[Federal Register Volume 77, Number 146 (Monday, July 30, 2012)]
[Proposed Rules]
[Pages 44721-45061]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-16814]



[[Page 44721]]

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.

BILLING CODE 4120-01-P

[[Page 44732]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.000


[[Page 44733]]


[GRAPHIC] [TIFF OMITTED] TP30JY12.001

BILLING CODE 4120-01-C

[[Page 44734]]

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.

---------------------------------------------------------------------------

[[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,

[[Page 44792]]

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

[[Page 44793]]

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-

[[Page 44794]]

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

[[Page 44811]]

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

[[Page 44815]]

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

[[Page 44816]]

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.
BILLING CODE 4120-01-P

[[Page 44817]]

[GRAPHIC] [TIFF OMITTED] TP30JY12.006


[[Page 44818]]


[GRAPHIC] [TIFF OMITTED] TP30JY12.007


[[Page 44819]]


BILLING CODE 4120-01-C
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

[[Page 44820]]

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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BILLING CODE 4120-01-C
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 
(e.g., ``gaming the

[[Page 44826]]

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

[[Page 44827]]

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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    Although we are proposing to add measures that were not available 
for reporting under the 2012 PQRS, we note that we are not proposing to 
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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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BILLING CODE 4120-01-C
    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

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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.

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    (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

[[Page 44957]]

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

[[Page 44959]]

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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    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 
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[[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.

[[Page 44985]]

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.
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    \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.
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    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \11\ Eligible professionals include physicians and non-
physicians such as physician assistants and nurse practitioners.
---------------------------------------------------------------------------

    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

[[Page 44996]]

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.
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    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

[[Page 44997]]

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.
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(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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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\
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    \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.
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     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

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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.
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(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]]

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    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 propo