Federal Register, Volume 77 Issue 146 (Monday, July 30, 2012)

[Federal Register Volume 77, Number 146 (Monday, July 30, 2012)]
[Proposed Rules]
[Pages 44722-45061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16814]

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Vol. 77

Monday,

No. 146

July 30, 2012

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, 414, 415 et al.

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

Federal Register / Vol. 77 , No. 146 / Monday, July 30, 2012 /
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 414, 415, 421, 423, 425, 486, and 495

[CMS-1590-P]
RIN 0938-AR11

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

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

ACTION: Proposed rule.

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

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

ADDRESSES: In commenting, please refer to file code CMS-1590-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions for
``submitting a comment.''
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1590-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1590-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.

FOR FURTHER INFORMATION CONTACT: Corinne Axelrod, (410) 786-5620, for
any physician payment issue not identified below.
Ryan Howe, (410) 786-3355, for issues related to practice expense
methodology and direct practice expense inputs, telehealth services,
and issues related to primary care and care coordination.
Sara Vitolo, (410) 786-5714, for issues related to potentially
misvalued services, malpractice RVUs, molecular pathology, and payment
for new preventive service HCPCS G-codes.
Ken Marsalek, (410) 786-4502, for issues related to the multiple
procedure payment reduction and payment for the technical component of
pathology services.
Michael Moore, (410) 786-6830, for issues related to geographic
practice cost indices and the sustainable growth rate.
Pam West, (410) 786-2302, for issues related to therapy services.
Chava Sheffield, (410) 786-2298, for issues related to certified
registered nurse anesthetists.
Roberta Epps, (410) 786-4503, for issues related to portable x-ray.
Anne Tayloe-Hauswald, (410) 786-4546, for issues related to
ambulance fee schedule and Part B drug payment.
Amanda Burd, (410) 786-2074, for issues related to the DME
provisions.
Debbie Skinner, (410) 786-7480, for issues related to non-random
prepayment complex medical review.
Latesha Walker, (410) 786-1101, for issues related to ambulance
coverage-physician certification statement.
Alexandra Mugge, (410) 786-4457, for issues related to physician
compare.
Christine Estella, (410) 786-0485, for issues related to the
physician quality reporting system, incentives for e-prescribing, and
Medicare shared savings program.
Pauline Lapin, (410) 786-6883, for issues related to the
chiropractic services demonstration budget neutrality issue.
Gift Tee, (410) 786-9316, for issues related to the Physician
Feedback Reporting Program and Value-Based Payment Modifier.
Jamie Hermansen, (410) 786-2064, for issues related to Medicare
coverage for hepatitis B vaccine.
Andrew Morgan, (410) 786-2543, for issues related to e-prescribing
under Medicare Part D.

SUPPLEMENTARY INFORMATION: 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.

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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

I. Executive Summary and Background
II. Provisions of the Proposed Rule
A. Resource-Based Practice Expense (PE) Relative Value Units
(RVUs)
B. Potentially Misvalued Codes Under the Physician Fee Schedule
C. Malpractice RVUs
D. Geographic Practice Cost Indices (GPCIs)
E. Medicare Telehealth Services for the Physician Fee Schedule
F. Extension of Payment for Technical Component of Certain
Physician Pathology Services
G. Therapy Services
H. Primary Care and Care Coordination
I. Payment for Molecular Pathology Services
J. Payment for New Preventive Services HCPCS G Codes
K. Certified Registered Nurse Anesthetists and Chronic Pain
Management Services
L. Ordering of Portable X-Ray Services
III. Other Provisions of the Proposed Regulation
A. Ambulance Fee Schedule
B. Part B Drug Payment: Average Sales Price (ASP) Issues
C. Durable Medical Equipment (DME) Face-to-Face Encounters and
Written Orders Prior to Delivery
D. Elimination of the Requirement for Termination of Non-Random
Prepayment Complex Medical Review
E. Ambulance Coverage-Physician Certification Statement
F. Physician Compare Web site
G. Physician Payment, Efficiency, and Quality Improvements--
Physician Quality Reporting System
H. Electronic Prescribing (eRx) Incentive Program
I. Medicare Shared Savings Program
J. Discussion of Budget Neutrality for the Chiropractic Services
Demonstration
K. Physician Value-Based Payment Modifier and the Physician
Feedback Reporting Program
L. Medicare Coverage of Hepatitis B Vaccine
M. Updating Existing Standards for E-Prescribing Under Medicare
Part D and Lifting the LTC Exemption
IV. Technical Corrections
A. Waiver of Deductible for Surgical Services Furnished on the
Same Date as a Planned Screening Colorectal Cancer Test and
Colorectal Cancer Screening Test Definition
V. Collection of Information Requirements
VI. Response to Comments
VII. Regulatory Impact Analysis

Acronyms

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

AHRQ [HHS] Agency for Healthcare Research and Quality
AMA American Medical Association
AMA RUC AMA [Specialty Society] Relative [Value] Update Committee
ARRA American Recovery and Reinvestment Act (Pub. L. 111-5)
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
CAH Critical access hospital
CBSA Core-Based Statistical Area
CF Conversion factor
CFC Conditions for Coverage
CFR Code of Federal Regulations
CNS Clinical nurse specialist
CoPs Conditions of Participation
CORF Comprehensive Outpatient Rehabilitation Facility
CPI Consumer Price Index
CPT [Physicians] Current Procedural Terminology (CPT codes,
descriptions and other data only are copyright 2011 American Medical
Association. All rights reserved.)
CRNA Certified registered nurse anesthetist
CY Calendar year
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DOTPA Development of Outpatient Therapy Payment Alternatives
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)
E/M Evaluation and management
EHR Electronic health record
EMTALA Emergency Medical Treatment and Active Labor Act (part of the
Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-
272)
eRx Electronic prescribing
FFS Fee-for-service
FR Federal Register
GAF Geographic adjustment factor
GAO [U.S.] Government Accountability Office
GPRO Group Practice Reporting Option
GPCI Geographic practice cost index
HAC Hospital-acquired conditions
HCPCS Healthcare Common Procedure Coding System
HHA Home health agency
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)
HPSA Health Professional Shortage Area
ICD International Classification of Diseases
IMRT Intensity Modulated Radiation Therapy
IOM Internet-only Manual
IPCI Indirect practice cost index
IPPS Inpatient prospective payment system
IWPUT Intra-service work per unit of time
MAC Medicare Administrative Contractor
MCTRJCA Middle Class Tax Relief and Job Creation Act of 2012 (Pub.
L. 112-96)
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)
MMEA Medicare and Medicaid Extenders Act of 2010 (Pub. L. 111-309)
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L.
110-173)
MP Malpractice
MPPR Multiple procedure payment reduction
MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539)
NP Nurse practitioner
NPP Nonphysician practitioner
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act (Pub. L. 101-239)
OIG [HHS] Office of Inspector General
PA Physician assistant
PC Professional component
PE Practice expense
PE/HR Practice expense per hour
PERC Practice Expense Review Committee
PFS Physician Fee Schedule
PGP [Medicare] Physician Group Practice
PLI Professional liability insurance
PPS Prospective payment system
PQRS Physician Quality Reporting System
PRA Paperwork Reduction Act
PPTRA Physician Payment and Therapy Relief Act of 2010 (Pub. L. 111-
286)
PVBP Physician and Other Health Professional Value-Based Purchasing
Workgroup
RAC [Medicare] Recovery Audit Contractor
RFA Regulatory Flexibility Act
RIA Regulatory impact analysis
RVU Relative value unit
SBRT Stereotactic body radiation therapy
SGR Sustainable growth rate
TC Technical component
TIN Tax identification number
TPTCCA Temporary Payroll Tax Cut Continuation Act of 2011 (Pub.
L.112-78)
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)
VBP Value-based purchasing

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Addenda Available Only Through the Internet on the CMS Web site

In the past, the Addenda referred to throughout the preamble of our
annual PFS proposed and final rules with comment period were included
in the printed Federal Register. However, effective with the CY 2012
PFS proposed rule, the PFS Addenda no longer appear in the Federal
Register. Instead these Addenda to the annual proposed and final rules
with comment period will be available only through the Internet. The
PFS Addenda along with other supporting documents and tables referenced
in this proposed rule with comment period are available through the
Internet on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/.
Click on the link on the left side of the screen titled, ``PFS Federal
Regulations Notices'' for a chronological list of PFS Federal Register
and other related documents. For the CY 2013 PFS proposed rule with
comment period, refer to item CMS-1590-P. Readers who experience any
problems accessing any of the Addenda or other documents referenced in
this proposed rule with comment period and posted on the CMS Web site
identified above should contact Corinne Axelrod at (410) 786-5620.

CPT (Current Procedural Terminology) Copyright Notice

Throughout this proposed rule, we use CPT codes and descriptions to
refer to a variety of services. We note that CPT codes and descriptions
are copyright 2011 American Medical Association. All Rights Reserved.
CPT is a registered trademark of the American Medical Association
(AMA). Applicable Federal Acquisition Regulations (FAR) and Defense
Federal Acquisition Regulations (DFAR) apply.

I. Executive Summary and Background

A. Executive Summary

1. Purpose
This major proposed rule would revise payment polices under the
Medicare Physician Fee Schedule (PFS) and make other policy changes
related to Medicare Part B payment. These changes would be applicable
to services furnished in CY 2013. It also would implement provisions of
the Affordable Care Act by establishing a face-to-face encounter as a
condition of payment for certain durable medical equipment (DME) items.
In addition, it would implement statutory changes regarding the
termination of non-random prepayment review.
2. Summary of the Major Provisions
The Social Security Act (Act) requires us to establish payments
under the PFS based on national uniform relative value units (RVUs) and
the relative resources used in furnishing a service. The Act requires
that national RVUs be established for physician work, practice expense
(PE), and malpractice (MP) expense. In this major proposed rule, we
propose payment rates for CY 2013 for the PFS, payments for Part B
drugs, and other Medicare Part B payment policies to ensure that our
payment systems are updated to reflect changes in medical practice and
the relative value of services. It also proposes to implement
provisions of the Affordable Care Act by establishing a face-to-face
encounter as a condition of payment for certain durable medical
equipment (DME) items, and by removing certain regulations regarding
the termination of non-random prepayment review. It also proposes new
claims-based data reporting requirements for therapy services to
implement a provision in the Middle Class Tax Relief and Jobs Creation
Act (MCTRCA). In addition, this rule proposes:

Potentially Misvalued Codes to be Evaluated.
Additional Multiple Procedure Payment Reductions (MPPR).
Expanding Medicare Telehealth Services.
Regulatory Changes regarding Payment for Technical Component
of Certain Physician Pathology Services to Conform to Statute.
Primary Care and Care Coordination Service.
Payment rates for Newly Covered Preventive Services.
Definition of Anesthesia and Related Care in the Certified
Registered Nurse Anesthetists Benefit.
Ordering Requirements for Portable X-ray Services.
Updates to the Ambulance Fee Schedule.
Part B Drug Payment Rates.
Ambulance Coverage-Physician Certification Statement.
Updating the--
++ Physician Compare Web site.
++ Physician Quality Reporting System.
++ Electronic Prescribing (eRx) Incentive Program.
++ Medicare Shared Savings Program.
Providing Budget Neutrality Discussion on the Chiropractic
Demonstration.
Physician Value-Based Payment Modifier and the Physician
Feedback Reporting Program.
Medicare Coverage of Hepatitis B Vaccine.
Updating Existing Standards for e-prescribing under Medicare
Part D and Lifting the LTC Exemption.
3. Summary of Costs and Benefits
The statute requires that we establish by regulation each year
payment amounts for all physicians' service. These payment amounts are
required to be adjusted to reflect the variations in the costs of
providing services in different geographic areas. The statute also
requires that annual adjustments to PFS RVUs not cause annual estimated
expenditures to differ by more than $20 million from what they would
have been had the adjustments not been made. If adjustments to RVUs
would cause expenditures to change by more than $20 million, we must
make adjustments to preserve budget neutrality.
Several proposed changes would affect the specialty distribution of
Medicare expenditures. This proposed rule reflects the Administration's
priority on improving payment for primary care services. Overall,
payments for primary care specialties would increase and payments to
select other specialties would decrease due to several changes in how
we propose to calculate payments for CY 2013. Primary care payments
would increase because of a proposed payment for managing a
beneficiary's care when the beneficiary is discharged from an inpatient
hospital, a SNF, an outpatient hospital observation, partial
hospitalization services, or a community mental health center. Primary
care payments also would increase due to redistributions from proposed
reductions in payments for other specialties. Because of the budget-
neutral nature of this system, proposed decreases in payments in one
service result in proposed increases in payments in others.
Payments to primary care specialties are also impacted by the
completion of the 4-year transition to new PE RVUs using the new
Physician Practice Information Survey (PPIS) data that was adopted in
the CY 2010 PFS final rule with comment period. The projected impacts
of using the new PPIS data are generally consistent with the impacts
discussed in the CY 2012 final rule with comment period (76 FR 72452).
Proposed changes in how we calculate payment when certain services
are furnished together would result in reductions in total payments
projected to cardiologists and ophthalmologists. Capital-intensive
specialties are projected to decrease due to proposed

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changes in how the interest rate used in the PE calculation is
estimated. Also, under our potentially misvalued codes initiative, we
propose to adjust the payment rates for two common radiation oncology
treatment delivery methods, intensity-modulated radiation treatment
(IMRT), and stereotactic body radiation therapy (SBRT) to reflect more
realistic time projections based upon publicly available data. The
combined effect of the PPIS transition and the latter two proposals
would be a reduction in payments to radiation therapy centers and
radiation oncology.

B. Background

Since January 1, 1992, Medicare has paid for physicians' services
under section 1848 of the Act, ``Payment for Physicians' Services.''
The Act requires that CMS make payments under the PFS using national
uniform relative value units (RVUs) based on the relative resources
used in furnishing a service. Section 1848(c) of the Act requires that
national RVUs be established for physician work, PE, and MP expense.
Before the establishment of the resource-based relative value system,
Medicare payment for physicians' services was based on reasonable
charges. We note that throughout this proposed rule, unless otherwise
noted, the term ``practitioner'' is used to describe both physicians
and nonphysician practitioners (such as physician assistants, nurse
practitioners, clinical nurse specialists, certified nurse-midwives,
psychologists, or clinical social workers) who are permitted to bill
Medicare under the PFS for their services.
1. Development of the Relative Value System
a. Work RVUs
The concepts and methodology underlying the PFS were enacted as
part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (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 MP RVUs were
based on average allowable charges.
The physician work RVUs established for the implementation of the
fee schedule in January 1992 were developed with extensive input from
the physician community. A research team at the Harvard School of
Public Health developed the original physician work RVUs for most codes
in a cooperative agreement with the Department of Health and Human
Services (HHS). In constructing the code-specific vignettes for the
original physician work RVUs, Harvard worked with panels of experts,
both inside and outside the Federal government, and obtained input from
numerous physician specialty groups.
Section 1848(b)(2)(B) of the Act specifies that the RVUs for
anesthesia services are based on RVUs from a uniform relative value
guide, with appropriate adjustment of the conversion factor (CF), in a
manner to assure that fee schedule amounts for anesthesia services are
consistent with those for other services of comparable value. We
established a separate CF for anesthesia services, and we continue to
utilize time units as a factor in determining payment for these
services. As a result, there is a separate payment methodology for
anesthesia services.
We establish physician work RVUs for new and revised codes based,
in part, on our review of recommendations received from the American
Medical Association/Specialty Society Relative Value Update Committee
(AMA RUC).
b. Practice Expense Relative Value Units (PE RVUs)
Section 121 of the Social Security Act Amendments of 1994 (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 physicians' service beginning in 1998. We were to
consider general categories of expenses (such as office rent and wages
of personnel, but excluding malpractice expenses) comprising PEs.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay
implementation of the resource-based PE RVU system until January 1,
1999. In addition, section 4505(b) of the BBA provided for a 4-year
transition period from charge-based PE RVUs to resource-based PE RVUs.
We established the resource-based PE RVUs for each
physicians'service in a final rule, published November 2, 1998 (63 FR
58814), effective for services furnished in 1999. Based on the
requirement to transition to a resource-based system for PE over a 4-
year period, resource-based PE RVUs did not become fully effective
until 2002.
This resource-based system was based on two significant sources of
actual PE data: The Clinical Practice Expert Panel (CPEP) data and the
AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were
collected from panels of physicians, practice administrators, and
nonphysician health professionals (for example, registered nurses
(RNs)) nominated by physician specialty societies and other groups. The
CPEP panels identified the direct inputs required for each physicians'
service. (We have since refined and revised these inputs based on
recommendations from the AMA RUC.) The SMS data provided aggregate
specialty-specific information on hours worked and PEs.
Separate PE RVUs are established for procedures that can be
furnished in both a nonfacility setting, such as a physician's office,
and a facility setting, such as a hospital outpatient department
(HOPD). The difference between the facility and nonfacility RVUs
reflects the fact that a facility typically receives separate payment
from Medicare for its costs of furnishing the service, apart from
payment under the PFS. The nonfacility RVUs reflect all of the direct
and indirect PEs of furnishing a particular service.
Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) directed the Secretary of Health and Human Services
(the Secretary) to establish a process under which we accept and use,
to the maximum extent practicable and consistent with sound data
practices, data collected or developed by entities and organizations to
supplement the data we normally collect in determining the PE
component. On May 3, 2000, we published the interim final rule (65 FR
25664) that set forth the criteria for the submission of these
supplemental PE survey data. The criteria were modified in response to
comments received, and published in the Federal Register (65 FR 65376)
as part of a November 1, 2000 final rule. The PFS final rules published
in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended
the period during which we would accept these supplemental data through
March 1, 2005.
In the CY 2007 PFS final rule with comment period (71 FR 69624), we
revised the methodology for calculating direct PE RVUs from the top-
down to the bottom-up methodology beginning in CY 2007. We adopted a 4-
year transition to the new PE RVUs. This transition was completed in CY
2010. Direct PE RVUs were calculated for CY 2013 using this
methodology, unless otherwise noted.
In the CY 2010 PFS final rule with comment period, we updated the
practice expense per hour (PE/HR) data that are used in the calculation
of PE RVUs for most specialties (74 FR 61749). For this update, we used
the Physician Practice Information Survey

[[Page 44726]]

(PPIS) conducted by the AMA. The PPIS is a multispecialty, nationally
representative, PE survey of both physicians and nonphysician
practitioners (NPPs) using a survey instrument and methods highly
consistent with those of the SMS and the supplemental surveys used
prior to CY 2010. We note that in CY 2010, for oncology, clinical
laboratories, and independent diagnostic testing facilities (IDTFs), we
continued to use the supplemental survey data to determine PE/HR values
(74 FR 61752). Beginning in CY 2010, we provided for a 4-year
transition for the new PE RVUs using the updated PE/HR data. In CY
2013, the final year of the transition, PE RVUs are calculated based on
the new data.
c. Resource-Based Malpractice RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act
requires that we implement resource-based MP RVUs for services
furnished on or after CY 2000. The resource-based MP RVUs were
implemented in the PFS final rule with comment period published
November 2, 1999 (64 FR 59380). The MP RVUs were based on malpractice
insurance premium data collected from commercial and physician-owned
insurers from all the States, the District of Columbia, and Puerto
Rico.
d. Refinements to the RVUs
Section 1848(c)(2)(B)(i) of the Act requires that we review all
RVUs no less often than every 5 years. Prior to CY 2013, we conducted
periodic reviews of work RVUs and PE RVUs independently.
The First Five-Year Review of Work RVUs was published on November
22, 1996 (61 FR 59489) and was effective in 1997. The Second Five-Year
Review of Work RVUs was published in the CY 2002 PFS final rule with
comment period (66 FR 55246) and was effective in 2002. The Third Five-
Year Review of Work RVUs was published in the CY 2007 PFS final rule
with comment period (71 FR 69624) and was effective on January 1, 2007.
The Fourth Five-Year Review of Work RVUs was published in the CY 2012
PFS final rule with comment period (76 FR 73026).
Initially refinements to the direct PE inputs relied on input from
the AMA RUC-established the Practice Expense Advisory Committee (PEAC).
Through March 2004, the PEAC provided recommendations to CMS for more
than 7,600 codes (all but a few hundred of the codes included in the
AMAs Current Procedural Terminology (CPT) codes). As part of the CY
2007 PFS final rule with comment period (71 FR 69624), we implemented a
new bottom-up methodology for determining resource-based PE RVUs and
transitioned the new methodology over a 4-year period. A comprehensive
review of PE was undertaken prior to the 4-year transition period for
the new PE methodology from the top-down to the bottom-up methodology,
and this transition was completed in CY 2010. In CY 2010, we also
incorporated the new PPIS data to update the specialty-specific PE/HR
data used to develop PE RVUs, adopting a 4-year transition to PE RVUs
developed using the PPIS data.
In the CY 2012 PFS final rule with comment period (76 FR 73057), we
finalized a proposal to consolidate reviews of work and PE RVUs under
section 1848(c)(2)(B) of the Act and reviews of potentially misvalued
codes under section 1848(c)(2)(K) of the Act into one annual process.
In the CY 2005 PFS final rule with comment period (69 FR 66236), we
implemented the first Five-Year Review of the MP RVUs (69 FR 66263).
Minor modifications to the methodology were addressed in the CY 2006
PFS final rule with comment period (70 FR 70153). The second Five-Year
Review and update of resource-based malpractice RVUs was published in
the CY 2010 PFS final rule with comment period (74 FR 61758) and was
effective in CY 2010.
In addition to the Five-Year Reviews, beginning for CY 2009, CMS
and the AMA RUC have identified and reviewed a number of potentially
misvalued codes on an annual basis based on various identification
screens. This annual review of work and PE RVUs for potentially
misvalued codes was supplemented by the amendments to Section 1848 of
the Act, as enacted by section 3134 of the Affordable Care Act, which
requires the agency to periodically identify, review and adjust values
for potentially misvalued codes with an emphasis on the following
categories: (1) Codes and families of codes for which there has been
the fastest growth; (2) codes or families of codes that have
experienced substantial changes in PEs; (3) codes that are recently
established for new technologies or services; (4) multiple codes that
are frequently billed in conjunction with furnishing a single service;
(5) codes with low relative values, particularly those that are often
billed multiple times for a single treatment; (6) codes which have not
been subject to review since the implementation of the fee schedule
(the so-called ``Harvard valued codes''); and (7) other codes
determined to be appropriate by the Secretary.
e. Application of Budget Neutrality to Adjustments of RVUs
Budget neutrality (BN) typically requires that expenditures not
increase or decrease as a result of changes or revisions to policy.
However, section 1848(c)(2)(B)(ii)(II) of the Act requires adjustment
only if the change in expenditures resulting from the annual revisions
to the PFS exceeds a threshold amount. Specifically, adjustments in
RVUs for a year may not cause total PFS payments to differ by more than
$20 million from what they would have been if the adjustments were not
made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if
revisions to the RVUs would cause expenditures to change by more than
$20 million, we make adjustments to ensure that expenditures do not
increase or decrease by more than $20 million.
2. Components of the Fee Schedule Payment Amounts
To calculate the payment for each physicians' service, the
components of the fee schedule (work, PE, and MP RVUs) are adjusted by
geographic practice cost indices (GPCIs). The GPCIs reflect the
relative costs of physician work, PE, and MP in an area compared to the
national average costs for each component.
RVUs are converted to dollar amounts through the application of a
CF, which is calculated by CMS' Office of the Actuary (OACT).
The formula for calculating the Medicare fee schedule payment
amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU MP x GPCI
MP)] x CF.

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

[[Page 44727]]

following for CY 2012: the total PFS update of -27.4 percent; the
initial estimate for the sustainable growth rate (SGR) of -16.9
percent; and the conversion factor (CF) of $24.6712. These figures were
calculated based on the statutory provisions in effect on November 1,
2011, when the CY 2012 PFS final rule with comment period was issued.
A correction notice was issued (77 FR 227) to correct several
technical and typographical errors that occurred in the CY 2012 PFS
final rule with comment period.
On December 23, 2011, the Temporary Payroll Tax Cut Continuation
Act of 2011 (TPTCCA) (Pub. L. 112-78) was signed into law. Section 301
of the TPTCCA specified a zero percent update to the PFS claims from
January 1, 2012 through February 29, 2012. As a result, the CY 2012 PFS
conversion factor was revised to $34.0376 for claims with dates of
service on or after January 1, 2012 through February 29, 2012. In
addition, TPTCCA extended several provisions affecting Medicare
services furnished on or after January 1, 2012 through February 29,
2012, including:
Section 303--the 1.0 floor on the physician work
geographic practice cost index;
Section 304--the exceptions process for outpatient therapy
caps;
Section 305--the payment to independent laboratories for
the TC of physician pathology services furnished to certain hospital
patients, and
Section 307--the five percent increase in payments for
mental health services.
On February 22, 2012, the MCTRJCA was signed into law. Section 3003
extended the zero percent PFS update to the remainder of CY 2012. As a
result of the MCTRJCA, the CY 2012 PFS CF was maintained as $34.0376
for claims with dates of service on or after March 1, 2012 through
December 31, 2012. In addition:
Section 3004 of MCTRJCA extended the 1.0 floor on the
physician work geographic practice cost index through December 31,
2012;
Section 3006 continued payment to independent laboratories
for the TC of physician pathology services furnished to certain
hospital patients through June 30, 2012; and
Section 3005 extended the exceptions process for
outpatient therapy caps through CY 2012 and made several other changes
related to therapy claims and caps.
On March 1, 2012, as required by Section 1848(d)(1)(E) of the Act,
we submitted to the Medicare Payment Advisory Committee (MedPAC) an
estimate of the SGR and conversion factor applicable to Medicare
payments for physicians' services for CY 2013. The actual values used
to compute physician payments for CY 2013 will be based on later data
and are scheduled to be published by November 1, 2012 as part of the CY
2013 PFS final rule.

II. Provisions of the Proposed Rule

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

1. Overview
Practice expense (PE) is the portion of the resources used in
furnishing the service that reflects the general categories of
physician and practitioner expenses, such as office rent and personnel
wages but excluding malpractice expenses, as specified in section
1848(c)(1)(B) of the Act. Section 121 of the Social Security Amendments
of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required us to
develop a methodology for a resource-based system for determining PE
RVUs for each physician's service. We develop PE RVUs by looking at the
direct and indirect physician practice resources involved in furnishing
each service. Direct expense categories include clinical labor, medical
supplies, and medical equipment. Indirect expenses include
administrative labor, office expense, and all other expenses. The
sections that follow provide more detailed information about the
methodology for translating the resources involved in furnishing each
service into service-specific PE RVUs. In addition, we note that
section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in
RVUs for a year may not cause total PFS payments to differ by more than
$20 million from what they would have otherwise been if the adjustments
were not made. Therefore, if revisions to the RVUs cause expenditures
to change by more than $20 million, we make adjustments to ensure that
expenditures do not increase or decrease by more than $20 million. We
refer readers to the CY 2010 PFS final rule with comment period (74 FR
61743 through 61748) for a more detailed explanation of the PE
methodology.
2. Practice Expense Methodology
a. Direct Practice Expense
We use a ``bottom-up'' approach to determine the direct PE by
adding the costs of the resources (that is, the clinical staff,
equipment, and supplies) typically involved with furnishing each
service. The costs of the resources are calculated using the refined
direct PE inputs assigned to each CPT code in our PE database, which
are based on our review of recommendations received from the AMA RUC.
For a detailed explanation of the bottom-up direct PE methodology,
including examples, we refer readers to the Five-Year Review of Work
Relative Value Units Under the PFS and Proposed Changes to the Practice
Expense Methodology proposed notice (71 FR 37242) and the CY 2007 PFS
final rule with comment period (71 FR 69629).
b. Indirect Practice Expense per Hour Data
We use survey data on indirect PEs incurred per hour worked in
developing the indirect portion of the PE RVUs. Prior to CY 2010, we
primarily used the practice expense per hour (PE/HR) by specialty that
was obtained from the AMA's Socioeconomic Monitoring Surveys (SMS). The
AMA administered a new survey in CY 2007 and CY 2008, the Physician
Practice Expense Information Survey (PPIS), which was expanded
(relative to the SMS) to include nonphysician practitioners (NPPs) paid
under the PFS.
The PPIS is a multispecialty, nationally representative, PE survey
of both physicians and NPPs using a consistent survey instrument and
methods highly consistent with those used for the SMS and the
supplemental surveys. The PPIS gathered information from 3,656
respondents across 51 physician specialty and healthcare professional
groups. We believe the PPIS is the most comprehensive source of PE
survey information available to date. Therefore, we used the PPIS data
to update the PE/HR data for almost all of the Medicare-recognized
specialties that participated in the survey for the CY 2010 PFS.
When we began using the PPIS data beginning in CY 2010, we did not
change the PE RVU methodology itself or the manner in which the PE/HR
data are used in that methodology. We only updated the PE/HR data based
on the new survey. Furthermore, as we explained in the CY 2010 PFS
final rule with comment period (74 FR 61751), because of the magnitude
of payment reductions for some specialties resulting from the use of
the PPIS data, we finalized a 4-year transition (75 percent old/25
percent new for CY 2010, 50 percent old/50 percent new for CY 2011, 25
percent old/75 percent new for CY 2012, and 100 percent new for CY
2013) from the previous PE RVUs to the PE RVUs developed using the new
PPIS data.

[[Page 44728]]

Section 1848(c)(2)(H)(i) of the Act requires us to use the medical
oncology supplemental survey data submitted in 2003 for oncology drug
administration services. Therefore, the PE/HR for medical oncology,
hematology, and hematology/oncology reflects the continued use of these
supplemental survey data.
We do not use the PPIS data for reproductive endocrinology and
spine surgery since these specialties currently are not separately
recognized by Medicare, nor do we have a method to blend these data
with Medicare-recognized specialty data. Similarly, we do not use the
PPIS data for sleep medicine since there is not a full year of Medicare
utilization data for that specialty.
Supplemental survey data on independent labs, from the College of
American Pathologists, were implemented for payments in CY 2005.
Supplemental survey data from the National Coalition of Quality
Diagnostic Imaging Services (NCQDIS), representing independent
diagnostic testing facilities (IDTFs), were blended with supplementary
survey data from the American College of Radiology (ACR) and
implemented for payments in CY 2007. Neither IDTFs nor independent labs
participated in the PPIS. Therefore, we continue to use the PE/HR that
was developed from their supplemental survey data.
Consistent with our past practice, the previous indirect PE/HR
values from the supplemental surveys for medical oncology, independent
laboratories, and IDTFs were updated to CY 2006 using the MEI to put
them on a comparable basis with the PPIS data.
Previously, we have established PE/HR values for various
specialties without SMS or supplemental survey data by crosswalking
them to other similar specialties to estimate a proxy PE/HR. For
specialties that were part of the PPIS for which we previously used a
crosswalked PE/HR, we instead use the PPIS-based PE/HR. We continue
previous crosswalks for specialties that did not participate in the
PPIS. However, beginning in CY 2010 we changed the PE/HR crosswalk for
portable x-ray suppliers from radiology to IDTF, a more appropriate
crosswalk because these specialties are more similar to each other for
physician time.
For registered dietician services, the resource-based PE RVUs have
been calculated in accordance with the final policy that crosswalks the
specialty to the ``All Physicians'' PE/HR data, as adopted in the CY
2010 PFS final rule with comment period (74 FR 61752) and discussed in
more detail in the CY 2011 PFS final rule with comment period (75 FR
73183).
There were five specialties whose utilization data were newly
incorporated into ratesetting for CY 2012. In accordance with the final
policies adopted in the CY 2012 final rule with comment period (76 FR
73036), we use proxy PE/HR values for these specialties by crosswalking
values from other, similar specialties as follows: Speech Language
Pathology from Physical Therapy; Hospice and Palliative Care from All
Physicians; Geriatric Psychiatry from Psychiatry; Intensive Cardiac
Rehabilitation from Cardiology, and Certified Nurse Midwife from
Obstetrics/gynecology.
For CY 2013, there are two specialties whose utilization data will
be newly incorporated into ratesetting. We are proposing to use proxy
PE/HR values for these specialties by crosswalking values from other
specialties that furnish similar services as follows: Cardiac
Electrophysiology from Cardiology; and Sports Medicine from Family
Practice. These proposed changes are reflected in the ``PE HR'' file
available on the CMS Web site under the supporting data files for the
CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.
As provided in the CY 2010 PFS final rule with comment period (74
FR 61751), CY 2013 is the final year of the 4-year transition to the PE
RVUs calculated using the PPIS data. Therefore, the CY 2013 proposed PE
RVUs were developed based entirely on the PPIS data, with the
exceptions described in this section.
c. Allocation of PE to Services
To establish PE RVUs for specific services, it is necessary to
establish the direct and indirect PE associated with each service.
(1) Direct Costs
The relative relationship between the direct cost portions of the
PE RVUs for any two services is determined by the relative relationship
between the sum of the direct cost resources (that is, the clinical
staff, equipment, and supplies) typically involved with furnishing the
services. The costs of these resources are calculated from the refined
direct PE inputs in our PE database. For example, if one service has a
direct cost sum of $400 from our PE database and another service has a
direct cost sum of $200, the direct portion of the PE RVUs of the first
service would be twice as much as the direct portion of the PE RVUs for
the second service.
(2) Indirect Costs
Section II.A.2.b. of this proposed rule describes the current data
sources for specialty-specific indirect costs used in our PE
calculations. We allocated the indirect costs to the code level on the
basis of the direct costs specifically associated with a code and the
greater of either the clinical labor costs or the physician work RVUs.
We also incorporated the survey data described earlier in the PE/HR
discussion. The general approach to developing the indirect portion of
the PE RVUs is described as follows:
For a given service, we use the direct portion of the PE
RVUs calculated as previously described and the average percentage that
direct costs represent of total costs (based on survey data) across the
specialties that furnish the service to determine an initial indirect
allocator. For example, if the direct portion of the PE RVUs for a
given service was 2.00 and direct costs, on average, represented 25
percent of total costs for the specialties that furnished the service,
the initial indirect allocator would be 6.00 since 2.00 is 25 percent
of 8.00 and 6.00 is 75 percent of 8.00.
We then add the greater of the work RVUs or clinical labor
portion of the direct portion of the PE RVUs to this initial indirect
allocator. In our example, if this service had work RVUs of 4.00 and
the clinical labor portion of the direct PE RVUs was 1.50, we would add
6.00 plus 4.00 (since the 4.00 work RVUs are greater than the 1.50
clinical labor portion) to get an indirect allocator of 10.00. In the
absence of any further use of the survey data, the relative
relationship between the indirect cost portions of the PE RVUs for any
two services would be determined by the relative relationship between
these indirect cost allocators. For example, if one service had an
indirect cost allocator of 10.00 and another service had an indirect
cost allocator of 5.00, the indirect portion of the PE RVUs of the
first service would be twice as great as the indirect portion of the PE
RVUs for the second service.
We next incorporate the specialty-specific indirect PE/HR
data into the calculation. As a relatively extreme example for the sake
of simplicity, assume in our previous example that, based on the survey
data, the average indirect cost of the specialties furnishing the first
service with an allocator of 10.00 was half of the average indirect
cost of the specialties furnishing the second service with an indirect
allocator of 5.00. In this case, the indirect portion of the PE RVUs of

[[Page 44729]]

the first service would be equal to that of the second service.
d. Facility and Nonfacility Costs
For procedures that can be furnished in a physician's office, as
well as in a hospital or facility setting, we establish two PE RVUs:
facility and nonfacility. The methodology for calculating PE RVUs is
the same for both the facility and nonfacility RVUs, but is applied
independently to yield two separate PE RVUs. Because Medicare makes a
separate payment to the facility for its costs of furnishing a service,
the facility PE RVUs are generally lower than the nonfacility PE RVUs.
e. Services With Technical Components (TCs) and Professional Components
(PCs)
Diagnostic services are generally comprised of two components: a
professional component (PC) and a technical component (TC), each of
which may be furnished independently or by different providers, or they
may be furnished together as a ``global' service. When services have PC
and TC components that can be billed separately, the payment for the
global component equals the sum of the payment for the TC and PC. This
is a result of using a weighted average of the ratio of indirect to
direct costs across all the specialties that furnish the global
components, TCs, and PCs; that is, we apply the same weighted average
indirect percentage factor to allocate indirect expenses to the global
components, PCs, and TCs for a service. (The direct PE RVUs for the TC
and PC sum to the global under the bottom-up methodology.)
f. PE RVU Methodology
For a more detailed description of the PE RVU methodology, we refer
readers to the CY 2010 PFS final rule with comment period (74 FR 61745
through 61746).
(1) Setup File
First, we create a setup file for the PE methodology. The setup
file contains the direct cost inputs, the utilization for each
procedure code at the specialty and facility/nonfacility place of
service level, and the specialty-specific PE/HR data from the surveys.
(2) Calculate the Direct Cost PE RVUs
Sum the costs of each direct input.
Step 1: Sum the direct costs of the inputs for each service. Apply
a scaling adjustment to the direct inputs.
Step 2: Calculate the current aggregate pool of direct PE costs.
This is the product of the current aggregate PE (aggregate direct and
indirect) RVUs, the CF, and the average direct PE percentage from the
survey data.
Step 3: Calculate the aggregate pool of direct costs. This is the
sum of the product of the direct costs for each service from Step 1 and
the utilization data for that service.
Step 4: Using the results of Step 2 and Step 3 calculate a direct
PE scaling adjustment so that the aggregate direct cost pool does not
exceed the current aggregate direct cost pool and apply it to the
direct costs from Step 1 for each service.
Step 5: Convert the results of Step 4 to an RVU scale for each
service. To do this, divide the results of Step 4 by the CF. Note that
the actual value of the CF used in this calculation does not influence
the final direct cost PE RVUs, as long as the same CF is used in Step 2
and Step 5. Different CFs will result in different direct PE scaling
factors, but this has no effect on the final direct cost PE RVUs since
changes in the CFs and changes in the associated direct scaling factors
offset one another.
(3) Create the Indirect Cost PE RVUs
Create indirect allocators.
Step 6: Based on the survey data, calculate direct and indirect PE
percentages for each physician specialty.
Step 7: Calculate direct and indirect PE percentages at the service
level by taking a weighted average of the results of Step 6 for the
specialties that furnish the service. Note that for services with TCs
and PCs, the direct and indirect percentages for a given service do not
vary by the PC, TC, and global components.
Step 8: Calculate the service level allocators for the indirect PEs
based on the percentages calculated in Step 7. The indirect PEs are
allocated based on the three components: the direct PE RVUs, the
clinical PE RVUs, and the work RVUs.
For most services the indirect allocator is: Indirect percentage *
(direct PE RVUs/direct percentage) + work RVUs.
There are two situations where this formula is modified:
If the service is a global service (that is, a service
with global, professional, and technical components), then the indirect
allocator is: Indirect percentage (direct PE RVUs/direct percentage) +
clinical PE RVUs + work RVUs.
If the clinical labor PE RVUs exceed the work RVUs (and
the service is not a global service), then the indirect allocator is:
indirect percentage (direct PE RVUs/direct percentage) + clinical PE
RVUs.
(Note: For global services, the indirect allocator is based on both
the work RVUs and the clinical labor PE RVUs. We do this to recognize
that, for the PC service, indirect PEs will be allocated using the work
RVUs, and for the TC service, indirect PEs will be allocated using the
direct PE RVUs and the clinical labor PE RVUs. This also allows the
global component RVUs to equal the sum of the PC and TC RVUs.)
For presentation purposes in the examples in Table 1, the formulas
were divided into two parts for each service.
The first part does not vary by service and is the
indirect percentage (direct PE RVUs/direct percentage).
The second part is either the work RVUs, clinical PE RVUs,
or both depending on whether the service is a global service and
whether the clinical PE RVUs exceed the work RVUs (as described earlier
in this step).
Apply a scaling adjustment to the indirect allocators.
Step 9: Calculate the current aggregate pool of indirect PE RVUs by
multiplying the current aggregate pool of PE RVUs by the average
indirect PE percentage from the survey data.
Step 10: Calculate an aggregate pool of indirect PE RVUs for all
PFS services by adding the product of the indirect PE allocators for a
service from Step 8 and the utilization data for that service.
Step 11: Using the results of Step 9 and Step 10, calculate an
indirect PE adjustment so that the aggregate indirect allocation does
not exceed the available aggregate indirect PE RVUs and apply it to
indirect allocators calculated in Step 8.
Calculate the indirect practice cost index.
Step 12: Using the results of Step 11, calculate aggregate pools of
specialty-specific adjusted indirect PE allocators for all PFS services
for a specialty by adding the product of the adjusted indirect PE
allocator for each service and the utilization data for that service.
Step 13: Using the specialty-specific indirect PE/HR data,
calculate specialty-specific aggregate pools of indirect PE for all PFS
services for that specialty by adding the product of the indirect PE/HR
for the specialty, the physician time for the service, and the
specialty's utilization for the service across all services furnished
by the specialty.
Step 14: Using the results of Step 12 and Step 13, calculate the
specialty-specific indirect PE scaling factors.
Step 15: Using the results of Step 14, calculate an indirect
practice cost index at the specialty level by dividing each specialty-
specific indirect scaling factor by the average indirect scaling factor
for the entire PFS.

[[Page 44730]]

Step 16: Calculate the indirect practice cost index at the service
level to ensure the capture of all indirect costs. Calculate a weighted
average of the practice cost index values for the specialties that
furnish the service. (Note: For services with TCs and PCs, we calculate
the indirect practice cost index across the global components, PCs, and
TCs. Under this method, the indirect practice cost index for a given
service (for example, echocardiogram) does not vary by the PC, TC, and
global component.)
Step 17: Apply the service level indirect practice cost index
calculated in Step 16 to the service level adjusted indirect allocators
calculated in Step 11 to get the indirect PE RVUs.
(4) Calculate the Final PE RVUs
Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs
from Step 17 and apply the final PE budget neutrality (BN) adjustment.
The final PE BN adjustment is calculated by comparing the results
of Step 18 to the current pool of PE RVUs. This final BN adjustment is
required in order to redistribute RVUs from step 18 to all PE RVUs in
the PFS and because certain specialties are excluded from the PE RVU
calculation for ratesetting purposes, but all specialties are included
for purposes of calculating the final BN adjustment. (See ``Specialties
excluded from ratesetting calculation'' later in this section.)
(5) Setup File Information
Specialties excluded from ratesetting calculation: For the
purposes of calculating the PE RVUs, we exclude certain specialties,
such as certain nonphysician practitioners paid at a percentage of the
PFS and low-volume specialties, from the calculation. These specialties
are included for the purposes of calculating the BN adjustment. They
are displayed in Table 1.

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

We are proposing to calculate the specialty mix for low volume
services (fewer than 100 billed services in the previous year) using
the same methodology we use for non-low volume services. We previously
have used the survey data from the dominant specialty for these low
volume services. However, because these services have such low
utilization, the dominant specialty tends to change from year to year.
We are proposing to calculate a specialty mix for these services rather
than use the dominant specialty in order to smooth year-to-year
fluctuations in PE RVUs due to changes in the dominant specialty.
Crosswalk certain low volume physician specialties:
Crosswalk the utilization of certain specialties with relatively low
PFS utilization to the associated specialties.
Physical therapy utilization: Crosswalk the utilization
associated with all physical therapy services to the specialty of
physical therapy.
Identify professional and technical services not
identified under the usual TC and 26 modifiers: Flag the services that
are PC and TC services, but do not use TC and 26 modifiers (for
example, electrocardiograms). This flag associates the PC and TC with
the associated global code for use in creating the indirect PE RVUs.
For example, the professional service, CPT code 93010
(Electrocardiogram, routine ECG with at least 12 leads; interpretation
and report only), is associated with the global service, CPT code 93000
(Electrocardiogram, routine ECG with at least 12 leads; with
interpretation and report).
Payment modifiers: Payment modifiers are accounted for in
the creation of the file consistent with

[[Page 44731]]

current payment policy as implemented in claims processing. For
example, services billed with the assistant at surgery modifier are
paid 16 percent of the PFS amount for that service; therefore, the
utilization file is modified to only account for 16 percent of any
service that contains the assistant at surgery modifier. Similarly, for
those services to which volume adjustments are made to account for the
payment modifiers, time adjustments are applied as well. For time
adjustments to surgical services, the intraoperative portion in the
physician time file is used; where it is not present, the
intraoperative percentage from the payment files used by Medicare
contractors to process Medicare claims is used instead. Where neither
is available, we use the payment adjustment ratio to adjust the time
accordingly. Table 2 details the manner in which the modifiers are
applied.

Table 2--Application of Payment Modifiers to Utilization Files
----------------------------------------------------------------------------------------------------------------
Modifier Description Volume adjustment Time adjustment
----------------------------------------------------------------------------------------------------------------
80, 81, 82......................... Assistant at Surgery.... 16%..................... Intraoperative portion.
AS................................. Assistant at Surgery-- 14% (85% * 16%)......... Intraoperative portion.
Physician Assistant.
50 or LT and RT.................... Bilateral Surgery....... 150%.................... 150% of physician time.
51................................. Multiple Procedure...... 50%..................... Intraoperative portion.
52................................. Reduced Services........ 50%..................... 50%.
53................................. Discontinued Procedure.. 50%..................... 50%.
54................................. Intraoperative Care only Preoperative + Preoperative +
Intraoperative Intraoperative
Percentages on the portion.
payment files used by
Medicare contractors to
process Medicare claims.
55................................. Postoperative Care only. Postoperative Percentage Postoperative portion.
on the payment files
used by Medicare
contractors to process
Medicare claims.
62................................. Co-surgeons............. 62.5%................... 50%.
66................................. Team Surgeons........... 33%..................... 33%.
----------------------------------------------------------------------------------------------------------------

We also make adjustments to volume and time that correspond to
other payment rules, including special multiple procedure endoscopy
rules and multiple procedure payment reductions (MPPR) including the
proposed ophthalmology and cardiovascular diagnostic services MPPR
discussed in section II.B.4. of this proposed rule. We note that
section 1848(c)(2)(B)(v) of the Act exempts certain reduced payments
for multiple imaging procedures and multiple therapy services from the
budget-neutrality calculation under section 1848(c)(2)(B)(ii)(II) of
the Act. These multiple procedure payment reductions are not included
in the development of the relative value units.
For anesthesia services, we do not apply adjustments to volume
since the average allowed charge is used when simulating RVUs and
therefore includes all discounts. A time adjustment of 33 percent is
made only for medical direction of two to four cases since that is the
only occasion where time units are duplicative.
Work RVUs: The setup file contains the work RVUs from this
proposed rule.
(6) Equipment Cost Per Minute
The equipment cost per minute is calculated as:

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

Where:

minutes per year = maximum minutes per year if usage were continuous
(that is, usage = 1); generally 150,000 minutes.
usage = 0.5 is the standard equipment utilization assumption; 0.75
for certain expensive diagnostic imaging equipment (see 74 FR 61753
through 61755 and section II.A.3. of the CY 2011 PFS final rule with
comment period).
price = price of the particular piece of equipment.
interest rate = sliding scale (see proposal below)
life of equipment = useful life of the particular piece of
equipment.
maintenance = factor for maintenance; 0.05.

The interest rate we have previously used was proposed and
finalized during rulemaking for CY 1998 PFS (62 FR 33164). In the CY
2012 proposed rule (76 FR 42783), we solicited comment regarding
reliable data on current prevailing loan rates for small businesses. In
response to that request, the AMA RUC recommended that rather than
applying the same interest rate across all equipment, CMS should
consider a ``sliding scale'' approach which varies the interest rate
based on the equipment cost, useful life, and SBA (Small Business
Administration) maximum interest rates for different categories of loan
size and maturity. The maximum interest rates for SBA loans are as
follows:
Fixed rate loans of $50,000 or more must not exceed Prime
plus 2.25 percent if the maturity is less than 7 years, and Prime plus
2.75 percent if the maturity is 7 years or more.
For loans between $25,000 and $50,000, maximum rates must
not exceed Prime plus 3.25 percent if the maturity is less than 7
years, and Prime plus 3.75 percent if the maturity is 7 years or more.
For loans of $25,000 or less, the maximum interest rate
must not exceed Prime plus 4.25 percent if the maturity is less than 7
years, and Prime plus 4.75 percent, if the maturity is 7 years or more.
The current Prime rate is 3.25 percent.
Based on that recommendation, for CY 2013, we are proposing to use
a ``sliding scale'' approach based on the current SBA maximum interest
rates for different categories of loan size (price of the equipment)
and maturity (useful life of the equipment). Additionally, we are
proposing to update this assumption through annual PFS rulemaking to
account for fluctuations in the Prime rate and/or changes to the SBA's
formula to determine maximum allowed interest rates.
The effects of this proposal on direct equipment inputs are
reflected in the CY 2013 proposed direct PE input database, available
on the CMS Web site under the downloads for the CY 2013 PFS proposed
rule at http://www.cms.gov/PhysicianFeeSched/. Additionally, we note
that the proposed PE RVUs included in Addendum B to this proposed rule
reflect the RVUs that result from application of this proposal.

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3. Changes to Direct PE Inputs for Specific Services
In this section, we discuss other specific CY 2013 proposals and
changes related to direct PE inputs for specific services. We note that
we will address comments on the interim direct PE inputs established in
the CY 2012 PFS final rule with comment period in the CY 2013 PFS final
rule.
a. Equipment Minutes for Interrogation Device Evaluation Services
It has come to our attention that the pacemaker follow-up system
(EQ138) associated with two interrogation device management service
codes does not have minutes allocated in the direct PE input database.
Based on our analysis of these services, we believe that 10 minutes
should be allocated to the equipment for each of the following CPT
codes: 93294 (Interrogation device evaluation(s) (remote), up to 90
days; single, dual, or multiple lead pacemaker system with interim
physician analysis, review(s) and report(s)), and 93295 (Interrogation
device evaluation(s) (remote), up to 90 days; single, dual, or multiple
lead implantable cardioverter-defibrillator system with interim
physician analysis, review(s) and report(s)). Therefore, we are
proposing to modify the direct PE input database to allocate 10 minutes
to the pacemaker follow-up system for CPT codes 93294 and 93295.
The proposed CY 2013 direct PE input database reflects these
changes and is available on the CMS Web site under the supporting data
files for the CY 2013 PFS proposed rule with comment period at http://www.cms.gov/PhysicianFeeSched/. We also note that the proposed PE RVUs
included in Addendum B to this proposed rule reflect the RVUs that
result from application of this proposal.
b. Clinical Labor for Pulmonary Rehabilitation Services (HCPCS Code
G0424)
It has come to our attention that the direct PE input database
includes 15 minutes of clinical labor time in the nonfacility setting
allocated for a CORF social worker/psychologist (L045C) associated with
HCPCS code G0424 (Pulmonary rehabilitation, including exercise
(includes monitoring), one hour, per session, up to two sessions per
day). Based on our analysis of this service, we believe that these 15
minutes should be added to the 15 minutes currently allocated to the
Respiratory Therapist (L042B) associated with this service. Therefore,
we are proposing to modify the direct PE input database to allocate 15
additional minutes to the Respiratory Therapist (L042B) (for a total of
30 minutes) and delete the CORF social worker/psychologist (L045C)
associated with HCPCS code G0424.
The proposed CY 2013 direct PE input database reflects these
changes and is available on the CMS Web site under the supporting data
files for the CY 2013 PFS proposed rule with comment period at http://www.cms.gov/PhysicianFeeSched/. We also note that the proposed PE RVUs
included in Addendum B to this proposed rule reflect the RVUs that
result from application of this proposal.
c. Transcranial Magnetic Stimulation Services
For CY 2011, the CPT Editorial Panel converted Category III CPT
codes 0160T and 0161T to Category I status (CPT codes 90867
(Therapeutic Repetitive Transcranial Magnetic Stimulation (TMS)
treatment; initial, including cortical mapping, motor threshold
determination, delivery and management), and 90868 (Therapeutic
Repetitive Transcranial Magnetic Stimulation (TMS) treatment;
subsequent delivery and management, per session)), which were
contractor priced on the PFS. For CY 2012, the CPT Editorial Panel
modified CPT codes 90867 and 90868, and created CPT code 90869
((Therapeutic Repetitive Transcranial Magnetic Stimulation (TMS)
treatment; subsequent motor threshold re-determination with delivery
and management.) In the CY 2012 PFS final rule with comment period, we
established interim final values based on refinement of RUC recommended
work RVUs, direct PE inputs, and malpractice risk factor crosswalks for
these services (76 FR 73201).
Subsequent to the development of interim final PE RVUs, it came to
our attention that the application of our usual PE methodology resulted
in anomalous PE values for these services. As we explain in section
II.A.2.c.2 of this proposed rule with comment period, for a given
service, we use the direct costs associated with a service (clinical
staff, equipment, and supplies) and the average percentage that direct
costs represent of total costs (based on survey data) across the
specialties that furnish the service to determine an initial indirect
allocator.
For services almost exclusively furnished by one specialty, the
average percentage of indirect costs relative to direct costs would
ordinarily be used to determine the initial indirect allocator. For
specialties that typically incur significant direct costs relative to
indirect costs, the initial indirect allocator for their services is
generally lower than for the specialties that typically incur lower
direct costs relative to indirect costs. Relative to direct costs, the
methodology generally allocates a greater proportion of indirect PE to
services furnished by psychiatrists, for example, than to services
furnished by specialties that typically incur significant direct costs,
such as radiation oncologists. In the case of the TMS, however, the
direct costs incurred by psychiatrists reporting the codes far exceed
the direct costs typical to any other service predominantly furnished
by psychiatrists. This drastic difference in the direct costs of TMS
relative to most other services furnished by psychiatrists results in
anomalous PE values since code-level indirect PE allocation relies on
typical resource costs for the specialties that furnish the service. In
other words, the amount of indirect PE allocated to TMS services is
based on the proportion of indirect expense to direct expense that is
typical of other psychiatric services, and is not on par with other
services that require similar investments in capital equipment and
high-cost, disposable supplies.
Historically, we have contractor-priced services with resource
costs that cannot be appropriately valued within the generally
applicable PE methodology used to price services across the PFS.
Because there is no mechanism to develop appropriate payment rates for
these services within our current methodology, we are proposing to
contractor price these codes for CY 2013.
d. Spinal Cord Stimulation Trial Procedures in the Nonfacility Setting
Stakeholders have recently brought to our attention that CPT code
63650 (Percutaneous implantation of neurostimulator electrode array,
epidural) is frequently furnished in the physician office setting but
is not priced in that setting. We note that the valuation of a service
under the PFS in particular settings does not address whether those
services are medically reasonable and necessary in the case of
individual patients, including being furnished in a setting appropriate
to the patient's medical needs and condition. However, because these
services are being furnished in the nonfacility setting, we believe
that CPT code 63650 should be reviewed to establish appropriate
nonfacility inputs. We propose to review CPT code 63650 and request
recommendations from the AMA RUC and other public commenters

[[Page 44735]]

on the appropriate physician work RVUs (as measured by time and
intensity), and facility and nonfacility direct PE inputs for this
service. We understand that disposable leads comprise a significant
resource cost for this service and are currently separately reportable
to Medicare for payment purposes when the service is furnished in the
physician office setting. Disposable medical supplies are not
considered prosthetic devices paid under the Durable Medical Equipment,
Prosthetic/Orthotic, and Supplies (DMEPOS) fee schedule and generally
are incorporated as nonfacility direct PE inputs to PE RVUs. We seek
comment on establishing nonfacililty PE RVUs for CPT code 63650.

B. Potentially Misvalued Codes Under the Physician Fee Schedule

1. Valuing Services Under the PFS
To value services under the PFS, section 1848(c) of the Act
requires the Secretary to determine relative values for physicians'
services based on three components: work; practice expense (PE); and
malpractice. Section 1848(c)(1)(A) of the Act defines the work
component to include ``the portion of the resources used in furnishing
the service that reflects physician time and intensity in furnishing
the service.'' In addition, section 1848(c)(2)(C)(i) of the Act
specifies that ``the Secretary shall determine a number of work
relative value units (RVUs) for the service based on the relative
resources incorporating physician time and intensity required in
furnishing the service.''
As discussed in detail in sections I.B.1.b. and I.B.1.c. of this
proposed rule, the statute also defines the PE and malpractice
components and provides specific guidance in the calculation of the
RVUs for each of these components. Section 1848(c)(1)(B) of the Act
defines the PE component as ``the portion of the resources used in
furnishing the service that reflects the general categories of expenses
(such as office rent and wages of personnel, but excluding malpractice
expenses) comprising practice expenses.'' Section 1848(c)(1)(C) of the
Act defines the malpractice component as ``the portion of the resources
used in furnishing the service that reflects malpractice expenses in
furnishing the service.'' Sections 1848 (c)(2)(C)(ii) and (iii) of the
Act specify that PE and malpractice expense RVUs shall be determined
based on the relative PE/malpractice expense resources involved in
furnishing the service.
Section 1848(c)(2)(B) of the Act directs the Secretary to conduct a
periodic review, not less often than every 5 years, of the RVUs
established under the PFS. On March 23, 2010, the Affordable Care Act
was enacted, further requiring the Secretary to periodically identify
and review potentially misvalued codes and make appropriate adjustments
to the relative values of those services identified as being
potentially misvalued. Section 3134(a) of the Affordable Care Act added
a new section 1848(c)(2)(K) to the Act, which requires the Secretary to
periodically identify potentially misvalued services using certain
criteria and to review and make appropriate adjustments to the relative
values for those services. Section 3134(a) of the Affordable Care Act
also added a new section 1848(c)(2)(L) to the Act which requires the
Secretary to develop a process to validate the RVUs of certain
potentially misvalued codes under the PFS, identified using the same
criteria used to identify potentially misvalued codes, and to make
appropriate adjustments.
As discussed in section I.B.1.a. of this proposed rule, each year
we develop and propose appropriate adjustments to the RVUs, taking into
account the recommendations provided by the American Medical
Association Specialty Society Relative Value Scale Update Committee
(AMA RUC), the Medicare Payment Advisory Commission (MedPAC), and
others. For many years, the AMA RUC has provided us with
recommendations on the appropriate relative values for new, revised,
and potentially misvalued PFS services. We review these recommendations
on a code-by-code basis and consider these recommendations in
conjunction with analyses of data sources, such as claims data, to
inform the decision-making process as authorized by the law. We may
also consider analyses of physician time, work RVUs, or direct PE
inputs using other data sources, such as Department of Veteran Affairs
(VA) National Surgical Quality Improvement Program (NSQIP), the Society
for Thoracic Surgeons (STS), and the Physician Quality Reporting
Initiative (PQRI) databases. In addition to considering the most
recently available data, we also assess the results of physician
surveys and specialty recommendations submitted to us by the AMA RUC.
We conduct a clinical review to assess the appropriate RVUs in the
context of contemporary medical practice. We note that section
1848(c)(2)(A)(ii) of the Act authorizes the use of extrapolation and
other techniques to determine the RVUs for physicians' services for
which specific data are not available, in addition to taking into
account the results of consultations with organizations representing
physicians. In accordance with section 1848(c) of the Act, we determine
appropriate adjustments to the RVUs, explain the basis of these
adjustments, and respond to public comments in the PFS proposed and
final rules.
2. Identifying, Reviewing, and Validating the RVUs of Potentially
Misvalued Services on the PFS
a. Background
In its March 2006 Report to the Congress, MedPAC noted that
``misvalued services can distort the price signals for physicians'
services as well as for other health care services that physicians
order, such as hospital services.'' In that same report MedPAC
postulated that physicians' services under the PFS can become misvalued
over time for a number of reasons: For example, MedPAC stated, ``when a
new service is added to the PFS, it may be assigned a relatively high
value because of the time, technical skill, and psychological stress
that are often required to furnish that service. Over time, the work
required for certain services would be expected to decline as
physicians become more familiar with the service and more efficient in
furnishing it.'' That is, the amount of physician work needed to
furnish an existing service may decrease as physicians build experience
furnishing that service. Services can also become overvalued when PEs
decline. This can happen when the costs of equipment and supplies fall,
or when equipment is used more frequently than is estimated in the PE
methodology, reducing its cost per use. Likewise, services can become
undervalued when physician work increases or PEs rise. In the ensuing
years since MedPAC's 2006 report, additional groups of potentially
misvalued services have been identified by the Congress, CMS, MedPAC,
the AMA RUC, and other stakeholders.
In recent years, CMS and the AMA RUC have taken increasingly
significant steps to address potentially misvalued codes. As MedPAC
noted in its March 2009 Report to Congress, in the intervening years
since MedPAC made the initial recommendations, ``CMS and the AMA RUC
have taken several steps to improve the review process.'' Most
recently, section 1848(c)(2)(K)(ii) of the Act (as added by section
3134(a) of the Affordable Care Act) directed the Secretary to
specifically examine, as determined appropriate, potentially

[[Page 44736]]

misvalued services in seven categories as follows:
Codes and families of codes for which there has been the
fastest growth;
Codes and families of codes that have experienced
substantial changes in PEs;
Codes that are recently established for new technologies
or services;
Multiple codes that are frequently billed in conjunction
with furnishing a single service;
Codes with low relative values, particularly those that
are often billed multiple times for a single treatment;
Codes which have not been subject to review since the
implementation of the PFS (the so-called `Harvard-valued codes'); and
Other codes determined to be appropriate by the Secretary.
Section 1848(c)(2)(K)(iii) of the Act also specifies that the
Secretary may use existing processes to receive recommendations on the
review and appropriate adjustment of potentially misvalued services. In
addition, the Secretary may conduct surveys, other data collection
activities, studies, or other analyses, as the Secretary determines to
be appropriate, to facilitate the review and appropriate adjustment of
potentially misvalued services. This section also authorizes the use of
analytic contractors to identify and analyze potentially misvalued
codes, conduct surveys or collect data, and make recommendations on the
review and appropriate adjustment of potentially misvalued services.
Additionally, this section provides that the Secretary may coordinate
the review and adjustment of any RVU with the periodic review described
in section 1848(c)(2)(B) of the Act. Finally, section
1848(c)(2)(K)(iii)(V) of the Act specifies that the Secretary may make
appropriate coding revisions (including using existing processes for
consideration of coding changes) which may include consolidation of
individual services into bundled codes for payment under the PFS.
In addition to these requirements, section 3003 (b)(1) of the
Middle Class Tax Cut and Job Creation Act of 2012 (Pub. L. 112-96),
requires that the Secretary conduct a study that examines options for
bundled or episode-based payment to cover physicians' services
currently paid under the PFS under section 1848 of the Act for one or
more prevalent chronic conditions or episodes of care for one or more
major procedures. In conducting the study, the Secretary shall consult
with medical professional societies and other relevant stakeholders.
Additionally, the study shall include an examination of related private
payer payment initiatives. This section also requires that not later
than January 1, 2013, the Secretary submit to certain committees of the
Congress a report on the study. The report shall include
recommendations on suitable alternative payment options for services
paid under the PFS and on associated implementation requirements.
Bundling is one method for structuring payment that can improve
payment accuracy and efficiency, assuming the bundling proposal has
considered the payment system, context, and included services. Current
work on bundling to date has targeted specific codes and sets of codes.
Specifically, our ongoing work identifying, reviewing, and validating
the RVUs of potentially misvalued services on the PFS will support the
development of this report. As detailed above, through the potentially
misvalued codes initiative we are currently identifying for review
codes that are frequently billed together and codes with low relative
values billed in multiples. Many of the codes identified through these
screens have been referred to the CPT Editorial Panel for the
development of a comprehensive or bundled code, and several bundled
codes have already been created and valued. Additionally, in section
II.B.2.d. of this CY 2013 PFS proposed rule, we discuss improving the
value of the global surgical package and request public comment on
methods of obtaining accurate and current data on E/M services
furnished as part of global surgical procedures. This information on
measuring post-operative work in our current payment bundles also will
inform our report to the Congress. We will continue to examine options
for bundled or episode-based payments and will include our
recommendations and implementation options in our report to the
Congress submitted no later than January 1, 2013.
b. Progress in Identifying and Reviewing Potentially Misvalued Codes
In accordance with our statutory mandate, we have identified and
reviewed numerous potentially misvalued codes in all seven of the
categories specified in section 1848(c)(2)(K)(ii) of the Act, and we
plan to continue our work examining potentially misvalued codes in
these areas over the upcoming years. In the current process, we
identify potentially misvalued codes for review, and request
recommendations from the AMA RUC and other public commenters on revised
work RVUs and direct PE inputs for those codes. The AMA RUC, through
its own processes, identifies potentially misvalued codes for review,
and through our public nomination process for potentially misvalued
codes established in the CY 2012 PFS final rule, other individuals and
stakeholder groups submit nominations for review of potentially
misvalued codes as well.
Since CY 2009, as a part of the annual potentially misvalued code
review and Five-Year Review process, we have reviewed over 1,000
potentially misvalued codes to refine work RVUs and direct PE inputs.
We have adopted appropriate work RVUs and direct PE inputs for these
services as a result of these reviews.
Our prior reviews of codes under the potentially misvalued codes
initiative have included codes in all seven categories specified in
section 1848(c)(2)(K)(ii) of the Act, listed above. A more detailed
discussion of the extensive prior reviews of potentially misvalued
codes is included in the CY 2012 PFS final rule with comment period (76
FR 73052 through 73055).
In last year's PFS proposed rule (CY 2012), we identified
potentially misvalued codes in the category of ``Other codes determined
to be appropriate by the Secretary,'' referring a list of the highest
PFS expenditure services, by specialty, that had not been recently
reviewed (76 FR 73059 through 73068). In the CY 2012 final rule with
comment period we finalized policy to consolidate the review of
physician work and PE at the same time (76 FR 73055 through 73958), and
established a process for the annual public nomination of potentially
misvalued services to replace the Five-Year review process (76 FR 73058
through 73059). Below we discuss proposals that support our continuing
efforts to appropriately identify, review, and adjust values for
potentially misvalued codes.
c. Validating RVUs of Potentially Misvalued Codes
In addition to identifying and reviewing potentially misvalued
codes, section 3134(a) of the Affordable Care Act added section
1848(c)(2)(L) of the Act, which specifies that the Secretary shall
establish a formal process to validate RVUs under the PFS. The
validation process may include validation of work elements (such as
time, mental effort and professional judgment, technical skill and
physical effort, and stress due to risk) involved with furnishing a
service and may include validation of the pre-, post-, and intra-
service components of work. The Secretary is directed, as part of the
validation, to validate a sampling of the work RVUs of codes identified
through

[[Page 44737]]

any of the seven categories of potentially misvalued codes specified by
section 1848(c)(2)(K)(ii) of the Act. Furthermore, the Secretary may
conduct the validation using methods similar to those used to review
potentially misvalued codes, including conducting surveys, other data
collection activities, studies, or other analyses as the Secretary
determines to be appropriate to facilitate the validation of RVUs of
services.
In the CY 2011 PFS proposed rule (75 FR 40068) and CY 2012 PFS
proposed rule (76 FR 42790), we solicited public comments on possible
approaches, methodologies, and data sources that we should consider for
a validation process. A summary of the comments along with our
responses are included in the CY 2011 PFS final rule with comment
period (75 FR 73217) and the CY 2012 PFS final rule with comment period
(73054 through 73055). In CY 2012 we intend to enter into a contract to
assist us in validating RVUs of potentially misvalued codes that will
explore a model for the validation of physician work under the PFS,
both for new and existing services. We plan to discuss this model
further in future rulemaking.
d. Improving the Valuation of the Global Surgical Package
(1) Background
We applied the concept of payment for a global surgical package
under the PFS at its inception on January 1, 1992 (56 FR 59502). For
each global surgical procedure, we establish a single payment, which
includes payment for a package of all related services typically
furnished by the surgeon furnishing the procedure during the global
period. Each global surgery is paid on the PFS as a single global
surgical package. Each global surgical package payment rate is based on
the work necessary for the typical surgery and related pre- and post-
operative work. The global period may include 0, 10, or 90 days of
post-operative care, depending on the procedure. For major procedures,
those with a 90-day global period, the global surgical package payment
also includes the day prior to the day of surgery.
Some global surgical packages have been valued by adding the RVU of
the surgical procedure and all pre- and post-operative evaluation and
management (E/M) services included in the global period. Others have
been valued using magnitude estimation, in which case, the overall RVU
for the surgical package was determined without factoring in the
specific RVUs associated with the E/M services in the global period.
The number and level of E/M services identified with a global surgery
payment are based on the typical case. Even though a surgical package
may have been developed with several E/M services included, a physician
is not required to furnish each pre- or post-operative visit to bill
for the global surgical package.
Similar to other bundled services on the PFS, when a global surgery
code is billed, the bundled pre- and post-operative care is not
separately payable; surgeons or other physicians billing a surgical
procedure, cannot separately bill for the E/M services that are
included in the global surgical package.
(2) Measuring Post-Operative Work
The use of different methodologies for valuing global surgical
packages since 1992 has created payment rates with a wide range of E/M
services included within the post-operative period. This is especially
true among those with 90-day global periods. More recently reviewed
codes tend to have fewer E/M services in the global period, and the
work RVUs of those E/M services are often accounted for in the value
for the global surgical package. The value of less recently reviewed
global surgeries frequently do not appear to include the full work RVUs
of each E/M service in the global surgical package, and the numbers of
E/M services included in the post-operative period can be inconsistent
within a family of procedures. For example, there is significant
variation in the number and level of E/M services included in two
transplantation procedures in Table 4. Pre-, intra-, and post-operative
times, including the number of post-operative visits, for each global
surgical package can be found in the physician time file on the CMS Web
site at http://www.cms.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=4&sortOrder=descending&itemID=CMS1253669&intNumPerPage=10.

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

In 2005, the HHS Office of Inspector General (OIG) examined whether
global surgical packages are appropriately valued. In its report on eye
and ocular surgeries, ``National Review of Evaluation and Management
Services Included in Eye and Ocular Adnexa Global Surgery Fees for
Calendar Year 2005'' (A-05-07-00077), the OIG reviewed a sample of 300
eye and ocular surgeries, and counted the actual number of face-to-face
services in the surgeons' medical records to establish whether the
surgeon furnished post-operative E/M services. The OIG findings show
that surgeons typically furnished fewer E/M services in the post-
operative period than were identified with the global surgical package
payment for each procedure. A smaller percentage of surgeons furnished
more E/M services than were identified with the global surgical package
payment. The OIG could only review the number of face-to-face services
and was not able to review the level of E/M services that the surgeons
furnished due to a lack of documentation in surgeons' medical records.
The OIG concluded that the RVUs for the global surgical package are too
high because they include the work of E/M services that are not
typically furnished within the global period for the reviewed
procedures.
Following the 2005 report, the OIG continued to investigate E/M
services furnished during the global surgical period. In May 2012, the
OIG published a report titled ``Musculoskeletal Global Surgery Fees
Often Did Not Reflect the Number of Evaluation and Management Services
Provided'' (A-05-09-00053). For this investigation, the OIG sampled 300
musculoskeletal global surgeries and again found that, for the majority
of sampled surgeries, physicians furnished fewer E/M services than were
identified as part of the global period for that service. Once again, a
smaller percentage of surgeons furnished more E/M services than were
identified with the global surgical package payment.

[[Page 44738]]

The OIG concluded that the RVUs for the global surgical package are too
high because they include the work of E/M services that are not
typically furnished within the global period for the reviewed
procedures.
In both reports, the OIG recommended that we adjust the number of
E/M services identified with the global surgical payments to reflect
the number of E/M services that are actually being furnished. Under the
PFS, we do not ask surgeons to report bundled services on their claim
when billing for the global surgical package as we do providers
furnishing bundled services under other Medicare payment systems. Since
it is not necessary for a surgeon to identify the level and code of the
E/M services actually furnished during the global period, there is very
limited documentation on the frequency or level of post-operative
services. Without sufficient documentation, a review of the medical
record cannot accurately determine the number or level of E/M services
furnished in the post-operative period.
As noted above, section 1848(c)(2)(K) of the Act (as added by
section 3134 of the Affordable Care Act), which essentially codified
the potentially misvalued codes initiative, requires that the Secretary
identify and review potentially misvalued services with an emphasis on
several categories, and recognizes the Secretary's discretion to
identify additional potentially misvalued codes. Several of the
categories of potentially misvalued codes support better valuation of
global surgical package codes. We have made efforts to prioritize the
review of RVUs for services on the PFS that have not been reviewed
recently or for services where there is a potential for misuse. One of
the priority categories for review of potentially misvalued codes is
services that have not been subject to review since the implementation
of the PFS (the so-called ``Harvard-valued codes''). In the CY 2009 PFS
proposed rule, we requested that the AMA RUC engage in an ongoing
effort to review the remaining Harvard-valued codes, focusing first on
the high-volume, low intensity codes (73 FR 38589). For the Fourth
Five-Year Review (76 FR 32410), we requested that the AMA RUC review
services that have not been reviewed since the original implementation
of the PFS with utilization greater than 30,000 (Harvard-valued--
Utilization > 30,000). In section II.B.3 of this proposed rule, we
propose to review Harvard-valued services with annual allowed charges
that total at least $10,000,000 (Harvard-valued--Allowed charges >=
$10,000,000), and request recommendations from the AMA RUC and other
public commenters on appropriate values for these services.
Of the more than 1,000 identified potentially misvalued codes, just
over 650 are surgical services with a global period of 0, 10, or 90
days. We have completed our review of 450 of these potentially
misvalued surgical codes. These efforts are important, but we believe
the usual review process does not go far enough to assess whether the
valuation of global surgical packages reflects the number and level of
post-operative services that are typically furnished. To support our
statutory obligation to identify and review potentially misvalued
services and to respond to the OIG's concern that global surgical
package payments are misvalued, we believe that we should begin
gathering more information on the E/M services that are typically
furnished with surgical procedures. Information regarding the typical
work involved in surgical procedures with a global period is necessary
to evaluate whether certain surgical procedures are appropriately
valued. While the AMA RUC reviews and recommends RVUs for services on
the PFS, we complete our own assessment of those recommendations, and
may adopt different RVUs. However, for procedures with a global period,
the lack of claims data and documentation restrict our ability to
review and assess the appropriateness of their RVUs.
We are seeking comments on methods of obtaining accurate and
current data on E/M services furnished as part of a global surgical
package. We are especially interested in and invite comments on a
claims-based data collection approach that would include reporting E/M
services furnished as part of a global surgical package, as well as
other valid, reliable, generalizable, and robust data to help us
identify the number and level of E/M services typically furnished in
the global surgical period for specific procedures. We will carefully
weigh all comments received as we consider ways to appropriately review
values for global surgical packages.
3. CY 2013 Identification and Review of Potentially Misvalued Services
a. Public Nomination of Potentially Misvalued Codes
In the CY 2012 PFS final rule, we finalized a public nomination
process for potentially misvalued codes (76 FR 73058). Under the
previous Five-Year Reviews, the public nominated potentially misvalued
codes for review. To allow for public input and to preserve the
public's ability to identify and nominate potentially misvalued codes
for review under our annual potentially misvalued codes initiative, we
established a process by which the public can submit codes, along with
documentation supporting the need for review, on an annual basis.
Stakeholders may nominate potentially misvalued codes for review by
submitting the code with supporting documentation during the 60-day
public comment period following the release of the annual PFS final
rule with comment period. Supporting documentation for codes nominated
for the annual review of potentially misvalued codes may include the
following:
Documentation in the peer reviewed medical literature or
other reliable data that there have been changes in physician work due
to one or more of the following: Technique; knowledge and technology;
patient population; site-of-service; length of hospital stay; and
physician time.
An anomalous relationship between the code being proposed
for review and other codes.
Evidence that technology has changed physician work, that
is, diffusion of technology.
Analysis of other data on time and effort measures, such
as operating room logs or national and other representative databases.
Evidence that incorrect assumptions were made in the
previous valuation of the service, such as a misleading vignette,
survey, or flawed crosswalk assumptions in a previous evaluation.
Prices for certain high cost supplies or other direct PE
inputs that are used to determine PE RVUs are inaccurate and do not
reflect current information.
Analyses of physician time, work RVU, or direct PE inputs
using other data sources (for example, Department of Veteran Affairs
(VA) National Surgical Quality Improvement Program (NSQIP), the Society
for Thoracic Surgeons (STS), and the Physician Quality Reporting System
(PQRS) databases).
National surveys of physician time and intensity from
professional and management societies and organizations, such as
hospital associations.
Under this newly established process, after we receive the
nominated codes during the 60-day comment period following the release
of the annual PFS final rule with comment period, we would evaluate the
supporting documentation and assess whether they appear to be
potentially misvalued codes appropriate for review under the

[[Page 44739]]

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

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

CPT codes 33282 (Implantation of patient-activated cardiac event
recorder) and 33284 (Removal of an implantable, patient-activated
cardiac event recorder) were nominated for review as potentially
misvalued codes. The commenter asserted that CPT codes 33282 and 33284
are misvalued in the nonfacility setting because these CPT codes
currently are only priced in the facility setting even though
physicians perform these services in the office setting. The commenter
requested that we establish appropriate payment for the services when
furnished in a physician office. Specifically, they requested that CMS
establish nonfacility PE RVUs for these services. We do not consider
the lack of pricing in a particular setting as an indicator of a
potentially misvalued code. However, given that these services are now
furnished in the nonfacility setting, we believe that CPT codes 33282
and 33284 should be reviewed to establish appropriate nonfacility
inputs. We note, as did the commenter, that the valuation of a service
under the PFS in a particular setting does not address whether those
services and the setting in which they are furnished are medically
reasonable and necessary for a patient's medical needs and condition.
We propose to review CPT codes 33282 and 33284 and request
recommendations from the AMA RUC and other public commenters on the
appropriate physician work RVUs (as measured by time and intensity),
and facility and nonfacility direct PE inputs for these services.
Like CPT codes 33282 and 33284, stakeholders have requested that we
establish appropriate payment for CPT code 63650 (Percutaneous
implantation of neurostimulator electrode array, epidural) when
furnished in an office setting. This request was not submitted as a
potentially misvalued code nomination. However, given that these
services are now furnished in the nonfacility setting, we believe CPT
code 63650 should be reviewed to establish appropriate nonfacility
inputs. Please see section II.A.3 (Changes to Direct Inputs for
Specific Services) for a discussion of spinal code stimulation trial
procedures in the nonfacility setting.
CPT code 77336 (Continuing medical physics consultation, including
assessment of treatment parameters, quality assurance of dose delivery,
and review of patient treatment documentation in support of the
radiation oncologist, reported per week of therapy) was nominated for
review as a potentially misvalued code. The commenter asserted that CPT
code 77336 is misvalued because changes in the technique for rendering
continuing medical physics consultations have resulted in changes to
the knowledge required, time, and effort expended, and complexity of
technology associated with the tasks performed by the physicist other
staff. Additionally the commenter believes that the direct PE inputs no
longer accurately reflect the resources used to deliver this service
and may be undervalued. CPT code 77336 was last reviewed for CY 2003.
After evaluating the detailed supporting information that the commenter
provided, we believe there may have been changes in technology and
other PE inputs since we last reviewed the service, and that further
review is warranted. As such, we propose to review CPT code 77336 as
potentially misvalued and request recommendations from the AMA RUC and
other public commenters on the direct PE inputs for this service, and
physician work RVUs and direct PE inputs for the other services within
this family of CPT codes.
CPT code 94762 (Noninvasive ear or pulse oximetry for oxygen
saturation; by continuous overnight monitoring (separate procedure))
was nominated for review as a potentially misvalued code. Commenters
asserted that CPT code 94762 is misvalued because the time currently
allocated to the various direct PE inputs does not accurately reflect
current practice. Commenters also asserted that independent diagnostic
testing facilities are not appropriately accounted for in the current
indirect PE methodology. In response to these

[[Page 44740]]

stakeholder concerns, we reviewed the PE inputs for CPT code 94762,
which was last reviewed for CY 2010. We believe CPT code 94762 is
misvalued, and we are proposing changes to the PE inputs for CY 2013.
Following clinical review, we believe that the current time allocated
to clinical labor and supplies appropriately reflects current practice.
However, we believe that 480 minutes (8 hours) of equipment time for
the pulse oximetry recording slot and pulse oximeter with printer are
more appropriate for this overnight monitoring procedure code. As such,
we are proposing this refinement to the direct PE inputs for CPT code
94762 for CY 2013. These proposed adjustments are reflected in the CY
2013 proposed direct PE input database, available on the CMS Web site
under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.
CPT code 53445 (Insertion of inflatable urethral/bladder neck
sphincter, including placement of pump, reservoir, and cuff) was
nominated for review as a potentially misvalued code. CPT code 53445
was identified through the site-of-service anomaly potentially
misvalued code screen for CY 2008 and is currently interim for CY 2012
and open to public comment. We will consider the content of the
potentially misvalued code nomination and supporting documentation for
CPT code 53445 as comments on the interim final value, and will address
the comments in the CY 2013 PFS final rule with comment period when we
address the final value of the CPT code.
For purposes of CY 2013 rulemaking, we do not consider the other
nominated codes, listed in Table 6 to be potentially misvalued because
these codes were last reviewed and valued for CY 2012 and the
supporting documentation did not provide sufficient evidence to
demonstrate that the codes should be reviewed as potentially misvalued
for CY 2013 or CY 2014. The supporting documentation for these services
generally mirrored the public comments previously submitted, to which
CMS has already responded.

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

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

Table 7--Harvard-Valued CPT Codes With Annual Allowed Charges
>=$10,000,000
------------------------------------------------------------------------
CPT Code Short descriptor
------------------------------------------------------------------------
13152*............................ Repair of wound or lesion.
27446............................. Revision of knee joint.
29823............................. Shoulder arthroscopy/surgery.
36215**........................... Place catheter in artery.
36245**........................... Ins cath abd/l-ext art 1st.
43264**........................... Endo cholangiopancreatograph.
50360............................. Transplantation of kidney.
52353*............................ Cystouretero w/lithotripsy.
64450*............................ N block other peripheral.

[[Page 44741]]

64590............................. Insrt/redo pn/gastr stimul.
66180............................. Implant eye shunt.
67036............................. Removal of inner eye fluid.
67917............................. Repair eyelid defect.
92286**........................... Internal eye photography.
92982*............................ Coronary artery dilation.
95860*............................ Muscle test one limb.
------------------------------------------------------------------------
* Scheduled for CY 2012 AMA RUC Review.
** Referred by the AMA RUC to the CPT Editorial Panel.

(2) Review of Services With Stand Alone PE Procedure Time
Improving the accuracy of procedure time assumptions used in PFS
ratesetting continues to be a high priority of the potentially
misvalued codes initiative. Procedure time is a critical measure of the
resources typically used in furnishing particular services to Medicare
beneficiaries, and procedure time assumptions are an important
component in the development of work and PE RVUs. Discussions in the
academic community have indicated that procedure times used for PFS
ratesetting are overstated (McCall, N., J. Cromwell, et al. (2006).
``Validation of physician survey estimates of surgical time using
operating room logs.'' Med Care Res Rev 63(6): 764-777. Cromwell, J.,
S. Hoover, et al. (2006). ``Validating CPT typical times for Medicare
office evaluation and management (E/M) services.'' Med Care Res Rev
63(2): 236-255. Cromwell, J., N. McCall, et al. (2010). ``Missing
productivity gains in the Medicare physician fee schedule: where are
they?'' Med Care Res Rev 67(6): 236-255.) MedPAC and others have
emphasized the importance of using the best available procedure time
information in establishing accurate PFS payment rates. (MedPAC, Report
to the Congress: Aligning Incentives in Medicare, June 2010, p. 230)
In recent years, CMS and the AMA RUC have taken steps to consider
the accuracy of available data regarding procedure times used in the
valuation of the physician work component of PFS payment. Generally,
the AMA RUC derives estimates of physician work time from survey
responses, and the AMA RUC reviews and analyzes those responses as part
of its process for developing a recommendation for physician work.
These procedure time assumptions are also used in determining the
appropriate direct PE input values used in developing nonfacility PE
RVUs. Specifically, physician intra-service time serves as the basis
for allocating the appropriate number of minutes within the service
period to account for the time used in furnishing the service to the
patient. The number of intra-service minutes, or occasionally a
particular proportion thereof, is allocated to both the clinical staff
that assists the physician in furnishing the service and to the
equipment used by either the physician or the staff in furnishing the
service. This allocation reflects only the time the beneficiary
receives treatment and does not include resources used immediately
prior to or following the service. Additional minutes are often
allocated to both clinical labor and equipment resources in order to
account for the time used for necessary preparatory tasks immediately
preceding the procedure or tasks typically performed immediately
following it. For codes without physician work, the procedure times
assigned to the direct PE inputs for such codes assume that the
clinical labor performs the procedure. For these codes, the number of
intra-service minutes assigned to clinical staff is independent and not
based on any physician intra-service time assumptions. Consequently,
the procedure time assumptions for these kinds of services have not
been subject to all of the same mechanisms recently used by the AMA RUC
and physician community in providing recommendations to CMS, and by CMS
in the valuation of the physician work component of PFS payment. These
independent clinical labor time assumptions largely determine the RVUs
for the procedure. To ensure that procedure time assumptions are as
accurate as possible across the Medicare PFS, we believe that codes
without physician work should be examined with the same degree of
scrutiny as services with physician work.
For CY 2012, a series of radiation treatment services were reviewed
as part of the potentially misvalued code initiative. Among these were
intensity modulated radiation therapy (IMRT) delivery services and
stereotactic body radiation therapy (SBRT) delivery services reported
with CPT codes 77418 (Intensity modulated treatment delivery, single or
multiple fields/arcs, via narrow spatially and temporally modulated
beams, binary, dynamic MLC, per treatment session) and 77373
(Stereotactic body radiation therapy, treatment delivery, per fraction
to 1 or more lesions, including image guidance, entire course not to
exceed 5 fractions), respectively. CPT code 77418 (IMRT treatment
delivery) had been identified as potentially misvalued based on
Medicare utilization data that indicated both fast growth in
utilization and frequent billing with other codes. We identified this
code as potentially misvalued in the CY 2009 PFS proposed rule (73 FR
38586). CPT code 77373 (SBRT treatment delivery) had been identified as
potentially misvalued by the RUC as a recently established code
describing services that use new technologies. There is no physician
work associated with either of these codes since other codes are used
to bill for planning, dosimetry, and radiation guidance. Both codes are
billed per treatment session. Because the physician work associated
with these treatments is reported using codes distinct from the
treatment delivery, the primary determinant of PE RVUs for these codes
is the number of minutes allocated for the procedure time to both the
clinical labor (radiation therapist) and the resource-intensive capital
equipment included as direct PE inputs.
In the CY 2012 PFS final rule with comment period, we received and
accepted without refinement PE recommendations from the AMA RUC for
these two codes. (We received the recommendation for CPT code 77418
(IMRT treatment delivery) too late in 2010 to be evaluated for CY 2011
and it was therefore included in the CY 2012 rulemaking cycle.) The AMA
RUC recommended minor revisions to the direct PE inputs for the code to
eliminate duplicative clinical labor, supplies, and equipment to
account for the frequency with which the code was billed with other
codes. For CPT code 77373 (SBRT treatment delivery), the RUC
recommended no significant changes to the direct PE inputs.
Subsequent to the publication of the final rule, the AMA RUC and
other stakeholders informed CMS that the direct PE input recommendation
forwarded to CMS for IMRT treatment delivery (CPT code 77418)
inadvertently omitted seven equipment items typically used in
furnishing the service. These items had been used as direct PE inputs
for the code prior to CY 2012. There is broad agreement among
stakeholders that these seven equipment items are typically used in
furnishing the services described by CPT code 77418. We were unable to
reincorporate the items for CY 2012. These omitted items are listed in
Table 8. In consideration of the comments from the AMA RUC and other
stakeholders, we are proposing to include the seven equipment items
omitted from the RUC recommendation for CPT code 77418.

[[Page 44742]]

These proposed adjustments are also reflected in the CY 2013 proposed
direct PE input database, available on the CMS Web site under the
downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We note that the proposed PE RVUs included in
Addendum B to this proposed rule reflect the RVUs that result from
application of these proposals.

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

It has come to our attention that there are wide discrepancies
between the procedure time assumptions used in establishing nonfacility
PE RVUs for these services and the procedure times made widely
available to Medicare beneficiaries and the general public.
Specifically, the direct PE inputs for IMRT treatment delivery (CPT
code 77418) reflect a procedure time assumption of 60 minutes. These
procedure minutes were first assigned to the code for CY 2002 based on
a recommendation from the AMA RUC indicating that the typical treatment
time for the IMRT patient was 40 to 70 minutes. The most recent RUC
recommendation that CMS received for CY 2012 rulemaking supported the
procedure time assumption of 60 minutes.
Information publicly available to Medicare beneficiaries and the
general public clearly indicates that IMRT sessions typically last
between 10 and 30 minutes. For example, the American Society for
Radiation Oncology (ASTRO) publishes a patient fact sheet that explains
that for all external beam radiation therapy, including IMRT,
``treatment is delivered in a series of daily sessions, each about 15
minutes long.'' [``Radiation Therapy for Prostate Cancer: Facts to Help
Patients Make an Informed Decision'' available for purchase at
www.astro.org/MyASTRO/Products/Product.aspx?AstroID=6901.] This fact
sheet is intended for patients with prostate cancer, the typical
diagnosis for Medicare beneficiaries receiving IMRT. Similarly, the
American College of Radiology (ACR) and the Radiological Society of
North America (RSNA) co-sponsor a Web site for patients called http://radiologyinfo.org that states that IMRT ``treatment sessions usually
take between 10 and 30 minutes.''
The direct PE inputs for SBRT treatment delivery (CPT code 77373)
reflect a procedure time assumption of 90 minutes. These procedure
minutes were first assigned to the code for CY 2007 based on a
recommendation from the AMA RUC. The most recent RUC recommendation
that CMS received for CY 2012 rulemaking supported continuing that
procedure time assumption.
In 2012, information publicly available to Medicare beneficiaries
and the general public states that SBRT treatment typically lasts no
longer than 60 minutes. For example, the American College of Radiology
(ACR) and the Radiological Society of North America (RSNA) Web site,
http://radiologyinfo.org, states that SBRT ``treatment can take up to
one hour.''
Given the importance of the procedure time assumption in the
development of RVUs for these services, using the best available
information is critical to ensuring that these services are valued
appropriately. We have no reason to believe that information medical
societies and practitioners offer to their cancer patients regarding
the IMRT or SBRT treatment experience is inaccurate or atypical.
Therefore, we believe that the typical procedure time for IMRT delivery
is between 10 and 30 minutes and that the typical procedure time for
SBRT delivery is under 60 minutes. The services are currently valued
using procedure time assumptions of 60 and 90 minutes, respectively. We
believe these procedure time assumptions, distinct from necessary
preparatory or follow-up tasks by the clinical labor, are clearly
outdated and need to be updated using the best information available.
While we generally have not used publicly available resources to
establish procedure time assumptions, we believe that the procedure
time assumptions used in setting payment rates for the Medicare PFS
should be derived from the most accurate information available. In the
case of these services, we believe that the need to reconcile the vast
discrepancies between our existing assumptions and more accurate
information outweighs the potential value in maintaining relativity
offered by only considering data from one source. We are proposing to
adjust the procedure time assumption for IMRT delivery (CPT code 77418)
to 30 minutes. We are proposing to adjust the procedure time assumption
for SBRT delivery (CPT code 77373) to 60 minutes. These procedure time
assumptions reflect the maximum number of minutes reported as typical
in publicly available information. We note that in the case of CPT code
77418, the `accelerator, 6-18 MV' (ER010) and the `collimator,
multileaf system w-autocrane' (ER017) are used throughout the procedure
and currently have no minutes allocated for preparing the equipment,
positioning the patient, or cleaning the room. Since these clinical
labor tasks are associated with related codes typically reported at the
same time, we are also proposing to allocate minutes to these equipment
items to account for their use immediately before and following the
procedure. All of these proposed adjustments are reflected in the CY
2013 proposed direct PE input database, available on the CMS Web site
under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We also note that the proposed PE RVUs
included in Addendum B to this proposed rule reflect the RVUs that
result from the application of this proposal. We request
recommendations from the AMA RUC and other public commenters on the
direct PE inputs for these services.
While we recognize that using these procedure time assumptions will
result in payment reductions for these particular services, we believe
such changes are necessary to appropriately

[[Page 44743]]

value these services. Recent attention from popular media sources like
the Wall Street Journal (online.wsj.com/article/SB10001424052748703904804575631222900534954.html December 7, 2010) and
the Washington Post (www.washingtonpost.com/wp-dyn/content/article/2011/02/28/AR2011022805378.html) February 28, 2011 has encouraged us to
consider the possibility that potential overuse of IMRT services may be
partially attributable to financial incentives resulting from
inappropriate payment rates. In its 2010 Report to Congress, MedPAC
referenced concerns that financial incentives may influence how cancer
patients are treated. In the context of the growth of ancillary
services in physicians' offices, MedPAC recommended that improving
payment accuracy for discrete services should be a primary tool used by
CMS to mitigate incentives to increase volume (Report to Congress:
Aligning Incentives in Medicare, June 2010, p. 225). We note that in
recent years, PFS nonfacility payment rates for IMRT treatment delivery
have exceeded the Medicare payment rate for the same service paid
through the hospital Outpatient Prospective Payment System (OPPS). We
believe that such high-volume services that are widely furnished in
both nonfacility and facility settings are highly unlikely to be more
resource-intensive in freestanding radiation therapy centers or
physicians' offices than when furnished in facilities like hospitals
that generally incur higher overhead costs, maintain a 24 hour, 7 day
per week capacity, are generally paid in larger bundles, and generally
furnish services to higher acuity patients than the patients who
receive services in physician offices or free-standing clinics. Given
that the OPPS payment rates are based on auditable data on hospital
costs, we believe the seemingly counterintuitive relationship between
the OPPS and nonfacility PFS payment rates reflects inappropriate
assumptions within the current direct PE inputs for CPT code 77418. The
AMA RUC's most recent direct PE input recommendations reflect the same
procedure time assumptions used in developing the recommendations for
CY 2002. As we explained above, we do not understand how the AMA RUC
can recommend these assumptions in the context of the procedure time
information available to the general public. We believe that using
procedure time assumptions that reflect the maximum times reported as
typical to Medicare beneficiaries will improve the accuracy of those
inputs and the resulting nonfacility payment rates.
These two treatment delivery codes are PE only codes and are fairly
unique in that the resulting RVUs are largely comprised of resources
for staff and equipment based on the minutes associated with clinical
labor. There are several other codes on the PFS established through the
same methodology. As we previously stated, we believe that the
procedure time assumptions for these kinds of services have not been
subject to all of the same mechanisms recently used by CMS in the
valuation of the physician work component of PFS payment. In light of
observations about publicly available procedure times for CPT codes
77418 (IMRT treatment delivery) and 77373 (SBRT treatment delivery) and
public awareness of potential adverse financial incentives associated
with IMRT treatment delivery in particular, we believe that similar
codes are potentially misvalued.
Therefore, consistent with the requirement in section
1848(c)(2)(K)(ii) of the Act to examine other codes determined to be
appropriate by the Secretary, we are proposing to review and make
adjustments to CPT codes with stand alone procedure time assumptions
used in developing nonfacility PE RVUs. These procedure time
assumptions are not based on physician time assumptions. We are
prioritizing for review CPT codes that have annual Medicare allowed
charges of $100,000 or more, include direct equipment inputs that
amount to $100 or more, and have PE procedure times of greater than 5
minutes. At this time, we are not including in this category services
with payment rates subject to the OPPS cap (as specified in the statute
under section 1848(b)(4) of the Act and listed in Addendum G to this
proposed rule) or services with PE minutes established through code
descriptors. (For example, an overnight monitoring code might contain
480 minutes of monitoring equipment time to account for 8 hours of
overnight monitoring.) The CPT codes meeting these criteria appear in
Table 9. We recognize that there are other CPT codes that are valued in
the same manner. We may consider evaluating those services as
potentially misvalued codes in future rulemaking.
For the services in Table 9, we request recommendations from the
AMA RUC and other public commenters on the appropriate direct PE inputs
for these services. We encourage the use of valid and reliable
alternative data sources when developing recommended values, including
electronic medical records and other independent data sources. We note
that many of the CPT codes in Table 9 have been identified through
other potentially misvalued code screens and have been recently
reviewed. Given our observed concerns with the inputs for the recently
reviewed IMRT and SBRT direct PE inputs discussed above, we believe it
is necessary to re-review other recently reviewed services with stand
alone PE procedure time.

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

c. Services With Anomalous Time
Each year when we publish the PFS proposed and final rules, we
publish on the CMS Web site several files that support annual PFS rate-
setting. One of these supporting files is the physician time file,
which lists the physician time associated with the HCPCS codes on the
PFS. The physician time file associated with this PFS proposed rule is
available on the CMS Web site under the downloads for the CY 2013 PFS
proposed rule at http://www.cms.gov/PhysicianFeeSched/.
In our review of potentially misvalued codes and their inputs, we
became aware of several HCPCS codes that have anomalous times in our
physician time file. Physician work is a measure of physician time and
intensity, so there should be no services that have payable physician
work RVUs but no physician time in the time file, and there should be
no payable services with physician time in the time file and no
physician work RVUs. For CY 2013 we are proposing to make the physician
time

[[Page 44744]]

file changes detailed below to address these anomalous time file
entries.
(1) Review of Services With Physician Work and No Listed Physician Time
CPT code 94014 (Patient-initiated spirometric recording per 30-day
period of time; includes reinforced education, transmission of
spirometric tracing, data capture, analysis of transmitted data,
periodic recalibration and physician review and interpretation) has a
physician work RVU of 0.52 and is currently listed with 0 physician
time. CPT code 94014 is a global service that includes CPT code 94015
(Patient-initiated spirometric recording per 30-day period of time;
recording (includes hook-up, reinforced education, data transmission,
data capture, trend analysis, and periodic recalibration)) (the
technical component), and CPT code 94016 (Patient-initiated spirometric
recording per 30-day period of time; physician review and
interpretation only) (the professional component). We believe it is
appropriate for the physician time of CPT code 94014 to match the
physician time of the code's component professional service--CPT code
94016. As such, for CPT code 94014 for CY 2013, we are proposing to
assign 2 minutes of pre-service evaluation time, and 20 minutes of
intra-service time, which matches the times associated with CPT code
94016. These proposed adjustments are reflected in the physician time
file associated with this proposed rule, available on the CMS Web site
under the downloads for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.
HCPCS codes G0117 (Glaucoma screening for high risk patients
furnished by an optometrist or ophthalmologist) and G0118 (Glaucoma
screening for high risk patient furnished under the direct supervision
of an optometrist or ophthalmologist) both have physician work RVUs
(0.45, and 0.17, respectively), but neither code is included in the
physician time file. HCPCS codes G0117 and G0118 have a PFS procedure
status indicator of T indicating that these services are only paid if
there are no other services payable under the PFS billed on the same
date by the same provider.
In the CY 2002 PFS final rule (66 FR 55274), we crosswalked the
physician work of HCPCS code G0117 from CPT code 99212 (Level 2 office
or other outpatient visit, established patient), and we crosswalked the
physician work of HCPCS code G0118 from CPT code 99211 (Level 1 office
or other outpatient visit, established patient). Based on these
finalized physician work crosswalks, we propose to assign HCPCS code
G0117 physician times matching CPT code 99212, and HCPCS code G0118
physician times matching CPT code 99211. Specifically, we are proposing
2 minutes of pre-service time, 10 minutes of intra-service time, and 4
minutes of immediate post-service time for HCPCS code G0117, and 5
minutes of intra-service time, and 2 minutes of immediate post-service
time for HCPCS code G0118. These proposed adjustments are reflected in
the physician time file associated with this proposed rule, available
on the CMS Web site under the downloads for the CY 2013 PFS proposed
rule at http://www.cms.gov/PhysicianFeeSched/.
HCPCS code G0128 (Direct (face-to-face with patient) skilled
nursing services of a registered nurse provided in a comprehensive
outpatient rehabilitation facility, each 10 minutes beyond the first 5
minutes) currently has a physician work RVU (0.08), but is not listed
in the physician time file. After review of this HCPCS code, we do not
believe that HCPCS code G0128 describes a service that includes
physician work. Time for a registered nurse to furnish the service is
included in the PE for the code. As such, for CY 2013, we propose to
remove the physician work RVU for HCPCS code G0128. HCPCS code G0128
will continue to have PE and malpractice expense RVUs.
HCPCS codes G0245 (Initial physician evaluation and management of a
diabetic patient with diabetic sensory neuropathy resulting in a loss
of protective sensation (LOPS) which must include: (1) The diagnosis of
LOPS; (2) a patient history; (3) a physical examination that consists
of at least the following elements: (a) Visual inspection of the
forefoot, hindfoot and toe web spaces; (b) evaluation of a protective
sensation; (c) evaluation of foot structure and biomechanics; (d)
evaluation of vascular status and skin integrity; and (e) evaluation
and recommendation of footwear; and (4) patient education), G0246
(Follow-up physician evaluation and management of a diabetic patient
with diabetic sensory neuropathy resulting in a loss of protective
sensation (LOPS) to include at least the following: (1) A patient
history; (2) a physical examination that includes: (a) Visual
inspection of the forefoot, hindfoot and toe web spaces; (b) evaluation
of protective sensation; (c) evaluation of foot structure and
biomechanics; (d) evaluation of vascular status and skin integrity; and
(e) evaluation and recommendation of footwear; and (3) patient
education), and G0247 (Routine foot care by a physician of a diabetic
patient with diabetic sensory neuropathy resulting in a loss of
protective sensation (LOPS) to include, the local care of superficial
wounds (that is, superficial to muscle and fascia) and at least the
following if present: (1) Local care of superficial wounds; (2)
debridement of corns and calluses; and (3) trimming and debridement of
nails) have physician work RVUs of 0.88, 0.45, and 0.50, respectively,
but are not listed in the physician time file. HCPCS codes G0245,
G0246, and G0247 have a procedure status indicator of R on the PFS
indicating that coverage of these services is restricted.
In the CY 2003 PFS final rule (67 FR 79990), we crosswalked the
physician work of HCPCS code G0245 from CPT code 99202 (Level 2 office
or other outpatient visits, new patient), we crosswalked the physician
work of HCPCS code G0246 from CPT code 99212, and we crosswalked the
physician work of HCPCS code G0257 from CPT code 11040 (Debridement;
skin; partial thickness). Based on these finalized physician work
crosswalks, we propose to assign HCPCS code G0245 physician times
matching CPT code 99202, HCPCS code G0246 physician times matching CPT
code 99212, and HCPCS code G0247 physician times matching CPT code
11040. Specifically, for HCPCS code G0245 we are proposing 2 minutes of
pre-service time, 15 minutes of intra-service time, and 5 minutes of
immediate post-service time. For HCPCS code G0246 we are proposing 2
minutes of pre-service time, 10 minutes of intra-service time, and 4
minutes of immediate post-service time. For HCPCS code G0247 we are
proposing 7 minutes of pre-service time, 10 minutes of intra-service
time, and 7 minutes of immediate post-service time. These proposed
adjustments are reflected in the physician time file associated with
this proposed rule, available on the CMS Web site under the downloads
for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.
HCPCS code G0250 (Physician review, interpretation, and patient
management of home INR (International Normalized Ratio) testing for
patient with either mechanical heart valve(s), chronic atrial
fibrillation, or venous thromboembolism who meets Medicare coverage
criteria; testing not occurring more frequently than once a week;
billing units of service include 4 tests) has a physician work RVU of
0.18 but is not listed in the physician time file. HCPCS code G0250 has
a procedure status indicator of R on the PFS indicating that coverage
of this service

[[Page 44745]]

is restricted. In the CY 2003 final rule (67 FR 79991), we assigned
HCPCS code G0250 a work RVU of 0.18, which corresponds to the work RVU
of CPT code 99211. While we did not articulate this as a direct
crosswalk in the CY 2003 final rule, after clinical review we believe
that HCPCS code G0250 continues to require similar work as CPT code
99211, and should have the same amount of physician time as CPT code
99211. As such, we are proposing to assign HCPCS code G0250 the same
physician time as CPT code 99211. Specifically, for HCPCS code G0250 we
are proposing 5 minutes of intra-service time and 2 minutes of
immediate post-service time. These proposed adjustments are reflected
in the physician time file associated with this proposed rule,
available on the CMS Web site under the downloads for the CY 2013 PFS
proposed rule at http://www.cms.gov/PhysicianFeeSched/.
During our annual review of new, revised, and potentially misvalued
CPT codes, the assessment of physician time used to furnish a service
is an important part of the clinical review when determining the
appropriate work RVU for a service. However, the time in the physician
time file is not used to automatically adjust the physician work RVUs
outside of that clinical review process. As such, the proposed addition
of physician time to the HCPCS codes discussed above will have no
impact on the current physician work RVUs for these services.
The time data in the physician time file is used in the PE
methodology described in section II.A.2. In creating the indirect
practice cost index (IPCI), we calculate specialty-specific aggregate
pools of indirect PE for all PFS services for that specialty by adding
the product of the indirect PE/HR for the specialty, the physician time
for the service, and the specialty's utilization for the service across
all services furnished by the specialty. The proposed addition of
physician time to the HCPCS codes discussed above will affect the
aggregate pools of indirect PE at the specialty level. However because
the services discussed above have low utilization and low total time,
the impact of the physician time changes on the IPCI is negligible, and
likely would have a modest impact if any on the PE RVUs at the
individual code level.
(2) Review of Services With Stand Alone PE Procedure Time
There are a number of services that have no physician work RVUs,
yet include physician time in the physician time file. Many of these
services are not payable under the PFS or are contractor priced
services where the physician time is not used to nationally price the
services on the PFS. We are not proposing to remove the physician time
from the time file for these services as the time has no effect on the
calculation of RVUs for the PFS. However, there are several CPT codes,
listed in Table 10, that are payable under the PFS and have no
physician work RVUs yet include time in the physician time file. We are
proposing to remove the physician time from the time file for these
seven CPT codes. These proposed adjustments are reflected in the
physician time file associated with this proposed rule, available on
the CMS Web site under the downloads for the CY 2013 PFS proposed rule
at http://www.cms.gov/PhysicianFeeSched/.

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

As mentioned above and as discussed in section II.A.2. of this
proposed rule, to create the IPCI used in the PE methodology, we
calculate specialty-specific aggregate pools of indirect PE for all PFS
services for that specialty by adding the product of the indirect PE/HR
for the specialty, the physician time for the service, and the
specialty's utilization for the service across all services performed
by the specialty. The proposed removal of physician time from the CPT
codes discussed above will affect the aggregate pools of indirect PE at
the specialty level. However because the services discussed above have
low utilization and/or low total time, the impact of the physician time
changes on the IPCI is negligible, and likely would have a modest
impact if any on the PE RVUs at the individual code level.
4. Expanding the Multiple Procedure Payment Reduction Policy
Medicare has long employed multiple procedure payment reduction
(MPPR) policies to adjust payment to more appropriately reflect reduced
resources involved with furnishing the service for certain sets of
services frequently furnished together. Under these policies, we reduce
payment for the second and subsequent services within the same MPPR
category furnished in the same session or same day. These payment
reductions reflect efficiencies that typically occur in either the
practice expense (PE) or professional work or both when services are
furnished together. With the exception of a few codes that are always
reported along with another code, the Medicare PFS values services
independently to recognize relative resources involved when the service
is the only one furnished in a session. While our general policy for
MPPRs precedes the Affordable Care Act, this payment policy approach
addresses the fourth category of potentially misvalued codes identified
in section 1848(c)(2)(K) of the Act, as added by section 3134(a) of the
Affordable Care Act, which is ``multiple codes that are frequently
billed in conjunction with furnishing a single service'' (see 75 FR
73216).
For CY 2013, we are proposing to continue our work to recognize
resource efficiencies when certain services are furnished together. We
are proposing to apply an MPPR to the technical component (TC) of
certain diagnostic tests. As discussed in the CY 2012 final rule with
comment period (76 FR 73079), we are also proceeding with

[[Page 44746]]

applying the current MPPR policy for imaging services to services
furnished in the same session by physicians in the same group practice.
a. Background
Medicare has a longstanding policy to reduce payment by 50 percent
for the second and subsequent surgical procedures furnished to the same
patient by a single physician or physicians in the same group practice
on the same day, largely based on the presence of efficiencies in the
PE and pre- and post-surgical physician work. Effective January 1,
1995, the MPPR policy, with this same percentage reduction, was
extended to nuclear medicine diagnostic procedures (CPT codes 78306,
78320, 78802, 78803, 78806, and 78807). In the CY 1995 PFS final rule
with comment period (59 FR 63410), we indicated that we would consider
applying the policy to other diagnostic tests in the future.
Consistent with recommendations of MedPAC in its March 2005 Report
to the Congress on Medicare Payment Policy, for CY 2006 PFS, we
extended the MPPR policy to the TC of certain diagnostic imaging
procedures furnished on contiguous areas of the body in a single
session (70 FR 70261). This MPPR recognizes that for the second and
subsequent imaging procedures furnished in the same session, there are
some efficiencies in clinical labor, supplies, and equipment time. In
particular, certain clinical labor activities and supplies are not
duplicated for subsequent imaging services in the same session and,
because equipment time and indirect costs are allocated based on
clinical labor time, we also reduced those accordingly.
The imaging MPPR policy originally applied to computed tomography
(CT) and computed tomographic angiography (CTA), magnetic resonance
imaging (MRI) and magnetic resonance angiography (MRA), and ultrasound
services within 11 families of codes based on imaging modality and body
region and only applied to procedures furnished in a single session
involving contiguous body areas within a family of codes, not across
families. Additionally, the MPPR policy originally applied to TC-only
services and to the TC of global services, and not to professional
component (PC) services.
There have been several revisions to this policy since it was
originally adopted. Under the current imaging MPPR policy, full payment
is made for the TC of the highest paid procedure, and payment for the
TC is reduced by 50 percent for each additional procedure subject to
this MPPR policy. We originally planned to phase in the imaging MPPR
policy over a 2-year period, with a 25 percent reduction in CY 2006 and
a 50 percent reduction in CY 2007 (70 FR 70263). However, the Deficit
Reduction Act of 2005 (DRA) (Pub. L. 109-171) amended the statute to
place a cap on the PFS payment amount for most imaging procedures at
the amount paid under the hospital outpatient prospective payment
system (OPPS). In view of the new OPPS payment cap added by the DRA, we
decided in the PFS final rule with comment period for 2006 that it
would be prudent to retain the imaging MPPR at 25 percent while we
continued to examine the appropriate payment levels (71 FR 69659). The
DRA also exempted reduced expenditures attributable to the imaging MPPR
policy from the PFS BN provision. Effective July 1, 2010, section
1848(b)(4)(C) of the Act, as added by section 3135(b)(1) of the
Affordable Care Act increased the MPPR on the TC of imaging services
under the policy established in the CY 2006 PFS final rule with comment
period from 25 to 50 percent. Section 1848(c)(2)(B)(v)(IV) of the Act,
as added by section 3135(b)(2) of the Affordable Care Act exempted the
reduced expenditures attributable to this further change from the PFS
BN provision.
In the July 2009 U.S. Government Accountability Office (GAO) report
entitled, ``Medicare Physician Payments: Fees Could Better Reflect
Efficiencies Achieved when Services are Provided Together,'' the GAO
recommended that we take further steps to ensure that fees for services
paid under the PFS reflect efficiencies that occur when services are
furnished by the same physician to the same beneficiary on the same
day. The GAO recommended the following: (1) Expanding the existing
imaging MPPR policy for certain services to the PC to reflect
efficiencies in physician work for certain imaging services; and (2)
expanding the MPPR to reflect PE efficiencies that occur when certain
nonsurgical, nonimaging services are furnished together. The GAO report
also encouraged us to focus on service pairs that have the most impact
on Medicare spending.
In its March 2010 report, MedPAC noted its concerns about
mispricing of services under the PFS. MedPAC indicated that it would
explore whether expanding the unit of payment through packaging or
bundling would improve payment accuracy and encourage more efficient
use of services. In the CYs 2009 and 2010 PFS proposed rules (73 FR
38586 and 74 FR 33554, respectively), we stated that we planned to
analyze nonsurgical services commonly furnished together (for example,
60 to 75 percent of the time) to assess whether an expansion of the
MPPR policy could be warranted. MedPAC encouraged us to consider
duplicative physician work, as well as PE, in any expansion of the MPPR
policy.
Section 1848(c)(2)(K) of the Act specifies that the Secretary shall
identify potentially misvalued codes by examining multiple codes that
are frequently billed in conjunction with furnishing a single service,
and review and make appropriate adjustments to their relative values.
As a first step in applying this provision, in the CY 2010 final rule
with comment period, we implemented a limited expansion of the imaging
MPPR policy to additional combinations of imaging services.
Effective January 1, 2011, the imaging MPPR applies regardless of
code family; that is, the policy applies to multiple imaging services
furnished within the same family of codes or across families. This
policy is consistent with the standard PFS MPPR policy for surgical
procedures that does not group procedures by body region. The current
imaging MPPR policy applies to CT and CTA, MRI and MRA, and ultrasound
procedures furnished to the same patient in the same session,
regardless of the imaging modality and is not limited to contiguous
body areas.
As we noted in the CY 2011 PFS final rule with comment period (75
FR 73228), while section 1848(c)(2)(B)(v)(VI) of the Act specifies that
reduced expenditures attributable to the increase in the imaging MPPR
from 25 to 50 percent (effective for fee schedules established
beginning with 2010 and for services furnished on or after July 1,
2010) are excluded from the PFS BN adjustment, it does not apply to
reduced expenditures attributable to our policy change regarding
additional code combinations across code families (non-continguous body
areas) that are subject to BN under the PFS. The complete list of codes
subject to the CY 2011 MPPR policy for diagnostic imaging services is
included in Addendum F.
As a further step in applying the provisions of section
1848(c)(2)(K) of the Act, on January 1, 2011, we implemented an MPPR
for therapy services. The MPPR applies to separately payable ``always
therapy'' services, that is, services that are only paid by Medicare
when furnished under a therapy plan of care. As we explained in the CY
2011 PFS final rule with comment period (75 FR 73232), the therapy MPPR
does not apply to contractor-priced codes, bundled codes,

[[Page 44747]]

and add-on codes. The complete list of codes subject to the MPPR policy
for therapy services is included in Addendum H.
This MPPR for therapy services was first proposed in the CY 2011
proposed rule (75 FR 44075) as a 50 percent payment reduction to the PE
component of the second and subsequent therapy services for multiple
``always therapy'' services furnished to a single patient in a single
day. It applies to services furnished by an individual or group
practice or ``incident to'' a physician's service. However, in response
to public comments, in the CY 2011 PFS final rule with comment period
(75 FR 73232), we adopted a 25 percent payment reduction to the PE
component of the second and subsequent therapy services for multiple
``always therapy'' services furnished to a single patient in a single
day.
Subsequent to publication of the CY 2011 PFS final rule with
comment period, section 3 of the Physician Payment and Therapy Relief
Act of 2010 (PPTRA) (Pub. L. 111-286) revised the payment reduction
percentage from 25 percent to 20 percent for therapy services for which
payment is made under a fee schedule under section 1848 (which are
services furnished in office settings, or non-institutional services).
The payment reduction percentage remains at 25 percent for therapy
services furnished in institutional settings. Section 4 of the PPTRA
exempted the reduced expenditures attributable to the therapy MPPR
policy from the PFS BN provision. Under our current policy as amended
by the PPTRA, for institutional services, full payment is made for the
service or unit with the highest PE and payment for the PE component
for the second and subsequent procedures or additional units of the
same service is reduced by 25 percent. For non-institutional services,
full payment is made for the service or unit with the highest PE and
payment for the PE component for the second and subsequent procedures
or additional units of the same service is reduced by 20 percent.
This MPPR policy applies to multiple units of the same therapy
service, as well as to multiple different ``always therapy'' services,
when furnished to the same patient on the same day. It applies to
services furnished by an individual or group practice or ``incident
to'' a physician's service. The MPPR applies when multiple therapy
services are billed on the same date of service for one patient by the
same practitioner or facility under the same National Provider
Identifier (NPI), regardless of whether the services are furnished in
one therapy discipline or multiple disciplines, including physical
therapy, occupational therapy, or speech-language pathology.
The MPPR policy applies in all settings where outpatient therapy
services are paid under Part B. This includes both services that are
furnished in the office setting and paid under the PFS, as well as
institutional services that are furnished by outpatient hospitals, home
health agencies, comprehensive outpatient rehabilitation facilities
(CORFs), and other entities that are paid for outpatient therapy
services at rates based on the PFS.
In its June 2011 Report to Congress, MedPAC highlighted continued
growth in ancillary services subject to the in-office ancillary
services exception. The in-office ancillary exception to the general
prohibition under section 1877 of the Act as amended by the Ethics in
Patient Referrals Act, also known as the Stark law, allows physicians
to refer Medicare patients for designated health services, including
imaging, radiation therapy, home health care, durable medical
equipment, clinical laboratory tests, and physical therapy, to entities
with which they have a financial relationship under specific
conditions. MedPAC recommended that we apply a MPPR to the PC of
diagnostic imaging services furnished by the same practitioner in the
same session as one means to curb excess self-referral for these
services. The GAO already had made a similar recommendation in its July
2009 report.
In continuing to apply the provisions of section 1848(c)(2)(K) of
the Act, in the CY 2012 final rule (76 FR 73071), we expanded the MPPR
to the PC of Advanced Imaging Services (CT, MRI, and Ultrasound), that
is, the same list of codes to which the MPPR on the TC of advanced
imaging already applied (see Addendum F). Thus, this MPPR policy now
applies to the PC and the TC of certain diagnostic imaging codes.
Specifically, we expanded the payment reduction currently applied to
the TC to apply also to the PC of the second and subsequent advanced
imaging services furnished by the same physician (or by two or more
physicians in the same group practice) to the same patient in the same
session on the same day. However, in response to public comments, in
the CY 2012 PFS final rule with comment period, we adopted a 25 percent
payment reduction to the PC component of the second and subsequent
imaging services.
Under this policy, full payment is made for the PC of the highest
paid procedure, and payment is reduced by 25 percent for the PC for
each additional procedure furnished to the same patient in the same
session. This policy was based on the expected efficiencies in
furnishing multiple services in the same session due to duplication of
physician work, primarily in the pre- and post-service periods, with
smaller efficiencies in the intraservice period.
This policy is consistent with the statutory requirement for the
Secretary to identify, review, and adjust the relative values of
potentially misvalued services under the PFS as specified by section
1848(c)(2)(K) of the Act. This policy is also consistent both with our
longstanding policy on surgical and nuclear medicine diagnostic
procedures, under which we apply a 50 percent payment reduction to
second and subsequent procedures. Furthermore, it was responsive to
continued concerns about significant growth in imaging spending, and to
MedPAC (March 2010 and June 2011) and GAO (July 2009) recommendations
regarding the expansion of MPPR policies under the PFS to account for
additional efficiencies.
In the CY 2012 proposed rule (76 FR 42812), we also invited public
comment on the following MPPR policies under consideration. We noted
that any proposals would be presented in future rulemaking and subject
to further public comment:
Apply the MPPR to the TC of All Imaging Services. This
approach would apply a payment reduction to the TC of the second and
subsequent imaging services furnished in the same session. Such an
approach could define imaging consistent with our existing definition
of imaging for purposes of the statutory cap on PFS payment at the OPPS
rate (including x-ray, ultrasound (including echocardiography), nuclear
medicine (including positron emission tomography), magnetic resonance
imaging, computed tomography, and fluoroscopy, but excluding diagnostic
and screening mammography). Add-on codes that are always furnished with
another service and have been valued accordingly could be excluded.
Such an approach would be based on the expected efficiencies due to
duplication of clinical labor activities, supplies, and equipment time
when multiple services are furnished together. This approach would
apply to approximately 530 HCPCS codes, including the 119 codes to
which the current imaging MPPR applies. Savings would be redistributed
to other PFS services as required by the statutory PFS BN provision.
Apply the MPPR to the PC of All Imaging Services. This
approach would apply a payment reduction to the PC of

[[Page 44748]]

the second or subsequent imaging services furnished in the same
encounter. Such an approach could define imaging consistent with our
existing definition of imaging for the cap on payment at the OPPS rate.
Add-on codes that are always furnished with another service and have
been valued accordingly could be excluded.
Such an approach would be based on efficiencies due to duplication
of physician work primarily in the pre- and post-service periods, with
smaller efficiencies in the intraservice period, when multiple services
are furnished together. This approach would apply to approximately 530
HCPCS codes, including the 119 codes to which the current imaging MPPR
applies. Savings would be redistributed to other PFS services as
required by the statutory PFS BN provision.
Apply the MPPR to the TC of All Diagnostic Tests. This
approach would apply a payment reduction to the TC of the second and
subsequent diagnostic tests (such as radiology, cardiology, audiology,
etc.) furnished in the same encounter. Add-on codes that are always
furnished with another service and have been valued accordingly could
be excluded.
Such an approach would be based on the expected efficiencies due to
duplication of clinical labor activities, supplies, and equipment time
when multiple services are furnished together. The approach would apply
to approximately 700 HCPCS codes, including the approximately 560 HCPCS
codes that are currently subject to the OPPS cap. The savings would be
redistributed to other PFS services as required by the statutory PFS BN
provision.
b. MPPR Policy Clarifications
(1) Apply the MPPR to Two Nuclear Medicine Procedures
As indicated previously, effective January 1, 1995, we implemented
an MPPR for six nuclear medicine codes. Under the current policy, full
payment is made for the highest paid procedure, and payment is reduced
by 50 percent for the second procedure furnished to the same patient on
the same day. Due to a technical error, the MPPR is not being applied
to CPT codes 78306 (Bone imaging; whole body when followed by CPT code
78320 (Bone imaging; SPECT). We will apply the MPPR to these procedures
effective January 1, 2013.
(2) Apply the MPPR to the PC and TC of Advanced Imaging Procedures to
Physicians in the Same Group Practice
As indicated in the CY 2012 final rule (76 FR 73077-73079), we
finalized a policy to apply the MPPR to the PC and TC of the second and
subsequent advanced imaging procedures furnished to the same patient in
the same session by a single physician or by multiple physicians in the
same group practice. Due to operational limitations, we were not able
to apply this MPPR to multiple physicians in the same group practice
during CY 2012. In addition, after we issued the CY 2012 final rule
with comment period, some stakeholders asserted that they had not
commented on the application of the MPPR to physicians in the same
group practice because that policy was not explicit in the CY 2012
proposed rule discussion expanding the MPPR for advanced imaging to the
PC. We have resolved the operational problems and, therefore, for
services furnished on or after January 1, 2013 we will apply the MPPR
to both the PC and the TC of advanced imaging procedures to multiple
physicians in the same group practice (same group NPI). Under this
policy, the MPPR will apply when one or more physicians in the same
group practice furnish services to the same patient, in the same
session, on the same day. This policy is consistent with other PFS MPPR
policies for surgical and therapy procedures. We continue to believe
that the typical efficiencies achieved when the same physician is
furnishing multiple procedures also accrue when different physicians in
the same group furnish multiple procedures involving the same patient
in the same session. It is our general intention to apply this and
future MPPRs to services furnished by one or more physicians in the
same group unless special circumstances warrant a more limited
application. In such circumstances, we will note in our proposal that
an MPPR does not apply to one or more physicians in the same group as
other MPPR policies do. We continue to welcome public comment on this
provision as it applies to advanced diagnostic imaging and to the MPPR
policy generally.
c. Proposed MPPR for the TC of Cardiovascular and Ophthalmology
Services
As noted above, we continue to examine whether it would be
appropriate to apply MPPR policies to other categories of services that
are frequently billed together, including the TC for other diagnostic
services. For CY 2013, we examined other diagnostic services to
determine whether there typically are efficiencies in the technical
component when multiple diagnostic services are furnished together on
the same day. We have conducted an analysis of the most frequently
furnished code combinations for all diagnostic services using CY 2011
claims data. Of the several areas of diagnostic tests that we examined,
we found that billing patterns and PE inputs indicated that
cardiovascular and ophthalmology diagnostic procedures, respectively,
are frequently furnished together and that there is some duplication in
PE inputs when this occurs. For cardiovascular diagnostic services, we
reviewed the code pair/combinations with the highest utilization in
code ranges 75600 through 75893, 78414 through 78496, and 93000 through
93990. For ophthalmology diagnostic services, we reviewed the code
pair/combinations with the highest utilization in code ranges 76510
through 76529 and 92002 through 92371. The most frequently billed
cardiovascular and ophthalmology diagnostic code combinations are
listed in Tables 14 and 15.
Under the resource-based PE methodology, specific PE inputs of
clinical labor, supplies, and equipment are used to calculate PE RVUs
for each individual service. When multiple diagnostic tests are
furnished to the same patient on the same day, most of the clinical
labor activities and some supplies are not furnished twice. We have
identified the following clinical labor activities that typically would
not be duplicated for subsequent procedures:
Greeting and gowning the patient.
Preparing the room, equipment and supplies.
Education and consent.
Completing diagnostic forms.
Preparing charts.
Taking history.
Taking vitals.
Preparing and positioning the patient.
Cleaning the room.
Monitoring the patient.
Downloading, filing, identifying and storing photos.
Developing film.
Collating data.
QA documentation.
Making phone calls.
Reviewing prior X-rays, lab and echos.
We analyzed the CY 2011 claims data for the most frequently billed
cardiovascular and ophthalmology diagnostic code combinations in order
to determine the level of duplication present when multiple services
are furnished to the same patient on the same day. Our MPPR
determination excludes the clinical staff minutes associated with the
activities that are not duplicated for subsequent procedures. For
purposes of this

[[Page 44749]]

analysis, we retained the higher number of minutes for each duplicated
clinical activity, regardless of the code in the pair with which those
clinical labor minutes were associated. Equipment time and indirect
costs are allocated based on clinical labor time; therefore, these
inputs were reduced accordingly. While we observed that some supplies
are duplicated, we did not factor these into our calculations because
they were low cost and had little impact on our estimate of the level
of duplication for each code pair.
When we removed the PE inputs for activities that are not
duplicated, and adjusted the equipment time and indirect costs, we
found support for payment reductions ranging from 8 to 57 percent for
second and subsequent cardiovascular procedures (volume-adjusted
average reduction across all code pairs of 25 percent); and payment
reductions ranging from 9 to 62 percent for second and subsequent
ophthalmology procedures (volume-adjusted average reduction across all
code pairs of 32 percent). Because we found a relatively wide range of
reduction by code pair, we believe that an across-the-board reduction
of 25 percent for second and subsequent procedures (which is
approximately the average reduction supported by our analysis) would be
appropriate. We propose to apply an MPPR to TC-only services and to the
TC portion of global services for the procedures listed in Tables 12
and 13. The MPPR would apply independently to second and subsequent
cardiovascular services and to second and subsequent ophthalmology
services. We propose to make full payment for the TC of the highest
priced procedure and to make payment at 75 percent (that is, a 25
percent reduction) of the TC for each additional procedure furnished by
the same physician (or physicians in the same group practice, that is,
the same group practice NPI) to the same patient on the same day. We
are not proposing to apply an MPPR to the PC for cardiovascular and
ophthalmology services at this time. In Table 11, we provide examples
illustrating the current and proposed payment amounts:

Table 11--Illustration of Current and Proposed Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

We believe that the proposed MPPR percentage represents an
appropriate reduction for the typical delivery of multiple
cardiovascular and ophthalmology services on the same day. Because the
reduction is based on discounting the specific PE inputs that are not
duplicated for second and subsequent services, the proposal is
consistent with our longstanding policy on surgical and nuclear
medicine diagnostic procedures and advanced imaging procedures which
applies a 50 percent reduction to second and subsequent procedures, and
our more recent policy on therapy services, which applies a 20 or 25
percent reduction depending on the setting.
Furthermore, it is consistent with section 1848(c)(2)(K) of the Act
which specifies that the Secretary shall identify potentially misvalued
codes by examining multiple codes that are frequently billed in
conjunction with furnishing a single service, and review and make
appropriate adjustments to their relative values.
Finally, it is responsive to continued concerns about significant
growth in spending on imaging and other diagnostic services, and to
MedPAC (March 2010) and GAO (July 2009) recommendations regarding the
expansion of MPPR policies under the PFS to account for additional
efficiencies. Savings resulting from this proposal would be
redistributed to other PFS services as required by the general
statutory PFS BN provision. In summary, for services furnished on or
after January 1, 2013, we plan to apply the MPPR to nuclear medicine
procedures to CPT codes 78306 (Bone imaging; whole body when followed
by CPT code 78320 (Bone imaging; SPECT). We plan to apply the MPPR to
the PC and the TC of advanced imaging procedures to multiple physicians
in the same group practice (same group NPI). Therefore, the MPPR will
apply when one or more physicians in the same group practice furnish
services to the same patient, in the same session, on the same day.
Finally, we propose to apply an MPPR to TC-only services and to the TC
portion of global services for diagnostic cardiovascular and
ophthalmology procedures. The reduction would apply independently to
cardiovascular and ophthalmology services. We propose to make full
payment for the TC of the highest priced procedure and payment at 75
percent of the TC for each additional procedure furnished by the same
physician (or physicians in the same group practice, that is, the same
group practice NPI) to the same patient on the same day.

Table 12--Diagnostic Cardiovascular Services Subject to the Multiple
Procedure Payment Reduction
------------------------------------------------------------------------
Code Descriptor
------------------------------------------------------------------------
75600............................. Contrast x-ray exam of aorta.

[[Page 44750]]

75605............................. Contrast x-ray exam of aorta.
75625............................. Contrast x-ray exam of aorta.
75630............................. X-ray aorta leg arteries.
75650............................. Artery x-rays head & neck.
75658............................. Artery x-rays arm.
75660............................. Artery x-rays head & neck.
75662............................. Artery x-rays head & neck.
75665............................. Artery x-rays head & neck.
75671............................. Artery x-rays head & neck.
75676............................. Artery x-rays neck.
75680............................. Artery x-rays neck.
75685............................. Artery x-rays spine.
75705............................. Artery x-rays spine.
75710............................. Artery x-rays arm/leg.
75716............................. Artery x-rays arms/legs.
75726............................. Artery x-rays abdomen.
75731............................. Artery x-rays adrenal gland.
75733............................. Artery x-rays adrenals.
75736............................. Artery x-rays pelvis.
75741............................. Artery x-rays lung.
75743............................. Artery x-rays lungs.
75746............................. Artery x-rays lung.
75756............................. Artery x-rays chest.
75774............................. Artery x-ray each vessel.
75791............................. Av dialysis shunt imaging.
75809............................. Nonvascular shunt x-ray.
75820............................. Vein x-ray arm/leg.
75822............................. Vein x-ray arms/legs.
75825............................. Vein x-ray trunk.
75827............................. Vein x-ray chest.
75831............................. Vein x-ray kidney.
75833............................. Vein x-ray kidneys.
75840............................. Vein x-ray adrenal gland.
75842............................. Vein x-ray adrenal glands.
75860............................. Vein x-ray neck.
75870............................. Vein x-ray skull.
75872............................. Vein x-ray skull.
75880............................. Vein x-ray eye socket.
75885............................. Vein x-ray liver.
75887............................. Vein x-ray liver.
75889............................. Vein x-ray liver.
75891............................. Vein x-ray liver.
75893............................. Venous sampling by catheter.
78428............................. Cardiac shunt imaging.
78445............................. Vascular flow imaging.
78451............................. Ht muscle image spect sing.
78452............................. Ht muscle image spect mult.
78453............................. Ht muscle image planar sing.
78454............................. Ht musc image planar mult.
78456............................. Acute venous thrombus image.
78457............................. Venous thrombosis imaging.
78458............................. Ven thrombosis images bilat.
78466............................. Heart infarct image.
78468............................. Heart infarct image (ef).
78469............................. Heart infarct image (3D).
78472............................. Gated heart planar single.
78473............................. Gated heart multiple.
78481............................. Heart first pass single.
78483............................. Heart first pass multiple.
78494............................. Heart image spect.
78496............................. Heart first pass add-on.
93005............................. Electrocardiogram tracing.
93017............................. Cardiovascular stress test.
93318............................. Echo transesophageal intraop.
93024............................. Cardiac drug stress test.
93025............................. Microvolt t-wave assess.
93041............................. Rhythm ecg tracing.
93225............................. Ecg monit/reprt up to 48 hrs.
93226............................. Ecg monit/reprt up to 48 hrs.
93229............................. Remote 30 day ecg tech supp.
93270............................. Remote 30 day ecg rev/report.
93271............................. Ecg/monitoring and analysis.
93278............................. ECG/signal-averaged.
93279............................. Pm device progr eval sngl.
93280............................. Pm device progr eval dual.
93281............................. Pm device progr eval multi.
93282............................. Icd device prog eval 1 sngl.
93283............................. Icd device progr eval dual.
93284............................. Icd device progr eval mult.
93285............................. Ilr device eval progr.
93286............................. Pre-op pm device eval.
93287............................. Pre-op icd device eval.
93288............................. Pm device eval in person.
93289............................. Icd device interrogate.
93290............................. Icm device eval.
93291............................. Ilr device interrogate.
93292............................. Wcd device interrogate.
93293............................. Pm phone r-strip device eval.
93296............................. Pm/icd remote tech serv.
93303............................. Echo transthoracic.
93304............................. Echo transthoracic.
93306............................. Tte w/doppler complete.
93307............................. Tte w/o doppler complete.
93308............................. Tte f-up or lmtd.
93312............................. Echo transesophageal.
93314............................. Echo transesophageal.
93318............................. Echo transesophageal intraop.
93320............................. Doppler echo exam heart.
93321............................. Doppler echo exam heart.
93325............................. Doppler color flow add-on.
93350............................. Stress tte only.
93351............................. Stress tte complete.
93701............................. Bioimpedance cv analysis.
93724............................. Analyze pacemaker system.
93786............................. Ambulatory BP recording.
93788............................. Ambulatory BP analysis.
93880............................. Extracranial study.
93882............................. Extracranial study.
93886............................. Intracranial study.
93888............................. Intracranial study.
93890............................. Tcd vasoreactivity study.
93892............................. Tcd emboli detect w/o inj.
93893............................. Tcd emboli detect w/inj.
93922............................. Upr/l xtremity art 2 levels.
93923............................. Upr/lxtr art stdy 3+ lvls.
93924............................. Lwr xtr vasc stdy bilat.
93925............................. Lower extremity study.
93926............................. Lower extremity study.
93930............................. Upper extremity study.
93931............................. Upper extremity study.
93965............................. Extremity study.
93970............................. Extremity study.
93971............................. Extremity study.
93975............................. Vascular study.
93976............................. Vascular study.
93978............................. Vascular study.
93979............................. Vascular study.
93980............................. Penile vascular study.
93981............................. Penile vascular study.
93990............................. Doppler flow testing.
------------------------------------------------------------------------

Table 13--Diagnostic Ophthalmology Services Subject to the Multiple
Procedure Payment Reduction
------------------------------------------------------------------------
Code Descriptor
------------------------------------------------------------------------
76510............................. Ophth us b & quant a.
76511............................. Ophth us quant a only.
76512............................. Ophth us b w/non-quant a.
76513............................. Echo exam of eye water bath.
76514............................. Echo exam of eye thickness.
76516............................. Echo exam of eye.
76519............................. Echo exam of eye.
92025............................. Corneal topography.
92060............................. Special eye evaluation.
92081............................. Visual field examination(s).
92082............................. Visual field examination(s).
92083............................. Visual field examination(s).
92132............................. Cmptr ophth dx img ant segmt.
92133............................. Cmptr ophth img optic nerve.
92134............................. Cptr ophth dx img post segmt.
92136............................. Ophthalmic biometry.
92228............................. Remote retinal imaging mgmt.
92235............................. Eye exam with photos.
92240............................. Icg angiography.
92250............................. Eye exam with photos.
92265............................. Eye muscle evaluation.
92270............................. Electro-oculography.
92275............................. Electroretinography.
92283............................. Color vision examination.
92284............................. Dark adaptation eye exam.
92285............................. Eye photography.
92286............................. Internal eye photography.
------------------------------------------------------------------------

BILLING CODE 4120-01-P

[[Page 44751]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.002

[[Page 44752]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.003

BILLING CODE 4120-01-C

C. Malpractice RVUs

Section 1848(c) of the Act requires that each service paid under
the PFS be comprised of three components: Work; PE; and malpractice.
From 1992 to 1999, malpractice RVUs were charge-based, using weighted
specialty-specific malpractice expense percentages and 1991 average
allowed charges. Malpractice RVUs for new codes after 1991 were
extrapolated from similar existing codes or as a percentage of the
corresponding work RVU. Section 4505(f) of the BBA, which amended
section 1848(c) of the Act, required us to implement resource-based
malpractice RVUs for services furnished beginning in 2000. Therefore,
initial implementation of resource-based malpractice RVUs occurred in
2000.
The statute also requires that we review and, if necessary, adjust
RVUs no less often than every 5 years. The first review and update of
resource-

[[Page 44753]]

based malpractice RVUs was addressed in the CY 2005 PFS final rule with
comment period (69 FR 66263). Minor modifications to the methodology
were addressed in the CY 2006 PFS final rule with comment period (70 FR
70153). In the CY 2010 PFS final rule with comment period, we
implemented the second review and update of malpractice RVUs. For a
discussion of the second review and update of malpractice RVUs, see the
CY 2010 PFS proposed rule (74 FR 33537) and final rule with comment
period (74 FR 61758).
As explained in the CY 2011 PFS final rule with comment period (75
FR 73208), malpractice RVUs for new and revised codes effective before
the next Five-Year Review of Malpractice (for example, effective CY
2011 through CY 2014, assuming that the next review of malpractice RVUs
occurs for CY 2015) are determined either by a direct crosswalk to a
similar source code or by a modified crosswalk to account for
differences in work RVUs between the new/revised code and the source
code. For the modified crosswalk approach, we adjust (or ``scale'') the
malpractice RVU for the new/revised code to reflect the difference in
work RVU between the source code and the new/revised work value (or, if
greater, the clinical labor portion of the fully implemented PE RVU)
for the new code. For example, if the proposed work RVU for a revised
code is 10 percent higher than the work RVU for its source code, the
malpractice RVU for the revised code would be increased by 10 percent
over the source code malpractice RVU. This approach presumes the same
risk factor for the new/revised code and source code but uses the work
RVU for the new/revised code to adjust for risk-of-service.
For CY 2013, we will continue our current approach for determining
malpractice RVUs for new/revised codes. We will publish a list of new/
revised codes and the malpractice crosswalk(s) used for determining
their malpractice RVUs in the final rule with comment period. The CY
2013 malpractice RVUs for new/revised codes will be implemented as
interim final values in the CY 2013 PFS final rule with comment period,
where they will be subject to public comment. They will then be
finalized in the CY 2014 PFS final rule with comment period.

D. Geographic Practice Cost Indices (GPCIs)

1. Background
Section 1848(e)(1)(A) of the Act requires us to develop separate
Geographic Practice Cost Indices (GPCIs) to measure resource cost
differences among localities compared to the national average for each
of the three fee schedule components (that is, work, practice expense
(PE), and malpractice (MP)). While requiring that the PE and MP GPCIs
reflect the full relative cost differences, section 1848(e)(1)(A)(iii)
of the Act requires that the work GPCIs reflect only one-quarter of the
relative cost differences compared to the national average. In
addition, section 1848(e)(1)(G) of the Act sets a permanent 1.5 work
GPCI floor for services furnished in Alaska beginning January 1, 2009,
and section 1848(e)(1)(I) of the Act sets a permanent 1.0 PE GPCI floor
for services furnished in frontier States beginning January 1, 2011.
Section 1848(e)(1)(E) of the Act provides for a 1.0 floor for the
work GPCIs, which was set to expire at the end of 2011. The statute was
amended to extend the 1.0 floor for the work GPCIs through February 29,
2012 by section 303 of the Temporary Payroll Tax Cut Continuation Act
of 2011 (TPTCCA) (Pub. L. 112-78). The statute was again amended by
section 3004 of the Middle Class Tax Relief and Job Creation Act of
2012 (MCTRJCA) (Pub. L. 112-399) to extend the 1.0 work floor for GPCIs
throughout the remainder of CY 2012 (that is, for services furnished no
later than December 31, 2012). During the development of the CY 2012
PFS final rule with comment period, neither TPTCCA nor MCTRJCA had been
enacted and, because the work GPCI floor was set to expire at the end
of 2011, the GPCIs published in Addendum E of the CY 2012 PFS final
rule with comment period did not reflect the 1.0 work floor.
Appropriate changes to the CY 2012 GPCIs were made to reflect the 1.0
work floor required by section 303 of the TPTCCA and section 3004 of
the MCTRJCA.
Since the 1.0 work GPCI floor provided in section 1848(e)(1)(E) of
the Act is set to expire prior to the implementation of the CY 2013
PFS, the proposed CY 2013 work GPCIs and summarized geographic
adjustment factors (GAFs) published in addendums D and E of this CY
2013 PFS proposed rule do not reflect the 1.0 work GPCI floor for CY
2013. As required by section 1848(e)(1)(G) and section 1848(e)(1)(I) of
the Act, the 1.5 work GPCI floor for Alaska and the 1.0 PE GPCI floor
for frontier States are applicable in CY 2013.
In the CY 2012 PFS final rule with comment period we made several
refinements to the GPCIs (76 FR 73081 through 73092), including
revising the sixth GPCI update to reflect the most recent data, with
modifications. Specifically, we finalized our proposal to change the
GPCI cost share weights for CY 2012 to reflect the most recent rebased
and revised Medicare Economic Index (MEI). As a result, the cost share
weight for the work GPCI (as a percentage of the total) was updated
from 52.466 percent to 48.266 percent, and the cost share weight for
the PE GPCI was revised from 43.669 percent to 47.439 percent with a
change in the employee compensation component from 18.654 to 19.153
percentage points. The cost share weight for the office rent component
of the PE GPCI was changed from 12.209 percent to 10.223 percentage
points (fixed capital with utilities), and the medical equipment,
supplies, and other miscellaneous expenses component was updated to
9.968 percentage points. In addition, we finalized the weight for
purchased services at 8.095 percentage points, of which 5.011
percentage points are adjusted for geographic cost differences. Lastly,
the cost share weight for the MP GPCI was revised from 3.865 percent to
4.295 percent. Table 16 displays the cost share weights that were
finalized in the CY 2012 final rule with comment period. Note that the
employee compensation; office rent; purchased services; and equipment
supplies and other cost share weights sum to the total PE GPCI cost
share weights of 47.439 percent.

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

We also finalized several other policies including the use of 2006
through 2008 American Community Survey (ACS) two-bedroom rental data as
a proxy for the relative cost difference in physician office rent. In
addition, we created a purchased services index to account for labor-
related services within the ``all other services'' and ``other
professional expenses'' MEI components. In response to public
commenters who recommended that we utilize Bureau of Labor Statistics
(BLS) Occupational Employment Statistics (OES) data to capture the
``full range'' of

[[Page 44754]]

occupations included in the offices of physician industry to calculate
the nonphysician employee wage component (also referred to as the
employee wage index) of the PE GPCI, we finalized a policy of using 100
percent of the total wage share of nonphysician occupations in the
offices of physicians' industry to calculate the nonphysician employee
wage component of the PE GPCI.
2. Recommendations From the Institute of Medicine
Concurrent with our CY 2012 rulemaking cycle, the Institute of
Medicine released the final version of its first of two anticipated
reports entitled ``Geographic Adjustment in Medicare Payment: Phase I:
Improving Accuracy, Second Edition'' on September 28, 2011. This report
included an evaluation of the accuracy of geographic adjustment factors
for the hospital wage index and the GPCIs, as well as the methodology
and data used to calculate them. Several of the policies that we
finalized in CY 2012 rulemaking addressed several of the
recommendations contained in the Institute of Medicine's first report.
Because we did not have adequate time to completely address the
Institute of Medicine's Phase I report recommendations during CY 2012
rulemaking, we have included a discussion in this proposed rule about
the recommendations that were not implemented or discussed in the CY
2012 final rule with comment period. We look forward to receiving
comments on these recommendations.
The Institute of Medicine's second report, expected in summer 2012,
will evaluate the effects of geographic adjustment factors (hospital
wage index and GPCIs) on the distribution of the healthcare workforce,
quality of care, population health, and the ability to provide
efficient, high value care. We did not receive the Institute of
Medicine's Phase II report in time for consideration for this CY 2013
proposed rule. We intend to address the Institute of Medicine's
recommendations in the Phase II report once we have had an opportunity
to fully evaluate the report and its recommendations.
3. GPCI Discussion for CY 2013
CY 2013 is the final year of the sixth GPCI update and, because we
will propose updates next year, we are not including any proposals
related to the GPCIs in this proposed rule. In response to public
inquiries about exceptions to the calculated GPCIs, we are providing a
brief discussion about the permanent 1.0 PE floor for frontier States,
the 1.5 work floor for Alaska, the GPCIs for the Puerto Rico payment
locality, and the expiration of the GPCI 1.0 work floor required under
section 1848(e)(1)(E) of the Act. We also discuss recommendations from
the first Institute of Medicine report that were not addressed during
CY 2012 rulemaking in this proposed rule.
a. Alaska Work Floor and PE GPCI Floor for Frontier States
Section 1848(e)(1)(G) of the Act sets a permanent 1.5 work GPCI
floor for services furnished in Alaska beginning January 1, 2009.
Therefore, the 1.5 work floor for Alaska will remain in effect in CY
2013. In addition, section 1848(e)(1)(I) of the Act establishes a 1.0
PE GPCI floor for physicians' services furnished in frontier States
effective January 1, 2011. In accordance with section 1848(e)(1)(I) of
the Act, beginning in CY 2011, we applied a 1.0 PE GPCI floor for
physicians' services furnished in States determined to be frontier
States. There are no proposed changes to those States identified as
``Frontier States'' for the CY 2013 proposed rule. The following States
are considered to be ``Frontier States'' for CY 2013: Montana, North
Dakota, Nevada, South Dakota, and Wyoming.
b. GPCI Assignments for the Puerto Rico Payment Locality
Recently, we have received inquiries from representatives of the
Puerto Rico medical community regarding our policies for determining
the GPCIs for the Puerto Rico payment locality. While we are not making
any proposals related to the GPCIs for Puerto Rico, in response to
those inquiries, we are providing the following discussion regarding
the GPCIs assigned to the Puerto Rico payment locality. We anticipate
recalculating all the GPCI's in the seventh GPCI update currently
anticipated in CY 2014.
As noted above, we are required by section 1848(e)(1)(A) of the Act
to develop separate GPCIs to measure relative resource cost differences
among localities compared to the national average for each of the three
fee schedule components: Work, PE and malpractice expense. To calculate
these GPCI values, we rely on three primary data sources. We currently
use the 2006-2008 BLS OES data to calculate the work GPCI, the
nonphysician employee wage component of PE GPCI, and the labor costs
associated with the purchased services component of PE GPCI. We use
2006-2008 ACS data to calculate the office rent component of the PE
GPCI. Finally, we use 2006-2007 malpractice premium data to calculate
the MP GPCI. For all localities, including Puerto Rico, we assume
equipment, supplies, and other expenses are purchased in a national
market and that the costs do not vary by geographic location.
Therefore, we do not use data on the price of equipment, supplies, and
expenses across localities in calculating PE GPCIs. With the exception
of the MP GPCI, we have current data from the applicable sources
allowing us to calculate the work and PE GPCIs for the Puerto Rico
payment locality. The 2006-2008 BLS OES data and rental values derived
from the 2006-2008 ACS indicate that the costs associated with
operating a physician practice in Puerto Rico are the lowest among all
payment localities.
In order to calculate the MP GPCI for the various Medicare PFS
localities, we collect malpractice insurance market share and premium
data from state departments of insurance and from state rate filings.
As discussed in our contractor's report (Final Report on the Sixth
Update of the Geographic Practice Cost Index for the Medicare Physician
Fee Schedule, pg. 41), for the fourth, fifth, and sixth GPCI updates we
were not able to collect this data for the Puerto Rico payment
locality. Therefore, we carried over the MP GPCI value of 0.249 from
previous GPCI updates when malpractice premium data were last
available. It is important that we have a source for more current
malpractice premium data for Puerto Rico for use in the upcoming
seventh GPCI update. We are working with the relevant officials in
Puerto Rico to acquire these data for use in future rulemaking. We
would encourage comments from stakeholders regarding potential data
sources that may be available for calculating the Puerto Rico
malpractice GPCI. For a detailed discussion regarding the methodology
used to calculate the various components of the Puerto Rico GPCIs, we
refer readers to our contractor's report from November of 2010 entitled
``Final Report on the Sixth Update of the Geographic Practice Cost
Index for the Medicare Physician Fee Schedule'' available on our Web
site at http://www.cms.gov/PhysicianFeeSched/downloads/GPCI_Report.pdf.
c. Expiration of GPCI Work Floor
The work GPCIs are designed to capture the relative costs of
physician labor by Medicare PFS locality. Previously, the work GPCIs
were developed using the median hourly earnings from the 2000 Census of
workers in seven professional specialty occupation categories which we
used as a proxy for physicians' wages.

[[Page 44755]]

Physicians' wages are not included in the occupation categories because
Medicare payments are a key determinant of physicians' earnings. That
is, including physicians' wages in the work GPCIs would effectively
make the indices dependent upon Medicare payments. As required by law,
the work GPCI reflects one quarter of the relative wage differences for
each locality compared to the national average. The work GPCI updates
in CYs 2001, 2003, 2005, and 2008 were based on professional earnings
data from the 2000 Census. For the sixth GPCI update in CY 2011, we
used the 2006 through 2008 BLS OES data as a replacement for the 2000
Census data.
Although we are not proposing any changes to the data or
methodology used to calculate the work GPCI for CY 2013, we note that
addenda D and E will reflect the expiration of the statutory 1.0 work
GPCI floor. As noted above, section 1848(e)(1)(E) of the Act provides
for a 1.0 floor for the work GPCIs, which was set to expire at the end
of 2011 until it was temporarily extended through February 29, 2012 by
section 303 of the TPTCCA. The GPCI work floor was extended throughout
the remainder of CY 2012 by section 3004 of the MCTRJCA.
4. Institute of Medicine Phase I Report
a. Background
At our request, the Institute of Medicine is conducting a study of
the geographic adjustment factors in Medicare payment. It is a
comprehensive empirical study of the geographic adjustment factors
established under sections 1848(e) (GPCI) and 1886(d)(3)(E) of the Act
(hospital wage index). These adjustments are designed to ensure
Medicare payment fees and rates reflect differences in input costs
across geographic areas. The factors the Institute of Medicine is
evaluating include the following:
Accuracy of the adjustment factors;
Methodology used to determine the adjustment factors; and
Sources of data and the degree to which such data are
representative.
Within the context of the U.S. healthcare marketplace, the
Institute of Medicine is also evaluating and considering the--
Effect of the adjustment factors on the level and
distribution of the health care workforce and resources, including--
++ Recruitment and retention taking into account mobility between
urban and rural areas;
++ Ability of hospitals and other facilities to maintain an
adequate and skilled workforce; and
++ Patient access to providers and needed medical technologies;
Effect of adjustment factors on population health and
quality of care; and
Effect of the adjustment factors on the ability of
providers to furnish efficient, high value care.
The Institute of Medicine's first report entitled ``Geographic
Adjustment in Medicare Payment, Phase I: Improving Accuracy'' evaluated
the accuracy of geographic adjustment factors and the methodology and
data used to calculate them. The recommendations included in the
Institute of Medicine's Phase I report that relate to or would have an
effect on the methodologies used to calculate the GPCIs and the
configuration of Medicare PFS payment locality structure are summarized
as follows:
Recommendation 2-1: The same labor market definition
should be used for both the hospital wage index and the physician
geographic adjustment factor. Metropolitan statistical areas and
statewide non-metropolitan statistical areas should serve as the basis
for defining these labor markets.
Recommendation 2-2: The data used to construct the
hospital wage index and the physician geographic adjustment factor
should come from all health care employers.
Recommendation 5-1: The GPCI cost share weights for
adjusting fee-for-service payments to practitioners should continue to
be national, including the three GPCIs (work, PE, and liability
insurance) and the categories within the PE (office rent and
personnel).
Recommendation 5-2: Proxies should continue to be used to
measure geographic variation in the physician work adjustment, but CMS
should determine whether the seven proxies currently in use should be
modified.
Recommendation 5-3: CMS should consider an alternative
method for setting the percentage of the work adjustment based on a
systematic empirical process.
Recommendation 5-4: The PE GPCI should be constructed with
the full range of occupations employed in physicians' offices, each
with a fixed national weight based on the hours of each occupation
employed in physicians' offices nationwide.
Recommendation 5-5 CMS and the Bureau of Labor Statistics
should develop an agreement allowing the Bureau of Labor Statistics to
analyze confidential data for the Centers for Medicare & and Medicaid
Services.
Recommendation 5-6: A new source of information should be
developed to determine the variation in the price of commercial office
rent per square foot.
Recommendation 5-7: Nonclinical labor-related expenses
currently included under PE office expenses should be geographically
adjusted as part of the wage component of the PE.
This report can be accessed on the Institute of Medicine 's Web
site at http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.
As previously noted, the Institute of Medicine will consider the
role of Medicare payments on matters such as the distribution of the
healthcare workforce, population health, and the ability of providers
to produce high-value, high-quality health care in its final report
anticipated in summer 2012. We were not able to evaluate the
recommendations contained in the Institute of Medicine's Phase II
report, in time for discussion in this proposed rule.
b. Institute of Medicine Recommendations Implemented in CY 2012
In the CY 2012 final rule with comment period, we addressed three
of the recommendations offered by the Institute of Medicine in their
Phase I report. Specifically, the final CY 2012 GPCIs utilized the full
range of non-physician occupations in the employee wage calculation
consistent with Institute of Medicine recommendation 5-4. Additionally,
we created a new purchased service index to account for non-clinical
labor related expenses similar to Institute of Medicine recommendation
5-7. Lastly, we have consistently used national cost share weights to
determine the appropriate weight attributed to each GPCI component,
which is supported by Institute of Medicine recommendation 5-1 (76 FR
73081 through 73092). In order to facilitate a public discussion
regarding the Institute of Medicine's remaining recommendations, we are
providing a summary analysis of these recommendations in this proposed
rule below. We will provide our technical analyses of the remaining
Institute of Medicine Phase I recommendations in a report that will be
released on the PFS Web site at http://www.cms.gov/PhysicianFeeSched.
Since we have not yet had an opportunity to review the recommendations
in the Institute of Medicine's Phase II report, these analyses focus
exclusively on the

[[Page 44756]]

recommendations as presented in the Institute of Medicine's Phase I
release.
c. Discussion of Remaining Institute of Medicine Recommendations
(1) Institute of Medicine Recommendation Summaries
(A) Institute of Medicine recommendation 2-1: The same labor market
definition should be used for both the hospital wage index and the
physician geographic adjustment factor. Metropolitan statistical areas
and statewide non-metropolitan statistical areas should serve as the
basis for defining these labor markets. (Geographic Adjustment in
Medicare Payment, Phase I: Improving Accuracy, pages 2-1 thru 2-29)
(i) Locality Background
The current PFS locality structure was developed and implemented in
1997. There are currently 89 total PFS localities; 34 localities are
Statewide areas (that is, only one locality for the entire State).
There are 52 localities in the other 16 States, with 10 States having 2
localities, 2 States having 3 localities, 1 State having 4 localities,
and 3 States having 5 or more localities. The District of Columbia,
Maryland, and Virginia suburbs, Puerto Rico, and the Virgin Islands are
additional localities that make up the remainder of the total of 89
localities. The development of the current locality structure is
described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and
the subsequent final rule with comment period (61 FR 59494).
Prior to 1992, Medicare payments for physicians' services were made
under the reasonable charge system. Payments were based on the charging
patterns of physicians. This resulted in large differences among types
of services, geographic payment areas, and physician specialties.
Recognizing this, the Congress replaced the reasonable charge system
with the Medicare PFS in the Omnibus Budget Reconciliation Act (OBRA)
of 1989, effective January 1, 1992. Payments under the fee schedule are
based on the relative resources required to provide services and vary
among areas as resource costs vary geographically as measured by the
GPCIs.
Payment localities were established under the reasonable charge
system by local Medicare carriers based on their knowledge of local
physician charging patterns and economic conditions. These localities
changed little between the inception of Medicare in 1967 and the
beginning of the PFS. As a result, a study was begun in 1994 which
resulted in a comprehensive locality revision, which was implemented in
1997 (61 FR 59494).
The revised locality structure reduced the number of localities
from 210 to the current 89 and the number of statewide localities
increased from 22 to 34. The revised localities were based on locality
resource cost differences as reflected by the GPCIs. A full discussion
of the methodology can be found in the CY 1997 PFS final rule with
comment period (61 FR 59494). The current 89 fee schedule areas are
defined alternatively by state boundaries (for example, Wisconsin),
metropolitan areas (for example, Metropolitan St. Louis, MO), portions
of a metropolitan area (for example, Manhattan), or rest-of-state areas
that exclude metropolitan areas (for example, Rest of Missouri). This
locality configuration is used to calculate the GPCIs that are in turn
used to calculate payments for physicians' services under the PFS.
As was stated in the CY 2011 final rule with comment period (75 FR
73261), we currently require that changes to the PFS locality structure
be done in a budget neutral manner within a state. For many years, we
have sought consensus for any locality changes among the professionals
whose payments would be affected. We have also considered more
comprehensive changes to locality configurations. In 2008, we issued a
draft comprehensive report detailing four different locality
configuration options (http://www.cms.gov/physicianfeesched/downloads/ReviewOfAltGPCIs.pdf). The alternative locality configurations in the
report are described below.
Option 1: CMS Core-Based Statistical Area (CBSA) Payment
Locality Configuration: CBSAs are a combination of Office of Management
and Budget (OMB's) Metropolitan Statistical Areas (MSAs) and their
Micropolitan Statistical Areas. Under this option, MSAs would be
considered as urban CBSAs. Micropolitan Statistical Areas (as defined
by OMB) and rural areas would be considered as non-urban (rest of
State) CBSAs. This approach would be consistent with the areas used in
the Inpatient Prospective Payment System (IPPS) pre-reclassification
wage index, which is the hospital wage index for a geographic area
(CBSA or non-CBSA) calculated from submitted hospital cost report data
before statutory adjustments reconfigure, or ``reclassify'' a hospital
to an area other than its geographic location, to adjust payments for
difference in local resource costs in other Medicare payment systems.
Based on data used in the 2008 locality report, this option would
increase the number of PFS localities from 89 to 439.
Option 2: Separate High-Cost Counties from Existing
Localities (Separate Counties): Under this approach, higher cost
counties are removed from their existing locality structure, and they
would each be placed into their own locality. This option would
increase the number of PFS localities from 89 to 214, using a 5 percent
GAF differential to separate high-cost counties.
Option 3: Separate MSAs from Statewide Localities
(Separate MSAs): This option begins with statewide localities and
creates separate localities for higher cost MSAs (rather than removing
higher cost counties from their existing locality as described in
Option 2). This option would increase the number of PFS localities from
89 to 130, using a 5 percent GAF differential to separate high-cost
MSAs.
Option 4: Group Counties Within a State Into Locality
Tiers Based on Costs (Statewide Tiers): This option creates tiers of
counties (within each State) that may or may not be contiguous but
share similar practice costs. This option would increase the number of
PFS localities from 89 to 140, using a 5 percent GAF differential to
group similar counties into statewide tiers.
For a detailed discussion of the public comments on the
contractor's 2008 draft report detailing four different locality
configurations, we refer readers to the CY 2010 PFS proposed rule (74
FR 33534) and subsequent final rule with comment period (74 FR 61757).
There was no public consensus on the options, although a number of
commenters expressed support for Option 3 (separate MSAs from Statewide
localities) because the commenters believed this alternative would
improve payment accuracy and could mitigate potential reductions to
rural areas compared to Option 1 (CMS CBSAs).
In response to some public comments regarding the third of the four
locality options, we had our contractor conduct an analysis of the
impacts that would result from the application of Option 3. Those
results were displayed in the final locality report released in 2011.
The final report, entitled ``Review of Alternative GPCI Payment
Locality Structures--Final Report,'' is accessible from the CMS PFS Web
page under the heading ``Review of Alternative GPCI Payment Locality
Structures--Final Report.'' The report may also be accessed directly
from the following link: http://www.cms.gov/PhysicianFeeSched/downloads/Alt_GPCI_Payment_Locality_Structures_Review.pdf.

[[Page 44757]]

(ii) Institute of Medicine Recommendation Discussion
The Institute of Medicine recommends altering the current locality
structure that was originally based on areas set by local contractors
and, in 1996, reduced from 210 to current 89 using a systematic
iterative methodology. Rather than using the current uniform fee
schedule areas in adjusting for relative cost differences as compared
to the national average, the Institute of Medicine recommends a three-
tiered system for defining fee schedule areas. In the first tier, the
Institute of Medicine proposes applying county-based fee schedule areas
to calculate the employee wage component of the PE GPCI. Although the
Institute of Medicine's report states that it recommends that
``Metropolitan statistical areas and statewide non-metropolitan
statistical areas should serve as the basis for defining these labor
markets,'' the Institute of Medicine also recommends applying an out-
commuting adjustment, which would permit employee wage index values to
vary by county. Since the employee wage index is one component of the
PE GPCI, these values also would vary by county under the Institute of
Medicine's proposal.
To understand why the employee wage index would vary by county
under the Institute of Medicine's recommendation, consider the three
steps that would be required to calculate the employee wage index. The
first step calculates the average hourly wage (AHW) for workers
employed in each MSA or residual (rest of state) area. The wages of
workers in each occupation are weighted by the number of workers
employed in physicians' offices nationally. The second step applies a
commuting-based smoothing adjustment to create area index wages for
each county. The commuting-adjusted county index wages are equal to a
weighted average of the AHW values calculated in the first step, where
the weights are county-to-MSA out-commuting patterns. The Institute of
Medicine's out-commuting-based weights equal the share of health care
workers that live in a county where a physician's office is located who
commute out of the county to work in a physician office in each MSA.
The third step sets each physician's employee index wage equal to the
estimated area index wage (calculated in Step 2) of the county in which
the physician office is located. Because the out-commuting adjustment
envisioned by the Institute of Medicine in the second step varies by
county, the employee wage index value--and thus the PE GPCI as a
whole--would also potentially vary by county depending on the smoothing
option chosen. If implemented, the number of employee wage index
payment areas could potentially increase from 89 to over 3,000.
The Institute of Medicine's second tier of fee schedule areas would
use an MSA-based approach. The Institute of Medicine proposes using the
MSA-based system for the work GPCI, the office rent index, the
purchased services index, and the MP GPCI. An MSA is made up of one or
more counties, including the counties that contain the core urban area
with a population of 50,000 or more, as well as surrounding counties
that exhibit a high degree of social and economic integration (as
measured by commuting patterns) with the urban core. MSAs are designed
to be socially and economically integrated units based on the share of
workers who commute to work within the urban core of each MSA.
Implementing an MSA-based locality structure would expand the number of
fee schedule areas from 89 to upwards of 400 plus additional MSAs for
U.S. territories (for example, Virgin Islands, American Samoa, Guam,
Northern Marianna Islands).
In its third payment area tier, the Institute of Medicine proposes
creating a national payment area for the ``equipment, supplies and
other'' index. We currently do not adjust PEs associated with supplies
and equipment since we believe they are typically purchased in a
national market. Thus, this approach is equivalent to using a national
fee schedule area to define this index. The Institute of Medicine
proposes no change to the fee schedule area used to compute the
``equipment, supplies and other'' index.
Based on our contractor's analysis, there would be significant
redistributive impacts if we were to implement a policy that would
reconfigure the PFS localities based on the Institute of Medicine's
three-tiered recommendation. Many rural areas would see substantial
decreases in their corresponding GAF and GPCI values as higher cost
counties are removed from current ``Rest of State'' payment areas.
Conversely, many urban areas, especially those areas that are currently
designated as ``Rest of State'' but reside within higher cost MSAs,
would experience increases in their applicable GPCIs and GAFs.
The localities used to calculate the GPCIs have been a subject of
substantial discussion and debate since the implementation of the PFS.
The intensity of those discussions has increased since the last
comprehensive update to the locality structure in 1997. Physicians and
other suppliers in areas such as Santa Cruz County, California and
Prince William County, Virginia have expressed concern that the current
locality structure does not appropriately capture economic and
demographic shifts that have taken place since the last PFS locality
update. On the other hand, rural practitioners have argued that
revisions to the current PFS payment localities will reduce their
payments and exacerbate the problems of attracting physicians and other
practitioners to rural areas. In the past, we have also heard concerns
from representatives of some statewide localities regarding the
potential implications of adopting an alternative locality structure
that would change their current statewide payment area (74 FR 33536).
The Institute of Medicine stated in its Phase I report regarding
its locality recommendation that, ``While the payment areas would stay
the same for the HWI (hospital wage index), implementing this
recommendation would mean that the GPCI payment areas would expand from
89 to 441 areas, which would be a significant change. The impact of the
change in payment areas will be assessed in the Phase II report.''
(``Geographic Adjustment in Medicare Payment: Phase I: Improving
Accuracy, Second Edition'' on September 28, 2011, pg 5-6.) Moreover,
the Institute of Medicine's Phase II report will evaluate the effects
of geographic adjustment factors on the distribution of the healthcare
workforce, quality of care, population health, and the ability to
provide efficient, high value care. Over the years, commenters that
have opposed revisions to localities have claimed that changes to the
PFS areas could have a significant impact on the ability of rural areas
to attract physicians. Certainly, one of our major goals when we last
comprehensively revised the Medicare PFS localities in 1996 was to
avoid excessively large urban/rural payment differences (61 FR 59494).
In 1996, we were hopeful that the revisions would improve access to
care for rural areas (61 FR 59494). Some areas may have experienced
both economic and demographic shifts since the last comprehensive
locality update. Before moving forward with the Institute of Medicine's
three tiered locality recommendation, or any other potential locality
revision, we need to assess, and prepare to inform the public of, the
impact of any change for all Medicare stakeholders. The Institute of
Medicine's Phase II report, scheduled for release this summer 2012,
should

[[Page 44758]]

contain an evaluation of many of these important factors including:
The effect of the adjustment factors on the level and
distribution of the health care workforce and resources, including--
++ Recruitment and retention taking into account mobility between
urban and rural areas;
++ Ability for hospitals and other facilities to maintain an
adequate and skilled workforce;
++ Patient access to providers and needed medical technologies;
++ Effect of adjustment factors on population health and quality of
care; and
++ Effect of adjustment factors on the ability of providers to
furnish efficient, high value care.
To fully assess the broader public policy implications associated
with the Institute of Medicine's locality recommendation, we must first
fully assess and analyze the recommendations contained in the Institute
of Medicine's phase II report. Accordingly, we believe that it would be
premature to propose any change to the PFS localities at this time.
In conjunction with a specific proposal for changing the locality
configuration during future rulemaking, we would provide detailed
analysis on the impact of the changes for physicians in each county. We
would also provide opportunities for public input (for example, Town
Hall meetings or Open Door Forums), as well as opportunities for public
comments afforded by the rulemaking process.
While we are making no proposal in this proposed rule to change the
current locality configuration, we are seeking public comment regarding
Institute of Medicine's recommended three-tiered PFS payment locality
definition. In addition, we will make our technical analyses of the
Institute of Medicine locality recommendations, specific to the Phase I
report, available on the PFS Web site at http://www.cms.gov/PhysicianFeeSched/.
(B) Institute of Medicine Recommendation 2-2: The data used to
construct the hospital wage index and the physician geographic
adjustment factor should come from all healthcare employers (Geographic
Adjustment in Medicare Payment, Phase I: Improving Accuracy, pages 2-1
thru 2-29) and; Recommendation 5-5 CMS and the Bureau of Labor
Statistics should develop an agreement allowing the Bureau of Labor
Statistics to analyze confidential data for the Centers for Medicare
and Medicaid Services. (Geographic Adjustment in Medicare Payment,
Phase I: Improving Accuracy, pg 5-38.)
The Institute of Medicine recommends altering the data used to
calculate the employee wage index. Specifically, Institute of Medicine
recommends using wage data for workers in the healthcare industry
rather than wage data for workers across all-industries. Although all-
industry wage data has the largest sample size, the Institute of
Medicine ``* * * is concerned that the [all-industry] sample does not
represent physician offices.'' BLS OES occupation wage data by MSA,
however, are not publicly available for the healthcare industry. Using
healthcare-industry wages requires the use of confidential BLS OES
data, to which CMS does not have access at this time. Although the
Institute of Medicine recommends that CMS secure an agreement with BLS
to use the confidential wage data, the current employee wage index
relies on publicly-available all-industry wage data. We seek comment on
the use of confidential employee wage index data rather than the
publicly available all-industry wage data.
Regardless of whether healthcare-industry or all-industry wage data
is used, the Institute of Medicine recommends following the current
approach adopted by CMS in CY 2012 for calculating the employee wage
index. This approach constructs the employee wage index as a weighted
average of occupation wages for the full-range of occupations employed
in physicians' offices, where the weights are equal to the fixed
national weight based on the hours of each occupation employed in
physicians' offices nationwide. We adopted this approach for
calculating the GPCI employee wage index in the CY 2012 PFS final rule
with comment period (76 FR 73088).
(C) Institute of Medicine recommendation 5-2: Proxies should
continue to be used to measure geographic variation in the physician
work adjustment, but CMS should determine whether the seven proxies
currently in use should be modified (Geographic Adjustment in Medicare
Payment, Phase I: Improving Accuracy, pg 5-36) and; Recommendation 5-3:
CMS should consider an alternative method for setting the percentage of
the work adjustment based on a systematic empirical process.
(Geographic Adjustment in Medicare Payment, Phase I: Improving
Accuracy, pages 5-36 thru 5-37.)
The Institute of Medicine recommends replacing the current work
GPCI methodology with a regression-based approach. We currently use
three steps to calculate the work GPCI. These steps include:
(1) Selecting the proxy occupations and calculating an occupation-
specific index for each proxy;
(2) Assigning weights to each proxy-occupation index based on the
each occupation's share of total national wages to create an aggregate
proxy-occupation index; and
(3) Adjusting the aggregate proxy-occupation index by a physician
inclusion factor to calculate the final work GPCI.
By using this approach, the current methodology reduces the
circularity problem that occurs when work GPCI values are based on
direct measurements of physician earnings. Because physician earnings
are made up of both wages and a return on investment from ownership of
the physician practice, calculating the work GPCI using physician
earnings information would assign areas where physician practices are
more profitable higher work GPCI values. Although the Institute of
Medicine recommends that we continue to use proxy occupations in the
work GPCI methodology, its regression-based approach alters each of the
three steps described above.
To modify the first step, the Institute of Medicine recommends that
we empirically evaluate the validity of seven proxy occupations we
currently use. The current proxy occupations in the work GPCI are
intended to represent highly educated, professional employee
categories. Although the Institute of Medicine recommends re-evaluating
the proxy occupations used in the work GPCI, it does not define
specific criteria to use for this purpose.
To modify the second step, the Institute of Medicine recommends
using a regression-based approach to weight the selected proxy
occupation indices based on their correlation with physician earnings.
This Institute of Medicine proposal would replace the current approach
where occupations are weighted by the size of their share of total
national wages. Such an approach presumes that wages for proxy
occupations are not related to physician profits.
Finally, the Institute of Medicine proposes an empirically-based
approach to determine the inclusion factor for work. The inclusion
factor for work refers to section 1848(e)(1)(A)(iii) of the Act
requiring that the work GPCI reflect only 25 percent of the difference
between the relative value of physicians' work effort in each locality
and the national average of such work effort. Therefore, under current
law, only one quarter of the measured

[[Page 44759]]

regional variation in physician wages is incorporated into the work
GPCI. The Institute of Medicine recommends calculating an inclusion
factor based on the predicted values of the regression described above.
Under the Institute of Medicine's approach, the inclusion factor is
larger when the proxy occupations have a higher correlation with
physicians' earnings and smaller when the proxy occupations have a
lower correlation with physicians' earnings. We note that using such an
empirical approach to weight the proxy occupation indices and to
estimate the inclusion factor requires the identification of a viable
source of physician wage information in addition to the wage
information of proxy occupations to accurately measure regional
variation in physician wages.
We seek comment on the Institute of Medicine recommendations to
revise the work GPCI methodology. In addition, we look forward to the
MedPAC study on this issue required under section 3004 of the MCTRJCA.
This study will assess whether any geographic adjustment to physician
work is appropriate and, if so, what the level should be and where it
should be applied.
(D) Institute of Medicine Recommendation 5-6: A new source of
information should be developed to determine the variation in the price
of commercial office rent per square foot. (Geographic Adjustment in
Medicare Payment, Phase I: Improving Accuracy, pages 5-38 thru 5-39.)
The Institute of Medicine recommends the development of a new
source of data to determine the variation in the price of commercial
office rent per square foot. However, the Institute of Medicine does
not explicitly recommend where the data should come from or how it
should be collected. Before coming to this recommendation, the
Institute of Medicine identified and evaluated several public and
commercially available sources of data to determine whether an accurate
alternative is available to replace the residential rent data currently
used as a proxy to measure regional variation in physicians' cost to
rent office space in the PE GPCI; these sources include rental data
from the U.S. Department of Housing and Urban Development, American
Housing Survey, General Services Administration, Basic Allowance for
Housing (U.S. Department of Defense), U.S. Postal Service, Medical
Group Management Association (MGMA), and REIS, Inc. The Institute of
Medicine concluded that these sources had substantial limitations,
including lack of representativeness of the market in which physicians
rent space, small sample size, low response rates, and sample biases.
Although we agree that a suitable source for commercial office rent
data would be preferable to the use of residential rent data in our PE
office rent methodology, we have still been unable to identify an
adequate commercial rent source that sufficiently covers rural and
urban areas. We will continue to evaluate possible commercial rent data
sources for potential use in the office rent calculation. We also
encourage public commenters to notify us of any publicly available
commercial rent data sources, with adequate data representation of
urban and rural areas that could potentially be used in the calculation
of the office rent component of PE.

E. Medicare Telehealth Services for the Physician Fee Schedule

1. Billing and Payment for Telehealth Services
a. History
Prior to January 1, 1999, Medicare coverage for services delivered
via a telecommunications system was limited to services that did not
require a face-to-face encounter under the traditional model of medical
care. Examples of these services included interpretation of an x-ray,
or electrocardiogram, or electroencephalogram tracing, and cardiac
pacemaker analysis.
Section 4206 of the BBA provided for coverage of, and payment for,
consultation services delivered via a telecommunications system to
Medicare beneficiaries residing in rural health professional shortage
areas (HPSAs) as defined by the Public Health Service Act.
Additionally, the BBA required that a Medicare practitioner
(telepresenter) be with the patient at the time of a teleconsultation.
Further, the BBA specified that payment for a teleconsultation had to
be shared between the consulting practitioner and the referring
practitioner and could not exceed the fee schedule payment which would
have been made to the consultant for the service furnished. The BBA
prohibited payment for any telephone line charges or facility fees
associated with the teleconsultation. We implemented this provision in
the CY 1999 PFS final rule with comment period (63 FR 58814).
Effective October 1, 2001, section 223 of the Medicare, Medicaid
and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)
(BIPA) added a new section, 1834(m), to the Act which significantly
expanded Medicare telehealth services. Section 1834(m)(4)(F)(i) of the
Act defines Medicare telehealth services to include consultations,
office visits, office psychiatry services, and any additional service
specified by the Secretary, when delivered via a telecommunications
system. We first implemented this provision in the CY 2002 PFS final
rule with comment period (66 FR 55246). Section 1834(m)(4)(F)(ii) of
the Act required the Secretary to establish a process that provides for
annual updates to the list of Medicare telehealth services. We
established this process in the CY 2003 PFS final rule with comment
period (67 FR 79988).
As specified in regulations at Sec. 410.78(b), we generally
require that a telehealth service be furnished via an interactive
telecommunications system. Under Sec. 410.78(a)(3), an interactive
telecommunications system is defined as multimedia communications
equipment that includes, at a minimum, audio and video equipment
permitting two-way, real time interactive communication between the
patient and the practitioner at the distant site. Telephones, facsimile
machines, and electronic mail systems do not meet the definition of an
interactive telecommunications system. An interactive
telecommunications system is generally required as a condition of
payment; however, section 1834(m)(1) of the Act does allow the use of
asynchronous ``store-and-forward'' technology in delivering these
services when the originating site is a Federal telemedicine
demonstration program in Alaska or Hawaii. As specified in regulations
at Sec. 410.78(a)(1), store and forward means the asynchronous
transmission of medical information from an originating site to be
reviewed at a later time by the practitioner at the distant site.
Medicare telehealth services may be furnished to an eligible
telehealth individual notwithstanding the fact that the individual
practitioner furnishing the telehealth service is not at the same
location as the beneficiary. An eligible telehealth individual means an
individual enrolled under Part B who receives a telehealth service
furnished at an originating site. Under the BIPA, originating sites
were limited under section 1834(m)(3)(C) of the Act to specified
medical facilities located in specific geographic areas. The initial
list of telehealth originating sites included the office of a
practitioner, a critical access hospital (CAH), a rural health clinic
(RHC), a Federally qualified health center (FQHC) and a hospital (as
defined in Section 1861(e) of the Act). More recently, section 149 of
the Medicare Improvements for Patients and

[[Page 44760]]

Providers Act of 2008 (Pub. L. 110-275) (MIPPA) expanded the list of
telehealth originating sites to include hospital-based renal dialysis
centers, skilled nursing facilities (SNFs), and community mental health
centers (CMHCs). In order to serve as a telehealth originating site,
these sites must be located in an area designated as a rural health
professional shortage area (HPSA), in a county that is not in a
metropolitan statistical area (MSA), or must be an entity that
participates in a Federal telemedicine demonstration project that has
been approved by (or receives funding from) the Secretary of Health and
Human Services as of December 31, 2000. Finally, section 1834(m) of the
Act does not require the eligible telehealth individual to be presented
by a practitioner at the originating site.
b. Current Telehealth Billing and Payment Policies
As noted previously, Medicare telehealth services can only be
furnished to an eligible telehealth beneficiary in an originating site.
An originating site is defined as one of the specified sites where an
eligible telehealth individual is located at the time the service is
being furnished via a telecommunications system. In general,
originating sites must be located in a rural HPSA or in a county
outside of an MSA. The originating sites authorized by the statute are
as follows:
Offices of a physician or practitioner;
Hospitals;
CAHs;
RHCs;
FQHCs;
Hospital-Based or Critical Access Hospital-Based Renal
Dialysis Centers (including Satellites);
SNFs;
CMHCs.
Currently approved Medicare telehealth services include the following:
Initial inpatient consultations;
Follow-up inpatient consultations;
Office or other outpatient visits;
Individual psychotherapy;
Pharmacologic management;
Psychiatric diagnostic interview examination;
End-stage renal disease (ESRD) related services;
Individual and group medical nutrition therapy (MNT);
Neurobehavioral status exam;
Individual and group health and behavior assessment and
intervention (HBAI);
Subsequent hospital care;
Subsequent nursing facility care;
Individual and group kidney disease education (KDE);
Individual and group diabetes self-management training
(DSMT); and
Smoking cessation services.
In general, the practitioner at the distant site may be any of the
following, provided that the practitioner is licensed under State law
to furnish the service via a telecommunications system:
Physician;
Physician assistant (PA);
Nurse practitioner (NP);
Clinical nurse specialist (CNS);
Nurse-midwife;
Clinical psychologist;
Clinical social worker;
Registered dietitian or nutrition professional.
Practitioners furnishing Medicare telehealth services submit claims
for telehealth services to the Medicare contractors that process claims
for the service area where their distant site is located. Section
1834(m)(2)(A) of the Act requires that a practitioner who furnishes a
telehealth service to an eligible telehealth individual be paid an
amount equal to the amount that the practitioner would have been paid
if the service had been furnished without the use of a
telecommunications system. Distant site practitioners must submit the
appropriate HCPCS procedure code for a covered professional telehealth
service, appended with the -GT (Via interactive audio and video
telecommunications system) or -GQ (Via asynchronous telecommunications
system) modifier. By reporting the -GT or -GQ modifier with a covered
telehealth procedure code, the distant site practitioner certifies that
the beneficiary was present at a telehealth originating site when the
telehealth service was furnished. The usual Medicare deductible and
coinsurance policies apply to the telehealth services reported by
distant site practitioners.
Section 1834(m)(2)(B) of the Act provides for payment of a facility
fee to the originating site. To be paid the originating site facility
fee, the provider or supplier where the eligible telehealth individual
is located must submit a claim with HCPCS code Q3014 (Telehealth
originating site facility fee), and the provider or supplier is paid
according to the applicable payment methodology for that facility or
location. The usual Medicare deductible and coinsurance policies apply
to HCPCS code Q3014. By submitting HCPCS code Q3014, the originating
site certifies that it is located in either a rural HPSA or non-MSA
county or is an entity that participates in a Federal telemedicine
demonstration project that has been approved by (or receives funding
from) the Secretary of Health and Human Services as of December 31,
2000 as specified in section 1834(m)(4)(C)(i)(III) of the Act.
As previously described, certain professional services that are
commonly furnished remotely using telecommunications technology, but
that do not require the patient to be present in-person with the
practitioner when they are furnished, are covered and paid in the same
way as services delivered without the use of telecommunications
technology when the practitioner is in-person at the medical facility
furnishing care to the patient. Such services typically involve
circumstances where a practitioner is able to visualize some aspect of
the patient's condition without the patient being present and without
the interposition of a third person's judgment. Visualization by the
practitioner can be possible by means of x-rays, electrocardiogram or
electroencephalogram tracings, tissue samples, etc. For example, the
interpretation by a physician of an actual electrocardiogram or
electroencephalogram tracing that has been transmitted via telephone
(that is, electronically, rather than by means of a verbal description)
is a covered physician's service. These remote services are not
Medicare telehealth services as defined under section 1834(m) of the
Act. Rather, these remote services that utilize telecommunications
technology are considered physicians' services in the same way as
services that are furnished in-person without the use of
telecommunications technology; they are paid under the same conditions
as in-person physicians' services (with no requirements regarding
permissible originating sites), and should be reported in the same way
(that is, without the -GT or -GQ modifier appended).
2. Requests for Adding Services to the List of Medicare Telehealth
Services
As noted previously, in the December 31, 2002 Federal Register (67
FR 79988), we established a process for adding services to or deleting
services from the list of Medicare telehealth services. This process
provides the public with an ongoing opportunity to submit requests for
adding services. We assign any request to make additions to the list of
telehealth services to one of two categories. In the November 28, 2011
Federal Register (76 FR 73102), we finalized revisions to criteria that
we use to review requests in the second category. The two categories
are:
Category 1: Services that are similar to professional
consultations, office visits, and office psychiatry services that

[[Page 44761]]

are currently on the list of telehealth services. In reviewing these
requests, we look for similarities between the requested and existing
telehealth services for the roles of, and interactions among, the
beneficiary, the physician (or other practitioner) at the distant site
and, if necessary, the telepresenter. We also look for similarities in
the telecommunications system used to deliver the proposed service, for
example, the use of interactive audio and video equipment.
Category 2: Services that are not similar to the current
list of telehealth services. Our review of these requests includes an
assessment of whether the service is accurately described by the
corresponding code when delivered via telehealth and whether the use of
a telecommunications system to deliver the service produces
demonstrated clinical benefit to the patient. In reviewing these
requests, we look for evidence indicating that the use of a
telecommunications system in delivering the candidate telehealth
service produces clinical benefit to the patient. Submitted evidence
should include both a description of relevant clinical studies that
demonstrate the service furnished by telehealth to a Medicare
beneficiary improves the diagnosis or treatment of an illness or injury
or improves the functioning of a malformed body part, including dates
and findings, and a list and copies of published peer reviewed articles
relevant to the service when furnished via telehealth. Our evidentiary
standard of clinical benefit does not include minor or incidental
benefits.
Some examples of clinical benefit include the following:
Ability to diagnose a medical condition in a patient
population without access to clinically appropriate in person
diagnostic services.
Treatment option for a patient population without access
to clinically appropriate in-person treatment options.
Reduced rate of complications.
Decreased rate of subsequent diagnostic or therapeutic
interventions (for example, due to reduced rate of recurrence of the
disease process).
Decreased number of future hospitalizations or physician
visits.
More rapid beneficial resolution of the disease process
treatment.
Decreased pain, bleeding, or other quantifiable symptom.
Reduced recovery time.
Since establishing the process to add or remove services from the
list of approved telehealth services, we have added the following to
the list of Medicare telehealth services: Individual and group HBAI
services; psychiatric diagnostic interview examination; ESRD services
with 2 to 3 visits per month and 4 or more visits per month (although
we require at least 1 visit a month to be furnished in-person by a
physician, CNS, NP, or PA in order to examine the vascular access
site); individual and group MNT; neurobehavioral status exam; initial
and follow-up inpatient telehealth consultations for beneficiaries in
hospitals and skilled nursing facilities (SNFs); subsequent hospital
care (with the limitation of one telehealth visit every 3 days);
subsequent nursing facility care (with the limitation of one telehealth
visit every 30 days); individual and group KDE; and individual and
group DSMT (with a minimum of 1 hour of in-person instruction to ensure
effective injection training), and smoking cessation services.
Requests to add services to the list of Medicare telehealth
services must be submitted and received no later than December 31 of
each calendar year to be considered for the next rulemaking cycle. For
example, requests submitted before the end of CY 2012 will be
considered for the CY 2014 proposed rule. Each request for adding a
service to the list of Medicare telehealth services must include any
supporting documentation the requester wishes us to consider as we
review the request. Because we use the annual PFS rulemaking process as
a vehicle for making changes to the list of Medicare telehealth
services, requestors should be advised that any information submitted
is subject to public disclosure for this purpose. For more information
on submitting a request for an addition to the list of Medicare
telehealth services, including where to mail these requests, we refer
readers to the CMS Web site at www.cms.gov/telehealth/.
3. Submitted Request and Other Additions to the List of Telehealth
Services for CY 2013
We received a request in CY 2011 to add alcohol and/or substance
abuse and brief intervention services as Medicare telehealth services
effective for CY 2013. The following presents a discussion of this
request, and our proposals for additions to the CY 2013 telehealth
list.
a. Alcohol and/or Substance Abuse and Brief Intervention Services
The American Telemedicine Association submitted a request to add
alcohol and/or substance abuse and brief intervention services,
reported by CPT codes 99408 (Alcohol and/or substance (other than
tobacco) abuse structured screening (for example, AUDIT, DAST), and
brief intervention (SBI) services; 15 to 30 minutes) and 99409 (Alcohol
and/or substance (other than tobacco) abuse structured screening (for
example, AUDIT, DAST), and brief intervention (SBI) services; greater
than 30 minutes) to the list of approved telehealth services for CY
2013 on a category 1 basis.
We note that we assigned a status indicator of ``N'' (Noncovered)
to CPT codes 99408 and 99409 as explained in the CY 2008 PFS final rule
with comment period (72 FR 66371). At the time, we stated that because
Medicare only provides payment for certain screening services with an
explicit benefit category, and these CPT codes incorporate screening
services along with intervention services, we believed that these codes
were ineligible for payment under the PFS. We continue to believe that
these codes are ineligible for payment under PFS and, additionally,
under the telehealth benefit. We do not believe it would be appropriate
to make payment for claims using these CPT codes for the services
furnished via telehealth, but not when furnished in person. Because CPT
codes 99408 and 99409 are currently assigned a noncovered status
indicator, and because we continue to believe this assignment is
appropriate, we are not proposing to add these CPT codes to the list of
Medicare Telehealth Services for CY 2013.
However, we created two parallel G-codes for 2008 that allow for
appropriate Medicare reporting and payment for alcohol and substance
abuse assessment and intervention services that are not furnished as
screening services, but that are furnished in the context of the
diagnosis or treatment of illness or injury. The codes are HCPCS code
G0396 (Alcohol and/or substance (other than tobacco) abuse structured
assessment (for example, AUDIT, DAST) and brief intervention, 15 to 30
minutes) and HCPCS code G0397 (Alcohol and/or substance (other than
tobacco) abuse structured assessment (for example, AUDIT, DAST) and
intervention greater than 30 minutes). Since these codes are used to
report comparable alcohol and substance abuse services under certain
conditions, we believe that it would be appropriate to consider the
ATA's request as it applies to these services when appropriately
reported by the G-codes. The ATA asked that CMS consider this request
as a category 1 addition based on the similarities between these
services and CPT codes 99406 (Smoking and tobacco use cessation
counseling visit; intermediate, greater than 3 minutes up to 10
minutes) and 99407 (Smoking and tobacco use

[[Page 44762]]

cessation counseling visit; intensive, greater than 10 minutes). We
agree that the interaction between a practitioner and a beneficiary
receiving alcohol and substance abuse assessment and intervention
services is similar to their interaction in smoking cessation services.
We also believe that the interaction between a practitioner and a
beneficiary receiving alcohol and substance abuse assessment and
intervention services is similar to the assessment and intervention
elements of CPT code 96152 (health and behavior intervention, each 15
minutes, face-to-face; individual), which also is currently on the
telehealth list.
Therefore, we are proposing to add HCPCS codes G0396 and G0397 to
the list of telehealth services for CY 2013 on a category 1 basis.
Consistent with this proposal, we are also proposing to revise our
regulations at Sec. 410.78(b) and Sec. 414.65(a)(1) to include
alcohol and substance abuse assessment and intervention services as
Medicare telehealth services.
b. Preventive Services
Under our existing policy, we add services to the telehealth list
on a category 1 basis when we determine that they are similar to
services on the existing telehealth list with respect to the roles of,
and interactions among, the beneficiary, physician (or other
practitioner) at the distant site and, if necessary, the telepresenter.
As we stated in the CY 2012 proposed rule (76 FR 42826), we believe
that the category 1 criteria not only streamline our review process for
publically requested services that fall into this category, the
criteria also expedite our ability to identify codes for the telehealth
list that resemble those services already on this list.
During CY 2012, CMS added coverage for several preventive services
through the national coverage determination (NCD) process as authorized
by section 1861(ddd) of the Act. These services add to Medicare's
existing portfolio of preventive services that are now available
without cost sharing under the Affordable Care Act. We believe that for
several of these services, the interactions between the furnishing
practitioner and the beneficiary are similar to services currently on
the list of Medicare telehealth services. Specifically, we believe that
the assessment, education, and counseling elements of the following
services are similar to existing telehealth services:
Screening and behavioral counseling interventions in
primary care to reduce alcohol misuse, reported by HCPCS codes G0442
(Annual alcohol misuse screening, 15 minutes) and G0443 (Brief face-to-
face behavioral counseling for alcohol misuse, 15 minutes).
Screening for depression in adults, reported by HCPCS code
G0444 (Annual Depression Screening, 15 minutes).
Screening for sexually transmitted infections (STIs) and
high-intensity behavioral counseling (HIBC) to prevent STIs, reported
by HCPCS code G0445 (High-intensity behavioral counseling to prevent
sexually transmitted infections, face-to-face, individual, includes:
Education, skills training, and guidance on how to change sexual
behavior, performed semi-annually, 30 minutes).
Intensive behavioral therapy for cardiovascular disease,
reported by HCPCS code G0446 (Annual, face-to-face intensive behavioral
therapy for cardiovascular disease, individual, 15 minutes).
Intensive behavioral therapy for obesity, reported by
HCPCS code G0447 (Face-to-face behavioral counseling for obesity, 15
minutes). We believe that the interactions between practitioners and
beneficiaries receiving these services are similar to individual KDE
services reported by HCPCS code G0420 (Face-to-face educational
services related to the care of chronic kidney disease; individual, per
session, per one hour), individual MNT reported by HCPCS code G0270
(Medical nutrition therapy; reassessment and subsequent intervention(s)
following second referral in the same year for change in diagnosis,
medical condition or treatment regimen (including additional hours
needed for renal disease), individual, face-to-face with the patient,
each 15 minutes); CPT code 97802 (Medical nutrition therapy; initial
assessment and intervention, individual, face-to-face with the patient,
each 15 minutes); and CPT code 97803 (Medical nutrition therapy; re-
assessment and intervention, individual, face-to-face with the patient,
each 15 minutes), and HBAI reported by CPT code 96150 (Health and
behavior assessment (for example, health-focused clinical interview,
behavioral observations, psychophysiological monitoring, health-
oriented questionnaires), each 15 minutes face-to-face with the
patient; initial assessment); CPT code 96151 (Health and behavior
assessment (for example, health-focused clinical interview, behavioral
observations, psychophysiological monitoring, health-oriented
questionnaires), each 15 minutes face-to-face with the patient re-
assessment); CPT code 96152 (Health and behavior intervention, each 15
minutes, face-to-face; Individual); CPT code 96153 (Health and behavior
intervention, each 15 minutes, face-to-face; Group (2 or more
patients)); CPT code 96154 (Health and behavior intervention, each 15
minutes, face-to-face; family (with the patient present)), all services
that are currently on the telehealth list.
Therefore, we are proposing to add HCPCS codes G0442, G0443, G0444,
G0445, G0446, and G0447 to the list of telehealth services for CY 2013
on a category 1 basis. We note that all coverage guidelines specific to
the services would continue to apply when these services are furnished
via telehealth. For example, when the national coverage determination
requires that the service be furnished to beneficiaries in a primary
care setting, the qualifying originating telehealth site must also
qualify as a primary care setting. Similarly, when the national
coverage determination requires that the service be furnished by a
primary care practitioner, the qualifying primary distant site
practitioner must also qualify as primary care practitioner. For more
detailed information on coverage requirements for these services, we
refer readers to the Medicare National Coverage Determinations Manual,
Pub. 100-03, Chapter 1, Section 210, available at http://www.cms.gov/manuals/downloads/ncd103c1_Part4.pdf. Consistent with this proposal,
we are also proposing to revise our regulations at Sec. 410.78(b) and
Sec. 414.65(a)(1) to include these preventive services as Medicare
telehealth services.
4. Technical Correction To Include Emergency Department Telehealth
Consultations in Regulation
In the CY 2012 PFS final rule with comment period (76 FR 73103), we
finalized our proposal to change the code descriptors for initial
inpatient telehealth consultation G-codes to reflect telehealth
consultations furnished to emergency department patients in addition to
inpatient telehealth consultations effective January 1, 2012. However,
we did not amend the description of the services within the regulation
at Sec. 414.65(a)(1)(i). Therefore, we are proposing to make a
technical revision to our regulation at Sec. 414.65(a)(1)(i) to
reflect telehealth consultations furnished to emergency department
patients in addition to hospital and SNF inpatients.

[[Page 44763]]

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

1. Background and Statutory Authority
Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554)
provided payment to independent laboratories furnishing the technical
component (TC) of physician pathology services to fee-for-service
Medicare beneficiaries who are inpatients or outpatients of a covered
hospital for a 2-year period beginning on January 1, 2000. This section
has been amended by section 732 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173),
section 104 of division B of the Tax Relief and Health Care Act of 2006
(MIEA-TRHCA) (Pub. L. 109-432), section 104 of the Medicare, Medicaid,
and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), section 136
of the Medicare Improvements for Patients and Providers Act of 2008
(MIPPA) (Pub. L. 110-275), section 3104 of the Affordable Care Act
(Pub. L. 111-148), section 105 of the Medicare and Medicaid Extenders
Act of 2010 (MMEA) (Pub. L. 111-309), section 305 of the Temporary
Payroll Tax Cut Continuation Act of 2011 (Pub. L. 112-78) and section
3006 of the Middle Class Tax Relief and Job Creation Act of 2012 (Pub.
L. 112-96) to continue payment to independent laboratories furnishing
the technical component (TC) of physician pathology services to fee-
for-service Medicare beneficiaries who are inpatients or outpatients of
a covered hospital for various time periods. As discussed in detail
below, Congress most recently acted to continue this payment through
June 30, 2012. The TC of physician pathology services refers to the
preparation of the slide involving tissue or cells that a pathologist
interprets. The professional component (PC) of physician pathology
services refers to the pathologist's interpretation of the slide.
When the hospital pathologist furnishes the PC service for a
hospital patient, the PC service is separately billable by the
pathologist. When an independent laboratory's pathologist furnishes the
PC service, the PC service is usually billed with the TC service as a
combined or global service.
Historically, any independent laboratory could bill the Medicare
contractor under the PFS for the TC of physician pathology services for
hospital patients even though the payment for the costs of furnishing
the pathology service (but not its interpretation) was already included
in the bundled inpatient stay payment to the hospital. In the CY 2000
PFS final rule with comment period (64 FR 59408 and 59409), we stated
that this policy has contributed to the Medicare program paying twice
for the TC service: (1) To the hospital, through the inpatient
prospective payment rate, when the patient is an inpatient; and (2) To
the independent laboratory that bills the Medicare contractor, instead
of the hospital, for the TC service. While the policy also permits the
independent laboratory to bill for the TC of physician pathology
services for hospital outpatients, in this case, there generally would
not be duplicate payment because we would expect the hospital to not
also bill for the pathology service, which would be paid separately to
the hospital only if the hospital were to specifically bill for it. We
further indicated that we would implement a policy to pay only the
hospital for the TC of physician pathology services furnished to its
inpatients.
Therefore, in the CY 2000 PFS final rule with comment period, we
revised Sec. 415.130(c) to state that for physician pathology services
furnished on or after January 1, 2001 by an independent laboratory,
payment is made only to the hospital for the TC of physician pathology
services furnished to a hospital inpatient. Ordinarily, the provisions
in the PFS final rule with comment period are implemented in the
following year. However, the change to Sec. 415.130 was delayed 1-year
(until January 1, 2001), at the request of the industry, to allow
independent laboratories and hospitals sufficient time to negotiate
arrangements.
Full implementation of Sec. 415.130 was further delayed by section
542 of the BIPA and section 732 of the MMA, which directed us to
continue payment to independent laboratories for the TC of physician
pathology services for hospital patients for a 2-year period beginning
on January 1, 2001 and for CYs 2005 and 2006, respectively. In the CY
2007 PFS final rule with comment period (71 FR 69788), we amended Sec.
415.130 to provide that, for services furnished after December 31,
2006, an independent laboratory may not bill the carrier for the TC of
physician pathology services furnished to a hospital inpatient or
outpatient. However, section 104 of the MIEA-TRHCA continued payment to
independent laboratories for the TC of physician pathology services for
hospital patients through CY 2007, and section 104 of the MMSEA further
extended such payment through the first 6 months of CY 2008.
Section 136 of the MIPPA extended the payment through CY 2009.
Section 3104 of the Affordable Care Act amended the prior legislation
to extend the payment through CY 2010. Section 105 of the MMEA extended
the payment through CY 2011. Subsequent to publication of the CY 2012
PFS final rule with comment period, section 305 of the Temporary
Payroll Tax Cut Continuation Act of 2011 extended the payment through
February 29, 2012 and section 3006 of the Middle Class Tax Relief and
Job Creation Act of 2012 extended the payment through June 30, 2012.
2. Revisions to Payment for TC of Certain Physician Pathology Services
In the CY 2012 PFS final rule with comment period, we finalized our
policy that an independent laboratory may not bill the Medicare
contractor for the TC of physician pathology services furnished after
December 31, 2011, to a hospital inpatient or outpatient (76 FR 73278
through 73279, 73473). As discussed above, subsequent to publication of
this final rule with comment period, Congress acted to continue payment
to independent laboratories through June 30, 2012. Therefore, the
policy that we finalized in the CY 2012 PFS final rule with comment
period is superseded by statute for six months. To be consistent with
the statutory changes and our current policy, we are proposing
conforming changes to Sec. 415.130(d) such that we will continue
payment under the PFS to independent laboratories furnishing the TC of
physician pathology services to fee-for-service Medicare beneficiaries
who are inpatients or outpatients of a covered hospital on or before
June 30, 2012. Independent laboratories may not bill the Medicare
contractor for the TC of physician pathology services furnished after
June 30, 2012, to a hospital inpatient or outpatient.

G. Therapy Services

1. Outpatient Therapy Caps for CY 2013
Section 1833(g) of the Act applies annual, per beneficiary,
limitations (therapy caps) on expenses incurred for outpatient therapy
services under Medicare Part B. There is one therapy cap for physical
therapy (PT) and speech-language pathology (SLP) services combined and
a second separate therapy cap for outpatient occupational therapy (OT)
services. Although therapy services furnished in an outpatient hospital
setting have been exempt from the application of the therapy caps,
section 3005(b) of the

[[Page 44764]]

MCTRJCA amended section 1833(g) of the Act to require therapy services
furnished in an outpatient hospital setting during 2012 be subject to
the therapy caps beginning not later than October 1, 2012.
The therapy caps amount for CY 2013 will be announced in the CY
2013 PFS final rule with comment period. The annual change in each
therapy cap is computed by multiplying the cap amount for CY 2012,
which is $1,880, by the MEI for CY 2013, then rounding to the nearest
$10. This amount is added to the CY 2012 therapy cap amount to obtain
the CY 2013 therapy cap amount.
An exceptions process to the therapy caps has been in effect since
January 1, 2006--originally authorized by section 5107 of the DRA,
which amended section 1833(g)(5) of the Act. Since that time, the
exceptions process for the therapy caps has been extended through
subsequent legislation (MIEA-TRHCA, MMSEA, MIPPA, the Affordable Care
Act, MMEA, and TPTCCA). Last amended by section 3005 of the MCTRJCA,
the Agency's authority to provide for an exception process to therapy
caps expires on December 31, 2012. To request an exception to the
therapy caps, therapy suppliers and providers use the KX modifier on
claims for services that are over the cap amount. Use of the KX
modifier indicates that the services are reasonable and necessary and
that there is documentation of medical necessity in the beneficiary's
medical record.
Section 3005 of the MCTRJCA also requires two additional changes to
Medicare policies for outpatient therapy services. Section 3005(a)(5)
adds a new subparagraph (C) to section 1833(g)(5) of the Act, effective
October 1 through December 31, 2012, that requires application of a
manual medical review process (similar to the process used in 2006 for
certain therapy cap exceptions) for exceptions to the therapy caps
after expenses incurred for the beneficiary's therapy services
(including services furnished in a hospital outpatient department)
exceed the threshold of $3,700 for the year. As with the therapy caps,
there are two separate thresholds for the manual medical review
process--one threshold of $3,700 for PT and SLP services combined and
one threshold of $3,700 for OT services. Requests for exceptions to the
therapy caps for services above the thresholds are subject to a manual
medical review process. The applicable amount of expenses incurred for
therapy services counted towards these thresholds for the year begins
on January 1, 2012. Since the exceptions process is set to expire on
December 31, 2012, the requirement for a manual medical review process
will also expire then.
Section 3005(c) adds a new section 1842(t)(2) to the Act, effective
beginning on October 1, 2012, that requires the National Provider
Identifier (NPI) of the physician (or NPP, where applicable), who
periodically reviews the therapy plan of care, to be reported on the
claim for therapy services. This reporting requirement applies to all
claims for outpatient therapy services.
2. Claims-Based Data Collection Strategy for Therapy Services
a. Introduction
Section 3005(g) of the MCTRJCA requires CMS to implement, beginning
on January 1, 2013, ``* * * a claims-based data collection strategy
that is designed to assist in reforming the Medicare payment system for
outpatient therapy services subject to the limitations of section
1833(g) of the Act. Such strategy shall be designed to provide for the
collection of data on patient function during the course of therapy
services in order to better understand patient condition and
outcomes.''
b. History/Background
In 2010, more than 7.6 million Medicare beneficiaries received
outpatient therapy services, including physical therapy (PT),
occupational therapy (OT), and speech-language-pathology (SLP).
Medicare payments for these services exceeded $5.6 billion. Between
1998-2008, Medicare expenditures for outpatient therapy services
increased at a rate of 10.1 percent per year while the number of
Medicare beneficiaries receiving therapy services only increased by 2.9
percent per year. Although a significant number of Medicare
beneficiaries benefit from therapy services, the rapid growth in
Medicare expenditures for these services has long been of concern to
the Congress and the Agency. To address this concern, efforts have been
focused on developing Medicare payment incentives that encourage
delivery of reasonable and necessary care while discouraging
overutilization of therapy services and the provision of medically
unnecessary care. A brief review of these efforts is useful in
understanding our proposal for CY 2013.
(1) Therapy Caps
Section 4541 of the Balanced Budget Act of 1997 (Pub. L. 105-33)
(BBA) amended section 1833(g) of the Act to impose financial
limitations on outpatient therapy services (the ``therapy caps''
discussed above) in an attempt to limit Medicare expenditures for
therapy services. Prior to the BBA amendment, these caps had applied to
services furnished by therapists in private practice, but the BBA
expanded the caps effective January 1, 1999, to include all outpatient
therapy services except those furnished in outpatient hospitals. Since
that time, the Congress has amended the statute several times to impose
a moratorium on the application of the caps or has required us to
implement an exceptions process for the caps. The therapy caps have
only been in effect without an exceptions process for less than two
years. (See the discussion about the therapy cap exceptions process
above.) Almost from the inception of the therapy caps, the Congress and
the Agency have been exploring potential alternatives to the therapy
caps.
(2) Multiple Procedure Payment Reduction (MPPR)
In the CY 2011 PFS final rule with comment period (75 FR 73232-
73242), we adopted a MPPR of 25 percent applicable to the practice
expense (PE) component of the second and subsequent therapy services
when more than one of these services is furnished in a single session.
This reduction applies to nearly 40 therapy services. (For a list of
therapy services to which this policy applies, see Addenda H.) The
Physician Payment and Therapy Relief Act of 2010 (PPTRA) subsequently
revised the reduction to 20 percent for services furnished in an office
setting, leaving the 25 percent reduction in place for services
furnished in institutional settings. We adopted this MPPR as part of
our directive under section 1848(c)(2)(k) of the statute (as added by
section 3134(a) of the Affordable Care Act) to identify and evaluate
potentially misvalued codes. By taking into consideration the expected
efficiencies in direct PE resources that occur when services are
furnished together, this policy results in more appropriate payment for
therapy services. Although we did not adopt this MPPR policy
specifically as an alternative to the therapy caps, paying more
appropriately for combinations of therapy services that are commonly
furnished in a single session reduces the number of beneficiaries
impacted by the therapy caps in a given year. For more details on the
MPPR policy, see section II.C.4. of this proposed rule.
(3) Studies Performed
A uniform dollar value therapy cap sets a limit on the volume of
services furnished unrelated to the specific services furnished or the
beneficiary's condition or needs. One uniform cap

[[Page 44765]]

does not deter unnecessary care or encourage efficient practice for low
complexity beneficiaries. In fact, it may even encourage the provision
of services up to the level of the cap. Conversely, a uniform cap
without an exceptions process restricts necessary and appropriate care
for certain high complexity beneficiaries. Recognizing these
limitations in a uniform dollar value cap, we have been studying
therapy practice patterns and exploring ways to refine payment for
these services as an alternative to therapy caps.
On November 9, 2004, the Secretary delivered the Report to
Congress, as required by the BBA as amended by the BBRA, ``Medicare
Financial Limitations on Outpatient Therapy Services.'' That report
included two utilization analyses. Although these analyses provided
details on utilization, neither specifically identified ways to improve
therapy payment. In the report, we indicated that further study was
underway to assess alternatives to the therapy caps. The report and the
analyses are available on the CMS Web site at http://www.cms.gov/TherapyServices/.
Since 2004, we have periodically updated the utilization analyses
and posted other reports on the CMS Web site to respond to the
additional BBRA requirements. Subsequent reports highlighted the
expected effects of limiting services in various ways and presented
plans to collect data about beneficiary condition, including functional
limitations, using available tools. Through these efforts, we have made
progress in identifying the outpatient therapy services that are billed
to Medicare, the demographics of the beneficiaries who utilize these
services, the types of therapy services furnished, the HCPCS codes used
to bill the services, the allowed and paid amounts of the services, the
providers of these services, the states in which the services are
furnished and the type of practitioner furnishing services.
From these and other analyses in our ongoing research effort, we
have concluded that without the ability to define the services that are
typically needed to address specific clinical cohorts of beneficiaries
(those with similar risk-adjusted conditions), it is not possible to
develop payment policies that encourage the delivery of reasonable and
necessary services while discouraging the provision of services that do
not produce a clinical benefit. Although there is widespread agreement
that beneficiary condition and functional limitations are critical to
developing and evaluating an alternative payment system for therapy
services, a system for collecting such data does not exist. Diagnosis
information is available from Medicare claims. However, we believe that
the primary diagnosis on the claim is a poor predictor for the type and
duration of therapy services required. Much additional work is needed
to develop an appropriate system for classifying clinical cohorts.
A 5-year CMS project titled ``Development of Outpatient Therapy
Payment Alternatives'' (DOTPA) is expected to provide some of this
information. The project is now in its final stages of data collection.
The purpose of the DOTPA project is to identify a set of measures that
we could routinely and reliably collect in support of payment
alternatives to the therapy caps. Specifically, the measures being
collected are to be assessed in terms of their administrative
feasibility and their usefulness in identifying beneficiary need for
outpatient therapy services and the outcomes of those services. A final
report is expected during the second half of CY 2013. In addition to
developing alternatives to the therapy caps, the DOTPA project reflects
our interest in value-based purchasing by identifying components of
value, namely, beneficiary need and the effectiveness of therapy
services. Although we expect DOTPA to provide meaningful data and
practical information to assist in developing improved methods of
paying for appropriate therapy services, DOTPA will not deliver a
standardized measurement instrument for use in outpatient therapy
services. Further, it is unlikely that this one project alone will
provide adequate information to implement a new payment system for
therapy. This study combined with data from a wider group of Medicare
beneficiaries would enhance our ability to develop alternative payment
policy for outpatient therapy services.
c. Proposal
(1) Overview
As required by section 3005(g) of MCTRJCA, we are proposing to
implement a claims-based data collection strategy on January 1, 2013.
This claims-based data collection system is designed to gather
information on beneficiary function and condition, therapy services
furnished, and outcomes achieved. This information will assist in
reforming the Medicare payment system for outpatient therapy services.
By collecting data on beneficiary function over an episode of therapy
services, we hope to better understand the Medicare beneficiary
population that uses therapy services, how their functional limitations
change as a result of therapy services, and the relationship between
beneficiary functional limitations and furnished therapy services over
an episode of care. The term ``functional limitation'' generally
encompasses both the terms ``activity limitations'' and ``participation
restrictions'' as described by the International Classification of
Functioning, Disability and Health (ICF). (For information on ICF, see
http://www.who.int/classifications/icf/en/ and for specific ICF
nomenclature (including activity limitations and participation
restrictions), see http://apps.who.int/classifications/icfbrowser/.)
We are proposing to encompass, under this proposal, the Medicare
Part B outpatient therapy benefit and PT, OT, and SLP under the
Comprehensive Outpatient Rehabilitation Facilities (CORF) benefit.
``Incident to'' therapy services furnished by physicians or
nonphysician practitioners (NPPs) would also be included. This broad
applicability would include services furnished in hospitals, critical
access hospitals (CAHs), skilled nursing facilities (SNFs), CORFs,
rehabilitation agencies, and home health agencies (when the beneficiary
is not under a home health plan of care) and private offices.
When used in this section ``therapists'' means all practitioners
who furnish outpatient therapy services, including physical therapists,
occupational therapists, and speech-language pathologists in private
practice and those therapists who furnish services in the institutional
settings, physicians and NPPs (including, physician assistants (PAs),
nurse practitioners (NPs), clinical nurse specialists (CNSs), as
applicable.)
This proposal is based upon an option for claims-based data
collection that was discussed during the CY 2011 rulemaking (75 FR
40096 through 40100 and 73284 through 73293). This option was developed
under a contract with CMS as part of the Short Term Alternatives for
Therapy Services (STATS) project. The STATS project provided three
options for alternative payment to the therapy caps that could be
considered in the short-term before completion of the DOTPA project. In
developing options, the STATS project drew upon the analytical
expertise of CMS contractors and the clinical expertise of various
outpatient therapy stakeholders to consider policies and available
claims data. The options developed were:

[[Page 44766]]

Capturing additional clinical information regarding the
severity and complexity of beneficiary functional impairments on
therapy claims in order to facilitate medical review and at the same
time gather data that would be useful in the long term to develop a
better payment mechanism;
Introducing additional claims edits regarding medical
necessity, in order to reduce overutilization; and
Adopting a per-session bundled payment that would vary
based on beneficiary characteristics and the complexity of evaluation
and treatment services furnished in a session.
While we did not propose to adopt any of these alternatives at that
time, we discussed these three options during the CY 2011 rulemaking
and solicited public comments on all aspects of these alternatives,
including the potential associated benefits or problems, clinical
concerns, practitioner administrative burden, consistency with other
Medicare and private payer payment policies, and claims processing
considerations. In general, public commenters on the data collection
effort questioned the ability to collect the needed information using
this type of system. Commenters raised specific concerns about the
training and education of therapists that would be needed prior to
implementation. Although concerns were expressed about claims-based
data reporting, no one questioned the need for data on beneficiary
condition and functional limitations. The Congress has now included in
section 3005(g) of the MCTRJCA a requirement to implement a claims-
based data collection effort. While the proposed system is based upon
the data collection alternative discussed in the CY 2011 PFS
rulemaking, it has been modified in response to the comments received
on the CY 2011 proposed rule.
The long-term goal is to develop an improved payment system for
Medicare therapy services. The desired payment system would pay
appropriately and similarly for efficient and effective services
furnished to beneficiaries with similar conditions and functional
limitations who have good potential to benefit from the services
furnished. Importantly, such a system would not encourage the
furnishing of medically unnecessary or excessive services. At this
time, the data on Medicare beneficiaries' use and benefit from therapy
services from which to develop an improved system does not exist. This
proposed data collection effort would be the first step towards
collecting the data needed for this type of payment reform. Once the
initial data have been collected and analyzed, we expect to be able to
identify gaps in information and determine what additional data are
needed to develop a new payment policy. Without a better understanding
of the diversity of beneficiaries receiving therapy services and the
variations in type and volume of treatments provided, we lack the
information to develop a comprehensive strategy to map the way to an
improved payment policy. While this claims-based data collection
proposal is only the first step in a long-term effort, it is an
essential step.
We are proposing to require that claims for therapy services
include nonpayable G-codes and modifiers. Through the use of these
codes and modifiers, we would capture data on the beneficiary's
functional limitations (a) at the outset of the therapy episode, (b) at
specified points during treatment and (c) at discharge from the
outpatient therapy episode of care. In addition, the therapist's
projected goal for functional status at the end of treatment would be
reported on the first claim for services and periodically throughout an
episode of care.
Specifically, G-codes would be used to identify what is being
reported--current status, goal status or discharge status. Modifiers
would indicate the extent of the severity/complexity of the functional
limitation being tracked. The difference between the reported
functional status at the start of therapy and projected functional
status at the end of the course of therapy represents the progress the
therapist anticipates the beneficiary would make during the course of
treatment/episode of care. As the beneficiary progresses through the
course of treatment, one would expect progress toward the goal
established by the therapist.
By tracking changes in functional limitations throughout the
therapy episode and at discharge, we would have information about the
furnished therapy services and the outcomes of such services. The ICD-9
diagnosis codes reported on the claim form would provide information on
beneficiary condition.
Since 2006, we have paid claims for therapy services that exceed
the annual per beneficiary caps when the claims include the KX
modifier. The presence of the KX modifier on a therapy claim indicates
that the therapist attests that the services on the claim are medically
necessary and that the justification for medical necessity is
documented in the beneficiary's medical record. We propose to apply the
additional G-code and modifier reporting requirements to all claims,
including claims with the KX modifier and those subject to any manual
medical review process, if such manual medical review or the KX
modifier were applicable, after December 31, 2012. (See the discussion
about therapy caps above.)
(2) Proposed Nonpayable G-Codes on Beneficiary Functional Status
For the proposed reporting, therapists would report G-codes and
modifiers on Medicare claims for outpatient therapy services. Table 17
shows the proposed G-codes and their definitions. (An appropriate
status indicator will be assigned to these codes if finalized.)

Table 17--Proposed Nonpayable G-Codes for Reporting Functional
Limitations
------------------------------------------------------------------------

------------------------------------------------------------------------
Functional limitation for primary functional limitation
------------------------------------------------------------------------
GXXX1.................. Primary Functional Current status at
limitation. initial treatment/
episode outset and at
reporting intervals.
GXXX2.................. Primary Functional Projected goal status.
limitation.
GXXX3.................. Primary Functional Status at therapy
limitation. discharge or end of
reporting.
------------------------------------------------------------------------
Functional limitation for a secondary functional limitation if one
exists
------------------------------------------------------------------------
GXXX4.................. Secondary Functional Current status at
limitation. initial treatment/
outset of therapy and
at reporting
intervals.
GXXX5.................. Secondary Functional Projected goal status.
limitation.
GXXX6.................. Secondary Functional Status at therapy
limitation. discharge or end of
reporting.

[[Page 44767]]

Provider attestation that functional reporting not required
------------------------------------------------------------------------
GXXX7.................. ....................... Provider confirms
functional reporting
not required.
------------------------------------------------------------------------

The proposed claims-based data collection system using G-codes and
severity modifiers builds upon current Medicare requirements for
therapy services. Section 410.61 requires that a therapy plan of care
(POC) be established before treatment begins. This POC must include:
The type, amount, frequency, and duration of the PT, OT, SLP services
to be furnished to each beneficiary, the diagnosis and the anticipated
goals. Section 410.105(c) contains similar requirements for services
furnished in the CORF setting. We have long encouraged therapists,
through our manual provisions, to express the POC-required goals for
each beneficiary in terms that are measureable and relate to identified
functional impairments. See Pub 100-02, Chapter 15, Section 220.1.2.
The evaluation and the goals developed as part of the POC would be the
foundation for the initial reporting under the proposed system.
Using the first set of G-codes (GXXX1, GXXX2, and GXXX3) with
appropriate modifiers, the therapist would report the beneficiary's
primary functional limitation or the most clinically relevant
functional limitation at the time of the initial therapy evaluation and
the establishment of the POC. In combination with appropriate
modifiers, these G-codes would describe the current functional
limitation (GXXX1) and the projected goal (GXXX2) for the functional
limitation and the status at the end of a course of therapy (GXXX3). At
specified intervals during treatment, claims would also include GXXX1
to show the status at that time and GXXX2 to show the goal, which would
not change during therapy, except as described below. At the time the
beneficiary is discharged from therapy, the final claim for this
episode of care would use GXXX2 to show the goal and GXXX3 to denote
status at the end of reporting for this functional limitation.
Therapists frequently use measurement tools to quantify beneficiary
function. The Patient Inquiry by Focus on Therapeutic Outcomes, Inc.
(FOTO) and the National Outcomes Measurement System (NOMS) by the
American Speech-Language-Hearing Association (ASHA) are two such
assessment tools in the public domain that can be used to determine a
composite or overall score for an assessment of beneficiary function.
Therapists could use the score produced by such measurement tools,
provided they are valid and reliable, to select the appropriate
modifier for reporting the beneficiary's functional status. While we
support the use of consistent, objective tools to determine beneficiary
functional limitation, for several reasons, at this time we are not
endorsing, nor are we proposing to require, use of a particular tool to
determine the severity modifier discussed in the next section. Some
tools are proprietary, and others in the public domain cannot be
modified to explicitly address this data collection project. Further,
this data collection effort spans several therapy disciplines.
Requiring a specific instrument could create burdens for therapists
that would have to be considered in light of any potential improvement
in data accuracy, consistency and appropriateness that such an
instrument would generate. We may reconsider this decision once we have
more experience with claims-based data collection on beneficiary
function associated with furnished therapy services. We are seeking
public comment on the use of assessment tools. In particular, we are
interested in feedback regarding the benefits and burdens associated
with use of a specific tool to assess beneficiary functional
limitations. We request that those favoring a requirement to use a
specific tool provide information on the preferred tool and describe
why the tool is preferred.
Early results from the DOTPA project suggest that most
beneficiaries have more than one functional limitation at treatment
outset. In fact, only 21 percent of the DOTPA assessments reported just
one functional limitation. Slightly more than half (54 percent)
reported two, three or four functional limitations.
To the extent that the DOTPA experience is typical, the therapist
may need to make a determination as to which functional limitation is
primary for reporting purposes. In cases where this is unclear, the
therapist may choose the functional limitation that is most clinically
relevant to a successful outcome for the beneficiary, the one that
would yield the quickest and greatest mobility, or the one that is the
greatest priority for the beneficiary. In all cases, this primary
functional limitation should reflect the predominant limitation that
the furnished therapy services are intended to address.
To allow for more complete reporting, the second set of G-codes in
Table 17 could be used to describe a secondary functional limitation,
when one exists. Two examples demonstrate the applicability of the
second set of G-codes.
(1) A beneficiary under a PT plan of care is being treated
simultaneously for mobility restriction, for example, ``walking and
moving'' (including, for example, climbing stairs) due to complications
following a total knee replacement and for a ``self-care'' restriction
due to a stabilized and immobilized upper extremity after a shoulder
dislocation.
(2) A beneficiary under a SLP plan of care may be treated
simultaneously for both a swallowing dysfunction and a communication
impairment resulting from a stroke.
This secondary G-code set is used to report the functional
limitation that the therapist considers secondary to the primary one at
the outset of a course of therapy. For example, in the first scenario
above, the therapist determines the ``self-care'' to be secondary to
the beneficiary's primary one (``walking and moving''). The therapist
would report the secondary functional limitation using a current status
(GXXX4) along with the associated goal (GXXX5).
In some cases, a secondary functional limitation may not develop or
be identified until after the course of treatment has begun. In such
situations, the therapist would begin reporting this secondary set at
the time the functional limitation is identified. Just as in the
example above, the therapist would report GXXX4 and GXXX5.
For beneficiaries having more than two functional limitations, once
the goal for the primary functional limitation has been reached or the
beneficiary's potential to reach the goal has been maximized, the
reporting on that functional limitation ends and reporting can begin on
a new functional limitation. The therapist would use the set of G-codes
(and associated modifiers) for the primary functional limitation, that
is, GXXX1-GXXX3, to report functional status of the beneficiary's third
functional restriction. This process of adding a new functional
limitation, for example, for the fourth and the fifth, can continue
until therapy

[[Page 44768]]

ends. Following this process, the set of G-codes that the therapist
uses originally to report each functional limitation does not change
throughout the episode of care, even though the originally reported
secondary functional limitation (reported with GXXX4 through GXXX6) may
have become the primary one, for clinical purposes, once the goal for
the originally reported primary functional limitation was reached. The
therapist is not expected to change the G-code set used originally to
report a particular functional limitation; we believe requiring
therapists to do so would be too burdensome and would confuse the data
we are collecting for programmatic purposes.
We are seeking comment on specific issues regarding reporting data
on a secondary limitation. Specifically, we request comments regarding
whether reporting on secondary functional limitations should be
required or optional. We would also be interested in information
regarding what percentage of Medicare therapy beneficiaries has more
than one functional limitation at the outset of therapy, and for those
with multiple functional limitations, what is the average number. We
would also be interested in information on the percentage of these
functional limitations for which therapists go on to measure, document,
and develop related therapy goals.
The proposed G-codes differ from the three separate pairs of G-
codes discussed in the CY 2011 PFS rulemaking. The CY 2011 discussion
included these three pairs of G-codes, all of which reflect specific
ICF terminology:
Impairments of Body Functions and/or Impairments of Body
Structures;
Activity Limitations and Participation Restrictions; and
Environmental Factors Barriers.

Each pair contained a G-code to represent the beneficiary's current
functional status and another G-code to represent the beneficiary's
projected goal status. Like the G-codes in this proposal, these G-codes
would have been used with modifiers to reflect the severity/complexity
of each element.
This set of G-codes appeared to us to be potentially redundant and
confusing since we are using the term functional limitations to be
synonymous with the ICF terminology ``activity limitations and
participation restrictions.'' Requiring separate reporting on three
elements would have imposed a burden on therapists without providing a
meaningful benefit in the value of the data provided. Further, because
environmental barriers as discussed in CY 2011 are contextual, we do
not believe collecting information on them would contribute to
developing an improved payment system or assist with medical review.
Since our goal is to develop a system that imposes the minimal
additional burden while providing adequate data to accomplish the
statutory directive (to assist in reforming the Medicare payment system
for outpatient therapy services), we are proposing to require that just
one set of G-codes be used for reporting the primary functional
limitation. We added a second set of G-codes for a secondary functional
limitation, which are identical to those used for the primary
functional limitation. We are interested in public comment on whether
these proposed G-codes allow adequate reporting on beneficiary's
functional limitations. We would particularly appreciate receiving
specific suggestions for any missing elements.
(3) Severity/Complexity Modifiers
For each functional G-code used on a claim, a modifier would be
required to report the severity/complexity for that functional
limitation. We propose to adopt a 12-point scale to report the severity
or complexity of the functional limitation involved. The proposed
modifiers are listed in Table 18.

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

An example of how a therapist would translate data from another
assessment tool to this scale may be helpful. In our example, the
physical therapist used the Berg Balance Scale (the long original
version) to document the beneficiary's functional balance restriction
and the beneficiary's test score is 33. (The scores on this test range
from 0-56. A score below 41 is considered to be at moderate risk of
falling.) Once the test is completed, the therapist maps the
beneficiary's score to our severity modifier scale. To do so, the
beneficiary's score must first be converted to a percentage. A score of
33 on a scale of 56 would equal 59 percent. To map the percentage from
the Berg Balance Scale to the modifier scale, it must be subtracted
from 100, since zero on the Berg Balance Scale reflects 100 percent
limitation/disability. When 59 percent is subtracted from 100 percent,
the result is 41 percent. This number falling between 40 percent and 49
percent is mapped to the severity modifier of ``XF.''
As already noted, there are many other valid and reliable
measurement tools that therapists use to quantify functional
limitations. Among these are four assessment tools we discussed in CY
2011 PFS rulemaking--namely, the Activity Measure--Post Acute Care (AM-
PAC) tool, the FOTO Patient Inquiry, OPTIMAL, and NOMS. We list these
tools as recommended for use by therapists, though not required, in the
outpatient therapy IOM provision of the Benefits Policy Manual, Chapter
15, Section 220.3C ``Documentation Requirements for Therapy Services.''
The scores from these and other measurement tools already in use by
therapy disciplines produce numerical or percentage scores that can be
mapped or crosswalked to the proposed severity modifier scale. The
advantage of using an assessment tool that yields a composite score,
such as NOMS, would be that only the G-codes for the primary functional
limitation would need to be reported even if we required reporting of
secondary limitations.
In assessing the ability of therapists to provide the required
severity information regardless of what assessment tool they use, if
any, we considered the comments received on the CY 2011 PFS proposed
rule discussion and our preliminary experience from the DOTPA project.
Both indicated that we needed greater granularity in our severity scale
to more accurately assess changes in functional limitation over the
course of therapy. Specifically, most commenters favored the 7-point
scale over the 5-point ICF-based scale. They preferred a scale with
more severity levels since it would allow the therapist to document
smaller changes that many therapy beneficiaries make towards their
goals. For example, the ``severe'' level of the 5-point scale includes
a 45-point spread (from 50-95 percent) making it difficult to document
a change or improvement in a beneficiary's condition whose limitation
being rated falls into this category. Commenters also liked the equal
increments of the 7-point scale.
We believe that neither the five- or seven-point scales are
adequate for this reporting system, and developed a new scale. The 12-
point scale we are proposing is an enhancement of the 7-

[[Page 44769]]

point scale. It achieves the ability to more accurately capture changes
in functional limitations over the course of treatment and is easier to
use and understand. It addresses the concern of a major association,
which supported the 7-point scale, but suggested that an even more
sensitive rating scale (one with more increments) might be necessary to
show progress of certain beneficiaries toward their projected goals,
particularly those beneficiaries with neurological conditions, such as
strokes. In addition, the proposed scale's 10-percentage point
increments make it easier for therapists to convert composite and
overall scores from assessment instruments or other measurement tools
to this scale.
(4) Adaptation for G-Codes by Select Categories of Functional
Limitations
The ultimate goal of gathering information on beneficiary function
is to have adequate information to develop an alternative payment
system for therapy services. Although the information that would be
collected pursuant to the proposal discussed above would greatly
increase our understanding of the therapy services furnished and any
progress made as a result of these services, it would leave us far
short of the data needed for developing a new payment system. A
significant limitation of this proposal is that it would not provide
data by type of functional limitation involved. We have been unable to
identify an existing system that categorizes the variety of functional
limitations addressed by therapists. Without an existing system that
could be used to collect data on specific functional limitations, we
could not develop and implement a complete system categorizing all
functional limitations within the time period allowed by the statute.
However, we could begin to collect data on select categories of
functional limitations by adapting the reporting system described above
to include some category specific-reporting in addition to the generic
reporting. Should we decide to use a system with category-specific
reporting, we would expect to develop specific nonpayable G-codes for
select categories of functional limitations in the final rule. Under
this adaptation, if one of the select categories of functional
limitations created describes the functional limitation being reported,
that G-code set would be used to report the current, projected goal,
and discharge status of the beneficiary.
Any functional limitation not identified in this limited G-code set
would be reported using the generic G-codes previously described.
To demonstrate this approach, we have created G-codes that describe
the two most frequently reported functional limitations by each of the
three therapy disciplines in the DOTPA project. (See Table 19.) When
appropriate, these G-codes would be used exactly as the generic ones.

BILLING CODE 4120-01-P

[[Page 44770]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.004

BILLING CODE 4120-01-C
The benefit of having these select G-code sets in addition to the
general G-codes is that the data collected could be analyzed by
specific diagnoses/conditions and categories of functional limitations.
We believe that in order to develop an improved payment system for
therapy services this type of information is needed. Moreover,
expansion of these categorical G-codes to encompass many more
categories of functional limitations is essential. However,
implementing specific G-codes for a select set of functional
limitations could be a starting point. An

[[Page 44771]]

initial data set could allow us to begin collecting the necessary data.
It would also help us to evaluate how such a system works and make
improvements before imposing requirements across the board.
We seek input from therapists on categories of functional
limitations, such as those described in this section. We specifically
request comments regarding the following questions. Would data
collected on categories of functional limitations provide more
meaningful data on therapy services than that collected through use of
the generic G-codes in our proposal? Should we choose to implement a
system that is based on at least some select categories of functional
limitation, which functional limitations should we collect data on in
2013? Is it more, less or the same burden to report on categories of
functional limitations or generic ones? The categories of functional
limitations described above are based on the ICF categories, but these
ICF categories also have subcategories. Should we use subcategories for
reporting? Are there specific conditions not covered by these ICF
categories? Would we need to have G-codes for the same categories of
secondary limitations?
(5) Reporting Frequency
We propose to require this claims-based reporting in conjunction
with the initial service at the outset of a therapy episode, at
established intervals during treatment and at discharge. The number of
G-codes required on a particular claim would vary from one to four,
depending on the circumstances. Table 20 shows a graphic example of
which codes are used for specified reporting. We would note that the
example represents a therapy episode of care occurring over an extended
time period. This example might be typical for a beneficiary receiving
therapy for the late effects of a stroke. We chose to use an example
with a much higher than average number of treatment days in order to
show a greater variety of reporting scenarios.
[GRAPHIC] [TIFF OMITTED] TP30JY12.005

Outset. Under this proposal, the first reporting of G-
codes and modifiers would occur when the outpatient therapy episode of
care begins. This would typically be the date of service when the
therapist furnishes the evaluation and develops the required plan of
care for the beneficiary. At the outset, the therapist would use the G-
codes and modifiers to report a current status and a projected goal for
the primary functional limitation. If a secondary functional limitation
needs to be reported at this time, the same information would be
reported using G-codes and associated modifiers for the secondary
functional limitation.
Every 10 Treatment Days or 30 Calendar Days, Whichever Is
Less. We propose to require that the reporting frequency for G-codes
and associated modifiers be once every 10 treatment days or at least
once during each 30 calendar days, whichever time period is shorter.
The first treatment day for purposes of reporting would be the day that
the initial visit takes place. The date the episode of care begins,
typically at the evaluation, even when the therapist does not furnish a
separately billable procedure in addition to the evaluation for this
day, would be considered treatment day one, effectively beginning the
count of treatment days or calendar days for the first reporting
period.
In calculating the 10 treatment days, a treatment day is defined as
a calendar day in which treatment occurs resulting in a billable
service. Often a treatment day and a therapy ``session'' or ``visit''
may be the same, but the two terms are not interchangeable.
Infrequently, for example, a beneficiary might receive certain services
twice a day--these two different sessions (or visits) in the same day
are counted as one treatment day).

[[Page 44772]]

On the claim for service on the 10th treatment day or the 30th
calendar day after treatment day one, the therapist would only report
GXXX1 and the appropriate modifier to show the beneficiary's functional
status at the end of this reporting period. If also reporting on a
secondary functional limitation, GXXX4 and the appropriate modifier
would be included as well.
The next reporting period begins on the next treatment day, that
is, the time period between the end of one reporting period and the
next treatment day does not count towards the 30 calendar day period.
On the claim for services furnished on this date, the therapist would
report both the G-code and modifier showing the current functional
status at this time along with the G-code and modifier reflecting the
projected goal that was identified at the outset of the therapy
episode. This process would continue until the beneficiary concludes
the course of therapy treatment.
On a claim for a service that does not require specific reporting
of a G-code with modifier (that is, a claim for services between the
first and the tenth day of service and that is less than 30 days from
the initial assessment), GXXX7 would be used. By using this code, the
therapist would be confirming that the claim does not require specific
functional limitation reporting. This is the only G-code that is
reported without a severity modifier.
The count of days, both treatment and calendar, for the second
reporting period and any others thereafter, would begin on the first
treatment day after the end of the previous reporting period.
We selected the 10/30 frequency of reporting to be consistent with
our timing requirements for progress reports. These timing requirements
are included in the Documentation Requirements for Therapy Services
(see Pub. 100-02, Chapter 15, Section 220.3, Subsection D). By making
these reporting timeframes consistent with Medicare's other
requirements, therapists, who are already furnishing therapy services
to Medicare outpatients, would have a familiar framework for
successfully adopting our new reporting requirement. This should
minimize the additional burden. In addition to reflecting the Medicare
required documentation for progress reports, we believe that this
simplifies the process and minimizes the new burden on practitioners
since many therapy episodes would be completed by the 10th treatment
day. In 2008, the average number of days in a therapy episode was nine
treatment days for SLP, 11 treatment days for PT, and 12 treatment days
for OT. When reporting on two functional limitations, the therapist
would report the G-codes and modifiers for the second condition in the
manner described above. In other words, at the end of the reporting
period, two G-codes would be reported to show current functional
status--one for the primary (GXXX1) and one for the secondary (GXXX4)
limitation. Similarly, at the beginning of the reporting period four G-
codes would be reported. GXXX1 and GXXX4 would be used to report
current status for the primary and secondary functional limitations,
respectively; and, GXXX2 and GXXX5 would be used to report the goal
status for the primary and secondary functional limitations,
respectively.
The reporting periods must be the same for both the primary and
secondary functional limitation. The therapist can accomplish this by
starting them at the same time or if the secondary functional
limitation is added at some point in treatment, the primary functional
limitation's reporting period must be re-started by reporting GXXX1 and
GXXX2 at the same time the new secondary functional limitation is added
using GXXX4 and GXXX5.
Further, for those therapy treatment episodes lasting longer
periods of time, the periodic reporting of the G-codes and associated
modifiers would reflect any progress that the beneficiary made toward
the identified goal. In summary, we propose to require the reporting of
G-codes and modifiers at episode outset (evaluation or initial visit),
and once every 10th treatment day or at least every 30 calendar days,
whichever time period is less.
We believe it is important that the requirements for this reporting
system be consistent with the requirements for documenting any progress
in the medical record as specified in our manual. Given the current
proposal for claims-based data collection, we believe it is an
appropriate time to reassess the manual requirements. Toward this vein,
we are seeking comment on whether it would be appropriate to modify the
progress note requirement in the IOM to one based solely on the number
of treatment days, such as six or ten. Should this modification be
made, a corresponding change would be made in the reporting periods. We
seek comments regarding clinical impact of such a change.
Discharge. In addition, we are proposing to require
reporting of the G-code/modifier functional data at the conclusion of
treatment so that we have a complete set of data for the therapy
episode of care. Requiring the reporting at discharge mirrors the IOM
requirement of a discharge note or summary. This set of data would
reveal any functional progress or improvement the beneficiary made
toward the projected therapy goal during the entire therapy episode.
Specifically, having information on the beneficiary's functional status
at the time of discharge shows whether or to what degree the projected
therapy goal was met.
To report the current status of the functional limitation at the
time of discharge, the therapist would use GXXX3 and the appropriate
modifier. Where there is a secondary functional limitation, GXXX6,
along with its appropriate modifier, would also be reported. In
addition, GXXX2, along with the modifier established at the outset of
therapy, is used to report the projected goal status of the primary
functional limitation. And, GXXX4 and its corresponding modifier is
reported to show the projected goal status for the secondary functional
limitation that was established at the outset of therapy. The
imposition of this reporting requirement does not justify scheduling an
additional, and perhaps medically unnecessary, final session in order
to measure the beneficiary's function for the sole purpose of
reporting.
Although collection of discharge data is important in achieving our
goals, we recognize that data on functional status at the time therapy
concludes is likely to be incomplete for some beneficiaries receiving
outpatient therapy services. The DOTPA project has found this to be
true. There are various reasons as to why the therapist would not be
able to report functional status using G-codes and modifiers at the
time therapy ends. Sometimes, beneficiaries may discontinue therapy
without alerting their therapist of their intention to do so, simply
because they feel better, they can no longer fit therapy into their
work schedules, or their transportation is unavailable. Whatever the
reason, there would be situations where the therapy ends without a
discharge visit. In these situations, we would not require the
reporting at discharge. However, we encourage therapists to include
discharge reporting whenever possible on the final claims.
For example, since the therapist is typically reassessing the
beneficiary during the therapy sessions, the data critical to the
severity/complexity of the functional measure may be available even
when the final therapy session does not occur. In these instances, the
G-codes and modifiers appropriate to discharge should be reported.
We are particularly interested in how often the therapy community
finds that beneficiaries discontinue therapy

[[Page 44773]]

without the therapist knowing in advance that it is the last treatment
session and other situations in which the discharge data would not be
available for reporting.
Significant Change in Beneficiary Condition. We are
proposing that, in addition to reporting at the intervals discussed
above, the G-code/modifier measures would be required to be reported
when a formal and medically necessary re-evaluation of the beneficiary
results in an alteration of the goals in the beneficiary's POC. This
could result from new clinical findings, an added comorbidity, or a
failure to respond to treatment described in the POC. This reporting
affords the therapist the opportunity to explain a beneficiary's
failure to progress toward the initially established goal(s) and
permits either the revision of the severity status of the existing goal
or the establishment of a new goal or goals. The therapist would be
required to begin a new reporting period when submitting a claim
containing a CPT code for an evaluation or a re-evaluation. These G-
codes, along with the associated modifiers, could be used to show an
increase in the severity of one or two functional limitations; or, they
could be used to reflect the severity of newly identified functional
limitations as delineated in the revised plan of care.
(6) Documentation
We propose to require that documentation of the information used
for reporting under this system must be included in the beneficiary's
medical record. The therapist would need to track in the medical record
the G-codes and the corresponding severity modifiers that were used to
report the status of the functional limitations at the outset of the
therapy episode, at the beginning and end of each reporting period, and
at the time of discharge (or to report that the projected goal has been
achieved and reporting on the particular functional limitation has
ended). It is important to include this information in the record in
order to create an auditable record and so that this record would also
serve to improve the quality of data CMS collects as it will help the
therapist keep track of assessment and treatment information for
particular beneficiaries.
For example, the therapist selects the functional limitation of
``walking and moving'' as the primary limitation and determines that at
therapy outset the beneficiary has a 60 percent limitation and sets the
goal to reduce the limitation to 5 percent. The therapist uses GXXX1-XH
to report the current status of the functional impairment; and GXXX2-XB
to report the goal. The therapist should note in the beneficiary's
medical record that the functional limitation is ``walking and moving''
and document the G-codes and severity modifiers used to report this
functional limitation on the claim for therapy services.
(7) Claims Requirements
Except for the addition of the proposed G-codes and modifiers,
nothing in this proposal would modify other existing requirements for
submission of therapy claims. For example, the therapy modifiers--GO,
GP, and GN--are still required to indicate that the therapy services,
for which the G-codes and modifiers are used to report function on, are
furnished under a OT, PT, or SLP plan of care, respectively.
Claims from institutional providers, which are submitted to the
fiscal intermediaries (FIs) and A/B MACs, would require that a charge
be included on the service line for each one of these G-codes in the
series, GXXX1-GXXX7. This charge would not be used for payment purposes
and would not affect processing. Claims for professional services
submitted to carriers and A/B MACs do not require that a charge be
included for these nonpayable G-codes but reporting a charge for the
nonpayable G-codes would not affect claims processing.
Medicare does not process claims that do not include a billable
service. As a result, reporting under this system would need to be
included on the same claim as a furnished service that Medicare covers.
(8) Implementation Date
In accordance with section 3005(g) of the MCTRJCA, we propose to
implement these data reporting requirements on January 1, 2013. We
recognize that with electronic health records and electronic claims
submission, therapists may encounter difficulty in including this new
data on claims. To accommodate those that may experience operational or
other difficulties with moving to this new reporting system and to
assure smooth transition, we are proposing a testing period from
January 1, 2013 until July 1, 2013. We would expect that all those
billing for outpatient therapy services would take advantage of this
testing period and begin attempting to report the new G-codes and
modifiers as quickly as possible on or after January 1, 2013, in
preparation for required reporting beginning on July 1, 2013. Taking
advantage of this testing period would help to minimize potential
problems after July 1, 2013, when claims without the appropriate G-
codes and modifiers would be returned unpaid.
(9) Compliance Required as a Condition for Payment and Regulatory
Changes
To implement the reporting system required by MCTRJCA and described
above we are proposing to amend the regulations establishing the
conditions for payment governing PT, OT, SLP, and CORFs to add a
requirement that the claims include information on beneficiary
functional limitations. In addition, we propose to amend the plan of
care requirements set forth in the regulations for outpatient therapy
services and CORFs to require that the therapy goals, which must be
included in the POC, are consistent with the beneficiary function
reporting on claims for services.
Specifically, we propose to amend the regulations for outpatient
OT, PT, and SLP (Sec. 410.59, Sec. 410.60, and Sec. 410.62,
respectively) by adding a new paragraph (a)(4) to require that claims
submitted for furnished services contain the information on beneficiary
functional limitations as described in this rule.
We also propose to amend the plan of care requirements set forth at
Sec. 410.61(c) to require that the therapy goals, which must be
included in the treatment plan, must be consistent with those reported
on claims for services. This requirement is in addition to those
already existing conditions for the POC
To achieve consistency in the provision of PT, OT, and SLP services
across settings, we propose to amend Sec. 410.105 to include the same
requirements for these services furnished in CORFs. These proposed
revisions would require that the goals in the treatment plan be
consistent with the beneficiary function reported on claims for
services and that claims submitted for furnished services contain
specified information on beneficiary functional limitations,
respectively. Respiratory therapy services furnished in CORFs are not
subject to the reporting requirements, and therefore, these
requirements would not apply to them.
(10) Consulting With Relevant Stakeholders
Section 3005(g) of the MCTRJCA requires us to consult with relevant
stakeholders as we propose and implement this reporting system. We are
meeting this requirement through the publication of this proposal, and
specifically solicit public comment on the various aspects of our
proposals. In

[[Page 44774]]

addition, we plan to meet with key stakeholders and will discuss this
issue in Open Door Forums over the course of the summer.

H. Primary Care and Care Coordination

In recent years, we have recognized primary care and care
coordination as critical components in achieving better care for
individuals, better health for individuals, and reduced expenditure
growth. Accordingly, we have prioritized the development and
implementation of a series of initiatives designed to ensure accurate
payment for, and encourage long-term investment in, primary care and
care management services. These initiatives include the following
programs and demonstrations:
The Medicare Shared Savings Program (described in
``Medicare Program; Medicare Shared Savings Program: Accountable Care
Organizations; Final Rule'' which appeared in the Federal Register on
November 2, 2011 (76 FR 67802)).
++ The testing of the Pioneer ACO model, designed for experienced
health care organizations (described on the Center for Medicare and
Medicaid Innovation's (Innovation Center's) Web site at http://innovations.cms.gov/initiatives/ACO/Pioneer/index.html).
++ The testing of the Advance Payment ACO model, designed to
support organizations participating in the Medicare Shared Savings
Program (described on Innovation Center's Web site at http://innovations.cms.gov/initiatives/ACO/Advance-Payment/index.html).
The Primary Care Incentive Payment (PCIP) Program
(described on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Downloads/PCIP-2011-Payments.pdf).
The patient-centered medical home model in the Multi-payer
Advanced Primary Care Practice (MAPCP) Demonstration designed to test
whether the quality and coordination of health care services are
improved by making advanced primary care practices more broadly
available. (described on the CMS Web site at http://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/downloads/mapcpdemo_Factsheet.pdf). The goal of the MAPCP demonstration is to
take a multi-payer approach to creating more advanced primary care
services or ``medical homes'' that utilize a team approach to care,
while emphasizing prevention, health information technology, care
coordination, and shared decision making. CMS will pay a monthly care
management fee for Medicare fee-for-service beneficiaries receiving
primary care from advanced primary care practices participating in the
demonstration. The following states are participating in the MAPCP
demonstration: Maine, Vermont, Rhode Island, New York, Pennsylvania,
North Carolina, Michigan, and Minnesota.\1\
---------------------------------------------------------------------------

\1\ More information about the MAPCP demonstration is available
at http://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/Medicare-Demonstrations-Items/CMS1230016.html.
---------------------------------------------------------------------------

The Federally Qualified Health Center (FQHC) Advanced
Primary Care Practice demonstration (described on the CMS Web site at
http://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/downloads/mapcpdemo_Factsheet.pdf and Innovation
Center's Web site at http://innovations.cms.gov/initiatives/FQHCs/index.html). Participating FQHCs in the demonstration are expected to
achieve National Committee for Quality Assurance (NCQA) Level 3
Patient-Centered Medical Home recognition by the end of the
demonstration as well as help patients manage chronic conditions and
actively coordinate care for patients. To help participating FQHCs make
the needed investments in patient care and infrastructure, CMS is
paying a monthly care management fee for each eligible Medicare fee-
for-service beneficiary receiving primary care services. In addition,
both CMS and the Health Resources Services Administration (HRSA) are
providing technical assistance to FQHCs participating in the
demonstration.
The Comprehensive Primary Care (CPC) initiative (described
on the Innovation Center's Web site at http://innovations.cms.gov/initiatives/Comprehensive-Primary-Care-Initiative/index.html). The CPC
initiative is a multi-payer initiative fostering collaboration between
public and private health care payers to strengthen primary care in the
following markets: Arkansas, Colorado, New Jersey, New York in the
Capital-District-Hudson Valley Region, Ohio and Kentucky in the
Cincinnati-Dayton Region, Oklahoma in the Greater Tulsa Region, and
Oregon. CMS pays a monthly care management fee to selected primary care
practices on behalf of their fee-for-service Medicare beneficiaries and
in years 2-4 of the initiative, each practice has the potential to
share in savings to the Medicare program.
In coordination with these initiatives, we also continue to explore
other potential refinements to the PFS that would appropriately value
primary care and care coordination within Medicare's statutory
structure for fee-for-service physician payment and quality reporting.
We believe that improvements in payment for primary care and
recognizing care coordination initiatives are particularly important as
EHR technology diffuses and improves the ability of physicians and
other providers of health care to work together to improve patient
care. We view these potential refinements to the PFS as part of a
broader strategy that relies on input and information gathered from the
initiatives described above, research and demonstrations from other
public and private stakeholders, the work of all parties involved in
the potentially misvalued code initiative, and from the public at
large.
The annual PFS notice and comment rulemaking process provides an
important avenue for interested parties to provide input on discrete
proposals intended to achieve these goals. Should any of these discrete
proposals become final policy, we would expect many of them to be
short-term payment strategies that would be modified and/or revised to
be consistent with broader primary care and care management and
coordination services if the agency decides to pursue payment for a
broader set of management and coordination services in future
rulemaking.
In the CY 2012 PFS proposed rule (76 FR 42793 through 42794), we
initiated a discussion to gather information about how primary care
services have evolved to focus on preventing and managing chronic
disease. We also proposed to review evaluation and management (E/M)
services as potentially misvalued and suggested that the American
Medical Association Relative (Value) Update Committee (AMA RUC) might
consider changes in the practice of chronic disease management and care
coordination as key reason for undertaking this review. In the CY 2012
PFS final rule with comment period, we did not finalize our proposal to
review E/M codes due to consensus from an overwhelming majority of
commenters that a review of E/M services using our current processes
could not appropriately value the evolving practice of chronic care
coordination, and therefore, would not accomplish the agency's goal of
paying appropriately for primary care services. We stated that we would
continue to consider ongoing research projects, demonstrations, and the
numerous policy alternatives suggested by commenters. In addition, in
the CY 2012 PFS proposed rule (76 FR 42917 through 42920), we initiated
a public discussion regarding payments for post-discharge care
management services. We sought broad public

[[Page 44775]]

comment on how to further improve care management for a beneficiary's
transition from the hospital to the community setting within the
existing statutory structure for physician payment and quality
reporting. We specifically discussed how post discharge care management
services are coded and valued under the current E/M coding structure,
and we requested public comment.
The physician community responded that comprehensive care
coordination services are not adequately represented in the
descriptions of, or payments for, office/outpatient E/M services. The
American Medical Association (AMA) and the American Academy of Family
Physicians (AAFP) created workgroups to consider new options for coding
and payment for primary care services. The AAFP Task Force recommended
that CMS create new primary care E/M codes and pay separately for non-
face-to-face E/M Current Procedural Terminology (CPT) codes. (A summary
of these recommendations is available at http://www.aafp.org/online/en/home/publications/news/news-now/inside-aafp/20120314cmsrecommendations.html.) The AMA workgroup, Chronic Care
Coordination Workgroup (C3W), is developing codes to describe care
transition and care coordination activities. (Several workgroup meeting
minutes and other related items are available at http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/care-coordination.page.) We are
continuing to monitor the progress of this workgroup and look forward
to receiving its final recommendations. For this CY 2013 PFS proposed
rule, we have decided to proceed with a proposal to refine PFS payment
for post discharge care management services. We also include a
discussion of how we could incorporate the idea of advanced primary
care through practices certified as medical homes in the FFS setting.
In developing the proposal and discussion described below, we have
thoroughly considered documented concerns regarding Medicare payment
for non-face-to-face elements of E/M services that are crucial to care
coordination. We will continue to consider other enhancements to
payment for primary care services and complex chronic care coordination
services, and we may make further proposals to improve payment
mechanisms and foster quality care for these and similar services in
future rulemaking.
Under current PFS policy, care coordination is a component of E/M
services which are generally reported using E/M CPT codes. The pre- and
post-encounter non face-to-face care management work is included in
calculating the total work for the typical E/M services, and the total
work for the typical service is used to develop RVUs for the E/M
services. In the CY 2012 PFS proposed rule, we highlighted some of the
E/M services that include substantial care coordination work.
Specifically, we noted that the vignettes that describe a typical
service for mid-level office/outpatient services (CPT codes 99203 and
99213) include providing care coordination, communication, and other
necessary care management related to the office visit in the post-
service work. We also highlighted vignettes that describe a typical
service for hospital discharge day management (CPT codes 99238 and
99239), which include providing care coordination, communication, and
other necessary management related to the hospitalization in the post-
service work.
As we have indicated many times in prior rulemaking, the payment
for non-face-to-face care management services is bundled into the
payment for face-to-face E/M visits. Moreover, Medicare does not pay
for services that are furnished to parties other than the beneficiary
and which Medicare does not cover, for example, communication with
caregivers. Accordingly, we do not pay separately for CPT codes for
telephone calls, medical team conferences, prolonged services without
patient contact, or anticoagulation management services.
However, we continue to hear concerns from the physician community
that the care coordination included in many of the E/M services, such
as office visits, does not adequately describe the non-face-to-face
care management work involved in primary care. Because the current E/M
office/outpatient visit CPT codes were designed to support all office
visits and reflect an overall orientation toward episodic treatment, we
agree that these E/M codes may not reflect all the services and
resources required to furnish comprehensive, coordinated care
management for certain categories of beneficiaries such as those who
are returning to a community setting following discharge from a
hospital or SNF stay. We are therefore considering new options to
recognize the additional resources typically involved in furnishing
coordinated care to particular types of beneficiaries.
As described below, we are proposing to address the significant
non-face-to-face work involved in coordinating services for a
beneficiary after discharge from a hospital or skilled nursing facility
(SNF). Specifically, we propose to create a HCPCS G-code to describe
care management involving the transition of a beneficiary from care
furnished by a treating physician during a hospital stay (inpatient,
outpatient observation services, or outpatient partial
hospitalization), SNF stay, or community mental health center (CMHC)
partial hospitalization program to care furnished by the beneficiary's
primary physician in the community. We consider this proposal to be
part of a multiple year strategy exploring the best means to encourage
care coordination services. Furthermore, in the interest of encouraging
comprehensive primary care services furnished in advanced primary care
practices, we have included a discussion regarding how care furnished
in these settings might be incorporated into the current fee-for-
service structure of the PFS. We look forward to continued development
of these ideas through current research and demonstration projects,
experience with ACOs and other programs, and further discourse on these
issues with stakeholders.
1. Hospital, SNF, or CMHC Post-Discharge Care Management
a. Background
Care management involving the transition of a beneficiary from care
furnished by a treating physician during a hospital, SNF, or CMHC stay
to the beneficiary's primary physician in the community can avoid
adverse events such as readmissions or subsequent illnesses, improve
beneficiary outcomes, and avoid a financial burden on the health care
system. Successful efforts to improve hospital discharge care
management and care transitions could improve the quality of care while
simultaneously decreasing costs.
Currently, there are several agency initiatives aimed at hospital
and community-based organizations. In April 2011, HHS launched the
Partnership for Patients, a national public-private patient safety
initiative for which more than 6,000 organizations--including physician
and nurses' organizations, consumer groups, employers and over 3,000
hospitals--have pledged to help achieve the Partnership's goals of
reducing hospital complications and improving care transitions. (More
information on this initiative is available at http://innovations.cms.gov/initiatives/partnership-for-patients/index.html.)
The Partnership for Patients includes the Community-based Care
Transitions

[[Page 44776]]

Program, created by section 3026 of the Affordable Care Act, which
provides funding to community-based organizations partnering with
eligible hospitals to coordinate a continuum of post-acute care to test
models for improving care transitions for high risk Medicare
beneficiaries.
Section 1886(q) of the Act (as added by section 3025 of the
Affordable Care Act) directs the Secretary to establish a Hospital
Readmissions Reduction Program, beginning in FY 2013, for certain
potentially preventable Medicare inpatient hospital readmissions
covering three conditions: heart attack; pneumonia; and congestive
heart failure. Beginning in FY 2015, the number of applicable
conditions can be expanded beyond the initial three conditions. Under
this program, a portion of Medicare's payment amounts for inpatient
services to certain hospitals will be reduced by an adjustment factor
based the hospital's excess Medicare readmissions. In the FY 2012 IPPS
final rule (76 FR 51662-51676), we provided an overview of the Hospital
Readmission Reduction program and finalized policies regarding
selection of applicable conditions, definition of ``readmissions,''
measures of the applicable conditions chosen for readmissions,
methodology for calculating the excess readmissions ratio, public
reporting of readmission data, and definition of applicable period. In
the FY2013 IPPS proposed rule (77 FR 27955-27968), we made proposals
regarding the base operating DRG payment amount, the adjustment factor,
aggregate payments for excess readmissions, and the hospitals that
would be included in the program.
In its 2007 Report to Congress: Promoting Greater Efficiency in
Medicare, MedPAC found that, in 2005, 17.6 percent of admissions
resulted in readmissions within 30 days of discharge, accounting for
$15 billion in spending. MedPAC estimated that 76 percent of the 30 day
readmissions were potentially preventable, resulting in $12 billion in
spending. In the same report, MedPAC also found that the rate of
potentially avoidable rehospitalizations after discharges from skilled
nursing facilities was 17.5 percent in 2004 (an increase of 2.8
percentage points from 2000.) MedPAC noted: ``We focus on the
hospital's role but recognize that other types of providers, including
physicians and various post-acute care providers, can be instrumental
in avoiding readmissions * * * [C]ommunity physicians and post-acute
care providers receiving the patient may not be sufficiently informed
about the patient's care needs and history to enable effective care.''
We agree with MedPAC that primary care physicians and practitioners
play a key role in post-acute care and reducing hospital readmissions.
In the CY 2012 PFS proposed rule (76 FR 42917 through 42920), we
initiated a public discussion regarding payments for post-discharge
care coordination services. We sought broad public comment on how to
further improve physician care coordination within the statutory
structure for physician payment and quality reporting, particularly for
a beneficiary's transition from the hospital to the community. As noted
above, we also proposed to review E/M services as potentially misvalued
and suggested that the AMA RUC might consider chronic disease
management and care coordination in its review (76 FR 42793). While the
commenters agreed that care coordination would lead to better care for
beneficiaries, they believed this care would be better described by new
codes, and not the current E/M codes.
b. Hospital and SNF Discharge Services
We believe that the successful transition of a beneficiary from
care furnished by a hospitalist physician to care furnished by the
beneficiary's primary physician or qualified nonphysician practitioner
could avoid adverse events such as readmissions or subsequent
illnesses, improve beneficiary outcomes, and avoid a financial burden
on the health care system.
We also believe that the current hospital discharge management
codes (CPT codes 99238 and 99239) and nursing facility discharge
services (CPT codes 99315 and 99316) adequately capture the care
coordination services required to discharge a beneficiary from hospital
or skilled nursing facility care. The work relative values for those
discharge management services include a number of pre-, post-, and
intra-care coordination activities. For example, the hospital discharge
management codes include the following pre-, intra-, and post-service
activities relating to care coordination:
Pre-service care coordination activities include:
Communicate with other professionals and with patient or
patient's family. Intra-service care coordination activities include:
Discuss aftercare treatment with the patient, family and
other healthcare professionals;
Provide care coordination for the transition including
instructions for aftercare to caregivers;
Order/arrange for post discharge follow-up professional
services and testing; and
Inform the primary care or referring physician or
qualified nonphysician practitioner of discharge plans.
Post-service care coordination activities include:
Provide necessary care coordination, telephonic or
electronic communication assistance, and other necessary management
related to this hospitalization; and
Revise treatment plan(s) and communicate with patient and/
or caregiver, as necessary.
The hospital and nursing facility discharge management codes also
include a number of other pre-, intra- and post-service activities.
Because these activities are critical to successfully avoiding
readmissions, we seek comment about the best ways to ensure that all
the activities of the discharge day management codes for hospital and
nursing facility discharge, including the care coordination activities,
are understood and furnished by the physicians or qualified
nonphysician practitioners who bill for these services. Potential ways
could include physician education or MEDLEARN articles.
c. Defining Post-Discharge Transitional Care Management Services
While we believe that current hospital and nursing facility
discharge management service codes adequately capture the care
management activities involved with discharging a beneficiary from a
hospital or skilled nursing facility, we do not believe that current E/
M office or other outpatient visit CPT codes appropriately describe
comparable care management work of the community physician or qualified
nonphysician practitioner coordinating care for the beneficiary post-
discharge. This is because the E/M codes represent the typical
outpatient office visit and do not capture or reflect the significant
care coordination activities that need to occur when a patient
transitions from institutional to community-based care. We believe that
the work of the discharging physician or qualified nonphysician
practitioner should be complemented by corresponding work of a
receiving physician or qualified nonphysician practitioner in the
community in order to ensure better continuity of care through
establishing or revising a plan of care for the beneficiary after
discharge. We acknowledge that many, if not most, physicians or
qualified nonphysician practitioners caring for beneficiaries following
a hospital or nursing facility

[[Page 44777]]

discharge have been furnishing coordinated care and reporting office or
other outpatient CPT codes. However, we agree with commenters to the CY
2012 proposed and final rules that the services described by current E/
M office or other outpatient CPT codes 99201 through 99215 may not
appropriately capture the significant coordination services involved in
post-discharge care.
We are proposing to create a HCPCS G-code that specifically
describes post-discharge transitional care management services. The
code would describe all non-face-to-face services related to the
transitional care management furnished by the community physician or
qualified nonphysician practitioner within 30 calendar days following
the date of discharge from an inpatient acute care hospital,
psychiatric hospital, long-term care hospital, skilled nursing
facility, and inpatient rehabilitation facility; hospital outpatient
for observation services or partial hospitalization services; and a
partial hospitalization program at a CMHC to community-based care. The
post-discharge transitional care management service includes non-face-
to-face care management services furnished by clinical staff member(s)
or office-based case manager(s) under the supervision of the community
physician or qualified nonphysician practitioner. We use the term
community physician and practitioner in this discussion to refer to the
community-based physician managing and coordinating a beneficiary's
care in the post-discharge period. We anticipate that most community
physicians will be primary care physicians and practitioners. We have
based the concept of this proposal, in part, on our policy for care
plan oversight services. We currently pay physicians for the non face-
to-face care plan oversight services furnished for patients under care
of home health agencies or hospices. These patients require complex and
multidisciplinary care modalities that involve: regular physician
development and/or revision of care plans, subsequent reports of
patient status, review of laboratory and other studies, communication
with other health professionals not employed in the same practice who
are involved in the patient's care, integration of new information into
the care plan, and/or adjustment of medical therapy. Physicians
providing these services bill HCPCS codes G0181 (Physician supervision
of a patient receiving Medicare-covered services provided by a
participating home health agency (patient not present) requiring
complex and multidisciplinary care modalities involving regular
physician development and/or revision of care plans, review of
subsequent reports of patient status, review of laboratory and other
studies, communication (including telephone calls) with other health
care professionals involved in the patient's care, integration of new
information into the medical treatment plan and/or adjustment of
medical therapy, within a calendar month, 30 minutes or more), or G0182
(Physician supervision of a patient under a Medicare-approved hospice
(patient not present) requiring complex and multidisciplinary care
modalities involving regular physician development and/or revision of
care plans, review of subsequent reports of patient status, review of
laboratory and other studies, communication (including telephone calls)
with other health care professionals involved in the patient's care,
integration of new information into the medical treatment plan and/or
adjustment of medical therapy, within a calendar month, 30 minutes or
more). (See the Medicare benefit manual, 100-02, Chapter 15, Section 30
for detailed description of these services.)
For CY 2013, we are proposing to create a new code to describe
post-discharge transitional care management. This service would
include:
Assuming responsibility for the beneficiary's care without
a gap.
++ Obtaining and reviewing the discharge summary.
++ Reviewing diagnostic tests and treatments.
++ Updating of the patient's medical record based on a discharge
summary to incorporate changes in health conditions and on-going
treatments related to the hospital or nursing home stay within 14
business days of the discharge.
Establishing or adjusting a plan of care to reflect
required and indicated elements, particularly in light of the services
furnished during the stay at the specified facility and to reflect
result of communication with beneficiary.
++ An assessment of the patient's health status, medical needs,
functional status, pain control, and psychosocial needs following the
discharge.
Communication (direct contact, telephone, electronic) with
the beneficiary and/or caregiver, including education of patient and/or
caregiver within 2 business days of discharge based on a review of the
discharge summary and other available information such as diagnostic
test results, including each of the following tasks:
++ An assessment of the patient's or caregiver's understanding of
the medication regimen as well as education to reconcile the medication
regimen differences between the pre- and post-hospital, CMHC, or SNF
stay.
++ Education of the patient or caregiver regarding the on-going
care plan and the potential complications that should be anticipated
and how they should be addressed if they arise.
++ Assessment of the need for and assistance in establishing or re-
establishing necessary home and community based resources.
++ Addressing the patient's medical and psychosocial issues, and
medication reconciliation and management.
When indicated for a specific patient, the post-discharge
transitional care service would also include:
Communication with other health care professionals who
will (re)assume care of the beneficiary, education of patient, family,
guardian, and/or caregiver.
Assessment of the need for and assistance in coordinating
follow up visits with health care providers and other necessary
services in the community.
Establishment or reestablishment of needed community
resources.
Assistance in scheduling any required follow-up with
community providers and services.
The post-discharge transitional care services HCPCS G-code we are
proposing would be used by the community physician or qualified
nonphysician practitioner to report the services furnished in the
community to ensure the coordination and continuity of care for
patients discharged from a hospital (inpatient stay, outpatient
observation, or outpatient partial hospitalization), SNF stay, or CMHC.
The post-discharge transitional care service would parallel the
discharge day management service for the community physician or
qualified nonphysician practitioner and complement the E/M office/
outpatient visit CPT codes.
The post-discharge transitional care service would support the
patient's physical and psychosocial health. In our recent Decision
Memorandum for Screening for Depression in Adults, CAG-00425N, we noted
that depression in older adults occurs in a complex psychosocial and
medical context and that, currently, we believe opportunities are
missed to improve mental health and general medical outcomes when
mental illness is under-recognized and undertreated in primary care
settings. We wish to emphasize the equal importance of the patient's
mental

[[Page 44778]]

health to the patient's physical condition to successful re-entry into
the community.
We propose that the post-discharge transitional care service HCPCS
G-code would be used to report physician or qualifying nonphysician
practitioner services for a patient whose medical and/or psychosocial
problems require moderate or high complexity medical decision making
during transitions in care from hospital (inpatient stay, outpatient
observation, and partial hospitalization), SNF stay, or CMHC settings
to community-based care. Moderate and high complexity medical decision
making are defined in the Evaluation and Management Guidelines. In
general, moderate complexity medical decision-making includes multiple
diagnoses or management options, moderate complexity and amount of data
to be reviewed, a moderate amount and/or complexity of data to be
reviewed; and a moderate risk of significant complications, morbidity,
and/or mortality. High complexity decision-making includes an extensive
number of diagnoses or management options, an extensive amount and/or
complexity of data to be reviewed, and high risk of significant
complications, morbidity, and/or mortality (See Evaluation and
Management Services Guide, Centers for Medicare & Medicaid Services,
December 2010.) We propose that the post-discharge transitional care
HCPCS code (GXXX1) would be payable only once in the 30 days following
a discharge, per patient per discharge, to a single community physician
or qualified nonphysician practitioner (or group practice) who assumes
responsibility for the patient's post-discharge transitional care
management. The service would be billable only at 30 days post
discharge or thereafter. The post-discharge transitional care
management service would be distinct from services furnished by the
discharging physician or qualified nonphysician practitioner reporting
CPT codes 99238 (Hospital discharge day management, 30 minutes or
less); 99239 (Hospital discharge day management, more than 30 minutes);
99217 (Observation care discharge day management); or Observation or
Inpatient Care services, CPT codes 99234-99236; as appropriate.
We propose to pay the first claim that we receive for the
beneficiary at 30 days after discharge. Given the elements of the
service and the short window of time following a discharge during which
a physician or qualifying nonphysician practitioner will need to
perform several tasks on behalf of a beneficiary, we believe it is
unlikely that two or more physicians or practitioners would have had a
face-to-face E/M contact with the beneficiary in the specified window
of 30 days prior or 14 days post discharge and have furnished the
proposed post-discharge transitional care management services listed
above. Therefore, we do not believe it is necessary to take further
steps to identify a beneficiary's community physician or qualified
nonphysician practitioner who furnishes the post-discharge transitional
care management services. We propose to pay only one claim for the
post-discharge transitional care GXXX1 billed per beneficiary at the
conclusion of the 30 day post-discharge period. Post-discharge
transitional care management relating to any subsequent discharges for
a beneficiary in the same 30-day period would be included in the single
payment. Practitioners billing this post-discharge transitional care
code accept responsibility for managing and coordinating the
beneficiary's care over the first 30 days after discharge. Although we
currently envision billing happening as it does for most services,
after the conclusion of the service, we welcome comment on whether in
this case there would be merit to allowing billing for the code to
occur at the time the plan of care is established.
We have explicitly constructed this proposal as a payment for non
face-to-face post-discharge transitional care management services
separate from payment for E/M or other medical visits. However, we
believe that it is important to ensure that the community physician or
qualified nonphysician practitioner furnishing post-discharge
transitional care management either have or establish a relationship
with the patient. As such, we propose that the community physician or
qualified nonphysician practitioner reporting post-discharge
transitional care management GXXX1 should already have a relationship
with the beneficiary, or establish one soon after discharge, prior to
furnishing transitional care management and billing this code.
Therefore, we propose that the community physician or qualified
nonphysician practitioner reporting a transitional care management
HCPCS G-code must have billed an E/M visit for that patient within 30
days prior to the hospital discharge (the start of post-discharge
transitional care management period), or must conduct an E/M office/
outpatient visit (99201 to 99215) within the first 14 days of the 30-
day post-discharge period of transitional care management services. The
E/M visit would be separately billed.
While we are proposing that the post-discharge transitional care
management code would not include a face-to-face visit, and that
physicians or qualified nonphysician practitioners would bill and be
paid for this care management service separately from a medical visit,
we are seeking comments about whether we should require a face-to-face
visit when billing for the post-discharge transitional care management
service. We are also seeking comments regarding how we might
incorporate such a required visit on the same day into the payment for
the proposed code. We considered several reasons for requiring a face-
to-face visit on the same day. We wondered whether, with a face-to-face
visit immediately after discharge, the plan of care would be more
accurate given that the patient's medical or psychosocial condition may
have changed from the time the practitioner last met with the patient
and the practitioner could better develop a plan of care through an in-
person visit and discussion. We also wondered whether beneficiaries
would understand their coinsurance liability for the post-discharge
transitional care service when they did not visit the physician's or
qualified nonphysician practitioner's office. On the other hand, we
have contemplated several scenarios where it is not possible for a
beneficiary to get to the physician's or qualified nonphysician
practitioner's office and welcome comment on whether an exception
process would be appropriate if we were to finalize a same day face-to-
face visit as a requirement for billing the post-discharge transitional
care management code.
The proposed post-discharge transitional care HCPCS G-code would be
described as follows:
GXXX1--Post-discharge transitional care management with the
following required elements:
Communication (direct contact, telephone, electronic) with
the patient or caregiver within 2 business days of discharge.
Medical decision making of moderate or high complexity
during the service period.
To be eligible to bill the service, physicians or
qualified nonphysician practitioners must have had a face-to-face E/M
visit with the patient in the 30 days prior to the transition in care
or within 14 business days following the transition in care.
We contemplated establishing a requirement that post-discharge
transitional care management be furnished by a physician or qualified
nonphysician practitioner or other clinical staff in the practice who
are qualified to assist beneficiaries in managing post-transition
changes in

[[Page 44779]]

conditions and treatments. We welcome public comment on whether this
would be an appropriate requirement for GXXX1.
We propose that a physician or qualified nonphysician practitioner
who bills for discharge management during the time period covered by
the transitional care management services code may not also bill for
HCPCS code GXXX1. The CPT discharge management codes are 99217, 99234-
99236, 99238-99239, 99281-99285, or 99315-99316, home health care plan
oversight services (HCPCS code G0181), or hospice care plan oversight
services (HCPCS code G0182) . We believe these codes describe care
management services for which Medicare makes separate payment and
should not be billed in conjunction with GXXX1, which is a
comprehensive post-discharge transitional care management service.
Further, we propose that a physician or qualified nonphysician
practitioner billing for a procedure with a 10- or 90-day global period
would not also bill HCPCS code GXXX1 in conjunction with that procedure
because any follow-up care management would be included in the post-
operative portion of the global period. Many of the global surgical
packages include discharge management codes. We believe that any
physician or qualified nonphysician practitioner billing separately for
the discharge management code that also is the community physician or
nonphysician practitioner for the beneficiary would be paid for post-
discharge transitional care management through the discharge management
code.
We are making this proposal to provide a separate reporting
mechanism to the community physician for these services in the context
of the broader HHS and CMS multi-year strategy to recognize and support
primary care and care management. Should any of these discrete
proposals, like this one, become final policy, they may be short-term
payment strategies that would be modified and/or revised to be
consistent with broader primary care and care management and
coordination services if the agency decides to pursue payment for a
broader set of management and coordination services in future
rulemaking. We would also note that this proposal dovetails with our
discussion under section III.J. of this proposed rule on the Value-
based Payment Modifier and Physician Feedback Reporting Program which
discusses hospital admission measures and a readmission measure as
outcome measures for the proposed value-based payment modifier
adjustment beginning in CY 2015.
c. Proposed Payment for Post-Discharge Transitional Care Management
Service
To establish a physician work relative value unit (RVU) for the
proposed post-discharge transitional care management, HCPCS code GXXX1,
we compared GXXX1 with CPT code 99238 (Hospital discharge day
management; 30 minutes or less) (work RVU = 1.28). We recognize that,
unlike CPT code 99238, HCPCS code GXXX1 is not a face-to-face visit.
However, we believe that the physician time and intensity involved in
post-discharge community care management is most equivalent to CPT code
99238 which, like the proposed new G-code, involves a significant
number of care management services. Therefore, we are proposing a work
RVU of 1.28 for HCPCS code GXXX1 for CY 2013. We also are proposing the
following physician times: 8 minutes pre-evaluation; 20 minutes intra-
service; and 10 minutes immediate post-service. The physician time file
associated with this PFS proposed rule is available on the CMS Web site
in the Downloads section for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.
In addition, we are proposing to crosswalk the clinical labor
inputs from CPT code 99214 (Level 4 established patient office or other
outpatient visit) to the post-discharge transitional care code. The
proposed CY 2013 direct PE input database reflects these inputs and is
available on the CMS Web site under the supporting data files for the
CY 2013 PFS proposed rule with comment period at http://www.cms.gov/PhysicianFeeSched/. The proposed PE RVUs included in Addendum B to this
proposed rule reflect the RVUs that result from application of this
proposal.
For malpractice expense, we are proposing a malpractice crosswalk
of CPT code 99214 for HCPCS code GXXX1 for CY 2013. We believe the
malpractice risk factor for CPT code 99214 appropriately reflects the
relative malpractice risk associated with furnishing HCPCS code GXXX1.
The malpractice RVUs included in Addendum B to this proposed rule
reflect the RVUs that result from the application of this proposal.
We note that as with other services paid under the PFS the 20
percent beneficiary coinsurance would apply to the post-discharge
transitional care management service as would the Part B deductible.
For BN calculations, we estimated that physicians or qualified
nonphysician practitioners would provide post-discharge transitional
care management services for 10 million discharges in CY 2013. This
number roughly considers the total number of hospital inpatient and SNF
discharges, hospital outpatient observation services and partial
hospitalization patients that may require with moderate to high
complexity decision-making.
For purposes of the Primary Care Incentive Payment Program (PCIP),
we are proposing to exclude the post discharge transitional care
management services from the total allowed charges used in the
denominator calculation to determine whether a physician is a primary
care practitioner. Under section 1833(x) of the statute the PCIP
provides a 10 percent incentive payment for primary care services
within a specific range of E/M services when furnished by a primary
care practitioner. Specific physician specialties and qualified
nonphysician practitioners can qualify as primary care practitioners if
60 percent of their PFS allowed charges are primary care services. As
we explained in the CY 2011 PFS final rule (75 FR 73435-73436), we do
not believe the statute authorizes us to add codes (additional
services) to the definition of primary care services. However, in order
to avoid inadvertently disqualifying community primary care physicians
who follow their patients into the hospital setting, we finalized a
policy to remove allowed charges for certain E/M services furnished to
hospital inpatients and outpatients from the total allowed charges in
the PCIP primary care percentage calculation.
We believe that the proposed transitional care management code
should be treated in the same manner as those services for the purposes
of PCIP because post-discharge transitional care management services
are a complement in the community setting to the hospital-based
discharge day management services already excluded from the PCIP
denominator. Similar to the codes already excluded from the PCIP
denominator, we are concerned that inclusion of the transitional care
management code in the denominator of the primary care percentage
calculation could produce unwarranted bias against ``true primary care
practitioners'' who are involved in furnishing post-discharge care to
their patients. Therefore, while physicians and qualified nonphysician
practitioners who furnish transitional care management would not
receive an additional incentive payment under the PCIP for the service
itself (because it is not considered a ``primary care service'' for
purposes of the PCIP), the allowed charges for transitional care

[[Page 44780]]

management would not be included in the denominator when calculating a
physician's or practitioner's percent of allowed charges that were
primary care services for purposes of the PCIP.
2. Primary Care Services Furnished in Advanced Primary Care Practices
a. Background
As we have discussed above, we are committed to considering new
options and developing future proposals for payment of primary care
services under the MPFS. Such options would promote comprehensive and
continuous assessment, care management, and attention to preventive
services that constitute effective primary care by establishing
appropriate payment when physicians furnish such services. One method
for ensuring that any targeted payment for primary care services would
constitute a minimum level of care coordination and continuous
assessment under the MPFS would be to pay physicians for services
furnished in an ``advanced primary care practice'' that has implemented
a medical home model supporting patient-specific care. The medical home
model has been the subject of extensive study in medical literature.
Since 2007, the AMA, American Academy of Family Physicians (AAFP), the
American Academy of Pediatrics (AAP), the American College of
Physicians (ACP), and the American Osteopathic Association (AOA), and
many other physician organizations have also endorsed ``Joint
Principles of the Patient-Centered Medical Home.'' In February 2011,
the AAFP, the AAP, the ACP, and AOA also published formal ``Guidelines
for Patient-Centered Medical Home (PCMH) Recognition and Accreditation
Programs'' to develop and promote the concept and practice of the PCMH.
(These guidelines are available at http://www.aafp.org/online/etc/medialib/aafp_org/documents/membership/pcmh/pcmhtools/pcmhguidelines.Par.0001.File.dat/GuidelinesPCMHRecognitionAccreditationPrograms.pdf.) As we have
discussed above, the Innovation Center has been conducting a several
initiatives based on the medical home concept.
The medical home concept emphasizes establishing an extensive
infrastructure requiring both capital investments and new staffing,
along with sophisticated processes, to support continuous and
coordinated care with an emphasis on prevention and early diagnosis and
treatment. The literature, reports, and guidelines dealing with the
medical home concept define the requisite elements or functions that
constitute this infrastructure and processes in various ways. For
example, the Innovation Center's CPC initiative identified a set of
five ``comprehensive primary care functions,'' which form the service
delivery model being tested and the required framework for practice
transformation under the CPC initiative. We believe these five
``comprehensive primary care functions'' provide an appropriate
starting point for discussing the incorporation of the comprehensive
primary care services delivered in advanced primary care practices
(practices implementing a medical home model) into the MPFS:
1. Risk-Stratified Care Management
One of the hallmarks of comprehensive primary care is the provision
of intensive care management for high-risk, high-need, high-cost
patients. Providers must provide routine, systematic assessment of all
patients to identify and predict which patients need additional
interventions. In consultation with their patients, they should create
a plan of care to assure care that is provided is congruent with
patient choices and values. Once patient needs, including social needs
and functional deficits, have been identified, they should be
systematically addressed. Markers of success include policies and
procedures describing routine risk assessment and the presence of
appropriate care plans informed by the risk assessment.
2. Access and Continuity
Health providers who know the patient should be accessible when a
patient needs care. Providers must have access to patient data even
when the office is closed so they can continue to participate in care
decisions with their patients. Patients need access to the patient care
team 24/7. Every patient is assigned to a designated provider or care
team with whom they are able to get successive appointments. Markers of
success include care continuity and availability of the EHR when the
office is closed.
3. Planned Care for Chronic Conditions and Preventive Care
Primary care must be proactive. Practitioners must systematically
assess all patients to determine his or her needs (one way would be
through the annual wellness visit \2\) and provide proactive,
appropriate care based on that assessment. Pharmaceutical management,
including medication reconciliation and review of adherence and
potential interactions, and oversight of patient self-management of
medications for diabetes, anti-coagulation management or warfarin
therapy, and other chronic conditions, should be a routine part of all
patient assessments. Markers of success include completion of the
Annual Wellness Visit and documentation of medication reconciliation.
---------------------------------------------------------------------------

\2\ The Affordable Care Act (ACA) covered an annual wellness
visit for Medicare beneficiaries through which they are to receive a
personalized prevention plan. The ACA also ensured preventive
services would be covered without cost if they are recommended by
the US Preventive Services Taskforce and meet certain other
conditions.
---------------------------------------------------------------------------

4. Patient and Caregiver Engagement
Truly patient-centered care assumes the mantra ``nothing about me
without me.'' Providers should establish systems of care that include
the patient in goal setting and decision making, creating opportunities
for patient engagement throughout the care delivery process. Markers of
success include policies and procedures designed to ensure that patient
preferences are sought and incorporated into treatment decisions.
5. Coordination of Care Across the Medical Neighborhood
The ``medical neighborhood'' is the totality of providers, related
non-health services and patients in an area, and the ways in which they
work together.\3\ Primary care can be seen as the hub of the
neighborhood and must take the lead in coordinating care. In
particular, primary care providers must move towards leadership of
health teams both within and outside their practice's walls. Providers
must have the ability to access a single medical record shared by the
whole team; the content of this record can be leveraged to manage
communication and information flow in support of referrals to other
clinicians, and to support safe and effective transitions from the
hospital and skilled nursing facilities back to the community. The
primary care practice must also include personnel who are qualified to
assist patients to manage post transition changes in conditions and
treatments required to support patients' health and reduce their need
for readmission. Markers of success include the presence of standard
processes and documents for communicating key information during care
transitions or upon referral to other providers.
---------------------------------------------------------------------------

\3\ ``Coordinating Care in the Medical Neighborhood'' White
Paper. Agency for Healthcare Research and Quality, June 2011.

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[[Page 44781]]

b. Advanced Primary Care Practices Accreditation and Infrastructure
1. Accreditation Utilizing Nationally Recognized Organizations
In the event that we were to establish an enhanced payment for
primary care services furnished to Medicare beneficiaries in an
advanced primary care practice environment, we would need to establish
a set of parameters to determine whether or not a clinical practice
could be considered an advanced primary care practice (medical home).
The foundation for our assessment could be whether the practice has the
capacity to deliver comprehensive primary care services that mirror the
five functions of the CPC initiative. However, we would need to
identify explicit criteria in the form of documented processes and
quantifiable practice attributes, such as the availability and capacity
of electronic health records, to assess the presence of these five
functions.
We could make our determination that a practice has implemented all
identified functions and is, therefore, an advanced primary care
practice, by recognizing one or more of the nationally available
accreditation programs currently in use by major organizations that
provide accreditation for advanced primary care practices, frequently
credentialed as ``PCMHs''. Having established recognition of
accreditation by one of several national accreditation organizations,
we might require that a provider document through the enrollment
process (PECOS) that the practice meets the definition of an Advanced
Primary Care Practice to furnish comprehensive primary care services.
We have identified four national models that provide accreditation for
organizations wishing to become an advanced primary care practice; the
Accreditation Association for Ambulatory Health, The Joint Commission,
the NCQA, and the Utilization Review Accreditation Commission (URAC).
While there are similarities between all four of the national models
for PCMH accreditation, each model has different standards and areas of
emphasis in its review and approval of organizational capacity and
function as a PCMH. For instance, according to a report prepared for
CMS by the Urban Institute entitled, ``Patient-Centered Medical Home
Recognition Tools: A Comparison of Ten Surveys' Content and Operational
Details'' released in March of 2012, the NCQA places a heavier emphasis
on Health IT than the other accrediting bodies in their measurement
standards. This report can be viewed at the following link: http://www.urban.org/uploadedpdf/412338-patient-centered-medical-home-rec-tools.pdf.
We believe that basing our determination on accreditation as a PCMH
by a national accreditation organization would offer a number of
benefits, including that their accreditation tools, which review
specific aspects of practice including information systems and
organizational processes already are well known, widely used, and well
respected. Level 3 NCQA accreditation, URAC, the Accreditation
Association for Ambulatory Health and Joint Commission accreditation
standards are, despite their differences, very similar to the concepts
of the comprehensive primary care services, and CMS could consider
accepting accreditation from any of these as documentation that a group
practice is an advanced primary care practice. Other payers currently
recognize PCMH accreditation by these organizations for payment. A
publication from the Medical Group Management Association (MGMA) ``The
Patient Centered Medical Home Guidelines: A Tool to Compare National
Programs'' found that all four of the national accreditation programs
met the guidelines set forth by the AAFP, the AAP, the ACP, and AOA in
their 2011 guidelines. The MGMA report can be downloaded from the
following Web site: http://www.mgma.com/Books/Patient-Centered-Medical-Home-Guidelines/. However, we recognize that the cost to a practice to
acquire accreditation from one of these accrediting organizations could
be significant. In addition, the processes to receive accreditation as
an advanced primary care practice under these guidelines can be
lengthy. We also are concerned that some parts of the accreditation
processes for these accrediting organizations would be considered
proprietary. We believe that Medicare payment should rely whenever
feasible on criteria and tools that are in the public domain. We also
recognize that it could be challenging for us to address how we could
rely on a set of standards from a private accrediting body while still
retaining responsibility for accreditation outcomes. It is unclear at
this time how we would balance the proprietary interests of these
private organizations in their accreditation models with our
responsibility to establish and maintain appropriate transparency in
our decision-making processes.
If we were to move forward with a process that would use the
accreditation standards from a private sector organization to make
determinations as to whether a practice is an advanced primary care
practice, we would need to determine whether to recognize one, some, or
all of the available and established accreditation models. As we stated
above, because each accreditation tool has different standards and
emphasizes different criteria, we are concerned that there could be
consistency issues if we were to recognize accreditation from all four
organizations as evidence of certification to provide advanced primary
care. It would be important to ensure that any of the accreditation
tool(s) we selected met the goals of our policy. We specifically invite
comments regarding the processes that we should consider for
application, confirmation that recognized accreditation standards are
met, and notification of recognition as a PCMH if we were to recognize
practices as advanced primary care practices based on accreditation as
a PCMH by one or more of the national accreditation organizations.
2. CMS-Developed Advanced Primary Care Accreditation Criteria
Alternatively, we could develop our own criteria using, for
example, the five functions of comprehensive primary care used in the
CPC initiative and described above, to determine what constitutes
advanced primary care for purposes of Medicare payment. We would then
need to develop a process for determining whether specific physician
practices meet the criteria for advanced primary care. This could
include creating our own criteria and processes for review or could
include using existing accrediting bodies to measure compliance against
advanced primary care criteria determined by CMS. This would create
more consistent standards for identifying advanced primary care
practices and provide greater transparency in the certification
process. If CMS was able to determine the validity of an organization's
application to be recognized to be an advanced primary care practice,
this could reduce the cost to the physician practice for accreditation.
However, practices would still need to invest in organizational process
and infrastructure to meet advanced primary care criteria. Implementing
an internal process to accredit practices as advanced primary care for
purposes of Medicare payment could involve significant administrative
cost. The amount of cost likely would depend on the rigor of the
required criteria, and the amount of documentation and review required
prior to approval as an advanced primary care practice.

[[Page 44782]]

If we established our own criteria in order to resolve the lack of
standardization between the standards adopted by the various national
accreditation organizations for PCMH, it is possible that the
accrediting bodies would then be able to assist us in determining
compliance with the CMS criteria. Depending on the nature of the
criteria, the CMS criteria may cost less to implement but would likely
require a practice to incur the cost for an accrediting body to review
the practice's compliance. We invite public comment on the potential
approaches we could use to identify advanced primary care practices for
purposes of Medicare payment, including the possible use of one or more
national accrediting organizations (and whether meaningful use of
certified electronic health record technology should be required for
such accreditation) as part of a Medicare approval process, as well as
any other potential approaches to accrediting advanced primary care
practices that we have not discussed here.
c. Beneficiary Attribution for Purposes of Payment
One potential issue surrounding comprehensive primary care services
delivered in an advanced primary care practice is attribution of a
beneficiary to an advanced primary care practice. We would not expect
that there would be more than one practice functioning as an advanced
primary care practice for a beneficiary at any given time. However, in
a fee-for-service environment we would need to determine which practice
is currently serving as the advanced primary care practice for the
beneficiary in order to ensure appropriate payment. One method of
attribution could be that each beneficiary prospectively chooses an
advanced primary care practice. We seek comment on how such a choice
might be documented and incorporated into the fee-for-service
environment. Other attribution methodologies might examine the quantity
and type of E/M or other designated services furnished to that
beneficiary by the practice. We welcome input on the most appropriate
approach to the issue of how to best determine the practice that is
functioning as the advanced primary care practice for each beneficiary.
We are not considering proposals that would restrict a beneficiary's
free choice of practitioners.
In summary, we believe that targeting primary care management
payments to advanced primary care practices would have many merits
including ensuring a basic level of care coordination and care
management. We recognize that the advanced primary care model has
demonstrated efficacy in improving the value of health care in several
contexts, and we are exploring whether we can achieve these outcomes
for the Medicare population through several demonstration projects.
Careful analysis of the outcomes of these demonstration projects will
inform our understanding of how this model of care affects the Medicare
population and of potential PFS payment mechanisms for these services.
At the same time, we also believe that there are many policy and
operational issues to be considered when nationally implementing such a
program within the PFS. Therefore, we generally invite broad public
comment on the accreditation and attribution issues discussed above and
any other aspect, including payment, of integrating an advanced primary
care model in to the PFS.

I. Payment for Molecular Pathology Services

For CY 2012, the AMA CPT Editorial Panel began creating new CPT
codes to replace the current codes used to bill for molecular pathology
services. The new codes describe distinct molecular pathology tests and
test methods. CPT divided these new molecular pathology codes into
Tiers. Tier 1 codes describe common gene-specific and genomic
procedures. Tier 2 codes capture reporting for less common tests and
each Tier 2 code represents a group of tests that involve similar
technical resources and interpretive work. For CY 2012, CPT created 101
new molecular pathology codes; 92 new Tier 1 codes for individual tests
and nine Tier 2 codes for common groups of tests. These codes appear in
Table 21. We anticipate that CPT will create additional molecular
pathology codes for CY 2013.
We stated in our notice for the Clinical Laboratory Fee Schedule
(CLFS) Annual Public Meeting (to be held July 16-17, 2012 at CMS
headquarters in Baltimore, Maryland, more information at https://www.cms.gov//Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/Public_Meetings.html) that we are following our process to determine
the appropriate basis and payment amounts for new clinical diagnostic
laboratory tests, including the molecular pathology tests, under the
CLFS for CY 2013. However, we also stated that we understand
stakeholders in the molecular pathology community continue to debate
whether Medicare should pay for molecular pathology tests under the
CLFS or the PFS. Medicare pays for clinical diagnostic laboratory tests
through the CLFS and for services that ordinarily require physician
work through the PFS. We stated that we believe we would benefit from
additional public comments on whether these tests are clinical
diagnostic laboratory tests that should be paid under the CLFS or
whether they are physicians' services that should be paid under the
PFS. Therefore, we said that we intend to solicit comment on this issue
in this proposed rule, as well as public comment on pricing policies
for these tests under the CLFS at the Annual Public Meeting. This
section first discusses and requests comment on whether these molecular
pathology CPT codes describe services that ordinarily require physician
work, and then discusses our proposal to address payment for these CPT
codes on the PFS, pending public comment on the first question. This
proposal is parallel to the invitation to discuss at the CLFS Annual
Public Meeting, the appropriate basis for establishing a payment amount
for the molecular pathology CPT codes as clinical diagnostic laboratory
tests under the CLFS.
As detailed in section II.B.1. of this proposed rule, Medicare
establishes payment under the PFS by setting RVUs for physician work,
practice expense (PE), and malpractice expense for services that
ordinarily require physician work. To establish RVUs for physician
work, we conduct a clinical review of the relative physician work (time
by intensity) required for each PFS service. This clinical review
includes the review of RVUs recommended by the American Medical
Association Relative Value Scale Update Committee (AMA RUC) and others.
The AMA RUC-recommended physician work RVUs typically are based in part
on results of a survey conducted by the relevant specialty society for
a service. CMS establishes RVUs for PE under a resource-based PE
methodology that considers the cost of direct inputs, as well as
indirect PE costs. The AMA RUC, through the Practice Expense
Subcommittee, recommends direct PE inputs to CMS, and the relevant
specialty societies provide pricing information for those direct inputs
to CMS. After we determine the appropriate direct PE inputs, the PE
methodology is used to develop proposed PE RVUs. Physician work and PE
RVUs for each CPT code are constructed to reflect the typical case;
that is, they reflect the service as it is furnished in greater than 50
percent of Medicare cases. CMS establishes resource-based malpractice
expense RVUs using weighted specialty-specific malpractice insurance
premium data collected from commercial and

[[Page 44783]]

physician-owned insurers in CY 2010 (74 FR 61758). For most services
paid under the PFS, beneficiary cost-sharing is 20 percent of the
payment amount.
CMS establishes a payment rate for new clinical diagnostic
laboratory tests under the CLFS by either crosswalking or gap-filling.
Crosswalking is used when a new test code is comparable to an existing
test code, multiple existing test codes, or a portion of an existing
test code on the CLFS. Under this methodology, the new test code is
assigned the local fee schedule amounts and the national limitation
amount (NLA) of the existing test, with payment made at the lesser of
the local fee schedule amount or the NLA. Gap-filling is used when no
comparable test exists on the CLFS. In the first year, carrier-specific
amounts are established for the new test code using the following
sources of information: Charges for the test and routine discounts to
charges; resources required to perform the test; payment amounts
determined by other payers; and charges, payment amounts, and resources
required for other tests that may be comparable or otherwise relevant.
For the second year, the NLA is calculated, which is the median of the
carrier-specific amounts. See Sec. 414.508. Services paid under the
CLFS do not include any physician work, although tests paid under the
CLFS can involve interpretation by a laboratory technician, a chemist,
or a geneticist--none of which are occupations that meet the statutory
definition of a physician. While payments can vary geographically due
to contractor discretion across locality areas (which are the same
localities used for the GPCIs under the PFS), payments cannot exceed a
NLA nor can they be adjusted once rates are determined. In the CY 2008
PFS final rule with comment period, we adopted a prospective
reconsideration process for new tests paid under the CLFS, allowing a
single year for Medicare and stakeholders to review pricing for new
tests after the payment is initially established (72 FR 66275 through
66279, 66401 through 66402). Finally, the statute waives beneficiary
cost-sharing for clinical laboratory diagnostic tests paid on the CLFS.
For a handful of clinical laboratory services paid under the CLFS,
we allow an additional payment under the PFS for the professional
services of a pathologist when they meet the requirements for clinical
consultation service as defined in Sec. 415.130. The PFS pays for
services that ordinarily require the work of a physician and, with
regard to pathology services, explicitly pays for both the professional
and technical component of the services of a pathologist as defined in
Sec. 415.130 including surgical pathology, cytopathology, hematology,
certain blood banking services, clinical consultations, and
interpretive clinical laboratory services.
Molecular pathology tests are currently billed using combinations
of longstanding CPT codes that describe each of the various steps
required to perform a given test. This billing method is called
``stacking'' because different ``stacks'' of codes are billed depending
on the components of the furnished test. Currently, all of the stacking
codes are paid through the CLFS. One stacking code, CPT code 83912
(molecular diagnostics; interpretation and report) is paid on both the
CLFS and the PFS. Payment for the interpretation and report of a
molecular pathology test when furnished and billed by a physician is
made under the PFS using the professional component (PC, or 26) of CPT
code 83912 (83912-26). Payment for the interpretation and report of a
molecular pathology test when furnished by non-physician laboratory
staff is made under the CLFS using CPT code 83912.
Since the creation of new molecular pathology CPT codes, there has
been significant debate in the stakeholder community regarding whether
these new molecular pathology codes describe physicians' services that
ordinarily require physician work and would be paid under the PFS, or
whether they describe clinical diagnostic laboratory tests that would
be paid on the CLFS. The AMA RUC reviewed the 101 new molecular
pathology CPT codes and concluded that 79 of 101 new molecular
pathology codes include work furnished by a physician. The American
Clinical Laboratory Association (ACLA) has indicated that 32 of the 101
new molecular pathology codes are interpreted by a physician and that a
physician may perform the technical component associated with 2 of the
101 CPT codes. Only 15 of the 101 new codes appear on both the AMA RUC
and ACLA list of codes that each believe include work furnished by a
physician. Additionally, some stakeholders have suggested that all
molecular pathology tests require physician interpretation and report.
Other stakeholders have suggested that the interpretation and report of
a molecular pathology test is not ordinarily required because the
majority of the molecular pathology tests are clearly negative so
interpretation and reporting generally are not necessary. In addition,
some stakeholders have argued that molecular pathology tests are
becoming more and more automated, and therefore generally do not
require interpretation by a physician.
In the CY 2012 PFS final rule (76 FR 73190), we stated that for CY
2012, Medicare would continue to use the existing stacking codes for
the reporting and payment of these molecular pathology services, and
that the 101 new CPT codes would not be valid for payment for CY 2012.
We did this because we were concerned that we did not have sufficient
information to know whether these new molecular pathology CPT codes
describe clinical diagnostic laboratory tests or services that
ordinarily require physician work. For CY 2013, we continue to have
many of the same concerns that led us not to recognize the 101
molecular pathology CPT codes for payment for CY 2012. Specifically, we
acknowledge that we are lacking definitive answers to the following
questions:
Do each of the 101 molecular pathology CPT codes describe
services that are ordinarily furnished by a physician?
Do each of these molecular pathology CPT codes ordinarily
require interpretation and report?
What is the nature of that interpretation and does it
typically require physician work?
Who furnishes interpretation services and how frequently?
We are seeking public comment on these questions and the broader
issue of whether the new molecular pathology codes describe physicians'
services that should be paid under the PFS, or if they describe
clinical diagnostic laboratory tests that should be paid under the
CLFS.
As we continue to consider public comment on whether these
molecular pathology CPT codes describe services that ordinarily require
physician work, we want to ensure that there is a payment mechanism in
place to pay for these CPT codes for CY 2013. We propose to price all
of the 101 new molecular pathology codes through a single fee schedule,
either the CLFS or the PFS. After meeting with stakeholders and
reviewing each CPT code, we believe that there is little variation in
the laboratory methodologies, as all of them employ gene sequencing
processes. However, there are very different processes for establishing
payment rates under the PFS and the CLFS. As discussed above, Medicare
sets payment under the CLFS by either crosswalking or gap-filling and,
after the prospective reconsideration process, currently cannot adjust
the payment amount

[[Page 44784]]

further. In contrast, Medicare sets payment under the PFS through a set
of resource-based methodologies for physician work, PE, and malpractice
expense, and payment can be reviewed and adjusted as the resources
required to furnish a service change. We are concerned that
establishing different prices for comparable laboratory services across
two different payment systems would create a financial incentive to
choose one test over another simply because of its fee schedule
placement. We are also concerned that the differences in prices would
become more pronounced over time as the PFS continues to review the
values for physician work and PE inputs relative to established CLFS
prices. Therefore, because of the homogeneity of the laboratory
methodologies behind these procedure test codes, we believe that it is
appropriate for all 101 new molecular pathology CPT codes to be priced
on the same fee schedule using the same methodology. We invite public
comment on this proposal.
In our effort to determine the appropriate Medicare payment for
these new molecular pathology codes, stakeholders will have the
opportunity to discuss the CLFS payment basis for establishing payment
amounts for the molecular pathology codes discussed above at the CLFS
Annual Public Meeting in July 2012. Section 1833(h)(8)(A) of the Act,
which discusses the CLFS, requires the Secretary to ``establish by
regulation procedures for determining the basis for, and amount of,
payment [under the CLFS] for any clinical diagnostic laboratory test
with respect to which a new or substantially revised HCPCS code is
assigned on or after January 1, 2005.'' Clauses (i) and (ii) of section
1833(h)(8)(B) of the Act requires the Secretary to: 1) Make ``available
to the public (through an Internet Web site and other appropriate
mechanisms) a list that includes any such test for which establishment
of a payment amount * * * is being considered for a year;'' and, ``on
the same day such list is made available, causes to have published in
the Federal Register notice of a meeting to receive comments and
recommendations (and data on which recommendations are based) from the
public on the appropriate basis * * * for establishing payment amounts
for the tests on such list.'' Because we believe that these molecular
pathology codes may be clinical diagnostic laboratory tests payable on
the CLFS, comments and recommendations from the public on the
appropriate basis for establishing payment amounts on the CLFS will be
discussed at the CY 2013 CLFS Annual Public Meeting. More information
on the CLFS Annual Public Meeting is available in the Federal Register
at 77 FR 31620 through 31622 and on the CMS Web site at http://www.cms.hhs.gov/ClinicalLabFeeSched.
As a parallel to our invitation to discuss these molecular
pathology codes as clinical diagnostic laboratory tests at the CLFS
Annual Public Meeting in July 2012, we also propose payment amounts for
these codes under the PFS for CY 2013. The AMA RUC provided CMS with
recommendations for physician work RVUs and PE inputs for the 79 CPT
codes it believes include physician work. At our request, CAP provided
CMS with direct PE input recommendations for 15 of the remaining 22 CPT
codes to the best of their ability. We do not have recommendations on
physician work RVUs or direct PE inputs for 7 of 101 codes which
represent tests that are patented, and therefore the methodology used
to furnish the service is proprietary and has been unavailable to the
AMA RUC or CMS to support developing appropriate direct PE inputs. For
the 79 CPT codes, the AMA RUC-recommended physician work RVUs range
from 0.13 to 2.35, with a median work RVU of 0.45. The AMA RUC-
recommended physician intra-service times (which, for these codes,
equals the total times) range from 7 minutes to 80 minutes, with a
median intra-service time of 18 minutes. We would note that the
physician work RVU for CPT code 83912-26 and all but one of the other
clinical diagnostic laboratory services for which CMS recognizes
payment for clinical interpretation is 0.37. Table 21 lists AMA RUC-
recommended physician work RVUs and times for these services.
Molecular pathology tests can be furnished in laboratories of
different types and sizes (for example a large commercial laboratory or
a pathologist's office), and tests may be furnished in small or large
batches. The methodologies used and resources involved in furnishing a
specific test can vary from laboratory to laboratory. When developing
direct PE input recommendations for CMS, CAP and the AMA RUC made
assumptions about the typical laboratory setting and batch size to
determine the typical direct PE inputs for each service. Given that
many of these services are furnished by private laboratories, providing
recommendations on the typical inputs was challenging for many
services, and not possible for other services. The AMA RUC and CAP-
recommended direct PE inputs are available on the CMS Web site in the
files supporting this CY 2013 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. We appreciate all of the effort CAP
has made to develop national pricing inputs. However, we agree with its
view that, in many cases, there is no established protocol for
executing many of these tests and that the potential means to execute
these tests can vary considerably.
In addition to recommendations on physician work and direct PE
inputs, the AMA RUC provided CMS with recommended utilization
crosswalks for the 79 molecular pathology services it believes are
typically furnished by a physician. When there are coding changes, the
utilization crosswalk tracks Medicare utilization from an existing code
to a new code. The existing code utilization figures are drawn from
Medicare claims data. We use utilization crosswalk assumptions to
ensure PFS BN and to create PE RVUs through the PE methodology.
Currently, payment for the interpretation and report of a molecular
pathology test when furnished and billed by a physician is made under
the PFS using CPT code 83912-26. Because CPT created the new molecular
pathology codes to replace the current stacking codes, when
recommending utilization crosswalks, the AMA RUC started with the total
utilization for CPT code 83912-26, and divided that utilization among
the 79 CPT codes. CAP has indicated that it distributed the utilization
based, in part, on ICD-9 diagnosis data. Table 22 lists the AMA RUC-
recommended utilization crosswalks for these services.
We are concerned that the RUC-recommended utilization is too low
because it is based on the utilization of CPT code 83912-26 only.
Instead, we believe that the utilization assumptions for the technical
component of the 101 new CPT codes should be based on the utilization
of the corresponding CPT codes currently billed on the CLFS. Several
laboratories provided us with a list of the molecular pathology tests
that they perform, and identified the stacking codes that are currently
used to bill for each test and the new CPT code that would be billed
for each test. However, because the same molecular pathology test may
be billed using different stacks, and the same stack may be billed for
different tests, it is not possible to determine which stacks match
which new CPT codes for all Medicare claims. Additionally, if a
beneficiary has more than one test on the same date of service and both
stacks

[[Page 44785]]

are billed on the same Medicare claim, it is not possible to determine
which stacking codes on the claim make up each stack. Furthermore, some
tests described by the new CPT codes are currently billed using general
``not otherwise classified'' (NOC) pathology CPT codes that capture a
range of services and not just the molecular pathology tests described
by the new CPT codes. Given these factors, it is difficult to estimate
the utilization of the 101 new molecular pathology codes based on the
Medicare billing of the current stacking and NOC codes.
If we were to finalize payment for molecular pathology services
under the PFS, we do not believe that we could propose national payment
rates at this time. Many outstanding questions remain including:
If these services are furnished by a physician, what are
the appropriate physician work RVUs and times relative to other similar
services?
Where and how are each of these services typically
furnished--for example, what is the typical laboratory setting and
batch size?
What is the correct projected utilization for each of
these services?
Given these major areas of uncertainty, if CMS determined that new
molecular pathology CPT codes should be paid under the PFS for CY 2013,
we are proposing to allow the Medicare contractors to price these codes
because we do not believe we have sufficient information to engage in
accurate national pricing and because the price of tests can vary
locally. As previously discussed, this proposal is a parallel to the
invitation to discuss at the CLFS Annual Public Meeting the appropriate
basis for establishing a payment amount for these molecular pathology
tests as clinical diagnostic laboratory tests under the CLFS. If we
decide to finalize payment for these new codes under the PFS, we would
consider modifying Sec. 415.130 as appropriate to provide for payment
to a pathologist for molecular pathology services.
After reviewing comments received on the proposals contained within
this CY 2013 PFS proposed rule, and after hearing the discussion at the
CLFS Annual Public Meeting, we will determine the appropriate basis for
establishing payment amounts for the new molecular pathology codes. We
intend to publish our final decision in the CY 2013 PFS final rule with
comment period and, at the same time that rule is published, as stated
in the CLFS Public Meeting Notice, to post final payment
determinations, if any, for the molecular pathology tests that will be
paid under the CLFS.

Table 21--AMA RUC-Recommended Physician Work RVUs and Times for New
Molecular Pathology CPT Codes
------------------------------------------------------------------------
AMA RUC-
AMA RUC- Recommended
CPT Code Short descriptor Recommended physician intra-
physician work service time
RVU (minutes)
------------------------------------------------------------------------
81206....... Bcr/abl1 gene major 0.37 15
bp.
81207....... Bcr/abl1 gene minor 0.15 11
bp.
81208....... Bcr/abl1 gene other 0.46 18
bp.
81210....... Braf gene........... 0.37 15
81220....... Cftr gene com 0.15 10
variants.
81221....... Cftr gene known fam 0.40 20
variants.
81222....... Cftr gene dup/delet 0.22 13
variants.
81223....... Cftr gene full 0.40 20
sequence.
81224....... Cftr gene intron 0.15 10
poly t.
81225....... Cyp2c19 gene com 0.37 13
variants.
81226....... Cyp2d6 gene com 0.43 15
variants.
81227....... Cyp2c9 gene com 0.38 14
variants.
81240....... F2 gene............. 0.13 7
81241....... F5 gene............. 0.13 8
81243....... Fmr1 gene detection. 0.37 15
81244....... Fmr1 gene 0.51 20
characterization.
81245....... Flt3 gene........... 0.37 15
81256....... Hfe gene............ 0.13 7
81257....... Hba1/hba2 gene...... 0.50 20
81261....... Igh gene rearrange 0.52 21
amp meth.
81262....... Igh gene rearrang 0.61 20
dir probe.
81263....... Igh vari regional 0.52 23
mutation.
81264....... Igk rearrangeabn 0.58 22
clonal pop.
81265....... Str markers specimen 0.40 17
anal.
81266....... Str markers spec 0.41 15
anal addl.
81267....... Chimerism anal no 0.45 18
cell selec.
81268....... Chimerism anal w/ 0.51 20
cell select.
81270....... Jak2 gene........... 0.15 10
81275....... Kras gene........... 0.50 20
81291....... Mthfr gene.......... 0.15 10
81292....... Mlh1 gene full seq.. 1.40 60
81293....... Mlh1 gene known 0.52 28
variants.
81294....... Mlh1 gene dup/delete 0.80 30
variant.
81295....... Msh2 gene full seq.. 1.40 60
81296....... Msh2 gene known 0.52 28
variants.
81297....... Msh2 gene dup/delete 0.80 30
variant.
81298....... Msh6 gene full seq.. 0.80 30
81299....... Msh6 gene known 0.52 28
variants.
81300....... Msh6 gene dup/delete 0.65 30
variant.
81301....... Microsatellite 0.50 20
instability.

[[Page 44786]]

81302....... Mecp2 gene full seq. 0.65 30
81303....... Mecp2 gene known 0.52 28
variant.
81304....... Mecp2 gene dup/delet 0.52 28
variant.
81310....... Npm1 gene........... 0.39 19
81315....... Pml/raralpha com 0.37 15
breakpoints.
81316....... Pml/raralpha 1 0.22 12
breakpoint.
81317....... Pms2 gene full seq 1.40 60
analysis.
81318....... Pms2 known familial 0.52 28
variants.
81319....... Pms2 gene dup/delet 0.80 30
variants.
81331....... Snrpn/ube3a gene.... 0.39 15
81332....... Serpina1 gene....... 0.40 15
81340....... Trb@ gene rearrange 0.63 25
amplify.
81341....... Trb@ gene rearrange 0.45 19
dirprobe.
81342....... Trg gene 0.57 25
rearrangement anal.
81350....... Ugt1a1 gene......... 0.37 15
81355....... Vkorc1 gene......... 0.38 15
81370....... Hla i & ii typing lr 0.54 15
81371....... Hla i & ii type 0.60 30
verify lr.
81372....... Hla i typing 0.52 15
complete lr.
81373....... Hla i typing 1 locus 0.37 15
lr.
81374....... Hla i typing 1 0.34 13
antigen lr.
81375....... Hla ii typing ag 0.60 15
equiv lr.
81376....... Hla ii typing 1 0.50 15
locus lr.
81377....... Hla ii type 1 ag 0.43 15
equiv lr.
81378....... Hla i & ii typing hr 0.45 20
81379....... Hla i typing 0.45 15
complete hr.
81380....... Hla i typing 1 locus 0.45 15
hr.
81381....... Hla i typing 1 0.45 12
allele hr.
81382....... Hla ii typing 1 loc 0.45 15
hr.
81383....... Hla ii typing 1 0.45 15
allele hr.
81400....... Mopath procedure 0.32 10
level 1.
81401....... Mopath procedure 0.40 15
level 2.
81402....... Mopath procedure 0.50 20
level 3.
81403....... Mopath procedure 0.52 28
level 4.
81404....... Mopath procedure 0.65 30
level 5.
81405....... Mopath procedure 0.80 30
level 6.
81406....... Mopath procedure 1.40 60
level 7.
81407....... Mopath procedure 1.85 60
level 8.
81408....... Mopath procedure 2.35 80
level 9.
------------------------------------------------------------------------

Table 22--AMA RUC-Recommended Utilization Crosswalks for New Molecular
Pathology CPT Codes
------------------------------------------------------------------------
Analytic
Source Destination ratio*
------------------------------------------------------------------------
83912 26................................ 81206 0.116
83912 26................................ 81207 0.003
83912 26................................ 81208 0.003
83912 26................................ 81210 0.020
83912 26................................ 81220 0.017
83912 26................................ 81221 0.003
83912 26................................ 81222 0.003
83912 26................................ 81223 0.003
83912 26................................ 81224 0.003
83912 26................................ 81225 0.006
83912 26................................ 81226 0.006
83912 26................................ 81227 0.011
83912 26................................ 81240 0.073
83912 26................................ 81241 0.110
83912 26................................ 81243 0.003
83912 26................................ 81244 0.000
83912 26................................ 81245 0.014
83912 26................................ 81256 0.050
83912 26................................ 81257 0.014
83912 26................................ 81261 0.014
83912 26................................ 81262 0.002
83912 26................................ 81263 0.001
83912 26................................ 81264 0.011
83912 26................................ 81265 0.043
83912 26................................ 81266 0.001
83912 26................................ 81267 0.006
83912 26................................ 81268 0.001
83912 26................................ 81270 0.050
83912 26................................ 81275 0.050
83912 26................................ 81291 0.017
83912 26................................ 81292 0.003
83912 26................................ 81293 0.001
83912 26................................ 81294 0.002
83912 26................................ 81295 0.003
83912 26................................ 81296 0.001
83912 26................................ 81297 0.002
83912 26................................ 81298 0.001
83912 26................................ 81299 0.002
83912 26................................ 81300 0.001
83912 26................................ 81301 0.003
83912 26................................ 81302 0.001
83912 26................................ 81303 0.000
83912 26................................ 81304 0.000
83912 26................................ 81310 0.014
83912 26................................ 81315 0.017
83912 26................................ 81316 0.003
83912 26................................ 81317 0.002
83912 26................................ 81318 0.001
83912 26................................ 81319 0.001
83912 26................................ 81331 0.001
83912 26................................ 81332 0.003
83912 26................................ 81340 0.011
83912 26................................ 81341 0.003
83912 26................................ 81342 0.017

[[Page 44787]]

83912 26................................ 81350 0.002
83912 26................................ 81355 0.011
83912 26................................ 81370 0.043
83912 26................................ 81371 0.029
83912 26................................ 81372 0.011
83912 26................................ 81373 0.011
83912 26................................ 81374 0.029
83912 26................................ 81375 0.006
83912 26................................ 81376 0.006
83912 26................................ 81377 0.006
83912 26................................ 81378 0.006
83912 26................................ 81379 0.003
83912 26................................ 81380 0.003
83912 26................................ 81381 0.003
83912 26................................ 81382 0.003
83912 26................................ 81383 0.003
83912 26................................ 81400 0.007
83912 26................................ 81401 0.007
83912 26................................ 81402 0.007
83912 26................................ 81403 0.007
83912 26................................ 81404 0.007
83912 26................................ 81405 0.007
83912 26................................ 81406 0.003
83912 26................................ 81407 0.003
83912 26................................ 81408 0.003
------------------------------------------------------------------------
* Percentage of source code utilization transferred to the destination
code

J. Payment for New Preventive Service HCPCS G-Codes

Under section 1861(ddd) of the Act, as amended by Section 4105 of
the Affordable Care Act, CMS is authorized to add coverage of
``additional preventive services'' if certain statutory criteria are
met as determined through the national coverage determination (NCD)
process, including that the service meets all of the following
criteria: (1) They must be reasonable and necessary for the prevention
or early detection of illness or disability, (2) they must be
recommended with a grade of A or B by the United States Preventive
Services Task Force (USPSTF), and (3) they must be appropriate for
individuals entitled to benefits under Part A or enrolled under Part B.
After reviewing the USPSTF recommendations for the preventive services,
conducting evidence reviews, and considering public comments under the
NCD process, we determined that the above criteria were met for the
services listed in Table 23. Medicare now covers each of the following
preventive services:
Screening and Behavioral Counseling Interventions in
Primary Care to Reduce Alcohol Misuse, effective October 14, 2011;
Screening for Depression in Adults, effective October 14,
2011;
Screening for Sexually Transmitted Infections (STIs) and
High Intensity Behavioral Counseling (HIBC) to Prevent STIs, effective
November 8, 2011;
Intensive Behavioral Therapy for Cardiovascular Disease,
effective November 8, 2011; and
Intensive Behavioral Therapy for Obesity, effective
November 29, 2011.
Table 23 lists the HCPCS G-codes created for reporting and payment
of these services. The Medicare PFS payment rates for these services
are discussed below. The NCD process establishing coverage of these
preventive services was not complete at the time of publication of the
CY 2012 PFS final rule in early November, so we could not indicate
interim RVUs for these preventive services in our final rule addenda.
However, we were able to include HCPCS G-codes and national payment
amounts for these services in the CY 2012 PFS national relative value
files, which became available at the end of the year and were effective
January 1, 2012. From the effective date of each service to December
31, 2011, the payment amount for these codes was established by the
Medicare Administrative Contractors.

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

Two new HCPCS codes, G0442 (Annual alcohol misuse screening, 15
minutes), and G0443 (Brief face-to-face behavioral counseling for
alcohol misuse, 15 minutes), were created for the reporting and payment
of screening and behavioral counseling interventions in primary care to
reduce alcohol misuse.
We believe that the screening service described by HCPCS code G0442
requires similar physician work as CPT code 99211 (Level 1 office or
other outpatient visit, established patient), that may not require the
presence of a physician. CPT code 99211 has a work RVU of 0.18 and we
believe HCPCS code G0442 should be valued similarly. As such, we are
proposing a work RVU of 0.18 for HCPCS code G0442 for CY 2013. For
physician time, we are proposing 15 minutes, which is the amount of
time specified in the HCPCS code descriptor. For malpractice expense,
we are proposing a malpractice expense crosswalk to CPT code 99211. The
proposed direct PE inputs are reflected in the CY 2013 proposed direct
PE input database, available on the CMS Web site under the downloads
for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed
values for HCPCS code G0442, which are the same as the current (CY
2012) values for this service.
We believe that the behavioral counseling service described by
HCPCS

[[Page 44788]]

code G0443 requires similar physician work to CPT code 97803 (Medical
nutrition therapy; re-assessment and intervention, individual, face-to-
face with the patient, each 15 minutes) (work RVU = 0.45) and should be
valued similarly. As such, we are proposing a work RVU of 0.45 for
HCPCS code G0443 for CY 2013. For physician time, we are proposing 15
minutes, which is the amount of time specified in the HCPCS code
descriptor. For malpractice expense, we are proposing a malpractice
expense crosswalk to CPT code 97803. The proposed direct PE inputs are
reflected in the CY 2013 proposed direct PE input database, available
on the CMS Web site under the downloads for the CY 2013 PFS proposed
rule at http://www.cms.gov/PhysicianFeeSched/. We request public
comment on these CY 2013 proposed values for HCPCS code G0443, which
are the same as the current (CY 2012) values for this service.
HCPCS code G0444 (Annual Depression Screening, 15 minutes) was
created for the reporting and payment of screening for depression in
adults.
We believe that the screening service described by HCPCS code G0444
requires similar physician work as CPT code 99211 (work RVU = 0.18) and
should be valued similarly. As such, we are proposing a work RVU of
0.18 for HCPCS code G0444 for CY 2013. For physician time, we are
proposing 15 minutes, which is the amount of time specified in the
HCPCS code descriptor. For malpractice expense, we are proposing a
malpractice expense crosswalk to CPT code 99211. The proposed direct PE
inputs are reflected in the CY 2013 proposed direct PE input database,
available on the CMS Web site under the downloads for the CY 2013 PFS
proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request
public comment on these CY 2013 proposed values for HCPCS code G0444,
which are the same as the current (CY 2012) values for this service.
HCPCS code G0445 (high-intensity behavioral counseling to prevent
sexually transmitted infections, face-to-face, individual, includes:
education, skills training, and guidance on how to change sexual
behavior, performed semi-annually, 30 minutes) was created for the
reporting and payment of HIBC to prevent STIs.
We believe that the behavioral counseling service described by
HCPCS code G0445 requires similar physician work to CPT code 97803
(work RVU = 0.45) and should be valued similarly. As such, we are
proposing a work RVU of 0.45 for HCPCS code G0445 for CY 2013. For
physician time, we are proposing 30 minutes, which is the amount of
time specified in the HCPCS code descriptor. For malpractice expense,
we are proposing a malpractice expense crosswalk to CPT code 97803. The
proposed direct PE inputs are reflected in the CY 2013 proposed direct
PE input database, available on the CMS Web site under the downloads
for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed
values for HCPCS code G0445, which are the same as the current (CY
2012) values for this service.
HCPCS code G0446 (Annual, face-to-face intensive behavioral therapy
for cardiovascular disease, individual, 15 minutes) was created for the
reporting and payment of intensive behavioral therapy for
cardiovascular disease.
We believe that the behavioral therapy service described by HCPCS
code G0446 requires similar physician work to CPT code 97803 (work RVU
= 0.45) and should be valued similarly. As such, we are proposing a
work RVU of 0.45 for HCPCS code G0446 for CY 2013. For physician time,
we are proposing 15 minutes, which is the amount of time specified in
the HCPCS code descriptor. For malpractice expense, we are proposing a
malpractice expense crosswalk to CPT code 97803. The proposed direct PE
inputs are reflected in the CY 2013 proposed direct PE input database,
available on the CMS Web site under the downloads for the CY 2013 PFS
proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request
public comment on these CY 2013 proposed values for HCPCS code G0446,
which are the same as the current (CY 2012) values for this service.
HCPCS G0447 (Face-to-face behavioral counseling for obesity, 15
minutes) was created for the reporting and payment of intensive
behavioral therapy for obesity.
We believe that the behavioral counseling service described by
HCPCS code G0447 requires similar physician work to CPT code 97803
(work RVU = 0.45) and should be valued similarly. As such, we are
proposing a work RVU of 0.45 for HCPCS code G0447 for CY 2013. For
physician time, we are proposing 15 minutes, which is the amount of
time specified in the HCPCS code descriptor. For malpractice expense,
we are proposing a malpractice expense crosswalk to CPT code 97803. The
proposed direct PE inputs are reflected in the CY 2013 proposed direct
PE input database, available on the CMS Web site under the downloads
for the CY 2013 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. We request public comment on these CY 2013 proposed
values for HCPCS code G0447, which are the same as the current (CY
2012) values for this service.

K. Certified Registered Nurse Anesthetists and Chronic Pain Management
Services

The benefit category for services furnished by a certified
registered nurse anesthetist (CRNA) was added to Medicare by section
9320 of the Omnibus Budget Reconciliation Act (OBRA) 1986. Since this
benefit was implemented on January 1, 1989, CRNAs have been eligible to
bill Medicare directly for the specified services. Section 1861(bb)(2)
of the Act defines a CRNA as ``a certified registered nurse anesthetist
licensed by the State who meets such education, training, and other
requirements relating to anesthesia services and related care as the
Secretary may prescribe. In prescribing such requirements the Secretary
may use the same requirements as those established by a national
organization for the certification of nurse anesthetists.''
Section 410.69(b) defines a CRNA as a registered nurse who: (1) Is
licensed as a registered professional nurse by the State in which the
nurse practices; (2) meets any licensure requirements the State imposes
with respect to nonphysician anesthetists; (3) has graduated from a
nurse anesthesia educational program that meets the standards of the
Council on Accreditation of Nurse Anesthesia Programs, or such other
accreditation organization as may be designated by the Secretary; and
(4) meets one of the following criteria: (i) Has passed a certification
examination of the Council on Certification of Nurse Anesthetists, the
Council on Recertification of Nurse Anesthetists, or any other
certification organization that may be designated by the Secretary; or
(ii) is a graduate of a program described in paragraph (3) of this
definition and within 24 months after that graduation meets the
requirements of paragraph (4)(i) of this definition.
Section 1861(bb)(1) of the Act defines services of a CRNA as
``anesthesia services and related care furnished by a certified
registered nurse anesthetist (as defined in paragraph (2)) which the
nurse anesthetist is legally authorized to perform as such by the State
in which the services are furnished''. CRNAs are paid at the same rate
as physicians for furnishing such services to Medicare beneficiaries.
Payment for services

[[Page 44789]]

furnished by CRNAs only differs from physicians in that payment to
CRNAs is made only on an assignment-related basis (Sec. 414.60) and
supervision requirements apply in certain circumstances.
At the time that the Medicare benefit for CRNA services was
established, CRNA practice largely occurred in the surgical setting and
services other than anesthesia (medical and surgical) were furnished in
the immediate pre- and post-surgery timeframe. The scope of
``anesthesia services and related care'' as delineated in section
1861(bb)(1) of the Act reflected that practice standard. As CRNAs have
moved into other practice settings, questions have arisen regarding
what services are encompassed under the ``related care'' aspect of the
benefit category. Specifically, some CRNAs now offer chronic pain
management services that are separate and distinct from a surgical
procedure. Changes in CRNA practice have prompted questions as to
whether these services fall within the scope of section 1861(bb)(1) of
the Act. Medicare Administrative Contractors (MACs) have reached
different conclusions as to whether the statutory description of
``anesthesia services and related care'' encompasses the chronic pain
management services delivered by CRNAs. As a result, we have been asked
to address whether or not chronic pain management is included within
the scope of the statutory benefit for CRNA services.
To determine whether chronic pain management is included in the
statutory benefit for CRNA services, we reviewed our current
regulations and subregulatory guidance. We found that the existing
guidance does not specifically address chronic pain management. In the
Internet Only Manual (Pub 100-04, Ch 12, Sec 140.4.3), we discuss the
medical or surgical services that fall under the ``related care''
language stating, ``These may include the insertion of Swan Ganz
catheters, central venous pressure lines, pain management, emergency
intubation, and the pre-anesthetic examination and evaluation of a
patient who does not undergo surgery.'' Some have interpreted the
reference to ``pain management'' in this language as authorizing direct
payment to CRNAs for chronic pain management services, while others
have taken the view that the services highlighted in the manual
language are services furnished in the perioperative setting and refer
only to acute pain management associated with the surgical procedure.
Since existing guidance was not determinative, we assessed the
issue of CRNA practice of chronic pain management more broadly. We
found that chronic pain management is an emerging field. The Institute
of Medicine (IOM) issued a report entitled ``Relieving Pain in America:
A Blueprint for Transforming Prevention, Care, Education and Research''
on June 29, 2011, discussing the importance of pain management and
focusing on the many challenges in delivering effective chronic pain
management. The available interventions to treat chronic pain have been
expanding. In addition to the use of medications and a variety of
diagnostic tests, techniques include neural blocks, neuromodulatory
techniques, and implanted pain management devices. The healthcare
community continues to examine the appropriateness and effectiveness of
these many and varied treatment techniques and modalities. As part of
this evolution, Medicare established a physician specialty code for
interventional pain management in 2003.
The healthcare community continues to debate whether CRNAs are
qualified to provide chronic pain management. Some have stated that
interventional pain management for beneficiaries with chronic pain is
the practice of medicine, that CRNAs do not receive the sufficient
education on chronic pain management, and that CRNAs do not have the
skills required to furnish chronic pain management services. Others
have stated that both acute and chronic pain management and treatment
are within the CRNA professional scope and are comparable services, and
that CRNAs receive the clinical training and experience necessary to
furnish both acute and chronic pain management services. Recently,
several State legislatures have debated the scope of CRNA practice,
including those in the States of California, Colorado, Missouri, South
Carolina, Nevada, and Virginia.
In the context of Medicare, some have pointed to Medicare policies
allowing other advanced practice nurses such as nurse practitioners or
clinical nurse specialists to furnish and bill for physicians' services
as support for recognizing a broader interpretation of the scope of
CRNA practice. We would note that the statutory benefit category
definition for CRNAs substantively differs from that for other advanced
practice nurses. Section 1861(s)(2)(K) of the Act authorizes certain
nonphysician practitioners (NPPs) to bill Medicare directly for
services they are legally authorized to perform under State law, and
``which would be physicians' services if furnished by a physician.''
With certain conditions (such as physician supervision or
collaboration), the statute allows these NPPs to bill Medicare for
physicians' services that fall within their State scope of practice.
Since State governments regulate the licensure and practice of
specific types of health care professionals, we have looked to the
State scope of practice laws to determine if chronic pain management
was within the scope of practice for CRNAs. State scope of practice
laws vary with regard to the range of services that CRNAs may perform,
and some include chronic pain management. As discussed earlier, several
States are debating whether to include chronic pain management services
within the CRNA scope of practice.
After assessing the information available to us, we have concluded
that chronic pain management is an evolving field, and we recognize
that certain States have determined that the scope of practice for a
CRNA should include chronic pain management in order to meet health
care needs of their residents and ensure their health and safety.
Therefore, we propose to revise our regulations at Sec. 410.69(b) to
define the statutory description of CRNA services. Specifically, we
propose to add the following language: ``Anesthesia and related care
includes medical and surgical services that are related to anesthesia
and that a CRNA is legally authorized to perform by the State in which
the services are furnished.'' This proposed definition would set a
Medicare standard for the services that can be furnished and billed by
CRNAs while allowing appropriate flexibility to meet the unique needs
of each State. The proposal also dovetails with the language in section
1861(bb)(1) of the Act requiring the State's legal authorization to
perform CRNA services as a key component of the CRNA benefit category.
Finally, the proposed definition is also consistent with our policy to
recognize State scope of practice as one parameter defining the
services that can be furnished and billed by other NPPs.
Simply because the State allows a certain type of health care
professional to furnish certain services does not mean that all members
of that profession are adequately trained to provide the service. In
the case of chronic pain management, the IOM report specifically noted
that many practitioners lack the skills needed to help patients with
the day-to-day self-management that is required to properly serve
individuals with chronic pain. As with all practitioners who furnish
services to Medicare beneficiaries, CRNAs practicing in States that
allow them to furnish chronic pain

[[Page 44790]]

management services are responsible for obtaining the necessary
training for any and all services furnished to Medicare beneficiaries.

L. Ordering of Portable X-Ray Services

Portable x-ray suppliers provide diagnostic imaging services at a
patient's location. These services are most often furnished in
residences, including private homes and group living facilities (for
example, nursing homes) rather than in a traditional clinical setting
(for example, a doctor's office or hospital). The supplier transports
mobile diagnostic imaging equipment to the patient's location, sets up
the equipment, and administers the test onsite. The supplier may
interpret the results itself or it may provide the results to an
outside physician for interpretation. Portable x-ray services may avoid
the need for expensive ambulance transport of frail patients to a
radiology facility or hospital.
In the Medicare Conditions for Coverage regulations established in
1969, Sec. 486.106(a), requires that ``portable x-ray examinations are
performed only on the order of a doctor of medicine (MD) or doctor of
osteopathy (DO) licensed to practice in the State * * *'' With the
exception of portable x-ray services, Medicare payment regulations at
Sec. 410.32 allow physicians, including limited-license practitioners
such as doctors of podiatry and optometry, and most nonphysician
practitioners who furnish physicians' services to order diagnostic x-
ray tests, diagnostic laboratory tests, and other diagnostic tests so
long as those nonphysician practitioners are operating within the scope
of their authority under State law and within the scope of their
Medicare statutory benefit.
Nonphysician practitioners have become an increasingly important
component of clinical care, and we believe that delivery systems should
take full advantage of all members of a healthcare team, including
nonphysician practitioners.
Although current Medicare regulations limit ordering of portable x-
ray services to a MD or a DO, the Office of the Inspector General (OIG)
in its December 2011 report entitled ``Questionable Billing Patterns of
Portable X-Ray Suppliers'' (OEI-12-10-00190) found that Medicare was
paying for portable x-ray services ordered by physicians other than MDs
and DOs, including podiatrists and chiropractors, and by nonphysician
practitioners. We issued a special education article on January 20,
2012, through the Medicare Learning Network (MLN) ``Important Reminder
for Providers and Suppliers Who Provide Services and Items Ordered or
Referred by Other Providers and Suppliers,'' reiterating our current
policy that portable x-ray services can only be ordered by a MD or DO.
The article is available at http://www.cms.gov/MLNMattersArticles/downloads/SE1201.pdf on the CMS Web site. Since the publication of the
above mentioned article, several stakeholders have told us that members
of the healthcare community fail to distinguish ordering for portable
x-ray services from ordering for other diagnostic services where our
general policy is to allow nonphysician practitioners and physicians
other than MDs and DOs to order diagnostic tests within the scope of
their authority under State law and their Medicare statutory benefit.
They report finding the different requirements confusing.
We propose to revise our current regulations, which limit ordering
of portable x-ray services to only a MD or DO, to allow other
physicians and nonphysician practitioners acting within the scope of
their Medicare benefit and State law to order portable x-ray services.
Specifically, we propose revisions to the Conditions for Coverage at
Sec. 486.106(a) and Sec. 486.106(b) to permit portable x-ray services
to be ordered by a physician or nonphysician practitioner in accordance
with the ordering policies for other diagnostic services under Sec.
410.32(a).
This proposed change would allow a MD or DO, as well as an nurse
practitioner, clinical nurse specialist, physician assistant, certified
nurse-midwife, doctor of optometry, doctor of dental surgery and doctor
of dental medicine, doctor of podiatric medicine, clinical
psychologist, and clinical social worker to order portable x-ray
services within their State scope of practice and the scope of their
Medicare benefit. Although all of these physicians and nonphysician
practitioners are authorized to order diagnostic services in accordance
with Sec. 410.32(a), their Medicare benefit delimits the services that
they can provide.
We also propose to revise the language included in Sec. 410.32(c)
to recognize the same authority for physicians and nonphysician
practitioners to order diagnostic tests as is prescribed for other
diagnostic services in Sec. 410.32(a). Finally, we are proposing two
technical corrections. One is to Sec. 410.32(d)(2), where we currently
cite to subsection (a)(3) for the definition of qualified nonphysician
practitioner. The definition of qualified nonphysician practitioner is
in paragraph (a)(2) and paragraph (a)(3) does not exist; therefore, we
are changing the citation to the correct citation. The second technical
correction is Sec. 410.32(b)(2)(iii) to better reflect statutory
authority to provide neuropsychological testing in addition to
psychological testing.
Although we believe that this proposal is appropriate given overall
changes in practice patterns since the beginning of the Medicare
program, we remain concerned about the OIG's recent findings. The OIG
observed questionable billing patterns for portable x-ray services in
addition to ordering by nonphysician practitioners. Of specific note
was the observation that some portable x-ray suppliers are delivering
services on the same day that the patient also receives services in a
clinical setting, such as the physician office or hospital. Under our
current regulation at Sec. 486.106(a)(2), the order for portable x-ray
services must include a statement concerning the condition of the
patient which indicates why portable x-ray services are necessary. If
the patient was able, on the same day that a portable x-ray service was
furnished, to travel safely to a clinical setting, the statement of
need for portable x-ray services could be questionable. We also are
concerned that the OIG observed some portable x-ray suppliers billing
for multiple trips to a facility. Medicare makes a single payment for
each trip the portable x-ray supplier makes to a particular location.
We make available multiple modifiers to allow the portable x-ray
supplier to indicate the number of patients served on a single trip to
a facility. We expect portable x-ray suppliers to use those modifiers
and not to bill multiple trips to the same facility when only one trip
was made. Additionally, we strongly encourage portable x-ray suppliers
to make efficient use of resources and consolidate trips rather than
making multiple trips on the same day as clinically appropriate.
In conjunction with our proposal to expand the scope of physicians
and nonphysician practitioners who can order portable x-ray services,
we intend to develop, as needed, monitoring standards predicated by
these and other OIG findings. In addition, we will be conducting data
analysis of ordering patterns for portable x-ray and other diagnostic
services to determine if additional claims edits, provider audits, or
fraud investigations are required to prevent abuse of this service and
to allow for the collection of any potential overpayments. We encourage
providers, as with any diagnostic test, to proactively determine and
document the medical necessity for this testing.

[[Page 44791]]

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

III. Other Provisions of the Proposed Regulation

A. Ambulance Fee Schedule

1. Amendment to Section 1834(l)(13) of the Act
Section 146(a) of the Medicare Improvements for Patients and
Providers Act of 2008 (Pub. L. 110-275) (MIPPA) amended section
1834(l)(13)(A) of the Act to specify that, effective for ground
ambulance services furnished on or after July 1, 2008 and before
January 1, 2010, the ambulance fee schedule amounts for ground
ambulance services shall be increased as follows:
For covered ground ambulance transports that originate in
a rural area or in a rural census tract of a metropolitan statistical
area, the fee schedule amounts shall be increased by 3 percent.
For covered ground ambulance transports that do not
originate in a rural area or in a rural census tract of a metropolitan
statistical area, the fee schedule amounts shall be increased by 2
percent.
Sections 3105(a) and 10311(a) of the Affordable Care Act further
amended section 1834(l)(13)(A) of the Act to extend the payment add-ons
described above for an additional year, such that these add-ons also
applied to covered ground ambulance transports furnished on or after
January 1, 2010 and before January 1, 2011. In the CY 2011 PFS final
rule (75 FR 73385 and 73386, 73625), we revised Sec. 414.610(c)(1)(ii)
to conform the regulations to this statutory requirement.
Section 106(a) of the MMEA again amended section 1834(l)(13)(A) of
the Act to extend the payment add-ons described above for an additional
year, such that these add-ons also applied to covered ground ambulance
transports furnished on or after January 1, 2011 and before January 1,
2012. In the CY 2012 End-Stage Renal Disease Prospective Payment System
(ESRD PPS) final rule (76 FR 70228, 70284 through 70285, 70315), we
revised Sec. 414.610(c)(1)(ii) to conform the regulations to this
statutory requirement. However, in doing so, paragraphs (c)(1)(ii)(A)
and (B) were inadvertently deleted from the Code of Federal
Regulations. Therefore, we propose to reinstate paragraphs
(c)(1)(ii)(A) and (B), as further revised below to conform to
subsequent legislation.
Subsequently, section 306 (a) of the Temporary Payroll Tax Cut
Continuation Act of 2011 (Pub. L. 112-78) (TPTCCA) amended section
1834(l)(13)(A) of the Act to extend the payment add-ons described above
through February 29, 2012; and section 3007(a) of the Middle Class Tax
Relief and Job Creation Act of 2012 (Pub. L. 112-96) (MCTRJCA) further
amended section 1834(l)(13)(A) to extend these payment add-ons through
December 31, 2012. Thus, these payment add-ons also apply to covered
ground ambulance transports furnished on or after January 1, 2012 and
before January 1, 2013. Accordingly, we are proposing to revise Sec.
414.610(c)(1)(ii) to conform the regulations to these statutory
requirements. These statutory requirements are self-implementing. A
plain reading of the statute requires only a ministerial application of
the mandated rate increase, and does not require any substantive
exercise of discretion on the part of the Secretary.
2. Amendment to Section 146(b)(1) of MIPPA
Section 146(b)(1) of the MIPPA amended the designation of rural
areas for payment of air ambulance services. This section originally
specified that any area that was designated as a rural area for
purposes of making payments under the ambulance fee schedule for air
ambulance services furnished on December 31, 2006, must continue to be
treated as a rural area for purposes of making payments under the
ambulance fee schedule for air ambulance services furnished during the
period July 1, 2008 through December 31, 2009.
Sections 3105(b) and 10311(b) of the Affordable Care Act amended
section 146(b)(1) of MIPPA to extend this provision for an additional
year, through December 31, 2010. In the CY 2011 PFS final rule (75 FR
73385 through 86, 73625 through 26), we revised Sec. 414.610(h) to
conform the regulations to this statutory requirement.
Section 106(b) of the MMEA amended section 146(b)(1) of MIPPA to
extend this provision again through December 31, 2011. In the CY 2012
ESRD PPS final rule (76 FR 70284 through 70285, 70315), we revised
Sec. 414.610(h) to conform the regulations to this statutory
requirement.
Subsequently, section 306 (b) of the TPTCCA amended section
146(b)(1) of MIPPA to extend this provision through February 29, 2012;
and section 3007(b) of the MCTRJCA further amended section 146(b)(1) of
MIPPA to extend this provision through December 31, 2012. Therefore, we
are proposing to revise Sec. 414.610(h) to conform the regulations to
these statutory requirements. These statutory requirements are self-
implementing. A plain reading of the statute requires only a
ministerial application of a rural indicator, and does not require any
substantive exercise of discretion on the part of the Secretary.
Accordingly, for areas that were designated as rural on December 31,
2006, and were subsequently re-designated as urban, we have re-
established the ``rural'' indicator on the ZIP Code file for air
ambulance services through December 31, 2012.
3. Amendment to Section 1834(l)(12) of the Act
Section 414 of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (MMA) added paragraph (12) to section 1834(l)
of the Act, which specified that in the case of ground ambulance
services furnished on or after July 1, 2004, and before January 1,
2010, for which transportation originates in a qualified rural area (as
described in the statute), the Secretary shall provide for a percent
increase in the base rate of the fee schedule for such transports. The
statute requires this percent increase to be based on the Secretary's
estimate of the average cost per trip for such services (not taking
into account mileage) in the lowest quartile of all rural county
populations as compared to the average cost per trip for such services
(not taking into account mileage) in the highest quartile of rural
county populations. Using the methodology specified in the July 1, 2004
interim final rule (69 FR 40288), we determined that this percent
increase was equal to 22.6 percent. As required by the MMA,

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this payment increase was applied to ground ambulance transports that
originated in a ``qualified rural area''; that is, to transports that
originated in a rural area included in those areas comprising the
lowest 25th percentile of all rural populations arrayed by population
density. For this purpose, rural areas included Goldsmith areas (a type
of rural census tract).
Sections 3105(c) and 10311(c) of the Affordable Care Act amended
section 1834(l)(12)(A) of the Act to extend this rural bonus for an
additional year through December 31, 2010. In the CY 2011 PFS final
rule (75 FR 73385 through 73386 and 73625), we revised Sec.
414.610(c)(5)(ii) to conform the regulations to this statutory
requirement.
Section 106(c) of the MMEA again amended section 1834(l)(12)(A) of
the Act to extend the rural bonus described above for an additional
year, through December 31, 2011. Therefore, in the CY 2012 ESRD PPS
final rule (76 FR 70284 through 70285, 70315), we revised Sec.
414.610(c)(5)(ii) to conform the regulations to this statutory
requirement.
Subsequently, section 306 (c) of the TPTCCA amended section
1834(l)(12)(A) of the Act to extend this rural bonus through February
29, 2012; and section 3007(c) of the MCTRJCA further amended section
1834(l)(12)(A) of the Act to extend this rural bonus through December
31, 2012. Therefore, we are continuing to apply the 22.6 percent rural
bonus described above (in the same manner as in previous years), to
ground ambulance services with dates of service on or after January 1,
2012 and before January 1, 2013 where transportation originates in a
qualified rural area.
This rural bonus is sometimes referred to as the ``Super Rural
Bonus'' and the qualified rural areas (also known as ``super rural''
areas) are identified during the claims adjudicative process via the
use of a data field included on the CMS supplied ZIP Code File.
Accordingly, we are proposing to revise Sec. 414.610(c)(5)(ii) to
conform the regulations to the statutory requirements set forth at
section 306(c) of the TPTCCA and section 3007(c) of the MCTRJCA. These
statutory requirements are self-implementing. Together, these
provisions require a one-year extension of the rural bonus (which was
previously established by the Secretary) through December 31, 2012, and
does not require any substantive exercise of discretion on the part of
the Secretary.

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

Section 1847A of the Act requires use of the average sales price
(ASP) payment methodology for payment for drugs and biologicals
described in section 1842(o)(1)(C) of the Act furnished on or after
January 1, 2005. The ASP methodology applies to most drugs furnished
incident to a physician's service, many drugs furnished under the DME
benefit, certain oral anti-cancer drugs, and oral immunosuppressive
drugs.
1. Widely Available Market Price (WAMP)/Average Manufacturer Price
(AMP) Price Substitution
For a drug or biological that is found to have exceeded the WAMP of
AMP by a threshold percentage, section 1847A(d)(3)(C) of the Act
authorizes the Secretary to substitute, the lesser of--
The widely available market price for the drug or
biological, or
103 percent of the average manufacturer price as
determined under section 1927(k)(1) of the Act.''
The applicable threshold percentage is specified in section
1847A(d)(3)(B)(i) of the Act as 5 percent for CY 2005. For CY 2006 and
subsequent years, section 1847A(d)(3)(B)(ii) of the Act authorizes the
Secretary to specify the threshold percentage for the WAMP or the AMP,
or both. In the CY 2006 (70 FR 70222), CY 2007 (71 FR69680), CY 2008
(72 FR 66258), CY 2009 (73 FR 69752), and CY 2010 (74 FR 61904) PFS
final rules with comment period, we specified an applicable threshold
percentage of 5 percent for both the WAMP and AMP. We based this
decision on the fact that data was too limited to support an adjustment
to the 5 percent threshold. Beginning in CY 2011, we treated the WAMP
and AMP based adjustments to the applicable threshold percentages
separately.
a. WAMP Threshold and Price Substitution
After soliciting and reviewing comments, we finalized proposals to
continue the 5 percent WAMP threshold for CY 2011 (75 FR 73469), and CY
2012 (76 FR 73287). For CY 2013, we again have no additional
information from OIG studies or other sources that leads us to consider
an alternative threshold. When making comparisons to the WAMP, we
propose that the applicable threshold percentage remain at 5 percent
until such time that a change in the threshold amount is warranted, and
we propose to update Sec. 414.904(d)(3)(iv) accordingly. As mentioned
above, the threshold has remained at 5 percent since 2005. Our proposal
will eliminate the need for annual rulemaking until a change is
warranted.
We are not proposing to make any WAMP based price substitutions at
this time. As we noted in the CY 2011 PFS final rule with comment
period (75 FR 73470) and reiterated in CY 2012 (76 FR 73287), we
understand that there are complicated operational issues associated
with the WAMP based substitution policy, and we continue to proceed
cautiously in this area. We remain committed to providing stakeholders,
including providers and manufacturers of drugs impacted by potential
price substitutions with adequate notice of our intentions, including
the opportunity to provide input with regard to the processes for
substituting the WAMP for the ASP.
b. AMP Threshold
Like the WAMP threshold, for CY 2013, we have no information that
leads us to believe that the 5 percent threshold percentage for AMP-
based price substitution is inappropriate or should be changed. We
propose that the applicable threshold percentage remain at 5 percent
until such time that a change in the threshold amount is warranted, and
we propose to update Sec. 414.904(d)(3)(iii) accordingly. The AMP
threshold has remained at 5 percent since 2005. Our proposal will
eliminate the need for annual rulemaking until a change is warranted.
c. AMP Price Substitution-Additional Condition
In the CY 2012 PFS rule, we specified that the substitution of AMP
for ASP will be made only when the ASP exceeds the AMP by 5 percent in
two consecutive quarters immediately prior to the current pricing
quarter, or three of the previous four quarters immediately prior to
the current quarter, and that matching sets of NDCs had to be used in
the comparison (76FR 73289 through 73295). The value of the AMP based
price substation must also be less than the ASP payment limit that is
calculated for the quarter in which the substitution is applied.
We did not apply the price substitution policy in April 2012
because access concerns led us to reconsider whether it was prudent to
proceed with price substitution during a developing situation that was
related to a drug shortage that had not met the definition of a public
health emergency under section 1847A(e) of the Act. In light of recent
concerns about drug shortages, the resulting impact on patient care,
beneficiary and provider access, as well as the potential for

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shortages to suddenly affect drug prices for the provider, under the
authority in section 1847A(d)(3)(C) of the Act, we propose adding Sec.
414.904(d)(3)(ii)(C) that would prevent the AMP price substitution
policy from taking effect if the drug and dosage form represented by
the HCPCS code are reported by the FDA on their Current Drug Shortage
list (or other FDA reporting tool that identifies shortages of critical
or medically necessary drugs) to be in short supply at the time that
ASP payment limits are being finalized for the next quarter. Further,
we also would like to clarify that this proposal to add to the
safeguards finalized in CY 2012 only applies to calculations under the
AMP-based price substitution policy. Our proposal is intended to
continue the cautious approach described in previous rules and to
strike a balance between operational requirements associated with
receiving manufacturers' ASP reports, calculating the payment limits,
and posting stable payment limits that will be used to pay claims. We
believe that this proposal also addresses concerns about access to
care, known program issues identified by the OIG, and provides an
opportunity for some modest program savings. At this time, we are not
proposing any other changes to the safeguards, timing, or notification
that identifies the codes that will be substituted each quarter. We
welcome comments on our approach as well as comments regarding
additional specific safeguards for the AMP price substitution policy.
2. Billing for Part B Drugs Administered Incident to Physicians'
Services
In this section, we propose to clarify payment policies regarding
billing for certain drugs under Medicare Part B. In 2010 and 2011, we
issued two change requests (CRs 7109 and 7397) that summarized a number
of longstanding drug payment policy and billing requirements. We
considered these CRs to be merely clarifying, rather than changing, our
policy. However, one item in the CRs, which stated that pharmacies may
not bill for drugs that are used incident to physicians' service, has
caused some concern. Specifically, we understand that some nonphysician
suppliers--operating in part on the basis of guidance from a Medicare
contractor--have been submitting claims for drugs that they have
shipped to physicians' offices for use in refilling implanted
intrathecal pumps. In light of concern over its potential effect on
suppliers, we delayed implementation of the most recently updated CR
(CR 7397 Transmittal 2437, April 4, 2012) until January 1, 2013 so that
we could undertake rulemaking, evaluate public comments on this issue,
and determine whether CR 7397 should be implemented as planned,
revised, or rescinded.
Implanted pumps may qualify as Durable Medical Equipment (DME);
however, unlike external pumps used to administer drugs, implanted
pumps are typically refilled in a physician's office. The implanted
intrathecal pump is refilled by injecting the drug into a pump's
reservoir, which lies below the patient's skin. The reservoir is
connected to the pump, which delivers the drug to the intrathecal space
through a tunneled catheter. The procedure of refilling an intrathecal
pain pump is a service that is typically performed by the physician
because of risk and complexity.
To be covered by Medicare, an item or service must fall within one
or more benefit categories within Part A or Part B, and must not be
otherwise excluded from coverage. Drugs and biologicals paid under
Medicare part B drugs fall into three basic categories as follows:
Drugs furnished ``incident to'' a physician's services:
These are typically injectable drugs that are bought by the physician,
administered in the physician's office and then billed by the physician
to the Medicare Administrative Contractor (MAC).
Drugs administered through a covered item of DME: These
drugs are supplies necessary for the effective use of DME and are
typically furnished to the beneficiary by suppliers that are either
pharmacies (or general DME suppliers that utilize licensed pharmacists)
for administration in a setting other than the physician's office. Most
DME drugs are billed to the DME MAC.
Drugs specified by the statute: Include a variety of
drugs, such as oral immunosuppressives and certain vaccines.
Drugs used to refill an implanted intrathecal pump can be
considered to be within either the ``incident to'' or the DME benefit
category. The CMS Benefit Policy Manual (100-02 Chapter 15 Section
50.3) states that drugs paid under the ``incident to'' provision are of
a form that is not usually self-administered; are furnished by a
physician; and are administered by the physician, or by auxiliary
personnel employed by the physician and under the physician's personal
supervision. In what we believe is a typical situation, when
physicians' services are used to refill an intrathecal pump, the
``incident to'' requirements can be met because, consistent with our
guidance and longstanding policy, the physician or other professional
employed by his or her office performs a procedure to inject the drug
into the implanted pump's reservoir (that is, the drug is not self-
administered) and the drug represents a cost to the physician because
he or she has purchased it.
Conversely, we believe that in the typical situation, payment to a
pharmacy or other nonphysician supplier under the DME benefit for a
drug dispensed for use in the physician's office is both inappropriate
and inconsistent with existing guidance. For example, DME prosthetics,
orthotics, and supplies (POS) policy does not permit payment for
prosthetics dispensed prior to a procedure. Moreover, in the case of
prescription drugs used in conjunction with DME, our guidance is clear
that the entity that dispenses the drug needs to furnish it directly to
the patient for whom a prescription is written. We do not believe that
an arrangement whereby a pharmacy (or supplier) ships a drug to a
physician's office for administration to a patient constitutes
furnishing the drug directly to the patient.
We note that payment to pharmacies (or suppliers) for drugs used to
refill an implanted pump can be made under the DME benefit category
where the drug is dispensed to a patient and the implanted pump is
refilled without a physician's service. However, it is our
understanding that implanted pumps are rarely refilled without
utilizing the service of a physician.
We are concerned about stakeholders' reports that, due to guidance
from a contractor, Medicare payment policy on this issue has been
applied in an inconsistent manner. We consider the contractor's
guidance to be erroneous. This inconsistency has permitted supplier
claims for drugs dispensed by pharmacies to physicians' offices to be
paid in some jurisdictions and has denied such payment in others. We
understand that the inconsistent application of our payment policy has
influenced the business and professional practices of pharmacies/DME
suppliers that prepare drugs for implanted pumps. However, we do not
believe that payment for drugs used to refill implanted DME should
continue to be made because such action is not supported under long
standing policy and, as discussed above, is not appropriate.
We therefore propose to clarify that we consider drugs used by a
physician to refill an implantable item of DME to be within the
``incident to'' benefit category and not the DME benefit category.
Therefore, the physician must buy and bill for the drug, and a non-

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physician supplier that has shipped the drug to the physician's office
may not do so (except as may be permitted pursuant to a valid
reassignment). We welcome comments on this proposal and its potential
impact on beneficiaries and providers.

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

1. Background
Sections 1832, 1834, and 1861 of the Act establish that the
provision of durable medical equipment, prosthetic, orthotics, and
supplies (DMEPOS) is a covered benefit under Part B of the Medicare
program.
Section 1834(a)(11)(B)(i) of the Act, as redesignated by the
Affordable Care Act, authorizes us to require, for specified covered
items, that payment may only be made under section 1834(a) of the Act
if a physician has communicated to the supplier a written order for the
item, before delivery of the item. Section 1834(h)(3) of the Act states
that section 1834(a)(11) applies to prosthetic devices, orthotics, and
prosthetics in the same manner as it applies to items of durable
medical equipment (DME). In a December 7, 1992 final rule (57 FR
57675), we implemented this provision in Sec. 410.38(g), for DME items
and Sec. 410.36(b) for prosthetic devices, orthotics, and prosthetics.
Both of these sections state that as a requirement for payment, CMS, a
carrier, or, more recently, a Medicare Administrative Contractor (MAC)
may determine that an item of DME requires a written physician order
before delivery. In addition to our regulations at Sec. 410.38(g) and
Sec. 410.36(b), we have stated in Chapter 5, Section 5.2.3.1 of the
Program Integrity Manual, that the following items require a written
order prior to delivery: (1) Pressure reducing pads, mattress overlays,
mattresses, and beds; (2) seatlift mechanisms; (3) transcutaneous
electrical nerve stimulation (TENS) units; (4) power operated vehicles
(POVs) and power wheelchairs.
Section 6407(b) of the Affordable Care Act amended section
1834(a)(11)(B) of the Act. It added language that requires a written
order for certain items of DME, which under section 1834(h)(3) of the
Act also could include prosthetic devices, orthotics, and prosthetics,
to be issued per a physician documenting that a physician, a physician
assistant (PA), a nurse practitioner (NP), or a clinical nurse
specialist (CNS) has had a face-to-face encounter with the beneficiary.
The encounter must occur during the 6 months prior to the written order
for each item or during such other reasonable timeframe as specified by
the Secretary.
2. Provisions of the Proposed Regulations
a. DME Face-to-Face Encounters
(1) General Requirements
We are proposing to first revise Sec. 410.38(g) to require, as a
condition of payment for certain covered items of DME, that a physician
must have documented and communicated to the DME supplier that the
physician or a PA, an NP, or a CNS has had a face-to-face encounter
with the beneficiary no more than 90 days before the order is written
or within 30 days after the order is written.
We make this proposal because we believe that a face-to-face
encounter that occurs within 90 days prior to the written order for DME
should be relevant to the reason for the beneficiary's need for the
item of DME, and therefore, this face-to-face encounter should
substantiate that the beneficiary's condition warrants the covered item
of DME and be sufficient to meet the goals of this statutory
requirement. However, we recognize that there may be circumstances when
it may not be possible to meet this general requirement of ``prior to
the written order,'' and that in such cases, beneficiary access to
needed items must be protected. If a face-to-face encounter occurs
within 90 days of the written order, but is not related to the
condition warranting the need for the item of DME, or if the
beneficiary has not seen the physician or PA, NP, or CNS within the 90
days prior to the written order, we propose to allow a face-to-face
encounter up to and including 30 days after the order is written in
order to ensure access to needed items.
During the face-to-face encounter the physician, a PA, a, NP, or a
CNS must have evaluated the beneficiary, conducted a needs assessment
for the beneficiary or treated the beneficiary for the medical
condition that supports the need for each covered item of DME. As a
matter of practice, this information would be part of the beneficiary's
medical record, which identifies the practitioner who provided the
face-to-face assessment. We believe that requiring a face-to-face
encounter that supports the need for the covered item of DME would
reduce the risk of fraud, waste, and abuse since these visits would
help ensure that a beneficiary's condition warrants the covered item of
DME.
Section 1834(a)(11)(B)(ii) of the Act, as amended by section
6407(b) of the Affordable Care Act states that a physician must
document that the physician, a PA, a NP, or a CNS has had a face-to-
face encounter (other than with respect to encounters that are incident
to services involved) with the beneficiary. Incident to services are
defined in section 1861(s)(2)(A) of the Act. Likewise, for the purpose
of this regulation, a face-to-face encounter must be documented by a
physician and any encounter that is covered as an ``incident to''
service does not satisfy the requirements of this regulation.
We note that a face-to-face encounter may be accomplished via a
telehealth encounter if all Medicare telehealth requirements as defined
under section 1834(m) of the Act and the implementing regulations in
Sec. 410.78 and Sec. 414.65 are met. Specifically, Medicare
telehealth services can only be furnished to an eligible telehealth
beneficiary in an originating site. The requirements in this proposed
rule do not supersede the requirements of telehealth and merely apply
to the telehealth benefit where applicable. In general, originating
sites must be located in a rural health professional shortage area
(HPSA) or in a county outside of a metropolitan statistical area (MSA).
The practitioner at the distant site may be a physician, PA, NP, or
CNS, and the encounter must be reported with a healthcare procedure
common coding system (HCPCS) code for a service on the list of approved
Medicare telehealth services for the applicable year. In the May 5,
2010 Federal Register (76 FR 25550), we published a final rule that
revised the conditions of participation (CoPs) for hospitals and
critical access hospitals (CAHs). These revisions implement a new
credentialing and privileging process for physicians and other
practitioners providing telemedicine services. We refer readers to the
CMS Web site for more information regarding telehealth services at
http://www.cms.gov/Telehealth/.
A single face-to-face encounter, including those facilitated
through the appropriate use of telehealth, can support the need for
multiple covered items of DME as long as it is clearly documented in
the pertinent medical record that the beneficiary was evaluated or
treated for a condition that supports the need for each covered item of
DME, during the specified period of time.
To promote the authenticity and comprehensiveness of the written
order and as part of our efforts to reduce the risk of waste, fraud,
and abuse, we propose that as a condition of payment a written order
must include: (1) The

[[Page 44795]]

beneficiary name; (2) the item of DME ordered; (3) prescribing
practitioner NPI; (4) the signature of the prescribing practitioner;
(5) the date of the order; (6) the diagnosis; and (7) necessary proper
usage instructions, as applicable. Examples of necessary proper usage
instruction could include duration of use, method of utilization, and
correct positioning. We recognize that standards of practice may
require that orders contain additional information. However, for
purposes of this proposed rule, which is focused on implementing
section 1834(a)(11)(B) of the Act and reducing fraud, waste, and abuse,
an order without these minimum elements would be considered incomplete
and would not support a claim for payment. We believe including this
information on the written order would be a safeguard against waste,
fraud, and abuse by promoting authenticity and comprehensiveness of the
order by the practitioner.
Based on our commitment to the general principles of the
President's Executive Order entitled ``Improving Regulation and
Regulatory Review'' (released January 18, 2011) and to be consistent
with other provisions in the amendments made by section 6407(a) of the
Affordable Care Act and the provisions of section 6407 (d) of the
Affordable Care Act as discussed above, we are proposing to require
that the face-to-face encounter occur no earlier than 90 days prior to
each written order for a covered item of DME or within 30 days after
the order is written. This proposal is consistent with the Medicare and
Medicaid home health face-to-face requirement which increases physician
accountability and specifies a timeframe within the discretion of the
Secretary. (For more information on the Medicare and Medicaid home
health face-to-face requirements see the November 17, 2010 final rule
(75 FR 70372) and the July 12, 2011 proposed rule (76 FR 41032) for
Medicare and Medicaid respectively.) We have exercised our discretion
to set a timeframe other than 6 months because we believe that our
proposal strikes an appropriate balance among several factors: (1) The
potential for fraud, waste, abuse associated with certain DME items;
(2) the potential inconvenience and cost to practitioners and
beneficiaries; and (3) potential health benefits to beneficiaries from
increased practitioner involvement and more periodic reviews of their
status and progress.
We perform ongoing education on many topics including the
requirements of the other face-to-face provisions. This education
includes, but is not limited to, various Medicare Learning
Network[supreg] products such as MLN Matters[supreg] articles,
brochures, fact sheets, Web-based training courses, and podcasts; Open
Door forums; and national provider conference calls. Medicare is
already working proactively with home health agencies, physicians, and
other providers to educate them on implementing the face-to-face
requirement. We plan to conduct similar provider education and outreach
in implementing the DME face-to-face requirement.
As noted previously, section 1834(h)(3) of the Act adds prosthetic
devices, orthotics, and prosthetics to the items encompassed by section
1834(a)(11)(B) of the Act. At this time, we are not proposing changes
to Sec. 410.36(b) to require documentation of a face-to-face encounter
for prosthetic devices, orthotics, and prosthetics that, according to
Sec. 410.36(b), require a written order before delivery in this
proposed rule. We intend to use future rulemaking to determine which
prosthetic devices, orthotics, and prosthetics, require, as a condition
of payment, a written order before delivery supported by documentation
of a face-to-face encounter with the beneficiary consistent with
section 1834(a)(11)(B)(ii) of the Act. We welcome comments on including
prosthetic devices, orthotics, and prosthetics in future rulemaking,
including any criteria that should be used for determining what items
should require a written order before delivery supported by
documentation of a face-to-face encounter.
This proposed requirement does not supersede any regulatory
requirements that more specifically address a face-to-face encounter
requirement for a particular item of DME. For example, Sec. 410.38(c),
which implemented section 1834(a)(1)(E)(iv) of the Act, specifically
addresses prescription and face-to-face encounter requirements for
power mobility devices (PMDs) and uses a 45-day period between the date
of the face-to-face encounter and the date of the written order. That
requirement is specific to the unique factors, including equipment
expense and complex medical necessity determinations that affect PMDs.
(2) Physician Documentation
The statute requires that a physician document that the physician
or a PA, NP or CNS has had a face-to-face encounter with the
beneficiary. We propose that when the face-to-face encounter is
performed by a physician, the submission of the pertinent portion(s) of
the beneficiary's medical record, containing sufficient information to
document that the face-to-face encounter meets our requirements, would
be considered sufficient and valid documentation of the face-to-face
encounter when submitted to the supplier and made available to CMS or
its agents upon request. Some examples of pertinent parts of the
beneficiary's medical record that can demonstrate that a face-to-face
encounter has occurred can include: history; physical examination;
diagnostic tests; summary of findings; diagnoses; treatment plans; or
other information as appropriate. As an alternative, we are requesting
comments on a second option for physicians to document the face-to-face
encounter when it is performed by the physician, by requiring this
physician documentation to be identical to what is required for a PA, a
NP, or a CNS as discussed later in this section. We strive to find the
option that strikes a balance between minimizing the effect on
physicians, while still meeting the statutory objective to limit fraud,
waste, and abuse.
(3) Physician Documentation of Face-to-Face Encounters Performed by
a Physician Assistant, Nurse Practitioner, or Clinical Nurse Specialist
We are considering the following proposed options for physician
documentation of a face-to-face encounter performed by a PA, NP, or
CNS. We are reserving judgment as to which of these proposed options
best accomplishes our goals until the final regulation and have not
provided language reflecting these options in the proposed regulations
text. The options are as follows:
Option 1: Attestation stating: ``I, Doctor (Name) (NPI
number) have reviewed the medical record and attest that (PA, NP or
CNS) has performed a face-to-face encounter with (beneficiary) on
(date) and evaluated the need for (the item of DME).'' (Sign) (Date).
This option would provide all the needed information to document that a
face-to-face encounter has occurred between the PA, NP or CNS and the
beneficiary in a standardized manner. However, this attestation would
not eliminate the need for the medical record to support the medical
necessity of the ordered item. The attestation serves only as physician
documentation of the face-to-face encounter.
Option 2: The physician signs or cosigns the pertinent
portion of the medical record, for the beneficiary for the date of the
face-to-face encounter, thereby documenting that the beneficiary was
evaluated or treated for a condition relevant to an item of DME on that
date of service. This option

[[Page 44796]]

would provide evidence that the physician has reviewed the relevant
documentation to support that a face-to-face encounter occurred for
that date of service. A signed order by the physician alone would not
satisfy the requirement described in this option that the physician
``sign/cosign the pertinent portion of the medical record.''
Option 3: The physician specifically initials the history
and physical examination for the beneficiary for the date of the face-
to-face encounter, thereby documenting that the beneficiary was
evaluated or treated for a condition relevant to an item of DME on that
date of service. This option would provide evidence that the physician
has reviewed the relevant documentation to support that a face-to-face
encounter occurred for that date of service. A signed order would not
satisfy the requirement described in this option that the physician
``initial the history and physical examination for the beneficiary for
the date of the face-to-face encounter''.
We welcome comment on how physician documentation requirements
should be handled when the face-to-face encounter with the beneficiary
is conducted by a PA, a NP, or a CNS. We are looking for the
alternative that best accomplishes the objective of reducing waste,
fraud, and abuse by having a physician document the face-to-face
encounter if it is performed by a PA, NP, or CNS without creating undue
impact.
(4) Supplier Notification
Since the supplier submits the claims for the covered items of DME,
the supplier must have access to the documentation of the face-to-face
encounter. We welcome comment on the type of communication that should
occur between the physician or PA, NP, or CNS, and the supplier. All
documentation to support the appropriateness of the item of DME ordered
including documentation of the face-to-face encounter, must be
available to the supplier. As with all items and services, we require
both the ordering practitioner and the supplier to maintain access to
the written order and supporting documentation relating to written
orders for covered items of DME and provide them to us upon our request
or at the request of our contractors.
We are considering adding one of the following proposed options on
how documentation of the face-to-face encounter must be delivered to
the supplier. We are reserving judgment on these proposed options until
the final regulation. The options are as follows:
Option 1: Require the practitioner who wrote the order to
provide the physician documentation of the face-to-face encounter
directly to the DME supplier. This option may increase practitioner
accountability, since it requires practitioners to submit the required
documentation to the supplier.
Option 2: Require the physician who completes the
documentation of the face-to-face encounter to provide that
documentation directly to the DME supplier. This option is consistent
with current policies where the entity who submits the claims collects
the necessary documentation even if it comes from multiple sources. For
example, the supplier must have access to all documentation necessary
to support the claim upon request.
Option 3: Require that the documentation, no matter who
completes it, be provided to the DME supplier through the same process
as the written order for the covered item of DME. The option ensures
that the same pathway followed for the order is also followed for the
face-to-face documentation. In most circumstances, we would expect the
order and the face-to-face documentation to travel together, the
exception being those circumstances where the face-to-face encounter
was conducted after the order.
Option 4: Require a physician to provide a copy of the
face-to-face documentation to the beneficiary for the beneficiary to
deliver to the DME supplier of his or her choice. This would ensure
that the supplier receives the documentation of the face-to-face
encounter directly and limits the supplier's need to rely on the PA,
NP, or CNS to receive this documentation completed by the physician.
We welcome comment on these options in order to facilitate open
communication and enhanced coordination of documentation of a face-to-
face encounter between the supplier, physician or when applicable, the
PA, NP or CNS.
b. Covered Items
Section 1834(a)(11)(B)(i) of the Act (as redesignated by the
Affordable Care Act authorizes us to specify covered items that require
a written order prior to delivery of the item. Under section
1834(a)(11)(B)(ii) of the Act, these orders must be written pursuant to
a physician documenting that a face-to-face encounter has occurred.
Accordingly, to reduce the risk of fraud, waste, and abuse, we are
proposing a list of Specified Covered Items that would require a
written order prior to delivery. Our proposed list of Specified Covered
Items is below. In future years, updates to this list would appear
annually in the Federal Register and the full updated list would be
available on the CMS Web site.
As highlighted in the January 2007 Government Accountability Office
(GAO) report entitled, ``Improvements Needed to Address Improper
Payments for Medical Equipment and Supplies'' it is estimated that
there were $700 million in improper payments across the spectrum of
DMEPOS from April 1, 2005, through March 31, 2006. GAO did not
specifically recommend the use of DME face-to-face encounters as a
remedial action in its report. However, the GAO did recommend making
improvements to address improper payments in the DMEPOS arena. This
proposed rule is one way in which we are working to prevent improper
payments.
Though we initially considered making all items encompassed by
section 1834(a)(11)(B) of the Act (including prosthetic and orthotic
items described in section 1834(h)(3) of the Act) subject to a face-to-
face encounter requirement, we have first proposed a more limited
criteria driven list to balance what we believe to be broad statutory
intent to establish a face-to-face requirement to prevent waste, fraud,
and abuse with concerns that including all items could have an undue
negative effect on practitioners and suppliers. We welcome comment on
limiting the associated burden of this proposed rule by refining the
number of items subject to a face-to-face encounter, while still
protecting the Medicare Trust Funds.
In this section of the proposed rule, we describe our proposed
criteria, as well as the reasons we selected these criteria. We first
note that our proposed list of Specified Covered Items contains DME
items only. We intend to use future rulemaking to apply section
1834(a)(11)(B)(ii) of the Act to prosthetics and orthotics. We believe
that our proposed current focus on DME items is an appropriate way of
balancing our goals of reducing waste, fraud, and abuse and limiting
burden on beneficiaries and the supplier community.
We propose to focus initially on DME items for several reasons.
First, these items are often marketed directly to beneficiaries and
requiring a face-to-face encounter would help ensure that a
practitioner has met with the beneficiary and considered whether the
item is appropriate. Additionally, requiring a face-to-face encounter
would help ensure that practitioners who order DME items are familiar
with the beneficiary's medical condition, that

[[Page 44797]]

this condition is documented, and that the item is reasonable and
necessary. Although we are also concerned about fraud, waste, and abuse
associated with prosthetics and prosthetic devices, these items are, as
stated in the Medicare Claims Processing Manual Chapter 20 (Section
10.1.2) ``devices that replace all or part of an internal body organ or
replace all or part of the function of a permanently inoperative or
malfunctioning internal body organ.'' The body member that is being
replaced by the prosthetic device can often be identified based on
previous claims history. We will consider this separately as there may
be different burden issues and other considerations that apply.
Therefore we are not pursuing a face-to-face requirement on these items
at this time. Further, since orthotics are treated in a manner similar
to prosthetics for billing and coverage purposes, in order to apply
consistent criteria these items will be considered together for future
rulemaking.
We welcome comment on limiting the associated burden of this
proposed regulation by refining the number of items subject to a face-
to-face encounter, while still protecting the Medicare Trust Funds and
also meeting the requirements of the statute.
The proposed list of Specified Covered Items contains items that
meet at least one of the following four criteria: (1) Items that
currently require a written order prior to delivery per instructions in
our Program Integrity Manual; (2) items that cost more than $1,000; (3)
items that we, based on our experience and recommendations from the DME
MACs, believe are particularly susceptible to fraud, waste, and abuse;
(4) items determined by CMS as vulnerable to fraud, waste and abuse
based on reports of the HHS Office of Inspector General, Government
Accountability Office or other oversight entities.
We are proposing to include items already listed in the Program
Integrity Manual (PIM), Chapter 5, section 5.2.3.1. These items were
added to the PIM originally since they were seen as posing
vulnerabilities to the Medicare program that could be mitigated through
requiring a written order prior to delivery. We believe that requiring
a face-to-face encounter is consistent with our previous initiatives
and strengthens our efforts to address this vulnerability.
We are also proposing to include any items of DME with a price
ceiling greater than or equal to $1,000 in the price ceiling column on
the DMEPOS Fee Schedule, which is updated annually and lists Medicare
allowable pricing for DME. We believe that improper claims related to
these high dollar items have a greater effect on the Medicare Trust
Funds based on amounts paid by Medicare for these items. Therefore, any
items that are $1,000 or greater would be added annually to the list of
Specified Covered Items on a prospective basis. For administrative
simplicity we would not annually adjust this value for inflation, any
changes to this threshold will go through rulemaking. We see this price
point as striking a balance between our responsibility to protect the
Medicare Trust Funds and ensuring these requirements do not place an
additional burden on beneficiaries, practitioners, and suppliers. Our
objective is to minimize inappropriate use of high dollar DME items to
help protect and preserve the Medicare Trust Funds.
The third criterion added items that we believe, based on our
experience and recommendations from our DME Medicare MACs are
particularly susceptible to fraud, waste, and abuse. Based on their
experience, the DME MACs suggested items that warrant increased
practitioner involvement because these items are often marketed
directly to beneficiaries, thus highlighting the important role of the
practitioner in conducting a needs assessment, evaluating, or treating
the beneficiary to ensure that his/her condition warrants the item. The
evaluations may assist in ensuring that the DME items are medically
necessary for the beneficiary. Increasing the practitioner's role in
evaluating the beneficiary's need for such items, would help ensure
proper ordering of DME items, thereby minimizing the risk of waste,
fraud, and abuse. The items recommended by the DME contractors were
pressure reducing pads, mattress overlays, mattress, beds, seat lift
mechanisms, TENS units, AEDs, external infusion pumps, glucose
monitors, wheelchairs and wheelchair accessories, nebulizers, negative
pressure wound therapy pumps, oxygen and oxygen equipment, pneumatic
compression devices, positive airway pressure devices, respiratory
assists devices, and cervical traction devices.
This criterion was also influenced by our experience with the
Health Care Fraud and Prevention and Enforcement Action Teams (HEAT).
These teams were established by HHS and the Department of Justice (DOJ)
to investigate, among other things, fraudulent DME suppliers and have
recovered millions of dollars in DME fraud. The HEAT strike force
teams, which are now in nine cities nationwide, have assisted in
investigating and prosecuting DME suppliers who were fraudulently
seeking payment for DME items and services. HEAT investigations have
resulted in indictments against DME suppliers relating to the following
items: pressure reducing mattresses, oxygen equipment, manual
wheelchairs, hospital beds, infusion supplies, and nebulizers. Further
information about DME fraud by State is available at
www.stopmedicarefraud.gov.
We are also proposing the inclusion of certain items of DME on the
list of Specified Covered Items because OIG has expressed concerns (as
expressed in DHHS-OIG reports since 1999) that these items are
vulnerable to fraud, waste and abuse. These reports detailed
vulnerabilities and called for CMS to address these issues. For
example, in an OIG Report entitled ``Inappropriate Medicare Payments
for Pressure Reducing Support Surfaces'' (OEI-02-07-00420), the OIG
noted as a vulnerability the fact that the vast majority of pressure
reducing pads that were billed failed to meet the coverage criteria.
Home oxygen therapy was highlighted as a vulnerability in the OIG
Report entitled ``Usage and Documentation of Home Oxygen Therapy''
(OEI-03-96-00090). Documentation and communication problems associated
with negative pressure wound therapy pumps were highlighted in a report
titled ``Comparison of Prices for Negative Pressure Wound Therapy
Pumps'' (OEI-02-07-00660). As the OIG explained in that report,
``[s]uppliers are required to communicate with the beneficiary's
treating clinician to assess wound healing progress and to determine
whether the beneficiary continues to qualify for Medicare coverage of
the pump * * * [S]uppliers reported not having contact with clinicians
for almost one-quarter of the beneficiaries.''
Our proposed list of Specified Covered Items is in Table 24 of this
proposed rule. We further propose to update this list of Specified
Covered Items annually in order to add any new items that are described
by a HCPCS code for the following types of DME:
TENS unit
Rollabout chair
Manual Wheelchair accessories
Oxygen and respiratory equipment
Hospital beds and accessories
Traction-cervical
Note that the proposed list does not include power mobility
devices, which are subject to already existing face-to-face
requirements, as previously discussed. In addition, we propose to add
to the list any item of DME that in the future appears on the DMEPOS
Fee Schedule with a price ceiling at or

[[Page 44798]]

greater than $1,000. Items not included in one of the proposed
automatic pathways would be added to the list of Specified Covered
Items through notice and comment rulemaking.
Through updates in the Federal Register, we propose removing HCPCS
codes from the list that are no longer covered by Medicare or that are
discontinued HCPCS codes.

Table 24--DME List of Specified Covered Items
------------------------------------------------------------------------
HCPCS Code Description
------------------------------------------------------------------------
E0185........................ Gel or gel-like pressure mattress pad.
E0188........................ Synthetic sheepskin pad.
E0189........................ Lamb's wool sheepskin pad.
E0194........................ Air fluidized bed.
E0197........................ Air pressure pad for mattress standard
length and width.
E0198........................ Water pressure pad for mattress standard
length and width.
E0199........................ Dry pressure pad for mattress standard
length and width.
E0250........................ Hospital bed fixed height with any type
of side rails, mattress.
E0251........................ Hospital bed fixed height with any type
side rails without mattress.
E0255........................ Hospital bed variable height with any
type side rails with mattress.
E0256........................ Hospital bed variable height with any
type side rails without mattress.
E0260........................ Hospital bed semi-electric (Head and foot
adjustment) with any type side rails
with mattress.
E0261........................ Hospital bed semi-electric (head and foot
adjustment) with any type side rails
without mattress.
E0265........................ Hospital bed total electric (head, foot
and height adjustments) with any type
side rails with mattress.
E0266........................ Hospital bed total electric (head, foot
and height adjustments) with any type
side rails without mattress.
E0290........................ Hospital bed fixed height without rails
with mattress.
E0291........................ Hospital bed fixed height without rail
without mattress.
E0292........................ Hospital bed variable height without rail
without mattress.
E0293........................ Hospital bed variable height without rail
with mattress.
E0294........................ Hospital bed semi-electric (head and foot
adjustment) without rail with mattress.
E0295........................ Hospital bed semi-electric (head and foot
adjustment) without rail without
mattress.
E0296........................ Hospital bed total electric (head, foot
and height adjustments) without rail
with mattress.
E0297........................ Hospital bed total electric (head, foot
and height adjustments) without rail
without mattress.
E0300........................ Pediatric crib, hospital grade, fully
enclosed.
E0301........................ Hospital bed Heavy Duty extra wide, with
weight capacity 350-600 lbs with any
type of rail, without mattress.
E0302........................ Hospital bed Heavy Duty extra wide, with
weight capacity greater than 600 lbs
with any type of rail, without mattress.
E0303........................ Hospital bed Heavy Duty extra wide, with
weight capacity 350-600 lbs with any
type of rail, with mattress.
E0304........................ Hospital bed Heavy Duty extra wide, with
weight capacity greater than 600 lbs
with any type of rail, with mattress.
E0424........................ Stationary compressed gas Oxygen System
rental; includes contents, regulator,
nebulizer, cannula or mask and tubing.
E0431........................ Portable gaseous oxygen system rental
includes portable container, regulator,
flowmeter, humidifier, cannula or mask,
and tubing.
E0433........................ Portable liquid oxygen system.
E0434........................ Portable liquid oxygen system, rental;
includes portable container, supply
reservoir, humidifier, flowmeter, refill
adaptor, content gauge, cannula or mask,
and tubing.
E0439........................ Stationary liquid oxygen system rental,
includes container, contents, regulator,
flowmeter, humidifier, nebulizer,
cannula or mask, and tubing.
E0441........................ Oxygen contents, gaseous (1 months
supply).
E0442........................ Oxygen contents, liquid (1 months
supply).
E0443........................ Portable Oxygen contents, gas (1 months
supply).
E0444........................ Portable oxygen contents, liquid (1
months supply).
E0450........................ Volume control ventilator without
pressure support used with invasive
interface.
E0457........................ Chest shell.
E0459........................ Chest wrap.
E0460........................ Negative pressure ventilator portable or
stationary.
E0461........................ Volume control ventilator without
pressure support node for a noninvasive
interface.
E0462........................ Rocking bed with or without side rail.
E0463........................ Pressure support ventilator with volume
control mode used for invasive surfaces.
E0464........................ Pressure support vent with volume control
mode used for noninvasive surfaces.
E0470........................ Respiratory Assist Device, bi-level
pressure capability, without backup rate
used non-invasive interface.
E0471........................ Respiratory Assist Device, bi-level
pressure capability, with backup rate
for a non-invasive interface.
E0472........................ Respiratory Assist Device, bi-level
pressure capability, with backup rate
for invasive interface.
E0480........................ Percussor electric/pneumatic home model.
E0482........................ Cough stimulating device, alternating
positive and negative airway pressure.
E0483........................ High Frequency chest wall oscillation air
pulse generator system.
E0484........................ Oscillatory positive expiratory device,
non-electric.
E0570........................ Nebulizer with compressor.
E0575........................ Nebulizer, ultrasonic, large volume.
E0580........................ Nebulizer, durable, glass or autoclavable
plastic, bottle type for use with
regulator or flowmeter.
E0585........................ Nebulizer with compressor & heater.
E0601........................ Continuous airway pressure device.
E0607........................ Home blood glucose monitor.
E0627........................ Seat lift mechanism incorporated lift-
chair.
E0628........................ Separate seat lift mechanism for patient
owned furniture electric.
E0629........................ Separate seat lift mechanism for patient
owned furniture non-electric.
E0636........................ Multi positional patient support system,
with integrated lift, patient accessible
controls.
E0650........................ Pneumatic compressor non-segmental home
model.
E0651........................ Pneumatic compressor segmental home model
without calibrated gradient pressure.
E0652........................ Pneumatic compressor segmental home model
with calibrated gradient pressure.
E0655........................ Non-segmental pneumatic appliance for use
with pneumatic compressor on half arm.
E0656........................ Non-segmental pneumatic appliance for use
with pneumatic compressor on trunk.
E0657........................ Non-segmental pneumatic appliance for use
with pneumatic compressor chest.
E0660........................ Non-segmental pneumatic appliance for use
with pneumatic compressor on full leg.
E0665........................ Non-segmental pneumatic appliance for use
with pneumatic compressor on full arm.
E0666........................ Non-segmental pneumatic appliance for use
with pneumatic compressor on half leg.
E0667........................ Segmental pneumatic appliance for use
with pneumatic compressor on full-leg.
E0668........................ Segmental pneumatic appliance for use
with pneumatic compressor on full arm.
E0669........................ Segmental pneumatic appliance for use
with pneumatic compressor on half leg.
E0671........................ Segmental gradient pressure pneumatic
appliance full leg.

[[Page 44799]]

E0672........................ Segmental gradient pressure pneumatic
appliance full arm.
E0673........................ Segmental gradient pressure pneumatic
appliance half leg.
E0675........................ Pneumatic compression device, high
pressure, rapid inflation/deflation
cycle, for arterial insufficiency.
E0692........................ Ultraviolet light therapy system panel
treatment 4 foot panel.
E0693........................ Ultraviolet light therapy system panel
treatment 6 foot panel.
E0694........................ Ultraviolet multidirectional light
therapy system in 6 foot cabinet.
E0720........................ Transcutaneous electrical nerve
stimulation, two lead, local
stimulation.
E0730........................ Transcutaneous electrical nerve
stimulation, four or more leads, for
multiple nerve stimulation.
E0731........................ Form fitting conductive garment for
delivery of TENS or NMES.
E0740........................ Incontinence treatment system, Pelvic
floor stimulator, monitor, sensor, and/
or trainer.
E0744........................ Neuromuscular stimulator for scoliosis.
E0745........................ Neuromuscular stimulator electric shock
unit.
E0747........................ Osteogenesis stimulator, electrical, non-
invasive, other than spine application.
E0748........................ Osteogenesis stimulator, electrical, non-
invasive, spinal application.
E0749........................ Osteogenesis stimulator, electrical,
surgically implanted.
E0760........................ Osteogenesis stimulator, low intensity
ultrasound, non-invasive.
E0762........................ Transcutaneous electrical joint
stimulation system including all
accessories.
E0764........................ Functional neuromuscular stimulator,
transcutaneous stimulations of muscles
of ambulation with computer controls.
E0765........................ FDA approved nerve stimulator for
treatment of nausea & vomiting.
E0782........................ Infusion pumps, implantable, Non-
programmable.
E0783........................ Infusion pump, implantable, Programmable.
E0784........................ External ambulatory infusion pump.
E0786........................ Implantable programmable infusion pump,
replacement.
E0840........................ Tract frame attach to headboard, cervical
traction.
E0849........................ Traction equipment cervical, free-
standing stand/frame, pneumatic,
applying traction force to other than
mandible.
E0850........................ Traction stand, free standing, cervical
traction.
E0855........................ Cervical traction equipment not requiring
additional stand or frame.
E0856........................ Cervical traction device, cervical collar
with inflatable air bladder.
E0958........................ Manual wheelchair accessory, one-arm
drive attachment.
E0959........................ Manual wheelchair accessory-adapter for
Amputee.
E0960........................ Manual wheelchair accessory, shoulder
harness/strap.
E0961........................ Manual wheelchair accessory wheel lock
brake extension handle.
E0966........................ Manual wheelchair accessory, headrest
extension.
E0967........................ Manual wheelchair accessory, hand rim
with projections.
E0968........................ Commode seat, wheelchair.
E0969........................ Narrowing device wheelchair.
E0971........................ Manual wheelchair accessory anti-tipping
device.
E0973........................ Manual wheelchair accessory, adjustable
height, detachable armrest.
E0974........................ Manual wheelchair accessory anti-rollback
device.
E0978........................ Manual wheelchair accessory positioning
belt/safety belt/pelvic strap.
E0980........................ Manual wheelchair accessory safety vest.
E0981........................ Manual wheelchair accessory Seat
upholstery, replacement only.
E0982........................ Manual wheelchair accessory, back
upholstery, replacement only.
E0983........................ Manual wheelchair accessory power add on
to convert manual wheelchair to
motorized wheelchair, joystick control.
E0984........................ Manual wheelchair accessory power add on
to convert manual wheelchair to
motorized wheelchair, Tiller control.
E0985........................ Wheelchair accessory, seat lift
mechanism.
E0986........................ Manual wheelchair accessory, push
activated power assist.
E0990........................ Manual wheelchair accessory, elevating
leg rest.
E0992........................ Manual wheelchair accessory, elevating
leg rest solid seat insert.
E0994........................ Arm rest.
E0995........................ Wheelchair accessory calf rest.
E1002........................ Wheelchair accessory Power seating
system, tilt only.
E1003........................ Wheelchair accessory Power seating
system, recline only without shear.
E1004........................ Wheelchair accessory Power seating
system, recline only with mechanical
shear.
E1005........................ Wheelchair accessory Power seating
system, recline only with power shear.
E1006........................ Wheelchair accessory Power seating
system, tilt and recline without shear.
E1007........................ Wheelchair accessory Power seating
system, tilt and recline with mechanical
shear.
E1008........................ Wheelchair accessory Power seating
system, tilt and recline with power
shear.
E1010........................ Wheelchair accessory, addition to power
seating system, power leg elevation
system, including leg rest pair.
E1014........................ Reclining back, addition to pediatric
size wheelchair.
E1015........................ Shock absorber for manual wheelchair.
E1020........................ Residual limb support system for
wheelchair.
E1028........................ Wheelchair accessory, manual swing away,
retractable or removable mounting
hardware for joystick, other control
interface or positioning accessory.
E1029........................ Wheelchair accessory, ventilator tray.
E1030........................ Wheelchair accessory, ventilator tray,
gimbaled.
E1031........................ Rollabout chair, any and all types with
castors 5'' or greater.
E1035........................ Multi-positional patient transfer system
with integrated seat operated by care
giver.
E1036........................ Patient transfer system.
E1037........................ Transport chair, pediatric size.
E1038........................ Transport chair, adult size up to 300 lb.
E1039........................ Transport chair, adult size heavy duty
>300 lb.
E1161........................ Manual Adult size wheelchair includes
tilt in space.
E1227........................ Special height arm for wheelchair.
E1228........................ Special back height for wheelchair.
E1232........................ Wheelchair, pediatric size, tilt-in-
space, folding, adjustable with seating
system.
E1233........................ Wheelchair, pediatric size, tilt-in-
space, folding, adjustable without
seating system.
E1234........................ Wheelchair, pediatric size, tilt-in-
space, folding, adjustable without
seating system.
E1235........................ Wheelchair, pediatric size, rigid,
adjustable, with seating system.
E1236........................ Wheelchair, pediatric size, folding,
adjustable, with seating system.
E1237........................ Wheelchair, pediatric size, rigid,
adjustable, without seating system.
E1238........................ Wheelchair, pediatric size, folding,
adjustable, without seating system.
E1296........................ Special sized wheelchair seat height.
E1297........................ Special sized wheelchair seat depth by
upholstery.
E1298........................ Special sized wheelchair seat depth and/
or width by construction.
E1310........................ Whirlpool non-portable.
E2502........................ Speech Generating Devices prerecord
messages between 8 and 20 minutes.
E2506........................ Speech Generating Devices prerecord
messages over 40 minutes.
E2508........................ Speech Generating Devices message through
spelling, manual type.
E2510........................ Speech Generating Devices synthesized
with multiple message methods.
E2227........................ Rigid pediatric wheelchair adjustable.
K0001........................ Standard wheelchair.
K0002........................ Standard hemi (low seat) wheelchair.

[[Page 44800]]

K0003........................ Lightweight wheelchair.
K0004........................ High strength ltwt wheelchair.
K0005........................ Ultra Lightweight wheelchair.
K0006........................ Heavy duty wheelchair.
K0007........................ Extra heavy duty wheelchair.
K0009........................ Other manual wheelchair/base.
K0606........................ AED garment with electronic analysis.
K0730........................ Controlled dose inhalation drug delivery
system.
------------------------------------------------------------------------

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

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

Medical review is the process performed by Medicare contractors to
ensure that billed items or services are covered and are reasonable and
necessary as specified under section 1862(a)(1)(A) of the Act. We enter
into contractual agreements with contractors to perform medical review
functions. On December 8, 2003, the Congress enacted the MMA. Section
934 of the MMA amended section 1874A of the Act by adding a new
subsection (h)--regarding random prepayment reviews and non-random
prepayment complex medical reviews and requiring us to establish
termination dates for non-random prepayment complex medical reviews.
Although section 934 of the MMA set forth requirements for random
prepayment review, our contractors do not perform random prepayment
review. However, our contractors do perform non-random prepayment
complex medical review.
On September 26, 2008, we published a final rule in the Federal
Register (73 FR 55753) entitled, ``Medicare Program; Termination of
Non-Random Prepayment Complex Medical Review'' that specified the
criteria contractors would use for the termination of providers and
suppliers from non-random prepayment complex medical review as required
under the MMA. The final rule required contractors to terminate the
non-random prepayment complex medical review of a provider or supplier
no later than 1 year following the initiation of the complex medical
review or when calculation of the error rate indicates the provider or
supplier has reduced its initial error rate by 70 percent or more. (For
more detailed information, see the September 26, 2008 final rule (73 FR
55753)).
On March 23, 2010, the Congress enacted the Patient Protection and
Affordable Care Act (Pub. L. 111-148) and the Health Care and Education
Reconciliation Act of 2010 (HCERA) (Pub. L. 111-152) (together known as
the Affordable Care Act). Section 1302 of the HCERA, repealed section
1874A(h) of the Act.
Section 1302 of the HCERA repealed section 1874A (h) of the Act,
and therefore, removed the statutory basis for our regulation. Thus, we
propose to remove the regulatory provisions in 42 CFR part 421, subpart
F, that require contractors to terminate a provider or supplier from
non-random prepayment complex medical review no later than 1 year
following the initiation of the medical review or when the provider or
supplier has reduced its initial error rate by 70 percent or more. As a
result of this proposal, contractors would not be required to terminate
non-random prepayment medical review by a prescribed time but would
instead terminate each medical review when the provider or supplier has
met all Medicare billing requirements as evidenced by an acceptable
error rate as determined by the contractor.

E. Ambulance Coverage-Physician Certification Statement

We propose to revise Sec. 410.40(d)(2) by incorporating nearly the
same provision found at Sec. 410.40(d)(3)(v) to clarify that a
physician certification statement (PCS) does not, in and of itself,
demonstrate that a nonemergency, scheduled, repetitive ambulance
service is medically necessary for Medicare coverage. The Medicare
ambulance benefit at section 1861(s)(7) of the Act allows for
``ambulance service where the use of other methods of transportation is
contraindicated by the individual's condition, but * * * only to the
extent provided in regulations.'' In other words, the definition of the
benefit itself embodies the clinical medical necessity requirement that
other forms of transportation must be contraindicated by a
beneficiary's condition. Section 410.40(d) interprets the medical
necessity requirement. Notably, even aside from the requirements of
section 1861(s)(7), section 1862(a)(1)(A) of the Act dictates that any
service that is not medically necessary under the Act and regulations
is not a covered benefit.
Despite these statutory provisions and the language of the present
regulation at section 410.40(d)(2) that we believe already requires
both medical necessity and a PCS, some courts have recently concluded
that Sec. 410.40(d)(2) establishes that a sufficiently detailed and
timely order from a beneficiary's physician, to the exclusion of any
other medical necessity requirements, conclusively demonstrates medical
necessity with respect to nonemergency, scheduled, repetitive ambulance
services.
Absent explicit statutorily-based exceptions, we have consistently
maintained that the Secretary is the final arbiter of whether a service
is reasonable and necessary and qualifies for Medicare coverage. For
example, in HCFA Ruling 93-1, we said ``[i]t is HCFA's ruling that no
presumptive weight should be assigned to the treating physician's
medical opinion in determining the medical necessity of inpatient
hospital or SNF services under section 1862(a)(1) of the Act. A
physician's opinion will be evaluated in the context of the evidence in
the complete administrative record. Even though a physician's
certification is required for payment, coverage decisions are not made
based solely on this certification; they are made based on objective
medical information about the patient's condition and the services
received. This information is available from the claims form and, when

[[Page 44801]]

necessary, the medical record which includes the physician's
certification.''
Medical necessity is not just an integral requirement of Medicare's
ambulance benefit in particular, but as we mentioned, section
1862(a)(1)(A) of the Act dictates that services must be reasonable and
necessary to qualify for any Medicare coverage. Numerous U.S. Circuit
Courts of Appeal have held that PCSs or certificates of medical
necessity do not, in and of themselves, conclusively demonstrate
medical necessity. The same applies in the context of nonemergency,
scheduled, repetitive ambulance services--the PCS is not, in and of
itself, the sole determinant of medical necessity, and, as we discuss
below, we believe the existing regulation at Sec. 410.40(d)(2) already
demonstrates that. To erase any doubt, however, we propose a revision
to Sec. 410.40(d)(2) to explicitly clarify this principle.
Since being finalized in the February 27, 2002 Federal Register (67
FR 9100, 9132), Sec. 410.40(d)(2) has stated that ``Medicare covers
medically necessary nonemergency, scheduled, repetitive ambulance
services if the ambulance provider or supplier, before furnishing the
service to the beneficiary, obtains a written order from the
beneficiary's attending physician certifying that the medical necessity
requirements of paragraph (d)(1) of this section are met.'' (emphasis
added). Although a physician certifies with respect to medical
necessity, the Secretary is the final arbiter of whether a service is
medically necessary for Medicare coverage. Indeed, the phrase
``medically necessary'' would have been surplus had we intended the PCS
to be the sole determinant of medical necessity. Rather, as
demonstrated by the fact that we did include that phrase, and by
various other clarifying points, we made clear that a PCS, while
necessary, does not on its own conclusively demonstrate the medical
necessity of nonemergency, scheduled, repetitive ambulance services.
The preamble to the February 27, 2002 final rule (Medicare Program;
Fee Schedule for Payment of Ambulance Services and Revisions to the
Physician Certification Requirements for Coverage of Nonemergency
ambulance Services (67 FR 9100)) and the 1999 final rule with comment
(FRC) (Medicare Program; Coverage of Ambulance Services and Vehicle and
Staff Requirements (64 FR 3637)) support this interpretation.
For example, in describing comments regarding medical necessity and
physician certification in the 1999 FRC, we said: ``[t]wo ambulance
suppliers commented that physicians are unaware of the coverage
requirements for ambulance services and that their decisions to request
ambulance services may be based on `family preference or the inability
to safely transport the beneficiary by other means rather than on the
medical necessity requirement imposed by Medicare.''' We responded that
section 1861(s)(7) of the Act allows coverage only under certain
limited circumstances, and suggested that ``[t]o facilitate awareness
of the Medicare rules as they relate to the ambulance service benefit,
ambulance suppliers may need to educate the physician (or the
physician's staff members) when making arrangements for the ambulance
transportation of a beneficiary.'' We continued that ``[s]uppliers may
wish to furnish an explanation of applicable medical necessity
requirements, as well as requirements for physician certification, and
to explain that the certification statement should indicate that the
ambulance services being requested by the attending physician are
medically necessary.'' (76 FR 3637, 3641) In light of our acknowledging
a significant program vulnerability--that the physicians writing PCSs
might not be fully cognizant of the Medicare ambulance benefit's
medical necessity requirements--and encouraging suppliers themselves to
help remedy that by educating physicians, it would have been irrational
of us to (and we did not) abrogate the Secretary's judgment and vest
exclusively in the PCS the authority to demonstrate an ambulance
transport's medical necessity. We made a similar point in response to a
separate comment: ``It is always the responsibility of the ambulance
supplier to furnish complete and accurate documentation to demonstrate
that the ambulance service being furnished meets the medical necessity
criteria.'' (76 FR 3637, 3639).
In the section of the February 27, 2002 final rule preamble
describing the PCS requirements, we said: ``[i]n all cases, the
appropriate documentation must be kept on file and, upon request,
presented to the carrier or intermediary. It is important to note that
the presence of the signed physician certification statement does not
necessarily demonstrate that the transport was medically necessary. The
ambulance supplier must meet all coverage criteria for payment to be
made.'' (67 FR 9100, 9111). Although we incorporated that passage into
the final rule only at Sec. 410.40(d)(3)(v), we intended, and we
believe our intent is clear from the preamble narrative, that the
principle apply equally to all nonemergency ambulance transports.
The OIG report titled ``Medicare Payments for Ambulance
Transports'' (OEI-05-02-00590) (January 2006) also supports our
position. Based on its analysis of a sample of calendar year 2002
claims, the OIG reported that ``27 percent of ambulance transports to
or from dialysis facilities did not meet Medicare's coverage
criteria.'' The OIG added ``the ongoing and repetitive nature of
dialysis treatment makes transports to and from such treatment
vulnerable to abuse. Although the condition of some patients warrants
repetitive, scheduled ambulance transports for dialysis treatment, many
dialysis transports do not meet coverage criteria.'' The OIG
recommended that we instruct our contractors to implement prepayment
edits with respect to dialysis transports and have them request wide-
ranging documents when conducting postpayment medical review. The fact
that we agreed with the OIG's recommendations demonstrated our belief
that the PCS was not the sole determinant of medical necessity.
Likewise, the fact that the OIG mentioned our ambulance coverage
regulations, including the PCS requirement, but did not recommend
altering or clarifying the regulations with respect to medical
necessity demonstrated that we were of like mind; that, while a
physician certifies with respect to medical necessity, the Secretary is
the final arbiter of whether a service is medically necessary.
Accordingly, we propose to revise Sec. 410.40(d)(2) to add nearly
the same provision presently found at Sec. 410.40(d)(3)(v), except
without reference to a ``signed return receipt'' that does not pertain
to nonemergency, scheduled, repetitive ambulance services. We propose
to accomplish this by redesignating the current language as Sec.
410.40(d)(2)(i), and adding the clarifying language to a new Sec.
410.40(d)(2)(ii). The proposed Sec. 410.40(d)(2)(ii) clarifies that a
signed physician certification statement does not, in and of itself,
demonstrate that an ambulance transport was reasonable and necessary.
Rather, for all ambulance services, providers and suppliers must retain
on file all appropriate documentation and present such documentation
upon request to a Medicare contractor. A CMS contractor may use such
documentation to assess, among other things, whether the service
satisfied Medicare's medical necessity, eligibility, coverage, benefit
category, or any other criteria necessary for Medicare payment to be
made. For example, the patient's condition must

[[Page 44802]]

be such that other means of transportation would be contraindicated,
and the expenses incurred must be reasonable and necessary for the
diagnosis or treatment of illness or injury.
We also propose to fix the typographical error ``fro,'' which
should be ``from'' in the existing Sec. 410.40(c)(3)(ii).

F. Physician Compare Web Site

1. Background and Statutory Authority
Section 10331(a)(1) of the Affordable Care Act requires that, by no
later than January 1, 2011, we develop a Physician Compare Internet Web
site with information on physicians enrolled in the Medicare program
under section 1866(j) of the Act, as well as information on other
eligible professionals who participate in the Physician Quality
Reporting System under section 1848 of the Act.
We launched the first phase of the Physician Compare Internet Web
site (http://www.medicare.gov/find-a-doctor/provider-search.aspx) on
December 30, 2010. This initial phase included the posting of the names
of eligible professionals that satisfactorily submitted quality data
for the 2009 Physician Quality Reporting System, consistent with
section 1848(m)(5)(G) of the Act. Since the initial launch of the Web
site, we have continued to build and improve Physician Compare.
Currently users can search by selecting a location and specialty for
physicians or other healthcare professionals. Search results provide
basic information about approved Medicare providers, such as primary
and secondary specialties, practice locations, group practice
affiliations, hospital affiliations, Medicare Assignment, education,
languages spoken, and gender. As required by section 1848(m)(5)(G) of
the Act, we have added the names of those eligible professionals who
are successful electronic prescribers under the Medicare Electronic
Prescribing (eRx) Incentive Program. As such, physician and other
healthcare professional profile pages indicate if professionals
satisfactorily participated in the Physician Quality Reporting System
and/or are successful electronic prescribers under the eRx Incentive
Program based on the most recent data available for these two quality
initiatives.
2. Public Reporting of Physician Performance
Section 10331(a)(2) of the Affordable Care Act also requires that,
no later than January 1, 2013, and for reporting periods that begin no
earlier than January 1, 2012, we implement a plan for making publicly
available through Physician Compare, information on physician
performance that provides comparable quality and patient experience
measures. This plan is outlined below. To the extent that
scientifically sound measures are developed and are available, we are
required to include, to the extent practicable, the following types of
measures for public reporting:
Measures collected under the Physician Quality Reporting
System.
An assessment of patient health outcomes and functional
status of patients.
An assessment of the continuity and coordination of care
and care transitions, including episodes of care and risk-adjusted
resource use.
An assessment of efficiency.
An assessment of patient experience and patient,
caregiver, and family engagement.
An assessment of the safety, effectiveness, and timeliness
of care.
Other information as determined appropriate by the
Secretary.
As required under section 10331(b) of the Affordable Care Act, in
developing and implementing the plan, we must include, to the extent
practicable, the following:
Processes to ensure that data made public are
statistically valid, reliable, and accurate, including risk adjustment
mechanisms used by the Secretary.
Processes for physicians and eligible professionals whose
information is being publicly reported to have a reasonable
opportunity, as determined by the Secretary, to review their results
before posting to Physician Compare.
Processes to ensure the data published on Physician
Compare provides a robust and accurate portrayal of a physician's
performance.
Data that reflects the care provided to all patients seen
by physicians, under both the Medicare program and, to the extent
applicable, other payers, to the extent such information would provide
a more accurate portrayal of physician performance.
Processes to ensure appropriate attribution of care when
multiple physicians and other providers are involved in the care of the
patient.
Processes to ensure timely statistical performance
feedback is provided to physicians concerning the data published on
Physician Compare.
Implementation of computer and data infrastructure and
systems used to support valid, reliable, and accurate reporting
activities.
Section 10331(d) of the Affordable Care Act requires us to consider
input from multi-stakeholder groups in selecting quality measures for
Physician Compare, which we seek to accomplish through rulemaking and
focus groups. In developing the plan for making information on
physician performance publicly available through Physician Compare,
section 10331(e) of the Affordable Care Act requires the Secretary, as
the Secretary deems appropriate, to consider the plan to transition to
value-based purchasing for physicians and other practitioners that was
developed under section 131(d) of the Medicare Improvements for
Patients and Providers Act of 2008.
We are required, under section 10331(f) of the Affordable Care Act,
to submit a report to the Congress by January 1, 2015, on Physician
Compare development, and include information on the efforts and plans
to collect and publish data on physician quality and efficiency and on
patient experience of care in support of value-based purchasing and
consumer choice. Section 10331(g) of the Affordable Care Act provides
that any time before that date, we may continue to expand the
information made available on Physician Compare.
We believe section 10331 of the Affordable Care Act supports our
overarching goals of providing consumers with quality of care
information to make informed decisions about their health care, while
encouraging clinicians to improve on the quality of care they provide
to their patients. In accordance with section 10331 of the Affordable
Care Act, we intend to utilize the Physician Compare Web site to
publicly report physician performance results.
In implementing our plan to publicly report physician performance,
we will use data reported under the existing Physician Quality
Reporting System as an initial step for making physician ``measure
performance'' information public on Physician Compare. By ``measure
performance'' in relation to the Physician Quality Reporting System, we
mean the percent of times that a particular clinical quality action was
reported as being performed, or a particular outcome was attained, for
the applicable persons to whom a measure applies as described in the
denominator for the measure. For measures requiring risk adjustment,
``measure performance'' refers to the risk adjusted percentage of times
a particular outcome was attained.
We previously finalized a decision to make public on Physician
Compare the performance rates of the quality measures that group
practices submit under the 2012 Physician Quality Reporting System
group practice

[[Page 44803]]

reporting option (GPRO) (76 FR 73417). Therefore, we anticipate, no
earlier than 2013, posting performance information collected through
the GPRO web interface for group practices participating in the
Physician Quality Reporting System GPRO CY 2012 on Physician Compare.
Specifically, we will make public performance information for measures
included in the 2012 Physician Quality Reporting System that meet the
minimum sample size, and that prove to be statistically valid and
reliable. As we previously established, if the minimum threshold is not
met for a particular measure, or the measure is otherwise deemed not to
be suitable for public reporting, the group's performance rate for that
measure will be suppressed and not publicly reported. We previously
established a minimum threshold of 25 patients for reporting
performance information on the Physician Compare Web site (76 FR
73418). Although we considered keeping the threshold for reporting
performance data on Physician Compare at 25 patients, we propose to
change the minimum patient sample size, from 25 patients to 20
patients, beginning with data collected for services furnished in 2013,
to align with the proposed minimum patient reporting thresholds for
Physician Quality Reporting System measures group reporting for the
2013 and 2014 incentives, and the proposed reliability thresholds for
the physician value-based payment modifier. We invite comment on the
proposed new minimum patient sample size for Physician Compare,
including whether or not we should retain the existing threshold of 25
patients.
Furthermore, in the Shared Savings Program final rule (76 FR 67948)
as codified at Sec. 425.308, we finalized ACO public reporting
provisions in the interest of promoting greater transparency regarding
the ACOs participating in the program. We finalized requirements for
ACOs to publicly report certain data as well as data that we would
publicly report. Because ACO providers/suppliers that are eligible
professionals are considered to be group practices for purposes of
qualifying for a Physician Quality Reporting System incentive under the
Shared Savings Program, we indicated that performance on quality
measures reported by ACOs at the ACO TIN level, on behalf of their ACO
providers/suppliers who are eligible professionals, using the GPRO web
interface would be reported on Physician Compare in the same way as for
the groups that report under the Physician Quality Reporting System.
In April 2012, we added functionality to Physician Compare allowing
users to search for group practices in preparation for the addition of
2012 Physician Quality Reporting System GPRO data. A full Web site
redesign is slated for early 2013 to further prepare the site for the
introduction of quality data. With each enhancement, we work to improve
the usability and functionality of the site, providing consumers with
more tools to help them make informed healthcare decisions.
In CY 2012, we intend to enhance the accuracy of ``administrative''
information displayed on the eligible professional's profile page, and
to add additional data. By ``administrative'' data, we are referring to
information about eligible professionals that is pulled from the
Provider Enrollment, Chain, and Ownership System (PECOS) and other
readily available external data sources. Specifically, we intend to add
whether a physician/other health care professional is accepting new
Medicare patients, board certification information, and to improve the
foreign language and hospital affiliation data. We also intend to
include the names of those eligible professionals who participated in
the Medicare EHR Incentive Program and the names of those eligible
professionals who satisfactorily participated under the Physician
Quality Reporting System GPRO. We will continue to update the names of
those eligible professionals and group practices who satisfactorily
participated under the Physician Quality Reporting System, and those
who are successful electronic prescribers under the eRx Incentive
Program based on the most recent program year data available.
In support of the HHS-wide Million Hearts Initiative, we propose to
post the names of the eligible professionals who report the Physician
Quality Reporting System Cardiovascular Prevention measures group. This
is consistent with the requirements under section 10331 of the
Affordable Care Act to provide information about physicians and other
eligible professionals who participate in the Physician Quality
Reporting System.
3. Future Development of Physician Compare
Consistent with Affordable Care Act requirements, we intend to
phase in an expansion of Physician Compare over the next several years
by incorporating quality measures from a variety of sources, if
technically feasible. For our next phase, we propose to make public on
Physician Compare, performance rates on the quality measures that group
practices submit through the GPRO web interface under the 2013
Physician Quality Reporting System GPRO and the Medicare Shared Savings
Program. We anticipate that the 2013 Physician Quality Reporting System
GPRO web interface measures data would be posted no sooner than 2014.
This data would include measure performance rates for measures included
in the 2013 Physician Quality Reporting System GPRO web interface that
meet the proposed minimum sample size of 20 patients, and that prove to
be statistically valid and reliable.
When technically feasible, but no earlier than 2014, we propose to
publicly report composite measures that reflect group performance
across several related measures. As an initial step we intend to
develop disease module level composite scores for Physician Quality
Reporting System GPRO measures. Under the Medicare Shared Savings
Program, ACOs are required to report on composite measures for Diabetes
Mellitus (DM) and Coronary Artery Disease (CAD) (76 FR 67891).
Accordingly, in an effort to align the PQRS GPRO measures with the GPRO
measures under the Shared Savings Program, we have proposed in Table 35
of this proposed rule to add composite measures for DM and CAD into the
Physician Quality Reporting System starting in 2013. We will also
consider future development of composites for the remaining disease
level modules within the GPRO web interface. As more data are added to
Physician Compare over time, we will consider adding additional disease
level composites across measure types as technically feasible and
statistically valid.
Consistent with the requirement under section 10331(a)(2) under the
Affordable Care Act to implement a plan to make publically available
comparable information on patient experience of care measures, we
propose to add patient experience survey-based measures such as, but
not limited to, the Clinician and Group Consumer Assessment of
Healthcare Providers and Systems (CG-CAHPS). As discussed in section
G.6.c. of this proposed rule, we propose to collect the following
patient experience of care measures for group practices participating
in the Physician Quality Reporting System GPRO;
CAHPS: Getting Timely Care, Appointments, and Information
CAHPS: How Well Your Doctors Communicate
CAHPS: Patients' Rating of Doctor
CAHPS: Access to Specialists
CAHPS: Health Promotion and Education
These measures capture patients' experiences with clinicians and
their staff, and patients' perception of care.

[[Page 44804]]

We propose, no earlier than 2014, to publicly report 2013 patient
experience data for all group practices participating in the 2013
Physician Quality Reporting System GPRO, not limited to those groups
participating via the GPRO web interface, on Physician Compare. At
least for 2013, we intend to administer and collect patient experience
survey data on a sample of the group practices' beneficiaries. As we
intend to administer and collect the data for these surveys, we do not
anticipate any notable burden on the groups.
For ACOs participating in the Shared Savings Program, consistent
with the Physician Quality Reporting System proposal to publicly report
patient experience measures on Physician Compare starting in 2013, we
propose to publicly report patient experience data in addition to the
measure data reported through the GPRO web interface. Specifically, the
patient experience measures that would be reported for ACOs include the
CAHPS measures in the Patient/Caregiver Experience domain finalized in
the Shared Savings Program final rule (76 FR 67889):
CAHPS: Getting Timely Care, Appointments, and Information
CAHPS: How Well Your Doctors Communicate
CAHPS: Patients' Rating of Doctor
CAHPS: Access to Specialists
CAHPS: Health Promotion and Education
CAHPS: Shared Decision Making
For patient experience data reported under either the Physician
Quality Reporting System GPRO or the Medicare Shared Savings Program,
we also considered an alternative option of providing confidential
feedback to group practices and ACOs using 2013 patient experience data
before publicly reporting patient experience data on Physician Compare.
In lieu of publicly reporting the patient experience data relating to
2013 Physician Quality Reporting System GPRO and ACOs participating in
the Shared Savings Program, we considered using the 2013 results as a
baseline to be shared confidentially with the group practices and ACOs,
during which time the group practices and ACOs would have the
opportunity to review their data, and implement changes to improve
patient experience scores. Under this alternative option, program year
2014 patient experience data would be the first to be publicly reported
on Physician Compare, and we would publicly report 2014 patient
experience data for ACOs and group practices participating in the 2014
Physician Quality Reporting System GPRO on Physician Compare no earlier
than 2015. We invite public comment on our proposal to begin publicly
reporting patient experience data for program year 2013, and also the
alternative option of delaying public reporting of patient experience
of care data on Physician Compare until program year 2014 in order to
give group practices and ACOs the opportunity to make changes to the
processes used in their practices based on the review of their data
from program year 2013.
As we continue to improve administrative and provider level data,
we propose posting the names of those physicians who earned a Physician
Quality Reporting System Maintenance of Certification Program incentive
as data becomes available, but no sooner than 2014. Additionally, we
are considering allowing measures that have been developed and
collected by approved and vetted specialty societies to be reported on
Physician Compare, as deemed appropriate, and as they are found to be
scientifically sound and statistically valid. We propose including
additional claims-based process, outcome and resource use measures on
Physician Compare, and intend to align measure selection for Physician
Compare with measures selected for the Value Based Modifier (section
III.K).
As an initial step, we propose to include group level ambulatory
care sensitive condition admission measures of potentially preventable
hospitalizations developed by the HHS Agency for Healthcare Research
and Quality (AHRQ) that meet the proposed minimum sample size of 20
patients, and that prove to be statistically valid and reliable
(measure details are available at http://www.qualitymeasures.ahrq.gov/content.aspx?id=27275). We propose reporting these measures on
Physician Compare no earlier than 2015 for those group practices
comprised of 2--99 eligible professionals participating in the proposed
2014 physician Quality Reporting System GPRO, and for ACOs. As our next
step, we propose to publicly report performance rates on quality
measures included in the 2015 Physician Quality Reporting System and
value-based payment modifier for individual eligible professionals.
Further details on what measures would be included in the 2015
reporting period will be addressed in future rule making. Public
reporting of 2015 PQRS and administrative claims-based quality measures
for individuals would occur no earlier than 2016. For all measures
publicly reported on the Physician Compare Web site, we propose to post
a standard of care, such as those endorsed by the National Quality
Forum. Such information will serve as a standard for consumers to
measure individual provider, and group level data.
We are committed to making Physician Compare a constructive tool
for Medicare beneficiaries, successfully meeting the Affordable Care
Act mandate, and in doing so, providing consumers with information
needed to make informed healthcare decisions. CMS has developed a plan,
and started to implement a phased approach to adding quality data to
Physician Compare. We believe a staged approach to public reporting of
physician information allows for the use of information currently
available while we develop the infrastructure necessary to support the
collection of additional types of measures and public reporting of
individual physicians' quality measure performance results.
Implementation of subsequent phases of the plan will need to be
developed and addressed in future notice and comment rulemaking, as
needed.
We invite comments regarding our proposals to: (1) Reduce the
minimum reporting threshold from 25 patients to 20 patients for
reporting on Physician Compare; (2) post the names of the eligible
professionals who report the Physician Quality Reporting System
Cardiovascular Prevention measures group for purposes of recognition
and in support of the Million Hearts Initiative; (3) develop composite
measures at the disease module level, initially with CY 2013 GPRO data,
and incorporating additional measures; (4) to publicly report 2013
patient experience data for group practices participating in the 2013
Physician Quality Reporting System GPRO, or who are part of an ACO
under the Medicare Shared Savings Program, on the Physician Compare Web
site no earlier than 2014; (5) the alternative option of providing
confidential feedback to group practices and ACOs on 2013 patient
experience data to allow them to make necessary changes to their
processes prior to publicly reporting of 2014 patient experience data
on Physician Compare; (6) report names of participants who earn a 2013
Physician Quality Reporting System Maintenance of Certification Program
Incentive no earlier than 2014; (7) allow measures that have been
developed and collected by specialty societies to be reported on the
Physician Compare Web site as deemed appropriate; (8) to report 2014
group level ambulatory care sensitive condition measures of potentially
preventable hospitalizations developed by the AHRQ no earlier than 2015
for groups participating in the 2014 Physician Quality Reporting System
and

[[Page 44805]]

ACOs, (measure details are available at http://www.qualitymeasures.ahrq.gov/content.aspx?id=27275); (9) publicly
report performance on 2015 Physician Quality Reporting System and
value-based payment modifier quality measures for individuals. Public
reporting of 2015 Physician Quality Reporting System and claims derived
quality measures for individuals would occur no earlier than 2016; and
(10) post a standard of care for measures posted on Physician Compare.
For the above proposals, we note that we would only post data on
Physician Compare if it is technically feasible; the data is available;
the system is set up/adjusted to post information and the data is
useful, sufficiently reliable, and accurate.

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

There are several healthcare quality improvement programs that
affect physician payments under the Medicare PFS. The National Quality
Strategy establishes three aims for quality improvement across the
nation: better health, better healthcare, and lower costs. This
strategy, the first of its kind, outlines a national vision for quality
improvement and creates an opportunity for programs to align quality
measurement and incentives across the continuum of care. CMS believes
that this alignment is especially critical for programs involving
physicians. The proposals that follow facilitate the alignment of
programs, reporting systems, and quality measures to make this vision a
reality. We believe that alignment of CMS quality improvement programs
will decrease the burden of participation on physicians and allow them
to spend more time and resources caring for beneficiaries. Furthermore,
as the leaders of care teams and the healthcare systems, physicians and
other clinicians serve beneficiaries both as frontline and system-wide
change agents to improve quality. CMS believes, however, that in order
to improve quality, physicians must first engage in quality measurement
and reporting. It is CMS's intent that the following proposals will
improve alignment of physician-focused quality improvement programs,
decrease the burden of successful participation on physicians, increase
engagement of physicians in quality improvement, and ultimately lead to
higher quality care for beneficiaries.
This section contains our proposals related to the Physician
Quality Reporting System (PQRS). The PQRS, as set forth in section
1848(a), (k), and (m) of the Act, is a quality reporting program that
provides incentive payments and payment adjustments to eligible
professionals who satisfactorily report data on quality measures for
covered professional services furnished during a specified reporting
period. We note that, in developing these proposals, it was our goal to
align program requirements between these quality reporting programs,
such as the eRx Incentive Program, EHR Incentive Program, Medicare
Shared Savings Program, and value-based payment modifier, wherever
possible. We believe that alignment of these quality reporting programs
will lead to greater overall participation in these programs, as well
as minimize the reporting burden on eligible professionals.
For example, we have aligned the definition of group practice under
the eRx Incentive Program with PQRS' definition of group practice. Our
proposals with respect to reporting as a group practice for the eRx
Incentive Program are intended to conform to our proposals for
reporting as a group practice for PQRS.
With respect to integration with the EHR Incentive Program, section
1848(m)(7) of the Act requires us to develop a plan to integrate
reporting on quality measures under the PQRS with reporting
requirements under the EHR Incentive Program. We began integrating
requirements for these two programs in 2012 with the alignment of
reporting requirements via the Physician Quality Reporting System--
Medicare EHR Incentive Pilot (76 FR 73422) and the alignment of
reportable EHR measures (76 FR 73364). Our proposals in this section
are intended to move the PQRS and EHR Incentive Program towards greater
alignment, benefiting those eligible professionals who wish to
participate in both programs. The vision is to report once for multiple
programs on a set of measures aligned across programs and with the
National Quality Strategy.
With respect to integration with the value-based payment modifier,
we note that we began our efforts to integrate our program requirements
with the value-based payment modifier in the CY 2012 Medicare PFS final
rule, when CY 2013 was established as the reporting period for the 2015
PQRS payment adjustment (76 FR 73391) and the initial performance
period for the application of the value modifier (76 FR 73435). Our
proposals in this section, particularly as they relate to the proposed
requirements for satisfactory reporting for the PQRS payment
adjustments, are intended to align with the proposals for the
application of the value modifier.
The regulation governing the PQRS is located at Sec. 414.90. The
program requirements for years 2007-2012 of the PQRS that were
previously established, as well as information on the PQRS, including
related laws and established requirements, are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html. Please also note that in this proposed
rule, we are proposing to make technical changes to Sec. 414.90 to aid
in the readability of the regulation.
1. Methods of Participation
There are two ways an eligible professional can participate in the
PQRS: (1) as in individual or (2) as part of a group practice
participating in the PQRS group practice reporting option (GPRO).
a. Participation as an Individual Eligible Professional
(1) Participation for the 2013 and 2014 Incentives
As defined at Sec. 414.90(b) the term ``eligible professional''
means any of the following: (1) A physician; (2) a practitioner
described in section 1842(b)(18)(C) of the Act; (3) a physical or
occupational therapist or a qualified speech-language pathologist; or
(4) a qualified audiologist. For more information on which
professionals are eligible to participate in the Physician Quality
Reporting System, we refer readers to the ``List of Eligible
Professionals'' download located in the ``How to Get Started'' section
of the PQRS CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/How_To_Get_Started.html. There is no requirement to self-nominate to participate
in PQRS as an individual eligible professional for the incentive or to
use the claims, registry, or EHR reporting mechanisms.
(2) Proposed Requirement for Eligible Professionals and Group Practices
Electing To Use the Administrative Claims-based Reporting Mechanism for
the 2015 and 2016 Payment Adjustments
Unlike using the traditional PQRS reporting mechanisms (claims,
registry, EHRs) to satisfy the reporting requirements for the 2015 and
2016 payment adjustments, we propose that eligible professionals and
group practices wishing to use the administrative claims reporting
mechanism, which is discussed in section K, and available for the 2015
and/or 2016 payment adjustments, must

[[Page 44806]]

elect to use the administrative claims reporting mechanism (please note
that since the same proposed requirements would apply to both
individual eligible professionals and group practices, we address both
in this discussion). We believe this election requirement is necessary
because CMS must be notified that CMS must analyze and calculate data
from an eligible professional or group practice's claims. This election
requirement is not necessary for eligible professionals and group
practices using traditional PQRS reporting mechanisms because, for
these traditional reporting mechanisms, CMS is not involved with
analyzing claims data to determine whether a clinical quality action
related to a quality measure was performed.
For eligible professionals, we propose that this election process
would consist of a registration statement that includes: the eligible
professional's name and practice name, the eligible professional's TIN
and NPI for analytical purposes, and the eligible professional's
contact information. For group practices, we propose that this election
process would also consist of a registration statement that includes:
The group practice's business name and contact information, the group
practice's TIN, and contact information of the group practice's
contact(s) who will be contacted for program, clinical, and/or
technical purposes. With respect to the method of submitting this
registration statement, we propose the following options:
--If technically feasible, submission of this statement via the Web and
--If technically feasible, submission of an eligible professional's or
group practice's intent to register to use the administrative claims-
based reporting mechanism by placing a G-code on at least 1 Medicare
Part B claim.

In the event the two proposed options are not technically feasible, we
also considered allowing for submission of the registration statement
by submitting a mailed letter to CMS at Centers for Medicare & Medicaid
Services, Office of Clinical Standards and Quality, Quality Measurement
and Health Assessment Group, 7500 Security Boulevard, Mail Stop S3-02-
01, Baltimore, MD 21244-1850a. However, we note that using this mailing
option would be a more burdensome and time-intensive process for CMS.
We invite public comment on this considered option.
The eligible professional would be required to complete this
election process by January 31 of the applicable payment adjustment
reporting period (for example, by January 31, 2015 for the 2015 payment
adjustment). However, we note that we propose that we may extend this
deadline based on the submission method that is finalized. For example,
because processing mailed letters would take the longest to process
(out of the 3 methods), we anticipate that if we were to include the
option of mailed letters the deadline for submitting a mailed
registration letter would be January 31 of the applicable payment
adjustment reporting period. Since it would be more efficient to
process registration statements received via the Web or via a G-code on
a claim, we anticipate that we would be able to extend the registration
deadline to as late as December 31 of the applicable payment adjustment
reporting period. Once an eligible professional makes an election to
participate in PQRS using the administrative claims-based reporting
mechanism for the PQRS payment adjustments, the eligible professional
would be assessed under the administrative claims-based reporting
mechanism.
For group practices participating in the GPRO, we propose that
these group practices would use the 2 methods described above (mailed
letter, Web, or G-code submission) and have the same deadline as
eligible professionals wishing to elect to use the administrative
claims-based reporting mechanism for an applicable payment adjustment.
In the alternative, we propose that a group practice participating in
the GPRO would be required to elect to use the administrative claims-
based reporting mechanism in its self-nomination statement. We are
proposing to provide less time for group practices to elect to use the
administrative claims-based reporting mechanism because it is necessary
for CMS to receive this information in the beginning of the applicable
reporting period to indicate to CMS how these group practices should be
analyzed throughout the reporting period. This early notification is
especially important for large group practices, which may have hundreds
or thousands of eligible professionals to track as a group practice.
Therefore, we feel it is appropriate to request that a group practice
elect to use the administrative claims-based reporting mechanism when
the group practice self-nominates.
We further propose that an eligible professional or group practice
would be required to make this election for each payment adjustment
year the eligible professional or group practice seeks to be analyzed
under this mechanism. For example, if the eligible professional seeks
to report under the administrative claims mechanism for the 2015 and
2016 payment adjustments, the eligible professional would be required
to make this election by the applicable deadline, for the 2015 payment
adjustment and again by the applicable deadline, for the 2016 payment
adjustment. We invite public comment on the proposed election
requirement for eligible professionals and group practices electing to
participate in the 2015 and 2016 payment adjustments using the
administrative claims-based reporting mechanism.
b. Participation as a Group Practice in the GPRO
(1) Proposed Definition of Group Practice
We propose to modify Sec. 414.90(b) to define group practice as
``a single Tax Identification Number (TIN) with 2 or more eligible
professionals, as identified by their individual National Provider
(NPI), who have reassigned their Medicare billing rights to the TIN.''
We are proposing to change the number of eligible professionals
comprising a PQRS group practice from 25 or more to 2 or more to allow
all groups of smaller sizes to participate in the GPRO. We believe that
expanding the scope of group practices eligible to participate under
the program will lead to greater program participation. To participate
in the GPRO, a group practice would be required to meet this proposed
definition at all times during the reporting period for the program
year in which the group practice is selected to participate in the
GPRO. We invite public comment on the proposed definition of group
practice.
(2) Proposed Election Requirement for Group Practices Selected To
Participate in the GPRO
We established the process for group practices to be selected to
participate in the GPRO in the CY 2012 PFS final rule with comment
period (76 FR 73316). However, this section contains additional
processes with respect to a group practice's self-nomination statement
that we are proposing for group practices selected to participate in
the GPRO for 2013 and beyond. With respect to the requirement that
group practices wishing to participate in the GPRO submit a self-
nomination statement (76 FR 73316), for 2012, we accepted these self-
nomination statements via a letter accompanied by an electronic file
submitted in a format specified by CMS because it was not operationally
feasible to receive self-nomination statements via the Web at that
time. In the CY 2012 Medicare PFS final rule with comment period, we

[[Page 44807]]

noted that we anticipated that CMS would have the ability to collect
self-nomination statements via the Web for the 2013 Physician Quality
Reporting System. We are therefore proposing that, for 2013 and beyond,
a group practice must submit its self-nomination statement via the Web.
We note that this Web-based functionality is still being developed
by CMS. Therefore, in the event this Web-based functionality would not
be available in time to accept self-nomination statements for the 2013
Physician Quality Reporting System, we propose that, in lieu of
submitting self-nomination statements via the Web, a group practice
would be required to submit its self-nomination statement via a letter
accompanied by an electronic file submitted in a format specified by
CMS (such as a Microsoft excel file). We propose that this self-
nomination statement would be mailed to the following address: Centers
for Medicare & Medicaid Services, Office of Clinical Standards and
Quality, Quality Measurement and Health Assessment Group, 7500 Security
Boulevard, Mail Stop S3-02-01, Baltimore, MD 21244-1850. If mailing the
self-nomination statement, we would require that this self-nomination
statement be received by no later than 5 p.m. Eastern Standard Time on
January 31 of the year in which the group practice wishes to
participate in the GPRO.
In the CY 2012 Medicare PFS final rule with comment period, we also
established what information is required to be included in a group
practice's self-nomination statement (76 FR 73316). In previous years,
the group practice only had one reporting mechanism available on which
to report data on PQRS quality measures: The GPRO web-interface.
However, beginning 2013, we are proposing to allow group practices to
report data on quality measures using the claims, registry, and EHR-
based reporting mechanisms for the PQRS incentive and payment
adjustment. Additionally, we are proposing to allow group practices to
use the proposed administrative claims reporting option. We propose
that a group practice wishing to participate in the GPRO for a program
year would be required to indicate the reporting mechanism the group
practice intends to use for the applicable reporting period in its
self-nomination statement. Furthermore, once a group practice is
selected to participate in the GPRO and indicates which reporting
mechanism the group practice would use, we propose that the group
practice would not be allowed to change its selection. Therefore, under
this proposal, the reporting mechanism the group practice indicates it
will use in its self-nomination statement for the applicable reporting
period would be the only reporting mechanism under which CMS will
analyze the group practice to determine whether the group practice has
met the criteria for satisfactory reporting for the PQRS incentive and/
or payment adjustment. We acknowledge that this proposal would depart
from the way we analyze an individual eligible professional, as CMS
analyzes an individual eligible professional (who is permitted to use
multiple reporting mechanisms during a reporting period) under every
reporting method the eligible professional uses. Unfortunately, due to
the complexity of analyzing group practices under the GPRO, such as
having to associate multiple NPIs under a single TIN, it is not
technically feasible for us to allow group practices using the GPRO to
use multiple reporting mechanisms or switch reporting mechanisms during
the reporting period. We invite public comment on the proposed election
requirement and the proposed restriction noted above for group
practices under the GPRO for 2013 and beyond.
(3) Proposed GPRO Selection Process
Group practices must be selected by CMS to participate in the PQRS
GPRO for a program year. Please note that if a group practice is
selected to participate in the PQRS as a GPRO, the eligible
professionals in the selected group practice cannot participate in the
PQRS individually. When selecting group practices to participate in the
GPRO, CMS bases its decision on the information the group practice
provides in its self-nomination statement. We believe that changes in a
group practice's size or TIN constitute such a significant change in
the group practice's composition that it would cause CMS to reconsider
its decision to allow the group practice to participate in the GPRO for
the applicable program year. Specifically, we understand that a group
practice's size may vary throughout the program year. For example, we
understand that eligible professionals enter into and leave group
practices throughout the year. Similarly, we understand that group
practices may undergo business reorganizations during the program year.
We note that size fluctuations may affect the criteria under which a
group practice would use to report after being selected to participate
in the GPRO. As indicated in section III.G.4., we are proposing that
groups of varying sizes be subject to different criteria for
satisfactory reporting for the 2013 and 2014 incentives, as well as for
the payment adjustments. Therefore, we propose that, for analysis
purposes, the size of the group practice must be established at the
time the group practice is selected to participate in the GPRO. We
invite public comment on this proposal.
We also understand that, for various reasons, a group practice may
change TINs within a program year. For example, a group practice may
undergo a mid-year reorganization that leads to the group practice
changing its TIN mid-year. We propose that, if a group practice changes
its TIN after the group practice is selected to participate in the
GPRO, the group practice cannot continue participate in PQRS as a GPRO.
We consider the changing of a group practice's TIN a significant change
to the makeup of the group practice, as the group practice is evaluated
under the TIN the group practice provided to CMS at the time the group
is selected to participate in the GPRO for the applicable year.
Therefore, we view a group practice that changes its TIN as an entirely
new practice, associated with a new TIN. We understand that this
proposal may pose a disadvantage for those group practices who find it
beneficial to report PQRS quality measures using the GPRO. However, we
note that eligible professionals in a group practice that has changed
its TIN within a year may still participate as individuals. We invite
public comment on this proposal.
We understand that a group practice may decide not to participate
in PQRS using the GPRO after being selected. Therefore, we propose that
group practices be provided with an opportunity to opt out of
participation in the GPRO after selection. We note that it is necessary
for a group practice to indicate to CMS the group practices' intent not
to use the GPRO because, once a group practice is selected to
participate in the GPRO for the applicable reporting period, CMS will
not separately assess the NPIs associated with the group practice's TIN
to see if they meet the criteria for satisfactory reporting for
individual eligible professionals. Therefore, CMS must be notified of
the group practice's decision not to participate in the GPRO so the
eligible professionals within the group practice could be assessed at
the individual TIN/NPI level. We propose that group practices have
until April 1 of the year of the applicable reporting period (for
example, by April 1, 2013 for reporting periods occurring in 2013) to
opt out of participating in the GPRO. We invite public comment on the
proposed selection process for group practices wishing to participate
in the GPRO.

[[Page 44808]]

(4) Proposed Requirement for Group Practices Electing To Use the
Administrative Claims-Based Reporting Mechanism for 2015 and 2016
Payment Adjustments
We propose an election requirement for group practices that elect
to participate in the PQRS for the 2015 and 2016 payment adjustment
using administrative claims-based reporting mechanism, which is
discussed in full in section III.G.5. (which also addresses election
requirements for eligible professionals). We seek comment on our
proposal on election requirements for group practices that intend to
report using the proposed administrative claims reporting option for
the 2015 and 2016 payment adjustment.
2. Proposed Reporting Periods for the PQRS Payment Adjustments for 2016
and Beyond
For the PQRS incentives, we previously established 12 and 6-month
reporting periods for satisfactorily reporting PQRS quality measures at
Sec. 414.90(f)(1). Under section 1848(a)(8)(C)(iii) of the Act, we are
authorized to specify the quality reporting period (reporting period)
with respect to a payment adjustment year. We propose to modify the
regulation to establish the reporting periods for the PQRS payment
adjustments for 2015 and beyond.
For the 2015 payment adjustment, in the CY 2012 Medicare PFS final
rule, we established CY 2013 (that is, January 1, 2013 through December
31, 2013) as the reporting period for the 2015 payment adjustment (76
FR 73392). We established a 12-month reporting period occurring 2 years
prior to the application of the payment adjustments for group practices
and for individual eligible professionals to allow time to perform all
reporting analysis prior to applying payment adjustments on eligible
professionals' Medicare Part B PFS claims. However, we note that we
might specify additional reporting periods for the 2015 payment
adjustment. To coincide with the 6-month reporting period associated
with the 2013 incentive for the reporting of measures groups via
registry, we propose to modify the regulation at newly designated Sec.
414.90(h) to add a 6-month reporting period occurring July 1, 2013--
December 31, 2013, for the 2015 payment adjustment for the reporting of
measures groups via registry.
For 2016 payment adjustments, to coincide with the reporting
periods for the 2014 incentive, we propose to modify the regulation at
newly designated Sec. 414.90(h) to specify a 12-month (January 1,
2014--December 31, 2014) and, for individual eligible professionals
reporting measures groups via registry only, a 6-month (July 1, 2014--
December 31, 2014) reporting periods for the 2016 payment adjustments.
We believe that data on quality measures collected based on 12-
months provides a more accurate assessment of actions performed in a
clinical setting than data collected based on a 6-month reporting
period. Therefore, it is our intention to move towards using solely a
12-month reporting period once the reporting periods for the 2013 and
2014 incentives conclude. Therefore, for payment adjustments occurring
in 2017 and beyond, we propose to modify the regulation at newly
designated Sec. 414.90(h) to specify only a 12-month reporting period
occurring January 1-December 31, that falls 2 years prior to the
applicability of the respective payment adjustment (for example,
January 1, 2015 through December 31, 2015, for the 2017 payment
adjustment). We invite public comment on the proposed reporting periods
for the PQRS payment adjustments for 2015 and beyond.
3. Proposed Requirements for the PQRS Reporting Mechanisms
This section contains our proposals for the following reporting
mechanisms: Claims, registry, EHR (including direct EHR products and
EHR data submission vendor products), GPRO web-interface, and
administrative claims. We previously established at Sec. 414.90(f)(2)
that eligible professionals reporting individually may use the claims,
registry, and EHR-based reporting mechanisms. We propose to modify
Sec. 414.90 to allow group practices comprised of 2-99 eligible
professionals to use the claims, registry, and EHR-based reporting
mechanisms as well, because we recognize the need to provide varied
reporting criteria for smaller group practices, particularly since we
are proposing to expand the definition of group practice. For example,
we understand that a smaller group practice may not have a sufficiently
varied practice to be able to meet the proposed satisfactory reporting
criteria for the GPRO web-interface that would require a smaller group
practice to report on all of the proposed PQRS quality measures
specified in Table 35. These proposals are reflected in our proposed
changes to Sec. 414.90, which we are proposing to re-designate Sec.
414.90(g) and Sec. 414.90(h). We invite public comment on this
proposal to make the claims, registry, and EHR-based reporting options
applicable to group practices.
a. Claims-Based Reporting: Proposed Requirements for Using Claims-Based
Reporting for 2013 and Beyond
Eligible professionals and group practices wishing to report data
on PQRS quality measures via claims for the incentives and for the
payment adjustments must submit quality data codes (QDCs) on claims to
CMS for analysis. QDCs for the eligible professional's or group
practice's selected PQRS (individual or measures groups) quality
measures that are reported on claims may be submitted to CMS at any
time during the reporting period for the respective program year.
However, as required by section 1848(m)(1)(A) of the Act, all claims
for services furnished during the reporting period, would need to be
processed by no later than the last Friday occurring two months after
the end of the reporting period, to be included in the program year's
PQRS analysis. For example, all claims for services furnished during a
reporting period that occurs during calendar year 2013 would need to be
processed by no later than the last Friday of the second month after
the end of the reporting period, that is, processed by February 28,
2014 for the reporting periods that end December 31, 2013. In addition,
after a claim has been submitted and processed, we propose at re-
designated Sec. 414.90(g)(2)(i)(A) and newly added Sec.
414.90(h)(2)(i)(A) to indicate that EPs cannot submit QDCs on claims
that were previously submitted and processed (for example, for the sole
purpose of adding a QDC for the PQRS). We invite public comment on our
proposed requirements for using the claims-based reporting mechanism
for the incentives and for the payment adjustments for 2013 and beyond.
b. Registry-Based Reporting
(1) Proposed Qualification Requirements for Registries for 2013 and
Beyond
For 2013 and beyond, we propose that registries wishing to submit
data on PQRS quality measures for a particular reporting period would
be required to be qualified for each reporting period the registries
wish to submit quality measures data. This qualification process is
necessary to verify that registries are able to submit data on PQRS
quality measures on behalf of eligible professionals and group
practices to CMS. Registries who wish to become qualified to report
PQRS quality measures for a reporting period undergo (1) a self-
nomination process

[[Page 44809]]

and (2) a qualification process regardless of whether the registry was
qualified the previous program year.
For the self-nomination process, we propose that the self-
nomination process would consist of the submission of a self-nomination
statement submitted via the web by January 31 of each year in which the
registry seeks to submit data on PQRS quality measures on behalf of
eligible professionals and group practices. For example, registries
that wish to become qualified to report data in 2013 under the program,
that is, to report during all of the reporting periods for the 2013
incentive and the 2015 payment adjustment, would be required to submit
its self-nomination statement by January 31, 2013. We propose that the
self-nomination statement contain all of the following information:
The name of the registry.
The reporting period start date the registry will cover.
The measure numbers for the PQRS quality measures on which
the registry is reporting.
We note that CMS is currently developing the functionality to
accept registry self-nomination statements via the web and anticipate
development of this functionality to be complete for registries to
submit their self-nomination statements via the web in 2013. However,
in the event that it is not technically feasible to collect this self-
nomination statement via the web, we propose that registry vendors
would submit its self-nomination statement via a mailed letter to CMS.
The self-nomination statement would be mailed to the following address:
Centers for Medicare & Medicaid Services, Office of Clinical Standards
and Quality, Quality Measurement and Health Assessment Group, 7500
Security Boulevard, Mail Stop S3-02-01, Baltimore, MD 21244-1850. We
propose that these self-nomination statements must be received by CMS
by 5 Eastern Standard Time on January 31 of the applicable year.
For the qualification process, we propose that all registries,
regardless of whether or not they have been qualified to report PQRS
quality measures in a prior program year, undergo a qualification
process to verify that the registry is prepared to submit data on PQRS
quality measures for the reporting period in which the registry seeks
to be qualified. To become qualified for a particular reporting period,
we propose that a registry would be required to:
Be in existence as of January 1 the year prior to the
program year in which the registry seeks qualification (for example,
January 1, 2012, to be qualified to submit data in 2013).
Have at least 25 participants by January 1 the year prior
to the program year in which the registry seeks qualification (for
example, January 1, 2012, to be qualified for the reporting periods
occurring in 2013).
Provide at least 1 feedback report to participating
eligible professionals and group practices for each program year in
which the registry submits data on PQRS quality measures on behalf of
eligible professionals and group practices. This feedback reporting
would be based on the data submitted by the registry to CMS for the
applicable reporting period or periods occurring during the program
year. For example, if a registry was qualified for the reporting
periods occurring in 2013, the registry would be required to provide a
feedback report to all participating eligible professionals and group
practices based on all 12 and 6-month reporting periods for the 2013
incentive and the 12-month reporting period for 2015 payment
adjustment. Although we propose to require that qualified registries
provide at least 1 feedback report to all participating eligible
professionals and group practices, we encourage registries to provide
an additional, interim feedback report, if feasible, so that an
eligible professional may determine what steps, if any, are needed to
meet the criteria for satisfactory reporting.
For purposes of distributing feedback reports to its
participating eligible professionals and group practices, the registry
must collect each participating eligible professional's email address
and have documentation from each participating eligible professional
authorizing the release of his or her email address.
Not be owned or managed by an individual, locally-owned,
single-specialty group (for example, single-specialty practices with
only 1 practice location or solo practitioner practices would be
precluded from becoming a qualified PQRS registry).
Participate in all ongoing PQRS mandatory support
conference calls and meetings hosted by CMS for the program year in
which the registry seeks to be qualified. For example, a registry
wishing to be qualified for reporting in 2013 would be required to
participate in all mandatory support conference calls hosted by CMS
related reporting in 2013 under the PQRS.
Be able to collect all needed data elements and transmit
to CMS the data at the TIN/NPI level for at least 3 measures.
Be able to calculate and submit measure-level reporting
rates and/or, upon request, the data elements needed to calculate the
reporting rates by TIN/NPI.
Be able to calculate and submit, by TIN/NPI, a performance
rate (that is, the percentage of a defined population who receive a
particular process of care or achieve a particular outcome based on a
calculation of the measure's numerator and denominator specifications)
for each measure on which the eligible professional or group practice
(as identified by the TIN/NPI) reports and/or, upon request, the
Medicare beneficiary data elements needed to calculate the reporting
rates.
Be able to separate out and report on Medicare Part B FFS
patients.
Report the number of eligible instances (reporting
denominator).
Report the number of instances a quality service is
performed (reporting/performance numerator).
Report the number of performance exclusions, meaning the
quality action was not performed for a valid reason as defined by the
measure specification.
Report the number of reported instances, performance not
met, meaning the quality action was not performed for any valid reason
as defined by the measure specification. Please note that an eligible
professional receives credit for reporting, not performance.
Be able to transmit data on PQRS quality measures in a
CMS-approved XML format.
Comply with a CMS-specified secure method for data
submission, such as submitting the registry's data in an XML file
through an identity management system specified by CMS or another CMS-
approved method, such as use of appropriate Nationwide Health
Information Network specifications, if technically feasible.
Submit an acceptable ``validation strategy'' to CMS by
March 31 of the reporting year the registry seeks qualification (for
example, if a registry wishes to become qualified for reporting in
2013, this validation strategy would be required to be submitted to CMS
by March 31, 2013). A validation strategy details how the registry will
determine whether eligible professionals and group practices have
submitted accurately and on at least the minimum number (80 percent) of
their eligible patients, visits, procedures, or episodes for a given
measure. Acceptable validation strategies often include such provisions
as the registry being able to conduct random sampling of their
participant's data, but may also be based on other credible means of
verifying the accuracy of data content and completeness of reporting or
adherence to a required sampling method.

[[Page 44810]]

Perform the validation outlined in the strategy and send
the results to CMS by June 30 of the year following the reporting
period (for example, June 30, 2014, for data collected in the reporting
periods occurring in 2013).
Enter into and maintain with its participating
professionals an appropriate Business Associate agreement that provides
for the registry's receipt of patient-specific data from the eligible
professionals and group practices, as well as the registry's disclosure
of quality measure results and numerator and denominator data and/or
patient-specific data on Medicare beneficiaries on behalf of eligible
professionals and group practices who wish to participate in the PQRS.
Obtain and keep on file signed documentation that each
holder of an NPI whose data are submitted to the registry has
authorized the registry to submit quality measure results and numerator
and denominator data and/or patient-specific data on Medicare
beneficiaries to CMS for the purpose of PQRS participation. This
documentation would be required to be obtained at the time the eligible
professional signs up with the registry to submit PQRS quality measures
data to the registry and would be required to meet any applicable laws,
regulations, and contractual business associate agreements.
Upon request and for oversight purposes, provide CMS
access to review the Medicare beneficiary data on which PQRS registry-
based submissions are founded or provide to CMS a copy of the actual
data.
Provide CMS a signed, written attestation statement via
mail or email which states that the quality measure results and any and
all data including numerator and denominator data provided to CMS are
accurate and complete.
Use PQRS measure specifications and the CMS provided
measure calculation algorithm, or logic, to calculate reporting rates
or performance rates unless otherwise stated. We will provide
registries a standard set of logic to calculate each measure and/or
measures group they intend to report for each reporting period.
Provide a calculated result using the CMS-supplied measure
calculation logic and XML file format for each measure that the
registry intends to calculate. The registries may be required to show
that they can calculate the proper measure results (that is, reporting
and performance rates) using the CMS-supplied logic and send the
calculated data back to CMS in the specified format. The registries
will be required to send in test files with fictitious data in the
designated file format.
Describe to CMS the cost for eligible professionals and
group practices that the registry charges to submit PQRS and/or eRx
Incentive Program data to CMS.
Agree to verify the information and qualifications for the
registry prior to posting (includes names, contact, measures, cost,
etc.) and furnish/support all of the services listed for the registry
on the CMS Web site.
Agree that the registry's data for Medicare beneficiaries
may be inspected or a copy requested by CMS and provided to CMS under
our oversight authority.
Be able to report consistent with the satisfactory
reporting criteria requirements for the PQRS incentives and payment
adjustments.
In addition to meeting all the requirements specified previously
for the reporting of individual quality measures via registry, for
registries that intend to report on PQRS measures groups, we propose
that these registries, regardless of whether or not registries were
qualified in previous years, would be required to:
Indicate the reporting period chosen for each eligible
professional who chooses to submit data on measures groups.
Base reported information on measures groups only on
patients to whom services were furnished during the relevant reporting
period.
If the registry is reporting using the measures group
option for 20 patients, the registry on behalf of the eligible
professional may include non-identifiable data for non-Medicare
beneficiaries as long as these patients meet the denominator of the
measure and the eligible professional includes a majority Medicare Part
B patients in their cohort of 20 patients for the measures group.
We intend to post the final list of registries qualified for each
reporting period by the Summer of each the year in which the reporting
periods occur on the CMS Web site at http://http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html. For example, we intend to post the list of registries
qualified for 2013 reporting periods by the Summer 2013. For each
reporting period, the list of qualified registries would contain the
following information: the registry name, registry contact information,
the measures and/or measures group(s) the registry is qualified and
intends to report for the respective reporting period.
This proposed registry qualification process is largely the same
process we established to qualify registries for the reporting periods
occurring in 2012. We are proposing a similar process to the 2012
qualification process because, registries are already familiar with
this qualification process, so we believe there would be a greater
likelihood that registries wishing to be qualified to report quality
measures data for a particular reporting period would be able to pass
the qualification process. We believe this will provide eligible
professional with more qualified registry products from which to
choose.
Lastly, in the CY 2012 Medicare PFS proposed rule, we raised the
issue of disqualifying registries that submit inaccurate data (76 FR
42845). We did not adopt a disqualification process but noted the
importance of such a process, as well as our intention to provide
detailed information regarding a disqualification process in future
rulemaking (76 FR 73322). In an effort to ensure that registries
provide accurate reporting of quality measures data, we propose to
modify Sec. 414.90 to indicate that we would audit qualified
registries. If, during the audit process, we find that a qualified
registry has submitted grossly inaccurate data, we propose, under Sec.
414.90, to indicate that we would disqualify such a registry from the
subsequent year under the program, meaning that a registry would not be
allowed to submit PQRS quality measures data on behalf of eligible
professionals and group practices for the next year. Under this
proposal, a disqualified registry would not be included in the list of
qualified registries that is posted for the applicable reporting
periods under which the registry attempted to qualify. For example, if
a qualified registry submits quality measures data for the reporting
periods occurring in 2013 but is then audited and later disqualified,
the registry would not be allowed to submit PQRS quality measures data
on behalf of participating eligible professionals and group practices
to CMS for the reporting periods occurring in 2014 or later. One
example of submitting grossly inaccurate data that CMS has encountered
in the past is if a registry reports inaccurate TIN/NPIs on 5 percent
or more of the registry's submission. As CMS calculates data on a TIN/
NPI level, it is important for registries to provide correct TIN/NPI
information. We invite public comment as to the threshold of grossly
inaccurate data for the purpose of disqualifying a registry.
Under our proposal, our decision to disqualify would be final. We
further

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propose to post a registry's disqualification status on the CMS Web
site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html.
In proposing registry disqualification, we considered other
alternatives, such as placing registries in a probationary status.
However, we believe it is important for registries to submit correct
data once it is qualified to submit data on behalf of its eligible
professionals and therefore, find that immediate disqualification to be
appropriate. This becomes especially important particularly as the
program moves from the use of incentives to payment adjustments.
We invite public comment on our proposals regarding registry
qualification and disqualification for 2013 and beyond.
In addition, the Nationwide Health Information Network (NwHIN) is
an initiative developed by the Department of Health and Human Services
that provides for the exchange of healthcare information.
Traditionally, CMS has not collected data received via a registry
through NwHIN. However, we strive to encourage the collection of data
via the NwHIN and intend to do so when it is technically feasible to do
so (as early as 2014). Therefore, we seek public comment on collecting
data via registry for PQRS via NwHIN.
c. EHR-Based Reporting
(1) Proposed Requirements for a Vendor's Direct EHR Products for 2014
and Beyond
We are proposing to modify Sec. 414.90(b) to define a direct
electronic health record (EHR) product as ``an electronic health record
vendor's product and version that submits data on Physician Quality
Reporting System measures directly to CMS.'' Please note that the self-
nomination and qualification requirements for a vendor's direct EHR
products for 2012 and 2013 were established in the CY 2012 Medicare PFS
final rule (76 FR 73323).
In lieu of continuing this process in future years of the program,
we propose to no longer require qualification of EHR products in order
to be used for reporting under the PQRS. Although we would still allow
EHR vendors to submit test files to the PQRS and continue to provide
support calls, we would no longer require vendors to undergo this
testing process. Although vendors and their products would no longer be
required to undergo this testing or qualification process, we propose
that CMS would only accept the data if the data are:
Transmitted in a CMS-approved XML format utilizing a
Clinical Document Architecture (CDA) standard such as Quality Reporting
Data Architecture (QRDA) level 1 and
In compliance with a CMS-specified secure method for data
submission, such as submitting the direct EHR vendor's data (for
testing) through an identity management system specified by CMS or
another approved method.
In addition, upon request and for oversight purposes, we propose
that the vendor would still be expected to provide CMS access to review
the Medicare beneficiary data on which PQRS direct EHR-based
submissions are founded or provide to CMS a copy of the actual data.
CMS, however, would no longer be posting a list of qualified EHR
vendors and their products on the CMS Web site. Therefore, eligible
professionals would need to work with their respective EHR vendor to
determine whether their specific EHR product has undergone any testing
with the PQRS and/or whether their EHR product can produce and transmit
the data in the CMS-specified format and manner. While we no longer
believe that this process is necessary, we invite public comment as to
whether CMS should continue to require that direct EHR products undergo
self-nomination and qualification processes prior to being authorized
to submit quality measures data to CMS for PQRS reporting purposes.
We are proposing to not to continue the qualification requirement
(that is, no longer propose this process for future years of the
program) because we believe adequate checks are in place to ensure that
a direct EHR product is able to submit quality measures data for the
PQRS. For example, to the extent possible, we intend to align with the
Medicare EHR Incentive Program with respect to our criteria for
satisfactory reporting and measures available for reporting under the
EHR-based reporting mechanism. The Medicare EHR Incentive Program
requires that a vendor's EHR system be certified under the program
established by the Office of the National Coordinator for Health
Information Technology (ONC). In future years, we anticipate that the
ONC certification process could include testing related to the
reporting of the proposed PQRS EHR measures indicated in Tables 32 and
33, since we are proposing to align the PQRS EHR-based measures with
the measures available for reporting under the EHR Incentive Program.
We invite public comment as to whether, in lieu of qualification, CMS
should require that direct EHR products that would be used to submit
data on PQRS quality measures for a respective reporting period be
classified as certified under the program established by ONC.
Please note that, regardless of whether the qualification process
is in place and not withstanding any CEHRT requirements that may apply,
we note that eligible professionals bear the burden of determining
choosing a direct EHR product that is able to adequately submit PQRS
quality measures data to CMS.
We also invite public comment on the above proposals related to the
proposed requirements for direct EHR products.
In addition, the Nationwide Health Information Network (NwHIN) is
an initiative developed by the Department of Health and Human Services
that provides for the exchange of healthcare information.
Traditionally, CMS has not collected data received via a direct EHR
product through NwHIN, but we would like to encourage this method with
EHR-based reporting. However, we strive to encourage the collection of
data via the NwHIN and intend to do so when it is technically feasible
to do so (as early as 2014). Therefore, we seek public comment on
collecting data via an EHR for PQRS via NwHIN.
(2) Proposed Requirements for a Vendor's EHR Data Submission Vendor
Products for 2013 and Beyond
The EHR data submission vendor reporting mechanism was a mechanism
that was newly established in the CY 2012 Medicare PFS final rule (76
FR 73324). We indicated that these EHR data submission vendors, some of
which included previous registries, were entities that are able to
receive and transmit clinical quality data extracted from an EHR to
CMS. We propose to modify Sec. 414.90(b) to define an electronic
health record (EHR) data submission vendor as ``an electronic health
record vendor's product and version that acts as an intermediary to
submit data on Physician Quality Reporting System measures on behalf of
an eligible professional or group practice.''
Please note that the qualification requirements for a vendor's EHR
data submission vendor products for 2013 were established in the CY
2012 Medicare PFS final rule (76 FR 73327). Specifically, we
established that a qualification and testing process would occur in
2012 to qualify EHR data submission vendor products to submit PQRS
quality measures data for reporting periods occurring in CY 2013.

[[Page 44812]]

Operationally, we were unable to establish a qualification and testing
process in 2012 to qualify EHR data submission vendor products for
reporting periods occurring in CY 2013. Therefore, we propose to
perform, in 2013, the qualification and testing process established in
the CY 2012 Medicare PFS final rule (76 FR 73327) that was supposed to
occur in 2012. We invite public comment on this proposal.
As for 2014 and beyond, we propose to no longer qualify EHR data
submission vendor products in order to use such products under the PQRS
for the same reasons we have articulated in our proposal not to
continue qualifying direct EHR products. Although we would still allow
EHR data submission vendors to submit test files to the PQRS and
continue to provide support calls, we would no longer require vendors
to undergo this testing process. Although EHR data submission vendor
products would no longer be required to undergo this testing or
qualification process, we propose that CMS would only accept the data
if the data are:
Transmitted in a CMS-approved XML format utilizing a
Clinical Document Architecture (CDA) standard such as Quality Reporting
Data Architecture (QRDA) level 1 and for EHR data submission vendors
who intend to report for purposes of the proposed PQRS Medicare EHR
Incentive Program pilot, if the aggregate data are transmitted in a
CMS-approved XML format.
In compliance with a CMS-specified secure method for data
submission.
In addition, upon request and for oversight purposes, we propose
that the vendor would still be expected to provide CMS access to review
the Medicare beneficiary data on which PQRS direct EHR-based
submissions are founded or provide to CMS a copy of the actual data.
CMS, however, would no longer be posting a list of qualified EHR data
submission vendors on the CMS Web site. Therefore, eligible
professionals would need to work with their respective EHR data
submission vendor to determine whether the vendor has undergone any
testing with the PQRS and/or whether EHR data submission vendor can
produce and transmit the data in the CMS-specified format and manner.
We invite public comment on our proposal to, beginning 2014, not
require qualification of EHR data submission vendor products. We also
invite public comment as to whether CMS should continue to require that
EHR data submission vendor products undergo these self-nomination and
qualification processes prior to being authorized to submit quality
measure data to CMS on an eligible professional's behalf for PQRS
reporting purposes.
We are proposing to not to continue the qualification requirement
(that is, no longer propose this process for 2014 and future years of
the program) because we believe adequate checks are in place to ensure
that a direct EHR product is able to submit quality measures data for
the PQRS. For example, to the extent possible, we intend to align with
the Medicare EHR Incentive Program with respect to our criteria for
satisfactory reporting and measures available for reporting under the
EHR-based reporting mechanism. The Medicare EHR Incentive Program
requires that a vendor's EHR system be certified under the program
established by the Office of the National Coordinator for Health
Information Technology (ONC). In future years, we anticipate that the
ONC certification process could include testing related to the
reporting of the proposed PQRS EHR measures indicated in Tables 32 and
33, since we are proposing to align the PQRS EHR-based measures with
the measures available for reporting under the EHR Incentive Program.
We invite public comment as to whether, in lieu of qualification, CMS
should require that EHR data submission vendor products wishing to
submit data on PQRS quality measures for a respective reporting period
be certified under the program established by ONC.
Please note that, if the qualification process is no longer
required or we do not require that an EHR data submission vendor
product be certified under ONC's program, we note that eligible
professionals bear the burden of determining choosing an EHR data
submission vendor product that is able to adequately submit PQRS
quality measures data to CMS.
In addition, the Nationwide Health Information Network (NwHIN) is
an initiative developed by the Department of Health and Human Services
that provides for the exchange of healthcare information.
Traditionally, CMS has not collected data received via an EHR data
submission vendor through NwHIN, but we would like to encourage this
method with EHR-based reporting. However, we strive to encourage the
collection of data via the NwHIN and intend to do so when it is
technically feasible to do so (as early as 2014). Therefore, we seek
public comment on collecting data via an EHR for PQRS via NwHIN.
d. GPRO Web-Interface: Proposed Requirements for Group Practices Using
the GPRO Web-Interface for 2013 and Beyond
The GPRO web-interface is a reporting mechanism established by CMS
that is used by group practices that are selected to participate in the
GPRO. For 2013 and beyond, we propose to modify newly designated Sec.
414.90(g) and Sec. 414.90(h) to identify the GPRO web-interface as a
reporting mechanism available for reporting under the PQRS by group
practices comprised of 25 or more eligible professionals. Consistent
with the GPRO satisfactory reporting criteria we established for the
2012 PQRS (76 FR 73338), as well as the GPRO satisfactory reporting
criteria we are proposing for 2013 and beyond, we propose to limit
reporting via the GPRO web-interface during a respective reporting
period to group practices comprised of at least 25 eligible
professionals (that is, this reporting option would not be available to
group practices that contain 2-24 eligible professionals) and selected
to participate in the GPRO for the year under which the reporting
period occurs. For example, a group practice wishing to submit quality
measure data via the GPRO web-interface for 2013 must be a group
practice selected to participate in the GPRO for the 2013 program year.
We believe it is necessary to limit use of the GPRO web-interface to
group practices comprised of at least 25 eligible professionals
selected to participate in the GPRO because the 17 measures that are
proposed to be reportable via the GPRO web-interface (as specified in
Table 35) reflect a variety of disease modules: patient/caregiver
experience, care coordination/patient safety, preventive health,
diabetes, hypertension, ischemic vascular disease, heart failure, and
coronary artery disease.
We believe that the reporting of these 18 proposed measures
spanning across various settings lends this reporting mechanism more
ideal for larger group practices that are more likely to be multi-
specialty practices (which are typically group practices consisting of
larger than 25 eligible professionals). The GPRO web-interface was
modeled after the CMS Physician Group Practice (PGP) demonstration, and
this demonstration was originally intended for large group practices.
From our experience with the PGP demonstration, we believe a group
practice comprised of 25 eligible professionals is the smallest group
practice that could benefit from use of the GPRO web-interface as a
reporting mechanism. We

[[Page 44813]]

also do not believe that excluding group practices comprised of 2-24
eligible professionals from using the GPRO web-interface as a reporting
mechanism would harm these smaller group practices as we are proposing
to allow groups comprised of 2-99 eligible professionals to report
using the claims, qualified registry, EHR, and administrative claims-
based reporting mechanisms.
We propose to provide group practices that are selected to
participate in the GPRO using GPRO web-interface reporting option with
access to the GPRO web-interface by no later than the first quarter of
the year following the end of the reporting period under which the
group practice intends to report. For example, for group practices
selected for the GPRO for the 2013 incentive using the GPRO web-
interface tool, we propose to provide group practices selected to
participate in the GPRO with access to the GPRO web-interface by no
later than the first quarter of 2014 for purposes of reporting for the
applicable 2013 reporting period for the incentive. In addition, should
CMS encounter operational issues with using the GPRO web-interface, we
reserve the right to use a similar tool for group practices to use in
lieu of reporting via the GPRO web-interface. We invite public comment
on our proposed requirements for group practices using the GPRO web-
interface for 2013 and beyond.
In addition, the Nationwide Health Information Network (NwHIN) is
an initiative developed by the Department of Health and Human Services
that provides for the exchange of healthcare information.
Traditionally, CMS has not collected data received via the GPRO web-
interface through NwHIN. However, we strive to encourage the collection
of data via the NwHIN and intend to do so when it is technically
feasible to do so (as early as 2014). Therefore, we seek public comment
on collecting data via the GPRO web-interface for PQRS via NwHIN.
e. Administrative Claims
For purposes of reporting for the 2015 and 2016 PQRS payment
adjustments only, we propose to modify Sec. 414.90(h) to allow
eligible professionals and group practices to use an administrative
claims reporting mechanism. The administrative claims reporting
mechanism builds off of the traditional PQRS claims-based reporting
mechanism. Under the traditional PQRS claims-based reporting mechanism,
eligible professionals and group practices wishing to report data on
PQRS quality measures via claims for the incentives and for the payment
adjustments must submit quality data codes (QDCs) on claims to CMS for
analysis. Under the proposed administrative claims reporting mechanism,
unlike the traditional claims-based reporting option, an eligible
professional or group practice would not be required to submit QDCs on
claims to CMS for analysis. Rather, CMS would analyze every eligible
professional's or group practice's patient's Medicare claims to
determine whether the eligible professional or group practice has
performed any of the clinical quality actions indicated in the proposed
PQRS quality measures in Table 63. We propose that, for purposes of
assessing claims for quality measures under this option, all claims for
services furnished that occurs during the 2015 and/or 2016 PQRS
reporting period would need to be processed by no later than 60 days
after the end of the respective 2015 and 2016 payment adjustment
reporting periods (that is, December 31, 2013 and December 31, 2014).
We invite public comment on our proposed requirements for using the
administrative claims-based reporting mechanism for the 2015 and 2016
payment adjustments.
4. Proposed Criteria for Satisfactory Reporting for the 2013 and 2014
Incentives
For 2013 and 2014, in accordance with Sec. 414.90(c)(3), eligible
professionals that satisfactorily report data on PQRS quality measures
are eligible to receive an incentive equal to 0.5 percent of the total
estimated Medicare Part B allowed charges for all covered professional
services furnished by the eligible professional or group practice
during the applicable reporting period. This section contains our
proposed criteria for satisfactory reporting for the 2013 and 2014
incentives, which are the last two incentives authorized under the
PQRS.
a. Proposed Criteria for Satisfactory Reporting for Individual Eligible
Professionals
Please note that, in large part, we are proposing many of the same
criteria for satisfactory reporting for individual eligible
professionals for the 2013 and 2014 incentives that we established for
the 2012 incentive, as eligible professionals are already familiar with
these reporting criteria.
(1) Proposed Criteria for Satisfactory Reporting on Individual PQRS
Quality Measures via Claims
According to the ``2010 Physician Quality Reporting System and eRx
Reporting Experience and Trends,'' available for viewing in the
``downloads'' section of the main page the PQRS Web site (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html), reporting via the claims-based reporting
mechanism was the most commonly used reporting method. We believe that
this trend continues, so we anticipate that, with respect to the 2013
and 2014 incentives, the criteria for satisfactory reporting for the
claims-based reporting mechanism will be the method most widely used by
individual eligible professionals. So as not to change reporting
criteria that a large number of individual eligible professionals are
familiar with using, we established the same reporting criteria for the
2011 and 2012 incentives (76 FR 73330). Therefore, for the respective
12-month reporting periods for the 2013 and 2014 incentives, based on
our authority under section 1848(m)(3)(D) of the Act to revise the
reporting criteria for satisfactory reporting specified under the
statute and our desire to maintain the same reporting criteria we
established for individual eligible professionals for the 2012 PQRS
incentive (76 FR 73330), we propose the following criteria for
satisfactory reporting of PQRS individual measures for individual
eligible professionals using the claims-based reporting mechanism:
Report at least 3 measures, OR, if less than 3 measures apply to the
eligible professional, report 1--2 measures, AND report each measure
for at least 50 percent of the eligible professional's Medicare Part B
FFS patients seen during the reporting period to which the measure
applies. Measures with a 0 percent performance rate would not be
counted. For an eligible professional who reports fewer than 3 measures
via the claims-based reporting mechanism, we propose that the eligible
professional be subject to the Measures Applicability Validation (MAV)
process, which would allow us to determine whether an eligible
professional should have reported quality data codes for additional
measures. We believe the MAV process is necessary to review whether
there are other closely related measures (such as those that share a
common diagnosis or those that are representative of services typically
provided by a particular type of eligible professional). Under the MAV
process, if an eligible professional who reports on fewer than 3
measures reports on a measure that is part of an identified cluster of
closely related measures, then the eligible professional would not
qualify as a satisfactory

[[Page 44814]]

reporter for the 2013 and/or 2014 incentives. We are proposing this MAV
process for the claims-based reporting mechanism only because it is
more likely for EPs to report on more than 3 measures under the
registry and EHR-based reporting mechanisms, as a registry or EHR
product will typically automatically report on all measures that apply
to the eligible professional's practice. We note that, consistent with
section 1848(m)(3)(A)(i) of the Act, this proposed claims-based
reporting criteria is the only proposed criteria where an eligible
professional may report on fewer than 3 measures. We invite public
comment on the proposed criteria for satisfactory reporting of
individual measures by individual eligible professionals via claims for
the 2013 and 2014 incentives.
(2) Proposed Criteria for Satisfactory Reporting on Individual PQRS
Quality Measures via Registry
In addition, we note that section 1848(m)(3)(A)(ii) of the Act
provides that, to meet the criteria for satisfactory reporting under
PQRS, an eligible professional would be required to report on at least
3 measures for at least 80 percent of the cases in which the respective
measure is reportable under the system. Although we have the authority
under section 1848(m)(3)(D) of the Act to revise the criteria for
satisfactory reporting, with respect to registry-based reporting, we
have largely followed these reporting criteria for the PQRS incentives.
According to the ``2010 Physician Quality Reporting System and eRx
Reporting Experience and Trends,'' eligible professionals are more
likely to meet the requirements for a PQRS incentive using the
satisfactory reporting criteria for the registry-based reporting
mechanism than claims. In fact, in 2010, approximately 87 percent of
the eligible professionals reporting individual PQRS quality measures
via registry were eligible and met the criteria for satisfactory
reporting for the 2010 incentive. Since eligible professionals have had
success with using these satisfactory reporting criteria, we believe
such criteria are appropriate and see no reason to change the criteria
for satisfactory reporting via registry that has been in place since
2010. Therefore, for those reasons and our desire to maintain the same
reporting criteria we established for individual eligible professionals
for the 2012 PQRS incentive (76 FR 73331), we propose the following
criteria for satisfactory reporting of PQRS individual measures for
individual eligible professionals using the registry-based reporting
mechanism for the 12-month reporting periods for the 2013 and 2014
incentives, respectively: Report at least 3 measures AND report each
measure for at least 80 percent of the eligible professional's Medicare
Part B FFS patients seen during the reporting period to which the
measure applies. Measures with a zero percent performance rate will not
be counted. We invite public comment on the proposed criteria for
satisfactory reporting of individual measures by individual eligible
professionals via a registry for the 2013 and 2014 incentives.
(3) Proposed Criteria for Satisfactory Reporting on Individual PQRS
Quality Measures via EHR
As stated previously, section 1848(m)(7) of the Act requires us to
develop a plan to integrate reporting requirements for PQRS and the EHR
Incentive Program. Therefore, with respect to EHR-based reporting, it
is our main goal to align our EHR reporting requirements with the
reporting requirements an eligible professional must meet in order to
satisfy the clinical quality measure (CQM) component of meaningful use
(MU) under the EHR Incentive Program. In the EHR Incentive Program--
Stage 2 NPRM (77 FR 13698), we proposed the CQM reporting requirements
for the EHR Incentive Program for 2013, 2014, 2015, and potentially
subsequent years. For the EHR reporting periods in CY 2013, we proposed
(77 FR 13745) to continue the CQM reporting requirements that were
established for eligible professionals for CYs 2011 and 2012 in the EHR
Incentive Program--Stage 1 final rule (75 FR 44398-44411). Therefore,
to align with the reporting requirements for meeting the CQM component
of meaningful use, and based on our authority under section
1848(m)(3)(D) of the Act to revise the reporting criteria for
satisfactory reporting identified under the statute, we propose the
following criteria for the 12-month reporting period for the 2013
incentive:
As required by the Stage 1 final rule, eligible
professionals must report on three Medicare EHR Incentive Program core
or alternate core measures, plus three additional measures. The EHR
Incentive Program' core, alternate core, and additional measures can be
found in Table 6 of the EHR Incentive Program's Stage 1 final rule (75
FR 44398) or in Tables 32 and 33 of this section. We refer readers to
the discussion in the Stage 1 final rule for further explanation of the
requirements for reporting those CQMs (75 FR 44398 through 44411).
Under this proposal, eligible professionals using these reporting
criteria would be required to report on 6 measures. For the proposed
PQRS EHR measures that are also Medicare EHR Incentive Program core,
alternate core, or additional measures that the eligible professional
reports (75 FR 44398 through 44411), an eligible professional would be
required to report the applicable measure for 100 percent of the
eligible professionals Medicare Part B FFS patients.
In addition, we note that section 1848(m)(3)(A)(ii) of the Act
provides that, to meet the criteria for satisfactory reporting under
PQRS, an eligible professional would be required to report on at least
3 measures for at least 80 percent of the cases in which the respective
measure is reportable under the system. Although we have the authority
under section 1848(m)(3)(D) of the Act to revise the criteria for
satisfactory reporting, for EHR-based reporting, we have largely kept
these reporting criteria for the 2010--2012 incentives. As we have seen
some eligible professionals succeed with these criteria, we are
proposing the following similar criteria for the 12-month reporting
period for the 2013 incentive: Report at least 3 measures AND report
each measure for at least 80 percent of the eligible professional's
Medicare Part B FFS patients seen during the reporting period to which
the measure applies. Measures with a zero percent performance rate will
not be counted.
We note that the Medicare EHR Incentive Program has proposed
options for meeting the CQM component of achieving meaningful use
beginning with CY 2014 (for more information on these options, please
see 77 FR 13746--13748). To align our EHR-based reporting requirements
with those proposed under the Medicare EHR Incentive Program, we are
proposing the following criteria for satisfactory reporting using the
EHR-based reporting mechanism for the 12-month reporting period for the
2014 incentive:
Option 1a: Select and submit 12 clinical quality measures
available for EHR-based reporting from Tables 32 and 33, including at
least 1 measure from each of the following 6 domains--(1) patient and
family engagement, (2) patient safety, (3) care coordination, (4)
population and public health, (5) efficient use of healthcare
resources, and (6) clinical process/effectiveness.
Option 1b: Submit 12 clinical quality measures composed of
all 11 of the proposed Medicare EHR Incentive Program core clinical
quality measures specified in Tables 32 and 33 plus 1

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menu clinical quality measure from Tables 32 and 33. It is our
intention to finalize the reporting criteria that aligns with the
criteria that will be established for meeting the CQM component of
meaningful use beginning with CY 2014 for the Medicare EHR Incentive
Program. Furthermore, to the extent that the final criteria for meeting
the CQM component of achieving meaningful use differ from what was
proposed, our intention is to align with the reporting criteria the EHR
Incentive Program ultimately establishes. Therefore, eligible
professionals who participate in both PQRS and the EHR Incentive
Program would be able to use one reporting criterion, during
overlapping reporting periods, to satisfy the satisfactory reporting
criteria under PQRS and the CQM component of meaningful use under the
Medicare EHR Incentive Program. We invite public comment on this
considered proposal.
In addition to this proposed criterion, the Medicare EHR Incentive
Program proposed that, beginning with CY 2014, eligible professionals
who participate in both the Physician Quality Reporting System and the
Medicare EHR Incentive Program may satisfy the CQM component of
meaningful use if they submit and satisfactorily report Physician
Quality Reporting System clinical quality measures under the Physician
Quality Reporting System's EHR reporting option using Certified EHR
Technology (77 FR 13748). Since this language suggests that the
Medicare EHR Incentive Program may defer to the satisfactory reporting
criteria for the EHR-based reporting mechanism that we will establish
for 2014, we are proposing the following reporting criteria for the 12-
month reporting period for the 2014 incentive that largely conform to
the criteria set forth under section 1848(m)(3)(A)(ii) of the Act that
we established for the 2012 incentive and that we are proposing for the
2013 incentive: report at least 3 measures AND report each measure for
at least 80 percent of the eligible professional's Medicare Part B FFS
patients seen during the reporting period to which the measure applies.
Measures with a zero percent performance rate will not be counted. We
invite public comment on the proposed criteria for satisfactory
reporting on PQRS measures via EHR.
(4) Proposed Criteria for Satisfactory Reporting on PQRS Measures
Groups via Claims
In the CY 2012 Medicare PFS final rule, we established the
following criteria for satisfactorily reporting PQRS measures groups
for the 12-month reporting period for the 2012 incentive (76 FR 73335):
Report at least 1 PQRS measures group, AND report each
measures group for at least 30 Medicare Part B FFS patients. Measures
groups containing a measure with a 0 percent performance rate will not
be counted; OR
Report at least 1 PQRS measures group, AND report each
measures group for at least 50 percent of the eligible professional's
Medicare Part B FFS patients seen during the reporting period to whom
the measures group applies; BUT report each measures group on no less
than 15 Medicare Part B FFS patients seen during the reporting period
to which the measures group applies. Measures groups containing a
measure with a 0 percent performance rate will not be counted.
We received stakeholder feedback that it is difficult for some
specialties to meet the 30 Medicare Part B FF patient threshold.
Therefore, based on our authority under section 1848(m)(3)(D) of the
Act to revise the reporting criteria for satisfactory reporting, we
propose the following criteria for the satisfactory reporting PQRS
measures groups for individual eligible professionals using the claims-
based reporting mechanism for the 12-month reporting periods for the
2013 and 2014 incentives: Report at least 1 measures group AND report
each measures group for at least 20 Medicare Part B FFS patients.
Measures groups containing a measure with a zero percent performance
rate will not be counted.
We note that, in an effort to simplify the satisfactory reporting
criteria, we are only proposing 1 option for meeting the criteria for
satisfactory reporting using PQRS measures groups via claims. We invite
public comment on the proposed criterion for satisfactory reporting of
measures groups via claims for the 2013 and 2014 incentives.
(5) Proposed Criteria for Satisfactory Reporting on PQRS Measures
Groups via Registry
In the CY 2012 Medicare PFS final rule, we established the
following criteria for satisfactorily reporting PQRS measures groups
for the 12-month reporting period for the 2012 incentive (76 FR 73337):
Report at least 1 PQRS measures group AND report each
measures group for at least 30 Medicare Part B FFS patients. Measures
groups containing a measure with a 0 percent performance rate will not
be counted; OR
Report at least 1 PQRS measures group, AND report each
measures group for at least 80 percent of the eligible professional's
Medicare Part B FFS patients seen during the reporting period to whom
the measures group applies; BUT report each measures group on no less
than 15 Medicare Part B FFS patients seen during the reporting period
to which the measures group applies. Measures groups containing a
measure with a 0 percent performance rate will not be counted.
In addition, we established the following criteria for
satisfactorily reporting PQRS measures groups for the 6-month reporting
period for the 2012 incentive (76 FR 73337): Report at least 1 PQRS
measures group, AND report each measures group for at least 80 percent
of the eligible professional's Medicare Part B FFS patients seen during
the reporting period to whom the measures group applies; BUT report
each measures group on no less than 8 Medicare Part B FFS patients seen
during the reporting period to which the measures group applies.
Measures groups containing a measure with a 0 percent performance rate
will not be counted.
We received stakeholder feedback that it is difficult for some
specialties to meet the 30 Medicare Part B FF patient threshold.
Therefore, based on our authority under section 1848(m)(3)(D) of the
Act to revise the reporting criteria for satisfactory reporting, we
propose the following criteria for satisfactory reporting of PQRS
measures groups for individual eligible professionals using the
registry-based reporting mechanism for the 2013 and 2014 incentives:
(1) For the 12-month reporting periods for the respective 2013 and
2014 incentives, report at least 1 measures group, AND report each
measures group for at least 20 patients, a majority of which must be
Medicare Part B FFS patients. Measures groups containing a measure with
a 0 percent performance rate will not be counted.
(2) For the 6-month reporting period for the respective 2013 and
2014 incentives, report at least 1 measures group, AND report each
measures group for at least 20 patients, a majority of which must be
Medicare Part B FFS patients. Measures group containing a measure with
a zero percent performance rate will not be counted. Please note that
this is the same criterion established for the 12-month reporting
period. We are proposing the same criterion for both reporting periods
in an effort to simplify the reporting criterion for satisfactory
reporting.
We note that, while we still are proposing to require that an
eligible professional report on at least 20 patients, we understand
that a patient's personal identification information may be stripped
when data is collected via

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a qualified registry. As such, we understand that it may be difficult
to distinguish Medicare and non-Medicare patients. Given this
difficulty and that the eligible professionals generally would be
attempting to report data on Medicare patients, we believe the
reporting of some non-Medicare patients could serve a proxy for the
reporting of Medicare patients whose data is not easily distinguishable
as data on Medicare patients under this reporting mechanism.
Finally, we note that these proposals would satisfy the requirement
under section 1848(m)(5)(F) of the Act that we provide for alternative
reporting periods and criteria for satisfactory reporting with regard
to measures groups and registry-based reporting. We invite public
comment on the proposed criteria for satisfactory reporting of measures
groups by individual eligible professionals via registry for the 2013
and 2014 incentives.
Tables 25 and 26 provide a summary of our proposals for the
satisfactory reporting of PQRS quality measures for the 2013 and 2014
incentives.
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b. Proposed Criteria for Satisfactory Reporting for Group Practices
Selected To Participate in the GPRO
This section contains our proposed criteria for satisfactory
reporting for group practices selected to participate in the GPRO for
the 2013 and 2014 incentives, which are the last two incentives
authorized under the Physician Quality Reporting System. Please note
that, in addition to offering the GPRO web-interface tool that we've
previously included under the program, we are proposing new criteria
for group practices under the GPRO that allow group practices to use
the claims, registry, and EHR-based reporting mechanisms. In prior
program years, large group practices have been successful in reporting
quality measures data via the GPRO web-interface. We are proposing new
criteria under the claims, qualified registry, and EHR-based reporting
mechanisms because we believe that smaller groups may benefit from
different reporting criteria and also other reporting mechanisms. Since
the introduction of smaller group practices comprised of 25-99 eligible
professionals under the GPRO is fairly recent, and given that we are
proposing to modify the definition for group practice such that the
PQRS GPRO would include beginning in 2013 group practices comprised of
2-24 eligible professionals, we are proposing additional criteria for
reporting because we believe it may be more practicable that smaller
group practices report on PQRS quality measures via claims, qualified
registry, or direct EHR or EHR data submission vendor versus the GPRO
web-interface, which was designed for use by larger group practices.
(1) Proposed Criteria for Beneficiary Assignment Methodology and
Satisfactory Reporting on PQRS Quality Measures via the GPRO Web-
Interface
In order to populate the GPRO web-interface, we must first assign
beneficiaries to each group practice and then from those assigned
beneficiaries draw a sample of beneficiaries for the disease modules in
the GPRO web interface. This assignment and sampling methodology is
based on what we learned from the PGP demonstration. The PGP
demonstration aims to encourage coordination of the care furnished to
individuals under Medicare parts A and B by institutional and other
providers, practitioners, and suppliers of health care items and
services; encourage investment in administrative structures and
processes to ensure efficient service delivery; and reward physicians
for improving health outcomes and reducing the rate of growth in health
care expenditures. In the PGP Transition demonstration, the goal of
beneficiary assignment criteria is to identify Medicare beneficiaries
that have a plurality of their allowed charges for office evaluation
and management (E & M) services furnished at a participating PGP during
the year. If they do not have any primary care physician visits, then
they are assigned using plurality of allowed charges for all office E &
M physician visits regardless of specialty.
In 2012, the beneficiaries that we assigned to group practices, for
purposes of reporting on the PQRS quality measures via the GPRO web-
interface, were limited to those Medicare Part B FFS beneficiaries with
Medicare Parts A and B claims for whom Medicare is the primary payer.
Assigned beneficiaries did not include Medicare Advantage enrollees. We
assigned a beneficiary to the group practice if the practice provided
the plurality of a beneficiary's office or other outpatient office
evaluation and management allowed charges. Beneficiaries with only one
office visit to the group practice were eliminated from the group
practice's assigned patient population. Please note that, for the GPRO
web-interface, similar to the PGP demonstration, also takes eligible
professional services other than physician services when evaluating a
group practice's office E & M services. We are proposing to continue
using this assignment methodology for 2013 and subsequent years because
it is already in place operationally. We believe the assignment
methodology we are currently using adequately captures sufficient data
to reflect the quality of care furnished by group practices reporting
under the GPRO web-interface. We invite public comment on our proposal
to continue to use this methodology for assigning beneficiaries.
We note that the Medicare Shared Savings Program uses a somewhat
different assignment methodology. More information regarding the
assignment methodology that is used in the Shared Savings Program be
found on the program Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html?redirect=/sharedsavingsprogram/. However, we note that consistent with the
requirements of section 1899(c) of the Act, the assignment methodology
used in the Shared Savings Program (which involves a 2-step process)
has a greater focus on physician-provided primary care services.
In order to more closely align with the Medicare Shared Savings
Program, we considered proposing to modify the assignment method PQRS
uses to assign beneficiaries to a group practice to be similar to the
two-step assignment method specified in Sec. 425.402 that is used
under the Medicare Shared Savings Program to assign beneficiaries to an
ACO. Consistent with that two-step methodology, in order for a
beneficiary to be eligible for assignment to a group practice, the
beneficiary must have received at least one primary care service from a
physician (as defined in Sec. 425.20) within the group practice during
the reporting period. Accordingly, we would identify beneficiaries who
received at least one primary care service from any group practice
physician (regardless of specialty) participating in the group practice
during the reporting period. Under the first assignment step, we would
assign the beneficiary to the group practice if the beneficiary had at
least one primary care service furnished by a primary care physician at
the participating group practice, and more primary care services
(measured by Medicare allowed charges) furnished by primary care
physicians in the participating group practice than furnished by
primary care physicians at any other group practice or non-group
practice physician. The second step applies only for those
beneficiaries who do not receive any primary care services from a
primary care physician during the reporting period. We would assign the
beneficiary to the participating group practice in this step if the
beneficiary had at least one primary care service furnished by a group
practice physician, regardless of specialty, and more primary care
services were furnished by group practice professionals (including non-
primary care physicians, nurse practitioners, physician assistants or
clinical nurse specialists) (measured by Medicare allowed charges) at
the participating group practice than at any other group practice or
non-group practice physician. We would then pull samples of
beneficiaries for the relevant measures/modules from this population of
assigned beneficiaries to populate the GPRO web interface. We
considered making this change to the assignment method beginning with
the 2013 PQRS GPRO web-interface so that the rules used to assign
beneficiaries to group practices participating in PQRS and ACOs
participating in the Medicare Shared Savings Program would be

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consistent. Since both group practices that are participating in the
PQRS GPRO and ACOs participating in the Medicare Shared Savings Program
would be using the same GPRO web interface to report the same set of
quality measures to CMS, we believe that applying consistent assignment
methods across the two programs would allow us to streamline our
processes and could potentially reduce confusion among group practices
considering participation in the PQRS GPRO or ACOs considering
participation in the Medicare Shared Savings Program. We invite public
comment on this alternative option of adopting a methodology similar to
the one the Medicare Shared Savings Program uses to assign
beneficiaries to ACOs to assign beneficiaries to group practices that
report on PQRS quality measures via the GPRO web-interface beginning in
2013.
Consistent with the group practice reporting requirements under
section 1848(m)(3)(C) of the Act, we propose the following criteria for
the satisfactory reporting of PQRS quality measures for group practices
selected to participate in the GPRO for the 12-month reporting periods
for the 2013 and 2014 incentives, respectively, using the GPRO Web-
interface for groups practices of 25-99 eligible professionals: Report
on all measures included in the web interface; AND populate data fields
for the first 218 consecutively ranked and assigned beneficiaries in
the order in which they appear in the group's sample for each disease
module or preventive care measure. If the pool of eligible assigned
beneficiaries is less than 218, then report on 100 percent of assigned
beneficiaries. In other words, we understand that, in some instances,
the sampling methodology CMS provides will not be able to assign at
least 218 patients on which a group practice may report, particularly
those group practices on the smaller end of the range of 25-99 eligible
professionals. If the group practice is assigned less than 218 Medicare
beneficiaries, then the group practice would report on 100 percent of
its assigned beneficiaries. In addition, we propose the following
criteria for the satisfactory reporting of PQRS quality measures for
group practices selected to participate in the GPRO for the 2013 and
2014 incentives, respectively, using groups practices of 100 or more
eligible professionals: Report on all measures included in the web
interface; AND populate data fields for the first 411 consecutively
ranked and assigned beneficiaries in the order in which they appear in
the group's sample for each disease module or preventive care measure.
If the pool of eligible assigned beneficiaries is less than 411, then
report on 100 percent of assigned beneficiaries.
The satisfactory criteria we proposed for the GPRO web-interface
for large group practices for the 2013 and 2014 incentives is
consistent with the reporting criteria we established for the 2012 PQRS
incentive (76 FR 73339). The satisfactory criteria we proposed for
groups of 25-99 eligible professionals are consistent with the
reporting criteria we established for the 2012 PQRS incentive (76 FR
73339). We are proposing these same criteria because the thresholds
proposed in these criteria are based on analysis performed on group
reporting based on the PGP demonstration to determine reasonable
thresholds for group practice reporting. Therefore, we believe the
satisfactory reporting criteria that we have proposed for the GPRO web-
interface for the 2013 and 2014 incentives are appropriate criteria and
reasonable for groups to meet.
Furthermore, we propose using Medicare Part B claims data for dates
of service on or after January 1 and submitted and processed by
approximately the last Friday in October of the applicable 12-month
reporting period under which the group practice participates in the
GPRO to assign Medicare beneficiaries to each group practice. For
example, for a group practice participating under the GPRO for the
reporting periods occurring in 2013, for the sampling model, we propose
that we would assign beneficiaries on which to report based on Medicare
Part B claims with dates of service beginning January 1, 2013 and
processed by October 25, 2013. We invite public comment on our proposal
to continue to use this methodology for assigning beneficiaries.
(2) Proposed Criteria for Satisfactory Reporting on Individual PQRS
Quality Measures for Group Practices Selected To Participate in the
GPRO via Claims, Registry, and EHR
We are proposing to have the claims, registry, and EHR reporting
mechanisms available for group practices of 2-99 eligible professionals
to use to report PQRS quality measures. We note that we are not
proposing to make the claims, registry, and EHR reporting mechanisms
available to larger groups of 100 or more eligible professionals,
because we believe that these larger group practices do not face the
potential limitations that smaller group practices may face when using
the GPRO web-interface. Although group practices of 100-249 were also
only introduced to the GPRO web-interface in 2012, we note that we
believe these practices are sufficiently large enough to account for
the varied measures required for reporting under the GPRO web-
interface. For example, the proposed criteria for satisfactory
reporting on individual PQRS quality measures for group practices using
the GPRO web-interface would require a group practice to report on all
18 measures that are indicated in Table 35. Larger group practices tend
to have more varied practices, so it would be easier for larger groups
to report on a measure set that covers multiple domains, such as the
one proposed in Table 35, than smaller group practices that tend to be
focused on a limited set of specialties. We certainly think this is the
case for the smallest group practices comprised of 2-24 eligible
professionals, which is the reason why we are not proposing that the
GPRO web-interface be available for use for these smaller group
practices. With respect to group practices comprised of 25-99 eligible
professionals, we believe it is possible for these group practices to
have a practice that is sufficiently varied to be able to report on
measures that cut across multiple domains. However, we note that use of
the GPRO web-interface as a reporting mechanism was only introduced to
groups of 2-99 in 2012, so no data is available to determine the
feasibility of groups of 25-99 using the GPRO web-interface. Therefore,
in the event these groups feel that reporting using the GPRO web-
interface would be difficult, we are proposing criteria alternative to
that proposed under the GPRO web-interface for satisfactory reporting
for the 2013 and 2014 incentives using the claims, registry, and EHR-
based reporting mechanisms that mirror the criteria we are proposing
for individual reporting for the claims, registry, and EHR-based
reporting mechanisms from the 2013 and 2014 incentives. We note that
the criteria we are proposing for the 2013 and 2014 incentives using
the claims, registry, and EHR-based reporting mechanisms are similar to
the criteria for individual reporting, because we believe smaller group
practices are more akin to individuals with respect to practice scope.
The larger the group practice, the more likely the group practice would
benefit using the reporting options under the GPRO web-interface.
Therefore, based on our authority under section 1848(m)(3)(C) of
the Act, we propose the following satisfactory reporting criteria via
claims for group practices comprised of 2-99 eligible

[[Page 44821]]

professionals under the GPRO for the 2013 and 2014 incentives via
claims: Report at least 3 measures AND report each measure for at least
50 percent of the group practice's Medicare Part B FFS patients seen
during the reporting period to which the measure applies. Measures with
a zero percent performance rate will not be counted.
For those group practices that choose to report using a qualified
registry, we propose the following satisfactory reporting criteria via
qualified registry for group practices comprised of 2-99 eligible
professionals under the GPRO for the 2013 and 2014 incentives: Report
at least 3 measures AND report each measure for at least 80 percent of
the group practice's Medicare Part B FFS patients seen during the
reporting period to which the measure applies. Measures with a zero
percent performance rate will not be counted. Please note that we are
only proposing these satisfactory reporting criteria for group
practices comprised of 2-99 eligible professionals because we believe
that larger group practices should have the technical capacity and
resources to report on the more expansive measure set that is collected
via the GPRO web-interface.
For group practices choosing to report PQRS quality measures via
EHR, we propose the following 2 options for the satisfactory reporting
criteria via a direct EHR product or EHR data submission vendor for
group practices comprised of 2-99 eligible professionals under the GPRO
for the 2013 incentive:
Option 1: Eligible professionals in a group practice must report on
three Medicare EHR Incentive Program core or alternate core measures,
plus three additional measures. The EHR Incentive Program' core,
alternate core, and additional measures can be found in Table 6 of the
EHR Incentive Program's Stage 1 final rule (75 FR 44398) or in Tables
32 and 33 of this section. We refer readers to the discussion in the
Stage 1 final rule for further explanation of the requirements for
eligible professionals reporting those CQMs (75 FR 44398 through
44411).
Option 2: Report at least 3 measures AND report each measure for at
least 80 percent of the eligible professional's Medicare Part B FFS
patients seen during the reporting period to which the measure applies.
Measures with a zero percent performance rate will not be counted.
We note that the Medicare EHR Incentive Program has proposed 2
options for meeting the CQM component of achieving meaningful use
beginning with CY 2014 (for more information on these options, please
see 77 FR 13746-13748). To align our EHR-based reporting requirements
with those proposed under the Medicare EHR Incentive Program, we are
proposing the following criteria for satisfactory reporting using the
EHR-based reporting mechanism for the 12-month reporting period for the
2014 incentive:
Option 1a: Select and submit 12 clinical quality measures
available for EHR-based reporting from Tables 32 and 33, including at
least 1 measure from each of the following 6 domains--(1) patient and
family engagement, (2) patient safety, (3) care coordination, (4)
population and public health, (5) efficient use of healthcare
resources, and (6) clinical process/effectiveness.
Option 1b: Submit 12 clinical quality measures composed of
all 11 of the proposed Medicare EHR Incentive Program core clinical
quality measures specified in Tables 32 and 33 plus 1 menu clinical
quality measure from Tables 32 and 33. We propose to adopt the group
reporting criteria that aligns with the criteria that will be
established for meeting the CQM component under CY 2014 for the
Medicare EHR Incentive Program. Furthermore, to the extent that the
final group reporting criteria for meeting the CQM component of
achieving meaningful use differ from what was proposed, our intention
is to align with the group reporting criteria the EHR Incentive Program
ultimately establishes. We invite public comment on this proposal.
We also considered proposing the following satisfactory reporting
criteria for the 2014 PQRS incentive for groups of 2-99 that was
similar to the satisfactory reporting criteria being proposed for the
2013 PQRS incentive: report at least 3 measures, AND report each
measure for at least 80 percent of the group practice's Medicare Part B
FFS patients seen during the reporting period to which the measure
applies. Measures with a zero percent performance rate will not be
counted. We invite public comment on this considered proposal.
We note that we believe these proposed criteria meets the
requirements for group practice reporting specified in section
1848(m)(3)(C) of the Act. Section 1848(m)(3)(C) requires that the
criterion for group reporting use a statistical sampling model, such as
the model used in the PGP demonstration. We note that, although these
criteria depart from the model used in the PGP demonstration, we
believe that these criteria still meet the statistical sampling model
requirement in that the group practices would still be required to
report the measures on a sample of their patients. Rather than CMS
choosing which sample of patients the group practice must report, with
these proposed criteria, the group practice decides on which sample of
patients to report for either 50 percent, 80 percent, or 100 percent of
its patients depending on the reporting mechanism the group practice
chooses. For example, if a group practice who sees 100 patients during
the 2013 incentive reporting period chooses to report PQRS quality
measures using the claims-based reporting mechanism, for the 2013
incentive, the group practice would have to report at least 3 measures
for 50 percent of the practice's patients. The group practice may pick
which patients on which to report, as long as the group practice
reports on at least 50 of the patients the practice sees in 2013. If
the same group practice decides to report on PQRS quality measures
using the Option 1 criteria for EHR-based reporting for the 2013
incentive, the group practice would report on all 100 patients. We note
that although reporting on 100 percent of patients is not a sample, for
data collection purposes, CMS would only collect data on the group
practice's patients to which the EHR measures apply. Therefore, even
though a group practice would report on 100 percent of patients to
which the measure applies, not all of the EHR measures would
necessarily apply to all of the group practice's patients. Since the
group practice is then only providing information on its applicable
patients, we believe the proposed EHR reporting criteria would still
meet the statistical sampling model requirement. We invite public
comment on the proposed criteria for satisfactory reporting of
individual measures by group practices via claims, registry, or EHR for
the 2013 and 2014 incentives.
A summary of the proposed criteria for satisfactory reporting for
group practices selected to participate in the GPRO for the 2013 and
2014 incentives is specified in Tables 27 and 28:
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c. Proposed Analysis of the Criteria for Satisfactory Reporting for the
2013 and 2014 Incentives
For the proposed criteria for satisfactory reporting for the 2013
and 2014 incentives described in this section, we propose that eligible
professionals and group practices may not combine different
satisfactory reporting criteria under different reporting mechanisms to
meet the requirements of satisfactory reporting for the 2013 and 2014
incentives. For example, an eligible professional may not meet the
requirements for the 2013 incentive by reporting on 2 applicable PQRS
quality measures via claims and 1 applicable PQRS quality measure via
qualified registry, because the eligible professional did not meet the
criteria for satisfactory reporting under at least one reporting
mechanism. Similarly, a group practice would be required to select a
single reporting mechanism for the entire group practice. For example,
for a group practice consisting of 4 eligible professionals, the group
practice would not be able to meet the requirements for the 2013
incentive by reporting 2 individual measures via claims and 1 measure
via the direct EHR submission method.
For individual eligible professionals and group practices reporting
on individual measures and/or measures groups, please note that,
although an eligible professional or group practice could meet more
than one criterion for satisfactory reporting, only one incentive
payment will be made to the eligible professional or group practice.
For example, if an eligible professional meets the criteria for
satisfactory reporting of individual measures via claims and measures
groups via claims for the 2013 incentive, the eligible professional
would nonetheless only be entitled to one incentive payment. CMS would
consider the eligible professional to be incentive eligible under
whichever reporting criterion yields the greatest bonus. We invite
public comment on our proposed analysis of the criteria for
satisfactory reporting for the 2013 and 2014 incentives.
5. Proposed Criteria for Satisfactory Reporting for the Payment
Adjustments
Section 1848(a)(8) of the Social Security Act, as added by section
3002(b) of the Affordable Care Act, provides that for covered
professional services furnished by an eligible professional during 2015
or any subsequent year, if the eligible professional does not
satisfactorily report data on quality measures for covered professional
services for the quality reporting period for the year, the fee
schedule amount for services furnished by such professional during the
year shall be equal to the applicable percent of the fee schedule
amount that would otherwise apply to such services. The applicable
percent for 2015 is 98.5 percent. For 2016 and subsequent years, the
applicable percent is 98.0 percent.
This section contains the proposed criteria for satisfactory
reporting for purposes of the 2015 and 2016 payment adjustments for
eligible professionals and group practices, as well as some discussion
of what we are considering for the payment adjustments for 2017 and
beyond.
As stated previously, the majority of eligible professionals
currently are not participating in the PQRS. Yet, the payment
adjustment will apply to all eligible professionals who are not
satisfactory reporters during the reporting period for the year.
Therefore, in implementing the PQRS payment adjustment, we seek to
achieve two overarching policy goals. First, and foremost, we seek to
increase participation in the PQRS and to implement the payment
adjustment in a manner that will allow eligible professionals who have
never participated in the program to familiarize themselves with the
program. Second, we seek to align the reporting requirements under the
PQRS with the quality reporting requirements being proposed for the
physician value-based payment modifier discussed in section III.K of
this proposed rule.
a. Proposed Criteria for Satisfactory Reporting for the 2015 and 2016
Payment Adjustments for Eligible Professionals and Group Practices
Using the Claims, Registry, EHR, and GPRO Web-Interface Reporting
Mechanisms
This section contains our proposals for the criteria for
satisfactory reporting for the 2015 and 2016 payment adjustments using
the claims, registry, EHR-based, and GPRO web-interface reporting
mechanisms. First, we propose that for purposes of the 2015 and 2016
payment adjustments (which would be based on data reported during 12
and 6-month reporting periods that fall within 2013 and 2014,
respectively), an eligible professional or group practice would meet
the requirement to satisfactorily report data on quality measures for
covered professional services for the 2015 and 2016 payment adjustments
by meeting the requirement for satisfactory reporting for the 2013 and
2014 incentives respectively. That is, we are proposing the exact same
criteria for satisfactory reporting for the 2015 and 2016 payment
adjustments that we are proposing for the 2013 and 2014 incentives,
described in Tables 25 and 26, with the exception of one additional
alternative criterion. Since we have already proposed satisfactory
reporting criteria for the 2013 and 2014 incentives and the reporting
periods for the respective 2013 and 2014 incentives and 2015 and 2016
payment adjustments coincide, we believe it is appropriate that the
proposed criteria for the 2013 and 2014 respective incentives apply to
satisfy the satisfactory reporting requirements for the 2015 and 2016
payment adjustments, respectively. Please note that these proposed
criteria for the 2013 and 2014 PQRS incentives are the only criteria we
are proposing to establish for the respective 2015 and 2016 PQRS
payment adjustments for group practices using the GPRO web-interface.
With respect to individual eligible professionals also
participating in the EHR Incentive Program, it is our intention to
align our proposed criteria for satisfactory reporting for the 2015 and
2016 PQRS payment adjustments with the criteria for meeting the CQM
component of meaningful use applicable during the 2015 and 2016 PQRS
payment adjustment reporting periods. For eligible professionals
participating in PQRS and the EHR Incentive Program using a direct EHR
product or EHR data submission vendor that is CEHRT, please note that
since we are proposing to align our proposed EHR criteria for
satisfactory reporting for the 2013 and 2014 PQRS incentives with the
proposed criteria for meeting the CQM component of meaningful use for
CYs 2013 and 2014, if these proposals are established and we meet our
goal of aligning the two programs, we note that an eligible
professional meeting the CQM component of meaningful use during the
PQRS 2015 and 2016 payment adjustment reporting periods using a direct
EHR product or EHR data submission vendor that is CEHRT would be able
to meet the requirements for satisfactory reporting for the 2015 and
2016 PQRS payment adjustments by submitting a single set of data.
As a result of the overarching goals we have articulated above
about encouraging participation and concern about eligible
professionals' familiarity and experience with the program, we propose
the following alternative criteria for satisfactory reporting during
the 12-month reporting periods for the 2015 and 2016 payment
adjustments for eligible professionals and group practices: report 1
measure or measures group using the claims, registry, or EHR-

[[Page 44825]]

based reporting mechanisms. We understand that this particular proposed
alternative criterion for satisfactory reporting are significantly less
stringent that the satisfactory reporting criteria we have proposed for
the 2013 and 2014 incentives. However, we stress that we are proposing
less stringent criteria only to ease eligible professionals and group
practices who have not previously participated in PQRS into reporting.
We note that we are only proposing these criteria for the 2015 and 2016
payment adjustments. As indicated in section III.G.5.c., for 2017 and
beyond, we anticipate eliminating these alternative proposed criteria
and establishing criteria that more closely resembles the proposed
satisfactory reporting criteria for the 2013 and 2014 incentives.
With respect to group practices, section 1848(m)(3)(C) requires
that the criterion for group reporting use a statistical sampling
model, such as the model used in the PGP demonstration, we note that
this proposed reporting criteria meets this standard, as the group
practice would decide on which sample of patients to report. In these
proposed criteria, the group practice would select the sample number,
meaning the group could choose to report on all applicable patients or
a certain number of patients to which the particular measure applied.
Please note that, although the group practice may choose the sample, we
anticipate that the sample the group practice selects would represent a
sufficient picture of the beneficiaries the group practice sees. We
invite public comment on the proposed criteria for satisfactory
reporting for the 2015 and 2016 payment adjustments for eligible
professionals and group practices using the claims, registry, EHR-based
reporting mechanisms.
b. Proposed Criteria for Satisfactory Reporting for the 2015 and 2016
Payment Adjustments for Eligible Professionals and Group Practices
Using the Administrative Claims-Based Reporting Mechanism
(1) Proposed Criteria for Satisfactory Reporting for the 2015 and 2016
Payment Adjustments for Eligible Professionals and Group Practices
Using the Administrative Claims-Based Reporting Mechanism
Unlike the traditional PQRS claims-based reporting mechanism, the
proposed administrative claims-based reporting mechanism does not
require an eligible professional to submit quality data codes (QDCs) on
Medicare Part B claims. Rather, using the administrative claims-based
reporting mechanism only requires that an eligible professional or
group practice submit Medicare claims to CMS. Since CMS, rather than
the eligible professional or group practice, is performing the analysis
and collecting the data provided in an eligible professional's or group
practice's Medicare claims for an eligible professional's or group
practice's Medicare beneficiaries, we believe it is appropriate to
propose a reporting threshold that is more stringent than that proposed
for the 2013 and 2014 incentives that use traditional PQRS reporting
mechanisms. Therefore, we propose the following criteria for
satisfactory reporting for the 12-month reporting periods for the 2015
and 2016 payment adjustments for eligible professionals and group
practices using the administrative claims-based reporting mechanism:
Report ALL measures in Table 63 for 100 percent of the cases in which
the measures apply.
Section 1848(m)(3)(C) requires that the criterion for group
reporting use a statistical sampling model, such as the model used in
the PGP demonstration. We note that, although these criteria depart
from the model used in the PGP demonstration, similar to our arguments
for the satisfactory reporting criteria we are proposing for group
practices using the claims, registry, and EHR-based reporting
mechanisms, we believe that these criteria still meet the statistical
sampling model requirement in that the group practices would still be
required to report the measures on a sample of their patients. We
understand that, with these proposed criteria, the group practice
provides claims data to CMS on 100 percent of its patients for which
the measure applies. We note that although reporting on 100 percent of
patients is not a sample, for data collection purposes, CMS would only
collect data on the group practice's patients to which the
administrative claims measures apply. Therefore, even though a group
practice who sees 100 patients during the applicable PQRS payment
adjustment reporting period would report on 100 percent of patients to
which the measure applies, not all of the proposed administrative
claims measures would necessarily apply to all of the group practice's
patients. Since the group practice is then only providing information
on its applicable patients, we believe these reporting criteria would
still meet the statistical sampling model requirement. We invite public
comment on these proposed criteria.
When considering proposals for reporting criteria for the 2015 and
2016 PQRS payment adjustments, we considered satisfactory reporting
options that would encourage eligible professionals and group practices
to report for the 2013 and/or 2014 incentives but, should eligible
professionals or group practices come up shy of meeting the 2013 and/or
2014 incentive reporting criteria, would still allow an eligible
professional to meet the criteria for satisfactory reporting for the
2015 and/or 2016 payment adjustments. In lieu or more lenient
satisfactory reporting criteria we proposed for the 2015 and 2016
payment adjustment, e.g. to report at least 1 measure or measures group
or to elect the administrative claims-based reporting option, we
considered the option of defaulting those eligible professionals who
report but fail to meet the criteria for satisfactory reporting using
the proposed criteria for the 2013 and/or 2014 incentives to the
administrative claims-based reporting option. We would therefore
analyze the claims of all eligible professionals who report at least 1
measure under a traditional reporting method during the respective 2015
and 2016 payment adjustment reporting periods under the administrative
claims-based reporting option. We considered this proposal because it
is our intention to encourage eligible professionals to report PQRS
measures using the proposed reporting criteria for the 2013 and 2014
PQRS incentives. However, given our concern about new eligible
professionals' familiarity and experience with the program, we believe
it is necessary to propose an alternative, less stringent reporting
option. We invite public comment on this considered proposal.
c. Proposed Analysis of Eligible Professionals and Group Practices Who
Will Be Assessed a PQRS Payment Adjustment
As noted in Sec. 414.90(b), an eligible professional is assessed
at the TIN/NPI level and a group practice selected to participate in
the GPRO is assessed at the TIN level. As there is a 1-year lapse in
time between the end of a proposed respective payment adjustment
reporting period and when an eligible professional is expected to
receive a PQRS payment adjustment for not meeting the requirements for
satisfactory reporting for the respective payment adjustment, we
understand that an eligible professional may change his or her TIN/NPIs
during this lapse of time. Likewise, a group practice selected to
participate in the GPRO may change its TIN during this lapse in time.
We believe this raises issues with regard to the subsequent application
of the payment adjustment and concerns about the potential for abuse
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system''). Accordingly, we invite public comment this issue, including
what parameters, if any, CMS should impose regarding the changes in
TIN/NPIs and compositions of group practices with regard to the payment
adjustment.
d. Criteria for Satisfactory Reporting for the Payment Adjustments for
2017 and Beyond for Eligible Professionals and Group Practices
We have stressed the importance of allowing eligible professionals
and group practices who are new to the program to gain familiarity with
PQRS's reporting requirements. However, we note that, as we move
towards the sole implementation of payment adjustments (which would
serve as the reporting period for the 2017 payment adjustment), it is
our intention that eligible professionals would be expected to meet
reporting criteria that more closely align to the reporting criteria
that we have proposed for the 2014 incentives above. It is our
expectation that in two years' time, eligible professionals who are new
to PQRS would have enough familiarity with the program that CMS could
reasonably expect a majority of participating eligible professionals to
meet the requirements that are identical or very similar to those that
have been required for incentive payment purposes. We invite public
comment on goals for future criteria for satisfactory reporting we may
require under the program for the 2017 payment adjustment that are
identical or similar to the criteria we have proposed for the 2014
incentive payments. We also invite commenters to provide alternative
criteria for us to consider in future rulemaking for the payment
adjustments for 2017 and beyond.
6. PQRS Quality Measures for 2013 and Beyond
a. Statutory Requirements for the Selection of Proposed PQRS Quality
Measures for 2013 and Beyond
Under section 1848(k)(2)(C)(i) of the Act, the PQRS quality
measures shall be such measures selected by the Secretary from measures
that have been endorsed by the entity with a contract with the
Secretary under subsection 1890(a) of the Act (currently, that is the
National Quality Forum, or NQF). However, in the case of a specified
area or medical topic determined appropriate by the Secretary for which
a feasible and practical measure has not been endorsed by the NQF,
section 1848(k)(2)(C)(ii) of the Act authorizes the Secretary to
specify a measure that is not so endorsed as long as due consideration
is given to measures that have been endorsed or adopted by a consensus
organization identified by the Secretary, such as the AQA alliance. In
light of these statutory requirements, we believe that, except in the
circumstances specified in the statute, each PQRS quality measure must
be endorsed by the NQF. Additionally, section 1848(k)(2)(D) of the Act
requires that for each PQRS quality measure, ``the Secretary shall
ensure that eligible professionals have the opportunity to provide
input during the development, endorsement, or selection of measures
applicable to services they furnish.''
The statutory requirements under section 1848(k)(2)(C) of the Act,
subject to the exception noted previously, require only that the
measures be selected from measures that have been endorsed by the
entity with a contract with the Secretary under section 1890(a) (that
is, the NQF) and are silent for how the measures that are submitted to
the NQF for endorsement were developed. The basic steps for developing
measures applicable to physicians and other eligible professionals
prior to submission of the measures for endorsement may be carried out
by a variety of different organizations. We do not believe there needs
to be any special restrictions on the type or make-up of the
organizations carrying out this basic process of development of
physician measures, such as restricting the initial development to
physician-controlled organizations. Any such restriction would unduly
limit the basic development of quality measures and the scope and
utility of measures that may be considered for endorsement as voluntary
consensus standards for purposes of the PQRS.
In addition to section 1848(k)(2)(C) of the Act, section 1890A of
the Act, as amended by adding section 3014 of the Patient Protection
and Affordable Care Act (PPACA), requires that the entity with a
contract with the Secretary under subsection 1890(a) of the Act
(currently that, is the NQF) establish a multi-stakeholder group that
would provide for a transparent process for selecting quality measures,
such as the quality measures selected for reporting under the PQRS.
Pursuant to section 3014 of Affordable Care Act, the NQF created the
Measure Applications Partnership. Section 1890(b)(7)(B) requires that
the Secretary establish a pre-rulemaking process whereby the multi-
stakeholder group will provide input to the Secretary on the selection
of quality measures. To receive input from the Measures Applications
Partnership, we submitted all the measures we are proposing in this
section with the exception of the administrative claims measures that
we are incorporating to align with the Value-Based Modifier and the
measures that we are incorporating to align with the Medicare Shared
Savings Program specified in Tables 29 through 62. The list of measures
the Measures Application Partnership have considered for 2012 are
available at http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx.
b. Other Considerations for the Selection of Proposed PQRS Quality
Measures for 2013 and Beyond
As we noted above, section 1848(k)(2)(C)(ii) of the Act provides an
exception to the requirement that the Secretary select measures that
have been endorsed by the entity with a contract under section 1890(a)
of the Act (that is, the NQF). We may select measures under this
exception if there is a specified area or medical topic for which a
feasible and practical measure has not been endorsed by the entity.
Under this exception, aside from NQF endorsement, we requested that
stakeholders apply the following considerations when submitting
measures for possible inclusion in the PQRS measure set:
High impact on healthcare.
Measures that are high impact and support CMS and HHS
priorities for improved quality and efficiency of care for Medicare
beneficiaries.
Measures that address gaps in the quality of care
delivered to Medicare beneficiaries.
Address Gaps in the PQRS measure set.
Measures impacting chronic conditions (chronic kidney
disease, diabetes mellitus, heart failure, hypertension and
musculoskeletal).
Measures applicable across care settings (such as,
outpatient, nursing facilities, domiciliary, etc.).
Broadly applicable measures that could be used to create a
core measure set required of all participating eligible professionals.
Measures groups that reflect the services furnished to
beneficiaries by a particular specialty.
On October 7, 2011, we ended a Call for Measures that solicited new
measures for possible inclusion in the PQRS for 2013 and beyond. During
the Call for Measures, we solicited measures that were either
consistent with section 1848(k)(2)(C) of the Act or fell under the
exception specified in section 1848(k)(2)(C)(ii) of the Act. Although
the deadline to submit measures for consideration for the 2013 PQRS

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program year has ended, we invite public comment on future
considerations related to the selection of new PQRS quality measures.
c. Proposed PQRS Quality Measures
This section focuses on the proposed PQRS individual Measures
available for reporting via claims, registry, and/or EHR-based
reporting for 2013 and beyond. To align with the proposed measure
domains provided in the EHR Incentive Program (77 FR 13743), we
classify all proposed measures against six domains based on the
National Quality Strategy's six priorities, as follows:
(1) Patient and Family Engagement. These are measures that reflect
the potential to improve patient-centered care and the quality of care
delivered to patients. They emphasize the importance of collecting
patient-reported data and the ability to impact care at the individual
patient level as well as the population level through greater
involvement of patients and families in decision making, self care,
activation, and understanding of their health condition and its
effective management.
(2) Patient Safety. These are measures that reflect the safe
delivery of clinical services in both hospital and ambulatory settings
and include processes that would reduce harm to patients and reduce
burden of illness. These measures should enable longitudinal assessment
of condition-specific, patient-focused episodes of care.
(3) Care Coordination. These are measures that demonstrate
appropriate and timely sharing of information and coordination of
clinical and preventive services among health professionals in the care
team and with patients, caregivers, and families in order to improve
appropriate and timely patient and care team communication.
(4) Population and Public Health. These are measures that reflect
the use of clinical and preventive services and achieve improvements in
the health of the population served and are especially focused on the
leading causes of mortality. These are outcome-focused and have the
ability to achieve longitudinal measurement that will demonstrate
improvement or lack of improvement in the health of the US population.
(5) Efficient Use of Healthcare Resources. These are measures that
reflect efforts to significantly improve outcomes and reduce errors.
These measures also impact and benefit a large number of patients and
emphasize the use of evidence to best manage high priority conditions
and determine appropriate use of healthcare resources.
(6) Clinical Processes/Effectiveness. These are measures that
reflect clinical care processes closely linked to outcomes based on
evidence and practice guidelines.
Please note that the PQRS quality measure specifications for any
given proposed PQRS individual quality measure may differ from
specifications for the same quality measure used in prior years. For
example, for the proposed PQRS quality measures that were selected for
reporting in 2012, please note that detailed measure specifications,
including the measure's title, for the proposed individual PQRS quality
measures for 2013 and beyond may have been updated or modified during
the NQF endorsement process or for other reasons. In addition, due to
our desire to align measure titles with the measure titles that were
proposed for 2013, 2014, 2015, and potentially subsequent years of the
EHR Incentive Program, we note that the measure titles for measures
available for reporting via EHR may change. To the extent that the EHR
Incentive Program updates its measure titles to include version numbers
(77 FR 13744), we intend to use these version numbers to describe the
PQRS EHR measures that will also be available for reporting for the EHR
Incentive Program. We will continue to work toward complete alignment
of measure specifications across programs whenever possible.
Through NQF's measure maintenance process, NQF endorsed measures
are sometimes updated to incorporate changes that we believe do not
substantially change the nature of the measure. Examples of such
changes could be updated diagnosis or procedure codes, changes to
exclusions to the patient population, definitions, or extension of the
measure endorsement to apply to other settings. We believe these types
of maintenance changes are distinct from more substantive changes to
measures that result in what are considered new or different measures,
and that they do not trigger the same agency obligations under the
Administrative Procedure Act. In this proposed rule, we are proposing
that if the NQF updates an endorsed measure that we have adopted for
the PQRS in a manner that we consider to not substantially change the
nature of the measure, we would use a subregulatory process to
incorporate those updates to the measure specifications that apply to
the program. Specifically, we would revise the Specifications Manual so
that it clearly identifies the updates and provide links to where
additional information on the updates can be found. We would also post
the updates on the CMS QualityNet Web site at https://www.QualityNet.org. We would provide sufficient lead time for [insert
applicable party; i.e. hospitals, LTCHs, etc.] to implement the changes
where changes to the data collection systems would be necessary.
We would continue to use the rulemaking process to adopt changes to
measures that we consider to substantially change the nature of the
measure. We believe that this proposal adequately balances our need to
incorporate NQF updates to NQF--endorsed [insert name of applicable
program] measures in the most expeditious manner possible, while
preserving the public's ability to comment on updates that so
fundamentally change an endorsed measure that it is no longer the same
measure that we originally adopted. We invite public comment on this
proposal.
To receive more information on the proposed measures contained in
this section, including the measure specifications for these proposed
measures, please contact the respective measure owners. Contact
information for the measure owners of these proposed PQRS measures is
available at the PQRS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html.
(1) Proposed PQRS Individual Core Measures Available for Claims,
Qualified Registry, and EHR-Based Reporting for 2013 and Beyond
In 2011, the Department of Health and Human Services (HHS) started
the Million Hearts Initiative, which is an initiative to prevent 1
million heart attacks and strokes in five years. We are dedicated to
this initiative and seek to encourage eligible professionals to join in
this endeavor. Therefore, based on our desire to support the Million
Hearts initiative and maintain our focus on cardiovascular disease
prevention, we are proposing the following proposed individual PQRS
Core Measures specified in Table 29 for 2013 and beyond. Please note
that these measures are the same measures we finalized under the 2012
PQRS in the CY 2012 Medicare PFS final rule (76 FR 73345).
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Please note that, although we are proposing that the measures in
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eligible professionals report on these proposed PQRS core measures. We
invite public comment on the proposed PQRS core measures for 2013 and
beyond.
(2) Proposed PQRS quality measures Available for Reporting via the
Claims, Qualified Registry, EHR, and GPRO Web-Interface Reporting
Mechanisms for 2013 and Beyond
This section contains our proposals for individual PQRS quality
measures for 2013 and beyond. Please note that, in large part, we are
proposing to retain most of the quality measures we finalized for
reporting for the 2012 PQRS (76 FR 42865 through 42872). However, in
2013 and 2014, we are proposing to include new measures, as well as
remove measures that were available for reporting under the 2012 PQRS
(not re-propose certain measures for 2013 and beyond). Table 30
specifies the measures we are proposing to be available for reporting
under the PQRS for 2013 and beyond.
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certain measures from the 2012 PQRS. For reference, in Table 31 we list
14 measures from the 2012 PQRS that we are not proposing for the 2013
PQRS.
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A summary of the measures we are proposing for 2013 and beyond are
specified in Table 32. Table 32 specifies our proposals to propose all
measures that were available for reporting in PQRS in 2012, with the
exception of the measures listed in Table 31, as well as propose new
measures specified in Table 30 not available for reporting under PQRS
in prior years.
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Beginning with reporting periods occurring in 2014, we are
proposing the following 45 individual quality measures specified in
Table 33 available for reporting under the PQRS:

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We also note that we are not proposing to include the following 9
measures specified in Table 34 for 2014.

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BILLING CODE 4120-01-C
For the 2012 PQRS, the PQRS aligned the measures the program had
available for EHR-based reporting with the EHR measures available for
reporting under the EHR Incentive Program (76 FR 73364) and CMS
proposes to retain those measures for 2013 and beyond. In fact, we are
proposing to add or remove measures available for EHR-based reporting
that align with what has been proposed for reporting under the EHR
Incentive Program for CY 2014 (77 FR 13746). We also intend to align
the PQRS measure set with other CMS programs such as the Value-based
Modifier and Medicare Shared Savings Program.
As indicated in Tables 29 through 34, we are proposing a total of
264 measures in 2013. Of these proposed measures, we note that 250 of
these measures were measures previously established for reporting under
the 2012 PQRS. 14 of these proposed measures are newly proposed in
2013. In 2013, we are also proposing to retire 14 measures that were
previously established for reporting under the 2012 PQRS. In 2014, we
are proposing 34 additional new measures that were not previously
established for reporting under the 2012 PQRS and proposing to retire 8
measures that were previously

[[Page 44955]]

established for reporting under the 2012 PQRS.
For Table 31, which specifies the tables we are not proposing to
retain in the PQRS measure set for 2013 and beyond, we are not
proposing the following measures for the following reasons:
(1) Stroke and Stroke Rehabilitation: Computed Tomography (CT) or
Magnetic Resonance Imaging (MRI) Reports: We are not proposing that
this measure be because the measure is no longer endorsed by NQF and
therefore does not satisfy the requirement for PQRS to provide
consensus-based quality measures under section 1848(k)(2)(C)(i) of the
Act. Although section 1848(k)(2)(C)(ii) of the Act provides an
exception to proposing PQRS measures endorsed by the NQF, we are not
exercising our authority to use this exception. The measure was not
recommended for reporting by the Measure Application Partnership and we
agree with the Measure Applications Partnership's (MAP) assessment.
More information on the MAP's assessment can be found in the ``MAP Pre-
Rulemaking Report: Input on Measures Under Consideration by HHS for
2012 Rulemaking'' available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.(2) Emergency Medicine:
Community-Acquired Pneumonia (CAP): Assessment of Oxygen Saturation:
The measure was not recommended for reporting by the MAP and we agree
with the MAP's assessment. More information on the MAP's assessment can
be found in the ``MAP Pre-Rulemaking Report: Input on Measures Under
Consideration by HHS for 2012 Rulemaking'' available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
(3) Emergency Medicine: Community-Acquired Pneumonia (CAP):
Assessment of Mental Status; Acute Otitis Externa (AOE): Pain
Assessment: The measure was not recommended for reporting by the MAP
and we agree with the MAP's assessment. More information on the MAP's
assessment can be found in the ``MAP Pre-Rulemaking Report: Input on
Measures Under Consideration by HHS for 2012 Rulemaking'' available at
http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
(4) Carotid Endarterectomy: Use of Patch During Conventional
Carotid Endarterectom: The measure was not recommended for reporting by
the MAP and we agree with the MAP's assessment. More information on the
MAP's assessment can be found in the ``MAP Pre-Rulemaking Report: Input
on Measures Under Consideration by HHS for 2012 Rulemaking'' available
at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
(5) Chronic Wound Care: Use of Compression System in Patients with
Venous Ulcers: The measure was not recommended for reporting by the MAP
and we agree with the MAP's assessment. More information on the MAP's
assessment can be found in the ``MAP Pre-Rulemaking Report: Input on
Measures Under Consideration by HHS for 2012 Rulemaking'' available at
http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
(6) Referral for Otologic Evaluation for Patients with History of
Active Drainage from the Ear Within the Previous 90 Days: The measure
was not recommended for reporting by the MAP and we agree with the
MAP's assessment. More information on the MAP's assessment can be found
in the ``MAP Pre-Rulemaking Report: Input on Measures Under
Consideration by HHS for 2012 Rulemaking'' available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
(7) Referral for Otologic Evaluation for Patients with a History of
Sudden or Rapidly Progressive Hearing Loss: The measure was not
recommended for reporting by the MAP and we agree with the MAP's
assessment. More information on the MAP's assessment can be found in
the ``MAP Pre-Rulemaking Report: Input on Measures Under Consideration
by HHS for 2012 Rulemaking'' available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx..
(8) Heart Failure: Patient Education; Functional Communication
Measure--Motor Speech
(9) Coronary Artery Disease (CAD): Symptom and Activity Assessment:
The measure was not recommended for reporting by the MAP and we agree
with the MAP's assessment. More information on the MAP's assessment can
be found in the ``MAP Pre-Rulemaking Report: Input on Measures Under
Consideration by HHS for 2012 Rulemaking'' available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
(10) Pregnancy Test for Female Abdominal Pain Patients: The measure
was not recommended for reporting by the MAP and we agree with the
MAP's assessment. More information on the MAP's assessment can be found
in the ``MAP Pre-Rulemaking Report: Input on Measures Under
Consideration by HHS for 2012 Rulemaking'' available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
(11) We also decline to propose the measure titled ``Health
Information Technology (HIT): Adoption/Use of Electronic Health Records
(EHR)'' again for the 2013 PQRS because of our desire to align with the
EHR Incentive Program. In addition, we believe that, since we
anticipate that most eligible professionals reporting via EHR will also
participate in the EHR Incentive Program, we believe it is redundant to
have an eligible professional report on whether or not s/he has adopted
an EHR.
(12) We are not proposing the measure titled ``Hypertension (HTN):
Plan of Care'' again for 2013 because this measure is being retired by
its measure owner.
For the measures we are not proposing to include in PQRS beginning
in 2014 in Table 34, we did not propose the Prostate Cancer: Three
Dimensional (3D) Radiotherapy; Hypertension (HTN): Blood Pressure
Measurement; and Prenatal Care: Anti-D Immune Globulin measures (which
are described in detail above in Table 34) for 2014 and beyond because
the measures will be retired by its measure owners. We are proposing to
retire the measure titled ``Preventive Care and Screening: Unhealthy
Alcohol Use--Screening'' because this measure was recommended for
removal from reporting by the Measure Applications Partnership. We are
proposing to retire the measure titled ``Heart Failure: Warfarin
Therapy for Patients with Atrial Fibrillation'' because evidence
suggests that treatments other than Warfarin have proven more effective
to treat Heart Failure. Lastly, we did not propose to retain the
measures titled ``Smoking and Tobacco Use Cessation, Medical
Assistance: a. Advising Smokers and Tobacco Users to Quit, b.
Discussing Smoking and Tobacco Use Cessation Medications, c. Discussing
Smoking and Tobacco Use Cessation Strategies'' and ``Advanced Care
Plan'' for reporting via the EHR-based reporting mechanisms beginning
in 2014 to align with the EHR Incentive Program.
As indicated in Tables 30 and 32, we are proposing a total of 212
measures for available for reporting beginning in 2013. Beginning 2014,
we are proposing that 210 measures be available for reporting under
PQRS. As indicated previously, these proposed measures are classified
under 6 domains.

[[Page 44956]]

(1) Patient safety. We are proposing 21 measures under the patient
safety domain available for reporting in PQRS beginning in 2013 or
2014. Of these measures, the following 18 measures are NQF-endorsed,
and therefore satisfy the requirement that PQRS provide consensus-based
measures for reporting under section 1848(k)(2)(C)(i) of the Act.
Perioperative Care: Timing of Antibiotic Prophylaxis--
Ordering Physician.
Perioperative Care: Selection of Prophylactic Antibiotic--
First OR Second Generation Cephalosporin.
Perioperative Care: Discontinuation of Prophylactic
Antibiotics (Non-Cardiac).
Perioperative Care: Venous Thromboembolism (VTE)
Prophylaxis (When Indicated in ALL Patients) Perioperative Care.
Perioperative Care: Discontinuation of Prophylactic
Antibiotics (Cardiac Procedures).
Medication Reconciliation: Reconciliation After Discharge
from an Inpatient Facility.
Prevention of Catheter-Related Bloodstream Infections
(CRBSI): Central Venous Catheter (CVC) Insertion Protocol.
Prostate Cancer: Three Dimensional (3D) Radiotherapy.
Documentation of Current Medications in the Medical
Record.
Prevention of Catheter-Related Bloodstream Infections
(CRBSI): Central Venous Catheter (CVC) Insertion Protocol.
Medication Reconciliation: Reconciliation After Discharge
from an Inpatient Facility.
Perioperative Care: Discontinuation of Prophylactic
Antibiotics (Cardiac Procedures).
Perioperative Care: Timely Administration of Prophylactic
Parenteral Antibiotics.
Perioperative Care: Venous Thromboembolism (VTE)
Prophylaxis (When Indicated in ALL Patients).
Perioperative Care: Discontinuation of Prophylactic
Antibiotics (Non-Cardiac).
Cataracts: Complications within 30 Days Following Cataract
Surgery Requiring Additional Surgical Procedures.
Perioperative Temperature Management.
Thoracic Surgery: Pulmonary Function Tests Before Major
Anatomic Lung Resection (Pneumonectomy, Lobectomy, or Formal
Segmentectomy).
The following 3 measures that are classified under the patient
safety domain are not NQF-endorsed. For these measures, we are
exercising our exception authority under section 1848(k)(2)(C)(ii) of
the Act to propose these measures for reporting under PQRS for the
following reasons:
Falls: Risk Assessment. We are proposing to include this
measure under our authority under section 1848(k)(2)(C)(ii) to adopt a
measure endorsed by the AQA alliance.
Elder Maltreatment Screen and Follow-Up Plan. We are
proposing to include this measure under our authority under section
1848(k)(2)(C)(ii) to adopt a measure endorsed by the AQA alliance.
Image Confirmation of Successful Excision of Image-
Localized Breast Lesion.
(2) Patient and Family Engagement. We are proposing 5 measures
available for reporting in PQRS under the patient and family engagement
domain beginning in 2013 or 2014. Of these measures, the following 4
measures are NQF-endorsed, and therefore satisfy the requirement that
PQRS provide consensus-based measures for reporting under section
1848(k)(2)(C)(i) of the Act.
Oncology: Medical and Radiation--Plan of Care for Pain.
Oncology: Medical and Radiation--Pain Intensity
Quantified.
Osteoarthritis (OA): Function and Pain Assessment.
Urinary Incontinence: Plan of Care for Urinary
Incontinence in Women Aged 65 Years and Older.
The following measure that is classified under the patient and
family engagement domain is not NQF-endorsed: Cataracts: Patient
Satisfaction within 90 Days Following Cataract Surgery. We are
exercising our exception authority under section 1848(k)(2)(C)(ii) of
the Act to propose this measures for reporting under PQRS because this
measure fills a measure satisfaction gap in the proposed PQRS measure
set.
(3) Care Coordination. We are proposing 38 measures available for
reporting in PQRS under the care coordination domain beginning in 2013
or 2014. Of these measures, the following 26 measures are NQF-endorsed,
and therefore satisfy the requirement that PQRS provide consensus-based
measures for reporting under section 1848(k)(2)(C)(i) of the Act.
Osteoporosis: Communication with the Physician Managing
On-going Care Post-Fracture of Hip, Spine or Distal Radius for Men and
Women Aged 50 Years and Older.
Advanced Care Plan.
Adult Kidney Disease: Hemodialysis Adequacy: Solute.
Adult Kidney Disease: Peritoneal Dialysis Adequacy:
Solute.
Acute Otitis Externa (AOE): Systemic Antimicrobial
Therapy--Avoidance of.
Melanoma: Coordination of Care.
Primary Open-Angle Glaucoma (POAG): Reduction of
Intraocular Pressure (IOP) by 15 percent OR Documentation of a Plan of
Care.
Nuclear Medicine: Correlation with Existing Imaging
Studies for All Patients Undergoing Bone Scintigraphy.
Endoscopy & Polyp Surveillance: Colonoscopy Interval for
Patients with a History of Adenomatous Polyps--Avoidance of
Inappropriate Use.
Functional Communication Measure--Spoken Language
Comprehension.
Functional Communication Measure--Attention.
Functional Communication Measure--Memory.
Functional Communication Measure--Reading.
Functional Communication Measure--Spoken Language
Expression.
Functional Communication Measure--Writing.
Functional Communication Measure--Swallowing.
Functional Deficit: Change in Risk-Adjusted Functional
Status for Patients with Knee Impairments.
Functional Deficit: Change in Risk-Adjusted Functional
Status for Patients with Hip Impairments.
Functional Deficit: Change in Risk-Adjusted Functional
Status for Patients with Lower Leg, Foot or Ankle Impairments.
Functional Deficit: Change in Risk-Adjusted Functional
Status for Patients with Lumbar Spine Impairments.
Functional Deficit: Change in Risk-Adjusted Functional
Status for Patients with Shoulder Impairments.
Functional Deficit: Change in Risk-Adjusted Functional
Status for Patients with Elbow, Wrist or Hand Impairments.
Functional Deficit: Change in Risk-Adjusted Functional
Status for Patients with Neck, Cranium, Mandible, Thoracic Spine, Ribs,
or Other General Orthopedic Impairments.
Radiology: Reminder System for Mammograms.
Biopsy Follow-Up.
Endoscopy and Polyp Surveillance: Appropriate Follow-Up
Interval for Normal Colonoscopy in Average Risk Patients.
Participation by a Physician or Other Clinician in a
Systematic Clinical Database Registry that Includes Consensus Endorsed
Quality.
Although the following 3 measures classified under the care
coordination domain are not NQF-endorsed, we are

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exercising our exception authority under section 1848(k)(2)(C)(ii) of
the Act to propose these measures for reporting in PQRS because these
measures have been reviewed by the AQA:
Functional Outcome Assessment.
Rheumatoid Arthritis (RA): Glucocorticoid Management.
Falls: Plan of Care.
The following 8 measures that are classified under the care
coordination domain are also not NQF-endorsed. We are exercising our
exception authority under section 1848(k)(2)(C)(ii) of the Act to
propose this measures for reporting under PQRS because these measures
fills gaps in assessing care coordination in the proposed PQRS measure
set.
Referral for Otologic Evaluation for Patients with
Congenital or Traumatic Deformity of the Ear.
Surveillance after Endovascular Abdominal Aortic Aneurysm
Repair (EVAR).
Rate of Open Elective Repair of Small or Moderate
Abdominal Aortic Aneurysms (AAA) without Major Complications
(Discharged to Home by Post-Operative Day 7)
Rate of Elective Endovascular Aortic Repair (EVAR) of
Small or Moderate Abdominal Aortic Aneurysms (AAA) without Major
Complications (Discharged to Home by Post- Operative Day 2).
Rate of Carotid Endarterectomy (CEA) for Asymptomatic
Patients, without Major Complications (Discharged to Home Post-
Operative Day 2).
Referral for Otologic Evaluation for Patients with Acute
or Chronic Dizziness.
CG-CAHPS Clinician/Group Survey.
Coordination of Care of Patients with Co-Morbid
Conditions--Timely Follow-Up (Paired Measure).
(4) Clinical Process/Effectiveness. We are proposing 127 measures
available for reporting under the clinical process/effectiveness domain
in PQRS beginning in 2013 or 2014. Of these measures, the following 97
measures are NQF-endorsed, and therefore satisfy the requirement that
PQRS provide consensus-based measures for reporting under section
1848(k)(2)(C)(i) of the Act.
Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes
Mellitus.
Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control
in Diabetes Mellitus.
Diabetes Mellitus: High Blood Pressure Control in Diabetes
Mellitus.
Heart Failure: Angiotensin-Converting Enzyme (ACE)
Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left
Ventricular Systolic Dysfunction (LVSD).
Coronary Artery Disease (CAD): Antiplatelet Therapy.
Coronary Artery Disease (CAD): Beta-Blocker Therapy for
CAD Patients with Prior Myocardial Infarction (MI).
Heart Failure: Beta-Blocker Therapy for Left Ventricular
Systolic Dysfunction (LVSD).
Anti-depressant medication management: (a) Effective Acute
Phase Treatment, (b) Effective Continuation Phase Treatment.
Primary Open Angle Glaucoma (POAG): Optic Nerve
Evaluation.
Age-Related Macular Degeneration (AMD): Dilated Macular
Examination.
Diabetic Retinopathy: Documentation of Presence or Absence
of Macular Edema and Level of Severity of Retinopathy
Diabetic Retinopathy: Communication with the Physician
Managing On-going Diabetes Care.
Aspirin at Arrival for Acute Myocardial Infarction (AMI).
Stroke and Stroke Rehabilitation: Deep Vein Thrombosis
(DVT) Prophylaxis for Ischemic Stroke or Intracranial Hemorrhage.
Stroke and Stroke Rehabilitation: Discharged on
Antithrombotic Therapy.
Stroke and Stroke Rehabilitation: Anticoagulant Therapy
Prescribed for Atrial Fibrillation (AF) at Discharge.
Stroke and Stroke Rehabilitation: Screening for Dysphagia.
Stroke and Stroke Rehabilitation: Rehabilitation Services
Ordered.
Screening or Therapy for Osteoporosis for Women Aged 65
Years and Older.
Osteoporosis: Management Following Fracture of Hip, Spine
or Distal Radius for Men and Women Aged 50 Years and Older.
Osteoporosis: Pharmacologic Therapy for Men and Women Aged
50 Years and Older.
Coronary Artery Bypass Graft (CABG): Use of Internal
Mammary Artery (IMA) in Patients with Isolated CABG: Surgery.
Coronary Artery Bypass Graft (CABG): Preoperative Beta-
Blocker in Patients with Isolated CABG Surgery.
Urinary Incontinence: Assessment of Presence or Absence of
Urinary Incontinence in Women Aged 65 Years and Older.
Urinary Incontinence: Characterization of Urinary
Incontinence in Women Aged 65 Years and Older.
Chronic Obstructive Pulmonary Disease (COPD): Spirometry
Evaluation.
Chronic Obstructive Pulmonary Disease (COPD):
Bronchodilator Therapy.
Asthma: Pharmacologic Therapy for Persistent Asthma.
Emergency Medicine: 12-Lead Electrocardiogram (ECG)
Performed for Non- Traumatic Chest Pain.
Emergency Medicine: 12-Lead Electrocardiogram (ECG)
Performed for Syncope.
Emergency Medicine: Community-Acquired Pneumonia (CAP):
Vital Signs.
Emergency Medicine: Community-Acquired Pneumonia (CAP):
Empiric Antibiotic.
Asthma: Assessment of Asthma Control.
Hematology: Myelodysplastic Syndrome (MDS) and Acute
Leukemias: Baseline.
Hematology: Myelodysplastic Syndrome (MDS): Documentation
of Iron Stores in Patients Receiving Erythropoietin Therapy.
Hematology: Multiple Myeloma: Treatment with
Bisphosphonates.
Hematology: Chronic Lymphocytic Leukemia (CLL): Baseline
Flow CytometryBreast Cancer: Hormonal Therapy for Stage IC-IIIC
Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer.
Colon Cancer: Chemotherapy for Stage III Colon Cancer
Patients.
Hepatitis C: Testing for Chronic Hepatitis C--Confirmation
of Hepatitis C Viremia.
Hepatitis C: Ribonucleic Acid (RNA) Testing Before
Initiating Treatment.
Hepatitis C: HCV Genotype Testing Prior to Treatment.
Hepatitis C: Antiviral Treatment Prescribed.
Hepatitis C: HCV Ribonucleic Acid (RNA) Testing at Week 12
of Treatment.
Hepatitis C: Counseling Regarding Risk of Alcohol
Consumption.
Hepatitis C: Counseling Regarding Use of Contraception
Prior to Antiviral Therapy.
Acute Otitis Externa (AOE): Topical Therapy.
Breast Cancer Resection Pathology Reporting: pT Category
(Primary Tumor) and pN Category (Regional Lymph Nodes) with Histologic
Grade.
Colorectal Cancer Resection Pathology Reporting: pT
Category (Primary Tumor) and pN Category (Regional Lymph Nodes) with
Histologic Grade.
Prostate Cancer: Adjuvant Hormonal Therapy for High-Risk
Prostate Cancer Patients.
Major Depressive Disorder (MDD): Diagnostic Evaluation.
Major Depressive Disorder (MDD): Suicide Risk Assessment.
Rheumatoid Arthritis (RA): Disease Modifying Anti-
Rheumatic Drug (DMARD) Therapy.

[[Page 44958]]

Preventive Care and Screening: Pneumonia Vaccination for
Patients 65 Years and Older.
Preventive Care and Screening: Screening Mammography .
Preventive Care and Screening: Colorectal Cancer
Screening.
Coronary Artery Disease (CAD): Angiotensin-Converting
Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy
for Patients with CAD and Diabetes and/or Left Ventricular Systolic
Dysfunction (LVSD.
Diabetes: Urine Screening.
Diabetes Mellitus: Diabetic Foot and Ankle Care,
Peripheral Neuropathy .
Diabetes Mellitus: Diabetic Foot and Ankle Care, Ulcer
Prevention--Evaluation of Footwear.
Melanoma: Continuity of Care--Recall System:.
Age-Related Macular Degeneration (AMD): Counseling on
Antioxidant Supplement.
Osteoarthritis (OA): Assessment for Use of Anti-
Inflammatory or Analgesic Over-the-Counter (OTC) Medications.
HIV/AIDS: CD4+ Cell Count or CD4+ Percentage.
HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP)
Prophylaxis.
HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS Who
Are Prescribed Potent Antiretroviral Therapy.
HIV/AIDS: HIV RNA Control After Six Months of Potent
Antiretroviral Therapy.
Diabetes Mellitus: Foot Exam.
Coronary Artery Bypass Graft (CABG): Prolonged Intubation.
Coronary Artery Bypass Graft (CABG): Deep Sternal Wound
Infection Rate.
Coronary Artery Bypass Graft (CABG): Stroke.
Coronary Artery Bypass Graft (CABG): Postoperative Renal
Failure.
Coronary Artery Bypass Graft (CABG): Surgical Re-
Exploration.
Coronary Artery Bypass Graft (CABG): Antiplatelet
Medications at Discharge.
Coronary Artery Bypass Graft (CABG): Beta-Blockers
Administered at Discharge.
Coronary Artery Bypass Graft (CABG): Anti-Lipid Treatment
at Discharge.
Hemodialysis Vascular Access Decision-Making by Surgeon to
Maximize Placement of Autogenous Arterial Venous (AV) Fistula.
Stroke and Stroke Rehabilitation: Thrombolytic Therapy.
Cataracts: 20/40 or Better Visual Acuity within 90 Days
Following Cataract Surgery.
Oncology: Cancer Stage Documented.
Radiology: Stenosis Measurement in Carotid Imaging
Reports.
Coronary Artery Disease (CAD): Lipid Control.
Heart Failure: Left Ventricular Ejection Fraction (LVEF)
Assessment.
Ischemic Vascular Disease (IVD): Blood Pressure Management
Control.
Ischemic Vascular Disease (IVD): Use of Aspirin or Another
Antithrombotic.
HIV/AIDS: Sexually Transmitted Disease Screening for
Chlamydia and Gonorrhea.
HIV/AIDS: Screening for High Risk Sexual Behaviors.
HIV/AIDS: Screening for Injection Drug Use.
HIV/AIDS: Sexually Transmitted Disease Screening for
Syphilis.
Heart Failure (HF): Left Ventricular Function (LVF)
Testing.
Thoracic Surgery: Recording of Performance Status Prior to
Lung or Esophageal Cancer Resection.
Hypertension (HTN): Controlling High Blood Pressure.
Ischemic Vascular Disease (IVD): Complete Lipid Panel and
Low Density Lipoprotein (LDL-C) Control.
Cardiac Rehabilitation Patient Referral from an Outpatient
Setting.
Anticoagulation for Acute Pulmonary Embolus Patients.
Ultrasound Determination of Pregnancy Location for
Pregnant Patients withRh Immunoglobulin (Rhogam) for Rh-Negative
Pregnant Women at Risk of Fetal Blood Exposure.
Pediatric Kidney Disease: ESRD Patients Receiving
Dialysis: Hemoglobin Level <10g/dL.
We are proposing 29 measures for inclusion in the PQRS measure set
under the clinical process domain in 2013/2014 that are not NQF-
endorsed. Although the following 11 measures classified under the
clinical domain are not NQF-endorsed, we are exercising our exception
authority under section 1848(k)(2)(C)(ii) of the Act to propose these
measures for reporting in PQRS because these measures have been
reviewed by the AQA:
Adult Kidney: Disease Laboratory Testing (Lipid Profile).
Adult Kidney Disease: Blood Pressure Management.
Adult Kidney Disease: Patients On Erythropoiesis-
Stimulating Agent (ESA)--Hemoglobin Level > 12.0 g/dL.
Rheumatoid Arthritis (RA): Tuberculosis Screening.
Rheumatoid Arthritis (RA): Periodic Assessment of Disease
Activity.
Rheumatoid Arthritis (RA): Functional Status Assessment.
Rheumatoid Arthritis (RA): Assessment and Classification
of Disease Prognosis.
Chronic Wound Care: Use of Wound Surface Culture Technique
in Patients with Chronic Skin Ulcers.
Chronic Wound Care: Use of Wet to Dry Dressings in
Patients with Chronic Skin Ulcers.
Substance Use Disorders: Counseling Regarding Psychosocial
and Pharmacologic Treatment Options for Alcohol Dependence.
Substance Use Disorders: Screening for Depression Among
Patients with Substance Abuse or Dependence.
The following 18 measures that are classified under the care
coordination domain are also not NQF-endorsed. We are exercising our
exception authority under section 1848(k)(2)(C)(ii) of the Act to
propose this measures for reporting under PQRS because these measures
fill gaps in measuring clinical process in the proposed PQRS measure
set.
Asthma: Tobacco Use: Screening--Ambulatory Care Setting.
Asthma: Tobacco Use: Intervention--Ambulatory Care
Setting.
Coronary Artery Disease (CAD): Symptom Management.
Hypertension: Blood Pressure Management.
Barrett's Esophagus.
Radical Prostatectomy Pathology Reporting.
Immunohistochemical (IHC) Evaluation of Human Epidermal
Growth Factor Receptor 2 Testing (HER2) for Breast Cancer Patients.
Statin Therapy at Discharge after Lower Extremity Bypass
(LEB).
Preoperative Diagnosis of Breast Cancer.
Sentinel Lymph Node Biopsy for Invasive Breast Cancer.
Epilepsy: Seizure Type(s) and Current Seizure
Frequency(ies).
Epilepsy: Documentation of Etiology of Epilepsy or
Epilepsy Syndrome.
Epilepsy: Counseling for Women of Childbearing Potential
with Epilepsy.
Cataracts: Improvement in Patient's Visual Function within
90 Days Following Cataract Surgery.
Stroke and Stroke Rehabilitation: Tissue Plasminogen
Activator (t-PA) Considered (Paired Measure).
Stroke and Stroke Rehabilitation: Tissue Plasminogen
Activator (t-PA) Administered Initiated (Paired Measure).
Adult Major Depressive Disorder: Coordination of Care of
Patients with Co-Morbid Conditions--Timely Follow-Up.
Pediatric End-Stage Renal Disease Measure (AMA/ASPN):
Pediatric Kidney Disease: Adequacy of Volume Management.
(5) Population/Public Health. We are proposing 9 measures
classified under

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the population/public health available for reporting in PQRS beginning
in 2013 or 2014. Of these measures, the following 7 measures are NQF-
endorsed, and therefore, satisfy the requirement that PQRS provide
consensus-based measures for reporting under section 1848(k)(2)(C)(i)
of the Act.
Preventive Care and Screening: Influenza Immunization.
Preventive Care and Screening: Body Mass Index (BMI)
Screening and Follow-Up.
Pain Assessment and Follow-Up.
Preventive Care and Screening: Screening for Clinical
Depression and Follow-Up Plan.
Hepatitis C: Hepatitis A Vaccination in Patients with HCV.
Hepatitis C: Hepatitis B Vaccination in Patients with HCV.
Preventive Care and Screening: Tobacco Use: Screening and
Cessation Intervention.
Two proposed PQRS measures in the population/public health domain
are not NQF-endorsed. Although the measure ``Preventive Care and
Screening: Unhealthy Alcohol Use--Screening'' classified under the
population/public health domain is not NQF-endorsed, we are exercising
our exception authority under section 1848(k)(2)(C)(ii) of the Act to
propose this measure for reporting in PQRS because the measure have
been reviewed by the AQA. The measure ``Preventive Care and Screening:
Screening for High Blood Pressure'' classified under the population/
public health domain is also not NQF-endorsed. However, we are
exercising our exception authority under section 1848(k)(2)(C)(ii) of
the Act to propose this measure for reporting under PQRS because the
measures fill gaps in assessing population/public health safety in the
proposed PQRS measure set.
(6) Efficiency. We are proposing 9 measures available for reporting
in PQRS beginning in 2013 or 2014. Of these measures, all measures are
NQF-endorsed, and therefore satisfy the requirement that PQRS provide
consensus-based measures for reporting under section 1848(k)(2)(C)(i)
of the Act.
Treatment for Children with Upper Respiratory Infection
(URI): Avoidance of Inappropriate Use.
Appropriate Testing for Children with Pharyngitis.
Prostate Cancer: Avoidance of Overuse of Bone Scan for
Staging Low-Risk Prostate Cancer Patients.
Antibiotic Treatment for Adults with Acute Bronchitis:
Avoidance of Inappropriate Use.
Radiology: Inappropriate Use of ``Probably Benign''
Assessment Category in Mammography Screening.
Melanoma: Overutilization of Imaging Studies in Melanoma.
Cardiac Stress Imaging Not Meeting Appropriate Use
Criteria: Preoperative Evaluative in Low-Risk Surgery Patients.
Cardiac Stress Imaging Not Meeting Appropriate Use
Criteria: Routine Testing After Percutaneous Coronary Intervention
(PCI).
Cardiac Stress Imaging Not Meeting Appropriate Use
Criteria: Testing in Asyptomatic, Low-Risk Patients.
Please note that the titles of the measures may change slightly
from CMS program and/or CMS program year based on specifications
updates. We intend to continue to work toward complete alignment of
measure specifications across programs whenever possible.
(3) Proposed PQRS quality measures Available for Reporting for Group
Practices Using the GPRO Web-Interface
We have previously discussed our measure proposals for group
practices using the GPRO web-interface. However, in order to emphasize
the measures we are proposing for group practices using the GPRO web-
interface, we have provided a summary of these proposed measures in the
following Table 32. As indicated in Table 35, we are proposing 18
measures for reporting under the PQRS using the GPRO web-interface for
2013 and beyond to align with the quality measures available for
reporting under the Medicare Shared Savings Program (76 FR 67890).
Please note that the Medicare Shared Savings Program indicates that it
established 22 measures. There is a discrepancy because the Medicare
Shared Savings Program lists the Diabetes Composite measure as separate
measures, whereas we are referring to the Diabetes Composite measure as
one measure in Table 35.
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We note that, due to our desire to align with the measures
available for reporting under the Medicare Shared Savings Program, we
are proposing not to retain the 13 measures specified in Table 36 for
purposes of reporting via the GPRO-web interface beginning in 2013.

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In addition to the measures we are proposing in Table 36, we are
also proposing to have the following measure available for reporting
occurring in 2013 and beyond: CG-CAHPS Clinician/Group Survey: Getting
timely care, appointments and information; How well your doctors
communicate; Patients rating of doctor; Access to specialists; Health
promotion and education; Shared decision making; Courteous and helpful
office staff; Care coordination; Between visit communication; Educating
patients about medication adherences; and Stewardship of patient
resources. We note that this survey measure requires a different form
of data collection and analysis than the other proposed measures in the
PQRS. Therefore, for this measure only, CMS intends to administer the
survey on behalf of the group practices participating in the 2013 PQRS
GPRO. In other words, CMS intends to collect the data for this measure
on group practices' behalf for CY 2013 reporting periods.
(4) Proposed PQRS measures groups Available for Reporting for 2013 and
Beyond
We propose the following 20 measures groups for reporting in the
PQRS beginning with reporting periods occurring in 2013: Diabetes
Mellitus; Chronic Kidney Disease (CKD); Preventive Care; Coronary
Artery Bypass Graft (CABG); Rheumatoid Arthritis (RA); Perioperative
Care; Back Pain; Hepatitis C; Heart Failure (HF); Coronary Artery
Disease (CAD); Ischemic Vascular Disease (IVD); HIV/AIDS; Asthma;
Chronic Obstructive Pulmonary Disease (COPD); Inflammatory Bowel
Disease (IBD); Sleep Apnea; Dementia; Parkinson's Disease;
Hypertension; Cardiovascular Prevention; and Cataracts. These 20
proposed measures groups were available for reporting under the PQRS in
2012.
Beginning in 2013, we are proposing the oncology measures groups
for reporting under the PQRS that provides measures available for
reporting related to breast cancer and colon cancer. We believe it is
important to measure cancer care.
We propose the following 4 measures groups for inclusion in the
PQRS beginning with reporting periods occurring in 2014: Osteoporosis;
Total Knee Replacement; Radiation Dose; and Preventive Cardiology.
These measures groups address conditions that the measures groups
established in 2012 do not address.
In 2012, the PQRS included a community-acquired pneumonia (CAP)
measures group among others. We are not proposing to include this
measures group again in the PQRS measure set for the 2013 PQRS or
subsequent years because measures contained within this measures group
were not recommended for retention by the Measure Applications
Partnership. We are also proposing, as identified in Table 47, to
change the composition of the Coronary Artery Disease (CAD) measures
group from what was finalized for 2012. Specifically, we are proposing
to remove PQRS measure 196: Coronary Artery Disease (CAD):
Symptom and Activity Assessment and replace this measure with PQRS
measure 242: Coronary Artery Disease (CAD): Symptom Management
in the CAD

[[Page 44965]]

measures group, because the measure 196 was not recommended
for retention by the measure applications partnership. On the hand,
measure 242 was recommended for retention by the Measure
Applications Partnership.
Descriptions of the measures we are proposing within each proposed
measures group are provided in Tables 37 through 62. Please note that
some of the proposed measures included within a proposed PQRS quality
measures group may also be available for reporting as an individual
measure.
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BILLING CODE 4120-01-C
We invite public comment on the proposed Physician Quality
Reporting System measures groups.
(5) Proposed Physician Quality Reporting System Measures for Eligible
Professionals and Group Practices That Report Using Administrative
Claims for the 2015 and 2016 Payment Adjustments
We are proposing the following measures in Table 63 for eligible
professionals and group practices that report using administrative
claims for the 2015 and 2016 payment adjustments. Our proposals on how
to attribute beneficiaries to groups of physicians that elect the
administrative claims option are discussed in the value-based payment
modifier in section K below. We considered all of the measures included
in the program year 2010 individual Physician Feedback reports that can
be calculated using administrative claims but are proposing only a
subset of the measures that were included in the program year 2010
individual Physician Feedback reports. We are proposing this subset of
measures for both the PQRS payment adjustment and the value-based
modifier because we believe these measures are clinically meaningful,
focus on highly prevalent conditions among beneficiaries, have the
potential to differentiate physicians, and be statistically reliable.
To the extent that the value-based payment modifier finalizes other
measures from the 2010 individual Physician Feedback reports that are
listed in Table 65, it would be our intent to finalize those additional
measures as well for purposes of the 2015 and 2016 PQRS payment
adjustments so that the two programs can be aligned.
As specified in Table 63, we are proposing 19 measures. Of these 19
proposed measures, 17 of these measures are NQF-endorsed and therefore
satisfying section 1848(k)(2)(C)(i) of the Act. With respect to the 2
measures that are not NQF-endorsed, ``Potentially Harmful Drug-Disease
Interactions in the Elderly'' and ``Diabetes: LDL-C Screening, '' we
are exercising our exception authority under section 1848(k)(2)(C)(ii)
of the Act to propose these measures for inclusion in the PQRS
administrative claims measure set. Both of these measures are relevant
as they address care coordination by measuring the amount of time a
patient has been readmitted and/or where their status is in the
healthcare continuum following hospitalization. The utilization of the
administrative claims measures will allow PQRS to implement different
reporting options which capture a wider venue of participants without
using the traditional methods of reporting and eliminate the potential
payment adjustment for non-participators.
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BILLING CODE 4120-01-C
We invite public comment on the proposed measures for eligible
professionals and group practices that report using administrative
claims. We seek comment on whether these are these proposed measures.
7. Proposed Maintenance of Certification Program Incentive: Proposed
Self-Nomination Process for Entities Wishing To Be Qualified for the
2013 and 2014 Maintenance of Certification Program Incentives
We propose that new and previously qualified entities wishing to
become qualified to provide their members with an opportunity to earn
the 2013 and/or 2014 Maintenance of Certification Program incentives
undergo a self-nomination and qualification process. Once qualified,
the entity would be able to submit data on behalf of its eligible
professionals.
For the self-nomination process, we propose that an entity wishing
to be qualified for the 2013 and/or 2014 Maintenance of Certification
Program incentive would be required to submit a self-nomination
statement containing all of the following information via the web:
Provide detailed information regarding the Maintenance of
Certification Program with reference to the statutory requirements for
such program.
Indicate the organization sponsoring the Maintenance of
Certification Program, and whether the Maintenance of Certification
Program is sponsored by an American Board of Medical Specialties (ABMS)
board. If not an ABMS board, indicate whether and how the program is
substantially equivalent to the ABMS Maintenance of Certification
Program process.
Indicate that the program is in existence as of January 1
the year prior to the year in which the entity seeks to be qualified
for the Maintenance of Certification Program incentive. For example, to
be qualified for the 2013 Maintenance of Certification Program
incentive, the entity would be required to be in existence by January
1, 2012.
Indicate that the program has at least one (1) active
participant.
The frequency of a cycle of Maintenance of Certification
for the specific Maintenance of Certification Program of the sponsoring
organization, including what constitutes ``more frequently'' for both
the Maintenance of Certification Program itself and the practice
assessment for the specific Maintenance of Certification Program of the
sponsoring organization.
Confirmation from the board that the practice assessment
will occur and be completed in the year the physician is participating
in the Maintenance of Certification Program Incentive.
What was, is, or will be the first year of availability of
the Maintenance of Certification Program practice assessment for
completion by an eligible professional.
What data is collected under the patient experience of
care survey and how this information would be provided to CMS.
Describe how the Maintenance of Certification program
monitors that an

[[Page 44983]]

eligible professional has implemented a quality improvement process for
their practice.
Describe the methods, and data used under the Maintenance
of Certification Program, and provide a list of all measures used in
the Maintenance of Certification Program for the year prior to which
the entity seeks to be qualified for the Maintenance of Certification
Program incentive (for example, measures used in 2012 for the 2013
Maintenance of Certification Program incentive), including the title
and descriptions of each measure, the owner of the measure, whether the
measure is NQF endorsed, and a link to a Web site containing the
detailed specifications of the measures, or an electronic file
containing the detailed specifications of the measures.
For the qualification process, we propose that an entity must meet
all of the following requirements to be considered for qualification
for purposes of the 2013 and 2014 Maintenance of Certification Program
incentives:
The name, NPI and applicable TINs of eligible
professionals who would like to participate for the 2013 and/or 2014
Maintenance of Certification Program incentives.
Attestation from the board that the information provided
to CMS is accurate and complete.
The board has signed documentation from eligible
professional(s) that the eligible professional wishes to have the
information released to us.
Information from the patient experience of care survey.
Information certifying the eligible professional has
participated in a Maintenance of Certification Program for a year,
``more frequently'' than is required to qualify for or maintain board
certification status, including the year the physician met the board
certification requirements for the Maintenance of Certification
Program, and the year the eligible professional participated in the
Maintenance of Certification Program ``more frequently'' than is
required to maintain or qualify for board certification.
Information certifying the eligible professional has
completed the Maintenance of Certification Program practice assessment
at least one time each year the eligible professional participates in
the Maintenance of Certification Program Incentive.
We are proposing this self-nomination and qualification process
because the process is identical to the self-nomination and
qualification process finalized for the 2011 and 2012 Maintenance of
Certification Program incentives and we believe such requirements
remain appropriate. As the incentives only run through 2014, we believe
it is important to keep the requirements consistent with what has been
required for the 2011 and 2012 Maintenance of Certification Program
incentives. We invite public comment on our proposed self-nomination
and qualification process for entities who wish to be qualified for the
2013 and 2014 Maintenance of Certification Program incentive.
8. Informal Review
We established an informal review process for 2012 and beyond in
the CY 2012 Medicare PFS final rule (76 FR 73390). In this proposed
rule, we address the additional parameters of eligible professionals
and group practices subject to a PQRS payment adjustment requesting an
informal review. For eligible professionals and group practices that
are subject to the payment adjustments that wish to request an informal
review, in addition to the requirements we previously established, we
propose the following:
For eligible professionals and group practices wishing to
submit an informal review related to the payment adjustment, we propose
that an eligible professional electing to utilize the informal review
process must request an informal review by February 28 of the year in
which the payment adjustment is being applied. For example, if an
eligible professional requests an informal review related to the 2015
payment adjustment, the eligible professional would be required to
submit his/her request for an informal review by February 28, 2015. We
believe this deadline provides ample time for eligible professionals
and group practices to discover that their respective claims are being
adjusted due to the payment adjustment.
Where we find that the eligible professional or group
practice did satisfactorily report for the payment adjustment, we
propose to cease application of the payment adjustment and reprocess
all claims that have been erroneously adjusted to date.
We invite public comment on our proposals for the PQRS informal
review process.

H. The Electronic Prescribing (eRx) Incentive Program

We established the requirements for the 2013 and 2014 eRx Incentive
Program in the CY 2012 Medicare PFS final rule (76 FR 73393). This
section contains additional proposals for the 2013 and 2014 eRx
Incentive Program.
1. Proposed Alternative Self-Nomination Process for Certain Group
Practices Under the eRx GPRO
In the CY 2012 Medicare PFS final rule (76 FR 73394), we
established that a group practice wishing to participate in the eRx
Incentive Program under the eRx GPRO must self-nominate via the web.
However, we propose an alternative submission mechanism for self-
nomination by groups participating in the MSSP, Pioneer ACO, or PGP
Demonstration. Specifically, we propose that the participating TINs
within these groups that wish to participate in the eRx Incentive
Program using the eRx GPRO must submit a self-nomination statement by
sending a letter indicating its intent to participate in the eRx
Incentive Program under the eRx GPRO. We also propose that the group
practice must submit an XML file describing the eligible professionals
included in the group practice. We are proposing this alternative
submission mechanism for group practices that are participating as
groups in the MSSP, Pioneer ACO, or PGP Demonstration because it is not
technically feasible for CMS to receive this information from these
group practices via the web. We invite public comment on this proposed
alternative mechanism for submitting self-nomination statements and the
XML file for the types of group practices identified above that want to
participate in the eRx Incentive Program using the eRx GPRO.
2. The 2013 Incentive: Proposed Criterion for Being a Successful
Electronic Prescriber for Groups Comprised of 2-24 Eligible
Professionals Selected To Participate Under the eRx GPRO
As stated in section III.G, we are proposing to modify Sec.
414.90(b) to define a group practice as ``a single Tax Identification
Number (TIN) with 2 or more eligible professionals, as identified by
their individual National Provider (NPI), who have reassigned their
Medicare billing rights to the TIN.'' Under Sec. 414.92(b), we define
a group practice as a practice that indicates its desire to participate
in the eRx group practice option and meets the definition of group
practice according to the PQRS at Sec. 414.90(b), or a group practice
participating in certain other Medicare programs (for example, PGP
demonstration, Shared Savings Program). Therefore, since we are
proposing to change the minimum group practice size from 25 to 2, we
are proposing to add another criterion for being a successful
electronic reporter under the program for the 2013

[[Page 44984]]

Incentive (for the other criteria we previously adopted for the ERx
GPRO Reporting Option, please see 76 FR 73407). Specifically, we are
proposing the following criterion for being a successful electronic
prescriber for group practices participating in the eRx GPRO comprised
of 2-24 eligible professionals for purposes of the 2013 eRx incentive:
report the electronic prescribing measure's numerator code during a
denominator-eligible encounter for at least 225 times during the 12-
month 2013 incentive reporting period (January 1, 2013-December 31,
2013). We are proposing lower criterion for group practices
participating under the eRx GPRO with 2-24 eligible professionals
because we understand that their smaller sizes necessitate a lower
reporting threshold. We chose this reporting threshold because this
reporting threshold is familiar to group practices, as this was the
threshold established for group practices comprised of 11-25 eligible
professionals that participated in the GPRO II in 2010 (75 FR 73509).
We invite public comment on our proposed criterion for being a
successful electronic prescriber for the 2013 incentive for groups
comprised of 2-24 eligible professionals.
3. The 2014 Payment Adjustment: Proposed Criterion for Being a
Successful Electronic Prescriber for Groups Comprised of 2-24 Eligible
Professionals Selected To Participate Under the eRx GPRO
As stated in section III.G, we are proposing to modify Sec.
414.90(b) to define a group practice as ``a single Tax Identification
Number (TIN) with 2 or more eligible professionals, as identified by
their individual National Provider (NPI), who have reassigned their
Medicare billing rights to the TIN.'' Under Sec. 414.92(b), we define
a group practice for the purposes of being able to participate under
the eRx GPRO as a practice that indicates its desire to participate in
the eRx group practice option and either meets the definition of group
practice according to the PQRS at Sec. 414.90(b) or is a group
practice participating in certain other Medicare programs (for example,
PGP demonstration, Shared Savings Program). Therefore, since we are
proposing to change the minimum group practice size from 25 to 2, we
are proposing to add another criterion for being a successful
electronic reporter under the program for the 2014 payment adjustment
(for the other criteria we previously adopted for the ERx GPRO
Reporting Option, please see 76 FR 73412-73414). Specifically, we are
proposing the following criterion for being a successful electronic
prescriber for purposes of the 2014 payment adjustment for group
practices comprised of 2-24 eligible professionals participating under
the eRx GPRO: Report the electronic prescribing measure's numerator
code at least 225 times for the 6-month 2014 payment adjustment
reporting period (January 1, 2013-June 30, 2013). We are proposing this
lower criterion for group practices participating under the eRx GPRO
with 2-24 eligible professionals because we understand that their
smaller sizes necessitate a lower reporting threshold. In addition, we
note that this reporting threshold is familiar to group practices, as
this was the threshold established for group practices comprised of 11-
25 eligible professionals that participated in the GPRO II in 2010 (75
FR 73509). We invite public comment on the proposed criterion for being
a successful electronic prescriber for the 2014 eRx payment adjustment
for the 6-month payment adjustment reporting period for group practices
composed of 2-24 eligible professionals.
4. Proposed Analysis for the Claims-Based Reporting Mechanism
We understand that, in certain instances, it is permissible for an
eligible professional to have their Medicare Part B claims reprocessed.
Please note that, if a Medicare Part B claim is reopened for
reprocessing, the reprocessing of claim does not allow an eligible
professional to attach a G-code on a claim for purposes of reporting
quality measures, such as the electronic prescribing measure.
Therefore, we are proposing to modify Sec. 414.92 to indicate that
claims may not be reprocessed for the sole purpose of attaching a
reporting G-code on a claim.
5. Proposed Significant Hardship Exemptions
Section 1848(a)(5)(B) of the Act provides that the Secretary may,
on a case-by-case basis, exempt an eligible professional from the
application of the payment adjustment, if the Secretary determines,
subject to annual renewal, that compliance with the requirement for
being a successful electronic prescriber would result in a significant
hardship. In the CY 2012 final rule with comment period, we finalized,
as set forth at Sec. 414.92(c)(2)(ii)(B), four circumstances under
which an eligible professional or eRx GPRO can request consideration
for a significant hardship exemption for the 2013 and 2014 eRx payment
adjustments (76 FR 73413):
The eligible professional or group practice practices in a
rural area with limited high speed internet access.
The eligible professional or group practice practices in
an area with limited available pharmacies for electronic prescribing.
The eligible professional or group practice is unable to
electronically prescribe due to local, state, or Federal law or
regulation.
The eligible professional or group practice has limited
prescribing activity, as defined by an eligible professional generating
fewer than 100 prescriptions during a 6-month reporting period.
We have received feedback from stakeholders requesting significant
hardship exemptions from application of the eRx payment adjustment
based on participation in the EHR Incentive Program, a program which
requires a certain level of electronic prescribing activity. Under the
EHR Incentive Program, eligible professionals \4\ may receive incentive
payments beginning in CY 2011 for successfully demonstrating
``meaningful use'' of Certified EHR Technology (CEHRT) and will be
subject to payment adjustments beginning in CY 2015 for failure to
demonstrate meaningful use. For further explanation of the statutory
authority and regulations for the EHR Incentive Program, we refer
readers to the July 28, 2010 final rule titled ``Medicare and Medicaid
Programs; Electronic Health Record Incentive Program; Final Rule,'' (75
FR 44314). As a result of such feedback, we believe that in certain
circumstances it may be a significant hardship for eligible
professionals and group practices who are participants of the EHR
Incentive Program to comply with the successful electronic prescriber
requirements of the eRx Incentive Program. Therefore, we are proposing
to revise the regulation at Sec. 414.92(c)(2)(ii)(B) to add the
following two additional significant hardship exemption categories for
the 2013 and 2014 eRx payment adjustments:
---------------------------------------------------------------------------

\4\ ``Eligible professional'' is defined for the EHR Incentive
Program at 42 CFR 495.4, 495.100, and 495.304.
---------------------------------------------------------------------------

Eligible professionals or group practices who achieve
meaningful use during certain eRx payment adjustment reporting periods.
Eligible professionals or group practices who demonstrate
intent to participate in the EHR Incentive Program and adoption of
Certified EHR Technology.

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A. Eligible Professionals or Group Practices Who Achieve Meaningful Use
During Certain 2013 and 2014 eRx Payment Adjustment Reporting Periods

Under Stage 1 of meaningful use for the EHR Incentive Program, an
eligible professional is required to meet certain objectives and
associated measures in order to achieve meaningful use. One of these
objectives is for the eligible professional to generate and transmit
permissible prescriptions electronically, and the measure of whether
the eligible professional has met this objective is more than 40
percent of all permissible prescriptions written by the eligible
professional are transmitted electronically using Certified EHR
Technology (Sec. 495.6(d)(4)). We note that the EHR Incentive Program
and the eRx Incentive Program share a common goal of encouraging
electronic prescribing and the adoption of technology that enables
eligible professionals to electronically prescribe. This goal is
advanced under each program via the respective program requirements--
the electronic prescribing objective under the EHR Incentive Program
and the requirement that an EP be a ``successful electronic
prescriber'' under the eRx Incentive Program. Indeed, both programs
require that the eligible professionals indicate their electronic
prescribing activity. Under the EHR Incentive Program, an eligible
professional must attest to the percentage of his or her permissible
prescriptions that were generated and transmitted electronically using
Certified EHR Technology during the applicable EHR reporting period,
which must exceed 40 percent. Under the eRx Incentive Program, to avoid
the payment adjustment, eligible professional must be a successful
electronic prescriber, which is achieved by the reporting of the eRx
quality measure a certain number of instances during the applicable
reporting period (each instance of reporting of the eRx quality, which
includes reporting of specific quality data codes, signifies that the
professional generated an electronic prescription for a specified
service or encounter). In most cases, we believe the electronic
prescribing objective of meaningful use would be a more rigorous
standard for eligible professionals to meet than the standard adopted
under the eRx Incentive Program (as demonstrated via the reporting of
the eRx quality measure). In addition, there seems to be no added
benefit with regard to reporting (presumably lower) electronic
prescribing activity under the eRx Incentive Program given that the
identical goals (encouraging electronic prescribing) of both programs
would have been fulfilled through the eligible professional's
achievement of meaningful use. For those reasons, we believe it may
pose a significant hardship for eligible professionals who are
meaningful EHR users to additionally comply with the requirements of
being a successful electronic prescriber under the eRx Incentive
program.
For the reasons stated, under this proposed significant hardship
category, we propose that individual eligible professionals (and every
eligible professional member of a group practice group practice
practices for the 2014 payment adjustment only) would need to achieve
meaningful use of Certified EHR Technology for a continuous 90-day EHR
reporting period (as defined for the EHR Incentive Program) that falls
within the 6-month reporting period (January 1-June 30, 2012) for the
2013 eRx payment adjustment or the 12- or 6-month reporting periods
(January 1- December 31, 2012 or January1-June 30, 2013, respectively)
for the 2014 eRx payment adjustment to be eligible to request a
significant hardship exemption. We also propose that for purposes of
the 2013 and 2014 eRx payment adjustments this hardship exemption
category would apply to individual EPs and group practices (that is,
every member of the group) who instead achieve meaningful use of
Certified EHR Technology for an EHR reporting period that is the full
CY 2012. In section III.H.5.b. below, we discuss the proposed deadlines
and procedures for requesting consideration of an exemption under this
proposed significant hardship exemption category.

B. Eligible Professionals or Group Practices Who Demonstrate Intent To
Participate in the EHR Incentive Program and Adoption of Certified EHR
Technology

We note that we finalized at Sec. 414.92(c)(2)(ii)(A)(3) a
significant hardship exemption category for the 2012 eRx payment
adjustment, under which eligible professionals and group practices
seeking consideration for an exemption were required to register to
participate in the EHR Incentive Program and adopt CEHRT (76 FR 54958).
That significant hardship category addressed significant hardships
relating to the selection, purchase and adoption of eRx technology (for
example, potential significant financial hardship of purchasing two
sets of eRx equipment for both programs) that may have occurred as a
result of the timing of the release of the standards and requirements
for CEHRT and the Certified Health IT Product List, the establishment
of the respective program requirements for the eRx and EHR Incentive
Programs, and the 2012 eRx payment adjustment reporting periods. Given
that eligible professionals have had adequate time to identify EHR
products that have been certified and that the requirements for these
programs have been implemented and, various stages of reporting are
underway, we do not believe this significant hardship exemption
category would continue to be applicable for the 2013 and 2014 eRx
payment adjustments. We understand, however, that although an eligible
professional may now have the requisite information about requirements
for CEHRT and each respective program, there may nevertheless exist a
significant hardship with regard to compliance with the requirements
for being a successful electronic prescriber under the eRx Incentive
Program, given the nature of CEHRT and how it is used/implemented in
one's practice.
When an eligible professional or eligible professional in a group
practice first adopts CEHRT, we understand significant changes may be
required with regard to how the eligible professional's practice
operates. Further, necessary steps are involved in fully implementing
CEHRT once it has been adopted, including: installation, configuration,
customization, training, workflow redesign and the establishment of
connectivity with entities that facilitate electronic health
information exchange (such as for electronic prescriptions). Thus, we
believe it would be difficult for an eligible professional or eligible
professional in a group practice who has adopted CEHRT to be able to
begin electronically prescribing on day one. Rather, we expect a
natural lag time would likely occur between an eligible professional's
adoption of CEHRT and the point at which CEHRT has been fully
implemented such that an eligible professional could begin
electronically prescribing. We believe this implementation timeline may
pose a significant hardship for an eligible professional or group
practice who seeks to comply with the requirements for being a
successful electronic prescriber under the eRx Incentive Program and
also participate for the first time in the EHR Incentive Program. Under
the EHR Incentive Program, an eligible professional who is
demonstrating meaningful use of CEHRT for the first time must do so for
any continuous 90-day period within

[[Page 44986]]

the calendar year (the ``EHR reporting period''). In the absence of
this significant hardship exemption category, eligible professionals or
group practices who choose a 90-day EHR reporting period that falls
later in the year may potentially have to adopt two systems (for
example, a stand-alone electronic prescribing system for purposes of
participating in the eRx Incentive Program, and CEHRT for purposes of
participating in the EHR Incentive Program), which could be financially
burdensome. Alternatively, such eligible professionals who wish to use
CEHRT for purposes of participating in both programs may potentially
have to adopt and implement CEHRT well in advance of their 90-day EHR
reporting period in order to meet an earlier reporting period for the
eRx Incentive Program.
Therefore, for the 2013 and 2014 eRx payment adjustments, we are
proposing a significant hardship exemption category to address this
situation. We believe, however, that for this category it is necessary
for eligible professionals and group practices to show they intend to
participate in the EHR Incentive Program for the first time and have
adopted CEHRT. Therefore, to be eligible for consideration for an
exemption under this proposed significant hardship exemption category
for the 2013 and 2014 eRx payment adjustments, we propose that eligible
professionals or group practices must register to participate in the
Medicare or Medicaid EHR Incentive Programs and adopt CEHRT by a date
specified by CMS. We further note that, given the nature of the
significant hardship at issue under this category, this proposal would
be limited to eligible professionals and group practices (that is,
every individual EP member of the group practice): (1) Who have not
previously adopted CEHRT or received an incentive payment under the
Medicare or Medicaid EHR Incentive Programs; and (2) who attempt to
participate in the Medicare or Medicaid EHR Incentive Programs from
January 2, 2012 through October 15, 2012, or the effective date of the
final rule (which includes the 6-month 2013 eRx payment adjustment
reporting period of January 1, 2012-June 30, 2012) for the 2013 eRx
payment adjustment, or during the 6 month payment adjustment reporting
period for the 2014 eRx payment adjustment (January 1, 2013 through
June 30, 2013).
With respect to eligible professionals or group practices who
intend to adopt EHR technology in the future or have not yet taken the
steps required in order to apply for this significant hardship
exemption, we believe that mere intent to adopt CEHRT or attest at a
later date does not sufficiently demonstrate that an eligible
professional will adopt CEHRT to participate in the Medicare or
Medicaid EHR Incentive Programs. Unlike those eligible professionals
who would have registered for the Medicare or Medicaid EHR Incentive
Programs and have adopted CEHRT available for immediate use, we would
have to monitor and provide oversight over those eligible professionals
who have not yet taken these steps to participate in the Medicare or
Medicaid EHR Incentive Programs. We also do not believe that such
eligible professionals or group practices would necessarily be facing a
significant hardship as contemplated in this proposed exemption
category. Accordingly, all of the proposed requirements to qualify for
an exemption under this significant hardship exemption category would
need to be met by the time the eligible professional requests an
exemption. In section III.H.5.b. below, we discuss the proposed
deadlines and procedures for requesting consideration of an exemption
under this proposed significant hardship exemption category. We invite
public comment on these two proposed significant hardship exemption
categories for the 2013 and 2014 payment adjustments.

C. Proposed Deadlines and Procedures for Requesting Significant
Hardship Exemptions

In the CY 2012 final rule with comment period, we established a
process whereby eligible professionals would submit significant
hardship exemptions for the existing significant hardship exemption
categories for the eRx payment adjustments (76 FR 54963).
Unfortunately, with respect to submitting these proposed significant
hardship exemptions for the 2013 eRx payment adjustment, it would not
be operationally feasible to accept significant hardship exemption
requests in the manner we previously established. Therefore, we propose
that, in order to request a significant hardship under the two proposed
significant hardship exemption categories for the 2013 eRx payment
adjustment, CMS would analyze the information provided to us in the
Registration and Attestation System under the EHR Incentive Program to
determine whether the eligible professional or group practice (that is,
every EP member of the group practice) has either (1) achieved
meaningful use under the EHR Incentive Program during the applicable
reporting periods we noted previously, or (2) registered to participate
in the EHR Incentive Program via the Registration and Attestation
system for the EHR Incentive Program (located at https://ehrincentives.cms.gov/hitech/login.action) and adopted CEHRT, or both,
if applicable. We understand that providing an eligible professionals
CEHRT product number is an optional field in the Registration Page.
Please note that if requesting a significant hardship exemption under
proposed category 2, the eligible professional must provide its CEHRT
product number when registering for the EHR Incentive Program. In the
event that it is not operationally feasible to accept this information
via the Registration and Attestation system for the EHR Incentive
Program, we propose that we would accept requests for significant
hardship exemptions under these two proposed categories via a mailed
letter to CMS to the following address: Centers for Medicare & Medicaid
Services, Office of Clinical Standards and Quality, Quality Measurement
and Health Assessment Group, 7500 Security Boulevard, Mail Stop S3-02-
01, Baltimore, MD 21244-1850.
Regardless of which method is finalized for the 2013 eRx payment
adjustment, we propose that eligible professionals would be required to
submit this significant hardship requests by October 15, 2012 or the
effective date of the final rule for this provision, whichever is
later. For those eligible professionals who request a significant
hardship exemption based on achieving meaningful use under the EHR
Incentive Program during the 12- or 6-month reporting periods for the
2013 payment adjustment, we also propose that the eligible professional
would be required to have attested under the EHR Incentive Program by
October 15th of 2012 (or if later, the effective date of the final
rule), in order to qualify for a significant hardship exemption for the
2013 payment adjustment. For those eligible professionals requesting a
significant hardship exemption for the 2013 eRx payment adjustment
under the second proposed significant hardship exemption category (that
is, intent to participate in the EHR Incentive Program and adoption of
CEHRT), we propose that these eligible professionals who intend to
participate in the EHR Incentive Program from January 1, 2011 through
October 15, 2012 or the effective date of the final rule would be
required to register for the EHR Incentive Program and adopt CEHRT by
the same deadline noted above, in order to qualify for a significant
hardship

[[Page 44987]]

exemption for the 2013 eRx payment adjustment.
We note that we are proposing a later deadline of October 15, 2012
(or the effective date of the final rule, if later) for the submission
of these requests because the deadline for submitting requests under
other previously established significant hardship exemption categories
to the 2013 eRx payment adjustment (June 30, 2012) has passed and other
similar dates we might choose would likely have passed by the time the
final rule is effective. We note that this October 15, 2012 deadline is
consistent with our intent to finalize our proposals related to these
two additional significant hardship exemptions in early Fall 2012,
prior to the publication of the CY 2013 Medicare PFS final rule.
However, to the extent we are not able to finalize these proposals in
the Fall 2012, please note that we may finalize the provisions related
to the two proposed significant hardship exemption categories in the CY
2013 Medicare PFS final rule. If such is the case, we propose to extend
the October 15, 2012 deadline to the effective date of the CY 2013
Medicare PFS final rule.
In addition, we would like to be able to process all such requests
before we begin making the claims processing systems changes later this
year to adjust eligible professionals' or group practices' payments
starting on January 1, 2013. However, we anticipate that, in some
cases, particularly in instances where eligible professionals submit
significant hardship exemption requests closer towards the deadline, we
may not be able to complete our review of the requests before the
claims processing systems updates are made to begin reducing eligible
professionals' and group practices' PFS amounts in 2013. In such cases,
if we ultimately approve the eligible professional or group practice's
request for a significant hardship exemption after January 1, 2013, we
would need to reprocess all claims for services furnished up to that
point in 2013 that were paid at the reduced PFS amount, which we
anticipate may take several months. In order to avoid the reprocessing
of claims, we encourage eligible professionals who would be submitting
a significant hardship exemption request under these two categories to
do so as soon as possible, rather than waiting until the deadline to
submit such a request.
We note that we are only proposing submission of requests for
significant hardship exemptions under these 2 categories under an
individual eligible professional level only because it is not
technically feasible for us to operationally analyze information on the
EHR Incentive Program's Registration and Attestation page using the
TIN, as the information stored in this system is stored by NPI.
However, we seek not to preclude eligible professionals currently in an
eRx GPRO for 2012 from submitting requests for significant hardship
exemptions under these 2 proposed categories. Therefore, to allow the
submission of significant hardship requests for the 2013 eRx payment
adjustment under these 2 proposed categories, we propose that eligible
professionals within an eRx GPRO may, as individuals, request a
significant hardship exemption under these 2 proposed categories.
Please note, however, that if an entire eRx GPRO wishes to request a
significant hardship exemption under these 2 proposed categories, then
each eligible professional in the group practice must submit a request.
With respect to submitting exemption requests for the 2 proposed
significant hardship exemption categories for the 2014 eRx payment
adjustment, we propose the following method for submitting a request
for a significant hardship exemption: Via the Communication Support
Page (which is the method established for submitting the established
significant hardship exemption categories).
In addition, we considered accepting significant hardship exemption
requests for the 2 proposed significant hardship exemption categories
for the 2014 eRx payment adjustment by CMS receiving eligible
professional's information through the Registration and Attestation
System for the EHR Incentive Program (similar to our proposed
submission process for the 2013 eRx payment adjustment) and via a
mailed letter to CMS using the following address: Centers for Medicare
& Medicaid Services, Office of Clinical Standards and Quality, Quality
Measurement and Health Assessment Group, 7500 Security Boulevard, Mail
Stop S3-02-01, Baltimore, MD 21244-1850. We invite public comment on
these considered submission options.
We propose that the deadline for submitting these significant
hardship exemption requests for the 2014 eRx payment adjustment would
be June 30, 2013, which is the same deadline established for submitting
a significant hardship exemption request for the existing significant
hardship exemption categories. Additionally, and consistent with our
proposal for the 2013 eRx payment adjustment, we propose that an
eligible professional or group practice (that is, all members of the
practice) that achieves meaningful use under the EHR Incentive Program
during the 6- or 12-month reporting periods for the 2014 eRx payment
adjustment would be required to attest by June 30, 2013. Similarly, for
eligible professionals requesting a significant hardship exemption for
the 2014 eRx payment adjustment under the second proposed significant
hardship exemption category (i.e., intent to participate in the EHR
Incentive Program and adoption of CEHRT), we propose that these
eligible professionals who intend to participate in the EHR Incentive
Program during the last six months of 2013 would be required to
register for the EHR Incentive Program and adopt CEHRT by June 30,
2013, in order to qualify for a significant hardship exemption for the
2014 eRx payment adjustment. We understand that these deadlines may
exclude some eligible professionals who attest or register for the EHR
Incentive Program at later dates, but these deadlines are necessary in
order to avoid the reprocessing of claims. We note, however, that these
proposed deadlines would not extend any deadlines applicable under the
EHR Incentive Program. That is, for purposes of the EHR Incentive
Program, an eligible professional must still attest to being a
meaningful user by the deadline established under the EHR Incentive
Program, even if such deadline falls prior to the proposed eRx
Incentive program significant hardship exemption deadline. We invite
public comment on this proposed process for submitting requests
significant hardship exemptions under these two proposed categories.
6. Informal Review
To better facilitate issues surrounding the issuance of incentives
and payment adjustments, we propose to establish an informal review
process for the eRx Incentive Program. We are proposing an informal
review process similar to the informal review process established for
the PQRS (76 FR 73390), because eligible professionals and group
practices are already familiar with this process. The proposed informal
review process, which is described below, would only be available for
the 2013 eRx incentive payments and the 2014 eRx payment adjustment.
For an informal review regarding the 2013 incentive, we propose
that an eligible professional or group practice must request an
informal review within 90 days of the release of his or her feedback
report, irrespective of when an eligible professional or group practice
actually accesses his/her feedback report.

[[Page 44988]]

For an informal review regarding the 2014 payment adjustment, we
propose that an eligible professional or group practice must request an
informal review by January 31, 2013. We believe this deadline provides
ample time for eligible professionals and group practices to discover
that their respective claims are being adjusted due to the 2014 payment
adjustment and seek informal review.
We propose that the request must be submitted in writing and
summarize the concern(s) and reasons for requesting an informal review.
In its request for an informal review, eligible professional may also
submit other information to assist in the review. We propose that an
eligible professional may request an informal review through the web.
We believe use of the web would provide a more efficient way for CMS to
record informal review requests, as the web would guide the eligible
professional through the creation of an informal review requests. For
example, the web-based tool would prompt an eligible professional of
any necessary information he or she must provide. Should it be
technically not feasible to receive requests for informal reviews via
the web, we propose that as eligible professional would be able to
request an informal review via email.
We further propose that we would make our determination and provide
the eligible professional or group practice with a written response to
his or her request for an informal review within 90 days of receiving
the request.
Based on our informal review and once we have made a determination,
we propose that we would provide the eligible professional or group
practice a written response. Where we find that the eligible
professional or group practice did successfully report for the 2013
incentive, we would provide the eligible professional or group practice
with the applicable incentive payment. Where we find that the eligible
professional or group practice did successfully report (that is, meet
criteria for being a successful electronic prescriber) for purposes of
the 2014 payment adjustment, we would cease application of the 2014
payment adjustment and reprocess all claims that have been adjusted. We
further propose that decisions based on the informal review would be
final, and there would be no further review or appeal.
We invite public comment on our proposals for the eRx Incentive
Program informal review process for the 2013 incentive and the 2014
payment adjustment.
a. Proposed Criteria for the PQRS-Medicare EHR Incentive Pilot
The Medicare EHR Incentive Program provides incentive payments to
eligible professionals (EPs) who demonstrate meaningful use of
certified EHR technology (CEHRT). EPs who fail to demonstrate
meaningful use will be subject to payment adjustments beginning in
2015. We established a phased approach to meaningful use, which we
expect will include three stages (75 FR 44321), and all EPs are
currently in Stage 1. In the CY 2012 Medicare PFS final rule, we
established the PQRS-Medicare EHR Incentive Pilot in an effort to pilot
the electronic submission of CQMs for the Medicare EHR Incentive
Program and move towards the alignment of quality reporting
requirements between Stage 1 of the Medicare EHR Incentive Program and
the PQRS (76 FR 73422). We refer readers to the final rule for further
explanation of the requirements of the Pilot (76 FR 73422-73425).
Specifically, we established that an EP participating in the PQRS-
Medicare EHR Incentive Pilot would be able to report clinical quality
measures (CQMs) data extracted from Certified EHR Technology via use of
a PQRS qualified direct EHR product or PQRS qualified EHR data
submission vendor product (76 FR 73422). We propose to modify Sec.
495.8 to extend this Pilot for the 2013 payment year as it was
finalized for the 2012 payment year. We are also proposing to remove
from Sec. 495.8(a)(2)(v) the cross-reference to Sec. 495.6(d)(10) in
order to conform with the proposed changes to Sec. 495.6(d) that were
included in the EHR Incentive Program--Stage 2 NPRM (77 FR 13698,
13702). This proposal includes the following:
For the 2013 payment year only, EPs intending to
participate in the PQRS-Medicare EHR Incentive Pilot may use a PQRS
qualified EHR data submission vendor product that would submit CQM data
extracted from the EP's CEHRT to CMS. Under this option, identical to
the submission process used for the Pilot in 2012 for the 2012 payment
year, the PQRS qualified EHR data submission vendor would calculate the
CQMs from the EP's CEHRT and then submit the calculated results to CMS
on the EP's behalf via a secure portal for purposes of this Pilot.
For the 2013 payment year only, identical to the
submission process used for the Pilot in 2012 for the 2012 payment
year, EPs intending to participate in the PQRS-Medicare EHR Incentive
Pilot may use a PQRS qualified direct EHR product to submit CQM data
directly from his or her CEHRT to CMS via a secure portal using the
infrastructure of the PQRS EHR-based reporting mechanism.
In addition, for the 2013 payment year, we are proposing to extend
the use of attestation as a reporting method for the CQM component of
meaningful use for the EHR Incentive Program. For 2013, EPs would be
able to continue to report by attestation CQM results as calculated by
CEHRT, as they did for 2011 and 2012. We refer readers to the EHR
Incentive Program--Stage 1 final rule for further explanation of the
CQM reporting criteria for EPs and attestation (75 FR 44386-44411,
44430-44434).
We invite public comment on our proposal to extend the PQRS-
Medicare EHR Incentive Pilot and attestation as it was established for
the 2012 payment year to the 2013 payment year. Please note that we are
only proposing the extension of the PQRS-Medicare EHR Incentive Pilot
to the 2013 payment year, because Stage 2 of the EHR Incentive Program
is expected to begin in 2014. The proposals for Stage 2 of the EHR
Incentive Program were provided in a standalone proposed rule published
on March 7, 2012 (77 FR 13698).

I. Medicare Shared Savings Program

1. Medicare Shared Savings Program and Physician Quality Reporting
System Payment Adjustment
Under section 1899 of the Act, CMS has established a Medicare
Shared Savings Program (Shared Savings Program) to facilitate
coordination and cooperation among providers to improve the quality of
care for Medicare Fee-For-Service (FFS) beneficiaries and reduce the
rate of growth in healthcare costs. Eligible groups of providers and
suppliers, including physicians, hospitals, and other healthcare
providers, may participate in the Shared Savings Program by forming or
participating in an Accountable Care Organization (ACO). The final rule
implementing the Shared Savings Program appeared in the Federal
Register on November 2, 2011 (Medicare Shared Savings Program:
Accountable Care Organizations Final Rule (76 FR 67802)).
Section 1899(b)(3)(D) of the Act affords the Secretary discretion
to ``* * * incorporate reporting requirements and incentive payments
related to the physician quality reporting initiative (PQRI), under
section 1848 of the Act, including such requirements and such payments
related to electronic prescribing, electronic health records, and other
similar initiatives under section 1848 * * *'' and permits the
Secretary to ``use

[[Page 44989]]

alternative criteria than would otherwise apply [under section 1848 of
the Act] for determining whether to make such payments.'' Under this
authority, we incorporated certain Physician Quality Reporting System
(PQRS) reporting requirements and incentive payments into the Shared
Savings Program (76 FR 67902). In the Shared Savings Program final
rule, we finalized the following requirements with regard to PQRS
incentive payments under the Shared Savings Program: (1) The 22 GPRO
quality measures identified in Table 1 of the final rule (76 FR 67889-
67890); (2) reporting via the GPRO web interface (76 FR 67893); (3)
criteria for satisfactory reporting (76 FR 67900); and (4) January 1
through December 31 as the reporting period. The regulation governing
the incorporation of PQRS incentives and reporting requirements under
the Shared Savings Program is set forth at Sec. 425.504.
Under Sec. 425.504(a)(1), ACOs, on behalf of their ACO provider/
suppliers who are eligible professionals, must submit the measures
determined under Sec. 425.500 using the GPRO web interface established
by CMS, to qualify on behalf of their eligible professionals for the
PQRS incentive under the Shared Savings Program. ACO providers/
suppliers that are eligible professionals constitute a group practice
for purposes of qualifying for a PQRS incentive under the Shared
Savings Program. Under Sec. 425.504(a)(2)(ii), an ACO, on behalf of
its ACO providers/suppliers who are eligible professionals, must
satisfactorily report the measures determined under the Shared Savings
Program during the reporting period according to the method of
submission established by CMS in order to receive a PQRS incentive
under the Shared Savings Program. For the years in which a PQRS
incentive is available, if eligible professionals that participate in
an ACO as ACO providers/suppliers qualify for a PQRS incentive payment
under the Medicare Shared Savings Program, the ACO participant TIN(s)
under which those ACO providers/suppliers bill, will receive an
incentive payment based on the allowed charges of those ACO providers/
suppliers. Under Sec. 425.504(a)(4), ACO participant TINs and
individual ACO providers/suppliers who are eligible professionals
cannot earn a PQRS incentive outside of the Medicare Shared Savings
Program. The PQRS incentive under the Medicare Shared Savings Program
is equal to 0.5 percent of the Secretary's estimate of the ACO's
eligible professionals' total Medicare Part B PFS allowed charges for
covered professional services furnished during the calendar year
reporting period from January 1 through December 31, for years 2012
through 2014.
As discussed in section III.G of this proposed rule, as required by
section 1848(a)(8) of the Act, a payment adjustment will apply under
the PQRS beginning in 2015. For eligible professionals who are not
satisfactory reporters, the PFS amount for covered professional
services furnished by the eligible professional during 2015 shall be
equal to 98.5 percent (and 98 percent for 2016 and each subsequent
year) of the fee schedule amount that would otherwise apply to such
services. Therefore, consistent with our authority under section
1899(b)(3)(D) of the Act, we propose to amend Sec. 425.504 to
incorporate reporting requirements for the PQRS payment adjustment
under the Shared Savings Program for eligible professionals that are
ACO providers/suppliers.
We are proposing to incorporate requirements for the PQRS payment
adjustment that are consistent with requirements for PQRS incentives
that we previously adopted in the Shared Savings Program final rule.
Specifically, for purposes of the PQRS payment adjustment, we propose
to incorporate the same PQRS GPRO under the Shared Savings Program that
is currently used for purposes of the PQRS incentive under the Shared
Savings Program. Under this proposal, eligible professionals that are
ACO providers/suppliers would constitute a group practice that would
report quality measures via the GPRO data collection tool for purposes
of both the PQRS incentive under the Shared Savings Program and the
PQRS payment adjustment under the Shared Savings Program.
For purposes of the payment adjustment, we propose to use the final
GPRO quality measures adopted under the Shared Shavings Program that
appear in Table 1 of the Shared Savings Program final rule (76 FR
67899-67890). We further propose to incorporate the same criteria for
satisfactory reporting that were finalized for the PQRS incentive under
the Shared Savings Program, which are described in the Shared Savings
Program final rule (76 FR 67900). Specifically:
An ACO on behalf of its eligible professionals must report
on all measures included in the GPRO data collection tool under the
Shared Savings Program final rule.
Beneficiaries would be assigned to the ACO using the
methodology described in Sec. 425.400. As a result, the GPRO tool
would be populated based on a sample of the ACO-assigned beneficiary
population. ACOs must to complete the tool for the first 411
consecutively ranked and assigned beneficiaries in the order in which
they appear in the group's sample for each domain, measures set, or
individual measure if a separate denominator is required such as in the
case of preventive care measures which may be specific to one sex. If
the pool of eligible assigned beneficiaries is less than 411, the ACO
must report on 100 percent of assigned beneficiaries for the domain,
measures set, or individual measure.
The GPRO data collection tool must be completed for all
domains, measure sets and measures described in Table 1 of the of the
Shared Savings Program final rule (76 FR 67889-67890).

Consistent with the reporting requirements for the PQRS incentive under
the Shared Savings Program, ACOs would only need to satisfactorily
report the 22 GPRO quality measures identified in Table 1 of the Shared
Savings Program final rule (76 FR 67889-67890), and would not need to
report the other 11 Shared Savings Program quality performance measures
for purposes of satisfactory reporting for the PQRS payment adjustment.
However, the ACO would still be required to satisfy the ACO quality
performance standards for purposes of determining eligibility for
shared savings, as described in Sec. 425.502.
We believe that using the same quality measures and the same
criteria for satisfactory reporting, including the same assignment and
sampling methodology, under the Shared Savings program for both the
PQRS incentive and payment adjustment is appropriate. Aligning the
satisfactory reporting requirements for the PQRS payment adjustment
under the Shared Savings Program with the reporting requirements for
purposes of the PQRS incentive under the Shared Savings Program would
enable eligible professionals that participate in ACOs as ACO
providers/suppliers to comply with these reporting requirements,
without imposing any additional reporting burden. In addition, as noted
above, the 22 GPRO measures that are reported for purposes of the PQRS
incentive under the Shared Savings Program must also be reported for
purposes of assessing ACOs' quality performance under the Shared
Savings Program and determining the percentage of shared savings that
ACOs are eligible to receive. Under the Shared Savings Program
regulations at Sec. 425.500(e)(3), ACOs are required to report on all
of the

[[Page 44990]]

quality measures established by CMS, and the failure to report on those
quality measures accurately, completely, and timely may subject the ACO
to termination or other sanctions. Thus, ACOs already have significant
incentives to report the 22 GPRO measures completely and accurately.
Furthermore, aligning the reporting requirements could help to
encourage greater participation in the Shared Savings Program, by
minimizing the reporting burden imposed upon ACOs and their
participants.
Although we propose to use the same timeframe of January 1 through
December 31 that we adopted for the PQRS incentive under the Shared
Savings Program as the reporting period for the PQRS payment
adjustment, we propose that the timing of the reporting period would
differ for purposes of the PQRS payment adjustment. Specifically, we
propose that the reporting period for the payment adjustment would fall
2 years prior to when the payment adjustment would be assessed. For
example, under the Shared Savings Program, the reporting period for the
2015 payment adjustment would be from January 1, 2013 through December
31, 2013. It is necessary for us to use a reporting period that
precedes the year in which the payment adjustment is applicable to
avoid retroactive payments and the reprocessing of claims. In addition,
it is not operationally feasible for us to use a full calendar year
reporting period that falls closer to the year in which the payment
adjustment is applicable because we need sufficient time to determine
if the requirements for satisfactory reporting have been met and to
adjust our claims systems prior to the start of the applicable year. We
note that the length and timing of the reporting period that we are
proposing for the PQRS payment adjustment under the Shared Savings
Program is consistent with the one used for the traditional PQRS (76 FR
73392).
We also note that this proposal results in overlapping reporting
periods for both the PQRS incentive and payment adjustment. For
example, the measure data collected for the 2013 calendar year
reporting period (January 1, 2013-December 31, 2013) would be used for
purposes of both the Physician Quality Reporting System 2013 incentive
and 2015 payment adjustment under the Shared Savings Program. We
believe using the same reporting period for purposes of both the
incentive and payment adjustment would result in less reporting burden,
since one set of measures from one reporting period would be used for
purposes of both the PQRS incentive and payment adjustment. We believe
ACOs will perceive this as more efficient than requiring one set of
measures reported during one timeframe for purposes of the PQRS
incentive and another set during another timeframe for purposes of the
payment adjustment.
Therefore, we propose that, if an ACO satisfactorily reports the
ACO GPRO web interface measures during the applicable reporting period,
its participant TINs with ACO providers/suppliers who are eligible
professionals, would not be subject to the PQRS payment adjustment. If
an ACO does not satisfactorily report the ACO GPRO web interface
measures during the applicable reporting period, its participant TINs
with ACO providers/suppliers who are eligible professionals, would be
subject to the PQRS payment adjustment starting in 2015.
Since the publication of the Shared Savings Program final rule, we
have received a number of inquiries regarding whether ACO participant
TINs need to self-nominate or register to participate in PQRS GPRO
under the Shared Savings Program, since there are such registration and
self-nomination requirements under the traditional PQRS GPRO. We wish
to clarify that no registration or self-nomination is required for ACO
providers/suppliers that are eligible professionals to participate in
PQRS under the Shared Savings Program.
Finally, just as ACO providers/suppliers that are eligible
professionals with an ACO may only participate under their ACO
participant TIN as a group practice under the PQRS GPRO under the
Shared Savings Program for purposes of receiving an incentive as both a
group and as an individual under the same TIN (76 FR 67903), we propose
that ACO providers/suppliers that are eligible professionals within an
ACO must participate under the ACO participant TIN as a group practice
under the PQRS GPRO under the Shared Savings Program for purposes of
the PQRS payment adjustment. Thus, ACO providers/suppliers who are
eligible professionals may not seek to avoid the payment adjustment by
reporting either as an individual under the traditional PQRS or under
the traditional PQRS GPRO.
We recognize that some eligible professionals may move across
programs and reporting options from year to year. For instance, an
eligible professional that is an ACO provider/supplier and participates
in the PQRS under the Shared Savings Program in 2013 may later exit the
Shared Savings Program and participate in PQRS individual reporting in
2014. Alternatively, a group practice participating in the traditional
PQRS GPRO in 2013 may be an ACO participant in 2014. In instances in
which eligible professionals change their PQRS reporting option from
year to year, we believe that as long as the eligible professional
satisfactorily reported for purposes of the payment adjustment during
the applicable reporting period, then the eligible professional should
not be subject to the payment adjustment even if the eligible
professional was reporting under a different reporting method than at
the time the payment adjustment would be assessed. Using the earlier
example, if an eligible professional is an ACO provider/supplier and
satisfactorily reports under the PQRS under the Shared Savings Program
in 2013 but subsequently exits the Shared Savings Program and
participates in PQRS individual reporting in 2014, the eligible
professional would not be subject to the payment adjustment in 2015.
Similarly, a group practice that satisfactorily reports under the
traditional PQRS GPRO in 2013 and becomes an ACO participant in 2014
would not be subject to the payment adjustment in 2015. We recognize
that group practices and ACOs may reorganize and that individual
providers and groups of providers may move in and out of ACOs from year
to year, so we believe this approach offers maximum flexibility for
eligible professionals and groups of providers to make appropriate
decisions regarding their participation in an ACO and allows ACOs to
recruit new participants, by eliminating any risk that eligible
professionals will be assessed with the payment adjustment as a result
of such changes. We believe it would be unfair to assess the payment
adjustment on an eligible professional on the basis of switching
reporting options, if the eligible professional had satisfactorily
reported during the applicable reporting period. We invite public
comment on our proposals for Shared Savings Program ACOs and the PQRS
payment adjustment and on the alternative considered.
Please note that, in this proposed rule, we also discuss a proposal
amending requirements for ACO data to be publicly reported on Physician
Compare in section III.G. of this proposed rule.

J. Discussion of Budget Neutrality for the Chiropractic Services
Demonstration

Section 651 of MMA requires the Secretary to conduct a
demonstration for up to 2 years to evaluate the feasibility and
advisability of expanding coverage for chiropractic services under

[[Page 44991]]

Medicare. Current Medicare coverage for chiropractic services is
limited to treatment by means of manual manipulation of the spine to
correct a subluxation described in section 1861(r)(5) of the Act
provided such treatment is legal in the State or jurisdiction where
performed. The demonstration expanded Medicare coverage to include:
``(A) care for neuromusculoskeletal conditions typical among eligible
beneficiaries; and (B) diagnostic and other services that a
chiropractor is legally authorized to perform by the State or
jurisdiction in which such treatment is provided.'' The 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
MMA mandates 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 the method for adjusting chiropractor fees in the
event the demonstration resulted in costs higher than those that would
occur in the absence of the demonstration. We stated that BN would be
assessed by determining the change in costs based on a pre-post
comparison of total Medicare costs for beneficiaries in the
demonstration and their counterparts in the control groups 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
that our analysis would not be limited to only review of chiropractor
claims because the costs of the expanded chiropractor services may have
an impact on other Medicare costs for other services.
In the CY 2010 PFS final rule with comment period (74 FR 61926), we
discussed the evaluation of this demonstration conducted by Brandeis
University and the two sets of analyses used to evaluate BN. In the
``All Neuromusculoskeletal Analysis,'' which compared the total
Medicare costs of all beneficiaries who received services for a
neuromusculoskeletal condition in the demonstration areas with those of
beneficiaries with similar characteristics from similar geographic
areas that did not participate in the demonstration, the total effect
of the demonstration on Medicare spending was $114 million higher costs
for beneficiaries in areas that participated in the demonstration. In
the ``Chiropractic User Analysis,'' which compared the Medicare costs
of beneficiaries who used expanded chiropractic services to treat a
neuromusculoskeletal condition in the demonstration areas, with those
of beneficiaries with similar characteristics who used chiropractic
services as was 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 on Medicare spending was a $50 million increase in costs.
As explained in the CY 2010 PFS final rule, we based the BN
estimate on the ``Chiropractic User Analysis'' because of its focus on
users of chiropractic services rather than all Medicare beneficiaries
with neuromusculoskeletal conditions, as the latter included those who
did not use chiropractic services and who may not have become users of
chiropractic services even with expanded coverage for them (74 FR 61926
through 61927). 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.
As explained in the CY 2010 PFS final rule (74 FR 61927), 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 finalized a policy to recoup $50 million in expenditures from
this demonstration over a 5-year period, from CYs 2010 through 2014 (74
FR 61927). Specifically, we are recouping $10 million for each such
year through adjustments to the chiropractic CPT codes. Payment under
the PFS for these codes will be reduced by approximately 2 percent. We
believe that spreading this adjustment over a longer period of time
will minimize its potential negative impact on chiropractic practices.
For the CY 2012 PFS, our Office of the Actuary (OACT) estimated
chiropractic expenditures to be approximately $470 million, which
reflected the statutory 29.4 percent reduction to physician payments
scheduled to take effect that year. As noted above, the statute was
subsequently amended to impose a zero percent update for CY 2012
instead of the 29.4 percent reduction. OACT now estimates CY 2012
chiropractic expenditures to be approximately $630 million. We are
currently recouping $10 million through adjustments to the chiropractic
CPT codes in CY 2012, and the percent of this reduction is
approximately 1.5 percent.
We are continuing the implementation of the required BN adjustment
by recouping $10 million in CY 2013. Our Office of the Actuary
estimates chiropractic expenditures in CY 2013 will be approximately
$470 million based on Medicare spending for chiropractic services for
the most recent available year and reflecting an approximate 30.9
percent reduction to physician payments scheduled to take effect under
current law. To recoup $10 million in CY 2013, the payment amount under
the PFS for the chiropractic CPT codes (CPT codes 98940, 98941, and
98942) will be reduced by approximately 2 percent. We are reflecting
this reduction only in the payment files used by the Medicare
contractors to process Medicare claims rather than through adjusting
the relative value units (RVUs). Avoiding an adjustment to the RVUs
would preserve the integrity of the PFS, particularly since many
private payers also base payment on the RVUs.
Therefore, as finalized in the CY 2010 PFS regulation and
reiterated in the CYs 2011-2012 PFS regulations, we are implementing
this methodology and recouping from the chiropractor fee schedule codes
set forth above. Our methodology meets the statutory requirement for BN
and appropriately impacts the chiropractic profession that is directly
affected by the demonstration.

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

1. Value-Based Payment Modifier and Physician Feedback Reporting
Program Overview of Proposals
Section 1848(p) of the Act requires the Secretary to ``establish a
payment modifier that provides for differential payment to a physician
or a group of physicians'' under the PFS ``based upon the quality of
care furnished compared to cost * * * during a performance period.'' In
addition, section 1848(p)(4)(B)(iii) of the Act requires the Secretary
to apply the payment modifier beginning January 1, 2015 to specific

[[Page 44992]]

physicians and groups of physicians the Secretary determines
appropriate. This section also requires the Secretary to apply the
value-based payment modifier for all physicians and groups of
physicians (and allows the Secretary to apply the value-based payment
modifier for eligible professionals as defined in section 1848(k)(3)(B)
of the Act as the Secretary determines appropriate) beginning not later
than January 1, 2017. Section 1848(p)(4)(C) of the Act requires the
value-based payment modifier to be implemented in a budget neutral (BN)
manner.
Section 1848(n) of the Act requires the Secretary to provide
confidential Physician Feedback reports to physicians that measure the
resources involved in furnishing care to Medicare beneficiaries.
Section 1848(n)(1)(A)(iii) of the Act also authorizes us to include
information on the quality of care furnished to Medicare beneficiaries
by a physician or group of physicians in those reports.
In developing our proposals for the value-based payment modifier,
we have reviewed our experience over the past 3 years in providing
Physician Feedback reports to certain physicians and groups of
physicians. The Physician Feedback reports allow us to test different
methodologies and to obtain stakeholder feedback that can be used to
further refine the reports and inform our policy proposals and
recommendations. We have also linked the Physician Feedback reports
with the Physician Quality Reporting System (PQRS), by including the
quality measures physicians and groups of physicians reported in the
PQRS program in the 2010 Physician Feedback reports that we produced
and disseminated in 2011 (to groups of physicians) and early 2012 (to
individual physicians).
In this proposed rule, we discuss our proposals to implement the
value-based payment modifier (which will affect payments starting in
2015). These proposals focus on creating value for Medicare fee-for-
service (FFS) beneficiaries by focusing on prevention and effective
chronic disease care and by encouraging high quality care for the most
difficult cases. The proposals recognize that physician quality
measurement is still evolving and that our methodologies are still
developing. We designed our proposals to (1) provide groups of
physicians with 25 or more eligible professionals an option that their
value-based payment modifier be calculated using a quality-tiering
approach; (2) focus our payment adjustment (both upward and downward)
on those groups of physicians that are outliers, that is on those that
are significantly different from the mean; and (3) align the value-
based payment modifier with the PQRS and utilize Medicare claims data
in order to reduce administrative burden on groups of physicians. We
believe that our proposals are adaptable to smaller groups of
physicians and physicians in solo practices that will be subject to the
value-based payment modifier starting in 2017 and we seek comment on
the potential for our current proposals to be applied to all physicians
and groups of physicians. We also encourage physicians and other
stakeholders to work with us to include additional quality measures
(including additional outcome measures) that meaningfully measure the
care they provide to Medicare beneficiaries.
Our proposed scoring methodology for the value-based payment
modifier would assess quality of care furnished compared to cost during
the performance period (which is 2013 for the first year) to calculate
an adjustment to payments under the PFS during the payment adjustment
period (which is 2015 for the first year). In light of our desire to
align CMS quality improvement programs, this methodology relies, in
part, on the data submitted on quality measures by groups of physicians
through the PQRS. Quality measurement is necessary, but not sufficient,
for quality improvement and a focus on value.\5\ To balance our goals
of beginning the implementation of the value-based payment modifier
consistent with the legislative requirements and to give us and the
physician community experience in its operation, we propose to separate
all groups of physicians with 25 or more eligible professionals into
two categories based on how they have chosen to participate in the
PQRS.
---------------------------------------------------------------------------

\5\ Mark R. Chassin, et al. ``Accountability Measures--Using
Measurement to Promote Quality Improvement,'' N Eng. J. of Med.
2010; 363:683-688 (Aug. 2010), available at http://www.nejm.org/doi/full/10.1056/NEJMsb1002320.
---------------------------------------------------------------------------

The first category includes those groups of physicians that have
met the criteria for satisfactory reporting of data on PQRS quality
measures for the 2013 and 2014 incentives or the criteria for
satisfactory reporting using the administrative claims-based reporting
mechanism, which is applicable to the 2015 and 2016 PQRS payment
adjustment. These groups of physicians will have fulfilled a key
condition for quality improvement and a focus on value, that is, to
measure quality by reporting data on quality measures that can be used
to assess quality of care furnished. Thus, we propose initially to set
the value-based payment modifier at 0.0 percent for these groups of
physicians, meaning that the value-based payment modifier would not
affect their payments under the PFS.
Within this category of satisfactory PQRS reporters, we propose to
offer an option that their value-based payment modifier be calculated
using a quality-tiering approach. This option would allow these groups
of physicians to earn an upward payment adjustment for high performance
(high-quality tier and low-cost tier) performance, and to be at risk
for a downward payment adjustment for poor performance (low-quality
tier and high-cost tier). Because of the BN requirement and proposed
limit on the downward adjustment noted below, we cannot specify the
exact amount of the upward payment adjustment for groups of physicians
achieving high performance. We propose, however, that the maximum
downward payment adjustment for these groups would be -1.0 percent for
poor performance because we recognize that 2015 is the initial year for
the value-based modifier and we wish to provide for a very modest
adjustment for the initial years. We believe this methodology would
encourage future improvement in terms of better value for Medicare
beneficiaries without being overly burdensome to groups of physicians
that requested to have their value-based payment modifier be calculated
using the quality-tiering approach.
The second category includes those groups of physicians with 25 or
more eligible professionals that have not met the PQRS satisfactory
reporting criteria identified above, including those groups of
physicians that have decided not to participate in any PQRS reporting
mechanism. Because we would not have quality measure performance rates
on which to assess the quality of care furnished by these groups of
physicians, we propose to set their value-based payment modifier at -
1.0 percent as described in more detail in our proposal below. We note
that this downward payment adjustment for the 2015 value-based payment
modifier would be in addition to the -1.5 percent payment adjustment
that is assessed under section 1848(a)(8) of the Act for failing to
meet the satisfactory reporting criteria under PQRS. Therefore, groups
of physicians with 25 or more eligible professionals that fail to meet
the PQRS satisfactory reporting criteria would be subject to a downward
adjustments during 2015 of 1.5 percent for eligible professionals who
fail to be satisfactory reporters under the PQRS and 1.0 percent for
the value-based payment modifier. Because the value-based payment
modifier provides upward

[[Page 44993]]

payment adjustments for groups of physicians on the high-quality and
lost-cost tiers, we encourage groups of physicians with 25 or more
eligible professionals to elect that their value-based payment modifier
be calculated using the quality-tiering approach.
In this proposed rule, we (1) expand upon our vision of how we see
the value-based payment modifier helping transform Medicare from a
passive payer to an active purchaser of higher quality, more efficient
healthcare; (2) propose to whom the value-based payment modifier would
apply starting in CY 2015 in ways that emphasize the value-based
payment modifier's focus on increasing quality measurement such that
all physicians and groups of physicians would be subject to value-based
payment modifier starting in CY 2017; (3) propose ways to align the
value-based payment modifier with the quality measures and reporting
requirements established under the PQRS; (4) propose how we would score
the value-based payment modifier and apply the BN requirement in ways
that encourage quality reporting through the PQRS; and (5) describe how
we have used and plan to continue to use the Physician Feedback reports
to further inform physicians and groups of physicians about their
quality of care and resource use.
2. Value-Based Payment Modifier Overview
The value-based payment modifier is an important component in
revamping how care and services are paid for under the PFS that has the
potential to help transform Medicare from a passive payer to an active
purchaser of higher quality, more efficient and effective healthcare.
We recognize that although the quality of care furnished is high in
many regards, this fact ignores ``[h]ealth care today harms too
frequently and routinely fails to deliver its potential benefits'' to
patients.\6\ Indeed, the Institute of Medicine has stated that the
``health care system as currently structured does not, as a whole, make
the best use of its resources.'' \7\ Findings from the 2010 Physician
Feedback reports confirm this statement: high value (high quality and
low cost) can be achieved and there is substantial room for quality
improvement and better value.\8\ We believe that the value-based
payment modifier can be used to incentivize and reward high quality,
efficiently furnished care by providing upward payment adjustments
under the PFS to high performing physicians (and groups of physicians)
and downward adjustments for low performing physicians (and groups of
physicians).
---------------------------------------------------------------------------

\6\ Institute of Medicine, ``Crossing the Quality Chasm,''
(2001) at 1; Elizabeth A. McGlynn, ``The Case for Keeping Quality on
the Health Reform Agenda,'' prepared testimony before the Senate
Committee on Finance (June 3, 2008), available at http://www.rand.org/content/dam/rand/pubs/testimonies/2008/RAND_CT306.pdf
\7\ ``Crossing the Quality Chasm'' at 3.
\8\ CMS, ``Analysis of 2010 Quality and Resource Use Reports for
Medical Practice Groups'' (2012), available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/QRURs_for_Medical_Practice_Groups.pdf.
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We recognize, however, that physicians are the forefront of care
delivery and that changes in payment policy can directly affect medical
care that physicians furnish to Medicare beneficiaries. Consistent with
the National Quality Strategy, our aim is to promote preventive care
and improve rather than impede the care that beneficiaries currently
receive, especially for the chronically ill and those with the most
complicated cases. Thus, we seek to implement payment policies that
complement and support ``the courage, hard work, and commitment of
doctors, nurses, and others in health care'' to improve the health care
systems in which they work.\9\
---------------------------------------------------------------------------

\9\ ``Crossing the Quality Chasm'' at 4.
---------------------------------------------------------------------------

We explained in the CY 2012 PFS proposed rule that Medicare is
beginning to implement value-based payment adjustments for other types
of services, including inpatient hospital services (76 FR 42908). We
have also developed plans to implement value-based purchasing for
skilled nursing facilities, home health services and ambulatory
surgical center services. In implementing value-based purchasing
initiatives generally, we seek to meet the following goals:
Recognize and reward high quality care and quality
improvements.
++ Value-based payment systems and public reporting should rely on
a mix of standards, processes, outcomes, and patient experience
measures, including measures of care transitions and changes in patient
functional status. Across all programs, we seek to move as quickly as
possible to the use of outcome and patient experience measures. To the
extent practicable and appropriate, we believe these outcome and
patient experience measures should be adjusted for risk or other
appropriate patient population or provider characteristics.
++ To the extent possible, and recognizing differences in payment
system readiness and statutory requirements and authorities, measures
should be aligned across Medicare and Medicaid's public reporting and
payment systems. We seek to evolve a focused core set of measures
appropriate to each specific provider category that reflects the level
of care and the most important areas of service and measures for that
provider.
++ The collection of information should minimize the burden on
providers to the extent possible. As part of that effort, we will
continuously seek to align our measures with the adoption of meaningful
use standards for health information technology (HIT), so the
collection of performance information is part of care delivery.
++ To the extent practicable, the measures we use should be
nationally endorsed by a multi-stakeholder organization. Measures
should be aligned with best practices among other payers and the needs
of the end users of the measures.
Promote more efficient and effective care through the use
of evidence based measures, less rework and duplication, and less
fragmented care.
++ Providers should be accountable for the costs of care, being
both rewarded for reducing unnecessary expenditures and responsible for
excess expenditures.
++ In reducing excess expenditures, providers should continually
improve and maintain the quality of care they deliver.
++ To the extent possible, and recognizing differences in payers'
value based purchasing initiatives, providers should redesign care
processes to deliver higher quality and more efficient care to their
entire patient population.
Because of the centrality of physicians to high-quality, efficient,
patient-centered care furnished in multiple settings, we believe that
in the long run the value-based payment modifier should rely on
measuring physician performance (both quality of care and cost) at four
levels (to the extent practicable)--the individual physician level, the
group practice level, the facility level (for example, hospital), and
the community level. Physicians make decisions on a patient-by-patient
basis as to what services are indicated and furnished. These decisions
are made independently by physicians within multiple settings (that is,
individual office practice, group practice, hospital) and are
dependent, in part, on how care is organized in a community.
Consequently, physicians have the potential to drive both quality of
care and costs at all levels of the health system and these decisions
have an impact on patient outcomes and costs for populations of
patients. We envision

[[Page 44994]]

a physician value-based payment modifier in the future that blends
performance at each of these levels (as applicable) and reinforces our
objectives to encourage and reward physicians for furnishing high-
quality, efficient, patient-centered clinical care.
To start to implement this long-term vision of the value-based
payment modifier, we have undertaken numerous activities in the past
year to inform our proposals in this rule. We have obtained stakeholder
input about the content (including the completeness of the quality
measures) and methodologies we have used in the Physician Feedback
reports, as well as input on how the private sector has used physician
pay-for-performance programs. In particular, we conducted five national
provider calls about methodologies we have used in the Physician
Feedback reports and similar private sector initiatives.\10\ We also
held (and continue to hold) numerous sessions with Physician Feedback
report recipients (both at the individual and group practice level) to
obtain additional feedback to improve the methodologies used in the
reports.
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\10\ See CMS, Physician Feedback Program Teleconferences and
Events, available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/CMS-Teleconferences-and-Events.html.
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These recent activities complement the work we have undertaken to
implement the statutory objectives to improve quality of care furnished
by physicians and groups of physicians to Medicare beneficiaries. For
example, the Congress required the Physician Group Practice (PGP)
Demonstration, which we implemented in 2005. The PGP Demonstration was
the first pay-for-performance initiative under the Medicare program
that involved a shared savings model. The demonstration created
incentives for physician groups to coordinate the overall care
furnished to Medicare beneficiaries and rewarded them for improving the
quality and cost efficiency of health care services. By the fifth year
of the demonstration, all 10 of the participating physician groups
achieved quality benchmark performance on at least 30 of the 32
measures, and seven of the groups achieved benchmark performance on all
32 performance measures. The PGP quality reporting tool and its
methodology also became the basis for the Group Practice Reporting
Option (GPRO) under the PQRS.
In 2003, we implemented the Medicare Care Management Performance
(MCMP) demonstration project. The demonstration showed that small and
solo physician practices are willing to participate in quality
measurement and reporting. Almost 700 physician practices of various
sizes used a GPRO-like reporting tool to report data on 23 quality
measures.
In 2006, Congress established what is now known as the Physician
Quality Reporting System (PQRS), which is a voluntary quality reporting
program that, as subsequently amended, provides a combination of
incentive payments and payment adjustments to eligible professionals
(including group practices) based on whether they satisfactorily report
data on quality measures for covered professional services furnished to
Medicare Part B FFS beneficiaries. In 2010, 268,968 eligible
professionals \11\ participated in PQRS in addition to those physicians
participating in quality reporting through the PQRS GPRO option.
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\11\ Eligible professionals include physicians and non-
physicians such as physician assistants and nurse practitioners.
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Recently, we provided physicians and groups of physicians with
confidential Physician Feedback reports that provide them with
comparative performance data on quality of care they furnish compared
to costs. Results from the most recent group practice reports show
little correlation between quality of care furnished and cost for the
35 participating group practices to whom we provided reports--high
quality can be associated with high or low cost (and vice versa) (see
Physician Feedback Program discussion below). Moreover, overall results
from the individual Physician Feedback reports based on 2010 data show
that clinical care is highly fragmented and there is substantial room
for improvement in the quality of care furnished to Medicare fee for
service beneficiaries.
Based on what we have learned from the aforementioned demonstration
projects, the results from the PQRS and the confidential Physician
Feedback reports, and our outreach on the national provider calls on
private sector programs, we believe the value-based payment modifier
and the Physician Feedback reports can be used to incentivize and
reward high quality, efficiently furnished care by providing upward
payment adjustments under the PFS to high performing physicians and
downward adjustments for low performing physicians. To do so, we
believe the following specific principles should govern the
implementation of the value-based payment modifier.
A focus on measurement and alignment. It is difficult to
maintain high quality care and improve quality and performance without
measurement. Therefore, the value-based payment modifier should
incorporate performance on more quality measures than those that we
finalized in the CY 2012 PFS final rule (76 FR 73429 through 73432).
These additional measures for the value-based payment modifier should
consistently reflect differences in performance among physicians and
physician groups and reflect the diversity of services furnished. These
measures should be consistent with the National Quality Strategy and
other CMS quality initiatives, including the PQRS, the Medicare Shared
Savings Program, and the Medicare EHR Incentive Program. In the
proposals described later in this section, we propose to expand the
quality measures for the value-based payment modifier. We also
encourage physicians to work with us to include additional quality
measures (including outcome measures) that meaningfully measure the
care they furnish to Medicare beneficiaries.
A focus on physician choice. Physicians should be able to
choose the level at which their performance will be assessed reflecting
physicians' choice over their practice configurations. The choice of
level should align with the requirements of other physician quality
reporting programs, such as the PQRS and the Medicare EHR Incentive
program to reduce administrative burden and encourage greater program
participation. In the proposals described later in this section, we
propose to rely on the quality measure data collected through the PQRS
Group Practice Reporting Option (GPRO) and Medicare EHR Incentive
Program to obtain most of the performance data for the value-based
payment modifier.
A focus on shared accountability. CMS has a role in
fostering high value care for individual patients, but also focusing on
how that patient interacts with the health care system generally. We
believe that the value-based payment modifier can facilitate shared
accountability by assessing performance at the practice group level and
by focusing on the total costs of care, not just the costs of care
furnished by an individual physician. In the proposals described later
in this section, we propose to use performance on several outcome
measures that we will calculate for physicians reporting measures at
the group level that encourage them to seek innovative ways to furnish
high-quality, patient-centered, and efficient care to the Medicare FFS
patients they treat. We also seek to start a discussion on how best to
incorporate individual, hospital-based, and community-based quality and
cost measures as a

[[Page 44995]]

component of the value-based payment modifier so that we align quality
measurement strategies across providers and settings of care.
A focus on actionable information. In conjunction with
adjusting payment based on performance, CMS should provide meaningful
and actionable information to help physicians identify clinical areas
where they are doing well as well as areas in which performance could
be improved. The Physician Feedback reports can serve this purpose. In
the proposals described later in this section, we propose ways to
provide additional feedback to physicians and groups of physicians
through the Physician Feedback reports.
A focus on a gradual implementation. We believe that the
value-based payment modifier should focus initially on outliers (that
is, those groups of physicians that are demonstrably high or low
performers as compared to their peers that treat like beneficiaries).
We also believe that groups of physicians should be able to elect how
the value-based payment modifier would apply to their payment under the
PFS starting in 2015 as we phase in the value-based payment modifier.
As we gain more experience with physician measurement tools and
methodologies, we can broaden the scope of measures assessed to
organize them around medical condition, refine physician peer groups to
focus on how like beneficiaries are treated, create finer payment
distinctions that focus on increasing value, and provide greater
payment incentives for high performance. In the proposals described
later in this section, we propose to allow groups of physicians with 25
or more eligible professionals to elect how the value-based payment
modifier would be applied to them under the PFS starting in 2015. We
also propose a scoring methodology that can identify outliers (both
high and low performers) and is flexible to accommodate these future
goals.
We seek comment on these principles as guides to our implementation
of the value-based payment modifier.
3. Proposals for the Value-Based Payment Modifier
In the following sections, we describe our proposals for each
component of the value-based payment modifier. These components
include: The quality measure reporting methods; the quality and cost
measures; the attribution methodology; the payment adjustment amount;
the scoring methodology; and the review and inquiry process. Following
the discussion of these components, we summarize how the components
would work together for a group of physicians with 25 or more eligible
professionals that submits data on quality measures using the PQRS GPRO
web-interface and requests that their value-based payment modifier be
calculated using the quality-tiering approach.
a. Proposed Application of the Value-Based Payment Modifier
Section 1848(p)(4)(B)(iii) of the Act requires the Secretary to
apply the value-based payment modifier to items and services furnished
beginning on January 1, 2015, for specific physicians and groups of
physicians the Secretary determines appropriate, and beginning not
later than January 1, 2017 for all physicians and groups of physicians.
For purposes of this proposed rule, physicians are defined in section
1861(r) of the Act to include doctors of medicine or osteopathy,
doctors of dental surgery or dental medicine, doctors of podiatric
medicine, doctors of optometry, and chiropractors.
We propose to initially include all groups of physicians with 25 or
more eligible professionals in the value-based payment modifier. For
purposes of establishing group size, we propose to use the definition
of an eligible professional as specified in section 1848(k)(3)(B) of
the Act. This section defines an eligible professional as any of the
following: (1) A physician; (2) a practitioner described in section
1842(b)(18)(C) of the Act; (3) a physical or occupational therapist or
a quality speech-language pathologist; or (4) a qualified audiologist.
In addition, we propose to define a group of physicians as ``a single
Tax Identification Number (TIN) with 25 or more eligible professionals,
as identified by their individual National Provider Identifier (NPI),
who have reassigned their Medicare billing rights to the TIN.'' We
chose these groups of physicians in order to align with the reporting
requirements for group practices and the definitions used in the PQRS.
We also propose to assess whether a group of physicians has 25 or more
eligible professionals at the time the group of physicians is selected
to participate under the PQRS GPRO.
We propose to apply the value-based payment modifier to the
Medicare paid amounts for the items and services billed under the PFS
at the TIN level so that beneficiary cost-sharing or coinsurance would
not be affected. We also propose to apply the value-based payment
modifier to the items and services billed by eligible professionals who
are physicians under the TIN, not to other eligible professionals that
also may bill under the TIN.
In addition, application of the value-based payment modifier at the
TIN level means that we would not ``track'' or ``carry'' a physician's
performance from one TIN to another TIN. In other words, if a physician
changes groups from TIN A in the performance period (2013) to TIN B in
the payment adjustment period (2015), we would apply TIN B's value-
based payment modifier to the physician's payments for items and
services billed under TIN B during 2015. We are making this proposal
for two reasons. First, payment at the group practice (TIN level)
reflects the view that the group in which a physician practices
matters. Second, we believe it will be more straightforward for groups
of physicians to understand how the value-based payment modifier
affects their TIN's payment in the payment adjustment period if all
physician billing under the TIN receive the same value-based payment
modifier. We seek comment on these proposals.
It is critical to note that our proposals would allow groups of
physicians with 25 or more eligible professionals to decide how the
value-based payment modifier would be applied to their PFS payments. In
light of our desire to align CMS quality improvement programs, this
methodology relies, in part, on the data submitted on quality measures
by groups of physicians through the PQRS. Quality measurement is
necessary, but not sufficient, for quality improvement and a focus on
value. We propose to separate all groups of physicians with 25 or more
eligible professionals into two categories based on how they have
chosen to participate in the PQRS.
The first category includes those groups of physicians with 25 or
more eligible professionals that have met the proposed criteria for
satisfactory reporting of data on PQRS quality measures for the 2013
and 2014 incentive or the proposed criteria for satisfactory reporting
using the administrative claims-based reporting mechanism, which is
applicable to the 2015 and 2016 PQRS payment adjustment. These groups
of physicians will have fulfilled a key condition for quality
improvement and a focus on value, that is, to measure quality by
submitting and/or having data on quality measures that can then be used
to assess quality of care furnished. We propose initially to set the
value-based payment modifier at 0.0 percent for these groups of
physicians, meaning that the value-based payment modifier would not
affect their payments under the PFS. We point out that in order for a
group of physicians to meet the

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satisfactory reporting criteria, the group of physicians must first
self-nominate as a group as described above in Section III.G.1.b.2 of
this proposed rule regarding the PQRS.
Within this category of satisfactory PQRS reporters, we propose to
offer an option that their value-based payment modifier be calculated
using the quality-tiering approach described below in subsection (h)
Proposed Value-Based Payment Modifier Scoring Methodology. Under these
proposals, groups of physicians could earn an upward payment adjustment
for high performance (high-quality tier compared to low-cost tier)
performance, and be at risk for a downward payment adjustment for poor
performance (low-quality tier compared to high-cost tier). We seek
comment, however, on whether to calculate the value-based payment
modifier for all groups of physicians that are satisfactory PQRS
reporters using the quality-tiering approach described in subsection
(h) below, rather than providing an option for such groups of
physicians to request that we do so.
The second category includes those groups of physicians with 25 or
more eligible professionals that have not met the PQRS satisfactory
reporting criteria identified above. Under our proposal, a group of
physicians could fail to meet the PQRS satisfactory reporting criteria
because the group of physician decided not to participate in any PQRS
reporting mechanism or because the group attempted to submit data, but
failed to meet the criteria to become a satisfactory reporter (e.g.,
did not report data appropriately on the requisite number of
beneficiaries or measures). Because we would not have quality measure
performance rates on which to assess the quality of care furnished by
these groups, we propose to set their value-based payment modifier at -
1.0 percent, meaning they would receive 99.0 percent of the paid
amounts for the items and services billed under the PFS.
We believe this approach is a reasonable way to phase in the value-
based payment modifier because groups of physicians have demonstrated
their ability to submit data on quality measures at the group level
using the PQRS GPRO since 2011. And for 2012, we revised the
eligibility criteria for the PQRS GPRO to include groups with at least
25 eligible professionals. Thus, we believe that these groups of
physicians have had sufficient opportunity to make an informed decision
about submitting data on quality measures that also could be used in
the value-based payment modifier starting in 2015.
Moreover, section 1848(p)(5) of the Act requires us to, as
appropriate, apply the value-based payment modifier ``in a manner that
promotes systems-based care.'' In this context, systems-based care is
the processes and workflows that (1) make effective use of information
technologies, (2) develop effective teams, (3) coordinate care across
patient conditions, services, and settings over time, and (4)
incorporate performance and outcome measurements for improvement and
accountability.\12\ We believe that groups of physicians have the
ability and the resources to redesign such processes and workflows to
achieve these objectives and furnish high-quality and cost-effective
clinical care.
---------------------------------------------------------------------------

\12\ Johnson JK, Miller SH, Horowitz SD. Systems-based practice:
Improving the safety and quality of patient care by recognizing and
improving the systems in which we work. In: Henriksen K, Battles JB,
Keyes MA, Grady ML, editors. Advances in Patient Safety: New
Directions and Alternative Approaches, Vol 2: Culture and Redesign.
AHRQ Publication No. 08-0034-2. Rockville, MD: Agency for Healthcare
Research and Quality; August 2008. p. 321-330.
---------------------------------------------------------------------------

Starting in 2017, we would apply the value-based payment modifier
to all physicians and groups of physicians as required by the statute.
We seek comment on whether we should offer individual physicians and
groups of physicians with fewer than 25 eligible professionals an
option that their value-based payment modifier be calculated using a
quality-tiering approach starting in 2015. If we did so, we could
calculate a value-based payment modifier for groups of physicians with
as few as two eligible professionals and apply the value-based payment
modifier at the TIN level in the manner described in these proposals
for groups of 25 or more eligible professionals. Likewise, we seek
comment on how to adapt our proposals to calculate a value-based
payment modifier at the TIN level for physicians in solo practices
(TINs comprised of one NPI).
We also seek comment on whether we should develop a value-based
payment modifier option for hospital-based physicians to elect to be
assessed based on the performance of the hospital at which they are
based. In particular, hospital performance could be assessed using the
measure rates the hospitals report on the quality measures in the
Inpatient Quality Reporting (IQR) and the Outpatient Quality Reporting
(OQR) programs. If so, we seek comment on which IQR and OQR measures
(and the applicable reporting period) would be appropriate to include
in such an option and a way to identify and verify whether physicians
are hospital-based. The IQR measures can be found at http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1141662756099 and the OQR measures can be found at http://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1196289981244.
In addition, we seek comment on how best to ascertain whether a
group of physicians with 25 or more eligible professionals requests the
option that their value-based payment modifier be calculated using a
quality-tiering approach. We seek to establish a system that reduces
administrative burden on physicians, enables these groups of physicians
to indicate how they plan to submit data on quality measures through
the PQRS, and is easy to administer. We could, for example, build off
of the self-nomination process that we have proposed for groups of
physicians to participate in the PQRS GPRO. As discussed in Section
III.G.1.b.2 of this proposed rule regarding the PQRS, we anticipate
that we will have the ability to collect self-nomination statements via
the web in 2013. As proposed above, these self-nomination statements
would be submitted by January 31, 2013 for the 2013 performance period.
In the event that the web-based functionality is unable to accept self-
nomination statements for 2013, we have proposed that groups of
physicians submit a self-nomination statement via a letter (in a
prescribed format) to CMS in a timely manner.
We also could establish a separate web-based registration system
that permits groups of physicians to, throughout calendar year 2013,
request that their value-based payment modifier be calculated using the
quality-tiering approach (rather than submit a self-nomination
statement by January 31, 2013 as proposed in the PQRS self-nomination
process). Another approach would be to require that groups of
physicians submit a letter (in a prescribed format) to CMS in a timely
manner. We seek comment on these approaches.
We propose not to offer groups of physicians with 25 or more
eligible professionals that are participating in the Medicare Shared
Savings Program or are associated with the Pioneer ACO program,
assuming they meet the PQRS satisfactory reporting criteria, the option
that their value-based payment modifier be calculated using the
quality-tiering approach. As of April 2012, 27 ACOs are participating
in the Shared Savings Program, and 32 ACOs are participating in the
Pioneer ACO program. We anticipate more ACOs will enter the

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Medicare Shared Savings Program beginning July 1, 2012, and on January
1st annually thereafter. Shared Savings Program ACOs will be in a ``pay
for reporting'' mode in 2013, while Pioneer ACOs will be in a ``pay for
performance'' mode in 2013.
We make this proposal because we are mindful that the physicians
and groups of physicians that are, or will be, participating in the
Shared Savings Program and the Pioneer ACO program have made sizable
investments to redesign care processes based on the incentives created
by these programs. Indeed, these organizations have committed to
reporting on a broader set of quality measures than we are proposing
for the value-based payment modifier to demonstrate the quality of care
their beneficiaries are receiving. We do not wish to unintentionally
disturb these investments. Therefore, we seek comment on ways to
structure the value-based payment modifier starting in 2017 so it does
not create incentives that conflict with the goals of the Shared
Savings Program and the Pioneer ACO program. Alternatively, we seek
comment on whether we should permit groups of physicians that are
participating in these two programs the option that their value-based
payment modifier be calculated using a quality-tiering approach and
applied to their payments under the PFS starting in 2015.
We note that the value-based payment modifier is applicable only to
payment for physicians' services under the PFS. The value-based payment
modifier does not apply to services that physicians furnish in Rural
Health Clinics (RHCs), Federally Qualified Health Centers (FQHCs), and
Critical Access Hospitals (CAHs) billing under method II (but not
method I or the standard method), because they are not considered as
being paid under the PFS.
b. Proposed Performance Period
We previously finalized CY 2013 as the initial performance period
for the value-based payment modifier that will be applied in CY 2015
(76 FR 73436). This means that we will use performance on quality and
cost measures during CY 2013 to calculate the value-based payment
modifier that we would apply to items and services for which payment is
made under the PFS during CY 2015. Likewise, we propose that
performance in CY 2014 be used to calculate the value-based payment
modifier that is applied to items and services for which payment is
made under the PFS during CY 2016.
As we explained previously in the CY 2012 PFS final rule with
comment period (76 FR 73435), we explored different options to close
the gap between the performance period (that is, 2013) and the payment
adjustment period (that is, 2015), but that none of them would have
permitted sufficient time for physicians and groups of physicians to
report measures or have their financial performance measured over a
meaningful period, or for us to calculate a value-based payment
modifier and notify physicians and groups of physicians of their
quality and cost performance and value-based payment modifier prior to
the payment adjustment period. We also explained that a system that
adjusted payments to take into account the value-based payment modifier
after claims have been paid would be onerous on physicians and
beneficiaries. We continue to explore ways to provide more timely
feedback to physicians and to narrow the gap between the performance
period and the payment adjustment period and seek comment on practical
alternatives that we could implement to do so. We seek comment on our
proposal to use CY 2014 as the performance period for the 2016 value-
based payment modifier.
c. Proposed Quality Measures
In this section we discuss our proposals to align quality measure
reporting for the value-based payment modifier with PQRS reporting
methods, to expand the range of quality measures that we will use for
the value-based payment methodology, and to start a discussion on how
to assess community based quality of care.
(1) Alignment of Quality Reporting Options With PQRS Satisfactory
Reporting Criteria
As discussed above, we propose to categorize groups of physicians
with 25 or more eligible professionals into two categories depending
upon whether they have met the PQRS satisfactory reporting criteria
established above for the value-based payment modifier. We note that
under those proposed criteria for satisfactory reporting, groups of 25
or more eligible professionals would be able to submit data on quality
measures using one of following proposed PQRS reporting mechanisms:
PQRS GPRO using the web-interface, claims, registries, or EHRs; or PQRS
administrative claims-based option. These reporting mechanisms are
discussed above in Section III.G of this proposed rule (Physician
Payment, Efficiency, and Quality Improvement--Physician Quality
Reporting System). The satisfactory reporting criteria for the PQRS
GPRO reporting mechanisms are described in Tables 27 and 28. The
satisfactory reporting criteria for the PQRS administrative claims-
based reporting option is described in Section III.G. (``Proposed
Criteria for Satisfactory Reporting for the 2015 and 2016 Payment
Adjustments for Eligible Professionals and Group Practices using the
Administrative Claims-based Reporting Mechanism.'') We propose to rely
on these proposed criteria for satisfactory reporting in order to
categorize groups of physicians for purposes of the value-based payment
modifier.
For those groups of physicians that have met the PQRS satisfactory
reporting criteria and request that their value-based payment modifier
be calculated using a quality-tiering approach, we propose to use the
performance rates on the quality measures reported through any of these
reporting mechanisms. We seek comment on this proposal. We are
concerned, however, that some groups of physicians may attempt to
submit data on PQRS quality measures using one of the GPRO reporting
mechanisms (web-interface, claims, registries, or EHRs) and fail to
meet the criteria for satisfactory reporting and thus be categorized as
non-PQRS reporters (and be subject to the -1.0 percent downward
adjustment). To address this issue, we seek comment on whether to
assess performance on the measures included in the PQRS administrative
claims-based reporting option as a default if a group of physicians
attempts to participate in one of the PQRS GPRO reporting mechanisms
and does not meet the PQRS criteria for satisfactory reporting.
In addition, we seek comment on which PQRS reporting mechanisms we
should offer to individual physicians if we were to apply the value-
based payment modifier applied to their payments under the PFS starting
in 2015 or 2016. Tables 25 and 26 describe the proposed PQRS reporting
options available to individual physicians for the 2013 and 2014 PQRS
incentives.
(2) Quality Measure Alignment With the Physician Quality Reporting
System
In the CY 2012 PFS final rule with comment period (76 FR 73432), we
finalized, for physicians practicing in groups, all measures in the
GPRO of PQRS for 2012. We also stated that we expected to update these
measures for the initial performance year (CY 2013) of the value-based
payment modifier based on the measures finalized in subsequent
rulemaking under PQRS. (76 FR 73427 through 73432). We propose to
include all individual measures in

[[Page 44998]]

the PQRS GPRO web-interface, claims, registries, and EHR reporting
mechanisms for 2013 and beyond for the value-based payment modifier.
These quality measures are included in Tables 30 and 32. We seek
comment on this proposal.
We also seek comment on the quality measures that we should propose
for individual physicians if we were to provide individual physicians
the ability to elect to have the value-based payment modifier apply to
their payments under the PFS starting in 2015 or 2016. In the CY 2012
PFS final rule with comment period, we finalized for individual
physicians, the PQRS core set of measures for CY 2012 and the core set
of measures, alternate core, and additional measures in the Medicare
EHR Incentive Program for 2012. We seek comment on which PQRS measures
for 2013 and beyond to include in calculating the value-based payment
modifier at the individual level. Table 32 lists the PQRS measures we
are proposing for reporting through PQRS for 2013 and beyond. We
believe incorporating all the PQRS measures provides a broad set of
quality measures from which physicians can choose how best to assess
their performance. We seek comment on these issues and the above
proposals.
(3) Administrative Claims Option Under PQRS
Under the PQRS, we propose to provide an option for physicians and
groups of physicians to select an administrative claims-based reporting
option for purposes of the PQRS payment adjustment for 2015 and 2016
only. We discuss two issues surrounding this proposed administrative
claims-based reporting option as it relates to the value-based payment
modifier: (1) the level at which to assess the administrative claims-
based measures (individual or group), and (2) the scope of quality
measures that will be assessed using administrative claims.
(a.) Level of Performance Assessment
We can either assess performance at the individual physician level,
as we did in the 2010 individual Physician Feedback reports, or at the
group practice level and apply the performance rate to the physicians
that are part of that group. Measurement and assessment at the
individual level (as identified by a National Provider Identification
number (NPI)) provides actionable information for improvement for
physicians and can incentivize physician accountability for quality of
care and cost. Despite these benefits, assessments of individual
physicians using administrative claims-based measures may result in
insufficient numbers of cases at the individual level to develop
statistically reliable performance rates for each measure. Moreover,
because physician performance would affect payment, we believe
performance rates should be statistically reliable.
Assessment of physician performance at the group practice level (as
identified by a single Taxpayer Identification Number (TIN)) reflects
the view that the group in which a physician practices matters.\13\
Group practice assessments will allow for a larger number of cases to
assess performance scores and a larger number of outcome measures than
assessments solely at the individual level. The larger number of cases
also means the performance scores will be more statistically reliable
on which to modify payment. It also allows us to calculate more quality
measures in more domains of the National Quality Strategy. For these
reasons, for purposes of the value-based payment modifier, we propose
to assess performance rates for the measures in the PQRS administrative
claims-based reporting option at the TIN level and apply the calculated
performance score and the resulting value-based payment modifier to all
physicians that bill under that TIN during the payment adjustment
period. We seek comment on this proposal.
---------------------------------------------------------------------------

\13\ See e.g., Johnson JK, Miller SH, Horowitz SD. Systems-based
practice: Improving the safety and quality of patient care by
recognizing and improving the systems in which we work. In:
Henriksen K, Battles JB, Keyes MA, Grady ML, editors. Advances in
Patient Safety: New Directions and Alternative Approaches, Vol 2:
Culture and Redesign. AHRQ Publication No. 08-0034-2. Rockville, MD:
Agency for Healthcare Research and Quality; August 2008. p. 321-330.
---------------------------------------------------------------------------

(b.) Quality Measures
In the CY 2010 individual Physician Feedback reports, which we
distributed to over 23,000 physicians in Iowa, Kansas, Missouri, and
Nebraska in March 2012, we provided performance rates on 28
administrative claims-based measures. These measures focused on
clinical care of prevalent and chronic diseases among Medicare
beneficiaries and medication management measures and were assessed at
the individual physician level (that is, NPI). Twenty-seven of the 28
measures were endorsed by the National Quality Forum and the remaining
measure was developed and is maintained by the National Committee for
Quality Assurance (NCQA). Specifications for all 28 administrative
claims-based measures can be found at https://www.cms.gov/physicianfeedbackprogram.
We propose to include, for purposes of assessing performance for
the PQRS administrative claims-based reporting option, 15 of these
measures, which are indicated in Table 64. We have selected these 15
measures because they are clinically meaningful, focus on highly
prevalent conditions among beneficiaries, have the potential to
differentiate physicians, and are reliable. Most of the proposed
measures do not rely on the use of Part D drug data that we do not have
for all Medicare FFS beneficiaries. We also note that these proposed
measures are similar to the measures adopted in several private sector
programs.\14\ We also seek comment, however, on whether to include any
of the remaining 13 measures that we have not proposed, but included in
the Physician Feedback Reports. These measures are listed in Table 65.
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\14\ Zirui Song, et al, ``Health Care Spending and Quality in
Year 1 of the Alternative Quality Contract,'' New England Journal of
Medicine, 365:10 (Sept. 2011).
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(4) Outcome Measures for Groups of Physicians
We finalized in the CY 2012 PFS final rule (76 FR 73432) for
physicians practicing in groups to include the rates of potentially
preventable hospital admissions for two ambulatory care sensitive
conditions (ACSCs) at the group practice level: heart failure; and
chronic obstructive pulmonary disease. We also noted that several
commenters to the CY 2012 proposed PFS rule expressed support for using
outcome measures that assess the rate of potentially preventable
hospital admissions including the Consumer-Purchaser Disclosure
Project, a group of large purchasers of health care services. We
believe it is appropriate to focus on potentially preventable hospital
admissions because, as our 2010 Physician Feedback reports have shown,
hospital inpatient, outpatient, and emergency department costs account
for over 50 percent of total per capita costs. Thus, we propose to
include four outcome measures in the value-based payment modifier for
all groups of physicians with 25 or more eligible professionals. These
outcome measures are discussed below. It is important to note that we
propose to calculate these measures for groups of physicians with 25 or
more eligible professionals regardless of which reporting mechanisms
the groups of physicians choose to report quality data: PQRS GPRO using
the web-interface, claims, registries, or EHRs; or the PQRS
administrative claims-based reporting option.
Currently the Physician Feedback reports that we provide to group
practices include potentially preventable hospital admission measures
for three chronic conditions: heart disease, chronic pulmonary
obstructive disease, and diabetes (a composite measure including
uncontrolled diabetes, short term diabetes complications, long term
diabetes complications and lower extremity amputation for diabetes). In
addition, the Physician Feedback reports provide potentially
preventable hospital admission measures for three acute conditions:
dehydration; urinary tract infection; and bacterial pneumonia.
Specifications for all six of these measures can be found at http://www.qualityindicators.ahrq.gov/Modules/PQI_TechSpec.aspx.
However, given the potential that any group of physicians may have
relatively few potentially preventable hospital admissions for a given
condition, we propose to create for the value-based payment modifier
two composites from these measures: an acute condition composite; and a
chronic care composite. Compositing measures is a well-established
technique in quality measurement to increase reliability when the
number of cases is small because it combines individual measures into
one composite measure. Additionally, presenters on the National
Provider Calls CMS held on February 29 and March 14 entitled
``Physician Value-Based Payment Modifier Program: Experience from
Private Sector Physician Pay-for-Performance Programs'' specifically
recommended this approach for the value-based payment modifier.
(Transcripts and slides from these presentations are available at
http://www.cms.gov/physicianfeedbackprogram.)
We propose that the acute condition composite combine the rates of
potentially preventable hospital admission for dehydration, urinary
tract infection, and bacterial pneumonia. We propose that the chronic
care composite combine the rates of potentially preventable hospital
admissions for diabetes, heart failure, and chronic obstructive
pulmonary disease. We believe group practices will be incentivized to
prevent these types of hospital admissions, which will improve patient
care and reduce per capita costs.

We also propose to use two other quality measures to assess care
coordination at the group level that we currently use in other CMS
physician quality programs: the all-cause hospital readmission
measure used in the Medicare Shared Savings Program (described on
the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/ACO_QualityMeasures.pdf) and the 30-day post-discharge visit measure
used in the PGP Transition Demonstration (described at https://www.cms.gov/Medicare/Demonstration-Projects/DemoProjectsEvalRpts/downloads//PGP_Transition_Quality_Specs_Report.pdf). We believe
that the all-cause hospital readmission measure provides a strong
incentive for groups to focus on reducing hospital readmissions. In
addition, the 30-day post-discharge visit measure helps incentivize
physicians to engage in more effective care coordination. Recent
literature cites a study in which there was no visit to a
physician's office between the time of discharge and
rehospitalization for 50 percent of patients who were rehospitalized
within 30 days after a medical discharge to the community.\15\ Based
on input and comments from stakeholders, including other payers, we
believe that such follow up visits can reduce unnecessary
rehospitalizations. These four measures are summarized in Table 66.
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\15\ N Engl J Med 2009; 360:1418-1428

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BILLING CODE 4120-01-C
We also note that we are making plans to seek National Quality Forum
endorsement for these four measures as required by section
1848(p)(2)(B)(ii) of the Act. We seek comment on our proposals to use
these four measures in the value-based payment modifier for all groups
of physicians with 25 or more eligible professionals.
At this time we are not making proposals regarding how to assess
community-level performance and how such assessments could be included
in the value-based payment modifier for groups of physicians. We seek
comment, however, on whether measurement and adjustment at the
community level would further our objectives to encourage and reward
physicians and groups of physicians for furnishing high-quality,
efficient, patient-centered clinical care.
d. Proposed Cost Measures
Section 1848(p)(3) of the Act requires us to evaluate costs, to the
extent practicable, based on a composite of appropriate measures of
costs. In the CY 2012 PFS final rule with comment period (76 FR 73434),
we finalized use of total per capita cost measures and per capita costs
measures for beneficiaries with four specific chronic conditions
(chronic obstructive pulmonary disease, heart failure, coronary artery
disease, and diabetes) for the value-based payment modifier. Total per
capita costs include payments under both Part A and Part B. Total per
capita costs do not include Medicare payments under Part D for drug
expenses. We propose to use at least a 60-day run out with a completion
factor from our Office of the Actuary (for example, claims paid through
March 1 of the year following December 31, the close of the performance
period) to calculate the total per capita cost measures. We seek
comment on this proposal.
We used these five measures in the 2010 Physician Feedback reports
for individual physicians and physician groups; they also will be
included in the 2011 Physician Feedback reports that we expect to
disseminate later in 2012. We propose to continue to use these five
measures to calculate the cost composite for the value-based payment
modifier. We also are developing plans to submit these per capita cost
measures for National Quality Forum endorsement.
Several recipients of the 2010 Physician Feedback reports objected
to being ``held responsible'' for total per capita costs of the
beneficiaries that they treated, because they could not affect the
other costs incurred by the patient. In our view, the total per capita
cost measure is just one metric used to assess the costs of care. It
has no impact until we use it to make comparisons among

[[Page 45003]]

physicians and groups of physicians. In other words, it is not the
measure itself (because it reflects the total cost of care
beneficiaries received), but how we use it to assess performance that
matters. As described more fully in the composite scoring methodology
proposals below, we propose to make cost comparisons among groups of
physicians using a similar beneficiary attribution methodology such
that we make ``apples to apples'' comparisons. We believe that this
would be an appropriate approach to using the total per capita cost
measure in the value-based payment modifier. We seek comment on these
proposals.
(1) Proposed Payment Standardization Methodology for Cost Measures
Section 1848(p)(3) of the Act requires that ``* * * costs shall be
evaluated, to the extent practicable, based on a composite of
appropriate measures of costs established by the Secretary (such as the
composite measure under the methodology established under section
1848(n)(9)(C)(iii)) that eliminate the effect of geographic adjustments
in payment rates (as described in subsection (e)) * * *'' In layman's
terms, this directive requires us to standardize Medicare payments to
ensure fair comparisons across geographic areas.
Payment standardization removes local or regional price differences
that may cause cost variation a physician cannot influence through
practicing efficient care. In Medicare, an effective payment
standardization methodology would exclude Medicare geographic
adjustment factors such as the geographic practice cost index (GPCI)
and the hospital wage index so that, for example, per capita costs for
beneficiaries in Boston, Massachusetts can be compared to those of
beneficiaries in Lincoln, Nebraska. Payment standardization, therefore,
allows fair comparisons of resource use costs for physicians to those
of peers who may practice in locations or facilities where Medicare
payments are higher or lower.
We have developed a detailed Medicare payment standardization
methodology that excludes such geographic payment rate differences. We
developed the methodology with substantial stakeholder input, and we
update it annually to incorporate any payment system changes. More
details of the CMS payment standardization methodology that we are
proposing can be found at http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772057350.
We have used this standardization approach, for example, in
feedback reports we provide to hospitals related to the Medicare
Spending per Beneficiary measure. The CMS payment standardization
methodology includes a number of payment adjustments across the
spectrum of fee-for-service Medicare. For example, the methodology
eliminates adjustments made to national payment amounts that reflect PE
and regional labor cost differences (measured by the GPCI and hospital
wage index); substitutes a national amount when services are paid using
a state fee schedule; eliminates supplemental payments to hospitals
that treat a high share of poor and uninsured patients (that is,
Medicare disproportionate share hospital (DSH) payments) or that
receive indirect graduate medical education (IME) payments; removes
incremental payments for community hospitals and Medicare-dependent
hospitals above their base payments; and eliminates certain rural add-
on payments for inpatient psychiatric hospitals and inpatient
rehabilitation facilities. Outlier payments are treated as they would
be if payments were not standardized, but they are adjusted to reflect
wage differences.
The CMS payment standardization methodology also eliminates the
effect of incentive payments under the PFS for physicians that furnish
services in rural areas and other underserved communities such that
they are not disadvantaged in the value-based payment modifier. For
example, section 1833(m) of the Act provides incentive payments for
physicians who furnish medical care services in geographic areas that
are designated as primary medical care Health Professional Shortage
Areas (HPSAs) under section 332 (a)(1)(A) of the Public Health Service
(PHS) Act. The CMS standardization methodology does not include these
incentive payments in standardized Part B costs so that physicians that
furnish services in these areas are not disadvantaged in the value-
based payment modifier. We believe that by doing so we are complying
with the requirement in Section 1848(p)(6) to ``take into account the
special circumstances of physicians or groups of physicians in rural
areas and other underserved communities when applying the value-based
payment modifier.''
We standardized the cost measures in the 2010 Physician Feedback
reports to allow fair comparisons of costs across physicians. However,
we note that the methodology used in the 2010 Physician Feedback
reports differs from the methodology that we are proposing for the
value-based payment modifier. Although that methodology achieved the
same goal of ensuring fair comparisons, the standardization techniques
used for the 2010 reports were performed at the regional level (because
the reports focused on providers in four states) and used an averaging
approach. Thus many of the national adjustments that we have proposed
in this rule were not applicable to the 2010 Physician Feedback
reports. In the 2011 Physician Feedback reports that we expect to
disseminate later in 2012, we will use the national payment
standardization methodology currently used to standardize payments in
hospital feedback reports for the Medicare Spending per Beneficiary
measure. We propose to use that same methodology to standardize cost
measures for purposes of the value-based payment modifier. We believe
that this approach to payment standardization allows us to standardize
payments nationally and to use a consistent approach across multiple
programs and CMS initiatives. We seek comments on this proposal.
(2) Proposed Risk Adjustment Methodology for Cost Measures
Section 1848(p)(3) of the Act requires that costs be adjusted to
``* * * take into account risk factors[,] such as socioeconomic and
demographic characteristics, ethnicity, and health status of
individuals (such as to recognize that less healthy individuals may
require more intensive interventions) and other factors determined
appropriate by the Secretary.''
Risk adjustment accounts for differences in patient characteristics
not directly related to patient care, but that may increase or decrease
the costs of care. In the Physician Feedback reports, after
standardizing per capita costs for geographic factors, we also adjusted
them based on the unique mix of patients attributed to the physician or
group of physicians. Costs for beneficiaries with high risk factors
(such as a history of chronic diseases, disability, or increased age)
are adjusted downward, and costs for beneficiaries with low risk
factors are adjusted upward. Thus, for individual physicians or
physician groups who have a higher than average proportion of patients
with serious medical conditions or other higher-cost risk factors, risk
adjusted per capita costs are lower than the unadjusted costs, because
costs of higher-risk patients are adjusted

[[Page 45004]]

downward. Similarly, for individual physicians or physician groups who
treated comparatively lower-risk patients, risk adjusted per capita
costs were higher than unadjusted costs, because costs for lower-risk
patients were adjusted upwards.
In the Physician Feedback program, we applied a risk adjustment
methodology to account for patient differences in per capita costs that
were due to patient demographics such as age and gender, socioeconomic
factors such as Medicaid dual eligible status, and prior health
conditions that can affect a beneficiary's costs, regardless of the
efficiency of the care provided. This risk adjustment methodology uses
the CMS' Hierarchical Condition Categories (HCC) model, which
incorporates beneficiary characteristics and prior year diagnoses to
predict relative Medicare Part A and Part B payments. This model was
originally developed under contract to CMS by researchers at Boston
University and Research Triangle Institute (RTI) with clinical input
from Harvard Medical School physicians based on an analysis of Medicare
FFS beneficiaries diagnoses and expenditures. The model is updated
every year to incorporate new diagnosis codes and is recalibrated
regularly to reflect more recent diagnosis and expenditure data.
The HCC model assigns prior year ICD-9-CM diagnosis codes (each
with similar disease characteristics and costs) to 70 generally high-
cost clinical conditions to capture medical condition risk. The HCC
risk scores also incorporate patient age, gender, reason for Medicare
eligibility (age or disability), and Medicaid eligibility status, which
is in part a proxy for socioeconomic status and reflects the greater
resources typically used by beneficiaries eligible for both Medicare
and Medicaid. The risk adjustment model also includes the beneficiary's
end stage renal disease (ESRD) status. More information about the risk
adjustment model is on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/122111_Slide_Presentation.pdf.
We have examined the impacts of applying the above risk adjustment
methodology for physicians included at the group and individual level
in the 2010 Physician Feedback reports and believe the approach
provides a reasonable method to adjust per capita costs based on
beneficiary characteristics. The results show that the risk adjustment
methodology, in the aggregate, compresses the range of per capita costs
substantially and that a group of physicians' total per capita cost
measures can experience substantial adjustment based upon the risk
profile of the beneficiary population. For groups of physicians, the
risk adjustment methodology had the effect of reducing the absolute
difference between the groups with the lowest per capita cost and the
highest total per capita cost by 55.7 percent. In particular, the
lowest third of the groups were increased by an average of 6.2 percent
and the most expensive third were lowered by 10.4 percent. The middle
third, on average, were lowered by 0.1 percent. The range of
adjustments was between -10.3 percent and +8.2 percent. We found
similar results at the individual level.
We propose to use the same risk adjustment model for risk adjusting
total per capita costs and the total per capita costs for beneficiaries
with four chronic diseases (coronary artery disease, COPD, diabetes,
and heart failure) as we have used for the group and individual 2010
Physician Feedback reports. We seek public comment on applying the same
risk adjustment approach to the value-based payment modifier as with
the Physician Feedback reports.
(3) Episode-Based Cost Measures
Section 1848(n)(9)(A)(ii) of the Act as added by section 3003 of
the Affordable Care Act, required CMS to develop a Medicare episode
grouper by January 1, 2012. Four contractors submitted prototype
episode groupers to CMS in September 2011, and, after evaluating the
prototypes, we selected one to develop its prototype episode grouper
into a comprehensive Medicare episode grouper. This process will entail
additional technical and analytical development, as well as testing of
the more fully developed episode grouping product. Initially the
episode grouper will focus on selected chronic conditions and acute
events. As development of the selected episode grouper continues, we
expect to see the number of conditions increase. We plan to use the
episode grouper in future Physician Feedback reports in order to test
and gain stakeholder input into the development of the episodes of
care.
Although the statute does not require the use of the episode-based
cost measures for the value-based payment modifier, it requires that we
use such cost measures in the Physician Feedback reports. We plan to
include episode-based cost measures for several conditions in the
Physician Feedback reports beginning in 2013 (based on 2012 data).
Interested parties that commented on the CY 2012 PFS final rule with
comment period (76 FR 73434) recommended that we use episode-based cost
measures in the value-based payment modifier, rather than total per
capita costs, because episode-based costs are used in many private
sector pay-for-performance programs and directly reflect care provided
by physicians. We anticipate providing episode-based cost measures in
the Physician Feedback reports before proposing them for the value-
based payment modifier in future rulemaking.
e. Attribution of Quality and Cost Measures
Calculation of administrative claims-based quality and cost measure
performance rates requires us to attribute Medicare beneficiaries to
groups of physicians. For example, for the PQRS administrative claims-
based reporting option, we must attribute beneficiaries to groups of
physicians (as identified by a single TIN) so that we are able to
calculate the relevant quality measure and cost measure performance
rates. Likewise, we must attribute beneficiaries to groups of
physicians that submit data on quality measures under the PQRS GPRO in
order to calculate the cost measure performance rates. In the 2010
Physician Feedback reports, we used two different attribution
methodologies: one method for individual physicians (``degree of
involvement method'') and another method for groups of physicians
(``plurality of care method''). This section discusses our proposals
for using these attribution methods to calculate the quality and cost
measures for the value-based payment modifier. We note that the
attribution methods do not impact beneficiaries' choice of providers.
We used the plurality of care method to attribute beneficiaries in
the 2010 Physician Feedback reports provided to the group practices
using the PQRS GPRO web-interface. In this method, we attributed
Medicare FFS beneficiaries to the group practice that billed a larger
share of office and other outpatient Evaluation and Management (E/M)
services (based on dollars) than any other group of physician practice
(that is, the plurality). In addition, beneficiaries had to have at
least two E/M services at the group of physicians. We used this
attributed population to identify a sample of beneficiaries eligible
for the quality measures reported via the PQRS GPRO web-interface. We
also calculated the per capita cost measures based on this attributed
population.
In the discussion above regarding beneficiary attribution for
groups of physicians choosing to report quality

[[Page 45005]]

measures through the PQRS GPRO web-interface, we are seeking comment on
the continued use of the ``plurality of care'' attribution methodology
or to use the Medicare Shared Savings Program attribution methodology
for 2013 and beyond. The Medicare Shared Savings Program attribution
methodology is described at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Statutes_Regulations_Guidance.html. For purposes of program alignment, we propose to use the
same attribution methodology that we finalize for the PQRS GPRO web-
interface to attribute beneficiaries to groups of physicians for
purposes of the value-based payment modifier. This proposal means that
we would calculate the per capita cost measures based on the same
attributed beneficiary population as we use for determining the quality
measures for the group of physicians that report PQRS quality data
through: PQRS GPRO using the web-interface, claims, registries, or
EHRs; or PQRS administrative claims-based option.
We are concerned, however, that such an attribution methodology may
be too restrictive because it relies solely on office (E/M) visit codes
and it could fail to attribute beneficiaries whom the group practices
would identify as their beneficiaries. This situation may occur, for
example, with single specialty groups such as radiologists or
anesthesiologists that do not submit claims that use E/M codes. For
these reasons, we seek comment on whether to use an alternative
approach (such as the ``degree of involvement'' method that is
discussed next) for all groups of physicians except those reporting
quality measures using the PQRS GPRO web-interface.
We used the ``degree of involvement'' method to attribute
beneficiaries for cost purposes to individual physicians in the CY 2010
Physician Feedback reports, which we produced for physicians (23,730
physicians in total) in four states: Iowa; Kansas; Missouri; and
Nebraska. Under this attribution method, we classified the patients for
which a physician submitted at least one Medicare FFS Part B claim into
three categories (directed, influenced, and contributed) based on the
amount of physician involvement with the patient:\16\
---------------------------------------------------------------------------

\16\ CMS, ``Detailed Methodology for Individual Physician
Reports'' (2012), available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeedbackProgram/Downloads/QRURs_for_Individual_Physicians.pdf.
---------------------------------------------------------------------------

For directed patients, the physician billed for 35 percent
or more of the patient's office or other outpatient evaluation and
management (E&M) visits.
For influenced patients, the physician billed for fewer
than 35 percent of the patient's outpatient E&M visits but for 20
percent or more of the patient's total professional costs.
For contributed patients, the physician billed for fewer
than 35 percent of the patient's outpatient E&M visits and for less
than 20 percent of the patient's total professional costs.
The result of this methodology is that all of the beneficiaries for
which a physician submitted Medicare Part B claims are attributed to
the physician, but the beneficiaries are classified according to the
degree of physician involvement with the beneficiary. We then
calculated per capita cost measures for the beneficiaries within each
of these three classifications. In addition, a beneficiary can be
attributed to more than one physician (and in different categories) if
the beneficiary received services from more than one physician.
Based on the CY 2010 reports, physicians that ``directed'' care
billed, on average, approximately three E/M visits with the patient,
which represented over 64 percent of all E/M services furnished by the
physicians treating the beneficiary. Although the directed attribution
rule permits two physicians to be attributed to the same beneficiary
(because only two physicians could each have greater than 35 percent of
the beneficiaries E/M visits), in practice that rarely happened as a
physician that directed care of a beneficiary had the substantial
majority of E/M visits, that accounted for 31 percent of costs among
all physicians treating the beneficiary. These observations indicate
the physician had substantial control over the patient's care. In
addition to primary care specialties, the other specialties with the
greatest percentage of physicians directing care were rheumatology and
oncology.
Physicians that ``influenced'' care had, on average, one E/M visit
with the beneficiary, but also had slightly over one-third of the
beneficiaries' total Part B costs. Although the average number of E/M
visits was low, the physician, on average, billed for one procedure
during the year and this procedure was the most expensive one for the
patient. This share of Part B costs was greater than physicians that
directed or contributed to a beneficiary's care. Although the
influenced attribution rule permits up to five physicians to influence
care (because five physicians could each bill 20 percent of total Part
B costs), this rarely happened as a physician that influenced care of a
beneficiary had, on average, approximately 84 percent of total Part B
costs compared to other physicians that could have influenced care.
Medical specialists and surgeons, including ophthalmology, orthopedic
surgery, plastic and reconstructive surgery had the greatest percent of
beneficiaries for which they influenced care.
Physicians that ``contributed'' to care had, on average, less than
one E/M visit per year with the beneficiary and billed for less than,
on average, 20 percent of average beneficiaries' total professional
costs, thus indicating that the beneficiary received care from many
providers. On average, at least five physicians contributed to a
beneficiary's care (not including those that directed or influenced
that care).
We calculated average total per capita cost measures for physicians
by attribution rule and these costs are shown in Table 67. Not
surprisingly, total per capita costs for directed and influenced
beneficiaries were about 50 percent of the total per capita costs of
physicians with contributed beneficiaries. The costs in Table 67 show
that beneficiaries that receive care from multiple physicians, have
substantially higher per capita costs. In addition, approximately 20
percent of Medicare beneficiaries covered by the 2010 Physician
Feedback reports had contributed care in which physicians only
contributed to it. In other words, the care furnished was neither
``directed'' nor ``influenced'' by a physician.

Table 67--Average Per Capita Costs by Attribution Rule for Physicians in
Iowa, Kansas, Nebraska, and Missouri
------------------------------------------------------------------------
Average total per
Attribution rule capita cost
------------------------------------------------------------------------
All physicians.................................... $18,831

[[Page 45006]]

Physicians with Directed Beneficiaries............ 10,719
Physicians with Influenced Beneficiaries.......... 9,407
Physicians with Contributed Beneficiaries......... 20,243
------------------------------------------------------------------------

We believe the value-based payment modifier should address not only
the care for beneficiaries that a physician may ``direct'' or
``influence,'' but also play a role in encouraging more efficient, not
just more, care for beneficiaries. We believe that any attribution rule
should consider the ``contributed'' beneficiaries, especially those
beneficiaries that are neither directed nor influenced by other
physicians, because the care of these beneficiaries is where the
greatest potential for improved care and coordination reside.
As explained more below, we seek comment on whether to attribute
two populations of beneficiaries to groups of physicians using (1) a
combination of the directed and influenced rules and (2) the
contributed rule. If we were to finalize this attribution methodology,
we would calculate a separate per capita cost measures for each patient
population. For example, we would calculate one total per capita cost
measure for the groups of physicians' ``directed and influenced''
beneficiaries and a second total per capita cost measure for the
groups' ``contributed'' beneficiaries. (In the value-based payment
modifier scoring methodology section below, we explain our proposals
for how to score and weight these measures to ensure fair comparisons
among groups of physicians).
First, we would attribute beneficiaries to a group of physicians
that billed for 35 percent or more of the patient's office or other
outpatient (E/M) visits or at least 20 percent or more of the
beneficiary's total professional costs. This proposal combines the
``directed'' and ``influenced'' methods discussed above. Combining
``directed'' and ``influenced'' beneficiaries into one attributed
patient population is reasonable because groups of physicians that care
for these beneficiaries treat them, on average, more than any other
physician or are responsible for a large percentage of professional
costs. Combining the ``directed'' and ``influenced'' rules attributes
beneficiaries to the group of physicians over which they have
substantial control of resource utilization.
Second, we would attribute a second and separate patient population
to the group of physicians which would consist of the remaining
beneficiaries to whom a group of physicians provided service but who
were not attributed in the first patient population (for example,
beneficiaries for which the group of physicians did not bill for 35
percent of more of E/M visits and for less than 20 percent of
professional costs). This rule corresponds to the ``contributed''
category discussed above. We believe that attributing a second patient
population to groups of physicians ensures accountability for all
beneficiaries to whom a group of physicians furnishes services. We seek
comment on whether to use the ``degree of involvement'' attribution
method for all groups of physicians that submit data on PQRS quality
measures through PQRS GPRO using claims, registries, and EHRs, and
through the PQRS administrative claims-based option.
f. Proposed Composite Scores for the Value-Based Payment Modifier
Section 1848(p)(2) of the Act requires that quality of care be
evaluated, to the extent practicable, based on a composite of measures
of the quality of care furnished. Likewise, section 1848(p)(3) of the
Act requires that cost measures used in the value-based payment
modifier be evaluated, to the extent practicable, based on a composite
of appropriate measures of costs. This section discusses our proposals
for constructing the quality of care and cost composites.
(1) Proposed Quality of Care and Cost Domains
In many of our value-based purchasing programs such as Hospital
Value-Based Purchasing and the Medicare Shared Savings Program, we
selected and classified measures into quality domains that reflect
important national objectives for quality assessment and improvement.
We believe it is important to align the quality measures used in the
value-based payment modifier with the national priorities established
in the National Quality Strategy. The National Quality Strategy
outlined six priorities including:
Make care safer by reducing harm caused in the delivery of
care (patient safety).
Ensure that care engages each person and family as
partners (patient experience).
Promote effective communication and coordination of care
(care coordination).
Promote the most effective prevention and treatment
practices for leading causes of mortality (clinical care).
Work with communities to promote wide use of best practice
to enable healthy living (population/community health).
Make quality care more affordable for individuals,
families, employers, and governments by developing and spreading new
health care delivery models (efficiency).\17\
---------------------------------------------------------------------------

\17\ National Quality Strategy, http://www.healthcare.gov/law/resources/reports/nationalqualitystrategy032011.pdf.
---------------------------------------------------------------------------

We propose to classify each of the quality measures that we
proposed for the value-based payment modifier into one of these six
domains. We propose to weight each domain equally to form a quality of
care composite. We believe this is a straightforward approach that
recognizes the importance of each domain. Within each domain, we
propose to weight each measure equally so that groups of physicians
have equal incentives to improve care delivery on all measures. To the
extent that a domain does not contain quality measures, the remaining
domains would be equally weighted to form the quality of care
composite. For example, if three domains contain quality information,
each domain would be weighted at 33.3 percent to form the quality
composite.
In terms of the cost composite, we finalized in the CY 2012 PFS
final rule (76 FR 73434) total per capita costs (Parts A and B) and
total per capita costs for beneficiaries with four chronic diseases
(diabetes, CAD, COPD, heart failure). We propose to group these five
per capita cost measures into two separate domains: total overall cost
(one measure) and total costs for

[[Page 45007]]

beneficiaries with specific conditions (four measures). A separate
domain for costs for beneficiaries with specific conditions highlights
our desire to incentivize efficient care for beneficiaries with these
conditions.
Similar to the quality of care composite, we propose to weight each
cost domain equally to form the cost composite and within the cost
domains we propose to weight each measure equally. In those instances
in which we cannot calculate a particular cost measure, for example due
to too few cases, we propose to weight the remaining cost measures in
the domain equally.
If we were to attribute two patient populations to each group of
physicians as discussed above regarding the ``degree of involvement''
attribution methodology, we propose to weight the measures in each
population based on the group of physicians' allowed charges for
beneficiaries attributed to each population so that the cost composite
accurately reflects the cost of care furnished. We seek comment on
these proposals. Table 68 graphically depicts these proposals for the
quality of care and cost composites and how they relate to the value-
based payment modifier.
[GRAPHIC] [TIFF OMITTED] TP30JY12.172

(2) Proposed Value-Based Payment Modifier Scoring Methods
We adopted different methods to score quality and cost measures in
our value-based purchasing programs with each scoring methodology
tailored to further the program's purpose. For example, in the Medicare
Shared Savings Program, we finalized a point system scoring methodology
that assesses performance against established Medicare program
benchmarks for each quality measure. In the hospital-value based
purchasing program, we used a point system methodology that considered
both a hospital's achievement and improvement from a baseline
performance period. We then translated these points using a linear
exchange function to develop a unique payment modifier for each
hospital.
For the value-based payment modifier, we believe the composite
scoring methodology should keep intact the underlying distribution of
performance rates so that the composite scores distinguish clearly
between high and low performance. Groups of physicians also should
easily be able to understand how performance on a quality or cost
measure can affect their composite score, and hence their payment. We
also believe that the composite scoring methodology should be used at
all performance assessment levels (individual physician, group of
physicians, hospital). Thus, because we are proposing to provide
flexibility to groups of physicians as to the quality measures they
report, the scoring methodology needs to be able to compare ``apples to
apples.''
Therefore, we propose a scoring approach that focuses on how the
group of physicians' performance differs from the benchmark on a
measure-by-measure basis. For each quality and cost measure, we propose
to divide the difference between a group of physicians' performance
rate and the benchmark by the measure's standard deviation. The
benchmarks, as further

[[Page 45008]]

described below, are the national means of the quality or cost measure.
This step produces a score for each measure that is expressed in
standardized units. As discussed above, we propose to weight each
measure's standardized score equally with other measures in the domain
to obtain the domain standardized score. We propose to weight the
domain scores equally to form the quality of care and cost composites.
We seek comment on this proposal.
We believe that this proposal achieves our policy objective to
distinguish clearly between high and low performance and to allow us to
create composites of quality of care for groups of physicians that
report different quality measures. We also note that this approach is
used in several private sector physician profiling efforts.\18\
---------------------------------------------------------------------------

\18\ See e.g., Tufts Health Plan, ``How Does Tufts Health Plan
Tier Its Doctors'' available at http://www.tuftshealthplan.com/members/members.php?sec=how_your_plan_works&content=your_choice&rightnav=your_choice_nav&WT.mc_id=members_leftnav_hypw_yourchoice&WT.mc_ev=click.
---------------------------------------------------------------------------

Table 69 illustrates how we would score three hypothetical quality
measures in the same quality domain under our proposal. A standardized
score of zero means that performance is at the national mean. Higher
standardized scores (for example, 2.98) mean that performance is better
than the national mean. Likewise, a large negative score means that
performance is much lower than the national mean. In the example shown
in Table 69, the quality domain score would be 0.79 (the average of the
three quality measures' standardized units) meaning the group of
physicians scored slightly better than average in this quality domain.
We would use the same method for the quality measures in the other
domains that a group of physicians reported.

Table 69--Example of Standardized Scores in one Quality Domain
----------------------------------------------------------------------------------------------------------------
Group of
physicians' Benchmark Standard Standardized
performance (national deviation unit
rate mean)
----------------------------------------------------------------------------------------------------------------
Quality Measures................................ .............. .............. .............. ..............
Measure 1....................................... 95.0 93.5 3.3 0.47
Measure 2....................................... 71.4 86.3 13.9 -1.07
Measure 3....................................... 100.0 60.6 13.2 2.98
Quality Domain Score............................ .............. .............. .............. 0.79
----------------------------------------------------------------------------------------------------------------

(3) Proposed Benchmarks and Peer Groups for Quality Measures
We propose that the benchmark for each quality measure be the
national mean of each measure's performance rate during the performance
period. We propose to unify the calculation of the benchmark by
weighting the performance rate of each physician and group of
physicians submitting data on the quality measure by the number of
cases used to calculate the performance rate. Alternatively, we could
weight each quality measure reported by groups of physicians by the
number of physicians in the group. We seek not to bias how physicians
choose to report quality measures (that is, at the group or individual
level) by establishing different benchmarks for the same quality
measures. Moreover, we believe beneficiaries are entitled to high
quality care, regardless of whether a group of physicians or an
individual physician furnishes it.
In addition, we propose that the benchmarks for quality measures in
the PQRS administrative claims-based reporting option be the national
mean of each quality measure's performance rate calculated at the TIN
level. We propose to calculate the national mean by including the all
TINs of groups of physicians with 25 or more eligible professionals. We
propose to weight the TIN's performance rate by the number of cases
used to calculate the quality measure.
To help groups of physicians understand how their quality measure
performance affects their quality of care composite score, we propose
to publish the previous years' performance rates (and standardized
scores) on each quality measure. By doing so, groups of physicians will
be better informed on how their performance may affect their payment in
the coming year. We note, for example, that ``topped out'' quality
measures are unlikely to have significantly higher or lower
standardized scores for each measure because performance is clustered
around the mean, and this scoring method seeks to differentiate
performance from the mean. We seek comment on these proposals.
(4) Proposed Benchmarks and Peer Groups for Cost Measures
To ensure fair cost comparisons that identify groups of physicians
that are outliers (both high and low), we believe the same methodology
should be used to attribute beneficiaries to the groups of physicians
and to the groups of physicians in the peer group. We seek to compare
like groups of physicians that use the same cost attribution
methodology to ensure we are making ``apples to apples'' comparisons
among groups of physicians. As discussed above, there are two ways to
attribute beneficiaries to groups of physicians (``plurality of care''
and ``degree of involvement''). We have proposed to use the ``plurality
of care'' method for groups of physicians, regardless of whether they
report data on PQRS quality measures using the GPRO web-interface,
claims, registries, or EHRs; or the PQRS administrative claims-based
option. Thus, we propose that the peer group for the cost measures
include all other groups of physicians for which we use the ``plurality
of care'' to attribute beneficiaries.
We seek comment on how the cost measure peer groups would change if
we adopt the ``degree of involvement'' methodology for groups of
physicians other than groups of physicians using the PQRS GPRO web-
interface to submit data on quality measures.
Alternatively, we seek comment on establishing cost benchmarks on a
quality measure-by-quality measure basis. Under this alternative
approach, we would set the benchmark as the mean per capita cost of the
physicians or groups of physicians that reported the quality measure--
whether it was reported by a group of physicians or at the individual
physician level. This approach encourages groups of physicians to
select to report quality measures that reflect their practice patterns
and patient populations more

[[Page 45009]]

accurately. We seek comment on whether we should adopt this approach.
We also note that although we are not proposing in this rule to use
episode-based costs, the scoring methodology that we have proposed can
readily be used to identify high and low performers relative to a
national benchmark for episodes of care. For example, we could develop
an episode cost profile for a typical beneficiary with macular
degeneration. We could then use the proposed scoring methodology to
identify groups of physicians that have high and low episode costs
relative to the benchmark. In addition, if we were to use such episode-
based cost measures, we could use attribution methods that seek to
stratify beneficiaries by relevant condition-specific characteristics
to ensure fair and accurate peer group comparisons among physicians. We
seek comment on our plans to use this approach in the future.
(5) Proposed Reliability Standard
We believe it is crucial that the value-based payment modifier be
based on quality of care and cost composites that reliably measure
performance. Statistical reliability depends on performance variation
for a measure across physicians (``signal''), the random variation in
performance for a measure within a physician's payment of attributed
beneficiaries (``noise''), and the number of beneficiaries attributed
to the physician. In other words, reliability is defined as the extent
to which variation in the measure's performance rate is due to
variation in the quality (or cost) furnished by the physicians (or
group of physicians) rather than random variation due to the sample of
cases observed. Reliability is important so that we can confidently
distinguish the performance of one physician (or group of physicians)
from another.\19\ Potential reliability values range from zero to one,
where one (highest possible reliability) signifies that all variation
in the measure's rates is the result of variation in differences in
performance across physicians (or groups of physicians). Generally,
reliabilities in the 0.40-0.70 range are often considered moderate and
values greater than 0.70 high.
---------------------------------------------------------------------------

\19\ John L. Adams, ``The Reliability of Provider Profiling, A
Tutorial,'' Rand Corporation (2009).
---------------------------------------------------------------------------

Therefore, we propose to establish a minimum number of cases in
order for a quality or cost measure to be included in the quality of
care or cost composite. To the extent that a group of physicians fails
to meet the minimum number of cases for a particular measure, the
measure would not be counted and the remaining measures in the domain
would be given equal weight. To the extent that we cannot develop
either a reliable quality of care composite or cost composite because
we do not have reliable domain information, we would not calculate a
value-based payment modifier and payment would not be affected. We
recognize that a trade-off exists between developing a program that
will eventually cover all physicians and groups of physicians and
providing statistically reliable performance results. In this instance,
as we increase the reliability threshold by requiring a higher minimum
case size threshold, the number of physicians and groups of physicians
for which we can develop a reliable quality of care or cost composite
decreases. Based on an analysis of the individual CY 2010 Physician
Feedback reports and on recent literature, we propose a minimum case
size of 20 for both quality and cost measures to ensure high
statistical reliability.\20\ This proposal means that if a group of
physicians does not have 20 or more beneficiaries eligible for a
particular measure, that particular measure would not be included in
the calculation of the value-based payment modifier.
---------------------------------------------------------------------------

\20\ Robert L. Houchens, ``The Reliability of Physician Cost
Profiling in Medicare,'' (Aug. 2010) (Describing how for most
physician specialties, Medicare physician cost profile scores are
substantially more reliable than those derived from commercial
settings).
---------------------------------------------------------------------------

Our reliability analysis of the quality and cost measures in the
2010 individual Physician Feedback reports informs our minimum case
size proposal. The average reliability of the total per capita cost
measure assessed at the individual level for physicians in all
specialties was high (greater than .70) when the minimum case size was
20 or more. There was a slight increase in average reliability by
increasing minimum case size to 30 cases. Increasing the minimum case
size from 20 to 30, however, decreases the number of physicians for
which we can calculate a reliable cost measure for physicians. The
decrease in the number of physicians is small for some specialties (for
example, internal medicine, family practice) but is much greater for
other specialties (for example, thoracic surgery, allergy/immunology).
Reliability was high for nine of the 15 administrative claims-based
quality measures that we are proposing for purposes of the value-based
payment modifier for the PQRS administrative claims-based reporting
option when the minimum case size was 20 or greater. Average
reliability increases slightly by increasing case size to 30, but the
number of physicians decreases, on average, by 30 percent of eligible
physicians. We anticipate that statistical reliability of the quality
and cost measures will increase when we assess physicians at the TIN
level rather than NPI level, because, on average, a TIN will be
attributed more beneficiaries than an NPI. We seek comment on these
proposals.
g. Proposed Payment Adjustment Amount
Section 1848(p) of the Act does not specify the amount of physician
payment that should be subject to the adjustment for the value-based
payment modifier; however, section 1848(p)(4)(C) of the Act requires
the payment modifier be implemented in a budget neutral manner. Budget
neutrality means that payments will increase for some groups of
physicians due to high performance and decrease for others due to low
performance, but the aggregate amount of Medicare spending in any given
year for physicians' services will not change as a result of
application of the value-based payment modifier.
In making proposals about the amount of Medicare payment made under
the PFS at risk for the value-based payment modifier, we considered
that there are two other payment adjustments affecting physicians'
Medicare payment in 2015 that could further decrease physician payments
in 2016. Specifically, under PQRS, a physician who does not
satisfactorily submit data on quality measures during the applicable
reporting period in 2013 have their fee schedule amount reduced by 1.5
percent for service furnished in 2015. This PQRS downward payment
adjustment to the fee schedule will increase to 2 percent in 2016 (and
thereafter) based on reporting periods that fall in CY 2014 (and
thereafter, reporting period or periods that fall two years prior to
the year in which the PQRS payment adjustment is assessed). However, as
noted previously in this preamble, individual physicians and groups of
physicians that satisfactorily submit data on PQRS quality measures via
any of the reporting methods proposed for the 2015 and 2016 PQRS
payment adjustment would avoid the PQRS downward payment adjustment.
The second payment adjustment is for physicians that are not meaningful
EHR users. Section 1848(a)(7) of the Act provides for a downward
payment adjustment of 1 percent in 2015 (based on performance in 2013),
2 percent in 2016 (performance in 2014), and 3 percent in 2017
(performance in 2015). We note that the adjustment in 2015 for not
being a meaningful EHR user is

[[Page 45010]]

increased by 1 percentage point (to -2 percent) if the physician was
subject to the eRx Incentive Program payment adjustment for 2014.
To balance our goals of beginning the implementation of the value
modifier consistent with the legislative requirements and to give us
and the physician community experience in its operation, we propose to
separate groups of physicians with 25 or more eligible professionals
into two categories.
For those groups of physicians that have met the criteria for
satisfactory reporting established for the value-based payment modifier
and request that their value-based payment modifier be calculated using
a quality-tiering approach, we propose that the maximum payment
adjustment be -1.0 percent for poor performance (Table 70 displays the
different downward payment adjustments depending upon a group of
physicians' quality and cost tiers). We recognize that 2015 is the
initial year for the value-based modifier and, thus, we are providing
for a very modest adjustment for the program's initial years. A payment
adjustment of -1.0 percent means that groups of physicians would
receive 99.0 percent of the PFS payment amount for the service
involved. Due to the BN requirement, we are not proposing the exact
amount of the upward payment adjustments for high performance under the
value-based payment modifier because the upward payment adjustments (in
the aggregate) will have to balance the downward payment adjustments in
order to achieve BN. Thus, we propose to determine the projected
aggregate amount of downward payment adjustments and then calculate the
upward payment adjustment factor based on the amount of the projected
aggregate upward payment adjustments. Our proposals regarding the
payment modifier scoring models in the next section explain how we
proposed to calculate upward adjustments for high performance.
For groups of physicians with 25 or more eligible professionals
that have not met the criteria for satisfactory reporting established
for the value-based payment modifier (including those groups that have
not participated in any of the PQRS reporting mechanisms), we propose
to set their value-based payment modifier at -1.0 percent. We arrived
at our proposal for a -1.0 percent downward adjustment using the
following rationale. Section 1848(p) of the Act requires us to
differentiate payment based on a comparison of quality of care
furnished compared to cost. Because we do not have performance rates on
which to assess the quality of care furnished by these groups, we can
differentiate payment based on costs only. A cost-only comparison would
set a lower downward adjustment for low-cost groups than for high-cost
groups. Due to the fact that the value-based payment modifier is just
starting in 2015, we do not wish to apply a greater downward payment
adjustment for non-satisfactory reporters than we are proposing for the
low quality/high cost groups that request that their value-based
payment modifier be calculated using a quality-tiering approach. Thus,
we propose to equalize the downward payment adjustment across these
groups of physicians, despite the fact that they may have different
costs. We seek comment on this approach.
h. Proposed Value-Based Payment Modifier Scoring Methodology
Section 1848(p)(1) of the Act requires the Secretary to establish a
payment modifier that provides for differential payment to a physician
or group of physicians under the fee schedule based upon the quality of
care furnished compared to cost during a performance period. As noted
previously, the statute requires that quality of care furnished and
cost shall be evaluated, to the extent practicable, based on composites
of quality of care furnished and cost. This section discusses our
proposals for comparing the quality of care furnished to cost for those
groups of physicians that request their value-based payment modifier be
calculated using a quality-tiering approach.
In making our proposals, we developed two models that compare the
quality of care furnished to costs: A quality tier model and a total
performance score model. We propose the quality-tiering model for the
value-based payment modifier, but we seek comment on the total
performance score model. We also note that the literature on physician
pay-for-performance includes other models, such as one based on an
efficient frontier, that we are not proposing here.\21\ We seek comment
on these proposals.
---------------------------------------------------------------------------

\21\ David Knutson, et al., ``Alternative Approaches to
Measuring Physician Resource Use,'' Second Interim Report (Dec.
2010), available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/Knutson_MN_2nd_InterimReport_AltApproaches_2010.pdf.
---------------------------------------------------------------------------

(1) Quality-Tiering Model
The quality-tiering model compares the quality of care composite
with the cost composite to determine the value-based payment modifier.
To make this comparison, we propose to classify the quality of care
composites scores into high, average, and low quality of care
categories based on whether they are statistically above, not different
from, or below the mean quality composite score. We seek to ensure that
those groups of physicians classified as high or low performers have
performance that is meaningfully different from average performance (to
be sure that no group of physicians is disadvantaged for performance
only slightly different from the benchmark) and is precisely measured
(to ensure that no group of physicians is disadvantaged by an
inaccurate performance assessment). We propose to assess meaningful
differences as those performance scores that are at least one standard
deviation from the mean. We propose to assess prevision by requiring a
group of physicians' score to be statistically different from the mean
at the 5.0 percent level of significance. We seek comment on these
proposals and on whether we should only examine meaningful differences
that are at least two or three standard deviations away from the mean.
We also seek comment on whether to define the high and low categories
of the quality composites as a fixed percentage (for example, 2.5
percent) of the number of groups of physicians or of the amount of
payments under the PFS. Such an approach would minimize the number of
group of physicians subject to payment adjustments.
Likewise, we propose to identify those groups of physicians that
have cost composite scores that are statistically different from the
mean cost composite score of all groups of physicians. We propose to
classify these groups of physicians into high, average, and low cost
categories based on whether they are significantly above, not different
from, or below the mean cost composite score as described above with
reference to quality composite. We propose to assess meaningful
differences as those performance scores that are at least one standard
deviation from the mean and we propose to assess precision at the 5.0
percent level of significance. We seek comment on these proposals and
on whether we should only examine meaningful differences that are at
least two or three standard deviations away from the mean. We also seek
comment on whether to define the high and low categories of the cost
composites as a fixed percentage (for example, 2.5 percent) of the
number of groups of physicians or of the amount of payments under the
PFS.
We propose to compare quality of care composite classification with
the cost

[[Page 45011]]

composite classification to determine the value-based payment modifier
adjustment according to the amounts in Table 70.

TABLE 70--Value-Based Payment Modifier Amounts for the Quality-Tiering Approach
----------------------------------------------------------------------------------------------------------------
Quality/cost Low cost Average cost High cost
----------------------------------------------------------------------------------------------------------------
High quality............................ +2.0x*.................... +1.0x*.................... +0.0%
Average quality......................... +1.0x*.................... +0.0%..................... -0.5%
Low quality............................. +0.0%..................... -0.5%..................... -1.0%
----------------------------------------------------------------------------------------------------------------
* Groups of physicians eligible for an additional +1.0x if reporting measures and average beneficiary risk score
in the top 25 percent of all risk scores.

We propose to establish the upward payment adjustment factor
(``x'') after the performance period has ended based on the aggregate
amount of downward payment adjustments. We also propose to aggregate
the downward payment adjustments in Table 70 with the downward
adjustment for groups of physicians with 25 or more eligible
professionals first and then to solve for the upward payment adjustment
factor (``x''). For example, after determining the aggregate projected
amount of the downward payment adjustments, CMS could calculate that
the payment adjustment factor (``x'') would be 0.75 percent such that
high quality/low cost groups of physicians would receive a 1.5 percent
(2 x 0.75) upward payment adjustment during the payment adjustment
period.
We also propose an additional incentive for groups of physicians to
furnish care to high-risk Medicare beneficiaries. We seek to ensure
that the value-based payment modifier does not cause unintended
consequences in which groups of physicians decline to treat the most
difficult cases. In particular, we propose that the scoring methodology
provide a greater upward payment adjustment (+1.0x) for groups of
physicians that care for high-risk patients (as evidenced by the
average HCC risk score of the attributed beneficiary population) and
submit data on PQRS quality measures through PQRS via the GPRO using
the web-interface, claims, registries, or EHRs. We propose to increase
the upward payment adjustment to +3x (rather than +2x) for groups of
physicians classified as high quality/low cost and to +2x (rather than
+1x) for groups of physicians that are either high quality/average cost
or average quality/low cost if the group of physicians' attributed
patient population has an average risk score that is in the top 25
percent of all beneficiary risk scores. In other words, we are not
proposing this additional upward payment adjustment (+1.0x) for groups
of physicians that select the PQRS administrative claims-based
reporting option.
We propose this quality-tiering scoring methodology because it
compares the quality of care furnished to cost as required by the
statute. It also allows physicians to understand clearly how their
payment is affected by their scores on the quality of care and cost
composites. We also believe it is a reasonable way to start to modify
physician payment because it clearly distinguishes the outliers (for
example, high quality/low cost compared to low quality/high cost) from
mean performance. The framework also allows us to fine tune payment
adjustments as we gain greater experience with the proposed
methodologies.
We seek comment on this proposal and on the proposed scoring
methodologies. We seek comment in particular on whether it is
appropriate to apply the same upward payment adjustment in Table 70 to
groups of physicians classified as high quality/medium cost and medium
quality/low cost. In addition, we seek comment on whether we should not
provide as great an upward payment adjustment for those groups of
physicians that select to report under the PQRS via the administrative
claims-based reporting option, so that we encourage greater PQRS
participation.
(2) Total Performance Score
A second approach to scoring the value-based payment modifier is a
total performance score approach. This approach allows us to develop a
unique value-based payment modifier for each group of physicians. This
approach results in a range of continuous payment adjustments rather
than the thresholds proposed in the quality tier approach. Under this
approach, we could calculate a total performance score (TPS) by equally
weighting the quality of care and cost composites. A negative score for
the quality composite (Physician Group 2 in Table 71) means the group
of physicians performed below the national average on the relevant
quality measures. Likewise, a negative score for the cost composite
means the group of physicians had higher costs than the national
average. A score of zero means that the group of physicians performed
at the national average. The example in Table 71 illustrates how we
could calculate the TPS for three groups of physicians. In this
example, Physician Groups 1 and 3 are above average and Physician Group
2 is below average.

TABLE 71--Example of Total Performance Score
----------------------------------------------------------------------------------------------------------------
Quality Cost
composite composite TPS
(50%) (50%)
----------------------------------------------------------------------------------------------------------------
Physician Group 1............................................... .9 .2 .55
Physician Group 2............................................... -.9 -1.2 -1.05
Physician Group 3............................................... 2.2 1.2 1.70
----------------------------------------------------------------------------------------------------------------

We could develop an exchange function in which we translated the
TPS into a unique value-based payment modifier for each group of
physicians. This method would be similar to the approach we use in the
Hospital Value-Based Purchasing program where we use a linear exchange
function to develop a unique payment for each

[[Page 45012]]

hospital. This approach results in a continuous array of unique value-
based payment modifiers such that there are no longer cut-off points
between high and low performing groups of physicians. Rather, each
group of physicians' payment would be modified under this approach.
We believe the quality-tiering approach may better compare the
quality of care furnished to costs. We also believe that the quality-
tiering approach is more transparent because groups of physicians may
be more aware of the level at which quality and cost performance is
likely to result in payment adjustment. However, we seek comment on
these observations and whether to use the total performance score
methodology rather than the quality-tiering methodology for the value-
based payment modifier. If we were to use a total performance score
methodology, we also seek comment on the weights to be given to quality
and cost composites.
i. Proposed Informal Review and Inquiry Process
Section 1848(p)(10) of the Act provides that there shall be no
administrative or judicial review under section 1869 of the Act,
section 1878 of the Act, or otherwise of the following:
The establishment of the value-based payment modifier;
The evaluation of the quality of care composite, including
the establishment of appropriate measure of the quality of care;
The evaluation of costs composite, including establishment
of appropriate measures of costs;
The dates of implementation of the value-based payment
modifier;
The specification of the initial performance period and
any other performance period;
The application of the value-based payment modifier; and
The determination of costs.
Despite the prohibition of administrative and judicial review, we
believe it is useful for groups of physicians to understand how their
payment under the PFS could be changed by the value-based payment
modifier. We also believe that a mechanism is needed for groups of
physicians to review and to identify any possible errors prior to
application of the value-based payment modifier.
Therefore, we intend to disseminate Physician Feedback reports
containing calendar year 2013 data in the fall of 2014 that encompass
all physicians (individually or in groups of physicians, as
applicable); these reports would be the basis of the value-based
payment modifier in 2015. We propose that these reports would contain,
among other things, the quality and cost measures and measure
performance and benchmarks used to score the composites, and quality of
care and cost composite scores, and the value-based payment modifier
amount.
After the dissemination of the Physician Feedback reports in the
fall of 2014, we propose that physicians would be able to email or call
a technical help desk to inquire about their report and the calculation
of the value-based payment modifier. We envision this process to help
educate and inform physicians about the value-based payment modifier,
especially for those groups of physicians that have elected that their
value-based payment modifier be calculated using a quality-tiering
approach. We note that because we have proposed to align our proposals
with the PQRS satisfactory reporting criteria, groups of physicians
will be able to avail themselves of the informal review process
regarding the PQRS payment adjustment as well. We do not envision
providing opportunities for review of a value-based payment modifier.
In anticipation of the reports that we would produce in 2014, in
the fall of 2013 we plan to produce and disseminate Physician Feedback
reports at the TIN level to all groups of physicians with 25 or more
eligible professionals based on 2012 data. These reports will include a
``first look'' at the methodologies we are proposing in this rule for
the value-based payment modifier. We view these reports as a way to
help educate groups of physicians about how the value-based payment
modifier could affect their payment under the PFS.
j. Physician Scenario and the Value-Based Payment Modifier Proposals
The following example summarizes and pulls together our proposals
for the payment modifier based on a group of physicians that
satisfactorily reports quality measures through the PQRS GPRO web-
interface and elects to have the value-based payment modifier
calculated using the proposed quality-tiering methodology.
Quality measures: A large medical practice group with more
than 100 physicians each billing under the same TIN could choose to
submit data on a common set of quality measures via the PQRS web-
interface. This group of physicians would need to meet the applicable
and proposed self-nomination requirements under the PQRS to report data
under this option. After approval to participate, CMS would provide the
group of physicians in early 2014 a list of patients pre-loaded into
the GPRO web-interface on which they would be required to report the
measures to CMS. They would complete the web-interface during the first
calendar quarter of 2014.
Composite quality score: To arrive at the quality
composite score, we would create a standardized score for each quality
measure included in the GPRO web-interface and then combine these
scores into the quality composite. Specifically, for each measure we
would divide the difference between the group's performance rate and
the benchmark (the national mean computed across all groups of
physicians and individual physicians submitting data on the quality
measure) by the measure's standard deviation to create a standardized
unit. Standardized units representing each measure are then combined
into quality domains with each measure weighted equally. We would then
equally weight the domains to form the quality composite score.
Composite cost score: CMS will calculate five cost
measures for the attributed beneficiaries. The standardized cost score
composite is comprised of two cost domains: total per capita cost and
condition-specific per capita costs. Each domain is weighted equally.
For each cost measure, the difference between the group's performance
and the national mean is divided by the standard deviation computed
across all groups of physicians.
Payment modifier: Using the quality composite, we would
identify groups of physicians that have quality composite scores that
are significantly different from the mean quality composite score of
all groups of physicians. We would classify the groups of physicians
into high, average, and low quality based on whether they are
statistically above, not different from, or below the mean.
We would also identify groups of physicians that have cost
composite scores that are significantly different from the mean cost
composite score and classify groups of physicians into high, average,
and low cost. We would then compare the quality of care composite
classification with the cost composite classification to determine the
payment modifier according to the amounts in Table 70.
Assuming the group of physicians had high quality and average cost,
it would be eligible for an upward payment adjustment of +1x on each of
its claims submitted for payment under the PFS during 2015. If the
beneficiaries attributed to the group of physicians had an average risk
score that was in the

[[Page 45013]]

top 25 percent of all beneficiary risk scores, the upward payment
adjustment would be increased to +2x. We would indicate the exact
amount of the upward payment adjustment in the Physician Feedback
report that we produced in the fall of 2014.
(4) Physician Feedback Program
Section 1848(n) of the Act requires us to provide confidential
reports to physicians that measure the resources involved in furnishing
care to Medicare FFS beneficiaries. Section 1848(n)(1)(A)(iii) of the
Act also authorizes us to include information on the quality of care
furnished to Medicare FFS beneficiaries. In September 2011, we produced
and disseminated confidential feedback reports to physician groups that
participated in the PQRS Group Practice Reporting Option (GPRO) in
2010, and in March 2012 we produced and disseminated reports to
physicians practicing in the following States: Iowa, Kansas, Missouri,
and Nebraska.
(a.) CY 2010 Physician Group Feedback Reports Based on 2010 Data and
Disseminated in 2011
In September 2011, we produced and distributed confidential
Physician Feedback reports to each of the 35 medical group practices
that participated in the 2010 GPRO of the PQRS. Each report provided
information on the quality of care and resource use for Medicare FFS
beneficiaries treated by the medical groups in 2010. More information
about the methodologies used in these reports and the aggregate
findings from these reports is available at http://www.cms.gov/physicianfeedbackprogram.
To participate in the 2010 PQRS GPRO, a group practice had to be a
single provider entity, identified by its TIN, with at least 200
eligible professionals. Thirty-five groups, encompassing 24,823
eligible professionals, participated in the 2010 PQRS GPRO reporting
option. On average, each group practice contained the following type of
medical professionals: Primary care (27 percent), medical specialties
(20 percent), surgeons (13 percent), other medical professionals (36
percent) and ER physicians represented less than 1 percent. Despite the
average group practice profile, five group practices were composed of
substantially more medical specialists and surgeons than primary care
professionals. A professional's medical specialty was determined based
on the CMS medical specialty code listed most often on their 2010 Part
B claims.
For each of the 35 participating group practices, we attributed
Medicare FFS beneficiaries to the group practice if eligible
professionals in the group practice billed for at least two office
visits or other outpatient E&M services and the group practice had the
plurality of E&M charges for that beneficiary. The average beneficiary
population attributed to a group practice was 12,550 beneficiaries with
the smallest group practice attributed 2,424 beneficiaries and the
largest with 31,006 beneficiaries.
In 2010, each beneficiary that was attributed to a group practice
had an average of 10 total E&M visits in 2010 (both to physicians in
and outside the group practice), ranging from a low of nine visits per
group practice to a high of 14 visits per group practice. Seven of
these E&M visits, on average, were with physicians in the group
practice, ranging from a low of five E&M visits to a high of nine E&M
visits with physicians in the group practice. Thus, the GPRO groups
provided not only the plurality, but the large majority, of E&M visits
to the beneficiaries attributed to that group practice. On average, the
group practices accounted for 78 percent of attributed beneficiaries'
E&M visits.
Primary care physicians, on average among all 35 groups, furnished
over half (53 percent) of the plurality of E&M visits within the group
practice, followed by medical specialists at 27 percent. Surgeons
provided 11 percent of the plurality of E&M visits and other physicians
furnished 9 percent. We note that for five group practices medical
specialists, rather than primary care providers, furnished the
plurality of care for the attributed beneficiaries.
Table 72 shows the mean performance rate and the performance rates
for the 10th, 50th, and 90th percentiles for each of the 26 quality
measures that were included in the PQRS GPRO measure set for 2010. We
calculated the performance rates based on the data submitted by each of
the group practices. Table 72 also shows the mean performance rate for
those 19 measures that were included in the PQRS GPRO that eligible
professionals also reported at an individual level through the PQRS.
The mean group practice performance rate was equal to or higher than
the individual performance rate for 16 of the 19 measures.
BILLING CODE 4120-01-P

[[Page 45014]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.160

[[Page 45015]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.161

BILLING CODE 4120-01-C
The group practice performance rates were statistically reliable at
a high level across the vast majority of the measures. We examine
reliability because the clinical measures are derived from samples of
the group practice's attributed beneficiaries. In this context,
reliability means the group practices' performance rates would be
similar or the same if a different sample population of the group
practice were used for quality measurement. The average reliability
score for the group practices' quality measures related to coronary
artery disease ranged from 0.86 to 0.99, for diabetes from 0.87 to
0.99, for heart failure from 0.79 to 0.99, for hypertension from 0.89
to 1.00, and for the preventive measures from 0.94 to 0.98. All groups'
quality measures achieved at least a 0.50 score with most group
practices well above that level.
The percentage of primary care physicians in a group practice did
not correlate with higher performance on the clinical care measures,
even though the 26 quality measures focused on effective primary care.
As noted above, in five group practices, medical specialists rather
than primary care providers furnished care to the majority of
attributed beneficiaries. Two of these five group practices were among
the top five group practices overall across all quality measures.
In addition to the 26 quality measures included in the GPRO, the
reports also contained each group practice's performance on measures of
avoidable hospitalizations for six ambulatory care sensitive conditions
(ACSCs). These are conditions for which outpatient care can potentially
prevent a hospital admission. The measures were based on measures
developed by the Agency for Healthcare Research and Quality (AHRQ) and
more information can be found at http://www.qualityindicators.ahrq.gov/modules/pqi_overview.aspx.
The six ambulatory care sensitive conditions include: (1) Bacterial
pneumonia; (2) urinary tract infection (UTI); (3) dehydration; (4)
heart failure (HF); (5) chronic obstructive pulmonary disease (COPD);
and (6) diabetes--a composite measure based on short-term diabetes
complications, uncontrolled diabetes, long-term diabetes complications,
and lower extremity amputation for diabetes. Table 73 shows the mean,
as well as minimum, and maximum performance rate (as expressed in
events per 1,000 beneficiaries) for each of the six ACSC measures of
potentially preventable hospitalizations.

Table 73--Performance Rates for the ACSCs
------------------------------------------------------------------------
(ACSC) Mean Minimum Maximum
------------------------------------------------------------------------
Diabetes..................................... 25 7 39
COPD......................................... 95 53 142
CHF.......................................... 122 66 200
Bacterial Pneumonia.......................... 12 7 20
UTI.......................................... 8 4 13
Dehydration.................................. 3 0 11
------------------------------------------------------------------------

We also examined five measures of cost: total per capita costs for
beneficiaries attributed to the group practice and total per capita for
beneficiaries that had the following four chronic conditions: Diabetes,
heart failure, chronic obstructive pulmonary disease, and coronary
artery disease.
In calculating these measures, we first standardized the Medicare
payments to ensure fair comparisons. Geographic variations in Medicare
payments to providers can reflect factors unrelated to the care
provided to beneficiaries. All Medicare payments have been standardized
such that a given service is priced at the same level across all
providers within the same facility type or setting, regardless of
geographic location or differences in Medicare payment rates among
facilities. More information about how CMS standardized payments can be
found in the September 2011 document describing the methodologies used
in the 2010 QRURs, which can be accessed at http://www.cms.gov/PhysicianFeedbackProgram/Downloads/2010_GPRO_QRUR_Detailed_Methodology.pdf.
The standardized total per capita costs for the 35 group practices
for attributed beneficiaries was on average, $13,135. Thus on average,
Medicare paid providers $13,135 per beneficiary attributed to each
group practice. The range of total per capita costs was $9,124 to
$24,480 and an absolute difference of $15,536 per beneficiary.
We applied a risk adjustment methodology to adjust these total per
capita costs for patient demographics, socioeconomic factors, and prior
health conditions, recognizing that physiologic differences among
beneficiaries can affect their medical costs, regardless of the care
provided. This risk adjustment methodology is based on the CMS'
Hierarchical Condition Categories (HCC) model that assigns ICD-9
diagnosis codes (each with similar disease characteristics and costs)
to 70 clinical conditions to capture medical condition risk. The HCC
risk scores also incorporate patient age, general reason for Medicare
eligibility (aged or

[[Page 45016]]

disabled), and Medicaid eligibility. The risk adjustment model also
included the beneficiary's end stage renal disease (ESRD) status. More
information about how CMS risk adjusted per capita costs can be found
in the September 2011 document describing the methodologies used in the
2010 QRURs, which can be accessed at http://www.cms.gov/PhysicianFeedbackProgram/Downloads/2010_GPRO_QRUR_Detailed_Methodology.pdf.
After risk adjustment, the adjusted average total per capita costs
was $12,652 with a range of $9,932 to $16,736 and an absolute
difference of $6,804. Thus the risk adjustment methodology had the
effect of reducing the absolute difference between the groups with the
lowest and highest total per capita range 55.7 percent. In particular,
the lowest third of the groups were adjusted upward by an average of
6.2 percent and the most expensive third were lowered by 10.4 percent.
The middle third, on average, were adjusted downward by 0.1 percent,
but the range of adjustments was -10.3 to +8.2 percent.
Moreover, three of the five group practices for which medical
specialists provided the plurality of care to attributed beneficiaries
had their costs risk adjusted downward. Two of these five groups had
their unadjusted per capita costs adjusted upward.
The physician feedback reports also showed the percentage of
professionals who did not bill under the group practice's TIN who
treated the beneficiaries attributed to the group practice. On average,
42 percent of the professionals that cared for attributed patients were
outside the group practice. The range was from 18 to 84 percent. We
also found a weak association between the percent of professionals who
did not bill under the group practice's TIN and total per capita costs
for the attributed beneficiaries. The correlation was 0.12.
All 35 group practices achieved statistical reliability scores
greater than 0.70 for the overall per capita cost measures and the four
subgroup-specific cost measures. In particular, the group practices
achieved an average reliability score of 0.99 for the overall per
capita cost measure. In addition, all 35 group practices achieved a
reliability of greater than 0.70 across all sub cost categories. The
average reliabilities were 0.93 for heart failure, 0.91 for COPD, 0.95
for diabetes, and 0.96 for CAD.
Although the sample of group practices was small (35), we found
almost no association between quality of care furnished and the total
risk-adjusted per capita cost for each group practice. We constructed a
simple quality score by taking the average of the 32 performance rates
(26 clinical quality measures and six ACSC rates). We translated the
ACSC rates into percentages with the lowest ACSC rate equal to 100.0
percent (because lower rates are better) and the highest ACSC rate
equal to 0.0 percent. Table 74 shows a scatter diagram of the
relationship between the quality of care furnished by each group
practice and the total risk-adjusted per capita cost. The correlation
between the two variables is 2.0 percent.
[GRAPHIC] [TIFF OMITTED] TP30JY12.162

(b.) Individual Physician Feedback Reports Based on 2010 Data and
Disseminated in 2012
In March 2012, we produced and made available for download
confidential individual Physician Feedback reports for 23,730
physicians enrolled in Medicare and practicing in Iowa, Kansas,
Missouri, and Nebraska. Each report provided information on the quality
of care and resource use for Medicare FFS beneficiaries treated by the
physician in 2010. Each report contained two sets of quality measures
for Medicare beneficiaries: measures physicians reported in the PQRS
via the claims-based reporting methodology, and quality measures
calculated by CMS that relied solely on Medicare administrative claims
data.
Approximately 25 percent (5,891) of the 23,730 physicians reported
on one or more PQRS measure in 2010. The five specialties with the
highest participation rates, as a percentage of the total number of
physicians in that specialty, were Ophthalmology, Anesthesiology,
Gynecology/Oncology, Pathology, and Geriatric Medicine. Physicians
reported 3.7 PQRS measures on average. The maximum number of

[[Page 45017]]

measures reported was 30, by a family practitioner.
The PQRS performance rates were strongly skewed upward and
compressed for the physicians in the four states. For approximately
three quarters of the measures, the 50th percentile was 100 percent.
For approximately one-third of the measures, the 25th percentile was
100 percent. The most frequently reported PQRS measure was ``Health
Information Technology: Adoption/Use of Electronic Health Records'',
reported by 1,494 physicians (6.3 percent). The 2010 Reporting
Experience report has more information on PQRS performance rates
nationwide and it is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/PQRS/index.html?redirect=/
PQRI.
The reports also contained information on up to 28 administrative
claims-based quality measures (and 13 sub-measures for a total of 41
measures) depending upon whether the physician treated at least one
beneficiary that was eligible for the measure, that assessed whether
Medicare FFS beneficiaries received recommended primary care and
preventive care services. We calculated these measure performance rates
solely from Medicare FFS claims data. The measurement year used for
calculating performance was January 1-December 31, 2010; claims were
available for a one-year look-back period to January 1, 2009, for
measures requiring a look-back period. Specifications for these
measures are available at http://www.cms.gov/PhysicianFeedbackProgram/Downloads/claims_based_measures_with_descriptions_num_denom_excl.pdf.
On average, a physician's report contained information on 30 of 41
measures. The reports provided this information for any beneficiary to
whom the physician furnished at least one service, even if the
physician did not provide the treatment indicated by the quality
measure. We provided this information because we believe it is critical
to inform physicians about the quality of care that their beneficiaries
received for primary care and preventive services from any Medicare FFS
physician. Moreover, physicians may be unaware of the care that their
beneficiaries receive. Table 75 shows the percentage of Medicare FFS
patients who received the treatment indicated by the quality measure.
There is room for improvement for physicians to provide basic
recommended services in many clinical areas, especially those where the
percentage of beneficiaries receiving the indicated treatment is less
than 50 percent.

[[Page 45018]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.163

[[Page 45019]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.164

The reports also provided information on five measures of per
capita cost. Total per capita costs for beneficiaries attributed to the
physician and total per capita costs for beneficiaries that had the
following four chronic conditions: diabetes; heart failure; chronic
obstructive pulmonary disease (COPD); and coronary artery disease
(CAD). As discussed earlier, we standardized and risk adjusted the
total per capita cost measures.
To assess per capita cost measures, we attributed beneficiaries to
physicians. To attribute beneficiaries, the reports classified each
physician's Medicare FFS beneficiaries into three groups based upon the
degree of the physician's involvement with the patient:
Directed: The physician billed for 35 percent or more of
the patient's office or other outpatient Evaluation and Management
(E&M) visits.
Influenced: The physician billed for fewer than 35 percent
of the patient's outpatient E&M visits, but for 20 percent or more of
the patient's total professional costs.
Contributed: The physician billed for fewer than 35
percent of the patient's outpatient E&M visits, and for less than 20
percent of the patient's total professional costs.
As discussed with reference to the value-based payment modifier,
this attribution methodology assigns the same patient to all physicians
who treated the patient, but classifies the patient based on how
involved the physician was with the care provided to the patient.
Table 76 shows the number of beneficiaries attributed, on average,
to physicians under each of these rules. We wish to highlight two
observations. First, that primary care physicians generally furnished
services to fewer patients than surgeons/specialists and other types of
physicians (which included radiologists, anesthesiologists, and
pathologists) and that primary care physicians directed care more often

[[Page 45020]]

than other types of physicians. Second, there were several physicians
in all categories who only contributed to care, meaning that care can
frequently be fragmented. This finding highlights the importance of
coordinating care among physicians.

Table 76--Beneficiaries in Iowa, Kansas, Missouri, and Nebraska Attributed by Physician Type: Average Number of
Beneficiaries
----------------------------------------------------------------------------------------------------------------
Average number Average number Average number Average number
Type of physician of attributed of directed of influenced of contributed
beneficiaries beneficiaries beneficiaries beneficiaries
----------------------------------------------------------------------------------------------------------------
Primary care............................ 279 105 13 181
Medical specialist...................... 471 59 51 381
Surgeons................................ 309 36 64 217
Emergency medicine...................... 367 35 14 350
Other................................... 860 18 34 840
----------------------------------------------------------------------------------------------------------------

We calculated total per capita costs for each type of attribution
of patients. As discussed above and shown in Table 77, the
beneficiaries who receive care under the ``contributed only''
attribution have substantially higher per capita costs and accounted
for 20 percent of those beneficiaries covered by the 2010 individual
reports.

Table 77--Mean Total per Capita Costs in the QRURs
----------------------------------------------------------------------------------------------------------------
Type of physician Overall Directed Influenced Contributed
----------------------------------------------------------------------------------------------------------------
Primary care............................ $16,580 $9,733 $6,780 $19,019
Medical specialist...................... 19,765 11,256 9,219 21,276
Surgeons................................ 17,535 11,482 15,182 18,313
Emergency medicine...................... 20,729 10,389 3,675 21,217
Other................................... 23,704 11,442 8,987 23,980
----------------------------------------------------------------------------------------------------------------

(c.) Physician Feedback Program Dissemination Strategy
Based on our previous dissemination of individual Physician
Feedback reports, we have learned that the overwhelming factor that
prevents physicians from accessing their reports is lack of knowledge
of their availability. We undertook several steps this year to increase
awareness of the Physician Feedback reports. First, we increased the
information we provided to physicians about the feedback reports,
performance reporting, the value-based payment modifier, and our
methodology via www.cms.gov/physicianfeedbackprogram, fact sheets,
FAQs, video, slides, national provider calls, targeted conference calls
with report recipients, meetings with national and local medical
associations and specialties, and multiple physician fee for service
list serve announcements. We also partnered with the J5 Medicare
Administrative Contractor (MAC), WPS, for Iowa, Kansas, Nebraska, and
Missouri, to develop a secure internet portal where physician could
easily obtain their reports. As of June 10, 2012, 7,484 of
approximately 24,000 (31 percent) individual Physician Feedback reports
have been accessed electronically. This is a substantial increase from
earlier phases of the Physician Feedback program in which only 1
percent of physicians obtained their reports.
We also have aggressively solicited feedback from physicians and
physician groups, including the American Medical Association, on how to
increase the usefulness of the reports so that physicians and groups of
physicians would actively seek this type of information from CMS. We
invited report recipients (via several conference calls directed first
to medical practice groups and then individual physicians) to provide
us input on the usefulness and credibility of the performance measures,
and other information contained in the reports so that we can improve
the reports for future years.
Following the September 26, 2011 distribution of reports to
physician groups, we hosted two conference calls for the 35 large
medical practice groups. In addition to ``walking through'' a sample
template of the group performance report, we responded to questions and
followed up with an aggregation of questions/issues raised by groups
and corresponding answers and explanations from CMS. These reports
represent the first time performance on a wide-range of quality and
cost measures can be viewed in the same report for Medicare
beneficiaries in large group practices across the country.
After the March 2012 dissemination of individual reports, we
conducted National Provider Calls on April 3, 2012 and April 5, 2012 at
which time we reported some initial observations, reviewed a report
template page by page, and answered questions from the call
participants. On May 8, 2012 and June 4, 2012, we held another call in
conjunction with the MAC, WPS, to obtain targeted feedback on the
feedback reports and how they could be improved and made more useful.
We view the physician feedback reports as a way to test various methods
of analyzing and displaying comparative performance information and
previewing methods that will be further developed for use in the value-
based payment modifier. In addition, we have responded to over 50
requests for more information from the Help Desk we established for the
program.
(d.) Future Plans for the Physician Feedback Reports
In the fall of 2012, we plan to disseminate Physician Feedback
reports to all physicians in nine states (California, Iowa, Illinois,
Kansas, Michigan, Minnesota, Missouri, Nebraska, and Wisconsin) based
on 2011 data. These reports will contain the PQRS measures that
physicians in these states submitted via enhanced claims, as well as
information on 28 administrative claims measures included in the 2010
reports. We also will produce and disseminate Physician Feedback
reports to the groups of

[[Page 45021]]

physicians that reported measures through the PQRS GPRO web interface
in 2011. We have adjusted and improved the content and organization of
the Physician Feedback reports that we plan to produce later this year
based on the comments we received from the Program Year 2010 report
recipients. We plan to increase our outreach efforts to encourage
physicians to view their reports, to begin to understand the
methodologies we have proposed for the value-based payment modifier and
that are included in the 2011 reports, and to provide suggestions on
how we can make these reports more meaningful and actionable in the
future.
In the fall of 2013, we plan to produce and disseminate Physician
Feedback reports at the TIN level to all groups of physicians with 25
or more eligible professionals and to individual physicians that
satisfactorily reported measures through PQRS in 2012 using any of the
PQRS reporting mechanisms. These reports will include a ``first look''
at the methodologies that we are proposing in this rule for the value-
based payment modifier.
In addition, section 1848(n) of the Act requires that we use the
episode-based costs in the Physician Feedback reports beginning in 2013
for the reports based on 2012 data. As discussed above in relation to
the value-based payment modifier, we plan to include episode-based cost
measures for several episode types in these Physician Feedback reports.
In addition, we plan to consider adjusting the format and organization
of the reports, to the extent practicable, to address the best
practices outlined in the AMA's Guidelines for Reporting Physician
Data. We believe that this dissemination plan satisfies our obligations
under the section 1848(p)(4)(B)(ii)(II) of the Act to provide
information to physicians and groups of physicians about the quality of
care furnished to Medicare FFS beneficiaries.
In the fall of 2014, we plan to disseminate Physician Feedback
reports based on 2013 data that show the amount of the value-based
payment modifier and the basis for its determination. We plan to
provide these reports to all groups of physicians (at the TIN level)
with 25 or more eligible professionals. We are examining whether we can
provide reports to groups of physicians with fewer than 25 eligible
professionals and to individual level reports as well. These reports
will contain, among other things, performance on the quality and cost
measures used to score the composites and the value-based payment
modifier amount. As discussed above, we anticipate providing an
opportunity for review and correction as outlined in our value-based
payment modifier proposals above.

L. Medicare Coverage of Hepatitis B Vaccine

1. Modification of High Risk Groups Eligible for Medicare Part B
Coverage of Hepatitis B Vaccine
a. Background and Statutory Authority--Medicare Part B Coverage of
Hepatitis B Vaccine
Section 1861(s)(10)(B) of the Act authorizes Medicare Part B
coverage of hepatitis B vaccine and its administration if furnished to
an individual who is at high or intermediate risk of contracting
hepatitis B. High and intermediate risk groups are defined in
regulations at Sec. 410.63.
On December 23, 2011, the United States Centers for Disease Control
and Prevention (CDC) published a Morbidity and Mortality Weekly Report,
which included an article entitled ``Use of Hepatitis B Vaccination for
Adults with Diabetes Mellitus: Recommendations of the Advisory
Committee on Immunization Practices (ACIP).'' The article stated that
``In the United States, since 1996, a total of 29 outbreaks of HBV
[Hepatitis B virus] infection in one or multiple long-term care (LTC)
facilities, including nursing homes and assisted-living facilities,
were reported to CDC; of these, 25 involved adults with diabetes
receiving assisted blood glucose monitoring. These outbreaks prompted
the Hepatitis Vaccines Work Group of the Advisory Committee on
Immunization Practices (ACIP) to evaluate the risk for HBV infection
among all adults with diagnosed diabetes.''
``HBV is highly infectious and environmentally stable; HBV can be
transmitted by medical equipment that is contaminated with blood that
is not visible to the unaided eye. Percutaneous exposures to HBV occur
as a result of assisted monitoring of blood glucose and other
procedures involving instruments or parenteral treatments shared
between persons. Lapses in infection control during assisted blood
glucose monitoring that have led to HBV transmission include
multipatient use of finger stick devices designed for single-patient
use and inadequate disinfection and cleaning of blood glucose monitors
between patients. Breaches have been documented in various settings,
including LTC facilities, hospitals, community health centers,
ambulatory surgical centers, private offices, homes, and health
fairs.'' Additionally, in analyses of persons without hepatitis B-
related risk behaviors (that is, injection-drug use, male sex with a
male, and sex with multiple partners), persons aged 23 through 59 years
with diabetes had 2.1 times the odds of developing acute hepatitis B as
those without diabetes; and the odds for hepatitis B infection were 1.5
times as likely for persons aged 60 and older. (MMWR, December 23,
2011).
Based on the Hepatitis Vaccines Work Group findings, ACIP
recommended that:
Hepatitis B vaccination should be administered to
unvaccinated adults with diabetes mellitus who are aged 19 through 59
years.
Hepatitis B vaccination may be administered at the
discretion of the treating clinician to unvaccinated adults with
diabetes mellitus who are aged 60 years and older.
b. Implementation
Based on the ACIP recommendations, we propose to modify Sec.
410.63(a)(1), High Risk Groups, by adding new paragraph ``(viii)
persons diagnosed with diabetes mellitus.'' Since HBV can be
transmitted by medical equipment (that is, finger stick devices and
blood glucose monitors) that is contaminated with blood that is not
visible to the unaided eye, we believe that persons diagnosed with
diabetes mellitus should be added the high risk group. Since lapses in
infection control have been reported in both community and facility
settings, the increased risk of contracting HBV is not limited to the
facility setting. We believe that expanding coverage of Hepatitis B
vaccinations and administration to those diagnosed with diabetes
mellitus is supported by the findings and evidence reviewed by the
Hepatitis Vaccines Work Group and the ACIP recommendations. Hepatitis B
vaccination is a preventive measure that needs to occur before
exposure. It is difficult to predict which diabetics will eventually be
exposed in the circumstances that we discussed above. Therefore, we are
proposing to expand coverage for hepatitis B vaccine and its
administration to all individuals diagnosed with diabetes mellitus, not
just those individuals with diabetes that are receiving glucose
monitoring in facilities, for example, in nursing homes.

[[Page 45022]]

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

1. Background
a. Legislative History
Section 101 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended title XVIII
of the Social Security Act (the Act) to establish a voluntary
prescription drug benefit program at section 1860D-4(e) of the Social
Security Act. Among other things, these provisions required the
adoption of Part D e-prescribing standards. Prescription Drug Plan
(PDP) sponsors and Medicare Advantage (MA) organizations offering
Medicare Advantage-Prescription Drug Plans (MA-PD) are required to
establish electronic prescription drug programs that comply with the e-
prescribing standards that are adopted under this authority. There is
no requirement that prescribers or dispensers implement e-prescribing.
However, prescribers and dispensers who electronically transmit
prescription and certain other information for covered drugs prescribed
for Medicare Part D eligible beneficiaries, directly or through an
intermediary, are required to comply with any applicable standards that
are in effect.
For a further discussion of the statutory basis for this proposed
rule and the statutory requirements at section 1860D-4(e) of the Act,
please refer to section I. (Background) of the E-Prescribing and the
Prescription Drug Program proposed rule, published February 4, 2005 (70
FR 6256).
b. Regulatory History
(1) Foundation and Final Standards
(a) Adopting and updating:
CMS utilized several rounds of rulemaking to adopt standards for
the e-prescribing program. Its first rule, which was published on
November 7, 2005 (70 FR 67568), adopted three standards that were
collectively referred to as the ``foundation'' standards. One of these
standards, the National Council for Prescription Drug Programs (NCPDP)
SCRIPT Standard, Implementation Guide, Version 5, Release 0 (Version
5.0), May 12, 2004 (excluding the Prescription Fill Status Notification
Transaction and its three business cases; Prescription Fill Status
Notification Transaction--Filled, Prescription Fill Status Notification
Transaction--Not Filled, and Prescription Fill Status Notification
Transaction--Partial Fill), hereafter referred to as the NCPDP SCRIPT
5.0, is the subject of several of the proposals in this rule. CMS
issued a subsequent rule on April 7, 2008 (73 FR 18918) that adopted
additional standards which are referred to as ``final'' standards. One
of these standards, version 1.0 of the NCPDP Formulary and Benefit
standard, Implementation Guide, Version 1, Release 0, hereafter
referred to as the NCPDP Formulary and Benefit 1.0) is also one of the
subjects of this proposed rule. Please see the ``Initial Standards
Versus Final Standards'' discussion at 70 FR 67568 in the November 7,
2005 rule for a more detailed discussion about ``foundation'' and
``final'' standards.
(b) Exemption From the NCPDP SCRIPT Standard in Long Term Care Settings
(LTC)
While prescribers and dispensers who electronically transmit
prescription and certain other information for covered drugs prescribed
for Medicare Part D eligible beneficiaries, directly or through an
intermediary, are generally required to comply with any applicable
standards that are in effect at the time of their transmission, the
early versions of the NCPDP SCRIPT standard did not support the
complexities of the prescribing process for patients in long term care
facilities where the prescribing process involves not only a prescriber
and a pharmacy, but also a facility and its staff. As such, we exempted
such entities from use of the NCPDP SCRIPT standard. That exemption,
currently found at Sec. 423.160(a)(3)(iv), provides an exemption for
entities transmitting prescriptions or prescription-related information
where the prescriber is required by law to issue a prescription for a
patient to a non-prescribing provider (such as a nursing facility) that
in turn forwards the prescription to a dispenser.
For a more detailed discussion, see the November 7, 2005 final rule
(70 FR 67583).
(2) Updating e-Prescribing Standards
Transaction standards are periodically updated to take new
knowledge, technology and other considerations into account. As CMS
adopted specific versions of the standards when it adopted the
foundation and final e-prescribing standards, there was a need to
establish a process by which the standards could be updated or replaced
over time to ensure that the standards did not hold back progress in
the industry. CMS discussed these processes in its November 7, 2005
final rule (70 FR 67579).
The discussion noted that the rulemaking process will generally be
used to retire, replace or adopt a new e-prescribing standard, but it
also provided for a simplified ``updating process'' when a standard
could be updated with a newer ``backward-compatible'' version of the
adopted standard. In instances in which the user of the later version
can accommodate users of the earlier version of the adopted standard
without modification, however, it noted that notice and comment
rulemaking could be waived, in which case the use of either the new or
old version of the adopted standard would be considered compliant upon
the effective date of the newer version's incorporation by reference in
the Federal Register. CMS utilized this streamlined process when it
published an interim final rule with comment on June 23, 2006 (71 FR
36020). That rule recognized NCPDP SCRIPT 8.1 as a backward compatible
update to the NCPDP SCRIPT 5.0, thereby allowing for use of either of
the two versions in the Part D program. Then, on April 7, 2008, CMS
used notice and comment rulemaking (73 FR 18918) to finalize the
identification of the NCPDP SCRIPT 8.1 as a backward compatible update
of the NCPDP SCRIPT 5.0, and, effective April 1, 2009, retire NCPDP
SCRIPT 5.0 and adopt NCPDP SCRIPT 8.1 as the official Part D e-
prescribing standard. Finally, on July 1, 2010, CMS utilized the
streamlined process to recognize NCPDP SCRIPT 10.6 as a backward
compatible update of NCPDP SCRIPT 8.1 in an interim final rule (75 FR
38026).
In contrast to the extensive updating that was done to the NCPDP
SCRIPT standard in the Part D e-prescribing program, the original NCPDP
Formulary and Benefit 1.0 is still in place as the official Part D e-
prescribing standard.
2. Proposals for Calendar Year 2013
a. Proposed Finalization of NCPDP SCRIPT 10.6 as a Backward Compatible
Version of NCPDP SCRIPT 8.1, Retirement of NCPDP SCRIPT 8.1 and
Adoption of NCPDP SCRIPT 10.6 as the Official Part D E-Prescribing
Standard
As described in greater detail below, we propose to finalize our
recognition of NCPDP SCRIPT 10.6 as a backward compatible version of
the official Part D e-prescribing standard NCPDP SCRIPT 8.1, effective
from the effective date of the final rule through October 31, 2013,
but, in response to the comments that were received to the interim
final rule with comment, we also propose to retire NCPDP SCRIPT 8.1
effective October 31, 2013, and we propose to adopt NCPDP SCRIPT 10.6
as the official Part D e-

[[Page 45023]]

prescribing standard effective November 1, 2013.
On July 1, 2010, we published an interim final rule with comment
(75 FR 38026) which named NCPDP SCRIPT 10.6 as a backward compatible
update to NCPDP SCRIPT 8.1. We received 7 timely public comments on
this interim final rule with comment. The comments came from a
standards setting organization, two national industry associations, two
healthcare organizations and, two health information intermediaries.
All commenters supported the voluntary use of NCPDP SCRIPT version 10.6
as a backward compatible version of the adopted NCPDP SCRIPT 8.1
standard. Five of the commenters recommended that Version 10.6 be
adopted as the official standard for the Medicare Part D e-Prescribing
Program with a time frame of full implementation of January 1, 2013.
One commenter recommended that CMS adopt version 10.6 as the official
Part D e-prescribing standard, and retire version 8.1, but did not
suggest a date by which that should happen. Another commenter
recommended that CMS adopt version 10.6 as early as January 1, 2012.
All commenters agreed that version 8.1 should be retired when version
10.6 was adopted.
As we discussed in the July 1, 2010 interim final rule with comment
(75 FR 38026) NCPDP SCRIPT 10.6 has a number of new functionalities
that, if users elect to use them will mesh with their use of the
adopted NCPDP SCRIPT 8.1, which was adopted in the April 7, 2008 e-
prescribing final rule (73 FR 18918). These new functions would allow
users drug NDC source information, pharmacy prescription fill numbers
and date of sale information that could then be used in a medication
history response. These added functionalities would therefore be
expected to facilitate better record matching, the identification and
elimination of duplicate records, and the provision of richer
information to the prescriber between willing trading partners. We
therefore agree with commenters that NCPDP SCRIPT 10.6 would be
appropriate as an official standard for the Medicare Part D e-
Prescribing Program. At the time of this rule's drafting, however, the
suggested dates for the adoption of SCRIPT Version 10.6 as the official
Part D e-prescribing standard and the retirement of NCPDP SCRIPT 8.1
have either passed or are too near in the future to be a reasonable
implementation date. Furthermore, since the time of these comments,
industry stakeholders have worked with NCPDP, a standards development
organization, and reached out to CMS with additional suggestions for
appropriate implementation dates in light of the current state of the
standards development process. Stakeholders working though NCPDP
currently recommend retiring NCPDP SCRIPT 8.1 on October 31, 2013 and
adoption of NCPDP Script 10.6 as the official Part D e-prescribing
standard on November 1, 2013. We believe that this is a realistic
timetable to retire NCPDP SCRIPT 8.1 and the adopt NCPDP SCRIPT 10.6 as
the official Part D e-prescribing standard on the dates described.
As such, we propose to revise Sec. 423.160(b)(2)(ii) so as to
limit its application to transactions on or before October 31, 2013 and
add a new Sec. 423.160(b)(2)(iii) to require that, as of November 1,
2013, providers and dispensers use NCPDP SCRIPT 10.6 for the following
electronic transactions that convey prescription or prescription
related information:
Get message transaction.
Status response transaction.
Error response transaction.
New prescription transaction.
Prescription change request transaction.
Prescription change response transaction.
Refill prescription request transaction.
Refill prescription response transaction.
Verification transaction.
Password change transaction.
Cancel prescription request transaction.
Cancel prescription response transaction.
Fill status notification.
Furthermore, we propose to amend Sec. 423.160(b)(1) by adding a
new 423.160(b)(1)(iii) to amend the information about which subsequent
requirements in the section are applicable to which timeframes and
amend Sec. 423.160(b)(1)(ii) to limit its application to transactions
on or before October 31, 2013.
As considerable time has passed since we solicited comments on the
retirement of NCPDP SCRIPT 8.1, we are soliciting additional comments
regarding the retirement of version 8.1 on October 31, 2013. We also
are soliciting comments on the adoption of Version 10.6 as the official
Part D e-prescribing standard for the e-prescribing functions that will
be outlined in Sec. 423.160(b)(1)(iii) and (b)(2)(iii), effective
November 1, 2013.
b. Proposed Recognition of NCPDP Formulary and Benefit Standard 3.0 as
a Backward Compatible Version of the NCPDP Formulary and Benefit
Standard 1.0, Proposed Retirement of NCPDP Formulary and Benefit
Standard 1.0 and Proposed Adoption of NCPDP Formulary and Benefit
Standard 3.0
Formulary and Benefits standards provide a uniform means for
pharmacy benefit payers (including health plans and PBMs) to
communicate a range of formulary and benefit information to prescribers
via point-of-care (POC) systems. These include:
General formulary data (for example, therapeutic classes
and subclasses);
Formulary status of individual drugs (that is, which drugs
are covered);
Preferred alternatives (including any coverage
restrictions, such as quantity limits and need for prior
authorization); and
Copayment (the copayments for one drug option versus
another).
The NCPDP Formulary and Benefits Standard 1.0 enables the
prescriber to consider this information during the prescribing process,
and make the most appropriate drug choice without extensive back-and-
forth administrative activities with the pharmacy or the health plan.
As discussed above, the November 7, 2005 final rule (70 FR 67579)
established the process of updating an official Part D e-prescribing
standard with the recognition of ``backward-compatible'' versions of
the official standard in instances in which the user of the later
version can accommodate users of the earlier version of the adopted
standard without modification. In these instances, notice and comment
rulemaking could be waived, and use of either the new or old version of
the adopted standard would be considered compliant with the adopted
standard upon the effective date of the newer version's incorporation
by reference in the Federal Register. This ``Backward Compatible''
version updating process allows for the standards' updating/maintenance
to correct technical errors, eliminate technical inconsistencies, and
add optional functions that provide optional enhancements to the
specified e-prescribing transaction standard. Since the adoption of the
NCPDP Formulary and Benefits 1.0 standard in the Part D e-prescribing
program, NCPDP has updated its Formulary and Benefits standard. Changes
were based upon industry feedback and business needs and ranged in
complexity from creating whole new fields or lists within the standard
to simply changing a

[[Page 45024]]

particular field designation from mandatory to optional. Each time a
change is made to a standard it is given a new version number. The
current version of the Formulary and Benefits standard is version 3.0.
One of the major improvements between version 1.0 and 3.0 involved
the addition of Text message support for ``Coverage and Copay
Information,'' the addition of the ``Text Message Type (A46-1S)'' field
and the addition of ``Optional Prior Authorization Lists.'' Theses list
were added for use in conveying prior authorization requirements.
Other improvements included conversion of certain elements from
optional to mandatory. Version 3.0 also provides for ``Formulary Status
List Headers,'' which are fields that allow the sender to specify a
default formulary status for non-listed drugs. Subsequent versions also
allowed for the omission of ``Formulary Status Detail'' records when
the non-listed formulary policies are used exclusively to convey the
status of a drug on a formulary.
Changes to a standard may also involve removing fields that are not
widely used in industry. The removed fields are often replaced by new
fields that better serve the business needs of the industry. For
example, the following items have been removed through the various
updates that led up to version 3.0: ``Classification List'' and
references to it (such as Drug Classification Information), ``Coverage
Information Detail--Medical Necessity (MN),'' ``Coverage Information
Detail--Resource Link--Summary Level (RS),'' and the Classification ID
in the Cross Reference Detail.
In place of these deleted fields, the following fields were added
or amended to ultimately result in Version 3.0: The ``Formulary Status
existing value 2'' field was changed to ``On Formulary/Non-Preferred,''
The following has been clarified from '' The file load also enables
payers to specify a single coverage-related text message for each
drug'' field was changed to ``A payer may send multiple quantity
limits, step medications, text messages and resource links for the same
drug.''
We have reviewed Version 3.0, and based on our findings, we have
determined that Formulary and Benefits 3.0 maintains full functionality
of the official adopted Part D e-prescribing standard Formulary and
Benefits 1.0, and would permit the successful communication of the
applicable transaction with entities that continue to use Version 1.0.
While we would usually use the ``backward compatible'' waiver of
notice and comment procedures that are described above to recognize
Version 3.0 as a backward compatible version of the officially adopted
Version 1.0, this would have to be done in an interim final rule with
comment. As we cannot combine proposals and elements of a final rule in
one rule, we are electing this one time to formally propose recognizing
a subsequent standard as a backward compatible version of an adopted
standard through full notice and comment rulemaking in order to avoid
having to publish two rules contemporaneously. We therefore propose to
recognize the use of either Version 1.0 or 3.0 as compliant with the
adopted Version 1.0 effective 60 days after the publication of a final
rule.
As noted above, according to the November 7, 2005 final rule (70 FR
67580), entities that voluntarily adopt later versions of standards
that are recognized as backward compatible versions of the official
Part D e-prescribing standard must still accommodate the earlier
official Part D e-prescribing standard without modification. Therefore,
as we are using full notice and comment in place of the backward
compatible methodology in this one instance, we also propose to require
users of 3.0 to support users who are still using Version 1.0 until
such time as Version 1.0 is officially retired as a Part D e-
prescribing standard and Version 3.0 is adopted as the official Part D
e-prescribing standard.
To effectuate these proposals, we also propose to revise Sec.
423.160(b)(5) by placing the existing material in a new subsection
(b)(5)(i), and creating a second new subsection ((b)(5)(ii)) to reflect
the use of Version 3.0. as a backward compatible version of the
official Part D e-prescribing standard [i from 60 days from the
publishing of the final rule through October 31, 2013 We seek comment
on this proposal as well.
We also seek comment on timing and when to retire Version 1.0 as
the official Part D e-prescribing standard, and the proposal to adopt
Formulary and Benefit Version 3.0. as the official Part D e-prescribing
standard.
c. Proposed Elimination of the Exemption for Non-Prescribing Providers
(Long Term Care)
In our November 16, 2007 proposed rule (72 FR 64902-64906), we
discussed the inability of NCPDP SCRIPT versions 5.0 and 8.1 to support
the workflows and legal responsibilities in the long-term care setting,
that is, entities transmitting prescriptions or prescription-related
information where the prescriber is required by law to issue a
prescription for a patient to a non-prescribing provider (such as a
nursing facility) that in turn forwards the prescription to a dispenser
(``three-way prescribing communications'' between facility, physician,
and pharmacy). As such, such entities were provided with an exemption
from the requirement to use the NCPDP SCRIPT standard in transmitting
such prescriptions or prescription-related information. On July 1, 2010
we published an IFC (75 FR 38029) in which we conveyed that we would
consider removing the LTC exemption when there was an NCPDP SCRIPT
standard that could address the unique needs of long-term care
settings. We noted that NCPDP SCRIPT Version 10.6 was available, and
that we believed that it addressed the concerns of the LTC industry
regarding their ability to successfully support their workflows when e-
prescribing. We solicited comments on the impact and timing of adopting
version 10.6 as the official Part D e-prescribing standard and the
removal of the long-term care facility exemption from the NCPDP SCIPT
standard.
LTC enhancements were first made to the NCPDP SCRIPT version 10.2,
and were subsequently further enhanced in subsequent versions of the
SCRIPT Standard.
In a July 1, 2009 recommendation letter to the Secretary, (http://www.ncvhs.hhs.gov/090701lt.pdf) NCVHS recommended the adoption of
Version 10.6, the retirement of Version 8.1 and the lifting of the
current exemption at Sec. 423.160(a)(3)(iv) from the requirement to
use the NCPDP SCRIPT standard for providers in long-term care settings.
During the NCVHS testimony that preceded the recommendation letter,
members of the industry testified that the changes that were present in
NCPDP SCRIPT 10.6 created an environment where long-term care (LTC)
facilities could carry out e-prescribing using NCPDP SCRIPT 10.6 if it
were to be adopted as the official Part D e-prescribing standard. More
information on the testimony given to, and the recommendations given by
NCVHS, can be found at the NCVHS Web site http://www.ncvhs.hhs.gov/.
We considered the recommendations of the industry and NCVHS and
concluded that it would be appropriate to retire Version 8.1, adopt
Version 10.6 and eliminate the LTC exemption from the NCPDP SCRIPT
standard. Since the LTC industry currently is exempt from the
requirement to use the NCPDP SCRIPT Version 8.1 standard, Medicare Part
D e-prescribing operators, providers, and vendors have been utilizing
proprietary e-prescribing

[[Page 45025]]

solutions and interfaces in the form of electronic medication
administration records and internet communications, which are likely
not interoperable. As the use of Part D e-prescribing standards would
promote our administrative priorities of promoting interoperability and
harmonization among IT systems, we therefore propose to retire Version
8.1, adopt Version 10.6 and eliminate the current exemption at Sec.
423.160(a)(3)(iv) for entities transmitting prescriptions or
prescription-related information where the prescriber is required by
law to issue a prescription for a patient to a non-prescribing provider
(such as a nursing facility) that in turn forwards the prescription to
a dispenser.
We are soliciting comments on lifting the Long Term Care exemption,
effective November 1, 2013 in conjunction with the effective date of
NCPDP SCRIPT 10.6. We solicit comments regarding the impact of these
proposed effective dates on industry and other interested stakeholders,
and whether an earlier or later effective date should be adopted.

IV. Technical Corrections

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

Section 4104(c) of the Affordable Care Act amended section
1833(b)(1) of the Act to waive the Part B deductible for colorectal
cancer screening tests that become diagnostic in the course of the
procedure or visit. Specifically, section 1833(b)(1) of the Act waives
the deductible for colorectal screening tests regardless of the code
that is billed for the establishment of a diagnosis as a result of the
test, or the removal of tissue or other matter or other procedure that
is furnished in connection with, as a result of, and in the same
clinical encounter as a screening test. To implement this statutory
provision, we proposed that ``all surgical services furnished on the
same date as a planned screening colonoscopy, planned flexible
sigmoidoscopy, or barium enema be considered to be furnished in
connection with, as a result of, and in the same clinical encounter as
the screening test.'' After receiving public comment, this proposal was
finalized in the CY 2011 final rule with comment period (75 FR 73431).
However, we neglected to amend our regulations to reflect this policy.
When a screening test becomes a diagnostic service, practitioners
are to append a modifier to the diagnostic procedure code that is
reported instead of the HCPCS code for screening colonoscopy or
screening flexible sigmoidoscopy or as a result of the barium enema. By
use of this modifier, practitioners signal that the procedure meets the
criteria for the deductible to be waived.
To reflect this policy in our regulations, we propose to amend
Sec. 410.160 Part B annual deductible to include colorectal screening
tests that become diagnostic services in the list of services for which
the deductible does not apply. Specifically, we propose to add a new
Sec. 410.160(b)(8) to read, ``Beginning January 1, 2011, a surgical
service furnished on the same date as a planned colorectal cancer
screening test as described in Sec. 410.37.''
Section 103 of the BIPA amended section 1861(pp)(1)(C) of the Act
to permit coverage of screening colonoscopies for individuals not at
high risk for colorectal cancer who meet certain requirements. In order
to conform our regulations to section 1861(pp)(1)(C) of the Act, we
propose to modify Sec. 410.37(a)(1)(iii) to define ``Screening
colonoscopies'' by removing the phrase ``In the case of an individual
at high risk for colorectal cancer'' from this paragraph.
We also propose to delete paragraph (g)(1) from this section since
Medicare no longer receives claims for dates of service between January
1, 1998 and June 30, 2001, making this paragraph obsolete. We also
propose to redesignate paragraphs (g)(2) through (g)(4) and make
technical changes to newly redesignated paragraph (g)(1) by replacing
the reference to paragraph (g)(4) with a reference to newly
redesignated paragraph (g)(3).

V. 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 Diagnostic X-ray Tests, Diagnostic Laboratory Tests,
and Other Diagnostic Tests: Conditions (Sec. 410.32)

Proposed Sec. 410.32(d)(2)(i) would require that the physician or
qualified nonphysician practitioner (as defined in Sec. 410.32(a)(2))
who orders the service maintain documentation of medical necessity in
the beneficiary's medical record. In addition, both the medical record
and the laboratory requisition (or order) would be required to be
signed by the physician or qualified nonphysician practitioner who
orders the service. The burden associated with these requirements would
be the time and effort necessary for a physician or qualified
nonphysician practitioner to sign the medical record or laboratory
requisition (or order). There would also be a recordkeeping requirement
associated with maintaining the documentation of medical necessity in
the beneficiary medical record. While these requirements are subject to
the PRA, we believe the associated burden is exempt from the PRA in
accordance with 5 CFR 1320.3(b)(2). We believe that the time, effort,
and financial resources necessary to comply with the aforementioned
information collection requirements would be incurred by persons in the
normal course of their activities and therefore considered to be usual
and customary business practices.

B. ICRs Regarding Durable Medical Equipment Scope and Conditions (Sec.
410.38(g))

In Sec. 410.38(g), we would require (as a condition of payment for
certain covered items of DME) that a physician must have documented and
communicated to the DME supplier that the physician or a physician
assistant (PA), a nurse practitioner (NP), or a clinical nurse
specialist (CNS) has had a face-to-face encounter with the beneficiary
no more than 90 days before the order is written or within 30 days
after the order is written.
We propose that when the face-to-face encounter is performed by a
physician, the submission of the pertinent portion(s) of the
beneficiary's medical record (portions containing sufficient
information to document that the face-to-face encounter meets our
requirements) would be considered sufficient and valid documentation of

[[Page 45026]]

the face-to-face encounter when submitted to the supplier and made
available to CMS or its agents upon request. While we believe that many
of the practitioners addressed in this proposed rule are already
conducting a needs assessment and evaluating or treating the
beneficiary for conditions relevant to the covered item of DME, this
proposed rule may require some changes in their procedures to ensure
that their documentation fulfills Medicare's regulatory requirements.
Suppliers should already be receiving written orders and documentation
to support the appropriateness of certain items of DME.
To promote the authenticity and comprehensiveness of the written
order and as part of our efforts to reduce the risk of waste, fraud,
and abuse, we propose that as a condition of payment a written order
must include: (1) The beneficiaries' name; (2) the item of DME ordered;
(3) prescribing practitioner NPI; (4) the signature of the prescribing
practitioner; (5) the date of the order; (6) the diagnosis; and (7)
necessary proper usage instructions, as applicable.
In order to determine costs associated with the impact we utilized
the Bureau of Labor Statistics mean hourly rates for the professional,
analyzed for the year that the original data was received. The hourly
rate for a physician, including fringe benefits and overhead is
estimated at $118 per hour. The hourly rate, including fringe benefits
and overhead, for a NP, PA, CNS is estimated at $55 per hour. The
hourly rate for administrative assistant, including fringe benefits and
overhead, is estimated at $23 per hour.
Physicians are now required to document the face-to-face encounter
if it was performed by a PA, NP, or CNS. In order to allow payment for
this documentation, a G code is established for this service. There are
approximately 10 million DME users and it was assumed that roughly 5
percent of face-to-face encounters are actually performed by these
other provider types, thereby requiring documentation of the encounter.
Therefore, it was assumed that about 500,000 of these documentation
services would be billed. We estimate the time for a physician to
review each one of these encounters that results in an order is 10
minutes. Therefore, we estimate that the physician documentation burden
to review and document when a PA, NP or CNS performed the face-to-face
encounter in year 1 would be nearly 83,333 hours and a total of 700,000
million hours over 5 years. The associated cost in year 1 is nearly
$9.8 million and over 5 years has associated costs of nearly $82.6
million based on the growth rate of the Medicare population. The
increase is slightly more than five-fold because the number of Medicare
beneficiaries would increase over time.

Table 78--Physician Time To Document Occurrence of a Face-to-Face
Encounter
------------------------------------------------------------------------
Year 1 5 Years
------------------------------------------------------------------------
Number of claims affected....... 500,000........... 4,200,000.
Time for physician review of 10 min............ 10 min.
each claim.
Total Time...................... 83,333 hours...... 700,000 hours.
Estimated Total Cost (Hours $9,833,333........ $82,600,000.
times $118).
------------------------------------------------------------------------

We assume it will take 3 minutes for a PA, NP, or CNS to prepare
the medical record for the review of the face-to-face encounter. For
the 500,000 orders used in the previous estimate, this creates a total
of 25,000 hours at a cost of about $1.4 million in year 1 and nearly
210,000 hours over 5 years at a cost of nearly $11.6 million based on
the growth rate of the Medicare population. Though consistent with
previous estimates, we believe that using a PA, NP, or CNS hourly rate
creates a high burden impact estimate since most of these tasks would
more than likely be completed by administrative personnel. We welcome
comments on the appropriateness of these estimates.

Table 79--Physician Assistant, Nurse Practitioner or Clinical Nurse
Specialist Time
------------------------------------------------------------------------
Year 1 5 Years
------------------------------------------------------------------------
Number of claims affected....... 500,000........... 4,200,000.
Time for PAs, NPs, or CNSs to 3 min............. 3 min.
gather and provide each claim.
Total Time...................... 25,000 hours...... 210,000 hours.
Estimated Total Cost (Hours $1,375,000.00..... 11,550,000.
times $55).
------------------------------------------------------------------------

This proposed rule would create only a minimal change in the normal
course of business activities in regards to recordkeeping. Although we
believe the documentation of a needs assessment, evaluation, and or
treatment of a beneficiary for a condition relevant to an item of DME
is a common practice, it is possible that some practitioners may not be
documenting the results of all encounters; and therefore, there may be
additional impact for some practitioners.
This regulation requires that the supplier have access to the
documentation of the face-to-face encounter, which is required when CMS
conducts an audit. CMS already accounts for the audit burden associated
with the exchange of documentation for claims subject to prepayment
review (approved under OCN 0938-0969). As a business practice we
recognize that some suppliers may receive the documentation of the
face-to-face for all applicable claims, voluntarily.
We believe that the requirements expressed in this proposed rule
meet the utility and clarity standards. We welcome comment on this
assumption and on ways to minimize the burden on affected parties. The
proposed recordkeeping requirement in Sec. 410.38(g)(5) and the
requirement to maintain and make the supplier's order/additional
documentation available to CMS upon request is subject to the PRA, but
we believe that these requirements are usual and customary business
practices as defined in 5 CFR 1320.3(b)(2) and, therefore, the
associated burden is exempt from the PRA.

[[Page 45027]]

C. ICRs Regarding Physician Quality Reporting System--Definitions
(Sec. 414.90(b))

While Sec. 414.90(b) contains information collection requirements
regarding the input process and the endorsement of consensus-based
quality measures, this rule would not revise any of the information
collection requirements or burden estimates that are associated with
those provisions. All of the requirements and burden estimates are
currently approved by OMB under OCN 0938-1083, and are not subject to
additional OMB review under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).

D. ICRs Regarding Physician Quality Reporting System--Use of Consensus-
Based Quality Measures (Sec. 414.90(e))

We are proposing to revise Sec. 414.90(e), redesignated as to
broadly define our use of consensus-based quality measures. The current
regulation at Sec. 414.90(e) states that we will publish a final list
of measures every year. However, we are proposing measures for 2013 and
beyond this year.
While Sec. 414.90(e) contains information collection requirements
regarding the input process and the endorsement of consensus-based
quality measures, this rule would not revise any of the information
collection requirements or burden estimates that are associated with
those provisions. All of the requirements and burden estimates are
currently approved by OMB under OCN 0938-1083, and are not subject to
additional OMB review under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).

E. ICRs Regarding Physician Quality Reporting System--Requirements for
the Incentive Payments (Sec. 414.90(g))

While Sec. 414.90(g) contains information collection requirements
regarding the PQRS incentive payments, this rule would not revise any
of the information collection requirements or burden estimates that are
associated with those provisions. All of the requirements and burden
estimates are currently approved by OMB under OCN 0938-1083, and are
not subject to additional OMB review under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

F. ICRs Regarding Physician Quality Reporting System--Requirements for
the Payment Adjustments (Sec. 414.90)

While Sec. 414.90 contains information collection requirements
regarding the PQRS payment adjustments, this rule would not revise any
of the information collection requirements or burden estimates that are
associated with those provisions, except for the proposed criteria for
reporting via claims for the 2015 and 2016 PQRS payment adjustments and
the provisions that would allow the administrative claims reporting
option. Otherwise, all of the requirements and burden estimates are
currently approved by OMB under OCN 0938-1083 and are not subject to
additional OMB review under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
With respect to the proposed reporting criteria for the 2015 and
2016 PQRS payment adjustments using the claims-based reporting
mechanism, we note below that we anticipate that approximately 320,000
eligible professionals would use the claims-based reporting mechanism
for CYs 2013 and 2014. This is a difference of 120,000 from the 200,000
that participated in PQRS using the claims-based reporting mechanism in
2010. We believe that these 120,000 eligible professional would use the
2015 and 2016 PQRS payment adjustment claims-based payment adjustment
criteria to meet the criteria for satisfactory reporting for the 2015
and 2016 payment adjustments.
We estimate the cost for an eligible professional and group
practices to review the list of PQRS quality measures or measures
group, identify the applicable measures or measures group for which
they can report the necessary information, incorporate reporting of the
selected measures or measures group into the office work flows, and
select a PQRS reporting option to be approximately $200 per eligible
professional ($40 per hour x 5 hours). Based on our experience with the
Physician Voluntary Reporting Program 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 will range from 15 seconds (0.25 minutes) to over 12
minutes for complicated cases and/or measures, with the median time
being 1.75 minutes. At an average labor cost of $40/hour per practice,
the cost associated with this burden would range from $0.17 in labor to
about $8.00 in labor time for more complicated cases and/or measures,
with the cost for the median practice being $1.67.
The total estimated annual burden for this requirement will also
vary along with the volume of claims on which quality data is reported.
In previous years, when we required reporting on 80 percent of eligible
cases for claims-based reporting, we found that on average, the median
number of reporting instances for each of the PQRS measures was 9.
Since we are proposing to reduce the required reporting rate by over
one-third to 50 percent, then for purposes of this burden analysis we
will assume that an eligible professional or eligible professional in a
group practice will need to report each selected measure for 6
reporting instances. The actual number of cases on which an eligible
professional or group practice is required to report quality measures
data will vary, however, with the eligible professional's or group
practice's patient population and the types of measures on which the
eligible professional or group practice chooses to report (each
measure's specifications includes a required reporting frequency).
Based on the assumptions discussed previously, we estimate the total
annual reporting burden per individual eligible professional or
eligible professional in a group practice associated with claims-based
reporting would range from 4.5 minutes (0.25 minutes per measure x 3
measures x 6 cases per measure) to 180 minutes (12 minutes per measure
x 3 measures x 6 cases per measure), with the burden to the median
practice being 31.5 minutes (1.75 minutes per measure x 3 measures x 6
cases). We estimate the total annual reporting cost per eligible
professional or eligible professional in a group practice associated
with claims-based reporting would range from $3.06 ($0.17 per measure x
3 measures x 6 cases per measure) to $144.00 ($8.00 per measure x 3
measures x 6 cases per measure), with the cost to the median practice
being $30.06 per eligible professional ($1.67 per measure x 3 measures
x 6 cases per measure).
With respect to reporting using the administrative claims reporting
option, we estimate that the burden associated with reporting using the
administrative claims option is the time and effort associated with
reporting. We note that the burden for eligible professionals and group
practices using the administrative claims-based reporting mechanism

G. Summary of Annual Burden Estimates for Codified Requirements
(Proposed)

[[Page 45028]]

Table 80--Summary of Annual Burden Estimates
----------------------------------------------------------------------------------------------------------------
Burden per Total burden
Regulation section(s) OCN Respondents Responses response (hr) (hr)
----------------------------------------------------------------------------------------------------------------
410.38(g) re: Physician...... 0938-New....... 500,000 500,000........ 10 min......... 83,333
410.38(g) re: PA, NP, or CNS. 0938-New....... 500,000 500,000........ 3 min.......... 25,000
414.90(h).................... 0938-1083...... 120,000 120,000 0.5 (31.5 60,000
(120,000 minutes--the
responses x 1 median).
measure).
----------------------------------------------------------------------------------------------------------------

H. Additional Information Collection Requirements

While this proposed rule would impose collection of information
requirements that are set out in the regulatory text (see above), this
rule also sets out information collection requirements that are set out
only in the preamble. Following is a discussion of the preamble-
specific information collections, some of which have already received
OMB approval.
1. Part B Drug Payment
The discussion of average sales price (ASP) issues in section XXX
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. All of the requirements
and burden estimates are currently approved by OMB under OCN 0938-0921,
and are not subject to additional OMB review under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
2. Physician Quality Reporting System (PQRS)
The preamble of this proposed rule discusses the background of the
PQRS, provides information about the proposed measures and reporting
mechanisms that would be available to eligible professionals and group
practices who choose to participate in the 2013 and 2014 PQRS, and
provides the proposed criteria for satisfactory reporting in CYs 2013
and 2014 (for the 2013 and 2014 PQRS incentives and the 2015 and 2016
PQRS payment adjustments).
a. Participation in the 2013 and 2014 PQRS
According to the 2010 Reporting Experience Report, a total of
$391,635,495 in PQRS incentives was paid by CMS for the 2010 program
year, which encompassed 168,843 individual eligible professionals. In
2010, eligible professionals earned a 2.0 percent incentive (i.e., a
bonus payment equal to 2.0 percent of the total allowed part B charges
for covered professional services under the PFS furnished by the
eligible professional in the reporting period) for satisfactory
reporting under PQRS. For 2013 and 2014, eligible professionals can
earn a 0.5 percent incentive for satisfactory reporting, a reduction of
1.5 percent from 2010. Therefore, based on 2010, we would expect that
approximately $97 million (approximately \1/4\ of $391,635,495) in
incentive payments would be distributed to eligible professionals who
satisfactorily report. However, we expect that, due to the
implementation of payment adjustments beginning in 2015, participation
in PQRS would rise to approximately 300,000 eligible professionals and
400,000 eligible professionals in 2013 and 2014 respectively.
The average incentive distributed to each eligible professional in
2010 was $2,157. Taking into account the 1.5 percent incentive
reduction from 2.0 percent in 2010 to 0.5 percent in 2013 and 2014, we
estimate that the average amount per eligible professional earning an
incentive in 2013 and 2014 would be $539. Therefore, we estimate that
we would distribute approximately $162 million ($539 x 300,000 eligible
professionals) and $216 million ($539 x 400,000 eligible professionals)
in incentive payments in 2013 and 2014, respectively. We believe these
incentive payments will help offset the cost to eligible professionals
participating in PQRS for the applicable year. Please note that,
beginning 2015, incentive payments for satisfactory reporting in PQRS
will cease and payment adjustments for not satisfactorily reporting
will commence.
We note that the total burden associated with participating in PQRS
is the time and effort associated with indicating intent to participate
in PQRS, if applicable, and submitting PQRS quality measures data. When
establishing these burden estimates, we assume the following:
The requirements for reporting for PQRS 2013 and 2014
incentives and 2015 and 2016 payment adjustments would be established
as proposed in this 2013 Medicare PFS proposed rule.
For an eligible professional or group practice using the
claims, registry, or EHR-based reporting mechanisms, that the eligible
professional or group practice would report on 3 measures.
With respect to labor costs, we believe that a billing
clerk would handle the administrative duties associated with
participating, while a computer analyst would handle duties related to
reporting PQRS quality measures. According to the Bureau of Labor
Statistics, the mean hourly wage for a billing clerk is approximately
$16/hour whereas the mean hourly wage for a computer analyst is
approximately $40/hour.
b. Burden Estimate on Participation in the CYs 2013 and 2014 PQRS--New
Individual Eligible Professionals: Preparation
For an eligible professional who wishes to participate in PQRS as
an individual, the eligible professional need not indicate his/her
intent to participate. Instead, the eligible professional may simply
begin reporting quality measures data. Therefore, these burden
estimates for individual eligible professionals participating in PQRS
are based on the reporting mechanism the individual eligible
professional chooses. However, we believe a new eligible professional
or group practice would spend 5 hours--which includes 2 hours to review
PQRS measures list, review the various reporting options, and select a
reporting option and measures on which to report and 3 hours to review
the measure specifications and develop a mechanism for incorporating
reporting of the selected measures into their office work flows.
Therefore, we believe that the initial administrative costs associated
with participating in PQRS would be approximately $80 ($16/hour x 5
hours).

[[Page 45029]]

c. Burden Estimate on Participation in the 2013 and 2014 PQRS via the
Claims-Based Reporting Mechanism--Individual Eligible Professionals
In 2010, approximately 200,000 of the roughly 245,000 eligible
professionals (or 84 percent) of eligible professionals used the
claims-based reporting mechanism. We believe that although the number
of eligible professionals or group practices using the claims-based
reporting mechanism will increase in CYs 2013 and 2014, we anticipate
that the percentage of eligible professionals or group practices using
the claims-based reporting mechanism will decrease slightly as eligible
professionals and group practices transition towards using the EHR-
based reporting mechanism. Therefore, although we estimate that the
participation rate for PQRS will double from participation rates in
2010, we note that, although we believe the claims-based reporting
mechanism will be the most widely used, the percentage of PQRS
participants using the claims-based reporting mechanism will decrease
as we anticipate that more eligible professionals would use the
registry and EHR-based reporting mechanisms. For these reasons, we
estimate that approximately 320,000 eligible professionals, whether
participating individually or in a group practice, will participate in
PQRS in CY 2014.
With respect to an eligible professional who participates in PQRS
via claims, the eligible professional must gather the required
information, select the appropriate quality data codes (QDCs), and
include the appropriate QDCs on the claims they submit for payment.
PQRS will collect QDCs as additional (optional) line items on the
existing HIPAA transaction 837-P and/or CMS Form 1500 (OCN 0938-0999).
Based on our experience with Physician Voluntary Reporting Program
PVRP, we continue to estimate that the time needed to perform all the
steps necessary to report each measure via claims would range from 0.25
minutes to 12 minutes, depending on the complexity of the measure.
Therefore, the time spent reporting 3 measures would range from 0.75
minutes to 36 minutes. Using an average labor cost of $40/hour, we
estimate that time cost of reporting for an eligible professional via
claims will range from $0.50 (0.75 minutes x $40/hour) to $24.00 (36
minutes x $40/hour) per reported case. With respect to how many cases
an eligible professional would report when using the claims-based
reporting mechanism, we proposed that an eligible professional would
need to report on 50 percent of the eligible professional's applicable
cases. The actual number of cases on which an eligible professional
will report will vary depending on the number of the eligible
professional's applicable cases. However, in prior years, when the
reporting threshold was 80 percent, we found that the median number of
reporting cases for each measure was 9. Since we are proposing to
reduce the reporting threshold to 50 percent, we estimate that the
average number of reporting cases for each measure would be reduced to
6. Based on these estimates, we estimate that the total cost of
reporting for an eligible professional choosing the claims-based
reporting mechanism would range from ($0.50/per reported case x 6
reported cases) $3.00 to ($24.00/reported case x 6 reported cases)
$144.
We note that, for the 2015 and 2016 PQRS payment adjustments, we
are proposing an administrative claims reporting option for eligible
professionals and group practices. The burden associated with reporting
using the administrative claims reporting option is the time and effort
associated with using this option. To submit quality measures data for
PQRS using the administrative claims reporting option, an eligible
professional or group practice would need to (1) register as an
administrative claims reporter for the applicable payment adjustment
and (2) report quality measures data. With respect to registration, we
believe it would take approximately 2 hours to register to participate
in PQRS as an administrative claims reporter. Therefore, we estimate
that the cost of undergoing the GPRO selection process will be ($16/
hour x 2 hours) $32. With respect to reporting, we note that any burden
associated with reporting would be negligible, as an eligible
professional or group practice would not be required to attach
reporting G-codes on the claims they submit. Rather, CMS would bear the
burden of reporting with respect to selecting which measures to report.
We note that there would be no additional burden on the eligible
professional or group practice to submit these claims, as the eligible
professional or group practice would have already submitted these
claims for reimbursement purposes.
d. Burden Estimate on Participation in the CYs 2013 and 2014 PQRS via
the Registry-Based or EHR-Based Reporting Mechanism
In 2010, approximately 40,000 of the roughly 245,000 eligible
professionals (or 16 percent) of eligible professionals used the
registry-based reporting mechanism. We believe the number of eligible
professionals and group practices using the registry based reporting
mechanism will remain the same, as eligible professionals use
registries for functions other than PQRS and therefore would obtain a
registry solely for PQRS reporting by CY 2014. In 2010, only 14 of the
roughly 245,000 eligible professionals (or >1 percent) of eligible
professionals used the EHR-based reporting mechanism. We believe the
number of eligible professionals and group practices using the EHR-
based reporting mechanism will increase as eligible professionals
become more familiar with EHR products. In particular, we believe
eligible professionals and group practices will transition from using
the claims-based to the EHR-based reporting mechanisms. We estimate
that approximately 40,000 eligible professionals (4 percent), whether
participating as an individual or part of a group practice, will use
the EHR-based reporting mechanism in CY 2014.
With respect to an eligible professional or group practice who
participates in PQRS via a qualified registry, direct EHR product, or
EHR data submission vendor product, we believe there would be little to
no burden associated for an eligible professional to report PQRS
quality measures data to CMS, because the selected reporting mechanism
submits the quality measures data for the eligible professional. While
we note that there may be start-up costs associated with purchasing a
qualified registry, direct EHR product, or EHR data submission vendor,
we believe that an eligible professional or group practice would not
purchase a qualified registry, direct EHR product, or EHR data
submission vendor product solely for the purpose of reporting PQRS
quality measures. Therefore, we have not included the cost of
purchasing a qualified registry, direct EHR, or EHR data submission
vendor product in our burden estimates.
e. Burden Estimate on Participation in the CYs 2013 and 2014 PQRS--
Group Practices
Unlike eligible professionals who choose to report individually, we
note that we are proposing that eligible professionals choosing to
participate as part of a group practice under the GPRO would need to
indicate their intent to participate in PQRS as a GPRO. The total
burden for group practices who submit PQRS quality measures data via
the GPRO web-interface would be the time and effort associated with
submitting this data. To submit quality

[[Page 45030]]

measures data for PQRS, a group practice would need to (1) be selected
to participate in the PQRS GPRO and (2) report quality measures data.
With respect to the administrative duties for being selected to
participate in PQRS as a GPRO, we believe it would take approximately 6
hours--including 2 hours to decide to participate in PQRS as a GPRO, 2
hours to self-nominate, and 2 hours to undergo the vetting process with
CMS officials--for a group practice to be selected to participate in
PQRS GPRO for the applicable year. Therefore, we estimate that the cost
of undergoing the GPRO selection process will be ($16/hour x 6 hours)
$96.
With respect to reporting PQRS quality measures using the GPRO web-
interface, the total reporting burden is the time and effort associated
with the group practice submitting the quality measures data (that is,
completed the data collection interface). Based on burden estimates for
the PGP demonstration, which uses the same data submission methods, we
estimate the burden associated with a group practice completing the
data collection interface would be approximately 79 hours. Therefore,
we estimate that the report cost for a group practice to submit PQRS
quality measures data for an applicable year would be ($40/hour x 79
hours) $3,160.
Eligible professionals who wish to qualify for an additional 0.5
percent Maintenance of Certification Program incentive will need to
``more frequently'' than is required to qualify for or maintain board
certification status participate in a qualified Maintenance of
Certification Program for 2012 and successfully complete a qualified
Maintenance of Certification Program practice assessment for the
applicable year. Although we understand that there is a cost associated
with participating in a Maintenance of Certification Board, we believe
that most of the eligible professionals attempting to earn this
additional incentive would already be enrolled in a Maintenance of
Certification Board for reasons other than earning the additional
Maintenance of Certification Program incentive. Therefore, the burden
to earn this additional incentive will depend on what a certification
board establishes as ``more frequently'' and the time needed to
complete the practice assessment component. We expect that the amount
of time needed to complete a qualified Maintenance of Certification
Program practice assessment would be spread out over time since a
quality improvement component is often required. With respect to the
practice assessment component, according to an informal poll conducted
by ABMS in 2012, the time an individual spends to complete the practice
assessment component of the Maintenance of Certification ranges from 8-
12 hours.
f. Burden Estimate on Vendor Participation in the CYs 2013 and 2014
PQRS
Aside from the burden of eligible professionals and group practices
participating in PQRS, we believe that registry and EHR vendor products
incur costs associated with participating in PQRS.
Based on the number of registries that have self-nominated to
become a qualified PQRS registry in prior program years, we estimate
that approximately 50 additional registries would self-nominate to be
considered a qualified registry for PQRS. With respect to qualified
registries, the total burden for qualified registries who submit PQRS
quality measures data would be the time and effort associated with
submitting this data. To submit quality measures data for the proposed
PQRS program years, a registry would need to (1) become qualified for
the applicable year and (2) report quality measures data on behalf of
its eligible professionals. With respect to administrative duties
related to the qualification process, we estimate that it would take a
total of 10 hours--including 1 hour to complete the self-nomination
statement, 2 hours to interview with CMS, 2 hours to calculate
numerators, denominators, and measure results for each measure the
registry wishes to report using a CMS-provided measure flow, and 5
hours to complete an XML submission--to become qualified to report PQRS
quality measures data. Therefore, we estimate that it would cost a
registry approximately ($16.00/hour x 10 hours) $160 to become
qualified to submit PQRS quality measures data on behalf of its
eligible professionals.
With respect to the reporting of quality measures data, the burden
associated with reporting is the time and effort associated with the
registry calculating quality measures results from the data submitted
to the registry by its eligible professionals, submitting numerator and
denominator data on quality measures, and calculating these measure
results. We believe, however, that registries already perform these
functions for its eligible professionals irrespective of participating
in PQRS. Therefore, we believe there is little to no additional burden
associated with reporting PQRS quality measures data. Whether there is
any additional reporting burden will vary with each registry, depending
on the registry's level of savvy with submitting quality measures data
for PQRS.
With respect to EHR products, the total burden for direct EHR
products and EHR data submission vendors who submit PQRS quality
measures data will be the time and effort associated with submitting
this data. To submit quality measures data for the proposed PQRS
program years, a direct EHR product or EHR data submission vendor would
need to report quality measures data on behalf of its eligible
professionals. Please note that since we are proposing not to continue
to require direct EHR products and EHR data submission vendors to
become qualified to submit PQRS quality measures data, there is no
burden associated with qualification of direct EHR products and EHR
data submission vendor products. With respect to reporting quality
measures data, we believe the burden associated with the EHR vendor
programming its EHR product(s) to extract the clinical data that the
eligible professional would need to submit to CMS will depend on the
vendor's familiarity with PQRS and the vendor's system and programming
capabilities. Since we believe that an EHR vendor would be submitting
data for reasons other than reporting under PQRS, we believe there
would be no additional burden for an EHR vendor to submit quality
measures data for PQRS reporting.
g. Summary of Burden Estimates on Participation in the 2013 and 2014
PQRS--Eligible Professionals and Vendors

Table 81--Estimated Costs for Reporting PQRS Quality Measures Data for Eligible Professionals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated hours Estimated cases Number of measures Hourly rate Total cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual Eligible Professional 5.0.................... 1 N/A.................... $16.................... $80.
(EP): Preparation.
Individual EP: Claims............... 0.2.................... 6 3...................... $40.................... $144.

[[Page 45031]]

Individual EP: Administrative Claims 2...................... 1 N/A.................... $16.................... $32.
Individual EP: Registry............. N/A.................... 1 N/A.................... N/A.................... Minimal.
Individual EP: EHR.................. N/A.................... 1 N/A.................... N/A.................... Minimal.
Group Practice: Self-Nomination..... 6.0.................... 1 N/A.................... $16.................... $96.
Group Practice: Reporting........... 79..................... 1 N/A.................... $40.................... $3,160.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 82--Estimated Costs to Vendors To Participate in PQRS
----------------------------------------------------------------------------------------------------------------
Estimated
hours Hourly rate Total cost
----------------------------------------------------------------------------------------------------------------
Registry: Self-Nomination....................................... 10 $160 $160
EHR: Programming................................................ 0 0 0
----------------------------------------------------------------------------------------------------------------

3. Electronic Prescribing (eRx) Incentive Program
The requirements for the eRx Incentive Program for 2012-2014 were
established in the CY 2012 Medicare PFS final rule. Although we are
making proposals related to the eRx Incentive Program in the CY 2013
Medicare PFS, these proposals have no additional burden or impact on
the public. Therefore, this rule would not revise the requirements or
burden estimates approved by OMB under OCN: 0938-1083.
4. Physician Quality Reporting System-Medicare EHR Incentive Pilot
The Physician Quality Reporting System-Medicare EHR Incentive Pilot
is a Pilot that provides a method whereby an eligible professional
participating in both PQRS and Medicare EHR Incentive Program may
submit one set of data and satisfy the reporting requirements for both
programs. We believe any burden or impact associated with the Pilot
would be absorbed in the burden and impact estimates provided for PQRS
(OCN: 0938-1083) and the EHR Incentive Program.

I. Submission of PRA-Related Comments

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-1590-P] Fax: (202) 395-6974; or Email: [email protected].

VI. 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.

VII. Regulatory Impact Analysis

A. Statement of Need

This proposed rule is necessary in order to make payment and policy
changes under the Medicare PFS and to make required statutory changes
under the Middle Class Tax Relief and Job Creation Act of 2012
(MCTRJCA), the Affordable Care Act, and other statutory changes. This
proposed rule also is necessary to make changes to Part B drug payment
policy and other related Part B related policies.

B. Overall Impact

We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(February 2, 2012), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct 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 RIA that, to the best of our ability,
presents the costs and benefits of the rulemaking. The RFA requires
agencies to analyze options for regulatory relief of small entities.
For purposes of the RFA, small entities include small businesses,
nonprofit organizations, and small governmental jurisdictions. Most
hospitals and most other providers and suppliers are small entities,
either by nonprofit status or by having revenues of $7.0 million to
$34.5 million in any 1 year (for details see the SBA's Web site at
http://www.sba.gov/content/table-small-business-size-standards (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

[[Page 45032]]

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 $10
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.
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. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area for Medicare payment regulations and has fewer than
100 beds. We are not preparing an analysis for section 1102(b) of the
Act because we have determined, and the Secretary certifies, that this
proposed rule would 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 also
requires that agencies assess anticipated costs and benefits on State,
local, or tribal governments or on the private sector before issuing
any rule whose mandates require spending in any 1 year of $100 million
in 1995 dollars, updated annually for inflation. In 2012, that
threshold is approximately $139 million. This proposed rule would have
no consequential spending effect on State, local, or tribal governments
or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
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 would use to
minimize the burden on small entities. As indicated elsewhere in this
proposed rule, we are proposing to implement 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, and to implement statutory provisions. We provide
information for each of the policy changes in the relevant sections of
this proposed rule. We are unaware of any relevant Federal rules that
duplicate, overlap, or conflict with this proposed rule. The relevant
sections of this proposed rule contain a description of significant
alternatives if applicable.

C. Relative Value Unit (RVU) Impacts

1. Resource-Based Work, PE, and Malpractice RVUs
Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or
decreases in RVUs may not cause the amount of expenditures for the year
to differ by more than $20 million from what expenditures would have
been in the absence of these changes. If this threshold is exceeded, we
make adjustments to preserve BN.
Our estimates of changes in Medicare revenues for PFS services
compare payment rates for CY 2012 with proposed payment rates for CY
2013 using CY 2011 Medicare utilization as the basis for the
comparison. To the extent that there are year-to-year changes in the
volume and mix of services furnished by physicians, the actual impact
on total Medicare revenues will be different from those shown in Tables
83 (CY 2013 PFS Proposed Rule Estimated Impact on Total Allowed Charges
by Specialty) and 84 (CY 2013 PFS Proposed Rule Estimated Impact on
Total Allowed Charges by Specialty by Selected Proposal). 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 and would depend on the mix of services the
physician furnishes. 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 85
percent of their Medicare revenues from clinical laboratory services
that are not paid under the PFS.
Tables 83 and 84 show the payment impact on PFS services. We note
that these impacts do not include the effect of the January 2013
conversion factor changes under current law. The annual update to the
PFS conversion factor is calculated based on a statutory formula that
measures actual versus allowed or ``target'' expenditures, and applies
a sustainable growth rate (SGR) calculation intended to control growth
in aggregate Medicare expenditures for physicians' services. This
update methodology is typically referred to as the ``SGR'' methodology,
although the SGR is only one component of the formula. Medicare PFS
payments for services are not withheld if the percentage increase in
actual expenditures exceeds the SGR. Rather, the PFS update, as
specified in section 1848(d)(4) of the Act, is adjusted to eventually
bring actual expenditures back in line with targets. If actual
expenditures exceed allowed expenditures, the update is reduced. If
actual expenditures are less than allowed expenditures, the update is
increased. By law, we are required to apply these updates in accordance
with section 1848(d) and (f) of the Act, and any negative updates can
only be averted by an Act of the Congress. While the Congress has
provided temporary relief from negative updates for every year since
2003, a long-term solution is critical. We are committed to working
with the Congress to permanently reform the SGR methodology for
Medicare PFS updates. We provide our most recent estimate of the SGR
and physician update for CY 2013 on our Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SustainableGRatesConFact/index.html?redirect=/SustainableGRatesConFact/.
The following is an explanation of the information represented in
Table 83:
Column A (Specialty): The Medicare specialty code as
reflected in our physician/supplier enrollment files.
Column B (Allowed Charges): The aggregate estimated PFS
allowed charges for the specialty based on CY 2011 utilization and CY
2012 rates. That is, allowed charges are the PFS amounts for covered
services and include coinsurance and deductibles (which are the
financial responsibility of the beneficiary). These amounts have been

[[Page 45033]]

summed across all services furnished by physicians, practitioners, and
suppliers within a specialty to arrive at the total allowed charges for
the specialty.
Column C (Impact of Work and Malpractice (MP) RVU
Changes): This column shows the estimated CY 2013 impact on total
allowed charges of the changes in the work and malpractice RVUs,
including the impact of changes due to potentially misvalued codes.
Column D (Impact of PE RVU Changes): This column shows the
estimated CY 2013 impact on total allowed charges of the changes in the
PE RVUs.
Column E (Combined Impact): This column shows the
estimated CY 2013 combined impact on total allowed charges of all the
changes in the previous columns.
BILLING CODE 4120-01-P

[[Page 45034]]

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Table 84 shows the estimated impact of selected policy proposals on
total allowed charges, by specialty. The following is an explanation of
the information represented in Table 84:
Column A (Specialty): The Medicare specialty code as
reflected in our physician/supplier enrollment files.
Column B (Allowed Charges): The aggregate estimated PFS
allowed charges for the specialty based on CY 2011 utilization and CY
2012 rates. That is, allowed charges are the PFS 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, and
suppliers within a specialty to arrive at the total allowed charges for
the specialty.
Column C (Impact of Baseline (PPIS transition, Updated
Claims Data, and All Other Factors)): This column shows the estimated
CY 2013 impact on total allowed charges of the changes in the RVUs due
to the final year of the PPIS transition, proposed multiple procedure
payment reduction for the TC of cardiovascular and ophthalmology
diagnostic tests furnished on the same day (section II.B.4. of this
proposed rule), all other proposals that result in minimal
redistribution of payments under the PFS, the use of CY 2011 claims
data to model payment rates, and other factors.
Column D (Updated Equipment Interest Rate Assumption):
This column shows the estimated CY 2013 impact on total allowed charges
of the changes in the RVUs resulting from our proposed update to the
equipment interest rate assumption as discussed in section II.A.2.f. of
this proposed rule.
Column E (Primary Care and Care Coordination: Post-
Discharge Transitional Care Management Services): This column shows the
estimated CY 2013 combined impact on total allowed charges of the
changes in the RVUs resulting from our proposed policy to pay for post-
discharge transitional care management services in the 30 days
following an inpatient hospital, outpatient observation or partial
hospitalization, skilled nursing facility (SNF), or community mental
health center (CMHC) discharge as discussed in section II.H.1. of this
proposed rule. We would expect a negative impact on all non-primary
care specialties due to the application of a BN adjustment to reflect
the discharge transitional care management policy.
Column F (Input Changes for Certain Radiation Therapy
Procedures): This column shows the estimated CY 2013 combined impact on
total allowed charges of the changes in the RVUs resulting from our
proposal to revise the procedure times for certain radiation therapy
procedures discussed in section II.B.3.b. of this proposed rule.
Column G (Cumulative Impact): This column shows the
estimated CY 2013 combined impact on total allowed charges of all the
proposed changes in the previous columns.

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2. CY 2012 PFS Impact Discussion
a. Changes in RVUs
The most widespread specialty impacts of the RVU changes are
generally related to several factors. First, as discussed in section
II.A.2. of this proposed rule, we are currently implementing the final
year of the 4-year transition to new PE RVUs using the PPIS data that
were adopted in the CY 2010 PFS final rule with comment period. The
impacts of the final year of the transition are generally consistent
with the impacts that would be expected based on the impacts displayed
in the CY 2012 final rule with comment period. The second factor is the
post-discharge transitional care management proposal, under which we
would pay separately for care coordination in the 30 days following an
inpatient hospital, outpatient hospital observation services or partial
hospitalization, SNF, or CMHC discharge from the treating physician in
the hospital to the beneficiary's primary physician in the community.
Table 83 also reflects updates to the proposed interest rate
assumption used in the medical equipment calculation in the PE RVU
methodology, the proposed multiple procedure payment reduction policy
for the technical component of diagnostic cardiovascular and
ophthalmological procedures, and proposed changes to the inputs for
certain radiation therapy procedures.
Table 84 shows the same information as provided in Table 83, but
rather than isolating the policy impact on physician work, PE, and
malpractice separately, Table 84 shows the impact of varied proposed
policies on total RVUs.
b. Combined Impact
Column E of Table 83 and column G of Table 84 display the estimated
CY 2013 combined impact on total allowed charges by specialty of all
the proposed RVU and MPPR changes. These impacts range from an increase
of 7 percent for family practice to a decrease of 19 percent for
radiation therapy centers. Again, these impacts are estimated prior to
the application of the negative CY

[[Page 45038]]

2013 Conversion Factor (CF) update applicable under the current
statute.
Table 85 (Impact of Proposed Rule on CY 2013 Payment for Selected
Procedures (Based on the March 2012 Preliminary Physician Update))
shows the estimated impact on total payments for selected high volume
procedures of all of the changes discussed previously. We have included
CY 2013 payment rates with and without the effect of the CY 2013
negative PFS CF update for comparison purposes. We selected these
procedures because they are the most commonly furnished by a broad
spectrum of physician specialties. There are separate columns that show
the change in the facility rates and the nonfacility rates. For an
explanation of facility and nonfacility PE, we refer readers to
Addendum A of this proposed rule.

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[[Page 45042]]

BILLING CODE 4120-01-C

D. Effect of Proposed Changes to Medicare Telehealth Services Under the
PFS

As discussed in section II.E.3 of this proposed rule, we are
proposing to add several new codes to the list of Medicare telehealth
services. While we expect these changes to increase access to care in
rural areas, based on recent utilization of similar services already on
the telehealth list, we estimate no significant impact on PFS
expenditures from the proposed additions.

E. Effect of Proposed Definition of Certified Registered Nurse
Anesthetists' (CRNA) Services

As discussed in section II.K.1. of this proposed rule, we propose
to define ``anesthesia and related care'' as used in the statutory
benefit category for CRNAs under section 1861(bb)(2) of the Act to
include those services that are related to anesthesia and included
within the state scope of practice for CRNAs in the state in which the
services are furnished. CMS has been requested to clarify the
definition with regard to chronic pain management services. Contractors
have reached different conclusions as to whether the statutory
definition of ``anesthesia services and related care'' encompasses the
chronic pain management services delivered by CRNAs. Given variations
in state scopes of practice, we expect that differences on whether
CRNAs can bill Medicare directly for these services will continue to
exist. In addition, current Medicare policies do not prohibit CRNAs
from furnishing these services in states where the scope of practice
allows them to do so, but only prohibit them from billing Medicare
directly. As a result of these two factors, we do not expect a
significant change in how many services are billed to Medicare and
therefore, we estimate no significant budgetary impact from this
proposed change.

F. Effects of Proposed Change to Ordering Requirements for Portable X-
Ray Services Under the PFS

As discussed in section III.K.2. of this proposed rule, we are
proposing to revise our current regulation that limits ordering of
portable x-ray services to only a doctor of medicine or a doctor of
osteopathy to allow other physicians and nonphysician practitioners
(acting within the scope of State law and their Medicare benefit) to
order portable x-ray services. We estimate no significant impact on PFS
expenditures from the proposed additions.

G. Geographic Practice Cost Indices (GPCIs)

As discussed in section II.E. of this proposed rule, we are
required to review and revise the GPCIs at least every 3 years and
phase in the adjustment over 2 years (if there has not been an
adjustment in the past year). For CY 2013, we are not proposing any
revisions related to the data or methodologies used to calculate the
GPCIs. However, since the 1.0 work GPCI floor provided in section
1848(e)(1)(E) of the Act is set to expire prior to the implementation
of the CY 2013 PFS, the proposed CY 2013 physician work GPCIs and
summarized geographic adjustment factors (GAFs) published in addendums
D and E of this CY 2013 PFS proposed rule do not reflect the 1.0 work
GPCI floor for CY 2013. As required by section 1848(e)(1)(G) and
section 1848(e)(1)(I) of the Act, the 1.5 work GPCI floor for Alaska
and the 1.0 PE GPCI floor for frontier States are applicable in CY
2013.

H. Other Provisions of the Proposed Regulation

1. Ambulance Fee Schedule
As discussed in section III.A. of this proposed rule, section 306
of the TPTCCA and section 3007 of the MCTRJCA require the extension of
certain add-on payments for ground ambulance services, and the
extension of certain rural area designations for purposes of air
ambulance payment, through CY 2012. As further discussed in section
III.A. of this proposed rule, this legislation is self-implementing,
and we are proposing to amend the regulation text at Sec. 414.610 only
to conform the regulations to these self-implementing statutory
requirements. As a result, we are not making any policy proposals
associated with these legislative provisions and there is no associated
regulatory impact.
2. Part B Drug Payment: ASP Issues
As discussed in section III of this proposed rule, we are proposing
to update the AMP-based price substitution policy that would allow
Medicare to pay based off lower market prices for those drugs and
biologicals that consistently exceed the applicable threshold
percentage. Our impact analysis is unchanged from last year (76 FR
73462): Based on estimates published in various OIG reports cited in
the CY 2012 PFS final rule with comment period (76 FR 73290-1), we
believe that this proposal will generate minor savings for the Medicare
program and its beneficiaries since any substituted prices would be for
amounts less than the calculated 106 percent of the ASP.
Our policy clarification regarding Pharmacy Billing for Part B
Drugs Administered Incident to a Physician's Services which is
discussed in section III of this proposed rule states that only
physicians and not pharmacies (or DME suppliers) are allowed to bill
Medicare under Part B for drugs administered in physicians' offices. We
do not believe that this clarification will significantly impact the
quantity or payment amount for part B drugs that are administered
through implanted DME and or the procedures used to refill such pumps.
3. Medicare Program; Durable Medical Equipment (DME) Face-to-Face
Encounters and Written Orders Prior to Delivery
a. Overall Impact
We estimate the overall economic impact of this provision on the
health care sector to be a cost of $49.95 million in the first year and
$285.2 million over 5 years. This overall impact is comprised of
additional administrative paperwork costs to private sector providers;
a slight increase in Medicare spending, consisting of additional costs
and some offsetting savings; and additional opportunity and out-of-
pocket costs to Medicare beneficiaries. We believe there are likely to
be other benefits and cost savings result from the DME face-to-face
requirement, however, many of those benefits cannot be quantified. For
instance, we expect to see savings in the form of reduced fraud, waste,
and abuse, including a reduction in improper Medicare fee-for-service
payments (note that not all improper payments are fraudulent). Our
detailed cost and benefit analysis is explained below. We are
specifically soliciting comment on the potential increased costs and
benefits associated with this provision.

[[Page 45043]]

Table 86--Overall Economic Impact to Health Sector
[In millions]
------------------------------------------------------------------------
Year 1 5 Years
------------------------------------------------------------------------
Private Sector (Paperwork Cost). $11.2 $94.2
Net Medicare impact of 5 30
additional visits and G code
billings.......................
Beneficiaries................... 29.75 161
---------------------------------------
Total Economic Impact to Health 49.95 285.2
Sector.........................
------------------------------------------------------------------------

The definition of small entity in the RFA includes non-profit
organizations. Most suppliers and providers are small entities as that
term is used in the RFA. Likewise, the vast majority of physician and
NP practices are considered small businesses according to the Small
Business Administration's size standards with total revenues of $10
million or less in any 1 year. While the economic costs and benefits of
this rule are substantial in the aggregate, the economic impacts on
individual entities will be relatively small. We estimate that 90 to 95
percent of DME suppliers and practitioners who order DME are small
entities under the RFA definition. Physicians and other professionals
would receive extra payments for some of the costs imposed, and other
costs (for example, for additional practitioner visits) would be
reimbursed by Medicare under regular payment rules. The rationale
behind requiring a face-to-face encounter is to reduce inappropriate
claims from those DME suppliers who have been abusing or defrauding the
program. The impact on these suppliers could be significant, however
since the purpose of the statute and this regulation is to reduce
abusive and fraudulent DME sales, we do not view the burden placed on
those providers in the form of lost revenues as a condition that we
must mitigate. We believe that the effect on legitimate suppliers and
practitioners would be minimal.
Anticipated Effects
b. Costs
(1) Private Sector Paperwork Costs
We believe that most practitioners are already seeing the
beneficiary no more than 90 days prior to the written order or within
30 days after the order is written in certain circumstances. However
this regulation potentially requires increased documentation.
Although we have no quantitative data for a specific dollar figure
for the additional DME that may now be authorized in accordance with
Sec. 410.38(g), nor can we determine if there would be cost avoidance
and a reduction of unnecessary DME, we acknowledge the potential for
this provision to surpass the economically significant threshold. We do
not believe that this proposed rule would significantly affect the
number of legitimate written orders for DME. However, we would expect a
decline in fraudulent, wasteful and abusive orders, thereby causing a
decrease in the amount paid for DME overall.
The covered items of DME as outlined in the M Pages, including the
proposed list of Specified Covered Items, contains items that meet at
least one of the criteria. The four criteria are as follows: (1) Items
that currently require a written order prior to delivery per
instructions in our Program Integrity Manual; (2) items that cost more
than $1,000; (3) items that we, based on our experience and
recommendations from the DME MACs, believe are particularly susceptible
to fraud, waste, and abuse; (4) items determined by CMS as vulnerable
to fraud, waste and abuse based on reports of the HHS Office of
Inspector General, the Government Accountability Office or other
oversight entities. We are requesting comments on our criteria.
We also have estimated the number of different covered Medicare
items subject to this proposed rule at approximately 164 HCPCS codes
for items of DME. As new products enter the market this number could
increase, which could increase the impact. In addition, we propose a G-
code to pay physicians' for documenting the encounter conducted by a
PA, a NP, or a CNS.
We anticipate there would be an impact as a result of additional
office visits for the face-to-face encounter and the additional time
spent by physicians to document the face-to-face encounters with a
beneficiary when it is furnished by a PA, a NP, or a CNS.
In our estimate of overall cost we include the estimates from
section III, of this proposed rule (Collection of Information
Requirements section). These are estimated at $11.2 million in year 1
and $ 94.2 million over 5 years. These are driven by the physician
documenting face-to-face encounters with a beneficiary when it is
furnished by a PA, a NP, or a CNS, including the time to communicate
the practitioners findings to physicians so they can complete the
necessary documentation.

Table 87--Private Sector Paperwork Costs
------------------------------------------------------------------------
Year 1 (in 5 Years (in
millions) millions)
------------------------------------------------------------------------
Physician time to document $9.8 $82.6
occurrence of a face-to-face
encounter cost.................
PA, NP, or CNS costs............ 1.4 11.6
---------------------------------------
Total Cost.................. 11.2 94.2
------------------------------------------------------------------------

(2) Medicare Costs
Medicare would incur additional costs associated with this proposed
rule related to additional face-to-face encounters in the form of
office visits, and additional payment for time spent documenting the
face-to-face encounter if furnished by the PA, NP or CNS and not by the
physician directly. Subsequently, a G-Code is being created to allow
Medicare payment to physicians for documenting the face-to-face
encounters that are furnished by a PA, NP, and CNS, and is included in
this proposed rule.
From a programmatic standpoint we believe that there would be
750,000

[[Page 45044]]

additional office visits billed and 500,000 G code claims for the
documentation. It is difficult to determine how many PAs, NPs or CNSs
wrote orders for covered items of DME, and while we lack exact
empirical data, in order to provide an estimate, we assumed that 5
percent of the orders for covered items of DME were written by a PA, NP
or CNS. For the purpose of this estimate we assume that each order
requires a separate face-to-face encounter, recognizing fully that the
estimate might be inflated.
While we believe that currently the majority of practitioners
evaluate beneficiaries before ordering DME, some may not, and
therefore, a certain number of beneficiaries would be required to have
a new visit in order to fulfill the face-to-face encounter requirement.
Actuarial estimates indicate approximately 5 percent of those obtaining
covered items of DME in a given year did not see a practitioner in the
90 days preceding the order or in the 30 days after the order was
written. We estimate that 500,000 beneficiaries would not see their
practitioners in the 90 days prior to the written order for the covered
item or in the 30 days after the order is written. We assume that 1.5
visits per year per affected beneficiary would be required to cover the
DME services that currently fail to meet the face-to-face requirement.
The range would be about one to three; possibly less than one if many
beneficiaries choose not to meet the requirement or reschedule
services. DME claims for beneficiaries who failed to meet the physician
contact requirements averaged 3 line items per beneficiary. However,
about 40 percent of these line items occur on the same date and so
probably refer to the same event and could be authorized during a
single visit. Some additional coordination is probable for DME
purchases within a narrow time frame. To estimate the impact of the
additional office visits we assumed 750,000 additional office visits
(1.5 visits * 500,000 beneficiaries). We also assumed that the average
cost for these office visits is around $65, which is consistent with a
mid-level office visit under the PFS. This represents the total amount
that the practitioners would receive, either from Medicare or the
beneficiary, who is responsible for the 20 percent coinsurance.
Physicians are now required to document the face-to-face encounter
if it was furnished by a PA, NP, or CNS. In order to allow payment for
this documentation, a G code is established for this service. There are
approximately 10 million DME users and it was assumed that roughly 5
percent of face-to-face encounters are actually furnished by these
other practitioner types, thereby requiring documentation of the
encounter. Therefore, it was assumed that about 500,000 of these
documentation services would be billed. We cannot predict with any
certainty the cost of this new service, but believe that $15 is a
reasonable estimate. This represents the total amount that the
physician would receive, either from Medicare or the beneficiary, who
is responsible for the 20 percent coinsurance.
Therefore the estimated gross cost is estimated to be $45 million
in year 1 and $250 million over 5 years; note that there are also
savings to Medicare that must be netted against the cost of additional
practitioner office visits, which are described later in the Benefits
section. There is a high degree of uncertainty surrounding this
estimate because it is difficult to predict how physicians and
beneficiaries would respond to the new requirement.
This provision would assist in providing better documentation which
may help to lower the error rate and thus reduce improper payments,
including those stemming from waste, fraud and abuse. Since there is a
large amount of potential variation in the amount of time that a face-
to-face encounter may take for an item of DME, as a proxy our estimate
is based on the amount of time needed for a mid-level visit to evaluate
a beneficiary (E&M code 99213). The time allotted for this visit to
furnish the face-to-face evaluation under a 99213 is 15 minutes. We
welcome comments as to the appropriateness of E&M Code 99213 as a proxy
measure of time required for a face-to-face encounter.
Based on actual data, projecting these historical patterns in light
of the draft regulation is not straight-forward. Some line items may be
bundled (perhaps because they are used together). Beneficiaries may
also change their behavior in response to the regulation. For example,
beneficiaries would be required to visit a physician in order for
Medicare to pay for a new piece of equipment may substitute this visit
for a later visit that would have been for a routine service. In this
situation, the overall number of visits would not increase. Moreover,
some beneficiaries may choose not to pursue the DME item at that time.
On the other hand, the proposed rule points out that some of the
encounters reported on the practitioner claim now may not qualify to
support the need for the item of DME. We assume that beneficiaries
would decide not to schedule 10 percent of the additional visits
required as a result of not needing the DME item and that some would
substitute a required service for a later planned visit.

Table 88--Medicare 5-Year Costs for Additional Face-to-Face Visits and G
Code Billings
------------------------------------------------------------------------
2013 2014 2015 2016 2017
------------------------------------------------------------------------
$45 $45 $50 $50 $60
------------------------------------------------------------------------
* These costs represent 80 percent of the allowed charges for the
additional visits and the new G codes.

The requirement for a face-to-face encounter with a beneficiary in
a certain time period as a condition of payment for DME is a new
statutory requirement. It is not subject to the physician fee schedule
budget neutrality requirement under section 1848(c)(2)(B)(ii)(II) of
the Act. However, by regulation, we are proposing to make an additional
payment through a new G-code for physician work documenting the face-
to-face encounters that are performed by a PA, NP, and CNS. This
additional regulatory spending is subject to the physician fee schedule
budget neutrality requirement under section 1848(c)(2)(B)(ii)(II) of
the Act.
(c) Beneficiary Cost Impact
From a programmatic standpoint, approximately 5 percent of those
obtaining covered items of DME in that year did not see a practitioner
in the 90 days preceding the order or in the 30 days after the order
was written. We estimate that 500,000 beneficiaries would not see their
practitioners in the 90 days prior to the written order for the covered
item or in the 30 days after the order is written. As mentioned above,
we assume that 1.5 visits per year per affected beneficiary would be
required to cover the DME services that currently fail to meet the face
to face requirement. The range would be about one to three; possibly
less than one if many beneficiaries choose not to meet the requirement
or reschedule services. DME claims for beneficiaries who failed to meet
the physician contact requirements averaged 3 line items per
beneficiary. However, about 40 percent of these line items occur on the
same date and so probably refer to the same event and could be
authorized during a single visit. Some additional coordination is
probable for DME purchases within a narrow time frame. There are
effects on travel time and cost for these beneficiaries. If it takes a
beneficiary 1.25 hours to go to a practitioner, the total estimate is
approximately 937,500 hours of time for this proposed rule. We assume
that an

[[Page 45045]]

average trip requires one hour and 15 minutes (45 minutes of round trip
travel time and 30 minutes in the doctor's office--half for waiting and
half for time with the staff). As a proxy we use $20 to estimate the
cost per hour including loss of leisure time and travel cost for a
beneficiary to see a practitioner. This is consistent with previous
estimates of beneficiary leisure time as proposed in the May 4, 2011
proposed rule entitled ``Medicare & Medicaid Programs; Influenza
Vaccination Standard for Certain Medicare & Medicaid Participating
Providers and Suppliers'' 76 FR 25469. This creates an economic cost of
nearly $18.75 million in year 1. Over 5 years this cost could reach
$105 million. There will be additional out of pocket expenses at the 20
percent Medicare Part B coinsurance. We estimated this cost to be $10
million in year 1 and $56 million over 5 years.

Table 89--Beneficiary Cost Impact Resulting From Additional Face-To-Face Visits To Obtain DME Services
----------------------------------------------------------------------------------------------------------------
Year 1 5 Years
----------------------------------------------------------------------------------------------------------------
Total beneficiaries visits impacted... 750,000............................ 4.2 million.
Time per beneficiary.................. 1.25 hours......................... 1.25 hours.
Total Time............................ 937,500............................ 5.25 million.
Beneficiary Time Cost ($20)........... $18.75 million..................... $105 million.
Out of Pocket Expense................. $10 million........................ $56 million.
Estimated Total Beneficiary Cost $29.75 million..................... $161 million.
Impact.
----------------------------------------------------------------------------------------------------------------
* These costs represent 20 percent of the allowed charges for the additional visits and the new G codes.

b. Benefits

There would be quantifiable benefits from an expected reduction in
Medicare DME services provided. In addition, we anticipate additional,
qualitative benefits from a decrease in waste, fraud, and abuse, which
would decrease the number of services. Further, requiring that there be
a face-to-face evaluation of the beneficiary helps ensure appropriate
orders based on the individual's medical condition, which increases the
quality of care that the beneficiary receives. It is difficult to
measure how much waste, fraud, and abuse will be prevented as a result
of this proposed rule since it is impossible to determine what would
have happened in the absence of the proposed rule. This provision is
expected to improve physician's documentation of DME, and therefore,
will help reduce improper payments and move the agency towards its
strategic goal to reduce the Medicare fee-for-service error rate for
DME items which has a higher error rate than other Medicare services.
The Comprehensive Error Rate Testing (CERT) program error rate for DME
is high. Fraud is an improper payment, but not all improper payments
are fraud.
Therefore, creating a measure of how much this proposed rule would
save in terms of a reduction in waste, fraud and abuse is not possible.
With that stated, in 2009 Medicare paid $1.7 billion for DME items
covered by this proposed rule, and we estimate that $1.9 billion will
be paid for covered items in 2012, and $9.9 billion over 5 years.
Preventing waste, fraud and abuse by changing behavior that results in
just a small percentage reduction in inappropriate or unnecessary
ordering of DME services will generate Medicare savings. This is an
area where savings can be found through increased oversight, such as
this regulation proposes. We believe that the cost of the visits will
be offset by the savings produced by this provision.
We project Medicare savings from reduced DME services; these
savings partially offset the costs of additional physician office
visits and documentation payments described earlier in the impact
analysis. The year-to-year Medicare savings from reduced DME services
is as follows:

Table 90--Year-to-Year Medicare Savings From Reduced DME Services
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013 2014 2015 2016 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
DME savings........................................................ -$40 -$40 -$45 -$45 -$50
--------------------------------------------------------------------------------------------------------------------------------------------------------

Based on an analysis of 2007 DME claims, approximately 2 percent of
total DME spending was for those beneficiaries who had little contact
with their physician during the year. For this subset of spending we
assumed that there would be a 20 percent reduction in spending due to
the face-to-face requirement. We found similar reductions in DME
expenditures among managed care enrollees compared to fee for service
(FFS) beneficiaries in the Medical Expenditure Panel Survey. This
assumption is fairly speculative but we think it is modest compared to
the estimates of fraud and abuse reported elsewhere. The savings occurs
because some beneficiaries will not choose to go to the physician to
authorize the DME item, some physicians will not order the items that
would otherwise have been provided in the absence of the regulation,
and some suppliers will not be able to achieve a payment that might
have occurred through an unnecessary sale or outright fraud.
The overall net impact to Medicare of the DME face-to-face
encounter policy is $5 million in the first year and $30 million over
the first 5 years.
This regulation produces an extra benefit that is difficult to
quantify, but is an extremely positive one in terms of greater
practitioner involvement. By increasing practitioner interactions with
beneficiaries before ordering DME, beneficiaries would receive more
appropriate DME and benefiting from higher quality care. Beneficiaries
would also benefit from reduced out-of-pockets costs by not having to
pay for unnecessary DME. This accomplishes the objective of achieving
greater practitioner accountability noted in the provisions of and the
amendments made by section 6407 and other sections of the Affordable
Care Act. We welcome public comment on the benefits of the DME face-to-
face requirement, including any data that could help quantify the
expected reduction in fraud, improper payments, or improved beneficiary
quality of care.
Alternatives Considered
In this proposed rule, we consider a variety of options and have
sought

[[Page 45046]]

comments on these options in other sections of this proposed rule. We
expect public comment on the way in which the supplier should be
notified that a face-to-face has occurred wanting to limit the
potential burden. We proposed several options for the physician
documentation of a face-to-face encounter furnished by that physician.
We believe just submitting the medical record for the applicable date
of service would create the least cost while still producing the
desired benefits. In this proposed rule we have also set forth
different options of what physician documentation of a face-to-face
encounter furnished by a PA, NP or CNS could look like, in the hope of
receiving comments on determining the method that will create the least
potential burden.
There are also options to change the list of covered DME, either by
expanding it to cover more items or by minimizing it to cover fewer
items with low unit costs. We welcome comment on our selection
criteria.
Finally, there are other possible periods of time that could be set
as the window within which face-to-face encounters must occur. We
believe that the consistency with the home health rule benefits
providers of services and suppliers, and beneficiaries but welcome
comment on this proposal.
4. Non-Random Prepayment Review
We estimate no significant budgetary impact. We believe that the
overall costs for most providers and suppliers would remain the same
unless they are subject to non-random prepayment complex medical review
for an extended period of time.
5. Ambulance Coverage--Physician Certification Statement
We estimate no significant budgetary impact.
6. Physician Compare Web Site
Section IV.N.2. of this proposed rule discusses the background of
the Physician Compare Web site. As described in section IV.N.2. of this
proposed rule, we propose to develop aspects of the Physician Compare
Web site in stages. In the first stage, which was completed in 2011, we
posted the names of those eligible professionals who satisfactorily
participated in the 2009 Physician Quality Reporting System. The second
phase of the plan, which was completed in 2012, included posting the
names of eligible professionals who were successful electronic
prescribers under the 2009 eRx Incentive Program, as well as eligible
professionals (EPs) who participate in the EHR Incentive Program. The
next phase of the plan includes posting of performance information with
respect to the 2012 Physician Quality Reporting System GPRO measures
which will be completed no sooner than 2013.
We are proposing to include performance information for the 2013
Physician Quality Reporting System GPRO web interface measures data no
sooner than 2014, in addition to 2013 patient experience data for group
practices participating in the 2013 Physician Quality Reporting System
GPRO. As reporting of physician performance rates and patient
experience data on the Physician Compare Web site will be performed
directly by us using the data that we collect under the 2012 Physician
Quality Reporting System GPRO and other data collection methods, we do
not anticipate any notable impact on eligible professionals with
respect to the posting of information on the Physician Compare Web
site.
7. Physician Payment, Efficiency, and Quality Improvements--Physician
Quality Reporting System
According to the 2010 Reporting Experience Report, a total of
$391,635,495 in Physician Quality Reporting System incentives was paid
by CMS for the 2010 program year, which encompassed 168,843 individual
eligible professionals. In 2010, eligible professionals earned a 2.0
percent incentive (i.e., a bonus payment equal to 2.0 percent of the
total allowed part B charges for covered professional services under
the PFS furnished by the eligible professional during the reporting
period) for satisfactory reporting under the Physician Quality
Reporting System. For 2013 and 2014, eligible professionals can earn a
0.5 percent incentive for satisfactory reporting, a reduction of 1.5
percent from 2010. Therefore, based on 2010,which is the latest year in
which PQRS has full participation data, we would expect that
approximately $97 million (approximately \1/4\ of $391,635,495) in
incentive payments would be distributed to eligible professionals who
satisfactorily report. However, we expect that, due to the
implementation of payment adjustments beginning in 2015, participation
in the Physician Quality Reporting System would rise incrementally to
approximately 300,000 eligible professionals and 400,000 eligible
professionals in 2013 and 2014, respectively.
The average incentive distributed to each eligible professional in
2010 was $2,157. Taking into account the 1.5 percent incentive
reduction from 2.0 percent in 2010 to 0.5 percent in 2013 and 2014, we
estimate that the average amount per eligible professional earning an
incentive in 2013 and 2014 would be $539. Therefore, we estimate that
the Physician Quality Reporting System would distribute approximately
$162 million ($539 x 300,000 eligible professionals) and $216 million
($539 x 400,000 eligible professionals) in incentive payments in 2013
and 2014, respectively. We believe these incentive payments will help
offset the cost to eligible professionals for participating in the
Physician Quality Reporting System for the applicable year. Please note
that, beginning 2015, incentive payments for satisfactory reporting in
the Physician Quality Reporting System will cease and payment
adjustments for not satisfactory reporting will commence.
We note that the total burden associated with participating in the
Physician Quality Reporting System is the time and effort associated
with indicating intent to participate in the Physician Quality
Reporting System, if applicable, and submitting Physician Quality
Reporting System quality measures data. When establishing these burden
estimates, we assume the following:
The requirements for reporting for the Physician Quality
Reporting System 2013 and 2014 incentives and payment adjustments for
2015 and beyond would be established as proposed in this 2013 Medicare
PFS proposed rule.
For an eligible professional or group practice using the
claims, registry, or EHR-based reporting mechanisms, we assume that the
eligible professional or group practice would report on 3 measures.
With respect to labor costs, we believe that a billing
clerk will handle the administrative duties associated with
participating, while a computer analyst will handle duties related to
reporting Physician Quality Reporting System quality measures.
According to the Bureau of Labor Statistics, the mean hourly wage for a
billing clerk is approximately $16/hour whereas the mean hourly wage
for a computer analyst is approximately $40/hour.
For an eligible professional who wishes to participate in the
Physician Quality Reporting System as an individual, the eligible
professional need not indicate his/her intent to participate. The
eligible professional may simply begin reporting quality measures data.
Therefore, these burden estimates for individual eligible professionals
participating in the Physician Quality Reporting System are

[[Page 45047]]

based on the reporting mechanism the individual eligible professional
chooses. However, we believe a new eligible professional or group
practice would spend 5 hours--which includes 2 hours to review the
Physician Quality Reporting System measures list, review the various
reporting options, and select a reporting option and measures on which
to report and 3 hours to review the measure specifications and develop
a mechanism for incorporating reporting of the selected measures into
their office work flows. Therefore, we believe that the initial
administrative costs associated with participating in the Physician
Quality Reporting System would be approximately $80 ($16/hour x 5
hours).
With respect to an eligible professional who participates in the
Physician Quality Reporting System via claims, the eligible
professional must gather the required information, select the
appropriate quality data codes (QDCs), and include the appropriate QDCs
on the claims they submit for payment. The Physician Quality Reporting
System collects QDCs as additional (optional) line items on the
existing HIPAA transaction 837-P and/or CMS Form 1500 (OCN: 0938-0999).
Based on our experience with Physician Voluntary Reporting Program
(PVRP), we continue to estimate that the time needed to perform all the
steps necessary to report each measure via claims will range from 0.25
minutes to 12 minutes, depending on the complexity of the measure.
Therefore, the time spent reporting 3 measures would range from 0.75
minutes to 36 minutes. Using an average labor cost of $40/hour, we
estimate that time cost of reporting for an eligible professional via
claims would range from $0.50 (0.75 minutes x $40/hour) to $24.00 (36
minutes x $40/hour) per reported case. With respect to how many cases
an eligible professional would report when using the claims-based
reporting mechanism, we proposed that an eligible professional would
need to report on 50 percent of the eligible professional's applicable
cases. The actual number of cases on which an eligible professional
would report would vary depending on the number of the eligible
professional's applicable cases. However, in prior years, when the
reporting threshold was 80 percent, we found that the median number of
reporting cases for each measure was 9. Since we are proposing to
reduce the reporting threshold to 50 percent, we estimate that the
average number of reporting cases for each measure would be reduced to
6. Based on these estimates, we estimate that the total cost of
reporting for an eligible professional choosing the claims-based
reporting mechanism would range from ($0.50/per reported case x 6
reported cases) $3.00 to ($24.00/reported case x 6 reported cases)
$144.
We note that, for the 2015 and 2016 PQRS payment adjustments, we
are proposing an administrative claims reporting option for eligible
professionals and group practices. The burden associated with reporting
using the administrative claims reporting option is the time and effort
associated with using this option. To submit quality measures data for
PQRS using the administrative claims reporting option, an eligible
professional or group practice would need to (1) register as an
administrative claims reporter for the applicable payment adjustment
and (2) report quality measures data. With respect to registration, we
believe it would take approximately 2 hours to register for to
participate in PQRS as an administrative claims reporter. Therefore, we
estimate that the cost of undergoing the GPRO selection process will be
($16/hour x 2 hours) $32. With respect to reporting, we note that any
burden associated with reporting would be negligible, as an eligible
professional or group practice would not be required to attach
reporting G-codes on the claims they submit. Rather, CMS would bear the
burden of reporting with respect to selecting which measures to report.
We note that there would be no additional burden on the eligible
professional or group practice to submit these claims, as the eligible
professional or group practice would have already submitted these
claims for reimbursement purposes.
With respect to an eligible professional or group practice who
participates in the Physician Quality Reporting System via a qualified
registry, direct EHR product, or EHR data submission vendor product, we
believe there would be little to no burden associated for an eligible
professional to report Physician Quality Reporting System quality
measures data to CMS, because the selected reporting mechanism submits
the quality measures data for the eligible professional. While we note
that there may be start-up costs associated with purchasing a qualified
registry, direct EHR product, or EHR data submission vendor, we believe
that an eligible professional or group practice would not purchase a
qualified registry, direct EHR product, or EHR data submission vendor
product solely for the purpose of reporting Physician Quality Reporting
System quality measures. Therefore, we have not included the cost of
purchasing a qualified registry, direct EHR, or EHR data submission
vendor product in our burden estimates.
Unlike eligible professionals who choose to report individually, we
note that eligible professionals choosing to participate as part of a
group practice under the GPRO must indicate their intent to participate
in the Physician Quality Reporting System as a group practice. The
total burden for group practices who submit Physician Quality Reporting
System quality measures data via the proposed GPRO web-interface would
be the time and effort associated with submitting this data. To submit
quality measures data for the Physician Quality Reporting System, a
group practice would need to (1) be selected to participate in the
Physician Quality Reporting System GPRO and (2) report quality measures
data. With respect to the administrative duties for being selected to
participate in the Physician Quality Reporting System as a GPRO, we
believe it would take approximately 6 hours--including 2 hours to
decode to participate in the Physician Quality Reporting System as a
GPRO, 2 hours to self-nominate, and 2 hours to undergo the vetting
process with CMS officials--for a group practice to be selected to
participate in the Physician Quality Reporting System GPRO for the
applicable year. Therefore, we estimate that the cost of undergoing the
GPRO selection process would be ($16/hour x 6 hours) $96. With respect
to reporting, the total reporting burden is the time and effort
associated with the group practice submitting the quality measures data
(that is, completed the data collection interface). Based on burden
estimates for the PGP demonstration, which uses the same data
submission methods, we estimate the burden associated with a group
practice completing the data collection interface would be
approximately 79 hours. Therefore, we estimate that the report cost for
a group practice to submit Physician Quality Reporting System quality
measures data for the proposed reporting options in an applicable year
would be ($40/hour x 79 hours) $3,160.
Eligible professionals who wish to quality for an additional 0.5%
Maintenance of Certification Program incentive must ``more frequently''
than is required to qualify for or maintain board certification status
participate in a qualified Maintenance of Certification Program for
2013 and/or 2014 and successfully complete a qualified Maintenance of
Certification Program practice assessment for the applicable year.
Although we understand that there is a cost associated with
participating in

[[Page 45048]]

a Maintenance of Certification Board, we believe that most of the
eligible professionals attempting to earn this additional incentive
would already be enrolled in a Maintenance of Certification board for
reasons other than earning the additional Maintenance of Certification
Program incentive. Therefore, the burden to earn this additional
incentive would depend on what a certification board establishes as
``more frequently'' and the time needed to complete the practice
assessment component. We expect that the amount of time needed to
complete a qualified Maintenance of Certification Program practice
assessment would be spread out over time since a quality improvement
component is often required. With respect to the practice assessment
component, according to an informal poll conducted by ABMS in 2012, the
time an individual spends to complete the practice assessment component
of the Maintenance of Certification ranges from 8-12 hours.
Aside from the burden of eligible professionals and group practices
participating in the Physician Quality Reporting System, we believe
that registry, direct EHR, and EHR data submission vendor products
incur costs associated with participating in the Physician Quality
Reporting System.
With respect to qualified registries, the total burden for
qualified registries who submit Physician Quality Reporting System
Quality Measures Data would be the time and effort associated with
submitting this data. To submit quality measures data for the proposed
program years for Physician Quality Reporting System, a registry would
need to (1) become qualified for the applicable year and (2) report
quality measures data on behalf of its eligible professionals. With
respect to administrative duties related to the qualification process,
we estimate that it will take a total of 10 hours--including 1 hour to
complete the self-nomination statement, 2 hours to interview with CMS,
2 hours to calculate numerators, denominators, and measure results for
each measure the registry wishes to report using a CMS-provided measure
flow, and 5 hours to complete an XML submission--to become qualified to
report Physician Quality Reporting System quality measures data.
Therefore, we estimate that it would cost a registry approximately
($16.00/hour x 10 hours) $160 to become qualified to submit Physician
Quality Reporting System quality measures data on behalf of its
eligible professionals.
With respect to the reporting of quality measures data, we believe
the burden associated with reporting is the time and effort associated
with the registry calculating quality measures results from the data
submitted to the registry by its eligible professionals, submitting
numerator and denominator data on quality measures, and calculating
these measure results. We believe, however, that registries already
perform these functions for its eligible professionals irrespective of
participating in the Physician Quality Reporting System. Therefore, we
believe there would be little to no additional burden associated with
reporting Physician Quality Reporting System quality measures data.
Whether there is any additional reporting burden will vary with each
registry, depending on the registry's level of savvy with submitting
quality measures data for the Physician Quality Reporting System.
With respect to EHR products, the total burden for direct EHR
products and EHR data submission vendors who submit Physician Quality
Reporting System Quality Measures Data would be the time and effort
associated with submitting this data. To submit quality measures data
for the proposed program years under the Physician Quality Reporting
System, a direct EHR product or EHR data submission vendor would need
to report quality measures data on behalf of its eligible
professionals. Please note that we are not proposing to continue to
require direct EHR products and EHR data submission vendors to become
qualified to submit Physician Quality Reporting System quality measures
data. With respect to reporting quality measures data, we believe the
burden associated with the EHR vendor programming its EHR product(s) to
extract the clinical data that the eligible professional must submit to
CMS would depend on the vendor's familiarity with the Physician Quality
Reporting System and the vendor's system and programming capabilities.
We believe it would take a vendor approximately 40 hours (for
experienced vendors) to 200 hours (for first-time vendor participants)
to submit Physician Quality Reporting System quality measures data.
Therefore, we estimate that it would cost an EHR vendor ($40/hour x 40
hours) $1,600 to $8,000 to submit Physician Quality Reporting System
quality measures data for its eligible professionals.

Table 91--Estimated Costs for Reporting Physician Quality Reporting System Quality Measures Data for Eligible
Professionals
----------------------------------------------------------------------------------------------------------------
Estimated Estimated Number of
hours cases measures Hourly rate Total cost
----------------------------------------------------------------------------------------------------------------
Individual Eligible Professional 5.0 1 N/A $16 $80
(EP): Preparation..............
Individual EP: Claims........... 0.2 6 3 40 144
Individual EP: Administrative 2 1 N/A 16 32
Claims.........................
Individual EP: Registry......... N/A 1 N/A N/A *
Individual EP: EHR.............. N/A 1 N/A N/A *
Group Practice: Self-Nomination. 6.0 1 N/A 16 96
Group Practice: Reporting....... 79 1 N/A 40 3,160
----------------------------------------------------------------------------------------------------------------
* Minimals.

Table 92--Estimated Costs to Vendors To Participate in the Physician Quality Reporting System
----------------------------------------------------------------------------------------------------------------
Estimated hours Hourly rate Total cost
----------------------------------------------------------------------------------------------------------------
Registry: Self-Nomination................................. 10 $40 $400
EHR: Programming.......................................... 40-200 40 1,600-1,800
----------------------------------------------------------------------------------------------------------------

[[Page 45049]]

8. Electronic Prescribing (eRx) Incentive Program
Please note that the requirements for becoming a successful
electronic prescriber for the 2013 incentive and 2014 payment
adjustment were established in the CY 2012 MPFS final rule with comment
period. The proposed provisions contained in this CY 2013 MPFS proposed
rule would make additional changes to the requirements for the 2013
incentive and 2014 payment adjustment for group practices.
Specifically, CMS is proposing to add a new criterion for being a
successful electronic prescriber for the 2013 incentive and 2014
payment adjustments for group practices of 2-24 eligible professionals
given that CMS is proposing to modify the definition of group practice.
However, we note that any additional impact a result of this proposal
would be minimal, as it is our understanding the eligible professionals
who would use this new reporting option are already participating in
the eRx Incentive Program as individual eligible professionals.
For the reasons stated, the proposals would have no additional
impact other than the impact of the 2013 and 2014 payment adjustments
described in the CY 2012 MPFS final rule with comment period.
9. Medicare Shared Savings Program
Please note that the requirements for participating in the Medicare
Shared Saving Program and the impacts of these requirements were
established in the final rule for the Medicare Shared Savings Program
that appeared in the Federal Register on November 2, 2011 (76 FR
67962). The proposals for the Medicare Shared Savings Program set forth
in the CY 2013 MPFS proposed rule impose requirements that eligible
professionals in group practices within accountable care organizations
would need to satisfy for purposes of the PQRS payment adjustment under
the Medicare Shared Savings Program as the proposals related to the
ACOs for the PQRS payment adjustment mirror the requirements that were
established for earning the PQRS incentives.
10. Medicare EHR Incentive Program
Please note that the requirements for reporting clinical quality
measures (CQMs) to achieve meaningful use under Stage 1 for the EHR
Incentive Program were established in a standalone final rule published
on July 28, 2010 (75 FR 44544). The proposals contained in this CY 2013
MPFS proposed rule merely propose methods to report CQMs to meet the
CQM objective for achieving meaningful use under Stage 1 for the EHR
Incentive Program. Therefore, the impacts to the proposal we are making
to extend the use of attestation and the Physician Quality Reporting
System-Medicare EHR Incentive Pilot to report CQMs were absorbed in the
impacts discussion published in the EHR Incentive Program final rule
published on July 28, 2010.
11. Chiropractic Services Demonstration
As discussed in section III of this rule with comment period, we
are continuing the recoupment of the $50 million in expenditures from
this demonstration in order to satisfy the BN requirement in section
651(f)(1)(B) of the MMA. We initiated this recoupment in CY 2010 and
this will be the fourth year. As discussed in the CY 2010 PFS final
rule with comment period, we finalized a policy to recoup $10 million
each year through adjustments to the PFS for all chiropractors in CY s
2010 through 2014. To implement this required BN adjustment, we are
recouping $10 million in CY 2013 by reducing the payment amount under
the PFS for the chiropractic CPT codes (that is, CPT codes 98940,
98941, and 98942) by approximately 2 percent.
11. Physician Value-Based Payment Modifier and the Physician Feedback
Reporting Program
The proposed changes to the Physician Feedback Program in section
IV.I. of this proposed rule would not impact CY 2013 physician payments
under the PFS. However, we expect that our proposals to use the
Physician Quality Reporting System (PQRS) quality measures in the
Physician Feedback reports and in the value modifier to be implemented
in CY 2015 may result in increased participation in the PQRS in CY
2013. We anticipate that as we approach implementation of the value
modifier, physicians will increasingly participate in the PQRS to
determine and understand how the value modifier could affect their
payments.
12. Medicare Coverage of Hepatitis B Vaccine: Modification of High Risk
Groups Eligible for Medicare Part B Coverage of Hepatitis B Vaccine
As discussed in section III of this proposed rule, section
1861(s)(10)(B) of the Act authorizes Medicare coverage of hepatitis B
vaccine and its administration if furnished to an individual who is at
high or intermediate risk of contracting hepatitis B, as determined by
the Secretary under regulations. Our current regulations are
established at 42 CFR 410.63. We are proposing to modify Sec.
410.63(a)(1) by adding persons diagnosed with diabetes mellitus to the
high risk group. While it is estimated that approximately 23 percent of
non-institutionalized Medicare beneficiaries are diagnosed with
diabetes mellitus, it is unclear how many of these beneficiaries will
obtain these services. Therefore, the estimated impact of adding
persons diagnosed with diabetes mellitus to the high risk group
eligible for coverage of hepatitis B vaccine and its administration is
unknown for CY 2013.
13. Existing Standards for E-prescribing Under Medicare Part D and
Identification and Lifting the LTC Exemption
The e-prescribing standard updates that are proposed in this
section of the proposed rule imposes no new requirements as the burden
in using the updated standards is anticipated to be the same as using
the old standards. We believe that prescribers and dispensers that are
now e-prescribing largely invested in the hardware, software, and
connectivity necessary to e-prescribe. We do not anticipate that the
retirement of NCPDP SCRIPT 8.1 in favor of NCPDP SCRIPT 10.6 will
result in significant costs. We also believe the same holds true for
the standard updates for NCPDP Formulary and Benefits 3.0. The backward
compatible Formulary and Benefits 3.0 imposes no new requirements on
entities that are already e-prescribing. Entities that choose to use
Formulary and Benefits 3.0 would be doing so voluntarily.
The proposed removal of the LTC exception to the NCPDP SCRIPT
standard would impose a small burden on the LTC industry. LTC entities
who use and developed proprietary solutions may need to invest in
software programming updates if they had not already incorporated the
Part D e-prescribing standards in their solutions. It is reasonable to
assume that a small number of proprietary solutions would have to
modify their software in order to adhere to the adopted e-prescribing
standards. Other cost may be incurred though staff training on the use
of the e-prescribing standards and the use of an e-prescribing solution
if adopted by a LTC facility. Additional training cost may involve
prescribers and dispensers learning the new workflows that an
electronic prescription may or may not require.

I. Alternatives Considered

This proposed rule contains a range of policies, including some
provisions

[[Page 45050]]

related to specific statutory provisions. The preceding preamble
provides descriptions of the statutory provisions that are addressed,
identifies those policies when discretion has been exercised, presents
rationale for our final policies and, where relevant, alternatives that
were considered.

J. Impact on Beneficiaries

There are a number of changes in this proposed rule that would have
an effect on beneficiaries. In general, we believe that many of the
proposed changes, including the refinements of the PQRS with its focus
on measuring, submitting, and analyzing quality data; establishing the
basis for the value-based payment modifier to adjust physician payment
beginning in CY 2015; creating a separate payment for post-discharge
transitional care management services in the 30 days after a
beneficiary has been discharged from an inpatient hospital admission,
from outpatient observation services and partial hospitalization
program, from a SNF, or from a CMHC; improved accuracy in payment
through revisions to the inputs used to calculate payments under the
PFS for certain radiation therapy services; capital interest rate
assumptions; multiple procedure payment reduction for ophthalmology and
cardiovascular diagnostic tests; and revisions to payment for Part B
drugs will have a positive impact and improve the quality and value of
care furnished to Medicare beneficiaries.
Most of the aforementioned proposed policy changes could result in
a change in beneficiary liability as it relates to coinsurance (which
is 20 percent of the fee schedule amount if applicable for the
particular provision after the beneficiary has met the deductible). To
illustrate this point, as shown in Table 85, the CY 2012 national
payment amount in the nonfacility setting for CPT code 99203 (Office/
outpatient visit, new) is $105.18 which means that in CY 2012 a
beneficiary would be responsible for 20 percent of this amount, or
$21.04. Based on this proposed rule, using the current (CY 2012) CF of
34.0376, the CY 2013 national payment amount in the nonfacility setting
for CPT code 99203, as shown in Table 85, is $106.31, which means that,
in CY 2013, the proposed beneficiary coinsurance for this service would
be $21.26

K. Accounting Statement

As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 93 (Accounting
Statement), we have prepared an accounting statement showing the
estimated expenditures associated with this proposed rule. This
estimate includes the estimated FY 2012 cash benefit impact associated
with certain Affordable Care Act and MCTRJCA provisions, and the CY
2013 incurred benefit impact associated with the estimated CY 2013 PFS
conversion factor update based on the Mid-Session Review of the FY 2013
President's Budget baseline.

Table 93--Accounting Statement: Classification of Estimated
Expenditures
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
CY 2013 Annualized Monetized Transfers. Estimated decrease in
expenditures of $23.5 billion
for PFS conversion factor
update.
From Whom To Whom?..................... Federal Government to
physicians, other
practitioners and providers
and suppliers who receive
payment under Medicare.
CY 2013 Annualized Monetized Transfers. Estimated increase in payment
of 162 millions.
From Whom To Whom?..................... Federal Government to eligible
professionals participated in
(Physician Quality Reporting
System (PQRS).
------------------------------------------------------------------------

Table 94--Accounting Statement:
Classification of Estimated Costs, Transfer, and Savings
[$ In Millions]
------------------------------------------------------------------------
Category Benefit
------------------------------------------------------------------------
Qualitative (unquantified) benefits of No precise estimate available.
fraud, waste, and abuse prevented, and
of improved quality of services to
patients improved quality of services
to patients.
------------------------------------------------------------------------
Category Cost
------------------------------------------------------------------------
CY 2013 Annualized monetized costs of $9.37 millions.
beneficiary travel time.
------------------------------------------------------------------------
Category Transfer
------------------------------------------------------------------------
CY 2013 Annualized Monetized Transfers $10 millions.
of beneficiary cost coinsurance.
From Whom To Whom?..................... Beneficiaries to Federal
Government.
------------------------------------------------------------------------
Category Transfer
------------------------------------------------------------------------
CY 2013 Medicare face-to-face visit and $16.2 millions.
G-code payments.
From Whom To Whom?..................... Federal Government to DME
providers.
------------------------------------------------------------------------

L. Conclusion

The analysis in the previous sections, together with the remainder
of this preamble, provides an initial ``Regulatory Flexibility
Analysis.'' The previous analysis, together with the remainder of this
preamble, provides a Regulatory Impact Analysis.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.

[[Page 45051]]

List of Subjects

42 CFR Part 410

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

42 CFR Part 414

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

42 CFR Part 415

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

42 CFR Part 421

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

42 CFR Part 423

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

42 CFR Part 425

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

42 CFR Part 486

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

42 CFR Part 495

Administrative practice and procedure, Electronic health records,
Health facilities, Health professions, Health maintenance organizations
(HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and
recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services propose to amend 42 CFR chapters IV as set forth
below:

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

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

Authority: Secs. 1102, 1834, 1871, 1881, and 1893 of the Social
Security Act (42 U.S.C. 1302. 1395m, 1395hh, and 1395ddd.

2. Section 410.32 is amended by--
A. Revising paragraphs (b)(2)(iii) introductory text, (d)(2)(i),
and (e).
B. Redesignating paragraphs (c)(2) and (c)(3) as paragraphs (c)(3)
and (c)(4), respectively.
C. Adding new paragraph (c)(2)
The revisions and addition read as follows:

Sec. 410.32 Diagnostic x-ray tests, diagnostic laboratory tests, and
other diagnostic tests: Conditions.

* * * * *
(b) * * *
(2) * * *
(iii) Diagnostic psychological and neuropsychological testing
services when--
* * * * *
(c) * * *
(2) These services are ordered by a physician as provided in (a) or
by a nonphysician practitioner as provided in (a)(2) of this section.
(d) * * *
(2) * * *
(i) Ordering the service. The physician or (qualified nonphysician
practitioner, as defined in paragraph (a)(2) of this section), who
orders the service must maintain documentation of medical necessity in
the beneficiary's medical record.
* * * * *
(e) Diagnostic laboratory tests furnished in hospitals and CAHs.
The provisions of paragraphs (a) and (d)(2) through (d)(4) of this
section, inclusive, of this section apply to all diagnostic laboratory
test furnished by hospitals and CAHs to outpatients.

Sec. 410.37 [Amended]

3. Amend Sec. 410.37 by--
A. Revising paragraph (a)(1)(iii) by removing the phrase ``In the
case of an individual at high risk for colorectal cancer,''.
B. Removing paragraph (g)(1).
C. Redesignating paragraphs (g)(2) through (g)(4) as paragraph
(g)(1) through (g)(3), respectively.
D. In newly redesignated paragraph (g)(1), removing the reference
``(g)(4)'' and adding in its place the reference ``(g)(3)''.
4. Section 410.38 is amended by revising paragraph (g) to read as
follows:

Sec. 410.38 Durable medical equipment: Scope and conditions.

* * * * *
(g)(1) Items requiring a written order. As a condition of payment,
Specified Covered Items (as described in paragraph (g)(2) of this
section) require a written order that meets the requirements in
paragraphs (g)(3) and (4) of this section before delivery of the item.
(2) Specified covered items. (i) Specified Covered Items are items
of durable medical equipment that CMS has specified in accordance with
section 1834(a)(11)(B)(i) of the Act. A list of these items is updated
annually in the Federal Register.
(ii) The list of Specified Covered Items includes the following:
(A) Any item described by a Healthcare Common Procedure Coding
System (HCPCS) code for the following types of durable medical
equipment:
(1) Transcutaneous electrical nerve stimulation (TENS) unit.
(2) Rollabout chair.
(3) Wheelchair accessories.
(4) Oxygen and respiratory equipment.
(5) Hospital beds and accessories.
(6) Traction-cervical.
(B) Any item of durable medical equipment that appears on the
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Fee
Schedule with a price ceiling at or greater than $1,000.
(C) Any other item of durable medical equipment that CMS adds to
the list of Specified Covered Items through the notice and comment
rulemaking process in order to reduce the risk of fraud, waste, and
abuse.
(iii) The list of specific covered items excludes the following:
(A) Any item that is no longer covered by Medicare.
(B) Any HCPCS code that is discontinued.
(3) Face-to-face encounter requirements. (i) For orders issued in
accordance with paragraphs (g)(1) and (2) of this section, as a
condition of payment for the Specified Covered Item, all of the
following must occur:
(A) The physician must document and communicate to the DME supplier
that the physician or a physician assistant, a nurse practitioner, or a
clinical nurse specialist has had a face-to-face encounter with the
beneficiary on the date of the written order or during either of the
following:
(1) Up to 90 days before the date of the written order.
(2) Within 30 days after the date that the order is written.
(B) During the face-to-face encounter the physician, a physician
assistant, a nurse practitioner, or a clinical nurse specialist must
conduct a needs assessment, evaluate, or treat the beneficiary for the
medical condition that supports the need for each covered item of DME
ordered.
(C) The face-to-face encounter must be documented in the pertinent
portion of the medical record (for example, history, physical
examination,

[[Page 45052]]

diagnostic tests, summary of findings, diagnoses, treatment plans or
other information as it may be appropriate).
(i) For purposes of paragraph (g), a face-to-face encounter does
not include DME items and services furnished from an ``incident to''
service.
(ii) For purposes of paragraph (g), a face-to-face beneficiary
encounter may occur via telehealth in accordance with all of the
following:
(A) Section 1834(m) of the Act.
(B)(1) Medicare telehealth regulations in Sec. 410.78 and Sec.
414.65 of this chapter; and
(2) Subject to the list of payable Medicare telehealth services
established by the applicable PFS.
(4) Written order issuance requirements. Written orders issued in
accordance with paragraphs (g)(1) and (2) of this section must include
all of the following:
(i) Beneficiary's name.
(ii) Item of DME ordered.
(iii) Prescribing practitioner NPI.
(iv) Signature of the prescribing practitioner.
(v) The date of the order.
(vi) The beneficiary's diagnosis.
(vii) Necessary proper usage instructions, as applicable.
(5) Supplier's order and documentation requirements. (i) A supplier
must maintain the written order and the supporting documentation
provided by the physician, physician assistant, nurse practitioner, or
clinical nurse specialist and make them available to CMS upon request
for 7 years from the date of service consistent with Sec. 424.516(f)
of this chapter.
(ii) Upon request by CMS or its agents, a supplier must submit
additional documentation to CMS or its agents to support and
substantiate that a face-to-face encounter has occurred.
5. Section 410.40 is amended by--
A. In paragraph (c)(3)(ii), the word ``fro'' is revised to read
``from.''
B. Redesignating paragraph (d)(2) as (d)(2)(i).
C. Adding paragraph (d)(2)(ii).
The addition reads as follows:

Sec. 410.40 Coverage of ambulance services.

* * * * *
(d) * * *
(2) * * *
(ii) In all cases, the provider or supplier must keep appropriate
documentation on file and, upon request, present it to the contractor.
The presence of the signed physician certification statement does not
alone demonstrate that the ambulance transport was medically necessary.
All other program criteria must be met in order for payment to be made.
* * * * *
6. Section 410.59 is amended by adding paragraph (a)(4) to read as
follows:

Sec. 410.59 Outpatient occupational therapy services: Conditions.

(a) * * *
(4) Claims submitted for furnished services contain prescribed
information on patient functional limitations.
* * * * *
7. Section 410.60 is amended by adding paragraph (a)(4) to read as
follows:

Sec. 410.60 Outpatient physical therapy services: Conditions.

(a) * * *
(4) Claims submitted for furnished services contain prescribed
information on patient functional limitations.
* * * * *
8. Section 410.61 is amended by revising paragraph (c) to read as
follows:

Sec. 410.61 Plan of treatment requirements for outpatient
rehabilitation services.

* * * * *
(c) Content of the plan. The plan prescribes the type, amount,
frequency, and duration of the physical therapy, occupational therapy,
or speech-language pathology services to be furnished to the
individual, and indicates the diagnosis and anticipated goals that are
consistent with the patient function reporting on claims for services.
* * * * *
9. Section 410.62 is amended by adding paragraph (a)(4) to read as
follows:

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

(a) * * *
(4) Claims submitted for furnished services contain prescribed
information on patient functional limitations.
* * * * *
10. Section 410.63 is amended by adding paragraph (a)(1)(viii) to
read as follows:

Sec. 410.63 Hepatitis B vaccine and blood clotting factors:
Conditions.

* * *
(a) * * *
(1) * * *
(viii) Persons diagnosed with diabetes mellitus.
* * * * *
11. Section 410.69 is amended by adding the definition ``Anesthesia
and related care'' to paragraph (b) in alphabetical order to read as
follows:

Sec. 410.69 Services of a certified registered nurse anesthetist or
an anesthesiologist's assistant: Basic rule and definitions.

* * * * *
(b) * * *
Anesthesia and related care includes medical and surgical services
that are related to anesthesia and that a CRNA is legally authorized to
perform by the state in which the services are furnished.
* * * * *
12. Section 410.78 is amending by revising the introductory text of
paragraph (b) to read as follows:

Sec. 410.78 Telehealth services.

* * * * *
(b) General rule. Medicare Part B pays for office or other
outpatient visits, subsequent hospital care services (with the
limitation of one telehealth visit every three days by the patient's
admitting physician or practitioner), subsequent nursing facility care
services (not including the Federally-mandated periodic visits under
Sec. 483.40(c) and with the limitation of one telehealth visit every
30 days by the patient's admitting physician or nonphysician
practitioner), professional consultations, psychiatric diagnostic
interview examination, neurobehavioral status exam, individual
psychotherapy, pharmacologic management, end-stage renal disease-
related services included in the monthly capitation payment (except for
one ``hands on'' visit per month to examine the access site),
individual and group medical nutrition therapy services, individual and
group kidney disease education services, individual and group diabetes
self-management training services (except for one hour of ``hands on''
services to be furnished in the initial year training period to ensure
effective injection training), individual and group health and behavior
assessment and intervention services, smoking cessation services,
alcohol and/or substance abuse and brief intervention services,
screening and behavioral counseling interventions in primary care to
reduce alcohol misuse, screening for depression in adults, screening
for sexually transmitted infections (STIs) and high intensity
behavioral counseling (HIBC) to prevent STIs, intensive behavioral
therapy for cardiovascular disease, and behavioral counseling for
obesity furnished by an interactive telecommunications system if the
following conditions are met:
* * * * *
13. Section 410.105 is amended by--
A. Revising paragraph (c)(1)(ii).
B. Adding new paragraph (d).

[[Page 45053]]

The revision and addition read as follows:

Sec. 410.105 Requirement for coverage of CORF services.

* * * * *
(c) * * *
(1) * * *
(ii) Prescribes the type, amount, frequency, and duration of the
services to be furnished, and indicates the diagnosis and anticipated
rehabilitation goals that are consistent with the patient function
reporting on the claims for services.
* * * * *
(d) Claims submitted for physical therapy, occupational therapy or
speech-language-pathology services, contain prescribed information on
patient functional limitations.
14. Section 410.160 is amended by--
A. Redesignating paragraphs (b)(8) through (b)(13) as paragraphs
(b)(9) through (b)(14).
B. Adding new paragraph (b)(8).
The addition reads as follows:

Sec. 410.160 Part B annual deductible.

* * * * *
(b) * * *
(8) Beginning January 1, 2011, a surgical service furnished in
connection with, as a result of, and in the same clinical encounter as
a planned colorectal screening test. A surgical service furnished in
connection with, as a result of, and in the same clinical encounter as
a colorectal screening test means--a surgical service furnished on the
same date as a planned colorectal cancer screening test as described in
Sec. 410.37 of this part.
* * * * *

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

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

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

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

Sec. 414.65 Payment for telehealth services.

(a) * * *
(1) The Medicare payment amount for office or other outpatient
visits, subsequent hospital care services (with the limitation of one
telehealth visit every 3 days by the patient's admitting physician or
practitioner), subsequent nursing facility care services (with the
limitation of one telehealth visit every 30 days by the patient's
admitting physician or nonphysician practitioner), professional
consultations, psychiatric diagnostic interview examination,
neurobehavioral status exam, individual psychotherapy, pharmacologic
management, end-stage renal disease-related services included in the
monthly capitation payment (except for one ``hands on'' visit per month
to examine the access site), individual and group medical nutrition
therapy services, individual and group kidney disease education
services, individual and group diabetes self-management training
services (except for one hour of ``hands on'' services to be furnished
in the initial year training period to ensure effective injection
training), individual and group health and behavior assessment and
intervention, smoking cessation services, alcohol and/or substance
abuse and brief intervention services, screening and behavioral
counseling interventions in primary care to reduce alcohol misuse,
screening for depression in adults, screening for sexually transmitted
infections (STIs) and high intensity behavioral counseling (HIBC) to
prevent STIs, intensive behavioral therapy for cardiovascular disease,
and behavioral counseling for obesity furnished via an interactive
telecommunications system is equal to the current fee schedule amount
applicable for the service of the physician or practitioner.
(i) Emergency department or initial inpatient telehealth
consultations. The Medicare payment amount for emergency department or
initial inpatient telehealth consultations furnished via an interactive
telecommunications system is equal to the current fee schedule amount
applicable to initial hospital care provided by a physician or
practitioner.
(ii) Follow-up inpatient telehealth consultations. The Medicare
payment amount for follow-up inpatient telehealth consultations
furnished via an interactive telecommunications system is equal to the
current fee schedule amount applicable to subsequent hospital care
provided by a physician or practitioner.
* * * * *
17. Section 414.90 is amended by--
A. In paragraph (b), revising the definitions ``Group practice''
and ``Qualified registry.''
B. Removing the term ``Qualified electronic health record
product''.
C. Adding the definitions ``Administrative claims,'' ``Direct
electronic health record (EHR) product,'' ``Electronic health record
(EHR) data submission vendor product,'' and ``Group practice reporting
option (GPRO) web-interface'' in alphabetical order.
D. Revising paragraphs (c) and (d).
E. Redesignating paragraphs (e), (f), (g), (h), (i), and (j) as
paragraphs (f), (g), (i), (j), (k), and (l), respectively.
F. Adding new paragraphs (e) and (h).
G. Revising newly designated paragraphs (f), (g), and (k).
The revisions and additions read as follows:

Sec. 414.90 Physician Quality Reporting System.

* * * * *
(b) * * *
Administrative claims means a reporting mechanism under which an
eligible professional or group practice uses claims to report data on
the proposed PQRS quality measures. Under this reporting mechanism, CMS
determines which measures an eligible professional or group practice
reports.
Direct electronic health record (EHR) product means an electronic
health record vendor's product and version that submits data on
Physician Quality Reporting System measures directly to CMS.
Electronic health record (EHR) data submission vendor product means
an electronic health record vendor's product or version that acts as an
intermediary to submit data on Physician Quality Reporting System
measures on behalf of an eligible professional or group practice.
* * * * *
Group practice means a physician group practice that is defined by
a TIN, with 2 or more individual eligible professionals (or, as
identified by NPIs) that has reassigned their billing rights to the
TIN.
Group practice reporting option (GPRO) web-interface means a web
product developed by CMS that is used by group practices that are
selected to participate in the group practice reporting option (GPRO)
to submit data on Physician Quality Reporting System quality measures.
* * * * *
Qualified registry means a medical registry or a maintenance of
certification program operated by a specialty body of the American
Board of Medical Specialties that, with respect to a particular program
year, has self-nominated and successfully completed a vetting process
(as specified by CMS) to demonstrate its compliance with the Physician
Quality Reporting System qualification requirements specified by CMS
for that program year. The registry may act as a data submission
vendor, which has the requisite legal authority to provide Physician
Quality Reporting

[[Page 45054]]

System data (as specified by CMS) on behalf of an eligible professional
to CMS. If CMS finds that a qualified registry submits grossly
inaccurate data for reporting periods occurring in a particular year,
CMS reserves the right to disqualify a registry for reporting periods
occurring in the following year.
* * * * *
(c) Incentive payments. For 2007 to 2014, with respect to covered
professional services furnished during a reporting period by an
eligible professional, an eligible professional (or in the case of a
group practice under paragraph (i) of this section, a group practice)
may receive an incentive if--
(1) There are any quality measures that have been established under
the Physician Quality Reporting System that are applicable to any such
services furnished by such professional (or in the case of a group
practice under paragraph (i) of this section, such group practice) for
such reporting period; and
(2) If the eligible professional (or in the case of a group
practice under paragraph (j) of this section, the group practice)
satisfactorily submits (as determined under paragraph (g) of this
section for the eligible professional and paragraph (i of this section
for the group practice) to the Secretary data on such quality measures
in accordance with the Physician Quality Reporting System for such
reporting period, in addition to the amount otherwise paid under
section 1848 of the Act, there also must be paid to the eligible
professional (or to an employer or facility in the cases described in
section 1842(b)(6)(A) of the Act or, in the case of a group practice
under paragraph (i) of this section, to the group practice) from the
Federal Supplementary Medical Insurance Trust Fund established under
section 1841 of the Act an amount equal to the applicable quality
percent (as specified in paragraph (c)(3) of this section) of the
eligible professional's (or, in the case of a group practice under
paragraph (i) of this section, the group practice's) total estimated
allowed charges for all covered professional services furnished by the
eligible professional (or, in the case of a group practice under
paragraph (i) of this section, by the group practice) during the
reporting period.
(3) The applicable quality percent is as follows:
(i) For 2007 and 2008, 1.5 percent.
(ii) For 2009 and 2010, 2.0 percent.
(iii) For 2011, 1.0 percent.
(iv) For 2012, 2013, and 2014, 0.5 percent.
(4) For purposes of this paragraph--
(i) The eligible professional's (or, in the case of a group
practice under paragraph (i) of this section, the group practice's)
total estimated allowed charges for covered professional services
furnished during a reporting period are determined based on claims
processed in the National Claims History (NCH) no later than 2 months
after the end of the applicable reporting period;
(ii) In the case of the eligible professional who furnishes covered
professional services in more than one practice, incentive payments are
separately determined for each practice based on claims submitted for
the eligible professional for each practice;
(iii) Incentive payments to a group practice under this paragraph
must be in lieu of the payments that would otherwise be made under the
Physician Quality Reporting System to eligible professionals in the
group practice for meeting the criteria for satisfactory reporting for
individual eligible professionals. For any program year in which the
group practice (as identified by the TIN) is selected to participate in
the Physician Quality Reporting System group practice reporting option,
the eligible professional cannot individually qualify for a Physician
Quality Reporting System incentive payment by meeting the requirements
specified in paragraph (g) of this section.
(iv) Incentive payments earned by the eligible professional (or in
the case of a group practice under paragraph (i) of this section, by
the group practice) for a particular program year will be paid as a
single consolidated payment to the TIN holder of record.
(d) Additional incentive payment. Through 2014, if an eligible
professional meets the requirements described in paragraph (d)(2) of
this section, the applicable percent for such year, as described in
paragraphs (c)(3)(i) and (ii) of this section, must be increased by 0.5
percentage points.
(1) In order to qualify for the additional incentive payment
described in paragraph (d)(1) of this section, an eligible professional
must meet all of the following requirements:
(i) Satisfactorily submits data on quality measures for purposes of
this section for the applicable incentive year.
(ii) Have such data submitted on their behalf through a Maintenance
of Certification program (as defined in paragraph (b) of this section)
that meets:
(A) The criteria for a registry (as specified by CMS); or
(B) An alternative form and manner determined appropriate by the
Secretary.
(iii) The eligible professional, more frequently than is required
to qualify for or maintain board certification status--
(A) Participates in a maintenance of certification program (as
defined in paragraph (b) of this section) for a year; and
(B) Successfully completes a qualified maintenance of certification
program practice assessment (as defined in paragraph (b) of this
section) for such year.
(2) In order for an eligible professional to receive the additional
incentive payment, a Maintenance of Certification Program must submit
to the Secretary, on behalf of the eligible professional, information--
(i) In a form and manner specified by the Secretary, that the
eligible professional has successfully met the requirements of
paragraph (d)(2)(ii) of this section, which may be in the form of a
structural measure.
(ii) If requested by the Secretary, on the survey of patient
experience with care.
(iii) As the Secretary may require, on the methods, measures, and
data used under the Maintenance of Certification Program and the
qualified Maintenance of Certification Program practice assessment.
(e) Payment Adjustments. For 2015 and subsequent years, with
respect to covered professional services furnished by an eligible
professional, if the eligible professional does not satisfactorily
submit data on quality measures for covered professional services for
the quality reporting period for the year (as determined under section
1848(m)(3)(A) of the Act), the fee schedule amount for such services
furnished by such professional during the year (including the fee
schedule amount for purposes for determining a payment based on such
amount) shall be equal to the applicable percent of the fee schedule
amount that would otherwise apply to such services under this
subsection.
(1) The applicable percent is as follows:
(i) For 2015, 98.5 percent; and
(ii) For 2016 and each subsequent year, 98 percent.
(2) [Reserved]
(f) Use of consensus-based quality measures. For measures selected
for inclusion in the Physician Quality Reporting System quality measure
set, CMS will use consensus-based quality measures that meet one of the
following criteria:
(1) Be such measures selected by the Secretary from measures that
have been endorsed by the entity with a contract with the Secretary
under section 1890(a) of the Act.
(2) In the case of a specified area or medical topic determined
appropriate by the Secretary for which a feasible and

[[Page 45055]]

practical measure has not been endorsed by the entity with a contract
under section 1890(a) of the Act, the Secretary may specify a measure
that is not so endorsed as long as due consideration is given to
measures that have been endorsed or adopted by a consensus organization
identified by the Secretary.
(3) For each quality measure adopted by the Secretary under this
paragraph, the Secretary ensures that eligible professionals have the
opportunity to provide input during the development, endorsement, or
selection of quality measures applicable to services they furnish.
(g) Requirements for the incentive payments. In order to qualify to
earn a Physician Quality Reporting System incentive payment for a
particular program year, an individual eligible professional, as
identified by a unique TIN/NPI combination, (or in the case of a group
practice under paragraph (i) of this section, by the group practice)
must meet the criteria for satisfactory reporting specified by CMS for
such year by reporting on either individual Physician Quality Reporting
System quality measures or Physician Quality Reporting System measures
groups identified by CMS during a reporting period specified in
paragraph (g)(1) of this section and using one of the reporting
mechanisms specified in paragraph (g)(2) of this section.
(1) Reporting periods. For purposes of this paragraph, the
reporting period is--
(i) The 12-month period from January 1 through December 31 of such
program year.
(ii) A 6-month period from July 1 through December 31 of such
program year.
(A) For 2011, such 6-month reporting period is not available for
EHR-based reporting of individual Physician Quality Reporting System
quality measures.
(B) For 2012 and subsequent program years, such 6-month reporting
period from July 1 through December 31 of such program year is only
available for registry-based reporting of Physician Quality Reporting
System measures groups by eligible professionals.
(2) Reporting mechanisms. For program year 2011 and subsequent
program years, an eligible professional who wishes to participate in
the Physician Quality Reporting System must report information on the
individual Physician Quality Reporting System quality measures or
Physician Quality Reporting System measures groups identified by CMS in
one of the following manners:
(i) Claims. Reporting the individual Physician Quality Reporting
System quality measures or Physician Quality Reporting System measures
groups to CMS, by no later than 2 months after the end of the
applicable reporting period, on the eligible professional's Medicare
Part B claims for covered professional services furnished during the
applicable reporting period.
(A) If an eligible professional re-submits a Medicare Part B claim
for reprocessing, the eligible professional may not attach a G-code at
that time for reporting on individual Physician Quality Reporting
System measures or measures groups.
(B) [Reserved]
(ii) Registry. Reporting the individual Physician Quality Reporting
System quality measures or Physician Quality Reporting System measures
groups to a qualified registry (as specified in paragraph (b) of this
section) in the form and manner and by the deadline specified by the
qualified registry selected by the eligible professional. The selected
registry will submit information, as required by CMS, for covered
professional services furnished by the eligible professional during the
applicable reporting period to CMS on the eligible professional's
behalf.
(iii) Direct EHR product. Reporting the individual Physician
Quality Reporting System quality measures to CMS by extracting clinical
data using a secure data submission method, as required by CMS, from a
direct EHR product (as defined in paragraph (b) of this section) by the
deadline specified by CMS for covered professional services furnished
by the eligible professional during the applicable reporting period.
(iv) EHR data submission vendor. Reporting the individual Physician
Quality Reporting System quality measures to CMS by extracting clinical
data using a secure data submission method, as required by CMS, from an
EHR data submission vendor product (as defined in paragraph (b) of this
section) by the deadline specified by CMS for covered professional
services furnished by the eligible professional during the applicable
reporting period.
(v) Web-interface. For a group practices defined in paragraph (b)
of this section, reporting individual Physician Quality Reporting
System quality measures to CMS using a CMS web-interface in the form
and manner and by the deadline specified by CMS.
(3) Although an eligible professional may attempt to qualify for
the Physician Quality Reporting System incentive payment by reporting
on both individual Physician Quality Reporting System quality measures
and measures groups, using more than one reporting mechanism (as
specified in paragraph (g)(2) of this section), or reporting for more
than one reporting period, he or she will receive only one Physician
Quality Reporting System incentive payment per TIN/NPI combination for
a program year.
(h) Requirements for the payment adjustments. In order to satisfy
the requirements for the Physician Quality Reporting System payment
adjustment for a particular program year, an individual eligible
professional, as identified by a unique TIN/NPI combination (or in the
case of a group practice under paragraph (i) of this section, by the
group practice) must meet the criteria for satisfactory reporting
specified by CMS for such year by reporting on either individual
Physician Quality Reporting System measures or Physician Quality
Reporting System measures groups identified by CMS during a reporting
period specified in paragraph (h)(1) of this section and using one of
the reporting mechanisms specified in paragraph (h)(2) of this section.
(1) For purposes of this paragraph, the reporting period for the
payment adjustment, with respect to a payment adjustment year, is the
12-month period from January 1 through December 31 that falls two years
prior to the year in which the payment adjustment is applied.
(i) For the 2015 and 2016 PQRS payment adjustments only, an
alternative 6-month reporting period, from July 1-December 31 that fall
two years prior to the year in which the payment adjustment is applied,
is also available.
(ii) [Reserved]
(2) An eligible professional (or in the case of a group practice
under paragraph (i) of this section, by the group practice) who wishes
to participate in the Physician Quality Reporting System must report
information on the individual Physician Quality Reporting System
measures or Physician Quality Reporting System measures groups
identified by CMS using one of the following reporting mechanisms:
(i) Claims. Reporting the individual Physician Quality Reporting
System quality measures or Physician Quality Reporting System measures
groups to CMS, by no later than 2 months after the end of the
applicable reporting period, on the eligible professional's Medicare
Part B claims for covered professional services furnished during the
applicable reporting period.
(A) Medicare Part B claims may not be reprocessed or reopened for
the sole purpose or reporting on individual

[[Page 45056]]

Physician Quality Reporting System measures or measures groups.
(B) [Reserved]
(ii) Qualified registry. Reporting the individual Physician Quality
Reporting System quality measures or Physician Quality Reporting System
measures groups to a qualified registry (as specified in paragraph (b)
of this section) in the form and manner and by the deadline specified
by the qualified registry selected by the eligible professional. The
selected registry will submit information, as required by CMS, for
covered professional services furnished by the eligible professional
during the applicable reporting period to CMS on the eligible
professional's behalf.
(iii) Direct EHR product. Reporting the individual Physician
Quality Reporting System quality measures to CMS by extracting clinical
data using a secure data submission method, as required by CMS, from a
direct EHR product (as defined in paragraph (b) of this section) by the
deadline specified by CMS for covered professional services furnished
by the eligible professional during the applicable reporting period.
(iv) EHR data submission vendor. Reporting the individual Physician
Quality Reporting System quality measures to CMS by extracting clinical
data using a secure data submission method, as required by CMS, from an
EHR data submission vendor product (as defined in paragraph (b) of this
section) by the deadline specified by CMS for covered professional
services furnished by the eligible professional during the applicable
reporting period.
(v) GPRO web-interface. For a group practices defined in paragraph
(b) of this section that are comprised of 25 or more eligible
professionals, reporting individual Physician Quality Reporting System
quality measures to CMS using a CMS web-interface in the form and
manner and by the deadline specified by CMS.
(vi) Administrative claims. For the 2015 and 2016 payment
adjustments, reporting certain administrative claims individual
Physician Quality Reporting System quality measures during the
applicable reporting period. Eligible professionals and (or in the case
of a group practice under paragraph (i) of this section) that are
administrative claims reporters must meet the following requirement for
the payment adjustment:
(A) Register to participate in the Physician Quality Reporting
System using the administrative claims reporting option.
(B) Reporting Medicare Part B claims data for CMS to determine
whether the eligible professional or group practice has performed
services applicable to certain individual Physician Quality Reporting
System quality measures.
(3) Although an eligible professional or group practice may attempt
to meet the criteria for satisfactory reporting for the Physician
Quality Reporting System payment adjustment by reporting on individual
Physician Quality Reporting System quality measures or measures groups
using more than one reporting mechanism (as specified in paragraph
(h)(2) of this section), the eligible professional or group practice
must satisfy the criteria for satisfactory reporting for the Physician
Quality Reporting System payment adjustment under one reporting
mechanism per TIN/NPI combination for a program year.
(i) Requirements for group practices. Under the Physician Quality
Reporting System, a group practice (as defined in paragraph (b) of this
section) must meet all of the following requirements:
(1) Meet the participation requirements specified by CMS for the
Physician Quality Reporting System group practice reporting option.
(2) Be selected by CMS to participate in the Physician Quality
Reporting System group practice reporting option.
(3) Report measures in the form and manner specified by CMS.
(4) Meet other requirements for satisfactory reporting specified by
CMS.
(5) Meet participation requirements.
(i) If an eligible professional, as identified by an individual
NPI, has reassigned his or her Medicare billing rights to a group
practice (as identified by the TIN) selected to participate in the
Physician Quality Reporting System group practice reporting option for
a program year, then for that program year the eligible professional
must participate in the Physician Quality Reporting System via the
group practice reporting option.
(ii) If, for the program year, the eligible professional
participates in the Physician Quality Reporting System as part of a
group practice (as identified by the TIN) that is not selected to
participate in the Physician Quality Reporting System group practice
reporting option for that program year, then the eligible professional
may individually participate and qualify for a Physician Quality
Reporting System incentive by meeting the requirements specified in
paragraph (g) of this section under that TIN.
18. Section 414.92 is amended by--
A. Revising paragraphs (c)(2)(ii)(A)(5) and (c)(2)(ii)(A)(6).
B. Adding paragraph (f)(2)(i)(A) and reserving paragraph
(f)(2)(i)(B).
C. Redesignating paragraph (g) as paragraph (h), and adding new
paragraph (g).
The revision and addition reads as follows:

Sec. 414.92 Electronic Prescribing Incentive Program.

* * * * *
(c) * * *
(2) * * *
(ii) * * *
(A) * * *
(5) Eligible professionals who achieve meaningful use during the
respective 6- or 12-month payment adjustment reporting period.
(6) Eligible professionals who have registered to participate in
the EHR Incentive Program and adopted Certified EHR Technology prior to
application of the respective payment adjustment.
* * * * *
(f) * * *
(2) * * *
(i) * * *
(A) If an eligible professional re-submits a Medicare Part B claim
for reprocessing, the eligible professional may not attach a G-code at
that time for reporting on the electronic prescribing measure.
(B) [Reserved]
Informal review. Eligible professionals (or in the case of
reporting under paragraph (e) of this section, group practices) may
seek an informal review of the determination that an eligible
professional (or in the case of reporting under paragraph (e) of this
section, group practices) did not meet the requirements for the 2013
incentive or the 2013 and 2014 payment adjustments.
(1) To request an informal review for the 2013 incentive, an
eligible professional or group practice must submit a request to CMS
within 90 days of the release of the feedback reports. The request must
be submitted in writing and summarize the concern(s) and reasons for
requesting an informal review and may also include information to
assist in the review.
(2) To request an informal review for the 2013 and 2014 payment
adjustments, an eligible professional or group practices must submit a
request to CMS by January 31 of the year in which the eligible
professional is receiving the applicable payment adjustment. The
request must be submitted in writing and summarize the concern(s) and
reasons for requesting an informal review and may also include
information to assist in the review.

[[Page 45057]]

(3) CMS will provide a written response of CMS' determination
within 90 days of the receipt of the request.
(i) All decisions based on the informal review are final.
(ii) There is no further review or appeal.
* * * * *
19. Section 414.610 is amended by revising paragraphs (c)(1)(ii),
(c)(5)(ii), and (h) to read as follows:

Sec. 414.610 Basis of payment.

* * * * *
(c) * * *
(1) * * *
(ii) For services furnished during the period July 1, 2008 through
December 31, 2012, ambulance services originating in--
(A) Urban areas (both base rate and mileage) are paid based on a
rate that is 2 percent higher than otherwise is applicable under this
section; and
(B) Rural areas (both base rate and mileage) are paid based on a
rate that is 3 percent higher than otherwise is applicable under this
section.
* * * * *
(5) * * *
(ii) For services furnished during the period July 1, 2004 through
December 31, 2012, the payment amount for the ground ambulance base
rate is increased by 22.6 percent where the point of pickup is in a
rural area determined to be in the lowest 25 percent of rural
population arrayed by population density. The amount of this increase
is based on CMS's estimate of the ratio of the average cost per trip
for the rural areas in the lowest quartile of population compared to
the average cost per trip for the rural areas in the highest quartile
of population. In making this estimate, CMS may use data provided by
the GAO.
* * * * *
(h) Treatment of certain areas for payment for air ambulance
services. Any area that was designated as a rural area for purposes of
making payments under the ambulance fee schedule for air ambulance
services furnished on December 31, 2006, must be treated as a rural
area for purposes of making payments under the ambulance fee schedule
for air ambulance services furnished during the period July 1, 2008
through December 31, 2012.
20. Section 414.904 is amended by revising paragraphs (d)(3)(ii),
(d)(3)(iii) and (d)(3)(iv).
B. The revisions read as follows:

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

* * * * *
(d) * * *
(3) * * *
(ii) Payment at 103 percent of the average manufacturer price for a
billing code will be applied at such times when all of the following
criteria are met:
(A) The threshold for making price substitutions, as defined in
paragraph (d)(3)(iii) of this section is met.
(B) 103 percent of the average manufacturer price is less than the
106 percent of the average sales price for the quarter in which the
substitution would be applied.
(C) Beginning in 2013, the drug and dosage form described by the
HCPCS code is not a critical or medically necessary drug identified by
the FDA to be in short supply at the time that ASP calculations are
finalized.
(iii) The applicable percentage threshold for average manufacturer
price comparisons is 5 percent and is reached when--
(A) The average sales price for the billing code has exceeded the
average manufacturer price for the billing code by 5 percent or more in
2 consecutive quarters, or 3 of the previous 4 quarters immediately
preceding the quarter to which the price substitution would be applied;
and
(B) The average manufacturer price for the billing code is
calculated using the same set of National Drug Codes used for the
average sales price for the billing code.
(iv) The applicable percentage threshold for widely available
market price comparisons is 5 percent.
* * * * *
21. Subpart N is added to Part 414 to read as follows:
Subpart N--Value-Based Payment Modifier Under the Physician Fee
Schedule
Sec.
414.1200 Basis and scope.
414.1205 Definitions.
414.1210 Application of the value-based payment modifier.
414.1215 Performance and payment adjustment periods for the value-
based payment modifier.
414.1220 Reporting mechanisms for the value-based payment modifier
under the physician fee schedule.
414.1225 Alignment of Physician Quality Reporting System quality
measures and quality measures for the value-based payment modifier.
414.1230 Additional measures for groups of physicians.
414.1235 Cost measures.
414.1240 Attribution for quality of care and cost measures.
414.1245 Scoring methods for the value-based payment modifier.
414.1250 Benchmarks for quality of care measures.
414.1255 Benchmarks for cost measures.
414.1260 Composite scores.
414.1265 Reliability of measures.
414.1270 Payment adjustments.
414.1275 Payment modifier scoring methodology.
414.1280 Limitation of review.
414.1285 Inquiry process.

Subpart N--Value-Based Payment Modifier Under the Physician Fee
Schedule

Sec. 414.1200 Basis and scope.

(a) Basis. This part/section implements section 1848(p) of the Act
by establishing a payment modifier that provides for differential
payment starting in 2015 to a group of physicians under the Medicare
physician fee schedule based on the quality of care furnished compared
to cost during a performance period.
(b) Scope. This subpart sets forth the following:
(1) The application of the value-based payment modifier.
(2) Performance and payment adjustment periods.
(3) Reporting mechanisms for the value-based payment modifier.
(4) Alignment of PQRS quality of care measures with the quality
composite of the value-based payment modifier.
(5) Additional measures for groups of physicians.
(6) Cost measures.
(7) Attribution for quality of care and cost measures.
(8) Scoring methods for the value-based payment modifier.
(9) Benchmarks for quality of care measures.
(10) Benchmarks for cost measures.
(11) Composite scores.
(12) Reliability of measures.
(13) Payment adjustments.
(14) Payment modifier scoring methodology.
(15) Limitation of review.
(16) Inquiry process.

Sec. 414.1205 Definitions.

As used in this section, unless otherwise indicated--
Accountable care organization (ACO) has the same meaning given this
term under Sec. 425.20 of this chapter.
Critical access hospital has the same meaning given this term under
Sec. 400.202 of this chapter.
Electronic health record (EHR) has the same meaning given this term
under Sec. 414.92 of this chapter.
Eligible professional has the same meaning given this term under
section1848(k)(5)(B) of the Act.
Federally Qualified Health Center has the same meaning given this
term under Sec. 405.2401(b) of this chapter.
Group of physicians means a single Tax Identification Number (TIN)
with 2

[[Page 45058]]

or more eligible professionals, as identified by their individual
National Provider Identifier (NPI), who have reassigned their Medicare
billing rights to the TIN, as determined at the time the group of
physicians is selected to participate under the Physician Quality
Reporting System GPRO.
Performance rate mean the calculated rate for each quality or cost
measure such as the percent of times that a particular clinical quality
action was reported as being performed, or a particular outcome was
attained, for the applicable persons to whom a measure applies as
described in the denominator for the measure.
Physician has the same meaning given this term under section
1861(r) of the Act.
Physician Fee Schedule has the same meaning given this term under
part 410 of this chapter.
Physician Quality Reporting System means the system established
under section 1848(k) of the Act.
Risk score means the beneficiary risk score derived from the CMS
Hierarchical Condition Categories (HCC) model.
Taxpayer Identification Number (TIN) has the same meaning given
this term under Sec. 425.20 of this chapter.
Value-based payment modifier means the percentage by which amounts
paid to a physician or group of physicians under the physician fee
schedule are adjusted.
Value-based payment modifier satisfactory reporting criteria means
the criteria for satisfactory reporting of data on Physician Quality
Reporting System quality measures for the 2013 and 2014 incentive or
the criteria for satisfactory reporting using the Physician Quality
Reporting System administrative claims-based reporting mechanism, which
is applicable to the 2015 and 2016 PQRS payment adjustment.

Sec. 414.1210 Application of the value-based payment modifier.

(a) The value-based payment modifier is applicable to the items and
services furnished under the Medicare Part B physician fee schedule by
physicians in groups of physicians with 25 or more eligible
professionals starting on January 1, 2015.
(b) Exceptions:
(1) Groups of physicians with 25 or more eligible professionals
that are participating in the Medicare Shared Savings Program or the
Pioneer ACO program.
(2) [Reserved]

Sec. 414.1215 Performance and payment adjustment periods for the
value-based payment modifier.

(a) The performance period is calendar year 2013 for payment
adjustments to be made in the calendar year 2015 payment adjustment
period.
(b) The performance period is calendar year 2014 for payment
adjustments to be made in the calendar year 2016 payment adjustment
period.

Sec. 414.1220 Reporting mechanisms for the value-based payment
modifier under the physician fee schedule.

Groups of physicians may submit data on quality of care measures as
specified under the Physician Quality Reporting System and in Sec.
414.90(g).

Sec. 414.1225 Alignment of Physician Quality Reporting System quality
measures and quality measures for the value-based payment modifier.

All of the quality measures for which groups of physicians are
eligible to report under the Physician Quality Reporting System
starting in 2013 are used to calculate the value-based payment modifier
program to the extent the group of physicians submits data on such
measures.

Sec. 414.1230 Additional measures for groups of physicians.

The value-based payment modifier includes the following additional
quality measures for all groups of physicians:
(a) A composite of rates of potentially preventable hospital
admissions for heart failure, chronic obstructive pulmonary disease,
and diabetes. The rate of potentially preventable hospital admissions
for diabetes is a composite measure of uncontrolled diabetes, short
term diabetes complications, long term diabetes complications and lower
extremity amputation for diabetes.
(b) A composite rates of potentially preventable hospital
admissions for dehydration, urinary tract infections, and bacterial
pneumonia.
(c) Rates of an all-cause hospital readmissions measure.
(d) A 30-day post-discharge visit measure.

Sec. 414.1235 Cost measures.

Costs for groups of physicians are assessed based on the following
five cost measures:
(a) Total per capita costs for all attributed beneficiaries; and
(b) Total per capita costs for all attributed beneficiaries with
diabetes, coronary artery disease, chronic obstructive pulmonary
disease, or heart failure.
(c) Total per capita costs include all payments made under Medicare
Part A and Part B.
(1) Payments under Medicare Part A and Part B will be adjusted
using CMS' payment standardization methodology to ensure fair
comparisons across geographic areas.
(2) The CMS-HCC model (and adjustments for ESRD status) is used to
adjust standardized payments for each cost measure; that is--
(i) Total per capita costs; and
(ii) Total per capita costs for beneficiaries with the following
conditions: Coronary artery disease, COPD, diabetes, and heart failure.

Sec. 414.1240 Attribution for quality of care and cost measures.

Beneficiaries are attributed to groups of physicians using the
method specified under the Physician Quality Reporting System.

Sec. 414.1245 Scoring methods for the value-based payment modifier.

For each quality of care and cost measure, a standardized score is
calculated for each group of physicians by dividing--
(1) The difference between their performance rate and the
benchmark, by
(2) The measure's standard deviation.

Sec. 414.1250 Benchmarks for quality of care measures.

The benchmark for each quality of care measure is the national mean
for that measure's performance rate during the performance period. In
calculating the national benchmark, groups of physicians' performance
rates are weighted by the number of cases used to calculate the group
of physician's performance rate.

Sec. 414.1255 Benchmarks for cost measures.

The benchmark for each cost measure is the national mean of the
performance rates calculated among all groups of physicians for which
beneficiaries are attributed to the group of physicians. In calculating
the national benchmark, groups of physicians' performance rates are
weighted by the number of cases used to calculate the group of
physician's performance rate.

Sec. 414.1260 Composite scores.

(a)(1) The standardized score for each quality of care measure is
classified into one of the following equally weighted domains to
determine the quality composite:
(i) Patient safety.
(ii) Patient experience.
(iii) Care coordination.
(iv) Clinical care.

[[Page 45059]]

(v) Population/community health.
(vi) Efficiency.
(2) If a domain includes no measure or does not reach the minimum
case size in Sec. 414.1265, the remaining domains are equally weighted
to form the quality of care composite.
(b)(1) The standardized score for each cost measure is grouped into
two separate and equally weighted domains to determine the cost
composite:
(i) Total per capita costs for all attributed beneficiaries (one
measures); and
(ii) Total per capita costs for all attributed beneficiaries with
specific conditions: diabetes, coronary artery disease, chronic
obstructive pulmonary disease, or heart failure (four measures).
(2) Measures within each domain are equally weighted.

Sec. 414.1265 Reliability of measures.

To calculate a composite score for a quality or cost measure based
on claims, a group of physicians must have 20 or more cases for that
measure.
(a) Where a group of physicians has fewer than 20 cases for a
measure, that measure is excluded from its domain and the remaining
measures in the domain are given equal weight.
(b) Where a reliable quality of care composite or cost composite
cannot be calculated, payments are not adjusted.

Sec. 414.1270 Payment adjustments.

(a) Downward payment adjustments. For a group of physicians with 25
or more eligible professionals that:
(1) Does not meet the value-based payment modifier satisfactory
reporting criteria, payments for items and services under the physician
fee schedule will be adjusted downward by 1.0 percent.
(2) Does meet the value-based payment modifier satisfactory
reporting criteria, elects that their value-based payment modifier be
calculated using a quality-tiering approach, and is determined to have
poor performance (low quality and high costs), payments for items and
services under the physician fee schedule are adjusted downward by up
to 1.0 percent as specified in Sec. 414.1275.
(b) Upward payment adjustments. If a group of physicians with 25 or
more eligible professionals does meet the value-based payment modifier
satisfactory reporting criteria and elects that the value-based payment
modifier be calculated using a quality-tiering approach, upward payment
adjustments are determined based on the projected aggregate amount of
downward payment adjustments determined under subsection (a) above and
applied as specified in Sec. 414.1275.

Sec. 414.1275 Payment modifier scoring methodology.

(a) The value-based payment modifier amount for a group of
physicians that elects the quality-tiering approach is based upon a
comparison of the composite of quality of care measures and a composite
of cost measures.
(b) Groups of physicians' quality composite and cost composite are
classified into high, average, and low categories based on whether the
composites are statistically above, not different from, or below the
mean composite scores.
(c) The following value-based payment modifier amounts apply:

Value-Based Payment Modifier Amounts for Groups of Physicians Requesting the Quality-Tiering Approach
----------------------------------------------------------------------------------------------------------------
Quality/cost Low cost Average cost High cost
----------------------------------------------------------------------------------------------------------------
High quality.................................................... * +2.0x * +1.0x +0.0%
Average quality................................................. * +1.0x +0.0% -0.5%
Low quality..................................................... +0.0% -0.5% -1.0%
----------------------------------------------------------------------------------------------------------------
* Groups of physicians eligible for an additional +1.0x if reporting Physician Quality Reporting System quality
measures through the GPRO using the web-interface, claims, registries, or EHRs, and average beneficiary risk
score in the top 25 percent of all beneficiary risk scores.

(d) Groups of physicians that have an attributed beneficiary
population with an average risk score in the top 25 percent of the risk
scores of beneficiaries nationwide and that satisfactorily report data
on quality measures through the Physician Quality Reporting System GPRO
using the web-interface, claims, registries, or EHRs reporting
mechanisms, receive a greater upward payment adjustment as follows:
(1) Groups of physicians classified as high quality/low cost
receive an upward adjustment of +3x (rather than +2x) and
(2) Groups of physicians classified as either high quality/average
cost or average quality/low cost receive an upward adjustment of +2x
(rather than +1x).

Sec. 414.1280 Limitation of review.

(a) There shall be no administrative or judicial review under
section 1869 of the Act, section 1878 of the Act, or otherwise of all
of the following:
(1) The establishment of the value-based payment modifier.
(2) The evaluation of the quality of care composite, including the
establishment of appropriate measure of the quality of care.
(3) The evaluation of costs composite, including establishment of
appropriate measures of costs.
(4) The dates of implementation of the value-based payment
modifier.
(5) The specification of the initial performance period and any
other performance period.
(6) The application of the value-based payment modifier.
(7) The determination of costs.

Sec. 414.1285 Inquiry process.

After the dissemination of the annual Physician Feedback reports, a
group of physicians may contact CMS to inquire about its report and the
calculation of the value-based payment modifier.

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

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

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

Sec. 415.130 [Amended]

23. In Sec. 415.130(d)(1) and (d)(2), remove the reference to
``December 31, 2011'' and add in its place the reference to ``June 30,
2012.''

PART 421--MEDICARE CONTRACTING

24. The authority citation for part 421 continues to read as
follows:

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

Subpart F--[Removed and Reserved]

25. Subpart F is removed and reserved.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

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

Authority: Sections 1102, 1106, 1860D-1 through 1860D-42, and
1871 of the Social

[[Page 45060]]

Security Act (42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, and
1395hh).

27. Section 423.160 is amended by--
A. Revising paragraphs (a)(3)(iv), (b)(1)(ii), and (b)(2)(ii)
introductory text.
B. Adding paragraphs (b)(1)(iii), (b)(2)(iii), (b)(5)(i), and
(b)(5)(ii).
The revisions and additions read as follows:

Sec. 423.160 Standards for electronic prescribing.

(a) * * *
(3) * * *
(iv) Until November 1, 2013, entities transmitting prescriptions or
prescription-related information where the prescriber is required by
law to issue a prescription for a patient to a non-prescribing provider
(such as a nursing facility) that in turn forwards the prescription to
a dispenser are exempt from the requirement to use the NCPDP SCRIPT
Standard adopted by this section in transmitting such prescriptions or
prescription-related information. After January 1, 2012, entities
transmitting prescriptions or prescription-related information where
the prescriber is required by law to issue a prescription for a patient
to a non-prescribing provider (such as a nursing facility) that in turn
forwards the prescription to a dispenser must utilize the NCPCP SCRIPT.
* * * * *
(b) * * *
(1) * * *
(ii) Before November 1, 2013 the standards specified in paragraphs
(b)(2)(ii) and (b)(3) of this section.
(iii) On or after November 1, 2013, the standards specified in
paragraphs (b)(2)(ii) and (b)(3) through (b)(6) of this section.
(2) * * *
(ii) The National Council for Prescription Drug Programs SCRIPT
standard, Implementation Guide Version 10.6, approved November 12, 2008
(incorporated by reference in paragraph (c)(1)(v) of this section), or
the National Council for Prescription Drug Programs Prescriber/
Pharmacist Interface SCRIPT Standard, Implementation Guide, Version 8,
Release 1 (Version 8.1), October 2005 (incorporated by reference in
paragraph (c)(1)(i) of this section), to provide for the communication
of a prescription or prescription-related information between
prescribers and dispensers, for the following:
* * * * *
(iii) The National Council for Prescription Programs SCRIPT
standard, Implementation Guide Version 10 release 6 approved November
12, 2008 (incorporated by reference in paragraph (c)(1)(i) of this
section), to provide for the communication of a prescription or related
prescription related information between prescribers and dispensers.
* * * * *
(5) * * *
(i) Formulary and benefits. The National Council for Prescription
Drug Programs Formulary and Benefits Standard, Implementation Guide,
Version 1, Release 0 (Version 3.0), January 2011(incorporated by
reference in paragraph (c)(1)(ii) of this section) for transmitting
formulary and benefits information between prescribers and Medicare
Part D sponsors.
(ii) Formulary and benefits. The National Council for Prescription
Drug Programs Formulary and Benefits Standard, Implementation Guide,
Version 1, Release 0 (Version 1.0), October 2005 (incorporated by
reference in paragraph (c)(1)(ii) of this section) for transmitting
formulary and benefits information between prescribers and Medicare
Part D sponsors; or The National Council for Prescription Drug Programs
Formulary and Benefits Standard, Implementation Guide, Version 1,
Release 0 (Version 3.0), January 2011 (incorporated by reference in
paragraph (c)(1)(ii) of this section) for transmitting formulary and
benefits information between prescribers and Medicare Part D sponsors.
* * * * *
28. Subpart F, consisting of Sec. 421.500 through Sec. 421.505 is
removed and reserved.

PART 425--MEDICARE SHARED SAVINGS PROGRAM

29. The authority citation for part 425 continues to read as
follows:

Authority: Secs. 1102, 1106, 1871, and 1899 of the Social
Security Act (42 U.S.C. 1302 and 1395hh).

30. Section 425.308 is amended by revising paragraph (e) to read as
follows:

Sec. 425.308 Public reporting and transparency.

* * * * *
(e) Results of claims based measures. Quality measures reported
using the GPRO web interface and patient experience of care survey
measures will be reported on Physician Compare in the same way as for
the group practices that report under the Physician Quality Reporting
System.
31. Section 425.504 is amended by adding paragraph (b) to read as
follows:

Sec. 425.504 Incorporating reporting requirements related to the
Physician Quality Reporting System.

* * * * *
(b) Physician Quality Reporting System payment adjustment.
(1) ACOs, on behalf of their ACO provider/suppliers who are
eligible professionals, must submit the measures determined under Sec.
425.500 using the GPRO web interface established by CMS, to
satisfactorily report on behalf of their eligible professionals for
purposes of the Physician Quality Reporting System payment adjustment
under the Shared Savings Program.
(2)(i) ACO providers/suppliers that are eligible professionals
within an ACO may only participate under their ACO participant TIN as a
group practice under the Physician Quality Reporting System Group
Practice Reporting Option of the Shared Savings Program for purposes of
the Physician Quality Reporting System payment adjustment under the
Shared Savings Program.
(ii) Under the Shared Savings Program, an ACO, on behalf of its ACO
providers/suppliers who are eligible professionals, must satisfactorily
report the measures determined under Subpart F of this part during the
reporting period for a year, as defined in paragraph (b)(6) of this
section, according to the method of submission established by CMS under
the Shared Savings Program for purposes of the Physician Quality
Reporting System payment adjustment.
(3) If an ACO, on behalf of its ACO providers/suppliers who are
eligible professionals, does not satisfactorily report for purposes of
a Physician Quality Reporting System payment adjustment, each ACO
supplier/provider who is an eligible professional, will receive a
payment adjustment, as described in paragraph (b)(5) of this section.
(4) ACO participant TINs and individual ACO providers/suppliers who
are eligible professionals cannot satisfactorily report for purposes of
a Physician Quality Reporting System payment adjustment outside of the
Medicare Shared Savings Program.
(5) For eligible professionals subject to the Physician Quality
Reporting System payment adjustment under the Medicare Shared Savings
Program, the Medicare Part B Physician Fee Schedule amount for covered
professional services furnished during the program year is equal to the
applicable percent of the Medicare Part B Physician Fee Schedule amount
that would otherwise apply to such services under section 1848 of the
Act.

[[Page 45061]]

(i) The applicable percent for 2015 is 98.5 percent.
(ii) The applicable percent for 2016 and subsequent years is 98.0
percent.
(6) The reporting period for a year is the calendar year from
January 1 through December 31 that occurs 2 years prior to the program
year in which the payment adjustment is applied.

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

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

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

33. Section 486.106 is amended by revising the introductory text
and paragraphs (a) and (b) to read as follows:

Sec. 486.106 Condition for coverage: Referral for service and
preservation of records.

All portable X-ray services performed for Medicare beneficiaries
are ordered by a physician or a nonphysician practitioner as provided
in Sec. 410.32(a) of this chapter or by a nonphysician practitioner as
provided in Sec. 410.32(a)(2) and records are properly preserved.
(a) Standard--referral by a physician or nonphysician
practitioners. Portable X-ray examinations are performed only on the
order of a physician licensed to practice in the State or by a
nonphysician practitioner acting within the scope of State law. Such
nonphysician practitioners may be treated the same as physicians
treating beneficiaries for the purpose of this paragraph. The
supplier's records show that:
(1) The portable X-ray test was ordered by a licensed physician or
a nonphysician practitioner acting within the State scope of law; and
(2) Such physician or nonphysician practitioner's written, signed
order specifies the reason a portable X-ray test is required, the area
of the body to be exposed, the number of radiographs to be obtained,
and the views needed; it also includes a statement concerning the
condition of the patient which indicates why portable X-ray services
are necessary.
(b) Standard--records of examinations performed. The supplier makes
for each patient a record of the date of the portable X-ray
examination, the name of the patient, a description of the procedures
ordered and performed, the referring physician or nonphysician
practitioner, the operator(s) of the portable X-ray equipment who
performed the examination, the physician to whom the radiograph was
sent, and the date it was sent.
* * * * *

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY
INCENTIVE PROGRAM

34. The authority citation for part 495 continues to read as
follows:

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

35. Section 495.8 is amended by revising paragraph (a)(2)(v) to
read as follows:

Sec. 495.8 Demonstration of meaningful use criteria.

(a) * * *
(2) * * *
(v) Exception for Medicare EPs for PY 2012 and 2013--Participation
in the Physician Quality Reporting System-Medicare EHR Incentive Pilot.
To satisfy the clinical quality measure reporting requirements of
meaningful use, aside from attestation, an EP participating in the
Physician Quality Reporting System may also participate in the
Physician Quality Reporting System-Medicare EHR Incentive Pilot through
one of the following methods:
(A) Submission of data extracted from the EP's certified EHR
technology through a Physician Quality Reporting System qualified EHR
data submission vendor; or
(B) Submission of data extracted from the EP's certified EHR
technology, which must also be through a Physician Quality Reporting
System qualified EHR.
* * * * *

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

Dated: June 27, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: June 28, 2012.
Kathleen Sebelius,
Secretary.
[FR Doc. 2012-16814 Filed 7-6-12; 4:15 pm]
BILLING CODE 4120-01-P