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Agricultural Marketing Service, USDA.
Final rule.
The Agricultural Marketing Service (AMS) is amending its regulations to provide for a set of standardized formulas by which fees are calculated. The fees are calculated using formulas to account for all costs incurred by AMS in providing these services. Each year, fees will be announced in a notice in the
The standardized formulas will be used to calculate fees that AMS charges for providing voluntary grading, inspection, certification, auditing and laboratory services for a variety of agricultural commodities including meat and poultry, fruits and vegetables, eggs, dairy products, and cotton and tobacco. The fees will also apply to those persons requesting such services including producers, handlers, processors, importers and exporters. Fees charged for inspection of fruits, vegetables, and specialty crops subject to the Agricultural Marketing Agreement Act of 1937 are also affected by this rule.
Provisions of this rule do not supersede rates established by Memoranda of Understanding, Marketing Orders, or by cooperative agreements already in place. Furthermore, the cotton program will continue to consult with its industry before rates are established.
For further information contact, Sonia N. Jimenez, AMS, U.S. Department of Agriculture, Room 3069–S, 1400 Independence Ave. SW., Washington, DC 20250; telephone (202) 720–5115, fax (202) 720–8477.
The Agricultural Marketing Act of 1946, as amended, (AMA) (7 U.S.C. 1621–1627), provides for the collection of fees to cover costs of various inspection, grading, certification or auditing services covering many agricultural commodities and products. The AMA also provides for the recovery of costs incurred in providing laboratory services. The Cotton Statistics and Estimates Act (7 U.S.C. 471–476) and the U.S. Cotton Standards Act (7 U.S.C. 51–65) provide for classification of cotton and development of cotton standards materials necessary for cotton classification. The Cotton Futures Act (7 U.S.C. 15b) provides for futures certification services and the Tobacco Inspection Act (7 U.S.C. 511–511s) provides for tobacco inspection and grading. These Acts also provide for the recovery of costs associated with these services. This action sets formulas to calculate these fees and any other fee currently being charged under these statutes. The table below shows the program regulations and types of fees charged for AMS services.
Grading, inspection and verification programs facilitate the movement of agricultural products through marketing channels—from growers to wholesalers, retailers and consumers—in a quick, efficient, and equitable manner. These services include the grading, inspection, or certification of quality factors in accordance with established U.S. Grade Standards; audits or accreditation according to International Organization for Standardization (ISO) standards and/or Hazard Analysis and Critical Control Point (HACCP) principles; and other marketing claims. The quality grades serve as a basis to reflect the value of agricultural commodities to both producers and consumers. AMS' grading and quality verification and certification, audit and accreditation, plant process and equipment verification, and laboratory approval services are voluntary tools paid for by the users on a fee-for-service basis. The agriculture industry can use these tools to promote and communicate the quality of agricultural commodities to consumers. Laboratory services are provided for analytic testing, including but not limited to chemical, microbiological, biomolecular, and physical analyses.
Approximately 70 percent of AMS' operational budget is derived from fees assessed for services provided to agricultural industries. Changes in fee-for-service rates may result from fluctuating customer needs, increases in employee salary and benefit expenses, inflationary impact on non-labor operating expenses and fixed costs, and/or uncollected revenue (bad debt). Prior to this action, each AMS program individually proposed a fee change when a revenue shortfall was anticipated for a specific program or activity. As a result, these changes did not appear in a single unified fee schedule. Lack of certainty as to when annual fees would be announced may affect fiscal planning for the users of the services, especially if fees are changed in the middle of a contract or harvest season. In addition, because of the separate and repetitive use of the agency rulemaking process, programs experienced delays in recovering the full cost of the services they provided.
As a result, a number of AMS programs amended their regulations to provide for multi-year annual fee changes that were established by a single rulemaking action. While this enabled the Agency to collect revenue based on a revised fee each year, estimates used to set the projected annual rates did not always result in the Agency collecting revenues sufficient to cover its costs. Instead, in some instances, the Agency recovered partial costs.
In order to provide both transparency and predictability to the industries served and to allow the Agency to effectively plan for staffing, investments in infrastructure, and other resources, AMS is amending its regulations to provide for a set of standardized formulas by which fees are calculated. This process will use formulas established to determine fees for AMS's grading, inspection, certification, auditing, and laboratory services that cover expected costs while maintaining a reasonable reserve. AMS programs are required to sustain a certain minimum level of reserve funds in order to maintain fiscal responsibility should the program area undergo closure. Each program reserve level is affected by factors such as number of employees, salaries, benefits, contracted obligations, and other items.
Currently, AMS performs financial analyses on an annual basis to determine whether the current fees are adequate to recover the costs incurred for providing these services. Historical or prior year cost and workload data, along with applicable projections are used to generate estimates of future obligations and revenues. This rule specifies that the rates be based on the actual cost and workload data of the previous fiscal year(s) or accounting period(s) (e.g. crop year) used by respective programs. On the basis of these analyses and using the formulas, AMS will determine the fees necessary to sustain program services. This increases predictability and provides information for planning purposes for the industries utilizing AMS user fee services.
The components (costs) that AMS will use to calculate the rates for services are the same costs used in calculating past rates.
As required by the Cotton Statistics and Estimates Act (7 U.S.C. 471–476), consultations regarding the establishment of the fee for cotton classification with U.S. cotton industry representatives will continue. Representatives of all segments of the cotton industry, including producers, ginners, bale storage facility operators, merchants, cooperatives, and textile manufacturers will continue to be addressed in various industry-sponsored forums.
Provisions of this rule will not supersede rates established by Memoranda of Understanding, Marketing Orders, cooperative agreements or other similar instruments. Under MOU, cooperative agreements, and similar instruments, fees are established based on specific agreements specified with an individual entity such as a State or university.
The outcome of this action is a transparent system for establishing fee rates for all AMS user fee programs, whereby financial and resource needs for continued operation are reviewed on a pre-determined cycle, using established formulas. This will avoid financial crises that may occur when reserve funds are rapidly depleted due to unanticipated business events, and will allow the Agency to more quickly adjust the cost of the services it provides. The information will also greatly benefit AMS customers by allowing them to better plan for the cost of AMS services.
Currently, AMS publishes a rule for each of the service fees it collects. This rulemaking action supports the
With this action, AMS is amending its regulations in 7 CFR parts 27, 28, 29, 51, 52, 54, 56, 58, 62, 70, 75, and 91 by making public the formulas it uses to calculate user-fee rates. Making the standardized formulas a part of the regulations allows AMS to announce annual fees in a yearly
Travel costs are also part of the costs that are charged for user fee services. Currently, in some instances, travel costs are already included in the fee charged for service. In other instances, travel costs are added to the fee. In both instances, travel costs are charged to the recipient of the service. The annual notice will maintain the same procedure currently used for recovering travel costs.
AMS is also making several administrative changes and corrections to language in the regulations that is obsolete, such as changing “diskette” to “electronic means”.
In order to provide additional clarity, AMS defines the following terms used throughout this document as follows:
With this rulemaking, AMS amends its regulations to provide a set of standardized formulas by which fees are calculated. The methodology used to calculate and implement the fees charged by AMS user-funded programs will be specified in 7 CFR parts 27, 28, 29, 51, 52, 54, 56, 58, 62, 70, 75, and 91.
AMS will use these formulas to calculate annual fee rates starting with the effective date of this rule and for subsequent years. AMS will publish the specific formulas used to calculate service fees. AMS intends to announce the actual annual fee rates in a
Salary, hours, and most rates used in the formulas will be based on the prior fiscal year's (or applicable accounting period or historical data) actual costs and hours. AMS will round the final rates up to make the amounts divisible by the quarter hour (15 minutes). Fifteen minutes will be the minimum charge for services covered by these rates.
Currently, some fees are charged on a per unit basis and others are charged on a per hour basis. AMS will continue to provide costs based on a per hour and per unit basis to maintain consistency. For cotton and some fruit and vegetable programs, per unit costs are determined after converting the hourly costs to units.
AMS is establishing the following formulas:
An example of the calculation will look like this: [FY 2013 Direct Pay divided by Total Direct Hours ($2,663,407/82,985) = $32.10, plus ($32.10 * 1.7% (2014 cost of living increase)) = $32.64 + $10.04 (benefits rate) + $28.90 (operating rate) + $.01 (bad debt allowance rate) = $71.59 (rounded to $71.60); rounding is done to reflect billable quarter hour increments of 15 minutes. If applicable, travel expenses may also be added.
An example of the calculation will look like this: [FY 2013 Direct Pay divided by Total Direct Hours ($2,663,407/82,985) = $32.10, plus ($32.10 * 1.7% (2014 cost of living increase)) = $32.64, multiplied by 1.5 ($32.64 * 1.5 (overtime rate)) = $48.96 + $10.04 (benefits rate) + 28.90 (operating rate) + $.01 (bad debt allowance rate) = $87.91 (rounded to $87.92); rounding is done to reflect billable quarter hour of 15 minutes. If applicable, travel expenses may also be added.
An example of the calculation will look like this: [FY 2013 Direct Pay divided by Total Direct Hours ($2,663,407/82,985) = $32.10, plus ($32.10 * 1.7% (2014 cost of living increase)) = $32.64, multiplied by 2 ($32.64 * 2 (double time or Holiday rate)) = $65.28 + $10.04 (benefits rate) + $28.90 (operating rate) + $.01 (bad debt allowance rate) = $ 104.23(rounded to $104.24); rounding is done to reflect billable quarter hour increments of 15 minutes. If applicable, travel expenses may also be added.
Formula calculations are based on prior fiscal year's actual costs or historical costs, workload data, projection of expenses impacting program costs, cost of living increase and inflation. Cost of living increases and inflation factors are based on the economic assumptions from 2013–2023 which have been updated in the Office of Management and Budget's (OMB) FY 2014 Mid-Session Review. Rather than codify a reference to this OMB budget document in this rule, each year AMS intends to use the most recent economic factors released by OMB for budget development purposes to determine cost impacts for these user fee activities.
AMS will derive the components of the formulas above, using previous fiscal year's actual costs/historical costs, as follows:
An example of the calculation will look like this: [2013 Direct Benefits cost/(Total hours + Total Overtime hours + Total Holiday hours) ($819,207/82,985)] = $9.87, plus ($9.87 * 1.7% (2014 Cost of Living)) = $10.04.
An example of the calculation will look like this: [2013 Total Operating Costs/(Total hours + Total Overtime hours + Total Holiday hours) ($2,351,857/82,985)] = $28.34, plus ($28.34 * 2% (2014 Inflation)) = $28.90.
An example of the calculation will look like this: [2013 Total Bad Debt cost/(Total hours + Total Overtime hours + Total Holiday hours) ($1,000/82,985) = $ 0.01
As noted above, the formulas reflect that the cost of providing services include both direct and indirect costs. Direct costs include the cost of salaries, employee benefits, and if applicable, travel and some operating costs. Indirect or overhead costs include the cost of program and Agency activities supporting the services provided to the industry. Indirect cost expenditures are allocated across the Agency for each direct hour of grading, inspection, classification, certification, auditing, or laboratory service provided. For purposes of these formulas, indirect costs have been included as part of operating costs.
AMS received two comments on the proposed rule.
One commenter asked whether the industry will be notified as to the amounts of each factor within the calculation, including the factors within the benefits rate and the operating rate; whether the Department will publish a final hourly rate for regular, overtime, and holiday rates; and when will the new fee schedule become effective and put into practice.
The categories of costs included in each fee were stated in the proposed rule and are part of this final rule. The specific amounts within each factor will not be published in the annual notice. However, this information is available upon request from the specific AMS program. The final hourly rate for regular, overtime, and holiday rates will be part of the annual notice.
Each year, fees will be announced in a notice in the
Another commenter recommended that application of this uniform fee regulation maintain the calculation and reporting of the cotton classing fee on a per sample basis and that the procedure used by the AMS Cotton Division maintain the flexibility with the formula to account for an adequate reserve and projection of classing volume.
As stated in the proposed rule and earlier in this rule, the yearly notice will include a per-hour rate and, in some instances, the equivalent per-unit cost which is the same as per sample basis. The per-unit (or per sample) cost will be provided to facilitate understanding of the costs associated with the services to the industries that historically use a unit-cost basis for payment.
An adequate reserve and work load (volume) are part of the standardized formulas as they have been in the past.
No changes were made to the proposed rule based on comments received.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563. The Office of Management and Budget has not reviewed this rule under these Orders.
This rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation will not have substantial and direct effect on Tribal governments and will not have significant Tribal implications.
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Has no retroactive effect; and (2) does not require administrative proceedings before parties may file suit in court challenging this rule.
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612) requires agencies to consider the economic impact of each rule on small entities and evaluate alternatives that would accomplish the objectives of the rule without unduly burdening small entities or erecting barriers that would restrict their ability to compete in the market. The purpose is to fit regulatory actions to the scale of businesses subject to the action. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.
Most small agricultural service firms have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $7,000,000. For certain types of businesses (e.g., dairy, egg, and meat processing; handlers of produce), the SBA considers a small entity as those that employ less than 500 employees.
The grading, inspection, certification and auditing services provided under these regulations are voluntary.
AMS estimates that approximately 849 entities use voluntary meat grading and certification services. This estimate includes 413 egg, poultry, and rabbit packing plants that use the USDA grade shield. Of these 413 plants, approximately fifteen percent would be considered a small business under the SBA criteria. The remaining 436 entities includes livestock slaughterers, brokers, meat and other processors, distributors, organic certification companies, trade associations, State and Federal entities, and livestock producers and feeders. Of these 436 entities, approximately 70 percent are considered a small business under the SBA criteria.
AMS estimates that 60 cotton merchants use AMS services for cotton futures classification, 20,000 cotton producers and 637 cotton gins use AMS services for normal cotton classification, and 125 tobacco customers use AMS services. Of these entities, approximately 80 percent are considered a small business under the SBA criteria.
AMS estimates that, over the last two fiscal years, we provided user fee services to an average of 2,308 fruit and vegetable companies for fresh products. AMS estimates that, over the last two fiscal years, we provided user fee services to an average of 1,087 fruit and vegetable companies for processed products. We estimate that approximately 98 percent of these 3,395 companies are considered a small business under the SBA criteria. The number of entities referenced above includes those subject to the provisions of the Agricultural Marketing Agreement Act of 1937.
AMS estimates that 360 dairy plants use AMS' dairy grading and inspection services. We believe that approximately 96 percent of these plants are considered a small business under the SBA criteria.
AMS considered the economic impact of this action on these small entities. The formulas will have a minimal impact on entities that request these services. The difference in fee rates are negligible since the costs used in the formulas to calculate the current and future fees will remain the same. For example, it is expected that the Dairy user fee will change from $76 per hour to $78 per hour under the proposed formulas. AMS has not updated several of its programs' user fees for a number of years. For those fees that have not been updated recently, there may be a change in fees. These possible changes will be the result of using current economic data and cost estimates to calculate the fee rates. AMS will take into consideration, when appropriate, economic and industry conditions before adjusting fees. The process will maintain up-to-date fees.
By including the formulas used to calculate annual user fee rates in the regulations, the Agency streamlines the rulemaking process to help ensure that fees are effective at the beginning of each fiscal year or other period as required by law. Fees will cover inflation and national and locality pay raises but will not support any new budgetary initiative. Any cost changes are similar to other changes that the industry would experience because of inflation and wage increases.
The outcome of this rule will be a transparent system for establishing fee rates for all AMS user fee programs, whereby financial and resource needs for continued operation are reviewed on a pre-determined cycle, using established formulas. This will avoid financial crises that occur when reserve funds are rapidly depleted due to unanticipated business events, and will allow the Agency to more quickly adjust the cost of the services it provides. The information will also greatly benefit AMS customers by allowing them to better plan for the cost of AMS services.
The total volume of commodities graded, inspected and certified under the associated regulations in 2012 was approximately 91 billion pounds. An overall increase in cost per pound of product associated with the new fees is estimated at $.0002. Even in competitive industries such as fruit and vegetables, meat, poultry, dairy and eggs, this amount of increase in costs will have an insignificant impact on profits and processes. Accordingly, AMS certifies that this rule will not have a significant economic impact on a substantial number of small entities.
This rule does not contain any new information collection or recordkeeping requirements that are subject to the Office of Management and Budget (OMB) approval under the Paperwork Reduction Act, 44 U.S.C. Chapter 35.
AMS and USDA are committed to achieving the purposes of the E-Government Act (44 U.S.C. 3601, et seq.) by, among other things, promoting the use of the Internet and other information technologies and providing increased opportunities for citizen access to Government information and services, and for other purposes.
Public awareness of all segments of rulemaking and policy development is
Finally, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
Commodity futures, Cotton.
Administrative practice and procedure, Cotton, Reporting and recordkeeping requirements, Warehouses.
Administrative practice and procedure, Advisory committees, Government publications, Imports, Pesticide and pests, Reporting and recordkeeping requirements, Tobacco.
Agricultural commodities, Food grades and standards, Fruits, Nuts, Reporting and recordkeeping requirements, Vegetables.
Food grades and standards, Food labeling, Frozen foods, Fruits, Reporting and recordkeeping requirements, Vegetables.
Food grades and standards, Food labeling, Meat and meat products, Poultry and poultry products.
Eggs and egg products, Food grades and standards, Food labeling, Reporting and recordkeeping requirements.
Dairy products, Food grades and standards, Food labeling, Reporting and recordkeeping requirements.
Food grades and standards, Food labeling, Meat and meat products.
Food grades and standards, Food labeling, Poultry and poultry products, Rabbits and rabbit products, Reporting and recordkeeping requirements.
Administrative practice and procedure, Agricultural commodities, Reporting and recordkeeping requirements, Seeds, Vegetables.
Administrative practice and procedure, Agricultural commodities, Laboratories, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR chapter I is amended as follows:
7 U.S.C. 15b, 7 U.S.C. 473a–b, 7 U.S.C. 1622(g).
(a) For each calendar year, AMS will calculate the rate for services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b) For each calendar year, based on historical costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(1)
(2)
(3)
(c)
For each new certificate issued in substitution for a prior certificate at the request of the holder thereof, for the purpose of business convenience, or when made necessary by the transfer of cotton under the supervision of any exchange inspection agency as provided in § 27.73, the person making the request shall pay a fee determined as described in § 27.80.
7 U.S.C. 55 and 61.
(a) For the classification of any cotton or samples, the person requesting the services shall pay a fee, based on the description that follows, subject to the
(1) For each calendar year, AMS will calculate the rate for services per hour per program employee using the following formulas:
(i)
(ii)
(iii)
(2) For each calendar year, based on historical costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(3) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most current Office of Management and Budget's Presidential Economic Assumptions.
(b) When a comparison is requested of any samples with a type or with other samples, the fees prescribed in paragraph (a) of this section shall apply to every sample involved, including each of the samples of which the type is composed.
(c) An additional fee based on current shipping rates shall be assessed for returning samples unless the request for service is so worded that the samples become government property immediately after classification.
(d) For any review of classification or comparison of any cotton, the fees prescribed in paragraph (a) of this section shall apply. The additional fee prescribed in paragraph (c) of this section is not applicable to review of classification if made on the same sample as the original class or comparison.
For each new memorandum or certificate issued in substitution for a prior memorandum or certificate at the request of the holder, thereof, on account of the breaking or splitting of the lot of cotton covered thereby or otherwise for his business convenience, the person requesting such substitution shall pay a fee determined as described in § 28.116. If the memorandum is provided by electronic means, the fee shall be determined using the same provisions.
The fee for the practical classing examination for cotton shall be determined as described in § 28.116. Any applicant who passes the examination may be issued a certificate indicating this accomplishment. Any person who fails to pass the examination may be reexamined. The fee for this practical reexamination will be determined as described in § 28.116.
7 U.S.C. 51–65; 7 U.S.C. 471–476.
(b) The cost of High Volume Instrument (HVI) cotton classification service to producers will be based on formulas set forth in § 28.116. The proceeds of the sale of cotton samples shall be used to defray the costs of providing the service under this subpart.
(a)(1) The samples submitted as provided in the subpart shall be classified by employees of the Division, and classification memoranda showing the official quality determination of each sample according to the official cotton standards of the United States shall be issued by any one of the following methods at no additional charge:
(i) Electronic means; or
(ii) Telecommunications, with all long distance telephone line charges paid by the receiver of data.
(2) When an additional copy of the classification memorandum is issued by any method listed in paragraph (a)(1) of this section, there will be a charge determined as described in § 28.116. If provided as an additional method of data transfer, the minimum fee for each method issued shall also be determined as described in § 28.116.
(b) Owners of cotton, other than producers, may receive classification data showing the official quality determination of each sample by means of telecommunications from a central database to be maintained by the Division. The fee for this service shall be determined as described in § 28.116, with all communication charges paid by the receiver of data.
(c) Upon request of an owner of cotton for which classification memoranda have been issued under the subpart, a new memorandum shall be issued for the business convenience of such owner without the reclassification of the cotton. Such rewritten memorandum shall bear the date of its issuance and the date or inclusive dates of the original classification. The per-hour fee for a new memorandum shall be determined according to § 28.116, with a minimum per-sheet fee determined under the same provisions.
(a) A producer may request one review classification for each bale of eligible cotton. The fee for review
(b) * * * Producers who request return of their samples after classing will pay a fee determined based on the formulas in § 28.116.
7 U.S.C. 511–511s.
The revisions and addition read as follows:
(a)
(b)
(2)
(3)
(4)
(c)(1) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(2) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(d)
(a) The fee for inspection of imported tobacco will be determined as described in § 29.123 and shall be paid by the importer. * * *
(b) The fee for sampling, accepting, and certification of imported flue-cured and burley tobacco for prohibited pesticide residues will be determined as described in § 29.123 and shall be paid by the importer.
(c) The fee for accepting imported flue-cured and burley tobacco not accompanied by a certification that it is free of prohibited pesticide residues will be determined as described in § 29.123. Fees for services rendered shall be remitted by check or draft in accordance with a statement issued by the Director, and shall be made payable to “Agricultural Marketing Service.”
7 U.S.C. 1621–1627.
(a) For each calendar year, AMS will calculate the rate for services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b)(1) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(2) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(c) When an inspection is delayed because product is not available or readily accessible, a charge for waiting time shall be determined using the formulas in this section.
7 U.S.C. 1621–1627.
(a) For each calendar year, AMS will calculate the rate for services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(1)
(2)
(3)
(c) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
Charges may be assessed to cover the cost of travel time incurred in connection with the performance of any inspection service, including appeal inspections, as described in § 52.42. This includes time spent waiting for transportation as well as time spent traveling, but not to exceed eight hours of travel time for any one person for any one day: And provided further, that if travel is by common carrier, no hourly charge may be made for travel time outside the employee's official work hours.
(a) The Administrator may enter into contracts with applicants to perform continuous inspection services or other types of inspection services pursuant to the regulations in this part and other requirements as prescribed by the Administrator in such contract, and the charges for such inspection service provided in such contracts shall be based on such basis as will reimburse the Agricultural Marketing Service of the Department for the full cost of rendering such inspection service as described in § 52.42.
(b) The Administrator may enter into a written memorandum of understanding or contract, whichever may be appropriate, with any administrative agency charged with the administration of a marketing agreement or a marketing order effective pursuant to the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601
(c) Charges for year-round in-plant inspection services on a contract basis will be billed to the applicant monthly for all hours worked with a minimum of 40 hours per week for each inspector assigned to perform the inspection services. Charges for work performed in excess of an employee's regular work schedule will be calculated as described in § 52.42(a)(2).
(d) Charges for less than year-round in-plant inspection services (four or more consecutive 40 hour weeks) on a contract basis will be billed to the applicant monthly for all hours with a minimum of 40 hours for each inspector assigned to perform the inspection services and will be calculated based on the formulas in § 52.42.
7 U.S.C. 1621—1627.
(a) Fees and other charges equal as nearly as may be to the cost of the services rendered shall be assessed and collected from applicants in accordance
(1)
(2)
(3)
(b)(1) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(2) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(c)
(d)
(e)
7 U.S.C. 1621–1627.
(a) Unless otherwise provided in this part, the fees to be charged and collected for any service performed, in accordance with this part, on a fee basis shall be based on the applicable formulas specified in this section. For each calendar year or crop year, AMS will calculate the rate for grading or audit services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b)(1) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(2) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(c) Fees for grading services will be based on the time required to perform the services. The hourly charges shall include the time actually required to perform the grading, waiting time, travel time, and any clerical costs involved in issuing a certificate.
(d) Fees for audit services will be based on the time and expenses required to perform the audit. The hourly charge shall include the time actually required to perform the audit, waiting time, travel time, and any clerical costs involved in issuing an audit report.
The revisions read as follows:
Fees to be charged and collected for any grading service, other than for an appeal grading, on a resident grading basis, shall be calculated as described in this part. The fees to be charged for any appeal grading shall be as provided in § 56.47.
(a) * * *
(1) * * * The costs for completing the plant survey shall be borne by the applicant on a fee basis as described in § 56.46. * * *
(2) Charges for the cost of each grader assigned to a plant will be calculated as described in § 56.46, except that no charge will be assessed when the assigned grader is temporarily reassigned by AMS to perform grading service for other than the applicant. * * *
Fees to be charged and collected for grading service on a nonresident grading basis, shall be calculated as described in this part. The fees to be charged for any appeal grading shall be calculated as provided in § 56.47.
(a) * * *
(1) A charge for the salary and other costs, calculated as described in § 56.46, for each grader while assigned to a plant, except that no charge will be made when the assigned grader is temporarily reassigned by AMS to perform grading service for other than the applicant. Charges to plants are as follows:
7 U.S.C. 1621–1627.
If an applicant requests that inspection or grading service be performed on a holiday, Saturday, or Sunday or in excess of each 8-hour shift Monday through Friday, the applicant shall be charged for such service at a rate determined using the formulas in § 58.43.
(a) Unless otherwise provided in this part, the fees to be charged and collected for any service performed, in accordance with this part, on a fee basis shall be based on the applicable formulas specified in this section. For each calendar year, AMS will calculate the rate for grading, certification, or inspection services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(1)
(2)
(3)
(c) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
Charges for the inspector(s) and grader(s) assigned to a continuous resident program shall be calculated using the formulas in § 58.43.
7 U.S.C. 1621–1627.
(a) For each calendar year, AMS will calculate the rate for quality systems verification services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b)(1) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(2) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(c)
(d)
(e)
7 U.S.C. 1621–1627.
Unless otherwise provided in this part, the fees to be charged and collected for any grading or audit service performed in accordance with this part, on a fee basis shall be based on the applicable formulas specified in this section.
(a) For each calendar year, AMS will calculate the rate for grading and audit services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b)(1) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(2) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(c) Fees for grading services will be based on the time required to perform the services. The hourly charges shall include the time actually required to perform the grading, waiting time, travel time, and any clerical costs involved in issuing a certificate.
(d) Fees for audit services will be based on the time and expenses required to perform the audit. The hourly charge shall include the time actually required to perform the audit, waiting time, travel time, and any clerical costs involved in issuing an audit report.
The costs of an appeal grading, or review of a grader's decision, shall be borne by the appellant on a fee basis at
Fees to be charged and collected for grading service on a nonresident grading basis shall be based on the formulas provided in this part. The fees to be charged for any appeal grading shall be as provided in § 70.72.
(a) * * *
(1) A charge for the salary and other costs, based on § 70.71, for each grader while assigned to a plant, except that no charge will be made when the assigned grader is temporarily reassigned by AMS to perform grading service for other than the applicant. * * *
Fees to be charged and collected for any grading service on a resident grading basis and for an appeal grading shall be determined based on the formulas in § 70.71.
(a) * * *
(1) When a signed application for service has been received, the State supervisor or the supervisor's assistant shall complete a plant survey pursuant to § 70.34. The costs for completing the plant survey shall be borne by the applicant on a fee basis based on the formulas in § 70.71. No charges will be assessed when the application is required because of a change in name or ownership. If service is not installed within 6 months from the date the application is filed, or if service is inactive due to an approved request for removal of a grader(s) for a period of 6 months, the application will be considered terminated, but a new application may be filed at any time. In addition, there will be a charge of $300 if the application is terminated at the request of the applicant for reasons other than for a change in location within 12 months from the date of the inauguration of service.
(2) A charge for the salary and other costs, as specified in this part, for each grader while assigned to a plant, except that no charge will be made when the assigned grader is temporarily reassigned by AMS to perform grading service for other than the applicant.
7 U.S.C. 1622 and 1624.
Fees and charges for inspection or certification services performed by Federal employees shall cover the cost of performing the service. Fees shall be for actual time required to render the service.
(a) For each calendar year, AMS will calculate the rate for inspection or certification services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(1)
(2)
(3)
(c) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(b) When onsite inspection services are performed by Federal employees at the request of the applicant, charges will be based on the formulas in § 75.41.
(a) Fees assessed based on the formulas in § 75.41.
(c) The fee for a preliminary report issued prior to completion of testing shall be assessed in accordance with paragraph (a) of this section.
7 U.S.C. 1622, 1624.
The revisions read as follows:
(a) For each fiscal year, AMS will calculate the rate for laboratory testing, analysis, and other services, per hour per program employee using the following formulas:
(1)
(2)
(3)
(b)(1) For each calendar year, based on previous fiscal year/historical actual costs, AMS will calculate the benefits, operating, and allowance for bad debt components of the regular, overtime and holiday rates as follows:
(i)
(ii)
(iii)
(2) The calendar year cost of living expenses and percentage of inflation factors used in the formulas in this section are based on the most recent Office of Management and Budget's Presidential Economic Assumptions.
(a) The applicant for appeal sample testing will be charged a fee based on the formulas in § 91.37.
(a) When analytical testing in a Science and Technology facility requires the services of laboratory personnel beyond their regularly assigned tour of duty on any day or on a day outside the established schedule, such services are considered as overtime work. When analytical testing in a Science and Technology facility requires the services of laboratory personnel on a Federal holiday or a day designated in lieu of such a holiday, such services are considered holiday work. Laboratory analyses initiated at the request of the applicant to be rendered on Federal holidays, and on an overtime basis will be charged fees based on the formulas in § 91.37.
Board of Governors of the Federal Reserve System.
Policy statement.
The Board of Governors of the Federal Reserve System (Board) has adopted revisions to part I of its
The Board will be guided by the PSR policy revisions when exercising the authorities discussed therein as of December 31, 2014, with the exception of the following measures, which the Board would expect to be met on or before December 31, 2015: Transparency, set forth in section I.B.2; establishing plans for recovery and orderly wind-down as necessary to meet the expectations of principle 3; establishing rules and procedures that explicitly address uncovered credit losses and liquidity shortfalls as necessary to meet the expectations of principles 4 and 7, respectively; maintaining sufficient liquid net assets funded by equity and a viable plan for raising additional equity as necessary to meet the expectations of principle 15; and managing risks arising in tiered participation arrangements as necessary to meet the expectations of principle 19.
Jennifer A. Lucier, Deputy Associate Director (202) 872–7581, Paul Wong, Manager (202) 452–2895, or Emily A. Caron, Senior Financial Services Analyst (202) 452–5261, Division of Reserve Bank Operations and Payment Systems; Christopher W. Clubb, Special Counsel (202) 452–3904, Legal Division; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263–4869.
In adopting the PSR policy, the Board's objectives have been to foster the safety and efficiency of payment, clearing, and settlement systems. Part I of the policy sets forth the Board's views, and related principles and minimum standards, regarding the management of risks in and transparency of payment, clearing, and settlement systems, including those operated by the Federal Reserve Banks (Reserve Banks).
In January 2014, the Board requested comment on proposed revisions to part I of the PSR policy.
The Board proposed revisions to the policy to incorporate the new international risk-management standards for financial market infrastructures in the PFMI, including the expectation for FMIs to complete the disclosure framework set out in the December 2012 CPSS–IOSCO report on the
The Board received three comment letters that were responsive to the January proposal, all from entities that operate designated FMUs.
The Board proposed to revise part I of the PSR policy by replacing the existing risk-management standards with the 24 headline standards from the PFMI verbatim. Commenters were generally supportive of the Board's overall approach. One commenter, however, raised two general concerns with respect to the Board's overall approach. The commenter expressed concern that one uniform set of standards that applies to all FMIs and all designs of the same type of FMI does not sufficiently take into account material differences that can be found among the different systems. The commenter also expressed concern that differences in language between the risk-management standards in Regulation HH and in part I of the PSR policy may result in two different sets of risk-management standards for FMIs.
With respect to differences among types of systems, the Board believes that a uniform set of standards is appropriate because, in many instances, FMIs face and must manage certain common risks. Although the design of systems may vary, the flexibility in the standards allows individual FMIs to implement, and supervisors to enforce, the standards appropriately based on the design of and risks that arise in a particular FMI. The Board also believes that a uniform set of standards promotes financial stability because it facilitates effective and consistent risk management across different types of FMIs and markets. For specific risk-management standards in the PSR policy that are applicable only to certain types of FMI, however, those standards are made expressly applicable only to those FMI types (for example, only CCPs are expected to have a risk-based margin system to cover credit risk). For these reasons, the Board continues to believe the overall approach is appropriate.
With respect to the differences in the language between Regulation HH and part I of the PSR policy, the Board continues to believe that such differences are appropriate. Regulation HH is an enforceable rule applicable to designated FMUs other than those supervised by the CFTC or SEC, so additional details from the key considerations and explanatory notes of the PFMI were incorporated in the rule text to provide greater clarity on the Board's expectations. The PSR policy, on the other hand, is a policy statement that provides guidance with respect to the Board's exercise of its other supervisory or regulatory authority over other financial market infrastructures (including those operated by the Federal Reserve Banks) or their participants, its participation in cooperative oversight arrangements for financial market infrastructures, or the provision of intraday credit to eligible Federal
The proposed revised policy stated that the Board sets out its views regarding management of risks in FMIs in part I of the PSR policy in order to encourage these systems and their primary regulators to take the standards in the policy into consideration in the design, operation, monitoring, and assessment of these systems. One commenter stated that the Board should acknowledge in the final PSR policy that if a regulatory agency other than the Board is the Supervisory Agency for a designated FMU, then the Board would consider compliance by the designated FMU with the corresponding PFMI-based regulations of such Supervisory Agency as sufficient.
In carrying out its Title VIII responsibilities, the Board participates in examinations of designated FMUs by other Supervisory Agencies and provides input to those Agencies with respect to the designated FMU's risk-management practices. Although the Supervisory Agency would apply its own rules in assessing the sufficiency of the designated FMU's compliance, the Board's input will be informed by the principles in the PSR policy as well as the Agency's rules and the general framework of Title VIII of the Dodd-Frank Act. Therefore, the Board will maintain the overall approach of the policy as proposed.
Proposed principle 2 stated that an FMI should have governance arrangements that are clear and transparent, promote the safety and efficiency of the FMI, and support the stability of the broader financial system, other relevant public interest considerations, and the objectives of relevant stakeholders. One commenter noted that public interest considerations is a vague concept, and that private-sector systems should not be required to consider public interest considerations and should focus exclusively on the needs of participants.
The Board believes that taking public interest considerations into account is consistent with the objectives of Title VIII of the Act to promote robust risk management, promote the safety and soundness of the designated FMU, and reduce systemic risks. For example, public interests may include supporting fair and efficient markets because an FMI that creates inefficiencies in the market may drive market participants toward less-safe alternatives that could increase systemic risks. Market transparency is another public interest consideration that may be relevant because, for example, an FMI that provides information to relevant authorities and the public about payment flows may help to identify and reduce sources of systemic risk. For certain FMIs, stability of the broader financial system may be the only relevant public interest consideration. The final policy retains the text of the principle as proposed.
Proposed principle 4 stated that an FMI should measure, monitor, and manage effectively its credit exposures to its participants and the credit exposures arising from its payment, clearing, and settlement processes. The principle also stated that an FMI should maintain sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence. In addition, a CCP that is involved in activities with a more-complex risk profile or that is systemically important in multiple jurisdictions should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the two participants and their affiliates that would potentially cause the largest credit exposure to the CCP in extreme but plausible market conditions (a “cover 2” expectation).
One commenter stated that, in setting a “cover 2” expectation for a particular FMI, the Board should also consider “the proportion of the CCP's clearing activities involving products with complex risk profiles as well as the manner in which the CCP manages those risks.” The commenter asked the Board to confirm that the “cover 2” expectation would not be triggered if a CCP has a small amount of activity with a complex risk profile relative to overall activity or if the CCP addresses the added risk incurred, such as through enhanced margin systems. The Board's “cover 2” expectation for a particular FMI would depend on all relevant facts and circumstances, including the mix of activities with varying risk profiles. The Board believes that the proposed policy language provides sufficient flexibility and has adopted the text of the principle as proposed.
Proposed principle 5 stated that an FMI that requires collateral to manage its or its participants' credit exposure should accept collateral with low credit, liquidity, and market risks and should set and enforce appropriately conservative haircuts and concentration limits. One commenter supported the flexibility in the wording of the principle and urged that it not be interpreted to exclude the use of equity securities as collateral for equity options. The Board believes that the principle would permit, where appropriate, an FMI to integrate the management of risk from participant positions with the risk from fluctuations in the value of collateral provided by participants. One example would be for a CCP to hold equity securities as collateral for options on those same securities. The final policy retains the text of the principle as proposed.
In the proposed policy, the Board defined liquidity risk as “the risk that a counterparty, whether a participant or other entity, will be unable to meet fully its financial obligations when due, although it may be able to do so in the future.” The definition went on to explain that an FMI, through its design or operation, may bear or generate liquidity risk in one or more currencies in its payment or settlement process. In this context, liquidity risk may arise between or among the system operator and the participants in the FMI, the system operator and other entities (such as settlement banks, nostro agents, or liquidity providers), the participants in the FMI and other entities, or two or more participants in the FMI.
After further consideration, the Board has added a footnote to the definition of liquidity risk to clarify that the Board believes that deliveries of currency are payments, and FMIs that conduct such activity should consider these deliveries to be payments in the management of liquidity risk. The Board added this footnote to clarify that it does not believe that such deliveries of currency should be treated as physical deliveries under principle 10 in the revised risk-management standards, but rather it would expect an FMI subject to its authority to manage effectively the liquidity risk related to these payments.
Proposed principle 8 stated that an FMI should provide clear and certain final settlement, at a minimum by the end of the value date. One commenter requested confirmation that the proposed provision would not require an FMI that is a CCP to accelerate its novation of certain noncompetitive transactions, such as backloaded over-the-counter options. The principle applies to an FMI's obligations to deliver funds and other financial instruments, at a minimum, by the end of the value date in accordance with the terms of the underlying contract and does not address the timing of novation. The Board believes that the proposed policy language provides sufficient flexibility, and the final policy retains the text of the principle as proposed.
Proposed principle 14 stated that a CCP should have rules and procedures that enable the segregation and portability of positions of a participant's customers and the collateral provided to the CCP with respect to those positions. The Board received two comment letters on this principle that addressed portability and alternative segregation regimes.
Where alternative segregation and portability arrangements offer the same degree of protection, proposed principle 14 would not prohibit the use of such arrangements. As noted above, the expectation is that an FMI's rules and procedures enable segregation and portability of positions, and the policy does not prescribe a single means by which this could be achieved. The final policy retains the text of the principle as proposed.
Proposed principle 15 stated that an FMI should identify, monitor, and manage its general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operations and services as a going concern if those losses materialize. Further, liquid net assets should at all times be sufficient to ensure a recovery or orderly wind-down of critical operations and services. Commenters generally supported the principle, but made two specific points that are addressed below.
Consistent with the previous international standards, the PFMI recognizes that flexibility in implementation is warranted for central bank-operated systems to meet the objectives of the standards because of central banks' roles as monetary authorities and liquidity providers. As noted in the proposal, the Board will allow flexibility in application of principle 15 on general business risk for the Fedwire Services. A key consideration in principle 15 of the PFMI requires FMIs to maintain viable recovery or orderly wind-down plans that consider general business risk and to hold sufficient liquidity and capital reserves to implement the plans. The Fedwire Services do not face the risk that a business shock would cause the service to wind down in a disorderly manner and disrupt the stability of the financial system. Given the fundamental role of the Fedwire Services in the U.S. financial system, the Federal Reserve would need to consider the impact of sudden or disorderly changes and would need to pursue policies consistent with financial stability and established principles of entering and exiting priced services. Therefore, the Board will not require the Fedwire Services to develop recovery or orderly wind-down plans under principle 3.
In order to foster competition with private-sector FMIs, however, the Board will require the Federal Reserve priced services to hold six months of the Fedwire Funds Service's current operating expenses as liquid financial assets and equity on the pro forma balance sheet used in determining Reserve Bank fees for priced services.
Proposed principle 19 stated that an FMI should identify, monitor, and manage the material risks to the FMI arising from tiered participation arrangements. These arrangements are those in which firms that are not members in the FMI (indirect participants) rely on the services provided by members of the FMI (direct participants) to access the FMI's payment, clearing, and settlement facilities. The Board received two comment letters that addressed this proposed principle.
Tiered participation arrangements could also pose other risks to the FMI, including operational risk. For example, an FMI may need to understand how its direct participants manage any spikes in volume submitted to the FMI on behalf of indirect participants. Understanding the potential for spikes in volume will allow the FMI to prepare to have the scalable operational capacity necessary to process those volumes effectively, such that it is able to achieve its service-level objectives.
Therefore, the Board believes that material risks to an FMI, including to its participants, may arise from tiered participation arrangements. The Board expects FMIs to seek to understand the risks associated with the relationships between direct participants and their customers in order to be able to assess whether any material risk to the FMI, including to its other participants, exists. The Board recognizes, however, that certain FMIs, including their participants, may not bear any material risks from these arrangements due to the design of their settlement arrangements or due to the characteristics of the markets they serve. These FMIs should conduct an analysis to support their conclusion.
The Board expects that an FMI will conduct an analysis to determine whether any material risks arise from tiered participation arrangements that are borne by the FMI, including by its participants as a result of their participation in the FMI. Depending on the nature of their payment, clearing, settlement, or recording activities, FMIs' methodologies for conducting the analysis may differ. For example, some FMIs may choose to gather information about the volume and value of activity processed by direct participants on behalf of indirect participants in the FMI or other relevant information. Where such information would be useful, an FMI may consider defining reasonable thresholds and other factors for gathering the information in order to minimize burden. If the FMI determines that no material risks exist to the FMI, including to its participants, from tiered participation arrangements, the Board would not expect the FMI to take any further action. If material risks are identified, the Board would expect the FMI to take steps to mitigate or manage these risks. The Board does not expect, however, an FMI to manage risks that arise between a direct participant and its customers, but rather only to manage the material risks to the FMI, including to its other participants.
The Board expects that an FMI will review and update its analysis of risks arising from tiered participation arrangements at the earlier of every two years or following material changes to the system design or operations or the environment in which the FMI operates if those changes could affect its analysis. If an FMI's review of its analysis indicates that the FMI faces no material risks from tiered participation arrangements, then no further action would be required.
The Board believes that conflicts of interest or antitrust issues that may arise from expectations with respect to principle 19 can be avoided through the careful design of the information-gathering and risk-management processes developed by the FMI. First, the FMI's board of directors does not have to see a complete picture of each participant's relationships with its customers. The FMI can put controls in place that would minimize potential conflicts to ensure that information is shared in an appropriate manner that would allow the board of directors to carry out its responsibility for the comprehensive management of risks. Second, the Board does not necessarily expect an FMI to encourage indirect participants that are large relative to their direct participants to move to a larger direct participant or become direct participants themselves. The FMI may choose other methods for mitigating or managing risks arising from tiered participation arrangements. For example, if the FMI is concerned that a direct participant's exposures to its indirect participants could cause it to default to the FMI, the FMI may require the direct participant to provide additional collateral to mitigate the relevant financial risks posed by its relationships with its customers.
The Board has adopted the text of this principle as proposed.
Proposed principle 21 stated that an FMI should be efficient and effective in meeting the requirements of its participants and the markets it serves. One commenter stated that an FMI that does not meet the requirements of its participants and the market it serves or that does not meet its objectives efficiently will not survive in the market. The commenter suggested that the Board remove the principle or redefine efficiency and effectiveness in terms of market judgments.
The Board continues to believe that the expectation for an FMI to be efficient and effective should be included in the policy and that the terms efficiency and effectiveness should not be defined solely in terms of market judgments. The Board agrees with the comment that market forces may encourage an FMI to be efficient and effective, particularly in cases where it has a direct competitor. Many markets for payment, clearing, and settlement services, however, are monopolies or oligopolies. Furthermore, it may be difficult for market participants to determine if a particular FMI is efficient and effective due to imperfect information about the FMI. Therefore, market judgments alone may be insufficient to encourage the FMI to operate efficiently and effectively. The Board has adopted the text of this principle as proposed.
Proposed principle 23 stated that an FMI should publicly disclose all relevant rules and key procedures. Consistent with the principle, section I.B.2 of the proposed policy sets forth the Board's expectation that FMIs subject to its supervisory authority complete the CPSS–IOSCO disclosure framework and make their disclosure readily available to the public.
The Board agrees that certain procedures should not be publicly disclosed in detail if such detail would undermine the FMI's safety and soundness. The Board stated in the proposed policy that, although disclosures should be robust, the Board does not expect FMIs to disclose to the public sensitive information that could expose system vulnerabilities or otherwise put the FMI at risk. For example, disclosing the detail included in the FMI's business continuity plan could expose the vulnerabilities of the system, and in this case it would be sufficient to disclose publicly only key highlights of the plan. The Board has adopted the text of the policy as proposed.
The Board proposed that the revised policy become effective upon publication of the final version in the
The Board received three comment letters that addressed the compliance date for the new or heightened expectations proposed in the revised policy. One commenter agreed with the six-month extension. Two commenters stated that a longer extension may be necessary, and one of these suggested that a minimum of 18 months be allowed to meet the expectations in the proposed policy, especially if the expectations under principle 19 on tiered participation arrangements are finalized as proposed.
After consideration of the comments and analysis, the Board is adopting an overall effective date for the PSR policy revisions of December 31, 2014. However, the Board will begin to apply the new or heightened risk-management and transparency expectations as of December 31, 2015. The Board believes that this additional time may be necessary to allow FMIs time to complete their processes and procedures for changes to their rulebooks and to minimize burden on FMIs and the markets they serve. FMIs, however, are encouraged to meet the expectations in the PSR policy as soon as possible.
One commenter also stated that the expectations under proposed principle 20 on links may require additional time to implement because implementation will require extensive cooperation and coordination between FMIs. These expectations, however, are included in the existing PSR policy and are not new or heightened.
The Board has established procedures for assessing the competitive impact of rule or policy changes that have a substantial impact on payment system participants.
This final policy sets forth revised risk-management standards, which are based on the PFMI, for certain FMIs, including the Federal Reserve Bank-operated Fedwire Services. In a separate, related
The final revisions to the risk-management and transparency expectations in part I of the PSR policy are consistent with those in final Regulation HH. As discussed above, a different level of detail is required for Regulation HH as compared to part I of the PSR policy. Regulation HH is an enforceable rule applicable to designated FMUs other than those supervised by the CFTC or SEC, so additional details from the key considerations and explanatory notes of the PFMI were incorporated in the rule text to provide greater clarity on the Board's expectations. The PSR policy, on the other hand, is a policy statement that provides guidance with respect to the Board's exercise of its other supervisory or regulatory authority over other financial market infrastructures (including those operated by the Federal Reserve Banks) or their participants, its participation in cooperative oversight arrangements for financial market infrastructures, or the provision of intraday credit to eligible Federal Reserve account holders. Incorporating the headline standards from the PFMI is consistent with the purpose of the document and the Board's long-standing principles-based approach to its PSR policy. The Board will be guided by the key considerations and the explanatory text of the PFMI, as well as its interpretation of the corresponding provisions of Regulation HH, in its application of the PSR policy. The Board does not intend for differences in language in the two documents to lead to inconsistent requirements for Reserve Bank-operated FMIs and their private sector competitors.
The Board recognizes the critical role that the Fedwire Services play in the financial system and is committed to applying risk-management standards to the Reserve Banks' Fedwire Funds Service that are at least as stringent as the applicable Regulation HH standards applied to designated FMUs that provide similar services. The final revisions to part I of the PSR policy provide that the treatment of Reserve Bank systems will be consistent with that of private-sector systems in order to avoid any material adverse effect on the ability of other service providers to compete effectively with the Reserve Banks.
There are, however, several risk-management standards for which flexibility in implementation will be necessary for the Fedwire Services given the Federal Reserve's legal framework and structure and its roles as monetary authority and liquidity provider.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR part 1320, Appendix A.1), the Board reviewed the final policy under the authority delegated to the Board by the Office of Management and Budget. For purposes of calculating burden under the Paperwork Reduction Act, a “collection of information” involves 10 or more respondents. Any collection of information addressed to all or a substantial majority of an industry is presumed to involve 10 or more respondents (5 CFR 1320.3(c), 1320.3(c)(4)(ii)). The Board estimates there are fewer than 10 respondents, and these respondents do not represent all or a substantial majority of payment, clearing, and settlement systems. Therefore, no collections of information pursuant to the Paperwork Reduction Act are contained in the final policy.
Financial market infrastructures (FMIs) are critical components of the nation's financial system. FMIs are multilateral systems among participating financial institutions, including the system operator, used for the purposes of clearing, settling, or recording payments, securities, derivatives, or other financial transactions.
Part I of this policy sets out the Board's views, and related standards, regarding the management of risks in FMIs, including those operated by the Reserve Banks. In setting out its views, the Board seeks to encourage FMIs and their primary regulators to take the standards in this policy into consideration in the design, operation, monitoring, and assessment of these systems. The Board will be guided by this part, in conjunction with relevant laws, regulations, and other Federal Reserve policies, when exercising its supervisory and regulatory authority over FMIs or their participants, providing accounts and services to FMIs, participating in cooperative oversight and similar arrangements for FMIs with other authorities, or providing intraday credit to eligible Federal Reserve account holders. Designated financial market utilities subject to the Board's Regulation HH are not subject to the risk-management or transparency expectations set out in this policy.
Part II of this policy governs the provision of intraday credit or “daylight overdrafts” in accounts at the Reserve Banks and sets out the general methods used by the Reserve Banks to control their intraday credit exposures.
Through this policy, the Board expects financial system participants, including private-sector FMIs and the Reserve Banks, to reduce and control settlement and other systemic risks arising in FMIs, consistent with the smooth operation of the financial system. This policy is also designed to govern the provision of intraday balances and credit while controlling the Reserve Banks' risk by (1) making financial system participants and FMIs aware of the types of basic risks that may arise in the payment, clearing, settlement, or recording process; (2) setting explicit risk-management expectations; (3) promoting appropriate transparency by FMIs to help inform participants and the public; and (4) establishing the policy conditions governing the provision of Federal Reserve intraday credit to eligible account holders. The Board's adoption of this policy in no way diminishes the primary responsibilities of financial system participants to address the risks that may arise through their operation of or participation in FMIs.
The basic risks in payment, clearing, settlement, and recording systems may include credit risk, liquidity risk, operational risk, and legal risk. In the context of this policy, these risks are defined as follows:
• Credit risk: The risk that a counterparty, whether a participant or other entity, will be unable to meet fully its financial obligations when due, or at any time in the future.
• Liquidity risk: The risk that a counterparty, whether a participant or other entity, will be unable to meet fully its financial obligations when due, although it may be able to do so in the future. An FMI, through its design or operation, may bear or generate liquidity risk in one or more currencies in its payment or settlement process.
• Operational risk: The risk that deficiencies in information systems or internal processes, human errors, management failures, or disruptions from external events will result in the reduction, deterioration, or breakdown of services provided by the FMI.
• Legal risk: The risk of loss from the unexpected or uncertain application of a law or regulation.
These risks also arise between financial institutions as they clear, settle, and record payments and other financial transactions and must be managed by institutions, both individually and collectively.
Further, FMIs may increase, shift, concentrate, or otherwise transform risks in unanticipated ways. FMIs, for example, may pose systemic risk to the financial system because the inability of one or more of its participants to perform as expected may cause other participants to be unable to meet their obligations when due. The failure of one or more of an FMI's participants to settle their payments or other financial transactions as expected, in turn, could create credit or liquidity problems for participants and their customers, the system operator, other financial institutions, and the financial markets the FMI serves. Thus, such a failure might lead ultimately to a disruption in the financial markets more broadly and undermine public confidence in the nation's financial system.
Mitigating the risks that arise in FMIs is especially important because of the interdependencies such systems inherently create among financial institutions. In many cases, interdependencies are a normal part of an FMI's structure or operations. Although they can facilitate the safety and efficiency of the FMI's payment, clearing, settlement, or recording processes, interdependencies can also present an important source or transmission channel of systemic risk. Disruptions can originate from any of the interdependent entities, including the system operator, the participants in the FMI, and other systems, and can spread quickly and widely across markets if the risks that arise among these parties are not adequately measured, monitored, and managed. For example, interdependencies often create complex and time-sensitive transaction and payment flows that, in combination with an FMI's design, can lead to significant demands for intraday credit or liquidity, on either a regular or an extraordinary basis.
The Board recognizes that the Reserve Banks, as settlement institutions, have an important role in providing intraday balances and credit to foster the smooth operation and timely completion of money settlement processes among financial institutions and between financial institutions and FMIs. To the extent that the Reserve Banks are the source of intraday credit, they may face a risk of loss if such intraday credit is not repaid as planned. In addition, measures taken by Reserve Banks to limit their intraday credit exposures
In addition, mitigating the risks that arise in certain FMIs is critical to the areas of monetary policy and banking supervision. The effective implementation of monetary policy, for example, depends on both the orderly settlement of open market operations and the efficient movement of funds throughout the financial system via the financial markets and the FMIs that support those markets. Likewise, supervisory objectives regarding the safety and soundness of financial institutions must take into account the risks FMIs, both in the United States and abroad, pose to financial institutions that participate directly or indirectly in, or provide settlement, custody, or credit services to, such systems.
This part sets out the Board's views, and related standards, regarding the management of risks in FMIs, including those operated by the Reserve Banks. The Board will be guided by this part, in conjunction with relevant laws, regulations, and other Federal Reserve policies, when exercising its authority in (1) supervising the Reserve Banks under the Federal Reserve Act; (2) supervising state member banks, Edge and agreement corporations, and bank holding companies, including the exercise of authority under the Bank Service Company Act, where applicable; (3) carrying out certain of its responsibilities under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act); (4) setting or reviewing the terms and conditions for the use of Reserve Bank accounts and services; and (5) developing and applying policies for the provision of intraday liquidity to eligible Reserve Bank account holders. This part will also guide the Board, as appropriate, in its interactions and cooperative efforts with other domestic and foreign authorities that have responsibilities for regulating, supervising, or overseeing FMIs within the scope of this part. The Board's adoption of this policy is not intended to exert or create supervisory or regulatory authority over any particular class of institutions or arrangements where the Board does not have such authority.
FMIs within the scope of part I include public- and private-sector payment systems that expect to settle a daily aggregate gross value of U.S. dollar-denominated transactions exceeding $5 billion on any day during the next 12 months.
Part I does not apply to market infrastructures such as trading exchanges, trade-execution facilities, or multilateral trade-compression systems. This part is also not intended to apply to bilateral payment, clearing, or settlement relationships, where an FMI is not involved, between financial institutions and their customers, such as traditional correspondent banking and government securities clearing services. The Board believes that these market infrastructures and relationships do not constitute FMIs for purposes of this policy and that risk-management issues associated with these market infrastructures and relationships are more appropriately addressed through other relevant supervisory and regulatory processes.
This section sets out the Board's views, and related standards, with respect to risk-management and transparency for the subset of FMIs described below in section B.1, including the Reserve Banks' Fedwire Funds Service and Fedwire Securities Service (collectively, Fedwire Services). The Board believes these FMIs should have comprehensive risk management as well as a high degree of transparency.
Authorities, including central banks, have promoted sound risk-management practices by developing internationally accepted minimum standards that promote the safety and efficiency of FMIs. Specifically, the Committee on Payment and Settlement Systems (CPSS) and Technical Committee of the International Organization of Securities Commissions (IOSCO) report on
The Board believes that the implementation of the PFMI by the FMIs within the scope of this section will help promote their safety and
The Board recognizes the critical role the Reserve Banks' Fedwire Services play in the financial system and requires them to meet or exceed the standards set forth in the appendix to this policy, consistent with the guidance on central bank-operated systems provided in the PFMI and with the requirements in the Monetary Control Act.
The Board's Regulation HH imposes risk-management standards applicable to a designated financial market utility for which the Board is the Supervisory Agency.
The Board expects all other FMIs that are subject to its supervisory authority under the Federal Reserve Act, including FMIs that are members of the Federal Reserve System, to meet or exceed the risk-management standards in the appendix.
The Board encourages all other central securities depositories, securities settlement systems, central counterparties, and trade repositories, whether they are located within or outside the United States, to meet or exceed the risk-management standards in the appendix to this policy. Where the Board does not have authority over a central securities depository, securities settlement system, central counterparty, or trade repository, the Board will be guided by this policy in its cooperative efforts with other FMI authorities.
The Board encourages systemically important offshore and cross-border payment systems that are not included in any of the categories above to meet or exceed the risk-management standards in the appendix to this policy.
Transparency helps ensure that relevant information is provided to an FMI's participants, authorities, and the public to inform sound decisionmaking, improve risk management, enable market discipline, and foster confidence in markets more broadly. In particular, public disclosures play a critical role in allowing current and prospective participants, as well as other stakeholders, to understand an FMI's operations and the risks associated with using its services and to manage more effectively their risks with respect to the FMI. The Board believes that FMIs are well-positioned to provide the information necessary to support greater market transparency and to maintain financial stability.
The Board expects an FMI that is subject to its supervisory authority, but not subject to Regulation HH, to disclose to its participants information about the risks and costs that they incur by participating in the FMI, consistent with the requirements in principle 23 in the appendix.
In addition, the Board expects such an FMI to complete the disclosure framework set forth in the CPSS–IOSCO
To ensure each FMI's accountability for the accuracy and completeness of its disclosure, the Board expects the FMI's
As part of its ongoing oversight of FMIs, the Board will review public disclosures by FMIs subject to its supervisory authority to ensure that the Board's policy objectives and expectations are being met.
The Board encourages payment systems within the scope of this policy, but that are not included in any of the categories in section B above, to implement a general risk-management framework appropriate for the risks the payment system poses to the system operator, system participants, and other relevant parties as well as the financial system more broadly.
A risk-management framework is the set of objectives, policies, arrangements, procedures, and resources that a system employs to limit and manage risk. Although there are a number of ways to structure a sound risk-management framework, all frameworks should
a. identify risks clearly and set sound risk-management objectives;
b. establish sound governance arrangements to oversee the risk-management framework;
c. establish clear and appropriate rules and procedures to carry out the risk-management objectives; and
d. employ the resources necessary to achieve the system's risk-management objectives and implement effectively its rules and procedures.
The first element of a sound risk-management framework is the clear identification of all risks that have the potential to arise in or result from the system's settlement process and the development of clear and transparent objectives regarding the system's tolerance for and management of such risks. System operators should identify the forms of risk present in their system's settlement process as well as the parties posing and bearing each risk. In particular, system operators should identify the risks posed to and borne by them, the system participants, and other key parties such as a system's settlement banks, custody banks, and third-party service providers. System operators should also analyze whether risks might be imposed on other external parties and the financial system more broadly.
In addition, system operators should analyze how risk is transformed or concentrated by the settlement process. System operators should also consider the possibility that attempts to limit one type of risk could lead to an increase in another type of risk. Moreover, system operators should be aware of risks that might be unique to certain instruments, participants, or market practices. Where payment systems have inter-relationships with or dependencies on other FMIs, system operators should also analyze whether and to what extent any cross-system risks exist and who bears them.
Using their clear identification of risks, system operators should establish the risk tolerance of the system, including the levels of risk exposure that are acceptable to the system operator, system participants, and other relevant parties. System operators should then set risk-management objectives that clearly allocate acceptable risks among the relevant parties and set out strategies to manage this risk. Risk-management objectives should be consistent with the objectives of this policy, the system's business purposes, and the type of payment instruments and markets for which the system clears and settles. Risk-management objectives should also be communicated to and understood by both the system operator's staff and system participants.
System operators should reevaluate their risks in conjunction with any major changes in the settlement process or operations, the transactions settled, the system's rules or procedures, or the relevant legal and market environments. System operators should review the risk-management objectives regularly to ensure that they are appropriate for the risks posed by the system, continue to be aligned with the system's purposes, remain consistent with this policy, and are being effectively adhered to by the system operator and participants.
Systems should have sound governance arrangements to implement and oversee their risk-management frameworks. The responsibility for sound governance rests with a system operator's board of directors or similar body and with the system operator's senior management. Governance structures and processes should be transparent; enable the establishment of clear risk-management objectives; set and enforce clear lines of responsibility and accountability for achieving these objectives; ensure that there is appropriate oversight of the risk-management process; and enable the effective use of information reported by the system operator's management, internal auditors, and external auditors to monitor the performance of the risk-management process.
Systems should have rules and procedures that are appropriate and sufficient to carry out the system's risk-management objectives and that are consistent with its legal framework. Such rules and procedures should specify the respective responsibilities of the system operator, system participants, and other relevant parties. Rules and procedures should establish the key features of a system's settlement and risk-management design and specify clear and transparent crisis management procedures and settlement failure procedures, if applicable.
System operators should ensure that the appropriate resources and processes are in place to allow the system to achieve its risk-management objectives and implement effectively its rules and procedures. In particular, the system operator's staff should have the appropriate skills, information, and tools to apply the system's rules and procedures and achieve the system's risk-management objectives. System operators should also ensure that their facilities and contingency arrangements, including any information system resources, are sufficient to meet their risk-management objectives.
Payment systems differ widely in form, function, scale, and scope of activities, and these characteristics result in differing combinations and levels of risks. Thus, the exact features of a system's risk-management framework should be tailored to the risks of that system. The specific features of a risk-management framework may entail tradeoffs between efficiency and risk reduction, and payment systems will need to consider these tradeoffs when designing appropriate rules and procedures. In considering such tradeoffs, however, it is critically important that system operators take into account the costs and risks that may be imposed on all relevant parties, including parties with no direct role in the system. Furthermore, in light of rapidly evolving technologies and risk-management practices, the Board encourages all system operators to consider making risk-management improvements when cost-effective.
The Board may seek to understand how a system achieves the four elements of a sound risk-management framework set out above. In this context, the Board may seek to obtain information from system operators regarding their risk-management framework, risk-management objectives, rules and procedures, significant legal analyses, general risk analyses, analyses of the credit and liquidity effects of settlement disruptions, business continuity plans, crisis management procedures, and other relevant documentation.
When the Board does not have statutory or exclusive authority over an FMI covered by this policy, this section will guide the Board, as appropriate, in its interactions with other domestic and foreign authorities to promote effective risk management in and transparency by FMIs. For example, the Federal Reserve may have an interest in the safety and efficiency of FMIs outside the United States that are subject to regulation, supervision, or oversight by another authority but that provide services to financial institutions supervised by the Board or conduct activity that involves the U.S. dollar.
In working with other authorities, the Board will seek to establish arrangements for effective and practical cooperation that promote sound risk-management outcomes. The Board believes that cooperative arrangements among relevant authorities can be an effective mechanism for, among other things, (1) sharing relevant information concerning the policies, procedures, and operations of an FMI; (2) sharing supervisory views regarding an FMI; (3) discussing and promoting the application of robust risk-management standards; and (4) serving as a forum for effective communication, coordination, and consultation during normal circumstances, as well as periods of market stress.
When establishing such cooperative arrangements, the Board will be guided, as appropriate, by international principles on cooperative arrangements for the regulation, supervision, and oversight of FMIs. In particular, responsibility E in the PFMI addresses domestic and international cooperation among central banks, market regulators, and other relevant authorities and provides guidance to these entities for supporting each other in fulfilling their respective mandates with respect to FMIs. The CPSS report on
[No change to existing part II of the policy.]
An FMI should have a well-founded, clear, transparent, and enforceable legal
An FMI should have governance arrangements that are clear and transparent, promote the safety and efficiency of the FMI, and support the stability of the broader financial system, other relevant public interest considerations, and the objectives of relevant stakeholders.
An FMI should have a sound risk-management framework for comprehensively managing legal, credit, liquidity, operational, and other risks.
An FMI should effectively measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes. An FMI should maintain sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence. In addition, a central counterparty that is involved in activities with a more-complex risk profile or that is systemically important in multiple jurisdictions should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the two participants and their affiliates that would potentially cause the largest aggregate credit exposure to the central counterparty in extreme but plausible market conditions. All other central counterparties should maintain additional financial resources sufficient to cover a wide range of potential stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would potentially cause the largest aggregate credit exposure to the central counterparty in extreme but plausible market conditions.
An FMI that requires collateral to manage its or its participants' credit exposure should accept collateral with low credit, liquidity, and market risks. An FMI should also set and enforce appropriately conservative haircuts and concentration limits.
A central counterparty should cover its credit exposures to its participants for all products through an effective margin system that is risk-based and regularly reviewed.
An FMI should effectively measure, monitor, and manage its liquidity risk. An FMI should maintain sufficient liquid resources in all relevant currencies to effect same-day and, where appropriate, intraday and multiday settlement of payment obligations with a high degree of confidence under a wide range of potential stress scenarios that should include, but not be limited to, the default of the participant and its affiliates that would generate the largest aggregate liquidity obligation for the FMI in extreme but plausible market conditions.
An FMI should provide clear and certain final settlement, at a minimum by the end of the value date. Where necessary or preferable, an FMI should provide final settlement intraday or in real time.
An FMI should conduct its money settlements in central bank money where practical and available. If central bank money is not used, an FMI should minimize and strictly control the credit and liquidity risk arising from the use of commercial bank money.
An FMI should clearly state its obligations with respect to the delivery of physical instruments or commodities and should identify, monitor, and manage the risks associated with such physical deliveries.
A central securities depository should have appropriate rules and procedures to help ensure the integrity of securities issues and minimize and manage the risks associated with the safekeeping and transfer of securities. A central securities depository should maintain securities in an immobilized or dematerialized form for their transfer by book entry.
If an FMI settles transactions that involve the settlement of two linked obligations (for example, securities or foreign exchange transactions), it should eliminate principal risk by conditioning the final settlement of one obligation upon the final settlement of the other.
An FMI should have effective and clearly defined rules and procedures to manage a participant default. These rules and procedures should be designed to ensure that the FMI can take timely action to contain losses and liquidity pressures and continue to meet its obligations.
A central counterparty should have rules and procedures that enable the segregation and portability of positions of a participant's customers and the collateral provided to the central counterparty with respect to those positions.
An FMI should identify, monitor, and manage its general business risk and hold sufficient liquid net assets funded by equity to cover potential general business losses so that it can continue operations and services as a going concern if those losses materialize. Further, liquid net assets should at all times be sufficient to ensure a recovery or orderly wind-down of critical operations and services.
An FMI should safeguard its own and its participants' assets and minimize the risk of loss on and delay in access to these assets. An FMI's investments should be in instruments with minimal credit, market, and liquidity risks.
An FMI should identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls. Systems should be designed to ensure a high degree of security and operational reliability and should have adequate, scalable capacity. Business continuity management should aim for timely recovery of operations and fulfilment of the FMI's obligations, including in the event of a wide-scale or major disruption.
An FMI should have objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access.
An FMI should identify, monitor, and manage the material risks to the FMI
An FMI that establishes a link with one or more FMIs should identify, monitor, and manage link-related risks.
An FMI should be efficient and effective in meeting the requirements of its participants and the markets it serves.
An FMI should use, or at a minimum accommodate, relevant internationally accepted communication procedures and standards in order to facilitate efficient payment, clearing, settlement, and recording.
An FMI should have clear and comprehensive rules and procedures and should provide sufficient information to enable participants to have an accurate understanding of the risks, fees, and other material costs they incur by participating in the FMI. All relevant rules and key procedures should be publicly disclosed.
A trade repository should provide timely and accurate data to relevant authorities and the public in line with their respective needs.
Federal Aviation Administration (FAA), DOT.
Final rule.
We are superseding Airworthiness Directive (AD) 76–06–09 for certain Piper Aircraft, Inc. Model PA–31P airplanes. AD 76–06–09 required repetitive inspection of certain exhaust system parts with replacement of parts mating with the turbocharger, as necessary, and allowed installation of a certain tailpipe v-band coupling as terminating action. This new AD requires the use of new service information and expands the scope of the inspections of the turbocharger exhaust system. This AD was prompted by reports of exhaust system failures, new service information, and the tailpipe v-band coupling used for terminating action is obsolete. We are issuing this AD to correct the unsafe condition on these products.
This AD is effective December 18, 2014.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of December 18, 2014.
The Director of the Federal Register approved the incorporation by reference of certain other publications listed in this AD as of July 17, 2013 (78 FR 35110, June 12, 2013).
For service information identified in this AD, contact Piper Aircraft, Inc., 2926 Piper Drive, Vero Beach, Florida 32960; telephone: (772) 567–4361; fax: (772) 978–6573; Internet:
You may examine the AD docket on the Internet at
Gary Wechsler, Aerospace Engineer, Atlanta Aircraft Certification Office, FAA, 1701 Columbia Avenue, College Park, Georgia 30337; telephone: (404) 474–5575; fax: (404) 474–5606; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 76–06–09, Amendment 39–3325 (43 FR 50417, October 30, 1978), (“AD 76–06–09”). AD 76–06–09 applied to certain Piper Aircraft, Inc. Model PA–31P airplanes. The NPRM published in the
We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM (79 FR 38806, July 9, 2014) or on the determination of the cost to the public.
We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM (79 FR 38806, July 9, 2014) for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 38806, July 9, 2014).
We estimate that this AD affects 85 airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
We have no way of determining how much damage may be found on each airplane during the inspection. The scope of damage on the exhaust system could vary from airplane to airplane due to the manner and environments the airplane may operate. We estimate the following costs to do any necessary modification, installation, and/or replacement that would be required based on the results of the inspection. We have no way of determining what damage may be found or the number of airplanes that might need the modification, installation, and/or replacement:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective December 18, 2014.
This AD supersedes AD 76–06–09, Amendment 39–3325 (43 FR 50417, October 30, 1978).
This AD applies to Piper Aircraft, Inc. Model PA–31P airplanes, serial numbers 31P–1 through 31P–80 and 31P–7300110 through 31P–7730012, that are certificated in any category.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 78, Engine Exhaust.
This AD was prompted by reports of exhaust system failures, new service information issued by the manufacturer, and the tailpipe v-band coupling used for terminating action is obsolete. We are issuing this AD to prevent the possibility of an in-flight powerplant fire due to an exhaust system failure.
Comply with this AD within the compliance times specified, unless already done.
(1) Within the next 60 hours time-in-service (TIS) after December 18, 2014(the effective date of this AD) or within the next 6 months after December 18, 2014 (the effective date of this AD), whichever occurs first, and repetitively thereafter at intervals not to exceed 60 hours TIS or 6 months, whichever occurs first, inspect the parts as specified in table 1 of paragraph (g)(1) of this AD, if installed.
(2) If any damage is found in any inspection required in paragraph (g)(1) of this AD, before further flight, do the corrective actions, as applicable, in paragraphs (g)(2)(i) through (g)(2)(iv).
(i) Replace Piper v-band couplings exhibiting cracks and/or exhaust leak stains with airworthy parts following Piper Aircraft, Inc. Mandatory Service Bulletin No. 644E, dated May 9, 2012. Replace Lycoming v-band couplings exhibiting cracks and/or exhaust leak stains with airworthy parts following Lycoming Service Instruction No. 1238B, Revision B, dated January 6, 2010.
Note to paragraphs (g)(2)(i) and (h)(2)(iii): During replacement of v-band couplings, we recommend not opening the v-band coupling more than the MINIMUM diameter necessary to clear coupled flanges. It is recommended to replace any locknuts and/or mating couplings with airworthy parts when locknuts do not exhibit a prevailing torque when installed.
(ii) Replace Lycoming exhaust system parts exhibiting bulges, cracks, and/or exhaust leak stains with airworthy parts following Lycoming Service Instruction No. 1320, dated March 7, 1975; or Textron Lycoming Service Instruction No. 1391, dated October 5, 1979, as applicable.
(iii) Replace Piper tail pipe assembly parts exhibiting bulges, cracks, and/or exhaust leak stains with airworthy parts following Piper Aircraft, Inc. Mandatory Service Bulletin No. 644E, dated May 9, 2012.
(iv) Replace Piper isolators and brackets exhibiting cracks, looseness and/or distortion following Piper Aircraft Corporation Service Bulletin No. 462A, dated November 3, 1975; and Piper Aircraft, Inc. Mandatory Service Bulletin No. 492A, dated May 29, 2012.
(1) Within the next 100 hours TIS after December 18, 2014 (the effective date of this AD) or within the next 12 months after December 18, 2014 (the effective date of this AD), whichever occurs first, review the airplane maintenance records to positively identify whether the modifications described in paragraphs (h)(1)(i) through (h)(1)(iii) of this AD have been done.
(i) Exhaust pipe slip joint modification following Piper Aircraft, Inc. Mandatory Service Bulletin No. 492A, dated May 29, 2012; and Textron Lycoming Mandatory Service Bulletin No. 393C, dated November 26, 1976.
(ii) Installation of bracket and clamp assembly following Piper Kit No. 760–974 as specified in Piper Aircraft, Inc. Mandatory Service Bulletin No. 492A, dated May 29, 2012; or Piper Aircraft, Inc. Service Bulletin 462A, dated November 3, 1975.
(iii) Replacement of Piper v-band coupling, part number 556–053, with Piper v-band coupling, part number 557–369, following Piper Aircraft, Inc. Mandatory Service Bulletin No. 644E, dated May 9, 2012.
(2) If you cannot positively identify that the modifications described in paragraphs (h)(1)(i) through (h)(1)(iii) of this AD have been done, before further flight, you must do the modifications described in paragraphs (h)(2)(i) through (h)(2)(iii), as applicable.
(i) Exhaust pipe slip joint modification following Piper Aircraft, Inc. Mandatory Service Bulletin No. 492A, dated May 29, 2012, and Textron Lycoming Mandatory Service Bulletin SB 393C, dated November 26, 1976.
(ii) Installation of bracket and clamp assembly following Piper Kit No. 760–974 as specified in Piper Aircraft, Inc. Mandatory Service Bulletin No. 492A, dated May 29, 2012; or Piper Aircraft Corporation Service Bulletin 462A, dated November 3, 1975.
(iii) Replacement of Piper v-band coupling, part number 556–053, with Piper v-band coupling, part number 557–369, following Piper Aircraft, Inc. Mandatory Service Bulletin No. 644E, dated May 9, 2012.
(1) The Manager, Atlanta Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in the Related Information, paragraph (j)(1) of this AD.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Gary Wechsler, Aerospace Engineer, Atlanta ACO, FAA, 1701 Columbia Avenue, College Park, Georgia 30337; telephone: (404) 474–5575; fax: (404) 474–5606; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(3) The following service information was approved for IBR on December 18, 2014.
(i) Piper Aircraft Corporation Service Bulletin No. 462A, dated November 3, 1975.
(ii) Piper Aircraft, Inc. Mandatory Service Bulletin No. 492A, dated May 29, 2012.
(iii) Textron Lycoming Mandatory Service Bulletin SB 393C, dated November 26, 1976.
(4) The following service information was approved for IBR on July 17, 2013 (78 FR 35110, June 12, 2013).
(i) Piper Aircraft, Inc. Mandatory Service Bulletin No. 644E, dated May 9, 2012.
(ii) Lycoming Service Instruction No. 1238B, Revision B, dated January 6, 2010.
(iii) Lycoming Service Instruction No. 1320, dated March 7, 1975.
(iv) Textron Lycoming Service Instruction No. 1391, dated October 5, 1979.
(5) For the service information identified in this AD, contact Piper Aircraft, Inc., 2926 Piper Drive, Vero Beach, Florida 32960; telephone: (772) 567–4361; fax: (772) 978–6573; Internet:
(6) You may review copies of the referenced service information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329–4148.
(7) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are superseding Airworthiness Directive (AD) 2012–26–16 for all PILATUS AIRCRAFT LTD. Models PC–12, PC–12/45, PC–12/47, and PC–12/47E airplanes. This AD results from mandatory continuing airworthiness information (MCAI) issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as a need to incorporate new revisions into the Limitations section, Chapter 4, of the FAA-approved maintenance program (e.g., maintenance manual). We are issuing this AD to require actions to address the unsafe condition on these products.
This AD is effective December 18, 2014.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in the AD as of December 18, 2014.
You may examine the AD docket on the Internet at
For service information identified in this AD, contact PILATUS AIRCRAFT LTD., Customer Service Manager, CH–6371 STANS, Switzerland; telephone: +41 (0) 41 619 33 33; fax: +41 (0) 41 619 73 11; Internet:
Doug Rudolph, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329–4059; fax: (816) 329–4090; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to add an AD that would apply to all PILATUS AIRCRAFT LTD. Models PC–12, PC–12/45, PC–12/47, and PC–12/47E airplanes. That NPRM was published in the
Since we issued AD 2012–26–16, Amendment 39–17311 (78 FR 11572, February 19, 2013), PILATUS AIRCRAFT LTD. has issued revisions to the Limitations section of the airplane maintenance manual to include repetitive inspections of the inboard flap drive arms for cracks.
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued AD No. 2014–0170, dated July 17, 2014 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
The maintenance instructions and airworthiness limitations applicable to the Structure and Components of PC–12 aeroplanes are specified in the Aircraft Maintenance Manual (AMM) under Chapter 4, Airworthiness Limitation Section (ALS).
The instructions contained in the ALS document have been identified as mandatory actions for continued airworthiness and failure to comply with these instructions and limitations could potentially lead to an unsafe condition.
Pilatus Aircraft Ltd. recently issued Pilatus PC–12 AMM report 02049 issue 28 for PC–12, PC–12/45 and PC–12/47 aeroplanes and PC–12 AMM report 02300 issue 11 for PC–12/47E aeroplanes to incorporate new repetitive inspection intervals of the inboard flap drive arms because of the detection of cracked parts.
For the reason described above, this AD retains the requirements of EASA AD 2013–0031, which is superseded, and requires implementation of the new maintenance requirements and/or airworthiness limitations.
We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the proposal and the FAA's response to each comment.
Johan Kruger, Pilatus Aircraft Ltd., requested that we remove the actions retained from AD 2012–26–16, paragraphs (f)(1) and (f)(2) of the proposed AD from the final rule AD action. These actions were originally in AD 2009–14–13, Amendment 39–15963 (74 FR 34213, July 15, 2009), which was superseded by AD 2012–26–16.
Johan Kruger stated that the need to retain the actions previously required in AD 2012–26–16, paragraphs (f)(1) and (f)(2) of the proposed AD, no longer exists for the following reasons:
• In AD 2012–26–16, the initial compliance time for replacing the nose landing gear (NLG) torque tubes part number (P/N) 532.50.12.047 on Models PC–12 and PC–12/45 airplanes is within the next 100 hours time-in-service (TIS) after August 19, 2009 (the effective date retained from AD 2009–14–13) or 1 year after August 19, 2009, whichever occurs first. Compliance with this requirement should have been completed by September 20, 2010. AD 2012–26–16 also prohibits installing any NLG torque tube P/N 532.50.12.047 as of March 26, 2013 (the effective date retained from AD 2012–26–16).
• Even if P/N 532.50.12.047 had not been replaced as required in AD 2012–26–16, the life limit for P/N 532.50.12.047 in the airworthiness limitations section (ALS) of the airplane maintenance manual (AMM) referenced in the proposed AD is deemed adequate to address the potential unsafe condition.
• Since August 19, 2009, the effective date of AD 2009–14–13, Pilatus has not provided any P/N 532.50.12.047 as spares to any owners/operators in the United States. Pilatus is implying that
Johan Kruger clarified that the unsafe condition caused by NLG torque tube P/N 532.50.12.047 that was addressed in AD 2012–26–16, which was a carryover from AD 2009–14–13, has sufficiently been addressed and is now covered by the ALS of the AMM that is referenced in the proposed AD, which is unchanged from AD 2012–26–16.
We agree with the commenter. We have changed the final rule AD action based on this comment and have removed paragraphs (f)(1) and (f)(2) as presented in the proposed AD from this final rule AD action. Any airplane that has not operated since the torque tube requirement was initiated through AD 2009–14–13 may apply for an alternative method of compliance.
Johan Kruger, Pilatus Aircraft Ltd., and Gerard Terpstra requested that the effective date imposed in paragraph (f)(3) of the proposed AD be removed.
The commenters stated that it is out of the ordinary to have a compliance effective date imposed in a proposed AD. The commenters also pointed out that the effective date is before the comment close date.
We agree with the commenters that compliance effective dates are not normally put in a proposed AD. The September 22, 2014, effective date in paragraph (f)(3) of the proposed AD was a mistake. There will be no enforcement for that date in the final rule AD action and comments were still allowed through the comment close date of October 6, 2014, before final rule action was taken.
We changed the final rule AD action based on these comments.
Gerard Terpstra requested that the proposed AD be withdrawn because compliance with the new airworthiness limitations is already mandatory under federal regulations.
Gerard Terpstra stated that Title 14 of the Code of Federal Regulations (CFR), part 23, Appendix G, makes the requirements in the ALS of the AMM mandatory and 14 CFR 91.403 additionally prohibits the operation of an airplane unless the requirements of the ALS of the AMM are complied with. Therefore, 14 CFR 39.5 cannot be the basis for issuing the proposed AD because no unsafe condition exists.
Gerard Terpstra also stated that by using 14 CFR part 39 here the FAA has in fact induced an unintended consequence of allowing an operator to delay the implementation of the new ALS requirements. For example, the FAA publishes an AD periodically to require compliance with the then “current” version of the ALS of the Pilatus PC–12 AMM, most recently with AD 2012–26–16, which became effective on March 26, 2013. Pilatus Aircraft Ltd. subsequently revised the ALS of the AMM by publishing two temporary revisions on March 13, 2014. Gerard Terpstra estimated the compliance date for the final rule AD action to be around the first week of November 2014 (if the FAA observes the 45-day comment period and the 35 days for complying with the AD after it becomes effective). Between the time that Pilatus Aircraft Ltd. published their temporary revision and the time the proposed AD becomes effective as a final rule AD action is approximately six months, thereby delaying compliance with the ALS by around six months.
Gerard Terpstra stated his understanding of the desire and requirement to have regulations harmonized between different countries and that is what is being done here. EASA issues an AD and the FAA follows suit and issues an AD. But in this instance the proposed AD is not required as the proper and appropriate Federal regulations are already in place to ensure that the ALS of the AMM are complied with.
We don't agree with the commenter. Based on guidance from the FAA's Office of the Chief Counsel (AGC), the definition of the word “current” is the ALS of the AMM that was delivered with the original airworthiness (A/W) certificate of each airplane. The only way the FAA can enforce the use of a newer version of the ALS to the AMM on the entire existing fleet is through 14 CFR part 39 AD action.
We agree that the new ALS to the AMM is binding for a new airplane upon the issuance of the A/W certificate or existing airplanes that have the requirement as part of their operational specifications (e.g., 14 CFR part 135 operations), but not for the entire existing fleet (e.g., 14 CFR part 91 operations). EASA is in agreement with the FAA and understands that the only way to require the most recent revision to the ALS section for existing fleets in either state of registry system is through AD action.
We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously and minor editorial changes. We have determined that these changes:
• Are consistent with the intent that was proposed in the NPRM (79 FR 48701, August 18, 2014) for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 48701, August 18, 2014).
We also determined that these changes will not increase the economic burden on any operator or increase the scope of the AD.
We estimate that this AD will affect 770 products of U.S. registry. We also estimate that it will take about 16.5 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $300 per product. Based on these figures, we estimate the cost of this AD on U.S. operators to be $1,310,925, or $1,702.50 per product. This breaks down as follows:
• New inspections, etc. through incorporating maintenance manual limitations: 3.5 work-hours with parts about $300 for a fleet cost of $460,075, or $597.50 per product.
• Wing main spar fastener holes inspection: 12 work-hours with no parts cost for fleet cost of $785,400 or $1,020 per product.
• Inboard flap drive arm inspection: 1 work-hour with no parts cost for fleet cost of $65,450 or $85 per product.
In addition, we estimate that any necessary corrective actions (on-condition costs) that must be taken based on the above inspections, etc. will take about 16 work-hours and require parts costing approximately $10,000 for a cost of $11,360 per product. We have no way of determining the number of products that may need these necessary corrective actions. This breaks down as follows:
• Replacements based on damaged parts or reduced life limits as a result of the new maintenance manual limitations: 6 work-hours with parts about $4,000 for a cost of $4,510 per product.
• Repairs to the wing spar as a result of the wing main spar fastener holes inspection: 7 work-hours with parts about $5,000 for a cost of $5,595 per product.
• Replacement of the inboard flap drive arm as a result of the inboard flap drive arm inspection: 3 work-hours with parts about $1,000 for a cost of $1,255.
The only costs that will be imposed by this AD over that already required by AD 2012–26–16 is the inboard flap arm inspection and replacement as necessary and the addition of 92 airplanes from 678 airplanes to 770 airplanes.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
You may examine the AD docket on the Internet at
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) becomes effective December 18, 2014.
This AD supersedes AD 2012–26–16, Amendment 39–17311 (78 FR 11572, February 19, 2013).
This AD applies to PILATUS AIRCRAFT LTD. Models PC–12, PC–12/45, PC–12/47, and PC–12/47E airplanes, all manufacturer serial numbers (MSNs), certificated in any category.
Air Transport Association of America (ATA) Code 5: Time Limits.
This AD was prompted by mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as a need to incorporate new revisions into the Limitations section, Chapter 4, of the FAA-approved maintenance program (e.g., maintenance manual). The limitations were revised to include repetitive inspections of the inboard flap drive arms for crack(s). These actions are required to ensure the continued operational safety of the affected airplanes.
Unless already done, do the actions in paragraphs (f)(1) through (f)(5) of this AD:
(1) Before further flight after December 18, 2014 (the effective date of this AD), insert Data module code 12–A–04–00–00–00A–000A–A, “STRUCTURAL, COMPONENT AND MISCELLANEOUS—AIRWORTHINESS LIMITATIONS,” dated March 13, 2014, of the Pilatus Model type—PC–12, PC–12/45, PC–12/47, Aircraft Maintenance Manual (AMM), Document No. 02049, 12–A–AM–00–00–00–I, revision 28, dated May 31, 2014, for Models PC–12, PC–12/45, PC–12/47, and Data module code 12–B–04–00–00–00A–000A–A, “STRUCTURAL AND COMPONENT LIMITATIONS—AIRWORTHINESS LIMITATIONS,” dated March 13, 2014, of the Pilatus Model type—PC–12/47E MSN–1001–UP, Aircraft Maintenance Manual (AMM), Document No. 02300, 12- B–AM–00–00–00–I, revision 11, dated May 31, 2014, for Model PC–12/47E, into the Limitations section of the FAA-approved maintenance program (e.g., maintenance manual). These limitations section revisions do the following:
(i) Establish an inspection of the inboard flap drive arms,
(ii) Specify replacement of components before or upon reaching the applicable life limit, and
(iii) Specify accomplishment of all applicable maintenance tasks within certain thresholds and intervals.
(2) Only authorized Pilatus Service Centers can do the Supplemental Structural Inspection Document (SSID) as required by the documents in paragraph (f)(1) of this AD because deviations from the type design in critical locations could make the airplane ineligible for this life extension.
(3) If no compliance time is specified in the documents listed in paragraph (f)(1) of this AD when doing any corrective actions where discrepancies are found as required in paragraph (f)(1)(iii) of this AD, do these corrective actions before further flight after doing the applicable maintenance task.
(4) During the accomplishment of the actions required in paragraphs (f)(1)(i), (f)(1)(ii), and (f)(1)(iii) of this AD, if a discrepancy is found that is not identified in the documents listed in paragraph (f)(1) of this AD, before further flight after finding the discrepancy, contact PILATUS AIRCRAFT LTD. at the address specified in paragraph (i) of this AD for a repair scheme and incorporate that repair scheme.
(5) Within the next 3 months after December 18, 2014 (the effective date of this AD) or within the next 150 hours TIS after December 18, 2014 (the effective date of this AD), whichever occurs first, inspect the inboard flap drive arms for cracks and take all necessary corrective actions.
The following provisions also apply to this AD:
(1)
(i) Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector (PI) in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.
(ii) AMOCs approved for AD 2012–26–16, Amendment 39–17311 (77 FR 11572, February 19, 2013) are not approved as AMOCs for this AD.
(2)
Special flight permits are prohibited.
Refer to MCAI European Aviation Safety Agency (EASA) AD No. 2014–0170, dated July 17, 2014, for related information. The MCAI can be found in the AD docket on the Internet at:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) Data module code 12–A–04–00–00–00A–000A–A, “STRUCTURAL, COMPONENT AND MISCELLANEOUS—AIRWORTHINESS LIMITATIONS,” dated March 13, 2014, of the Pilatus Model type—PC–12, PC–12/45, PC–12/47, Aircraft Maintenance Manual (AMM), Document No. 02049, 12–A–AM–00–00–00–I, revision 28, dated May 31, 2014.
(ii) Data module code 12–B–04–00–00–00A–000A–A, “STRUCTURAL AND COMPONENT LIMITATIONS—AIRWORTHINESS LIMITATIONS,” dated March 13, 2014, of the Pilatus Model type—PC–12/47E MSN–1001–UP, Aircraft Maintenance Manual (AMM), Document No. 02300, 12- B–AM–00–00–00–I, revision 11, dated May 31, 2014.
Data module code 12–A–04–00–00–00A–000A–A, “STRUCTURAL, COMPONENT AND MISCELLANEOUS—AIRWORTHINESS LIMITATIONS,” dated March 13, 2014, of the Pilatus Model type—PC–12, PC–12/45, PC–12/47, Aircraft Maintenance Manual (AMM), Document No. 02049, 12–A–AM–00–00–00–I, revision 28, dated May 31, 2014; and Data module code 12–B–04–00–00–00A–000A–A, “STRUCTURAL AND COMPONENT LIMITATIONS—AIRWORTHINESS LIMITATIONS,” dated March 13, 2014, of the Pilatus Model type—PC–12/47E MSN–1001–UP, Aircraft Maintenance Manual (AMM), Document No. 02300, 12- B–AM–00–00–00–I, revision 11, dated May 31, 2014, were issued as complete updates to the AMM Airworthiness Limitations sections.
(3) For Pilatus Aircraft LTD. service information identified in this AD, contact PILATUS AIRCRAFT LTD., Customer Service Manager, CH–6371 STANS, Switzerland; telephone: +41 (0) 41 619 33 33; fax: +41 (0) 41 619 73 11; Internet:
(4) You may view this service information at FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329–4148.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration, DOT.
Notice of policy.
This document notifies the public of the Federal Aviation Administration's policy regarding enforcement of the pilot pairing requirement in the “Part 121 Pilot Age Limit” final rule. Currently, while the International Civil Aviation Organization (ICAO) standards allow a person between the age of 60 and 65 to serve as pilot in command (PIC) of an airplane with two or more pilots, in international commercial air transport operations, the PIC must be paired with a pilot younger than 60 years of age. Parts 61 and 121 of title 14, of the Code of Federal Regulations contain similar limitations. However, a recent amendment to the ICAO standards would remove this pilot pairing requirement. Instead, all pilots serving on airplanes in international commercial air transport operations with more than one pilot may serve beyond 60 years of age (until age 65) without being paired with a pilot under 60 years of age. This ICAO amendment triggers the sunset of the statutory authority that provides the basis for the crew pairing limitations in title 14.
Effective November 13, 2014. If implementation by the International Civil Aviation Organization of Amendment 172 to Annex 1 is delayed, the FAA will publish notification of the date changes.
For technical questions concerning this document, contact Nancy Lauck Claussen, email:
On December 13, 2007, the Fair Treatment of Experienced Pilots Act (Pub. L. 110–135) amended title 49 of the United States Code by adding section 44729. Section 44729(a) raised the age limit for pilots serving in operations under part 121
Section 44729(c) specified a pilot pairing limitation for PICs serving on international flights. Specifically, section 44729(c)(1) provides, “A pilot who has attained 60 years of age may serve as pilot-in-command in covered operations between the United States and another country only if there is another pilot in the flight deck crew who has not yet attained 60 years of age.” The pilot pairing requirement in section 44729(c)(1) is consistent with the pilot pairing standard in ICAO Annex 1 (Personnel Licensing), Chapter 2 (Licenses and Ratings for Pilots), Standard 2.1.10.
The crew pairing requirement in section 44729(c)(1) will sunset in accordance with section 44729(c)(2), on the date that ICAO removes the pilot pairing limitation in Standard 2.1.10. Section 44729(c)(2) states, “Paragraph
During a meeting of the ICAO Council on March 3, 2014, Council members adopted Amendment 172 to Annex 1, Personnel Licensing. The amendment removes the requirement in Standard 2.1.10 to pair a pilot in command over age 60 with a pilot under age 60. Without the pairing requirement, all pilots on multi-pilot crews serving in international air transport commercial operations may continue to serve as long as they have not reached 65 years of age.
On July 15, 2009, the Federal Aviation Administration (FAA) published the “Part 121 Pilot Age Limit” final rule (74 FR 34229) to conform FAA regulations to the statutory requirements in the Fair Treatment for Experienced Pilots Act (codified at 49 U.S.C. 44729). Based on the statutory authority in 49 U.S.C. 44729, the 2009 final rule raised the pilot age limitation from 60 to 65 and added the pilot pairing requirement for pilots conducting part 121 operations and other multi-pilot operations between or over the territory of more than one country using U.S. registered airplanes.
In the final rule preamble, the agency stated that it believed that the Fair Treatment for Experienced Pilots Act intended to harmonize FAA regulations with the ICAO standard pertaining to pilot age limitations and pilot pairing requirements, which would encompass international operations in addition to the part 121 operations identified by the Act.
As discussed previously, 49 U.S.C. 44729(c)(2) states that the pilot pairing requirement in 49 U.S.C. 44729(c)(1) ceases to be effective when ICAO amends its standard to remove the pilot pairing limitation. Once the pilot pairing limitation of 49 U.S.C. 44729(c)(1) ceases to be effective, the statutory basis for pilot pairing in §§ 121.383(d)(2), 121.383(e)(2), 61.3(j)(2) and 61.77(g) of title 14 of the Code of Federal Regulations will no longer exist and those regulations will be contrary to 49 U.S.C. 44729. For this reason, beginning on the date the ICAO amendment is implemented, the FAA will no longer enforce the crew pairing requirements contained in14 CFR 121.383(d)(2), 121.383(e)(2), 61.3(j)(2) and 61.77(g).
The FAA has initiated a rulemaking to conform applicable relevant regulations to the statute and anticipates publication of a final rule in 2015.
National Aeronautics and Space Administration.
Final rule.
NASA is revising the NASA Grant & Cooperative Agreement Handbook to clarify that NASA does not pay profit or fee on Federal Financial Assistance awards, i.e. grants and cooperative agreements, to non-profit organizations. This rule makes changes to NASA regulations to reflect that revision.
Effective December 15, 2014.
William Roets, NASA Office of Procurement, Contract Management Division, Suite 5K34, 202–358–4483,
NASA published a proposed rule for Profit and Fee under Financial Assistance Awards in the
Historically, NASA has discouraged the payment of profit or fee under its Federal Financial Assistance awards because payment in excess of costs is inconsistent with the intent of grants and cooperative agreements which provide funding in the form of financial assistance to recipients for their performance of a public purpose. For commercial firms, payment of profit or fee is specifically prohibited under NASA grants and cooperative agreements (See NASA Grant and Cooperative Handbook, Subpart 1274.204). Because this prohibition does not include non-profit organizations, NASA's policy has been misinterpreted and inconsistent application has occurred.
Therefore, this final rule extends the prohibition on the payment of profit or fee to all recipients of NASA grants and cooperative agreements, alleviating the misinterpretation and inconsistent application of the policy.
Based on a review of the public comments discussed below, NASA has concluded that no change to the second proposed rule is necessary. NASA received comments from three respondents. New comments, not already addressed in response to the first proposed rule, are discussed below. Comments that were received in response to the first proposed rule were addressed in the second proposed rule at 79 FR 10346, February 25, 2014.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
NASA certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule does not impose any additional requirements on small entities and currently less than 1 percent of recipients of NASA grants and cooperative agreements receive profit or management fees.
The Paper Reduction Act (Pub. L. 104–13) is not applicable because the prohibition on payment of profit and management fees by NASA does not require the submission of any information by recipients that requires the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.
Colleges and universities, Business and Industry, Grant programs, Grants administration, Cooperative agreements, State and local governments, Non-profit organizations, Commercial firms, Recipients.
Accordingly, 14 CFR Part 1260 is amended as follows:
42 U.S.C. 2473(c)(1), Pub. L. 97–258, 96 Stat. 1003 (31 U.S.C. 6301, et seq.), and OMB Circular A–110.
(b) * * *
(2) Payment of fee or profit is consistent with an activity whose principal purpose is the acquisition of goods and services for the direct benefit or use of the United States Government, rather than an activity whose principal purpose is assistance. Therefore, the grants officer shall use a procurement contract, rather than assistance instrument, in all cases where fee or profit is to be paid to the recipient of the instrument or the instrument is to be used to carry out a program where fee or profit is necessary to achieving program objectives. Grants and cooperative agreements shall not provide for the payment of fee or profit to the recipient.
(b) * * *
(1) * * *
(iv) Payment of fee or profit is consistent with an activity whose principal purpose is the acquisition of goods and services for the direct benefit or use of the United States Government, rather than an activity whose principal purpose is assistance. Therefore, the grants officer shall use a procurement contract, rather than assistance instrument, in all cases where fee or profit is to be paid to the recipient of the instrument or the instrument is to be used to carry out a program where fee or profit is necessary to achieving program objectives. Grants and cooperative agreements shall not provide for the payment of fee or profit to the recipient.
(e) Payment of fee or profit is consistent with an activity whose principal purpose is the acquisition of goods and services for the direct benefit or use of the United States Government, rather than an activity whose principal purpose is assistance. Therefore, the grants officer shall use a procurement contract, rather than assistance instrument, in all cases where fee or profit is to be paid to the recipient of the instrument or the instrument is to be used to carry out a program where fee or profit is necessary to achieving program objectives. Grants and cooperative agreements shall not provide for the payment of fee or profit to the recipient.
Social Security Administration.
Final rule; correction.
This document corrects a misspelling in the regulatory language of our final rulemaking published in the
Effective December 9, 2014.
Cheryl A. Williams, Office of Medical Policy, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235–6401, (410) 965–1020. For information on eligibility or filing for benefits, call our national toll-free number, 1–800–772–1213, or TTY 1–800–325–0778, or visit our Internet site, Social Security Online, at
On October 10, 2014 we published a final rulemaking in the
In final rule FR Doc 2014–24114 published on October 10, 2014 at 79 FR 61221, in the regulatory language section, make the following correction:
Internal Revenue Service (IRS), Treasury.
Final regulations.
This document contains final regulations that provide guidance on the recovery of overpayments of arbitrage rebate on tax-exempt bonds and other tax-advantaged bonds. These final regulations provide the deadline for filing a claim for an arbitrage rebate overpayment and certain other rules. These final regulations affect issuers of tax-exempt and tax-advantaged bonds.
Timothy Jones at (202) 317–6980 (not a toll-free number).
On September 16, 2013, the IRS published a Notice of Proposed Rulemaking (REG–148812–11) in the
The final regulations amend the Income Tax Regulations (26 CFR part 1) on the arbitrage investment restrictions on tax-exempt bonds and other tax-advantaged bonds under section 148 of the Internal Revenue Code (Code). Section 1.148–3(i) of the existing Income Tax Regulations provides that an issuer may recover an overpayment of arbitrage rebate and similar payments on an issue of tax-exempt bonds if the issuer establishes to the satisfaction of the Commissioner that the overpayment occurred.
Rev. Proc. 2008–37 (2008–2 CB 137) provides procedures for filing claims for the refund of arbitrage rebate and similar payments and imposes a deadline for filing such claims. In particular, a claim for a refund must be filed no later than two years after the final arbitrage computation date for the issue from which the claim arose. A transition rule applies to issues with a final computation date on or before June 24, 2008. Like the Proposed Regulations, the final regulations include this two-year limitation on filing claims as well as the transition rule.
The final regulations also adopt the rule in the Proposed Regulations that the Commissioner may request additional information to support a claim, specify a date for a return of that information, and deny the claim if the information is not returned by the date specified in the Commissioner's request or, if the Commissioner grants the issuer an extension to provide the information, by the extension date. Under both the Proposed Regulations and final regulations, if the Commissioner denies a claim because the Commissioner asserts that it was filed after the two-year deadline or that the information requested by the Commissioner was not received by the date specified in the request for such additional information, the issuer may appeal the denial to the Office of Appeals. If the Office of Appeals concludes that the claim was timely filed or the requested information was timely submitted, as applicable, the case will be returned to the Commissioner for further consideration of the merits of the claim.
The final regulations amend the Proposed Regulations to take into account a comment received suggesting that the Proposed Regulations be revised to provide a minimum time period for issuers to respond to any request by the Commissioner for additional information. In response to this request, the final regulations revise the Proposed Regulations to provide that issuers will be given at least 21 calendar days to respond to a request for additional information. The 21 day period is consistent with the time period provided by the IRS in other instances for submitting additional information. See, for example, section 8.05 of Rev. Proc. 2014–1, 2014–1 IRB 1, 31 (providing taxpayers with 21 days to submit additional information requested by the IRS in connection with the evaluation of a letter ruling request).
Another commenter questioned the Commissioner's authority to impose the two-year limitation on filing of claims for recovery of an overpayment of arbitrage rebate. The commenter also expressed a concern that an issuer's right to proceed to court could expire while the issuer's claim awaits review by the Commissioner.
Treasury and the IRS believe that the Commissioner's authority to impose the two-year limitation arises from the broad grant of authority to prescribe regulations under section 148(i). In addition, an issuer's right to proceed to court cannot expire in the manner suggested by the commenter because sections 6532 and 7422 apply to the recovery of arbitrage rebate overpayments. Under section 7422, a claim for the recovery of an alleged arbitrage overpayment cannot be filed in any court until a claim for such amount has been filed with the Secretary. Under section 6532, a proceeding to recover an alleged overpayment of arbitrage generally may not begin before the expiration of six months from the date the claim required by section 7422 has been filed with the Secretary, nor after the expiration of two years from the date the taxpayer is notified of the claim denial. Thus, the final regulations adopt the two-year limitation without change.
Certain changes made by the final regulations to the procedures for processing arbitrage rebate overpayment claims are not reflected in Rev. Proc. 2008–37. As a result, the Treasury Department and the IRS intend to publish guidance updating Rev. Proc. 2008–37 to take into account changes made by the final regulations. Comments are requested on whether other changes should be made to the procedures as part of that guidance.
In accordance with section 7805(b)(1)(C) and Rev. Proc. 2008–37, § 1.148–3(i)(3)(i) of the final regulations applies to refund claims arising from an issue of bonds to which § 1.148–3(i) applies and for which the final
It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. The final regulations reaffirm or clarify filing deadlines previously published in other administrative guidance. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking that preceded these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.
The principal author of these regulations is Timothy Jones, Office of Associate Chief Counsel (Financial Institutions and Products), IRS. However, other personnel from the IRS and the Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 7805 * * *
Section 1.148–0 through 1.148–11 also issued under 26 U.S.C. 148(i). * * *
(c) * * *
(i) * * *
(3) Time and manner for requesting refund.
(k) [Reserved]
(l) Additional arbitrage guidance updates.
(1) [Reserved]
(2) [Reserved]
(3) [Reserved]
(4) Application.
(i) * * *
(3)
(ii) The Commissioner may request additional information to support a claim. The issuer must file the additional information by the date specified in the Commissioner's request, which date may be extended by the Commissioner if unusual circumstances warrant. An issuer will be given at least 21 calendar days to respond to a request for additional information.
(iii) A claim described in either paragraph (i)(3)(iii)(A) or (B) of this section that has been denied by the Commissioner may be appealed to the Office of Appeals under this paragraph (i)(3)(iii). Upon a determination in favor of the issuer, the Office of Appeals must return the undeveloped case to the Commissioner for further consideration of the substance of the claim.
(A) A claim is described in this paragraph (i)(3)(iii)(A) if the Commissioner asserts that the claim was filed after the filing deadline.
(B) A claim is described in this paragraph (i)(3)(iii)(B) if the Commissioner asserts that additional information to support the claim was not submitted within the time specified in the request for information or in any extension of such specified time period.
(k) [Reserved]
(l)
(1) [Reserved]
(2) [Reserved]
(3) [Reserved]
(4)
(ii) Section 1.148–3(i)(3)(ii) and (iii) apply to claims arising from an issue of bonds to which § 1.148–3(i) applies and for which the final computation date is after September 16, 2013.
Internal Revenue Service (IRS), Treasury.
Temporary and final regulations.
This document contains temporary and final regulations relating
Karen Keller, at (202) 317–5772 (not a toll free number).
This document amends regulations at 26 CFR Part 801 that implemented sections 1201 and 1204 of the Internal Revenue Service Restructuring and Reform Act of 1998, Public Law 105–206, 112 Stat. 685, 713 (1998) (the Act), and provided rules relating to the establishment of a performance management system.
The temporary regulation contained in this document relates to the Employee Satisfaction Measure, Section 801.5. When the existing regulations were promulgated in 1999, the employee satisfaction measure incorporated the features of an existing employee satisfaction survey, which measured and reported the satisfaction of employees in “pay and duty status” (non-seasonal employees) to first-level supervisors and up through the organization. Other surveys, such as OPM's Federal Employee Viewpoint Survey (FEVS), which did not exist in 1999 but are now administered government-wide, required reporting of employee satisfaction data to a higher level of agency leadership than first-level supervisors. Although the IRS began conducting the FEVS when it was created by OPM, the IRS modified its pre-existing survey to enable the continued reporting of data to first-level supervisors as required by the regulation. Currently, the IRS conducts both the FEVS and the survey that complies with Section 801.5. The administration of both surveys has resulted in an undue burden on employees and duplication of effort by the IRS. Accordingly, the temporary regulation eliminates the requirement to use the IRS' pre-existing survey and permits the reporting of employee satisfaction data from the FEVS to agency leadership, alleviating “survey fatigue” and the unnecessary expenditure of resources and promoting consistency between the IRS and other government agencies when reporting employee satisfaction information.
This regulation is published as a temporary regulation to immediately eliminate the unnecessary requirement for the IRS to administer a second employee satisfaction survey in addition to FEVS. This temporary regulation does not affect taxpayers or taxpayer rights. The temporary regulation only impacts the internal operations of the IRS by eliminating unnecessary burden and expenditure of limited resources.
It has been determined that as this is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563, a regulatory assessment is not required, and it has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this regulation. Because this regulation does not impose a collection of information on small entities, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses.
The principal author of these regulations is Karen F. Keller, Office of Associate Chief Counsel (General Legal Services). However, other personnel from the IRS participated in their development.
Federal employees, Organization and functions (Government agencies).
Accordingly, 26 CFR part 801 is amended as follows:
5 U.S.C. 9501 * * *
(a) The employee satisfaction numerical ratings to be given to a Business Operating Division (BOD) or equivalent office within the IRS will be determined on the basis of information gathered through various methods. For example, questionnaires, surveys, and other information gathering mechanisms may be employed to gather data regarding satisfaction. The information gathered will be used to measure, among other factors bearing upon employee satisfaction, the quality of supervision, and the adequacy of training and support services. All full and part-time permanent employees of a BOD or equivalent office who are in pay and duty status will have an opportunity to provide information regarding employee satisfaction under conditions that guarantee them confidentiality.
(b)
Coast Guard, DHS.
Notice of enforcement of regulation.
The Coast Guard will enforce the Hanohano Ocean Challenge special local regulations on January 24, 2015. This marine event occurs on the navigable waters of Mission Bay, in San Diego, California. This action is necessary to provide for safety of the participants, crew, spectators, safety vessels, and general users of the waterway. During the enforcement period, persons and vessels are prohibited from entering into, transiting through, or anchoring within this regulated area unless authorized by the Captain of the Port, or his designated representative.
The regulations for the marine event listed in 33 CFR 100.1101, Table 1, Item 16, will be enforced from 6:00 a.m. to 2:00 p.m. on January 24, 2015.
If you have questions on this notice, call or email Petty Officer Nick Bateman, Waterways Management, U.S. Coast Guard Sector San Diego, CA; telephone (619) 278–7656, email
The Coast Guard will enforce the special local regulations in Mission Bay for the Hanohano Ocean Challenge Nationals in 33 CFR 100.1101, Table 1, Item 16 from 6:00 a.m. to 2:00 p.m.
Under the provisions of 33 CFR 100.1101, persons and vessels are prohibited from entering into, transiting through, or anchoring within the regulated race course area during designated racing times unless authorized by the Captain of the Port, or his designated representative. Persons or vessels desiring to enter into or pass through the regulated area may request permission from the Captain of the Port or designated representative. If permission is granted, all persons and vessels shall comply with the instructions of the Captain of the Port or designated representative. Spectator vessels may safely transit outside the regulated area, but may not anchor, block, loiter, or impede the transit of participants or official patrol vessels. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in patrol notification and education of the marine event special local regulations.
This notice is issued under authority of 5 U.S.C. 552 (a) and 33 CFR 100.1101. In addition to this notice in the
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone in the navigable waters of Carquinez Strait near Martinez, CA in support of a cable repair operation. This temporary safety zone is established to ensure the safety of the mariners and vessels from the dangers associated with the cable repairs being done in Carquinez Strait. Unauthorized persons or vessels are prohibited from entering into, transiting through, or remaining in the safety zone without the permission of the Captain of the Port or a designated representative.
This rule is effective without actual notice from November 13, 2014 until 8:00 p.m. on December 5, 2014. For the purposes of enforcement, actual notice will be used from 6 a.m. on November 4, 2014, until November 13, 2014.
Documents mentioned in this preamble are part of docket USCG–2014–0950. To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Lieutenant Junior Grade Joshua Dykman, U.S. Coast Guard Sector San Francisco; telephone (415) 399–3585 or email at
The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that it would be impracticable to publish a notice of proposed rulemaking (NPRM) with respect to this rule because immediate action is necessary to protect the public from the dangers associated with the cable repair operation. The cable repairs in the Carquinez Strait are the result of a previous emergency anchorage and are an unforeseeable event that poses an immediate danger to mariners.
For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The legal basis for the proposed rule is 33 U.S.C 1231; 46 U.S.C Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05–1, 6.04–1, 6.04–6, 160.5; Public Law 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1, which collectively authorize the Coast Guard to establish safety zones.
On October 10, 2014, Coast Guard Sector San Francisco received notification that the Manson 71 Barge would be conducting cable repairs following an anchoring incident in Carquinez Strait. The cable repairs are necessary to ensure that power is not lost to the San Francisco Bay area in the future due to damage done to the cable during the anchoring incident. The safety zone is necessary to protect people, vessels, and other property from the hazards associated with the cable repair operations in Carquinez Strait.
The Coast Guard is establishing a temporary safety zone in navigable waters of the Carquinez Strait enclosed within the following points: 38°02′26″ N, 122°07′41″ W; 38°02′13″ N, 122°07′34″ W; 38°02′07″ N, 122°07′48″ W; and 38°02′15″ N, 122°08′03″ W (NAD83) during the cable repair operations following an anchoring incident in Carquinez Strait. Anchors will be placed at each of the coordinates and the Manson 71 Barge will be tied off in a four-point configuration. This will allow the barge to remain on top of the cable and move up and down to conduct all repairs. This rule is effective and enforceable from 6 a.m. on November 4, 2014 until 8 p.m. on December 5, 2014.
Unauthorized persons or vessels are prohibited from entering into, transiting through, or remaining in the safety zone without the permission of the Captain of the Port or a designated representative. The effect of the safety zones will be to restrict navigation in the vicinity of the Manson 71 Barge while the vessel is conducting a cable repair operation. Except for persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the restricted area. These regulations are needed to keep people, vessels, and other property safe by preventing interaction between the Manson 71 Barge and small craft during restricted maneuvering and to ensure safety of life on the navigable waters.
We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes and executive orders.
This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.
We expect the economic impact of this rule will not rise to the level of necessitating a full Regulatory Evaluation. The safety zones are limited in duration, and are limited to a narrowly tailored geographic area. In addition, although this rule restricts access to the waters encompassed by the safety zones, the effect of this rule will not be significant because the local waterway users will be notified via public Broadcast Notice to Mariners to ensure the safety zones will result in minimum impact. The entities most likely to be affected are waterfront facilities, commercial vessels, and pleasure craft engaged in recreational activities.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601–612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
This rule may affect owners and operators of waterfront facilities, commercial vessels, and pleasure craft engaged in recreational activities and sightseeing. These safety zones would not have a significant economic impact on a substantial number of small entities for the following reasons. These safety zones would be activated, and thus subject to enforcement, for a limited duration. When the safety zones are activated, vessel traffic may coordinate movements around the safety zones by contacting PATCOM on VHF channel 16. The maritime public will be advised in advance of these safety zones via Broadcast Notice to Mariners.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1–888–REG–FAIR (1–888–734–3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.
This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.
This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4370f), and have concluded this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone of limited size and duration. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2–1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, and Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR Part 165 as follows:
33 U.S.C. 1226, 1231; 46 U.S.C. Chapter 701; 50 U.S.C. 191, 195; 33 CFR 1.05–1(g), 6.04–1, 6.04–6, and 160.5; Pub. L. 107–295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(d)
(2) The safety zones are closed to all vessel traffic, except as may be permitted by the COTP or a designated representative.
(3) Vessel operators desiring to enter or operate within the safety zones must contact the COTP or a designated representative to obtain permission to do so. Vessel operators given permission to enter or operate in the safety zones must comply with all directions given to them by the COTP or a designated representative. Persons and vessels may request permission to enter the safety zones on VHF–16 or through the 24-hour Command Center at telephone (415) 399–3547.
Federal Communications Commission.
Final rule.
In this document, the Commission issued in response to a petition for rulemaking filed by WPXS, Inc. (“WPXS”), the licensee of WPXS(TV), channel 21, Mount Vernon, Illinois, requesting the substitution of channel 11 for channel 21 at Mount Vernon. WPXS filed comments reaffirming its interest in the proposed channel substitution and states that it will apply for the channel if allotted,
This rule is effective December 15, 2014.
Joyce Bernstein,
This is a synopsis of the Commission's Report and Order, MB Docket No. 143–139, adopted October 30, 2014, and released October 31, 2014. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY–A257, 445 12th Street SW., Washington, DC, 20554. This document will also be available via ECFS (
This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104–13. In addition, therefore, it does not contain any information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198,
The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional review Act,
Television.
Federal Communications Commission.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR Part 73 as follows:
47 U.S.C. 154, 303, 334, 336, and 339.
Defense Acquisition Regulations System, Department of Defense (DoD).
Final rule.
DoD is making technical amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) to provide needed editorial changes.
Effective November 13, 2014.
Mr. Manuel Quinones, Defense Acquisition Regulations System, OUSD(AT&L)DPAP(DARS), Room 3B941, 3060 Defense Pentagon, Washington, DC 20301–3060. Telephone 571–372–6088; facsimile 571–372–6094.
This final rule amends the DFARS as follows:
1. Directs contracting officers to additional procedures and guidance by adding references at 217.207 to DFARS PGI 217.207.
2. Corrects paragraph designation at 219.201.
Government procurement.
Therefore, 48 CFR parts 217 and 219 are amended as follows:
41 U.S.C. 1303 and 48 CFR chapter 1.
(c) In addition to the requirements at FAR 17.207(c), exercise an option only after determining that the contractor's record in the System for Award Management database is active and the contractor's Data Universal Numbering System (DUNS) number, Commercial and Government Entity (CAGE) code, name, and physical address are accurately reflected in the contract document. See PGI 217.207 for the requirement to perform cost or price analysis of spare parts prior to exercising any option for firm-fixed-price contracts containing spare parts.
Fish and Wildlife Service, Interior.
Final rule.
We, the U.S. Fish and Wildlife Service (Service), in accordance with the Endangered Species Act of 1973, as amended (Act), are amending the List of Endangered and Threatened Wildlife (List) by adding 20 species of corals: Boulder star coral (
This rule is effective November 13, 2014.
Douglas Krofta, Chief, Branch of Endangered Species Listing, U.S. Fish and Wildlife Service, MS–ES, 5275 Leesburg Pike, Falls Church, VA 22041–3803; 703–358–2171.
In accordance with the Act (16 U.S.C. 1531 et seq.) and Reorganization Plan No. 4 of 1970 (35 FR 15627; October 6, 1970), NMFS has jurisdiction over the marine and anadromous taxa identified in this rule. Under section 4(a)(2) of the Act, NMFS must decide whether a species under its jurisdiction should be classified as an endangered or threatened species. NMFS makes these determinations via its rulemaking process. We, the Service, are then responsible for publishing final rules to amend the List in title 50 of the Code of Federal Regulations (CFR) at 50 CFR 17.11(h).
On December 7, 2012, NMFS published a proposed rule (77 FR 73220) to list 66 petitioned coral species, 12 as endangered and 54 as threatened, and to reclassify from threatened to endangered two coral species (elkhorn coral (
On September 10, 2014, NMFS published a final rule (79 FR 53852) to list 20 of the 66 proposed coral species as threatened species. The listing of the 20 species was effective October 10, 2014. In that same rule, NMFS also determined that elkhorn coral and staghorn coral did not warrant reclassification from threatened to endangered. However, we revise the elkhorn coral and staghorn coral listings in this rule to make the information in the Historic Range column consistent with the other coral entries; the listing status of threatened remains unchanged for these two species.
In the September 10, 2014, final rule (79 FR 53852), NMFS addressed all public comments received in response to the proposed rule. By publishing this final rule, we are simply taking the necessary administrative step to codify these changes in the List in 50 CFR 17.11(h).
Because NMFS provided a public comment period on the proposed rules for these taxa, and because this action of the Service to amend the List in accordance with the determination by NMFS is nondiscretionary, the Service finds good cause that the notice and public comment procedures of 5 U.S.C. 553(b) are unnecessary for this action. We also find good cause under 5 U.S.C. 553(d)(3) to make this rule effective immediately. The NMFS rules extended protection under the Act to these species and listed them in 50 CFR parts 223 and 224; this rule is an administrative action to add the species to the List of Endangered and Threatened Wildlife at 50 CFR 17.11(h). The public would not be served by delaying the effective date of this rulemaking action.
We have determined that an environmental assessment, as defined under the authority of the National Environmental Policy Act of 1969, need not be prepared in connection with regulations adopted pursuant to section 4(a) of the Act. We outlined our reasons for this determination in the
Endangered and threatened species, Exports, Imports, Reporting and recordkeeping requirements, Transportation.
Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below:
16 U.S.C. 1361–1407; 1531–1544; 4201–4245, unless otherwise noted.
(h) * * *
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
NMFS issues regulations under authority of the Western and Central Pacific Fisheries Convention Implementation Act (WCPFC Implementation Act) to revise the 2014 limit on fishing effort by U.S. purse seine vessels in the U.S. exclusive economic zone (U.S. EEZ) and on the high seas between the latitudes of 20° N. and 20° S. in the area of application of the Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (Convention). The total limit for 2014 is revised from 2,588 fishing days to 1,828 fishing days. This action is necessary for the United States to implement provisions of a conservation and management measure (CMM) adopted by the Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (Commission) and to satisfy the obligations of the United States under the Convention, to which it is a Contracting Party.
This rule is effective December 15, 2014.
Copies of supporting documents prepared for this final rule, including the regulatory impact review (RIR) and the Supplemental Information Report prepared for National Environmental Policy Act (NEPA) purposes, as well as the proposed rule, are available via the Federal e-Rulemaking Portal, at
Tom Graham, NMFS PIRO, 808–725–5032.
On July 25, 2014, NMFS published a proposed rule in the
This final rule is issued under the authority of the WCPFC Implementation Act (16 U.S.C. 6901
This final rule implements for U.S. fishing vessels some of the purse seine-related provisions of the Commission's Conservation and Management Measure (CMM) 2013–01, “Conservation and Management Measure for Bigeye, Yellowfin and Skipjack Tuna in the Western and Central Pacific Ocean.” The preamble to the proposed rule includes detailed background information, including on the Convention and the Commission, the provisions of CMM 2013–01 being implemented in this rule, and the bases for the proposed regulations, which is not repeated here.
This final rule revises the existing limit on the number of fishing days that may be used by U.S. purse seine vessels in 2014 in an area called the Effort Limit Area for Purse Seine (ELAPS). The ELAPS includes all areas of the high seas and U.S. EEZ within the Convention Area between the latitudes of 20° North and 20° South (but not the U.S. territorial sea). The limit is revised from 2,588 fishing days to 1,828 fishing days.
Once NMFS determines during 2014 that, based on available information, the limit is expected to be reached by a specific future date, NMFS will issue a notice in the
NMFS received three sets of comments on the proposed rule and supporting documents. The comments are summarized below, followed by responses from NMFS.
These areas are highly regulated, as U.S. boats must be U.S.-built and have a fisheries endorsement to fish in these areas; and that is less than one third of the U.S. fleet. My boat is U.S.-built but cannot fish in U.S. waters. But instead of our government helping me to gain access, it just adds more unnecessary regulations.
There are countries that continue to add boats and to fish on fish aggregating devices even during the closure while not living up to their responsibilities that are already in place.
I propose to postpone implementing the limit until a long-term solution is agreed and implemented by all in the Commission, as this is not a permanent solution. These areas are not in danger from U.S. boats. However, the U.S. boats are the eyes and ears, and have in the past found and reported illegal, unreported, and unregulated fishing in the U.S. EEZ. The U.S. boats do not receive any reimbursement for time or
While areas continue to be closed off, we are only hurting the stocks as we are allowing the Pacific Island Parties to focus international fishing efforts into their exclusive economic zones for purely economic reasons, rather than focusing on efforts to truly conserve, by limiting vessels. Remember these are highly migratory species. I compare the focusing of effort to sunlight: Normally, it will not hurt you, but if you focus sunlight through a magnifying glass, it will burn; this is what is being done by driving effort into smaller areas.
Postpone this proposed rule, or better, cancel it, as these areas are already regulated by the United States. The problem can be addressed and solved on the international level rather than strangle-holding our fleet while others continue to add boats, skirt regulations, and worst of all, not even enforce what is already in place.
Support the U.S. fleet and the stock and push for vessel limits on all fleets, as the catch phrase “domestic fleet” is simply Asian boats that are flagged in the islands. Work with the U.S. fleet instead of against it; we are the highest regulated fleet in the world, and we are ahead of the curve, as we have already dropped our fishing efforts (numbers of boats) in the 1980s when the U.S. Tuna Treaty (Treaty on Fisheries between the Governments of Certain Pacific Island States and the Government of the United States of America, also known as the South Pacific Tuna Treaty, or SPTT) was signed, well ahead of other fleets that are continuing to add effort.
Let's be logical and work together and protect the stock and our food source.
The proposed reduction in allowable fishing days in the ELAPS from 2,588 to 1,828 would be a substantial loss of fishing opportunities for U.S. vessels at a time of great uncertainty regarding fishing access under the SPTT. The ATA understands that there may be little flexibility in implementing the Commission measure establishing a fishing day limit on the high seas, but we note that there is flexibility for the U.S. EEZs. Therefore, in combining the two areas as the ELAPS, a level higher than 1,828 fishing days is justified.
The ELAPS limits are not based on science relative to the conservation of the tuna stocks. The science provider to the Commission has not recommended, as a conservation measure, limits on catches of tunas on the high seas, or in any particular economic zones. This is an important point, because that truth provides the United States with more flexibility in the manner in which it regulates the U.S. fleet. For example, the United States could establish a larger number for allowable catches in the U.S. EEZ based on using certain past high years as base years. Given the variability in the availability of highly migratory stocks in different areas during different years, and the relevance of the fishing strategies that are employed in any given year, such an approach would not be unreasonable.
The ATA urges NMFS to develop such an alternative approach and provide for a larger ELAPS limit than 1,828 fishing days. We also believe that, if all fishing by purse seine vessels is prohibited in these remote island areas as a result of an expansion of the Pacific marine monuments, as is being contemplated by the Administration (an action strongly opposed by ATA), the consequent lost fishing opportunities should be compensated for by allowing more fishing on the same stocks elsewhere; that is, on the high seas. From a science or conservation point of view, there would be no detriment to the tuna stocks from such an approach.
This rule implements certain provisions of CMM 2013–01, which directs coastal members like the United States to “establish effort limits, or equivalent catch limits for purse seine fisheries within their EEZs that reflect the geographical distributions of skipjack, yellowfin, and bigeye tunas, and are consistent with the objectives for those species” (excerpt from paragraph 23 of CMM 2013–01). CMM 2013–01 further requires, “Those coastal States that have already notified limits to the Commission shall restrict purse seine effort and/or catch within their EEZs in accordance with those limits” (excerpt from paragraph 23 of CMM 2013–01). Because the United States has previously notified the Commission of its purse seine effort limits for the U.S. EEZ since the limits were first established in 2009 (in a final rule published August 4, 2009; 74 FR 38544), the United States is obligated to continue to apply the same limits for the U.S. EEZ. Thus, CMM 2013–01 does not change the applicable purse seine fishing effort limit for the U.S. EEZ, and for that reason NMFS does not agree that there is flexibility in the limit for the U.S. EEZ or that a limit for the ELAPS of more than 1,828 fishing days is justified in this rule to implement provisions of CMM 2013–01.
Finally, on September 25, 2014, President Obama issued Proclamation 9173 extending the boundaries of the Pacific Remote Islands Marine National Monument around Jarvis Island, Wake Island, and Johnston Atoll to the outer limit of the U.S. EEZ. Under the Proclamation, commercial fishing is prohibited in the expansion area. NMFS acknowledges that the prohibition of commercial fishing within the expansion area will limit the fishing grounds available to U.S. purse seine vessels; however, we note that the expansion area represents a small
No changes from the proposed rule have been made in this final rule.
The Administrator, Pacific Islands Region, NMFS, has determined that this final rule is consistent with the WCPFC Implementation Act and other applicable laws.
This final rule has been determined to be not significant for purposes of Executive Order 12866.
A FRFA was prepared. The FRFA incorporates the IRFA prepared for the proposed rule. The analysis in the IRFA is not repeated here in its entirety.
A description of the action, why it is being considered, and the legal basis for this action are contained in the preamble of the proposed rule and in the
NMFS did not receive any comments on the IRFA itself, but two sets of comments could pertain to small entities. See Comments 2 and 3 on the proposed rule, and NMFS' responses, above.
Small entities include “small businesses,” “small organizations,” and “small governmental jurisdictions.” The Small Business Administration (SBA) has established size standards for all major industry sectors in the United States, including commercial finfish harvesters (NAICS code 114111). A business primarily involved in finfish harvesting is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $20.5 million for all its affiliated operations worldwide.
This final rule will apply to owners and operators of U.S. purse seine vessels used for fishing in the Convention Area. The number of affected vessels is the number licensed under the Treaty on Fisheries between the Governments of Certain Pacific Island States and the Government of the United States of America (South Pacific Tuna Treaty, or SPTT). The current number of licensed vessels is 40, the maximum number of licenses available under the SPTT (excluding joint-venture licenses, of which there are five available under the SPTT, none of which have ever been applied for or issued).
Based on (limited) available financial information about the affected fishing vessels and the SBA's small entity size standards for commercial finfish harvesters, and using individual vessels as proxies for individual businesses, NMFS believes that all the affected fish harvesting businesses are small entities. As stated above, there are currently 40 purse seine vessels in the affected purse seine fishery. Neither gross receipts nor ex-vessel price information specific to the 40 vessels are available to NMFS. Average annual receipts for each of the 40 vessels during the last 3 years for which reasonably complete data are available (2010–2012) were estimated as follows: The vessel's reported retained catches of skipjack tuna, yellowfin tuna, and bigeye tuna in each year were each multiplied by an indicative Asia-Pacific regional cannery price for that species and year (developed by the Pacific Islands Forum Fisheries Agency and available at
The final rule will not establish any new reporting or recordkeeping requirements within the meaning of the Paperwork Reduction Act. The classes of small entities subject to the requirements and the types of professional skills necessary to fulfill each of the requirements are described in the IRFA.
There would be no disproportionate economic impacts between small and large entities operating purse seine vessels as a result of this final rule. Furthermore, there would be no disproportionate economic impacts based on vessel size, gear, or homeport.
In previous rulemakings to establish or revise U.S. purse seine fishing effort limits in the ELAPS in accordance with Commission decisions, NMFS considered a number of alternatives. The alternatives included different time scales for the limits (e.g., single-year versus multiple-year limits); whether separate limits or a combined limit would be established in the U.S. EEZ and high seas portions of the ELAPS; whether the limit(s) would be allocated to individual vessels; and different magnitudes of the limit(s).
The first category of alternatives, time scales, is not relevant here because the objective is to implement the required fishing effort limit for 2014 only.
The second category of alternatives—whether or not to break up the ELAPS limit into separate limits for the U.S. EEZ and the high seas portions of the ELAPS—would provide less operational flexibility for affected purse seine vessels, and thus be more constraining and costly than the proposed limit. It is rejected for that reason.
The third category of alternatives, allocating the limit among individual vessels, would likely alleviate any adverse impacts of a race-to-fish that might occur as a result of establishing the competitive fishing effort limits as in the proposed rule. As described in the IRFA, those potential impacts include lower prices for landed product, as well as risks to performance and safety stemming from fishing during sub-optimal times. Those impacts, however, are expected to be minor. Furthermore, developing the necessary allocation criteria and procedures would be a substantial and lengthy process that probably could not be completed in time to implement this limit for 2014. For these reasons, this alternative is rejected.
Regarding the fourth category of alternatives (the magnitude of the limits), NMFS considered, for the 2013 rule that established the 2013 ELAPS limit and existing 2014 ELAPS limit, both smaller and larger limits for the ELAPS. Smaller limits, being more constraining and costly to affected fishing businesses, are not considered further here. With respect to larger limits, in the 2013 rule, NMFS considered an alternative that would be based in part on the fleet's greatest annual level of fishing effort in the U.S. EEZ (on an average per-vessel basis, then expanded to a 40-vessel-equivalent) during the 1997–2010 time period. For this rule, NMFS considered an alternative using the same approach considered in the 2013 rule. Using that approach, the limit in the U.S. EEZ would be 1,655 fishing days, and when combined with the high seas limit of 1,270 fishing days, the total ELAPS limit would be 2,925 fishing days. Because
The alternative of taking no action at all, which would leave the existing 2014 ELAPS limit of 2,588 fishing days in place, is rejected because it would fail to accomplish the objective of the WCPFC Implementation Act or satisfy the obligations of the United States as a Contracting Party to the Convention.
Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a small entity compliance guide has been prepared. The guide will be sent to permit and license holders in the affected fisheries. The guide and this final rule will also be available at
Administrative practice and procedure, Fish, Fisheries, Fishing, Marine resources, Reporting and recordkeeping requirements, Treaties.
For the reasons set out in the preamble, 50 CFR part 300 is amended as follows:
16 U.S.C. 6901
(a) * * *
(1) For calendar year 2014 there is a limit of 1,828 fishing days.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; interim action; request for comments.
This temporary rule implements commercial and recreational fishery management measure changes for Gulf of Maine cod protection in response to a recent updated assessment of the status of this severely depleted stock. The measures of this interim rule are necessary to reduce fishing mortality on GOM cod and to provide additional stock and spawning protection. The intended effect of these interim measures are to decrease fishing year 2014 catch so that overfishing is reduced and protect the stock until more permanent measures can be developed by the New England Fishery Management Council (Council).
Effective November 13, 2014, until May 12, 2015. Comments must be received by December 13, 2014.
You may submit comments, identified by NOAA–NMFS–2014–0125, by any of the following methods:
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Copies of an environmental assessment (EA) prepared by the Greater Atlantic Regional Fisheries Office (GARFO) and Northeast Fisheries Science Center (Center) for this rulemaking are available from John K. Bullard, Regional Administrator, National Marine Fisheries Service, 55 Great Republic Drive, Gloucester, MA 01930. The EA is also accessible via the Internet at
Michael Ruccio, Fishery Policy Analyst, phone: 978–281–9104.
At the request of the Council, and in response to a recent updated assessment of Gulf of Maine (GOM) cod indicating that this stock is at a historically low abundance level, NMFS, on behalf of the Secretary of Commerce, is taking interim action to implement GOM cod fishing mortality reductions and other management measures designed to reduce overfishing, protect aggregations and spawning, and keep GOM cod on a rebuilding trajectory. These actions are being implemented as interim measures under the authority provided in section 305(c) of the Magnuson-Stevens Fishery
1. Time and area closures applicable to federally permitted vessels using commercial and recreational fishing gear capable of catching GOM cod;
2. A 200-lb (90.7-kg) GOM cod trip limit both the common pool and sector vessels;
3. Changes to commercial fishing declarations prohibiting sector vessels declaring into the GOM Broad Stock Area from fishing in another broad stock area on the same trip;
4. Prohibition on the possession of recreationally caught GOM cod (applies to entire GOM Broad Stock Area); and
5. Revocation of a previously authorized GOM exemption that allowed sector vessels declared into the gillnet fishery to use more gillnets.
This rule implements these measures for an initial 180 days, as authorized by section 305(c) of the Magnuson-Stevens Act. These measures may be extended, or modified, as needed, for an additional 186 days pursuant to section 305(c) of the Magnuson-Stevens Act. Any modification or extension will be published in the
The following areas are closed to federally permitted vessels using fishing gear (commercial and recreational, including party and charter) capable of catching GOM cod, which does not include “exempted gear” as defined in § 648.2, in the times and areas indicated in Figure 1, beginning on the date this rule is published in the
Three objectives were used in evaluating areas for interim closures: Reducing fishing mortality by reducing GOM cod commercial and recreational catch; protecting core areas where the remaining GOM cod stock is believed to be located; and protecting areas of likely cod spawning activities. These objectives were analyzed in the context of not closing down the entire GOM so as to allow some harvesting of other groundfish stocks but still reducing mortality and fishing on cod while the Council develops more permanent measures for Framework Adjustment 53.
In requesting the emergency action, the Council was not specific in describing measures it recommended to reduce fishing mortality for the remainder of fishing year 2014. We agree that, based on the updated assessment, fishing mortality must be greatly reduced for GOM cod as soon as possible to help ensure that overfishing can be ended and the stock can rebuild. To allow fishing on GOM cod for the rest of this fishing year without any additional measures and under the available annual catch limit (ACL), would reduce the likelihood of ending overfishing and successfully rebuilding the stock in subsequent years. We contemplated making changes to the ACL for the rest of fishing year 2014, which would trigger a quota recall. However, doing so would be administratively complex and a challenge to implement quickly. Given the stage of the fishing year, it would also be challenging to administer a quota recall in an equitable fashion. The Council is developing specifications for the 2015 fishing year (May 1, 2015, to April 30, 2016) in Framework Adjustment 53 that would reduce the GOM cod ACLs based on the 2014 stock assessment update for cod.
We chose time and area closures as the best means to reduce catch for the remainder of fishing year 2014 in light of the objectives stated above. In selecting these areas, we analyzed where the majority of 2010 to mid-calendar year 2014 GOM cod catches have occurred. The basis for our analysis is that fishermen have fished where the stock is located and by selectively closing some of these areas, catch can be reduced and the standing stock protected. These analyses indicated several locations where cod have consistently been taken in commercial and recreational fisheries during this time. Our analysis indicates that while catches were more inshore during 2010–12, a higher proportion of catch occurred east of the year-round WGOM Closure Area in 2013 and thus far in 2014. It is not known if this is a shift in fishing behavior, redistribution of the GOM cod stock, or some combination of both. It is also not known if effort and the stock may shift back inshore during peak spawning periods yet to come for winter and spring 2015. This redistribution mirrors anecdotal information recently provided by the fishing industry. The areas and times selected for closure, therefore, were informed by these most recent trends of fishing but also provide protection for areas of high catch earlier in the period evaluated.
We also chose measures to reduce fishing mortality on GOM cod based on the potential of effort shifting to other groundfish stocks. We were particularly concerned about potential haddock interactions, as we are undertaking concurrent action to increase the fishing year 2014 commercial haddock catch allowance for the remainder of the year. We kept open areas where the amount of non-cod species catch might be strong but the potential cod catch relatively low. In cases where co-occurrence of cod and other likely target stocks were high, the areas were closed to reduce cod fishing mortality and to discourage intentional targeting of cod or incidental take of cod while fishing for other stocks.
For GOM cod to have a meaningful chance to recover, not only must fishing mortality be controlled, but the complex courtship and spawning process must be protected. To this end, we are also closing areas important to spawning and spawning potential. The spawning-related closure measures are based on information assembled by the Closed Area Technical Team for the Council's Omnibus Habitat Amendment 2, information from the Industry Based Survey, Massachusetts Division of Marine Fisheries research, and scientific literature. Because of difficulty in pinpointing spawning spatially and temporally, we used broad, larger areas for the spawning-related closures. The use of larger areas is expected to provide more protection for spawning activities than would smaller or disaggregated areas. This is because there is strong evidence that pre-spawning courtship and foraging, spawning activities, and post-spawning egress from areas can be substantially impacted by fishing activities and result in high fishery removals. In particular, the focused harvest of spawning aggregations in Atlantic Canada is often cited as a substantial contribution to the cod stock collapse there in the early 1990s. More information on the analyses we performed is available in the EA and not repeated here.
In selecting spawning-related closures, we first examined if areas were known or likely to be cod spawning or spawning activity related areas. When areas/times were verified, we designated those areas for closure irrespective of how much cod catch had historically occurred in the time/area. Next, we looked for areas that produced a proportionately high cod catch relative to the total cod caught in a given month because there is a strong correlation between high cod catch and spawning activity. Accordingly, those areas that provide high proportional catches, particularly in recent years, were designated for closure.
As another basis for selecting the closed areas, if an area produced moderate catches or had variable catch contributions over time, we evaluated the tradeoff between closing the area for cod mortality reduction and the potential foregone access to other, more abundant stocks. We attempted to strike a balance between ensuring cod mortality would, in fact be reduced, while providing access to other stocks.
The analyses we undertook indicate that by closing areas identified as producing a high proportion of cod catch and/or are involved with cod spawning activities, it may be possible to reduce GOM cod catch by a sizable amount—ranging from 68 to 82 percent for commercial and 73 to 81 percent for recreational catch, depending on which of the years from 2010 to 2014 are included in the analysis. These potential reductions should be viewed with the caveat that they are the result of evaluating how much catches would be reduced had the interim measure closures been in place for 12 months, fishing behaviors remained unchanged, and stock distribution stayed the same. This evaluation does not consider the catch that has already occurred for fishing year 2014, so it is not appropriate to conclude that approximately 75 percent of the ACL will be taken, for example. Any number of these assumptions may change and, as a result, the reductions should be viewed as a potential relative reduction in fishing mortality/catch. In particular, effort may shift to areas not heavily targeted for cod following implementation of these seasonal closures. In any given year, no more than 32 percent of the total commercial and 27 percent of the total recreational cod catch occurred in the areas being left open under this interim action. As a result, it is not possible to precisely quantify the potential magnitude of fishing mortality reduction that will result from the area closures; however, the analysis indicates closing these areas should be effective in reducing GOM cod catch and reducing
As previously indicated, implementation of these closure areas will be delayed for 2 weeks so that fixed gear can be removed from the November closure areas. However, on and after the date of publication of this rule, vessels transiting these closed areas must have gear stowed in accordance with regulations found in § 648.2. Trawl vessels may use on-net storage provisions in § 648.2 not available for immediate use that pertain to transiting seasonal closure areas.
This action implements a 200-lb (90.7-kg) GOM cod trip limit for all vessels fishing in fishing year 2014 sectors. This means that sector vessels and common pool vessels are now limited to possessing and landing limit of 200 lb (90.7 kg) of GOM cod per trip regardless of the length of a trip. This does not change the current possession and landing limit for Handgear A and Small Vessel category permitted vessels because they were already subject to a 200-lb (90.7-kg) per trip limit under Framework Adjustment 51 measures.
The 200-lb (90.7-kg) trip limit is necessary to ensure open-area catch does not result in excessive GOM cod fishing mortality by reducing the incentive to target on this stock in areas that would remain open. We evaluated a trip limit versus reducing the ACL and chose the trip limit because reducing ACLs would be administratively complex and something that could not be done quickly. Without a trip limit, there would be a possibility that if GOM cod occurred in any concentrations not expected, then catch reduction objectives from closed areas would be compromised.
A 200-lb (90.7-kg) limit was chosen based on analysis of trip-level catch data from calendar year 2013, the most recent calendar year available for analysis, which indicates that approximately 75 percent of the trips taken in areas that will remain open in this action caught less than 200 lb (90.7 kg). While the range of these trips above 200 lb (90.7 kg) varies from just over 200 lb (90.7 kg) to upwards of 2,000 lb (90.7 kg), these data suggest that the frequency and magnitude of discards would not be excessive even if fishing behaviors are unchanged. This is particularly true when paired with the expected mortality reductions provided by the interim measure closed areas. If fishing behavior is changed such that fishermen actively seek to avoid catching GOM cod, the likelihood of regulatory discards should be even lower. Overall, even if discards of GOM cod on individual trips increase somewhat as a result of this trip limit, the overall reduction of fishing mortality of this stock should be greater than if no trip limit was in place.
Approximately 25 percent of sector trips are subject to at-sea monitoring or observation. The remaining 75 percent of GOM sector trips are not monitored at sea. Very few fishermen report discards on their Vessel Trip Reports. However, we are hopeful that fishermen will take measures to avoid catching GOM cod by either avoiding areas of known cod concentration, using selective gear, leaving areas where cod are unexpectedly captured, and, when necessary, reporting cod discards. There are several uncertainties about how effort may shift in response to the closed areas and what GOM cod catch rates may be in the remaining open areas. Trip limits are an essential component to mitigating these uncertainties while attempting to ensure the overarching objectives for GOM cod are not compromised if effort and catches would otherwise be high in open areas. We expect trip limits to effectively dissuade targeting behavior, even with concerns about discards and monitoring. However, our message is clear: Avoid cod, if at all possible.
We expect the Council will put in place 2015 GOM cod catch limits that will constrain operations because of low common pool sector catch limits. Thus, it is likely that sector trip limits will only be necessary until May 1, 2015, as a way to ensure overfishing is reduced for the remainder of the 2014 fishing year. The Council's SSC has recommended 485 mt as an acceptable biological catch (ABC) for the 2015 fishing year.
This interim rule also prohibits commercial fishing vessels in both the sector program and common pool that declare trips in the GOM Broad Stock Area from fishing in other broad stock areas (i.e., Georges Bank (GB) or Southern New England (SNE)) on the same trip.
NMFS, the Council, and Council's Groundfish Oversight Committee have expressed concern that there is a strong incentive to misreport catch on unobserved trips in situations where catch limits or available annual catch entitlement (ACE) may be constraining. There are retrospective patterns in many groundfish stock assessments that may be the result of unaccounted-for mortality, one source of which may be misreported or unreported catch. To better ensure that accurate apportionment of catch, we are implementing a requirement that restricts trips declared into the GOM Broad Stock Area to fishing in that area only, irrespective of whether the trip is monitored/observed or not. Although recognizing that this measure impedes flexibility previously provided to fish in multiple stock areas on a trip, we have determined that the short-term benefits of this measure are necessary in the context of this interim rule and its objectives to ensure the effectiveness of all of the other measures in this interim rule.
The Council and Committee contemplated a similar requirement restricting vessels to fishing in the inshore GOM area (defined as west of 70° W. longitude) unless an at-sea monitor or observer was onboard. We understood the objective of such a measure was to ensure better catch reporting accuracy and discard estimation for unobserved trips occurring in the inshore GOM area while allowing multiple area trips when the fishing activity was monitored or observed. We considered this approach but were unable to adopt the specific approach discussed by the Committee and Council for two reasons: First, the existing reporting areas are based on broad stock areas (e.g., GOM). We would have to create a new inshore reporting area which would require changes to Vessel Monitoring System (VMS) areas and reporting requirements. Furthermore, new monitoring strata would be required for estimating discards inside and outside this area. This change would have implications for prescribed monitoring coverage levels and funding for the year. Such changes would also extend the development and implementation time of an emergency action and, as a result, were not implemented because of the overarching need to put in place cod conservation measures quickly.
Second, putting in place this type of flexibility can create a bias for observed trips that are randomly selected for observer or at-sea monitoring coverage through the pre-trip notification system (PTNS). We are concerned that the flexibility to fish in multiple areas on a trip provides a strong incentive to wait and undertake a multiple-area trip if
Because of these concerns, the most expeditious way to improve GOM cod catch apportionment in the context of this interim rule is to restrict fishing activity to the GOM for trips declared into the broad stock area. Vessels may continue to declare into the Inshore and Offshore Georges Bank or Southern New England Broad Stock Areas and fish in both on a trip, provided all other existing declaration and reporting requirements for so doing are satisfied. We will encourage the Council to consider the implications of multiple stock area trips moving forward as long-term GOM cod recovery measures are discussed for Framework Adjustment 53 implementation.
This interim rule extends the current prohibition on possession or landing GOM cod in or from Federal waters by recreational anglers and federally permitted party and charter vessels to the end of the fishing year, April 30, 2015. The prohibition may be extended beyond May 1, 2015, pending further Council discussion and/or agency evaluation of fishing year 2015 accountability measures.
The possession of recreationally caught GOM cod was already in place for September 1, 2014, to April 14, 2015, under the measures implemented for fishing year 2014 (77 FR 22419; April 22, 2014). This rule extends that prohibition until at least April 30, 2015.
This change is necessary to minimize additional recreational catch and discard mortality for GOM cod. Marine Recreational Information Program (MRIP) data for May–August 2014 indicates that the fishing year 2014 recreational sub-ACL has already been exceeded, prior to the opening of the scheduled spring fishery. MRIP data through waves 3 and 4 (May–August 2014) indicate a recreational GOM cod catch of approximately 500 mt. The recreational GOM cod sub-ACL for the 2014 fishing year is 486 mt. A prohibition on possession does not preclude recreational fishing in areas not otherwise closed to gear capable of catching cod by this interim rule. However, similar to commercial trip limits, we expect that a prohibition on retention will dissuade fishing activity in areas where cod are frequently taken in recreational fisheries. As with the commercial fishery, even if discards may increase on some individual trips, overall mortality due to recreational fishing is expected to decrease, particularly since a portion of recreationally captured cod are estimated to survive. Discard survivability may be enhanced further by good handling techniques and through use of baited hooks that better ensure mouth hooking. Preliminary work by several New England fisheries research institutions shows a higher incidence of severe body injury and associated mortality for cod taken with unbaited jig tackle.
Additional measures to reduce GOM cod recreational mortality are anticipated for the May 1, 2015, start date of fishing year 2015, given the 2014 overage and expected reduction in the overall catch limit next year. We will work with the Council as such measures are developed and will either implement interim measures, as needed for fishing year 2015, or will assist in implementing recreational measures through Framework Adjustment 53 rulemaking.
This action rescinds a previously issued fishing year 2014 sector exemption (79 FR 23278; April 28, 2014) for the number of gillnets that Day gillnet vessels fishing in the GOM can use. With this exemption rescinded, Day gillnet vessels will be subject to the existing regulation restricting them to using no more than 100 gillnets of 300 feet (91.4 m), or 50 fathoms (91.4 m) in length in the GOM. Of these 100 gillnets, no more than 50 gillnets may be rigged for roundfish (i.e., gillnets that are constructed with floats on the float line and that have no tie-down twine between the float line and the lead line).
We examined all fishing year 2014 issued sector exemptions, seeking to evaluate their potential impact on GOM cod. The Council discussed including exemption review in its emergency action request. Although ultimately, the Council did not ask us to review the possibility of rescinding sector exemptions, we examined which exemptions may be negatively impacting cod through high cod selectivity or disruption to spawning activity. We determined that that the closed areas and other management measures in this rule provide sufficiently robust catch reduction and stock protection measures that, other than the gillnet exemption, no other exemption needed to be modified or revoked for the remainder of the 2014 fishing year.
Day gillnet fishermen leave their nets fishing when they come in and out of port. The 2014 sector exemption allowed them to fish up to 150 nets, all of which could be roundfish nets. In both 2013 and 2014, we reduced this flexibility by removing the exemption when fishing in 30-minute blocks 124 and 125 in May and blocks 132 and 133 in June, because of concerns relating to mortality to GOM cod caused by continuous fishing by gillnets left in the water and the potential to disrupt spawning when cod are caught. In addition to the overall amount of Day gillnet gear in the water, we are also concerned that continuing the exemption could cause barriers of gillnets along the boundaries of closed areas that would otherwise catch cod going into or coming out of the closed areas. As a result, we are revoking this exemption as a discrete and effective measure that could reduce the overall mortality of GOM cod.
We will allow a 2-week window from the date of publication of this rule for Day gillnet vessels to remove excess gear from the GOM Broad Stock Area.
In our consideration of what measures would provide catch reduction and stock protection in the context of an interim rule with the objectives stated above, we felt it important that measures must be developed, analyzed, and implemented quickly to be of benefit for the remainder of fishing year 2014 and to provide stop-gap measures while the Council develops Framework Adjustment 53 to address on a long-term basis the updated assessment. This limited the scope and scale of options.
We considered wholescale closure of the GOM; however, we thought that the negative socio-economic impacts were not justified for the conservation return that could be realized for such an action. As indicated in current analyses, it is not necessary to stop all mortality on this stock for it to be rebuilt over time as long as appropriate measures are implemented in 2015 and onward.
We considered requiring selective trawl gear use in conjunction with closed areas. These types of nets have demonstrated an ability to reduce cod catch when properly outfitted and fished. We were concerned that the benefits of requiring such gear would be
We constrained our evaluation to modifications of existing measures or things that could be quickly implemented. This was necessary because new concepts and measures would take more time to develop and would potentially delay implementation of any action. For example, changes in VMS require clearance under the Paperwork Reduction Act. Although by itself this is not an insurmountable issue, it would require additional time to complete the required clearances, which would be contrary to the purpose of this action to reduce overfishing of GOM cod as soon as possible. We also started our evaluation by considering what the Council and Committee discussed, including evaluating the alternatives that the Council has initiated for Framework Adjustment 53 because these interim measures should attempt to complement and bolster the potential Council actions. As an interim action, the scope, scale and type of the measures are necessarily different than those the Council may consider and has discussed for fishing year 2015. For example, the Council may choose to make use of catch limits that end overfishing in fishing year 2015 whereas this interim rule was constricted to using closed areas and trip limits as explained above.
We were also concerned about concurrently increasing the GOM haddock catch limits in response to new assessment information for that stock. We considered not increasing haddock catch limits in the face of this action but recognize the desire for fisheries flexibility to target healthy stocks and the need to further mitigate the negative consequences of this action and relatively low overall catch limits for many stocks including GOM haddock in Framework Adjustment 51. We believe the combination of closed areas that will reduce cod and to some extent haddock catch, trip limits, and limitations of available sector annual catch entitlement (ACE) for other stocks will help ensure that cod mortality associated with targeting haddock will not jeopardize the overall objective of this action in reducing cod overfishing while the Council develops longer-term measures in Framework Adjustment 53.
NMFS' interim authority is available for up to 180 days in an initial action and is open to public comments. After considering public comments, the interim rule may be extended or modified up to an additional 186 days after the date of publication by a subsequent rulemaking, which provides for a full year (12 consecutive months) of interim measures, if necessary. NMFS may renew and modify interim measures on or about March 2015 to provide cod mortality reduction and protection measures for the beginning of the 2015 fishing year that begins May 1, 2015, as needed. Our intent is to work with the Council as it develops measures for Framework Adjustment 53; however, should the Council either not take action or not recommend sufficient measures for fishing year 2015, we may extend these or other interim measures for an additional period not to exceed an additional 186 total days. As examples of measures that could be implemented on May 1, it may be necessary to implement recreational measures for the start of the fishing year or modify closure area locations and times based on more protracted evaluation of spawning information or catch distribution. We are accepting comment on these initial interim measures for consideration on the extension, should one be warranted.
The Magnuson-Stevens Act authorizes the Secretary to act if (1) the Secretary finds that an emergency involving a fishery exists; or (2) the Secretary finds that interim measures are needed to reduce overfishing in any fishery; or (3) if the Council finds one of those factors exists and requests that the Secretary act. See section 305 of the Magnuson-Stevens Act, 16 U.S.C. 1855(c). Where such circumstances exist, the Secretary may promulgate emergency rules or interim measures “to address the emergency or overfishing” 16 U.S.C. 1855(c)(1) and (2). The Secretary has delegated this authority to NMFS. Further, NMFS has issued guidance defining when “an emergency” involving a fishery exists (62 FR 44421; August 21, 1997). This guidance defines an emergency as a situation that (1) arose from recent, unforeseen events, (2) presents a serious conservation problem in the fishery, and (3) can be addressed through interim emergency regulations for which the immediate benefits outweigh the value of advance notice, public comment, and the deliberative consideration of the impacts on participants to the same extent as would be expected under the formal rulemaking process. Under the statute and guidance, the rationale for issuing these emergency and interim regulations is as follows: The August 2014 GOM cod assessment update indicates that the stock is overfished, is subject to overfishing, and is at a historically low level of abundance. The measures currently in place for fishing year 2014 may result in substantial overfishing of the stock and compromise the stock's ability to rebuild over the long term if not implemented as soon as possible. This action is necessary to reduce overfishing, consistent with the stated authority in section 305(c) of the Magnuson-Stevens Act.
Both NMFS and the Council agree with the stock assessment update's findings and that the stock is in need of immediate emergency measures to reduce overfishing and protect stock aggregations and spawning activities as a stop-gap while the Council develops longer-term measures necessitated by the updated assessment. Stated more simply, catch must be reduced and when and where cod are caught matters. The Council process would not be able to develop and recommend a framework adjustment, or other management measures, until its November 2014 meeting at earliest and most likely later. NMFS would not be able to consider and implement any such Council recommendations, even if issued directly as a final rule without prior public comment, until late winter or early spring. Based on these considerations, the Council voted 14 for, 3 against, to recommend that NMFS take emergency action as expeditiously as possible on behalf of the Secretary. NMFS stated its support for this request during Council deliberations, as the agency believes GOM cod is in need of immediate and rigorous protection. The Council's request is to use measures to reduce fishing mortality in fishing year 2014 while the Council works on long-term measures for May 1, 2015, implementation through Framework Adjustment 53. Accordingly, under the Magnuson-Stevens Act, NMFS, issues these emergency interim measures to address the need to reduce overfishing and protect the stock of GOM cod more expeditiously than the Council process or standard Administrative Procedure Act (APA) agency rulemaking could achieve.
Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has made a determination that this interim rule is consistent with the Northeast
Section 553 of the APA establishes procedural requirements applicable to rulemaking by Federal agencies. The purpose of these requirements is to ensure public access to the Federal rulemaking process and to give the public adequate notice and opportunity for comment. Pursuant to 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3), the Assistant Administrator for Fisheries finds good cause to waive the otherwise applicable requirements for both notice and comment rulemaking and a 30-day delay in effectiveness for this temporary rule implementing GOM cod management measures.
The availability of information and need for expedient action makes it impracticable to provide prior notice-and-comment opportunity and a 30-day cooling off period. The updated GOM cod assessment was initially made available in August and peer review was conducted late in that same month. The assessment indicates the GOM cod stock continues to be overfished, subject to substantial overfishing, and is estimated to be the smallest total size in recorded history. Over the course of September, the Council's Plan Development Team and Scientific and Statistical Committee received the results of the assessment and peer-review before providing advice to the Council's Groundfish Oversight Committee on September 24, 2014. In turn, the Committee recommended to the Council that a recommendation for emergency action be forwarded to NMFS. The Council deliberated on the Committee recommendation on October 1, 2014. The Council overwhelmingly agreed that the fishing mortality for GOM cod needed to be reduced as quickly as possible for the remainder of fishing year 2014. The existing catch limits, if left in place with no additional management changes, have the potential to result in fishing at a rate four times the desired fishing mortality for the year. This is substantial overfishing. The temporary rule is designed to implement measures that will decrease fishing mortality and reduce overfishing, shift fishing effort from areas of recent high catches where cod are believed to be aggregated, and to protect cod spawning areas and activities. Reducing catch limits, which would include recalling previously issued sector ACE during the fishing year, would be administratively complex and time consuming. By taking the approach outlined in this temporary rule, NMFS can put in place measures that have the potential to reduce fishing mortality, as requested by the Council. In the interim between this action and the start of the 2015 fishing year that begins May 1, 2015, the Council will develop and recommend long-term solutions, including potentially lower ACLs, designed to protect and rebuild GOM cod.
These timing-related issues paired with the need to complete analyses and the rulemaking processes as quickly as possible to reduce cod catches and end overfishing make it impracticable to propose GOM cod measures through notice-and-comment rulemaking. During the delay in which measures were developed and implemented, additional and potentially excessive GOM cod fishing mortality was expected to occur. In addition, some empirical data indicate that spawning, as indicated by ripe and running fish, begins in November. To provide protection for the 2014 spawning activities that begin in fall and continue through winter into spring, expediting these emergency measures is necessary.
For the reasons outlined, NMFS finds it impracticable and contrary to the public interest to provide prior opportunity to comment on these GOM cod emergency measures and provide a 30-day delay in implementation. Therefore, there exists good cause to waive both of those requirements.
NMFS has consulted with the Office of Information and Regulatory Affairs (OIRA) and due to the circumstances described above this action is exempt from review under Executive Order 12866.
This interim final rule does not contain policies with Federalism or “takings” implications as those terms are defined in E.O. 13132 and E.O. 12630, respectively.
This interim final rule is exempt from the procedures of the Regulatory Flexibility Act because the rule is issued without opportunity for prior notice and opportunity for public comment.
Fisheries, Fishing, Recordkeeping and reporting requirements.
Therefore, NOAA amends 50 CFR part 648 as follows:
16 U.S.C. 1801
The addition reads as follows.
(k) * * *
(3) * * *
(i) * * *
(A) Vessels that notify NMFS of their intended fishing activity in accordance with paragraphs (g), (h), or (k) of this section, must declare one or more NE multispecies broad stock areas, as defined in paragraphs (k)(3)(i) through (iv) of this section, unless otherwise specified in this paragraph (k)(3)(i)(A). If a vessel declares to fish in the GOM Stock Area I as defined in paragraph (k)(3)(i), the vessel is prohibited from fishing outside of the GOM Stock Area I on that trip.
(B) [Reserved]
The revisions and additions read as follows:
(k) * * *
(6) * * *
(i) * * *
(H) Use, set, haul back, fish with, or possess on board a vessel, unless not available for immediate use as defined in § 648.2, or fail to remove, sink gillnet gear and other gillnet gear capable of catching NE multispecies, with the exception of single pelagic gillnets (as described in § 648.81(o)(2)(ii)), in the areas and for the times specified in § 648.80(g)(6)(iii) and (iv), except as provided in § 648.80(g)(6)(iii) and (iv), and § 648.81(o)(2)(ii), or unless otherwise authorized in writing by the Regional Administrator.
(7) * * *
(i) * * *
(H)
(I) Enter, be on a fishing vessel in, or fail to remove gear from the EEZ portion of the areas described in § 648.81(d)(3) through (g)(1), except as provided in § 648.81(d)(4), (e)(3), (g)(2), and (i), and (o)(2).
(J) Fish for, harvest, possess, or land regulated species in or from the closed areas specified in § 648.81(a) through (f) and (o), unless otherwise specified in § 648.81(c)(2)(iii), (i), (o)(2), or as authorized under § 648.85.
(12)
(v) * * *
(K) If fishing in the Regular B DAS Program specified in § 648.85(b)(6), fail to comply with the landing limits specified in § 648.85(b)(6)(iv)(K).
(L) If fishing under a Regular B DAS in the Regular B DAS Program, fail to comply with the DAS flip requirements of § 648.85(b)(6)(iv)(E) if the vessel harvests and brings on board more than the landing limit for a groundfish stock of concern specified in § 648.85(b)(6)(iv)(K), other groundfish specified under § 648.86, or monkfish under § 648.94.
(13)
(D) * * *
(
(
(ii) * * *
(K) Possess or land per trip more than the possession or landing limits specified in § 648.86(a), (b), (c), (e), (g), (h), (j), (l), (m), (n), and (o); § 648.82(b)(7) and (8); § 648.85; or § 648.88, if the vessel has been issued a limited access NE multispecies permit or open access NE multispecies permit, as applicable.
(L) Fish for, possess at any time during a trip, or land regulated NE multispecies or ocean pout specified in § 648.86 after using up the vessel's annual DAS allocation or when not participating in the DAS program pursuant to § 648.82, unless otherwise exempted by §§ 648.82(b)(7), 648.87, or 648.89, or allowed pursuant to §§ 648.85(b)(6) or 648.88.
(M)
(
(
(14) * * *
(xii) With the exception of GOM cod, discard legal-sized regulated species or ocean pout allocated to sectors pursuant to § 648.87(b)(1)(i), as prohibited by § 648.87(b)(1)(v).
(16) * * *
(iii) * * *
(D) If fishing under the recreational or charter/party regulations, fish for or possess cod caught in the GOM Regulated Mesh Area as specified under § 648.89(c)(8), or fail to abide by the appropriate restrictions if transiting with cod on board.
(E) If the vessel has been issued a charter/party permit or is fishing under charter/party regulations, fail to comply with the requirements specified in § 648.81(o)(2)(iii) when fishing in the areas described in § 648.81(d)(3) through (o)(1) during the time periods specified.
(F) If the vessel is a private recreational or charter/party boat fishing vessel, fail to comply with the GOM cod possession prohibition described in § 648.89(c)(8).
The additions read as follows:
(a) * * *
(3) * * *
(viii)
(4) * * *
(ix)
(g) * * *
(6) * * *
(iii)
(iv)
The additions read as follows:
(d) * * *
(3) No fishing vessel or person on a fishing vessel may enter, fish in, or be in, and no fishing gear capable of catching NE multispecies, unless otherwise allowed in this part, may be in, or on board a vessel in the area known as the Cashes Ledge Closure Area, as defined by straight lines connecting the following points in the order stated, except as specified in paragraphs (d)(4) and (i) of this section (a chart depicting this area is available from the Regional Administrator upon request):
(4) Unless otherwise restricted under the EFH Closure(s) specified in paragraph (h) of this section, paragraph (d)(3) of this section does not apply to persons aboard fishing vessels or fishing vessels:
(i) That are fishing with or using exempted gear as defined under this part, or in the Midwater Trawl Gear Exempted Fishery as specified under 648.80(d), and excluding pelagic gillnet gear capable of catching NE multispecies, except for vessels fishing with a single pelagic gillnet not longer than 300 ft (91.4 m) and not greater than 6 ft (1.83 m) deep, with a maximum mesh size of 3 inches (7.6 cm), provided:
(A) The net is attached to the boat and fished in the upper two-thirds of the water column;
(B) The net is marked with the owner's name and vessel identification number;
(C) There is no retention of regulated species; and
(D) There is no other gear on board capable of catching NE multispecies;
(ii) That are fishing under charter/party or recreational regulations, provided that:
(A) For vessels fishing under charter/party regulations in the Cashes Ledge Closure Area or Western GOM Area Closure, as described under paragraph (d) and (e) of this section, respectively, it has on board a letter of authorization issued by the Regional Administrator, as specified in § 648.89(e)(6);
(B) Fish species managed by the NEFMC or MAFMC that are harvested or possessed by the vessel, are not sold or intended for trade, barter or sale, regardless of where the fish are caught; and
(C) The vessel has no gear other than rod and reel or handline on board and is fishing for pelagic recreational species; and
(D) The vessel does not use any NE multispecies DAS during the entire period for which the letter of authorization is valid;
(iii) That are fishing with or using scallop dredge gear when fishing under a scallop DAS or when lawfully fishing in the Scallop Dredge Fishery Exemption Area as described in § 648.80(a)(11), provided the vessel does not retain any regulated NE multispecies during a trip, or on any part of a trip; or
(iv) That are fishing in the Raised Footrope Trawl Exempted Whiting Fishery, as specified in § 648.80(a)(15).
(e) * * *
(3) No fishing vessel or person on a fishing vessel may enter, fish in, or be in, and no fishing gear capable of catching NE multispecies, unless otherwise allowed in this part, may be in, or on board a vessel in, the area known as the Western GOM Closure Area, as defined by straight lines connecting the following points in the order stated, except as specified in paragraphs (d)(4) and (i) of this section:
(4) Unless otherwise restricted under paragraph (h) of this section, paragraph (e)(3) of this section does not apply to fishing vessels that meet the criteria in paragraphs (e)(4) of this section, or consistent with the requirements specified under § 648.80(a)(5).
(g) * * *
(1) * * *
(vii) That meet the criteria in paragraphs (o)(2)(i) or (ii) of this section;
(o)
(i) From January 1 through January 31, the restrictions specified in this
(ii) From February 1 through February 28, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 2, which is defined by the following points, connected in the order listed by straight lines, and bounded on the west by the coastline of Massachusetts:
(iii) From March 1–March 31, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 3, which is defined by the following points, connected in the order listed by straight lines, and bounded on the west by the coastline of Massachusetts and New Hampshire:
(iv) From April 1–April 30, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 4, which is defined by the following points, connected in the order listed by straight lines, and bounded on the west by the coastline of Massachusetts and New Hampshire:
(v) From May 1–May 30, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 5, which is defined by the following points, connected in the order listed by straight lines, and bounded on the west by the coastline of the United States:
(vi) From June 1–June 30, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 6, which is defined by the following points, connected in the order listed by straight lines, and bounded on the west by the coastline of the United States:
(vii) From July 1–August 30, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 7, which is defined by the following points, connected in the order listed by straight lines:
(viii) From September 1–October 31, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 8, which is defined by the following points, connected in the order listed by straight lines:
(ix) From November 1–November 30, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 9, which is defined by the following points, connected in the order listed by straight lines, and bounded on the west by the
(x) From December 1–December 31, the restrictions specified in this paragraph (o)(1) apply to Seasonal Interim Closure Area 9, which is defined by the following points, connected in the order listed by straight lines, and bounded on the west by the coastline of Massachusetts:
(2) Paragraph (o)(1) of this section does not apply to persons aboard fishing vessels or fishing vessels:
(i) That have not been issued a Federal multispecies permit and that are fishing exclusively in state waters;
(ii) That are fishing with or using exempted gear as defined under this part, or in the Midwater Trawl Gear Exempted Fishery as specified under 648.80(d), and excluding pelagic gillnet gear capable of catching NE multispecies, except for vessels fishing with a single pelagic gillnet not longer than 300 ft (91.4 m) and not greater than 6 ft (1.83 m) deep, with a maximum mesh size of 3 inches (7.6 cm), provided:
(A) The net is attached to the boat and fished in the upper two-thirds of the water column;
(B) The net is marked with the owner's name and vessel identification number;
(C) There is no retention of regulated species; and
(D) There is no other gear on board capable of catching NE multispecies;
(iii) That are fishing with or using scallop dredge gear when fishing under a scallop DAS or when lawfully fishing in the Scallop Dredge Fishery Exemption Area as described in § 648.80(a)(11), provided the vessel does not retain any regulated NE multispecies during a trip, or on any part of a trip; or
(iv) That are fishing in the Raised Footrope Trawl Exempted Whiting Fishery, as specified in § 648.80(a)(15).
(v) That are transiting through the Seasonal Interim Closure Areas described in paragraph (o)(1) of this section, provided that gear is not available for immediate use as defined in § 648.2.
The additions read as follows:
(b) * * *
(7)
(A) The vessel is 30 ft (9.1 m) or less in length overall, as determined by measuring along a horizontal line drawn from a perpendicular raised from the outside of the most forward portion of the stem of the vessel to a perpendicular raised from the after most portion of the stern.
(B) If construction of the vessel was begun after May 1, 1994, the vessel must be constructed such that the quotient of the length overall divided by the beam is not less than 2.5.
(C) Acceptable verification for vessels 20 ft (6.1 m) or less in length shall be USCG documentation or state registration papers. For vessels over 20 ft (6.1 m) in length overall, the measurement of length must be verified in writing by a qualified marine surveyor, or the builder, based on the vessel's construction plans, or by other means determined acceptable by the Regional Administrator. A copy of the verification must accompany an application for a NE multispecies permit.
(D) Adjustments to the Small Vessel category requirements, including changes to the length requirement, if required to meet fishing mortality goals, may be made by the Regional Administrator following framework procedures of § 648.90.
(ii) [Reserved]
(8)
(i) The vessel must not use or possess on board gear other than handgear while in possession of, fishing for, or landing NE multispecies, and must have at least one standard tote on board.
(ii) A vessel may not fish for, possess, or land regulated species from March 1 through March 20 of each year.
(iii) Tub-trawls must be hand-hauled only, with a maximum of 250 hooks.
(iv) Declaration. For any such vessel that is not required to use VMS pursuant to § 648.10(b)(4), to fish for GB cod south of the GOM Regulated Mesh Area, as defined at § 648.80(a)(1), a vessel owner or operator must obtain, and retain on board, a letter of authorization from the Regional Administrator stating an intent to fish south of the GOM Regulated Mesh Area and may not fish in any other area for a minimum of 7 consecutive days from the effective date of the letter of authorization. For any such vessel that is required, or elects, to use VMS pursuant to § 648.10(b)(4), to fish for GB cod south of the GOM Regulated Mesh Area, as defined at § 648.80(a)(1), a vessel owner or operator must declare an intent to fish south of the GOM Regulated Mesh Area on each trip through the VMS prior to leaving port, in accordance with instructions provided by the Regional Administrator. Such vessels may transit the GOM Regulated Mesh Area, as defined at § 648.80(a)(1), provided that their gear is not available for immediate use as defined in § 648.2.
The addition reads as follows:
(b) * * *
(6) * * *
(iv) * * *
(K)
The additions read as follows:
(b) * * *
(5)
(i)
(ii) [Reserved]
(6)
(7)
(i)
(ii) A NE multispecies limited access vessel exempt from the GOM cod landing limit pursuant to paragraph (b)(7)(i) of this section may not fish north of the line specified in paragraph (b)(7) of this section for the duration of the trip, but may transit the GOM Regulated Mesh Area, provided that its gear is unless not available for immediate use as defined in § 648.2.
The additions read as follows:
(b) * * *
(1) * * *
(v) * * *
(C)
(x)
(c) * * *
(2) * * *
(ii) * * *
(E) Trip limits on NE multispecies stocks for which a sector receives an allocation of ACE pursuant to paragraph (b)(1)(i) of this section (i.e., all stocks except Atlantic halibut, ocean pout, windowpane flounder, and Atlantic wolffish), unless otherwise specified § 648.86(b)(5) and paragraph (b)(1)(x) of this section.
(F) The GB Seasonal Closed Area specified in § 648.81(g).
(iii)
(A)
(B) [Reserved]
The addition reads as follows:
(a) * * *
(3) The vessel may possess and land up to 75 lb (90.7 kg) of cod, and up to the landing and possession limit restrictions for other NE multispecies specified in § 648.86, provided the vessel complies with the restrictions specified in paragraph (a)(2) of this section. If either the GOM or GB cod trip limit applicable to a vessel fishing under a NE multispecies DAS permit, as specified in § 648.86(b)(5) and (6), respectively, is adjusted by NMFS, the cod trip limit specified in this paragraph (a)(1) shall be adjusted proportionally (rounded up to the nearest 25 lb (11.3 kg)). For example, if the GOM cod trip limit specified at § 648.86(b)(5) doubled, then the cod trip limit for the Handgear B category fishing in the GOM Regulated Mesh Area would also double to 150 lb (68 kg).
The additions as follows:
(c) * * *
(8)
(ii) For purposes of counting fish, fillets will be converted to whole fish at the place of landing by dividing the number of fillets by two. If fish are filleted into a single (butterfly) fillet, such fillet shall be deemed to be from one whole fish.
(iii) Cod harvested by charter/party vessels, or recreational fishing vessels in or from the EEZ, with more than one person aboard may be pooled in one or more containers. If there is a violation of the possession limit on board a vessel carrying more than one person, the violation shall be deemed to have been committed by the owner or operator of the vessel.
(iv) Private recreational, and charter and party vessels in possession of cod caught outside the GOM Regulated Mesh Area may transit the GOM area, provided all bait and hooks are removed from fishing rods and any cod on board has been gutted and stored.
(e) * * *
(4)
(5)
(6)
(i) The letter of authorization must be carried on board the vessel during the period of participation;
(ii) Fish species managed by the NEFMC or MAFMC that are harvested or possessed by the vessel, are not sold or intended for trade, barter or sale, regardless of where the fish are caught;
(iii) The vessel has no gear other than rod and reel or handline gear on board; and
(iv) For the GOM charter/party closed area exemption only, the vessel may not fish on a sector trip, under a NE multispecies DAS, or under the provisions of the NE multispecies Small Vessel Category or Handgear A or Handgear B permit categories, as specified at § 648.82, during the period of participation.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS is prohibiting directed fishing for Pacific cod by vessels using pot gear in the Central Regulatory Area of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2014 Pacific cod total allowable catch (TAC) apportioned to vessels using pot gear in the Central Regulatory Area of the GOA.
Effective 1200 hours, Alaska local time (A.l.t.), November 10, 2014, through 2400 hours, A.l.t., December 31, 2014.
Obren Davis, 907–586–7228.
NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679. Regulations governing sideboard protections for GOA groundfish fisheries appear at subpart B of 50 CFR part 680.
The 2014 Pacific cod TAC apportioned to vessels using pot gear in the Central Regulatory Area of the GOA is 11,352 metric tons (mt), as established by the final 2014 and 2015 harvest specifications for groundfish of the GOA (79 FR 12890, March 6, 2014) and one reallocation (79 FR 64334, October 29, 2014).
In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator) has determined that the 2014 Pacific cod TAC apportioned to vessels using pot gear in the Central Regulatory Area of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 11,832 mt and is setting aside the remaining 10 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific cod by vessels using pot gear in the Central Regulatory Area of the GOA. After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.
This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the directed fishing closure of Pacific cod for vessels using pot gear in the Central Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of November 6, 2014.
The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
This action is required by § 679.20 and is exempt from review under Executive Order 12866.
16 U.S.C. 1801
U.S. Office of Personnel Management.
Proposed rule.
The United States Office of Personnel Management (OPM) is proposing to amend the Federal Long Term Care Insurance Program (FLTCIP) regulation to expand eligibility to apply for coverage under the Program. Under the proposed regulation, the definition of “qualified relative” is expanded to cover all individuals who are domestic partners (both same-sex and opposite-sex) of Federal and U.S. Postal Service employees, annuitants, members of the uniformed services, and retired members of the uniformed services. In addition, the proposed regulation provides that adult children of domestic partners will be considered one of the types of individuals comprising the statutory term “qualified relative” who may apply for FLTCIP coverage.
Comments are due on or before January 12, 2015.
Send written comments to Ronald Brown, Policy Analyst, Planning & Policy Analysis, Office of Personnel Management, 1900 E Street NW., Washington, DC 20415–9700; or deliver to OPM, Room 2309, 1900 E Street NW., Washington, DC; or FAX to (202) 606–0636. Comments may also be sent through the Federal eRulemaking Portal at:
Ronald Brown, Policy Analyst, (202) 606–0004, or by email to
In support of the President's Memoranda of June 17, 2009 and June 2, 2010, concerning Federal Benefits and Non-Discrimination, OPM has identified certain benefits under FLTCIP that may be extended to additional individuals consistent with existing law, whose relationship to the workforce member is considered to constitute a family relationship. The proposed regulation enhances the ability of Federal agencies to provide for the needs of an increasingly diverse workforce. OPM changed its regulation on June 1, 2010 to allow same-sex domestic partners of employees and annuitants to apply for FLTCIP coverage as a qualified relative. OPM now proposes to expand the term “qualified relative” to include all individuals who are domestic partners (both same-sex and opposite-sex) of employees, annuitants, members of the uniformed services and retired members of the uniformed services. In addition, OPM's June 1, 2010 regulation did not include same-sex domestic partners of members of the uniformed services. This proposed regulation includes domestic partners, both same-sex and opposite-sex, of members and retired members of the uniformed services.
Additionally, just as is currently required for same-sex domestic partners, newly eligible individuals (both same-sex and opposite-sex) will be required to provide documentation to establish that they meet the regulatory criteria for domestic partners.
Finally, OPM has determined that eligibility may be extended to adult children of domestic partners by defining the term “stepchild,” which is one of the types of individuals comprising the statutory term “qualified relative,” to include the child of a domestic partner. The definition of “stepchild” set forth in this proposed regulation appropriately encompasses and reflects the variety of parent-child relationships that exist today.
The proposed changes and clarifications are:
Changes:
(1) We propose to expand the definition of “qualified relative” under 5 U.S.C. 9001(5)(D) to include both same-sex and opposite sex domestic partners of Federal and U.S. Postal Service employees and annuitants and members and retired members of the uniformed services. This revision can be found in section 875.101 and 875.213 of the proposed rule.
(2) We propose to expand the definition of “qualified relative” to include adult children of domestic partners of Federal and U.S. Postal Service employees and annuitants, and members and retired members of the uniformed services consistent with Presidential Memoranda issued on June 17, 2009 and June 2, 2010. This revision can be found in section 875.101 of the proposed rule.
(3) We propose that the workforce member or his or her domestic partner must provide notice to the employing office if at any time between the time of application and the time coverage is scheduled to go into effect, any of the conditions for a domestic partnership are no longer met, in which case a domestic partnership is deemed terminated. Such notification must be made as soon as possible, but in no event later than thirty calendar days after such conditions are no longer met. This change can be found in 875.101 of the proposed rule.
(4) As is currently the case for same-sex domestic partners, opposite-sex domestic partners will be required to provide documentation to establish that they meet the criteria for domestic partners. This revision can be found in section 875.101 of the proposed rule.
(5) This proposed rule makes other technical conforming amendments to the FLTCIP rules that would be amended by this proposed rule. These changes can be found in section 875.405 of the proposed rule.
Clarification:
(1) We clarify that once coverage has begun, termination of a domestic partnership does not terminate a domestic partner's insurance coverage as long as the Carrier continues to receive the required premium when due. This revision can be found in section 875.412 of the changes.
I certify that this regulation will not have a significant economic impact on a substantial number of small entities because the regulation only adds additional groups to the list of groups eligible to apply for coverage under the FLTCIP. The FLTCIP is a voluntary, self-pay, benefits program with no Government contribution.
This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.
We have examined this rule in accordance with Executive Order 13132, Federalism, and have determined that this rule will not have any negative impact on the rights, roles and responsibilities of State, local, or tribal governments.
Administrative practice and procedure, Employee benefit plans, Government contracts, Government employees, health insurance, military personnel, organization and functions, Retirement.
Accordingly, OPM is proposing to amend 5 CFR part 875 as follows:
5 U.S.C. 9008.
(1) A committed relationship between two adults, of the opposite sex or same sex, in which the partners—
(i) Are each other's sole domestic partner and intend to remain so indefinitely;
(ii) Maintain a common residence, and intend to continue to do so (or would maintain a common residence but for an assignment abroad or other employment-related, financial, or similar obstacle);
(iii) Are at least 18 years of age and mentally competent to consent to a contract;
(iv) Share responsibility for a significant measure of each other's financial obligations;
(v) Are not married or joined in a civil union to anyone else;
(vi) Are not a domestic partner of anyone else;
(vii) Are not related in a way that would prohibit legal marriage in the U.S. jurisdiction in which the domestic partnership was formed;
(viii) Provide documentation demonstrating fulfillment of the requirements of (i) through (vii) as prescribed by OPM; and
(ix) Certify that they understand that willful falsification of the documentation described in subparagraph (viii) of this section may lead to disciplinary action and the recovery of the cost of benefits received related to such falsification and may constitute a criminal violation under 18 U.S.C. 1001.
(2) You or your domestic partner must notify the employing office if at any time between the time of application and the time coverage is scheduled to go into effect, any of the conditions listed in paragraphs (1)(i) through (vii) of this definition are no longer met, in which case a domestic partnership is deemed terminated. Such notification must be made as soon as possible, but in no event later than thirty calendar days after such conditions are no longer met.
You may not apply as a qualified relative if the workforce member on whom you are basing your qualified relative status died prior to the time you apply for coverage, unless you are receiving a survivor annuity as the spouse or an insurable interest annuity as the domestic partner of a deceased workforce member. In this case, your adult children and your current spouse or domestic partner are also considered to be qualified relatives.
(a) You may apply for coverage as a qualified relative if you are a domestic partner, as described in section 875.101 of this chapter. As prescribed by OPM, you will be required to provide documentation to demonstrate that you meet these requirements, and you must submit to full underwriting requirements. However, as explained in section 875.210 of this chapter, if you lose your status as a domestic partner, and therefore a qualified relative, before your coverage goes into effect, you are no longer eligible for FLTCIP coverage.
(a)(1) If you are an active workforce member and you have married, your spouse is eligible to submit an application for coverage under this section within 60 days from the date of your marriage and will be subject to the underwriting requirements in force for the spouses of active workforce members during the most recent open season. You, however, are not eligible for abbreviated underwriting because of your marriage. You, your spouse, or both you and your spouse may apply for coverage during this 60-day period, but full underwriting will be required for you. After 60 days from the date of your marriage, you and/or your spouse may still apply for coverage but will be subject to full underwriting.
(2) If you are an active workforce member and you have entered into a domestic partnership, your domestic partner is eligible to submit an application for coverage under this section at any time from the commencing date of your domestic partnership and will be subject to full underwriting requirements. You are not eligible for abbreviated underwriting because of your domestic partnership. You, your domestic partner, or both you and your domestic partner may apply for coverage at any time, but full underwriting will be required for both of you.
(b) The new spouse or domestic partner of an annuitant or retired member of the uniformed services may apply for coverage with full underwriting at any time following the
(c) Other qualified relative(s) of a workforce member may apply for coverage with full underwriting at any time following the marriage or commencing date of the domestic partnership.
Except as provided in paragraph (e) of this section, your coverage will terminate on the earliest of the following dates:
(e) Termination of a domestic partnership does not terminate insurance coverage as long as the Carrier continues to receive the required premium when due.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all the Boeing Company Model 707 airplanes, and Model 720 and 720B series airplanes. This proposed AD is intended to complete certain mandated programs intended to support the airplane reaching its limit of validity (LOV) of the engineering data that support the established structural maintenance program. This proposed AD would require repetitive inspections for cracking of the inboard and outboard midspar fittings of the nacelle struts and of the torque bulkhead, midspar chords, drag fitting, and front spar support, and doing applicable related investigative and corrective actions; replacing the midspar fittings; and doing other specified actions. We are proposing this AD to detect and correct cracking in the midspar fittings of the inboard and outboard nacelle struts, which could result in the loss of the structural integrity of the midspar fitting. This condition could cause an unsafe separation of the engine and consequent wing fire.
We must receive comments on this proposed AD by December 29, 2014.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
• Federal eRulemaking Portal: Go to
• Fax: 202–493–2251.
• Mail: U.S. Department of Transportation, Docket Operations, M–30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590.
• Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.
For service information identified in this proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, WA 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
You may examine the AD docket on the Internet at
Chandra Ramdoss, Aerospace Engineer, Airframe Branch, ANM–120L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712–4137; phone: 562–627–5239; fax: 562–627–5210; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
As described in FAA Advisory Circular 120–104 (
We received reports of cracked midspar fittings on the inboard and outboard nacelle struts. The airplanes had accumulated between 9,900 and 63,000 total flight hours. Five of these airplanes had cracked midspar fittings that resulted in separation of the inboard strut and engine from the airplane inflight. In two of those events the inboard nacelle strut contacted the outboard engine, causing it to separate from the airplane. Operators have also reported cracking in the transition radius of the inboard and outboard midspar fittings of the nacelle struts of the numbers 1 and 4 engines.
The reported cracks on the inboard and outboard midspar fittings of the nacelle struts of engines numbers 1, 2, 3, and 4 were found to be vertical at the
Cracked midspar fittings, if not detected and corrected, could result in the loss of the structural integrity of the midspar fitting. This condition could cause an unsafe separation of the engine and consequent wing fire.
We reviewed Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014. For information on the procedures and compliance times, see this service information at
AD 93–11–02, Amendment 39–8594, Docket No. 92–NM–230–AD, which applies to The Boeing Company Model 707 and 720 series airplanes, requires repetitive inspections for cracking of the midspar fittings on the inboard struts, related investigative and corrective actions if necessary, and replacement of the midspar fittings with new, improved fittings, which constitutes terminating action for the repetitive inspections.
AD 2012–16–12, Amendment 39–17159 (77 FR 49708, August 17, 2012), which applies to The Boeing Company Model 707 airplanes, and Model 720 and 720B series airplanes, requires a detailed inspection of the midspar fittings of the nacelle struts for engine numbers 2 and 3 to confirm that the correct part number is installed, and installing the correct part number if it is not installed. The correct part number is the new, improved midspar fitting required by AD 93–11–02, Amendment 39–8594, Docket No. 92–NM–230–AD. AD 2012–16–12 also requires repetitive high frequency eddy current inspections (HFEC) of the midspar fittings of engine numbers 2 and 3 nacelle struts for cracks and repair if necessary. In addition, AD 2012–16–12 requires repetitive general visual inspections of the nacelle struts of engine numbers 1, 2, 3, and 4 to verify that the nacelle strut has not drooped below its normal position, and repair if necessary.
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the inspections for cracking of the inboard and outboard midspar fittings of the nacelle struts and of the torque bulkhead, midspar chords, drag fitting, and front spar support, and doing applicable related investigative and corrective actions; replacing the midspar fittings; and doing other specified actions; as specified in parts 2 through 6, inclusive, of the Accomplishment Instructions of the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.”
The phrase “related investigative actions” is used in this proposed AD. “Related investigative actions” are follow-on actions that (1) are related to the primary actions, and (2) further investigate the nature of any condition found. Related investigative actions in an AD could include, for example, inspections.
The phrase “corrective actions” is used in this proposed AD. “Corrective actions” are actions that correct or address any condition found. Corrective actions in an AD could include, for example, repairs.
The phrase “other specified actions” is used in this proposed AD. Other specified actions in this proposed AD include installing new inboard and outboard midspar fittings, installing oversized fasteners in the two forward most fastener holes common to the inboard side of the nacelle strut overwing support fitting and the wing front spar upper chord, applying sealant to the midspar area, and applying corrosion inhibiting compound to the midspar fitting areas.
We have determined that the actions specified in table 1 of paragraph 1.E., “Compliance,” of Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, should not be required in this AD, as noted in the service bulletin.
Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, specifies to contact the manufacturer for fitting installation instructions and instructions on how to repair certain conditions, but this proposed AD would require doing those corrective actions in one of the following ways:
• In accordance with a method that we approve; or
• Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.
We estimate that this proposed AD affects 12 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any additional inspections that would be required based on the results of the proposed inspections. We have no way of determining the number of aircraft that might need these inspections:
We have received no definitive data that would enable us to provide cost estimates for the on-condition corrective actions specified in this AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by December 29, 2014.
None.
This AD applies to all The Boeing Company Model 707–100 long body, –200, –100B long body, and –100B short body series airplanes; Model 707–300, –300B, –300C, and –400 series airplanes; and Model 720 and 720B series airplanes; certificated in any category.
Air Transport Association (ATA) of America Code 54, Nacelles/Pylons.
This AD was prompted by certain mandated programs intended to support the airplane reaching its limit of validity (LOV) of the engineering data that support the established structural maintenance program. We are issuing this AD to detect and correct cracking in the midspar fittings of the inboard and outboard nacelle struts, which could result in the loss of the structural integrity of the midspar fitting. This condition could cause an unsafe separation of the engine and consequent engine fire.
Comply with this AD within the compliance times specified, unless already done.
At the applicable time specified in table 2 or table 3 of paragraph 1.E., “Compliance,” of Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, except as required by paragraph (i)(1) of this AD: Do the inspections required by paragraphs (g)(1), (g)(2), and (g)(3) of this AD in accordance with part 2 or part 3, as applicable, of the Accomplishment Instructions of Boeing Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, except as required by paragraph (i)(2) of this AD. Before further flight, do all applicable related investigative and corrective actions, replace the inboard and outboard midspar fittings with new parts, and do other specified actions (including installing new bushings and oversize fasteners) in accordance with part 2 or part 3, as applicable, of the Accomplishment Instructions of Boeing Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, except as required by paragraph (i)(2) of this AD. Repeat the inspections required by paragraphs (g)(1), (g)(2), and (g)(3) of this AD thereafter at the applicable intervals specified in table 2 or table 3 of paragraph 1.E., “Compliance,” of Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, except as required by paragraph (i)(1) of this AD.
(1) A detailed inspection and a high frequency eddy current inspection (HFEC) for cracks in the inboard and outboard midspar fittings of the nacelle struts.
(2) Open hole HFEC inspections for cracks in the torque bulkhead, midspar chords, drag fitting, and front spar support.
(3) A surface HFEC inspection of the front spar support for cracks.
At the applicable time specified in table 4 or 5 of paragraph 1.E., “Compliance,” of Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014: Do the inspections required by paragraphs (h)(1), (h)(2), and (h)(3) of this AD, in accordance with part 4 or part 5, as applicable, of the Accomplishment Instructions of Boeing Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, except as required by paragraph (i)(2) of this AD. Do all applicable related investigative, corrective, and other specified actions (including installing new bushings and oversize fasteners) before further flight. Repeat the inspections required by paragraphs (h)(1), (h)(2), and (h)(3) of this AD thereafter at the applicable intervals specified in table 4 or 5 of paragraph 1.E., “Compliance,” of Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014. The threshold for the repetitive inspections required by paragraphs (h)(1), (h)(2), and (h)(3) of this AD is 1,500 flight cycles or 48 months, whichever occurs first, since the most recent midspar fitting replacement.
(1) A detailed inspection and a surface HFEC inspection for cracks in the inboard
(2) An open hole HFEC inspection for cracks in the drag fitting and front spar support.
(3) A surface HFEC inspection for cracks in the front spar support.
(1) Where Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, specifies a compliance time “after the Revision 6 date of this service bulletin,” this AD requires compliance within the specified compliance time after the effective date of this AD.
(2) Where Boeing 707 Alert Service Bulletin A3183, Revision 6, dated February 7, 2014, specifies to contact Boeing for appropriate action: Do corrective actions before further flight using a method approved in accordance with the procedures specified in paragraph (k) of this AD.
Special flight permits, as described in Section 21.197 and Section 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199), are not allowed.
(1) The Manager, Los Angeles Aircraft Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (l)(1) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA
(1) For more information about this AD, contact Chandra Ramdoss, Aerospace Engineer, Airframe Branch, ANM–120L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712–4137; phone: 562–627–5239; fax: 562–627–5210; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H–65, Seattle, WA 98124–2207; telephone 206–544–5000, extension 1; fax 206–766–5680; Internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for Airbus Helicopters Model EC135P1, EC135P2, EC135P2+, EC135T1, EC135T2, and EC135T2+ helicopters. This proposed AD would require reducing the life limit of certain parts and removing each part that has reached its life limit. The proposed actions are intended to reduce the life limits of certain critical parts to prevent failure of a part and subsequent loss of control of the helicopter.
We must receive comments on this proposed AD by January 12, 2015.
You may send comments by any of the following methods:
•
•
•
•
You may examine the AD docket on the Internet at
Matt Fuller, Senior Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 2601 Meacham Blvd., Fort Worth, Texas 76137; telephone (817) 222–5110; email
We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.
We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.
EASA, which is the Technical Agent for the Member States of the European Union, issued EASA AD No. 2013–0178, dated August 7, 2013, to correct an unsafe condition for the Eurocopter Deutschland GmbH (ECD) (now Airbus Helicopters) Model EC135P1, EC135P2, EC135P2+, EC135T1, EC135T2, EC135T2+, EC635T1, EC635P2+, and EC635T2+ helicopters. EASA advises that ECD has revised the airworthiness limitations for the EC135 and EC635
These helicopters have been approved by the aviation authority of Germany and are approved for operation in the United States. Pursuant to our bilateral agreement with Germany, the EASA, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.
The airworthiness limitations and maintenance procedures for certain parts are contained in the Airworthiness Limitations section, Chapter 4, of Eurocopter's MSM EC135, dated December 1, 2001. Revision 14 of the MSM, dated July 1, 2012, establishes a life limit for certain part-numbered main rotor blades and reduces the life limits for swashplate and mixing lever gear unit parts.
This proposed AD would require, before further flight, revising the ALS of the applicable maintenance manual and the component history card or equivalent record by reducing the life limit for various parts and removing from service any part that has reached its life limit.
This proposed AD does not apply to Airbus Helicopters Model EC635T1, P2+, or EC635T2+ helicopters because those helicopters are not type certificated in the U.S.
We estimate that this proposed AD would affect 267 helicopters of U.S. Registry.
We estimate that operators may incur the following costs in order to comply with this AD. Labor costs are estimated at $85 per hour. We estimate 2 work hours to update the maintenance manual for a total cost of $170 for each helicopter and $45,390 for the U.S. fleet.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD applies to Model EC135P1, EC135P2, EC135P2+, EC135T1, EC135T2, and EC135T2+ helicopters, certificated in any category.
This AD defines the unsafe condition as failure of a critical part, which could result in loss of control of the helicopter.
We must receive comments by January 12, 2015.
You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.
Before further flight:
(1) Revise the life limit of each part listed in paragraphs (e)(1)(i) through (ii) in the Airworthiness Limitations Section of the applicable maintenance manual and record the revised life limit on the component history card or equivalent record as follows:
(i) For swashplate parts:
(A) Ring (bearing ring), part number (P/N) L623M2001214, reduce the life limit from 8,300 hours time-in-service (TIS) to 8,000 hours TIS.
(B) Ring (control ring), P/N L623M2001213, reduce the life limit from 8,300 hours TIS to 8,000 hours TIS.
(C) Cardan ring (two-part), P/N L623M2005205, reduce the life limit from 14,400 hours TIS to 12,900 hours TIS.
(D) Bolt (control ring), P/N L671M7001215, reduce the life limit from 14,400 hours TIS to 12,900 hours TIS.
(E) Bolt (sliding sleeve), P/N L623M2006206 and P/N L623M2006213, reduce the life limit from 14,400 hours TIS to 12,900 hours TIS.
(ii) For mixing lever gear unit parts:
(A) Forked lever assembly, P/N L671M3012102, reduce the life limit from 9,000 hours TIS to 8,700 hours TIS.
(B) Hinged support, P/N L671M7003210, reduce the life limit from 8,700 hours TIS to 8,400 hours TIS.
(C) Bolt, P/N L671M7001220, reduce the life limit from 8,700 hours TIS to 8,400 hours TIS.
(2) Remove from service any part listed in paragraph (e)(1) of this AD that has reached or exceeded its newly revised life limit.
Special flight permits are limited to a one-time flight to a maintenance facility to replace a part that has reached its life limit.
(1) The Manager, Safety Management Group, FAA, may approve AMOCs for this AD. Send your proposal to: Matt Fuller, Senior Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 2601 Meacham Blvd., Fort Worth, Texas 76137; telephone (817) 222–5110; email
(2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.
The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD 2013–0178, dated August 7, 2013. You may view the EASA AD on the Internet at
Joint Aircraft Service Component (JASC) Code: 6300, 2700 Swashplate Ring, Cardan Ring, Bolt, Mixing Lever Gear Unit (flight controls).
National Aeronautics and Space Administration.
Notice of proposed rulemaking.
The National Aeronautics and Space Administration (NASA) is proposing to amend its rules implementing Section 504 of the Rehabilitation Act of 1973 (section 504), which prohibits discrimination on the basis of disability in programs, services, and activities by recipients of Federal financial assistance from NASA as well as those programs, services, and activities conducted by NASA. The revisions to this rule are part of NASA's retrospective plan under EO 13563 completed in August 2011.
Submit comments on or before December 15, 2014.
Comments must be identified with RIN 2700–AD85 and may be sent to NASA via the
NASA's full plan can be accessed at:
Robert Cosgrove, (202) 358–0446.
In this rulemaking, NASA is proposing to amend its section 504 regulations to incorporate changes to the definition of disability required by the Americans with Disabilities Act (ADA) Amendments Act of 2008, include an affirmative statement of the longstanding requirement for reasonable accommodations in programs, services, and activities, include a definition of direct threat and a provision describing the parameters of the existing direct threat defense to a claim of discrimination, clarify the existing obligation to provide auxiliary aids and services to qualified individuals with disabilities, update the methods of communication that recipients may use to inform program beneficiaries of their obligation to comply with section 504 to reflect changes in technology, adopt updated accessibility standards applicable to the design, construction, and alteration of buildings and facilities, establish time periods for compliance with these updated accessibility standards, provide NASA with access to recipient data and records to determine compliance with section 504, and make administrative updates to correct titles.
NASA is also proposing to amend its regulation to incorporate changes required by the Rehabilitation Act Amendments of 1992 (1992 Amendments) by revising current sections 1251.2—Employment Practices (Federally Assisted Programs) and 1251.540—Employment (Federally Conducted Programs) and instead referencing the EEOC's ADA title I regulation. The proposed rule also updates outdated terminology and references that currently exist in Part 1251 and changes the word “handicapped” and similar variations of that word that appear throughout Part 1251, replacing it with “people first” language (e.g., “individuals with disabilities”) consistent with the 1992 Amendments.
NASA implements the requirements of Section 504 of the Rehabilitation Act of 1973 (section 504), which prohibits discrimination on the basis of disability in Federally conducted and assisted programs or activities, through its regulation in Part 1251. NASA's section 504 regulation applies to recipients to whom the Agency extends Federal financial assistance, such as research, education and training grants, and cooperative agreements, as well as programs, services, and activities conducted by NASA. NASA's section 504 regulation at § 1251.103 prohibits denial of the benefits of, exclusion from participation in, or other discrimination against qualified individuals with disabilities in programs or activities because a recipient's facilities are inaccessible to or unusable by persons with disabilities. Many of the entities that receive financial assistance from NASA are also covered by Title II of the ADA (title II), which prohibits discrimination on the basis of disability by public entities (i.e., state and local governments and their agencies) or Title III of the ADA (title III), which prohibits discrimination on the basis of disability by: (1) Public accommodations (i.e., private entities that own, operate, lease, or lease to places of public accommodation); (2) newly constructed and altered commercial facilities; and (3) private entities that offer certain examinations and courses related to educational and occupational certification.
The ADA Amendments Act of 2008 (the ADA Amendments Act) was signed into law in September 2008 and became effective on January 1, 2009. Congress enacted the ADA Amendments Act to revise the ADA definition of disability in order to ensure that this definition is broadly construed and applied without extensive analysis and to supersede Supreme Court decisions that had too narrowly interpreted the ADA's definition of a disability. The ADA Amendments Act not only amended the definition of disability applicable to the ADA but also amended the Rehabilitation Act of 1973 to conform the section 504 definition of disability at 29 U.S.C. 705(20)(B) to the revised ADA definition. In this rulemaking, NASA is proposing to amend its section 504
Due to the changes that the ADA Amendments Act made to the application of the definition of disability, participants in recipients' programs, services, and activities who, in the past decade, may not have been determined to have a disability under section 504 and title II may now in fact be found to have a disability under those laws. Section 504 and the ADA define disability as (1) a physical or mental impairment that substantially limits a major life activity; (2) a record of such impairment; or (3) being regarded as having such an impairment [29 U.S.C. 705(9)(B); 42 U.S.C. 12102(1)]. The ADA Amendments Act does not alter these three elements of the definition of disability in the ADA and section 504, but it significantly changes how the term “disability” is to be interpreted and adds important rules of construction to inform that interpretation. Specifically, Congress directed that the definition of disability shall be construed broadly and that the determination of whether an individual has a disability should not demand extensive analysis [42 U.S.C. 12102].
NASA's proposed revisions to the definition of disability are all based on specific provisions in the ADA Amendments Act or specific language in the legislative history. Since the ADA Amendments Act does not change the meaning of the term “physical or mental impairment,” NASA is retaining the general regulatory definitions for this term with only minor modifications consistent with DOJ's proposed revisions to its Title II ADA regulations. First, NASA is proposing to add examples of two new body systems—the immune system and the circulatory system—that may be affected by a physical impairment. See 14 CFR 1251.102(h)(2)(A). In addition, “dyslexia” will be added to 14 CFR 1251.102(h)(2)(A) as one example of a specific learning disability that falls within the meaning of the phrase “physical or mental impairment.”
The proposed revisions also expand the definition of “major life activities” by providing a non-exhaustive list of major life activities and specifically including the operation of major bodily functions. Prior to the ADA Amendments Act, section 504 did not define “major life activities,” leaving delineation of illustrative examples to agency regulations. The definition of “disability” in the NASA's current section 504 regulations states that “[m]ajor life activities means functions such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.” See 14 CFR 1251.102(h)(2)(ii). The ADA, as amended, incorporates into the statutory language a non-exhaustive list of major life activities that includes, but is not limited to, “caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working.” See 42 U.S.C. 12102(2)(A). This list reflects Congress's concern that courts were interpreting the term “major life activities” more narrowly than Congress intended. See 42 U.S.C. 12101(b)(4). In §§ 1251.102(h) and 1251.503(h), NASA proposes to revise its section 504 regulatory definitions of disability to incorporate the statutory examples as well as to provide additional examples included in the EEOC title I final regulation—reaching, sitting, and interacting with others. See 29 CFR 1630.2(i)(1)(i).
These proposed revisions also add rules of construction that should be applied when determining whether an impairment substantially limits a major life activity. The rules of construction state the following:
In keeping with the ADA Amendments Act, the proposed rule provides that if a person seeks to establish coverage under section 504 using the “regarded as” prong of the disability definition, that individual need only establish that he or she has been subjected to an act prohibited by section 504 because of an actual or perceived physical or mental impairment. An individual will not be “regarded as” a person with a disability if the impairment is both transitory (meaning that it has an actual or expected duration of six months or less) and minor. ADA Amendments Act, section 4(a) (codified as amended at 42 U.S.C. 12102).
Although NASA's existing section 504 Federally assisted regulation referenced the provision of auxiliary aids,
NASA proposes to revise Section 1251.2—Employment Practices (Federally Assisted Programs) and Section 1251.540—Employment (Federally Conducted Programs) to conform to the Rehabilitation Act Amendments of 1992 (Pub. L. 102–569, sec. 506) which amended title V to make
NASA is also proposing to clarify its role in the processing and coordination of complaints alleging discrimination by its recipients, Title I of the ADA (title I) prohibits discrimination against individuals with disabilities employed in a business that has fifteen or more employees. Title I is enforced by the United States Equal Employment Opportunity Commission (EEOC) and is the designated Federal agency for the processing and adjudication of all complaints filed under title I. Many of the Agency's recipients may fall under the jurisdiction of title I and may also file a complaint alleging discrimination under section 504. NASA has authority to receive complaints of discrimination and has developed procedures to identify when NASA has jurisdiction to process such complaints or when they must be referred to the EEOC or DOJ for processing. In order to avoid duplication of investigative and enforcement efforts, NASA will process and coordinate any complaints filed under this Part in accordance with the Equal Employment Opportunity Commission (EEOC) procedures set forth in 29 CFR part 1640 and the Department of Justice (DOJ) procedures set forth at 28 CFR part 37 (Procedures for Coordinating the Investigation of Complaints or Charges of Employment Discrimination Based on Disability Subject to the Americans with Disabilities Act and Section 504 of the Rehabilitation Act of 1973).
NASA is also proposing to clarify its role in the processing and adjudication of section 504 complaints in its Federally conducted programs.
NASA's current section 504 Federally assisted regulation at § 1251.103(b)(3) provides that “[r]ecipients shall take appropriate steps to ensure that no handicapped individual is denied the benefits of, excluded from participation in, or otherwise subjected to discrimination in any program or activity receiving Federal financial assistance because of the absence of auxiliary aids for individuals with impaired sensory, manual, or speaking skills.”
This Notice of Proposed Rule Making (NPRM) proposes to clarify this existing obligation by providing affirmative language explaining this obligation. Similar language is already included in NASA's Federally conducted regulation at § 1251.560. (Communications)
NASA's section 504 regulations at § 1251.107(a) require a recipient that employs 15 or more persons to take appropriate initial and continuing steps to notify participants, beneficiaries, applicants, and employees, including those with or hearing and vision disabilities, and unions or professional organizations holding collective bargaining or professional agreements with the recipient that it does not discriminate on the basis of disability in violation of section 504 and this part. The notification shall state, where appropriate, that the recipient does not discriminate in admission or access to, or treatment or employment in, its programs or activities. The notification shall also include an identification of the responsible employee designated to coordinate the recipient's efforts to comply with section 504 pursuant to § 1251.106(a). The regulation requires the recipient to make the initial notification required by this paragraph within 90 days of the effective date of this part. This regulation also delineates the methods of initial and continuing notification to include “the posting of notices, publication in newspapers and magazines, placement of notices in recipient's publication, and distribution of memoranda or other written communications.” NASA recognizes that the methods by which a recipient communicates with interested persons has changed significantly since these regulations were promulgated and this regulation as currently written does not reflect the current and future state of information dissemination. With the advent of broad application of the Internet and the Web, as well as electronic publishing, electronic mail, text messaging, and social media platforms, NASA has determined that the regulation does not adequately include electronic methods of communication. Furthermore, NASA's grant recipients currently rely on their Web sites, email, text messaging, and social media to communicate with and provide information to the beneficiaries of its programs, services, and activities. Many of the publications that were available in print such as pamphlets, brochures, maps, course catalogs, policies, and procedures are now posted on the recipients' Web sites and can be printed or downloaded by the interested person viewing the Web site. In revising the regulation to include electronic communications, NASA is also providing its grant recipients the ability to provide this information in a more cost-effective and expeditious manner than by relying on printed media. Information or programs provided to the public on recipient's Web sites should be provided in an accessible format in order to ensure equal access to the recipient's programs, services, and activities.
NASA's section 504 regulations at § 1251.302(c) require that if construction of a recipient's facility commenced after the effective date of the regulations (January 18, 1991), the facility must be designed and constructed so that it is readily accessible to and usable by persons with disabilities. These regulations also require that facility alterations commenced after January 18, 1991, that affect or may affect the facility's usability must be accomplished so that, to the maximum extent feasible, the altered portion of the facility is readily accessible and usable by persons with disabilities.
For facilities subject to the new construction and alterations requirements, the NASA regulation at § 1251.302(c) has always incorporated by reference an accessibility design standard, such that construction or alterations in conformance with that standard would be deemed in compliance with NASA's section 504 regulation. Under the current regulation, new construction or alterations made in conformance with the Uniform Federal Accessibility Standards (UFAS) are deemed to be in compliance with NASA's section 504 regulation, although a recipient may depart from UFAS when other methods provide equivalent or greater access to and usability of the facility.
The adoption of UFAS as an accessibility design standard in NASA's section 504 regulation occurred in 1991 as part of a joint rulemaking with other Federal agencies, led by the DOJ pursuant to its coordinating authority for section 504 under Executive Order 12250.
DOJ's 1991 title II ADA regulation incorporated by reference two sets of standards for new construction and alterations: UFAS and the 1991 ADA Standards for Accessible Design (1991 Standards) except that the elevator exemption contained at sections 4.1.3(5) and 4.1.6(1)(k) of the 1991 Standards did not apply. The 1991 title II ADA regulations also permitted departures from the particular requirements of either standard by the use of other methods when it was clearly evident that equivalent access to the facility or part of the facility is thereby provided. UFAS was included as an option for title II entities because it was deemed the accessibility standard under existing section 504 accessibility regulations. UFAS was not an accessibility option under the ADA for title III entities, even if they were also subject to an agency section 504 regulation.
On September 15, 2010, DOJ published revised title II and title III ADA regulations that included the adoption of revised accessibility standards, the 2010 ADA Standards for Accessible Design (2010 Standards).
In the preamble to the final title II regulation, DOJ stated that Federal agencies that extend Federal financial assistance should revise their section 504 regulations to adopt the 2010 Standards as section 504 standards for new construction and alterations
Under NASA's section 504 regulations, the same accessibility standards for new construction and alterations are applied to all recipients regardless of whether they are public or private entities that have an obligation to comply with title II or title III of the ADA, respectively. That is, both private and public recipients are subject to the same requirements for the purposes of compliance with NASA's section 504 regulations. The 2010 Standards impose several different requirements for buildings and facilities covered by title II as compared to buildings and facilities covered by title III. For example, Exception 1 of section 206.2.3 of the 2010 Standards exempts certain multistory buildings owned by private entities from the requirement to provide an elevator. This exemption does not apply to buildings owned by public entities. Similarly, the 2010 Standards specify TTY requirements for public buildings that are different than those required for private buildings. In order to maintain consistency in the requirements applicable to all its recipients, regardless of whether they are public or private entities, NASA is requiring all buildings and facilities covered by its section 504 Federally assisted rule to comply with the requirements for a “public building or facility,” which are the requirements for buildings subject to title II of the ADA.
The NPRM proposes that compliance with the 2010 Standards is required one year from the publication date of the final rule in the
The NPRM also proposes to adopt the approach used in both title II at 28 CFR 35.151(c) and title III at 28 CFR 36.406(a) to determine the “triggering event” for applying the proposed standards to new construction and alterations under section 504. For NASA recipients that are public entities (i.e., state and local governments and their agencies and organizations) who would otherwise comply with title II, the triggering event will be the commence of physical construction or alterations. For private entities who would otherwise comply with title III (i.e., privately owned and operated organizations), the triggering event is the date of: a) The last application for a building permit or permit extension certified to be complete by a state, county, or local government; or b) in those jurisdictions where the government does not certify completion of applications, the date when the last application for a building permit or permit extension is received by the State, county, or local government; or c) if no permit is required, the start of physical construction or alterations. For both public and private entities, NASA proposes to adopt the language found at 28 CFR 35.151(c)(4) in title II and 28 CFR 36.406(a)(4) in title III to make it clear that the date of ceremonial groundbreaking or the date a structure is razed to make it possible for construction of a facility to take place does not qualify as the commencement of physical construction.
In
Subsequently, in
In addition, in keeping with these decisions of the Supreme Court over the past decades, Federal courts and Federal agencies have regularly acknowledged the affirmative obligation to provide qualified individuals with disabilities reasonable accommodations in programs, services, and activities.
Similarly, Congress, in the ADA at 42 U.S.C. 12182(b)(2)(A)(ii), and DOJ, in its ADA regulations at 28 CFR 35.130(b)(7) and 28 CFR 36.302, stated the obligation as a positive requirement to make reasonable changes in policies, practices, or procedures when necessary to avoid discrimination on the basis of disability. Accordingly, and with the approval of the DOJ pursuant to its section 504 coordination authority, we are proposing to add to the section 504 rule at §§ 1251.111 (Federally Assisted Programs) and 1251.581 (Federally Conducted Programs) a provision stating that a recipient must provide reasonable accommodations by making changes to policies, practices, or procedures when necessary to avoid discrimination on the basis of disability, unless the covered entity can show that the accommodations would result in a fundamental alteration in the nature of its service, program, or activity or impose undue financial and administrative burdens. The term “reasonable accommodation” is intended to have the same meaning as the term reasonable modifications under title II of the ADA (and the title II implementing regulation) and not the same meaning as “reasonable accommodation” in title I of the ADA (and the title I implementing regulation) covering employment. However, unlike reasonable modifications under title II, the obligation to provide reasonable accommodations under section 504 is limited by both the fundamental alteration and the undue financial and administrative burden defenses.
NASA is proposing to revise § 1251.102(k) Qualified Individual with a Disability in order to streamline the language and update the references to employment to cite to the EEOC title I ADA regulation.
In
Federal agencies that have the responsibility to ensure that their recipients comply with civil rights regulations that prohibit discrimination in programs, services, and activities that receive Federal financial assistance have provisions in their regulations that provide the authority for agencies to ensure compliance and conduct enforcement activities. NASA's section 504 regulation at § 1251.400 incorporates by reference several provisions of the Title VI of the Civil Rights Act of 1964 regulation that authorize NASA to conduct compliance activities to ensure that recipients do not discriminate on the basis of disability in their programs, services, and activities. These provisions of the title VI regulation require NASA to conduct periodic compliance reviews of recipient programs; receive, investigate and resolve complaints of
NASA proposes to amend its section 504 regulation at § 1251.400 to incorporate by reference those title VI regulatory provisions omitted from this section 504 Federally assisted regulation that are necessary for NASA to ensure that recipients and subrecipients are complying with this part. Accordingly, NASA will incorporate by reference into § 1251.400, NASA's title VI regulation at § 1250.105 (Compliance Information), which requires NASA to seek the cooperation of recipients in obtaining compliance with this part; requires recipients and subrecipients to keep records and provide reports to NASA upon request to determine compliance with this part; requires recipients to permit NASA to have access to records and sources of information to determine compliance with this part; and requires recipients to make available information regarding provisions of this part in a manner deemed appropriate by NASA to apprise interested persons of the rights and protections afforded to them by this part. NASA will also incorporate by reference into § 1251.400, NASA's title VI regulation at § 1250.107 (Procedures for Effecting Compliance), which delineates the process by which NASA will effectuate compliance with this part through the termination, suspension, or refusal to grant or continue Federal financial assistance if a recipient's noncompliance with this part cannot be remedied through informal means. Lastly, NASA will incorporate by reference into § 1251.400, NASA's title VI regulation at § 1250.109 (decisions and notices) which delineates the process for rendering decisions and findings of the hearings conducted in accordance with § 1250.107.
In addition to its proposed revisions to its section 504 Federally assisted regulation at § 1215.1, NASA is also proposing to revise its section 504 regulation that prohibits discrimination on the basis of disability in programs, services, and activities conducted by NASA at § 1251.5. In 1978, Congress extended application of section 504 to programs and activities conducted by Federal Executive agencies and the United States Postal Service. Pursuant to Executive Order 12250, the Department of Justice developed a prototype regulation to implement the 1978 amendment for Federally conducted programs and activities. More than 80 Federal agencies, including NASA, have now issued final regulations based on that prototype, prohibiting discrimination based on handicap in the programs and activities they conduct. Despite the large number of regulations implementing section 504 for Federally assisted and Federally conducted programs and activities, there is very little variation in their substantive requirements, or even in their language. The regulatory revisions in this rulemaking do not propose different requirements for NASA's Federally conducted programs, with the exception of the applicable accessibility standards for new and altered facilities.
Specifically, NASA proposes to revise the definition of “disability” and “individual with a disability” at § 1251.503 by incorporating by reference the companion definitions in the revised Federally assisted programs regulation at § 1251.102(h) and (k). NASA also proposes to revise the definition of “direct threat” and revise the regulatory standards for direct threat, employment, and reasonable accommodation in the Federally conducted programs regulation to conform with the companion regulatory standards for direct threat found at § 1251.110, employment found at § 1251.2, and reasonable accommodation found at § 1251.111. Lastly, NASA proposes to revise its Federally conducted programs regulation at § 1251.551 to update the regulatory reference to the GSA standards applicable to Federal buildings subject to the Architectural Barriers Act for new construction and alterations, which is no longer at GSA Federal Management Regulation 41 CFR 101–19.600 to 101–19.607, but is now found at 41 CFR part 102–76, subpart C.
The National Aeronautics and Space Act (the Space Act), 51 U.S.C. 20113 (a), authorizes the Administrator of the National Aeronautics and Space Administration (NASA) to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of its operations and the exercise of the powers vested in it by law.
Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This proposed rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, this rule has been reviewed by the Office of Management and Budget.
It has been certified that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities.
This rule does not contain an information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
This rule will not result in the expenditure by state, local, and Tribal governments, in the aggregate, or by the
This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996 (as amended), 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.
Administrative practice and procedure, civil rights, equal employment opportunity, Federal buildings and facilities, and individuals with disabilities.
For the reasons stated in the preamble, the National Aeronautics and Space Administration proposes to amend 14 CFR part 1251 as follows:
Sec. 504 (29 U.S.C. 794)
(a)
(b)
The revisions and additions read as follows:
(h) * * *
(1) * * *
(iii) Being regarded as having such an impairment as described in paragraph (h)(1)(v)(A) of this section. This means that the individual has been subjected to an action prohibited by this part because of an actual or perceived impairment that is not both “transitory and minor.”
(A)
(
(B) [Reserved]
(2) * * *
(i)
(A) Any physiological disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: Neurological, musculoskeletal, special sense organs, respiratory (including speech organs), cardiovascular, reproductive, digestive, genitourinary, immune, circulatory, hemic and lymphatic, skin, and endocrine; or
(B) Any mental or psychological disorder such as an intellectual disability, organic brain syndrome, emotional or mental illness, and specific learning disabilities. The phrase “physical or mental impairment”
(C) The phrase “physical or mental impairment” does not include homosexuality or bisexuality.
(ii)
(A) Caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, interacting with others, and working; and
(B) The operation of a major bodily function, including functions of the immune system, special sense organs and skin; normal cell growth; and digestive, genitourinary, bowel, bladder, neurological, brain, respiratory, circulatory, cardiovascular, endocrine, hemic, lymphatic, musculoskeletal, and reproductive functions. The operation of a major bodily function includes the operation of an individual organ within a body system.
(C) In determining other examples of major life activities, the term “major” shall not be interpreted strictly to create a demanding standard for disability. Whether an activity is a “major life activity” is not determined by reference to whether it is of “central importance to daily life.”
(iii)
(
(
(
(
(
(
(
(
(
(B)
(
(
(
(
(
(i
(
(
(
(
(
(
(
(C)
(
(
(D) Mitigating measures include, but are not limited to:
(
(
(
(
(
(iv)
(A)
(B) Reasonable accommodation. An individual with a record of a substantially limiting impairment may be entitled to a reasonable accommodation if needed and related to the past disability.
(v)
(A) An individual is “regarded as having such an impairment” if the individual is subjected to an action prohibited by the ADA because of an actual or perceived physical or mental impairment, whether or not that impairment substantially limits, or is perceived to substantially limit, a major life activity, except for an impairment that is both transitory and minor. A transitory impairment is an impairment with an actual or expected duration of six months or less.
(B) An individual is “regarded as having such an impairment” any time a covered entity takes a prohibited action against the individual because of an actual or perceived impairment, even if the entity asserts, or may or does ultimately establish, a defense to such action.
(C) Establishing that an individual is “regarded as having such an impairment” does not, by itself, establish liability. Liability is established under section 504 only when an individual proves that a covered entity discriminated on the basis of disability within the meaning of section 504.
(vi)
(A) Transvestism, transsexualism, pedophilia, exhibitionism, voyeurism, gender identity disorders not resulting from physical impairments, or other sexual behavior disorders;
(B) Compulsive gambling, kleptomania, or pyromania; or
(C) Psychoactive substance use disorders resulting from current illegal use of drugs.
(i)
(1) With respect to any aid, benefit, or service, provided under a program or activity subject to this part, an individual with a disability who, with or without reasonable accommodations in rules policies, or procedures, the removal of architectural, communication, or transportation barriers, or the provision auxiliary aids or services, meets the essential eligibility requirements for participation in, or receipt from, that aid, benefit, or service, and
(2) With respect to employment, the definition given that term in the Equal Employment Opportunity Commission's regulation at 29 CFR part 1630, implementing Title I of the Americans with Disabilities Act of 1990, which regulation is made applicable to this part by § 1251.2.
(j)
(l)
(m)
(1) Qualified interpreters onsite or through video remote interpreting (VRI) services; notetakers; real-time computer-aided transcription services; written materials; exchange of written notes; telephone handset amplifiers; assistive listening devices; assistive listening systems; telephones compatible with hearing aids; closed caption decoders; open and closed captioning, including realtime captioning; voice, text, and video-based telecommunications products and systems, including text telephones (TTYs), videophones, and captioned telephones, or equally effective telecommunications devices; videotext displays; accessible electronic and information technology; or other effective methods of making aurally delivered information available to
(2) Qualified readers; taped texts; audio recordings; Brailled materials and displays; screen reader software; magnification software; optical readers; secondary auditory programs (SAP); large print materials; accessible electronic and information technology; or other effective methods of making visually delivered materials available to individuals who are blind or have low vision;
(3) Acquisition or modification of equipment or devices; and
(4) Other similar services and actions.
(a) A recipient that employs 15 or more persons shall take appropriate initial and continuing steps to notify participants, beneficiaries, applicants, and employees, including those with vision or hearing disabilities, and unions or professional organizations holding collective bargaining or professional agreements with the recipient that it does not discriminate on the basis of disability in violation of section 504 and this part. The notification shall state, where appropriate, that the recipient does not discriminate in admission or access to, or treatment or employment in, its programs or activities. The notification shall also include an identification of the responsible employee designated pursuant to § 1251.106(a). A recipient shall make the initial notification required by this paragraph within 90 days of the effective date of this part. Methods of initial and continuing notification may include the posting of notices, transmission via electronic mail or text message, publication on the recipient's internet Web site, or in newspapers and magazines, placement of notices in recipient's publication, and distribution of memoranda or other written communications.
(a) This part does not require a recipient to permit an individual to participate in or benefit from the services, programs, or activities of that recipient when that individual poses a direct threat to the health or safety of others.
(b) In determining whether an individual poses a direct threat to the health or safety of others, a recipient must make an individualized assessment, based on reasonable judgment that relies on current medical knowledge or on the best available objective evidence, to ascertain: the nature, duration, and severity of the risk; the probability that the potential injury will actually occur; and whether reasonable accommodations in policies, practices, or procedures or the provision of auxiliary aids or services will mitigate the risk.
A recipient shall make reasonable accommodations in policies, practices, or procedures when such accommodations are necessary to avoid discrimination on the basis of disability, unless the recipient can demonstrate that making the accommodations would fundamentally alter the nature of the service, program, or activity or result in an undue financial and administrative burden. For the purposes of this section, the term reasonable accommodation shall be interpreted in a manner consistent with the term “reasonable modifications” as set forth in the Americans with Disabilities Act Title II regulation at 28 CFR 35.130(b)(7), and not as it is defined or interpreted for the purposes of employment discrimination under Title I of the ADA (42 U.S.C. 12111–12112) and its implementing regulation at 29 CFR Part 1630.
(a) A recipient shall take appropriate steps to ensure effective communication with applicants, participants, and members of the public.
(1) The recipient shall furnish appropriate auxiliary aids or services where necessary to afford an individual with a disability, including applicants, participants and members of the public, an equal opportunity to participate in, and enjoy the benefits of, a program or activity of the recipient.
(i) In determining what type of auxiliary aid or service is necessary, the recipient shall give primary consideration to the requests of the individual with a disability.
(ii) The recipient need not provide individually prescribed devices, readers for personal use or study, or other devices of a personal nature.
(2) Where the recipient communicates with applicants and beneficiaries by telephone, telecommunication devices for deaf persons (TTY's) or equally effective telecommunication systems shall be used to communicate with persons with hearing disabilities.
(b) The recipient shall ensure that interested persons, including persons with vision or hearing disabilities, can obtain information as to the existence and location of accessible services, activities, and facilities.
(c) This section does not require the recipient to take any action that it can demonstrate would result in a fundamental alteration in the nature of a program or activity or in undue financial and administrative burdens. In those circumstances where the recipient believes that the proposed action would fundamentally alter the program or activity or would result in undue financial and administrative burdens, the recipient has the burden of proving that compliance with § 1251.112 would result in such alteration or burdens. The decision that compliance would result in such alteration or burdens must be made by the recipient agency head or his or her designee after considering all of the recipient's resources available for use in the funding and operation of the conducted program or activity and must be accompanied by a written statement of the reasons for reaching that conclusion. If an action required to comply with this section would result in such an alteration or such burdens, the recipient shall take any other action that would not result in such an alteration or such burdens but would nevertheless ensure that, to the maximum extent possible, individuals with disabilities receive the benefits and services of the program or activity.
(a)
(b)
(a)
(c)
(ii) New construction and alterations in which the last application for a building permit or permit extension for such construction or alterations is certified to be complete by a state, county, or local government (or, in those jurisdictions where the government does not certify completion of applications, if the date when the last application for a building permit or permit extension is received by the state, county, or local government) is on or after [DATE ONE YEAR AFTER PUBLICATION OF THE FINAL RULE IN THE
(2)
(ii) If physical construction or alterations commence on or after [DATE ONE YEAR AFTER PUBLICATION OF THE FINAL RULE IN THE
(3) For the purposes of this section, ceremonial groundbreaking or razing of structures prior to site preparation will not be considered to commence or start physical construction or alterations.
(4) All newly constructed or altered buildings or facilities subject to this section shall comply with the requirements for a “public building or facility” as defined in section 106.5 of the 2010 Standards.
(a) The investigative, compliance, and enforcement procedural provisions of Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) are hereby adopted and apply to these section 504 regulations. These procedures are found at §§ 1250.105 through 1250.110 of this chapter.
(b) The agency shall ensure that complaints alleging violations of section 504 with respect to employment are processed according to the procedures established by the EEOC in 29 CFR part 1640 and the United States DOJ at 28 CFR part 37.
As used in this part, the term:
(1) Qualified interpreters onsite or through VRI services; notetakers; real-time computer-aided transcription services; written materials; exchange of written notes; telephone handset amplifiers; assistive listening devices; assistive listening systems; telephones compatible with hearing aids; closed caption decoders; open and closed captioning, including realtime captioning; voice, text, and video-based telecommunications products and systems, including text telephones (TTYs), videophones, and captioned telephones, or equally effective telecommunications devices; videotext displays; accessible electronic and information technology; or other effective methods of making aurally delivered information available to individuals who are deaf or hard of hearing;
(2) Qualified readers; taped texts; audio recordings; Brailled materials and displays; screen reader software; magnification software; optical readers; secondary auditory programs (SAP); large print materials; accessible electronic and information technology; or other effective methods of making visually delivered materials available to individuals who are blind or have low vision;
(3) Acquisition or modification of equipment or devices; and
(4) Other similar services and actions.
(a)
(b)
Each building or part of a building that is constructed or altered by, on behalf of, or for the use of the agency shall be designed, constructed, or altered so as to be readily accessible to and usable by individuals with handicaps. The definitions, requirements, and standards of the Architectural Barriers Act (42 U.S.C. 4151–4157), as established in 41 CFR part 102–76, subpart C, apply to buildings covered by this section.
(b) The agency shall process complaints alleging violations of section 504 with respect to employment according to the procedures established by the Equal Employment Opportunity Commission in 29 CFR part 1614.
(c) The Associate Administrator for Diversity and Equal Opportunity shall be responsible for coordinating implementation of this section. Complaints may be sent to the Office of Diversity and Equal Opportunity, NASA Headquarters, 300 E Street SW., Washington, DC 20546.
(a) This part does not require the Agency to permit an individual to participate in or benefit from the services, programs, or activities of that recipient when that individual poses a direct threat to the health or safety of others.
(b) In determining whether an individual poses a direct threat to the health or safety of others, a recipient must make an individualized assessment, based on reasonable judgment that relies on current medical knowledge or on the best available objective evidence, to ascertain: the nature, duration, and severity of the risk; the probability that the potential injury will actually occur; and whether reasonable accommodations in policies, practices, or procedures or the provision of auxiliary aids or services will mitigate the risk.
The agency shall make reasonable accommodations in policies, practices, or procedures when such accommodations are necessary to avoid discrimination on the basis of disability,
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking by cross-reference to temporary regulation.
In the Rules and Regulations section of this issue of the
Written or electronic comments and requests for a public hearing must be received by January 12, 2015.
Send submissions to: CC:PA:LPD:PR (REG–138605–13), Internal Revenue Service, Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–138605–13), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20224; or sent electronically via the Federal eRulemaking Portal at
Concerning the proposed regulation, Neil Worden, (202) 317–5775; concerning submissions of comments, Oluwafunmilayo (Funmi) Taylor, Publications and Regulations Branch, (202) 317–6901 (not toll-free numbers).
The temporary regulation published in the Rules and Regulations section of this issue of the
It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
Before this proposed regulation is adopted as a final regulation, consideration will be given to any written or electronic comments that are timely submitted to the IRS. The IRS and the Treasury Department request comments on all aspects of the proposed regulations. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested by any person who timely submits comments. If a public hearing is scheduled, notice of the date, time and place for the hearing will be published in the
The principal author of these regulations is Karen F. Keller, Office of Associate Chief Counsel (General Legal Services). However, other personnel from the IRS participated in their development.
Federal employees, Organization and functions (Government agencies).
Accordingly, 26 CFR Part 801 is proposed to be amended as follows:
5 U.S.C. 9501 * * *
Office of Surface Mining Reclamation and Enforcement (OSMRE), Interior.
Proposed rule; reopening of the comment period.
We are reopening the public comment period on a proposed
The comment period for the proposed rule published on May 20, 2014, at 79 FR 28858–28860 is reopened. We will accept written comments on this amendment and the Special Reclamation Tax Credit Rule being announced today until 4:00 p.m. EDT, on November 28, 2014.
You may submit comments by any of the following two methods: Federal eRulemaking Portal:
Please include the rule identifier (WV–122–FOR) with your written comments.
In addition, you may review a copy of the amendment during regular business hours at the following locations:
Mr. Roger W. Calhoun, Director, Charleston Field Office, Telephone: (304) 347–7158. Email:
Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, “. . . a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of the Act . . .; and rules and regulations consistent with regulations issued by the Secretary pursuant to the Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the West Virginia program on January 21, 1981. You can find background information on the West Virginia program, including the Secretary's findings, the disposition of comments, and conditions of approval of the West Virginia program in the January 21, 1981,
On June 6, 2014, the West Virginia State Tax Department filed a Special Reclamation Tax Credit Rule with the Secretary of State to implement the special reclamation tax incentive revisions at West Virginia Code Section 22–3–11(g) and (h) for mine operators who reclaim bond forfeiture sites within the State. The statutory revisions, as set forth in Committee Substitute for House Bill 2352, were previously announced in the May 20, 2014,
This rule further clarifies and implements the proposed revisions to West Virginia Code 22–3–11(g and h) relating to special reclamation tax incentives for mine operators who reclaim bond forfeiture sites. The new Special Reclamation Tax Credit regulations are set forth at the Code of State Regulations (CSR) 110–29–1 through 6.
Non-substantive additions at CSR 110–29–2 include definitions of “Act,” “Bond forfeited mine site,” “Secretary,” and “Tax Commissioner.”
CSR 110–29–1.5 clarifies that the special reclamation tax credit is only available to qualified operators for taxable years beginning on or after July 12, 2013.
Under the new tax credit rule at CSR 110–29–2.4, a qualified operator is any person that obtains a permit under the West Virginia Surface Coal Mining and Reclamation Act to mine coal and perform reclamation on a bond forfeited mine site and that qualifies for the special reclamation tax credit.
CSR 110–29–4 sets forth requirements governing the application for and the amount of the tax credit. Section 4 provides that a qualified operator may reclaim the bond forfeited mine site pursuant to either an Article 3 permit or a reclamation agreement. The amount of tax credit granted to the qualified operator is based on the amount of money that would have been spent from the Special Reclamation Fund and the Special Reclamation Water Trust Fund on the bond forfeited site as determined by the WVDEP Secretary.
CSR 110–29–5 specifies operator eligibility requirements for the tax credit and the limitation of the tax credit. A
CSR 110–29–6 contains general procedures to claim and administer the tax credit. The qualified operator must provide complete and accurate forms and other information to claim the tax credit. In addition, the qualified operator must maintain records to verify the validity of the tax credit and the amount of tax credit claimed. Finally, the Tax Commissioner has the authority to audit the qualified operator.
All of the proposed State tax credit requirements identified above are intended to conform to the Federal requirements of 30 CFR 800.50 and sections 509 and 519 of SMCRA.
Under the provisions of 30 CFR 732.17(h), we are seeking your comments on whether the amendment satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the West Virginia program.
Send your written comments to OSMRE at one of the addresses given above. Your written comments should be specific, pertain only to the issues proposed in this rulemaking, and include explanations in support of your recommendations. We may not consider or respond to your comments when developing the final rule if they are received after the close of the comment period (see
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
This rule is exempted from review by the Office of Management and Budget (OMB) under Executive Order 12866.
When a State submits a program amendment to OSMRE for review, our regulations at 30 CFR 732.17(h) require us to publish a notice in the
Intergovernmental relations, Surface mining, Underground mining.
Environmental Protection Agency.
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve portions of submissions from Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee for inclusion into each State's implementation plan. This proposal pertains to the Clean Air Act (CAA or Act) infrastructure requirements for the 2008 Lead, 2008 Ozone and 2010 Nitrogen Dioxide (NO
Written comments must be received on or before December 15, 2014.
Submit your comments, identified by Docket ID No. EPA–R04–OAR–2014–0610, by one of the following methods:
1.
2. Email:
3. Fax: (404) 562–9019.
4. Mail: “EPA–R04–OAR–2014–0610,” Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960.
5. Hand Delivery or Courier: Lynorae Benjamin, Chief, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. Such deliveries are only accepted during the Regional Office's normal hours of operation. The Regional Office's official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding federal holidays.
Sean Lakeman, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303–8960. The telephone number is (404) 562–9043. Mr. Lakeman can be reached via electronic mail at
By statute, SIPs meeting the requirements of sections 110(a)(1) and (2) are to be submitted by states within three years after promulgation of a new or revised NAAQS to provide for the implementation, maintenance, and enforcement of the new or revised NAAQS. EPA has historically referred to these SIP submissions made for the purpose of satisfying the requirements of CAA sections 110(a)(1) and 110(a)(2) as “infrastructure SIP” submissions. Sections 110(a)(1) and (2) require states to address basic SIP elements such as for monitoring, basic program requirements and legal authority that are designed to assure attainment and maintenance of the newly established or revised NAAQS. More specifically, section 110(a)(1) provides the procedural and timing requirements for SIPs. Section 110(a)(2) lists specific elements that states must meet for the “infrastructure” SIP requirements related to a newly established or revised NAAQS. The contents of an infrastructure SIP submission may vary depending upon the data and analytical tools available to the state, as well as the provisions already contained in the state's implementation plan at the time in which the state develops and submits the submission for a new or revised NAAQS.
Through this action, EPA is proposing approval of the PSD requirements of sections 110(a)(2)(C), 110(a)(2)(D)(i)(II) (prong 3) and 110(a)(2)(J) (hereafter “PSD Elements”) for various infrastructure SIP submissions from the states of Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee. As described further below, for some of these states, EPA is proposing approval of the PSD Elements in the infrastructure SIP submissions for the 2008 Lead, 2008 Ozone and 2010 NO
A brief background regarding the NAAQS relevant to today's proposal is provided below. For comprehensive information on these NAAQS, please refer to the
On October 5, 1978, EPA promulgated a revised NAAQS for Lead under section 109 of the Act.
For the 2008 Lead NAAQS, EPA is only addressing the PSD Elements of the infrastructure SIP submissions from Alabama (received November 4, 2011), Florida (received October 14, 2011), Georgia (received May 14, 2012), Kentucky (received July 17, 2012), Mississippi (received November 17, 2011), and South Carolina's (received September 20, 2011). EPA notes that the Agency approved the PSD Elements of Tennessee's 2008 Lead infrastructure SIP submission on August 12, 2013 (78 FR 48806).
On March 27, 2008, EPA promulgated a revised NAAQS for ozone based on 8-hour average concentrations. EPA revised the level of the 8-hour Ozone NAAQS to 0.075 parts per million.
For the 2008 Ozone NAAQS, EPA is only addressing the PSD Elements of the infrastructure SIP submissions from Alabama (received August 20, 2012), Georgia (received March 6, 2012), Mississippi (received May 29, 2012; and resubmitted July 26, 2012), and South Carolina (received on July 17, 2012). EPA notes that the Agency approved the PSD Elements of the Florida, Kentucky and Tennessee infrastructure SIP submissions for the 2008 Ozone NAAQS on May 19, 2014 (79 FR 28607),
On February 9, 2010 (75 FR 6474), EPA established a new 1-hour primary NAAQS for NO
For the 2010 NO
EPA is acting upon the PSD Elements portions of SIP submissions that address the infrastructure requirements of CAA sections 110(a)(1) and 110(a)(2) for the 2008 Lead, 2008 Ozone and 2010 NO
EPA has historically referred to these SIP submissions made for the purpose of satisfying the requirements of CAA sections 110(a)(1) and 110(a)(2) as “infrastructure SIP” submissions. Although the term “infrastructure SIP” does not appear in the CAA, EPA uses the term to distinguish this particular type of SIP submission from submissions that are intended to satisfy other SIP requirements under the CAA, such as “nonattainment SIP” or “attainment plan SIP” submissions to address the nonattainment planning requirements of part D of title I of the CAA, “regional haze SIP” submissions required by EPA rule to address the visibility protection requirements of CAA section 169A, and nonattainment new source review permit program submissions to address the permit requirements of CAA, title I, part D. Section 110(a)(1) addresses the timing and general requirements for infrastructure SIP submissions, and section 110(a)(2) provides more details concerning the required contents of these submissions.
Historically, EPA has elected to use guidance documents to make recommendations to states for infrastructure SIPs, in some cases conveying needed interpretations on newly arising issues and in some cases conveying interpretations that have already been developed and applied to individual SIP submissions for particular elements.
EPA's review of infrastructure SIP submissions with respect to the PSD program requirements in sections 110(a)(2)(C), (D)(i)(II), and (J) focuses upon the structural PSD program requirements contained in part C and EPA's PSD regulations. Structural PSD program requirements include provisions necessary for the PSD program to address all regulated sources and new source review (NSR) pollutants, including greenhouse gases (GHGs). By contrast, structural PSD program requirements do not include provisions that are not required under EPA's regulations at 40 CFR 51.166 but are merely available as an option for the state, such as the option to provide grandfathering of complete permit applications with respect to the 2012 PM
EPA's approach to review of infrastructure SIP submissions is to identify the CAA requirements that are logically applicable to that submission. EPA believes that this approach to the review of a particular infrastructure SIP submission is appropriate, because it would not be reasonable to read the general requirements of section 110(a)(1) and the list of elements in 110(a)(2) as requiring review of each and every provision of a state's existing SIP against all requirements in the CAA and EPA regulations merely for purposes of assuring that the state in question has the basic structural elements for a functioning SIP for a new or revised NAAQS. Because SIPs have grown by accretion over the decades as statutory and regulatory requirements under the CAA have evolved, they may include some outmoded provisions and historical artifacts. These provisions, while not fully up to date, nevertheless may not pose a significant problem for the purposes of “implementation, maintenance, and enforcement” of a new or revised NAAQS when EPA evaluates adequacy of the infrastructure SIP submission. EPA believes that a better approach is for states and EPA to focus attention on those elements of section 110(a)(2) of the CAA most likely to warrant a specific SIP revision due to the promulgation of a new or revised NAAQS or other factors.
EPA believes that its approach with respect to infrastructure SIP requirements is based on a reasonable reading of sections 110(a)(1) and 110(a)(2) because the CAA provides other avenues and mechanisms to address specific substantive deficiencies in existing SIPs. These other statutory
Section 110(a)(2)(C) has three components that must be addressed in infrastructure SIP submissions: Enforcement, state-wide regulation of new and modified minor sources and minor modifications of major sources; and PSD permitting of major sources and major modifications in areas designated attainment or unclassifiable for the subject NAAQS as required by CAA title I part C (
Section 110(a)(2)(D)(i) has two components; 110(a)(2)(D)(i)(I) and 110(a)(2)(D)(i)(II). Each of these components have two subparts resulting in four distinct components, commonly referred to as “prongs,” that must be addressed in infrastructure SIP submissions. The first two prongs, which are codified in section 110(a)(2)(D)(i)(I), are provisions that prohibit any source or other type of emissions activity in one state from contributing significantly to nonattainment of the NAAQS in another state (“prong 1”), and interfering with maintenance of the NAAQS in another state (“prong 2”). The third and fourth prongs, which are codified in section 110(a)(2)(D)(i)(II), are provisions that prohibit emissions activity in one state interfering with measures required to prevent significant deterioration of air quality in another state (“prong 3”), or to protect visibility in another state (“prong 4”).
Section 110(a)(2)(J) has four components that must be addressed in infrastructure SIP submissions: (1) consultation with government officials, (2) public notification, (3) prevention of significant deterioration, and (4) visibility protection.
With respect to the PSD Elements of these sections, EPA interprets the CAA to require each state to make, for each new or revised NAAQS, an infrastructure SIP submission that demonstrates that the air agency has a complete PSD permitting program meeting the current requirements for all regulated NSR pollutants. The requirements of the PSD Elements may also be satisfied by demonstrating that the air agency has a complete PSD permitting program correctly addressing all regulated NSR pollutants.
In addition to analyzing whether a state has adequate authority to regulate new and modified sources to assist in the protection of air quality, there are also four structural PSD program requirements that are relevant to EPA's review of the PSD Elements of the infrastructure SIP submissions for the 2008 Lead, 2008 Ozone and 2010 NO
The Phase II rule established federal NSR permitting requirements for the implementation of the ozone NAAQS including recognizing nitrogen oxide as an ozone precursor.
The GHG Tailoring Rule established emission thresholds for determining which new stationary sources and modification projects become subject to PSD permitting requirements for their GHG emissions.
The 2008 NSR PM
The 2008 implementation rule addressed by the court decision, “Implementation of New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM
The court's decision with respect to the nonattainment NSR requirements promulgated by the 2008 implementation rule also does not affect EPA's action on the present infrastructure actions. EPA interprets the Act to exclude nonattainment area requirements, including requirements associated with a nonattainment NSR program, from infrastructure SIP submissions due 3 years after adoption or revision of a NAAQS. Instead, these elements are typically referred to as nonattainment SIP or attainment plan elements, which would be due by the dates statutorily prescribed under subpart 2 through 5 under part D, extending as far as 10 years following designations for some elements.
On December 9, 2013, EPA issued a final rulemaking to remove the vacated and remanded PM
EPA did not entirely remove PM
By continuing to include PM
EPA also advises states to begin preparations to remove the PM
Described below is EPA's analysis of how the Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee infrastructure SIP submissions meet the requirements of the PSD Elements for the NAAQS for which they were submitted. This analysis includes review of the EPA's previous approval of the four structural PSD program requirements with respect to each of the states addressed in this action. Table 1 below summarizes EPA approvals of these structural PSD program requirements into the Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee SIPs. EPA's rationale for today's proposal with respect to each State is provided below. All other applicable infrastructure requirements for the 2008 Lead, 2008 Ozone and 2010 NO
For the 2008 Lead, 2008 Ozone and 2010 NO
As such, EPA has made the preliminary determination that Alabama's SIP and practices are adequate and comply with PSD Elements of the 2008 Lead, 2008 Ozone and 2010 NO
For the 2008 Lead and 2010 NO
As such, EPA has made the preliminary determination that Florida's SIP and practices are adequate and comply with PSD Elements of the 2008 Lead and 2010 NO
For the 2008 Lead, 2008 Ozone and 2010 NO
Georgia's infrastructure SIP submissions demonstrate that new major sources and major modifications in areas of the state designated attainment or unclassifiable for the specified NAAQS are subject to a federally-approved PSD permitting program meeting all the current structural requirements of part C of title I of the CAA to satisfy the infrastructure SIP PSD Elements, including the authority to regulate GHG emitting sources consistent with the holding in
As such, EPA has made the preliminary determination that Georgia's SIP and practices are adequate and comply with the PSD Elements of the 2008 Lead, 2008 Ozone, and 2010 NO
For the 2008 Lead and 2010 NO
Kentucky's infrastructure SIP submissions demonstrate that new major sources and major modifications in areas of the state designated attainment or unclassifiable for the specified NAAQS are subject to a federally-approved PSD permitting program meeting all the current structural requirements of part C of title I of the CAA to satisfy the infrastructure SIP PSD Elements, including the authority to regulate GHG emitting sources consistent with the holding in
As such, EPA has made the preliminary determination that Kentucky's SIP and practices are adequate and comply with the PSD Elements of the 2008 Lead and 2010 NO
For the 2008 Lead, 2008 Ozone and 2010 NO
For the 2008 Lead, 2008 Ozone and 2010 NO
As such, EPA has made the preliminary determination that South Carolina's SIP and practices are adequate and comply with the PSD Elements requirements of the 2008 Lead, 2008 Ozone, and 2010 NO
For the 2010 NO
As such, EPA has made the preliminary determination that Tennessee's SIP and practices are adequate and comply with the PSD Elements requirements of the 2010 NO
As described above, EPA is proposing to approve the portions of the above-described infrastructure SIP submissions from Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee to address the PSD permitting requirements of sections 110(a)(2)(C), 110(a)(2)(D)(i)(II) (prong 3) and 110(a)(2)(J) of the CAA. As described above, for some of these states, EPA is proposing approval of the PSD Elements of the infrastructure SIP submissions for the 2008 Lead, 2008 Ozone and 2010 Nitrogen NO
EPA also notes that, at present, the Agency has preliminarily determined that the Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee SIPs are sufficient to satisfy the PSD permitting requirements portion of section 110(a)(2)(C), 110(a)(2)(D)(i)(II), prong 3 and 110(a)(2)(J) with respect to GHGs because the PSD permitting program previously-approved by EPA into the SIP continues to require that PSD permits (otherwise required based on emissions of pollutants other than GHGs) contain limitations on GHG emissions based on the application of BACT. Although the approved Alabama, Florida, Georgia, Kentucky, Mississippi, South Carolina and Tennessee PSD permitting programs may currently contain provisions that are no longer necessary in light of the Supreme Court's
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations.
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
With the exception of South Carolina, the SIPs involved in this proposal are not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.” With respect to today's proposed action as it relates to South Carolina, EPA notes that the Catawba Indian Nation Reservation is located within South Carolina and pursuant to the Catawba Indian Claims Settlement Act, S.C. Code Ann. 27–16–120, “all state and local environmental laws and regulations apply to the Catawba Indian Nation and Reservation
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Particulate Matter, Reporting and recordkeeping requirements, Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency.
Notice; additional information regarding the translation of emission rate-based CO
The Environmental Protection Agency (EPA) is issuing this notice in support of the proposed rule, “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” published on June 18, 2014 and the supplemental proposal, “Carbon Pollution Emission Guidelines: Existing Stationary Sources in Indian Country and U.S. Territories; Multi-jurisdictional Partnerships,” issued on October 28, 2014, to provide further discussion of potential approaches for translating the emission rate-based carbon dioxide (CO
Comments on the proposed rule published on June 18, 2014, along with the additional information presented in this notice, must be received on or before December 1, 2014.
The EPA requests that you also submit a separate copy of your comments to the contact person identified below (see
The
In addition to being available in the docket, an electronic copy of this notice will be available on the World Wide Web (WWW). Following signature, a copy of this notice will be posted at the following address:
Ms. Amy Vasu, Sector Policies and Programs Division (D205–01), U.S. EPA, Research Triangle Park, NC 27711; telephone number (919) 541–0107, facsimile number (919) 541–4991; email address:
I. Background
A. Proposed Rule
B. Purpose of the Notice
II. Additional Information on the Translation of Emission Rate-Based CO
On June 18, 2014, under the authority of Clean Air Act (CAA) section 111(d), the EPA proposed emission guidelines for states to follow in developing plans to address greenhouse gas (GHG) emissions from existing fossil fuel-fired electric generating units (EGUs)(79 FR 34830). On October 28, 2014, the EPA also issued a supplemental proposal, “Carbon Pollution Emission Guidelines: Existing Stationary Sources in Indian Country and U.S. Territories; Multi-jurisdictional Partnerships” (79 FR 65481).
One of the main elements of the proposals is the establishment of emission rate-based CO
Upon issuance of the proposed rule, the EPA continued the extensive outreach effort to stakeholders and members of the public that the EPA had engaged in for many months preceding the proposal. This outreach has provided opportunities for all jurisdictions with affected entities—both individually and in regional groups—as well as numerous industry groups and non-governmental organizations, to meet with the EPA and ask clarifying questions about, and give initial reactions to, the proposed components, requirements and timing of the rulemaking. This outreach has included individual meetings; attendance at conferences; webinars; conference calls; and other communications, during which the EPA has responded to hundreds of clarifying questions about the proposal and received numerous initial reactions in both oral and written form. This engagement has been designed to facilitate a better understanding of the rule by stakeholders so that they could provide more informed substantive comments for the EPA to consider for the final rule, as well as allow the EPA to consider stakeholders' initial reactions.
During these discussions, many of the states, in particular, emphasized the importance of having more information and clarity on how the proposed rate-based goals could potentially be translated to a mass-based equivalent metric. Some states requested additional information about how they might calculate a mass-based equivalent metric, while other states requested that the EPA calculate and provide presumptive mass-based equivalent metrics.
The purpose of this notice is to share additional information regarding potential methods for determining the mass that is equivalent to the emission rate-based CO
In the proposed rule published on June 18, 2014, the EPA proposed a set of state-specific emission rate-based CO
In the proposed rule, the EPA intended to afford a considerable amount of flexibility in choosing the types of programs and measures needed to meet the goals established by the rulemaking. An important proposed element of this flexibility is allowing each implementing authority to demonstrate compliance with its interim and final rate-based goals established in the proposal, or to establish equivalent mass-based metrics for purposes of demonstrating compliance with the provisions of the rule. The agency recognizes that implementing authorities can use a mix of measures and programs to meet their goals regardless of which form of the standard they choose to use to demonstrate compliance in the state plan, including both programs that use mass-based metrics, as well as measures that use rate-based measures. State plans submitted to the EPA will be required either to (i) demonstrate that their programs and measures meet the rate-based goals established by the rulemaking, or (ii) if they choose to translate the rate-based goals into mass-based equivalents, demonstrate achievement of the goals using the mass-based metrics.
In section VII of the preamble to the June 18, 2014 proposed rule, the EPA provides basic considerations necessary to translate the emission rate-based CO
The data, assumptions and methodological choices used for the estimation of generation by affected entities are of central importance for translation to a mass-based metric.
In response to requests by states, we are issuing this notice and the TSD, “Translation of the Clean Power Plan Emission Rate-Based CO
The EPA is providing this additional information to states, U.S. territories, tribes, and other stakeholders to provide a better understanding of the proposed rule. It should be reiterated that the mass-based equivalent metrics presented in the TSD are not required mass-based emission limits that implementing authorities must meet; rather, they are illustrations of two potential options that implementing authorities may choose to adopt if they choose to use a mass-based form of the emission rate-based goal. The EPA presents them to provide stakeholders a better understanding of the methodology and mass outcomes associated with two possible ways of calculating mass-based equivalent metrics.
Environmental Protection Agency.
Notice of public meeting on potential rulemaking.
The U.S. Environmental Protection Agency (EPA) is announcing a public meeting and webinar to discuss the agency's preliminary determinations on whether or not to develop drinking water regulations for five unregulated contaminants listed on the third Contaminant Candidate List (CCL3). The EPA published and requested public
The public meeting and webinar will be held on Tuesday, December 9, 2014, from 1 p.m. to 5 p.m., eastern time. Persons wishing to attend the meeting in person or online via webinar must register by December 2, 2014, as described in the
The public meeting will be held at The Cadmus Group, Inc., third floor conference room, located at 1555 Wilson Blvd., Suite 300, Arlington, VA 22209. All attendees must show government-issued photo identification (e.g., a driver's license) when signing in. This meeting will also be simultaneously broadcast as a webinar, available on the Internet.
Members of the public who wish to receive further information about the meeting and webinar or have questions about this notice should contact Ali Arvanaghi, Standards and Risk Management Division, Office of Ground Water and Drinking Water, Environmental Protection Agency, 1200 Pennsylvania Avenue NW., Mail Code 4607M, Washington, DC 20460; telephone number: (202) 564–1260; email address:
Persons wishing to attend the meeting in person or online via the webinar must register in advance no later than 5 p.m., eastern time on December 2, 2014, by sending an email to
The 508-compliant meeting materials will be sent by email to the registered attendees prior to the meeting. Information about registration and participation in the public meeting and webinar can be found on the EPA's Contaminant Candidate List 3 Web site:
The 1996 Safe Drinking Water Act Amendments require EPA to determine whether to regulate at least five unregulated contaminants from the current Contaminant Candidate List (CCL) with national primary drinking water regulations every five years. The process of making decisions about whether to regulate any of the CCL unregulated contaminants is called Regulatory Determination. On October 8, 2009 (74 FR 51850), EPA published the CCL3 containing 116 unregulated contaminants. On October 20, 2014 (79 FR 62716), EPA announced and solicited public comment on its preliminary determinations to regulate one contaminant (i.e., strontium) and to not regulate four contaminants (i.e., 1,3-dinitrobenzene, dimethoate, terbufos and terbufos sulfone). The public comment period for the October 20, 2014, FR announcement, Preliminary Regulatory Determinations for Contaminants on the Third Drinking Water Contaminant Candidate List, closes on December 19, 2014. After considering public comments and any additional information, EPA expects to publish the final, third Regulatory Determination in late 2015.
The Environmental Protection Agency.
Notice of proposed and final modification of the expiration date of the eleven (11) NPDES general permits for Sewage Sludge.
The Environmental Protection Agency (EPA) is giving notice of modification of the expiration date of the National Pollutant Discharge Elimination System (NPDES) general permits for facilities or operations that generate, treat, and/or use/dispose of sewage sludge by means of land application, landfill and surface disposal in the states of Colorado, Montana, North Dakota, and Wyoming and in Indian country in the states of Colorado, Montana, North Dakota, South Dakota, Wyoming and Utah (except for the Goshute Indian Reservation and the Navajo Indian Reservation) from May 12, 2018, to January 15, 2015. The EPA will regulate sewage sludge (biosolids) through the direct enforceability provision of the regulation.
This comment period closes on December 15, 2014.
After considering these comments, the EPA will issue the final permit decision together with written responses to any significant comments, in accordance with 40 CFR 124.15. If no comments are received, the modification of the 11 permits will be effective immediately upon issuance of the final permit decision.
The administrative record is available by appointment for review and copying at the EPA Region 8 offices during the hours of 8:00 a.m. to 4:00 p.m., Monday through Friday, Federal holidays excluded.
To make an appointment to look at or copy the documents call Bob Brobst at (303) 312–6129. The Region 8 offices are located at 1595 Wynkoop Street, Denver, Colorado 80202–1129. A reasonable fee may be charged for copying.
Additional information concerning the final permits may be obtained from Bob Brobst, EPA Region 8, Wastewater Unit (8P–W–WW), 1595 Wynkoop Street, Denver, Colorado 80202–1129, telephone (303) 312–6129 or email at
The final general permits, the fact sheet and additional information may be downloaded from the EPA Region 8 Web page at
The EPA proposes to change the expiration date from May 12, 2018, to January 15, 2015. No other changes will occur in the general permits. The Federal Sewage Sludge Regulations gives the permitting authority, in this case the EPA Region 8, the choice of either issuing a permit or relying on direct enforceability of the regulation.
Direct enforceability means that no person shall use or dispose of sewage sludge through any practice for which requirements are established in the Federal Sewage Sludge Regulation, except in accordance with such requirements.
The EPA Region 8 has decided, for administrative reasons, to regulate sewage sludge (biosolids) through the direct enforceability provision of the regulation. In accordance with 40 CFR 503.3, the permitting authority, in this case the EPA Region 8, may either issue a permit or rely on direct enforceability of the 40 CFR 503. The EPA Region 8 has elected to administer the program under the direct enforceability provision.
The Federal Sewage Sludge Regulations referred to above in the summary section are located at 40 CFR 503 specifically at 40 CFR 503.3. (See
33 U.S.C. 1251
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; reopening of comment period.
NMFS reopens the comment period on the proposed rule to implement the Fishery Management Plan for Regulating Offshore Aquaculture in the Gulf of Mexico (FMP) that published on August 28, 2014. The original comment period closed on October 27, 2014. NMFS is reopening the comment period for an additional 15 days to provide the public additional time to comment on this proposed rule. If implemented, the proposed rule would establish a comprehensive regulatory program for managing the development of an environmentally sound and economically sustainable aquaculture industry in Federal waters of the Gulf of Mexico (Gulf). The purpose of the proposed rule is to increase the yield of Federal fisheries in the Gulf by supplementing the harvest of wild caught species with cultured product.
The comment period for the proposed rule that published on August 28, 2014 (79 FR 51424), and closed on October 27, 2014, will reopen on November 13, 2014 and remain open through November 28, 2014.
You may submit comments on the proposed rule, identified by “NOAA–NMFS–2008–0233,” by any of the following methods:
• Electronic Submissions: Submit electronic public comments via the Federal e-Rulemaking Portal. Go to
• Mail: Submit written comments to Jess Beck-Stimpert, Southeast Regional Office, NMFS, 263 13th Avenue South, St. Petersburg, FL 33701.
Instructions: Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered by NMFS. All comments received are a part of the public record and will generally be posted for public viewing on
Electronic copies of the FMP, which includes a final programmatic environmental impact statement (FPEIS), an initial regulatory flexibility analysis (IRFA), and a regulatory impact review (RIR) may be obtained from the Southeast Regional Office Web site at
Comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted in writing to Anik Clemens, Southeast Regional Office, NMFS, 263 13th Ave. South, St. Petersburg, FL 33701; and the Office of Management and Budget (OMB), by email at
Jess Beck-Stimpert, 727–824–5301.
Aquaculture in the Gulf will be managed under the FMP. The FMP was prepared by the Council and is being implemented through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
On August 28, 2014, NMFS published a proposed rule to implement the FMP to authorize the development of commercial aquaculture operations in Federal waters of the Gulf (79 FR 51424). The FMP provides a comprehensive framework for authorizing and regulating offshore aquaculture activities. The FMP also establishes a programmatic approach for evaluating the potential impacts of proposed aquaculture operations in the Gulf.
NMFS received several requests from the public to extend the comment period of the proposed rule. Due to the extensive nature of the FMP and the proposed rulemaking, NMFS is reopening the comment period on the proposed rule for an additional 15 days. Comments submitted during the prior comment period will be incorporated into the public record and will be fully considered during the preparation of the final rule.
5 U.S.C. 561 and 16 U.S.C. 1801
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104–13. Comments regarding (a) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by December 15, 2014 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20503. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
Animal and Plant Health Inspection Service, USDA.
Extension of approval of an information collection; comment request.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Animal and Plant Health Inspection Service's intention to request an extension of approval of an information collection associated with the regulations for the importation of mangoes from Australia.
We will consider all comments that we receive on or before January 12, 2015.
You may submit comments by either of the following methods:
• Federal eRulemaking Portal: Go to
• Postal Mail/Commercial Delivery: Send your comment to Docket No. APHIS–2014–0083, Regulatory Analysis and Development, PPD, APHIS, Station 3A–03.8, 4700 River Road Unit 118, Riverdale, MD 20737–1238.
Supporting documents and any comments we receive on this docket may be viewed at
For information on the importation of mangoes from Australia, contact Ms. Nicole Russo, Assistant Director, RCC, RPM, PHP, PPQ, APHIS, 4700 River Road Unit 133, Riverdale, MD 20737; (301) 851–2159. For copies of more detailed information on the information collection, contact Ms. Kimberly Hardy,
In accordance with § 319.56–60, mangoes from Australia are subject to certain conditions before entering the United States to ensure that plant pests are not introduced into the United States. Among other things, the regulations require an information collection activity consisting of a phytosanitary certificate. Each shipment of mangoes must be accompanied by a phytosanitary certificate issued by the national plant protection organization of Australia with an additional declaration that the mangoes were inspected prior to export and found free of certain pests and treated in accordance with the regulations.
We are asking the Office of Management and Budget (OMB) to approve our use of this information collection activity for an additional 3 years.
The purpose of this notice is to solicit comments from the public (as well as affected agencies) concerning our information collection. These comments will help us:
(1) Evaluate whether the collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of our estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, through use, as appropriate, of automated, electronic, mechanical, and other collection technologies; e.g., permitting electronic submission of responses.
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
An application has been submitted to the Foreign-Trade Zones (FTZ) Board by the Port of Stockton, grantee of FTZ 231, requesting subzone status for the facilities of 5.11, Inc., located in Modesto and Lathrop, California. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a–81u), and the regulations of the FTZ Board (15 CFR part 400). It was formally docketed on November 6, 2014.
The proposed subzone would consist of the following sites:
In accordance with the FTZ Board's regulations, Christopher Kemp of the FTZ Staff is designated examiner to review the application and make recommendations to the Executive Secretary.
Public comment is invited from interested parties. Submissions shall be addressed to the FTZ Board's Executive Secretary at the address below. The closing period for their receipt is December 23, 2014. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period to January 7, 2015.
A copy of the application will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230–0002, and in the “Reading Room” section of the FTZ Board's Web site, which is accessible via
For further information, contact Christopher Kemp at
On September 10, 2014, the Executive Secretary of the Foreign-Trade Zones (FTZ) Board docketed an application submitted by the Louisville & Jefferson County Riverport Authority, grantee of FTZ 29, requesting subzone status subject to the existing activation limit of FTZ 29, on behalf of Kinder Morgan Operating L.P. “C”, in Hawesville, Kentucky.
The application was processed in accordance with the FTZ Act and Regulations, including notice in the
Komatsu America Corporation (Komatsu) submitted a notification of proposed production activity to the FTZ Board for its facility in Newberry, South Carolina, within FTZ 127. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on October 28, 2014.
The Komatsu facility is located within Site 3 of FTZ 127. The facility is used for the production of wheel loaders and forklift trucks, but may produce other material handling, construction and forestry machinery in the future, such as bulldozers, angledozers, hydraulic excavators, forestry harvesters, forestry feller bunchers, dump trucks (duty-free) and forestry forwarders. Pursuant to 15 CFR 400.14(b), FTZ activity would be limited to the specific foreign-status materials and components and specific finished products described in the submitted notification (as described below) and subsequently authorized by the FTZ Board.
Production under FTZ procedures could exempt Komatsu from customs duty payments on the foreign status components and materials used in export production. On its domestic sales, Komatsu would be able to choose the duty rates during customs entry procedures that apply to fork-lift trucks, wheel loaders, bulldozers, angledozers, hydraulic excavators, forestry harvesters, forestry feller bunchers, dump trucks (duty-free) and forestry forwarders (duty rate 25%) for the foreign status inputs noted below. Customs duties also could possibly be deferred or reduced on foreign status production equipment.
The components and materials sourced from abroad include: Paints; plastic hoses; hose joints; adhesive decals; plastic tags; plastic washers; plastic rings; plastic seals; plastic packings; plastic bands; PVC electric terminal caps; plastic clamps; plastic clips; rubber foam sheets; sponges; rubber pads w/adhesive; rubber weather strip; rubber weather strip seals; rubber hoses no fitting; rubber tubes; rubber hoses w/fittings not reinforced; rubber hoses w/fittings cover w/metal wire; rubber hoses reinforced w/textile; rubber hoses w/fittings reinforced; rubber hoses no fittings reinforced; rubber hoses for construction equipment; rubber hoses w/fittings cover w/metal wire & textile; molded rubber hoses; fan belts; alternators; v-belts reinforced w/textile; wheel loader tires; forklift tires; rubber floor mats; rubber grommets; rubber dust seals; rubber gaskets; rubber o-rings; rubber pads, no adhesive; rubber seals; rubber blocks; rubber caps; rubber clamps; rubber cushions; damper, operators compartment; rubber guards; cork plugs; glass wool; mirror for wheel loaders; sheet, fiber glass-heat resistant; elbows, alloy/cast/threaded; tees, alloy/cast/threaded; unions; flange hoses, alloy; elbows, tube non alloy; connectors, non-alloy steel fitting; quick couplers; steel wire ropes; chains for wheel loaders; screws for forklift; bolts, hex head, no nut; SEMS bolt and washer assemblies; screws, Phillip, no nut; nuts, hex head; bolts, hex head w/nut; screws w/nut; u-bolts w/nut; studs; nuts, steel for forklift; nuts, general application; washers, iron helical spring; washers, alloy; rivets; cotter pin clips; keys, steel; dowel pins not threaded; pins, metal, not threaded; helical springs; bands, hose/tube holders; metal clamps, hose holders; clips, hose/tube holder; plastic holders; elbows, brass, threaded; washers, brass; aluminum nuts; aluminum clamps, not threaded; steel clamps for forklift; keys, steel with padlock; lock assemblies; metal hinges for wheel loaders; handrails for wheel loaders; clips, alloy w/rubber coating; clips, electric wiring; springs, pneumatic cylinder; locks, metal latches; wheel loader consoles; name plates, vinyl; engines for wheel loaders; engines for forklifts; plugs, oil pan & suction tubes, steel; tilt cylinders for forklifts; cylinders for wheel loaders; motor assemblies for wheel loaders; shims, round, steel; fuel pumps; hydraulic pump assemblies; hydraulic gear pumps; couplings, hydraulic pump part; compressor assembly parts; air compressor collars; A/C receiver dryers; strainers, fuel filter; filter assemblies; air cleaner assemblies; diesel particle filter assemblies; cap, air cleaner, plastic; fire extinguisher assemblies; washer tank assemblies; axles for forklifts; bands, electric system; bars, for forklift counterweights; bonnets for forklifts; breathers, hydraulic system; clips for forklifts; collars for forklifts; control valves for forklifts; counterweights for forklifts; covers, electrical system, forklifts; damper stays, bonnet for forklifts; dashboard covers; dual tire spacers for forklifts; engine accessories for forklifts; fitting assemblies for forklifts; floors, steel plate; forklift main frames; forklift radiators; fuse holders; LPG fitting kits; ground straps; head guard assemblies for forklifts; hub & knuckle for forklifts; knob, operator compartment for forklifts; lever, steel for forklifts; light, LED w/switch; lights for forklifts; lock pin for forklifts; liquefied petroleum tanks for forklifts; metal bracket/block for forklifts; metal cap for forklifts; metal plug for forklifts; meter panels; mirrors for forklifts; mounts, engine mounting parts; mounting cushions for forklifts; mufflers; mufflers for forklifts; operator fans for forklifts; operator seats for forklifts; pedal assemblies; pins for forklifts; pipes for forklifts; radiators; reserve tank assemblies; rims for forklifts; shaft steering, steering columns for forklifts; shroud kits for forklifts; solenoid valves for forklifts; sponges, insulators for forklift frames; standard forks for forklifts; steel brackets for forklift lights; steel plates for forklifts; steel shims for forklifts; steering wheels for forklifts; sub-counterweights for forklifts; support brackets for forklift frames; tire spacers for forklifts; tire/rim assemblies for forklifts; tubes for forklifts; front buckets for wheel loaders; cylinders, bucket for wheel loaders; three valve lever consoles; adapters, hoses; additional counterweights for wheel loaders; air cleaners; axles for wheel loaders; bands, cab washer tanks; bands, threaded nuts; bar locks; battery cables; beacons; bellcranks for wheel loaders; machined metal blocks; blocks, hydraulic pumps; boom assemblies for wheel loaders; brackets, welded, steel; buckets for wheel loader; bushings, metal, multi application; cabs for wheel loaders; caps, radiator; caps, rubber, multiple purposes; catches; clamps; clamps, steel plate, multiple purposes; clips; collars, steel, for hinge pins; connectors; cool & heat boxes; counterweights; counterweights for wheel loaders; coupler assemblies for wheel loaders; couplings; covers, plastic for wheel loader; cushions, multiple application; cutting edges for buckets; cylinder assemblies; dashboards; decals; deflectors steel cover; doors for wheel loaders; elbows; elbows alloy/cast; elbows, main valves; elbows, steel, thread cast; fasteners; fenders, metal; finishers; flanges, hoses/metal/fittings; floors, metal sheets; foam sheets; frames,
Public comment is invited from interested parties. Submissions shall be addressed to the FTZ Board's Executive Secretary at the address below. The closing period for their receipt is December 23, 2014.
A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230–0002, and in the “Reading Room” section of the FTZ Board's Web site, which is accessible via
For further information, contact
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On July 30, 2014, the Department of Commerce (the “Department”) published the
Steven Hampton, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–0116.
On July 30, 2014, the Department published the
The products covered by the order are certain hot-rolled carbon steel flat products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers), regardless of thickness, and in straight lengths of a thickness of less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (
1.80 percent of manganese, or
2.25 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.10 percent of molybdenum, or
0.10 percent of niobium, or
0.15 percent of vanadium, or
0.15 percent of zirconium.
All products that meet the physical and chemical description provided above are within the scope of the order unless otherwise excluded. The following products, for example, are outside or specifically excluded from the scope of the order:
• Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above (including,
• Society of Automotive Engineers (“SAE”)/American Iron & Steel Institute (“AISI”) grades of series 2300 and higher.
• Ball bearing steels, as defined in the HTSUS.
• Tool steels, as defined in the HTSUS.
• Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 2.25 percent.
• ASTM specifications A710 and A736.
• USS abrasion-resistant steels (USS AR 400, USS AR 500).
• All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507).
• Non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTSUS.
The merchandise subject to the order is classified in the HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, and 7211.19.75.90. Certain hot-rolled carbon steel flat products covered by the order, including: vacuum degassed fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to the order is dispositive.
In the
Upon issuance of the final results, the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries, in accordance with 19 CFR 351.212. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of the final results of review. The Department announced a refinement to its assessment practice in NME cases.
The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act: (1) for previously investigated or reviewed PRC and non-PRC exporters not listed above that have separate rates, the cash deposit rate will continue to be the exporter-specific rate published for the most recent period; (2) for all PRC exporters of subject merchandise which have not been found to be entitled to a separate rate, the cash deposit rate will be the PRC-wide rate of 90.83 percent; and (3) for all non-PRC exporters of subject merchandise which have not received their own rate, the cash deposit rate will be the rate applicable to the PRC exporters that supplied that non-PRC exporter. These deposit requirements, when imposed, shall remain in effect until further notice.
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
In accordance with 19 CFR 351.305(a)(3), this notice also serves as a reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the return or destruction of proprietary information disclosed under APO, which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
We are issuing and publishing this administrative review and notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) is conducting an administrative review of the countervailing duty (CVD) order on drill pipe from the People's Republic of China (PRC). The period of review (POR) is January 1, 2013, through December 31, 2013. We preliminarily determine that Shanxi Yida Special Steel Imp. & Exp. Co., Ltd. and its cross-owned affiliates received countervailable subsidies during the POR.
Kristen Johnson, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone (202) 482–4793.
The scope of the order consists of steel drill pipe and steel drill collars, whether or not conforming to American Petroleum Institute (API) or non-API specifications. The merchandise subject to the order is currently classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) categories: 7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000, 7304.23.6030, 7304.23.6045, 7304.23.6060, 8431.43.8040 and may also enter under 8431.43.8060, 8431.43.4000, 7304.39.0028, 7304.39.0032, 7304.39.0036, 7304.39.0040, 7304.39.0044, 7304.39.0048, 7304.39.0052, 7304.39.0056, 7304.49.0015, 7304.49.0060, 7304.59.8020, 7304.59.8025, 7304.59.8030, 7304.59.8035, 7304.59.8040, 7304.59.8045, 7304.59.8050, and 7304.59.8055. Although the HTSUS subheadings are provided for convenience and customs purposes, the written product description remains dispositive.
A full description of the scope of the order is contained in the memorandum from Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations to Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance, “Decision Memorandum for Preliminary Results of Countervailing Duty Administrative Review: Drill Pipe from the People's Republic of China” (Preliminary Decision Memorandum), dated concurrently with this notice, and hereby adopted by this notice.
The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (IA ACCESS). IA ACCESS is available to registered users at
The Department conducted this review in accordance with section 751(a)(1)(A) of the Tariff Act of 1930, as amended (the Act). For the program found countervailable, we preliminarily determine that there is a subsidy,
In making the preliminary findings, we relied, in part, on facts available and, because the Government of the PRC did not act to the best of its ability to respond to the Department's requests for information, we applied an adverse inference in selecting from among the facts otherwise available.
For a full description of the methodology underlying the Department's conclusions,
As a result of this review, we preliminarily determine a net countervailable subsidy rate of 3.57 percent
The Department intends to disclose to parties to this proceeding the calculations performed in reaching the preliminary results within five days of the date of publication of these preliminary results.
Interested parties, who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce within 30 days after the date of publication of this notice.
Parties are reminded that briefs and hearing requests are to be filed electronically using IA ACCESS and that electronically filed documents must be received successfully in their entirety by 5:00PM Eastern Time on the due date.
Unless the deadline is extended pursuant to section 751(a)(3)(A) of the Act, the Department will issue the final results of this administrative review, including the results of our analysis of the issues raised by parties in their comments, within 120 days after issuance of these preliminary results.
Consistent with section 751(a)(1) of the Act and 19 CFR 351.212(b)(2), upon issuance of the final results, the Department shall determine, and U.S. Customs and Border Protection (CBP) shall assess, countervailing duties on all appropriate entries covered by this review. We intend to issue instructions to CBP 15 days after publication of the final results of this review.
Also in accordance with section 751(a)(1) of the Act, the Department intends to instruct CBP to collect cash deposits of estimated countervailing duties in the amount shown above for the reviewed company should the final results remain the same as these preliminary results. For all non-reviewed firms, we will instruct CBP to collect cash deposits of estimated countervailing duties at the most recent company-specific or all-others rate applicable to the company. These cash deposit requirements, when imposed, shall remain in effect until further notice.
These preliminary results of administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.213 and 351.221(b)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Rebecca Trainor at (202) 482–4007 or Reza Karamloo at (202) 482–4470 (Republic of Korea); Elizabeth Eastwood at (202) 482–3874 or Dennis McClure at (202) 482–5973 (Republic of Turkey), AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.
On October 16, 2014, the Department of Commerce (the Department) received countervailing duty (CVD) petitions concerning imports of welded line pipe from the Republic of Korea (Korea) and the Republic of Turkey (Turkey) filed in proper form on behalf of American Cast Iron Pipe Company, Energex (a division of JMC Steel Group), Maverick Tube Corporation, Northwest Pipe Company, Stupp Corporation (a division of Stupp Bros., Inc.), Tex-Tube Company, TMK IPSCO, and Welspun Tubular LLC USA (collectively, the petitioners). The CVD petitions were accompanied by two antidumping duty (AD) petitions.
On October 21, 2014, the Department requested information and clarification for certain areas of the Petitions.
In accordance with section 702(b)(1) of the Tariff Act of 1930, as amended (the Act), the petitioners allege that the Government of Korea (GOK) and the Government of Turkey (GOT) are providing countervailable subsidies (within the meaning of sections 701 and 771(5) of the Act) to imports of welded line pipe from Korea and Turkey, respectively, and that such imports are materially injuring, or threatening material injury to, an industry in the United States. Also, consistent with section 702(b)(1) of the Act, the Petitions are accompanied by information reasonably available to the petitioners supporting their allegations.
The Department finds that the petitioners filed the Petitions on behalf of the domestic industry because the petitioners are interested parties as defined in section 771(9)(C) of the Act. The Department also finds that the petitioners demonstrated sufficient industry support with respect to the initiation of the CVD investigations that the petitioners are requesting.
The period of the investigation for both Korea and Turkey is January 1, 2013, through December 31, 2013.
The product covered by these investigations is welded line pipe from Korea and Turkey. For a full description of the scope of these investigations, see the “Scope of the Investigations” in Appendix I of this notice.
During our review of the Petitions, the Department issued questions to, and received responses from, the petitioners pertaining to the proposed scope to ensure that the scope language in the Petitions would be an accurate reflection of the products for which the domestic industry is seeking relief.
As discussed in the preamble to the Department's regulations,
The Department requests that any factual information the parties consider relevant to the scope of the investigations be submitted during this time period. However, if a party subsequently finds that additional factual information pertaining to the scope of the investigations may be relevant, the party may contact the Department and request permission to submit the additional information. All such comments must be filed on the records of the Korea and Turkey AD and CVD investigations.
All submissions to the Department must be filed electronically using Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (IA ACCESS).
Pursuant to section 702(b)(4)(A)(i) of the Act, the Department notified representatives of the GOK and the GOT of the receipt of the Petitions. Also, in accordance with section 702(b)(4)(A)(ii) of the Act, the Department provided representatives of the GOK and the GOT the opportunity for consultations with respect to the Petitions.
Section 702(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 702(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (i) At least 25 percent of the total production of the domestic like product; and (ii) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department shall: (i) Poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A); or (ii) determine industry support using a statistically valid sampling method to poll the “industry.”
Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product, or those producers whose collective output of a domestic like product constitutes a major proportion of the total domestic production of the product. Thus, to determine whether a petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product,
Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation” (
With regard to the domestic like product, the petitioners do not offer a definition of the domestic like product distinct from the scope of the investigations. Based on our analysis of the information submitted on the record, we have determined that welded line pipe, as defined in the scope of the investigations, constitutes a single domestic like product and we have analyzed industry support in terms of that domestic like product.
In determining whether the petitioners have standing under section 702(c)(4)(A) of the Act, we considered the industry support data contained in the Petitions with reference to the domestic like product as defined in the “Scope of the Investigations,” in Appendix I of this notice. To establish industry support, the petitioners provided their production of the domestic like product in 2013, as well as the production of a company that supports the Petitions, and compared this to the total production of the domestic like product for the entire domestic industry.
On October 27, 2014, we received a submission from U.S. Steel, a domestic producer of welded line pipe. In the submission, U.S. Steel states that it supports the AD and CVD petitions on welded line pipe from Korea and
We have relied upon data that the petitioners and U.S. Steel provided for purposes of measuring industry support.
Based on information provided in the Petitions, supplemental submissions, and other information readily available to the Department, we determine that the petitioners have met the statutory criteria for industry support under section 702(c)(4)(A)(i) of the Act because the domestic producers (or workers) who support the Petitions account for at least 25 percent of the total production of the domestic like product.
The Department finds that the petitioners filed the Petitions on behalf of the domestic industry because they are interested parties as defined in section 771(9)(C) of the Act and they have demonstrated sufficient industry support with respect to the CVD investigations that they are requesting the Department initiate.
Because Korea and Turkey are “Subsidies Agreement Countries” within the meaning of section 701(b) of the Act, section 701(a)(2) of the Act applies to these investigations. Accordingly, the ITC must determine whether imports of the subject merchandise from Korea and Turkey materially injure, or threaten material injury to, a U.S. industry.
The petitioners allege that imports of the subject merchandise are benefitting from countervailable subsidies and that such imports are causing, or threaten to cause, material injury to the U.S. industry producing the domestic like product. In addition, the petitioners allege that subject imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.
The petitioners contend that the industry's injured condition is illustrated by reduced market share, underselling and price depression or suppression, lost sales and revenues, declining shipments, reduced production capacity, and a decline in financial performance.
Section 702(b)(1) of the Act requires the Department to initiate a CVD investigation whenever an interested party files a CVD petition on behalf of an industry that: (1) Alleges the elements necessary for an imposition of a duty under section 701(a) of the Act; and (2) is accompanied by information reasonably available to the petitioner supporting the allegations.
In the Petitions, the petitioners allege that producers/exporters of welded line pipe in Korea and Turkey benefited from countervailable subsidies bestowed by the governments of these countries, respectively. The Department has examined the Petitions and finds that they comply with the requirements of section 702(b)(1) of the Act. Therefore, in accordance with section 702(b)(1) of the Act, we are initiating CVD investigations to determine whether manufacturers, producers, or exporters of welded line pipe from Korea and Turkey receive countervailable subsidies from the governments of these countries, respectively.
Based on our review of the Petition, we find that there is sufficient information to initiate a CVD investigation of 22 of the 23 alleged programs. For a full discussion of the basis for our decision to initiate or not initiate on each program, see Korea CVD Initiation Checklist.
Based on our review of the Petition, we find that there is sufficient information to initiate a CVD investigation of 16 of the 18 alleged programs. For a full discussion of the basis for our decision to initiate or not initiate on each program, see Turkey CVD Initiation Checklist.
A public version of the initiation checklist for each investigation is available on IA ACCESS and at
In accordance with section 703(b)(1) of the Act and 19 CFR 351.205(b)(1), unless postponed, we will make our preliminary determinations no later than 65 days after the date of this initiation.
The petitioners named 13 companies as producers/exporters of welded line pipe from Korea and 13 companies as producers/exporters of welded line pipe from Turkey.
In accordance with section 702(b)(4)(A)(i) of the Act and 19 CFR 351.202(f), copies of the public version of the Petitions have been provided to the GOK and GOT via IA ACCESS. Because of the particularly large number of producers/exporters identified in the Petitions, the Department considers the service of the public version of the Petitions to the foreign producers/exporters to be satisfied by the provision of the public version of the Petitions to the GOK and GOT, consistent with 19 CFR 351.203(c)(2).
We have notified the ITC of our initiation, as required by section 702(d) of the Act.
The ITC will preliminarily determine, within 45 days after the date on which the Petitions were filed, whether there is a reasonable indication that imports of welded line pipe from Korea and/or Turkey are materially injuring, or threatening material injury to, a U.S. industry.
On April 10, 2013, the Department published
On September 20, 2013, the Department modified its regulation concerning the extension of time limits for submissions in AD and CVD proceedings.
Any party submitting factual information in an AD or CVD proceeding must certify to the accuracy and completeness of that information.
Interested parties must submit applications for disclosure under APO in accordance with 19 CFR 351.305. On January 22, 2008, the Department published
This notice is issued and published pursuant to sections 702 and 777(i) of the Act.
The merchandise covered by these investigations is circular welded carbon and alloy steel (other than stainless steel) pipe of a kind used for oil or gas pipelines (welded line pipe), not more than 24 inches in nominal outside diameter, regardless of wall thickness, length, surface finish, end finish, or stenciling. Welded line pipe is normally produced to the American Petroleum Institute (API) specification 5L, but can be produced to comparable foreign specifications, to proprietary grades, or can be non-graded material. All pipe meeting the physical description set forth above, including multiple-stenciled pipe with an API or comparable foreign specification line pipe stencil is covered by the scope of these investigations.
The welded line pipe that is subject to these investigations is currently classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) under subheadings 7305.11.1030, 7305.11.5000, 7305.12.1030, 7305.12.5000, 7305.19.1030, 7305.19.5000, 7306.19.1010, 7306.19.1050, 7306.19.5110, and 7306.19.5150. The subject merchandise may also enter in HTSUS 7305.11.1060 and 7305.12.1060. While the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of these investigations is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On August 1, 2014, the Department of Commerce (the “Department”) published the notice of initiation of the first five-year (“sunset”) review of the antidumping duty order on certain kitchen appliance shelving and racks (“KASR”) from the People's Republic of China (“PRC”) pursuant to section 751(c) of the Tariff Act of 1930, as amended (the “Act”).
Irene Gorelik, AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–6905.
As noted above, on August 1, 2014, the Department published the initiation of the first sunset review of KASR from the PRC.
The scope of the order consists of shelving and racks for refrigerators, freezers, combined refrigerator-freezers, other refrigerating or freezing equipment, cooking stoves, ranges, and ovens (“certain kitchen appliance shelving and racks” or “the merchandise under order”).
The merchandise subject to the order is currently classifiable in the Harmonized Tariff Schedule of the United States (“HTSUS”) statistical reporting numbers 8418.99.8050, 8418.99.8060, 7321.90.5000, 7321.90.6090, 8516.90.8000 and 8419.90.9520. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of the order is dispositive.
All issues raised in this sunset review are addressed in the Issues and Decision Memorandum. The issues discussed in the Issues and Decision Memorandum include the likelihood of continuation or recurrence of dumping and the magnitude of the margins likely to prevail if the order were to be revoked. Parties may find a complete discussion of all issues raised in the review and the corresponding recommendations in this public memorandum which is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (“IA ACCESS”). IA ACCESS is available to registered users at
Pursuant to section 752(c) of the Act, the Department determines that revocation of the order would be likely to lead to continuation or recurrence of dumping at weighted-average margins up to 95.99 percent.
This notice also serves as the only reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of the return of destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an
We are publishing these final results and notice in accordance with sections 751(c), 752(c), and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Based on affirmative final determinations by the Department of Commerce (“Department”) and the International Trade Commission (“ITC”), the Department is issuing a countervailing duty order on chlorinated isocyanurates (“Isos”) from the People's Republic of China (“PRC”).
Paul Walker or Matthew Renkey, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–0413 or (202) 482–2312, respectively.
In accordance with section 705(d) of the Tariff Act of 1930, as amended (“Act”), on September 22, 2014, the Department published its final determination that countervailable subsidies are being provided to producers and exporters of Isos from the PRC.
On November 3, 2014, the ITC notified the Department of its final determination pursuant to section 705(d) of the Act that an industry in the United States is threatened with material injury within the meaning of section 705(b)(1)(A)(ii) of the Act by reason of subsidized imports of subject merchandise from the PRC.
The products covered by this order are chlorinated isocyanurates. Chlorinated isocyanurates are derivatives of cyanuric acid, described as chlorinated s-triazine triones. There are three primary chemical compositions of chlorinated isocyanurates: (1) Trichloroisocyanuric acid (“TCCA”) (Cl
Chlorinated isocyanurates are currently classifiable under subheadings 2933.69.6015, 2933.69.6021, 2933.69.6050, 3808.50.4000, 3808.94.5000, and 3808.99.9500 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The tariff classification 2933.69.6015 covers sodium dichloroisocyanurates (anhydrous and dihydrate forms) and trichloroisocyanuric acid. The tariff classifications 2933.69.6021 and 2933.69.6050 represent basket categories that include chlorinated isocyanurates and other compounds including an unfused triazine ring. The tariff classifications 3808.50.4000, 3808.94.5000 and 3808.99.9500 cover disinfectants that include chlorinated isocyanurates. The HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of this order is dispositive.
In accordance with sections 705(b)(1)(A)(ii) and 705(d) of the Act, the ITC has notified the Department of its final determination that the industry in the United States producing Isos is threatened with material injury by reason of subsidized imports of drawn sinks from the PRC. Therefore, in accordance with section 705(c)(2) of the Act, we are publishing this countervailing duty order.
According to section 706(b)(2) of the Act, countervailing duties shall be assessed on subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of the ITC's notice of final determination if that determination is based upon the threat of material injury. Section 706(b)(1) of the Act states, “{i}f the Commission, in its final determination under section 705(b), finds material injury or threat of material injury which, but for the suspension of liquidation under section 703(d)(2), would have led to a finding of material injury, then entries of the merchandise subject to the countervailing duty order, the liquidation of which has been suspended under section 703(d)(2), shall be subject to the imposition of countervailing duties under section 701(a).” In addition, section 706(b)(2) of the Act requires U.S. Customs and Border Protection (“CBP”) to refund any cash deposits or bonds of estimated countervailing duties posted before the date of publication of the ITC's final affirmative determination, if the ITC's final determination is based on threat other than the threat described in section 706(b)(1) of the Act. Because the ITC's final determination in this case is based on the threat of material injury and is not accompanied by a finding that injury would have resulted but for the imposition of suspension of liquidation of entries since the publication of the Department's
As a result of the ITC's determination and in accordance with section 706(a)(1) of the Act, the Department will direct CBP to assess, upon further instruction by the Department, countervailing duties equal to the amount of the net countervailable subsidy for all relevant entries of Isos from the PRC. The Department instructed CBP to discontinue the suspension of liquidation on June 24, 2014, in accordance with section 703(d) of the Act. Section 703(d) states that the suspension of liquidation pursuant to a preliminary determination may not remain in effect for more than four months. Entries of Isos from the PRC made on or after June 24, 2014, and prior to the date of publication of the ITC's final determination in the
In accordance with section 706 of the Act, the Department will direct CBP to reinstitute suspension of liquidation,
The Department will instruct CBP to terminate the suspension of liquidation for entries of Isos from the PRC, entered or withdrawn from warehouse, for consumption prior to the publication of the ITC's notice of final determination. The Department will also instruct CBP to refund any cash deposits made and release any bonds with respect to entries of Isos entered, or withdrawn from warehouse, for consumption on or after February 24, 2014 (
This notice constitutes the countervailing duty order with respect to Isos from the PRC, pursuant to section 706(a) of the Act. Interested parties may contact the Department's Central Records Unit, Room 7046 of the main Commerce Building, for copies of an updated list of countervailing duty orders currently in effect.
This order is issued and published in accordance with section 706(a) of the Act and 19 CFR 351.211(b).
International Trade Administration, U.S. Department of Commerce.
Notice of an Open Meeting.
The Renewable Energy and Energy Efficiency Advisory Committee (RE&EEAC) will hold a meeting on December 17, 2014. The meeting is open to the public and the room is disabled-accessible. Public seating is limited and available on a first-come, first-served basis.
December 17, 2014, from 9:00 a.m. to 4:00 p.m. Eastern Standard Time (EST). Members of the public wishing to attend the meeting must notify Andrew Bennett at the contact information below by 5:00 p.m. EST on Wednesday, December 10, in order to pre-register for clearance into the building. Please specify any requests for reasonable accommodation at least five business days in advance of the meeting. Last minute requests will be accepted, but may be impossible to fill.
The meeting will be held at the U.S. Department of Commerce, Room 6029, 1401 Constitution Avenue NW., Washington, DC 20230.
Andrew Bennett, Office of Energy and Environmental Industries (OEEI), International Trade Administration, U.S. Department of Commerce at (202) 482–5235; email:
During the December 17th meeting of the RE&EEAC, committee members will discuss key objectives and the types of issues they plan to address during the course of the Committee's two-year charter. Previous recommendations were developed by the previous Committee on finance, U.S. competitiveness, trade policy, and trade promotion.
A limited amount of time, from approximately 3:30 p.m. to 3:45 p.m., will be available for pertinent oral comments from members of the public attending the meeting. To accommodate as many speakers as possible, the time for public comments will be limited to five minutes per person. Individuals wishing to reserve additional speaking time during the meeting must contact Mr. Bennett and submit a brief statement of the general nature of the comments, as well as the name and address of the proposed participant by 5:00 p.m. EST on Wednesday, December 10, 2014. If the number of registrants requesting to make statements is greater than can be reasonably accommodated during the meeting, the International Trade Administration may conduct a lottery to determine the speakers. Speakers are requested to bring at least 20 copies of their oral comments for distribution to the participants and the public at the meeting.
Any member of the public may submit pertinent written comments concerning the RE&EEAC's affairs at any time before or after the meeting. Comments may be submitted to the Renewable Energy and Energy Efficiency Advisory Committee, c/o: Andrew Bennett, Office of Energy and Environmental Industries, U.S. Department of Commerce, Mail Stop: 4053, 1401 Constitution Avenue NW., Washington, DC 20230. To be considered during the meeting, written comments must be received no later than 5:00 p.m. EST on Wednesday, December 10, 2014, to ensure transmission to the Committee prior to the meeting. Comments received after that date will be distributed to the members but may not be considered at the meeting.
Copies of RE&EEAC meeting minutes will be available within 30 days following the meeting.
National Oceanic and Atmospheric Administration, Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information
Written comments must be submitted on or before January 12, 2015.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Gordon Colvin (240) 357–4524 or
This request is for extension of a currently approved collection.
The National Saltwater Angler Registry Program (Registry Program) was established to implement recommendations included in the review of national saltwater angling data collection programs conducted by the National Research Council (NRC) in 2005/2006, and the provisions of the Magnuson-Stevens Reauthorization Act, codified at Section 401(g) of the Magnuson-Stevens Fishery Conservation and Management Act (MSA), which require the Secretary of Commerce to commence improvements to recreational fisheries surveys, including establishing a national saltwater angler and for-hire vessel registry, by January 1, 2009. A final rule that includes regulatory measures to implement the Registry Program (RIN 0648–AW10) was adopted and codified in 50 CFR 600.1400–600.1417.
The Registry Program collects identification and contact information from those anglers and for-hire vessels who are involved in recreational fishing in the United States Exclusive Economic Zone or for anadromous fish in any waters, unless the anglers or vessels are exempted from the registration requirement. The data that is collected includes: For anglers: Name, address, date of birth, telephone contact information and region(s) of the country in which they fish; for for-hire vessels: Owner and operator name, address, date of birth, telephone contact information, vessel name and registration/documentation number and home port or primary operating area. This information is compiled into a national and/or series of regional registries that is being used to support surveys of recreational anglers and for-hire vessels to develop estimates of recreational angling effort.
Persons may register in two ways: Via a toll-free telephone number or on line at a NOAA-maintained Web site. Registration cards, valid for one year from the date of issuance, are mailed to registrants.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
Bureau of Consumer Financial Protection.
Notice and request for comment.
In accordance with the Paperwork Reduction Act of 1995 (PRA), the Consumer Financial Protection Bureau (Bureau) is proposing to renew the approval for an existing information collection, titled, “CFPB State Official Notification Rule.”
Written comments are encouraged and must be received on or before January 12, 2015 to be assured of consideration.
You may submit comments, identified by the title of the information collection, OMB Control Number (see below), and docket number (see above), by any of the following methods:
• Electronic:
• Mail: Consumer Financial Protection Bureau (Attention: PRA Office), 1700 G Street NW., Washington, DC 20552.
• Hand Delivery/Courier: Consumer Financial Protection Bureau (Attention: PRA Office), 1275 First Street NE., Washington, DC 20002.
Documentation prepared in support of this information collection request is available at
OMB's approval for this collection of information is scheduled to expire on 04/30/2015. Pursuant to the requirements set forth in the PRA implementing regulations at 5 CFR 1320.12,
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern Time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR § 385.211 and § 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
Any person desiring to protest in any of the above proceedings must file in accordance with Rule 211 of the Commission's Regulations (18 CFR § 385.211) on or before 5:00 p.m. Eastern time on the specified comment date.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
Description: Notice of Non-Material Change in Status of AENAC Sellers.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Environmental Protection Agency.
Notice of proposed settlement agreement; request for public comment.
In accordance with section 113(g) of the Clean Air Act, as amended (“CAA” or the “Act”), notice is hereby given of a proposed settlement agreement to address a lawsuit filed by Environmental Integrity Project and Sierra Club in the United States District Court for the District of Columbia:
Written comments on the proposed settlement agreement must be received by December 15, 2014.
Submit your comments, identified by Docket ID number EPA–HQ–OGC–2014–0825, online at
Karen Bianco, Air and Radiation Law Office (2344A), Office of General Counsel, U.S. Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone: (202) 564–3298; fax number (202) 564–5603; email address:
This proposed settlement agreement would resolve a lawsuit filed by Environmental Integrity Project and Sierra Club seeking to compel the Administrator to take actions under CAA section 505(b)(2). Under the terms of the proposed settlement agreement, EPA would agree to sign a response addressing the following issues from Environmental Integrity Project and Sierra Club's Title V petitions by no later than January 23, 2015:
a. Petition for Objection to Texas Title V Permit No. 065 for the Operation of the Big Brown Steam Electric Station, Freestone County, Texas (Mar. 3, 2014) (attached as Exhibit 1 to the proposed settlement agreement)(“Big Brown Petition”), Issue V.A (pp. 7–14);
b. Petition for Objection to Texas Title V Permit No. 064 for the Operation of the Monticello Steam Electric Station, Titus County, Texas (Mar. 3, 2014) (attached as Exhibit 2 to the proposed settlement agreement) (“Monticello Petition”), Issue V.A (pp. 5–11); and
c. Petition for Objection to Texas Title V Permit No. 053 for the Operation of the Martin Lake Steam Electric Station in Rusk County, Texas (Feb. 24, 2014) (attached as Exhibit 3 to the proposed settlement agreement) (“Martin Lake Petition”), Issue V.A (pp. 5–9).
EPA would also agree to sign a response addressing the following issues from Environmental Integrity Project and Sierra Club's Title V petitions by no later than May 15, 2015:
a. Big Brown Petition, Issue V.D (pp. 17–20);
b. Monticello Petition, Issue V.B (pp. 11–14); and
c. Martin Lake Petition, Issue V.B (pp. 9–14).
EPA would have no obligation to respond to any issue in the title V petitions except those specifically identified. Further, under the terms of the proposed agreement, Plaintiffs would send a letter to the EPA Administrator within 60 days of the execution of the settlement agreement withdrawing the remaining portions of their Big Brown petition, namely:
a. Big Brown Petition, Issue V.B (pp. 14–15); and
b. Big Brown Petition, Issue V.C (pp. 15–17).
Under the terms of the proposed settlement agreement, EPA will expeditiously deliver notice of EPA's responses to the Office of the Federal Register for review and publication following signature of such response. In addition, the proposed settlement agreement outlines the procedure for the Plaintiffs to request costs of litigation, including attorney fees.
For a period of thirty (30) days following the date of publication of this notice, the Agency will accept written comments relating to the proposed settlement agreement from persons who are not named as parties or intervenors to the litigation in question. EPA or the Department of Justice may withdraw or withhold consent to the proposed
The official public docket for this action (identified by Docket ID No. EPA–HQ–OGC–2014–0825) contains a copy of the proposed settlement agreement. The official public docket is available for public viewing at the Office of Environmental Information (OEI) Docket in the EPA Docket Center, EPA West, Room 3334, 1301 Constitution Ave. NW., Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566–1744, and the telephone number for the OEI Docket is (202) 566–1752.
An electronic version of the public docket is available through
It is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing online at
You may submit comments as provided in the
If you submit an electronic comment, EPA recommends that you include your name, mailing address, and an email address or other contact information in the body of your comment and with any disk or CD–ROM you submit. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. Any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.
Use of the
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501–3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments should be submitted on or before December 15, 2014. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contacts below as soon as possible.
Direct all PRA comments to Nicholas A. Fraser, OMB, via email
For additional information or copies of the information collection, contact Cathy Williams at (202) 418–2918. To view a copy of this information collection request (ICR) submitted to OMB: (1) Go to the Web page <
(a) Required video programming distributors to make best efforts to obtain certification from video programmers that their programming (i) Complies with the captioning quality standards established in the Report and Order; (ii) adheres to the Best Practices for video programmers set out in the Report and Order; or (iii) is exempt from the closed captioning rules under one or more properly attained and specified exemptions.
(b) Adopted additional requirements and a “compliance ladder” for broadcasters that use electronic newsroom technique.
(c) Required video programming distributors to keep records of their activities related to the maintenance, monitoring, and technical checks of their captioning equipment.
(d) Required that petitions requesting an exemption based on the economically burdensome standard and all subsequent pleadings, as well as comments, oppositions, or replies to comments, be filed electronically in accordance with 47 CFR 0.401(a)(1)(iii) instead of as a paper filing. Comments, oppositions, or replies to comments must be served on the other party, by delivering or mailing a copy to the last known address in accordance with 47 CFR 1.47 or by sending a copy to the email address last provided by the party, its attorney, or other duly constituted agent, and must include a certification that the other party was served with a copy.
Pursuant to the provisions of the “Government in the Sunshine Act” (5 U.S.C. 552b), notice is hereby given that the Federal Deposit Insurance Corporation's Board of Directors will meet in open session at 10:00 a.m. on Tuesday, November 18, 2014, to consider the following matters:
No substantive discussion of the following items is anticipated. These matters will be resolved with a single vote unless a member of the Board of Directors requests that an item be moved to the discussion agenda.
Disposition of minutes of previous Board of Directors' Meetings.
Memorandum and resolution re: Regulatory Capital Rules: Regulatory Capital, Proposed Revisions to the Advanced Approaches Risk-Based Capital Rule.
Memorandum and resolution re: Final Rule To Adjust the Timing of the Annual Stress Testing Cycle.
Memorandum and resolution re: Notice of Proposed Rulemaking: Filing Requirements and Processing Procedures for Changes in Control with Respect to State Nonmember Banks and State Savings Associations.
Summary reports, status reports, reports of the Office of Inspector General, and reports of actions taken pursuant to authority delegated by the Board of Directors.
Memorandum and resolution re: Final Rule on Revisions to the Deposit Insurance Assessment System.
The meeting will be held in the Board Room temporarily located on the fourth floor of the FDIC Building located at 550 17th Street NW., Washington, DC
This Board meeting will be Webcast live via the Internet and subsequently made available on-demand approximately one week after the event. Visit
The FDIC will provide attendees with auxiliary aids (e.g., sign language interpretation) required for this meeting. Those attendees needing such assistance should call 703–562–2404 (Voice) or 703–649–4354 (Video Phone) to make necessary arrangements.
Requests for further information concerning the meeting may be directed to Mr. Robert E. Feldman, Executive Secretary of the Corporation, at 202–898–7043.
Federal Deposit Insurance Corporation
Federal Election Commission.
Tuesday November 18, 2014 at 10:00 a.m.
999 E Street NW., Washington, DC.
This meeting will be closed to the public.
Judith Ingram, Press Officer, Telephone: (202) 694–1220.
The Commission hereby gives notice of the filing of the following agreements under the Shipping Act of 1984. Interested parties may submit comments on the agreements to the Secretary, Federal Maritime Commission, Washington, DC 20573, within twelve days of the date this notice appears in the
By Order of the Federal Maritime Commission.
Federal Trade Commission.
Proposed consent agreement.
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations.
Comments must be received on or before December 8, 2014.
Interested parties may file a comment at
Daniel O. Hanks (202–326–2472) or Michael Tankersley (202–326–2991), Bureau of Consumer Protection, 600 Pennsylvania Avenue NW., Washington, DC 20580.
Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for November 6, 2014), on the World Wide Web, at
You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before December 8, 2014. Write “MPHJ Technology Investments, LLC, et al—Consent Agreement; File No. 142 3003” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at
Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which . . . is privileged or confidential,” as discussed in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices,
If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).
Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at
If you file your comment on paper, write “MPHJ Technology Investments, LLC, et al—Consent Agreement; File No. 142 3003” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service.
Visit the Commission Web site at
The Federal Trade Commission (the “Commission”) has accepted, subject to approval, an agreement containing a consent order from MPHJ Technology Investments, LLC; Jay Mac Rust; and Farney Daniels, P.C. (the “Respondents”).
The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement's proposed order.
This matter concerns allegedly deceptive representations that the Respondents made in a campaign of letters sent to thousands of small businesses across the United States in an attempt to sell licenses for certain U.S. patents. The complaint alleges that the Respondents made false or unsubstantiated representations in their letters that many small businesses had already agreed to pay thousands of dollars for such licenses. The complaint also alleges that the Respondents' letters falsely represented that a patent infringement lawsuit would be filed against the recipient if it did not respond to the letter, and that this suit would be filed imminently. The complaint alleges that these representations constitute deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act.
The proposed consent order contains provisions designed to prevent the Respondents from engaging in similar acts and practices in the future. Section I.A of the proposed order would prohibit false or unsubstantiated representations that a patent has been licensed in substantial numbers, at particular prices, or within particular price ranges. Section I.B of the proposed order would prohibit false or unsubstantiated representations about the licenses for a patent or the responses of recipients of patent assertion communications, or concerning the results of licensing, sales, settlement, or litigation of a patent. Section I.C would prohibit misrepresentations that the Respondents or an affiliate of the Respondents has initiated a lawsuit. And Section I.D would prohibit representations that the Respondents or an affiliate of the Respondents will initiate a lawsuit unless they have decided to take such action and they possess competent and reliable evidence sufficient to substantiate that they are prepared and able to do so. In determining whether such a representation was substantiated at the time that it was made, evidence that an action was not taken because of a change in circumstances or information obtained subsequent to making the representation shall be considered.
These prohibitions in the proposed consent order apply to communications (other than filings in a lawsuit or correspondence between counsel in a lawsuit) that state that the intended recipient or anyone affiliated with the intended recipient is or may be infringing rights arising from a patent, is or may be obligated to obtain a license because of a patent, or owes or may owe compensation to another because of a patent.
The proposed consent order also contains reporting and compliance provisions. Section II requires the Respondents to maintain and upon request make available certain compliance-related records. Sections III through VI requires the Respondents to deliver a copy of the order to officers, employees, and representatives having managerial responsibilities with respect to the order's subject matter, notify the Commission of changes in corporate structure that might affect compliance obligations, and file compliance reports with the Commission.
Section VII of the proposed order provides that, with certain exceptions, the order will terminate in twenty years.
The purpose of this analysis is to facilitate public comment on the proposed order. It is not intended to constitute an official interpretation of the complaint or the proposed order, or to modify in any way the proposed order's terms.
By direction of the Commission.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice.
This notice provides public announcement
Catalogue of Federal Domestic Assistance Number (CFDA): 93.318.
Sections 307 and 317(k)(2), Public Health Service Act 42 U.S.C. 242
Single award may be awarded to grantee totaling $1,100,000 for Ebola response outbreak.
Funding is appropriated under the Continuing Appropriations Resolution, 2015, Public Law 113–164, 128 Stat. 1867 (2014).
Anticipated award date is 12/1/2014.
Project Number is CDC–RFA–GH14–1419.
CDC has waived the Grants.gov electronic submission process for this requirement. Recipients are hereby authorized to submit a paper copy application for (CDC–RFA–GH14–1419) via Express Mail (i.e. FedEx, UPS, or DHL) and send the application via email. Mailed applications must be address to Dionne Bounds, Centers for Disease Control and Prevention, 2920 Brandywine Road, Atlanta, GA 30341, telephone (770) 488–2082, or email her at
Please download the following to complete the application package:
All applications must be submitted to and received by the Grants Management Officer (GMO) no later than 11:59 p.m. EST on November 17, 2014 and please provide the GMO a PDF version of the application by email to the following email address:
Applicants will be provided with the Funding Opportunity Announcement (FOA) and additional application submission guidance via email notification. Applicants may contact the POCs listed with questions regarding the application process.
The purpose of this notice is to solicit an application from IANPHI to assist in the response to the Ebola virus in West Africa. The funding will support the impacted surrounding countries to combat this health crisis. This funding will target the following countries: Cameroon, Cote d'Ivoire, Guinea, and Guinea-Bissau to support the responses of the CDC to the outbreak of Ebola virus in West Africa. This funding will enable the U.S. to provide unified mobilization to address a crisis of this magnitude. CDC will continue to build partnerships and strengthen existing projects to respond to Ebola. CDC and its partners will help to address the need for surveillance, detection, coordination, response, and increase eligible governments' capacity to respond to the Ebola outbreak.
Approximate Total Current Fiscal Year Funding
OWP: ANA proposes to reformat the OWP (content is same) by swapping the Objective field with Problem Statement. In other words, this section will require respondents to begin with a concise statement about the problem the project is designed to address and will be followed by more details about the objectives of the project.
The two fields “Results Expected and Benefits Expected” will be combined into one field to read “Results and benefits Expected”. This will reduce redundancy and help reduce the burden on Grantees.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an amendment to the notice of meeting of the Science Board to the Food and Drug Administration. This meeting was announced in the
Martha Monser, Office of the Chief Scientist, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 1, Rm. 3309, Silver Spring, MD 20993, 301–796–4627, or FDA Advisory Committee Information Line, 1–800–741–8138 (301–443–0572 in the Washington, DC area). Please call the Information Line for up-to-date information on this meeting.
In the
The link for the Webcast on November 19, 2014, is available at:
This notice is issued under the Federal Advisory Committee Act (5 U.S.C. app. 2) and 21 CFR part 14, relating to the advisory committees.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an amendment to the notice of the meeting of the Food Advisory Committee. This meeting was announced in the
Karen Strambler, Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, 240–402–2589, FAX: 301–436–2637, email:
In the
FDA is opening a docket for public comment on this meeting. The docket will open for public comment on November 13, 2014. The docket will close on January 15, 2014. Interested persons may submit either electronic comments regarding this meeting to
On page 49091, in the second column, the
This notice is issued under the Federal Advisory Committee Act (5 U.S.C. app. 2) and 21 CFR part 14, relating to the advisory committees.
Health Resources and Services Administration, HHS.
Notice.
In compliance with the requirement for opportunity for public comment on proposed data collection projects (Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995), the Health Resources and Services Administration (HRSA) announces plans to submit an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, HRSA seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on this Information Collection Request must be received no later than January 12, 2015.
Submit your comments to
To request more information on the proposed project or to obtain a copy of the data collection plans and draft instruments, email
When submitting comments or requesting information, please include the information request collection title for reference.
Statute requires the Secretary to determine an appropriate THCGME program payment for indirect medical expenses (IME) as well as to update, as deemed appropriate, the per resident amount used to determine the Program's payment for direct medical expenses (DME). To inform these determinations and to increase understanding of this model of residency training, the George Washington University (GW) is conducting an evaluation of the costs associated with training residents in the Teaching Health Center (THC) model. GW has developed a standardized costing instrument to gather data from all THCGME programs. The information gathered in the standardized costing instrument includes, but is not limited to, resident and faculty full-time equivalents, salaries and benefits, residency administration costs, educational costs, residency clinical operations and administrative costs, and patient visits and clinical revenue generated by medical residents.
The annual estimate of burden is as follows:
HRSA specifically requests comments on (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions, (2) the accuracy of the estimated burden, (3) ways to enhance the quality, utility, and clarity of the information to be collected, and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Health Resources and Services Administration, HHS.
Notice.
In compliance with Section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the Health Resources and Services Administration (HRSA) has submitted an Information Collection Request (ICR) to the Office of Management and Budget (OMB) for review and approval. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public during the review and approval period.
Comments on this ICR should be received no later than December 15, 2014.
Submit your comments, including the Information Collection Request Title, to the desk officer for HRSA, either by email to
To request a copy of the clearance requests submitted to OMB for review, email the HRSA Information Collection Clearance Officer at
Relative to the state's submission of a yearly Application, Annual Report and 5-year Needs Assessment, the aims of the MCH Block Grant to States program transformation are threefold: (1) Reduce burden to states, (2) maintain state flexibility, and (3) improve accountability. Revisions to this edition are intended to enable the state to tell a more cohesive and comprehensive Title V story and to better reflect on the program's leadership role and its contributions to the state's public health system in building improved and expanded systems of care for the MCH population. It is recognized that the full extent of the anticipated burden reduction will be realized over time as states become more familiar with the new instructions and reporting requirements. The burden estimates presented in the table below are based on previous burden estimates, consultations with a few states on the proposed changes, and comments received during the 60-day public comment period.
Specific changes to this edition of the
(1) Narrative reporting will be organized by six population health domains (i.e., Women's/Maternal Health; Perinatal/Infant's Health; Child Health; CSHCN; Adolescent Health and Cross-cutting or Life Course); (2) Revised National Performance Measure (NPM) framework will be implemented with states selecting 8 of 15 NPMs for their programmatic focus; (3) state-level program data, such as breakdowns of MCH populations by race/ethnicity, health indicator data, and national performance and outcome measure data will be provided by MCHB, as available, from national data sources, thus, reducing the annual reporting burden for states; (4) Given that most MCH issues are multifactorial, the state will establish evidence based or evidence informed strategies to address each of the selected NPMs and will report on one or more of the Evidence-based or informed Strategy Measures (ESMs) developed for each NPM; (5) Revised instructions and the inclusion of a logic model for the State Title V MCH Block Grant Application/Annual Report process will provide greater emphasis on the need for the state priority needs and national MCH priority areas to drive the state's reporting on the 5-year (and ongoing) Needs Assessment findings, the selection of eight (8) NPMs which target the state-identified priority needs, the development of evidence based or informed strategies and related ESMs for addressing each of the selected NPMs, and the establishment of between three (3) and five (5) State Performance Measures (SPMs) which respond to the state's identified unique needs; (6) State Application/Annual Report will include a 5-year Action Plan for addressing the identified MCH priority areas; (7) An
In fiscal year (FY) 2016, states and jurisdictions will be submitting an application and annual report with a 5-year Needs Assessment for a total estimated burden of 11,169 hours. In FY 2017 and FY 2018, states and jurisdictions will be submitting an Application and Annual Report without a 5-year needs assessment for a total estimated burden of 14,514.
HRSA specifically requests comments on (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions, (2) the accuracy of the estimated burden, (3) ways to enhance the quality, utility, and clarity of the information to be collected, and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Fish and Wildlife Service, Interior.
Notice of availability; request for comments.
We, the U.S. Fish and Wildlife Service, invite the public to comment on the following application for a recovery permit to conduct activities with the purpose of enhancing the survival of an endangered species. The Endangered Species Act of 1973, as amended (Act), prohibits certain activities with endangered species unless a Federal permit allows such activity. The Act also requires that we invite public comment before issuing such permits.
To ensure consideration, please send your written comments by December 15, 2014.
Program Manager for Restoration and Endangered Species Classification, Ecological Services, U.S. Fish and Wildlife Service, Pacific Regional Office, 911 NE 11th Avenue, Portland, OR 97232–4181. Please refer to the permit number for the application when submitting comments.
Colleen Henson, Fish and Wildlife Biologist, at the above address, or by telephone (503–231–6131) or fax (503–231–6243).
The Act (16 U.S.C. 1531
A permit granted by us under section 10(a)(1)(A) of the Act authorizes the permittee to conduct activities (including take or interstate commerce) with respect to U.S. endangered or threatened species for scientific purposes or enhancement of propagation or survival. Our regulations implementing section 10(a)(1)(A) of the Act for these permits are found at 50 CFR 17.22 for endangered wildlife species, 50 CFR 17.32 for threatened wildlife species, 50 CFR 17.62 for endangered plant species, and 50 CFR 17.72 for threatened plant species.
We invite local, State, and Federal agencies and the public to comment on the following application. Please refer to the permit number for the application when submitting comments.
Documents and other information submitted with this application are available for review by request from the Program Manager for Restoration and Endangered Species Classification at the address listed in the
The applicant requests a new permit to take (monitor and excavate nests, deploy nest temperature loggers, handle, measure, weigh, tag, attach transmitters, collect biological samples, salvage, photograph, and videograph) the hawksbill sea turtle (
All comments and materials we receive in response to this request will
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
We provide this notice under section 10 of the Act (16 U.S.C. 1531
U.S. Geological Survey (USGS), Interior.
Notice of a new information collection, ISO Geospatial Metadata Editors Registry.
We (the U.S. Geological Survey) are notifying the public that we have submitted to the Office of Management and Budget (OMB) the information collection request (ICR) described below. To comply with the Paperwork Reduction Act of 1995 (PRA) and as part of our continuing efforts to reduce paperwork and respondent burden, we invite the general public and other Federal agencies to take this opportunity to comment on this ICR.
To ensure that your comments on this ICR are considered, OMB must receive them on or before December 15, 2014.
Please submit your written comments on this information collection directly to the Office of Management and Budget, Office of Information and Regulatory Affairs, Attention: Desk Officer for the Department of the Interior, via email: (
Jennifer Carlino, Federal Geographic Data Committee Office of the Secretariat, at (303) 202–4260 or
As National Spatial Data Infrastructure (NSDI) stakeholders move forward with the implementation of the International Organization for Standardization's (ISO) 191xx series of geospatial metadata standards, there is increasing demand for information about applications/editors that can be used to create ISO compliant metadata records. The USGS, through the Federal Geographic Data Committee (FGDC) Office of the Secretariat (
We again invite comments concerning this ICR as to: (a) Whether the proposed collection of information is necessary for the agency to perform its duties, including whether the information is useful; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) how to enhance the quality, usefulness, and clarity of the information to be collected; and (d) how to minimize the burden on the respondents, including the use of automated collection techniques or other forms of information technology.
Please note that comments submitted in response to this notice are a matter of public record. Before including your personal mailing address, phone
U.S. Geological Survey, Interior.
Notice of meeting.
The National Geospatial Advisory Committee (NGAC) will meet on December 3, 2014, from 1:00 p.m. to 4:00 p.m. EST. The meeting will be held via web conference and teleconference.
The NGAC, which is composed of representatives from governmental, private sector, non-profit, and academic organizations, has been established to advise the Chair of the Federal Geographic Data Committee on management of Federal geospatial programs, the development of the National Spatial Data Infrastructure, and the implementation of Office of Management and Budget (OMB) Circular A–16. Topics to be addressed at the meeting include:
Members of the public who wish to attend the meeting must register in advance. Please register by contacting Lucia Foulkes at the Federal Geographic Data Committee (703–648–4142,
The meeting will include an opportunity for public comment. Attendees wishing to provide public comment should register by November 28. Please register by contacting Lucia Foulkes at the Federal Geographic Data Committee (703–648–4142,
The meeting will be held on December 3, 2014, from 1:00 p.m. to 4:00 p.m. EST.
John Mahoney, U.S. Geological Survey (206–220–4621).
Meetings of the National Geospatial Advisory Committee are open to the public. Additional information about the NGAC and the meeting are available at
Bureau of Land Management, Interior.
Notice of filing of plats of surveys.
The Bureau of Land Management (BLM) has officially filed the plats of survey of the lands described below in the BLM Idaho State Office, Boise, Idaho, effective 9:00 a.m., on the dates specified.
Bureau of Land Management, 1387 South Vinnell Way, Boise, Idaho 83709–1657.
These surveys were executed at the request of the Bureau of Land Management to meet their administrative needs. The lands surveyed are:
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Little Jacks Creek Wilderness boundary in T. 8 S., R. 1 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Little Jacks Creek Wilderness boundary and Big Jacks Creek Wilderness Area 1 boundary in T. 8 S., R. 3 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Big Jacks Creek Wilderness Area 1 boundary in T. 8 S., R. 4 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Little Jacks Creek Wilderness boundary in T. 9 S., R. 2 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Little Jacks Creek Wilderness boundary and Big Jacks Creek Wilderness Area 1 boundary in T. 9 S., R. 3 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Big Jacks Creek Wilderness Area 1 boundary in T. 9 S., R. 4 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Big Jacks Creek Wilderness Area 1 boundary in T. 10 S., R. 2 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Big Jacks Creek Wilderness Area 1 boundary in T. 10 S., R. 3 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The plat constituting the entire survey record of the dependent resurvey of a portion of the west boundary, T. 10 S., R. 3 E., Boise Meridian, Idaho, Group Number 1317, was accepted July 25, 2014.
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Big Jacks Creek Wilderness Area 2 boundary in T. 11 S., R. 3 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The plat constituting the entire survey record of the dependent resurvey of portions of the east boundary and
The field notes representing the remonumentation of certain original corners and monumentation of certain angle points of the Big Jacks Creek Wilderness Area 2 boundary in T. 11 S., R. 4 E., Boise Meridian, Idaho, Group Number 1317, was approved July 25, 2014.
The supplemental plat showing new lots 1 and 2 in sec. 12, T. 8 N., R. 5 W., Boise Meridian, Idaho, Group Number 1424, was accepted September 5, 2014.
The supplemental plat portraying lot 7, T. 4 S., R. 36 E., Boise Meridian, Idaho, Group Number 1316, was accepted September 5, 2014.
These surveys were executed at the request of the U.S.D.A. Natural Resources Conservation Service to meet their administrative needs. The lands surveyed are:
The plat representing the dependent resurvey of portions of the First Standard Parallel North (north boundary) and subdivisional lines, and the subdivision of section 4, and a metes-and-bounds survey in section 4, T. 4 N., R. 24 E., of the Boise Meridian, Idaho, Group Number 1397, was accepted August 27, 2014.
The plat representing the dependent resurvey of portions of the north boundary and subdivisional lines, and the subdivision of sections 4, 9, 10, 13, 14, 15, and 23, T. 2 N., R. 24 E., of the Boise Meridian, Idaho, Group Number 1396, was accepted September 25, 2014.
The plat represents the dependent resurvey of portions of the First Standard Parallel North (south boundary), west boundary, and subdivisional lines, and the subdivision of sections 30 and 31, and a metes-and-bounds survey in sections 30 and 31, T. 5 N., R. 24 E., of the Boise Meridian, Idaho, Group Number 1398, was accepted September 25, 2014.
This survey was executed at the request of the U. S. Forest Service to meet certain administrative and management purposes.
The plat representing the dependent resurvey of a portion of Tract 39, and the survey of portions of the east boundary and subdivisional lines, T. 30 N., R. 7 E., of the Boise Meridian, Idaho, Group Number 1324, was accepted June 19, 2014.
National Park Service, Interior.
Notice of availability.
The National Park Service announces availability of the Final Environmental Impact Statement (EIS) for the Cottonwood Cove and Katherine Landing Development Concept Plans, Lake Mead National Recreation Area. The document describes and analyzes three alternatives.
The Record of Decision for the Cottonwood Cove and Katherine Landing Development Concept Plans will be executed not sooner than 30 days after the date of publication by the Environmental Protection Agency of its notice of filing of the Final EIS in the
The Final EIS is available for public inspection at
Mr. Jim Holland, Park Planner, Lake Mead National Recreation Area, 601 Nevada Highway, Boulder City, NV 89005, (702) 293–8986.
The purposes of the development concept plans are to reevaluate the implementation strategies for these two areas that were identified in the 1986
The GMP addressed the need to provide recreational opportunities while preserving and protecting natural and cultural resources. It established land-based management zones and included development concept plans for Cottonwood Cove and Katherine Landing that identified limits on the development, established the number and type of facilities, and addressed flood hazards. The GMP's vision for both areas was to accommodate increasing use, enhance the visitor experience, and mitigate flood hazards. The LMP established water-based management zones and provided further guidance for the long-term protection of park resources while allowing a range of recreational opportunities to support visitor needs. A number of the management actions identified in both approved plans require more site-specific development planning. There are also a number of management issues that have not been adequately addressed or resolved in the previous planning efforts and that require a more detailed examination of development and operational needs. The primary issues addressed in the Final EIS are as follows: (1) Water quality and flood control; (2) air quality; (3) socioeconomics guiding policies, regulations, and laws; and (4) Park operations methodologies and assumptions.
National Park Service, Interior.
Notice of meeting.
Notice is hereby given in accordance with the Federal Advisory Committee Act (5 U.S.C. Appendix 1–16) that a meeting of the Committee for the Preservation of the White House will be held at the White House at 12:00 p.m. on Thursday, December 11, 2014.
Thursday, December 11, 2014 (Eastern).
The White House, 1600 Pennsylvania Avenue NW., Washington, DC 20500.
Comments may be provided to: John Stanwich, Executive Secretary, Committee for the Preservation of the White House, 1100 Ohio Drive SW., Washington, DC 20242, (202) 619–6344. Before including your address, telephone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
It is expected that the meeting agenda will include policies, goals, and long-range plans. The meeting will be open, but subject to appointment and security clearance requirements. Clearance information, which includes full name, date of birth, Social Security number, city and state of residence, and country of citizenship must be received by December 3, 2014. Due to the present mail delays being experienced, clearance information should be faxed to (202) 619–6353 in order to assure receipt by deadline. Inquiries may be made by calling the Committee for the Preservation of the White House between 9 a.m. and 4 p.m. weekdays at (202) 619–6344. Written comments may be sent to John Stanwich, Executive Secretary, Committee for the Preservation of the White House, 1100 Ohio Drive SW., Washington, DC 20242.
National Park Service, Interior.
Notice of meeting.
This notice announces a meeting of the Boston Harbor Islands National Recreation Area Advisory Council. The agenda includes a presentation by Cathy Stanton, anthropologist, lecturer, and writer who has been investigating the origins of the cottages located on Peddocks Island and is exploring whether this area can be classified as a “community” within the Boston Harbor Islands. There will also be a discussion about the Council's mission, goals, and community outreach initiative, and Superintendent Giles Parker will give updates about park operations and planning efforts.
December 10, 2014, 4:00 p.m. to 6:00 p.m. (EASTERN).
WilmerHale, 60 State Street, 26th Floor Conference Room, Boston, MA 02109.
Giles Parker, Superintendent and Designated Federal Officer (DFO), Boston Harbor Islands National Recreation Area, 15 State Street, Suite 1100, Boston, MA 02109, telephone (617) 223–8669, or email
This meeting open to the public. Those wishing to submit written comments may contact the DFO for the Boston Harbor Islands National Recreation Area Advisory Council, Giles Parker, by mail at National Park Service, Boston Harbor Islands, 15 State Street, Suite 1100, Boston, MA 02109, or via email
The Council was appointed by the Director of the National Park Service pursuant to 16 U.S.C. 460kkk(g). The purpose of the Council is to advise and make recommendations to the Boston Harbor Islands Partnership with respect to the implementation of a management plan and park operations. Efforts have been made locally to ensure that the interested public is aware of the meeting dates.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined to review in part the final initial determination (“ID”) issued by the presiding administrative law judge (“ALJ”) finding a violation of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337) (“section 337”), in the above-referenced investigation on August 29, 2014.
Michael Liberman, Esq., Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205–3115. Copies of non-confidential documents filed in connection with this investigation are or will be available for
The Commission instituted this investigation on July 26, 2013, based on a complaint filed by Knowles Electronics, LLC, of Itasca, Illinois. 78 FR 45272 (July 26, 2013). The notice of investigation named GoerTek, Inc. of Weifang, China and GoerTek Electronics, Inc. of Sunnyvale, California as respondents. The Commission's Office of Unfair Import Investigations is not a party to this investigation. The complaint alleged violations of section 337 in the importation into the United States, the sale for importation, and the sale within the United States after importation of silicon microphone packages and products containing the same, by reason of infringement of certain claims of U.S. Patent Nos. 7,439,616 (“the `616 patent”); 8,018,049 (“the `049 patent”); and 8,121,331 (“the `331 patent”). Subsequently, the investigation was terminated as to claims 13 and 14 of the `616 patent and claim 24 of the `049 patent based on the withdrawal of complainant's allegations as to those claims.
The final ID on violation was issued on August 29, 2014. The ALJ issued his recommended determination (“RD”) on remedy, the public interest and bonding on the same day. The ALJ found that a violation of section 337 has occurred in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain silicon microphone packages and products containing same, by reason of infringement of one or more of claims 1, 2, 8, 11–12, 15–18, and 21 of the `616 patent; claims 1, 15, 16, 19, 21–23, and 25–26 of the `049 patent; and claims 1, 2, 4, 5, and 11–13 of the `331 patent. The ALJ recommended that the Commission issue a limited exclusion order directed to respondents' accused products that infringe the `616, `049, and `331 patents. The ALJ did not recommend issuance of a cease and desist order against respondents.
On October 2, 2014, complainant filed a post-RD statement on the public interest pursuant to Commission Rule 201.50(a)(4). No responses from the public were received in response to the post-RD Commission Notice issued on September 3, 2014.
Having examined the record in this investigation, including the ALJ's final ID, the petitions for review, and the responses thereto, the Commission has determined to review the ID in part. In particular, the Commission has determined to review the construction of the “cover” limitation with respect to the `616 and `049 patent as well as related anticipation, obviousness, infringement and technical prong analyses. In addition, the Commission has determined to review infringement with respect to claim 8 of the `616 patent.
The parties are requested to brief their positions on only the following issues, with reference to the applicable law and the evidentiary record:
(1) Please discuss whether the record supports or precludes the ALJ's interpretation of the claim limitations “the at least one layer of conductive material in the cover” and “conductive layer formed in the cover” in the `049 and `616 patents, respectively. As part of this discussion, please address:
(a) Whether the references to “a shield to protect . . . against electromagnetic interference” in claim 1 of the `049 patent and “a shield against electromagnetic interference” in claims 11 and 15 of the `616 patent provide context for interpreting the above-mentioned claim limitations; and
(b) Whether multiple layers in the cover are relevant in order to provide “a shield to protect” or “a shield against” electromagnetic interference.
(2) With respect to the `049 and `661 patents, please discuss, in light of your response to the Commission's question pertaining to construction of claim limitations “the at least one layer of conductive material in the cover” and “conductive layer formed in the cover” in the `049 and `616 patents, respectively, whether the record supports the ALJ's findings regarding these limitations with respect to infringement, technical prong, and non-obviousness, including the evidence of secondary considerations of non-obviousness.
(3) Assuming the asserted claims of the `049 patent require the presence of one or more additional layers in the cover besides “at least one layer of conductive material,” how does the presence of that additional material impact the respondents' allegation that the asserted claims are obvious in light of Halteren and Une under
In connection with the final disposition of this investigation, the Commission may (1) issue an order that could result in the exclusion of the subject articles from entry into the United States, and/or (2) issue one or more cease and desist orders that could result in the respondents being required to cease and desist from engaging in unfair acts in the importation and sale of such articles. Accordingly, the Commission is interested in receiving written submissions that address the form of remedy, if any, that should be ordered. If a party seeks exclusion of an article from entry into the United States for purposes other than entry for consumption, the party should so indicate and provide information establishing that activities involving other types of entry either are adversely affecting it or are likely to do so. For background,
If the Commission contemplates some form of remedy, it must consider the effects of that remedy upon the public interest. The factors the Commission will consider include the effect that an exclusion order and/or cease and desist orders would have on (1) the public health and welfare, (2) competitive conditions in the U.S. economy, (3) U.S. production of articles that are like or directly competitive with those that are subject to investigation, and (4) U.S. consumers. The Commission is therefore interested in receiving written submissions that address the aforementioned public interest factors in the context of this investigation.
If the Commission orders some form of remedy, the U.S. Trade Representative, as delegated by the President, has 60 days to approve or disapprove the Commission's action.
Persons filing written submissions must file the original document electronically on or before the deadlines stated above and submit 8 true paper copies to the Office of the Secretary by noon the next day pursuant to section 210.4(f) of the Commission's Rules of Practice and Procedure (19 CFR 210.4(f)). Submissions should refer to the investigation number (“Inv. No. 337–TA–888”) in a prominent place on the cover page and/or the first page. (
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in Part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
On November 6, 2014, the Department of Justice lodged a proposed consent decree with the United States District Court for the Middle District of Louisiana in the lawsuit entitled
The United States and Louisiana Department of Environmental Quality filed this lawsuit under the Clean Air Act and Louisiana Environmental Quality Act. The complaint seeks injunctive relief and civil penalties for violations of the Clean Air Act's Prevention of Significant Deterioration requirements and related state requirements at sulfuric acid manufacturing plants owned and operated by the defendants, PCS Nitrogen Fertilizer, L.P., AA Sulfuric, Inc., and White Springs Agricultural Chemicals, Inc., in Geismar, Louisiana and White Springs, Florida. The consent decree requires the defendants to perform injunctive relief, pay a $ 1,300,000 civil penalty, and perform a Supplemental Environmental Project at a nitric acid manufacturing facility owned and operated by PCS Nitrogen Fertilizer, Inc. in Geismar, Louisiana. The consent decree also requires PCS Phosphate Company, Inc. to perform injunctive relief at the sulfuric acid manufacturing facility that it owns and operates in Aurora, North Carolina.
The publication of this notice opens a period for public comment on the proposed consent decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the proposed consent decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $43.50 (25 cents per page reproduction cost) payable to the United States Treasury. For a paper copy without the exhibits and signature pages, the cost is $ 17.00.
Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)–(h), that a proposed Final Judgment, Asset Preservation Stipulation, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in
Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection at the Department of Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth Street NW., Suite 1010, Washington, DC 20530 (telephone: 202–514–2481), on the Department of Justice's Web site at
Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the U.S. Department of Justice, Antitrust Division's internet Web site, filed with the Court and, under certain circumstances, published in the
The United States of America, acting under the direction of the Attorney General of the United States brings this civil action to enjoin the proposed acquisition by Media General, Inc. (“Media General”) of LIN Media LLC (“LIN”) (collectively, “Defendants”) and to obtain other equitable relief. The proposed acquisition likely would substantially lessen competition in the sale of broadcast television spot advertising in the following Designated Market Areas (“DMAs”): Mobile, Alabama/Pensacola, Florida; Birmingham, Alabama; Savannah, Georgia; Providence, Rhode Island/New Bedford, Massachusetts; and Green Bay/Appleton, Wisconsin (collectively “the DMA Markets”), in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. Plaintiff alleges as follows:
1. Pursuant to a Purchase Agreement dated March 21, 2014, Media General agreed to purchase LIN whereby LIN shareholders would receive aggregate consideration valued at approximately $1.5 billion in a combination of stock and cash.
2. Media General and LIN both own and operate broadcast television stations in each of the DMA Markets. Media General's and LIN's broadcast television stations compete head-to-head for the business of local and national companies that advertise on broadcast television stations in each of the DMA Markets.
3. If consummated, the proposed acquisition would eliminate the head-to-head competition between Media General and LIN in each of the DMA Markets. Unless enjoined, the acquisition is likely to lead to higher prices and will substantially lessen competition for broadcast television spot advertising in each of the DMA Markets in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
4. The United States brings this action pursuant to Section 15 of the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
5. Defendants sell broadcast television spot advertising, a commercial activity that substantially affects, and is in the flow of, interstate commerce. The Court has subject-matter jurisdiction over this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
6. Defendants transact business and are found in the District of Columbia, and are subject to the personal jurisdiction of this Court. Defendants have consented to venue and personal jurisdiction in this District. Therefore, venue is proper in this District under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(c).
7. Media General is incorporated in the Commonwealth of Virginia, with its headquarters in Richmond, Virginia. Media General reported operating revenues of over $270 million in 2013. Media General owns and operates 31 broadcast television stations in 29 metropolitan areas. It owns and operates broadcast television stations in each of the DMA Markets.
8. LIN is a Delaware corporation, with its headquarters in Austin, Texas. LIN owns and operates, or provides programming, operating, or sales services to more than 50 stations in 23 metropolitan areas. It also owns and operates, or provides programming, operating, or sales services to broadcast television stations in each of the DMA Markets.
9. Broadcast television stations attract viewers through their programming, which is delivered for free over the air or retransmitted to viewers, mainly through wired cable or other terrestrial television systems and through satellite television systems. Broadcast television stations then sell advertising time to businesses that want to advertise their products to television viewers. Broadcast television “spot” advertising, which comprises the majority of a television station's revenues, is sold directly by the station itself or through its national representative on a localized basis and is purchased by advertisers who want to target potential customers in specific geographic areas. Spot advertising differs from network and syndicated television advertising, which are sold by television networks and producers of syndicated programs on a nationwide basis and broadcast in every market where the network or syndicated program is aired.
10. Broadcast television spot advertising possesses a unique combination of attributes that set it apart from advertising using other types of media. Television combines sight, sound, and motion, thereby creating a more memorable advertisement. Moreover, of all media, broadcast television spot advertising generally
11. Like broadcast television, subscription television channels, such as those carried over cable or satellite television, combine elements of sight, sound, and motion, but they are not a desirable substitute for broadcast television spot advertising for two important reasons. First, satellite, cable, and other subscription content delivery systems do not have the “reach” of broadcast television. Typically, broadcast television can reach well-over 90% of homes in a DMA, while cable television often reaches many fewer homes. Even when several subscription television companies within a DMA jointly offer cable television spot advertising through a consortium called an interconnect, cable spot advertising does not match the reach of broadcast television spot advertising. As a result, an advertiser can achieve greater audience penetration through broadcast television spot advertising than through advertising on a subscription television channel. Second, because subscription services may offer more than 100 channels, they fragment the audience into small demographic segments. Because broadcast television programming typically has higher rating points than subscription television programming, broadcast television provides a much easier and more efficient means for an advertiser to reach a high proportion of its target demographic. Media buyers often buy time on subscription television channels not so much as a substitute for broadcast television, but rather to supplement a broadcast television message, to reach a narrow demographic (e.g., 18–24 year olds) with greater frequency, or to target narrow geographic areas within a DMA. A small but significant price increase by broadcast television spot advertising providers would not be made unprofitable by advertisers switching to advertising on subscription television channels.
12. Internet-based media is not currently a substitute for broadcast television spot advertising. Although Online Video Distributors (“OVDs”) such as Netflix and Hulu are important sources of video programming, as with cable television advertising, the local video advertising of OVDs lacks the reach of broadcast television spot advertising. Non-video internet advertising, e.g., Web site banner advertising, lacks the important combination of sight, sound, and motion that gives television its impact. Consequently, local media buyers currently purchase internet-based advertising primarily as a supplement to broadcast television spot advertising, and a small but significant price increase by broadcast television spot advertising providers would not be made unprofitable by advertisers switching to internet-based advertising.
13. Broadcast television stations generally can identify advertisers with strong preferences for using broadcast television advertising. Broadcast television stations negotiate prices individually with advertisers and consequently can charge different advertisers different prices. During the individualized negotiations on price and available advertising slots that commonly occur between advertisers and broadcast television stations, advertisers provide stations with information about their advertising needs, including their target audience. Broadcast television stations could profitably raise prices to those advertisers who view broadcast television as a necessary advertising medium, either as their sole means of advertising or as a necessary part of a total advertising plan.
14. Accordingly, the sale of broadcast television spot advertising is a line of commerce under Section 7 of the Clayton Act and a relevant product market for purposes of analyzing the proposed acquisition under Section 7 of the Clayton Act.
15. DMAs are geographic units defined by the A.C. Nielsen Company, a firm that surveys television viewers and furnishes broadcast television stations, advertisers, and advertising agencies in a particular area with data to aid in evaluating audience size and composition. DMAs are ranked according to the number of households they contain. Signals from broadcast television stations located in a DMA Market reach viewers located throughout the DMA, but signals from broadcast television stations located outside the DMA reach few viewers within the DMA. DMAs are used to analyze revenues and shares of broadcast television stations in the
16. Advertisers use broadcast television stations within each of the DMA Markets to reach the largest possible number of viewers across the DMA. Some of these advertisers are located in each of the DMA Markets and need to reach customers there; others are regional or national businesses that want to target consumers across each of the DMA Markets. Advertising on television stations outside each of the DMA Markets is not an alternative for these advertisers because such stations cannot be viewed by a significant number of potential customers within each of the DMAs. Thus, if there were a small but significant increase in broadcast television spot advertising prices within a specific DMA Market, an insufficient number of advertisers would switch advertising purchases to television stations outside that DMA to render the price increase unprofitable.
17. Accordingly, each of the DMA Markets is a section of the country under Section 7 of the Clayton Act and a relevant geographic market for the sale of broadcast television spot advertising for purposes of analyzing the proposed acquisition under Section 7 of the Clayton Act.
18. Broadcast television stations compete for advertisers through programming that attracts viewers to their stations. In developing their own programming and in considering the programming of the networks with which they may be affiliated, broadcast television stations try to select programs that appeal to the greatest number of viewers and to differentiate their stations from others in the same DMA by appealing to specific demographic groups. Advertisers, in turn, are interested in using broadcast television spot advertising to reach both a large audience and a high proportion of the type of viewers that are most likely to buy their products.
19. Broadcast station ownership in each of the DMA Markets is already significantly concentrated. In each of these markets, four stations, each affiliated with a major network, had more than 90 percent of gross advertising revenues in 2013. In the
20. Using the Herfindahl-Hirschman Index (“HHI”), a standard measure of market concentration (defined and explained in Appendix A), a combination of Media General's and LIN's broadcast television stations in each of the DMA markets would result in both a large change in concentration and a highly concentrated market. The post-acquisition HHI in each of the DMA Markets would be over 2500 with an increase in the HHI of more than 500 points. Under the Horizontal Merger Guidelines issued by the Department of Justice and the Federal Trade Commission, mergers resulting in highly concentrated markets (with an HHI in excess of 2500) and with an increase in the HHI of more than 200 points are presumed to be likely to enhance market power.
21. In addition to increasing concentration in the DMA Markets, the proposed transaction combines stations that are close substitutes and vigorous competitors in markets with limited alternatives. In each of the DMA Markets, Defendants have broadcast stations that are affiliated with the major national television networks, ABC, CBS, NBC, and FOX. Their respective affiliations with those networks, and their local news operations, provide Defendants' stations with a variety of competing programming options that are often each other's next-best or second-best substitutes for many viewers and advertisers.
22. Advertisers benefit from Defendants' head-to-head competition in the sale of broadcast television spot advertising in each of the DMA Markets. Advertisers purposefully spread their advertising dollars across numerous spot advertising suppliers to reach their marketing goals most efficiently. After the proposed acquisition, advertisers in each of the DMA Markets would likely find it more difficult to “buy around” the Defendants' combined stations in response to higher advertising rates, than to “buy around” Media General's stations or LIN's stations, as separate entities, as they could have done before the proposed acquisition. Because a significant number of advertisers would likely be unable to reach their desired audiences as effectively unless they advertise on at least one station that Media General would control after the proposed acquisition, those advertisers' bargaining positions would be weaker, and the advertising rates they pay would likely increase.
23. Accordingly, the proposed acquisition is likely to substantially reduce competition and will restrain trade in the sale of broadcast television spot advertising in each of the DMA Markets.
24. De novo entry into each of the DMA Markets is unlikely. The FCC regulates entry through the issuance of broadcast television licenses, which are difficult to obtain because the availability of spectrum is limited and the regulatory process associated with obtaining a license is lengthy. Even if a new signal became available, commercial success would come, at best, over a period of many years. In each of the DMA Markets, all of the major broadcast networks (CBS, NBC, ABC, FOX) are already affiliated with a licensee, the contracts last for many years, and the broadcast networks rarely switch licensees when the contracts expire. Thus, entry into each DMA Market's broadcast television spot advertising market would not be timely, likely, or sufficient to deter Media General from engaging in anticompetitive price increases or other anticompetitive conduct after the proposed acquisition occurs.
25. Other broadcast television stations in each of the DMA Markets could not readily increase their advertising capacity or change their programming sufficiently in response to a price increase by Defendants. The number of 30-second spots in a DMA is largely fixed by programming and time constraints. This fact makes the pricing of spots very responsive to changes in demand. During so-called political years, for example, political advertisements crowd out commercial advertising and make the spots available for commercial advertisers more expensive than they would be in nonpolitical years. Adjusting programming in response to a pricing change is risky, difficult, and time-consuming. Network affiliates are often committed to the programming provided by the network with which they are affiliated, and it often takes years for a station to build its audience. Programming schedules are complex and carefully constructed, taking many factors into account, such as audience flow, station identity, and program popularity. In addition, stations typically have multi-year contractual commitments for individual shows. Accordingly, a television station is unlikely to change its programming sufficiently or with sufficient rapidity to overcome a small but significant price increase imposed by Defendants.
26. Although Defendants assert that the proposed acquisition would produce efficiencies, they cannot demonstrate acquisition-specific and cognizable efficiencies that would be sufficient to offset the proposed acquisition's anticompetitive effects.
27. Plaintiff hereby repeats and realleges the allegations of paragraphs 1 through 26 as if fully set forth herein.
28. The proposed acquisition likely would lessen competition substantially in interstate trade and commerce, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18. The proposed acquisition likely would have the following effects, among others:
a. Competition in the sale of broadcast television spot advertising in each of the DMA Markets would be lessened substantially;
b. competition among Media General and LIN in the sale of broadcast television spot advertising in each of the DMA Markets would be eliminated; and
c. the prices for spot advertising time on broadcast television stations in each of the DMA Markets would likely increase.
29. Unless restrained, the proposed acquisition would violate Section 7 of the Clayton Act, 15 U.S.C. 18.
30. Plaintiff requests:
d. That the Court adjudge the proposed merger to violate Section 7 of the Clayton Act, 15 U.S.C. 18;
e. that the Court permanently enjoin and restrain Defendants from carrying
f. that the proposed Final Judgment giving effect to the divestitures be entered by the Court after compliance with the Antitrust Procedures and Penalties Act, 15 U.S.C. 16;
g. that the Court award Plaintiff the costs of this action; and
h. that the Court award such other relief to Plaintiff as the Court may deem just and proper.
Respectfully submitted,
The term “HHI” means the Herfindahl-Hirschman Index, a commonly accepted measure of market concentration. The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (30
Pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (“APPA” or “Tunney Act”), 15 U.S.C. 16(b)-(h), plaintiff United States of America (“United States”) files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding.
Defendants Media General, Inc. (“Media General”) and LIN Media LLC (“LIN”) entered into a Purchase Agreement, dated March 21, 2014, pursuant to which Media General would acquire LIN. Under the Purchase Agreement, LIN shareholders would receive approximately $1.5 billion in a combination of stock and cash. Defendants compete head-to-head in the sale of broadcast television spot advertising in the following Designated Market Areas (“DMAs”): Mobile, Alabama/Pensacola, Florida; Birmingham, Alabama; Savannah, Georgia; Providence, Rhode Island/New Bedford, Massachusetts; and Green Bay/Appleton, Wisconsin (collectively “the DMA Markets”).
The United States filed a civil antitrust Complaint on October 30, 2014, seeking to enjoin the proposed acquisition. The Complaint alleges that the likely effect of the acquisition would be to lessen competition substantially and increase broadcast television spot advertising prices in each of the DMA Markets in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
At the same time the Complaint was filed, the United States also filed a Hold Separate Stipulation and Order (“Hold Separate”) and proposed Final Judgment, which are designed to eliminate the anticompetitive effects of the proposed acquisition. Under the proposed Final Judgment, which is explained more fully below, Defendants are required to divest the Divestiture Assets (collectively, the “Divestiture Stations”) to Acquirers approved by the United States in a manner that preserves competition in each of the DMA Markets: WVTM–TV, located in the Birmingham, Alabama DMA; WJCL and WTGS, both located in the Savannah, Georgia DMA; WALA–TV, located in the Mobile, Alabama/Pensacola, Florida DMA; WJAR, located in the Providence, Rhode Island/New Bedford, Massachusetts DMA; and WLUK–TV and WCWF, both located in the Green Bay/Appleton, Wisconsin DMA. The Hold Separate requires Defendants to take certain steps to ensure that the Divestiture Stations are operated as competitively independent, economically viable, and ongoing businesses that will remain independent and uninfluenced by the consummation of the acquisition that competition is maintained during the pendency of the ordered divestitures.
The United States and Defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Court would retain jurisdiction to construe, modify, or enforce the provisions of the proposed Final Judgment and to punish violations thereof.
Media General is incorporated in the Commonwealth of Virginia, with its headquarters in Richmond, Virginia. Media General owns and operates 31 broadcast television stations in 29 metropolitan areas. It owns and operates broadcast television stations in each of the DMA Markets.
LIN is a Delaware corporation, with its headquarters in Austin, Texas. LIN owns and operates, or provides programming, operating, or sales services to more than 50 stations in 23 metropolitan areas. It also owns and operates, or provides programming, operating, or sales services to broadcast television stations in each of the DMA Markets.
The proposed acquisition would lessen competition substantially in the sale of broadcast television spot advertising in each of the DMA Markets. This acquisition is the subject of the Complaint and proposed Final Judgment filed by the United States on October 30, 2014.
The Complaint alleges that the sale of broadcast television spot advertising constitutes a relevant product market for analyzing this acquisition under Section 7 of the Clayton Act. Television stations attract viewers through their programming and then sell advertising time to businesses wanting to advertise their products to those television viewers. Advertisers purchase broadcast television spot advertising to target potential customers in specific DMAs. Spot advertising differs from network and syndicated television advertising, which are sold on a nationwide basis by major television networks and by producers of syndicated programs and are broadcast in every market area in which the network or syndicated program is aired.
Broadcast television spot advertising possesses a unique combination of attributes that sets it apart from advertising using other types of media. Television combines sight, sound, and motion, thereby creating a more memorable advertisement. Broadcast television spot advertising generally reaches the largest percentage of potential customers in a targeted geographic area and is therefore especially effective in introducing, establishing, and maintaining a product's image.
Because of this unique combination of attributes, broadcast television spot advertising has no close substitute for a significant number of advertisers. Spot advertising on subscription television channels and internet-based video advertising lack the same reach; radio spots lack the visual impact; and newspaper and billboard ads lack sound and motion, as do many internet search engine and Web site banner ads. Through information provided during individualized price negotiations, stations can readily identify advertisers with strong preferences for using broadcast television spot advertising and ultimately can charge different advertisers different prices. Consequently, a small but significant price increase in broadcast television spot advertising is unlikely to cause enough advertising customers to switch advertising purchases to other media to make the price increase unprofitable.
The Complaint alleges that each of the DMA Markets constitutes a relevant geographic market for purposes of analyzing this acquisition under Section 7 of the Clayton Act. A.C. Nielsen Company defines DMAs as specific geographic units for advertising purposes. Signals from full-powered television stations in each of the DMA Markets reach viewers throughout that DMA, so advertisers can use television stations in each of the DMA Markets to target the largest possible number of viewers within each of those markets. Some of these advertisers are located in each of the DMA Markets and are trying to reach consumers that live in that specific market; others are regional or national businesses wanting to target consumers in a specific area. Advertising on television stations outside each of the DMA Markets is not an alternative for either local, regional, or national advertisers, because signals from television stations outside each of the DMA Markets reach relatively few viewers within each of those DMAs. Thus, advertising on those stations outside a DMA does not reach a significant number of potential customers within the DMA.
The Complaint alleges that the proposed acquisition likely would lessen competition substantially in interstate trade and commerce, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18, and likely would have the following effects, among others:
(a) Competition in the sale of broadcast television spot advertising in each of the DMA Markets would be lessened substantially;
(b) competition between Media General broadcast television stations and LIN broadcast television stations in the sale of broadcast television spot advertising in each of the DMA Markets would be eliminated; and
(c) the prices for spot advertising time on broadcast television stations in each of the DMA Markets likely would increase.
Both Defendants own and operate network-affiliated broadcast television stations in each of the DMA Markets. The acquisition, by eliminating LIN as a separate competitor and combining its operations with Media General, would allow the combined entity to increase its market share of the broadcast television spot advertising and revenues in each of the DMA Markets. In the Mobile, Alabama/Pensacola, Florida DMA, combining the three stations that Defendants operate would give Media General approximately 54 percent of all television station gross advertising revenues in that DMA. In the Birmingham, Alabama DMA, combining the two stations that Defendants operate would give Media General approximately 34 percent of all television station gross advertising revenues in that DMA. In the Savannah, Georgia DMA, combining the three stations that Defendants operate would give Media General approximately 55 percent of all television station gross advertising revenues in that DMA. In the Providence, Rhode Island/New Bedford, Massachusetts DMA, combining the three stations that Defendants operate would give Media General approximately 83 percent of all television station gross advertising revenues in that DMA. Finally, in the Green Bay/Appleton, Wisconsin DMA, combining the three stations that Defendants operate would give Media General approximately 59 percent of all television station gross advertising revenues in that DMA. In addition to increasing Media General's share of broadcast television spot advertising revenue in each of the DMA Markets, the proposed acquisition would increase substantially its concentration in each of the DMA Markets.
Using the Herfindahl-Hirschman Index (“HHI”), a standard measure of market concentration (defined and explained in Appendix A to the Complaint), the post-acquisition HHI in each of the DMA Markets would be over 2500 with an increase in the HHI of more than 500 points in each of those markets. Under the Horizontal Merger Guidelines issued by the Department of Justice and Federal Trade Commission, mergers resulting in highly concentrated markets (with an HHI in excess of 2500) with an increase in the HHI of more than 200 points are presumed to be likely to enhance market power.
The transaction also combines stations that are close substitutes and vigorous competitors in a product market with limited alternatives. In each of the DMA Markets, Defendants have broadcast stations that are affiliated with the major national television networks, ABC, CBS, NBC, and FOX. Their respective affiliations with those networks, and their local news operations, provide Defendants' stations with a variety of competing programming options that are often each other's next-best or second-best substitutes for viewers and advertisers.
Currently, Defendants' stations that overlap in the same DMA Market compete for the business of local, regional, and national firms seeking to advertise on broadcast television stations. Advertisers benefit from this competition. Thus, the proposed acquisition is likely to eliminate this head-to-head competition and therefore, could enable Defendants to raise prices for broadcast spot advertising.
The Complaint alleges that entry or expansion in each of the DMA Markets' television spot advertising market would not be timely, likely, or sufficient to prevent any anticompetitive effects. New entry is unlikely since any new station would require an FCC license, which is difficult to obtain. Even if a new station became operational, commercial success would come over a period of many years. The number of 30-second spots available at a station is generally fixed, and additional slots cannot be created. Adjusting programming in response to a pricing change is difficult and time-consuming. Programming schedules are complex and carefully constructed, and television stations often have multi-year contractual commitments for individual shows or are otherwise committed to programming provided by their affiliated network. Accordingly, other television stations in each of the DMA Markets could not readily increase their advertising capacity or change their programming in response to a small but significant price increase by Media General.
The divestiture requirement of the proposed Final Judgment will eliminate the anticompetitive effects of the transaction in each of the DMA Markets by maintaining the Divestiture Stations as independent, economically viable competitors.
The “Divestiture Assets” are defined in Paragraph II.O of the proposed Final Judgment to include all assets principally devoted to and necessary for the operation of the Divestiture Stations. These Divestiture Assets are essentially the same assets that Defendants would have operated under the Asset Purchase Agreement. The assets include real property, equipment, FCC licenses, contracts, intellectual property rights, programming materials, and customer lists maintained by Media General or LIN in connection with each of the Divestiture Stations. These do not include assets that are not principally devoted to or necessary for the operation of each of the Divestiture Stations, but are used to support multiple stations. Thus, Media General will be able to retain back-office systems or other assets and contracts used to support multiple broadcast television stations, and which an Acquirer with experience operating broadcast television stations can supply for itself.
To ensure that each of the Divestiture Stations is operated as an independent, economically viable competitor after the divestitures, Section XI of the proposed Final Judgment prohibit Defendants from entering into any agreements during the term of the Final Judgment that create a long-term relationship with any of the Acquirers of the Divestiture Stations after the divestitures are completed. Examples of prohibited agreements include options to repurchase or assign interests in any of the Divestiture Stations; agreements to provide financing or guarantees for financing; local marketing agreements, joint sales agreements, or any other cooperative selling arrangements; shared services agreements; and agreements to jointly conduct any business negotiations with the Acquirers with respect to any of the Divestiture Stations. This shared services prohibition does not preclude agreements limited to helicopter sharing and stock video pooling in the forms that are customary in the industry. It also does not preclude other non-sales-related agreements approved in advance by the United States in its sole discretion. These limited exceptions do not permit Defendants to enter into broad news-sharing agreements with respect to any of the Divestiture Stations. The United States in its sole discretion may approve in writing of any transition services agreement that may be necessary to facilitate the continuous operations of the Divestiture Assets until the Acquirers can provide such capabilities independently. The terms and conditions of any such transition services agreement shall be subject to the approval of the United States, in its sole discretion. These transition services agreements will allow each of the Divestiture Stations to continue its operations as an independent, ongoing, economically viable, and active competitor in the broadcast television spot advertising business.
Defendants are required to take all steps reasonably necessary to accomplish the divestitures quickly and to cooperate with prospective purchasers. Because transferring the broadcast license for each of the Divestiture Stations requires FCC approval, Defendants are specifically required to use their best efforts to obtain all necessary FCC approvals as expeditiously as possible. The divestiture of each of the Divestiture Stations must occur within ninety (90) calendar days after the filing of the Hold Separate in this matter or five (5) calendar days after notice that the Court has entered the Final Judgment, whichever is later, subject to Defendants' receipt of any necessary FCC order pertaining to the divestiture. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. If FCC applications to assign or transfer licenses to the Acquirers of the Divestiture Stations have been filed within the period permitted for divestiture, but an order or other
If the divestitures do not occur within the prescribed timeframe in Section VI (A) of the proposed Final Judgment, the proposed Final Judgment provides that the Court, upon application of the United States, will appoint a Divestiture Trustee selected by the United States to sell any of the Divestiture Stations that have not been divested. The Defendants will pay all costs and expenses of the Divestiture Trustee. The Divestiture Trustee's commission will be structured to provide an incentive for the Divestiture Trustee based on the price obtained and the speed with which the divestiture is accomplished. The Divestiture Trustee would file monthly reports with the Court and the United States describing efforts to divest the remaining stations. If the divestiture has not been accomplished after six (6) months, the Divestiture Trustee and the United States will make recommendations to the Court, which shall enter such orders as appropriate, to carry out the purpose of the trust.
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys' fees. Entry of the proposed Final Judgment will neither impair nor assist the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against Defendants.
The United States and Defendants have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court's determination that the proposed Final Judgment is in the public interest.
The APPA provides a period of at least sixty (60) days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within sixty (60) days of the date of publication of this Competitive Impact Statement in the
Written comments should be submitted to: David C. Kully, Chief, Litigation III Section, Antitrust Division, United States Department of Justice, 450 5th Street NW., Suite 4000, Washington, DC 20530. The proposed Final Judgment provides that the Court retains jurisdiction over this action, and Defendants may apply to the Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment.
The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against Defendants. The United States could have continued the litigation and sought preliminary and permanent injunctions against Media General's acquisition of LIN. The United States is satisfied, however, that the divestiture of assets described in the proposed Final Judgment will preserve competition for the sale of broadcast television spot advertising in each of the DMA Markets. Thus, the proposed Final Judgment would achieve all or substantially all of the relief the United States would have obtained through litigation, but avoids the time, expense, and uncertainty of a full trial on the merits of the Complaint.
The Clayton Act, as amended by the APPA, requires that proposed consent judgments in antitrust cases brought by the United States be subject to a sixty-day comment period, after which the court shall determine whether entry of the proposed Final Judgment “is in the public interest.” 15 U.S.C. 16(e)(1). In making that determination, the court, in accordance with the statute as amended in 2004, is required to consider:
(A) The competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
As the United States Court of Appeals for the District of Columbia Circuit has held, under the APPA a court considers, among other things, the relationship between the remedy secured and the specific allegations set forth in the government's complaint, whether the decree is sufficiently clear, whether enforcement mechanisms are sufficient,
Courts have greater flexibility in approving proposed consent decrees than in crafting their own decrees following a finding of liability in a litigated matter. “[A] proposed decree must be approved even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is `within the reaches of public interest.' ”
Moreover, the court's role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its Complaint, and does not authorize the court to “construct [its] own hypothetical case and then evaluate the decree against that case.”
In its 2004 amendments, Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement, adding the unambiguous instruction that “[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.” 15 U.S.C. 16(e)(2);
There are no determinative materials or documents within the meaning of the APPA that were considered by the United States in formulating the proposed Final Judgment.
I, Mark A. Merva, hereby certify that on October 30, 2014, I caused copies of the Complaint, Competitive Impact Statement, Hold Separate Stipulation and Order, Proposed Final Judgment, and Plaintiff's Explanation of Consent Decree Procedures to be served upon Defendants Media General, Inc. and LIN Media LLC. by mailing the documents electronically to the duly authorized legal representatives of Defendants as follows: Counsel for Defendant Media General, Inc.: Richard C. Park (D.C. Bar #458426), Fried, Frank, Harris, Shriver & Jacobson LLP, 801 17th Street NW., Washington, DC 20006, Telephone: 202–639–7064, Facsimile: 202–639–7003, Email:
Counsel for LIN Media LLC: Deborah A. Garza (D.C. Bar #359259), Covington & Burling LLP, 1201 Pennsylvania Avenue NW., Washington, DC 20004, Telephone: 202–662–5146, Facsimile: 202–778–5146, Email:
WHEREAS, plaintiff, the United States of America filed its Complaint on October 30, 2014, and Defendant Media General, Inc. (“Media General”) and Defendant LIN Media LLC (“LIN”), by their respective attorneys, have consented to the entry of this Final Judgment without trial or adjudication of any issue of fact or law, and without this Final Judgment constituting any evidence against or admission by any party regarding any issue of fact;
AND WHEREAS, Defendants agree to be bound by the provisions of this Final Judgment pending its approval by the Court;
AND WHEREAS, the essence of this Final Judgment is the prompt and certain divestiture of certain rights or assets by the Defendants to assure that competition is not substantially lessened;
AND WHEREAS, the United States requires Defendants to make certain divestitures for the purpose of remedying the loss of competition alleged in the Complaint;
AND WHEREAS, Defendants have represented to the United States that the divestitures required below can and will be made and that Defendants will later raise no claim of hardship or difficulty as grounds for asking the Court to modify any of the divestiture provisions contained below;
NOW THEREFORE, before any testimony is taken, without trial or adjudication of any issue of fact or law, and upon consent of the parties, it is ORDERED, ADJUDGED, AND DECREED:
This Court has jurisdiction over each of the parties hereto and over the subject matter of this action. The Complaint states a claim upon which relief may be granted against Defendants under Section 7 of the Clayton Act, as amended, 15 U.S.C. 18.
As used in this Final Judgment:
A. “Media General” means Defendant Media General, Inc., a Virginia corporation headquartered in Richmond, Virginia, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.`
B. “LIN” means Defendant LIN Media LLC, a Delaware corporation headquartered in Austin, Texas, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
C. “Acquirer” means Hearst Television Inc., Meredith Corporation, Sinclair Broadcast Group, Inc., or another entity to whom Defendants divest any of the Divestiture Assets.
D. “Hearst” means Hearst Television Inc., a Delaware corporation headquartered in New York, NY, its successor and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
E. “Meredith” means Meredith Corporation, an Iowa corporation headquartered in Des Moines, IA, its successor and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
F. “Sinclair” means Sinclair Broadcast Group, Inc., a Maryland corporation headquartered in Hunt Valley, Maryland, its successor and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
G. “DMA” means Designated Market Area as defined by A.C. Nielsen Company based upon viewing patterns and used by the
H. “WVTM–TV” means the NBC-affiliated broadcast television station located in the Birmingham, Alabama DMA owned by Defendant Media General.
I. “WJCL” means the ABC-affiliated broadcast television station located in the Savannah, Georgia DMA owned by Defendant LIN.
J. “WALA–TV” means the Fox-affiliated broadcast television station located in the Mobile, Alabama/Pensacola, Florida DMA owned by Defendant LIN.
K. “WJAR” means the NBC-affiliated broadcast television station located in the Providence, Rhode Island/New Bedford, Massachusetts DMA owned by Defendant Media General.
L. “WLUK–TV” means the Fox-affiliated broadcast television station located in the Green Bay/Appleton, Wisconsin DMA owned by Defendant LIN.
M. “WCWF” means the CW-affiliated broadcast television station located in the Green Bay/Appleton, Wisconsin DMA owned by Defendant LIN.
N. “WTGS” means the Fox-affiliated broadcast television station located in the Savannah, Georgia DMA.
O. “Divestiture Assets” means all assets, tangible or intangible, principally devoted to and necessary for the
A. This Final Judgment applies to Defendants, and all other persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise.
B. If, prior to complying with Sections IV and V of this Final Judgment, Defendants sell or otherwise dispose of all or substantially all of their assets or of lesser business units that include the Defendants' Divestiture Assets, they shall require the purchaser to be bound by the provisions of this Final Judgment. Defendants need not obtain such an agreement from the Acquirers of the assets divested pursuant to this Final Judgment.
A. Defendants are ordered and directed, within ninety (90) calendar days after the filing of the Hold Separate Stipulation and Order in this matter or five (5) calendar days after notice of the entry of this Final Judgment by the Court, whichever is later, to divest the Divestiture Assets to one or more Acquirers acceptable to the United States, in its sole discretion. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total, and shall notify the Court in such circumstances. With respect to divestiture of the Divestiture Assets by Defendants or a Divestiture Trustee appointed pursuant to Section V of this Final Judgment, if applications have been filed with the FCC within the period permitted for divestiture seeking approval to assign or transfer licenses to the Acquirers of the Divestiture Assets, but an order or other dispositive action by the FCC on such applications has not been issued before the end of the period permitted for divestiture, the period shall be extended with respect to divestiture of the Divestiture Assets for which no FCC order has issued until five (5) days after such order is issued. Defendants agree to use their best efforts to divest the Divestiture Assets as expeditiously as possible, including using their best efforts to obtain all necessary FCC approvals as expeditiously as possible. This Final Judgment does not limit the FCC's exercise of its regulatory powers and process with respect to the Divestiture Assets. Authorization by the FCC to conduct the divestiture of a Divestiture Asset in a particular manner will not modify any of the requirements of this Final Judgment.
B. The United States in its sole discretion may approve in writing of any transition services agreement that may be necessary to facilitate the continuous operations of the Divestiture Assets until the Acquirers can provide such capabilities independently. The terms and conditions of any such transition services agreement shall be subject to the approval of the United States, in its sole discretion.
C. In the event that Defendants are attempting to divest assets related to WVTM–TV and WJCL to an Acquirer other than Hearst, assets related to WALA–TV to an Acquirer other than Meredith, or assets related to WJAR, WLUK–TV, WCWF, and WTGS to an Acquirer other than Sinclair:
(1) Defendants, in accomplishing the divestitures ordered by this Final Judgment, promptly shall make known, by usual and customary means, the availability of the Divestiture Assets not yet divested;
(2) Defendants shall inform any person making inquiry regarding a possible purchase of the applicable Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment;
(3) Defendants shall offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the applicable Divestiture Assets customarily provided in a due diligence process except such information or documents subject to the attorney-client privilege or work-product doctrine; and
(4) Defendants shall make available such information to the United States at the same time that such information is made available to any other person.
D. Defendants shall provide the Acquirers and the United States information relating to the personnel involved in the operation and management of the applicable Divestiture Assets to enable the Acquirers to make offers of employment. Defendants shall not interfere with any negotiations by the Acquirers to employ or contract with any employee of any Defendant whose primary responsibility relates to the operation or management of the applicable Divestiture Assets being sold by the Acquirers.
E. Defendants shall permit the Acquirers of the Divestiture Assets to have reasonable access to personnel and to make inspections of the physical facilities of the applicable stations; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process.
F. Defendants shall warrant to the Acquirers that each Divestiture Asset will be operational on the date of sale.
G. Defendants shall not take any action that will impede in any way the permitting, operation, or divestiture of the Divestiture Assets.
H. Defendants shall warrant to the Acquirers that there are no material defects in the environmental, zoning, or other permits pertaining to the operation of each asset, and that, following the sale of the Divestiture Assets, Defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits relating to the operation of the Divestiture Assets.
I. Unless the United States otherwise consents in writing, the divestitures pursuant to Section IV, or by trustee appointed pursuant to Section V of this Final Judgment, shall include the entire Divestiture Assets and be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Assets can and will be used by the Acquirers as part of a viable, ongoing commercial television broadcasting business. Divestiture of the Divestiture Assets may be made to one or more Acquirers, provided that in each instance it is demonstrated to the sole satisfaction of the United States that the Divestiture Assets will remain
(1) Shall be made to Acquirers that, in the United States' sole judgment, have the intent and capability (including the necessary managerial, operational, technical, and financial capability) of competing effectively in the commercial television broadcasting business; and
(2) shall be accomplished so as to satisfy the United States, in its sole discretion, that none of the terms of any agreement between Acquirers and Defendants gives Defendants the ability unreasonably to raise any of the Acquirers' costs, to lower any of the Acquirers' efficiency, or otherwise to interfere in the ability of any of the Acquirers to compete effectively.
A. If Defendants have not divested the Divestiture Assets within the time period specified in Section IV(A), Defendants shall notify the United States of that fact in writing, specifically identifying the Divestiture Assets that have not been divested. Upon application of the United States, the Court shall appoint a Divestiture Trustee selected by the United States and approved by the Court to effect the divestiture of the Divestiture Assets that have not yet been divested.
B. After the appointment of a Divestiture Trustee becomes effective, only the Divestiture Trustee shall have the right to sell the applicable Divestiture Assets. The Divestiture Trustee shall have the power and authority to accomplish the divestiture to an Acquirer acceptable to the United States at such price and on such terms as are then obtainable upon reasonable effort by the trustee, subject to the provisions of Sections IV, V, and VI of this Final Judgment, and shall have such other powers as this Court deems appropriate. Subject to Section V(D) of this Final Judgment, the Divestiture Trustee may hire at the cost and expense of Defendants any investment bankers, attorneys, or other agents, who shall be solely accountable to the trustee, reasonably necessary in the trustee's judgment to assist in the divestiture. Any such investment bankers, attorneys, or other agents shall serve on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications.
C. Defendants shall not object to a sale by the trustee on any ground other than the trustee's malfeasance. Any such objections by Defendants must be conveyed in writing to the United States and the Divestiture Trustee within ten (10) calendar days after the trustee has provided the notice required under Section VI.
D. The Divestiture Trustee shall serve at the cost and expense of Defendants pursuant to a written agreement, on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. The trustee shall account for all monies derived from the sale of the applicable Divestiture Assets and all costs and expenses so incurred. After approval by the Court of the trustee's accounting, including fees for its services yet unpaid and those of any professionals and agents retained by the trustee, all remaining money shall be paid to Defendants and the trust shall then be terminated. The compensation of the Divestiture Trustee and any professionals and agents retained by the trustee shall be reasonable in light of the value of the Divestiture Assets subject to sale by the Divestiture Trustee and based on a fee arrangement providing the trustee with an incentive based on the price and terms of the divestiture and the speed with which it is accomplished, but timeliness is paramount. If the Divestiture Trustee and Defendants are unable to reach agreement on the trustee's or any agents' or consultants' compensation or other terms and conditions of engagement within 14 calendar days of appointment of the trustee, the United States may, in its sole discretion, take appropriate action, including making a recommendation to the Court. The Divestiture Trustee shall, within three (3) business days of hiring any other professionals or agents, provide written notice of such hiring and the rate of compensation to Defendants and the United States.
E. Defendants shall use their best efforts to assist the Divestiture Trustee in accomplishing the required divestiture. The Divestiture Trustee and any consultants, accountants, attorneys, and other agents retained by the trustee shall have full and complete access to the personnel, books, records, and facilities of the business to be divested, and Defendants shall develop financial and other information relevant to such business as the trustee may reasonably request, subject to reasonable protection for trade secret or other confidential research, development, or commercial information or any applicable privileges. Defendants shall take no action to interfere with or to impede the Divestiture Trustee's accomplishment of the divestiture.
F. After its appointment, the Divestiture Trustee shall file monthly reports with the United States and, as appropriate, the Court setting forth the trustee's efforts to accomplish the applicable divestiture ordered under this Final Judgment. To the extent such reports contain information that the Divestiture Trustee deems confidential, such report shall not be filed in the public docket of the Court. Such report shall include the name, address, and telephone number of each person who, during the preceding month, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person. The Divestiture Trustee shall maintain full records of all efforts made to divest the applicable Divestiture Assets.
G. If the Divestiture Trustee has not accomplished any applicable divestiture ordered under this Final Judgment within six (6) months after its appointment, the trustee shall promptly file with the Court a report setting forth (1) the trustee's efforts to accomplish the required divestiture, (2) the reasons, in the trustee's judgment, why the required divestiture has not been accomplished, and (3) the trustee's recommendations. To the extent such report contains information that the Divestiture Trustee deems confidential, such report shall not be filed in the public docket of the Court. The Divestiture Trustee shall at the same time furnish such report to the United States which shall have the right to make additional recommendations consistent with the purpose of the trust. The Court thereafter shall enter such orders as it shall deem appropriate to carry out the purpose of the Final Judgment, which may, if necessary, include extending the trust and the term of the Divestiture Trustee's appointment by a period requested by the United States.
H. If the United States determines that the Divestiture Trustee has ceased to act or failed to act diligently or in a reasonably cost-effective manner, it may recommend the Court appoint a substitute Divestiture Trustee.
A. Within two (2) business days following execution of a definitive divestiture agreement, Defendants or the Divestiture Trustee, whichever is then responsible for effecting the divestitures required herein, shall notify the United States of any proposed divestiture
B. Within fifteen (15) calendar days of receipt by the United States of such notice, the United States may request from Defendants, the proposed Acquirer, any other third party, or the Divestiture Trustee, if applicable, additional information concerning the proposed divestiture, the proposed Acquirer, and any other potential Acquirers. Defendants and the Divestiture Trustee shall furnish any additional information requested within fifteen (15) calendar days of the receipt of the request, unless the parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or within twenty (20) calendar days after the United States has been provided the additional information requested from Defendants, the proposed Acquirer, any third party, and the Divestiture Trustee, whichever is later, the United States shall provide written notice to Defendants and the Divestiture Trustee, if there is one, stating whether or not it objects to the proposed divestiture. If the United States provides written notice that it does not object, the divestiture may be consummated, subject only to Defendants' limited right to object to the sale under Section V(C) of this Final Judgment. Absent written notice that the United States does not object to the proposed Acquirer or upon objection by the United States, a divestiture proposed under Section IV or Section V shall not be consummated. Upon objection by Defendants under Section V(C), a divestiture proposed under Section V shall not be consummated unless approved by the Court.
Defendants shall not finance all or any part of any purchase made pursuant to Section IV or V of this Final Judgment.
Until the divestitures required by this Final Judgment has been accomplished, Defendants shall take all steps necessary to comply with the Hold Separate Stipulation and Order entered by this Court. Defendants shall take no action that would jeopardize the divestiture ordered by this Court.
A. Within twenty (20) calendar days of the filing of the Complaint in this matter, and every thirty (30) calendar days thereafter until the divestiture has been completed under Section IV or V of this Final Judgment, Defendants shall deliver to the United States an affidavit as to the fact and manner of their compliance with Section IV or V of this Final Judgment. Each such affidavit shall include the name, address, and telephone number of each person who, during the preceding thirty (30) calendar days, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring, any interest in the Divestiture Assets, and shall describe in detail each contact with any such person during that period. Each such affidavit shall also include a description of the efforts Defendants have taken to solicit buyers for and complete the sale of the Divestiture Assets, including efforts to secure FCC or other regulatory approvals, and to provide required information to prospective Acquirers, including the limitations, if any, on such information. Assuming the information set forth in the affidavit is true and complete, any objection by the United States to information provided by Defendants, including limitations on information, shall be made within fourteen (14) calendar days of receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the Complaint in this matter, Defendants shall deliver to the United States an affidavit that describes in reasonable detail all actions Defendants have taken and all steps Defendants have implemented on an ongoing basis to comply with Section VIII of this Final Judgment. Each such affidavit shall also include a description of the efforts Defendants have taken to complete the sale of the Divestiture Assets, including efforts to secure FCC or other regulatory approvals. Defendants shall deliver to the United States an affidavit describing any changes to the efforts and actions outlined in Defendants' earlier affidavits filed pursuant to this section within fifteen (15) calendar days after the change is implemented.
C. Defendants shall keep all records of all efforts made to preserve and divest the Divestiture Assets until one year after such divestiture has been completed.
A. For the purposes of determining or securing compliance with this Final Judgment, or of any related orders such as any Hold Separate Stipulation and Order, or of determining whether the Final Judgment should be modified or vacated, and subject to any legally recognized privilege, from time to time authorized representatives of the United States Department of Justice, including consultants and other persons retained by the United States, shall, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to Defendants, be permitted:
(1) Access during Defendants' office hours to inspect and copy, or at the option of the United States, to require Defendants to provide hard copies or electronic copy of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of Defendants, relating to any matters contained in this Final Judgment; and
(2) to interview, either informally or on the record, Defendants' officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by Defendants.
B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, Defendants shall submit written reports or responses to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in this section shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or as otherwise required by law.
D. If at the time information or documents are furnished by Defendants to the United States, Defendants represent and identify in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(g) of the Federal Rules of Civil Procedure, and Defendants mark each pertinent page of such material, “Subject to claim of protection under
Defendants may not (1) reacquire any part of the Divestiture Assets, (2) acquire any option to reacquire any part of the Divestiture Assets or to assign the Divestiture Assets to any other person, (3) enter into any local marketing agreement, joint sales agreement, other cooperative selling arrangement, or shared services agreement, or conduct other business negotiations jointly with the Acquirers with respect to the Divestiture Assets, or (4) provide financing or guarantees of financing with respect to the Divestiture Assets, during the term of this Final Judgment. The shared services prohibition does not preclude Defendants from continuing or entering into agreements in a form customarily used in the industry to (1) share news helicopters or (2) pool generic video footage that does not include recording a reporter or other on-air talent, and does not preclude Defendants from entering into any non-sales-related shared services agreement or transition services agreement that is approved in advance by the United States in its sole discretion.
This Court retains jurisdiction to enable any party to this Final Judgment to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions.
Unless this Court grants an extension, this Final Judgment shall expire ten years from the date of its entry.
Entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon, and the United States' responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and response to comments filed with the Court, entry of this Final Judgment is in the public interest.
The Bureau of International Labor Affairs, United States Department of Labor.
Notice: Request for information and invitation to comment.
This notice is a request for information and/or comment on the 2013 Findings on the Worst Forms of Child Labor report (TDA report) issued by the Bureau of International Labor Affairs (ILAB) on October 7, 2014, regarding child labor in certain foreign countries. The recently published TDA report assessed efforts by more than 140 countries to reduce the worst forms of child labor and reported whether countries made significant, moderate, minimal, or no advancement. It also suggested actions foreign countries can take to eliminate the worst forms of child labor through legislation, enforcement, coordination, policies and social programs. This year's report introduced a new streamlined format for country profiles to make it more user-friendly and a better policy tool for engagement. Relevant information will be used by the Department of Labor (DOL) in preparation of its ongoing reporting mandated under the Trade and Development Act of 2000. In addition, ILAB will use relevant information to conduct assessments of each country's advancement toward eliminating the worst forms of child labor during the current calendar year compared to previous years.
Submitters of information are requested to provide their submission to the Office of Child Labor, Forced Labor, and Human Trafficking (OCFT) at the email or physical address below by 5 p.m. January 15, 2015.
Federal eRulemaking Portal:
The portal includes instructions for submitting comments. Parties submitting responses electronically are encouraged not to submit paper copies.
Chanda Uluca and Charita Castro (see contact information above).
The Trade and Development Act of 2000 (TDA), Public Law 106–200 (2000), established a new eligibility criterion for receipt of trade benefits under the Generalized System of Preferences (GSP), Caribbean Basin Trade and Partnership Act (CBTPA), and Africa Growth and Opportunity Act (AGOA) and the Andean Trade Preference Act/Andean Trade Promotion and Drug Eradication Act (ATPA/ATPDEA).
The TDA amended the GSP reporting requirements of Section 504 of the Trade Act of 1974, 19 U.S.C. 2464, to require that the President's annual report on the status of internationally recognized worker rights include “findings by the Secretary of Labor with respect to the beneficiary country's implementation of its international commitments to eliminate the worst forms of child labor.” Title II of the TDA and the TDA Conference Report, Joint Explanatory Statement of the Committee of Conference, 106th Cong.2d.Sess. (2000), indicate that the same criterion applies for the receipt of benefits under CBTPA and AGOA, respectively. In addition, the Andean Trade Preference Act, as amended and expanded by the Andean Trade Promotion and Drug Eradication Act, Public Law 107–210, Title XXXI (2002), includes as a criterion for receiving benefits “[w]hether the country has implemented its commitments to eliminate the worst forms of child labor as defined in section 507(6) of the Trade Act of 1974.”
DOL fulfills these reporting mandates through annual publication of the U.S. Department of Labor's Findings on the
Information Requested and Invitation to Comment: Interested parties are invited to comment and provide information regarding DOL's 2013 TDA Report which may be found on the Internet at
This notice is a general solicitation of comments from the public.
Occupational Safety and Health Administration (OSHA), Labor.
Request for public comments.
OSHA solicits public comments concerning its proposal to extend the Office of Management and Budget's (OMB) approval of the information collection requirements specified in the Cotton Dust Standard (29 CFR 1910.1043).
Comments must be submitted (postmarked, sent, or received) by January 12, 2015.
Theda Kenney or Todd Owen, Directorate of Standards and Guidance, OSHA, U.S. Department of Labor, Room N–3468, 200 Constitution Avenue NW., Washington, DC 20210; telephone (202) 693–2222.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent (i.e., employer) burden, conducts a preclearance consultation program to provide the public with an opportunity to comment on proposed and continuing information collection requirements in accord with the Paperwork Reduction Act of 1995 (PRA–95) (44 U.S.C. 3506(c)(2)(A)). This program ensures that information is in the desired format, reporting burden (time and costs) is minimal, collection instruments are clearly understood, and OSHA's estimate of the information collection burden is accurate. The Occupational Safety and Health Act of 1970 (the OSH Act) (29 U.S.C. 651 et seq.) authorizes information collection by employers as necessary or appropriate for enforcement of the OSH Act or for developing information regarding the causes and prevention of occupational injuries, illnesses, and accidents (29 U.S.C. 657). The OSH Act also requires that OSHA obtain such information with minimum burden upon employers, especially those operating small businesses, and to reduce to the maximum extent feasible unnecessary duplication of efforts in obtaining information (29 U.S.C. 657).
The information collection requirements specified in the Cotton Dust Standard protect workers from the adverse health effects that may result from their exposure to cotton dust. The major information collection requirements of the Cotton Dust Standard include: performing exposure monitoring, including initial, periodic,
OSHA has a particular interest in comments on the following issues:
• Whether the proposed information collection requirements are necessary for the proper performance of the Agency's functions, including whether the information is useful;
• The accuracy of OSHA's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply; for example, by using automated or other technological information collection and transmission techniques.
OSHA is requesting to increase its current burden hours from 20,558 to 22,381 hours, a total increase of 1,823 hours. Although the cost of exposure monitoring sampling increased slightly from $19 to $20, there was a $14,976 increase in the overall cost of sampling (from $79,344 to $94,320). Further, although the cost of a medical exam increased from $175 to $187, there was a $976,550 increase in the overall cost of medical exams (from $2,369,850 to $2,848,384), as a result of the increase in the number of medical exams.
You may submit comments in response to this document as follows: (1) Electronically at
Because of security procedures, the use of regular mail may cause a significant delay in the receipt of comments. For information about security procedures concerning the delivery of materials by hand, express delivery, messenger, or courier service, please contact the OSHA Docket Office at (202) 693–2350, (TTY (877) 889–5627).
Comments and submissions are posted without change at
All submissions, including copyrighted material, are available for inspection and copying at the OSHA Docket Office. Information on using the
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506 et seq.) and Secretary of Labor's Order No. 1–2012 (77 FR 3912).
Occupational Safety and Health Administration (OSHA), Labor.
Request for public comments.
OSHA solicits public comments concerning its proposal to extend OMB approval of the information collection requirements specified by the Acrylonitrile Standard (29 CFR 1910.1045).
Comments must be submitted (postmarked, sent, or received) by January 12, 2015.
Theda Kenney or Todd Owen, Directorate of Standards and Guidance, OSHA, U.S. Department of Labor, Room N–3609, 200 Constitution Avenue NW., Washington, DC 20210; telephone (202) 693–2222.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent (i.e., employer) burden, conducts a preclearance consultation program to provide the public with an opportunity to comment on proposed and continuing information collection requirements in accord with the Paperwork Reduction Act of 1995 (PRA–95) (44 U.S.C. 3506(c)(2)(A)). This program ensures that information is in the desired format, reporting burden (time and costs) is minimal, collection instruments are clearly understood, and OSHA's estimate of the information collection burden is accurate. The Occupational Safety and Health Act of 1970 (the OSH Act) (29 U.S.C. 651 et seq.) authorizes information collection by employers as necessary or appropriate for enforcement of the Act or for developing information regarding the causes and prevention of occupational injuries, illnesses, and accidents (29 U.S.C. 657). The OSH Act also requires that OSHA obtain such information with minimum burden upon employers, especially those operating small businesses, and to reduce to the maximum extent feasible unnecessary duplication of efforts in obtaining information (29 U.S.C. 657).
The information collection requirements specified in the Acrylonitrile (AN) Standard protect workers from the adverse health effects that may result from their exposure to AN. The major information collection requirements of the AN Standard include notifying workers of their AN exposures, implementing a written compliance program, providing examining physicians with specific information, ensuring that workers receive a copy of their medical examination results, maintaining workers exposure monitoring and medical records for specific periods, and providing access to these records by OSHA, the National Institute for Occupational Safety and Health, the affected workers, and designated representatives.
OSHA has a particular interest in comments on the following issues:
• Whether the proposed information collection requirements are necessary for the proper performance of the Agency's functions, including whether the information is useful;
• The accuracy of OSHA's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply; for example, by using automated or other technological information collection and transmission techniques.
OSHA is requesting that OMB extend its approval of the information collection requirements contained in the Acrylonitrile Standard (29 CFR 1910.1045).
OSHA is requesting an adjustment decrease in the burden hour total from 2,299 to 1,999 hours, a total decrease of 300 hours as a result of the decreased number of affected establishments based on updated data. There was a slight adjustment of the number of exposure monitoring samples from 864 to 814., but the number of medical exams slightly decreased from 630 to 594, which resulted in a slight cost decrease. The adjustment of the burden hours and costs are shown in detail by provision in the supporting statement.
You may submit comments in response to this document as follows: (1) electronically at
Because of security procedures, the use of regular mail may cause a significant delay in the receipt of comments. For information about security procedures concerning the delivery of materials by hand, express delivery, messenger, or courier service, please contact the OSHA Docket Office at (202) 693–2350, (TTY (877) 889–5627). Comments and submissions are posted without change at
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506 et seq.) and Secretary of Labor's Order No. 1–2012 (77 FR 3912).
Occupational Safety and Health Administration (OSHA), Labor.
Request for public comments.
OSHA solicits public comments concerning its proposal to extend OMB approval of the information collection requirements contained in the Shipyard Employment Standards of Subpart G—Gear and Equipment for Rigging and Materials Handling (29 CFR 1915.112(a)(1), 29 CFR 1915.112(b)(1)(i), 29 CFR 1915.112(c)(1)(i), 29 CFR 1915.112(c)(2), 29 CFR 1915.113(a)(1), 29 CFR 1915.113(b)(1) and 29 CFR 1915.115(c)) and Subpart K—Portable, Unfired Pressure Vessels, Drums and Containers, Other than Ship's Equipment (29 CFR 1915.172(d)). The purpose of the collection of information (paperwork) provisions of the Standards is to reduce workers' risk of death or serious injury by ensuring that equipment has been tested and is in safe operating condition.
Comments must be submitted (postmarked, sent, or received) by January 12, 2015.
Theda Kenney or Todd Owen, Directorate of Standards and Guidance, OSHA, U.S. Department of Labor, Room N–3609, 200 Constitution Avenue NW., Washington, DC 20210; telephone (202) 693–2222.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent (i.e., employer) burden, conducts a preclearance consultation program to provide the public with an opportunity to comment on proposed and continuing information collection requirements in accord with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3506(c)(2)(A)).
This program ensures that information is in the desired format, reporting burden (time and costs) is minimal, collection instruments are clearly understood, and OSHA's estimate of the information collection burden is accurate. The Occupational Safety and Health Act of 1970 (the OSH Act) (29 U.S.C. 651
The records are used to assure that equipment has been properly tested. The records also provide the most efficient means for the compliance officers to determine that an employer is complying with the Standard.
OSHA has a particular interest in comments on the following issues:
• Whether the proposed information collection requirements are necessary for the proper performance of the Agency's functions, including whether the information is useful;
• The accuracy of OSHA's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply; for example, by using automated or other technological information collection and transmission techniques.
OSHA is proposing to increase the existing burden hour estimate for the collection of information requirements specified by the Standards from 3,162 hours to 9,773 hours, a total increase of 6,611 hours. In this ICR, the scope of the maritime standards in 29 CFR 1915 for slings, shackles, and hooks are based on the Final Economic Analysis for the Final Rule revising subpart F of 29 CFR part 1915 prepared by OSHA's Office of Regulatory Analysis. As a result of the Final Rule, the revision of the standard applies to all shipyard employment which is defined in § 1915.4(i) as ship repairing, shipbuilding, shipbreaking, and related employment. Also, upon further analysis, the Agency identified two new collections of information contained in the Standard under paragraphs §§ 1915.112(c)(2) and 1915.115(c)(1). The Agency will summarize any comments submitted in response to this notice and will include this summary in its request to OMB.
You may submit comments in response to this document as follows: (1) Electronically at
Because of security procedures, the use of regular mail may cause a significant delay in the receipt of comments. For information about security procedures concerning the delivery of materials by hand, express delivery, messenger, or courier service, please contact the OSHA Docket Office at (202) 693–2350, (TTY (877) 889–5627).
Comments and submissions are posted without change at
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506
Occupational Safety and Health Administration (OSHA), Labor.
Announcement of a meeting of NACOSH.
NACOSH will meet December 10, 2014, in Washington, DC.
OSHA will post in the public docket, without change, any comments, requests to speak, and speaker presentations, including any personal information that you provide. Therefore, OSHA cautions interested parties about submitting personal information such as Social Security numbers and birthdates.
NACOSH will meet December 10, 2014, in Washington, DC. Some NACOSH members may attend electronically. NACOSH meetings are open to the public.
NACOSH was established by Section 7(a) of the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 651, 656) to advise, consult with and make recommendations to the Secretary of Labor and the Secretary of Health and Human Services on matters relating to the administration of the OSH Act. NACOSH is a continuing advisory committee of indefinite duration.
NACOSH operates in accordance with the Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2), its implementing regulations (41 CFR part 102–3), and OSHA's regulations on NACOSH (29 CFR part 1912a).
The tentative agenda for the NACOSH meeting includes:
• Remarks from the Assistant Secretary of Labor for Occupational Safety and Health;
• Remarks from the Director of the National Institute for Occupational Safety and Health;
• Updates on Ebola activities;
• Request for information (RFI) on Chemical Management and Permissible Exposure Limits (PELs); and
• Protecting Temporary Workers: Recommended Practices.
OSHA transcribes and prepares detailed minutes of NACOSH meetings. OSHA posts the transcripts and minutes in the public docket along with written comments, speaker presentations, and other materials submitted to NACOSH or presented at NACOSH meetings.
Individuals requesting special accommodations to attend the NACOSH meeting should contact Ms. Jameson.
Because of security-related procedures, submissions by regular mail may experience significant delays. For information about security procedures for submitting materials by hand delivery, express mail, and messenger/courier service, please contact the OSHA Docket Office.
• The amount of time requested to speak;
• The interest you represent (e.g., business, organization, affiliation), if any; and
• A brief outline of the presentation.
PowerPoint presentations and other electronic materials must be compatible with PowerPoint 2010 and other Microsoft Office 2010 formats. The NACOSH Chair may grant requests to address NACOSH as time and circumstances permit.
OSHA also places in the public docket meeting transcripts, meeting minutes, documents presented at the NACOSH meeting, and other documents pertaining to NACOSH meetings. These documents may be available online at
Electronic copies of this
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice under the authority granted by 29 U.S.C. 656; 5 U.S.C. App. 2; 29 CFR part 1912a; 41 CFR part 102–3; and Secretary of Labor's Order No. 1–2012 (77 FR 3912 (January 25, 2012)).
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92–463, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Human Exploration and Operations Committee of the NASA Advisory Council.
Tuesday, December 2, 2014, 10:00 a.m. to 6:00 p.m.; and Wednesday, December 3, 2014, 8:00 a.m. to 4:30 p.m., Local Time.
NASA Headquarters, 300 E Street SW., Room 9H40, Washington, DC 20546.
Dr. Bette Siegel, Human Exploration and Operations Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358–2245, or
The meeting will be open to the public up to the seating capacity of the room. This meeting is also available telephonically and by WebEx. Any interested person may call the USA toll free conference call number 1–888–469–0647 or toll number 1–203–827–7016, pass code 5106584, to participate in this meeting by telephone. The WebEx link is
The agenda for the meeting includes the following topics:
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92-463, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Technology, Innovation and Engineering Committee of the NASA Advisory Council. This meeting will be held for the purpose of soliciting, from
Thursday, December 4, 2014, 8:00 a.m. to 5:00 p.m.; Local Time.
NASA Headquarters, Room MIC 6A, 300 E Street SW., Washington, DC 20546.
Mr. Mike Green, Space Technology Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358–4710, or
The meeting will be open to the public up to the capacity of the room. This meeting is also available telephonically and online via WebEx. Any interested person may call the USA toll free conference number 844–467–6272, passcode 102421, to participate in this meeting by telephone. The WebEx link is
The agenda for the meeting includes the following topics:
Attendees will be requested to sign a register and to comply with NASA Headquarters security requirements, including the presentation of a valid picture ID, before receiving access to NASA Headquarters. Foreign nationals attending this meeting will be required to provide a copy of their passport and visa in addition to providing the following information no less than 10 working days prior to the meeting: full name; gender; date/place of birth; citizenship; passport information (number, country, expiration date); visa information (number, type, expiration date); employer/affiliation information (name of institution, address, country, telephone); title/position of attendee. To expedite admittance, attendees with U.S. citizenship and Permanent Residents (green card holders) can provide full name and citizenship status 3 working days in advance by contacting Ms. Anyah Dembling via email at
National Aeronautics and Space Administration (NASA).
Notice of meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92–463, as amended, and the President's 2004 U.S. Space-Based Positioning, Navigation, and Timing (PNT) Policy, the National Aeronautics and Space Administration (NASA) announces a meeting of the National Space-Based Positioning, Navigation, and Timing (PNT) Advisory Board.
Wednesday, December 10, 2014, 9:00 a.m. to 5:00 p.m.; and Thursday, December 11, 2014, 9:00 a.m. to 12:00 p.m., Local Time.
The Omni Shoreham Hotel, Hampton Ballroom, 2500 Calvert Street NW., Washington, DC 20008.
Mr. James J. Miller, Human Exploration and Operations Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358–4417, fax (202) 358–4297, or
The meeting will be open to the public up to the seating capacity of the room. Visitors will be requested to sign a visitor's register.
The agenda for the meeting includes the following topics:
• Examine emerging trends and requirements for PNT services in U.S. and international arenas through PNT Board technical assessments.
• Update on U.S. Space-Based Positioning, Navigation and Timing (PNT) Policy and Global Positioning System (GPS) modernization.
• Prioritize current and planned GPS capabilities and services while assessing future PNT architecture alternatives with a focus on affordability.
• Examine methods in which to Protect, Toughen, and Augment (PTA) access to GPS/Global Navigation Satellite System (GNSS) services in key domains for multiple user sectors.
• Assess economic impacts of GPS on the United States and in select international regions, with a consideration towards effects of potential PNT service disruptions if radio spectrum interference is introduced.
• Explore opportunities for enhancing the interoperability of GPS with other emerging international GNSS.
It is imperative that the meeting be held on these dates to accommodate the scheduling priorities of the key participants.
National Endowment for the Arts, National Foundation on the Arts and Humanities.
Notice of meeting.
Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92–463), as amended, notice is hereby given that 21 meetings of the Arts Advisory Panel to the National Council on the Arts will be held by teleconference from the National Endowment for the Arts, Constitution Center, 400 7th St. SW., Washington, DC 20506 as follows (all meetings are Eastern time and ending times are approximate):
Further information with reference to these meetings can be obtained from Ms. Kathy Plowitz-Worden, Office of Guidelines & Panel Operations, National Endowment for the Arts, Washington, DC 20506;
The closed portions of meetings are for the purpose of Panel review, discussion, evaluation, and recommendations on financial assistance under the National Foundation on the Arts and the Humanities Act of 1965, as amended, including information given in confidence to the agency. In accordance with the determination of the Chairman of February 15, 2012, these sessions will be closed to the public pursuant to subsection (c)(6) of section 552b of Title 5, United States Code.
The National Endowment for the Arts, on behalf of the Federal Council on the Arts and the Humanities, has submitted the following public information collection request (ICR) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104–13, 44 U.S.C. Chapter 35). Copies of this ICR, with applicable supporting documentation, may be obtained at reginfo.gov.
Comments should be sent to Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for the National Endowment for the Arts, Office of Management and Budget, Room 10235, Washington, DC 20503 (202/395–4718), within thirty days of this publication in the
The OMB is particularly interested in comments which:
The Endowment requests the review of its application guidelines. This entry is issued by the Endowment and contains the following information: (1) The title of the form; (2) how often the required information must be reported; (3) who will be required or asked to report; (4) what the form will be used for; (5) an estimate of the number of responses; (6) the average burden hours per response; (7) an estimate of the total number of hours needed to prepare the form. This entry is not subject to 44 U.S.C. § 3504(h).
The National Science Board's
This meeting will be held by teleconference originating at the National Science Board Office, National Science Foundation, 4201Wilson Blvd., Arlington, VA 22230.
Please refer to the National Science Board Web site (
Securities and Exchange Commission (“Commission”).
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c–1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act, and under section 12(d)(1)(J) of the Act for an exemption from sections 12(d)(1)(A) and (B) of the Act.
Eaton Vance Management (“Eaton Vance”), Eaton Vance ETMF Trust (“ETMF Trust”) and Eaton Vance ETMF Trust II (“ETMF Trust II”).
Applicants request an order that permits: (a) Actively managed series of certain open-end management investment companies to issue shares (“Shares”) redeemable in large aggregations only (“Creation Units”); (b) secondary market transactions in Shares to occur at the next-determined net asset value (“NAV”) plus or minus a market-determined premium or discount (“premium/discount”) that may vary during the trading day (“NAV-based Trading”); (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days from the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares; and (f) certain series to create and redeem Shares in kind in a master-feeder structure.
The application was filed on March 27, 2013 and amended on September 12, 2013, January 23, 2014, September 15, 2014, and September 25, 2014.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on December 1, 2014, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Applicants: Frederick S. Marius, Esq., Eaton Vance Management, Two International Place, Boston, MA 02110.
Jean E. Minarick, Senior Counsel, Daniele Marchesani, Branch Chief or Dalia Osman Blass, Assistant Chief Counsel, at (202) 551–6821 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the Company name box, at
1. ETMF Trust and ETMF Trust II (each, a “Trust” and, together the “Trusts”) will be registered as open-end management investment companies under the Act and are business trusts organized under the laws of Massachusetts. ETMF Trust and ETMF Trust II will initially offer ten and eightseries, respectively (the “Initial ETMFs”). Each ETMF (as defined below) will invest in securities and other assets selected to pursue the ETMF's investment objective (“Portfolio Positions”).
2. Eaton Vance, a Massachusetts business trust, will serve as investment adviser to the Initial ETMFs. An Adviser (as defined below) will serve as investment adviser to each ETMF. Eaton Vance is, and any other Adviser will be, registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”). The Adviser may retain one or more subadvisers (each a “Subadviser”) to manage the portfolios of the ETMFs (as defined below). Any Subadviser will be registered, or not subject to registration, under the Advisers Act.
3. Applicants seek an exemptive order that would permit them to offer
4. Applicants request that the order apply to the Initial ETMFs and any future series of the Trusts as well as any other open-end management investment companies or series thereof that: (a) Are advised by Eaton Vance or an entity controlling, controlled by, or under common control with Eaton Vance (Eaton Vance and each such other entity, and any successor thereto, included in the term “Adviser”);
5. Shares would be listed and traded on an Exchange (“Listing Exchange”).
6. Accordingly, unlike ETFs, NAV-based Trading would not offer investors the opportunity to transact intraday at prices based on current (versus end-of-day) determinations of the Shares' value. Instead, like intraday orders to buy or sell shares of mutual funds, an ETMF investor would not know the NAV at the time the order is placed, but the levels of premium/discount would be fully transparent allowing investors to see the execution costs of buying or selling Shares.
7. Shares would not be individually redeemable and owners of Shares may acquire those Shares from an ETMF, or tender such shares for redemption to the ETMF, in Creation Units only.
8. Like ETFs, and to keep trading costs low and permit each ETMF to be as fully invested as possible, Shares would be purchased and redeemed in Creation Units and primarily on an in-kind basis. Authorized Participants would be required to purchase Creation Units by making an in-kind deposit of specified instruments (these instruments are referred to, in the case of either a purchase or redemption, as the “Basket Instruments,” and, together as the “Basket”), specified by the ETMF at the beginning of each Business Day and Authorized Participants redeeming their Shares would receive an in-kind transfer of Basket Instruments.
9. Each ETMF would process purchases and redemptions of Creation Units in a manner that would protect the ETMF from any investor who might seek advantageous treatment vis-à-vis other investors. Therefore, each Business Day, the Basket would be constructed in accordance with policies and procedures that: (a) Have been approved by the relevant ETMF's Board based on a determination that such policies and procedures are in the best interests of the ETMF; and (b) are administered in accordance with rule 38a–1 under the Act by the chief compliance officer designated by the ETMF under that rule. Moreover, the names and quantities of the instruments that constitute the Basket Instruments on a given Business Day would be identical for all purchasers and redeemers of an ETMF's Creation Units that day, except in certain limited circumstances.
10. To preserve the confidentiality of an ETMF's trading activities, the Basket would normally not be a pro rata slice of the Portfolio Positions. Instruments being acquired by the ETMF would generally be excluded from the Basket until their purchase is completed and Basket Instruments being sold may not be removed from the Basket until the sale program is substantially completed. Further, when deemed by the Adviser to be in the best interests of an ETMF and its shareholders, other Portfolio Positions would be excluded from the Basket. Whenever Portfolio Positions are excluded from the Basket, the Basket may include proportionately more cash than is in the portfolio. Furthermore, if there is a difference between the NAV attributable to a Creation Unit and the aggregate market value of the Basket exchanged for the Creation Unit, the party conveying a Basket with the lower value would also pay to the other an amount in cash equal to that difference (the “Balancing Amount”).
11. Each Business Day, before the open of trading on the Listing Exchange, the Adviser would cause to be published through the NSCC the names and quantities of the Basket Instruments, as well as the estimated Balancing Amount (if any), for that day. The published Basket would apply until a new Basket is announced on the following Business Day, and there would be no intraday changes to the Basket except to correct errors in the published Basket.
12. Any purchasers or redeemers of Creation Units are expected to incur a transaction fee (“Transaction Fee”) to cover the estimated cost to the ETMF of processing the transaction, including the costs of clearance and settlement charged to it by NSCC or DTC, and the estimated trading costs incurred in converting the Basket to the desired Portfolio Positions. The Transaction Fee would be borne only by purchasers and redeemers of Creation Units and would be limited to amounts that have been authorized by the Board and determined appropriate by the Adviser to defray the transaction expenses that would be incurred by an ETMF when an investor purchases or redeems Creation Units.
13. Applicants assert that in light of NAV-based Trading, daily portfolio transparency is not necessary for ETMFs. Applicants recognize that contemporaneous portfolio holdings disclosure has been viewed as necessary for effective arbitrage and efficient secondary market trading of ETFs.
14. Applicants claim that ETMFs, not being required to provide daily portfolio transparency, have the potential for providing investors with access to a broad range of active strategies in a structure that provides the cost and tax efficiencies and shareholder protections of an ETF.
15. Applicants request an order under section 6(c) of the Act for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c–1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under section 12(d)(1)(J) of the Act for an exemption from sections 12(d)(1)(A) and (B) of the Act.
16. Applicants' request for relief is novel only under section 22(d) and rule 22c–1 under the Act with respect to NAV-based Trading. In all other respects, applicants are seeking the same relief that the Commission has previously granted to permit the operation of ETFs. As discussed above, the requested relief would be available to any existing or future investment company that is an ETMF operating in compliance with the terms and conditions of the order and that is advised by an Adviser. In support of future ETMF relief, applicants assert that Future ETMFs raise no legal or policy questions different from those presented by the Initial ETMFs and that the arguments for exemptive relief are equally valid regardless of the type of assets or investment strategy utilized by a specific ETMF. The Commission preliminarily agrees with these assertions.
17. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provisions of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) of the Act if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and the proposed transaction is consistent with the policies of the registered investment company and the general purposes of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors.
18. Section 22(d) of the Act, among other things, prohibits a dealer from selling a redeemable security that is currently being offered to the public by or through a principal underwriter other than at a current public offering price described in the fund's prospectus. Rule 22c–1 under the Act requires open-end funds, their principal underwriters, and dealers in fund shares (and certain others) to sell and redeem fund shares at a price based on the current NAV next computed after receipt of an order to buy or redeem. Together, these provisions are designed to prevent dilution caused by riskless trading schemes, require that shareholders are treated equitably when buying and selling fund shares, and assure an orderly distribution system of investment company shares.
19. Applicants request relief from these provisions to permit NAV-based Trading of Shares. Because of ETMFs' NAV-based Trading, the need for exemptive relief from section 22(d) and rule 22c–1 for ETMFs arises due to the portion of the trading price that is the negotiated amount (
20. Applicants assert that the concerns underlying section 22(d) of the Act and rule 22c–1 under the Act with respect to pricing are addressed by the NAV-based Trading of Shares. Applicants maintain that while there is little legislative history regarding section 22(d), its provisions, as well as those of rule 22c–1, appear to have been designed to (a) prevent dilution caused by certain riskless-trading schemes by principal underwriters and contract dealers, (b) prevent unjust discrimination or preferential treatment among buyers resulting from sales at different prices, and (c) assure an orderly distribution system of investment company shares by eliminating price competition from brokers offering shares at less than the published sales price and repurchasing shares at more than the published redemption price.
21. Applicants believe that none of these purposes would be thwarted by permitting NAV-based Trading of Shares. Applicants state that NAV-based Trading in Shares would not cause dilution of the shareholders' beneficial interests in ETMFs because secondary market trading in Shares would not involve the ETMF's portfolio. Applicants assert that NAV-Based Trading responds to concerns of unjust price discrimination among purchasers and preserving an orderly distribution of Shares. Shares would trade on an Exchange, a regulated venue, at market-determined premiums/discounts. The current and historical premiums/discounts also would be transparent to investors and intermediaries.
22. The relief from section 22(d) and rule 22c–1 requested by applicants is significantly different from the relief previously granted by the Commission to actively managed ETFs. ETFs require relief from these provisions because certain investors may purchase and sell individual ETF shares on the secondary market at current market prices;
23. Historically, in making the findings necessary to grant exemptive relief from section 22(d) and rule 22c–1, the Commission has relied on representations by ETF sponsors that an arbitrage mechanism functions to keep the market price of the ETF's shares at or close to the NAV per share of the ETF. The close tie between the market price and the NAV per share of the ETF is the foundation for why the prices at which retail investors buy and sell shares are similar to the prices at which Authorized Participants are able to buy and redeem shares directly from the ETF at NAV.
24. ETMF trading prices, as discussed above, would be directly tied to NAV. Unlike ETFs, ETMFs' need for relief arises because their trading price deviate from NAV only with respect to the execution costs of buying and selling ETMF Shares (i.e., the premium/discount). In contrast, ETFs need relief because of differences related to the value of the underlying portfolio positions. Therefore, because ETMF Shares' trading prices are directly tied to NAV, an arbitrage mechanism that would keep market price close to or at NAV is not necessary.
25. Accordingly, the Commission preliminarily agrees that any amount of premium or discount will be limited in the manner explained by applicants and that the concerns underlying section 22(d) and rule 22c–1 thereunder are addressed by the NAV-based Trading of Shares proposed by the applicants. Any differences from the ETMF proposed model, however, would not necessarily address those concerns.
26. Section 5(a)(1) of the Act defines an “open-end company” as a management investment company that is offering for sale or has outstanding any redeemable security of which it is the issuer. Section 2(a)(32) of the Act defines a redeemable security as any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer, is entitled to receive approximately a proportionate share of the issuer's current net assets, or the cash equivalent. Because Shares would not be individually redeemable, applicants request an order that would permit the Trusts to register as open-end investment companies and each ETMF to redeem Shares in Creation Units only.
27. Section 22(e) of the Act generally prohibits a registered investment company from suspending the right of redemption or postponing the date of payment of redemption proceeds for more than seven days after the tender of a security for redemption. Applicants observe that settlement of redemptions of Creation Units of ETMFs holding Portfolio Positions traded on global markets (“Global ETMFs”) is contingent not only on the settlement cycle of the U.S. securities markets but also on the delivery cycles present in foreign markets in which those ETMFs invest. Applicants represent that, under certain circumstances, the delivery cycles for transferring foreign-traded Basket Instruments to redeeming investors, coupled with local market holiday schedules, would require a delivery process of up to 14 calendar days. Applicants therefore request relief from section 22(e) in order to provide payment or satisfaction of redemptions within the maximum number of calendar days required for such payment or satisfaction in the principal local markets where transactions in the foreign-traded Basket Instruments of each Global ETMF customarily clear and settle, but in all cases no later than 14 calendar days following the tender of a Creation Unit.
28. Applicants state that section 22(e) was designed to prevent unreasonable, undisclosed and unforeseen delays in the actual payment of redemption proceeds. Applicants state that allowing redemption payments in kind for Creation Units of a Global ETMF to be made within a maximum of 14 calendar days would not be inconsistent with the spirit and intent of section 22(e). Applicants state each ETMF's statement of additional information (“SAI”) would disclose those local holidays (over the period of at least one year following the date of the SAI), if any, that are expected to prevent the delivery of redemption proceeds in kind in seven calendar days and the maximum number of days (not to exceed 14 calendar days) needed to deliver the proceeds in kind for each affected ETMF. Applicants are not seeking relief from section 22(e) with respect to Global ETMFs that do not effect redemptions in kind.
29. Section 12(d)(1)(A) of the Act prohibits a registered investment company from acquiring shares of an investment company if the securities represent more than 3% of the total outstanding voting stock of the acquired company, more than 5% of the total assets of the acquiring company, or, together with the securities of any other investment companies, more than 10% of the total assets of the acquiring company. Section 12(d)(1)(B) of the Act prohibits a registered open-end investment company, its principal underwriter, or any other broker or dealer from selling its shares to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale
30. Applicants are seeking relief so that an ETMF may be an acquired fund in a fund of funds structure. In particular, applicants request that pursuant to section 12(d)(1)(J) of the Act the order permit Acquiring Funds (as defined below) to acquire Shares of an ETMF beyond the limitations in section 12(d)(1)(A) and permit an ETMF, any principal underwriter for the ETMFs,
31. Applicants submit that their proposed conditions address any concerns regarding the potential for undue influence. To limit the control that an Acquiring Fund may have over an ETMF, applicants propose a condition prohibiting the adviser of an Investing Management Company (“Acquiring Fund Adviser”), sponsor of an Acquiring Trust (“Sponsor”), any person controlling, controlled by, or under common control with the Acquiring Fund Adviser or Sponsor, and any investment company or issuer that would be an investment company but for sections 3(c)(1) or 3(c)(7) of the Act that is advised or sponsored by the Acquiring Fund Adviser, the Sponsor, or any person controlling, controlled by, or under common control with the Acquiring Fund Adviser or Sponsor (“Acquiring Fund's Advisory Group”) from controlling (individually or in the aggregate) an ETMF within the meaning of section 2(a)(9) of the Act. The same prohibition would apply to any sub-adviser to an Acquiring Management Company (“Acquiring Fund Sub-Adviser”), any person controlling, controlled by or under common control with the Acquiring Fund Sub-Adviser, and any investment company or issuer that would be an investment company but for sections 3(c)(1) or 3(c)(7) of the Act (or portion of such investment company or issuer) advised or sponsored by the Acquiring Fund Sub-Adviser or any person controlling, controlled by or under common control with the Acquiring Fund Sub-Adviser (“Acquiring Fund's Sub-Advisory Group”).
32. To limit undue influence, applicants propose a condition to ensure that no Acquiring Fund or Acquiring Fund Affiliate
33. Applicants propose several conditions to address the potential for layering of fees. Applicants note that the board of directors or trustees of any Acquiring Management Company, including a majority of the directors or trustees who are not “interested persons” within the meaning of section 2(a)(19) of the Act (“disinterested directors or trustees”), would be required to find that the advisory fees charged under the Acquiring Management Company's advisory contract are based on services provided that would be in addition to, rather than duplicative of, services provided under the advisory contract of any ETMF (or, in the case of an ETMF Feeder, its Master Fund) in which the Acquiring Management Company may invest. Applicants also state that any sales charges and/or service fees charged with respect to shares of an Acquiring Fund will not exceed the limits applicable to a fund of funds as set forth in NASD Conduct Rule 2830.
34. Applicants submit that the proposed arrangement would not create an overly complex fund structure. Applicants note that an ETMF (and, in the case of an ETMF Feeder, the Master Fund) would be prohibited from acquiring securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent that the ETMF acquires such securities in compliance with section 12(d)(1)(E) of the Act or this order or the ETMF (or, in the case of an ETMF Feeder, the Master Fund): (a) Receives securities of another investment company as a dividend or as a result of a plan of reorganization of a company (other than a plan devised for the purpose of evading section 12(d)(1) of the Act); or (b) acquires (or is deemed to have acquired) securities of another investment company pursuant to exemptive relief from the Commission permitting the ETMF (or in the case of a ETMF Feeder, the Master Fund) to (i) acquire securities of one or more investment companies for short-term cash management purposes or (ii) engage in interfund borrowing and lending transactions.
35. To ensure that an Acquiring Fund is aware of the terms and conditions of the requested order, the Acquiring Fund must enter into an agreement with the respective ETMFs (“Acquiring Fund Agreement”). The Acquiring Fund Agreement will include an acknowledgement from the Acquiring Fund that it may rely on the order only
36. Applicants further request relief to permit an ETMF to be a feeder (an “ETMF Feeder”) in a master-feeder structure alongside one or more other registered open-end investment companies advised by the same Adviser (each such other open-end investment company, a “Mutual Fund Feeder,” and together with any ETMF Feeder, the “Feeder Funds”). The requested relief would permit the ETMF Feeder to acquire shares of another registered investment company in the same group of investment companies having substantially the same investment objectives as the ETMF Feeder (a “Master Fund”) beyond the limitations in section 12(d)(1)(A) of the Act and permit the Master Fund, and any principal underwriter for the Master Fund, to sell shares of the Master Fund to the ETMF Feeder beyond the limitations in section 12(d)(1)(B) of the Act (“Master-Feeder Relief”).
37. Applicants are seeking the Master-Feeder Relief to permit ETMF Feeders to create and redeem in kind Shares with their Master Funds. Applicants assert that this structure is substantially identical to traditional master-feeder structures permitted pursuant to the exception provided in section 12(d)(1)(E) of the Act. Section 12(d)(1)(E) provides that the percentage limitations of sections 12(d)(1)(A) and (B) will not apply to a security issued by an investment company (in this case, the shares of the applicable Master Fund) if, among other things, that security is the only investment security held in the investing fund's portfolio (in this case, the ETMF Feeder's portfolio). Applicants believe the proposed master-feeder structure complies with section 12(d)(1)(E) because each ETMF Feeder would hold only investment securities issued by its corresponding Master Fund; however, the ETMF Feeders may receive securities other than securities of its corresponding Master Fund if an ETMF Feeder accepts an in-kind creation. To the extent that an ETMF Feeder may be deemed to be holding both shares of the Master Fund and other securities, applicants request relief from sections 12(d)(1)(A) and (B). The ETMF Feeders would operate in compliance with all other provisions of section 12(d)(1)(E).
38. Section 17(a) of the Act generally prohibits an affiliated person of a registered investment company, or an affiliated person of such a person (“second-tier affiliate”), from selling any security to or purchasing any security from the company. Section 2(a)(3) of the Act defines “affiliated person” to include any person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of the other person and any person directly or indirectly controlling, controlled by, or under common control with, the other person. Section 2(a)(9) of the Act defines “control” as the power to exercise a controlling influence over the management or policies of a company and provides that a control relationship will be presumed where one person owns more than 25% of another person's voting securities. Each ETMF may be deemed to be controlled by an Adviser and hence affiliated persons of each other. In addition, the ETMFs may be deemed to be under common control with any other registered investment company (or series thereof) advised by an Adviser (an “Affiliated Fund”).
39. Applicants request an exemption under sections 6(c) and 17(b) of the Act from sections 17(a)(1) and 17(a)(2) of the Act to permit in-kind purchases and redemptions of Creation Units by persons that are affiliated persons or second-tier affiliates of the ETMFs solely by virtue of one or more of the following: (a) Holding 5% or more, or in excess of 25% of the outstanding Shares of one or more ETMFs; (b) having an affiliation with a person with an ownership interest described in (a); or (c) holding 5% or more, or more than 25% of the Shares of one or more Affiliated Funds.
40. Applicants assert that no useful purpose would be served by prohibiting such affiliated persons from making in-kind purchases or in-kind redemptions of Shares of an ETMF in Creation Units. Absent the limited circumstances discussed in the application, the Basket Instruments available for an ETMF would be the same for all purchasers and redeemers, respectively. The deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions would be the same for all purchases and redemptions. All Basket Instruments would be valued in the same manner as they are valued for purposes of calculating the ETMF's NAV, and such valuation would be made in the same manner regardless of the identity of the purchaser or redeemer. Applicants do not believe that in-kind purchases and redemptions would result in abusive self-dealing or overreaching of the ETMF.
41. Applicants also submit that the sale of Shares to and redemption of Shares from an Acquiring Fund meets the standards for relief under sections 17(b) and 6(c) of the Act. Applicants note that any consideration paid for the purchase or redemption of Shares directly from an ETMF would be based on the NAV of the ETMF in accordance with policies and procedures set forth in the ETMF's registration statement.
42. To the extent that an ETMF operates in a master-feeder structure,
However, applicants believe that in-kind creations and redemptions between an ETMF Feeder and a Master Fund advised by the same investment adviser do not involve “overreaching” by an affiliated person. Such transactions would occur only at the ETMF Feeder's proportionate share of the Master Fund's net assets, and the Basket Instruments would be valued in the same manner as they are valued for the purposes of calculating the applicable Master Fund's NAV. Further, all such transactions would be effected with respect to the Basket and on the same terms with respect to all investors. Finally, such transactions would only occur as a result of, and to effectuate, a creation or redemption transaction between the ETMF Feeder and a third party investor. Applicants believe that the terms of the proposed transactions are reasonable and fair and do not involve overreaching on the part of any person concerned and that the transactions are consistent with the general purposes of the Act.
Applicants agree that any order of the Commission granting the requested relief will be subject to the following conditions:
1. As long as an ETMF operates in reliance on the requested order, its Shares will be listed on an Exchange.
2. Neither the Trusts nor any ETMF will be advertised or marketed as an open-end investment company, a mutual fund or an ETF. Any advertising material that describes the purchase or sale of Creation Units or refers to redeemability will prominently disclose that Shares are not individually redeemable and that owners of Shares may acquire those Shares from an ETMF and tender those Shares for redemption to the ETMF in Creation Units only.
3. The Web site for the ETMFs, which will be publicly accessible at no charge, will contain, on a per Share basis, for each ETMF, the prior Business Day's NAV; intraday high, low, average and closing trading prices (expressed as premiums/discounts to NAV); the midpoint of the highest bid and lowest offer prices as of the close of Exchange trading (“Closing Bid/Ask Midpoint”) (expressed as a premium/discount to NAV); and the spread between the highest bid and lowest offer prices as of the close of Exchange trading (“Closing Bid/Ask Spread”). The Web site for the ETMFs also will contain charts showing the frequency distribution and range of values of trading prices, Closing Bid/Ask Midpoints and Closing Bid/Ask Spreads over time.
4. The Adviser or any Subadviser, directly or indirectly, will not cause any Authorized Participant (or any investor on whose behalf an Authorized Participant may transact with the ETMF) to acquire any Basket Instrument for the ETMF through a transaction in which the ETMF could not engage directly.
1. The members of an Acquiring Fund's Advisory Group will not control (individually or in the aggregate) an ETMF (or, in the case of an ETMF Feeder, its Master Fund) within the meaning of section 2(a)(9) of the Act. The members of an Acquiring Fund's Subadvisory Group will not control (individually or in the aggregate) an ETMF (or, in the case of an ETMF Feeder, its Master Fund) within the meaning of section 2(a)(9) of the Act. If, as a result of a decrease in the outstanding voting securities of the ETMF, the Acquiring Fund's Advisory Group or the Acquiring Fund's Subadvisory Group, each in the aggregate, becomes a holder of more than 25 percent of the outstanding voting securities of an ETMF, it will vote its Shares of the ETMF in the same proportion as the vote of all other holders of such Shares. This condition does not apply to the Acquiring Fund's Subadvisory Group with respect to an ETMF (or, in the case of an ETMF Feeder, its Master Fund) for which the Acquiring Fund Subadviser or a person controlling, controlled by or under common control with the Acquiring Fund Subadviser acts as the investment adviser within the meaning of section 2(a)(20)(A) of the Act.
2. No Acquiring Fund or Acquiring Fund Affiliate will cause any existing or potential investment by the Acquiring Fund in an ETMF to influence the terms of any services or transactions between the Acquiring Fund or an Acquiring Fund Affiliate and the ETMF (or, in the case of an ETMF Feeder, its Master Fund) or an ETMF Affiliate.
3. The board of directors or trustees of an Acquiring Management Company, including a majority of the disinterested directors or trustees, will adopt procedures reasonably designed to ensure that the Acquiring Fund Adviser and any Acquiring Fund Subadviser are conducting the investment program of the Acquiring Management Company without taking into account any consideration received by the Acquiring Management Company or an Acquiring Fund Affiliate from an ETMF (or, in the case of an ETMF Feeder, its Master Fund) or an ETMF Affiliate in connection with any services or transactions.
4. Once an investment by an Acquiring Fund in the Shares of an ETMF exceeds the limit in section 12(d)(1)(A)(i) of the Act, the Board of the ETMF, including a majority of the disinterested directors or trustees, will determine that any consideration paid by the ETMF (or, in the case of an ETMF Feeder, its Master Fund) to an Acquiring Fund or an Acquiring Fund Affiliate in connection with any services or transactions: (i) Is fair and reasonable in relation to the nature and quality of the services and benefits received by the ETMF (or, in the case of an ETMF Feeder, its Master Fund); (ii) is within the range of consideration that the ETMF (or, in the case of an ETMF Feeder, its Master Fund) would be required to pay to another unaffiliated entity in connection with the same services or transactions; and (iii) does not involve overreaching on the part of any person concerned. This condition does not apply to any services or transactions between an ETMF (or, in the case of an ETMF Feeder, its Master Fund) and its investment adviser(s), or any person controlling, controlled by or under common control with such investment adviser(s).
5. No Acquiring Fund or Acquiring Fund Affiliate (except to the extent it is acting in its capacity as an investment adviser to an ETMF (or, in the case of an ETMF Feeder, its Master Fund)) will cause an ETMF (or, in the case of an ETMF Feeder, its Master Fund) to purchase a security in an Affiliated Underwriting.
6. The Board of an ETMF (or, in the case of an ETMF Feeder, its Master Fund), including a majority of the disinterested directors or trustees, will adopt procedures reasonably designed to monitor any purchases of securities by the ETMF (or, in the case of an ETMF Feeder, its Master Fund) in an Affiliated Underwriting, once an investment by an Acquiring Fund in the securities of the ETMF exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any purchases made directly from an Underwriting Affiliate. The Board will review these purchases periodically, but no less frequently than annually, to
7. Each ETMF (or, in the case of an ETMF Feeder, its Master Fund) will maintain and preserve permanently in an easily accessible place a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in Affiliated Underwritings, once an investment by an Acquiring Fund in the securities of the ETMF exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth from whom the securities were acquired, the identity of the underwriting syndicate's members, the terms of the purchase, and the information or materials upon which the determinations of the Board were made.
8. Before investing in an ETMF in excess of the limits in section 12(d)(1)(A), an Acquiring Fund and the ETMF will execute an Acquiring Fund Agreement stating that their boards of directors or trustees and their investment advisers, or Trustee and Sponsor, as applicable, understand the terms and conditions of the order, and agree to fulfill their responsibilities under the order. At the time of its investment in Shares of an ETMF in excess of the limit in section 12(d)(1)(A)(i), an Acquiring Fund will notify the ETMF of the investment. At such time, the Acquiring Fund will also transmit to the ETMF a list of the names of each Acquiring Fund Affiliate and Underwriting Affiliate. The Acquiring Fund will notify the ETMF of any changes to the list of the names as soon as reasonably practicable after a change occurs. The ETMF and the Acquiring Fund will maintain and preserve a copy of the order, the Acquiring Fund Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place.
9. The Acquiring Fund Adviser, or Trustee or Sponsor, as applicable, will waive fees otherwise payable to it by the Acquiring Fund in an amount at least equal to any compensation received from an ETMF (or, in the case of an ETMF Feeder, its Master Fund) by the Acquiring Fund Adviser, or Trustee, or Sponsor, or an affiliated person of the Acquiring Fund Adviser, or Trustee, or Sponsor, other than any advisory fees paid to the Acquiring Fund Adviser, or Trustee, or Sponsor, or its affiliated person by the ETMF (or, in the case of an ETMF Feeder, its Master Fund), in connection with the investment by the Acquiring Fund in the ETMF. Any Acquiring Fund Subadviser will waive fees otherwise payable to the Acquiring Fund Subadviser, directly or indirectly, by the Acquiring Management Company in an amount at least equal to any compensation received from an ETMF (or, in the case of an ETMF Feeder, its Master Fund) by the Acquiring Fund Subadviser, or an affiliated person of the Acquiring Fund Subadviser, other than any advisory fees paid to the Acquiring Fund Subadviser or its affiliated person by the ETMF (or, in the case of an ETMF Feeder, its Master Fund), in connection with any investment by the Acquiring Management Company in the ETMF made at the direction of the Acquiring Fund Subadviser. In the event that the Acquiring Fund Subadviser waives fees, the benefit of the waiver will be passed through to the Acquiring Management Company.
10. Any sales charges and/or service fees charged with respect to shares of an Acquiring Fund will not exceed the limits applicable to a fund of funds as set forth in NASD Conduct Rule 2830.
11. No ETMF (or, in the case of an ETMF Feeder, its Master Fund) relying on the Section 12(d)(1) relief will acquire securities of any investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent that the ETMF acquires such securities in compliance with section 12(d)(1)(E) of the Act or acquires shares of a Master Fund; or the ETMF (or, in the case of an ETMF Feeder, its Master Fund) (a) Receives securities of another investment company as a dividend or as a result of a plan of reorganization of a company (other than a plan devised for the purpose of evading section 12(d)(1) of the Act), or (b) acquires securities of another investment company pursuant to exemptive relief from the Commission permitting such ETMF (or, in the case of an ETMF Feeder, its Master Fund) to (i) Acquire securities of one or more investment companies for short-term cash management purposes or (ii) engage in interfund borrowing and lending transactions.
12. Before approving any advisory contract under section 15 of the Act, the board of each Acquiring Management Company, including a majority of the disinterested directors or trustees, will find that the advisory fees charged under such advisory contract are based on services provided that will be in addition to, rather than duplicative of, the services provided under the advisory contracts of any ETMF (or, in the case of an ETMF Feeder, its Master Fund) in which the Acquiring Management Company may invest. These findings and their basis will be recorded fully in the minute books of the appropriate Acquiring Management Company.
By the Commission.
Securities and Exchange Commission (“Commission”).
Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (the “Act”) for exemptions from sections 12(d)(1)(A), (B), and (C) of the Act, under sections 6(c) and 17(b) of the Act for an exemption from section 17(a) of the Act, and under section 6(c) of the Act for an exemption from rule 12d1–2(a) under the Act.
Applicants request an order that would (a) permit certain registered open-end management investment companies that operate as “funds of funds” to acquire shares of certain registered open-end management investment companies, registered closed-end management investment companies, business development companies as defined by section 2(a)(48) of the Act (“business development companies”), and registered unit investment trusts that are within or outside the same group of investment companies as the acquiring investment companies and (b) permit certain registered open-end management investment companies relying on rule 12d1–2 under the Act to invest in certain financial instruments.
AllianceBernstein Cap Fund, Inc. (the “Company”), AllianceBernstein L.P. (the “Adviser”), and AllianceBernstein Investments, Inc. (the “Distributor”).
An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on December 1, 2014, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer's interest, any facts bearing on the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Applicants: c/o Emilie D. Wrapp, 1345 Avenue of the Americas, New York, NY 10105.
Deepak T. Pai, Senior Counsel, at (202) 551–6876, or Mary Kay Frech, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or for an applicant using the “Company” name box, at
1. The Company is an open-end management investment company registered under the Act and organized as a Maryland corporation. The Company has multiple series, which pursue distinct investment objectives and strategies. Applicants request that the order apply not only to any existing series of the Company, but also to any future series of the Company, and any other existing or future registered open-end management investment companies and any series thereof that are part of the same group of investment companies, as defined in section 12(d)(1)(G)(ii) of the Act, as the Company and are, or may in the future be, advised by the Adviser or any other investment adviser controlling, controlled by, or under common control with the Adviser (together with the existing series of the Company, each series a “Fund,” and collectively, the “Funds”).
2. The Adviser, a Delaware limited partnership, is registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”), and serves as the investment adviser to the existing Funds.
3. Applicants request relief to the extent necessary to permit: (a) A Fund (each, a “Fund of Funds,” and collectively, the “Funds of Funds”) to acquire shares of registered open-end management investment companies (each, an “Unaffiliated Open-End Investment Company”), registered closed-end management investment companies, business development companies (each registered closed-end management investment company and each business development company, an “Unaffiliated Closed-End Investment Company” and, together with the Unaffiliated Open-End Investment Companies, the “Unaffiliated Investment Companies”), and registered unit investment trusts (“UITs”) (the “Unaffiliated Trusts,” and together with the Unaffiliated Investment Companies, the “Unaffiliated Funds”), in each case, that are not part of the same “group of investment companies” as the Funds of Funds;
4. Applicants also request an exemption under section 6(c) from rule 12d1–2 under the Act to permit any existing or future Fund that relies on
1. Section 12(d)(1)(A) of the Act, in relevant part, prohibits a registered investment company from acquiring shares of an investment company if the securities represent more than 3% of the total outstanding voting stock of the acquired company, more than 5% of the total assets of the acquiring company, or, together with the securities of any other investment companies, more than 10% of the total assets of the acquiring company. Section 12(d)(1)(B) of the Act prohibits a registered open-end investment company, its principal underwriter, and any broker or dealer from selling the investment company's shares to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company's voting stock, or if the sale will cause more than 10% of the acquired company's voting stock to be owned by investment companies generally. Section 12(d)(1)(C) prohibits an investment company from acquiring any security issued by a registered closed-end investment company if such acquisition would result in the acquiring company, any other investment companies having the same investment adviser, and companies controlled by such investment companies, collectively, owning more than 10% of the outstanding voting stock of the registered closed-end investment company.
2. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Applicants request an exemption under section 12(d)(1)(J) of the Act from the limitations of sections 12(d)(1)(A), (B) and (C) of the Act to the extent necessary to permit: (i) The Funds of Funds to acquire shares of Underlying Funds in excess of the limits set forth in section 12(d)(1)(A) and (C) of the Act; and (ii) the Underlying Funds that are registered open-end management investment companies, their principal underwriters and any Broker to sell shares of the Underlying Funds to the Funds of Funds in excess of the limits set forth in section 12(d)(1)(B) of the Act.
3. Applicants state that the proposed arrangement will not give rise to the policy concerns underlying sections 12(d)(1)(A), (B), and (C), which include concerns about undue influence by a fund of funds over underlying funds, excessive layering of fees, and overly complex fund structures. Accordingly, applicants believe that the requested exemption is consistent with the public interest and the protection of investors.
4. Applicants submit that the proposed structure will not result in the exercise of undue influence by a Fund of Funds or its affiliated persons over the Underlying Funds. Applicants assert that the concern about undue influence does not arise in connection with a Fund of Funds' investment in the Affiliated Funds because they are part of the same group of investment companies. To limit the control a Fund of Funds or Fund of Funds Affiliate
5. With respect to closed-end Underlying Funds, applicants note that although closed-end funds may not be unduly influenced by a holder's right of redemption, closed-end Underlying Funds may be unduly influenced by a holder's ability to vote a large block of stock. To address this concern, applicants submit that, with respect to a Fund's investment in an Unaffiliated Closed-End Investment Company, (i) each member of the Group or Sub-Adviser Group that is an investment company or an issuer that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act will vote its shares of the Unaffiliated Closed-End Investment Company in the manner prescribed by section 12(d)(1)(E) of the Act and (ii) each other member of the Group or Sub-Adviser Group will vote its shares of the Unaffiliated Closed-End Investment Company in the same proportion as the vote of all other holders of the same type of such Unaffiliated Closed-End Investment Company's shares. Applicants state that, in this way, an Unaffiliated Closed-End Investment Company will be protected from undue influence by a Fund of Funds through the voting of the Unaffiliated Closed-End Investment Company's shares.
6. Applicants propose other conditions to limit the potential for undue influence over the Unaffiliated Funds, including that no Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to an Unaffiliated Investment Company or sponsor to an Unaffiliated Trust) will cause an Unaffiliated Fund to purchase a security in an offering of securities during the existence of any underwriting or selling syndicate of which a principal underwriter is an Underwriting Affiliate (“Affiliated Underwriting”).
7. To further ensure that an Unaffiliated Investment Company understands the implications of a Fund of Funds' investment under the requested exemptive relief, prior to its investment in the shares of an Unaffiliated Investment Company in excess of the limit of section 12(d)(1)(A)(i) of the Act, a Fund of Funds and the Unaffiliated Investment Company will execute an agreement
8. Applicants state that they do not believe that the proposed arrangement will result in excessive layering of fees. The Board of each Fund of Funds, including a majority of the directors who are not “interested persons” within the meaning of section 2(a)(19) of the Act (the “Independent Directors”), will find that the management or advisory fees charged under a Fund of Funds' advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Underlying Fund in which the Fund of Funds may invest. In addition, the Adviser will waive fees otherwise payable to it by a Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by an Unaffiliated Investment Company under rule 12b-1 under the Act) received from an Unaffiliated Fund by the Adviser, or an affiliated person of the Adviser, other than any advisory fees paid to the Adviser or an affiliated person of the Adviser by the Unaffiliated Investment Company, in connection with the investment by the Fund of Funds in the Unaffiliated Fund.
9. Applicants further state that any sales charges and/or service fees charged with respect to shares of a Fund of Funds will not exceed the limits applicable to funds of funds set forth in rule 2830 of the Conduct Rules of the NASD (“NASD Conduct Rule 2830”).
10. Applicants submit that the proposed arrangement will not create an overly complex fund structure. Applicants note that no Underlying Fund (or, if applicable, its respective master fund) will acquire securities of any other investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in section 12(d)(1)(A) of the Act, except in certain circumstances identified in condition 12 below.
1. Section 17(a) of the Act generally prohibits sales or purchases of securities between a registered investment company and any affiliated person, or affiliated person of an affiliated person, of the company. Section 2(a)(3) of the Act defines an “affiliated person” of another person to include (a) any person directly or indirectly owning, controlling, or holding with power to vote, 5% or more of the outstanding voting securities of the other person; (b) any person 5% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote by the other person; and (c) any person directly or indirectly controlling, controlled by, or under common control with the other person.
2. Applicants state that the Funds of Funds and the Affiliated Funds may be deemed to be under the common control of the Adviser and, therefore, affiliated persons of one another. Applicants also state that the Funds of Funds and the Underlying Funds organized as open-end investment companies (“Underlying Open-End Funds”) or UITs (“Underlying UITs”) may also be deemed to be affiliated persons of one another if a Fund of Funds owns 5% or more of the outstanding voting securities of one or more of such Underlying Open-End Funds and/or Underlying UITs. Applicants state that the sale of shares by the Underlying Open-End Funds or Underlying UITs to the Funds of Funds and the purchase of those shares from the Funds of Funds by the Underlying Open-End Funds and/or Underlying UITs (through redemptions) could be deemed to violate section 17(a).
3. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (i) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (ii) the proposed transaction is consistent with the policies of each registered investment company concerned; and (iii) the proposed transaction is consistent with the general purposes of the Act. Section 6(c) of the Act permits the Commission to exempt any person or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
4. Applicants submit that the proposed transactions satisfy the standards for relief under sections 17(b) and 6(c) of the Act. Applicants state that the terms of the transactions are reasonable and fair and do not involve overreaching. Applicants state that the terms upon which an Underlying Open-End Fund or Underlying UIT will sell its shares to or purchase its shares from a Fund of Funds will be based on the net asset value of each Underlying Open-End Fund or Underlying UIT.
1. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) will not apply to securities of an acquired company purchased by an acquiring company if: (i) The acquiring company and acquired company are part of the same “group of investment companies,” as defined in section 12(d)(1)(G)(ii) of the Act; (ii) the acquiring company holds only securities of acquired companies that are part of the same “group of investment companies,” as defined in section 12(d)(1)(G)(ii) of the Act, government securities, and short-term paper; (iii) the aggregate sales loads and distribution-related fees of the acquiring company and the acquired company are not excessive under rules adopted pursuant to section 22(b) or section 22(c) of the Act by a securities association registered under section 15A of the 1934 Act or by the Commission; and (iv) the acquired company has a policy that prohibits it from acquiring securities of registered open-end management investment companies or registered UITs in reliance on section 12(d)(1)(F) or (G) of the Act.
2. Rule 12d1–2 under the Act permits a registered open-end investment company or a registered UIT that relies on section 12(d)(1)(G) of the Act to acquire, in addition to securities issued by another registered investment company in the same group of investment companies, government securities, and short-term paper: (1) Securities issued by an investment company that is not in the same group of investment companies, when the acquisition is in reliance on section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other than securities issued by an investment company); and (3) securities issued by a money market fund, when the investment is in reliance on rule 12d1–1 under the Act. For the purposes of rule 12d1–2, “securities” means any security as defined in section 2(a)(36) of the Act.
3. Applicants state that the proposed arrangement would comply with rule 12d1–2 under the Act, but for the fact that the Section 12(d)(1)(G) Funds may invest a portion of their assets in Other Investments. Applicants request an order under section 6(c) of the Act for an exemption from rule 12d1–2(a) to allow the Section 12(d)(1)(G) Funds to invest in Other Investments. Applicants assert that permitting a Section 12(d)(1)(G) Fund to invest in Other Investments as described in the application would not raise any of the concerns that section 12(d)(1) of the Act was intended to address.
4. Consistent with its fiduciary obligations under the Act, a Section 12(d)(1)(G) Fund's Board will review the advisory fees charged by the Section 12(d)(1)(G) Fund's investment adviser(s) to ensure that the fees are based on services provided that are in addition to, rather than duplicative of, services provided pursuant to the advisory agreement of any investment company in which the Section 12(d)(1)(G) Fund may invest.
Applicants agree that the order granting the requested relief to permit Funds of Funds to invest in Underlying Funds shall be subject to the following conditions:
1. The members of the Group will not control (individually or in the aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) of the Act. The members of a Sub-Adviser Group will not control (individually or in the aggregate) an Unaffiliated Fund within the meaning of section 2(a)(9) of the Act. With respect to a Fund's investment in an Unaffiliated Closed-End Investment Company, (i) each member of the Group or Sub-Adviser Group that is an investment company or an issuer that would be an investment company but for section 3(c)(1) or 3(c)(7) of the Act will vote its shares of the Unaffiliated Closed-End Investment Company in the manner prescribed by section 12(d)(1)(E) of the Act and (ii) each other member of the Group or Sub-Adviser Group will vote its shares of the Unaffiliated Closed-End Investment Company in the same proportion as the vote of all other holders of the same type of such Unaffiliated Closed-End Investment Company's shares. If, as a result of a decrease in the outstanding voting securities of any other Unaffiliated Fund, the Group or a Sub-Adviser Group, each in the aggregate, becomes a holder of more than 25% of the outstanding voting securities of such Unaffiliated Fund, then the Group or the Sub-Adviser Group will vote its shares of the Unaffiliated Fund in the same proportion as the vote of all other holders of the Unaffiliated Fund's shares. This condition will not apply to a Sub-Adviser Group with respect to an Unaffiliated Fund for which the Sub-Adviser or a person controlling, controlled by or under common control with the Sub-Adviser acts as the investment adviser within the meaning of section 2(a)(20)(A) of the Act (in the case of an Unaffiliated Investment Company) or as the sponsor (in the case of an Unaffiliated Trust).
2. No Fund of Funds or Fund of Funds Affiliate will cause any existing or potential investment by the Fund of Funds in an Unaffiliated Fund to influence the terms of any services or transactions between the Fund of Funds or a Fund of Funds Affiliate and the Unaffiliated Fund or an Unaffiliated Fund Affiliate.
3. The Board of each Fund of Funds, including a majority of the Independent Directors, will adopt procedures reasonably designed to ensure that its Adviser and any Sub-Adviser to the Fund of Funds are conducting the investment program of the Fund of Funds without taking into account any consideration received by the Fund of Funds or Fund of Funds Affiliate from an Unaffiliated Investment Company or Unaffiliated Trust or any Unaffiliated Fund Affiliate of such Unaffiliated Investment Company or Unaffiliated Trust in connection with any services or transactions.
4. Once an investment by a Fund of Funds in the securities of an Unaffiliated Investment Company exceeds the limit of section 12(d)(1)(A)(i) of the Act, the Board of the Unaffiliated Investment Company, including a majority of the Independent Directors, will determine that any consideration paid by the Unaffiliated Investment Company to a Fund of Funds or a Fund of Funds Affiliate in connection with any services or transactions: (a) Is fair and reasonable in relation to the nature and quality of the services and benefits received by the Unaffiliated Investment Company; (b) is within the range of consideration that the Unaffiliated Investment Company would be required to pay to another unaffiliated entity in connection with the same services or transactions; and (c) does not involve overreaching on the part of any person concerned. This condition does not apply with respect to any services or transactions between an Unaffiliated Investment Company and its investment adviser(s), or any person controlling, controlled by, or under common control with such investment adviser(s).
5. No Fund of Funds or Fund of Funds Affiliate (except to the extent it is acting in its capacity as an investment adviser to an Unaffiliated Investment Company or sponsor to an Unaffiliated Trust) will cause an Unaffiliated Fund to purchase a security in any Affiliated Underwriting.
6. The Board of an Unaffiliated Investment Company, including a majority of the Independent Directors,
7. Each Unaffiliated Investment Company will maintain and preserve permanently, in an easily accessible place, a written copy of the procedures described in the preceding condition, and any modifications to such procedures, and will maintain and preserve for a period of not less than six years from the end of the fiscal year in which any purchase in an Affiliated Underwriting occurred, the first two years in an easily accessible place, a written record of each purchase of securities in an Affiliated Underwriting once an investment by a Fund of Funds in the securities of an Unaffiliated Investment Company exceeds the limit of section 12(d)(1)(A)(i) of the Act, setting forth (1) the party from whom the securities were acquired, (2) the identity of the underwriting syndicate's members, (3) the terms of the purchase, and (4) the information or materials upon which the determinations of the Board of the Unaffiliated Investment Company were made.
8. Prior to its investment in shares of an Unaffiliated Investment Company in excess of the limit set forth in section 12(d)(1)(A)(i) of the Act, the Fund of Funds and the Unaffiliated Investment Company will execute a Participation Agreement stating, without limitation, that their Boards and their investment advisers understand the terms and conditions of the order and agree to fulfill their responsibilities under the order. At the time of its investment in shares of an Unaffiliated Investment Company in excess of the limit set forth in section 12(d)(1)(A)(i), a Fund of Funds will notify the Unaffiliated Investment Company of the investment. At such time, the Fund of Funds will also transmit to the Unaffiliated Investment Company a list of the names of each Fund of Funds Affiliate and Underwriting Affiliate. The Fund of Funds will notify the Unaffiliated Investment Company of any changes to the list as soon as reasonably practicable after a change occurs. The Unaffiliated Investment Company and the Fund of Funds will maintain and preserve a copy of the order, the Participation Agreement, and the list with any updated information for the duration of the investment and for a period of not less than six years thereafter, the first two years in an easily accessible place.
9. Before approving any advisory contract under section 15 of the Act, the Board of each Fund of Funds, including a majority of the Independent Directors, shall find that the advisory fees charged under the advisory contract are based on services provided that are in addition to, rather than duplicative of, services provided under the advisory contract(s) of any Underlying Fund in which the Fund of Funds may invest. Such finding, and the basis upon which the finding was made, will be recorded fully in the minute books of the appropriate Fund of Funds.
10. The Adviser will waive fees otherwise payable to it by a Fund of Funds in an amount at least equal to any compensation (including fees received pursuant to any plan adopted by an Unaffiliated Investment Company pursuant to rule 12b–1 under the Act) received from an Unaffiliated Fund by the Adviser, or an affiliated person of the Adviser, other than any advisory fees paid to the Adviser or its affiliated person by the Unaffiliated Investment Company, in connection with the investment by the Fund of Funds in the Unaffiliated Fund. Any Sub-Adviser will waive fees otherwise payable to the Sub-Adviser, directly or indirectly, by the Fund of Funds in an amount at least equal to any compensation received by the Sub-Adviser, or an affiliated person of the Sub-Adviser, from an Unaffiliated Fund, other than any advisory fees paid to the Sub-Adviser or its affiliated person by the Unaffiliated Investment Company, in connection with the investment by the Fund of Funds in the Unaffiliated Fund made at the direction of the Sub-Adviser. In the event that the Sub-Adviser waives fees, the benefit of the waiver will be passed through to the Fund of Funds.
11. Any sales charges and/or service fees charged with respect to shares of a Fund of Funds will not exceed the limits applicable to funds of funds set forth in NASD Conduct Rule 2830.
12. No Underlying Fund will acquire securities of any other investment company or company relying on section 3(c)(1) or 3(c)(7) of the Act, in excess of the limits contained in section 12(d)(1)(A) of the Act, except to the extent that such Underlying Fund: (a) Acquires such securities in compliance with section 12(d)(1)(E) of the Act and either is an Affiliated Fund or is in the same “group of investment companies” as its corresponding master fund; (b) receives securities of another investment company as a dividend or as a result of a plan of reorganization of a company (other than a plan devised for the purpose of evading section 12(d)(1) of the Act); or (c) acquires (or is deemed to have acquired) securities of another investment company pursuant to exemptive relief from the Commission permitting such Underlying Fund to: (i) Acquire securities of one or more investment companies for short-term cash management purposes or (ii) engage in inter-fund borrowing and lending transactions.
Applicants agree that the order granting the requested relief to permit Section 12(d)(1)(G) Funds to invest in Other Investments shall be subject to the following condition:
1. Applicants will comply with all provisions of rule 12d1–2 under the Act, except for paragraph (a)(2) to the extent that it restricts any Section 12(d)(1)(G) Fund from investing in Other Investments as described in the application.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 967NY to enhance the functionality of the trade collar protection mechanism. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange is proposing to amend Rule 967NY(a) to clarify and conform with the functionality of the trade collar protection mechanism in use on the Exchange. The Exchange's amendment is to specify (a) how marketable Limit Orders behave when received in a wide market, (b) how subsequently-arriving Market Orders effect collared orders, and (c) the values associated with a Trading Collar. The Exchange also seeks to make non-substantive wording changes to Rule 967NY(a).
Pursuant to Rule 967NY(a), the Exchange applies a “Trade Collar Protection” mechanism that prevents the immediate execution of certain orders at prices outside of a specified parameter (referred to as a “Trading Collar”).
Trading Collars are determined by the Exchange on a class-by-class basis and, unless announced otherwise via Trader Update, are the same value as the bid-ask differential guidelines established pursuant to Rule 925NY(b)(4), as set forth in Rule 967NY(a)(2). For example, Rule 925NY(b)(4) sets the bid-ask differential for an option priced less than $2.00 at $0.25. For any option that has a bid less than $2.00, the Trading Collar will be $0.25. Accordingly, if the National Best Bid and Offer (“NBBO”) for XYZ is $0.75 bid and $1.75 offer, certain orders the Exchange receives will be subject to a $0.25 Trading Collar.
Trade Collar Protection applies to two scenarios. First, pursuant to Rule 967NY(a)(1)(i), Trade Collar Protection prevents executions of certain orders when the difference between the National Best Offer (“NBO”) and the National Best Bid (“NBB”) is greater than one Trading Collar. Second, pursuant to Rule 967NY(a)(1)(ii), Trade Collar Protection prevents the execution of the balance of an eligible buy order if it were to execute at a price that is the NBO plus a Trading Collar (or a price that is the NBB minus a Trading Collar for an eligible sell order).
Pursuant to Rule 967NY(a)(1)(i), if the difference between the NBO and the NBB is greater than one Trading Collar, the Exchange will prevent execution or routing of certain orders. Instead, pursuant to Rule 967NY(a)(4)(A), the Exchange will display the order at a price equal to the NBO minus one Trading Collar for sell orders or the NBB plus one Trading Collar for buy orders (the “collared order”). The Exchange will then attempt to execute or route the collared order to buy (sell) against any contra interest priced within one Trading Collar above (below) the displayed price of the collared order.
The collared order will re-price before the expiration of one second as a result of certain changes in the market. Pursuant to Rule 967NY(a)(4)(C)(i), an update to the NBBO (based on another market center or a quote or order on the Exchange) that improves the same side of the market as the collared order will cause the collared order to be redisplayed at the same price as the updated NBBO. In accordance with Rule 967NY(a)(4)(C)(ii), a Limit Order (which is not an IOC Order, AON Order, FOK Order or NOW Order) on the same side of the market priced better than one Trading Collar from the collared order will also become subject to Trade Collar Protection and will cause the collared order to improve by one Trading Collar (which will redisplay at the new price and additional size of the new Limit Order).
As set forth in Rule 967NY(a)(1)(ii), when the difference between the NBB and NBO is within the bid-ask differential guidelines, orders execute against the NBB or NBO, but Trade Collar Protection prevents execution of the balance of certain order at prices that are a Trading Collar above the NBO for buy orders (or at prices that are a Trading Collar below the NBB for sell orders). Essentially, the Exchange will permit the immediate execution of a Market Order or a marketable Limit Order (together a “marketable order”) up to a Trading Collar away from the NBBO. Pursuant to Rule 967NY(a)(5), the balance of the partially executed order will be subject to Trade Collar Protection and will display at the last sale price. However, if there is an opportunity for trading within one Trading Collar of the last sale price, the order will continue to be displayed at the NBB (NBO) established at the time of the initial execution. Once subject to Trade Collar Protection, the order will follow the re-pricing mechanism described above.
The Exchange seeks to clarify and correct Rule 967NY so as to conform to current functionality. Pursuant to the language of Rule 967NY(a)(1)(i), the Exchange will prevent the immediately [sic] execution of “Market Orders or marketable Limit Orders” if the width of the bid-ask differential of the NBBO is greater than one Trading Collar. However, during wide market conditions, the Exchange only prevents the immediate execution of Market Orders. Orders with limit prices that are executable against the NBB or NBO, regardless of the width of the bid-ask differential of the NBBO, immediately execute.
The Exchange also seeks to delete 967NY(a)(4)(C)(iv), which states that a Market Order that arrives while another order is being displayed due to Trade Collar Protection will join the collared order and display at the same price. While the Exchange believes this behavior beneficial to the market, it has not yet deployed the functionality. While it intends to incorporate such an enhancement in the near future, the Exchange is deleting (a)(4)(C)(iv) in order for its rules to comply with current functionality. Market Orders that arrive while another order is displayed due to Trade Collar Protection will behave in the same manner as later-arriving marketable Limit Orders. Specifically, the later-arriving Market Order will join the already collared order and both will display at a price one Trading Collar above (below) the previous displayed price. The Exchange intends to make another filing to re-establishing the language of (a)(4)(C)(iv) once the functionality is available.
The Exchange also proposes to amend Rule 967NY(a) to add language that clarifies the current operation of the trading collar mechanism. In particular, the Exchange proposes to delete the reference to Rule 925NY(b)(4) and instead codify the values of the Trading Collar directly in Rule 967NY(a). Rule 925NY(b)(4) sets the bid-ask differentials based exclusively on the bid price. The trading collar mechanism employs the same values for determining the Trading Collar. However, while those values are based upon the NBB for buy orders, the value of the Trading Collar for sell orders is based upon the NBO. The Exchange uses the NBB for buy orders because it believes that a market participant who is looking to buy would derive its price off of what other market participants are willing to pay (i.e. the prevailing bid). Similarly, the Exchange uses the NBO for sell orders because it believes that a market participant who is looking to sell would derive its price off of what other market participants are willing to sell (i.e. the prevailing offer). Accordingly, the Exchange proposes new sections (a)(2)(A) and (a)(2)(B) to Rule 967NY, which specifies the values based upon whether the order subject to Trade Collar Protection is to buy or sell.
As an example, the NBBO for XYZ is $1.00 bid and $6.00 offer. Based upon Rule 967NY's reference to Rule 925NY(b)(4), it could be interpreted that the Trading Collar would be $0.25 regardless of whether the Exchange received an order to buy or sell (based upon the bid being less than $2.00). However, collared sell orders currently derive their Trading Collar and display price from the NBO. Accordingly, a Market Order to buy would display at $1.25 (i.e., the $1.00 NBB plus the $0.25 Trading Collar (based upon the NBB being less than $2.00)) and would attempt to execute against any contra interest (on any market) priced $1.50 or less (i.e., $1.25 bid plus the $0.25 Trading Collar). However, a Market Order to sell would display at $5.50 (i.e., the $6.00 NBO minus the $0.50 Trading Collar (based upon the NBO being more than $5.00 but does not exceed $10.00)) and would attempt to execute against any contra interest (on any market) priced $5.00 or greater (i.e., $5.50 offer minus the $0.50 Trading Collar).
As a further example, the NBBO for XYZ is $1.45 × 200 bid and $2.10 × 200 offer with a $0.05 MPV. If the Exchange receives a market order to buy 100 contracts, the Trading Collar would be $0.25 (pursuant to new section (a)(2)(B)(i)). Accordingly, the order will be displayed at $1.70 (i.e., $1.45 bid plus the $0.25 Trading Collar). For a period of one second, the Exchange will attempt to execute the buy order against any contra interest (on any market) priced $1.95 or less (i.e., $1.70 plus the $0.25 Trading Collar). Under Rule 967NY(a)(4)(C)(iii), at the expiration of one second, the Exchange will attempt to redisplay the market buy order subject to Trade Collar Protection at $1.95 (i.e., $1.70 plus the $0.25 Trading Collar). However, since the $2.10 NBO represents contra interest priced $2.20 or less (i.e. $1.95 plus the $0.25 Trading Collar), the market buy order would execute its 100 contracts against the NBO at $2.10. In comparison, in the same market for XYZ, if the Exchange receives a market order to sell 100 contracts, the Trading Collar would be $0.40 (pursuant to new section (a)(2)(B)(ii)). Accordingly, the Exchange will attempt to display the market sell order at $1.70 (i.e., $2.10 offer minus the $0.40 Trading Collar). However, since the $1.45 NBB represents contra interest priced $1.45 or greater, (i.e. $1.70 minus the $0.25 Trading Collar), the market sell order would execute its 100 contracts against the NBB at $1.45.
The Exchange also proposes to amend Rule 967NY(a) to strike the extraneous term “inbound” from the rule, which could cause confusion as to when Trade Collar Protection is available because the trade collar mechanism continues to apply to resting orders. In addition, the Exchange proposes to delete the reference in 967NY(a)(3) to the cancellation of IOC Orders, AON Orders, FOK Orders and NOW Orders if not immediately executed, as such is not the behavior of AON Orders. The
The statutory basis for the proposed rule change is Section 6(b)(5) of the Securities Exchange Act of 1934 (the “Act”), in general, and furthers the objectives of Section 6(b)(5)
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposal will provide market participants with clarity relating to how the Exchange systems provides protection from anomalous executions. Thus, the Exchange does not believe the proposal creates any significant impact on competition.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 6.60 to enhance the functionality of the trade collar protection mechanism. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange is proposing to amend Rule 6.60(a) to clarify and conform with the functionality of the trade collar protection mechanism in use on the Exchange. The Exchange's amendment is to specify (a) how marketable Limit Orders behave when received in a wide market, (b) how subsequently-arriving Market Orders effect collared orders, and (c) the values associated with a Trading Collar. The Exchange also seeks to make non-substantive wording changes to Rule 6.60(a) and fix a typographical error in Rule 6.37(b)(1)(E).
Pursuant to Rule 6.60(a), the Exchange applies a “Trade Collar Protection” mechanism that prevents the immediate execution of certain orders at prices outside of a specified parameter (referred to as a “Trading Collar”).
Trading Collars are determined by the Exchange on a class-by-class basis and, unless announced otherwise via Trader Update, are the same value as the bid-ask differential guidelines established pursuant to Rule 6.37(b)(1), as set forth in Rule 6.60(a)(2). For example, Rule 6.37(b)(1) sets the bid-ask differential for an option priced less than $2.00 at $0.25. For any option that has a bid less than $2.00, the Trading Collar will be $0.25. Accordingly, if the National Best Bid and Offer (“NBBO”) for XYZ is $0.75 bid and $1.75 offer, certain orders the Exchange receives will be subject to a $0.25 Trading Collar.
Trade Collar Protection applies to two scenarios. First, pursuant to Rule 6.60(a)(1)(i), Trade Collar Protection prevents executions of certain orders when the difference between the National Best Offer (“NBO”) and the National Best Bid (“NBB”) is greater than one Trading Collar. Second, pursuant to Rule 6.60(a)(1)(ii), Trade Collar Protection prevents the execution of the balance of an eligible buy order if it were to execute at a price that is the NBO plus a Trading Collar (or a price that is the NBB minus a Trading Collar for an eligible sell orders).
Pursuant to Rule 6.60(a)(1)(i), if the difference between the NBO and the NBB is greater than one Trading Collar, the Exchange will prevent execution or routing of certain orders. Instead, pursuant to Rule 6.60(a)(4)(A), the Exchange will display the order at a price equal to the NBO minus one Trading Collar for sell orders or the NBB plus one Trading Collar for buy orders (the “collared order”). The Exchange will then attempt to execute or route the collared order to buy (sell) against any contra interest priced within one Trading Collar above (below) the displayed price of the collared order.
The collared order will re-price before the expiration of one second as a result of certain changes in the market. Pursuant to Rule 6.60(a)(4)(C)(i), an update to the NBBO (based on another market center or a quote or order on the Exchange) that improves the same side of the market as the collared order will cause the collared order to be redisplayed at the same price as the updated NBBO. In accordance with Rule 6.60(a)(4)(C)(ii), a Limit Order (which is not an IOC Order, AON Order, FOK Order or NOW Order) on the same side of the market priced better than one Trading Collar from the collared order will also become subject to Trade Collar Protection and will cause the collared order to improve by one Trading Collar (which will redisplay at the new price and additional size of the new Limit Order).
As set forth in Rule 6.60(a)(1)(ii), when the difference between the NBB and NBO is within the bid-ask differential guidelines, orders execute against the NBB or NBO, but Trade Collar Protection prevents execution of the balance of certain order at prices that are a Trading Collar above the NBO for buy orders (or at prices that are a Trading Collar below the NBB for sell orders). Essentially, the Exchange will permit the immediate execution of a Market Order or a marketable Limit Order (together a “marketable order”) up to a Trading Collar away from the NBBO. Pursuant to Rule 6.60(a)(5), the balance of the partially executed order will be subject to Trade Collar Protection and will display at the last sale price. However, if there is an opportunity for trading within one Trading Collar of the last sale price, the order will continue to be displayed at the NBB (NBO) established at the time of the initial execution. Once subject to Trade Collar Protection, the order will follow the re-pricing mechanism described above.
The Exchange seeks to clarify and correct Rule 6.60 so as to conform to current functionality. Pursuant to the language of Rule 6.60(a)(1)(i), the Exchange will prevent the immediately [sic] execution of “Market Orders or marketable Limit Orders” if the width of the bid-ask differential of the NBBO is greater than one Trading Collar. However, during wide market conditions, the Exchange only prevents the immediate execution of Market Orders. Orders with limit prices that are executable against the NBB or NBO, regardless of the width of the bid-ask differential of the NBBO, immediately execute.
The Exchange also seeks to delete 6.60(a)(4)(C)(iv), which states that a Market Order that arrives while another order is being displayed due to Trade Collar Protection will join the collared order and display at the same price. While the Exchange believes this behavior beneficial to the market, it has not yet deployed the functionality. While it intends to incorporate such an enhancement in the near future, the Exchange is deleting (a)(4)(C)(iv) in order for its rules to comply with current functionality. Market Orders that arrive while another order is displayed due to Trade Collar Protection will behave in the same manner as later-arriving marketable Limit Orders. Specifically, the later-arriving Market Order will join the already collared order and both will display at a price one Trading Collar above (below) the previous displayed price. The Exchange intends to make another filing to re-establishing the language of (a)(4)(C)(iv) once the functionality is available.
The Exchange also proposes to amend Rule 6.60(a) to add language that clarifies the current operation of the trading collar mechanism. In particular, the Exchange proposes to delete the reference to Rule 6.37(b)(1) and instead codify the values of the Trading Collar directly in Rule 6.60(a). Rule 6.37(b)(1) sets the bid-ask differentials based exclusively on the bid price. The trading collar mechanism employs the same values for determining the Trading Collar. However, while those values are based upon the NBB for buy orders, the value of the Trading Collar for sell orders is based upon the NBO. The Exchange uses the NBB for buy orders because it believes that a market participant who is looking to buy would derive its price off of what other market participants are willing to pay (i.e. the prevailing bid). Similarly, the Exchange uses the NBO for sell orders because it believes that a market participant who is looking to sell would derive its price off of what other market participants are willing to sell (i.e. the prevailing offer). Accordingly, the Exchange proposes new sections (a)(2)(A) and (a)(2)(B) to Rule 6.60, which specifies the values based upon whether the order subject to Trade Collar Protection is to buy or sell.
As an example, the NBBO for XYZ is $1.00 bid and $6.00 offer. Based upon Rule 6.60's reference to Rule 6.37(b)(1), it could be interpreted that the Trading Collar would be $0.25 regardless of whether the Exchange received an order to buy or sell (based upon the bid being less than $2.00). However, collared sell orders currently derive their Trading Collar and display price from the NBO. Accordingly, a Market Order to buy would display at $1.25 (i.e., the $1.00 NBB plus the $0.25 Trading Collar (based upon the NBB being less than $2.00)) and would attempt to execute against any contra interest (on any market) priced $1.50 or less (i.e., $1.25 bid plus the $0.25 Trading Collar). However, a Market Order to sell would display at $5.50 (i.e., the $6.00 NBO minus the $0.50 Trading Collar (based upon the NBO being more than $5.00 but does not exceed $10.00)) and would attempt to execute against any contra interest (on any market) priced $5.00 or greater (i.e., $5.50 offer minus the $0.50 Trading Collar).
As a further example, the NBBO for XYZ is $1.45 × 200 bid and $2.10 × 200 offer with a $0.05 MPV. If the Exchange receives a market order to buy 100 contracts, the Trading Collar would be $0.25 (pursuant to new section (a)(2)(B)(i)). Accordingly, the order will be displayed at $1.70 (i.e., $1.45 bid plus the $0.25 Trading Collar). For a period of one second, the Exchange will attempt to execute the buy order against any contra interest (on any market) priced $1.95 or less (i.e., $1.70 plus the $0.25 Trading Collar). Under Rule 6.60(a)(4)(C)(iii), at the expiration of one second, the Exchange will attempt to redisplay the market buy order subject to Trade Collar Protection at $1.95 (i.e., $1.70 plus the $0.25 Trading Collar). However, since the $2.10 NBO represents contra interest priced $2.20 or less (i.e. $1.95 plus the $0.25 Trading Collar), the market buy order would execute its 100 contracts against the NBO at $2.10. In comparison, in the same market for XYZ, if the Exchange receives a market order to sell 100 contracts, the Trading Collar would be $0.40 (pursuant to new section (a)(2)(B)(ii)). Accordingly, the Exchange will attempt to display the market sell order at $1.70 (i.e., $2.10 offer minus the $0.40 Trading Collar). However, since the $1.45 NBB represents contra interest priced $1.45 or greater, (i.e. $1.70 minus the $0.25 Trading Collar), the market sell order would execute its 100 contracts against the NBB at $1.45.
The Exchange also proposes to amend Rule 6.60(a) to strike the extraneous term “inbound” from the rule, which could cause confusion as to when Trade Collar Protection is available because the trade collar mechanism continues to apply to resting orders. In addition, the Exchange proposes to delete the reference in 6.60(a)(3) to the cancellation of IOC Orders, AON Orders, FOK Orders and NOW Orders if not immediately executed, as such is not the behavior of AON Orders. The Exchange also proposes to capitalize the term “limit order” as used in Rule
Finally, the Exchange seeks to amend Rule 6.37(b)(1)(E) to rectify a typographical error. Specifically, the rule currently states that the bid-ask differentials should be no more than $1 when the last bid is $20.10 or more. The rule should instead refer to the last bid being $20.01 or more.
The statutory basis for the proposed rule change is Section 6(b)(5) of the Securities Exchange Act of 1934 (the “Act”), in general, and furthers the objectives of Section 6(b)(5)
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes the proposal will provide market participants with clarity relating to how the Exchange systems provides protection from anomalous executions. Thus, the Exchange does not believe the proposal creates any significant impact on competition.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On July 21, 2014, New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange has represented that it does not currently offer the NYSE BQT data feed.
The Exchange proposes to establish the NYSE BQT data feed, a data feed consisting of certain data elements from six existing market data feeds: NYSE Trades, NYSE BBO, NYSE Arca Trades, NYSE Arca BBO, NYSE MKT Trades, and NYSE MKT BBO.
The last sale channel would provide an aggregation of the same data that is available through NYSE Trades, NYSE Arca Trades, and NYSE MKT Trades.
The best quotes channel would provide the “NYSE BQT BBO,” which would be the best quote from among the NYSE BBO, NYSE Arca BBO, and NYSE MKT BBO based on the following criteria, in order:
• Price—the exchange with the highest bid or the lowest offer would have overall priority;
• Size—the largest size would take precedence when multiple exchanges submit the same bid or offer price; and
• Time—the earliest time would take precedence when multiple exchanges submit the same bid or offer price with the same sizes.
For each security, the best quotes channel would only include one best bid and one best offer from among the three exchanges. The NYSE BQT BBO would be marked with a market center ID identifying the exchange from which the BBO originated. For example, if XYZ stock were traded on both NYSE and NYSE Arca, and the highest bid and lowest offer according to the NYSE BBO were 1,000 shares at $10.00 and 1,000 shares at $10.03, respectively, and the highest bid and lowest offer for XYZ stock according to the NYSE Arca BBO were 1,200 shares at $9.99 and 900 shares at $10.02, respectively, then the NYSE BQT data feed would generate the best bid for XYZ stock as 1,000 shares at $10.00 on NYSE and the best offer as 900 shares at $10.02 on NYSE Arca.
The consolidated volume channel would carry consolidated volume for all listed equities, which the Exchange would obtain from the securities information processors and then distribute in a manner consistent with the requirements for redistributing such data as set forth in the securities information processor plans.
The NYSE BQT data feed would also provide related data elements, such as trade and security status updates (e.g., trade corrections and trading halts), that are contained in the NYSE Trades, NYSE Arca Trades, and NYSE MKT Trades feeds.
The Exchange proposes to offer the NYSE BQT data feed through the Exchange's Secure Financial Transaction Infrastructure (“SFTI”) network and market data vendors, as the Exchange does with its other proprietary market data products.
The Exchange has stated that it believes that the NYSE BQT data feed would provide high-quality, comprehensive last sale and BBO data for the Exchange, NYSE Arca, and NYSE MKT in a unified view and would respond to subscriber demand for such a product. The Exchange anticipates that an end user might use the NYSE
While NYSE, NYSE Arca, and NYSE MKT are the exclusive distributors of the six BBO and Trades feeds from which certain data elements would be taken to create the NYSE BQT data feed, the Exchange has stated that NYSE would not be the exclusive distributor of the aggregated and consolidated information that would compose the proposed NYSE BQT data feed. The Exchange has represented that it would not have any unfair advantage over competing vendors with respect to obtaining data from NYSE, NYSE Arca, and NYSE MKT. In recognition that the Exchange is the source of its own market data and is affiliated with NYSE Arca and NYSE MKT, the Exchange has represented that it will continue to make available all of the individual underlying feeds
With respect to latency, the Exchange, NYSE Arca, and NYSE MKT are located in the same data center in Mahwah, New Jersey. The system creating and supporting the proposed NYSE BQT data feed would need to obtain the six underlying data feeds from these three exchanges before it could aggregate and consolidate information to create the NYSE BQT data feed and then distribute it to end users. After creating the NYSE BQT data feed, the Exchange would distribute this data feed through SFTI and market data vendors. The Exchange also offers third parties access to its data center through co-location. Accordingly, a competing market data vendor wishing to offer a product similar to the NYSE BQT data feed would be able to co-locate at the Exchange's Mahwah, New Jersey facility and obtain the six underlying data feeds.
The Exchange has represented that it has designed the NYSE BQT data feed so that it would not have a competitive advantage over a competing vendor with respect to the speed of access to those six underlying data feeds. Likewise, the Exchange has represented that the NYSE BQT data feed would not have a speed advantage vis-à-vis competing vendors co-located in the data center with respect to access to end-user customers, whether those end users are also co-located or not. The Exchange also has represented that the path for distribution by the Exchange of the NYSE BQT data feed would not be faster than that for distribution by a vendor that independently created a product like the NYSE BQT data feed. The Exchange therefore believes that a market data vendor could perform the aggregation and consolidation function in the Mahwah facility and redistribute a competing product from that location to similarly situated customers on a level playing field with respect to the speed that the Exchange could create and redistribute the NYSE BQT data feed.
With respect to cost, the Exchange has stated that it will file a separate rule filing to establish the fees for the NYSE BQT data feed. To ensure that vendors could compete with the Exchange by creating a product with the same content as the NYSE BQT data feed and selling it to their clients, the Exchange has represented that it would charge its clients for the NYSE BQT data feed an amount at least equal to the cost to a market data vendor to subscribe to the six underlying data feeds, plus an additional amount (to be determined) that would reflect the value of the aggregation and consolidation function performed by the Exchange. The Exchange therefore believes that a competing vendor could create and offer a product similar to the proposed NYSE BQT data feed at no material cost disadvantage relative to the Exchange. For these reasons, the Exchange believes that vendors could readily offer a product similar to the NYSE BQT data feed on a competitive basis.
The Exchange has stated that it will announce the effective date of the proposed rule change in a notice to be published as soon as practicable following the approval of the proposed rule change by the Commission. The Exchange anticipates making available the NYSE BQT data feed as soon as practicable after approval of the proposed rule change by the Commission and the effectiveness of a rule filing to establish the fees for the NYSE BQT data feed.
As noted above, the Commission received one comment letter on the proposed rule change, and a letter from the Exchange responding to this commenter.
First, SIFMA notes that the Exchange has argued that, because it intends to offer the NYSE BQT data feed in the capacity of a vendor, it does not believe that its proposed data feed is subject to review under the Act. This commenter cites the statement in the proposal that “the Exchange reserves the right to argue, with respect to the NYSE BQT data feed or any other product, that there is no requirement for a filing under Section 19 of the Act to enable the Exchange to offer such products.” The commenter disagrees with this view and has argued that selling a combination of data feeds for its various platforms does not make the Exchange a “vendor” in a way that negates its statutory obligations as an SRO. The commenter argues that the Exchange, by relying on a false vendor capacity argument, is attempting to trump its obligations as an SRO and make all of its market data distribution unreviewable. The commenter expresses the concern that this would rob the public of the opportunity to comment afforded under the Act and urges the Commission to ensure that such rule changes are in fact filed with the Commission and subject to public comment and Commission review.
In its response, NYSE states that although it has reserved the right to argue at another time that there is no requirement for a filing to offer this market data product, it has in fact filed the proposal with the Commission and has sought the Commission's approval to offer the NYSE BQT data feed.
Second, SIFMA argues that the Exchange has failed to file fees for the proposed NYSE BQT data feed that meet the requirements of the Act, including the requirement that such fees be “fair and reasonable” under Section 11A(c)(1)(C) of the Act. The commenter also states that the Exchange has circumvented the requirement to file these fees by marketing the NYSE BQT data feed product for the past 16 months with promotional materials that contain pricing information. SIFMA also argues that the Exchange's proposed markup for the consolidated feed would apply to any vendor that wanted to create a competing product.
In its response letter, NYSE notes that no data recipients are currently receiving the NYSE BQT data feed and that the Exchange has no plans to offer and charge for the NYSE BQT data feed until the appropriate regulatory process has been completed consistent with the Exchange's obligations under the Act. Furthermore, in Amendment No. 1, NYSE has represented that it would not offer the NYSE BQT data feed until after it has filed fees with the Commission for the NYSE BQT data feed and such fees have become effective. NYSE also states that a competing vendor seeking to create a similar unified feed would not need to pay for the NYSE BQT data feed, but would only need to pay for the six underlying feeds. The Exchange has also represented that it would continue to make available all of the individual underlying feeds.
Finally, SIFMA disputes the Exchange's assertion that it is not the exclusive distributor of the NYSE BQT data feed. The commenter argues that the Exchange's vendor contract appears to restrict competition by providing the Exchange with “sole discretion” over the data, particularly with respect to the indirect access service permission that would apply to a competing vendor. The commenter further notes that the contract explicitly prohibits any re-dissemination or other use of its market data. NYSE responds by asserting that the Exchange, NYSE MKT, and NYSE Arca do not contractually restrict vendors from using the underlying data feeds and notes that vendors currently consolidate data products offered by these exchanges, which is permitted under the vendor agreements related to the receipt of market data.
After carefully considering the proposal and the comments submitted, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission notes that, to create the NYSE BQT data feed, the Exchange would use underlying data feeds that belong to the Exchange (NYSE BBO and NYSE Trades) and underlying data feeds that belong to its affiliated exchanges, NYSE Arca and NYSE MKT (NYSE Arca BBO, NYSE Arca Trades, NYSE MKT BBO, and NYSE MKT Trades). Accordingly, the Commission's review of the Exchange's proposal has focused, in particular, on whether the proposal would result in affiliated exchanges—which are separate self-regulatory organizations under the Act—making their data products or services available to one another at terms (e.g., content, pricing, or latency) that are more favorable than those available to unaffiliated market participants.
The Exchange has represented that the NYSE BQT data feed would be created using underlying data feeds that are available for subscription by market participants. In addition, the Exchange has represented that, as the creator and distributor of the NYSE BQT data feed, it would receive the underlying data feeds from its own systems and from NYSE Arca and NYSE MKT with no latency advantage compared to a competing vendor that wishes to acquire the component feeds in order to offer a competing consolidated data feed. The Exchange, NYSE Arca, and NYSE MKT are located in the same data center in Mahwah, New Jersey, which would be the point at which the Exchange would receive the six underlying data feeds before then aggregating the data to create the NYSE BQT data feed. The Exchange has represented that it offers third parties access to this data center through co-location and that co-located vendors could obtain the same underlying feeds there.
With respect to pricing, although specific fees to be charged for the NYSE BQT data feed are not part of the Exchange's proposal, the Exchange has represented that it will assess a fee that is at least equal to the aggregate cost of the underlying feeds (i.e., at least as much as the cost to a vendor of subscribing to each of the underlying data feeds), plus an additional amount (to be determined) that would reflect the value of the aggregation and consolidation function performed to create the NYSE BQT data feed.
SIFMA has also argued that the Exchange has been actively marketing NYSE BQT for months. The Commission notes, however, that the Exchange has represented that it has not been offering NYSE BQT and that it will not offer this product until fees for it have been filed with the Commission and have become effective.
Based on the Exchange's representations with respect to the content, latency, and pricing of the NYSE BQT data feed—which are central to the Commission's analysis of the proposal—the Commission finds that the Exchange's proposal is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange. The Commission believes that these representations are designed to ensure that NYSE, NYSE Arca, and NYSE MKT, which are separate self-regulatory organizations, do not, because of their relationship as affiliates, offer one another products or services on a more favorable basis than that available to other competing market participants.
Finally, the Commission notes that SIFMA has objected to the Exchange's characterization of the NYSE BQT data feed as being part of the Exchange's vendor function and outside of the scope of the rule filing process of Section 19(b) of the Act. The Commission believes that a data feed offered by an exchange that contains that exchange's own market data (including a feed that also contains data from other exchanges) is a “material aspect of the operation of the facilities of the self-regulatory organization,” and that therefore, such a data product and any related fees are subject to the rule filing process of Section 19(b) of the Act.
For the foregoing reasons, the Commission finds that the proposed rule change, as amended, is consistent with Section 11A(c)(1)(C) of the Act and Rule 603(a)(2) of Regulation NMS thereunder,
Amendment No. 1 revised the proposal to (i) remove language proposing specific fee amounts for the NYSE BQT data feed, (ii) clarify that the Exchange intends to propose fees that would be no lower than the cost to a vendor of creating a comparable product, including the costs of the underlying feeds, and (ii) represent that the Exchange will not offer the NYSE BQT data feed until after the proposal has been approved by the Commission, the Exchange has filed fees for the NYSE BQT data feed with the Commission, and such fees have become effective. Accordingly, the Commission does not believe that Amendment No. 1 raises any novel regulatory issues and therefore finds that good cause exists to approve the proposal, as modified by Amendment No. 1, on an accelerated basis.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 to the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On April 7, 2014, The NASDAQ Stock Market LLC (“Nasdaq” or the “Exchange”) filed with the Securities and Exchange Commission (“Commission”) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing with the Commission a proposal to amend NASDAQ OMX PSX (“PSX”)
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this filing is to correct two typographical errors in PSX Rule 3315(d) in which references were made to a NASDAQ rule rather than the PSX rule itself, and thereby clarify and conform Exchange rules pertaining to error accounts in respect of order routing.
Order routing is currently discussed in PSX Rule 3315. Subsection (d)(2) deals with the maintenance and use of an error account when routing. PSX Rule 3315 was adopted
The Exchange is now proposing to correct these two typographical errors. The Exchange is thus substituting the current references to NASDAQ Rule 4758 in subsections (d)(2)(A) and (d)(2)(B) of PSX Rule 3315 with the correct references to PSX Rule 3315. There are no other changes.
The proposed non-substantive change substituting an improper rule reference is done to clarify the order routing rules and eliminate potential confusion, to the benefit of market participants.
Phlx believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
Phlx does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of purposes of the Act. The Exchange believes that while rule clarity is generally pro-competitive, the act of clarifying and conforming the two non-substantive typographical errors should have little, if any, impact on competition.
No written comments were either solicited or received.
Because the proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)of the Act
A proposed rule change filed under Rule 19b–4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–PHLX–2014–67 and should be submitted on or before December 4, 2014.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend the NYSE Amex Options Fee Schedule (“Fee Schedule”) to add a service fee for certain post-trade adjustments performed by the Exchange. The Exchange proposes to implement the fee
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend the Fee Schedule to add a service fee for certain post-trade adjustments performed by the Exchange (the “Service Fee”). The Exchange proposes to implement the Service Fee effective December 1, 2014. As described below, the proposed Service Fee would apply to certain post-trade adjustments performed by Exchange staff. The purpose of the proposed Service Fee is to ensure a fair and reasonable use of Exchange resources by allowing the Exchange to recoup for valuable employee time and resources expended on these post-trade adjustments that may also be self-executed by ATP Holders. In addition, the Exchange believes that the proposed Service Fee would incentivize ATP Holders to process their own post-trade adjustments going forward.
In an effort to conserve Exchange resources, the Exchange has provided ATP Holders with the functionality to perform certain of their own post-trade adjustments. Specifically, ATP Holders may perform post-trade adjustments on their side of the trade that do not affect the contractual terms of a transaction. For example, ATP Holders may currently make the following non-contractual post-trade adjustments without Exchange interaction: changing the position indicator (
Notwithstanding the availability of functionality for ATP Holders to perform this function themselves, ATP Holders still send the Exchange a significant number of requests, on a daily basis, to perform these straightforward Post-Trade Adjustments on the ATP Holders' behalf. The Exchange uses its best efforts to respond to these requests by ATP Holders in a timely manner. While the Exchange is committed to delivering a certain level of customer service to its ATP Holders, it believes that performing the Post-Trade Adjustments free of charge results in the diversion of valuable Exchange time and resources in a manner that is not a [sic] fair and equitable to either the Exchange or, ultimately the ATP Holders.
Thus, to help offset the costs of having Exchange staff process Post-Trade Adjustments on behalf of ATP Holders, the Exchange is proposing a $5.00 Service Fee, per trade adjusted. The Post-Trade Adjustments that would be subject to the proposed Service Fee would be only those Post-Trade Adjustments that do not affect the contractual terms of a transaction and that are performed by the Exchange on behalf of ATP Holders when the ATP Holders could otherwise enter the Post-Trade Adjustments on their own behalf.
The $5.00 Service Fee would apply to each trade adjusted, not to each non-contractual change that the Exchange is requested to make to a given trade.
The Exchange is proposing to discount the $5.00 fee to $1.00 per trade adjusted for the first three months that the Service Fee is operative (
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the Service Fee is reasonable, equitable and not unfairly discriminatory because it is designed to ensure a fair and reasonable use of Exchange resources by allowing the Exchange to recoup for valuable employee time and resources expended on the Post-Trade Adjustments. The Exchange believes that imposing this $5.00 fee per trade adjusted would reasonably compensate the Exchange for the resources diverted to the Post-Trade Adjustments (
Moreover, the Exchange believes that the Service Fee would promote a fair
The Exchange believes that the Service Fee is reasonable, equitable and not unfairly discriminatory because ATP Holders would have the option, as they do today, to perform the Post-Trade Adjustments themselves and the Service Fee would only apply if ATP Holders elected to rely on the Exchange to perform these adjustments for them. Moreover, the Service Fee would apply equally to all market participants who opt to rely on the Exchange to perform the Post-Trade Adjustments. In fact, the Exchange believes that the proposed Service Fee would incentivize ATP Holders to process their own Post-Trade Adjustments going forward.
Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange's statement regarding the burden on competition.
In accordance with Section 6(b)(8) of the Act,
The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues, and imposing the Service Fee may enable the Exchange to improve efficiency and ensure the fair and reasonable use of Exchange resources. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed Service Fee reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On September 10, 2014, NASDAQ OMX PHLX LLC (“Phlx” or “Exchange”) filed with the Securities and Exchange Commission (the “Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”)
The Exchange proposes to adopt Phlx Rule 1080.08(f)(iii)(C) relating to the generation and execution of “legging orders.” Under the proposal, a legging order is a limit order on the regular order book in an individual series that represents one leg of a two-legged complex order (which improves the cPBBO)
The Exchange proposes that legging orders may be automatically generated on behalf of Complex Orders resting on the top of the CBOOK so that they are represented at the best bid and/or offer on the Exchange for the individual legs.
To determine whether a Legging Order may be generated, the Exchange proposes to evaluate the CBOOK when a Complex Order enters the CBOOK and at a regular time interval to be determined by the Exchange (which interval shall not exceed 1 second) following a change in the National Best Bid/Offer (“NBBO”) or PBBO in any component of a complex order eligible to generate legging orders to determine whether legging orders may be generated.
The Exchange proposes to adopt Phlx Rule 1080.08(f)(iii)(C)(2) to provide that legging orders will not be generated if: (i) The price of the legging order would lock or cross the best bid or offer of another exchange; (ii) there is an auction on either side of the market in the series or a “Posting Period” under Phlx Rule 1080(p) regarding “Acceptable Trade Range” on the same side in progress in the series; (iii) the price of the complex order is outside of the Acceptable Complex Execution (“ACE”) Parameter under Phlx Rule 1080.08(i); (iv) there is already a legging order in that series on the same side of the market at the same price (unless it has priority based on the participant type, under existing Exchange rules); (v) the complex order is an all-or-none order; or (vi) the generated legging order for a complex order would immediately cause resting legging orders to be removed pursuant to section proposed Phlx Rule 1080.08(f)(iii)(C)(4)(ix).
The Exchange proposes that it may limit the number of legging orders generated on an objective basis and may remove existing legging orders to maintain a fair and orderly market in time of extreme volatility or uncertainty.
The Exchange proposes that legging orders would be executed only after all other executable orders (including any non-displayed size) and quotes at the same price are executed in full pursuant to the Phlx priority rules applicable to Phlx XL non-Complex Orders, rather than based on the time of receipt of the Complex Order.
Phlx believes that legging orders will provide additional execution opportunities for complex orders without negatively impacting investors
The Exchange proposes to adopt Phlx Rule 1080.08(f)(iii)(C)(4) to provide that a legging order will be removed from the Exchange's regular limit order book automatically if: (i) The price of the legging order is no longer at the Exchange's displayed best bid or offer on the regular limit order book; (ii) execution of the legging order would no longer achieve the net price of the complex order when the other leg is executed against the Exchange's best displayed bid or offer on the regular limit order book (other than another legging order); (iii) the complex order is executed in full or in part; (iv) the complex order is cancelled or modified; (v) the price of the complex order is outside of the ACE Parameter of Phlx Rule 1080.08(i); (vi) the Exchange receives a Qualified Contingent Cross Order
Finally, the Exchange proposes to implement the proposed rule change within 30 days of approval by the Commission, and represents that it will notify Exchange members of implementation by issuing an Options Trader Alert.
After careful review, the Commission finds that the proposed rule change, as modified by Amendment No. 1, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission believes that legging orders could facilitate the execution of complex orders resting on the Exchange's CBOOK by increasing the opportunities for eligible complex orders to execute against interest in the regular market on the Exchange's regular order book, thereby benefitting investors seeking to execute complex orders. In addition, the Commission believes that legging orders could benefit participants in the regular market by providing additional liquidity, and potentially more favorable executions, for regular market interest. The Commission notes that it previously approved proposals by other options exchanges to implement legging orders.
Under the proposal, legging orders will be firm orders that represent one leg of a two-legged complex order involving a one-to-one ratio resting on the top of the CBOOK.
As noted above, the Exchange represents that it will carefully manage and curtail the number of legging orders being generated so that they do not negatively impact system capacity and performance.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
The Commission finds good cause for approving the proposed rule change, as amended by Amendment No. 1, prior to the 30th day after the date of publication of notice in the
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
NASDAQ proposes to add specificity to the Exchange's options trading rules. The NASDAQ Options Market (“NOM”) is Nasdaq's facility for executing and routing standardized equity and index options. The Exchange proposes to define cancel-replacement orders and also describe a route timer in Chapter VI, entitled “Trading Systems.”
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange is proposing to amend Chapter VI to add additional specificity to its rules. The Exchange proposes to amend Section 1, Definitions, to define a cancel- replacement order. The Exchange proposes to amend Section 11, Order Routing, to add greater specificity to the Rulebook concerning a route timer.
A market participant today has the option of either sending in a cancel order and then separately sending in a new order which serves as a replacement of the original order (two separate messages) or sending a single cancel-replacement order in one message.
If an order is submitted to the System and then subsequently a cancel order is sent to the System cancelling the original order, the original order will be cancelled by the System provided the original order was not already filled partially or in its entirety. A subsequent replacement order would be treated as a new order by the System and will not retain the priority of the cancelled order.
An order that is entered as one single message (“cancel-replacement order”)
By way of example, if the original order is for 600 contracts and a market participant submits a cancel-replacement order for 600 contracts and in doing so, amends a term or condition such as the order type, presuming the original order was not filled in its entirety or partially, the entire original order would be cancelled. If the original order is for 600 contracts and a market participant submits a cancel-replacement order for 600 contracts and in doing so, amends a term or condition such as the order type, and 600 contracts were already filled, the cancel-replacement order would be returned to the market participant. If the original order is for 600 contracts and a market participant submits a cancel-replacement order for 600 contracts and in doing so, amends a term or condition such as the order type, and 300 contracts were already filled, the order would be modified to 300 contracts. Finally, if the original order is for 600 contracts and a market participant submits a cancel-replacement order solely reducing the size of the order by 300 contracts, the order would be modified to 300 contracts and the original order would retain its priority. In the previous examples provided, the orders would not retain the priority of the original orders.
The Exchange proposes to add the following definition in Chapter VI, Section 1, “Cancel-replacement order shall mean a single message for the immediate cancellation of a previously received order and the replacement of that order with a new order with new terms and conditions. If the previously placed order is already filled partially or in its entirety, the replacement order is automatically canceled or reduced by the number of contracts that were executed. The replacement order will not retain the priority of the cancelled order except when the replacement order reduces the size of the order and all other terms and conditions are retained.” This language is being added to Section 1(e)(1) to reflect the manner in which cancel-replacement orders function today. This filing does not reflect a change to the System; rather, the Exchange is memorializing in its rules the manner in which cancel-replacement orders are treated today.
Today, the System provides a number of routing options pursuant to which orders are sent to other available market centers for potential execution, per the entering market participant's instructions.
The Exchange proposes to add language in a new Section 11(a)(1)(C) to specify that after an order is initially routed,
This language is being added to Section 11 to reflect the manner in which the Exchange imposes a Route Timer on routed orders today to permit quote updates to occur prior to subsequent routing. This filing does not reflect a change to the System, rather the Exchange is memorializing in its rules the manner in which orders are routed today.
The Exchange also proposes to amend rule text in Section 11(a)(1)(A) of Chapter VI concerning the SEEK routing option. The Exchange proposes to add language which clarifies the differences between SEEK and SRCH routing options with respect to contracts that remain un-executed after routing and are posted on the book. The Exchange proposes to state, “Once on the book
The Exchange also proposes to correct a typographical error in Chapter VI, Section 11(a)(1).
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange believes that its proposal to define cancel-replacement orders will add transparency to the rules. The Exchange is not amending the manner in which the System handles these orders. The Exchange is memorializing, in its rules, the method by which orders are handled by the System. The Exchange is defining cancel-replacement orders within Chapter VI, Section 1.
Specifically, with respect to cancel-replacement orders that reduce size, the Exchange believes that allowing cancel-replacement orders where only size is reduced to retain the priority of the original order is consistent with the manner in which the Exchange treats partially executed orders, which similarly apply the priority of the executed portion of the order to the remaining portion of the order. In addition, by permitting market participants' orders to remain on the book with the original priority and reduced size, the Exchange is providing market participants an ability to reduce exposure. The Exchange believes that adding transparency and specificity to the Rules protects investors and the public interest by reducing the potential for investor confusion.
The Exchange is also memorializing the manner in which the Exchange routes unexecuted portions of an order that will be subsequently routed to other markets when it comes back and subsequently locks and/or crosses the market. The Exchange will continue to re-route eligible unexecuted orders pursuant to a Route Timer. Contracts which remain unexecuted will be posted to the book provided the order's limit price would not lock or cross the ABBO. Specifically, the Exchange is describing the Route Timer that applies to eligible unexecuted portions of an order which will be subsequently routed. The timer protects investors and the public interest by providing a brief time period to allow the opportunity for markets to update quotes prior to subsequent routes.
The Exchange seeks to add language concerning the specific manner in which the Exchange will handle the routed order by specifying the routing methods in which SEEK or SRCH orders will route to the away market(s). The Exchange is adding clarifying language to make clear that after an order is initially routed, pursuant to either the SEEK or SRCH routing option, the order will post to the book and will be routed after a time period (“Route Timer”) not to exceed one second as specified by the Exchange on its Web site provided that the order would lock or cross other market center(s). If, during the Route Timer, any new interest arrives opposite the order that is equal to or better than the ABBO price, the order will trade against such new interest at the ABBO price. Eligible unexecuted orders will be routed at the end of the Route Timer provided the order was not filled and it would continue to lock or cross the ABBO. If an order was routed with either the SEEK or SRCH routing option, and has size after such routing, it will execute against contra side interest in the book, post in the book, and route again pursuant to the process described above, if applicable, if the order would lock or cross another market center(s).
Further, the proposal to amend rule text in Section 11(a)(1)(A) of Chapter VI concerning SEEK orders clarifies the differences between SEEK and SRCH routing options with respect to contracts that remain un-executed after routing and are posted on the book. The Exchange seeks to clearly note that once an order routed pursuant to the SEEK routing option is on the order book at the limit price, it will not route, despite the order locking or crossing another market center. The Exchange believes this language more clearly differentiates an order routed pursuant to the SEEK routing option as compared to SRCH routing option.
The Exchange believes this language adds specificity and detail to the rule text so that market participants may anticipate the manner in which orders are handled by the Exchange when routing. The Exchange believes that adding transparency and specificity to the Rules protects investors and the public interest by reducing the potential for investor confusion.
The Exchange's proposal is intended to provide additional specificity to the rules in the manner in which the System treats cancel-replacement orders and handles routing of eligible unexecuted portions of previously routed orders, which is designed to promote just and equitable principles of trade.
The Exchange is not proposing to amend the manner in which the System operates. Cancel-replacement orders have been treated in this fashion since NOM was first launched. Further, the Routing Timer for subsequent routes has also been in place on NOM since its launch. The Exchange is proposing these additions to the rules in order to provide greater specificity to the Exchange's rules.
Nasdaq does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange is seeking to provide greater transparency in its rules. The amendments are non-substantive and would apply to all market participants in the same manner. Permitting cancel-replacement orders to retain their original priority does not impose a burden on competition because the priority is retained only in the instance that size alone is changed and only if it is reduced. Permitting all market participants to reduce their exposure without penalty does not burden competition, rather it promotes competition by allowing participants the ability to change their orders in a changing market, provided the order was not already partially filled or filled in its entirety.
No Written comments were neither solicited nor received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. The Exchange has provided the Commission
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to modify Section V entitled “Routing Fees” of the NASDAQ OMX Phlx LLC Pricing Schedule (“Pricing Schedule”). Specifically, the Exchange proposes to modify Section V entitled “Routing Fees” of the Phlx Pricing Schedule (“Pricing Schedule”). Specifically, the Exchange proposes to amend its Routing Fees, and to allow aggregation of Customer
While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on November 3, 2014.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this filing is to amend the Routing Fees in Section V of the Pricing Schedule in order to recoup costs incurred by the Exchange to route orders to away markets, and to allow members and member organizations to aggregate their Customer volume for calculating discount thresholds and receiving discounted routing fees.
Today, the Exchange assesses a Non-Customer a $0.97 per contract Routing Fee to any options exchange for routing an order. The Customer Routing Fee for option orders routed to The NASDAQ Options Market, LLC (“NOM”) is a $0.12 per contract Fixed Fee (“Fixed Fee”) in addition to the actual transaction fee assessed. The Customer Routing Fee for option orders routed to NASDAQ OMX BX, Inc. (“BX Options”) is $0.12 per contract. The Customer Routing Fee for option orders routed to all other options exchanges
With respect to the fixed costs, the Exchange incurs a fee when it utilizes
The Exchange is proposing to increase its Non-Customer Routing Fees from $0.97 to $0.99 per contract to any options exchange. The Exchange is proposing to increase its Customer Routing Fixed Fees to NOM from $0.12 to $0.13 per contract, in addition to the actual transaction fee assessed to recoup an additional portion of the costs incurred by the Exchange for routing these orders. The Exchange is proposing to increase its Customer Routing Fixed Fees to BX Options from $0.12 to $0.13 per contract. The Exchange is proposing to increase its Customer Routing Fixed Fees to all other options exchanges (excluding NOM and BX Options) from $0.22 to $0.23 per contract, in addition to actual transaction fees assessed. The Exchange would also increase the Customer Routing Fee to all other options exchanges if the away market pays a rebate from a fee of $0.12 to $0.13 per contract, because the Exchange would continue to retain the rebate to offset the cost to route orders to offset the cost to route orders to these away markets. The Exchange desires to recoup additional costs at this time.
Today, a member organization that: (1) Qualifies for a Tier 2, 3, 4 or 5 rebate in the Customer Rebate Program in Section B of the Pricing Schedule; and (2) routes away more than 5,000 Customer contracts per day in a given month to an away market (together the “Customer Rebate requirements”)
The Exchange is proposing to add language to Section V stating that members and member organizations under Common Ownership
The proposal allows the Exchange to continue attracting liquidity to Phlx while recouping costs incurred by the Exchange to route orders to away markets.
The Exchange believes that its proposal to amend the Pricing Schedule is consistent with Section 6(b) of the Act
The Exchange believes that amending the Non-Customer Routing Fee for orders routed to any options exchange from a fee of $0.97 to $0.99 per contract, is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing Non-Customer orders. The Exchange is proposing to increase the Fixed Fee to recoup additional costs that are incurred by the Exchange in connection with routing these orders on behalf of its members.
The Exchange believes that amending the Customer Routing Fee for orders routed to NOM from a Fixed Fee of $0.12 to $0.13 per contract, in addition to the actual transaction fee, is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing Customer orders to NOM. Today, the Exchange assesses orders routed to NOM a lower Fixed Fee for routing Customer orders as compared to the Fixed Fee assessed to other options exchanges. The Exchange is proposing to increase the Fixed Fee to recoup additional costs that are incurred by the Exchange in connection with routing these orders on behalf of its members.
The Exchange believes that amending the Customer Routing Fee for orders routed to BX Options from a Fixed Fee of $0.12 to $0.13 per contract is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing Customer orders to BX Options, similar to the amount of Fixed Fee it proposes to assess for orders routed to NOM. The Exchange is proposing to assess a Fixed Fee to recoup additional costs that are incurred by the Exchange in connection with routing these orders on behalf of its members. While the Exchange would continue to retain any rebate paid by BX Options,
The Exchange believes that continuing to assess lower Fixed Fees to route Customer orders to NOM and BX Options, as compared to other options exchanges, is reasonable as the Exchange is able to leverage certain infrastructure to offer those markets
Moreover, the Exchange believes that amending the Customer Routing Fee to other away markets, other than NOM and BX Options, if the away market pays a rebate, from $0.12 to $0.13 per contract is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing Customer orders to away markets, similar to the amount of Fixed Fee it proposes to assess for orders routed to NOM and BX Options. The Exchange is proposing to assess a Fixed Fee to recoup additional costs that are incurred by the Exchange in connection with routing these orders on behalf of its members. While the Exchange would continue to retain any rebate paid by away markets, the Exchange does not assess the actual transaction fee that is charged by away markets for Customer orders.
The Exchange believes that amending the Non-Customer Routing Fee for orders routed to any options exchange from a fee of $0.97 to $0.99 per contract, is equitable and not unfairly discriminatory because the Exchange would assess the same $0.99 per contract fee to all market participants utilizing routing for Non-Customer orders.
The Exchange believes that amending the Customer Routing Fee for orders routed to NOM from a Fixed Fee of $0.12 to $0.13 per contract, in addition to the actual transaction fee, is equitable and not unfairly discriminatory because the Exchange would assess the same Fixed Fee to all orders routed to NOM in addition to the transaction fee assessed by that market.
The Exchange believes that increasing the Customer Routing Fee for orders routed to BX Options from a Fixed Fee from $0.12 to $0.13 per contract is equitable and not unfairly discriminatory because the Exchange would uniformly increase the Fixed Fee, similar to NOM, for all orders routed to BX Options and would continue to uniformly not assess the actual transaction fee, as is the case today.
The Exchange would uniformly assess a $0.13 per contract Fixed Fee to orders routed to NASDAQ OMX exchanges because the Exchange is passing along the saving realized by leveraging NASDAQ OMX's infrastructure and scale to market participants when those orders are routed to NOM or BX Options and is providing those saving to all market participants. Furthermore, it is important to note that when orders are routed to an away market they are routed based on price first.
The Exchange believes that amending the Customer Routing Fee to other away markets, other than NOM and BX Options, in the instance the away market does not pay a rebate from a Fixed Fee of $0.22 to $0.23 per contract is equitable and not unfairly discriminatory because the Exchange would assess the same Fixed Fee to all orders routed to away markets other than NOM and BX Options in addition to the transaction fee. The Exchange's proposal to increase the Customer Routing Fee to all other options exchanges that pay a rebate, other than NOM and BX Options, from $0.12 to $0.13 per contract is equitable and not unfairly discriminatory because the Exchange would assess the same Fixed Fee that is proposed when routing Customer orders to a NASDAQ OMX exchange. All market participants that route an order to an away market, other than NOM or BX Options, would be assessed a uniform fee of $0.13 per contract if the away market (non-NASDAQ OMX exchange) pays a rebate. These proposals would apply uniformly to all market participants when routing to an away market that pays a rebate, other than NOM and BX Options.
In addition, market participants may submit orders to the Exchange as ineligible for routing or “DNR” to avoid Routing Fees.
Finally, the Exchange believes that the added aggregation language regarding members and member organizations under Common Ownership is reasonable because the Exchange desires to attract liquidity. The added language is equitable and not unfairly discriminatory because it would apply to all members and member organizations uniformly. The Customer Rebate requirements regarding Tier and volume remain in place. However, all members and member organizations that are under Common Ownership will have the ability to aggregate their Customer volume for the purpose of calculating discount thresholds and receiving discounted routing fees. The Exchange will apply the aggregation language to all members and member organizations in a uniform manner.
The proposal allows the Exchange to continue attracting liquidity to Phlx while recouping costs incurred by the Exchange to route orders to away markets.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposal creates a burden on intra-market competition because the Exchange is applying the same Routing Fees to all market participants in the same manner dependent on the routing venue, with the exception of Customers. The Exchange will continue to assess separate Customer Routing Fees. Customers will continue to receive the lowest fees as compared to non-Customers when routing orders, as is the case today. Other options exchanges also assess lower Routing Fees for customer orders as compared to non-customer orders.
The Exchange's proposal would allow the Exchange to continue to recoup its costs when routing Customer orders to NOM or BX Options as well as away markets that pay a rebate when such orders are designated as available for routing by the market participant. The Exchange continues to pass along savings realized by leveraging NASDAQ OMX's infrastructure and scale to market participants when Customer orders are routed to NOM and BX Options and is providing those savings to all market participants. Today, other options exchanges also assess fixed routing fees to recoup costs incurred by the exchange to route orders to away markets.
The Exchange is seeking to encourage market participants to transact a greater number of Customer orders on Phlx, which liquidity benefits all market participants. Customer liquidity benefits all market participants by providing more trading opportunities, which attracts specialists and other market makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. In addition, the credit toward Customer Routing Fees is in addition to the Customer rebate received for the qualifying Customer Rebate Tier.
No written comments were either solicited or received.
Pursuant to Section 19(b)(3)(A)(ii) of the Act,
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend NYSE rules concerning supervision to harmonize the rules with certain Financial Industry Regulatory Authority, Inc. (“FINRA”) rules and make other conforming changes. The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend its rules concerning supervision to harmonize the rules with certain FINRA rules and make other conforming changes. Set forth below are descriptions of the harmonization process, the current NYSE rules, and the proposed NYSE rules. Specifically, the Exchange proposes to: (1) Adopt new rule text that is substantially similar to FINRA Rules 3110, 3120, 3150, and 3170; (2) delete Rule 342 and related Rule Interpretations (except for certain text in Rule 342.13 and related Rule Interpretation regarding qualifications and exam requirements for individuals with supervisory responsibilities), Rule 351(e) and related Rule Interpretations, Rule 354, Rule 401, and Rule 401A; and (3) make other conforming changes.
On July 30, 2007, FINRA's predecessor, the National Association of Securities Dealers, Inc. (“NASD”), and NYSE Regulation, Inc. (“NYSER”) consolidated their member firm regulation operations into a combined organization, FINRA. Pursuant to Rule 17d–2 under the Act,
As part of its effort to reduce regulatory duplication and relieve firms that are members of FINRA, the Exchange, and NYSE MKT of conflicting or unnecessary regulatory burdens, FINRA is now engaged in the process of reviewing and amending the NASD and FINRA Incorporated NYSE Rules in order to create a consolidated FINRA rulebook.
FINRA recently harmonized NASD and FINRA Incorporated NYSE Rules and interpretations concerning supervision. More particularly, FINRA: (1) Adopted FINRA Rules 3110 and 3120 to largely replace NASD Rules 3010 and 3012, respectively; (2) incorporated into FINRA Rule 3110 and its supplementary material the requirements of NASD IM–1000–4, NASD IM–3010–1, FINRA Incorporated NYSE Rule 401A, and FINRA Incorporated NYSE Rule 342.21; (3) replaced NASD Rule 3010(b)(2) with new FINRA Rule 3170; (4) replaced NASD Rule 3110(i) with new FINRA Rule 3150; and (5) deleted the following FINRA Incorporated NYSE Rules and NYSE Rule Interpretations: (i) NYSE Rule 342 and related NYSE Rule Interpretations; (ii) NYSE Rule 343 and related NYSE Rule Interpretations; (iii) NYSE Rule 351(e) and related NYSE Rule Interpretation; (iv) NYSE Rule 354; (v) NYSE Rule 401; and (vi) NYSE Rule 401A.
FINRA has announced that the effective date for the rule change will be December 1, 2014. The Exchange proposes to make its proposed rule change effective on the same date as FINRA, and will announce the effective date via an Information Memo.
Rule 342(a) requires each office, department or business activity of a member or member organization (including foreign incorporated branch offices) to be under the supervision and control of the member or member
Rule 342(b) provides that the general partners or directors of each member organization must provide for appropriate supervisory control and must designate a general partner or principal executive to assume overall authority and responsibility for internal supervision and control of the organization and compliance with securities' laws and regulations. This person must:
• Delegate to qualified principals or employees responsibility and authority for supervision and control of each office, department or business activity, and provide for appropriate procedures of supervision and control; and
• Establish a separate system of follow-up and review to determine that the delegated authority and responsibility is being properly exercised.
Rule 342(c) provides that a member organization must provide notice to the Exchange of each branch office established by such member organization.
Rule 342(d) provides that qualified persons acceptable to the Exchange must be in charge of:
• Any office of a member or member organization;
• Any regional or other group of offices; and
• Any sales department or activity.
Rule 342(e) provides that the amounts and types of credit extended by a member organization must be supervised by members or principal executives qualified by experience for such control in the types of business in which the member organization extends credit.
Supplementary Materials 342.10-.30 provide additional guidance relating to the definition of branch offices, annual fees, foreign branch offices, the acceptability of supervisors, the experience of senior management, small offices, the supervision of registered representatives, the review of communications with the public, bookkeeping, the supervision of producing managers, information requests, trade review and investigation, the definition of related financial instrument, internal controls, annual branch office inspection, risk-based surveillance and branch office identification, criteria for inspection programs, and annual reports and certifications. The related Rule 342 Interpretations provide further guidance relating to the foregoing.
Rule 351(e) provides that each member not associated with a member organization and a principal executive of each member organization must take one or both of the following two actions in relation to the trades that are subject to the review procedures required by Rule 342.21(a):
• Sign a written statement in the form specified in the rule and deliver it to the Exchange by the 15th day of the month following the calendar quarter in which the trade occurred.
• As to any such trade that is the subject of an internal investigation pursuant to Rule 342.21(b), but has not been both resolved and included in the written statement, report in writing to the Exchange:
• The commencement of the internal investigation, the identity of the trade, and the reason why the trade could not be the subject of the written statement (report by the 15th day of the month, following the calendar quarter in which the trade occurred);
• the quarterly progress of each open investigation (report by the 15th day of the month following the quarter); and
• the completion of the investigation, detailing the methodology and results of the investigation, any internal disciplinary action taken, and any referral of the matter to the Exchange, another self-regulatory organization (“SRO”), the Commission or another Federal agency, and including, where no internal disciplinary action has been taken and no such referral has been made, a written statement in relation to the trade in the form specified below (report within one week after completion of the investigation).
Rule 351(e) also provides that when a statement pertains to one or more trades that have been the subject of an internal investigation pursuant to Rule 342.21(b) but as to which no internal disciplinary action has been taken and no referral of the matter to the Exchange, another SRO, or a Federal agency has been made, the written statement must also refer to the particular trade(s) (rather than to the trades of a particular calendar quarter) and must omit the clause excepting trades reported as the subject of an investigation. The related Rule 351 Interpretations provide additional guidance relating to the foregoing.
Rule 354(a) provides that, by April 1 of each year, each member organization must submit a copy of its Rule 342.30 annual report on supervision and compliance to its control person(s) or, if the member organization has no control person, to the audit committee of its Board of Directors or its equivalent committee or group. In the case of a control person that is an organization (a “controlling organization”), the member organization must submit the report to the general counsel of the controlling organization and to the audit committee of the controlling organization's Board of Directors or its equivalent committee or group.
Rule 354(b) provides that, for the purpose of Rule 354(a), “control person” means a person who controls the member organization within the meaning of Rule 2 otherwise than solely by virtue of being a director, general partner, or principal executive (or person occupying a similar status or performing similar functions) of the member organization.
Rule 401(b) provides that each member and member organization must maintain written policies and procedures, administered pursuant to the internal control requirements prescribed under Rule 342.23, specifically with respect to the following activities:
• Transmittals of funds (
• From customer accounts to third party accounts (
• from customer accounts to outside entities (
• from customer accounts to locations other than a customer's primary residence (
• between customers and registered representatives (including the hand-delivery of checks).
• Customer changes of address.
• Customer changes of investment objectives.
The policies and procedures required under Rule 401(b)(1), (2), and (3) must include a means/method of customer confirmation, notification, or follow-up that can be documented.
Rule 401A(a) provides that, for every customer complaint they receive that is subject to the reporting requirements of Rule 4530(d), members and member organizations must:
• Acknowledge receipt of the complaint within 15 business days of receiving it; and
• Respond to the issues raised in the complaint within a reasonable period of time.
Rule 401A(b) provides that each acknowledgement and response
• Acknowledgements and responses to written complaints must be either:
• In writing, mailed to the complaining customer's last known address; or
• Electronically transmitted to the email address from which the complaint was sent (method only permissible for electronically transmitted complaints).
• Acknowledgements and responses to verbal complaints must be either:
• In writing, mailed to the complaining customer's last known address; or
• Made verbally to the complaining customer, and recorded in a log of verbal acknowledgements and responses to customer complaints.
Rule 401A(c) provides that written records of the acknowledgements, responses, and logs required by this rule must be retained in accordance with Rule 440.
The Exchange proposes to delete the foregoing rules and interpretations relating to supervision (except as noted below), which are, in main part, either duplicative of, or do not align with, the proposed supervision requirements discussed below, and adopt the text of FINRA Rules 3110, 3120, 3150, and 3170, subject to certain technical and conforming changes.
The Exchange proposes to retain the requirements contained in Rule 342.13(a) and (b) and related interpretations regarding qualifications and exam requirements for individuals with supervisory responsibilities. The proposed new version of Rule 342(a), corresponding to current Rule 342.13(a), would provide that any member or employee identified as in charge of (1) any office of a member or member organization, (2) any regional or other group of offices, or (3) any sales department or activity must have a creditable record and pass the General Securities Sales Supervisor Qualification Examination (Series 9/10) or another examination acceptable to the Exchange. The proposed new version of Rule 342(a) would retain the current requirement in the Interpretation to Rule 342 that every branch office or sales manager must have at least three years' experience as a registered representative or substantial experience in a related sales or managerial position and must pass the Series 9/10.
Further, the proposed new version of Rule 342(a) would retain the current examples of a related sales or managerial position in the Interpretation to Rule 342 and the requirement that in order to qualify as a supervisory person, a principal executive
The proposed new version of Rule 342(b), corresponding to current Rule 342.13(b), would provide that the individuals designated as having day-to-day compliance responsibilities for their respective firms, or who supervise ten or more persons engaged in compliance activities, have the knowledge necessary to carry out their job responsibilities (
• Compliance supervisors at member organizations whose activities are solely related to execution of orders on the Exchange trading floor and who do not conduct any business with the public;
• Compliance supervisors at member organizations whose commissions and other fees from public business (retail and institutional) are under $500,000 in the preceding calendar year and who introduce to another broker-dealer; and
• Supervisors of ten or more persons whose compliance responsibilities are limited to the registration of member organization employees with the various regulators and SROs.
Proposed Rule 3110 is based primarily on requirements in the FINRA rulebook and current Rule 342 relating to, among other things, supervisory systems, written procedures, internal inspections, and review of correspondence.
Proposed Rule 3110(a) would cover supervisory systems and would require each member organization to establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable Exchange rules. Under the proposed rule, final responsibility for proper supervision would rest with the member organization. In addition, a member organization's supervisory system would be required to provide, at a minimum, for the following:
• The establishment and maintenance of written procedures as required by proposed Rule 3110.
• The designation, where applicable, of an appropriately registered principal with authority to carry out the supervisory responsibilities of the member organization for each type of business in which it engages for which registration as a broker-dealer is required.
• The registration and designation as a branch office or an office of supervisory jurisdiction (“OSJ”) of each location, including the main office, that
• The designation of one or more appropriately registered principals in each OSJ and one or more appropriately registered representatives or principals in each non-OSJ branch office with authority to carry out the supervisory responsibilities assigned to that office by the member organization.
• The assignment of each registered person to an appropriately registered representative or principal who would be responsible for supervising that person's activities.
• The use of reasonable efforts to determine that all supervisory personnel are qualified, either by virtue of experience or training, to carry out their assigned responsibilities.
• The participation of each registered representative and registered principal, either individually or collectively, no less than annually, in an interview or meeting conducted by persons designated by the member organization at which compliance matters relevant to the activities of the representative and principal are discussed, which may occur in conjunction with the discussion of other matters and may be conducted at a central or regional location or at the representative's or principal's place of business.
In proposed Rule 3110(b), the Exchange proposes to consolidate provisions from current Rule 401A relating to the review of customer complaints with various provisions and rules from the FINRA rulebook that currently require written procedures, including provisions relating to the supervision and review of registered representatives' transactions and correspondence. In addition, proposed supplementary material, which is discussed in detail below, would codify and expand guidance in these areas.
Proposed Rule 3110(b)(1) would address written procedures and would require each member organization to establish, maintain, and enforce written procedures to supervise the types of business in which it engages and the activities of its associated persons that are reasonably designed to achieve compliance with applicable securities laws and regulations and applicable Exchange rules.
Under proposed Rule 3110(b)(2), the supervisory procedures required by proposed Rule 3110(b) would include procedures for the review by a registered principal, evidenced in writing, of all transactions relating to the investment banking or securities business of the member organization.
Consistent with FINRA Rule 3110(b)(3), proposed Rule 3110(b)(3) would be marked “Reserved.”
Under proposed Rule 3110(b)(4), the supervisory procedures required by proposed Rule 3110(b) would also include procedures for the review of incoming and outgoing written (including electronic) correspondence and internal communications relating to the member organization's investment banking or securities business and be appropriate for the member organization's business, size, structure, and customers. The supervisory procedures would require the member organization's review of:
• Incoming and outgoing written (including electronic) correspondence to properly identify and handle in accordance with firm procedures, customer complaints, instructions, funds and securities, and communications that are of a subject matter that require review under Exchange rules and federal securities laws; and
• Internal communications to properly identify those communications that are of a subject matter that require review under Exchange rules and federal securities laws.
• Communications between non-research and research departments concerning a research report's contents (Rule 472(b)(3)).
• Certain communications with the public that require a principal's pre-approval (Rule 2210).
• The identification and reporting to the Exchange of customer complaints (Rule 4530).
Current Rule 401A requires firms to acknowledge and respond to all customer complaints subject to the reporting requirements of current Rule 4530(d). Previously, this meant that firms had to acknowledge and respond to both written and oral customer complaints. However, as part of the effort to harmonize the NASD and NYSE rules in the interim period before completion of the Consolidated FINRA Rulebook, current Rule 4530(d) was amended to limit the definition of “customer complaint” to include only written complaints, thereby making the definition substantially similar to that in FINRA Rule 4530(d).
Proposed Rule 3110(b)(5), which requires a member organization's supervisory procedures to include procedures to capture, acknowledge, and respond to all written (including electronic) customer complaints, essentially incorporates the customer complaint requirement in current Rule 401A, including the limitation on including only written (including electronic) customer complaints. The Exchange believes that oral complaints are difficult to capture and assess, and that they raise competing views as to the substance of the complaint being alleged. Consequently, the Exchange believes that oral complaints do not lend themselves as effectively to a review program as written complaints, which are more readily documented and retained. However, the Exchange reminds member organizations that the failure to address any customer complaint, written or oral, may be a violation of Rule 2010.
Under proposed Rule 3110(b)(6), the supervisory procedures required by proposed Rule 3110(b) must set forth the supervisory system established by the member organization pursuant to proposed Rule 3110(a), and would include:
• The titles, registration status, and locations of the required supervisory personnel and the responsibilities of each supervisory person as these relate to the types of business engaged in, applicable securities laws and regulations, and Exchange rules.
• A record, preserved by the member organization for a period of not less than three years, the first two years in an easily accessible place, of the names of all persons who are designated as supervisory personnel and the dates for which such designation is or was effective.
• Procedures prohibiting associated persons who perform a supervisory function from:
• Supervising their own activities; and
• Reporting to, or having their compensation or continued employment determined by, a person or persons they are supervising.
• If a member organization determines, with respect to any of its supervisory personnel, that compliance with the preceding two bullets is not possible because of the member organization's size or a supervisory personnel's position within the firm, the member organization would be required to document:
• The factors the member organization used to reach such determination; and
• How the supervisory arrangement with respect to such supervisory personnel otherwise complies with proposed Rule 3110(a).
• Procedures reasonably designed to prevent the supervisory system required pursuant to proposed Rule 3110(a) from being compromised due to the conflicts of interest that may be present with respect to the associated person being supervised, including the position of such person, the revenue such person generates for the firm, or any compensation that the associated person conducting the supervision may derive from the associated person being supervised.
Proposed Rule 3110(b)(7) would require a member organization to keep and maintain a copy of its written supervisory procedures, or such relevant portions, in each OSJ and at each location where supervisory activities are conducted on behalf of the member organization. Each member organization would be required to promptly amend its written supervisory procedures to reflect changes in applicable securities laws or regulations, including Exchange rules, and as changes occur in its supervisory system. Each member organization would be responsible for promptly communicating its written supervisory procedures and amendments to all associated persons to whom such written supervisory procedures and amendments are relevant based on their activities and responsibilities.
Proposed Rule 3110(c) would cover internal inspections. Proposed Rule 3110(c)(1) would require each member organization to conduct a review, at least annually (on a calendar-year basis), of the businesses in which it engages. The review must be reasonably designed to assist the member organization in detecting and preventing violations of, and achieving compliance with, applicable securities laws and regulations, and with applicable Exchange rules. Each member organization would be required to review the activities of each office, which would include the periodic examination of customer accounts to detect and prevent irregularities or abuses. Each member organization would also be required to retain a written record of the date upon which each review and inspection is conducted.
In addition, proposed Rule 3110(c)(1) would require each member organization to inspect at least annually (on a calendar-year basis) every OSJ and any branch office that supervises one or more non-branch locations. Each member organization would also be required to inspect at least every three years every branch office that does not supervise one or more non-branch locations. In establishing how often to inspect each non-supervisory branch office, the member organization would be required to consider whether the nature and complexity of the securities activities for which the location is responsible, the volume of business done at the location, and the number of associated persons assigned to the location require the non-supervisory branch office to be inspected more frequently than every three years. If a member organization establishes a more frequent inspection cycle, the member organization would be required to ensure that at least every three years, the inspection requirements enumerated in proposed Rule 3110(c)(2) have been met. The member organization's written supervisory and inspection procedures would have to set forth the non-supervisory branch office examination cycle, an explanation of the factors the member organization used in determining the frequency of the examinations in the cycle, and the manner in which a member organization would comply with proposed Rule 3110(c)(2) if using more frequent inspections than every three years.
Under proposed Rule 3110(c)(1), each member organization would also be required to inspect every non-branch location on a regular, periodic schedule. In establishing such a schedule, the member organization would be required to consider the nature and complexity of the securities activities for which the location is responsible and the nature and extent of contact with customers. The member organization's written supervisory and inspection procedures would have to set forth the schedule and an explanation regarding how the member organization determined the frequency of the examination.
Proposed Rule 3110(c)(2) would require that the inspection and review by a member organization pursuant to proposed Rule 3110(c)(1) be reduced to a written report and kept on file by the member organization for a minimum of three years, unless the inspection is being conducted pursuant to proposed Rule 3110(c)(1)(C) and the regular periodic schedule is longer than a three-year cycle, in which case the report would have to be kept on file at least until the next inspection report has been written. If applicable to the location being inspected, proposed Rule 3110(c)(2)(A) would require that location's written inspection report to include, without limitation, the testing and verification of the member organization's policies and procedures, including supervisory policies and procedures in the following areas:
• Safeguarding of customer funds and securities;
• Maintaining books and records;
• Supervision of supervisory personnel;
• Transmittals of funds (
• Changes of customer account information, including address and investment objectives changes and validation of such changes.
Under proposed Rules 3110(c)(2)(B) and 3110(c)(2)(C), a member organization's policies and procedures regarding transmittals of funds must include a means or method of customer confirmation, notification, or follow-up that can be documented. Member organizations could use reasonable risk-based criteria to determine the authenticity of the transmittal instructions. The policies and procedures regarding changes in customer account information would have to include, for each change processed, a means or method of customer confirmation, notification, or follow-up that can be documented and that complies with Rules 17a–3(a)(17)(i)(B)(2) and 17a–3(a)(17)(i)(B)(3) under the Act.
Pursuant to proposed Rule 3110(c)(2)(D), if a member organization does not engage in all of the activities enumerated in the bullets immediately above at the location being inspected, the member organization would be required to identify those activities in the member organization's written supervisory procedures or the location's
Under proposed Rule 3110(c)(3), for each inspection conducted pursuant to the proposed rule, a member organization would be required to:
• Have procedures reasonably designed to prevent the effectiveness of inspections from being compromised due to conflicts of interest that may be present with respect to the location being inspected, including but not limited to, economic, commercial, or financial interests in the associated persons and businesses being inspected; and
• Ensure that the person conducting an inspection is not an associated person assigned to the location or is not directly or indirectly supervised by, or otherwise reporting to, an associated person assigned to the location.
Under the proposed rule, if a member organization determines that compliance with these two bullets is not possible either because of a member organization's size or its business model, the member organization would be required to document in the inspection report both the factors the member organization used to make its determination and how the inspection otherwise complies with proposed Rule 3110(c)(1).
By way of comparison, under current Rules 342.24 and 342.25, each branch office must be inspected annually, unless the member organization obtained an exemption by submitting to the Exchange written policies and procedures for systematic risk-based surveillance of its branch offices, in which case each branch office must be inspected at least every three years. The proposed subject matter requirements for inspection reports are substantially the same as the current subject matter requirements.
Section 15(g) of the Act, adopted as part of the Insider Trading and Securities Fraud Enforcement Act of 1988,
Proposed Rule 3110(d) incorporates provisions of current Rule 342.21, with some modifications, and extends the requirement beyond Exchange-listed securities and related financial instruments to cover all securities. Proposed Rule 3110(d) would cover transaction reviews and investigations. Proposed Rule 3110(d)(1) would require each member organization to include in its supervisory procedures a process for the review of securities transactions reasonably designed to identify trades that may violate the provisions of the Act, the rules thereunder, or Exchange rules prohibiting insider trading and manipulative and deceptive devices that are effected for the:
• Accounts of the member organization;
• Accounts introduced or carried by the member organization in which a person associated with the member organization has a beneficial interest or the authority to make investment decisions;
• Accounts of a person associated with the member organization that are disclosed to the member organization pursuant to Rule 407 or NASD Rule 3050, as applicable; and
• Covered accounts.
Under proposed Rule 3110(d)(2), each member organization would be required to promptly conduct an internal investigation into any such trade to determine whether a violation of those laws or rules has occurred. In addition, under proposed Rule 3110(d)(3), a member organization engaging in investment banking services would be required to file written reports with the Exchange, signed by a senior officer of the member organization, at such times and, without limitation, including such content, as follows:
• Within ten business days of the end of each calendar quarter, a written report describing each internal investigation initiated in the previous calendar quarter pursuant to proposed Rule 3110(d)(2), including the identity of the member organization, the date each internal investigation commenced, the status of each open internal investigation, the resolution of any internal investigation reached during the previous calendar quarter, and, with respect to each internal investigation, the identity of the security, trades, accounts, associated persons of the member organization, or associated person of the member organization's family members holding a covered account, under review, and that includes a copy of the member organization's policies and procedures required by proposed Rule 3110(d)(1).
• Within five business days of completion of an internal investigation pursuant to proposed Rule 3110(d)(2) in which it was determined that a violation of the provisions of the Act, the rules thereunder, or Exchange rules prohibiting insider trading and manipulative and deceptive devices had occurred, a written report detailing the completion of the investigation, including the results of the investigation, any internal disciplinary action taken, and any referral of the matter to the Exchange, another SRO, the SEC, or any other federal, state, or international regulatory authority.
For purposes of proposed Rule 3110(d)(4), the following definitions would apply:
• The term “covered account” would include any account introduced or carried by the member organization that is held by:
• The spouse of a person associated with the member organization;
• A child of the person associated with the member organization or such person's spouse, provided that the child resides in the same household as, or is financially dependent upon, the person associated with the member organization;
• Any other related individual over whose account the person associated with the member organization has control; or
• Any other individual over whose account the associated person of the member organization has control and to whose financial support such person materially contributes.
• The term “investment banking services” would include, without limitation, acting as an underwriter, participating in a selling group in an offering for the issuer, or otherwise acting in furtherance of a public offering of the issuer; acting as a financial adviser in a merger or acquisition; providing venture capital or equity lines of credit or serving as placement agent for the issuer or otherwise acting in
Proposed Rule 3110(e) would define “OSJ” and “branch office.” As noted above, “OSJ” would be a new designation for the Exchange and the definition of the term would substantially mirror FINRA's definition. The term “OSJ” would mean any office of a member organization at which any one or more of the following functions take place:
• Order execution or market making;
• Structuring of public offerings or private placements;
• Maintaining custody of customers' funds or securities;
• Final acceptance (approval) of new accounts on behalf of the member organization;
• Review and endorsement of customer orders;
• Final approval of retail communications for use by persons associated with the member organization, pursuant to Rule 2210(b)(1), except for an office that solely conducts final approval of research reports; or
• Responsibility for supervising the activities of persons associated with the member organization at one or more other branch offices of the member organization.
• Any location that is established solely for customer service or back office type functions where no sales activities are conducted and that is not held out to the public as a branch office;
• Any location that is the associated person's primary residence, provided that:
• Only one associated person, or multiple associated persons who reside at that location and are members of the same immediate family, conduct business at the location;
• The location is not held out to the public as an office and the associated person does not meet with customers at the location;
• Neither customer funds nor securities are handled at that location;
• The associated person is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, retail communications and other communications to the public by such associated person;
• The associated person's correspondence and communications with the public are subject to the firm's supervision in accordance with proposed Rule 3110;
• Electronic communications (
• All orders are entered through the designated branch office or an electronic system established by the member organization that is reviewable at the branch office;
• Written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the member organization; and
• A list of the residence locations is maintained by the member organization.
• Any location, other than a primary residence, that is used for securities business for less than 30 business days
• Any office of convenience, where associated persons occasionally and exclusively by appointment meet with customers, which is not held out to the public as an office;
• Any location that is used primarily to engage in non-securities activities and from which the associated person(s) effects no more than 25 securities transactions in any one calendar year; provided that any retail communication identifying such location also sets forth the address and telephone number of the location from which the associated person(s) conducting business at the non-branch locations are directly supervised;
• The floor of a registered national securities exchange where a member organization conducts a direct access business with public customers; or
• A temporary location established in response to the implementation of a business continuity plan.
Notwithstanding the exclusions for branch offices described above, any location that is responsible for supervising the activities of persons associated with the member organization at one or more non-branch locations of the member organization would be considered a branch office.
Proposed Supplementary Material .01 to Rule 3110 would require a member organization's main office location to be registered and designated as a branch office or OSJ if it meets the definitions of a “branch office” or “office of supervisory jurisdiction” as set forth in proposed Rule 3110(e). In general, the nature of activities conducted at a main office will satisfy the requirements of such terms.
Proposed Supplementary Material .02 to Rule 3110 would provide that, in addition to the locations that meet the definition of OSJ in proposed Rule 3110(e), each member organization must also register and designate other offices as OSJs as is necessary to supervise its associated persons in accordance with the standards set forth in proposed Rule 3110. In making a determination as to whether to designate a location as an OSJ, the member organization should consider the following factors:
• Whether registered persons at the location engage in retail sales or other activities involving regular contact with public customers;
• Whether a substantial number of registered persons conduct securities activities at, or are otherwise supervised from, such location;
• Whether the location is geographically distant from another OSJ of the firm;
• Whether the member organization's registered persons are geographically dispersed; and
• Whether the securities activities at such location are diverse or complex.
Proposed Supplementary Material .03 to Rule 3110 would provide additional guidance relating to proposed Rule 3110(a)(4), which would require a member organization to designate one or more appropriately registered principals in each OSJ with the authority to carry out the supervisory responsibilities assigned to that office (“on-site principal”). The proposed Supplementary Material would provide that the designated on-site principal for each OSJ must have a physical presence, on a regular and routine basis, at each OSJ for which the principal has supervisory responsibilities. Consequently, there is a general presumption that a principal will not be designated and assigned to be the on-site principal pursuant to proposed Rule 3110(a)(4) to supervise more than one
• Whether the on-site principal is qualified by virtue of experience and training to supervise the activities and associated persons in each location;
• Whether the on-site principal has the capacity and time to supervise the activities and associated persons in each location;
• Whether the on-site principal is a producing registered representative;
• Whether the OSJ locations are in sufficiently close proximity to ensure that the on-site principal is physically present at each location on a regular and routine basis; and
• The nature of activities at each location, including size and number of associated persons, scope of business activities, nature and complexity of the products and services offered, volume of business done, the disciplinary history of persons assigned to such locations, and any other indicators of irregularities or misconduct.
The proposed Supplementary Material would provide that a member organization must establish, maintain, and enforce written supervisory procedures regarding the supervision of all OSJs. In all cases where a member organization designates and assigns one on-site principal to supervise more than one OSJ, the member organization must document in the member organization's written supervisory and inspection procedures the factors used to determine why the member organization considers such supervisory structure to be reasonable and the determination by the member organization will be subject to scrutiny.
Proposed Supplementary Material .04 to Rule 3110 would provide that a member organization is not required to conduct in-person meetings with each registered person or group of registered persons to comply with the annual compliance meeting (or interview) required by proposed Rule 3110(a)(7). A member organization that chooses to conduct compliance meetings using other methods (
Proposed Supplementary Material .05 to Rule 3110 would provide that a member organization may use a risk-based review system to comply with proposed Rule 3110(b)(2)'s requirement that a registered principal review all transactions relating to the investment banking or securities business of the member organization. A member organization would not be required to conduct detailed reviews of each transaction if it is using a reasonably designed risk-based review system that provides it with sufficient information to permit it to focus on the areas that pose the greatest numbers and risks of violation.
Proposed Supplementary Material .06 to Rule 3110 would provide that, by employing risk-based principles, a member organization must decide the extent to which additional policies and procedures for the review of:
• Incoming and outgoing written (including electronic) correspondence that fall outside of the subject matters listed in proposed Rule 3110(b)(4) are necessary for its business and structure. If a member organization's procedures do not require that all correspondence be reviewed before use or distribution, the procedures must provide for:
• The education and training of associated persons regarding the firm's procedures governing correspondence;
• The documentation of such education and training; and
• Surveillance and follow-up to ensure that such procedures are implemented and followed.
• Internal communications that are not of a subject matter that require review under Exchange rules and federal securities laws are necessary for its business and structure.
Proposed Supplementary Material .07 to Rule 3110 would provide that the evidence of review required in proposed Rule 3110(b)(4) must be chronicled either electronically or on paper and must clearly identify the reviewer, the internal communication or correspondence that was reviewed, the date of review, and the actions taken by the member organization as a result of any significant regulatory issues identified during the review. Merely opening a communication would not be sufficient review.
Proposed Supplementary Material .08 to Rule 3110 would provide that, in the course of the supervision and review of correspondence and internal communications required by proposed Rule 3110(b)(4), a supervisor/principal may delegate certain functions to persons who need not be registered. However, the supervisor/principal would remain ultimately responsible for the performance of all necessary supervisory reviews, irrespective of whether he or she delegates functions related to the review. Accordingly, supervisors/principals must take reasonable and appropriate action to ensure delegated functions are properly executed and should evidence performance of their procedures sufficiently to demonstrate overall supervisory control.
Proposed Supplementary Material .09 to Rule 3110 would provide that each member organization must retain the internal communications and correspondence of associated persons relating to the member organization's investment banking or securities business for the period of time and accessibility specified in Rule 17a–4(b) under the Act. The names of the persons who prepared outgoing correspondence and who reviewed the correspondence must be ascertainable from the retained records, and the retained records must be readily available to the Exchange, upon request.
Proposed Supplementary Material .10 to Rule 3110 would provide that a member organization's determination that it is not possible to comply with proposed Rules 3110(b)(6)(C)(i) or (b)(6)(C)(ii) prohibiting supervisory personnel from supervising their own activities and from reporting to, or otherwise having compensation or continued employment determined by, a person or persons they are supervising generally will arise in instances where:
• The member organization is a sole proprietor in a single-person firm;
• A registered person is the member organization's most senior executive officer (or similar position); or
• A registered person is one of several of the member organization's most senior executive officers (or similar positions).
Proposed Supplementary Material .11 to Rule 3110 would provide that a member organization may use electronic media to satisfy its obligation to communicate its written supervisory procedures, and any amendment
• The written supervisory procedures have been promptly communicated to, and are readily accessible by, all associated persons to whom such supervisory procedures apply based on their activities and responsibilities through, for example, the member organization's intranet system;
• All amendments to the written supervisory procedures are promptly posted to the member organization's electronic media;
• Associated persons are notified that amendments relevant to their activities and responsibilities have been made to the written supervisory procedures;
• The member organization has reasonable procedures to monitor and maintain the security of the material posted to ensure that it cannot be altered by unauthorized persons; and
• The member organization retains current and prior versions of its written supervisory procedures in compliance with the applicable record retention requirements of Rule 17a–4(e)(7) under the Act.
Proposed Supplementary Material .12 to Rule 3110 would provide that, in fulfilling its obligations under proposed Rule 3110(c), each member organization must conduct a review, at least annually, of the businesses in which it engages. The review must be reasonably designed to assist in detecting and preventing violations of and achieving compliance with applicable securities laws and regulations and with Exchange rules. Each member organization must establish and maintain supervisory procedures that must take into consideration, among other things, the firm's size, organizational structure, scope of business activities, number and location of the firm's offices, the nature and complexity of the products and services offered by the firm, the volume of business done, the number of associated persons assigned to a location, the disciplinary history of registered representatives or associated persons, and any indicators of irregularities or misconduct (
Proposed Supplementary Material .13 to Rule 3110 would provide additional guidance to proposed Rule 3110(c)(1)(C), which would require a member organization to inspect on a regular periodic schedule every non-branch location. In establishing a non-branch location inspection schedule, there is a general presumption that a non-branch location will be inspected at least every three years, even in the absence of any indicators of irregularities or misconduct (
Proposed Supplementary Material .14 to Rule 3110 would provide that a member organization's determination that it is not possible to comply with proposed Rule 3110(c)(3)(B) with respect to who is not allowed to conduct a location's inspection will generally arise in instances where:
• The member organization has only one office; or
• The member organization has a business model where small or single-person offices report directly to an OSJ manager who is also considered the offices' branch office manager.
Proposed Supplementary Material .15 to Rule 3110 would provide a definition for “associated person” for the purposes of proposed Rule 3110.
Proposed Rule 3120(a), which is based on FINRA Rule 3120(a), would provide that each member organization must designate and specifically identify to the Exchange one or more principals who must establish, maintain, and enforce a system of supervisory control policies and procedures that:
• Test and verify that the member organization's supervisory procedures are reasonably designed with respect to the activities of the member organization and its associated persons, to achieve compliance with applicable securities laws and regulations, and with applicable Exchange rules; and
• Create additional or amend supervisory procedures where the need is identified by such testing and verification.
Proposed Rule 3120(b) would provide that each report provided to senior management pursuant to proposed Rule 3120(a) in the calendar year following a calendar year in which a member organization reported $200 million or more in gross revenue must include, to the extent applicable to the member organization's business:
• A tabulation of the reports pertaining to customer complaints and internal investigations made to the Exchange during the preceding year; and
• Discussion of the preceding year's compliance efforts, including procedures and educational programs, in each of the following areas:
• Trading and market activities;
• Investment banking activities;
• Antifraud and sales practices;
• Finance and operations;
• Supervision; and
• Anti-money laundering.
Proposed Rule 3120(c) would provide that, for purposes of proposed Rule 3120(b), “gross revenue” is defined as:
• Total revenue as reported on FOCUS Form Part II or IIA (line item 4030) less commodities revenue (line item 3990), if applicable; or
• Total revenue as reported on FOCUS Form Part II CSE (line item 4030) less, if applicable,
• Commissions on commodity transactions (line item 3991); and
• Commodities gains or losses (line items 3924 and 3904).
Proposed Supplementary Material .01 to Rule 3120 would provide a definition for “associated person” for the purposes of proposed Rule 3120.
Proposed Rule 3150(a) would provide that a member organization may hold mail for a customer who will not be receiving mail at his or her usual address, provided that:
• The member organization receives written instructions from the customer that include the time period during which the member organization is requested to hold the customer's mail. If the requested time period included in the instructions is longer than three consecutive months (including any aggregation of time periods from prior requests), the customer's instructions must include an acceptable reason for the request (
• The member organization:
• Informs the customer in writing of any alternate methods, such as email or access through the member organization's Web site, that the customer may use to receive or monitor account activity and information; and
• Obtains the customer's confirmation of the receipt of such information; and
• The member organization verifies at reasonable intervals that the customer's instructions still apply.
Proposed Rule 3150(b) would provide that, during the time that a member organization is holding mail for a customer, the member organization must be able to communicate with the customer in a timely manner to provide important account information (
Proposed Rule 3150(c) would provide that a member organization holding a customer's mail pursuant to proposed Rule 3150 must take actions reasonably designed to ensure that the customer's mail is not tampered with, held without the customer's consent, or used by an associated person of the member organization in any manner that would violate Exchange rules or the federal securities laws.
The Exchange currently does not have a rule comparable to proposed Rule 3150. The Exchange believes that adding proposed Rule 3150 would help protect customers.
Proposed Supplementary Material .01 to Rule 3150 would provide a definition for “associated person” for the purposes of proposed Rule 3150.
Proposed Rule 3170(a) would provide the following definitions for purposes of proposed Rule 3170:
• The term “registered person” would mean any person registered with the Exchange.
• The term “disciplined firm” would mean:
• A member organization that, in connection with sales practices involving the offer, purchase, or sale of any security, has been expelled from membership or participation in any securities industry SRO or is subject to an order of the SEC revoking its registration as a broker-dealer;
• A futures commission merchant or introducing broker that has been formally charged by either the Commodity Futures Trading Commission or a registered futures association with deceptive telemarketing practices or promotional material relating to security futures, those charges have been resolved, and the futures commission merchant or introducing broker has been closed down and permanently barred from the futures industry as a result of those charges; or
• A futures commission merchant or introducing broker that, in connection with sales practices involving the offer, purchase, or sale of security futures is subject to an order of the SEC revoking its registration as a broker or dealer.
• The term “disciplinary history” would mean a finding of a violation by a registered person in the past five years by the SEC, an SRO, or a foreign financial regulatory authority of one or more of the following provisions (or comparable foreign provision) or rules or regulations thereunder:
• Violations of the types enumerated in Section 15(b)(4)(E) of the Act;
• Section 15(c) of the Act;
• Section 17(a) of the Securities Act of 1933;
• Rules 10b–5 and 15g–1 through 15g–9 under the Act;
• NASD Rule 2110 (Standards of Commercial Honor and Principles of Trade) or FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) or NYSE Rule 2010 (Standards of Commercial Honor and Principles of Trade) or NYSE Rule 476(a)(6) (Failure to Observe High Standards of Commercial Honor and Just and Equitable Principles of Trade) (only if the finding of a violation of NASD Rule 2110, FINRA Rule 2010, NYSE Rule 2010 or NYSE Rule 476(a)(6) is for unauthorized trading, churning, conversion, material misrepresentations or omissions to a customer, front-running, trading ahead of research reports or excessive markups), FINRA Rule 5280 (Trading Ahead of Research Reports), NASD Rule 2120 (Use of Manipulative, Deceptive or Other Fraudulent Devices) or FINRA Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices) or NYSE Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices) or NYSE Rule 476(a)(5) (effecting any transaction in, or inducing the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance), NASD Rule 2310 (Recommendations to Customers (Suitability)) or FINRA Rule 2111 (Suitability) or NYSE Rule 405 (Diligence as to Accounts), NASD Rule 2330 (Customers' Securities or Funds) or FINRA Rule 2150 (Improper Use of Customers' Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts) or NYSE Rule 2150 (Improper Use of Customers' Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts), NASD Rule 2440 (Fair Prices and Commissions), NASD Rule 3010 (Supervision) or FINRA Rule 3110 (Supervision) or NYSE Rule 3110 (Supervision) or NYSE Rule 342 (Offices—Approval, Supervision and Control) (failure to supervise only for both NASD Rule 3010, FINRA Rule 3110, NYSE Rule 3110 or Rule 342), NASD Rule 3310 (Publication of Transactions and Quotations) or FINRA Rule 5210 (Publication of Transactions and Quotations) or NYSE Rule 5210 (Publication of Transactions and Quotations), and NASD Rule 3330 (Payment Designed to Influence Market Prices, Other than Paid Advertising) or FINRA Rule 5230 (Payments Involving Publications that Influence the Market Price of a Security); and MSRB Rules G–19, G–30, and G–37(b) & (c).
• The term “tape recording” would include without limitation, any electronic or digital recording that meets the requirements of proposed Rule 3170.
• The term “taping firm” would mean:
• A member organization with at least five but fewer than ten registered persons, where 40% or more of its registered persons have been associated with one or more disciplined firms in a registered capacity within the last three years;
• A member organization with at least ten but fewer than twenty registered persons, where four or more of its registered persons have been associated with one or more disciplined firms in a registered capacity within the last three years;
• A member organization with at least twenty registered persons where 20% or more of its registered persons have been associated with one or more disciplined firms in a registered capacity within the last three years.
• For purposes of calculating the number of registered persons who have been associated with one or more disciplined firms in a registered capacity within the last three years pursuant to proposed Rule 3170(a)(5), member organizations should not include registered persons who:
• Have been registered for an aggregate total of 90 days or less with one or more disciplined firms within the past three years; and
• Do not have a disciplinary history.
Proposed Rule 3170(b) would provide that each member organization that either is notified by the Exchange or otherwise has actual knowledge that it is a taping firm must establish, maintain, and enforce special written procedures for supervising the telemarketing activities of all of its registered persons. A taping firm required to establish, maintain, and enforce special written procedures pursuant to proposed Rule 3170(b) would be required to establish and implement the procedures within 60 days of receiving notice from the Exchange or obtaining actual knowledge that it is a taping firm. The procedures required by proposed Rule 3170(b) would include procedures for tape recording all telephone conversations between the taping firm's registered persons and both existing and potential customers and for reviewing the tape recordings to ensure compliance with applicable securities laws and regulations and applicable Exchange rules. The procedures must be appropriate for the taping firm's business, size, structure, and customers, and must be maintained for a period of three years from the date that the taping firm establishes and implements the procedures. All tape recordings made pursuant to the requirements of proposed Rule 3170(b) must be retained for a period of not less than three years from the date the tape was created, the first two years in an easily accessible place. Each taping firm would be required to catalog the retained tapes by registered person and date. By the 30th day of the month following the end of each calendar quarter, each taping firm subject to the requirements of proposed Rule 3170(b) would be required to submit to the Exchange a report on the taping firm's supervision of the telemarketing activities of its registered persons.
Proposed Rule 3170(c) would provide that a member organization that becomes a taping firm for the first time may reduce its staffing levels to fall below the threshold levels within 30 days after receiving notice from the Exchange pursuant to the provisions of proposed Rule 3170(b)(1) or obtaining actual knowledge that it is a taping firm, provided the member organization promptly notifies the Exchange's Department of Member Regulation in writing of its becoming subject to the Rule. Once the member organization has reduced its staffing levels to fall below the threshold levels, it must not rehire a person terminated to accomplish the staff reduction for a period of 180 days. On or prior to reducing staffing levels pursuant to proposed Rule 3170(c), a member organization would be required to provide the Exchange's Department of Member Regulation with written notice identifying the terminated person(s).
Proposed Rule 3170(d) would provide that, pursuant to the Rule 9600 Series, the Exchange could, in exceptional circumstances, taking into consideration all relevant factors, exempt any taping firm unconditionally or on specified terms and conditions from the requirements of proposed Rule 3170. A taping firm seeking an exemption would be required to file a written application pursuant to the Rule 9600 Series within 30 days after receiving notice from the Exchange or obtaining actual knowledge that it is a taping firm. A member organization that becomes a taping firm for the first time could elect to reduce its staffing levels pursuant to the provisions of proposed Rule 3170(c) or, alternatively, to seek an exemption pursuant to proposed Rule 3170(d), as appropriate. A taping firm would not be able to seek relief from proposed Rule 3170 by both reducing its staffing levels pursuant to proposed Rule 3170(c) and requesting an exemption.
The Exchange does not currently have a rule comparable to proposed Rule 3170. The Exchange believes that adopting proposed Rule 3170 will provide for more effective supervision of member organizations that have a significant number of registered persons with disciplinary history, thereby resulting is enhanced customer protection.
The Exchange also proposes to make certain conforming changes to Rules 36, 70, 86, 345, 405, 407, 408,
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b–4(f)(6)
The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest, because it allows the Exchange to immediately conform its supervision rules to corresponding FINRA rules. This will ensure that Dual Members generally will be subject to a single set of rules governing supervision. As noted by the Exchange, the proposal would harmonize NYSE and FINRA rules, resulting in less burdensome and more efficient regulatory compliance. In addition, the proposal will update and add specificity to the Exchange's requirements governing supervision, which will promote just and equitable principles of trade and help to protect investors. For these reasons, the Commission designates the proposed rule change to be operative upon filing.
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On July 14, 2014, BATS Exchange, Inc. (“BATS”), EDGA Exchange, Inc. (“EDGA”), and EDGX Exchange, Inc. (“EDGX”) and, on July 18, 2014, BATS Y-Exchange, Inc. (together with BATS, EDGA, and EDGX, the “Exchanges”) each filed with the Securities and Exchange Commission (“Commission”) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend the Fee Schedule to amend the Fee Schedule [sic] on the BOX Market LLC (“BOX”) options facility. While changes to the fee schedule pursuant to this proposal will be effective upon filing, the changes will become operative on November 1, 2014. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to make a number of changes to the BOX Fee Schedule.
First, the Exchange proposes to amend Section I (Exchange Fees) to establish a subsection entitled “Non-Auction Transactions.”
Currently, Non-Auction Transactions in non-Select Symbols are subject to the fee structure outlined in Section I of the BOX Fee Schedule. For every Non-Auction Transaction, Public Customers are assessed a $0.07 fee per contract and Professional Customers and Broker Dealers $0.42 per contract. Market Makers are assessed a per contract fee based upon the Market Maker's Monthly ADV in all transactions executed on BOX, as calculated at the end of each month. All Non-Auction Transactions for that month are charged the same per contract fee according to the ADV achieved by the Market Maker, which ranges from $0.13 to $0.35.
In proposed Section I.A. (Non-Auction Transactions), the Exchange proposes to adopt a pricing model where the Exchange will assess transaction fees and credits dependent upon three factors: (i) The account type of the Participant submitting the order; (ii) whether the Participant is a liquidity provider or liquidity taker; and (iii) the account type of the contra party. Non-Auction Transactions in Penny Pilot Classes will also be assessed different fees or credits than Non-Auction Transactions in Non-Penny Pilot Classes.
The Exchange also proposes to specify that these transactions will now be exempt from the Liquidity Fees and Credits outlined in Section II of the BOX Fee Schedule. The proposed fee structure for all Non-Auction Transactions is as follows:
For example, if a Public Customer submitted an order to the BOX Book in a Penny Pilot Class (making liquidity), the Public Customer would be credited $0.22 if the order interacted with a Market Maker's order and the Market Maker (taking liquidity) would be charged $0.55. To expand on this example, if the Market Maker instead submitted an order to the BOX Book in a Penny Pilot Class (making liquidity), the Market Maker would be charged $0.51 if the order interacted with a Public Customer's order and the Public Customer (taking liquidity) would again be credited $0.22.
Accordingly, the Exchange proposes to adopt the same tiered volume-based rebate for Market Makers and Public Customers in Non-Auction Transactions that was previously applied to Non-Auction Transactions in Select Symbols. Specifically, Market Makers and Public Customers will receive a per contract rebate based on ADV considering all transactions executed on BOX by the Market Maker or Public Customer, respectively, as calculated at the end of each month. All Non-Auction Transactions for that month will receive the same per contract rebate according to the ADV achieved by the Market Maker or Public Customer. However, the Exchange proposes to specify that Non-Auction Transactions where a Public Customer order interacts with another Public Customer order will be exempt from the per contract rebate listed below. These transactions will still count toward the Public Customer's monthly ADV.
The new per contract rebate for Market Makers and Public Customers in Non-Auction Transactions as set forth in Section I.A.1. of the BOX Fee Schedule will be as follows:
The Exchange then proposes to amend Section I (Exchange Fees) to establish a subsection entitled “Auction Transactions.”
The new Auction Transactions as set forth in Section I.B. of the BOX Fee Schedule will be as follows:
Since
The Exchange then proposes to edit the language in proposed Section II.C, formerly Section II.D. (Exempt Transactions) and add the following fees for transactions which occur on the opening or re-opening of trading. For these transactions, which are deemed neither to “add” nor “remove” liquidity, the Exchange proposes to assess a flat fee per contract of $0.00 for Public Customers, $0.20 for Professional Customers and Broker Dealers and $0.12 for Market Makers. The Exchange also proposes to clarify that outbound Eligible Orders routed to an Away Exchange, as defined in Rule 15000 Series, remain subject to the fees outlined in Section IV. Eligible Orders Routed to an Away Exchange.
Finally, the Exchange proposes to remove the “Select Symbols” language in Section II.C. (Exempt Transactions) that states that Non-Auction Transactions in Select Symbols will be considered exempt from all liquidity fees and credits. With the proposed changes, all Non-Auction Transactions will be considered exempt.
The Exchange also proposes to amend the Fee Schedule to remove the reference to the Mini Nasdaq 100 Index (NDX) [sic].
Because the Exchange has delisted the Mini-NDX® Index (MNX), the Exchange proposes to remove the reference to MNX from the BOX Fee Schedule. Currently, Section I (Exchange Fees) of the BOX Fee Schedule provides for a surcharge to be applied to options on any index traded on BOX; which includes a $0.22 per contract surcharge for options on MNX. The Exchange has since delisted options on MNX and they are no longer traded on BOX. As such, no related surcharge will apply and the Exchange is proposing to remove the reference from the BOX Fee Schedule.
Finally, the Exchange is proposing to make additional non-substantive changes to the Fee Schedule. Specifically, the Exchange is renumbering certain footnotes, headings and internal references to accommodate the above proposed changes to the Fee Schedule. The Exchange also proposes to move the BOX Volume Rebate from current Section I.E of the Fee Schedule to proposed Section I.B (Auction Transactions).
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act, in general, and Section 6(b)(4) and 6(b)(5) of the Act,
The Exchange believes adopting the current fee structure for Non-Auction Transactions in Select Symbols for all Non-Auction Transactions, regardless of symbol, is reasonable, equitable and not unfairly discriminatory. Even though the Select Symbol fee structure for Non-Auction Transactions was only adopted last month, it was well received by Participants and the industry and the Exchange believes it is appropriate to now apply it to all Non-Auction Transactions. The proposed fee structure is intended to attract order flow to the Exchange by offering all market participants incentives to submit their Non-Auction orders to the Exchange. The practice of providing additional incentives to increase order flow is, and has been, a common practice in the options markets.
The Exchange also believes it is equitable, reasonable and not unfairly discriminatory to assess fees and credits according to the account type of the Participant originating the order and the contra party. This proposed fee structure was recently adopted by the Exchange for Non-Auction Transactions
The Exchange believes that the proposed fees and credits for Public Customers in Non-Auction Transactions are reasonable. Under the proposed fee structure Public Customers will either pay a Maker fee of $0.00 or receive a Maker/Taker credit of $0.22 for Penny Pilot classes and $0.57 for Non-Penny Pilot classes. These potential fees and credits are reasonable and will at all times be less than the current $0.07 Exchange Fee that Public Customers pay in Non-Auction Transactions.
The Exchange believes providing a credit or charging no fee to Public Customers for all Non-Auction Transactions is equitable and not unfairly discriminatory. The securities markets generally, and BOX in particular, have historically aimed to improve markets for investors and develop various features within the market structure for Public Customer benefit. Accordingly, the Exchange believes that charging no fee or providing a credit for Public Customers is appropriate and not unfairly discriminatory. Public Customers are less sophisticated than other Participants and the credit will help to attract a high level of Public Customer order flow to the BOX Book and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX.
Finally, the Exchange believes it is reasonable, equitable and not unfairly discriminatory to give Public Customers a credit when their orders execute against a non-Public Customer and, accordingly, charge non-Public Customers a higher fee when their orders execute against a Public Customer. As stated above, the Exchange aims to improve markets by developing features for the benefit of its Public Customers. Similar to the payment for order flow and other pricing models that have been adopted by the Exchange and other exchanges to attract Public Customer order flow, the Exchange increases fees to non-Public Customers in order to provide incentives for Public Customers. The Exchange believes that providing incentives for Non-Auction Transactions by Public Customers is reasonable and, ultimately, will benefit all Participants trading on the Exchange by attracting Public Customer order flow.
The Exchange believes that charging Professional Customers and Broker Dealers higher fees than Public Customers for Non-Auction Transactions is equitable and not unfairly discriminatory. Professional Customers, while Public Customers by virtue of not being Broker Dealers, generally engage in trading activity more similar to Broker Dealer proprietary trading accounts (submitting more than 390 standard orders per day on average). The Exchange believes that the higher level of trading activity from these Participants will draw a greater amount of BOX system resources than that of non-professional, Public Customers. Because this higher level of trading activity will result in greater ongoing operational costs, the Exchange aims to recover its costs by assessing Professional Customers and Broker Dealers higher fees for transactions.
The Exchange also believes it is equitable and not unfairly discriminatory for BOX Market Makers to be assessed lower fees than Professional Customers and Broker Dealers for Non-Auction Transactions because of the significant contributions to overall market quality that Market Makers provide. Specifically, Market Makers can provide higher volumes of liquidity and lowering their fees will help attract a higher level of Market Maker order flow to the BOX Book and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX. As such, the Exchange believes it is appropriate that Market Makers be charged lower transaction fees than Professional Customers and Broker Dealers for Non-Auction Transactions.
The Exchange believes that the proposed fees and credits for all other Participants in Non-Auction Transactions are reasonable. Under the proposed fee structure, a Professional Customer or Broker Dealer making liquidity and interacting with a Professional Customer, Broker Dealer or Market Marker will either be charged a fee of $0.20 for Penny Pilot Classes or $0.30 for Non-Penny Pilot Classes. If the Professional Customer or Broker Dealer is instead taking liquidity in either Penny Pilot or Non-Penny Pilot Classes, it will be charged $0.35 if it interacts with a Professional Customer or Broker Dealer and $0.39 if it interacts with a Market Maker. The Exchange believes the fees listed above are reasonable as they are lower than the current $0.42 Exchange Fee charged to Broker Dealers and Professional Customers in Non-Auction Transactions.
Similarly, in the proposed fee structure a Market Maker making liquidity in both Penny Pilot and Non-Penny Pilot Classes will either be charged a fee of $0.00 for interacting with a Professional Customer or Broker Dealer or $0.10 for interacting with another Market Maker. If the Market Maker is instead taking liquidity, it will be charged $0.05 (for Penny Pilot Classes) and $0.10 (for Non-Penny Pilot Classes) if it interacts with a Professional Customer or Broker Dealer. If a Market Maker is taking liquidity and interacts with another Market Maker they will be charged $0.29 in all situations. The Exchange believes the fees listed above are reasonable as they are, in most situations, lower than the current $0.13 to $0.35 Exchange Fee range for Market Makers under the BOX Fee Schedule and are in line with what is currently charged by the industry.
The Exchange believes it is reasonable, equitable and not unfairly discriminatory for Professional Customers, Broker Dealers and Market Makers to be charged higher fees for both making and taking liquidity when interacting with Public Customers. In the proposed fee structure, a Professional Customer or Broker Dealer interacting with a Public Customer will be charged a $0.55 Maker fee or $0.59 Taker fee for Penny Pilot Classes and a $0.90 Maker fee or $0.94 Taker fee for Non-Penny Pilot Classes. Similarly a Market Marker interacting with a Public Customer will be charged a $0.51 Maker fee or $0.55 Taker fee for Penny Pilot Classes and a $0.85 Maker fee or $0.90 Taker fee for Non-Penny Pilot Classes. While these fees are higher than what these Participants are currently charged for Non-Auction Transactions in Non-Select Symbols, the Exchange believes they are reasonable as they are in line when compared to similar fees in the options industry.
The Exchange believes it is reasonable, equitable and not unfairly discriminatory for Professional Customers, Broker Dealers and Market Makers to be charged a higher fee for orders removing liquidity when compared to the fee they receive for orders that add liquidity. Charging a lower fee for orders that add liquidity will promote liquidity on the Exchange and ultimately benefit all participants on BOX. Further, the concept of incentivizing orders that add liquidity over orders that remove liquidity is commonly accepted within the industry as part of the “Make/Take” liquidity model.
Further, the Exchange believes it is equitable and not unfairly discriminatory to charge the Professional Customer or Broker Dealer more for taking liquidity against a Market Maker than they are charged for taking liquidity against other Professional Customers or Broker Dealers. As stated above, the Exchange proposes to provide certain incentives to Market Makers because of the high volumes of liquidity they can provide and increasing fees for Professional Customers and Broker Dealers taking liquidity will allow the Exchange to offer these incentives, ultimately benefiting all Participants trading on BOX.
Finally, the Exchange also believes it is reasonable to charge Professional Customers, Broker Dealers, and Market Makers less for certain executions in Penny Pilot issues compared to Non-Penny Pilot issues because these classes are typically more actively traded; assessing lower fees will further incentivize order flow in Penny Pilot issues on the Exchange, ultimately benefiting all Participants trading on BOX. Additionally, the Exchange believes it is reasonable to give a greater credit to Public Customers for Non-Auction Transactions in Non-Penny Pilot issues as compared to Penny Pilot issues. Since these classes have wider spreads and are less actively traded, giving a larger credit will further incentivize Public Customers to trade in these classes, ultimately benefitting all Participants trading on BOX.
The Exchange believes that the proposed Non-Auction Transactions fee structure will keep the Exchange competitive with other exchanges and will be applied in an equitable manner among all BOX Participants. The Exchange believes the proposed fee structure is reasonable and competitive with fee structures in place on other exchanges. Further, the Exchange believes that the competitive marketplace impacts the fees proposed for BOX.
BOX believes it is reasonable, equitable and not unfairly discriminatory to introduce tiered volume based rebates for Market Makers and Public Customers in all Non-Auction Transactions. Other exchanges employ similar incentive programs,
Additionally, the Exchange believes that the proposed volume thresholds are reasonable because they will incentivize Public Customers and Market Makers to direct order flow to the Exchange to obtain the benefit of the rebate, which will in turn benefit all market participants by increasing liquidity on the Exchange. The Exchange believes that its proposed volume threshold and rebate is competitive when compared to rebate structures at other exchanges. Finally, the Exchange believes it is reasonable to exempt Non-Auction Transactions where a Public Customer order interacts with another Public Customer order from the per contract rebate. The Exchange does not believe a rebate in this situation is appropriate, as neither Public Customer will be paying a fee for the transaction. Further, these transactions will still count toward the Public Customer's monthly ADV.
The Exchange also believes it is equitable and not unfairly discriminatory to only adopt these structures for Public Customers and Market Makers. The proposed volume credits are intended to further encourage Public Customer and Market Maker Non-Auction order flow to the Exchange. Increased Public Customer and Market Maker volume will provide greater liquidity, which benefits all market participants on the Exchange. The practice of incentivizing increased Public Customer order flow is common in the options markets. Further, Market Makers also provide significant contributions to overall market quality. Specifically, Market Makers can provide high volumes of liquidity and lowering their Non-Auction Transaction fees will potentially help attract a higher level of
The Exchange believes it reasonable to remove the tiered fee structure for Market Makers based upon ADV. The tiered fee structure was adopted to incentivize Market Makers to direct order flow to the Exchange, which the Exchange believes is now unnecessary with the adoption of the new Non-Auction Transactions fee structure as well as the Tiered Volume Rebates for Market Makers in Non-Auction Transactions. Additionally, in Auction Transactions Market Makers remain eligible for the BOX Volume Rebate for all PIP and COPIP Orders of 250 and under contracts. The Exchange believes it is reasonable to adopt a flat $0.20 per contract fee for Market Makers in PIP Orders, COPIP Orders, and Agency Orders. Specifically, the Exchange believes the fee strikes the appropriate balance between the $0.13 to $0.35 fees that Market Makers are currently charged for these orders and is reasonable when compared to similar fees among the industry.
The Exchange believes that exempting all Non-Auction Transactions from Section II (Liquidity Fees and Credits) is reasonable, equitable and not unfairly discriminatory. The Exchange's Liquidity Fees and Credits are intended to attract order flow to the Exchange by offering incentives to all market participants to submit orders to the Exchange and the Exchange believes that the proposed fee structure will provide appropriate incentives to encourage Participants to submit Non-Auction Transactions to the Exchange. The Exchange believes that exempting Non-Auction Transactions from liquidity fees and credits is reasonable compared to the similar fees and credits offered by the other exchanges. The Exchange believes exempting Non-Auction Transactions from liquidity fees and credits is not unfairly discriminatory as the exemption from the liquidity fees and credits applies equally to all Participants on the Exchange.
The Exchange believes it is reasonable edit [sic] the Exempt Transactions subsection and to assess a flat fee for transactions which occur on the opening or re-opening of trading and are deemed neither to “add” nor “remove” liquidity. With the proposed fee structure for Non-Auction Transactions, which assess fees and credits dependent upon whether the Participant is a liquidity provider or liquidity taker, transactions on the opening or re-opening will not being [sic] charged an Exchange fee. For example, under the proposed Non-Auction fee structure a transaction on the opening would not be charged an Exchange Fee under Section I of the BOX Fee Schedule. Instead the Exchange is proposing to ensure that these transactions are assessed a fee. The Exchange has previously had this type of fee within the BOX Fee Schedule
The Exchange believes it is reasonable to remove from the BOX Fee Schedule a reference to a fee that is no longer applicable as options on MNX have been delisted and are no longer traded on BOX. The Exchange also believes it is equitable and not unfairly discriminatory to remove all references to MNX as this applies equally to all Participants on the Exchange.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange believes that adopting the proposed fee structure for all Non-Auction Transactions will not impose a burden on competition among various Exchange Participants. BOX currently assesses distinct standard contract Exchange Fees for different account and transaction types. The Exchange believes that applying a fee structure that is determined according to whether the order removes or adds liquidity, the account type of the Participant submitting the order, and the contra party will result in Participants being charged appropriately for these transactions. Submitting an order is entirely voluntary and Participants can determine which type of order they wish to submit, if any, to the Exchange.
Further, the Exchange believes that this proposal will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for order flow.
Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing exchanges. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Exchange Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to add specificity to the Exchange's options trading rules. The Exchange proposes to define cancel-replacement orders and also describe a route timer at in Chapter VI, entitled “Trading Systems.”
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange is proposing to amend Chapter VI to add additional specificity to its rules. The Exchange proposes to amend Section 1, Definitions, to define a cancel-replacement order. The Exchange proposes to amend Section 11, Order Routing, to add greater specificity to the Rulebook concerning a route timer.
A market participant today has the option of either sending in a cancel order and then separately sending in a new order which serves as a replacement of the original order (two separate messages) or sending a single cancel-replacement order in one message.
If an order is submitted to the System and then subsequently a cancel order is sent to the System cancelling the original order, the original order will be cancelled by the System provided the original order was not already filled partially or in its entirety. A subsequent replacement order would be treated as a new order by the System and will not
An order that is entered as one single message (“cancel-replacement order”) containing two orders (versus two messages as described above) will also result in the original order being cancelled, provided the original order was not already filled partially or in its entirety.
By way of example, if the original order is for 600 contracts and a market participant submits a cancel-replacement order for 600 contracts and in doing so, amends a term or condition such as the order type, presuming the original order was not filled in its entirety or partially, the entire original order would be cancelled. If the original order is for 600 contracts and a market participant submits a cancel-replacement order for 600 contracts and in doing so, amends a term or condition such as the order type, and 600 contracts were already filled, the cancel-replacement order would be returned to the market participant. If the original order is for 600 contracts and a market participant submits a cancel-replacement order for 600 contracts and in doing so, amends a term or condition such as the order type, and 300 contracts were already filled, the order would be modified to 300 contracts. Finally, if the original order is for 600 contracts and a market participant submits a cancel-replacement order solely reducing the size of the order by 300 contracts, the order would be modified to 300 contracts and the original order would retain its priority. In the previous examples provided, the orders would not retain the priority of the original orders.
The Exchange proposes to add the following definition in Chapter VI, Section 1, “Cancel-replacement order shall mean a single message for the immediate cancellation of a previously received order and the replacement of that order with a new order with new terms and conditions. If the previously placed order is already filled partially or in its entirety, the replacement order is automatically canceled or reduced by the number of contracts that were executed. The replacement order will not retain the priority of the cancelled order except when the replacement order reduces the size of the order and all other terms and conditions are retained.” This language is being added to Section 1(e)(1) to reflect the manner in which cancel-replacement orders function today. This filing does not reflect a change to the System; rather, the Exchange is memorializing in its rules the manner in which cancel-replacement orders are treated today.
Today, the System provides a number of routing options pursuant to which orders are sent to other available market centers for potential execution, per the entering market participant's instructions.
The Exchange proposes to add language in a new Section 11(a)(1)(C) to specify that after an order is initially routed,
This language is being added to Section 11 to reflect the manner in which the Exchange imposes a Route Timer on routed orders today to permit quote updates to occur prior to subsequent routing. This filing does not reflect a change to the System, rather the Exchange is memorializing in its rules the manner in which orders are routed today.
The Exchange also proposes to amend rule text in Section 11(a)(1)(A) of Chapter VI concerning the SEEK routing option. The Exchange proposes to add language which clarifies the differences between SEEK and SRCH routing options with respect to contracts that remain un-executed after routing and are posted on the book. The Exchange proposes to state, “Once on the book
The Exchange also proposes to correct a typographical error in Chapter VI, Section 11(a)(1).
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange believes that its proposal to define cancel-replacement orders will add transparency to the rules. The Exchange is not amending the manner in which the System handles these orders. The Exchange is memorializing, in its rules, the method by which orders are handled by the System. The Exchange is defining cancel-replacement orders within Chapter VI, Section 1.
Specifically, with respect to cancel-replacement orders that reduce size, the Exchange believes that allowing cancel-replacement orders where only size is reduced to retain the priority of the original order is consistent with the manner in which the Exchange treats partially executed orders, which similarly apply the priority of the executed portion of the order to the remaining portion of the order. In addition, by permitting market participants' orders to remain on the book with the original priority and reduced size, the Exchange is providing market participants an ability to reduce exposure. The Exchange believes that adding transparency and specificity to the Rules protects investors and the public interest by reducing the potential for investor confusion.
The Exchange is also memorializing the manner in which the Exchange routes unexecuted portions of an order that will be subsequently routed to other markets when it comes back and subsequently locks and/or crosses the market. The Exchange will continue to re-route eligible unexecuted orders pursuant to a Route Timer. Contracts which remain unexecuted will be posted to the book provided the order's limit price would not lock or cross the ABBO. Specifically, the Exchange is describing the Route Timer that applies to eligible unexecuted portions of an order which will be subsequently routed. The timer protects investors and the public interest by providing a brief time period to allow the opportunity for markets to update quotes prior to subsequent routes.
The Exchange seeks to add language concerning the specific manner in which the Exchange will handle the routed order by specifying the routing methods in which SEEK or SRCH orders will route to the away market(s). The Exchange is adding clarifying language to make clear that after an order is initially routed, pursuant to either the SEEK or SRCH routing option, the order will post to the book and will be routed after a time period (“Route Timer”) not to exceed one second as specified by the Exchange on its Web site provided that the order would lock or cross other market center(s). If, during the Route Timer, any new interest arrives opposite the order that is equal to or better than the ABBO price, the order will trade against such new interest at the ABBO price. Eligible unexecuted orders will be routed at the end of the Route Timer provided the order was not filled and it would continue to lock or cross the ABBO. If an order was routed with either the SEEK or SRCH routing option, and has size after such routing, it will execute against contra side interest in the book, post in the book, and route again pursuant to the process described above, if applicable, if the order would lock or cross another market center(s).
Further, the proposal to amend rule text in Section 11(a)(1)(A) of Chapter VI concerning SEEK orders clarifies the differences between SEEK and SRCH routing options with respect to contracts that remain un-executed after routing and are posted on the book. The Exchange seeks to clearly note that once an order routed pursuant to the SEEK routing option is on the order book at the limit price, it will not route, despite the order locking or crossing another market center. The Exchange believes this language more clearly differentiates an order routed pursuant to the SEEK routing option as compared to SRCH routing option.
The Exchange believes this language adds specificity and detail to the rule text so that market participants may anticipate the manner in which orders are handled by the Exchange when routing. The Exchange believes that adding transparency and specificity to the Rules protects investors and the public interest by reducing the potential for investor confusion.
The Exchange's proposal is intended to provide additional specificity to the rules in the manner in which the System treats cancel-replacement orders and handles routing of eligible unexecuted portions of previously routed orders, which is designed to promote just and equitable principles of trade.
The Exchange is not proposing to amend the manner in which the System operates. Cancel-replacement orders have been treated in this fashion since BX Options was first launched. Further, the Routing Timer for subsequent routes has also been in place on BX Options since its launch. The Exchange is proposing these additions to the rules in order to provide greater specificity to the Exchange's rules.
BX does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange is seeking to provide greater transparency in its rules. The amendments are non-substantive and would apply to all market participants in the same manner. Permitting cancel-replacement orders to retain their original priority does not impose a burden on competition because the priority is retained only in the instance that size alone is changed and only if it is reduced. Permitting all market participants to reduce their exposure without penalty does not burden competition, rather it promotes competition by allowing participants the ability to change their orders in a changing market, provided the order was not already partially filled or filled in its entirety.
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Kolasco Corp. because of questions regarding control over the company and the accuracy of company information, including in filings with the Commission, concerning, among other things, the company's acting officers. Kolasco Corp. is a Nevada corporation with its principal place of business located in Toronta, Canada. Its stock is quoted on OTC Link, operated by OTC Markets Group Inc., under the ticker: KLSC.
The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed company.
By the Commission.
U.S. Small Business Administration.
Notice of open Federal Advisory Committee Meeting.
The SBA is issuing this notice to announce the location, date, time, and agenda for the next meeting of the Advisory Committee on Veterans Business Affairs. The meeting will be open to the public.
Wednesday, December 17, 2014 from 9 a.m. to 4 p.m.
U.S. Small Business Administration, 409 3rd Street SW., Washington, DC 20416. Room: Eisenhower Conference room C, located on the Concourse Level Floor.
Pursuant to section 10(a) (2) of the Federal Advisory Committee Act (5 U.S.C., Appendix 2), SBA announces the meeting of the Advisory Committee on Veterans Business Affairs. The Advisory Committee on Veterans Business Affairs serves as an independent source of advice and policy recommendation to the Administrator of the U.S. Small Business Administration.
The purpose of this meeting is scheduled as a full committee. It will focus on strategic planning, updates on past and current events and the ACVBA's objectives for 2015. For information regarding our veterans' resources and partners, please visit our Web site at
The meeting is open to the public, however, advance notice of attendance is requested. Anyone wishing to attend and/or make a presentation to the Advisory Committee must contact Barbara Carson, by December 12, 2014, by email in order to be placed on the agenda. Comments for the Record should be emailed prior to the meeting for inclusion in the public record, verbal presentations; however, will be limited to five minutes in the interest of time and to accommodate as many presenters as possible. Written comments should be emailed to Barbara Carson Acting Associate Administrator, Office of Veterans Business Development, U.S. Small Business Administration, 409 3rd Street SW., Washington, DC 20416.
Additionally, if you need accommodations because of a disability or require additional information, please contact Barbara E. Carson, Designated Federal Official for the Advisory Committee on Veterans Business Affairs at (202) 205–6773; or by email at
U.S. Small Business Administration.
Notice of open Federal Interagency Task Force Meeting.
The SBA is issuing this notice to announce the location, date, time, and vagenda for its public meeting of the Interagency Task Force on Veterans Small Business Development. The meeting will be open to the public.
SBA Headquarters, 409 3rd Street SW., Washington, DC 20416, in the Eisenhower Conference Room B, Concourse Level.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C., Appendix 2), SBA announces the meeting of the Interagency Task Force on Veterans Small Business Development. The Task Force is established pursuant to Executive Order 13540 and focused on coordinating the efforts of Federal agencies to improve capital, business development opportunities and pre-established Federal contracting goals for small business concerns owned and controlled by veterans (VOB's) and service-disabled veterans (SDVOSB'S). Moreover, the Task Force shall coordinate administrative and regulatory activities and develop proposals relating to “six focus areas”: (1) Access to capital (loans, surety bonding and franchising); (2) Ensure achievement of pre-established contracting goals, including mentor protégé and matching with contracting opportunities; (3) Increase the integrity of certifications of status as a small business; (4) Reducing paperwork and administrative burdens in accessing business development and entrepreneurship opportunities; (5) Increasing and improving training and counseling services; and (6) Making other improvements to support veteran's business development by the Federal government. On November 1, 2011, the Interagency Task Force on Veterans Small Business Development submitted its first report to the President, which included 18 recommendations that were applicable to the “six focus areas” identified above. The purpose of the meeting is to discuss progress on the recommendations and next steps identified by the Interagency Task Force (IATF) in the Fiscal Year (FY) 14 Annual Report. The agenda will include updates from each of the members, public comment, and planning for the FY 14 of the IATF's Annual Report. In addition, the Task Force will allow time to obtain public comment from individuals and representatives of organizations regarding the areas of focus.
The meeting is open to the public; however, advance notice of attendance is requested. Anyone wishing to attend and/or make a presentation to the Task Force must contact Barbara Carson, by December 12, 2014 by email in order to be placed on the agenda. Comments for the record should be applicable to the “six focus areas” of the Task Force and emailed prior to the meeting for inclusion in the public record, verbal presentations; however, will be limited to five minutes in the interest of time and to accommodate as many presenters as possible.
Written comments should be emailed to Barbara Carson, Acting Associate Administrator, Office of Veterans Business Development, U.S. Small Business Administration, 409 3rd Street SW., Washington, DC 20416, at the email address for the Task Force,
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the imported objects, contact Paul W. Manning, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6469). The mailing address is U.S. Department of State, SA–5, L/PD, Fifth Floor (Suite 5H03), Washington, DC 20522–0505.
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the exhibit objects, contact Julie Simpson, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6467). The mailing address is U.S. Department of State, SA–5, L/PD, Fifth Floor (Suite 5H03), Washington, DC 20522–0505.
The U.S. Advisory Commission on Public Diplomacy will hold a public meeting from 10:00 a.m. until 12:00 p.m., Thursday, December 11, 2014 in Room 902 (ninth floor) of the Hart Senate Office Building, at the corner of Second Street and Constitution Ave. NE., Washington, DC 20002.
The meeting's topic will be on “A Report on United States Public Diplomacy and International Broadcasting Activity Worldwide” and will feature findings from the Commission's Congressionally-mandated Comprehensive Annual Report on State Department and Broadcasting Board of Governors-led foreign public engagement activities. Representatives from the State Department and the BBG will be in attendance to discus the report, which focuses on both Washington and field-directed activities.
This meeting is open to the public, Members and staff of Congress, the State Department, Defense Department, the media, and other governmental and non-governmental organizations. To attend and make any requests for reasonable accommodation, email
The United States Advisory Commission on Public Diplomacy appraises U.S. Government activities intended to understand, inform, and influence foreign publics. The Advisory Commission may conduct studies, inquiries, and meetings, as it deems necessary. It may assemble and disseminate information and issue reports and other publications, subject to the approval of the Chairperson, in consultation with the Executive Director. The Advisory Commission may undertake foreign travel in pursuit of its studies and coordinate, sponsor, or oversee projects, studies, events, or other activities that it deems desirable and necessary in fulfilling its functions.
The Commission consists of seven members appointed by the President, by and with the advice and consent of the Senate. The members of the Commission shall represent the public interest and shall be selected from a cross section of educational, communications, cultural, scientific, technical, public service, labor, business, and professional backgrounds. Not more than four members shall be from any one political party. The President designates a member to chair the Commission.
The current members of the Commission are: Mr. William Hybl of Colorado, Chairman; Ambassador Lyndon Olson of Texas, Vice Chairman; Mr. Sim Farar of California, Vice Chairman; Ambassador Penne Korth-Peacock of Texas; Ms. Lezlee Westine of Virginia; and Anne Terman Wedner of Illinois. One seat on the Commission is currently vacant.
The following individual has been nominated to the Commission but awaits Senate confirmation as of this writing: Alfredo Balsera of Florida.
To request further information about the meeting or the U.S. Advisory Commission on Public Diplomacy, you may contact its Executive Director, Katherine Brown, at
Office of the Secretary of Transportation, Department of Transportation (DOT).
Notice of availability.
DOT is announcing the availability of guidance implementing Section 1319 of MAP–21, on Accelerated Decisionmaking in Environmental Reviews. This section of MAP–21 provides for the use of errata sheets on the Draft Environmental Impact Statement, in lieu of a Final EIS (FEIS), when the EIS has limited or factual changes. It also states that the lead agency under NEPA shall issue a combined FEIS and ROD unless circumstances exist to make it impracticable. This eliminates the 30-day wait period between the release of the FEIS and ROD. This guidance builds on the interim guidance that was released by FHWA and FTA in January 2013, but applies to the entire Department. The FHWA and FTA interim guidance is retained as a supplemental appendix specific to those agencies. The guidance is available at
Rebecca Higgins, Department of Transportation, 1200 New Jersey Ave. SE. W84–318, Washington, DC 20590; email
Federal Aviation Administration (FAA), DOT.
Notice of Memorandum of Agreement.
The FAA has entered into a Memorandum of Agreement for replacing the Griffin—Spalding County
December 15, 2014.
Larry F. Clark, Manager, Federal Aviation Administration, Atlanta Airports District Office, 1701 Columbia Ave., Campus Building, Suite 2–260, College Park, GA 30337.
On October 28, 2014, the City of Griffin and Spalding County, herein referred to as the Sponsor, and the Griffin-Spalding County Airport Authority entered into a Memorandum of Agreement (Agreement) with the FAA for replacing the Griffin-Spalding County Airport (6A2) in Griffin, Georgia. This Agreement sets forth the parties' obligations and commitments with regard to planning and constructing a replacement airport and outlines the process the parties will undertake to decommission 6A2 in the future. Prior to decommissioning 6A2, the FAA will provide notice and an opportunity for public comment as required by 49 U.S.C. 47107(h)(2).
On September 26, 2014, the Federal Aviation Administration added the proposed Griffin-Spalding County Replacement Airport to its National Plan of Integrated Airport Systems. The runway length and airport design at the existing airport are insufficient to support aviation needs. The sponsor evaluated all reasonable and practicable alternatives to address these constraints and proposed construction of the replacement airport to the FAA. The FAA issued a Finding of No Significant Impact/Record of Decision for the proposed replacement airport on March 12, 2013.
Any person may inspect, by appointment, the Agreement in person at the FAA office listed above under
In addition, any person may, upon appointment and request, inspect the Agreement, notice and other documents determined by the FAA to be related to the Agreement in person at the Griffin-Spalding County Airport, 1035 Hill Street, Griffin, GA 30224.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0804
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Jake Troutman, (202) 267–9521, 800 Independence Avenue SW., Washington, DC 20951.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and
You may send comments identified by Docket Number FAA–2014–0838 using any of the following methods:
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Jake Troutman, (202) 267–9521, 800 Independence Avenue SW., Washington, DC, 20951.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0802 using any of the following methods:
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Nia Daniels, (202) 267–7626, 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0816 using any of the following methods:
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Keira Jones (202) 267–4024, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0873 using any of the following methods:
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Nia Daniels, (202) 267–7626. 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0845 using any of the following methods:
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Nia Daniels, (202) 267–7626. 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0496 using any of the following methods:
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Mr. Doug Lundgren, Airman Certification and Training Branch, (AFS–810), General Aviation and Commercial Division, FAA; telephone number (202) 385–9600, fax number (202) 385–9577, email at
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0842 using any of the following methods:
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Jake Troutman, (202) 267–9521, 800 Independence Avenue SW., Washington, DC 20951.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0824
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Jake Troutman, (202) 267–9521, 800 Independence Avenue SW., Washington, DC, 20951.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0855 using any of the following methods:
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Jake Troutman, (202) 267–9521, 800 Independence Avenue SW., Washington, DC, 20951.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0846
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Jake Troutman, (202) 267–9521, 800 Independence Avenue SW., Washington, DC 20951.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice of petition for exemption received.
This notice contains a summary of a petition seeking relief from specified requirements of 14 CFR. The purpose of this notice is to improve the public's awareness of, and participation in, this aspect of FAA's regulatory activities. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before December 3, 2014.
You may send comments identified by Docket Number FAA–2014–0825
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Jake Troutman, (202) 267–9521, 800 Independence Avenue SW., Washington, DC 20951.
This notice is published pursuant to 14 CFR 11.85.
Federal Highway Administration (FHWA), DOT.
Notice of limitation on claims for judicial review of actions by the California Department of Transportation (Caltrans), pursuant to 23 USC 327, and
The FHWA, on behalf of Caltrans, is issuing this notice to announce actions taken by Caltrans, that are final within the meaning of 23 U.S.C. 139(
By this notice, the FHWA, on behalf of Caltrans, is advising the public of final agency actions subject to 23 U.S.C. 139(
Boris Deunert, Senior Environmental Planner, Caltrans District 4 Office of Local Assistance, 12th Floor, 111 Grand
Effective July 1, 2007, the Federal Highway Administration (FHWA) assigned, and the California Department of Transportation (Caltrans) assumed, environmental responsibilities for this project pursuant to 23 U.S.C. 327. Notice is hereby given that Caltrans has taken final agency actions subject to 23 U.S.C. 139(
23 U.S.C. 139(
Federal Highway Administration (FHWA), DOT.
Notice of Availability Regarding a Record of Decision (ROD) for the Virginia Avenue Tunnel Reconstruction Project in Washington, DC.
In accordance with the National Environmental Policy Act (NEPA) and Federal Highway Administration (FHWA) procedures, this notice announces the availability of the ROD regarding the Virginia Avenue Tunnel Reconstruction Project in Washington, DC The Division Administrator, FHWA-District of Columbia signed the ROD on November 4, 2014.
The FHWA ROD for the Virginia Avenue Reconstruction Project can be viewed and downloaded from the project Web site at
Mr. Michael Hicks, Environmental/Urban Engineer, 1990 K Street, Suite 510, Washington, DC 20006–1103, (202) 219–3513; email:
The Virginia Avenue Tunnel Reconstruction Project ROD was developed through preparation of the Final Environmental Impact Statement for the Virginia Avenue Tunnel Reconstruction Project in the District of Columbia. CSX Transportation, Inc. (CSX), the owner of the Virginia Avenue Tunnel, requested approval from FHWA to allow the short-term closure of I–695 ramps located at 6th and 8th Streets SE and occupancy of a portion of the 11th Street Bridge right-of-way located on Interstate 695 (I–695) to allow the reconstruction of the Virginia Avenue Tunnel. The tunnel is located in the Capitol Hill neighborhood of Washington, DC beneath eastbound Virginia Avenue SE. from 2nd Street SE. to 9th Street SE.; Virginia Avenue Park between 9th and 11th Streets; and the 11th Street Bridge right-of-way. The tunnel is also aligned on the south side of I-695. The final agency actions documented in the FHWA Record of Decision (ROD) were taken in full consideration of the information presented in the Draft Environmental Impact Statement approved on July 2, 2013, the Final Environmental Impact Statement approved on June 5, 2014, public and agency comments, and in other documents in the FHWA administrative record. The final agency actions also considered the DEIS public hearing held on July 31, 2013; and public meetings held on September 14, 2011, November 30, 2011, May 21, 2012, September 27, 2012, July 1, 2014 and July 31, 2014.
23 CFR 771.127; 49 CFR 1.81, 1.85.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FMCSA announces its plan to submit the Information Collection Request (ICR) described below to the Office of Management and Budget (OMB) for its review and approval and invites public comment. The FMCSA requests approval of a new ICR titled,
We must receive your comments on or before January 12, 2015.
You may submit comments identified by Federal Docket Management System (FDMS) Docket Number FMCSA–2014–0133 using any of the following methods:
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Mr. Michael Gordon, Office of State Programs, Commercial Driver's License Division (MC–ESL),, Federal Motor Carrier Safety Administration, West Building 6th Floor, 1200 New Jersey Avenue SE., Washington, DC 20590. Telephone: 304–549–2651; email
This collection of information supports the DOT strategic goal of safety by requiring the States to assure that drivers of CMVs are properly licensed according to all applicable Federal requirements
States will be required to complete a Commercial Driver's License Program Plan using a spreadsheet or pdf document that will be provided by FMCSA to each SDLA. The plan will be completed by the State and provided to FMCSA's CDL Division via the Automated Compliance Review System (ACRS), for review and concurrence. FMCSA may reject a State's Commercial Driver's License Program Plan if it is determined to be deficient by not adequately addressing the State's deficiencies, and/or assurances. Within the plan, the State will identify any deficiencies from the most recent audit and will be required to provide detailed information to demonstrate how the State will obtain compliance with Section 32305(a) of MAP–21 by September 30, 2015 and remain in compliance through September 30, 2016. This will enable FMCSA to determine a State's level of compliance with the CDL requirements. Previous to
The spreadsheet was developed by FMCSA. The spreadsheet will be sent to each SDLA. The SDLA will complete the spreadsheet and send directly to FMCSA via electronic transmission. FMCSA will then review each plan to assess each State's level of compliance with the CDL requirements. The spreadsheets will then be uploaded into FMCSA's Automated Compliance Review System (ACRS). Appropriate feedback will be provided from MC–ESL to each State after review.
FMCSA estimates that each SDLA would need approximately 40 hours to complete the State Commercial Driver's License Program Plan and submit it to FMCSA. The Program Plan is completed on a one-time basis as required by section 32305 of MAP–21. There is no continuing information collection function associated with submitting this Program Plan. The Program Plan asks for information which is readily available to the filer.
For the purposes of the CDL program, the District of Columbia is considered a State. Therefore, there are 51 State responses with an estimated 40 hours per response to complete and submit the Program Plan to FMCSA.
The FMCSA estimates the SDLAs total annual burden is 2,040 hours (51 responses × 40 hours = 2,040 hours).
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of Availability of Research Report.
On March 28, 2014, the Federal Motor Carrier Safety Administration (FMCSA) published a Supplemental Notice of Proposed Rulemaking (SNPRM) that proposed amendments to the Federal Motor Carrier Safety Regulations (FMCSRs) to establish: Minimum performance and design standards for hours-of-service (HOS) electronic logging devices (ELDs); requirements for the mandatory use of these devices by drivers currently required to prepare HOS records of duty status (RODS); requirements concerning HOS supporting documents; and measures to address concerns about harassment resulting from the mandatory use of ELDs. FMCSA announces the availability of a new report: “Attitudes of Truck Drivers and Carriers on the Use of Electronic Logging Devices and Driver Harassment.” This project surveyed drivers on their attitudes regarding carrier harassment and examined whether reported harassment experiences varied due to the hours-of-service logging method used by the driver. The survey is an effort to further address the potential for harassment associated with ELDs and provides results that are consistent with the Agency's discussion of harassment in the ELD SNPRM. A copy of the report has been placed in the docket referenced at the beginning of this notice.
Comments must be received by December 15, 2014.
You may submit comments identified by Docket Number FMCSA–2010–0167 addressing the Research Report using any of the following methods:
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To avoid duplication, please use only one of these four methods. See the “Public Participation and Request for Comments” portion of the
For information concerning this report, please contact Mr. Albert Alvarez, Research Division of the Office of Analysis, Research, and Technology, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590–0001 or by telephone at 202–385–2377.
FMCSA encourages you to participate by submitting comments and related materials pertaining to the report. This notice does not extend the earlier comment period pertaining to the ELD SNPRM published March 28, 2104.
If you submit a comment, please include the docket number for this notice (FMCSA–2010–0167), indicate the specific section of the report to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so the Agency can contact you if it has questions regarding your submission.
To submit your comment online, go to
If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
FMCSA will consider all comments and material received during the comment period pertaining to the report.
To view comments, as well as other documents available in the docket, go to
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to
This research report, titled, “Attitudes of Truck Drivers and Carriers on the Use of Electronic Logging Devices and Driver Harassment,” examines the nature of harassment as viewed by truck drivers who are required to record their hours of service for the purposes of Federal reporting regulations. As it examines their perceptions, this research also reviews:
• Whether drivers' experiences and interactions with their carriers fall into the category of harassment.
• If these experiences occur with any regularity (once or twice a month or more).
• Whether these interactions are made possible as a result of the carrier using HOS data collected via an ELD and whether it was a standalone ELD or part of a comprehensive system that included ELD capability.
These experiences and perceptions are reviewed both for truck drivers and for carrier personnel who manage truck drivers. The data collected from carrier personnel is similar to that collected from the drivers; that is, carriers were asked about the regularity of specific interactions with drivers at their firm, and whether the drivers might consider such actions (if they occur) harassment.
Drivers are analyzed according to the systems they used for logging their HOS (i.e., paper or ELD). Carrier personnel are also considered according to the primary HOS logging method used by their company.
Additional data was collected regarding attitudes about ELDs, reactions to definitions of harassment and coercion developed by the FMCSA, ways in which drivers are compensated and evaluated, and profiles of both the drivers and the carrier companies.
For the complete report, visit docket number FMCSA–2010–0167 or
Federal Transit Administration (FTA), (DOT).
Notice of intent to prepare an environmental impact statement (EIS) and section 4(f) evaluation.
The Federal Transit Administration (FTA) and the Metropolitan Atlanta Rapid Transit Authority (MARTA) intend to prepare an Environmental Impact Statement (EIS) and an evaluation per 49 U.S.C. 303 and 23 CFR part 774 (“Section 4(f)”) for MARTA's I–20 East Heavy Rail Transit (HRT) Extension project, which would extend the existing Blue Line from the Indian Creek MARTA Station to the Mall at Stonecrest in eastern DeKalb County. The EIS and Section 4(f) Evaluation will be prepared in accordance with regulations implementing the National Environmental Policy Act (NEPA), Section 4(f), as well as FTA's regulations and guidance implementing NEPA (40 CFR parts 1500 through 1508 and 23 CFR 771.105).
The extension of the existing MARTA Blue Line HRT was selected as a component of a multimodal Locally Preferred Alternative (LPA) resulting from the I–20 East Transit Initiative Detailed Corridor Analysis (DCA) completed in April 2012. The LPA also includes new Bus Rapid Transit (BRT) service along I–20 between downtown Atlanta and a new station at Wesley Chapel Road, east of I–285 in DeKalb County. The NEPA analysis for the BRT project is being advanced separately in an Environmental Assessment (EA).
The FTA originally published a NOI to perform federal environmental review for the entire I–20 East Transit Initiative LPA on August 28, 2012 (77 FR 52128). Project scoping activities for the I–20 East Transit Initiative LPA occurred in September 2012. In today's issue of the
The first phase of the I–20 East Transit Initiative was the two year-long DCA. This DCA built upon a number of transit studies previously completed in the corridor and identified and evaluated transit improvements in the I–20 East Corridor from downtown Atlanta to the Mall at Stonecrest in eastern DeKalb County. The result of the DCA was the selection of a multimodal LPA comprised of an extension of the existing Blue heavy rail transit (HRT) line from MARTA's Indian Creek Station to the Mall at Stonecrest in eastern DeKalb County and new BRT service along I–20 between downtown Atlanta and a new station at Wesley Chapel Road, east of I–285 in DeKalb County.
The EIS, which focuses on the HRT Extension, has a study area that extends from the MARTA Indian Creek Station
The LPA presented to the public at Public Scoping Meetings on September 10, 11, and 13, 2012 included both the BRT and HRT components of the LPA. The BRT component is a separate project that is being addressed in an Environmental Assessment. The EIS Purpose and Need has been revised to specifically address the HRT Extension project as follows:
The purpose of the I–20 East HRT Extension project is to increase east-west mobility options between the City of Atlanta and Southeast DeKalb County and to improve transit access between residential areas and activity and employment centers both within the corridor and across the region—with minimal impacts to private property, historical resources and neighborhoods, and parklands by:
• Providing reliable and efficient transit service with sufficient capacity to address future travel demand projected in the I–20 corridor through a one-seat ride into downtown Atlanta and other activity centers in the corridor.
• Providing an alternative to automobile travel on congested roadways in the corridor, particularly the most congested areas east of I–285.
• Connecting to the existing MARTA rail network, thereby addressing a gap in the current system and improving regional transit accessibility and access to jobs for those who live and work in South DeKalb County.
• Completing an important link in the region's long term transit vision, Concept 3.
• Encouraging redevelopment and revitalization in key activity centers through investment opportunities around fixed transit stations.
The project is needed to:
• Meet the needs of corridor residents by providing a high capacity transit alternative to the current transportation system in a corridor that does not have sufficient capacity or planned capacity to address future travel demand. Few roadway investments are planned along the I–20 East Corridor between I–285 and the Mall at Stonecrest through 2040.
• Address increasing congestion and unreliable travel times in the corridor by providing an alternative to automobile trips into and out of Atlanta. Transit travel times on the current MARTA and Georgia Regional Transportation Authority (GRTA) Xpress bus systems to destinations east of I–285 are expected to double between 2010 and 2040, with the majority of travel times greater than 80 minutes.
• Improve regional mobility and access to jobs and services for corridor residents, especially the transit-dependent population. The I–20 East corridor has a higher transit-dependent population than the metro Atlanta region and the State of Georgia, with approximately 10% zero-car households.
• Provide a direct link to the existing MARTA rail and bus network for residents of South DeKalb County, closing a critical gap in the existing network for the historically underserved and choice transit riders in the corridor. By offering a connection into the existing MARTA heavy rail system, residents and workers in the area would be provided with a one-seat ride to a direct connection to the City of Atlanta, the City of Decatur, DeKalb County and various regional employment centers. Citizens east of I–285 currently have a constrained number of options to access the MARTA system, requiring travel either by bus or by car, experiencing (and contributing to) congested roadway conditions and unreliable transit travel times due to operations in mixed traffic. This expansion will close a critical gap in the existing network by providing a proximate, direct, and reliable link for the traditionally underserved and choice transit riders in the corridor.
• Implement the region's future transit vision as well as regional and local land use and development plans for future investment in the corridor. Both the Atlanta Regional Commission's (ARC) Plan 2040 financially constrained regional transportation plan and the Concept 3 Transit Vision include the I–20 Corridor as a key link in the future regional transit network. The Regional Development Plan, DeKalb County Comprehensive Transportation Plan, and numerous local plans and studies incorporate fixed guideway transit as a catalyst for redevelopment in the I–20 East corridor.
• Promote reinvestment by providing the transit infrastructure needed to support investment in transit oriented development at key activity centers, such as the Wesley Chapel Road and Mall at Stonecrest. There is significant projected economic benefit for the corridor and the region through transit oriented development and related investment opportunities that will create jobs, revitalize key areas, and contribute to a transit oriented development pattern served directly by the MARTA system.
MARTA completed a two year-long DCA that evaluated potential alignments and transit technologies for transit improvements in the I–20 East Corridor. From multiple alignment and transit technology alternatives, an LPA was selected and adopted by the MARTA Board of Directors in April 2012. The LPA included both a BRT and an HRT Extension project. The EIS will evaluate vertical and horizontal alternatives of the HRT portion of the adopted LPA as well as a No-Build alternative. These alternatives are described as follows:
1. No Build Alternative: This alternative reflects the existing transportation system plus any committed MARTA and Georgia Regional Transit Authority (GRTA) local and express bus service in the corridor, as well as all other transportation investments included in the Atlanta Regional Commission's (ARC) long-range transportation plan. ARC is the Metropolitan Planning Organization (MPO) for the Atlanta urbanized area. The I–20 East BRT project is included in the No-Build Alternative because its implementation is expected to precede that of the I–20 East HRT Extension by several years. NEPA requires the consideration of a No Build Alternative as a means of comparing and evaluating the impacts and benefits of the Build Alternative.
2. Build Alternative: The Build Alternative to be evaluated in the EIS is the extension of the existing MARTA east-west HRT line from the Indian Creek Station, south parallel to I–285, then east parallel to I–20 to the Mall at Stonecrest in eastern DeKalb County. The HRT service would include new stations at Covington Highway, Wesley Chapel Road, Panola Road, Lithonia Industrial Blvd., and the Mall at Stonecrest. It is expected that the HRT service would be implemented in two phases. The first phase would extend the existing MARTA east-west HRT line from Indian Creek Station to Wesley Chapel Road. The second phase would extend from Wesley Chapel Road to the Mall at Stonecrest. The HRT alignment would generally be located adjacent to the interstate and would utilize Georgia Department of Transportation (GDOT) right-of-way wherever possible.
The scope of the environmental analysis and procedures shared in the NOI published August 28, 2012 and at
Federal Transit Administration (FTA), DOT.
Rescind Notice of Intent to prepare an environmental impact statement and environmental assessment.
The FTA in cooperation with the Metropolitan Atlanta Rapid Transit Authority (MARTA) is issuing this notice to advise the public that the Notice of Intent (NOI) to prepare an Environmental Impact Statement (EIS) and Environmental Assessment (EA) for the proposed public transportation improvement project in the City of Atlanta and DeKalb County, Georgia is being rescinded.
Mr. Stan Mitchell, Environmental Protection Specialist, Federal Transit Administration Region IV, 230 Peachtree Street NW., Atlanta, GA 30303, phone 404–865–5643, email
The FTA, as lead federal agency, and MARTA published a NOI on August 28, 2012 (77 FR 52128) to prepare an EIS and EA for the MARTA I–20 East Transit Initiative project. This project would extend the existing east-west rail Heavy Rail Transit (HRT) line from the Indian Creek Station to the Mall at Stonecrest in eastern DeKalb County and also create a new Bus Rapid Transit (BRT) service along I–20 between downtown Atlanta and a new station at Wesley Chapel Road, east of I–285 in DeKalb County.
Since that time, FTA and MARTA have conducted scoping activities which have led to reevaluating the project in terms of Purpose and Need. Based on these scoping activities, FTA is rescinding the August 28, 2012 NOI, and, in today's issue of the
Maritime Administration (MARAD), Department of Transportation.
Notice and request for comments.
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Comments must be submitted on or before December 15, 2014.
Anne Wehde, 202–366–5469, Office of Maritime Workforce Development, Maritime Administration, U.S. Department of Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590.
Send comments regarding the burden estimate, including suggestions for reducing the burden, to the Office of Management and Budget, Attention: Desk Officer for the Office of the Secretary of Transportation, 725 17th Street NW., Washington, DC 20503. Comments are invited on: Whether the proposed collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; the accuracy of the Department's estimate of the burden of the proposed information collection; ways to enhance the quality, utility and clarity of the information to be collected; and ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology.
The Paperwork Reduction Act of 1995; 44 U.S.C. Chapter 35, as amended; and 49 CFR 1.93.
Surface Transportation Board, DOT.
Correction to notice of petition for exemption.
On September 30, 2014, Norfolk Southern Railway Company (NSR) filed with the Surface Transportation Board a petition under 49 U.S.C. 10502 for exemption from the provisions of 49 U.S.C. 10903 to discontinue rail service over approximately 40.7 miles of rail line between milepost CT 32.83 at Williamsburg and milepost CT 73.50 at Plum Run in Clermont, Brown and Adams Counties, Ohio.
On October 20, 2014, notice of the petition for exemption was served and published in the
Board decisions and notices are available on our Web site at “
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
U.S.-China Economic and Security Review Commission.
Notice of Official Public Release of the Commission's 2014 Annual Report to Congress on November 20, 2014, Washington, DC.
Notice is hereby given of the following public hearing of the U.S.-China Economic and Security Review Commission.
The Commission is subject to the Federal Advisory Committee Act (FACA) with the enactment of the Science, State, Justice, Commerce and Related Agencies Appropriations Act, 2006 that was signed into law on November 22, 2005 (Pub. L. 109–108). In accord with FACA, meetings of the Commission to make decisions concerning the substance and recommendations of its 2014 Annual Report to Congress are open to the public.
The Commission's 2014 Annual Report contains the following chapters and sections:
Any member of the public seeking further information concerning the hearing should contact Reed Eckhold, 444 North Capitol Street NW., Suite 602, Washington, DC 20001; phone: 202–624–1496, or via email at
Congress created the U.S.-China Economic and Security Review Commission in 2000 in the National Defense Authorization Act (Public Law 106–398), as amended by Division P of the Consolidated Appropriations Resolution, 2003 (Pub. L. 108–7), as amended by Public Law 109–108 (November 22, 2005).
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501–3521), this notice announces that the Veterans Benefits Administration (VBA), Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden; it includes the actual data collection instrument.
Comments must be submitted on or before December 15, 2014.
Submit written comments on the collection of information through
Crystal Rennie, Enterprise Records Service (005R1B), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 632–7492 or email
a. Central Nervous System and Neuromusculo Diseases, Disability Benefits Questionnaire, VA Form 21–0960C–5.
b. Headaches (Including Migraine Headaches), Disability Benefits Questionnaire, VA Form 21–0960C–8.
c. Multiple Sclerosis (MS), Disability Benefits Questionnaire, VA Form 21–0960C–9.
d. Esophageal Disorders (Including GERD), Disability Benefits Questionnaire, VA Form 21–0960G–1.
e. Gallbladder and Pancreas Conditions, Disability Benefits Questionnaire, VA Form 21–0960G–2.
f. Intestinal Disorders (Other Than Surgical or Infectious) (Including Irritable Bowel Syndrome, Crohn's
g. Intestines Surgical and/or Infectious Intestinal Disorders (Bowel Resection, Colostomy, Ileostomy, Bacterial and Parasitic Infections) Disability Benefits Questionnaire, VA Form 21–0960G–4.
h. Hepatitis, Cirrhosis and Other Liver Conditions, Disability Benefits Questionnaire, VA Form 21–0960G–5.
i. Peritoneal Adhesions Disability Benefits Questionnaire, VA Form 21–0960G–6.
j. Stomach and Duodenal Conditions (Not Including GERD or Esophageal Disorders) Disability Benefits Questionnaire, VA Form 21–0960G–7.
k. Infectious Intestinal Disorders, Including Bacterial and Parasitic Infections Disability Benefits Questionnaire, VA Form 21–0960G–8.
l. Rectum and Anus Disability Benefits Questionnaire, VA Form 21–0960H–2.
m. Breast Conditions and Disorders Disability Benefits Questionnaire, VA Form 21–0960K–1.
n. Gynecological Conditions Disability Benefits Questionnaire, VA Form 21–0960K–2.
o. Sleep Apnea Disability Benefits Questionnaire, VA Form 21–0960L–2.
p. Osteomyelitis Disability Benefits Questionnaire, VA Form 21–0960M–11.
q. Ear Conditions (Including Vestibular and Infectious) Disability Benefits Questionnaire, VA Form 21–0960N–1.
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
a. VA Form 21–0960C–5—5,000.
b. VA Form 21–0960C–8—3,750.
c. VA Form 21–0960C–9—7,500.
d. VA Form 21–0960G–1—10,000.
e. VA Form 21–0960G–2—1,250.
f. VA Form 21–0960G–3—1,250.
g. VA Form 21–0960G–4—1,250.
h. VA Form 21–0960G–5—5,000.
i. VA Form 21–0960G–6—1,250.
j. VA Form 21–0960G–7—2,500.
k. VA Form 21–0960G–8—1,250.
l. VA Form 21–0960H–2—2,500.
m. VA Form 21–0960K–1—7,500.
n. VA Form 21–0960K–2—10,000.
o. VA Form 21–0960L–2—1,250.
p. VA Form 21–0960M–11—10,000.
q. VA Form 21–0960N–1—6,250.
a. VA Form 21–0960C–5—30 minutes.
b. VA Form 21–0960C–8—15 minutes.
c. VA Form 21–0960C–9—45 minutes.
d. VA Form 21–0960G–1—15 minutes.
e. VA Form 21–0960G–2—15 minutes.
f. VA Form 21–0960G–3—15 minutes.
g. VA Form 21–0960G–4—15 minutes.
h. VA Form 21–0960G–5—30 minutes.
i. VA Form 21–0960G–6—15 minutes.
j. VA Form 21–0960G–7—15 minutes.
k. VA Form 21–0960G–8—15 minutes.
l. VA Form 21–0960H–2—15 minutes.
m. VA Form 21–0960K–1—15 minutes.
n. VA Form 21–0960K–2—30 minutes.
o. VA Form 21–0960L–2—15 minutes.
p. VA Form 21–0960M–11—15 minutes.
q. VA Form 21–0960N–1—15 minutes.
a. VA Form 21–0960C–5—10,000.
b. VA Form 21–0960C–8—15,000.
c. VA Form 21–0960C–9—10,000.
d. VA Form 21–0960G–1—40,000.
e. VA Form 21–0960G–2—5,000.
f. VA Form 21–0960G–3—5,000.
g. VA Form 21–0960G–4—5,000.
h. VA Form 21–0960G–5—10,000.
i. VA Form 21–0960G–6—5,000.
j. VA Form 21–0960G–7—10,000.
k. VA Form 21–0960G–8—5,000.
l. VA Form 21–0960H–2—10,000.
m. VA Form 21–0960K–1—30,000.
n. VA Form 21–0960K–2—20,000.
o. VA Form 21–0960L2—5,000.
p. VA Form 21–0960M–11—40,000.
q. VA Form 21–0960N–1—25,000.
By direction of the Secretary.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule with comment period.
This major final rule with comment period addresses changes to the physician fee schedule, and other Medicare Part B payment policies to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services, as well as changes in the statute. See the Table of Contents for a listing of the specific issues addressed in this rule.
In commenting, please refer to file code CMS–1612–FC. 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.
2.
Please allow sufficient time for mailed comments to be received before the close of the comment period.
3.
4.
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.
Donta Henson, (410) 786–1947 for any physician payment issues not identified below.
Gail Addis, (410) 786–4522, for issues related to the refinement panel.
Chava Sheffield, (410) 786–2298, for issues related to practice expense methodology, impacts, the sustainable growth rate, conscious sedation, or conversion factors.
Kathy Kersell, (410) 786–2033, for issues related to direct practice expense inputs.
Jessica Bruton, (410) 786–5991, for issues related to potentially misvalued services or work RVUs.
Craig Dobyski, (410) 786–4584, for issues related to geographic practice cost indices or malpractice RVUs.
Ken Marsalek, (410) 786–4502, for issues related to telehealth services.
Pam West, (410) 786–2302, for issues related to conditions for therapists in private practice or therapy caps.
Ann Marshall, (410) 786–3059, for issues related to chronic care management.
Marianne Myers, (410) 786–5962, for issues related to ambulance extender provisions.
Amy Gruber, (410) 786–1542, for issues related to changes in geographic area designations for ambulance payment.
Anne Tayloe-Hauswald, (410) 786–4546, for issues related to clinical lab fee schedule.
Corinne Axelrod, (410) 786–5620, for issues related to Rural Health Clinics or Federally Qualified Health Centers.
Renee Mentnech, (410) 786–6692, for issues related to access to identifiable data for the Centers for Medicare & Medicaid models.
Marie Casey, (410) 786–7861 or Karen Reinhardt, (410) 786–0189, for issues related to local coverage determination process for clinical diagnostic laboratory tests.
Frederick Grabau, (410) 786–0206, for issues related to private contracting/opt-out.
David Walczak, (410) 786–4475, for issues related to payment policy for substitute physician billing arrangements (locum tenens).
Melissa Heesters, (410) 786–0618, for issues related to reports of payments or other transfers of value to covered recipients.
Alesia Hovatter, (410) 786–6861, for issues related to physician compare.
Christine Estella, (410) 786–0485, for issues related to the physician quality reporting system.
Alexandra Mugge, (410) 786–4457, for issues related to EHR incentive program.
Patrice Holtz, (410) 786–5663, for issues related to comprehensive primary care initiative.
Terri Postma, (410) 786–4169, for issues related to Medicare Shared Savings Program.
Kimberly Spalding Bush, (410) 786–3232, for issues related to value-based modifier and improvements to physician feedback.
Elizabeth Holland, (410) 786–1309, Medicare EHR Incentive Program (Medicare payment adjustments and hardship exceptions).
Elisabeth Myers (CMS), (410) 786–4751, Medicare EHR Incentive Program (Medicare payment adjustments and hardship exceptions).
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.
In addition, because of the many organizations and terms to which we refer by acronym in this final rule with comment period, we are listing these acronyms and their corresponding terms in alphabetical order below:
The PFS Addenda along with other supporting documents and tables referenced in this final rule with comment period are available through the Internet on the CMS Web site at
Throughout this final rule with comment period, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2013 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.
This major final rule with comment period revises payment polices under the Medicare Physician Fee Schedule (PFS) and makes other policy changes related to Medicare Part B payment. These changes are applicable to services furnished in CY 2015.
The Social Security Act (the Act) requires us to establish payments under the PFS based on national uniform relative value units (RVUs) that account for the relative resources used in furnishing a service. The Act requires that RVUs be established for three categories of resources: Work, practice expense (PE); and malpractice (MP) expense; and, that we establish by regulation each year's payment amounts for all physicians' services, incorporating geographic adjustments to reflect the variations in the costs of furnishing services in different geographic areas. In this major final rule with comment period, we establish RVUs for CY 2015 for the PFS, 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, as well as changes in the statute. In addition, this final rule with comment period includes discussions and proposals regarding:
• Misvalued PFS Codes.
• Telehealth Services.
• Chronic Care Management Services.
• Establishing Values for New, Revised, and Misvalued Codes.
• Updating the Ambulance Fee Schedule regulations.
• Changes in Geographic Area Delineations for Ambulance Payment.
• Updating the—
++ Physician Compare Web site.
++ Physician Quality Reporting System.
++ Medicare Shared Savings Program.
++ Electronic Health Record (EHR) Incentive Program.
• Value-Based Payment Modifier and the Physician Feedback Program.
The Act requires that annual adjustments to PFS RVUs may 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. These adjustments can affect the distribution of Medicare expenditures across specialties. In addition, several proposed changes would affect the specialty distribution of Medicare expenditures. When considering the combined impact of work, PE, and MP RVU changes, the projected payment impacts are small for most specialties; however, the impact would be larger for a few specialties.
We have determined that this final rule with comment period is economically significant. For a detailed discussion of the economic impacts, see section VII. of this final rule with comment period.
Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Act, “Payment for Physicians' Services.” The system relies on national relative values that are established for work, PE, and MP, which are adjusted for geographic cost variations. These values are multiplied by a conversion factor (CF) to convert the RVUs into payment rates. The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act of 1989 (Pub. L. 101–239, enacted on December 19, 1989) (OBRA '89), and the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101–508, enacted on November 5, 1990) (OBRA '90). The final rule published on November 25, 1991 (56 FR 59502) set forth the first fee schedule used for payment for physicians' services.
We note that throughout this final rule with comment period, unless otherwise noted, the term “practitioner” is used to describe both physicians and nonphysician practitioners (NPPs) who are permitted to bill Medicare under the PFS for services furnished to Medicare beneficiaries.
The work RVUs established for the initial fee schedule, which was implemented on January 1, 1992, were developed with extensive input from the physician community. A research team at the Harvard School of Public Health developed the original work RVUs for most codes under a
As specified in section 1848(c)(1)(A) of the Act, the work component of physicians' services means the portion of the resources used in furnishing the service that reflects physician time and intensity. We establish work RVUs for new, revised and potentially misvalued codes based on our review of information that generally includes, but is not limited to, recommendations received from the American Medical Association/Specialty Society Relative Value Update Committee (RUC), the Health Care Professionals Advisory Committee (HCPAC), the Medicare Payment Advisory Commission (MedPAC), and other public commenters; medical literature and comparative databases; as well as a comparison of the work for other codes within the Medicare PFS, and consultation with other physicians and health care professionals within CMS and the federal government. We also assess the methodology and data used to develop the recommendations submitted to us by the RUC and other public commenters, and the rationale for their recommendations.
Initially, only the work RVUs were resource-based, and the PE and MP RVUs were based on average allowable charges. 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 required to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs. The PE RVUs continue to represent the portion of these resources involved in furnishing PFS services.
Originally, the resource-based method was to be used beginning in 1998, but section 4505(a) of the Balanced Budget Act of 1997 (Pub. L. 105–33, enacted on August 5, 1997) (BBA) delayed 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 the charge-based PE RVUs to the resource-based PE RVUs.
We established the resource-based PE RVUs for each physicians' service in a final rule, published on November 2, 1998 (63 FR 58814), effective for services furnished in CY 1999. Based on the requirement to transition to a resource-based system for PE over a 4-year period, payment rates were not fully based upon resource-based PE RVUs until CY 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. (These data sources are described in greater detail in the CY 2012 final rule with comment period (76 FR 73033).)
Separate PE RVUs are established for services furnished in facility settings, such as a hospital outpatient department (HOPD) or an ambulatory surgical center (ASC), and in nonfacility settings, such as a physician's office. The nonfacility RVUs reflect all of the direct and indirect PEs involved in furnishing a service described by a particular HCPCS code. The difference, if any, in these PE RVUs generally results in a higher payment in the nonfacility setting because in the facility settings some costs are borne by the facility. Medicare's payment to the facility (such as the outpatient prospective payment system (OPPS) payment to the HOPD) would reflect costs typically incurred by the facility. Thus, payment associated with those facility resources is not made under the PFS.
Section 212 of the Balanced Budget Refinement Act of 1999 (Pub. L. 106–113, enacted on November 29, 1999) (BBRA) 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
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 for CY 2010. 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). In CY 2010, we began a 4-year transition to the new PE RVUs using the updated PE/HR data, which was completed for CY 2013.
Section 4505(f) of the BBA amended section 1848(c) of the Act to require 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 are based on commercial and physician-owned insurers' malpractice insurance premium data from all the states, the District of Columbia, and Puerto Rico. For more information on MP RVUs, see section II.C. of this final rule with comment period.
Section 1848(c)(2)(B)(i) of the Act requires that we review RVUs no less often than every 5 years. Prior to CY 2013, we conducted periodic reviews of work RVUs and PE RVUs independently. We completed five-year reviews of work RVUs that were effective for calendar years 1997, 2002, 2007, and 2012.
Although refinements to the direct PE inputs initially relied heavily on input from the RUC Practice Expense Advisory Committee (PEAC), the shifts to the bottom-up PE methodology in CY 2007 and to the use of the updated PE/HR data in CY 2010 have resulted in significant refinements to the PE RVUs in recent years.
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.
With regard to MP RVUs, we completed five-year reviews of MP that were effective in CY 2005 and CY 2010. This final rule with comment period establishes a five-year review for CY 2015.
In addition to the five-year reviews, beginning for CY 2009, CMS, and the 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.
As described in section VI.C. of this final rule with comment period, in accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs caused expenditures for the year to change by more than $20 million, we make adjustments to ensure that expenditures did not increase or decrease by more than $20 million.
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) to reflect the variations in the costs of furnishing the services. The GPCIs reflect the relative costs of physician work, PE, and MP in an area compared to the national average costs for each component. (See section II.D. of this final rule with comment period for more information about GPCIs.)
RVUs are converted to dollar amounts through the application of a CF, which is calculated based on a statutory formula by CMS's Office of the Actuary (OACT). The CF for a given year is calculated using (a) the productivity-adjusted increase in the Medicare Economic Index (MEI) and (b) the Update Adjustment Factor (UAF), which is calculated by taking into account the Medicare Sustainable Growth Rate (SGR), an annual growth rate intended to control growth in aggregate Medicare expenditures for physicians' services, and the allowed and actual expenditures for physicians' services. The formula for calculating the Medicare fee schedule payment amount for a given service and fee schedule area can be expressed as:
Section 1848(b)(2)(B) of the Act specifies that the fee schedule amounts for anesthesia services are to be based on a uniform relative value guide, with appropriate adjustment of an anesthesia conversion factor, in a manner to assure that fee schedule amounts for anesthesia services are consistent with those for other services of comparable value. Therefore, there is a separate fee schedule methodology for anesthesia services. Specifically, we establish a separate conversion factor for anesthesia services and we utilize the uniform relative value guide, or base units, as well as time units, to calculate the fee schedule amounts for anesthesia services. Since anesthesia services are not valued using RVUs, a separate methodology for locality adjustments is also necessary. This involves an adjustment to the national anesthesia CF for each payment locality.
The CY 2014 PFS final rule with comment period (78 FR 74230) implemented changes to the PFS and other Medicare Part B payment policies. It also finalized many of the CY 2013 interim final RVUs and established interim final RVUs for new and revised codes for CY 2014 to ensure that our payment system is updated to reflect changes in medical practice, coding changes, and the relative values of services. It also implemented section 635 of the American Taxpayer Relief Act of 2012 (Pub. L. 112–240, enacted on January 2, 2013) (ATRA), which revised the equipment utilization rate assumption for advanced imaging services furnished on or after January 1, 2014.
Also, in the CY 2014 PFS final rule with comment period, we announced the following for CY 2014: the total PFS update of −20.1 percent; the initial estimate for the SGR of −16.7 percent; and a CF of $27.2006. These figures were calculated based on the statutory provisions in effect on November 27, 2013, when the CY 2014 PFS final rule with comment period was issued.
The Pathway for SGR Reform Act of 2013 (Pub. L. 113–67, enacted on December 26, 2013) established a 0.5 percent update to the PFS CF through March 31, 2014 and the Protecting Access to Medicare Act of 2014 (Pub. L. 113–93, enacted on April 1, 2014) (PAMA) extended this 0.5 percent update through December 31, 2014. As a result, the CF for CY 2014 that was published in the CY 2014 final rule with comment period (78 FR 74230) was revised to $35.8228 for services furnished on or after January 1, 2014 and on or before December 31, 2014. The PAMA provides for a 0.0 percent update to the PFS for services furnished on or after January 1, 2015 and on or before March 31, 2015.
The Pathway for SGR Reform Act extended through March 31, 2014 several provisions of Medicare law that would have otherwise expired on December 31, 2013. The PAMA extended these same provisions further through March 31, 2015. A list of these provisions follows.
In addition, section 220 of the PAMA included several provisions affecting the valuation process for services under the PFS. Section 220(a) of the PAMA amended section 1848(c)(2) of the Act to add a new subparagraph (M). The new subparagraph (M) provides that the Secretary may collect or obtain information from any eligible professional or any other source on the resources directly or indirectly related to furnishing services for which payment is made under the PFS, and that such information may be used in the determination of relative values for services under the PFS. Such information may include the time involved in furnishing services; the amounts, types and prices of practice expense inputs; overhead and accounting information for practices of physicians and other suppliers, and any other elements that would improve the valuation of services under the PFS. This information may be collected or obtained through surveys of physicians or other suppliers, providers of services, manufacturers, and vendors; surgical logs, billing systems, or other practice or facility records; EHRs; and any other mechanism determined appropriate by the Secretary. If we use this information, we are required to disclose the source and use of the information in rulemaking, and to make available aggregated information that does not disclose individual eligible professionals, group practices, or information obtained pursuant to a nondisclosure agreement. Beginning with fiscal year 2014, the Secretary may compensate eligible professionals for submission of data.
Section 220(c) of the PAMA amended section 1848(c)(2)(K)(ii) of the Act to expand the categories of services that the Secretary is directed to examine for the purpose of identifying potentially misvalued codes. The nine new categories are as follows:
• Codes that account for the majority of spending under the PFS.
• Codes for services that have experienced a substantial change in the hospital length of stay or procedure time.
• Codes for which there may be a change in the typical site of service since the code was last valued.
• Codes for which there is a significant difference in payment for the same service between different sites of service.
• Codes for which there may be anomalies in relative values within a family of codes.
• Codes for services where there may be efficiencies when a service is furnished at the same time as other services.
• Codes with high intra-service work per unit of time.
• Codes with high PE RVUs.
• Codes with high cost supplies.
Section 220(i) of the PAMA also requires the Secretary to make publicly available the information we considered when establishing the multiple procedure payment reduction (MPPR) policy for the professional component of advanced imaging procedures. The policy reduces the amount paid for the professional component when two advanced imaging procedures are furnished in the same session. The policy was effective for individual physicians on January 1, 2012 and for physicians in the same group practice on January 1, 2013.
In addition, section 220 of the PAMA includes other provisions regarding valuation of services under the PFS that take effect in future years. Section 220(d) of the PAMA establishes an annual target from CY 2017 through CY 2020 for reductions in PFS expenditures resulting from adjustments to relative values of misvalued services. The target is calculated as 0.5 percent of the estimated amount of expenditures under the fee schedule for the year. If the net reduction in expenditures for the year is equal to or greater than the target for the year, the funds shall be redistributed in a budget-neutral manner within the PFS. The amount by which such reduced expenditures exceed the target for the year shall be treated as a reduction in expenditures for the subsequent year, for purposes of determining whether the target has or has not been met. The legislation includes an exemption from budget neutrality of reduced expenditures if the target is not met. Other provisions of section 220 of the PAMA include a 2-year phase-in for reductions in RVUs of at least 20 percent for potentially misvalued codes that do not involve coding changes, and certain adjustments to the fee schedule areas in California. These provisions will be addressed as we implement them in future rulemaking.
On March 5, 2014, we submitted to MedPAC an estimate of the SGR and CF applicable to Medicare payments for physicians' services for CY 2015, as required by section 1848(d)(1)(E) of the Act. The actual values used to compute physician payments for CY 2015 will be based on later data and are scheduled to be published by November 1, 2014, as part of the CY 2015 PFS final rule with comment period.
The Department of Health and Human Services (HHS) believes all patients, their families, and their health care providers should have consistent and timely access to patient health information in a standardized format that can be securely exchanged between the patient, providers, and others involved in the patient's care. (HHS August 2013 Statement, “Principles and Strategies for Accelerating Health Information Exchange,” see
We believe that health IT that incorporates usability features and has been certified to interoperable standards can effectively and efficiently help all providers improve internal care delivery practices, support management of patient care across the continuum, and support the reporting of electronically specified clinical quality measures (eCQMs).
Practice expense (PE) is the portion of the resources used in furnishing a 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. As required by section 1848(c)(2)(C)(ii) of the Act, we use a resource-based system for determining PE RVUs for each physician's service. We develop PE RVUs by considering the direct and indirect 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. 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.
We determine the direct PE for a specific service by adding the costs of the direct resources (that is, the clinical staff, medical supplies, and medical equipment) typically involved with furnishing that 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 generally based on our review of recommendations received from the RUC and those provided in response to public comment periods. For a detailed explanation of the 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).
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). The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) paid under the PFS using a 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 health care professional groups. We believe the PPIS is the most comprehensive source of PE survey information available. We used the PPIS data to update the PE/HR data for the CY 2010 PFS for almost all of the Medicare-recognized specialties that participated in the survey.
When we began using the PPIS data 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 transitioned its use over a 4-year period from the previous PE RVUs to the PE RVUs developed using the new PPIS data. As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), the transition to the PPIS data was complete for CY 2013. Therefore, PE RVUs from CY 2013 forward are developed based entirely on the PPIS data, except as noted in this section.
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.
Supplemental survey data on independent labs from the College of American Pathologists were implemented for payments beginning 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 beginning 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 these specialties were updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data.
We also 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 the PPIS data with Medicare-recognized specialty data.
Previously, we 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 used 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 work 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).
To establish PE RVUs for specific services, it is necessary to establish the direct and indirect PE associated with each service.
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, medical supplies, and medical equipment) typically involved with furnishing each of 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.
Section II.A.2.b. of this final rule with comment period 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 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. In other words, the initial indirect allocator is calculated so that the direct costs equal the average percentage of direct costs of those specialties furnishing the service. For example, if the direct portion of the PE RVUs for a given service is 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 calculated so that it equals 75 percent of the total PE RVUs. Thus, in this example, the initial indirect allocator would equal 6.00, resulting in
• Next, we 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 4.00 (since the 4.00 work RVUs are greater than the 1.50 clinical labor portion) to the initial indirect allocator of 6.00 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.
• Next, we incorporate the specialty-specific indirect PE/HR data into the calculation. In our example, if, 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, the indirect portion of the PE RVUs of the first service would be equal to that of the second service.
For procedures that can be furnished in a physician's office, as well as in a hospital or other 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 in calculating the PE RVUs for services furnished in a facility, we do not include resources that would generally not be provided by physicians when furnishing the service in a facility, the facility PE RVUs are generally lower than the nonfacility PE RVUs. Medicare makes a separate payment to the facility for its costs of furnishing a service.
Diagnostic services are generally comprised of two components: A professional component (PC); and a technical component (TC). The PC and TC may be furnished independently or by different providers, or they may be furnished together as a “global” service. When services have separately billable PC and TC components, the payment for the global service equals the sum of the payment for the TC and PC. To achieve this we use a weighted average of the ratio of indirect to direct costs across all the specialties that furnish the global service, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global service, PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum to the global.)
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).
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 calculated from the surveys.
Sum the costs of each direct input.
Create indirect allocators.
For most services the indirect allocator is: Indirect PE 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 PE allocator is: Indirect percentage (direct PE RVUs/direct percentage) + clinical labor 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 PE percentage (direct PE RVUs/direct percentage) + clinical labor PE 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 RVU, clinical labor PE RVU, 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.
Calculate the indirect practice cost index.
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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). 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 BN calculation under section 1848(c)(2)(B)(ii)(II) of the Act. These MPPRs are not included in the development of the RVUs.
For anesthesia services, we do not apply adjustments to volume since the average allowed charge is used when simulating RVUs, and therefore, includes all adjustments. A time adjustment of 33 percent is made only for medical direction of two to four cases since that is the only situation where time units are duplicative.
•
The equipment cost per minute is calculated as:
In this section, we discuss other CY 2015 revisions related to direct PE inputs for specific services. The final direct PE inputs are included in the final rule CY 2015 direct PE input database, which is available on the CMS Web site under downloads for the CY 2015 PFS final rule with comment period at
We received a recommendation from the RUC regarding appropriate clinical labor minutes for post-procedure moderate sedation monitoring and post-procedure monitoring. The RUC recommended 15 minutes of RN time for one hour of monitoring following moderate sedation and 15 minutes of RN time per hour for post-procedure monitoring (unrelated to moderate sedation). For 17 procedures listed in Table 5, the recommended clinical labor minutes differed from the clinical labor minutes in the direct PE database. We proposed to accept, without refinement, the RUC recommendation to adjust these clinical labor minutes as indicated in Table 5 as “Change to Clinical Labor Time.”
We received a RUC recommendation to modify PE inputs included in the standard moderate sedation package. Specifically, the RUC indicated that several specialty societies have pointed to the need for a stretcher during procedures for which moderate sedation is inherent in the procedure. Although the RUC did not recommend that we make changes to PE inputs for codes at this time, the RUC indicated that its future recommendations would include the stretcher as a direct input for procedures including moderate sedation.
The RUC recommended three scenarios that it would use in the future to allocate the equipment time for the stretcher based on the procedure time and whether the stretcher would be available for other patients to use during a portion of the procedure. Although we appreciate the RUC's attention to the differences in the time required for the stretcher based on the time for the procedure, we believe that one of the purposes of standard PE input packages is to reduce the complexity associated with assigning appropriate PE inputs to individual procedures while, at the same time, maintaining relativity between procedures. Since we generally allocate inexpensive equipment items to the entire service period when they are likely to be unavailable for another use during the full service period, we believe it is preferable to treat the stretcher consistently across services. Therefore, we proposed to modify the standard moderate sedation input package to include a stretcher for the same length of time as the other equipment items in the moderate sedation package. The revised moderate sedation input package will be applied to relevant codes as we review them through future notice and comment rulemaking. In seeking comments on the proposal, we stated that it would be useful to hear stakeholders' views and the reasoning behind them on this issue, especially from those who think that the stretcher, as expressed through the allocation of equipment minutes, should be allocated with more granularity than the equipment costs that are allocated to other similar items.
The RUC provided a recommendation regarding the PE inputs for digital imaging services. Specifically, the RUC recommended that we remove a list of supply and equipment items associated with film technology since these items are no longer a typical resource input; these items are detailed in Table 6. The RUC also recommended that the Picture Archiving and Communication System (PACS) equipment be included for these imaging services since these items are now typically used in furnishing imaging services. We received a description of the PACS system as part of the recommendation, which included both items that appear to be direct PE items and items for which indirect PE RVUs are allocated in the PE methodology. As we have previously indicated, items which are not clinical labor, medical supplies, or medical equipment, or are not individually allocable to a particular patient for a particular procedure, are not categorized as direct costs in the PE methodology. Since we did not receive any invoices for the PACS system prior to the proposed rule, we were unable to determine the appropriate pricing to use for the inputs. We proposed to accept the RUC recommendation to remove the film supply and equipment items, and to allocate minutes for a desktop computer (ED021) as a proxy for the PACS workstation as a direct expense. Specifically, for the 31 services that already contain ED021 (computer, desktop, w-monitor), we proposed to retain the time that is currently included in the direct PE input database. For the remaining services that are valued in the nonfacility setting, we proposed to allocate the full clinical labor intraservice time to ED021, except for codes without clinical labor, in which case we proposed to allocate the intraservice work time to ED021. For services valued only in the facility setting, we proposed to allocate the post-service clinical labor time to ED021, since the film supply and/or equipment inputs were previously associated with the post-service period.
We note that the RUC exempted certain procedures from its recommendation because (a) the dominant specialty indicated that digital technology is not yet typical or (b) the procedure only contained a single input associated with film technology, and it was determined that the sharing of images, but not actual imaging, may be involved in the service. However, we do not believe that the most appropriate approach in establishing relative values for services that involve imaging is to exempt services from the transition from film to digital PE inputs based on information reported by individual specialties. Although we understand that the migration from film technology to digital technology may progress at different paces for particular specialties, we do not have information to suggest that the migration is not occurring for all procedures that require the storage of images. Just as it was appropriate to use film inputs as a proxy for some services for which digital inputs were typical pending these changes in the direct PE input database, we believe it is appropriate to use digital inputs as a proxy for the services that may still use film, pending their migration to digital technology. In addition, since the RUC conducted its collection of information from the specialties over several years, we believe the migration process from film to digital inputs has likely continued over the time period during which the information was gathered, and that the digital PE inputs will reflect typical use of technology for most if not all of these services before the change to digital inputs would take effect beginning January 1, 2015.
We noted that we believed that, for the sake of relativity, we should remove the equipment and supply inputs noted below from all procedures in the direct PE database, including those listed in Table 7. We sought comment on whether the computer workstation, which we proposed to use as a proxy for the PACS workstation, is the appropriate input for the services listed in Table 7, or whether an alternative input is a more appropriate reflection of direct PE costs.
Finally, we noted that the RUC recommendation also indicated that, given the labor-intensive nature of reviewing all clinical labor tasks associated with film technology, these times would be addressed as these codes are reviewed. We agreed with the RUC that reviewing and adjusting the times for each code would be difficult and labor-intensive since the direct PE input database does not allow for a comprehensive adjustment of the clinical labor time based on changes in particular clinical labor tasks. To make broad adjustments such as this across codes, the PE database would need to contain the time associated with individual clinical labor tasks rather than reflecting only the sum of times for the pre-service period, service period, and post-service period, as it does now. We recognized this situation presents a challenge in implementing RUC recommendations such as this one, and makes it difficult to understand the basis of both the RUC's recommended clinical labor times and our refinements of those recommendations. Therefore, we stated that we were considering revising the direct PE input database to include task-level clinical labor time information for every code in the database. As an example, we referred readers to the supporting data files for the direct PE inputs, which include public use files that display clinical labor times as allocated to each individual clinical labor task for a sample of procedures. We displayed this information as we attempt to increase the transparency of the direct PE database. We stated that we hoped that this modification would enable us to more accurately allocate equipment minutes to clinical labor tasks in a more consistent and efficient manner. Given the number of procedures and the volume of information involved, we sought comments on the feasibility of this approach. We note that we did not propose to make any changes to PE inputs for CY 2015 based on this modification to the design of the direct PE input database.
As discussed in section II.G. of this final rule with comment period, some of the RUC recommendations for 2015 included film items as practice expense inputs. For existing codes, the database from the proposed rule already included the PACS workstation proxy. However, for new services, as with the current items in the database, we have replaced the film items with the PACS workstation proxy. The codes affected by this change are listed in Table 8.
With regard to the 31 services that already included the desktop computer as an equipment input, we will include the desktop computer as a proxy for the PACS workstation using the same methodology as for the services that did not previously contain the desktop computer. To clearly differentiate the desktop computer proxy from the desktop computer currently included in these services, and to facilitate accurate replacement of this input when we do receive pricing information, we will create a new equipment item called “desktop computer (proxy for PACS workstation),” which will be allocated to each procedure using the methodology described above.
Mammography services are currently reported and paid using both CPT codes and G-codes. To meet the requirements of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), we established G-codes for use beginning in CY 2002 to pay for mammography services using new digital technologies (G0202 screening mammography digital; G0204 diagnostic mammography digital; G0206 diagnostic mammography digital). We continued to use the CPT codes for mammography services furnished using film technology (77055 (Mammography; unilateral); 77056 (Mammography; bilateral); 77057 (Screening mammography, bilateral (2-view film study of each breast)). As we discussed previously in this section, the RUC has recommended that all imaging codes, including mammography, be valued using digital rather than film inputs because the use of film is no longer typical. A review of Medicare claims data shows that the mammography CPT codes are billed extremely infrequently, and that the G-codes are billed for the vast majority of mammography claims, confirming the RUC's conclusion that the typical service uses digital technology. As such, we stated that we do not believe there is a reason to continue the separate CPT codes and G-codes for mammography services since both sets of codes would have the same values when priced based upon the typical digital technology. Accordingly, we proposed to delete the mammography G-codes beginning for CY 2015 and to pay all mammography using the CPT codes.
We indicated that, although we believed that the CPT codes should now be used to report all mammography services, we had concerns about whether the current values for the CPT codes accurately reflect the resource inputs associated with furnishing the services. Because the CPT codes have not been recently reviewed and
As discussed in section II.B of this final rule with comment period, we proposed these CPT codes as potentially misvalued and requested that the RUC and other interested stakeholders review these services in terms of appropriate work RVUs, work time assumptions, and direct PE inputs. However, as discussed in section II.B. of this final rule with comment period, we will continue to maintain separate payment rates for film and digital mammography while we consider revaluation of all mammography services. For CY 2015, we will therefore maintain both the G-codes and CPT codes; we will continue using the 2014 RVUs from each of the following codes to price them for 2015: G0202, G0204, G0206, 77055, 77056, and 77057. 2015. We also note that we will continue to pay for film mammography services at the 2014 rates until we revalue the mammography services.
We refer readers to section II.B. of this final rule with comment period, where we address comments received on this proposal.
In previous rulemaking (77 FR 68922, 78 FR 74346), we indicated that we included the radiation treatment vault as a direct PE input for several recently reviewed radiation treatment codes for the sake of consistency with its previous inclusion as a direct PE input for some other radiation treatment services, but that we intended to review the radiation treatment vault input and address whether or not it should be included in the direct PE input database for all services in future rulemaking. Specifically, we questioned whether it was consistent with the principles underlying the PE methodology to include the radiation treatment vault as a direct cost given that it appears to be more similar to building infrastructure costs than to medical equipment costs. In response to this discussion, we received comments and invoices from stakeholders who indicated that the vault should be classified as a direct cost. However, upon review of the information received, we believed that the specific structural components required to house the linear accelerator are similar in concept to components required to house other medical equipment such as expensive imaging equipment. In general, the electrical, plumbing, and other building specifications are often unique to the intended functionality of a given building, including costs that are attributable to the specific medical equipment housed in the building, but those building characteristics do not represent direct medical equipment costs in our established PE methodology. Therefore, we believed that the special building requirements indicated for the radiation treatment vault to house a linear accelerator do not represent a direct cost in our PE methodology, and that the vault construction is instead accounted for in the indirect PE methodology, just as the building and infrastructure costs are treated for other PFS services including those with specialized infrastructure costs to accommodate specific equipment. Therefore, we proposed to remove the radiation treatment vault as a direct PE input from the radiation treatment procedures listed in Table 9, because we believed that the vault is not, itself, medical equipment; and therefore, it is accounted for in the indirect PE methodology.
After continued review of the issues pertaining to the vault in the context of the comments, we believe that these issues require further study. Therefore, at this time, we will continue to include the vault as a direct PE input for the services listed in Table 9.
Subsequent to the publication of the CY 2014 PFS final rule with comment period, it came to our attention that, due to a clerical error, the clinical labor type for CPT code 77293 (Respiratory Motion Management Simulation (list separately in addition to code for primary procedure)) was entered as L052A (Audiologist) instead of L152A (Medical Physicist), which has a higher cost per minute. We proposed a correction to the clinical labor type for this service.
In conducting a routine data review of the database, we also discovered that, due to a clerical error, the RN time allocated to CPT codes 33620 (Apply r&l pulm art bands), 33621 (Transthor cath for stent), and 33622 (Redo compl cardiac anomaly) was entered in the nonfacility setting, rather than in the facility setting where the code is valued. When a service is not valued in a particular setting, any inputs included in that setting are not included in the calculation of the PE RVUs for that service. Therefore, we proposed to move the RN time allocated to these procedures to the facility setting. The PE RVUs listed in Addendum B reflect these technical corrections.
We did not receive any comments on this proposal; therefore, we are finalizing our proposal to move the RN time allocated to these procedures to the facility setting. The CY 2015 Direct Practice Expense Input database reflects this correction.
Subsequent to the publication of the CY PFS 2014 final rule with comment period, several inconsistencies in the work time file came to our attention. First, for some services, the total work time, which is used in our PE methodology, did not equal the sum of the component parts (pre-service, intra-service, post-service, and times associated with global period visits). The times in the CY 2015 work time file reflect our corrected values for total work time. Second, for a subset of services, the values in the pre-positioning time, pre-evaluation time, and pre-scrub-dress-wait time, were inadvertently transposed. We note that this error had no impact on calculation of the total times, but has been corrected in the CY 2015 work time file. Third, minor discrepancies for a series of interim final codes were identified between the work time file and the way we addressed these codes in the preamble text. Therefore, we have made adjustments to the work time file to reflect the decisions indicated in the preamble text. The work time file is available on the CMS Web site under the supporting data files for the CY 2015 PFS final rule with comment period at
In the CY 2011 PFS final rule with comment period (75 FR 73205), we finalized a process to act on public requests to update equipment and supply price and equipment useful life inputs through annual rulemaking beginning with the CY 2012 PFS proposed rule. During 2013, we received a request to update the price of SD216 (catheter, balloon, esophageal or rectal (graded distention test)) from $217 to $237.50. We also received a request to update the price of SL196 (kit, HER–2/neu DNA Probe) from $105 to $144.50. We received invoices that documented updated pricing for each of these supply items. We proposed to increase the price associated with these supply items.
We continue to believe it is important to maintain a periodic and transparent process to update the price of items to reflect typical market prices in our ratesetting methodology, and we continue to study the best way to improve our current process. We remind stakeholders that we have difficulty obtaining accurate pricing information. The goal of the current transparent process is to offer the opportunity for the community to both request supply price updates by providing us copies of paid invoices, and to object to proposed changes in price inputs for particular items by providing additional information about prices available to the practitioner community. We remind stakeholders that PFS payment rates are developed within a budget neutral, relative value system, and any increases in price inputs for particular supply items result in corresponding decreases to the relative values of all other direct PE inputs.
We also received a RUC recommendation to update the prices associated with two supply items. Specifically, the RUC recommended that we increase the price of SA042 (pack, cleaning and disinfecting, endoscope) from $15.52 to $17.06 to reflect the addition of supply item SJ009 (basin, irrigation) to the pack, and increase the price of SA019 (kit, IV starter) from $1.37 to $1.60 to reflect the addition of supply item SA044 (underpad 2 ft. x 3 ft. (Chux)) to the kit. We proposed to update the prices for both of these items based on these recommendations.
The RUC recommended creating a new direct PE input standard supply package “Imaging w/contrast, standard package” for contrast enhanced imaging, with a price of $6.82. This price reflects the combined prices of the medical supplies included in the package; these items are listed in Table 10. We proposed to accept this recommendation, but sought comment on whether all of the items included in the package are used in the typical case. The CY 2015 direct PE database reflects this change and is available on the CMS Web site under the supporting data files for the CY 2015 PFS proposed rule at
In the CY 2014 PFS final rule with comment period (78 FR 74245), we summarized comments received about whether CPT codes 77372 and 77373 would accurately reflect the resources used in furnishing the typical SRS delivery if there were no coding distinction between robotic and non-robotic delivery methods. Until now, SRS services furnished using robotic methods were billed using contractor-priced G-codes G0339 (Image-guided robotic linear accelerator based stereotactic radiosurgery, complete course of therapy in one session or first session of fractionated treatment), and G0340 (Image-guided robotic linear accelerator-based stereotactic radiosurgery, delivery including collimator changes and custom plugging, fractionated treatment, all lesions, per session, second through fifth sessions, maximum five sessions per course of treatment). We indicated that we would consider deleting these codes in future rulemaking.
Most commenters responded that the CPT codes accurately described both services, and the RUC stated that the direct PE inputs for the CPT codes accurately accounted for the resource costs of the described services. One commenter objected to the deletion of the G-codes but did not include any information to suggest that the CPT codes did not describe the services or that the direct PE inputs for the CPT codes were inaccurate. Based on a review of the comments received, we had no indication that the direct PE inputs included in the CPT codes would not reflect the typical resource inputs involved in furnishing an SRS service. Therefore, in the CY 2014 proposed rule we proposed to recognize only the CPT codes for SRS services, and to delete the G-codes used to report robotic delivery of SRS.
We proposed to include equipment item EQ358, Sleep capnograph, polysomnography (pediatric), for CPT codes 95782 (Polysomnography; younger than 6 years, sleep staging with
Accurate and reliable pricing information for both individual items and indirect PEs is critical to establish accurate PE RVUs for PFS services. As we have addressed in previous rulemaking, we have serious concerns regarding the accuracy of some of the information we use in developing PE RVUs. In particular, as discussed in the CY 2014 PFS final rule with comment period, we have several longstanding concerns regarding the accuracy of direct PE inputs, including both items and procedure time assumptions, and prices of individual supplies and equipment (78 FR 74248–74250). In addition to the concerns regarding the inputs used in valuing particular procedures, we also noted that the allocation of indirect PE is based on information collected several years ago (as described above) and will likely need to be updated in the coming years.
To mitigate the impact of some of these potentially problematic data used in developing values for individual services, in rulemaking for the CY 2014 PFS, we proposed to limit the nonfacility PE RVUs for individual codes so that the total nonfacility PFS payment amount would not exceed the total combined amount that Medicare would pay for the same code in the facility setting. In developing the proposal, we sought a reliable means for Medicare to set upper payment limits for office-based procedures and believed OPPS and ASC payment rates would provide an appropriate comparison because these rates are based on relatively more reliable cost information in settings with cost structures that generally would be expected to be higher than in the office setting.
We received many comments regarding our proposal, the vast majority of which urged us to withdraw the proposal. Some commenters questioned the validity of our assumption that facilities' costs for providing all services are necessarily higher than the costs of physician offices or other nonfacility settings. Other commenters expressed serious concerns with the asymmetrical comparisons between PFS payment amounts and OPPS/ASC payment amounts. Finally, many commenters suggested revisions to technical aspects of our proposed policy.
In considering all the comments, however, we were persuaded that the comparison of OPPS (or ASC) payment amounts to PFS payment amounts for particular procedures is not the most appropriate or effective approach to ensuring that PFS payment rates are based on accurate cost assumptions. Commenters noted several flaws with the approach. First, unlike PFS payments, OPPS and ASC payments for individual services are grouped into rates that reflect the costs of a range of services. Second, commenters suggested that since the ASC rates reflect the OPPS relative weights to determine payment rates under the ASC payment system, and are not based on cost information collected from ASCs, the ASC rates should not be used in the proposed policy. For these and other reasons raised by commenters, we did not propose a similar policy for the CY 2015 PFS. If we consider using OPPS or ASC payment rates in developing PFS PE RVUs in future rulemaking, we would consider all of the comments received regarding the technical application of the previous proposal.
After thorough consideration of the comments regarding the CY 2014 proposal, we continue to believe that there are various possibilities for leveraging the use of available hospital cost data in the PE RVU methodology to ensure that the relative costs for PFS services are developed using data that is auditable and comprehensively and regularly updated. Although some commenters questioned the premise that the hospital cost data are more accurate than the information used to establish PE RVUs, we continue to believe that the routinely updated, auditable resource cost information submitted contemporaneously by a wide array of providers across the country is a valid reflection of “relative” resources and could be useful to supplement the resource cost information developed under our current methodology based upon a typical case that are developed with information from a small number of representative practitioners for a small percentage of codes in any particular year.
Section 220(a)(1) of the PAMA added a new subparagraph (M) under section 1848(c)(2) of the Act that gives us authority to collect information on resources used to furnish services from eligible professionals (including physicians, non-physician practitioners, PTs, OTs, SLPs and qualified audiologists), and other sources. It also authorizes us to pay eligible professionals for submitting solicited information. We will be exploring ways of collecting better and updated resource data from physician practices, including those that are provider-based, and other non-facility entities paid through the PFS. We believe such efforts will be challenging given the wide variety of practices, and that any effort will likely impose some burden on eligible professionals paid through the PFS regardless of the scope and manner of data collection. Currently, through one of the validation contracts discussed in section II.B. of this final rule with comment period, we have been gathering time data directly from physician practices. Through this project, we have learned much about the challenges for both CMS and the eligible professionals of collecting data directly from practices. Our own experience has shown that is difficult to obtain invoices for supply and equipment items that we can use in pricing direct PE inputs.
Many specialty societies also have noted the challenges in obtaining recent invoices for medical supplies and equipment (78 FR 74249). Further, PE calculations rely heavily on information from the Physician Practice Expense Information Survey (PPIS) survey, which, as discussed earlier, was conducted in 2007 and 2008. When we implemented the results of the survey, many in the community expressed serious concerns over the accuracy of this or other PE surveys as a way of gathering data on PE inputs from the diversity of providers paid under the PFS.
In addition to data collection, section 1848(c)(2)(M) of the Act as added by section 220(a) of the PAMA provides authority to develop and use alternative approaches to establish PE relative values, including the use of data from other suppliers and providers of services. We are exploring the best approaches for exercising this authority, including with respect to use of hospital outpatient cost data. We understand that
Therefore, in the CY 2015 PFS proposed rule (79 FR 40333), we sought comment on the possible uses of the Medicare hospital outpatient cost data (not the APC payment amount) in potential revisions of the PFS PE methodology. This could be as a means to validate or, perhaps, in setting the relative resource cost assumptions within the PFS PE methodology. We noted that the resulting PFS payment amounts would not necessarily conform to OPPS payment amounts since OPPS payments are grouped into APCs, while PFS payments would continue to be valued individually and would remain subject to the relativity inherent in establishing PE RVUs, budget neutrality adjustments, and PFS updates. We expressed particular interest in comments that compare such possibilities to other broad-based, auditable, mechanisms for data collection, including any we might consider under the authority provided under section 220(a) of the PAMA. We urged commenters to consider a wide range of options for gathering and using the data, including using the data to validate or set resource assumptions for only a subset of PFS services, or as a base amount to be adjusted by code or specialty-level recommended adjustments, or other potential uses. We appreciate the many thoughtful comments that we received on whether and how to use the OPPS cost data in establishing PE relative values. We will consider these as we continue to think about mechanisms to improve the accuracy of PE values.
In addition to soliciting comments as noted above, in the CY 2015 proposed rule we stated that we continue to seek a better understanding regarding the growing trend toward hospital acquisition of physicians' offices and how the subsequent treatment of those locations as off-campus provider-based outpatient departments affects payments under PFS and beneficiary cost-sharing. MedPAC continues to question the appropriateness of increased Medicare payment and beneficiary cost-sharing when physicians' offices become hospital outpatient departments, and to recommend that Medicare pay selected hospital outpatient services at PFS rates (MedPAC March 2012 and June 2013
To understand how this trend is affecting Medicare, including the accuracy of payments made through the PFS, we need to develop data to assess the extent to which this shift toward hospital-based physician practices is occurring. To that end, during CY 2014 rulemaking we sought comment regarding the best method for collecting information that would allow us to analyze the frequency, type, and payment for services furnished in off-campus provider-based hospital departments (78 FR 74427). We received many thoughtful comments. However, the commenters did not present a consensus opinion regarding the options we presented in last year's rule. Based on our analysis of the comments, we stated that we believed the most efficient and equitable means of gathering this important information across two different payment systems would be to create a HCPCS modifier to be reported with every code for physicians' and hospital services furnished in an off-campus provider-based department of a hospital.
We proposed that the modifier would be reported on both the CMS–1500 claim form for physicians' services and the UB–04 (CMS form 1450) for hospital outpatient claims. (We note that the requirements for a determination that a facility or an organization has provider-based status are specified in § 413.65, and we define a hospital campus to be the physical area immediately adjacent to the provider's main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office.)
Therefore, we proposed to collect this information on the type and frequency of services furnished in off-campus provider-based departments in accordance with our authority under section 1848(c)(2)(M) of the Act (as added by section 220(a) of the PAMA) beginning January 1, 2015. The collection of this information would allow us to begin to assess the accuracy of the PE data, including both the service-level direct PE inputs and the specialty-level indirect PE information that we currently use to value PFS services. Furthermore, this information would be critical in order to develop proposed improvements to our PE data or methodology that would appropriately account for the different resource costs among traditional office, facility, and off-campus provider-based settings. We also sought additional comment on whether a code modifier is the best mechanism for collecting this service-level information.
Commenters generally recommended that CMS choose the least administratively burdensome approach that would ensure accurate data collection, but did not necessarily agree on what approach would optimally achieve that result. Some commenters believed that a HCPCS modifier would more clearly identify specific services furnished at off-campus PBDs, and would provide better information about the type and level of care furnished. Some commenters believed that a HCPCS modifier would be the least administratively burdensome approach because hospitals and physicians already report a number of claims-based modifiers. However, other commenters stated that additional modifiers would increase administrative burden because this approach would increase the modifiers that would need to be considered when billing.
Though we considered proposing a new POS code for professional claims to collect data on services furnished in the off-campus hospital setting, we note that previous GAO and OIG reports (October 2004 A–05–04–0025, January 2005 A–06–04–00046, July 2010 A–01–09–00503, September 2011 A–01–10–00516) have noted frequent inaccuracies in the reporting of POS codes. Additionally, at the time the proposed rule was developed, we had concerns that using a POS code to report this information might not give us the reliable data we are looking to collect, especially if such data were to be cross-walked with hospital claims for the same service, since the hospital claim would have a modifier, not a POS code. However, we have been persuaded by public comments suggesting that use of a POS code on professional claims would be less administratively burdensome than use of a modifier, and would be more familiar to those involved in practitioner billing. Specifically, since a POS code is already required on every professional claim, we believe that creating a new POS code to distinguish outpatient hospital services that are furnished on the hospital campus versus in an off-campus provider-based department would require less staff training and education than would the use of a modifier on the professional claim. Additionally, professional claims only have space for four modifiers; while a very small percentage of professional claims have four modifiers, required use of an additional modifier for every professional claim could lead to more occurrences where there would not be space for all applicable payment modifiers for a specific service. Unlike institutional claims, we note that a new professional claim is required whenever the place of service changes. That is, even if the same practitioner treats the same patient on the same day in the office and the hospital, the services furnished in the office setting must be submitted on one claim with POS 11 (Office), while those furnished in the outpatient hospital department would be submitted on a separate claim with POS 22 (Outpatient Hospital). Likewise, if a new POS code were to be created for off-campus outpatient provider-based hospital department, a separate claim for services furnished in that setting would be required relative to a claim for outpatient services furnished on the hospital's main campus by the same practitioner to the same patient on the same day. Based on public comments and after further consultation with Medicare billing experts, we believe that use of the POS code on professional claims would be no less accurate than use of a modifier on professional claims in identifying services furnished in off-campus PBDs. In addition, we believe that the POS code would be less administratively burdensome for practitioners billing using the professional claim since a POS code is already required for every professional claim.
With respect to adding new fields to existing claim forms or creating a new bill type, we do not believe that this data collection warrants these measures. We believe that those changes would create greater administrative burden than the proposed HCPCS modifier and POS codes, especially since providers are already accustomed to using modifiers and POS codes. Revisions to the claim form to add new fields or an additional bill type would create significant administrative burden to revise claims processing systems and educate providers that is not necessary given the availability of a modifier and POS codes. Though providers may not be familiar with this new modifier or any new POS code; since these types of codes already exist generally for hospital and professional claims, providers and suppliers should already have an understanding of these types of codes and how to apply them. Finally, we do not believe that expansions to the claim form or use of a new bill type
We also do not believe that we could accurately determine which services are furnished at off-campus provider-base departments (PBDs) using currently available NPI and facility address data. Hospitals are required to report the nine-digit ZIP code indicating where a service was furnished for purposes of paying properly for physician and anesthesia services paid off the PFS when that ZIP code differs from the master address for the hospital on file in CMS claims systems in value code 78 (pub 100–04, transmittal 1681, February 13, 2009). However, the billing ZIP code for the hospital main campus could be broad enough to incorporate on and off-campus provider-based departments. Further, a ZIP code reported in value code 78 does not allow CMS to distinguish between services furnished in different locations on the same date. Therefore, we do not believe that a comparison of the ZIP code captured in value code 78 and the main campus ZIP code is sufficiently precise.
Finally, while we considered the suggestion that CMS use currently reported Medicare hospital cost report (CMS–2552–10) data to identify services furnished at off-campus PBDs, we note that though aggregate data on services furnished in different settings must be reported through the appropriate cost center, we would not be able to obtain the service-specific level of detail that we would be able to obtain from claims data.
We will take under consideration the suggestion that CMS create a way for hospitals to report their acquisition of physician offices as off-campus PBDs through the enrollment process, although this information, as currently reported, would not allow us to know exactly which services are furnished in off-campus provider based departments and which services are furnished on the hospital's main campus when a hospital provides both on the same day.
We also are finalizing our proposal to create a HCPCs modifier for hospital services furnished in an off-campus PBD setting; but we are adopting a voluntary reporting period for the new HCPCS modifier for one year. That is, reporting the new HCPCS modifier for services furnished at an off-campus PBD will not be mandatory until January 1, 2016, in order to allow providers time to make systems changes, test these changes, and train staff on use of the new modifier before reporting is required. We welcome early reporting of the modifier and believe a full year of preparation should provide hospitals with sufficient time to modify their systems for accurate reporting.
We also appreciate the comment on emergency departments. We do not intend for hospitals to report the new modifier for services furnished in emergency departments. We note that there is already a POS code for the emergency department, POS 23 (emergency room-hospital), and this would continue to be used on professional claims for services furnished in emergency departments. That is, the new POS code for off-campus hospital PBDs that will be created for purposes of this data collection would not apply to emergency department services. Hospitals and practitioners that have questions about which departments are considered to be “off-campus PBDs” should review additional guidance that CMS releases on this policy and work with the appropriate CMS regional office if individual, specific questions remain.
In summary, after consideration of the comments received, we are finalizing our proposal with modifications. For professional claims, instead of finalizing a HCPCS modifier, in response to comments, we will be deleting current POS code 22 (outpatient hospital department) and establishing two new POS codes—one to identify outpatient services furnished in on-campus, remote or satellite locations of a hospital, and another to identify services furnished in an off-campus hospital PBD setting that is not a remote location of a hospital, a satellite location of a hospital or a hospital emergency department. We will maintain the separate POS code 23 (emergency room-hospital) to identify services furnished in an emergency department of the hospital. These new POS codes will be required to be reported as soon as they become available, however advance notice of the availability of these codes will be shared publicly as soon as practicable.
For hospital claims, we are creating a HCPCS modifier that is to be reported with every code for outpatient hospital services furnished in an off-campus PBD of a hospital. This code will not be required to be reported for remote locations of a hospital defined at § 412.65, satellite facilities of a hospital defined at § 412.22(h) or for services furnished in an emergency department. This 2-digit modifier will be added to the HCPCS annual file as of January 1, 2015, with the label “PO,” the short descriptor “Serv/proc off-campus pbd,” and the long descriptor “Services, procedures and/or surgeries furnished at off-campus provider-based outpatient departments.” Reporting of this new modifier will be voluntary for 1 year (CY 2015), with reporting required beginning on January 1, 2016. Additional instruction and provider education will be forthcoming in subregulatory guidance.
Section 1848(c) of the Act requires the Secretary to determine relative values for physicians' services based on three components: Work, PE, and malpractice. Section 1848(c)(1)(A) of the Act defines the work component to mean, “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.”
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)(2)(C)(ii) of the Act requires that PE RVUs be determined based upon the relative PE resources involved in furnishing the service. (See section II.A. of this final rule with comment period for more detail on the PE component.)
Section 1848(c)(1)(C) of the Act defines the MP component as “the portion of the resources used in furnishing the service that reflects malpractice expenses in furnishing the service.” Section 1848(c)(2)(C)(iii) of the Act specifies that MP expense RVUs shall be determined based on the relative MP expense resources involved in furnishing the service. (See section II.C. of this final rule with comment period for more detail on the MP component.)
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. Section 1848(c)(2)(K) of the Act 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 1848(c)(2)(L) of the Act also requires the Secretary to develop a process to validate the RVUs of certain potentially misvalued codes under the PFS, using the same criteria used to identify potentially misvalued codes, and to make appropriate adjustments.
As discussed in section I.B. of this final rule with comment period, each year we develop appropriate adjustments to the RVUs taking into account recommendations provided by the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC), the Medicare Payment Advisory Commission (MedPAC), and others. For many years, the 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 other data, such as claims data, to inform the decision-making process as authorized by the law. We may also consider analyses of work 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 RUC. We also consider information provided by other stakeholders. We conduct a 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 and make appropriate adjustments to the RVUs.
In its March 2006 Report to the Congress, MedPAC discussed the importance of appropriately valuing physicians' services, noting 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. MedPAC stated, “When a new service is added to the physician fee schedule, 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.” We believe services can also become overvalued when PE declines. 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 PE rises.
As MedPAC noted in its March 2009 Report to Congress, in the intervening years since MedPAC made its initial recommendations, “CMS and the RUC have taken several steps to improve the review process.” Also, since that time the Congress added section 1848(c)(2)(K)(ii) to the Act, which augments our efforts. It directs the Secretary to specifically examine, as determined appropriate, potentially misvalued services in the following seven categories:
• 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 RBRVS (the so-called `Harvard-valued codes'); and
• Other codes determined to be appropriate by the Secretary.
Section 220(c) of the Protecting Access to Medicare Act of 2014 (PAMA) further expanded the categories of codes that the Secretary is directed to examine by adding nine additional categories. These are:
• Codes that account for the majority of spending under the PFS;
• Codes for services that have experienced a substantial change in the hospital length of stay or procedure time;
• Codes for which there may be a change in the typical site of service since the code was last valued;
• Codes for which there is a significant difference in payment for the same service between different sites of service;
• Codes for which there may be anomalies in relative values within a family of codes;
• Codes for services where there may be efficiencies when a service is furnished at the same time as other services;
• Codes with high intra-service work per unit of time;
• Codes with high PE RVUs; and
• Codes with high cost supplies.
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 of the Act 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. 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) that may include consolidation of individual services into bundled codes for payment under the physician fee schedule.
To fulfill our statutory mandate, we have identified and reviewed numerous potentially misvalued codes as specified in section 1848(c)(2)(K)(ii) of the Act, and we plan to continue our work examining potentially misvalued codes as authorized by statute over the coming years. As part of our current process, we identify potentially misvalued codes for review, and request recommendations from the RUC and other public commenters on revised work RVUs and direct PE inputs for those codes. The RUC, through its own processes, also identifies potentially misvalued codes for review. Through our public nomination process for potentially misvalued codes established in the CY 2012 PFS final rule with comment period, 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 1,250 potentially misvalued codes to refine work RVUs and direct PE inputs. We have assigned appropriate work RVUs and direct PE inputs for these services as a result of these reviews. 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 the CY 2012 final rule with comment period, we finalized our 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.
In the CY 2013 final rule with comment period, we built upon the work we began in CY 2009 to review potentially misvalued codes that have not been reviewed since the implementation of the PFS (so-called “Harvard-valued codes”). In CY 2009, we requested recommendations from the RUC to aid in our review of Harvard-valued codes that had not yet been reviewed, focusing first on high-volume, low intensity codes (73 FR 38589). In the fourth Five-Year Review, we requested recommendations from the RUC to aid in our review of Harvard-valued codes with annual utilization of greater than 30,000 (76 FR 32410). In the CY 2013 final rule with comment period, we identified Harvard-valued services with annual allowed charges that total at least $10,000,000 as potentially misvalued. In addition to the Harvard-valued codes, in the CY 2013 final rule with comment period we finalized for review a list of potentially misvalued codes that have stand-alone PE (codes with physician work and no listed work time, and codes with no physician work that have listed work time).
In the CY 2014 final rule with comment period, we finalized for review a list of potentially misvalued services. We included on the list for review ultrasound guidance codes that had longer procedure times than the typical procedure with which the code is billed to Medicare. We also finalized our proposal to replace missing post-operative hospital E/M visit information and work time for approximately 100 global surgery codes. For CY 2014, we also considered a proposal to limit PFS payments for services furnished in a nonfacility setting when the nonfacility PFS payment for a given service exceeds the combined Medicare Part B payment for the same service when it is furnished in a facility (separate payments being made to the practitioner under the PFS and to the facility under the OPPS). Based upon extensive public comment, we did not finalize this proposal. We address our current consideration of the potential use of OPPS data in establishing RVUs for PFS services, as well as comments received, in section II.B. of this final rule with comment period.
Section 1848(c)(2)(L) of the Act requires the Secretary to establish a formal process to validate RVUs under the PFS. The Act specifies that 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 any of the 16 categories of potentially misvalued codes specified in 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 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. We provided a summary of the comments along with our responses in the CY 2011 PFS final rule with comment period (75 FR 73217) and the CY 2012 PFS final rule with comment period (76 FR 73054 through 73055).
We contracted with two outside entities to develop validation models for RVUs. Given the central role of time in establishing work RVUs and the concerns that have been raised about the current time values used in rate setting, we contracted with the Urban Institute to collect time data from several practices for services selected by the contractor in consultation with CMS. These data will be used to develop time estimates. The Urban Institute will use a variety of approaches to develop objective time estimates, depending on the type of service. Objective time estimates will be compared to the current time values used in the fee schedule. The project team will then convene groups of physicians from a
The second contract is with the RAND Corporation, which is using available data to build a validation model to predict work RVUs and the individual components of work RVUs, time, and intensity. The model design was informed by the statistical methodologies and approach used to develop the initial work RVUs and to identify potentially misvalued procedures under current CMS and RUC processes. RAND will use a representative set of CMS-provided codes to test the model. RAND consulted with a technical expert panel on model design issues and the test results. We anticipate a report from this project by the end of the year and will make the report available on the CMS Web site.
Descriptions of both projects are available on the CMS Web site at
We acknowledge comments received regarding the Urban Institute and RAND projects, but note that we did not solicit comments on these projects because we made no proposals related to them. Any changes to payment policies under the PFS that we might make after considering these reports would be issued in a proposed rule and subjected to public comment before they would be finalized and implemented.
In the CY 2012 PFS final rule with comment period, we finalized a process for the public to nominate potentially misvalued codes (76 FR 73058). The public and 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 work 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 work time, work RVU, or direct PE inputs using other data sources (for example, VA NSQIP, STS National Database, and the PQRS databases).
• National surveys of work time and intensity from professional and management societies and organizations, such as hospital associations.
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 evaluate the supporting documentation and assess whether the nominated codes appear to be potentially misvalued codes appropriate for review under the annual process. In the following year's PFS proposed rule, we publish the list of nominated codes and indicate whether we are proposing each nominated code as a potentially misvalued code.
During the comment period to the CY 2014 final rule with comment period, we received nominations and supporting documentation for four codes to be considered as potentially misvalued codes. Although we evaluated the supporting documentation for two of the nominated codes to ascertain whether the submitted information demonstrated that the code should be proposed as potentially misvalued, we did not identify the other two codes until after the publication of the proposed rule. We apologize for this oversight and will address the nomination of CPT codes 92227 and 92228 in the proposed rule for CY 2016.
We proposed CPT code 41530 (submucosal ablation of the tongue base, radiofrequency, 1 or more sites, per session) as potentially misvalued based on public nomination due to a significant decrease in two of the direct PE inputs.
We did not propose CPT code 99174 (instrument-based ocular screening (for example, photoscreening, automated-refraction), bilateral) as potentially misvalued, because it is a non-covered service, and we only consider nominations of active codes that are covered by Medicare at the time of the nomination (see 76 FR 73059).
We proposed 68 codes listed in Table 11 as potentially misvalued codes under the newly established statutory category, “codes that account for the majority of spending under the physician fee schedule.” To develop this list, we identified the top 20 codes by specialty (using the specialties used in Table 11) in terms of allowed charges. We excluded those codes that we have reviewed since CY 2009, those codes with fewer than $10 million in allowed charges, and E/M services. E/M services were excluded for the same reason that we excluded them in a similar review for CY 2012. The reason was explained in the CY 2012 final rule with comment period (76 FR 73062 through 73065).
We stated that we believed that a review of the codes in Table 11 is warranted to assess changes in physician work and to update direct PE inputs since these codes have not been reviewed since CY 2009 or earlier. Furthermore, since these codes have significant impact on PFS payment at the specialty level, a review of the relativity of the codes is essential to ensure that the work and PE RVUs are appropriately relative within the specialty and across specialties, as discussed previously. For these reasons, we proposed the codes listed in Table 11 as potentially misvalued.
Several commenters questioned the statutory authority for CMS's proposal. One commenter questioned CMS's authority under the relevant statute to select potentially misvalued codes by specialty. The commenter stated that identifying the top 20 codes by specialty in terms of allowed charges does not appear to align with a direct reading of the relevant statutory authority, which allows CMS to identify codes that account for the majority of spending under the PFS, but does not provide for the identification of codes by specialty. The commenter said that a more direct interpretation of the statutory authority would be to select codes based on allowed charges irrespective of specialty, and then to narrow the universe of codes based upon the top codes in terms of allowed charges. Another commenter believed the proposed screen did not comport with the statutory selection criteria because the majority or near majority of spending under the PFS is for evaluation and management (E/M) codes, which CMS excluded from review. The commenter said that if CMS believes that E/M services should not be reviewed—a position the commenter said they would certainly understand—then such a determination is sufficient to meet the statutory mandate to review codes accounting for the majority of PFS spending, and it would then be
Regarding screening for codes by specialty, as we discussed above, the included codes have significant impact on PFS payment at the specialty level, therefore a review of the relativity of the codes is essential to ensure that the work and PE RVUs are appropriately relative within the specialty and across specialties. We mentioned in the CY 2012 final rule with comment period how stakeholders have noted that many of the services previously identified under the potentially misvalued codes initiative were concentrated in certain specialties. To develop a robust and representative list of codes for review, we examine the highest PFS expenditure services by specialty and we identify those codes that have not been recently reviewed (76 FR 73060).
Although we understand commenters' concerns that the screens can produce redundant results, we note that we exempted codes that have been reviewed since 2009 for this very reason. We believe that the practice of medicine can change significantly over a 10-year period, and disagree with commenters' suggestions that no changes would occur over a 10-year period that would significantly affect a procedure's valuation.
Regarding the exclusion of E/M services, we refer the commenters to the extensive discussion in the CY 2012 PFS final rule with comment period (76 FR 73060 through 73065). It is true that E/M services account for significant volume under the PFS, but there are significant issues with reviewing these codes as discussed in the CY 2012 final rule with comment period, and as a result we did not propose to include these codes as potentially misvalued.
After considering the comments received, as well as the other proposals we are finalizing, we believe it is appropriate to finalize the high expenditure screen as a tool to identify potentially misvalued codes. However, given the resources required over the next several years to revalue the services with global periods, we believe it is best to concentrate our efforts on these valuations. Therefore, we are not finalizing the codes identified through the high expenditure screen as potentially misvalued at this time. Also, we are not responding to comments at this time regarding whether particular codes should or should not be included in the high expenditure code screen and identified as potentially misvalued codes. We will re-run the high expenditure screen at a future date, and will propose at that time the specific set of codes to be reviewed that meet the high expenditure criteria.
For CY 2014, we established interim final rates for four epidural injection procedures, CPT codes 62310 (Injection(s), of diagnostic or therapeutic substance(s) (including anesthetic, antispasmodic, opioid, steroid, other solution), not including neurolytic substances, including needle or catheter placement, includes contrast for localization when performed, epidural or subarachnoid; cervical or thoracic), 62311 (Injection(s), of diagnostic or therapeutic substance(s) (including anesthetic, antispasmodic, opioid, steroid, other solution), not including neurolytic substances, including needle or catheter placement, includes contrast for localization when performed, epidural or subarachnoid; lumbar or sacral (caudal)), 62318 (Injection(s), including indwelling catheter placement, continuous infusion or intermittent bolus, of diagnostic or therapeutic substance(s) (including anesthetic, antispasmodic, opioid, steroid, other solution), not including neurolytic substances, includes contrast for localization when performed, epidural or subarachnoid; cervical or thoracic) and 62319 (Injection(s), including indwelling catheter placement, continuous infusion or intermittent bolus, of diagnostic or therapeutic substance(s) (including anesthetic, antispasmodic, opioid, steroid, other solution), not including neurolytic substances, includes contrast for localization when performed, epidural or subarachnoid; lumbar or sacral (caudal)). These interim final values resulted in CY 2014 payment reductions from the CY 2013 rates for all four procedures.
In the CY 2014 final rule with comment period (78 FR 74340), we described in detail our interim valuation of these codes. We indicated we established interim final work RVUs for these codes that were less than those recommended by the RUC because we did not believe that the RUC-recommended work RVUs accounted for the substantial decrease in time it takes to furnish these services as reflected in the RUC survey data for these four codes. Since the RUC provided no indication that the intensity of the procedures had changed, we indicated that we believed the work RVUs should reflect the reduction in time. We also established interim final direct PE inputs for these four codes based on the RUC-recommended inputs without any refinement. These recommendations included the removal of the radiographic-fluoroscopy room for CPT codes 62310, 62311, and 62318 and a portable C-arm for CPT code 62319.
In response to the comments we received objecting to the CY 2014 interim final values for these codes, we looked at other injection procedures. Other injection procedures, including some that commenters recommended we use to value these epidural injection codes, include the work and practice expenses of image guidance in the injection code. In the proposed rule, we detailed many of these procedures, which include the image guidance in the injection CPT code. Since our analysis of the Medicare data and comments received on the CY 2014 final rule with comment period indicated that these services are typically furnished with imaging guidance, we believe it would be appropriate for the codes to be bundled and the inputs for image guidance to be included in the valuation of the epidural injection codes as it is for transforaminal and paravertebral codes. We stated that we did not believe the epidural injection codes can be appropriately valued without considering the image guidance, and that bundling image guidance will help assure relativity with other injection codes that include the image guidance. To determine how to appropriately value resources for the combined codes, we indicated that we believed more information is needed. Accordingly, we proposed to include CPT codes 62310, 62311, 62318, and 62319 on the potentially misvalued code list so that we can obtain information to value them with the image guidance included. In the meantime, we proposed to use the CY 2013 input values for CPT codes 62310, 62311, 62318 and 62319 to value these codes for CY 2015. Specifically, we proposed to use the CY 2013 work RVUs and work times.
Because it was clear that inputs that are specifically related to image guidance, such as the radiographic fluoroscopic room, are included in these proposed direct PE inputs for the epidural injection codes, we believed allowing separate reporting of the image guidance codes would overestimate the resources used in furnishing the overall service. To avoid this situation, we also proposed to prohibit the billing of image guidance codes in conjunction with these four epidural injection codes. We stated that we believed our two-tiered proposal to utilize CY 2013 input values for this family while prohibiting separate billing of imaging guidance best ensures that appropriate reimbursements continue to be made for these services, while we gather additional data and input on the best way to value them through codes that include both the injection and the image guidance.
After considering comments received, we are finalizing CPT codes 62310, 62311, 62318, and 62319 as potentially misvalued, finalizing the proposed RVUs for these services, and prohibiting separate billing of image guidance in conjunction with these services.
We proposed CPT codes 64553 (Percutaneous implantation of neurostimulator electrode array; cranial nerve) and 64555 (Percutaneous implantation of neurostimulator electrode array; peripheral nerve (excludes sacral nerve)) as potentially misvalued after stakeholders questioned whether the codes included the appropriate direct PE inputs when furnished in the nonfacility setting.
We appreciate the support for our proposal expressed by some commenters. Since the commenter opposing the addition of these codes to the potentially misvalued code list did not provide justification for its assertion that the work RVUs for CPT codes 64553 and 64555 did not need to be reviewed, after consideration of comments received, we are finalizing CPT codes 64553 and 64555 as potentially misvalued.
Medicare currently pays for mammography services through both CPT codes, (77055 (mammography; unilateral), 77056 (mammography; bilateral) and 77057 (screening mammography, bilateral (2-view film study of each breast)) and HCPCS G-codes, (G0202 (screening mammography, producing direct digital image, bilateral, all views), G0204 (diagnostic mammography, producing direct digital image, bilateral, all views), and G0206 (diagnostic mammography, producing direct digital image, unilateral, all views)). The CPT codes were designed to be used for mammography regardless of whether film or digital technology is used. However, for Medicare purposes, the HCPCS G-codes were created to describe mammograms using digital technology in response to special payment rules for digital mammography included in the Medicare Benefit Improvements and Protection Act of 2000 (BIPA).
The RUC recommended that CMS update the direct PE inputs for all imaging codes to reflect the migration from film-to-digital storage technologies since digital storage is now typically used in imaging services. Review of the Medicare data with regard to the application of this policy to mammography confirmed that virtually all mammography is now digital. As a result, we proposed that CPT codes 77055, 77056, and 77057 be used to report mammography regardless of whether film or digital technology is used, and to delete the HCPCS G-codes G0202, G0204, and G0206. We proposed to establish values for the CPT codes by crosswalking the values established for the digital mammography G-codes for CY 2015. (See section II.B. of this final rule with comment period for more discussion of this policy.) In addition, since the G-code values have not been evaluated since they were created in CY 2002 we proposed to include CPT codes 77055, 77056, and 77057 on the list of potentially misvalued codes.
After consideration of public comments, we are modifying our proposal as follows: We will include CPT codes 77055, 77056, and 77057 on the potentially misvalued codes list; we will continue to recognize G0202, G0204 and G0206 but will modify the descriptors so that they are specific to 2–D digital mammography, and instead of using the digital values we will continue to use the CY 2014 work and PE RVUs to value the mammography CPT codes. We expect that the CPT Editorial Panel will consider the descriptor for screening mammography, CPT code 77057, in light of the prevailing use of digital mammography.
When Medicare began paying for abdominal aortic aneurysm (AAA) ultrasound screening, HCPCS code G0389 (Ultrasound, B-scan and/or real time with image documentation; for abdominal aortic aneurysm (AAA) screening) in CY 2007, we set the RVUs at the same level as CPT code 76775 (Ultrasound, retroperitoneal (e.g., renal, aorta, nodes), B-scan and/or real time with image documentation; limited). We noted in the CY 2007 final rule with comment period that CPT code 76775 was used to report the service when furnished as a diagnostic test and that we believed the service reflected by G0389 used equivalent resources and work intensity to those contained in CPT code 76775 (71 FR 69664 through 69665).
In the CY 2014 proposed rule, we proposed to replace the ultrasound room included as a direct PE input for CPT code 76775 with a portable ultrasound unit based upon a RUC recommendation. Since the RVUs for G0389 were crosswalked from CPT code 76775, the proposed PE RVUs for G0389 in the CY 2014 proposed rule were reduced as a result of this change. However, we did not discuss the applicability of this change to G0389 in the preamble to the proposed rule, and did not receive any comments on G0389 in response to the proposed rule. We finalized the change to CPT code 76775 in the CY 2014 final rule with comment period and as a result, the PE RVUs for G0389 were also reduced.
We proposed G0389 as potentially misvalued in response to a stakeholder suggestion that the reduction in the RVUs for G0389 did not accurately reflect the resources involved in furnishing the service. We sought recommendations from the public and other stakeholders, including the RUC, regarding the appropriate work RVU, time, direct PE input, and malpractice risk factors that reflect the typical resources involved in furnishing the service.
Until we receive the information needed to re-value this service, we proposed to value this code using the same work and PE RVUs we used for CY 2013. We proposed MP RVUs based on the five-year review update process as described in section II.C of this final rule with comment period. We stated that we believe this valuation would ameliorate the effect of the CY 2014 reduction that resulted from the RVUs for G0389 being tied to those for another code while we assess appropriate valuation through our usual methodologies. Accordingly, we proposed a work RVU of 0.58 for G0389 and proposed to assign the 2013 PE RVUs until this procedure is reviewed.
After consideration of comments received, we are finalizing our proposal to add G0389 to the potentially misvalued codes list, and to maintain the 2013 work and PE RVUs while we complete our review of the code. The MP RVUs will be calculated as discussion in section II.C. of this rule.
For CY 2014, we modified the code descriptors of G0416 through G0419 so that these codes could be used for any method of prostate needle biopsy services, rather than only for prostate saturation biopsies. The CY 2014 descriptions are:
• G0416 (Surgical pathology, gross and microscopic examination for prostate needle biopsies, any method; 10–20 specimens).
• G0417 (Surgical pathology, gross and microscopic examination for prostate needle biopsies, any method; 21–40 specimens).
• G0418 (Surgical pathology, gross and microscopic examination for prostate needle biopsies, any method; 41–60 specimens).
• G0419 (Surgical pathology, gross and microscopic examination for prostate needle biopsies, any method; greater than 60 specimens).
Subsequently, we have discussed prostate biopsies with stakeholders, and reviewed medical literature and Medicare claims data in considering how best to code and value prostate biopsy pathology services. After considering these discussions and information, we believed it would be appropriate to use only one code to report prostate biopsy pathology services. Therefore, we proposed to revise the descriptor for G0416 to define the service regardless of the number of specimens, and to delete codes G0417, G0418, and G0419. We believe that using G0416 to report all prostate biopsy pathology services, regardless of the number of specimens, would simplify the coding and mitigate overutilization incentives. Given the infrequency with which G0417, G0418, and G0419 are used, we did not believe that this was a significant change.
Based on our review of medical literature and examination of Medicare claims data, we indicated that we believe that the typical number of specimens evaluated for prostate biopsies is between 10 and 12. Since G0416 currently is used for between 10 and 12 specimens, we proposed to use the existing values for G0416 for CY 2015, since the RVUs for this service were established based on similar assumptions.
In addition, we proposed G0416 as a potentially misvalued code for CY 2015 and sought public comment on the appropriate work RVUs, work time, and direct PE inputs.
With respect to our proposing G0416 as potentially misvalued, commenters stated that the recent change to these codes has already been confusing and suggests that there is not a clear understanding of what these codes represent, thus making an assessment of their valuation difficult. Commenters further stated that it is unreasonable to consider this a misvalued code when the payment is already 30 percent below what they think it should be, and that CMS has failed to provide justification for why it is potentially misvalued.
The RUC and others suggested that it would be most accurate to utilize CPT code 88305 (Level IV—surgical pathology, gross and microscopic examination) for the reporting of prostate biopsies and to allow the reporting of multiple units. Given the additional granularity and scrutiny given to CPT code 88305 in the CY 2014 final rule, the commenters indicated that they believe that the agency's intent to establish straightforward coding and accurate payment for these services would be realized with this approach.
After consideration of comments received, we are finalizing our proposal to include G0416 on the potentially misvalued codes list, to modify the descriptor to reflect all prostate biopsies, and to maintain the current value until we receive and review information and recommendations from the RUC. We are also finalizing our proposal to delete codes G0417, G0418, and G0419.
Pursuant to section 1861(ddd) of the Act, we added coverage for a new preventive benefit, Intensive Behavioral Therapy for Obesity, effective November 29, 2011, and created HCPCS code G0447 (Face-to-face behavioral counseling for obesity, 15 minutes) for reporting and payment of individual behavioral counseling for obesity. Coverage requirements specific to this service are delineated in the Medicare National Coverage Determinations Manual, Pub. 100–03, Chapter 1, Section 210, available at
It was brought to our attention that behavioral counseling for obesity is sometimes furnished in group sessions, and questions were raised about whether group sessions could be billed using HCPCS code G0447. To improve payment accuracy, we proposed to create two new HCPCS codes for the reporting and payment of group behavioral counseling for obesity. Specifically, we proposed to create GXXX2 (Face-to-face behavioral counseling for obesity, group (2–4), 30 minutes) and GXXX3 (Face-to-face behavioral counseling for obesity, group (5–10), 30 minutes). We indicated that the coverage requirements for these services would remain in place, as described in the National Coverage Determination for Intensive Behavioral Therapy for Obesity cited above. The practitioner furnishing these services would report the relevant group code for each beneficiary participating in a group therapy session.
Since we believed that the face-to-face behavioral counseling for obesity services described by GXXX2 and GXXX3 would require similar per minute work and intensity as HCPCS code G0447, we proposed work RVUs of 0.23 and 0.10 for HCPCS codes GXXX2 and GXXX3, with work times of 8 minutes and 3 minutes respectively. Since the services described by GXXX2 and GXXX3 would be billed per beneficiary receiving the service, the work RVUs and work time that we proposed for these codes were based upon the assumed typical number of beneficiaries per session, 4 and 9, respectively. Accordingly, we proposed
Since the inception of the PFS, we have valued and paid for certain services, such as surgery, as part of global packages that include the procedure and the services typically furnished in the periods immediately before and after the procedure (56 FR 59502). For each of these codes (usually referred to as global surgery codes), we establish a single PFS payment that includes payment for particular services that we assume to be typically furnished during the established global period.
There are three primary categories of global packages that are labeled based on the number of post-operative days included in the global period: 0-day; 10-day; and 90-day. The 0-day global codes include the surgical procedure and the pre-operative and post-operative physicians' services on the day of the procedure, including visits related to the service. The 10-day global codes include these services and, in addition, visits related to the procedure during the 10 days following the procedure. The 90-day global codes include the same services as the 0-day global codes plus the pre-operative services furnished one day prior to the procedure and post-operative services during the 90 days immediately following the day of the procedure.
Section 40.1 of the Claims Processing Manual (Pub. 100–04, Chapter 12 Physician/Nonphysician Practitioners) defines the global surgical package to include the following services when furnished during the global period:
• Preoperative Visits—Preoperative visits after the decision is made to operate beginning with the day before the day of surgery for major procedures and the day of surgery for minor procedures;
• Intra-operative Services—Intra-operative services that are normally a usual and necessary part of a surgical procedure;
• Complications Following Surgery—All additional medical or surgical services required of the surgeon during the postoperative period of the surgery because of complications that do not require additional trips to the operating room;
• Postoperative Visits—Follow-up visits during the postoperative period of the surgery that are related to recovery from the surgery;
• Postsurgical Pain Management—By the surgeon;
• Supplies—Except for those identified as exclusions; and
• Miscellaneous Services—Items such as dressing changes; local incisional care; removal of operative pack; removal of cutaneous sutures and staples, lines, wires, tubes, drains, casts, and splints; insertion, irrigation and removal of urinary catheters, routine peripheral intravenous lines, nasogastric and rectal tubes; and changes and removal of tracheostomy tubes.
CMS supports bundled payments as a mechanism to incentivize high-quality, efficient care. Although on the surface, the PFS global codes appear to function as bundled payments similar to those Medicare uses to make single payments for multiple services to hospitals under the inpatient and outpatient prospective payment systems, the practical reality is that these global codes function significantly differently than other bundled payments. First, the global surgical codes were established several decades ago when surgical follow-up care was far more homogenous than today. Today, there is more diversity in the kind of procedures covered by global periods, the settings in which the procedures and the follow-up care are furnished, the health care delivery system and business arrangements used by Medicare practitioners, and the care needs of Medicare beneficiaries. Despite these changes, the basic structures of the global surgery packages are the same as the packages that existed prior to the creation of the resource-based relative value system in 1992. Another significant difference between this and other typical models of bundled payments is that the payment rates for the global surgery packages are not updated regularly based on any reporting of the actual costs of patient care. For example, the hospital inpatient and outpatient prospective payment systems (the IPPS and OPPS, respectively) derive payment rates from hospital cost and charge data reported through annual Medicare hospital cost reports and the most recent year of claims data available for an inpatient stay or primary outpatient service.
Because payment rates are based on consistently updated data, over time, payment rates adjust to reflect the average resource costs of current practice. Similarly, many of the new demonstration and innovation models track costs and make adjustments to payments. Another significant difference is that payment for the PFS global packages relies on valuing the combined services together. This means that there are no separate PFS values established for the procedures or the follow-up care, making it difficult to estimate the costs of the individual global code component services.
In the following paragraphs, we address a series of concerns regarding the accuracy of payment for 10- and 90-day global codes, including: The fundamental difficulties in establishing
Concerns such as these commonly arise when developing payment mechanisms, for example fee-for-service payment rates, single payments for multiple services, or payment for episodes of care over a period of time. However, in the case of the post-operative portion of the 10- and 90-day global codes, we believe that together with certain unique aspects of PFS rate setting methodology, these concerns create substantial barriers to accurate valuation of these services relative to other PFS services.
In general, we face many challenges in valuing PFS services as accurately as possible. However, the unique nature of global surgery packages with 10- and 90-day post-operative periods presents additional challenges distinct from those presented in valuing other PFS services. Our valuation methodology for PFS services generally relies on assumptions regarding the resources involved in furnishing the “typical case” for each individual service unlike other payment systems that rely on actual data on the costs of furnishing services. Consistent with this valuation methodology, the RVUs for a global code should reflect the typical number and level of E/M services furnished in connection with the procedure. However, it is much easier to maintain relativity among services that are valued on this basis when each of the services is described by codes of similar unit sizes. In other words, because codes with long post-operative periods include such a large number of services, any variations between the “typical” resource costs used to value the service and the actual resource costs associated with particular services are multiplied. The effects of this problem can be two-fold, skewing the accuracy of both the RVUs for individual global codes and the Medicare payment made to individual practitioners. The RVUs of the individual global service codes are skewed whenever there is any inaccuracy in the assumption of the typical number or kind of services in the post-operative periods. This inaccuracy has a greater impact than inaccuracies in assumptions for non-global codes because it affects a greater number of service units over a period of time than for individually priced services. Furthermore, in contrast to prospective payment systems, such inaccuracies under the PFS are not corrected over time through a ratesetting process that makes year-to-year adjustments based on data on actual costs. For example, if a 90-day global code is valued based on an assumption or survey response that ten post-operative visits is typical, but practitioners reporting the code in fact typically only furnish six visits, then the resource assumptions are overestimated by the value of the four visits multiplied by the number of the times the procedure code is reported. In contrast, when our assumptions are incorrect about the typical resources involved in furnishing a PFS code that describes a single service, any inaccuracy in the RVUs is limited to the difference between the resource costs assumed for the typical service and the actual resource costs in furnishing one individual service. Such a variation between the assumptions used in calculating payment rates and the actual resource costs could be corrected if the payments for packaged services were updated regularly using data on actual services furnished. Medicare's prospective payment systems have more mechanisms in place than the PFS does to adjust over time for such variation To make adjustments to the RVUs to account for inaccurate assumptions under the current PFS methodology, the global surgery code would need to be identified as potentially misvalued, survey data would have to reflect an accurate account of the number and level of typical post-operative visits, and we (with or without a corresponding recommendation from the RUC or others) would have to implement a change in RVUs based on the change in the number and level of visits to reflect the typical service.
These amplified inaccuracies may also occur whenever Medicare pays an individual practitioner reporting a 10- or 90-day global code. Practitioners may furnish a wide range of post-operative services to individual Medicare beneficiaries, depending on individual patient needs, changes in medical practice, and dynamic business models. Due to the way the 10- and 90-day global codes are constructed, the number and level of services included for purposes of calculating the payment for these services may vary greatly from the number and level of services that are actually furnished in any particular case. In contrast, the variation between the “typical” and the actual resource cost for the practitioner reporting an individually valued PFS service is constrained because the practitioner is only reporting and being paid for a specific service furnished on a particular date.
For most PFS services, any difference between the “typical” case on which RVUs are based and the actual case for a particular service is limited to the variation between the resources assumed to be involved in furnishing the typical case and the actual resources involved in furnishing the single specific service. When the global surgical package includes more or a higher level of E/M services than are actually furnished in the typical post-operative period, the Medicare payment is based on an overestimate of the quantity or kind of services furnished, not merely an overestimation of the resources involved in furnishing an individual service. The converse is true if the RVUs for the global surgical package are based on fewer or a lower level of services than are typically furnished for a particular code.
In previous rulemaking (77 FR 68911 through 68913), we acknowledged evidence suggesting that the values included in the post-operative period for global codes may not reflect the typical number and level of post-operative E/M visits actually furnished.
In 2005, the 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 recorded in the patients' medical records to establish whether and, if so, how many post-operative E/M services were furnished by the surgeons. For about two-thirds of the claims sampled by the OIG, surgeons furnished fewer E/M services in the post-operative period than were included in the global surgical package payment for each procedure. A small percentage of the surgeons furnished more E/M services than were included in the global surgical package payment. The OIG identified the number of face-to-face services recorded in the medical record, but did not review the medical necessity
Following that report, the OIG continued to investigate E/M services furnished during global surgical periods. In May 2012, the OIG published a report entitled “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 included as part of the global period payment for that service. Once again, a small percentage of surgeons furnished more E/M services than were included in the global surgical package payment. The OIG concluded that the RVUs for these global surgical packages are too high because they include a higher number of E/M services than typically are 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 studied global surgical payments to reflect the number of E/M services that are actually being furnished. However, since it is not necessary under our current global surgery payment policy for a surgeon to report the individual E/M services actually furnished during the global surgical period, we do not have objective data upon which to assess whether the RVUs for global period surgical services reflect the typical number or level of E/M services that are furnished. In the CY 2013 PFS proposed rule (77 FR 44738), we previously sought public comments on collecting these data. As summarized in the CY 2013 PFS final rule (77 FR 68913) we did not discover a consensus among stakeholders regarding either the most appropriate means to gather the data, or the need for, or the appropriateness of using such data in valuing these services. In response to our comment solicitation, some commenters urged us to accept the RUC survey data as accurate in spite of the OIG reports and other concerns that have been expressed regarding whether the visits included in the global periods reflected the typical case. Others suggested that we should conduct new surveys using the RUC approach or that we should mine hospital data to identify the typical number of visits furnished. Some comments suggested eliminating the 10- and 90-day global codes.
Historically, our attempts to adjust RVUs for global services based on changes in the typical resource costs (especially with regard to site of service assumptions or changes to the number of post-surgery visits) have been difficult and controversial. At least in part, this is because the relationship between the work RVUs for the 10- and 90-day global codes (which includes the work RVU associated with the procedure itself) and the number of included post-operative visits in the existing values is not always clear. Some services with global periods have been valued by adding the work RVU of the surgical procedure and all pre- and post-operative E/M services included in the global period. However, in other cases, as many stakeholders have noted, the total work RVUs for surgical procedures and post-operative visits in global periods are estimated as a single value without any explicit correlation to the time and intensity values for the individual service components. Although we would welcome more objective information to improve our determination of the “typical” case, we believe that even if we engaged in the collection of better data on the number and level of E/M services typically furnished during the global periods for global surgery services, the valuation of individual codes with post-operative periods would not be straightforward. Furthermore, we believe it would be important to frequently update the data on the number and level of visits furnished during the post-operative periods in order to account for any changes in the patient population, medical practice, or business arrangements. Practitioners paid through the PFS do not report such data.
Subsequent to our last comment solicitation regarding the valuation of the post-operative periods (77 FR 68911 through 68913), some stakeholders have raised concerns that global surgery packages contribute to unwarranted payment disparities between practitioners who do and do not furnish these services. These stakeholders have addressed several ways the 10- and 90-day global packages may contribute to unwarranted payment disparities.
The stakeholders noted that, through the global surgery packages, Medicare pays practitioners who furnish E/M services during post-surgery periods regardless of whether the services are actually furnished, while practitioners who do not furnish global procedures with post-operative visits are only paid for E/M services that are actually furnished. In some cases, it is possible that the practitioner furnishing the global surgery procedure may not furnish any post-operative visits. Although we have policies to address the situation when post-operative care is transferred from one practitioner to another, the beneficiary might simply choose to seek care from another practitioner without a formal transfer of care. The other practitioner would then bill Medicare separately for E/M services for which payment was included in the global payment to the original practitioner. Those services would not have been separately billable if furnished by the original practitioner.
These circumstances can lead to unwarranted payment differences, allowing some practitioners to receive payment for fewer services than reflected in the Medicare payment. Practitioners who do not furnish global surgery services bill and are paid only for each individual service furnished. When global surgery values are based on inaccurate assumptions about the typical services furnished in the post-operative periods, these payment disparities can contribute to differences in aggregate RVUs across specialties. Since the RVUs are intended to reflect differences in the relative resource costs involved in furnishing a service, any disparity between assumed and actual costs results not only in paying some practitioners for some services that are not furnished, it also skews relativity between specialties.
Stakeholders have also pointed out that payment disparities can arise because E/M services reflected in global periods generally include higher PE values than the same services when billed separately. The difference in PE values between separately billed visits and those included in global packages result primarily from two factors that are both inherent in the PFS pricing methodology.
First, there is a different mix of PE inputs (clinical labor/supplies/equipment) included in the direct PE inputs for a global period E/M service and a separately billed E/M service. For example, the clinical labor inputs for separately reportable E/M codes includes a staff blend listed as “RN/LPN/MTA” (L037D) and priced at $0.37 per minute. Instead of this input, some codes with post-operative visits include the staff type “RN” (L051A) priced at a higher rate of $0.51 per minute. For these codes, the higher resource cost
Second, the indirect PE allocated to the E/M visits included in global surgery codes is higher than that allocated to separately furnished E/M visits. This occurs because the range of specialties furnishing a particular global service is generally not as broad as the range of specialties that report separate individual E/M services. Since the specialty mix for a service is a key factor in determining the allocation of indirect PE to each code, a higher amount of indirect PE can be allocated to the E/M services that are valued as part of the global surgery codes than to the individual E/M codes. Practitioners who use E/M codes to report visits separately are paid based on PE RVUs that reflect the amount of indirect PE allocated across a wide range of specialties, which has the tendency to lower the amount of indirect PE. For practitioners who are paid for visits primarily through post-operative periods, indirect PE is generally allocated with greater specificity. Two significant steps would be required to alleviate the impact of this disparity. First, we would have to identify the exact mathematical relationship between the work RVU and the number and level of post-operative visits for each global code; and second, we would have to propose a significant alteration of the PE methodology in order to allocate indirect PE that does not correlate to the specialties reporting the code in the Medicare claims data.
Furthermore, stakeholders have pointed out that the PE RVUs for codes with 10- or 90-day post-operative periods reflect the assumption that all outpatient visits occur in the higher-paid non-facility office setting, when many of these visits are likely to be furnished in provider-based departments, which would be paid at the lower, PFS facility rate if they were billable separately. As we note elsewhere in this final rule with comment period, we do not have data on the volume of physicians' services furnished in provider-based departments, but public information suggests that it is not insignificant and that it is growing. When these services are paid as part of a global package, there is no adjustment made based on the site of service. Therefore, even though the PFS payment for services furnished in post-operative global periods might include clinical labor, disposable supply, and medical equipment costs (and additional indirect PE allocation) that are incurred by the facility and not the practitioner reporting the service, the RVUs for global codes reflect all of these costs associated with the visits.
In addition to these issues, the 10- and 90-day global periods reflect a long-established but no longer exclusive model of post-operative care that assumes the same practitioner who furnishes the procedure typically furnishes the follow-up visits related to that procedure. In many cases, we believe that models of post-operative care are increasingly heterogeneous, particularly given the overall shift of patient care to larger practices or team-based environments.
We believe that RVUs used to establish PFS payments are likely to serve as critical building blocks to developing, testing, and implementing a number of new payment models, including those that focus on bundled payments to practitioners or payments for episodes of care. Therefore, we believe it is critical for us to ensure that the PFS RVUs accurately reflect the resource costs for individual PFS services instead of reflecting potentially skewed assumptions regarding the number of services furnished over a long period of time in the “typical” case. To the extent that the 10- and 90-day global periods reflect inaccurate assumptions regarding resource costs associated with individual PFS services, we believe they are likely to be obstacles to a wide range of potential improvements to PFS payments, including the potential incorporation of payment bundling designed to foster efficiency and quality care for Medicare beneficiaries.
Although we have marginally addressed some of the concerns noted above with global packages in previous rulemaking, we do not believe that we have made significant progress in addressing the fundamental issues with the 10- and 90-day post-operative global packages. In the context of the misvalued code initiative, we believe it is critical for the RVUs used to develop PFS payment rates reflect the most accurate resource costs associated with PFS services. Based on the issues discussed above, we do not believe we can effectively address the issues inherent in establishing values for the 10- and 90-day global packages under our existing methodologies and with available data. As such, we do not believe that maintaining the post-operative 10-and 90-day global periods is compatible with our continued interest in using more objective data in the valuation of PFS services and accurately valuing services relative to each other. Because the typical number and level of post-operative visits during global periods may vary greatly across Medicare practitioners and beneficiaries, we believe that continued valuation and payment of these face-to-face services as a multi-day package may skew relativity and create unwarranted payment disparities within PFS fee-for-service payment. We also believe that the resource based valuation of individual physicians' services will continue to serve as a critical foundation for Medicare payment to physicians, whether through the current PFS or in any number of new payment models. Therefore, we believe it is critical that the RVUs under the PFS be based as closely and accurately as possible on the actual resources involved in furnishing the typical occurrence of specific services.
To address the issues discussed above, we proposed to retain global bundles for surgical services, but to refine bundles by transforming over several years all 10- and 90-day global codes to 0-day global codes. Medically reasonable and necessary visits would be billed separately during the pre- and post-operative periods outside of the day of the surgical procedure. We propose to make this transition for current 10-day global codes in CY 2017 and for the current 90-day global codes in CY 2018, pending the availability of data on which to base updated values for the global codes.
We believe that transforming all 10- and 90-day global codes to 0-day global codes would:
• Increase the accuracy of PFS payment by setting payment rates for individual services based more closely upon the typical resources used in furnishing the procedures;
• Avoid potentially duplicative or unwarranted payments when a beneficiary receives post-operative care
• Eliminate disparities between the payment for E/M services in global periods and those furnished individually;
• Maintain the same-day packaging of pre- and post-operative physicians' services in the 0-day global; and
• Facilitate availability of more accurate data for new payment models and quality research.
As we transition these codes, we would need to establish RVUs that reflect the change in the global period for all the codes currently valued as 10- and 90-day global surgery services. We sought assistance from stakeholders on various aspects of this task. Prior to implementing these changes, we intend to gather objective data on the number of E/M and other services furnished during the current post-operative periods and use those data to inform both the valuation of particular services and the overall budget neutrality adjustments required to implement this proposal. We sought comment on the most efficient means of acquiring accurate data regarding the number of visits and other services actually being furnished by the practitioner during the current post-operative periods. For all the reasons stated above, we do not believe that survey data reflecting assumptions of the “typical case” meets the standards required to measure the resource costs of the wide range of services furnished during the post-operative periods. We acknowledge that collecting information on these services through claims submission may be the best approach, and we would propose such a collection through future rulemaking. However, we are also interested in alternatives. For example, we sought information on the extent to which individual practitioners or practices may currently maintain their own data on services furnished during the post-operative period, and how we might collect and objectively evaluate that data.
We also sought comment on the best means to ensure that allowing separate payment of E/M visits during post-operative periods does not incentivize otherwise unnecessary office visits during post-operative periods. If we adopt this proposal, we intend to monitor any changes in the utilization of E/M visits following its implementation but we also solicited comment on potential payment policies that will mitigate such a change in behavior.
In developing this proposal, we considered several alternatives to the transformation of all global codes to 0-day global codes. First, we again considered the possibility of gathering data and using the data to revalue the 10- and 90-day global codes. While this option would have maintained the status quo in terms of reporting services, it would have required much of the same effort as this proposal without alleviating many of the problems associated with the 10- and 90-day global periods. For example, collecting accurate data would allow for more accurate estimates of the number and kind of visits included in the post-operative periods at the time of the survey. However, this alternative approach would only mitigate part of the potential for unwarranted payment disparities. For example, the values for the visits in the global codes would continue to include different amounts of PE RVUs than separately reportable visits and would continue to provide incentives to some practitioners to minimize patient visits. Additionally, it would not address the changes in practice patterns that we believe have been occurring whereby the physician furnishing the procedure is not necessarily the same physician providing the post-procedure follow up.
This alternative option would also rest extensively on the effectiveness of using the new data to revalue the codes accurately. Given the unclear relationship between the assigned work RVUs and the post-operative visits across all of these services, incorporating objective data on the number of visits to adjust work RVUs would still necessitate extensive review of individual codes or families of codes by CMS and stakeholders, including the RUC. We believe the investment of resources for such an effort would be better made to solve a broader range of problems.
We also considered other possibilities, such as altering our PE methodology to ensure that the PE inputs and indirect PE for visits in the global period were valued the same as separately reportable E/M codes or requiring reporting of the visits for all 10- and 90-day global services while maintaining the 10- and 90-day global period payment rates. However, we believe this option would require all of the same effort by practitioners, CMS, and other stakeholders without alleviating most of the problems addressed in the preceding paragraphs.
We also considered maintaining the status quo and identifying each of the 10- and 90-day global codes as potentially misvalued through our potentially misvalued code process for review as 10- and 90-day globals. Inappropriate valuations of these services has a major effect on the fee schedule due to the percentage of PFS dollars paid through 10- and 90-day global codes (3 percent and 11 percent, respectively), and thus, valuing them appropriately is critical to appropriate valuation and relativity throughout the PFS. Through the individual review approach, we could review the appropriateness of the global period and the accurate number of visits for each service. Yet revaluing all 3,000 global surgery codes through the potentially misvalued codes approach would not address many of the problems identified above. Unless such an effort was combined with changes in the PE methodology, it would only partially address the valuation and accuracy issues and would leave all the other issues unresolved. Moreover, the valuation and accuracy issues that could be addressed through this approach would rapidly be out of date as medical practice continues to change. Therefore, such an approach would be only partially effective and would impede our ability to address other potentially misvalued codes.
We sought stakeholder input on an accurate and efficient means to revalue or adjust the work RVUs for the current 10- and 90-day global codes to reflect the typical resources involved in furnishing the services including both the pre- and post-operative care on the day of the procedure. We believe that collecting data on the number and level of post-operative visits furnished by the practitioner reporting current 10- and 90-day global codes will be important to ensuring work RVU relativity across these services. We also believe that these data will be important to determine the relationship between current work RVUs and current number of post-operative visits, within categories of codes and code families. However, we believe that once we collect those data, there is a wide range of possible approaches to the revaluation of the large number of individual global services, some of which may deviate from current processes like those undertaken by the RUC. To date, the potentially misvalued code initiative has focused on several hundred, generally high-volume codes per year. This proposal requires revaluing a larger number of codes over a shorter period of time and includes many services with relatively low volume in the Medicare population. Given these circumstances, it does not seem practical to survey time and intensity information on each of these procedures. Absent any new survey data regarding the procedures themselves,
• Using the current potentially misvalued code process to identify and value the relatively small number of codes that represent the majority of the volume of services that are currently reported with codes with post-operative periods, and then adjusting the aggregate RVUs to account for the number of visits and using magnitude estimation to value the remaining services in the family.
• Valuing one code within a family through the current valuation process and then using magnitude estimation to value the remaining services in the family.
• Surveying a sample of codes across all procedures to create an index that could be used to value the remaining codes.
Although we believe these are plausible options for the revaluation of these services, we believed there may be others. Therefore, we sought input on the best approach to achieve this proposed transition from 10- and 90-day, to 0-day global periods, including the timing of the changes, the means for revaluation, and the most effective and least burdensome means to collect objective, representative data regarding the actual number of visits currently furnished in the post-operative global periods. We also solicited comment on whether the effective date for the transition to 0-day global periods should be staggered across families of codes or other categories. For example, while we proposed to transition 10-day global periods in 2017 and 90-day global periods in 2018, we solicited comment on whether we should consider implementing the transition more or less quickly and over one or several years. We also solicited comment regarding the appropriate valuation of new, revised, or potentially misvalued 10- or 90-day global codes before implementation of this proposal.
We received many comments regarding the proposed transition to 0-day global packages. Many commenters expressed support or opposition to the proposal. Some commenters offered direct responses to the topics for which we specifically sought comment, while others raised questions regarding how the transition would be implemented. In the following paragraphs, we summarize and respond to these comments.
In agreeing with the proposal, MedPAC stated that it “is essential that the individual services that make up a bundle have accurate values and that there is a mechanism to ensure that the services that are part of the bundle are not paid separately (unbundling). Otherwise, the payment rate for the entire bundle will be inaccurate.” MedPAC urged CMS to finalize this proposal and plan to use the more accurate valuations to create more accurate bundles in the future.
The RUC informed CMS that it has identified several large hospital-based physician group practices that internally use CPT code 99024 to report each bundled post-operative visit, and therefore data is already being captured for some Medicare providers. The RUC also suggested that CMS may have denied-claims data available for CPT code 99024 via the Medicare claims processing system. The RUC recommends that CMS work with it to explore the availability, usefulness, and appropriateness of these data from group practices and the CMS denied-claims dataset, in order to gather existing, objective data to validate the actual number of post-operative visits for 10-day and 90-day procedures. The RUC also suggested that CMS should consider reviewing Medicare Part A claims data to determine the length of stay for surgical services furnished in the inpatient acute care hospital setting.
MedPAC stated that data collection could take several years, would be burdensome for CMS and providers, and may be inaccurate since providers would have little incentive to report each visit. Furthermore, MedPAC suggested that such data collection would be unnecessary since the current ratesetting methodology already assumes particular numbers of visits. MedPAC suggested that CMS should reduce the RVUs for the 10- and 90-day global services based on the same assumptions currently used to pay for these services.
Several other commenters agreed with the approach advocated by MedPAC (often referred to as “reverse-building block”) to revaluing the services. These commenters stated that since CMS has increased RVUs for these services proportionate to the number of E/M services assumed to be included in the postoperative period, for the sake of relativity, the RVUs attributed to the visits can be fairly removed in order to value the new 0-day global codes. Many of these commenters acknowledged that this approach would result in negative or other anomalous values for many of these codes, but asserted that codes with anomalous values might then be individually reviewed. MedPAC suggested that if specialty societies or the RUC believe that the new values for specific global codes are inaccurate, they could present evidence that the codes are misvalued to CMS, presumably through the potentially misvalued code public nomination process. MedPAC further states that for codes without accurate post-operative assumptions, CMS could calculate interim RVUs for these codes based on the average percent reduction for other global codes in the same family.
Many other commenters were against the reverse-building block approach to revaluation. These commenters stated that backing out the bundled E/M services would be highly inappropriate and methodologically unsound since the services were not necessarily valued using a building-block methodology. Many of these commenters, including the RUC, stated that the amount of post-operative work included in the codes can only be appropriately surveyed, vetted, and valued by the RUC.
The RUC stated that there are over 4,200 services within the PFS with a 10-day or 90-day global period, so the scope of the proposal is very large and the transition should be staggered over many years. However, the RUC also pointed out that most of these services have relatively low utilization, as only 268 of them (or 6 percent of 10- or 90-day global surgery services) were performed more than 10,000 times annually based on 2013 Medicare claims data.
As we stated in making the proposal, we do not believe that surveying practitioners who furnish each of these services is a practical or necessarily advisable approach to appropriate valuation. Regardless of when the proposal is implemented, it seems likely that the number of codes to be revalued is much larger than the number of codes that should or can be surveyed. Through its normal process, the RUC routinely makes annual recommendations regarding several hundred codes, and we acknowledge that thousands of services cannot be valued using the typical RUC process in one year. On the other hand we believe that there are other options for revaluing some of the global surgery codes as 0-day global packages, particularly those of low volume, and we have indicated a willingness to work with the RUC to determine appropriate mechanisms for revaluations. Therefore, although we agree that revaluing such a high number of codes is a significant undertaking, we do not believe that that the required revaluations would represent an undue burden between the present and the proposed implementation dates. We also note that in order to focus efforts on revaluing the global surgery packages, we are not asking the RUC to review the nearly 100 services we proposed as potentially misvalued this year under the high expenditure screen. We continue to remain interested in other potential data sources for accurately valuing PFS services, especially the vast majority of 10- and 90-day global codes for which there is not significant volume. We also urge stakeholders to engage with us to help us understand why alternative approaches to the revaluation of the 10- and 90-day global services would require the kind of delay that was urged based on the assumption that the RUC survey approach would be used for all those services.
Additionally, we request stakeholders, including the CPT Editorial Panel and the RUC, to consider the utility of establishing and maintaining separate coding and national Medicare RVUs for the many procedures that have little to no utilization in the Medicare population. For example, there are over 1,000 10-
After consideration of all the comments received regarding this proposal, we are finalizing the proposal to transition and revalue all 10- and 90-day global surgery services with 0-day global periods, beginning with the 10-day global services in CY 2017 and following with the 90-day global services in CY 2018. We note that as we
We also actively seek the analysis and perspective of all affected stakeholders regarding the best means to revalue these services as 0-day global codes. We urge all stakeholders to engage with us regarding potential means of making the transition as seamless as possible, both for patient care and provider impact. We are considering a wide range of approaches to all details of implementation from revaluation to communication and transition, and we are hopeful that sufficient agreement can be reached among stakeholders on important issues such as revaluation of the global services and appropriate coding for post-operative care. We remain committed to collecting objective data regarding the number of visits typically furnished during post-operative periods and will explore the extant source options presented by commenters as we consider other options as well.
The CPT manual includes more than 300 diagnostic and therapeutic procedures, listed in Appendix G, for which CPT has determined that moderate sedation is an inherent part of furnishing the procedure and, therefore, only the single procedure code is appropriately reported when furnishing the service and the moderate sedation. The work of moderate sedation has been included in the work RVUs for these diagnostic and therapeutic procedures based upon their inclusion in Appendix G. Similarly, the direct PE inputs for these services include those inputs associated with furnishing a typical moderate sedation service. To the extent that moderate sedation is typically furnished as part of the diagnostic or therapeutic service, the inclusion of moderate sedation in the valuation of the procedure is appropriate.
In the CY 2014 PFS proposed rule (79 FR 40349), we noted that it appeared that practice patterns for endoscopic procedures were changing, with anesthesia increasingly being separately reported for these procedures. For example, one study showed that while the use of a separate anesthesia professional for colonoscopies and upper endoscopies was just 13.5 percent in 2003, the rate more than doubled to 30.2 percent in 2009. An analysis of Medicare claims data showed that a similar pattern is occurring in the Medicare program. We found that, for certain types of procedures such as digestive surgical procedures, a separate anesthesia service is furnished 53 percent of the time. For some of these digestive surgical procedures, the claims analysis showed that this rate was as high as 80 percent.
Our data clearly indicated that moderate sedation was no longer typical for all of the procedures listed in CPT's Appendix G, and, in fact, the data suggested that the percent of cases in which it is used is declining. For many of these procedures in Appendix G, moderate sedation continued to be furnished. The trend away from the use of moderate sedation toward a separately billed anesthesia service was not universal. We found that it differed by the class of procedures, sometimes at the procedure code level, and continued to evolve over time. Due to the changing nature of medical practice in this area, we noted that we were considering establishing a uniform approach to valuation for all Appendix G services for which moderate sedation is no longer inherent, rather than addressing this issue at the procedure level as individual procedures are revalued.
We sought public comment on approaches to address the appropriate valuation of these services. Specifically, we were interested in approaches to valuing Appendix G codes that would allow Medicare to pay accurately for moderate sedation when it is furnished while avoiding potential duplicative payments when separate anesthesia is furnished and billed. To the extent that Appendix G procedure values are adjusted to no longer include moderate sedation, we requested suggestions as to how moderate sedation should be reported and valued, and how to remove from existing valuations the RVUs and inputs related to moderate sedation.
We noted that in the CY 2014 PFS final rule with comment period, we established values for many upper gastrointestinal procedures, 58 of which were included in Appendix G. For those interim final values, we included the inputs related to moderate sedation. We stated that we did not expect to change existing policies for valuing moderate sedation as inherent in these procedures until we have the opportunity to assess and respond to the comments on the proposed rule on the overall valuation of Appendix G codes.
We received many helpful suggestions in response to our comment solicitation. At this time, we are not making any changes to how we value Appendix G codes for which moderate sedation is an inherent part of the procedure. We intend to address this topic in future notice and comment rulemaking, taking into account the comments we received. In section II.G. of this CY 2015 PFS final rule with comment period, we address interim final values and establish CY 2015 inputs for the lower gastrointestinal procedures, many of which are also listed in Appendix G.
Section 1848(c) of the Act requires that each service paid under the PFS be comprised of three components: Work; PE; and malpractice (MP) expense. As required by section 1848(c) of the Act, beginning in CY 2000, MP RVUs are resource based. Malpractice RVUs for new codes after 1991 were extrapolated from similar existing codes or as a percentage of the corresponding work RVU. Section 1848(c)(2)(B)(i) of the Act also requires that we review, and if necessary adjust, RVUs no less often than every 5 years. For CY 2015, we are proposing to implement the third comprehensive review and update of MP RVUs. For details about prior updates, see the CY 2010 final rule with comment period (74 FR 33537).
The proposed MP RVUs were calculated by a CMS contractor based on updated MP premium data obtained from state insurance rate filings. The methodology used in calculating the proposed CY 2015 review and update of resource-based MP RVUs largely paralleled the process used in the CY 2010 update. The calculation required using information on specialty-specific MP premiums linked to a specific service based upon the relative risk factors of the various specialties that furnish a particular service. Because MP premiums vary by state and specialty,
Similar to the previous update, we calculated the proposed MP RVUs using specialty-specific MP premium data because they represent the actual expense incurred by practitioners to obtain MP insurance. We obtained and used MP premium data from state departments of insurance rate filings, primarily for physicians and surgeons. When the state insurance departments did not provide data, we used state rate filing data from the Perr and Knight database, which derives its data from state insurance departments. We used information obtained from MP insurance rate filings with effective dates in 2011 and 2012. These were the most current data available during our data collection process.
We collected MP insurance premium data from all 50 States, the District of Columbia, and Puerto Rico. Rate filings were not available in American Samoa, Guam, or the Virgin Islands. Premiums were for $1 million/$3 million, mature, claims-made policies (policies covering claims made, rather than those covering services furnished, during the policy term). A $1 million/$3 million liability limit policy means that the most that would be paid on any claim is $1 million and the most that the policy would pay for claims over the timeframe of the policy is $3 million. We made adjustments to the premium data to reflect mandatory surcharges for patient compensation funds (funds to pay for any claim beyond the statutory amount, thereby limiting an individual physician's liability in cases of a large suit) in states where participation in such funds is mandatory. We attempted to collect premium data representing at least 50 percent of the medical MP premiums paid.
We included premium information for all physician and NPP specialties, and all risk classifications available in the collected rate filings. Most insurance companies provided crosswalks from insurance service office (ISO) codes to named specialties. We matched these crosswalks to Medicare primary specialty designations (specialty codes). We also used information we obtained regarding surgical and nonsurgical classes. Some companies provided additional surgical subclasses; for example, distinguishing family practice physicians who furnish obstetric services from those who do not.
Although we collected premium data from all states and the District of Columbia, not all specialties had premium data in the rate filings from all states. Additionally, for some specialties, MP premiums were not available from the rate filings in any state. Therefore, for specialties for which there was not premium data for at least 35 states, and specialties for which there was not distinct premium data in the rate filings, we crosswalked the specialty to a similar specialty, conceptually or by available premium data, for which we did have sufficient and reliable data. Additionally, we crosswalked three specialties—physician assistant, registered dietitian and optometry—for which we had data from at least 35 states to a similar specialty type because the available data contained such extreme variations in premium amounts that we found it to be unreliable. The range in premium amounts for registered dietitians is $85 to $20,813 (24,259 percent), for physician assistants is $614 to $35,404 (5,665 percent), and for optometry is $189 to $10,798 (5,614 percent). We crosswalked these specialties to allergy and immunology, the specialty with the lowest premiums for which we had sufficient and reliable data.
Our proposed methodology for updating the MP RVUs conceptually followed the specialty-weighted approach, used in the CY 2010 update. The specialty-weighted approach bases the MP RVUs for a given service upon a weighted average of the risk factors of all specialties furnishing the service. This approach ensures that all specialties furnishing a given service are accounted for in the calculation of the MP RVUs. We also continued to use the risk factor of the dominant specialty for rarely billed services (that is, when CY 2013 claims data reflected allowed services of less than 100).
We proposed minor refinements for updating the CY 2015 MP RVUs as compared to the previous update. These refinements included calculating a combined national average surgical premium and risk factor for neurosurgery and neurology and updating the list of invasive cardiology service HCPCS codes (for example, cardiac catheterization and angioplasty) to be classified as surgery for purposes of assigning service level risk factors. Additionally, we proposed to classify injection procedures used in conjunction with cardiac catheterization as surgery (for purposes of assigning a service specific risk factor). To calculate the risk factor for TC services we proposed to use the
As discussed in the CY 2015 proposed rule (79 FR 40354 through 40355), we did not include an adjustment under the anesthesia fee schedule to reflect updated MP premium information and stated that we intend to propose an anesthesia adjustment for MP in the CY 2016 PFS proposed rule. We also requested comments on how to reflect updated MP premium amounts under the anesthesiology fee schedule.
We posted our contractors report, “Report on the CY 2105 Update of Malpractice RVUs” on the CMS Web site. The report on MP RVUs for the CY 2015 proposed rule and the proposed MP premium amounts and specialty risk factors are accessible from the CMS Web site under the supporting documents section of the CY 2015 PFS proposed rule at
We received over 70 industry comments on the CY 2015 proposed MP RVU update. A summary of the comments we received on the proposed MP RVU update and our responses are discussed below.
We note that in both of these cases by using the discounted utilization file the weighted average that we use reflects only the proportion of the utilization by these practitioners and only at the payment rate made. Including specialty utilization for all practitioners involved in furnishing the global service reflects the MP risk for the entire global service.
In contrast, the AMA and other commenters did not support crosswalking NPPs with insufficient or unreliable premium data to the premium amounts and risk factor used for allergy/immunology. The commenters stated that allergy/immunology premiums overstate NPP premiums and requested that we use the generally lower MP survey data from the Physician Practice Information Survey (PPIS) for NPPs instead of crosswalking NPPs to the lowest physician specialty (allergy/immunology) or use some other measure of central tendency within the existing collected premium data to determine accurate MP premium risk factors for NPPs. Another commenter suggested that we work with the AMA
We believe that using the updated RBMA premium data without further study is problematic because the updated data reflects only the
We believe further study is necessary to reconcile comments on the use of updated RBMA premium data for TC services (which would result in an increase MP RVU for TC services) and our current methodology for calculating the risk factor for PC services relative to the global service and TC service. Therefore, we will finalize the TC premium data as proposed and maintain our current methodology for calculating the PC risk factor. We will consider the request to use the updated premium information from RBMA and alternatives to our current methodology for calculating the PC risk factor as part of our further study and would propose any changes through future rulemaking.
After consideration of the public comments received on the CY 2015 MP RVU update, we are finalizing the CY 2015 MP RVU update as proposed with minor modifications. We are crosswalking gynecological oncology to the risk factor for general surgery (instead of the risk factor for obstetrics gynecology). We are also adding HCPCS codes 92961, 92986, 92987, 92990, 92997, and 92998 to the list of services outside of the surgical HCPCS code range considered as surgery for purposes of assigning service level risk factors. Additionally, for determining the risk factor for low volume services, we are overriding the dominant specialty from our claims data with the recommended specialty for the low volume service codes listed in Table 12. For all other low volume services, we are finalizing our proposal to use the risk factor of the dominant specialty from our Medicare claims data. The MP premium amounts, specialty risk factors, and a complete list of service codes outside the surgical HCPCS code range considered surgery for the purpose of assigning service level risk factors, may be found on the CMS Web site under the supporting documents section of the CY 2015 PFS final rule with comment period.
Additional information on the CY 2015 update may be found in our contractor's report, “Final Report on the CY 2105 Update of Malpractice RVUs,” which is available on the CMS Web site. It is also located under the supporting documents section of the CY 2015 PFS final rule with comment period located at
Section 1848(e)(1)(A) of the Act requires us to develop separate Geographic Practice Cost Indices (GPCIs) to measure relative cost differences among localities compared to the national average for each of the three fee schedule components (that is, work, PE, and MP). Although the statute requires 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 (as defined in section 1848(e)(1)(I) of the Act) beginning January 1, 2011. Additionally, section 1848(e)(1)(E) of the Act provided for a 1.0 floor for the work GPCIs, which was set to expire on March 31, 2014. However, section 102 of the PAMA extended application of the 1.0 floor to the work GPCI through March 31, 2015.
Section 1848(e)(1)(C) of the Act requires us to review and, if necessary, adjust the GPCIs at least every 3 years. Section 1848(e)(1)(C) of the Act requires that “if more than 1 year has elapsed since the date of the last previous adjustment, the adjustment to be applied in the first year of the next adjustment shall be 1/2 of the adjustment that otherwise would be made.” We completed a review and finalized updated GPCIs in the CY 2014 PFS final rule with comment period (78 FR 74390). Since the last GPCI update had been implemented over 2 years prior, CY 2011 and CY 2012, we phased in 1/2 of the latest GPCI adjustment in CY 2014. We also revised the cost share
As previously noted, section 102 of the PAMA extended the 1.0 work GPCI floor through March 31, 2015. Therefore, the CY 2015 work GPCIs and summarized GAFs were revised to reflect the 1.0 work floor. Additionally, as required by sections 1848(e)(1)(G) and 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 permanent, and therefore, applicable in CY 2015.
As discussed in the CY 2014 PFS final rule with comment period (78 FR 74380) the updated GPCIs were calculated by a contractor to CMS. We used updated Bureau of Labor and Statistics Occupational Employment Statistics (BLS OES) data (2009 through 2011) as a replacement for 2006 through 2008 data for purposes of calculating the work GPCI and the employee compensation component and purchased services component of the PE GPCI. We also used updated U.S. Census Bureau American Community Survey (ACS) data (2008 through 2010) as a replacement for 2006 through 2008 data for calculating the office rent component of the PE GPCI. To calculate the MP GPCI we used updated malpractice premium data (2011 and 2012) from state departments of insurance as a replacement for 2006 through 2007 premium data. We also noted that we do not adjust the medical equipment, supplies and other miscellaneous expenses component of the PE GPCI because we continue to believe there is a national market for these items such that there is not a significant geographic variation in relative costs. Additionally, we updated the GPCI cost share weights consistent with the modifications made to the 2006-based MEI cost share weights in the CY 2014 final rule with comment period. As discussed in the CY 2014 final rule with comment period, use of the revised GPCI cost share weights changed the weighting of the subcomponents within the PE GPCI (employee wages, office rent, purchased services, and medical equipment and supplies). For a detailed explanation of how the GPCI update was developed, see the CY 2014 final rule with comment period (78 FR 74380 through 74391).
As discussed in the CY 2015 proposed rule (79 FR 40355 through 40356) the current methodology for calculating locality level GPCIs relies on the acquisition of county level data (when available). Where data for a specific county are not available, we assign the data from a similar county within the same payment locality. The Virgin Islands have county level equivalents identified as districts. Specifically, the Virgin Islands are divided into 3 districts: Saint Croix; Saint Thomas; and Saint John. These districts are, in turn, subdivided into 20 sub-districts. Although the Virgin Islands are divided into these county equivalents, county level data for the Virgin Islands are not represented in the BLS OES wage data. Additionally, the ACS, which is used to calculate the rent component of the PE GPCI, is not conducted in the Virgin Islands, and we have not been able to obtain malpractice insurance premium data for the Virgin Islands payment locality. Given the absence of county level wage and rent data and the insufficient malpractice premium data by specialty type, we have historically set the three GPCI values for the Virgin Islands payment locality at 1.0.
For CY 2015, we explored using the available data from the Virgin Islands to more accurately reflect the geographic cost differences for the Virgin Islands payment locality as compared to other PFS localities. Although county level data for the Virgin Islands are not represented in the BLS OES wage data, aggregate territory level BLS OES wage data are available. We believe that using aggregate territory level data is a better reflection of the relative cost differences of operating a medical practice in the Virgin Islands payment locality as compared to other PFS localities than the current approach of assigning a value of 1.0. At our request, our contractor calculated the work GPCI, and the employee wage component and purchased services component of the PE GPCI, for the Virgin Islands payment locality using aggregated 2009 through 2011 BLS OES data.
As discussed in this section, the ACS is not conducted in the Virgin Islands and we have not been able to obtain malpractice premium data for the Virgin Islands payment locality. Therefore, we assigned a value of 1.0 for the rent index of the PE GPCI and to the MP GPCI.
Using aggregate territory-level BLS OES wage data resulted in a −2.3 percent decrease in the work GPCI, a −4.48 percent decrease in the PE GPCI and a −3.2 percent decrease to the GAF for the Virgin Islands payment locality. However, with the application of the 1.0 work GPCI floor, there is no change to the work GPCI and the overall impact of using actual BLS OES wage data on the Virgin Islands payment locality is only reflected by the change in PE GPCI (−4.48 percent) resulting in a −2.00 percent decrease to the GAF. As mentioned previously in this section, since we have not been able to obtain malpractice premium data for the Virgin Islands payment locality we maintained the MP GPCI at 1.0. As such, we did not propose any changes to the MP GPCI.
We requested comments on our proposal to use aggregate territory-level BLS OES wage data to calculate the work GPCI and the employee wage component and purchased services component of the PE GPCI for the Virgin Islands payment locality beginning for CY 2015, and for future GPCI updates. However, we did not receive any specific comments on this proposal. As discussed above, we believe that using aggregate territory level BLS OES wage data is a better reflection of the relative cost differences of operating a medical practice in the Virgin Islands payment locality as compared to other PFS localities than the current approach of assigning a value of 1.0. Therefore, we will finalize the changes to the GPCI values for the Virgin Islands payment locality as proposed. See Addenda D and E for the CY 2015 GPCIs and summarized GAFs. Additional information on the changes to GPCI values for the Virgin Islands payment locality may be found in our contractor's report, “Revised Final Report on the CY 2014 Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule,” which is available on the CMS Web site. It is located under the supporting documents section of the CY 2015 PFS final rule with comment period located at
We received several comments on topics that are not within the scope of proposals in the CY 2015 PFS proposed rule. These comments are briefly discussed below.
Several conditions must be met in order for Medicare payments to be made for telehealth services under the PFS. Specifically, the service must be on the list of Medicare telehealth services and meet all of the following additional requirements for coverage:
• The service must be furnished via an interactive telecommunications system.
• The practitioner furnishing the service must meet the telehealth requirements, as well as the usual Medicare requirements.
• The service must be furnished to an eligible telehealth individual.
• The individual receiving the services must be in an eligible originating site.
When all of these conditions are met, Medicare pays an originating site fee to the originating site and provides separate payment to the distant site practitioner furnishing the service.
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 furnished via a telecommunications system. We first implemented this statutory provision, which was effective October 1, 2001, in the CY 2002 PFS final rule with comment period (66 FR 55246). We established a process for annual updates to the list of Medicare telehealth services as required by section 1834(m)(4)(F)(ii) of the Act in the CY 2003 PFS final rule with comment period (67 FR 79988).
As specified at § 410.78(b), we generally require that a telehealth service be furnished via an interactive telecommunications system. Under § 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 distant site physician or practitioner.
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 allows the use of asynchronous “store-and-forward” technology when the originating site is part of a federal telemedicine demonstration program in Alaska or Hawaii. As specified in regulations at § 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 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.
Practitioners furnishing Medicare telehealth services are reminded that these services are subject to the same non-discrimination laws as other services, including the effective communication requirements for persons with disabilities of section 504 of the Rehabilitation Act and language access for persons with limited English proficiency, as required under Title VI of the Civil Rights Act of 1964. For more information, see
Practitioners furnishing Medicare telehealth services submit claims for telehealth services to the Medicare Administrative 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.
Originating sites, which can be one of several types of sites specified in the statute where an eligible telehealth individual is located at the time the service is being furnished via a telecommunications system, are paid a fee under the PFS for each Medicare telehealth service. The statute specifies both the types of entities that can serve as originating sites and the geographic qualifications for originating sites. With regard to geographic qualifications, § 410.78(b)(4) limits originating sites to those located in rural health professional shortage areas (HPSAs) or in a county that is not included in a metropolitan statistical areas (MSAs).
Historically, we have defined rural HPSAs to be those located outside of MSAs. Effective January 1, 2014, we modified the regulations regarding
An entity participating in a federal telemedicine demonstration project that has been approved by, or received funding from, the Secretary as of December 31, 2000 is eligible to be an originating site regardless of its geographic location.
Effective January 1, 2014, we also changed our policy so that geographic eligibility for an originating site would be established and maintained on an annual basis, consistent with other telehealth payment policies (78 FR 74400). Geographic eligibility for Medicare telehealth originating sites for each calendar year is now based upon the status of the area as of December 31 of the prior calendar year.
For a detailed history of telehealth payment policy, see 78 FR 74399.
As noted previously, in the December 31, 2002
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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.
For the list of covered telehealth services, see the CMS Web site at
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 final rule with comment period (76 FR 73098), we believe that the category 1 criteria not only streamline our review process for publicly 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.
We received several requests in CY 2013 to add various services as Medicare telehealth services effective for CY 2015. The following presents a discussion of these requests, and our proposals for additions to the CY 2015 telehealth list. Of the requests received, we find that the following services are sufficiently similar to psychiatric diagnostic procedures or office/outpatient visits currently on the telehealth list to qualify on a category one basis. Therefore, we propose to add the following services to the telehealth list on a category 1 basis for CY 2015:
• CPT codes 90845 (Psychoanalysis); 90846 (family psychotherapy (without the patient present); and 90847 (family psychotherapy (conjoint psychotherapy) (with patient present);
• CPT codes 99354 (prolonged service in the office or other outpatient setting requiring direct patient contact beyond the usual service; first hour (list separately in addition to code for office or other outpatient evaluation and management service); and, 99355 (prolonged service in the office or other outpatient setting requiring direct patient contact beyond the usual service; each additional 30 minutes (list
• HCPCS codes G0438 (annual wellness visit; includes a personalized prevention plan of service (pps), initial visit; and, G0439 (annual wellness visit, includes a personalized prevention plan of service (pps), subsequent visit).
We also received requests to add services to the telehealth list that do not meet our criteria for being on the Medicare telehealth list. We did not propose to add the following procedures for the reasons noted:
• CPT codes 92250 (fundus photography with interpretation and report); 93010 (electrocardiogram, routine ECG with at least 12 leads; interpretation and report only), 93307 (echocardiography, transthoracic, real-time with image documentation (2d), includes m-mode recording, when performed, complete, without spectral or color Doppler echocardiography; 93308 (echocardiography, transthoracic, real-time with image documentation (2d), includes m-mode recording, when performed, follow-up or limited study); 93320 (Doppler echocardiography, pulsed wave and/or continuous wave with spectral display (list separately in addition to codes for echocardiographic imaging); complete); 93321 (Doppler echocardiography, pulsed wave and/or continuous wave with spectral display (list separately in addition to codes for echocardiographic imaging); follow-up or limited study (list separately in addition to codes for echocardiographic imaging); and 93325 (Doppler echocardiography color flow velocity mapping (list separately in addition to codes for echocardiography). These services include a technical component (TC) and a professional component (PC). By definition, the TC portion of these services needs to be furnished in the same location as the patient and thus cannot be furnished via telehealth. The PC portion of these services could be (and typically would be) furnished without the patient being present in the same location. (Note: For services that have a TC and a PC, there is sometimes an entirely different code that is used when only the PC portion of the service is being furnished, and other times the same CPT code is used with a –26 modifier to indicate that only the PC is being billed.) For example, the interpretation by a physician of an actual electrocardiogram or electroencephalogram tracing that has been transmitted electronically, can be furnished without the patient being present in the same location as the physician. Given the nature of these services, it is not necessary to consider including the PC of these services for addition to the telehealth list. When these PC services are furnished remotely, they do not meet the definition of Medicare telehealth services under section 1834(m) of the Act. Rather, these remote services 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 as other physicians' services (that is, without the –GT or –GQ modifiers).
• CPT codes 96103 (psychological testing (includes psychodiagnostic assessment of emotionality, intellectual abilities, personality and psychopathology, eg, MMPI), administered by a computer, with qualified health care professional interpretation and report); and, 96120 (neuropsychological testing (eg, Wisconsin Card Sorting Test), administered by a computer, with qualified health care professional interpretation and report). These services involve testing by computer, can be furnished remotely without the patient being present, and are payable in the same way as other physicians' services. These remote services are not Medicare telehealth services as defined under the Act; therefore, we need not consider them for addition to the telehealth list, and the restrictions that apply to telehealth services do not apply to these services.
• CPT codes 90887 (interpretation or explanation of results of psychiatric, other medical examinations and procedures, or other accumulated data to family or other responsible persons, or advising them how to assist patient); 99090 (analysis of clinical data stored in computers (eg, ECGs, blood pressures, hematologic data); 99091 (collection and interpretation of physiologic data (eg, ECG, blood pressure, glucose monitoring) digitally stored and/or transmitted by the patient and/or caregiver to the physician or other qualified health care professional, qualified by education, training, licensure/regulation (when applicable) requiring a minimum of 30 minutes of time); 99358 (prolonged evaluation and management service before and/or after direct patient care; first hour); and 99359 (prolonged evaluation and management service before and/or after direct patient care; each additional 30 minutes (list separately in addition to code for prolonged service). These services are not separately payable by Medicare. It would be inappropriate to include services as telehealth services when Medicare does not otherwise make a separate payment for them.
• CPT codes 96101 (psychological testing (includes psychodiagnostic assessment of emotionality, intellectual abilities, personality and psychopathology, eg, MMPI, Rorschach, WAIS), per hour of the psychologist's or physician's time, both face-to-face time administering tests to the patient and time interpreting these test results and preparing the report); 96102 (psychological testing (includes psychodiagnostic assessment of emotionality, intellectual abilities, personality and psychopathology, eg, MMPI and WAIS), with qualified health care professional interpretation and report, administered by technician, per hour of technician time, face-to-face); 96118 (neuropsychological testing (eg, Halstead-Reitan Neuropsychological Battery, Wechsler Memory Scales and Wisconsin Card Sorting Test), per hour of the psychologist's or physician's time, both face-to-face time administering tests to the patient and time interpreting these test results and preparing the report); and, 96119 (neuropsychological testing (eg, Halstead-Reitan Neuropsychological Battery, Wechsler Memory Scales and Wisconsin Card Sorting Test), with qualified health care professional interpretation and report, administered by technician, per hour of technician time, face-to-face). These services are not similar to other services on the telehealth list, as they require close observation of how a patient responds. The requestor did not submit evidence supporting the clinical benefit of furnishing these services on a category 2 basis. As such, we did not propose to add these services to the list of telehealth services.
• CPT codes 57452 (colposcopy of the cervix including upper/adjacent vagina; 57454 colposcopy of the cervix including upper/adjacent vagina; with biopsy(s) of the cervix and endocervical curettage); and, 57460 (colposcopy of the cervix including upper/adjacent vagina; with loop electrode biopsy(s) of the cervix). These services are not similar to other services on the telehealth service list. Therefore, it would not be appropriate to add them on a category 1 basis. The requestor did not submit evidence supporting the clinical benefit of furnishing these services on a category 2 basis. As such, we did not propose to add these services to the list of telehealth services.
• HCPCS code M0064 (brief office visit for the sole purpose of monitoring or changing drug prescriptions used in the treatment of mental psychoneurotic
• Urgent Dermatologic Problems and Wound Care—The American Telemedicine Association (ATA) cited several studies to support adding dermatology services to the telehealth list. However, the request did not include specific codes. Since we did not have specific codes to consider for this request, we cannot evaluate whether the services are appropriate for addition to the Medicare telehealth services list. We note that some of the services that the requester had in mind may be billed under the telehealth office visit codes or the telehealth consultation G-codes.
In summary, we proposed to add the following codes to the telehealth list on a category 1 basis:
• Psychotherapy services CPT codes 90845, 90846 and 90847.
• Prolonged service office CPT codes 99354 and 99355.
• Annual wellness visit HCPCS codes G0438 and G0439.
As discussed in section II.E.2. of this final rule with comment period, under the statute, we created an annual process for considering the addition of services to the Medicare telehealth list. Under this process, we propose services to be added to the list in the proposed rule in response to public nominations or our own initiative and seek public comments on our proposals. After consideration of public comments, we finalize additions to the list in the final rule. We have also revised § 410.78(b) each year to include the description of the added services. Because the list of Medicare telehealth services has grown quite lengthy, and given the other mechanisms by which we can make the public aware of the list of Medicare telehealth services for each year, we proposed to revise § 410.78(b) by deleting the description of the individual services for which Medicare payment can be made when furnished via telehealth. Under this proposal, we would continue our current policy to address requests to add to the list of telehealth services through the PFS rulemaking process so that the public would have the opportunity to comment on additions to the list. We also proposed to revise § 410.78(f) to indicate that a list of Medicare telehealth codes and descriptors is available on the CMS Web site.
The following is a summary of the comments we received regarding the proposed addition of services to the list of Medicare telehealth services.
Concerning payment for services furnished using store-and-forward technology, we note that the statute at section 1861(m) of the Act includes store-and-forward technology as a telecommunication system for telehealth services only in the case of federal telemedicine demonstration programs in Alaska and Hawaii (see § 410.78(d)).
Concerning psychological testing services, we noted that remote services (CPT codes 96103 and 96120) are not Medicare telehealth services as defined under the Act and thus can be furnished when beneficiary is not in the same place as the practitioner. It would also be counter-productive to add these codes to the telehealth list because, if we did, the telehealth originating site, geographic, and other restrictions would apply to these services.
CPT codes 90887, 90991, 93358 and 99359 are not separately payable by Medicare. It would be inappropriate to include services as telehealth services when Medicare does not otherwise make a separate payment for them.
Finally, CPT codes 96101, 96102, 96118 and 96119 are not similar to other services on the telehealth list, as they require close observation of how a patient responds. The requestor did not submit evidence supporting the clinical benefit of furnishing these services on a category 2 basis. As such, we did not propose to add these services to the list of telehealth services.
We received other public comments on matters related to Medicare telehealth services that were not the subject of proposals in the CY 2015 PFS proposed rule. Because we did not make any proposals regarding these matters, we generally do not summarize or respond to such comments in the final rule. However, we are summarizing and responding to the following comments to acknowledge the interests and concerns of the commenters, and a mechanism to address some of those concerns.
Many commenters supported the overall expansion of telehealth by:
• Removing geographic restrictions to include both rural and urban areas.
• Revising permissible originating sites to include a patient's home, domiciliary care and first responder vehicles.
• Adopting a broader definition of telehealth technologies to include services provide via mobile technology, including emails, phone calls, and store-and-forward technologies.
• Adding physical and occupational therapists as practitioners who can remotely furnish telehealth services.
• Adding more services to the telehealth list, including services under category 2.
• Prioritizing coverage of services that include care coordination with the patient's medical home and/or existing treating physicians.
• Considering the use of telehealth technology for the purpose of furnishing direct supervision of services furnished by on-site practitioners.
• Using demonstration projects under CMS's Center for Medicare and Medicaid Innovation (CMMI) to collect clinical evidence on the effect of expanding telehealth and to address how telemedicine can be integrated into new payment and delivery models.
In summary, after consideration of the comments we received, we are finalizing our proposal to add psychotherapy services CPT codes 90845, 90846 and 90847; prolonged service office CPT codes 99354 and 99355; and annual wellness visit HCPCS codes G0438 and G0439 to the list of Medicare telehealth services.
In addition, we are finalizing our proposal to change our regulation at § 410.78(b) by deleting the description of the individual services for which Medicare payment can be made when furnished via telehealth. We will continue our current policy to address requests to add services to the list of Medicare telehealth services through the PFS rulemaking process so that the public has the opportunity to comment on additions to the list. We are also finalizing our proposal to revise § 410.78(f) to indicate that a list of Medicare telehealth codes and descriptors is available on the CMS Web site.
We remind all interested stakeholders that we are currently soliciting public requests to add services to the list of Medicare telehealth services. To be considered during PFS rulemaking for CY 2016, these requests must be submitted and received by December 31, 2014. Each request to add 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. 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
Section 1834(m)(2)(B) of the Act establishes the Medicare telehealth originating site facility fee for telehealth services furnished from October 1, 2001, through December 31 2002, at $20.00. For telehealth services furnished on or after January 1 of each subsequent calendar year, the telehealth originating site facility fee is increased by the percentage increase in the MEI as defined in section 1842(i)(3) of the Act. The MEI increase for 2015 is 0.8 percent. Therefore, for CY 2015, the payment amount for HCPCS code Q3014 (Telehealth originating site facility fee) is 80 percent of the lesser of the actual charge or $24.83. The Medicare telehealth originating site facility fee and MEI increase by the applicable time period is shown in Table 13.
Establishing valuations for newly created and revised CPT codes is a routine part of maintaining the PFS. Since inception of the PFS, it has also been a priority to revalue services regularly to assure that the payment rates reflect the changing trends in the practice of medicine and current prices for inputs used in the PE calculations. Initially, this was accomplished primarily through the five-year review process, which resulted in revised RVUs for CY 1997, CY 2002, CY 2007, and CY 2012. Under the five-year review process, revisions in RVUs were proposed in a proposed rule and finalized in a final rule. In addition to the five-year reviews, in each year beginning with CY 2009, CMS and the RUC have identified a number of potentially misvalued codes using various identification screens, such as codes with high growth rates, codes that are frequently billed together, and high expenditure codes. Section 3134 of the Affordable Care Act codified the misvalued code initiative in section 1848(c)(2)(K) of the Act.
In the CY 2012 rulemaking process, we proposed and finalized consolidation of the five-year review and the potentially misvalued code activities into an annual review of potentially misvalued codes to avoid redundancies in these efforts and better accomplish our goal of assuring regular assessment of code values. Under the consolidated process, we issue interim final RVUs for all revaluations and new codes in the PFS final rule with comment period, and make payment based upon those values during the calendar year covered by the final rule. (Changes in the PFS methodology that may affect valuations of a variety of codes are issued as proposals in the proposed rule.) We consider and respond to any public comments on the interim final values in the final rule with comment period for the subsequent year. When consolidating these processes, we indicated that it was
Under the process finalized in the CY 2012 PFS final rule with comment period, in each year's proposed rule, we propose specific codes and/or groups of codes that we believe may be appropriate to consider under our potentially misvalued code initiative. As part of our process for developing the list of proposed potentially misvalued codes, we consider public nominations for potentially misvalued codes under a process also established in the CY 2012 PFS final rule with comment period. If appropriate, we include such codes in our proposed potentially misvalued code list. In the proposed rule, we solicit comments on the proposed potentially misvalued codes. We then respond to comments and establish a final list of potentially misvalued codes in the final rule for that year. These potentially misvalued codes are reviewed and revalued, if appropriate, in subsequent years. In addition, the RUC regularly identifies potentially misvalued codes using screens that have previously been identified by CMS, such as codes performed together more than 75 percent of the time.
Generally, the first step in revaluing codes that have been identified as potentially misvalued is for the RUC to review these codes through its standard process, which includes active involvement of national specialty societies for the specialties that ordinarily use the codes. Frequently, the RUC's discussion of potentially misvalued codes will lead the CPT Editorial Panel to make adjustments to the codes involved, such as bundling of codes, creation of new codes or revisions of code descriptors. The AMA has estimated that 75 percent of all annual CPT coding changes result from the potentially misvalued code initiative.
The RUC provides CMS with recommendations for the work values and direct PE inputs for the codes we have identified as potentially misvalued codes or, in the case of a coding revision, for the new or revised codes that will replace these potentially misvalued codes. (This process is also applied to codes that the RUC identifies using code screens that we have identified, and to new or revised codes that are issued for reasons unrelated to the potentially misvalued code process.) Generally, we receive the RUC recommendations concurrently for all codes in the same family as the potentially misvalued code(s). We believe it is important to evaluate and establish appropriate work and MP RVUs and direct PE inputs for an entire code family at the same time to avoid rank order anomalies and to maintain appropriate relativity among codes. We generally receive the RUC recommendations for the code or replacement code(s) within a year or two following the identification of the code as potentially misvalued.
We consider the RUC recommendations along with other information that we have, including information submitted by other stakeholders, and establish interim final RVUs for the potentially misvalued codes, new codes, and any other codes for which there are coding changes in the final rule with comment period for a year. There is a 60-day period for the public to comment on those interim final values after we issue the final rule. For services furnished during the calendar year following the publication of interim final rates, we pay for services based upon the interim final values established in the final rule. In the final rule with comment period for the subsequent year, we consider and respond to public comments received on the interim final values, and make any appropriate adjustments to values based on those comments. We then typically finalize the values for the codes.
As we discussed in the CY 2012 PFS final rule with comment period, we adopted this consolidated review process to combine all coding revaluations into one annual process allowing for appropriate consideration of relativity in and across code families. In addition, this process assures that we have the benefit of the RUC recommendations for all codes being valued.
Some stakeholders who have experienced reductions in payments as the result of interim final valuations have objected to the process by which we revise or establish values for new, revised, and potentially misvalued codes. Some have stated that they did not receive notice of the possible reductions before they occurred. Generally, stakeholders are aware that we are considering changes in the payment rates for particular services either because CPT has made changes to codes or because we have identified the codes as potentially misvalued. As the RUC considers the appropriate value for a service, representatives of the specialties that use the codes are involved in the process. The RUC usually surveys physicians or other practitioners who furnish the services described by the codes regarding the time it takes to furnish the services, and representatives of the specialty(ies) also participate in the RUC meetings where recommendations for work RVUs and direct PE inputs are considered. Through this process, representatives of the affected specialties are generally aware of the RUC recommendations.
Some stakeholders have stated that even when they are aware that the RUC has made recommendations, they have no opportunity to respond to the RUC recommendations before we consider them in adopting interim final values because the RUC actions and recommendations are not public. Some stakeholders have also said that the individuals who participate in the RUC review process are not able to share the recommendations because they have signed a confidentiality agreement. We note, however, that at least one specialty society has raised funds via its Web site to fight a “pending cut” based upon its knowledge of RUC recommendations for specific codes prior to CMS action on the recommendation. Additionally, some stakeholders have pointed out that some types of suppliers that are paid
We recognize that some stakeholders, including those practitioners represented by societies that are not participants in the RUC process, may not be aware of the specifics of the RUC recommendations before we consider them in establishing interim final values for new, revised, and potentially misvalued codes. We note that, as described above, before we review a service as a potentially misvalued code, we go through notice and comment rulemaking to identify it as a potentially misvalued code. Thus, the public has notice and an opportunity to comment on whether we should review the values for a code before we finalize the code as potentially misvalued and begin the valuation process. As a result, all stakeholders should be aware that a particular code is being considered as potentially misvalued and that we may establish revised interim final values in a subsequent final rule with comment period. As noted above, there may be some codes for which we receive RUC recommendations based upon their identification by the RUC through code screens that we establish. These codes are not specifically identified by CMS through notice and comment rulemaking as potentially misvalued codes. We recognize that if stakeholders are not monitoring RUC activities or evaluating Medicare claims data, they may be unaware that these codes are being reviewed and could be revalued on an interim final basis in a final rule with comment period for a year.
In recent years, we have increased our scrutiny of the RUC recommendations and have increasingly found cause to modify the values recommended by the RUC in establishing interim final values under the PFS. Sometimes we also find it appropriate, on an interim final basis, to refine how the CPT codes are to be used for Medicare services or to create G-codes for reporting certain services to Medicare. Some stakeholders have objected to such interim final decisions because they do not learn of the CMS action until the final rule with comment period is issued. Stakeholders said that they do not have an opportunity to meaningfully comment and for CMS to address their comments before the coding or valuation decision takes effect.
We received comments on the CY 2014 PFS final rule with comment period suggesting that the existing process for review and adoption of interim final values for new, revised, and misvalued codes violates section 1871(a)(2) of the Act, which prescribes the rulemaking requirements for the agency in establishing payment rates. In response to those commenters, we note that the process we use to establish interim final rates is in full accordance with the statute and we do not find this a persuasive reason to consider modifying the process that we use to establish PFS rates.
Our recent revaluation of the four epidural injection codes provides an example of the concerns that have been expressed with the existing process. In the CY 2014 PFS final rule with comment period, we established interim final values for four epidural injection codes, which resulted in payment reductions for the services when furnished in the office setting of between 35 percent and 56 percent. (In the facility setting, the reductions ranged from 17 percent to 33 percent.) One of these codes had been identified as a potentially misvalued code 2 years earlier. The affected specialties had been involved in the RUC process and were generally aware that the family of codes would be revalued on an interim basis in an upcoming rule. They were also aware that the RUC had made significant changes to the direct PE inputs, including removal of the radiographic-fluoroscopy room, which explains, in large part, the reduction to values in the office setting. The societies representing the affected specialty were also aware of significant reductions in the RUC-recommended “time” to furnish the procedures based on the most recent survey of practitioners who furnish the services, which resulted in reductions in both the work and PE portion of the values. Although the specialties were aware of the changes that the RUC was recommending to direct PE inputs, they were not specifically aware of how those changes would affect the values and payment rate. In addition, we decreased the work RVUs for these procedures because we found the RUC-recommended work RVUs did not adequately reflect the RUC-recommended decreases in time. This decision is consistent with our general practice when the best available information shows that the time involved in furnishing the service has decreased, and in the absence of information suggesting an increase in work intensity. Since the interim final values for these codes were issued in the CY 2014 PFS final rule with comment period, we have received numerous comments that will be useful to us as we consider finalizing values for these codes. If we had followed a process that involved proposing values for these codes in a proposed rule, we would have been able to consider the additional information contained in these comments prior to making payments for the services based upon revised values. (See section II.B.3.b.(2) of this final rule with comment period for a discussion of proposed valuation of these epidural injection codes for CY 2015.)
In the proposed rule, we noted that given our heightened review of the RUC recommendations and the increased concerns expressed by some stakeholders, we believed that an assessment of our process for valuing these codes was warranted. To that end, we considered potential alternatives to address the timing and rulemaking issues associated with establishing values for new, revised and potentially misvalued codes (as well as for codes within the same families as these codes). Specifically, we explored three alternatives to our current approach:
• Propose work and MP RVUs and direct PE inputs for all new, revised and potentially misvalued codes in a proposed rule.
• Propose changes in work and MP RVUs and direct PE inputs in the proposed rule for new, revised, and potentially misvalued codes for which we receive RUC recommendations in time; continue to establish interim final values in the final rule for other new, revised, and potentially misvalued codes.
• Increase our efforts to make available more information about the specific issues being considered in the course of developing values for new, revised and potentially misvalued codes to increase transparency, but without making changes to the existing process for establishing values.
In the proposed rule we discussed each of these alternatives as follows.
(a)
Under this approach, we stated that we would evaluate the RUC recommendations for all new, revised, and potentially misvalued codes, and include proposed work and MP RVUs and direct PE inputs for the codes in the first available PFS proposed rule. We would receive and consider public comments on those proposals and establish final values in the final rule. The primary obstacle to this approach relates to the current timing of the CPT coding changes and RUC activities. Under the current calendar, all CPT coding changes and most RUC recommendations are not available to us in time to include proposed values for
Therefore, we stated that if we were to adopt this proposal, which would require us to propose changes in inputs before we revalue codes based upon those values, we would need a mechanism to pay for services for which the existing codes would no longer be available, or for which there would be changes for a given year.
As we noted in the CY 2012 PFS final rule with comment period, the RUC recommendations are an essential element that we consider when valuing codes. Likewise, we recognize the significant contribution that the CPT Editorial Panel makes to the success of the potentially misvalued code initiative through its consideration and adoption of coding changes. Although we have increased our scrutiny of the RUC recommendations in recent years and accepted fewer of the recommendations without making our own refinements, the CPT codes and the RUC recommendations continue to play a major role in our valuations. For many codes, the surveys conducted by specialty societies as part of the RUC process are the best data that we have regarding the time and intensity of work. The RUC determines the criteria and the methodology for those surveys. It also reviews the survey results. This process allows for development of survey data that are more reliable and comparable across specialties and services than would be possible without having the RUC at the center of the survey vetting process. In addition, the debate and discussion of the services at the RUC meetings in which CMS staff participate provides a good understanding of what the service entails and how it compares to other services in the family, and to services furnished by other specialties. The debate among the specialties is also an important part of this process. Although we increasingly consider data and information from many other sources, and we intend to expand the scope of those data and sources, the RUC recommendations remain a vital part of our valuation process.
Thus, if we were to adopt this approach, we would need to address how to make payment for the services for which new or revised codes take effect for the following year but for which we did not receive RUC recommendations in time to include proposed work values and PE inputs in the proposed rule. Because the annual coding changes are effective on January 1st of each year, we would need a mechanism for practitioners to report services and be paid appropriately during the interval between the date the code takes effect and the time that we receive RUC recommendations and complete rulemaking to establish values for the new and revised codes. One option would be to establish G-codes with identical descriptors to the predecessors of the new and revised codes and, to the fullest extent possible, carry over the existing values for those codes. This would effectively preserve the status quo for one year.
The primary advantage of this approach would be that the RVUs for all services under the PFS would be established using a full notice and comment procedure, including consideration of the RUC recommendations, before they take effect. In addition to having the benefit of the RUC recommendations, this would provide the public the opportunity to comment on a specific proposal prior to it being implemented. This would be a far more transparent process, and would assure that we have the full benefit of stakeholder comments before establishing values.
One drawback to such a process is that the use of G-codes for a significant number of codes may create an administrative burden for CMS and for practitioners. Presumably, practitioners would need to use the G-codes to report certain services for purposes of Medicare, but would use the new or revised CPT codes to report the same services to private insurers. The number of G-codes needed each year would depend on the number of CPT code changes for which we do not receive the RUC recommendations in time to formulate a proposal to be included in the proposed rule for the year. To the extent that we receive the RUC recommendations for all new and revised codes in time to develop proposed values for inclusion in the proposed rule, there would be no need to use G-codes for this purpose.
Another drawback is that we would need to delay for at least one year the revision of values for any misvalued codes for which we do not receive RUC recommendations in time to include a proposal in the proposed rule. For a select set of codes, we would be continuing to use the RVUs for the codes for an additional year even though we know they do not reflect the most accurate resources. Since the PFS is a budget neutral system, misvalued services affect payments for all services across the fee schedule. On the other hand, if we were to take this approach, we would have the full benefit of public comments received on the proposed values for potentially misvalued services before implementing any revisions.
(b)
This alternative approach would allow for notice and comment rulemaking before we adopt values for some new, revised and potentially misvalued codes (those for which we receive RUC recommendations in time to include a proposal in the proposed rule), while others would be valued on an interim final basis (those for which we do not receive the RUC recommendations in time). Under this approach, we would establish values in a year for all new, revised, and potentially misvalued codes, and there would be no need to provide for a mechanism to continue payment for outdated codes pending receipt of the RUC recommendations and completion of a rulemaking cycle. For codes for which we do not receive the RUC recommendations in time to include a proposal in the proposed rule for a year, there would be no change from the existing valuation process.
This would be a balanced approach that recognizes the benefits of a full opportunity for notice and comment rulemaking before establishing rates when timing allows, and the importance of establishing appropriate values for the current version of CPT codes and for potentially misvalued codes when the timing of the RUC recommendations does not allow for a full notice and comment procedure.
However, this alternative would go only part of the way toward addressing concerns expressed by some stakeholders. For those codes for which the RUC recommendations are not received in time for us to include a proposal in the proposed rule, Medicare payment for one year would still be based on inputs established without the benefit of full public notice and comment. Another concern with this approach is that it could lead to the valuation of codes within the same family at different times depending on when we receive RUC recommendations for each code within a family. As discussed previously, we believe it is important to value an entire code family together to make adjustments to account appropriately for relativity within the family and between the family and other families. If we receive RUC recommendations in time to propose
(c)
The main concern with continuing our current approach is that stakeholders have expressed the desire to have adequate and timely information to permit the provision of relevant feedback to CMS for our consideration prior to establishing a payment rate for new, revised, and potentially misvalued codes. We could address some aspects of this issue by increasing the transparency of the current process. Specifically, we could make more information available on the CMS Web site before interim final values are established for codes. Examples of such information include an up-to-date list of all codes that have been identified as potentially misvalued, a list of all codes for which RUC recommendations have been received, and the RUC recommendations for all codes for which we have received them.
Although the posting of this information would significantly increase transparency for all stakeholders, it still would not allow for full notice and comment rulemaking procedures before values are established for payment purposes. Nor would it provide the public with advance information about whether or how we will make refinements to the RUC recommendations or coding decisions in the final rule with comment period. Thus, stakeholders would not have an opportunity to provide input on our potential modifications before interim final values are adopted.
After considering the current process, including its strengths and weaknesses, and the alternatives to the current process described previously, we proposed to modify our process to make all changes in the work and MP RVUs and the direct PE inputs for new, revised and potentially misvalued services under the PFS by proposing the changes in the proposed rule, beginning with the PFS proposed rule for CY 2016. We proposed to include proposed values for all new, revised and potentially misvalued codes for which we have complete RUC recommendations by January 15th of the preceding year. We also proposed to delay revaluing the code for one year (or until we receive RUC recommendations for the code before January 15th of a year) and include proposed values in the following year's rule if the RUC recommendation was not received in time for inclusion in the proposed rule. Thus, we would include proposed values prior to using the new code (in the case of new or revised codes) or revising the value (in the case of potentially misvalued codes). Due to the complexities involved in code changes and rate setting, there could be some circumstances where, even when we receive the RUC recommendations by January 15th of a year, we are not able to propose values in that year's proposed rule. For example, we might not have recommendations for the whole family or we might need additional information to appropriately value these codes. In situations where it would not be appropriate or possible to propose values for certain new, revised, or potentially misvalued codes, we would treat them in the same way as those for which we did not receive recommendations before January 15th.
For new, revised, and potentially misvalued codes for which we do not receive RUC recommendations before January 15th of a year, we proposed to adopt coding policies and payment rates that conform, to the extent possible, to the policies and rates in place for the previous year. We would adopt these conforming policies on an interim basis pending our consideration of the RUC recommendations and the completion of notice and comment rulemaking to establish values for the codes. For codes for which there is no change in the CPT code, it is a simple matter to continue the current valuation. For services for which there are CPT coding changes, it is more complicated to maintain the current payment rates until the codes can be valued through the notice and comment rulemaking process. Since the changes in CPT codes are effective on January 1st of a year, and we would not have established values for the new or revised codes (or other codes within the code family), it would not be practical for Medicare to use those CPT codes. For codes that were revised or deleted as part of the annual CPT coding changes, when the changes could affect the value of a code and we have not had an opportunity to consider the relevant RUC recommendations prior to the proposed rule, we propose to create G-codes to describe the predecessor codes to these codes. If CPT codes are revised in a manner that would not affect the resource inputs used to value the service (for example, a grammatical changes to CPT code descriptors), we could use these revised codes and continue to pay at the rate developed through the use of the same resource inputs. For example, if a single CPT code was separated into two codes and we did not receive RUC recommendations for the two codes before January 15th of the year, we would assign each of those new codes an “I” status indicator (which denotes that the codes are “not valid for Medicare purposes”), and those codes could not be used for Medicare payment during the year. Instead, we would create a G-code with the same description as the single predecessor CPT code and continue to use the same inputs as the predecessor CPT code for that G-code during the year.
For new codes that describe wholly new services, as opposed to new or revised codes that are created as part of a coding revision of a family or that describe services are already on the PFS, we would make every effort to work with the RUC to ensure that we receive recommendations in time to include proposed values in the proposed rule. However, if we do not receive timely recommendations from the RUC for such a code and we determine that it is in the public interest for Medicare to use a new code during the code's initial year, we would establish values for the code's initial year. As we do under our current policy, if we receive the RUC recommendations in time to consider them for the final rule, we propose to establish values for the initial year on an interim final basis subject to comment in the final rule. In the event we do not receive RUC recommendations in time to consider them for the final rule, or in other situations where it would not be appropriate to establish interim final
We specifically sought comments on the following topics:
• Is this proposal preferable to the present process? Is another one of the alternatives better?
• If we were to implement this proposal, is it better to move forward with the changes, or is more time needed to make the transition such that implementation should be delayed beyond CY 2016? What factors should we consider in selecting an implementation date?
• Are there alternatives other than the use of G-codes that would allow us to address the annual CPT changes through notice and comment rather than interim final rulemaking?
Similarly, as requested by the AMA and most other medical specialty societies, we are delaying the complete implementation of this process so that those who have requested new codes and modifications in existing codes with the expectation that they would be valued under the PFS for CY 2016 will not be negatively affected by timing of this change. We note that the AMA has been working to develop timeframes that would allow a much higher percentage of codes to be addressed in the proposed rule, and has shared with us some plans to achieve this goal. We appreciate AMA's efforts and are confident that with the finalization of this process, the CPT Editorial Panel and the RUC will be able to adjust their timelines and processes so that most, if
As discussed in the 1993 PFS final rule with comment period (57 FR 55938), we adopted a refinement panel process to assist us in reviewing the public comments on CPT codes with interim final work RVUs for a year and in developing final work values for the subsequent year. We decided the panel would be comprised of a multispecialty group of physicians who would review and discuss the work involved in each procedure under review, and then each panel member would individually rate the work of the procedure. We believed establishing the panel with a multispecialty group would balance the interests of the specialty societies who commented on the work RVUs with the budgetary and redistributive effects that could occur if we accepted extensive increases in work RVUs across a broad range of services.
Following enactment of section 1848(c)(2)(K) of the Act, which required the Secretary periodically to review potentially misvalued codes and make appropriate adjustments to the RVUs, we reassessed the refinement panel process. As detailed in the CY 2011 PFS final rule with comment period (75 FR 73306), we continued using the established refinement panel process with some modifications.
As we considered making changes to the process for valuing codes, we reassessed the role that the refinement panel process plays in the code valuation process. We noted that the current refinement panel process is tied to interim final values. It provides an opportunity for stakeholders to provide
We also noted that by using the proposed process for new, revised, and potentially misvalued codes, we believed the consideration of additional clinical information and any other issues associated with the CMS proposed values could be addressed through the notice and comment process. Similarly, prior to CY 2012 when we consolidated the five-year valuation, changes made as part of the five-year review process were addressed in the proposed rule and those codes were generally not subject to the refinement process. The notice and comment process would provide stakeholders with complete information on the basis and rationale for our proposed inputs and any relating coding policies. We also noted that an increasing number of requests for refinement do not include new clinical information that would justify a change in the work RVUs and that was not available at the time of the RUC meeting, in accordance with the current criteria for refinement. Thus, we did not believe the elimination of the refinement panel process would negatively affect the code valuation process. We believe the proposed process, which includes a full notice and comment procedure before values are used for purposes of payment, offers stakeholders a better mechanism for providing any additional data for our consideration and discussing any concerns with our proposed values than the current refinement process
Commenters supported “a fair, objective, and consistently applied appeals process that would be open to any commenting organization.” Commenters expressed concern that the elimination of the refinement panel without a replacement mechanism “indicates that CMS will no longer seek the independent advice of contractor medical officers and practicing physicians and will solely rely on Agency staff to determine if the comment is persuasive in modifying a proposed value. The lack of any perceived organized appeal process will likely lead to a fragmented lobbying effort, rather than an objective review process.”
MedPAC suggested that we use a panel with membership limited to those without a financial stake in the process, such as contractor medical directors, experts in medical economics and technology diffusion, private payer representatives, and a mix of physicians and other health professionals not directly affected by the RVUs in question. It also suggested user fees to provide the resources needed or such a refinement panel.
We are also finalizing our proposed change to the regulation at § 414.24 with the addition of the phrase “For valuations for calendar year 2017 and beyond,” to paragraph (b) to reflect implementation of the revised process for all valuations beginning with those for CY 2017.
We conducted a review of each code identified in this section and reviewed the current work RVU, if one exists, the RUC-recommended work RVUs, intensity, and time to furnish the preservice, intraservice, and postservice activities, as well as other components of the service that contribute to the value. Our review generally includes, but is not limited to, a review of information provided by the RUC, Health Care Professionals Advisory Committee (HCPAC), and other public commenters, medical literature, and comparative databases, as well as a comparison with other codes within the Medicare PFS, consultation with other physicians and health care professionals within CMS and the federal government. We also assessed the methodology and data used to develop the recommendations submitted to us by the RUC and other public commenters and the rationale for the recommendations. In the CY 2011 PFS final rule with comment period (75 FR 73328 through 73329), we discussed a variety of methodologies and approaches used to develop work RVUs, including survey data, building blocks, crosswalk to key reference or similar codes, and magnitude estimation. More information on these issues is available in that rule. When referring to a survey, unless otherwise noted, we mean the surveys conducted by specialty societies as part of the formal RUC process. The building block methodology is used to construct, or deconstruct, the work RVU for a CPT code based on component pieces of the code. Components used in the building block approach may include preservice, intraservice, or postservice time and post-procedure visits. When referring to a bundled CPT code, the components could be the CPT
The PFS incorporates cross-specialty and cross-organ system relativity. Valuing services requires an assessment of relative value and takes into account the clinical intensity and time required to furnish a service. In selecting which methodological approach will best determine the appropriate value for a service, we consider the current and recommended work and time values, as well as the intensity of the service, all relative to other services.
Several years ago, to aid in the development of preservice time recommendations for new and revised CPT codes, the RUC created standardized preservice time packages. The packages include preservice evaluation time, preservice positioning time, and preservice scrub, dress and wait time. Currently there are six preservice time packages for services typically furnished in the facility setting, reflecting the different combinations of straightforward or difficult procedure, straightforward or difficult patient, and without or with sedation/anesthesia. Currently, there are three preservice time packages for services typically furnished in the nonfacility setting, reflecting procedures without and with sedation/anesthesia care. We have developed several standard building block methodologies to appropriately value services when they have common billing patterns. In cases where a service is typically furnished to a beneficiary on the same day as an evaluation and management (E/M) service, we believe that there is overlap between the two services in some of the activities furnished during the preservice evaluation and postservice time. We believe that at least one-third of the physician time in both the preservice evaluation and postservice period is duplicative of work furnished during the E/M visit. Accordingly, in cases where we believe that the RUC has not adequately accounted for the overlapping activities in the recommended work RVU and/or times, we adjust the work RVU and/or times to account for the overlap. The work RVU for a service is the product of the time involved in furnishing the service times the intensity of the work. Preservice evaluation time and postservice time both have a long-established intensity of work per unit of time (IWPUT) of 0.0224, which means that 1 minute of preservice evaluation or postservice time equates to 0.0224 of a work RVU. Therefore, in many cases when we remove 2 minutes of preservice time and 2 minutes of postservice time from a procedure to account for the overlap with the same day E/M service, we also remove a work RVU of 0.09 (4 minutes × 0.0224 IWPUT) if we do not believe the overlap in time has already been accounted for in the work RVU. The RUC has recognized this valuation policy and, in many cases, addresses the overlap in time and work when a service is typically provided on the same day as an E/M service. The RVUs and other payment information for all CY 2015 payable codes are available in Addendum B. The RVUs and other payment information for all codes subject to public comment are available in Addendum C. Both addenda are available on the CMS Web site under downloads for the CY 2015 PFS final rule with comment period at
In this section, we are responding to the public comments received on specific interim final values established in the CY 2014 PFS final rule with comment period and discussing the final values that we are establishing for CY 2015. The final CY 2015 work, PE, and MP RVUs are in Addendum B of a file called “CY 2015 PFS Addenda,” available on the CMS Web site under downloads for the CY 2015 PFS final rule with comment period at
As discussed in the 1993 PFS final rule with comment period (57 FR 55938), we adopted a refinement panel process soon after implementing the fee schedule to assist us in reviewing the public comments on CPT codes with interim final work RVUs and in developing final work values for the subsequent year. We decided the panel would be comprised of a multispecialty group of physicians who would review and discuss the work involved in each procedure under review, and then each panel member would individually rate the work of the procedure. We believed a multispecialty group would balance the interests of the specialty societies who commented on the work RVUs with the budgetary and redistributive effects that could occur if we accepted extensive increases in work RVUs across a broad range of services. Depending on the number and range of codes that are subject to refinement in a given year, we establish refinement panels with representatives from four groups: Clinicians representing the specialty identified with the procedures in question; physicians with practices in related specialties; primary care physicians; and contractor medical directors (CMDs). Typical panels have included 8 to 10 physicians across the four groups.
Following the addition of section 1848(c)(2)(K) to the Act, which requires the Secretary periodically to review potentially misvalued codes and make appropriate adjustments to the RVUs, we reassessed the refinement panel process. As detailed in the CY 2011 PFS final rule with comment period (75 FR 73306), we believed that the refinement panel process might provide an opportunity to review and discuss the proposed and interim final work RVUs with a clinically diverse group of experts, who could provide informed recommendations following the discussion. Therefore, we indicated that we would continue the refinement process, but with administrative modification and clarification. We also noted that we would continue using the established panel composition that includes representatives from the four groups—clinicians representing the specialty identified with the procedures in question, physicians with practices in related specialties, primary care physicians, and CMDs.
At that time, we made a change in how we calculated refinement panel results. The basis of the refinement panel process is that, following discussion of the information but without an attempt to reach a consensus, each member of the panel submits an independent rating to CMS. Historically, the refinement panel's recommendation to change a work value or to retain the interim final value had
We remind readers that the refinement panels are not intended to review the work RVUs for every code for which we did not accept the RUC-recommended work RVUs. Rather, refinement panels are designed for situations where there is new clinical information available that might provide a reason for a change in work values and where a multispecialty panel of physicians might provide input that would assist us in establishing work RVUs. To facilitate the selection of services for the refinement panels, commenters seeking consideration by a refinement panel should specifically state in their public comments that they are requesting refinement panel review. Furthermore, we have asked commenters requesting refinement panel review to submit any new clinical information concerning the work required to furnish a service so that we can consider whether the new information warrants referral to the refinement panel (57 FR 55917).
We note that most of the information presented during the last several refinement panel discussions has been duplicative of the information provided to the RUC during its development of recommendations and considered by CMS in establishing values. As detailed above, we consider information and recommendations from the RUC when assigning proposed and interim final RVUs to services. Thus, if the only information that a commenter has to present is information already considered by the RUC, referral to a refinement panel is not appropriate. We request that commenters seeking refinement panel review of work RVUs submit supporting information that has not already been considered by the RUC in developing recommendations or by CMS in assigning proposed and interim final work RVUs. We can make best use of our resources, as well as those of the specialties and physician volunteers involved, by avoiding duplicative consideration of information by the RUC, CMS, and a refinement panel. To achieve this goal, CMS will continue to critically evaluate the need to refer codes to refinement panels in future years, specifically considering any new information provided by commenters.
We referred to the CY 2014 refinement panel 19 CPT codes with CY 2014 interim final work values for which we received a request for refinement that met the requirements described above. For these 19 CPT codes, all commenters requested increased work RVUs. For ease of discussion, we will be referring to these services as “refinement codes.” Consistent with the process described above, we convened a multi-specialty panel of physicians to assist us in the review of the information submitted to support increased work RVUs. The panel was moderated by our physician advisors, and consisted of the following voting members:
• One to two clinicians representing the commenting organization.
• One to two primary care clinicians nominated by the American Academy of Family Physicians and the American College of Physicians.
• Four Contractor Medical Directors (CMDs).
• One to two clinicians with practices in related specialties, who were expected to have knowledge of the services under review.
The panel process was designed to capture each participant's independent judgment and his or her clinical experience which informed and drove the discussion of the refinement code during the refinement panel proceedings. Following the discussion, each voting participant rated the work of the refinement code(s) and submitted those ratings to CMS directly and confidentially. We note that not all voting participants voted for every CPT code. There was no attempt to achieve consensus among the panel members. As finalized in the CY 2011 PFS final rule with comment period (75 FR 73307), we calculated the median value for each service based upon the individual ratings that were submitted to CMS by panel participants.
Table 14 presents information on the work RVUs for the refinement codes, including the refinement panel ratings and the final CY 2015 work RVUs. In section II.G.2.a.ii., we discuss the CY 2015 work RVUs assigned each of the individual refinement codes.
For each code with an interim final work value, Table 15 lists the CY 2014 interim final work RVU and the CY 2015 work RVU and indicates whether we are finalizing the CY 2015 work RVU. For codes without a work RVU, the table includes a PFS procedure status indicator. A list of the PFS procedure status indicators can be found in Addendum A. If the CY 2015 Action column indicates that the CY 2015 values are interim final, we will accept public comments on these values during the public comment period for this final rule with comment period. A comprehensive list of all values for which public comments are being solicited is contained in Addendum C to the CY 2015 PFS final rule with comment period. A comprehensive list of all CY 2015 RVUs is in Addendum B to this final rule with comment period. All Addenda to PFS final rule are available on the CMS Web site under downloads at
In the following section, we discuss each code for which we received a comment on the CY 2014 interim final work value or work time during the comment period for the CY 2014 final rule with comment period or for which we are modifying the CY 2014 interim final work RVU, work time or procedure status indicator for CY 2015. If a code in Table 15 is not discussed in this section, we did not receive any comments on that code and are finalizing the interim final work RVU and time without modification for CY 2015.
As detailed in the CY 2014 PFS final rule with comment period, we maintained the CY 2013 work RVUs for CPT codes 17311 and 17313 codes, based upon the RUC-recommended work RVUs.
For CY 2014, the CPT Editorial Panel created 14 new codes, CPT codes 19081 through 19288, to describe breast biopsy and placement of breast localization devices, and the RUC recommended work RVUs for each of these codes. In the 2014 final rule with comment period, we established interim final values for all of these codes as recommended by the RUC except for CPT code 19287 and its add-on CPT code, 19288, which are used for magnetic resonance (MR) guidance. We expressed concern that for CPT code 19287 the RUC-recommended work RVUs were too high in relation to those of other marker placement codes, and refined it to a lower value. Since we had adopted the RUC recommendation that all the add-on codes in this family have work RVUs equal to 50 percent of the base code's work RVU, our refinement of CPT code 19287 resulted in a refinement of CPT code 19288 also. We also changed the intraservice time of CPT code 19286, an add-on code, from 19 minutes to 15 minutes since we believed the intraservice time of an add-on code should not be higher than its base code and the base code for CPT code 19286, has an intraservice time of 15 minutes.
For CY 2013, the MR guidance code, CPT code 77032, had a lower work RVU than the stereotactic guidance code, CPT code 77031. Combining the values for the marker placement or biopsy codes with the guidance codes should not, in our view, result in a change in the rank order of the guidance. Accordingly, we do not believe the bundled code that includes MR guidance should now be valued significantly higher than one that includes the stereotactic guidance. Also, the refinement panel discussions did not provide new clinical information. Therefore, we continue to believe the CY 2014 interim final values are appropriate for CPT codes 19287 and 19288, and are finalizing them for CY 2015.
In the CY 2014 final rule with comment period we established interim final values for three CPT codes for hip and knee replacements that had previously been identified as potentially misvalued codes under the CMS high expenditure procedural code screen. For CY 2014, we established the RUC-recommended work value of 17.48 as interim final work RVUs for CPT code 27446. As we explained in the CY 2014 final rule with comment period, we established interim final work RVUs for CPT codes 27130 and 27447 that varied from those recommended by the RUC based upon information that we received from the relevant specialty societies. We noted that the information presented by the specialty societies and the RUC raised concerns regarding the appropriate valuation of these services, especially related to the use of the best data source for determining the intraservice time involved in furnishing PFS services. Specifically, there was significant variation between the time values estimated through a survey versus those collected through specialty databases. We characterized our concerns saying, “The divergent recommendations from the specialty societies and the RUC regarding the accuracy of the estimates of time for these services, including both the source of time estimates for the procedure itself as well as the inpatient and outpatient visits included in the global periods for these codes, lead us to take a cautious approach in valuing these services.”
With regard to the specific valuations, we agreed with the RUC's recommendation to value CPT codes 27130 and 27447 equally. We explained that we modified the RUC-recommended work RVUs for these two codes to reflect the visits in the global period as recommended by the specialty societies, resulting in a 1.12 work RVU increase from the RUC-recommended value for each code. Accordingly, we assigned CPT codes 27130 and 27447 an interim final work RVU of 20.72. We sought public comment regarding, not only the appropriate work RVUs for these services, but also the most appropriate reconciliation for the conflicting information regarding time values for these services as presented to us by the physician community. We also sought public comment on the use of specialty databases as compared to surveys for determining time values, potential sources of objective data regarding procedure times, and levels of visits furnished during the global periods for the services described by these codes.
For CY 2014, we established the RUC-recommended work RVUs for newly created CPT codes 37236, 37237, and 37238 as the interim final values. We disagreed with the RUC-recommended work RVU for CPT code 37239, which is the add-on code to CPT code 37238, for the placement of an intravascular stent in each additional vein. As we described in the CY 2014 final rule with comment period we believe that the work for placement of an additional stent in a vein should bear the same relationship to the work of placing an initial stent in the vein as the placement of an additional stent in an artery to the placement of the initial stent in an artery.
For CY 2014, we established interim final work RVUs for these two codes based upon the survey's 25th percentile. As we discussed in the CY 2014 interim final rule with comment period, we believed that the RUC-recommended work RVU for CPT code 37242 did not adequately take into account the substantial decrease in intraservice time. We indicated that we believed that the survey's 25th percentile work RVU of 10.05 was more consistent with the decreases in intraservice time since its last valuation and more appropriately reflected the work of the procedure. Similarly, we did not believe that the RUC-recommended work RVU for CPT code 37243 adequately considered the substantial decrease in intraservice time for the procedure; and we also use the survey's 25th percentile for CPT code 37243.
We established CY 2014 interim final work RVUs for the rigid transoral esophagoscopy codes using a ratio of 1 RVU per 10 minutes of intraservice time, resulting in a RVU of 2.00 for CPT code 43191, 3.00 for CPT code 43193, 3.00 for CPT code 43194, 3.00 for CPT code 43195, and 3.30 for CPT code 43196. As we detailed in the CY 2014 final rule with comment period, the surveys showed that this ratio was reflected for about half of the rigid transoral esophagoscopy codes. Additionally, we noted that this ratio was further supported by the relationship between the CY 2013 work value of 1.59 RVUs for CPT code 43200 (Esophagoscopy, rigid or flexible; diagnostic, with or without collection of specimen(s) by brushing or washing (separate procedure)) and its intraservice time of 15 minutes. For CPT code 43192, the 1 work RVU per 10 minutes ratio resulted in a value that was less than the survey low, and thus did not appear to be appropriate for this procedure. Therefore, we established a CY 2014 interim final work RVU for CPT code 43192 of 2.45 based upon the survey low.
We established CY 2014 interim final work RVUs of 1.48 for CPT code 43197 and 1.78 for CPT code 43198. As detailed in the CY 2014 final rule with comment period, we removed 2 minutes
We established CY 2014 interim final work RVUs for the flexible transoral esophagoscopy family, which are detailed in Table 15. As we described in the CY 2014 final rule with comment period, to establish work values for these codes we used a variety of methodologies as did the RUC. The methodologies used by CMS And the RUC include basing values on the surveys (either medians or 25th percentiles), crosswalking values to other codes, using the building block methodology, and valuing a family of codes based on the incremental differences in the work RVUs between the codes being valued and another family of codes. As we did for the rigid transoral esophagoscopy codes, in addition to the methodologies used by the RUC, we also reduced the work RVUs for particular codes in direct proportion to the reduction in times that were recommended by the RUC. Using these methodologies, we assigned the RUC-recommended work RVUs for five codes in this family; for the other eight codes we used these same methodologies but because of different values for a base code or variation in the crosswalk selected we obtained different values.
For CPT code 43200, which is the base code for flexible transoral esophagoscopy, we agree with commenters that another methodology is preferable to applying the work RVU ratio of 1 RVU per 10 minutes of intraservice time. In revaluing this service, we subtracted 0.07 to account for the 3 minute decrease in postservice time since the last valuation from the CY 2013 work RVU for the predecessor base code, which resulted in a work RVU of 1.52. We are finalizing this work RVU.
The CY 2014 interim final work RVUs for CPT codes 43201, 43202, 43204, 43205 and 43215 were all based upon methodologies using the work RVU of the base code, 43200. As we are establishing a final value for CPT code 43200 that is higher than the CY 2014 interim final value, we are also adjusting the work RVUs for the other codes based upon the new work RVU for CPT code 43200. We are finalizing a work RVU of 1.82 for 43201, 1.82 for 43202, 2.43 for 43204, 2.54 for 43205, and 2.54 for 43215.
CPT codes 43204 and 43205 were considered by the refinement panel. The refinement panel median for each of these codes was 2.77 and 2.88, respectively. The refinement panel discussion reiterated the information presented to the RUC and in the comments in response to the CY 2014 final rule with comment period, such as that the typical patient for these codes are sicker and thus the work is more intense. Because we do not agree with commenters' contention that higher work RVUs are warranted since these codes involve the sicker patients or that our methodology for calculating the interim final RVUs was inappropriate, we are establishing final values determined using these methodologies. However, due to the change in the base code, CPT code 43200, as discussed in the previous paragraph the final values for these codes are higher than the interim final values.
In the CY 2014 final rule with comment period, we assigned an interim final work RVU of 4.21 to CPT code 43211 by using a comparable esophagogastroduodenoscopy (EGD) code and subtracting the difference in work between the base esophagoscopy and base EGD codes. After consideration of the comments that indicated the interim final work RVU of 4.21 was too low, we believe this code should instead be crosswalked to CPT code 31636 (Bronchoscopy bronch stents), which we believe is a comparable service with comparable intensity. It has the same intraservice time and slightly higher total time. As a result we are finalizing a work RVU of 4.30.
As we noted in the CY 2014 final rule with comment period, we crosswalked the interim final work RVU for CPT 43212 to that of CPT code 43214. Since we are increasing the work RVU for CPT code 43214, we are also increasing the work RVU for CPT code 43212, which is consistent with comments that we had undervalued this procedure.
As we detailed in the CY 2014 final rule with comment period, we based the work RVU of 4.73 for CPT code 43213 on the value of CPT code 43220, increased proportionately to reflect the longer intraservice time of CPT code 43213. The refinement panel median was 5.00 for this code. No new information was presented at the refinement panel. We continue to believe that 4.73 is the appropriate work RVU and are finalizing it.
Based upon the information presented by commenters about the typical patient and the advanced skills required for the procedure, we are changing our method of valuing CPT code 43214. We believe it should be crosswalked to CPT 52214 (cystoscopy), which we believe is similar in intensity. This results in a final work RVU of 3.50 as compared to an interim final of 3.38. This refinement also supports the belief made by commenters that the work of CPT code 43214 is greater than the interim final work RVU. Therefore, we are finalizing a work RVU of 3.50 for CPT code 43214.
For CPT code 43227, we modified the CY 2013 work RVU to reflect the percentage decrease in intraservice time of 36 minutes to 30 minutes in the RUC recommendation to establish a CY 2014 interim final value of 2.99. The commenters stated that the survey validates the RUC recommendation of 3.26 and that the drop in intraservice time that upon which we based our change in the work RVU was inappropriate since the intraservice time had not really changed. They contend that the change was from moving the time for moderate sedation from intraservice to preservice. We disagree. We have no information from the RUC that leads us to believe that when the pre-service packages were developed several years ago and moderate sedation was explicitly recognized as a pre-service item that the RUC also intended CMS to assume that the intraservice times were no longer correct. We believe that our proposed valuation methodology is correct and thus are finalizing a work RUV of 2.99.
Commenters, disagreeing with our crosswalk of CPT code 43229 to CPT code 43232, stated that the two codes were not comparable. We disagree. We continue to believe this crosswalk is appropriate as the times and intensities are quite similar. We note that the RUC also bases crosswalks on the comparability of time and intensity of codes and not on the clinical similarity of work. Thus, we will continue this crosswalk. However, as discussed below, we are refining the interim final value of CPT code 43232 to 3.59 and thus are finalizing the work RVU of 3.59 for CPT code 43229.
For CPT code 43231, we added the work of an endobronchial ultrasound (EBUS) to the work of the base esophagoscopy code to arrive at our interim final value. The commenters disagreed with our approach, stating that the EBUS code is an add-on code and as such does not have pre- and postservice work. We agree that pre- and postservice work is not included in the EBUS code nor should it be for the ultrasound portion of the examination of esophagus. Therefore, we are finalizing a work RVU of 2.90.
For CPT code 43232, the commenters stated our interim final value is too low and that the work involved in this code is appropriately reflected in the RUC recommendation. They objected to our basing the work RVU for 43232 on the difference between the RUC-recommended values for this code and CPT code 43231. We learned from the comments that the typical patient for this service has advanced cancer and agree that our interim final value may not represent the full extent of the work involved in this procedure. Therefore, we are crosswalking this code to CPT code 36595 (Mechanical removal of pericatheter obstructive material (eg, fibrin sheath) from central venous device via separate venous access), which has identical intraservice time, slightly less total time, and a slightly higher intensity and are finalizing a work RVU of 3.59.
We established interim final work RVUs for various EGD codes in the CY 2014 final rule with comment period. In this section, we discuss the 18 EGD codes on which we received comments disagreeing with or making recommendations for changes in our interim final values. As we detailed in the CY 2014 final rule with comment period, we valued many of these codes by adding the additional work of an EGD to the comparable esophagoscopy (ESO) code. We determined the additional work of an EGD by subtracting the work RVU of CPT code 43200, the base ESO code, from the work of CPT code 43235, the base EGD code. For example, CPT code 43233 is an identical procedure to CPT code 43214 except that it uses EGD rather than ESO. We valued it by adding the additional work of EGD to the work RVU of CPT code 43214, resulting in an interim final work RVU of 4.05. We valued the additional work the same way the RUC did in its recommendations. The following EGD codes were valued in the same way using the code in parentheses as the corresponding ESO code: 43233 (43214), 43236 (43201), 43237 (43231), 43238 (43232), 43247 (43215), 43254 (43211), 43255 (43227), 43266 (43212), and 43270 (43229). In valuing CPT codes 43235, we agreed with the RUC recommended work RVU difference between this EGD base code and the esophagoscopy base code, CPT 43200 but applied the difference to our CY 2014 RVU values. In a similar fashion, in valuing CPT code 43242 we agreed with the RUC recommended methodology of which took the increment between CPT code 43238 and CPT code 43237 but we applied the difference to our CY 2014 values. In order to value other EGD codes, we crosswalked the services to similar procedures; specifically for CY 2014 we crosswalked CPT codes 43239 to 43236, 43246 to 43255, 43253 to 43242 and 43257 to 43238. We valued CPT codes 43244 and 43249 through acceptance of the RUC work RVU recommendation. Lastly, we valued CPT code 43259 by adjusting the CY 2013 work RVU to account for the CY 2014 RUC recommended reduction in total time.
CPT code 43233 was referred to the refinement panel and received a median work RVU of 4.26. As outlined above, we are finalizing a work RVU of 4.17 for CPT code 43233 at 4.17, which is higher than our interim value of 4.05, but consistent with our valuation of the other EGD codes. We do not believe that the comments provided at the refinement panel justify adoption of the higher median value.
The interim final work value of CPT code 43239 was crosswalked to the work RVU of CPT code 43236. Since we increased the final work RVU from the interim final for this code, the final work RUV of CPT code 43239 increases to 2.49.
In the CY 2014 final rule with comment period we established interim final work RVUs for several ERCP codes due to coding revisions. For all those codes not discussed in this section, we are finalizing the interim final work RVUs. For CPT code 43263, we established an interim final work RVU based upon a crosswalk to CPT code 43262. As we detailed in the CY 2014 final rule with comment period, we valued CPT codes 43274, 43276, and 43278 using the same formula that the RUC used in determining its recommendations, but substituting our interim final work RVUs for codes used in the formula for the RUC-recommended values. CPT code 43277 was valued using the survey 25th percentile.
We proposed new work RVUs for these codes in the PFS proposed rule. (79 FR 40338–40339). See section II.B.3 for a discussion of the valuation of these codes, and a summary of public comments and our responses.
We established interim final work RVUs for CPT codes 63047 and 63048 for CY 2014. As we indicated in the CY 2014 final rule with comment period, we had identified CPT code 63047 as potentially misvalued through the high expenditure procedure code screen and the RUC included a recommendation for CPT code 63048. We noted that, to appropriately value these codes, we need to consider the other two codes in this family: CPT codes 63045 (Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord, cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; cervical) and 63046 (Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord, cauda equina and/or nerve root[s], [eg, spinal or lateral recess stenosis]), single vertebral segment; thoracic). Although we did not receive recommendations for CPT codes 63045 and 63046, we established CY 2014 interim final work RVUs for CPT codes 63047 and 63048 of 15.37 and 3.47, respectively, based upon the RUC recommendations. We noted that we expected to review these values in concert with the RUC
We assigned refined interim final work RVU values of 1.53 to CPT code 64616 and 1.90 to CPT code 64617. As detailed in the CY 2014 final rule with comment period, we refined the RUC-recommended work RVUs of 1.79 for CPT code 64616 and 2.06 for CPT code 64617 to reflect the deletion of an outpatient visit that was included in the predecessor code, CPT code 64613 (chemodenervation of muscle(s); neck muscle(s) (eg, for spasmodic torticollis, spasmodic dysphonia)). We also explained that since CPT code 64617, chemodenervation of the larynx, includes EMG guidance when furnished we determined the interim final work RVU by adding the work RVU for CPT code 95874 (Needle electromyography for guidance in conjunction with chemodenervation (List separately in addition to code for primary procedure)) to the CY 2013 work RVU for CPT 64616.
For CY 2014, we assigned interim final work RVUs for CPT code 64643 and CPT code 64645 of 1.22 and 1.39, respectively. As we explained in the CY 2014 final rule with comment period, we refined the RUC-recommended work RVUs for these add-on codes by subtracting the RVUs to account for 19 minutes of pre-service time and the decrease in time for furnishing the add-on service. Additionally, we based the global period for these codes on the predecessor code, CPT code 64614 (chemodenervation of muscle(s); extremity and/or trunk muscle(s) (eg, for dystonia, cerebral palsy, multiple sclerosis)), which was deleted for CY 2014. Therefore, we assigned 10-day global periods to the services.
After it was identified as a potentially misvalued code pursuant to the CMS high expenditure screen, CPT code 69210, which describes removal of impacted cerumen, was revised from being applicable to “1 or both ears” to a unilateral code effective January 1, 2014. For Medicare purposes we limited the code to billing once whether it was furnished unilaterally or bilaterally because we believed the procedure would typically be furnished in both ears as the physiologic processes that create cerumen impaction likely would affect both ears. Similarly, we continued the CY 2013 value as our interim final CY 2014 value since for Medicare purposes the service was unchanged.
As detailed in the CY 2014 final rule with comment period, we agreed with the RUC-recommended values for CPT codes 77001, 77002 and 77003 but were concerned that the recommended intraservice times for all three codes was generally higher than the procedure codes with which they were typically billed. We sought additional public comment and input from the RUC and other stakeholders regarding the appropriate relationship between the intraservice time associated with fluoroscopic guidance and the intraservice time of the procedure codes with which they are typically billed.
These codes were revised for CY 2015. For discussion of valuation for CY 2015, see section II.G.3.b.
As detailed in the CY 2014 final rule with comment period, we believed that the typical optical endomicroscopy case would involve only the endoscopist, and CPT codes 43206 and 43253 were valued to reflect this. Accordingly, we believed a separate payment for CPT code 88375 would result in double payment for a portion of the overall optical endomicroscopy service. Therefore, we assigned a PFS procedure status of I (Not valid for Medicare purposes. Medicare uses another code for the reporting of and the payment for these services) to CPT code 88375.
In CY 2014, we assigned CY 2014 interim final work RVUs of 1.75 and 1.50 for CPT codes 92521 and 92522, respectively, as the HCPAC recommended. For CPT code 92523, we disagreed with the HCPAC-recommended work RVU of 3.36. We believed that the appropriate value for 60 minutes of work for the speech evaluation codes was reflected in CPT code 92522, for which the HCPAC recommended 1.50 RVUs. Because the intraservice time for CPT code 92523 was twice that for CPT code 92522, we assigned a work RVU of 3.0 to CPT code 92523. Similarly, since CPT codes 92524 and 92522 had identical intraservice time recommendations and similar descriptions of work we believed that the work RVU for CPT code 92524 should be the same as the work RVU for CPT code 95922. Therefore, we assigned a work RVU of 1.50 to CPT code 92524.
As detailed in the CY 2014 final rule with comment period, we reviewed new CPT code 93582. Although the RUC compared this code to CPT code 92941 (percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary), which has a work RVU of 12.56 and 70 minutes of intraservice time, it recommended a work RVU of 14.00, the survey's 25th percentile. We agreed with the RUC that CPT code 92941 is an appropriate comparison code and believed that due to the similarity in intensity and time that the codes should be valued with the same work RVU. Therefore, we assigned an interim final work RVU of 12.56 to CPT code 93582.
For CY 2014 we maintained the CY 2013 RVUs for CPT codes 93880 and 93882. We were concerned that the RUC-recommended values for CPT codes 93880 and 93882, as well as our final values for CPT codes 93925 (Duplex scan of lower extremity arteries or arterial bypass grafts; complete bilateral study) and 93926 (Duplex scan of lower extremity arteries or arterial bypass grafts; unilateral or limited study), did not maintain the appropriate relativity within the family and referred the entire family to the RUC to assess relativity among the codes and then recommend appropriate work RVUs. We also requested that the RUC consider CPT codes 93886 (Transcranial Doppler study of the intracranial arteries; complete study) and 93888 (Transcranial Doppler study of the
In CY 2014 we assigned CPT codes 99446, 99447, 99448, and 99449 a PFS procedure status indicator of B (Bundled code. Payments for covered services are always bundled into payment for other services, which are not specified. If RVUs are shown, they are not used for Medicare payment). If these services are covered, payment for them is subsumed by the payment for the services to which they are bundled (for example, a telephone call from a hospital nurse regarding care of a patient) because Medicare pays for telephone consultations regarding beneficiary services as a part of other services furnished to the beneficiary.
In this section, we address interim final direct PE inputs as presented in the CY 2014 PFS final rule with comment period and displayed in the final CY 2014 direct PE database available on the CMS Web site under the downloads at
On an annual basis, the RUC provides CMS with recommendations regarding PE inputs for new, revised, and potentially misvalued codes. We review the RUC-recommended direct PE inputs on a code-by-code basis. When we determine that the RUC recommendations appropriately estimate the direct PE inputs (clinical labor, disposable supplies, and medical equipment) required for the typical service and reflect our payment policies, we use those direct PE inputs to value a service. If not, we refine the PE inputs to better reflect our estimate of the PE resources required for the service. We also confirm whether CPT codes should have facility and/or nonfacility direct PE inputs and refine the inputs accordingly.
In the CY 2014 PFS final rule with comment period (78 FR 74242), we addressed the general nature of some of our common refinements to the RUC-recommended direct PE inputs, as well as the reasons for refinements to particular inputs. In the following sections, we respond to the comments we received regarding common refinements we made based on established principles or policies. Following those discussions, we summarize and respond to comments received regarding other refinements to particular codes.
We note that the interim final direct PE inputs for CY 2014 that are being finalized for CY 2015 are displayed in the final CY 2015 direct PE input database, available on the CMS Web site under the downloads for the CY 2015 PFS final rule at
Prior to CY 2010, the RUC did not generally provide CMS with recommendations regarding equipment time inputs. In CY 2010, in the interest of ensuring the greatest possible degree of accuracy in allocating equipment minutes, we requested that the RUC provide equipment times along with the other direct PE recommendations, and we provided the RUC with general guidelines regarding appropriate equipment time inputs. We continue to appreciate the RUC's willingness to provide us with these additional inputs as part of its PE recommendations.
In general, the equipment time inputs correspond to the service period portion of the clinical labor times. We have clarified this principle, indicating that we consider equipment time as the times within the intra-service period when a clinician is using the piece of equipment plus any additional time that the piece of equipment is not available for use for another patient due to its use during the designated procedure. For services in which we allocate cleaning time to portable equipment items, because the equipment does not need to be cleaned in the room that contains the remaining equipment items, we do not include that time for the remaining equipment items as they are available for use for other patients during that time. In addition, when a piece of equipment is typically used during any additional visits included in the global period for a service, the equipment time would also reflect that use.
We believe that certain highly technical pieces of equipment and equipment rooms are less likely to be used during all of the pre-service or post-service tasks performed by clinical labor staff on the day of the procedure
Some commenters have repeatedly objected to our rationale for refinement of equipment minutes on this basis. We acknowledge the comments we received reiterating those objections to this rationale and refer readers to our extensive discussion in response to those objections in the CY 2012 PFS final rule with comment period (76 FR 73182). In the following paragraphs, we address new comments on this policy.
In general, the pre-service, service period, and post-service clinical labor minutes associated with clinical labor inputs in the direct PE input database reflect the sum of particular tasks described in the information that accompanies the recommended direct PE inputs, commonly called the “PE worksheets.” For most of these described tasks, there are a standardized number of minutes, depending on the type of procedure, its typical setting, its global period, and the other procedures with which it is typically reported. The RUC sometimes recommends a number of minutes either greater than or less than the time typically allotted for certain tasks. In those cases, CMS staff reviews the deviations from the standards to determine their appropriateness. When we do not accept
In general, clinical labor tasks fall into one of the categories on the PE worksheets. In cases where tasks cannot be attributed to an existing category, the tasks are labeled “other clinical activity.” In these instances, CMS staff reviews these tasks to determine whether they are similar to tasks delineated for other services under the PFS. For those tasks that do not meet this criterion, we do not accept those clinical labor tasks as direct inputs.
In section II.A. of this final rule with comment period, we finalize our proposal to accept the RUC recommendation to remove inputs associated with film technology that are associated with imaging services. We acknowledge comments received regarding the minutes allocated to equipment items associated with film technology; we will not address those comments below, because subsequent to the publication of the CY 2014 final rule with comment period, as discussed in section II.A. of this final rule with comment period, we finalized our proposal to remove these inputs from the Direct PE database, and thus the comments are no longer relevant.
In establishing interim final direct PE inputs for services that contain the standard moderate sedation input package, we refined the RUC's recommendation by removing the stretcher (EF018) and adjusting the standard moderate sedation equipment inputs to conform to the standard moderate sedation equipment times. These procedures are listed in Table 17.
We are therefore finalizing the PE inputs for the procedures containing the standard moderate sedation inputs, with the additional refinements of including the stretcher for all of these procedures, removing the power table for the codes noted in Table 17 as containing a power table, and adjusting the equipment time for CPT code 37238. We note that these changes are displayed in the final CY 2015 direct PE input database, available on the CMS Web site under the downloads for the CY 2015 PFS final rule at
In preparing the Direct Practice Expense Input database for CY 2014, we noted that in some cases, there were recommended inputs in the database that were not used in the calculation of the PE RVUs. In cases where inputs are included for a particular service in a particular setting, but that service is not priced in that setting, the inputs are not used. In the documentation files for the CY 2014 final rule, we stated, “In previous years, we have displayed recommended inputs even when these inputs are not used in the calculation of the practice expense relative value units. We note that we are no longer displaying such inputs in these public use files since they are not used in the calculation of the practice expense relative value units that appear in the final rule.”
We note that we received many comments objecting to refinements made based on “CMS clinical review” (including our determination that certain recommended PE inputs were duplicative of others already included with the service), statutory requirements, or established principles and policies under the PFS. We note that for many of our refinements, the specialty societies that represent the practitioners who furnish the service objected to most of these refinements for the general reasons described above or for the reasons we respond to in the “background and methodology” portion of this section, or stated that they supported the RUC recommended PE inputs. Below, we respond to comments in which commenters address specific CPT/HCPCS codes and explain their objections to our refinements by providing us with new information supporting the inclusion of the items and/or times requested. When discussing these refinements, rather than listing all refinements made for each service, we discuss only the specific refinements for which commenters provided supporting information. We indicate the presence of other refinements by noting “among other refinements” after delineating the specific refinements for a particular service or group of services. For those comments that stated that an item was “necessary for the service” and provided no additional rationale or information, we conducted further review to determine whether the inputs as refined were appropriate and concluded that the inputs as refined were indeed appropriate. We also note that in many cases, commenters objected to our indication that items were duplicative, stating that they did not know where the duplication existed. In future rulemaking, we do not intend to respond to comments where the commenters dispute the duplicative nature of inputs unless commenters specifically explain why the relevant items are not duplicative with the identical items included in a room, kit, pack, or tray. We expect that commenters will review the components of the room, kit, pack, or tray included for that procedure prior to commenting that the item is not duplicative. Finally, we note that in some cases we made proposals related to comments received in response to the CY 2014 final rule with comment period. In cases where we have addressed the concerns of commenters in the proposed rule, we do not respond to comments here as well.
In establishing interim final direct PE inputs for CY 2014, CMS accepted the RUC's recommendations for supply item LMX 4% anesthetic cream (SH092).
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 19085, 19086, 19287, and 19288 by removing several new PE inputs, including items called “20MM handpiece—MR,” “vacuum line assembly,” “introducer localization set (trocar),” and “tissue filter,” since we concluded that these items served redundant clinical purposes with other biopsy supplies already included in the PE inputs for these codes. We also removed three new equipment items, described as “breast biopsy software,” “breast biopsy device (coil),” and “lateral grid,” because we determined that these items served clinical functions to items already included in the MR room.
In reviewing the breast biopsy codes, we noted that we inadvertently included supply and equipment items related to breast biopsies in CPT codes 19283, 19284, 19285, 19286, 19087, and 19088, which are procedures that describe the placement of a localization device, not a biopsy. We will therefore remove the items listed in Table 22, which are currently included as direct PE inputs for these procedures. After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for CPT codes 19081, 19082, 19083, 19084, 19085, 19086, 19281, 19282, 19283, 19284, 19285, 19286, 19287, and 19288 as established, with the additional refinements noted above.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 31237 and 31238 by refining the nurse blend (L037D) clinical labor time associated with task “Monitor pt. following service/check tubes, monitors, drains” from 15 minutes to 5 minutes.
In the CY 2013 final rule with comment period, in response to nomination of CPT codes 33282 and 33284 as potentially misvalued codes, we indicated that we did not consider the absence of pricing in a particular setting as an indicator of potentially misvalued codes. However, we requested that the RUC review these codes, including the work RVUs, for appropriate nonfacility and facility inputs.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 37236 and 37237 by including supply item “catheter, balloon, PTA” (SD152) as a proxy for “balloon expandable” because we believed that was an appropriate proxy. The invoices provided with the recommendation did not indicate the items on the PE worksheet with which they were associated.
After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for CPT codes 37236 and 37237 as established with the additional refinement of including “balloon implantable stent” and removing “catheter, balloon, PTA” (SD152).
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 43197 and 43198 to remove the Medical/Technical Assistant (L026A) time associated with clinical labor task “Clean Surgical Instrument Package,” since no surgical instrument package is included in the service, and to remove the endoscopic biopsy forceps (SD066) from CPT code 43198, among other refinements.
For the biopsy forceps, we indicated in the final rule with comment period that the information included with the RUC recommendation suggested that the biopsy forceps was reusable (as suggested by the cleaning time mentioned in this comment). As such, we have created a new equipment item based on the invoice provided with the recommendation and assigned 46 minutes to this equipment item. However, since we did not receive a paid invoice with this item, we will price it at $0 until we receive a paid invoice.
After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for CPT codes 43197 and 43198 as established, with the additional refinement of including 46 minutes for the reusable biopsy forceps.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 43200, 43201. 43202, 43206, 43215, 43216, 43217, 43220, 43226, 43227, 43231, 43232, 43235, 43236, 43239, 43245, 43247, 43248, 43248, 43250, 43251, 43252, 43255, and 43270 by refining the quantity of item “canister, suction” (SD009) from 2 to 1.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 43201 by removing needle, micropigmentation (tattoo) (SC079), as the needle required for this procedure needs to go through an endoscope, and no invoice was provided for this item.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 43201, 43220, 43226, and 43231 by removing supply item “cup, biopsy-specimen non-sterile 4oz” (SL035).
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT code 43220 by substituting supply item “SD019” as a proxy for “SD025.”
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 43220, 43249, and 43270 by removing supply item “guidewire, STIFF” (SD090), among other refinements.
After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for codes 43200, 43201. 43202, 43206, 43215, 43216, 43217, 43220, 43226, 43227, 43231, 43232, 43235, 43236, 43239, 43245, 43247, 43248, 43248, 43250, 43251, 43252, 43255, and 43270 as established, with the additional refinements of including the supply items noted above.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 43450 and 43453 by removing equipment item “endoscope disinfector, rigid or fiberoptic, w-cart” (ES005), and not creating a new item “mobile stand, vital signs monitor,” and other refinements.
In establishing interim final direct PE inputs for CY 2014, CMS accepted the RUC recommendations for CPT codes 62310, 62311, 62318, and 62319. Based on comments received, we made a proposal to maintain the CY 2014 direct PE inputs for CY 2015 while the codes are reexamined for bundling. We are finalizing this proposal, so while we acknowledge comments received on these codes, we will not respond to these comments as the interim final inputs to which the comments relate will not be used for 2015.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT code time by removing the time associated with clinical labor task “Clean Surgical Instrument Package” and removing supply item “pack, cleaning, surgical instruments” (SA043) since no surgical
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 64616, 64642, 64644, 64646, and 64647 by reducing the minutes allocated to “table, exam” (EF023) and removing the time associated with clinical labor task “Complete botox log,” as well as reducing the L037D time for clinical labor “assist physician performing procedure” for CPT code 64616, among other refinements.
After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for CPT codes 64616, 64642, 64644, 64646, and 64647 as established, with the additional refinement of adjusting the minutes for the exam table as indicated above and adding 2 minutes of clinical labor for the “assist physician” task for 64616.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 70551, 70552, and 70553 by adjusting the time for clinical labor task “assist physician in performing procedure/acquire images,” removing 2 minutes of clinical labor time for clinical labor task “escort patient from exam room due to magnetic sensitivity,” removing supply items “gauze,sterile 2in x 2in” (SG053), “tape, phix strips (for nasal catheter)” (SG089), “povidone swabsticks (3 pack uou” (SJ043), and “swab-pad, alcohol” (SJ 053) from CPT codes 70552 and 70553, among other refinements.
After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for CPT codes 70551, 70552, and 70553, with the additional refinement of including 2 minutes of clinical labor time as noted above.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 72141, 72142, 72146, 72147, 72149, 72156, 72157, and 72158 by removing 2 minutes of clinical labor time for clinical labor task “escort patient from exam room due to magnetic sensitivity,” and other refinements.
After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for CPT codes 72141, 72142, 72146, 72147, 72149, 72156, 72157, and 72158, with the additional refinement of including 2 minutes of clinical labor time and including the supply pack for the services noted above.
In establishing interim final direct PE inputs for CY 2014, when reviewing CPT code 36245, which was identified through a misvalued code screen of codes reported together more than 75 percent of the time, we noted that it was frequently billed with 75726. We then noted that these two services had identical time for “assist physician in performing procedure,” and since the time for 36245 was reduced from 73 to 45 minutes, refined the clinical labor time for 75726 to correspond to this change.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT code 77373 by refining the equipment time for “pulse oximeter w-printer” (EQ211) and “SRS system, SBRT, six systems, average” (ER083) to conform to established equipment policies.
For CY 2014, we also eliminated several anomalous supply inputs included in the direct PE database, which affected 77422 and 77423, among other services.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT code 77600 by refining the time allocated to equipment item “hyperthermia system, ultrasound, external” (ER035) and removing the time associated with clinical labor task “clean scope,” among other refinements.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 77785, 77786, and 77787 to remove “Emergency service container—safety kit,” as we consider it an indirect PE.
When reviewing the interim final direct PE inputs for these services, we noted that the specialty societies conducted a survey of the technicians, which revealed higher procedure times than the current procedure times. However, since the RUC indicated that they did not have “compelling evidence,” the specialty society did not request the higher procedure times. We believe that if the specialty society believes that the code is undervalued relative to the expert panel value, and there is no indication that the survey was flawed, the specialty society should recommend the use of the surveyed procedure times. In doing so, the specialty society would give CMS the opportunity to consider the information provided alongside the RUC recommended times. We believe that surveys of technicians have the potential to be more accurate, rather than less accurate, than those of physicians, as the technicians do not have incentives to increase the surveyed time. We suggest that rather than attempting to insert items that are not standard in the PE methodology, that specialty societies make a strong, data-driven case, for why the survey times are correct.
After consideration of the comments received, we are finalizing the CY 2014 interim final direct PE inputs for CPT codes 77785, 77786, and 77787 as established.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT code 88112 by removing the clinical labor time associated with several clinical labor tasks, including “Order, restock, and distribute specimen containers with requisition forms,” “Perform screening function (where applicable),” “Confirm patient ID, organize work, verify and review history,” and “Enter screening diagnosis in laboratory information system, complete workload recording logs, manage any relevant utilization review/quality assurance activities and regulatory compliance documentation and assemble and deliver slides with paperwork to pathologist.”
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 93880 and 93882 by removing the equipment time allocated for equipment items “video SVHS VCR (medical grade)” (ED034) and “video printer, color (Sony medical grade)” (ED036), and refining the equipment time for “computer desktop, w-monitor”
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 95816, 95819, and 95822 by refining the equipment time allocated to equipment item “EEG, digital, testing system (computer hardware, software & camera)” (EQ330), among other refinements.
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes, we accepted the RUC's recommendation to include a new clinical labor type called “child life specialist.”
In establishing interim final direct PE inputs for CY 2014, CMS refined the RUC's recommendations for CPT codes 88342 and 88343 by creating G-codes G0461 and G0462 and refining the inputs for these services. We acknowledge comments regarding the refinements CMS made to these inputs, as well as comments indicating that the direct practice expense inputs for these procedures implied that the reporting would be different than the reporting implied by the code descriptors. We note that the RUC has subsequently reviewed CPT codes 88342 and 88343 again and we present the interim final values for 2015 in this final rule with comment period. Therefore, we will not address specific comments regarding G0461 and G0462 except, as discussed below, as they pertain to errors identified with regard to the pricing of supplies.
In accordance with our malpractice methodology, we adjusted the malpractice RVUs for the CY 2014 new/revised/potentially misvalued codes for the difference in work RVUs (or, if greater, the clinical labor portion of the PE RVUs) between the source codes and the new/revised codes to reflect the specific risk-of-service for the new/revised codes. The interim final malpractice crosswalks were listed in Table 30 of the CY 2014 PFS final rule with comment period.
We received only one comment on our CY 2014 interim final cross walks. As detailed in the CY 2014 final rule with comment period, we assigned malpractice crosswalk of CPT code 31575 (Laryngoscopy, flexible fiberoptic; diagnostic) to CPT codes 43191–43195 and CPT code 31638 (Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with revision of tracheal or bronchial stent inserted at previous session (includes tracheal/bronchial dilation as required)) to CPT code 43196.
We received no comments on the CY 2014 interim final malpractice crosswalks and are finalizing them without modification for CY 2015.
The malpractice RVUs for these services are reflected in Addendum B of this CY 2014 PFS final rule with comment period. Since we are finalizing a five-year review of MP RVUs in this final rule with comment period, the MP RVUs assigned to this codes will also be affected by the updates due to this review. For details on the review, see section II.C.
For all other new, revised, or potentially misvalued codes with CY 2014 interim final RVUs that are not
In the CY 2015 proposed rule, we proposed CY 2015 work values for several codes. Table 24 contains a list of these codes and the final CY 2015 work RVUs. For more information on these codes and the establishment of the values, see section II.Bof this final rule with comment period.
Table 25 contains the CY 2015 interim final work RVUs for all codes for which we received RUC recommendations for CY 2015 and G-codes with interim final values for CY 2015. These values are subject to public comment. The column labeled “CMS Time Refinement” indicates whether CMS refined the time values recommended by the RUC or HCPAC.
This section discusses codes for which the interim final work RVU or time values assigned for CY 2015 vary from those recommended by the RUC or for which we do not have RUC recommendations.
For CY 2015, the CPT Editorial Panel deleted CPT code 21810 (Treatment of rib fracture requiring external fixation (flail chest)) and replaced it with three CPT codes 21811, 21812 and 21813, to report internal fixation of rib fracture. The RUC recommended valuing these three codes as 90-day global services. For the reasons we articulate in section II.B.4 of this final rule with comment period about the difficulties in accurately valuing codes as 90-day global services, we believe that the valuation of these codes should be as 0-day global services. In addition, we believe this is particularly appropriate for these codes because the number of RUC-recommended inpatient and outpatient visits included in the postservice time seems higher than would likely occur. The vignette for CPT code 21811 describes an elderly patient who falls and experiences three rib fractures that require internal fixation. The seven visits included in the postservice time for this code seem high since the vignette does not describe a very ill patient. The vignettes for CPT codes 21812 and 21813 describe patients experiencing significant rib fractures in car accidents that require internal fixation. We believe that in these scenarios, injuries beyond rib fractures are likely, and as a result, we believe it is likely that multiple practitioners would be involved in providing post-operative care. If other practitioners would furnish care in the post-surgery period, we believe the ten and thirteen postservice visits included in CPT codes 21812 and 21813 would likely not occur. By valuing these codes as 0-day globals, we do not need to address these issues because the surgeon will be able to bill separately for the postoperative services that are furnished after the day of the procedure.
To value these services as 0-day global codes, we subtracted the work RVUs related to the postoperative services from the total work RVU. We are establishing CY 2015 interim work RVUs of 10.79 for CPT code 21811, of 13.00 for CPT code 21812, and of 17.61 for CPT code 21813. We also refined the RUC recommended time by subtracting the time associated with the postoperative visits. By removing the work and time associated with visits in the postoperative period, the remaining work and time reflect the work and time of services furnished on the day of surgery.
For CY 2015, the CPT Editorial Panel replaced the eight existing percutaneous vertebroplasty with six new codes, CPT codes 22510–22515, which include the percutaneous vertebroplasty and the image guidance together. We are establishing the RUC-recommended work values as interim final for CY 2015 for all of the codes in this family except CPT code 22511.
Unlike other codes in this family for which the RUC-recommended work RVU was based on the 25th percentile in the survey, the RUC established its recommended work value for CPT code 22511 by crosswalking this service to CPT code 39400 (Mediastinoscopy, includes biopsy(ies), when performed), which has a work RVU of 8.05. Because the level of work performed by a physician in the two services differs, we do not agree that this crosswalk is appropriate. Instead, we believe a more appropriate analogy is found in the difference between the work values for the predecessor codes for CPT codes 22510 and 22511, CPT codes 22520 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection; thoracic) and 22521 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection; thoracic; lumbar). Accordingly, we are applying the difference in the current work RVUs for CPT codes 22520 and 22521 to the work RVU that we are establishing for CPT code 22510. We believe this increment establishes the appropriate rank order in this family and thus are assigning an interim final work RVU of 7.58 for CPT code 22511, which is 0.57 work RVUs lower than the CY 2015 work RVU for CPT code 22510.
For CY 2015, the RUC reviewed CPT code 31620 because it was identified through the High Volume Growth Services, which are those services for which Medicare utilization increased by at least 100 percent from 2006 to 2011. CPT code 31620 is an add-on code to CPT code 31629 (Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with transbronchial needle aspiration biopsy(s), trachea, main stem and/or lobar bronchus(i)).
Medicare data show that 82 percent of the time when EBUS is billed it is billed with CPT code 31629. Given this relationship, we believe that CPT code 31620 should be bundled with CPT code 31629. The specialty societies maintain that EBUS is distinct from bronchoscopy with biopsy because the intraservice work of EBUS occurs between the two components of the base code, bronchoscopy and biopsy. However, based upon the discussion at the RUC meeting, we believe that the biopsy actually occurs during the EBUS and the biopsy is actually performed through the EBUS scope. Thus, we do not believe the EBUS code descriptor accurately describes the service nor is it possible to accurately value this service when the descriptor is inaccurate. Therefore, for CY 2015 we are maintaining the CY 2014 work RVU for
In the CY 2014 PFS final rule with comment period, CPT codes 33960 (Prolonged extracorporeal circulation for cardiopulmonary insufficiency; initial day) and 33961 (Prolonged extracorporeal circulation for cardiopulmonary insufficiency; each subsequent day) were identified as potentially misvalued codes. Specifically, the services were originally valued when they were primarily provided to premature neonates; but the services are now typically used in treating adults with severe influenza, pneumonia, and respiratory distress syndrome. For CY 2015, CPT codes 33960 and 33961 were deleted and replaced with 25 new codes to describe this treatment. We are assigning the RUC-recommended work values as interim final for CY 2015 for all of the codes in this family except CPT codes 33952, 33953, 33954, 33957, 33958 and 33959, 33962, 33969, and 33984.
We accepted the RUC-recommended work RVU of 8.15 for CPT code 33951, which describes an ECMO peripheral cannula(e) insertion for individuals up to 5 years of age. The RUC recommended a work RVU of 8.43 for CPT code 33952, which describes the same procedure for individuals 6 years and older. We do not believe this difference in the age of the patient increases the work of the service from the younger patient. The fact that the RUC-recommended intraservice time is identical for both codes supports our view that the work RVU should be the same for both codes. Therefore, for CY 2015, we are establishing an interim final work RVUs of 8.15 for CPT code 33952, the same as we established for CPT 33951 based upon the RUC-recommendation for the younger patient.
The RUC recommended work RVUs of 9.83 and 9.43 for CPT codes 33953 and 33954, respectively. For the same reasons discussed above, we are establishing the same work values for the code for treatment of patients from birth through 5 years of age and the code for treatment of patients 6 years and older. To determine the value for these codes, we adjusted the work RVU of the equivalent percutaneous codes, CPT code 33951 (Extracorporeal membrane oxygenation (ECMO)/extracorporeal life support (ECLS) provided by physician; insertion of peripheral (arterial and/or venous) cannula(e), percutaneous, birth through 5 years of age (includes fluoroscopic guidance, when performed)) and CPT code 33952 (Extracorporeal membrane oxygenation (ECMO)/extracorporeal life support (ECLS) provided by physician; insertion of peripheral (arterial and/or venous) cannula(e), percutaneous, 6 years and older (includes fluoroscopic guidance, when performed)), to reflect the greater work of the open procedure codes, CPT codes 33953 (Extracorporeal membrane oxygenation (ECMO)/extracorporeal life support (ECLS) provided by physician; insertion of peripheral (arterial and/or venous) cannula(e), open birth, through 5 years of age) and 33954 (Extracorporeal membrane oxygenation (ECMO)/extracorporeal life support (ECLS) provided by physician; insertion of peripheral (arterial and/or venous) cannula(e), open, 6 years and older). To measure the difference in work between these two sets of codes we applied the 0.96 RVU differential between the percutaneous arterial CPT code 33620 (Application of right and left pulmonary artery bands (for example, hybrid approach stage 1)) and the open arterial CPT code 36625 (Arterial catheterization or cannulation for sampling, monitoring or transfusion (separate procedure); cutdown) codes. This measure allows us to establish the difference in work between the sets of codes based upon the difference in intensity. Accordingly, we are assigning an interim final work RVU to CPT codes 33953 and 33954 of 9.11.
Unlike other codes in this family for which the RUC-recommended work value was based upon the 25th percentile of the survey, for CPT codes 33957 and 33958 the RUC recommended a work RVU of 4.00 and 4.05, respectively, based upon the survey median. We believe that, like other services in this family, these codes should be valued based upon the 25th percentile values of the survey because those values best describe the work involved in these procedures and results in the appropriate relativity amongst the codes in the family. Therefore, for CY 2015 we are assigning an interim final work RVU of 3.51 for CPT codes 33957 and 33958.
We believe the RUC-recommended work RVUs of 4.69 and 4.73 for CPT codes 33959 and 33962 respectively, overstate the work involved in the services. As we discussed above for CPT codes 33953 and 33954, we believe the differential between the percutaneous arterial and open arterial CPT codes more appropriately reflects the work involved in these services. Accordingly we are establishing a CY 2015 interim final work RVU of 4.47 for CPT codes 33959 and 33962.
After researching comparable codes, we believe the RUC-recommended work RVUs of 6.00 and 6.38 for CPT codes 33969 and 33984, respectively, overstates the work involved in the procedures. For the same reasons and following the same valuation methodology utilized above, we added the differential between the percutaneous arterial and arterial cutdown codes, 0.96 RVU, to the CY 2015 interim final work RVU of 4.50 for CPT code 33966, which is the percutaneous counterpart of CPT code 33984. This results in a work RVU of 5.46 for CPT code 33984. Because CPT code 33969 has 2 minutes less intraservice time than CPT code 33984 (Extracorporeal membrane oxygenation (ECMO)/extracorporeal life support (ECLS) provided by physician; removal of peripheral (arterial and/or venous) cannula(e), open, 6 years and older), we adjusted the work RVU of CPT code 33984 for the decrease in time to get a work RVU of 5.22 for CPT code 33969 (Extracorporeal membrane oxygenation (ECMO)/extracorporeal life support (ECLS) provided by physician; removal of peripheral (arterial and/or venous) cannula(e), open, birth through 5 years of age). Therefore, for CY 2015 we are establishing an interim final work RVU of 5.46 to CPT code 33984 and 5.22 to CPT code 33969.
For CY 2015, CPT code 34839 was created to report the planning that occurs prior to the work included in the global period for a FEVAR. The RUC recommended that we contractor price this service as the RUC survey response rate was too low to provide the basis for an appropriate valuation. In general, we prefer that planning be bundled with the underlying service, and we have no reason to believe bundling is not appropriate in this case. Accordingly, we are assigning a PFS procedure status indicator of B (Bundled Code) to CPT code 34839.
In the CY 2013 PFS final rule with comment period, the AV anastomosis family of services were determined to be potentially misvalued due to rank order anomalies, including CPT codes 36818–36821 and CPT codes 36825–36830. The RUC recommendations that we received
For CPT code 36819, the RUC-recommended intraservice and total times are only minimally different than the current times. Even though the intraservice and total times decreased minimally, the RUC increased the work RVU. We believe that the small decrease in total time, 2 percent, suggest that the current work RUV is appropriate. Therefore, we are assigning a CY 2015 interim final work RVU of 13.29, which is the current work value.
The RUC recommended a work value of 13.99 for CPT code 36820. The RUC recommended that the postservice time of CPT code 36820 be reduced by removing visits. Specifically, a CPT code 99231 and one-half of a CPT code 99238 were removed from the service, which would equal 1.40 RVU. We do not believe that this reduction was accounted for in the RUC-recommended work RVU. To account for this reduction in visits, we are establishing a CY 2015 interim final work RVU of 13.07 for CPT 36820 which reflects a 1.40 work RVU reduction in the current work RVU.
For CPT code 36825, the RUC-recommended intraservice and total times are only minimally different than the current times. However, the RUC increased the work RVU. We do not believe the work RVU should be increased without corresponding time changes. Therefore, we believe the appropriate CY 2015 interim final work RVU is the current work value of 14.17. For CPT code 36830, the RUC-recommended intraservice and total times are only minimally different than the current times. However, the RUC decreased the work RVU. We do not believe the work RVU should be decreased without corresponding time changes. Therefore, we are establishing a CY 2015 interim final work RVU of 12.03, which is equal to the current work RVU.
Furthermore, we refined the total time values as follows: 238 minutes for CPT code 36831, 266 minutes for CPT code 36832, and 296 minutes for CPT code 36833.
CPT revised the lower gastrointestinal endoscopy code set for CY 2015 following identification of some of the codes as potentially misvalued and the affected specialty society's contention that this code set did not allow for accurate reporting of services based upon the current practice. The RUC subsequently provided recommendations to CMS for valuing these services. In comments on the proposed rule, stakeholders noted our proposal to begin including proposed values for new, revised and potentially misvalued codes in the proposed rule. Commenters suggested that, rather than implementing this new process in CY 2016, we should implement it immediately and thus defer the valuation of the new GI code set until CY 2016. They indicated that the opportunity to comment prior to implementation of the new values was important for these codes, many of which have high utilization. In addition, in this final rule with comment period we discuss the need to modify how moderate sedation is reported and valued. Since the valuation of most codes in this code set includes moderate sedation, stakeholders suggested that we revalue these codes in conjunction with any changes in reporting and valuation of moderate sedation.
We agree with the commenters. In light of the substantial nature of this code revision and its relationship to the policies on moderate sedation, we are delaying revaluation of these codes until CY 2016 when we will be able to include proposals in the proposed rule for their valuation, along with consideration of policies for moderate sedation. Accordingly for CY 2015, we are maintaining the inputs for the lower gastrointestinal endoscopy codes at the CY 2014 levels. (Note: Due to budget neutrality adjustments and other system-wide changes, the payment rates may change.) Since the code set is changing for CY 2015, including the deletion of some of the CY 2014 codes, we are creating G-codes as necessary to allow practitioners to report services to CMS in the same way in CY 2015 that they did in CY 2014 and to maintain payment under the PFS based on the same inputs. All payment policies applicable to the CY 2014 CPT codes will apply to the replacement G-codes. The new and revised CY 2015 CPT codes for lower gastrointestinal endoscopy that will not be recognized by Medicare for CY 2015 are denoted with an “I” (Not valid for Medicare purposes) in Table 26. The chart below lists the G-codes that we are creating and the CY 2014 CPT codes that they are replacing.
In the CY 2014 PFS final rule with comment period, we finalized CPT codes 55842 and 55845 as potentially misvalued codes. For CY 2015, the RUC provided recommendations for these services of 29.07 and 24.16, respectively. We disagreed with the RUC-recommended crosswalk for CPT code 55842. To value CPT code 55842, we are crosswalking it to CPT code 55840 (Prostatectomy, retropubic radical, with or without nerve sparing) due to their identical times. Therefore, we are establishing an interim final work RVU of 21.36.
For CPT code 55845, we are establishing a work RVU of 25.18 based upon the 25th percentile of the survey. This work RVU results in an 18 percent decrease from the current work RVU, which we believe reflects the changes since the last valuation, based upon a 20 percent decrease in intraservice time and the 29 percent decrease in total time.
After identifying CPT code 66180 through the Harvard-Valued Annual Allowed Charges Greater than $10 million screen, the RUC recommended work RVUs for the aqueous shunt family for CY 2015. We are establishing the RUC-recommended work RVUs as interim final for all codes in this family except CPT code 67255. The RUC recommended maintaining the CY 2014 work RVU of 10.17 for CPT 67255. However, we believe maintaining this value would be inconsistent with the RUC-recommended decreases in total time for the service. As a result, we reduced the work RVU by the same percentage that the RUC recommended a reduction in total time, which results in a CY 2015 interim final work RVU of 8.38 for CPT code 67255.
The RUC's Relativity Assessment Workgroup identified CPT code 70486 for review through the CMS/Other Source—Utilization over 250,000 screen. The involved specialty societies expanded the survey to include CPT codes 70487 and 70488, all of which involve maxillofacial CTs. We are establishing the RUC-recommended work RVU of 0.85 as the CY 2015 interim final value for CPT code 70486, which is without contrast material. The RUC established this recommendation by crosswalking this code to the equivalent code in the CT for the head or brain, CPT code 70450 (Computed tomography, head or brain without contrast). We agree with that method and in order to maintain rank order within and across CT families, we crosswalked CPT code 70487, which is with contrast material(s), to the CPT code 70460, which is the equivalent code in the head or brain family and CPT code 70488, which is without contrast materials followed by contrast material(s) and further sections to CPT code 70470, which is the equivalent code in the head or brain family. Therefore, for CY 2015 we are establishing interim final work RVUs of 1.13 for CPT code 70487 and 1.27 for CPT code 70488.
For CY 2015, the CPT Editorial Panel replaced CPT code 76645 (Ultrasound, breast(s) (unilateral or bilateral), real time with image documentation) with two codes, CPT codes 76641 (Ultrasound, breast, unilateral, real time with image documentation, including axilla when performed; complete) and 76642 (Ultrasound, breast, unilateral, real time with image documentation, including axilla when performed; limited). The difference between the new codes is that one is for complete breast ultrasound procedures and the other is for limited. We are assigning the RUC-recommended work RVUs of 0.73 and 0.68 to CPT codes 76641 and 76642, respectively, as interim final. One difference between the predecessor code and the new ones is that while the predecessor code was used to report unilateral or bilateral breast ultrasounds, the new codes are unilateral ones. To appropriately adjust payment when bilateral procedures are furnished under the PFS, payments are adjusted to 150 percent of the unilateral payment when a service has a bilateral payment indicator assigned. We are assigning a bilateral payment indicator to these codes.
CPT revised the radiation therapy code set for CY 2015 following identification of some of the codes as potentially misvalued and the affected specialty society's contention that the provision of radiation therapy could not be accurately reported under the existing code set. The RUC subsequently provided recommendations to CMS for valuing these services. Some stakeholders approached CMS with concerns about these codes being revalued as interim final in the final rule with comment period, noting that these codes account for the vast majority of Medicare payment for radiation therapy centers. They noted our proposal to begin including proposals to value new, revised and potentially misvalued codes in the proposed rule, and suggested that these code valuations should be delayed to CY 2016 so that they could be addressed under this new process. This would provide affected
In response to comments and in light of the substantial nature of this code revision, we are delaying revaluation of these codes until CY 2016. The coding changes for CY 2015 involve significant changes in how radiation therapy services and associated image guidance are reported. There is substantial work to be done to assure the new valuations for these codes accurately reflect the coding changes. Accordingly we are delaying the use of the revised radiation therapy code set until CY 2016 when we will be able to include proposals in the proposed rule for their valuation. We are maintaining the inputs for radiation therapy codes at the CY 2014 levels. (Note: Due to budget neutrality adjustments and other system-wide changes, the payment rates may change.) Since the code set has changed and some of the CY 2014 codes are being deleted, we are creating G-codes as necessary to allow practitioners to continue to report services to CMS in CY 2015 as they did in CY 2014 and for payments to be made in the same way. All payment policies applicable to the CY 2014 CPT codes will apply to the replacement G-codes. The new and revised CY 2015 CPT codes that will not be recognized by Medicare for CY 2015 are denoted with an “I” (Not valid for Medicare purposes) on Table 27. The chart below lists the G-codes that we are creating and the CY 2014 CPT codes that they are replacing.
Additionally, we would like to note that changes to the prefatory text modify the services that are appropriately billed with CPT code 77401, which is used to report superficial radiation therapy. This change effectively means that CPT code 77401 is now bundled with many other procedures supporting superficial radiation therapy. However, the RUC did not review superficial radiation therapy procedures, and therefore, did not assess whether changes in its valuation were appropriate in light of this bundling. Stakeholders have suggested to us that the change to the prefatory text prohibits them from billing for codes that were previously frequently billed in addition to this code and as a result there will be a significant reduction in their payments.” We are interested in information on whether the new code set combined with modifications in prefatory text allows for appropriate reporting of the services associated with superficial radiation and whether the payment continues to reflect the relative resources required to furnish superficial radiation therapy services.
For CY 2015,
In the proposed rule, based upon our belief that digital mammography is now typical, we proposed to replace the G-codes that currently describe all digital mammography services under Medicare with the CPT codes, to value the CPT codes for CY 2015 based upon the current G-code values, and to include the CPT codes on the potentially misvalued code list since the resources involved in furnishing these services had not been evaluated in more than a decade. Having reassessed the proposal in light of the new codes and RUC recommendations for tomosynthesis and the comments received upon our proposal, we are finalizing a modified proposal. For a discussion of our proposal, a summary of the comments we received, and our policy for CY 2015, see section II.B.4.
With regard to screening mammography, the CPT coding system now has an add-on CPT code for tomosynthesis. This coding scheme is consistent with the FDA requiring a 2–D mammography when tomosynthesis is used for screening purposes. Accordingly, we will recognize CPT code 77063 to be reported, when tomosynthesis is used in addition to 2–D mammography. Since CPT code 77063 is an add-on code, and does not have an equivalent CY 2014 code, we believe it is appropriate to value it on an interim final basis in advance of receiving the RUC recommendations for other mammography services. We are assigning it a CY 2015 interim final work RVU of 0.60 as recommended by the RUC.
Whenever feasible, it is our strong preference to value entire families together in order to avoid rank order anomalies. In this final rule with comment period, we are including the codes for digital mammography on the potentially misvalued code list, which currently includes tomosynthesis as well as 2–D mammography. Accordingly, we will wait to value the new diagnostic mammography tomosynthesis codes until we have received recommendations from the RUC for all mammography services. In the interim, we are assigning a PFS indicator of “I” to 77061 and 77062. Those furnishing diagnostic mammography using tomosynthesis will continue to report G0204 and G0206 as appropriate. In addition, we are creating a new code, G–2079 (Diagnostic digital breast tomosynthesis, unilateral or bilateral (List separately in addition to G0204 or G0206)) as an add-on code that should be reported in addition to the relevant 2–D diagnostic mammography G-code to recognize the additional resources involved in furnishing diagnostic breast tomosynthesis. We will assign it the same inputs as CPT code 77063 because we believe it describes a similar service.
For CY 2015, the CPT Editorial Panel replaced six CPT codes (77305, 77310, 77315, 77326, 77327, and 77328) with five new CPT codes to bundle basic dosimetry calculation(s) with teletherapy and brachytherapy isodose planning. We are establishing the RUC-recommended work RVUs for CY 2015 for all of the codes in this family except CPT code 77316. We disagree with the RUC-recommended crosswalk for this service because we do not believe it is an appropriate match in work. The RUC crosswalked CPT code 77318 to CPT code 77307, both of which are complex isodose planning codes in the same family. We believe that the RUC should have crosswalked CPT code 77316, a simple isodose planning code, to the corresponding simple isodose planning code in the same family, CPT code 77306. Therefore, for CY 2015 we are establishing an interim final work RVU of 1.40 for CPT code 77316.
In the CY 2014 PFS final rule with comment period (78 FR 74341), we assigned a status indicator of I (Not valid for Medicare purposes) to CPT codes 88341, 88342, and 88343 and instead created two G-codes, G0461 and G0462, to report immunohistochemistry services. We did this in part to avoid creating incentives for overutilization. For CY 2015, the CPT coding was revised with the creation of two new CPT codes, 88341 and 88344, the revision of CPT code 88342 and the deletion of CPT code 88343. We believe that the revised coding structure addresses the concerns that we had with the CY 2014 coding regarding the creation of incentives and overutilization. Accordingly, we are deleting the G-codes and assigning interim final values for these CPT codes for CY 2015. We are establishing the RUC-recommended work RVUs as interim final for CY 2015 for CPT codes 88342 and 88344.
In the past for similar procedures in this family, the RUC recommended a work RVU for the add-on code that was 60 percent of the base code. For example, the RUC-recommended work RVU for CPT code 88334 (Pathology consultation during surgery; cytologic examination (for example, touch prep, squash prep), each additional site (List separately in addition to code for primary procedure)) is 60 percent of the work RVU of the base CPT code 88333 (Pathology consultation during surgery; cytologic examination (for example, touch prep, squash prep), initial site). Similarly, the RUC-recommended work RVU for CPT code 88177 (Cytopathology, evaluation of fine needle aspirate; immediate cytohistologic study to determine adequacy for diagnosis, each separate additional evaluation episode, same site (List separately in addition to code for primary procedure)) is 60 percent of the recommended value for the base CPT code 88172 (Cytopathology, evaluation of fine needle aspirate; immediate cytohistologic study to determine adequacy for diagnosis, first evaluation episode, each site). We believe that the relative resources involved in furnishing an add-on service in this family would be reflected appropriately using the same 60 percent metric. To value CPT code 88341, we calculated 60 percent of the work RVU of the base CPT code 88342, which has a work RVU of 0.70; resulting in a work RVU of 0.42 for CPT code 88341.
For CY 2014, the in situ hybridization procedures, CPT codes 88365, 88367 and 88368, were revised to specify “each separately identifiable probe per block;” three new add-on codes (CPT codes 88364, 88373, 88369) were created to specify “each additional
CPT code 88367 is the computer assisted version of morphometric analysis, analogous to 88368 which is the manual version. We have accepted the RUC recommended work RVU of 0.88 for 88368 which has 30 minutes of intraservice time. CPT code 88367 only has 25 minutes of intraservice time and we do not believe that the RUC recommended work RVU of 0.86 adequately reflects that change in time. We believe that the ratio of the intraservice times (25/30) applied to the work RVU (0.88) adequately reflects the difference in work. Therefore, we are assigning an interim final work RVU to CPT code 88367 of 0.73.
Similarly, CPT code 88374 is the computer assisted version of CPT code 88377 but with a drop in intraservice time from 45 minutes to 30 minutes. We believe applying this ratio to the work RUV of 88377 more accurately reflects the work. Therefore, we are assigning an interim final work RVU to CPT code 88374 of 0.93.
As discussed in the previous section, some of the add-on codes in this family had RUC-recommended work RVUs that were 60 percent of the work RVU of the base procedure and we applied that reduction to 88341. We believe this accurately reflects the resources used in furnishing these add-on codes. Accordingly, we used this methodology to establish interim final work RVUs of 0.53 for code 88364 (60 percent of the work RVU of CPT code 88365); 0.53 for CPT code 88369 (60 percent of the work RVU of CPT code 88368); and 0.43 for CPT code 88373 (60 percent of the work RVU of CPT code 88367).
After the RUC identified CPT code 92543 as potentially misvalued through the CMS-Other Source—Utilization over 250,000 screen, CPT revised the parentheticals for this code for CY 2015. We received RUC recommendations for CY 2015 for this code and other codes in the family. We are assigning the RUC-recommended work values for CPT codes 92270, 92540, 92541, 92542, 92544, and 92545. For CPT code 92543, however, we have been informed by the RUC that survey respondents may not have understood the revised code description for CPT code 92543, and thus the survey data may be unreliable. As a result, we believe the most accurate information upon which to base work RVUs for CPT code 92543 is its existing work RVU. Therefore, we are establishing a work RVU of 0.10 for CPT code 92543 as interim final for CY 2015.
For CY 2015, CPT code 93355 was created to describe transesophageal echocardiography during interventional cardiac procedures. The RUC provided recommendations for CPT code 93355, and for CPT codes 93312–93318 in order to ensure intra-family relativity. We are establishing the RUC-recommended work RVU of 2.40 as interim final for CY 2015 for CPT code 93318 and 4.66 for CPT code 93355.
The RUC based the work RVU for CPT code 93312 upon a crosswalk to CPT code 43247 (Esophagogastroduodenoscopy, flexible, transoral; with removal of foreign body). This code has significant differences from CPT code 93312. We have been unable to identify a CPT code with 30 minutes of intraservice time and 60 minutes of total time with a work RVU higher than 2.55. We believe this service is more similar to CPT code 75573 (Computed tomography, heart, with contrast material, for evaluation of cardiac structure and morphology in the setting of congenital heart disease (including 3D image postprocessing, assessment of LV cardiac function, RV structure and function and evaluation of venous structures, if performed) since it has similar work, time and the same global period. Based upon this crosswalk, we are assigning CPT code 93312 a CY 2015 interim final work RVU of 2.55.
Due to CPT descriptor for CPT code 93315, we believe that the appropriate work for this service is reflected in the combined work of CPT codes 93316 and 93317, resulting in a CY 2015 interim final work RVU of 2.94.
For CPT codes 93313, 93314, 93316 and 93317, we are assigning CY 2015 interim final work RVUs based upon the 25th percentile values from the survey: 0.51 for CPT code 93313, 2.10 for CPT code 93314, 2.94 for CPT code 93315, 0.85 for CPT code 93316, 2.09 for CPT code 93317, and 4.66 for CPT code 93355. Each of these codes had a significant drop in intraservice time since the last valuation and RUC recommendations for higher work RVUs. As we have stated in the absence of information showing a change in intensity, we believe meaningful changes in time should be reflected in the work RVUs. For these codes, we believe the 25th percentile survey values better describe the work and time involved in these procedures than the RUC recommendations and also help maintain appropriate relativity in the family. Additionally, we are refining the preservice and intraservice times for CPT codes 93314 and 93317 to 10 and 20 minutes, respectively, to maintain relativity among the interim final work RVUs and times.
For CY 2015, the CPT Editorial Panel added the word “implantable” to the descriptors for several codes in this family and created several new codes, CPT codes 33270, 33271, 33272, 33272, 93260, 93261 and 93644. We received RUC recommendations for the new and revised codes. We are establishing the RUC-recommended work RVUs for all of the codes in this family except CPT code 93644. This code has an intraservice time of 20 minutes and a total time of 84 minutes. We disagree with the RUC-recommended crosswalk for CPT code 93644 which has an intraservice time of 29 minutes and a total time of 115 minutes and believe that a crosswalk to CPT code 32551 would be better as that code's intraservice time is 20 minutes and the total time is 83 minutes. Therefore, we are establishing a CY 2015 interim final work RVU of 3.29 for CPT code 93644.
In the CY 2013 PFS final rule with comment period, we requested that the RUC assess the relativity among the entire family of duplex scans codes and recommend appropriate work RVUs. CMS also requested that the RUC consider CPT codes 93886, Transcranial Doppler study of the intracranial arteries; complete study, and 93888, Transcranial Doppler study of the intracranial arteries; limited study, in conjunction with the duplex scan codes in order to assess the relativity between and among those codes. The RUC reviewed this entire family of codes and provided recommendations for CY 2015. For CY 2015, we are establishing the RUC-recommended work RVUs as interim final for all of the codes in the family except CPT codes 93886, 93888, 93926, 93975, 93976, 93977, 93978, and 93979.
For several codes in this family with 10 minutes of intraservice time, the RUC recommended 0.50 work RVUs. We
For several codes in this family with 15 minutes of intraservice time, the RUC recommended work RVUs based upon the survey 25th percentile. We find this to appropriately reflect the work involved. Accordingly, for CPT codes 93975, 93976, and 93978, which all have 15 minutes of intraservice time, we are disagreeing with the RUC work RVU recommendations and assigning the 25th percentile of the survey as CY 2015 interim final values. Therefore, for CY 2015 we are establishing the following interim final work RVUs: 1.16 for CPT code 93975, 0.80 for CPT code 93976, 0.80 for CPT code 93978 and 0.50 for CPT code 93979. Lastly, we believe that the RUC recommendation for CPT code 93886 overvalues the work involved. We accepted the RUC recommendation for CPT code 93880 of 0.80 with an intraservice time of 15 minutes. CPT code 93886 has an intraservice time of 17 minutes. Applying the work RVU to time ratio of CPT code 93880 to the intraservice time of CPT code 93886 (results in our interim final value of 0.91 for CPT code 93886.
For CY 2015, a new code, CPT code 93895, describes the work of using carotid ultrasound to measure atherosclerosis and quantify the intima-media thickness. After review of this code, we determined that it is used only for screening and therefore, we are assigning a PFS procedure status indicator of N (Noncovered service) to CPT code 93895.
For CY 2015, the RUC provided a recommendation for CPT code 93990 which had been identified through the High Volume Growth Services where Medicare utilization increased by at least 100 percent from 2006 to 2011. The RUC recommended a work RVU of 0.60 for this service. Due to the similarity of this service to duplex scans, we are establishing RVUs for CPT code 93990 that are consistent with duplex scans with 10 minutes of intraservice time; which we discussed above in section E.4.18. We assigned it an interim final work RVU of 0.50.
For CY 2015, the RUC reviewed CPT codes 95971 and 95972 because they were identified by the High Volume Growth Services screen which identifies services in which Medicare utilization increased by at least 100 percent from 2006 to 2011 screen. It is unclear to us why CPT code 95973, the add-on code to CPT code 95972, was not also surveyed. We are valuing CPT code 95971 based upon the RUC recommended work RVU of 0.78.
For CPT code 95972, we do not believe that the RUC recommended change in work RVU from 1.50 to 0.90 reflects the much more significant change in intraservice time from 60 minutes to 23 minutes. Therefore, we used a building block methodology to develop a work RUV of 0.80.
Even though the RUC did not survey 95973, we believe we should review it as part of this family. Not having a survey or RUC recommendations, we believe that the percent decrease in the work RVU from the base code 95972 should apply to this code. Therefore, we are establishing an interim final work RVU of 0.49 for CPT code 95973.
We note that the descriptor for CPT code 95972 was changed from “. . . first hour” to “. . .up to one hour.” We note that for Medicare purposes this code should only be billed when a majority of an hour is completed. We would also note that the add-on code should only be reported after a full 60 minutes of service is furnished.
The lack of a survey for CPT code 95973 along with the confusing descriptor language and intraservice time suggest the need for this family to be returned to CPT for clarification of the descriptor and then to the RUC for resurvey.
Prior to CY 2013, the codes used to report negative pressure wound therapy were CPT codes 97605 and 97606, both of which were typically reported in conjunction with durable medical equipment that was paid separately. In the CY 2013 final rule with comment period, we created two HCPCS codes to provide a payment mechanism for negative pressure wound therapy services furnished to beneficiaries using equipment that is not paid for as durable medical equipment: G0456 (Negative pressure wound therapy, (for example, vacuum assisted drainage collection) using a mechanically-powered device, not durable medical equipment, including provision of cartridge and dressing(s), topical application(s), wound assessment, and instructions for ongoing care, per session; total wound(s) surface area less than or equal to 50 square centimeters) and G0457 (Negative pressure wound therapy, (for example, vacuum assisted drainage collection) using a mechanically-powered device, not durable medical equipment, including provision of cartridge and dressing(s), topical application(s), wound assessment, and instructions for ongoing care, per session; total wound(s) surface area greater than 50 sq cm).
For CY 2015, two new codes, CPT codes 97607 and 97608, were created to describe negative pressure wound therapy with the use of a disposable system. In addition, CPT codes 97605 and 97606 were revised to specify the use of durable medical equipment. Based upon these the revised coding scheme for negative pressure wound therapy, we are deleting the G-codes. We are contractor pricing these codes for CY 2015. CPT codes 97607 and 97608 will be designated “Sometimes Therapy” on our Therapy Code List, which is consistent with the G-codes. The Therapy Code List is available at
CPT Code 99188 is a new code for CY 2015 that describes the application of topical fluoride varnish to teeth. Since this code describes a service that involves the care of teeth, it is excluded from coverage under Medicare by section 1862(a)(12) of the Act, which provides “items and services in connection with the care, treatment, filling, removal, or replacement of teeth, or structures directly supporting the teeth are excluded from coverage.” Accordingly, we are assigning a PFS procedure status indicator of N (Noncovered service) to CPT code 99188.
For CY 2015, the CPT Editorial Panel created two new codes describing advance care planning services: CPT code 99497 (Advance care planning including the explanation and discussion of advance directives such as standard forms (with completion of such forms, when performed), by the physician or other qualified health professional; first 30 minutes, face-to-face with the patient, family member(s)
The RUC provides CMS with recommendations regarding direct PE inputs, including clinical labor, disposable supplies, and medical equipment, for new, revised, and potentially misvalued codes. We review the RUC-recommended direct PE inputs on a code-by-code basis, including the recommended facility PE inputs and/or nonfacility PE inputs. This review is informed by both our clinical assessment of the typical resource requirements for furnishing the service and our intention to maintain the principles of accuracy and relativity in the database. We determine whether we agree with the RUC's recommended direct PE inputs for a service or, if we disagree, we refine the PE inputs to represent inputs that better reflect our estimate of the PE resources required to furnish the service in the facility and/or nonfacility settings. We also confirm that CPT codes should have facility and/or nonfacility direct PE inputs and make changes based on our clinical judgment and any PFS payment policies that would apply to the code.
We have accepted for CY 2015, as interim final and without refinement, the direct PE inputs based on the recommendations submitted by the RUC for the codes listed in Table 28. For the remainder of the RUC's direct PE recommendations, we have accepted the PE recommendations submitted by the RUC as interim final, but with refinements. These codes and the refinements to their direct PE inputs are listed in Table 31.
We note that the final CY 2015 PFS direct PE input database reflects the refined direct PE inputs that we are adopting on an interim final basis for CY 2015. That database is available under downloads for the CY 2015 PFS final rule with comment period on the CMS Web site at
Table 31 details our refinements of the RUC's direct PE recommendations at the code-specific level. In this section, we discuss the general nature of some common refinements and the reasons for particular refinements.
Some direct PE inputs are directly affected by revisions in work time described in section II.E.3.a. of this final rule with comment period. We note that for many codes, changes in the intraservice portions of the work time and changes in the number or level of postoperative visits included in the global periods result in corresponding changes to direct PE inputs. We also note that, for a significant number of services, especially diagnostic tests, the procedure time assumptions used in determining direct PE inputs are distinct from, and therefore not dependent on, work intraservice time assumptions. For these services, we do not make refinements to the direct PE
For equipment associated with the intraservice period in the nonfacility setting, we generally allocate time based on the typical number of minutes a piece of equipment is being used, and therefore, not available for use with another patient during that period. In general, we allocate these minutes based on the description of typical clinical labor activities. To the extent that we are making changes in the clinical labor times associated with the intraservice portion of procedures, we have adjusted the corresponding equipment minutes associated with the codes.
These refinements are reflected in the final CY 2015 PFS direct PE input database and detailed in Table 31.
In general, the equipment time inputs reflect the sum of the times within the intraservice period when a clinician is using the piece of equipment, plus any additional time the piece of equipment is not available for use for another patient due to its use during the designated procedure. In cases where equipment times included time for clinical labor activities in the pre-service period, we have refined these times to remove the minutes associated with these tasks, since the pre-service period ends “when patient enters office/facility for surgery/procedure.” Although some services include equipment that is typically unavailable during the entire clinical labor service period, certain highly technical pieces of equipment and equipment rooms are less likely to be used by a clinician for all tasks associated with a service, and therefore, are typically available for other patients during the preservice and postservice components of the service period. We adjust those equipment times accordingly. We refer interested stakeholders to our extensive discussion of these policies in the CY 2012 PFS final rule with comment period (76 FR 73182–73183) and in section II.G.2.b. of this final rule with comment period. We are refining the CY 2015 RUC direct PE recommendations to conform to these equipment time policies. These refinements are reflected in the final CY 2015 PFS direct PE input database and detailed in Table 31.
In the CY 2012 PFS final rule (76 FR 73043–73049), we finalized a standard package of direct PE inputs for services where moderate sedation is considered inherent in the procedure. In section II.A. of this final rule with comment period, we finalized a refinement to the standard package to include a stretcher for the same length of time as the other equipment items in the standard package. We are refining the CY 2015 RUC direct PE recommendations to conform to these policies. This includes the removal of a power table where it was included during the intraservice period, as the stretcher takes the place of the table. These refinements are reflected in the final CY 2015 PFS direct PE input database and detailed in Table 31.
In general, the preservice, intraservice period, and postservice clinical labor minutes associated with clinical labor inputs in the direct PE input database reflect the sum of particular tasks described in the information that accompanies the recommended direct PE inputs on “PE worksheets.” For most of these described tasks, there are a standardized number of minutes, depending on the type of procedure, its typical setting, its global period, and the other procedures with which it is typically reported. At times, the RUC recommends a number of minutes either greater than or less than the time typically allotted for certain tasks. In those cases, CMS reviews the deviations from the standards to assess whether they are clinically appropriate. Where the RUC-recommended exceptions are not accepted, we refine the interim final direct PE inputs to match the standard times for those tasks. In addition, in cases when a service is typically billed with an E/M or other evaluation service, we remove the preservice clinical labor tasks so that the inputs are not duplicative and reflect the resource costs of furnishing the typical service.
In some cases the RUC recommendations include additional minutes described by a category called “other clinical activity,” or through the addition of clinical labor tasks that are different from those previously included as standard. In these instances, CMS reviews the tasks as described in the recommendation to determine whether they are already incorporated into the total number of minutes based on the standard tasks. Additionally, CMS reviews these tasks in the context of the kinds of tasks delineated for other services under the PFS. For those tasks that are duplicative or not separately incorporated for other services, we do not accept those additional clinical labor tasks as direct inputs. For example, as we have previously discussed (78 FR 74308), we believe that quality assurance documentation tasks for services across the PFS are already accounted for in the overall estimate of clinical labor time. We do not believe that it would serve the relativity of the direct PE input database were additional minutes added for each clinical task that
The RUC generally recommends the use of supply and equipment items that already exist in the direct PE input database for new, revised, and potentially misvalued codes. Some recommendations include supply or equipment items that are not currently in the direct PE input database. In these cases, the RUC has historically recommended a new item be created and has facilitated CMS's pricing of that item by working with the specialty societies to provide sales invoices to us.
We received invoices for several new supply and equipment items for CY 2015. We have accepted the majority of these items and added them to the direct PE input database. Tables 29 and 30 detail the invoices received for new and existing items in the direct PE database. As discussed in section II.A. of this final rule with comment period, we encourage stakeholders to review the prices associated with these new and existing items to determine whether these prices appear reasonable. Where prices appear unreasonable, we encourage stakeholders to provide invoices that provide more accurate pricing for these items in the direct PE database. We remind stakeholders that due to the budget neutral nature of the PFS, increased prices for any items in the direct PE database decrease the pool of PE RVUs available to all other PFS services. Tables 29 and 30 also include the number of invoices received as well as the number of nonfacility allowed services for procedures that use these equipment items. In cases where large numbers of allowed services exist, we question pricing the item based upon a single invoice. We are concerned that the single invoice may not be reflective of typical costs for these items and encourage stakeholders to provide additional invoices.
In some cases we cannot adequately price a newly recommended item due to inadequate information. In some cases, no supporting information regarding the price of the item has been included in the recommendation to create a new item. In other cases, the supporting information does not demonstrate that the item has been purchased at the listed price (for example, price quotes instead of paid invoices). In cases where the information provided allowed us to identify clinically appropriate proxy items, we have used existing items as proxies for the newly recommended items. In other cases, we have included the item in the direct PE input database without an associated price. Although including the item without an associated price means that the item does not contribute to the calculation of the PE RVU for particular services, it facilitates our ability to incorporate a price once we are able to do so.
In some cases, the recommended direct PE inputs included items that are not clinical labor, disposable supplies, or medical equipment resources. We have addressed these kinds of recommendations in previous rulemaking and in sections II.G.2.b. and II.B.4.a. of this final rule with comment period. Refinements to adjust for these recommended inputs are reflected in the final CY 2015 PFS direct PE input database and detailed in Table 31.
As discussed in section II.A.3 of this final rule with comment period, we are finalizing our policy to remove equipment and supply inputs associated with film technology from the direct PE database. Since the recommendations we received for 2015 were prepared before the transition occurred, in some cases, the RUC recommendations included film inputs. Where recommendations included these inputs, we have removed these inputs and replaced them with “PACS workstation proxy” as described in section II.A.3 of this final rule with comment period. Since the film-to-digital transition results from our acceptance of a RUC recommendation, we do not consider the removal of these items to be refinements of RUC recommendations, and therefore do not include them in Table 31.
In general, we believe that certain pre-service and post-service tasks are not repeated for services reported using add-on codes. In some cases, we also believe that the time for certain equipment items are not duplicated for add-on codes. In these cases, we removed the time associated with those tasks and/or equipment items from those codes. These refinements appear in Table 31.
For the newly created rib fracture codes, which are frequently furnished as emergency surgeries, the RUC did not include time for the standard pre-service activities “Provide pre-service education/obtain consent” and “Follow-up phone calls & prescriptions.” However, the RUC recommendation included time for pre-service activities “Complete pre-service diagnostic & referral forms,” “Coordinate pre-surgery services”, and “Schedule space and equipment in facility.” Since these codes would typically be provided as emergency surgeries, we question whether these tasks would typically be performed.
We reviewed other emergency procedures in the PFS to determine whether pre-service clinical labor activities were typically included in the PE worksheets. We found that the recommendations for these procedures were inconsistent. Therefore, we will not remove the time allocated for these clinical labor activities at this time. However, we believe that for emergency procedures, none of the pre-service tasks listed above would typically be performed. We seek comment to clarify this issue, and plan to consider this issue in future rulemaking.
As discussed earlier in this section of this final rule with comment period, we have valued CPT codes 21811, 21812, and 21813 as 0-day globals. We have therefore removed direct PE inputs associated with the postoperative visits.
The RUC recommendation regarding add-on CPT code 22512 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection, inclusive of all imaging guidance, each additional cervicothoracic or lumbosacral vertebral body)) included new supply item “10g IVAS drill.” We note that the recommendations for the base codes did not contain this supply item, and the vertebroplasty kit does not appear to contain this drill either. We do not understand why the drill would be required for the add-on code when it is not required for the base code. Therefore, we will not include supply item “10g IVAS drill” in CPT code 22512 at this time.
As indicated earlier in this section of this final rule with comment period, we are maintaining the CY 2014 work RVU for CPT code 31620 in light of our concerns regarding coding structure. As such, we are maintaining the CY 2014 direct PE inputs for 31620 as well.
For CY 2015, the CPT Editorial Panel created three codes to describe digital breast tomosynthesis services: 77061(Digital breast tomosynthesis; unilateral), 77062 (Digital breast tomosynthesis; bilateral) and 77063 (Screening digital breast tomosynthesis, bilateral (List separately in addition to code for primary procedure)). For these newly created codes, the RUC recommended creating a new equipment item, “room, breast tomosynthesis”, at a price of $667,669, as well as a list of items contained in the room. We believe that several of the items included in the room are not appropriately characterized as direct costs. We also believe that the creation of rooms sometimes causes confusion when items in the room are also included as stand-alone PE inputs, as specialty societies do not consider the items included in the room when preparing the PE worksheets. Further, we believe that the prices for the rooms sometimes result in less transparency, as prices for items within the room tend to remain static over time. Therefore, we are not creating this new equipment item, but will instead include the individual equipment items that we believe are appropriately characterized as direct costs.
The price for the digital breast tomosynthesis unit indicated on the invoice received by the RUC was $498,412. We received many invoices for this equipment item with an average price of $381,380. Therefore, we will create a new equipment item “DBT unit”, at a price of $381,380.
The RUC also recommended including a new equipment item, “PACS cache”, for these procedures. We do not believe that digital storage constitutes a direct cost, as it is not individually allocable to an individual patient for a particular service. . Therefore, we will not add this new equipment item to the direct PE database.
For CY 2015, the CPT Editorial Panel revised the set of codes that describe radiation treatment delivery services. These revisions included the addition and deletion of several codes and the development of new guidelines and coding instructions. Due to the significant code restructuring and potential for changes in payment, some specialty societies representing providers of radiation treatment services have requested that we delay implementation of the new code set. We believe that given the large scale of the changes in this code set restructuring, in the context of our upcoming revised process for valuing new, revised, and potentially misvalued codes, it is prudent to propose the values for the revised code set in the CY 2016 rule
The RUC recommended including supply item “UltraView Universal DAB Detection Kit” (SL488) for CPT codes 88341, 88342, and 88344, which is priced at $10.49 per kit, and “UltraView Universal Alkaline Phosphatase Red Detection Kit”, which is priced at $20.64. We noted that for other similar services, CPT codes 88364, 88365, 88367, 88368, 88369, and 88373, the RUC recommended including supply item “Universal Detection Kit” (SA117), which is priced at $4.00 per kit. After reviewing information about these two kits, we believe that functions provided by SL488 and SL489 are also provided by SA117. The recommendations did not explain why the more expensive kit was necessary for 88341, 88342, and 88344 when the less expensive kit was sufficient for CPT codes 88364, 88365, 88367, 88368, 88369, and 88373. Absent any rationale for the use of the more expensive kit, we are including SA117 for 88341, 88342, and 88344 in place of SL488.
The RUC recommended including a new supply item, “diamond milling tool”, for use with CPT code 88348. However, upon reviewing the invoice, we believe that “diamond milling tool” is more appropriately characterized as equipment. We have therefore created an equipment item for this tool, as listed in Table 29.
The CPT Editorial Panel revised the in situ hybridization codes (88365, 88367, and 88368) and created three new add-on codes for reporting each additional separately identifiable probe per slide. The RUC reviewed CPT codes 88365, 88367, and 88368, among other services in this family, in October 2013 and recommended direct inputs for these procedures, including supply item “kit, FISH paraffin pretreatment” (SL195), with quantities of 1 unit for CPT code 88365, 0.75 units for CPT code 88367, and 1 unit for CPT code 88368.
After the CY 2014 PFS final rule with comment period was published, the specialty societies determined that additional clarification was necessary, and requested that the CPT Editorial Panel review the entire family again. The CPT editorial panel added three new codes for “each multiplex probe stain procedure.” The specialty societies then resurveyed these procedures. The RUC reviewed the entire family at the April 2014 meeting and recommended supply item SL195 with a quantity of 2 units for CPT code 88365, 1.4 units for CPT code 88367, and 2 units for CPT code 88368. These quantities are double what the RUC recommended to us in October 2013, which was 1 unit for CPT code 88365, 0.75 units for CPT code 88367, and one unit for CPT code 88368. Without an explanation for this significant change, we are including SL195 with the following quantities: 1 unit for CPT code 88365, 0.75 units for CPT code 88367, and 1 unit for CPT code 88368. Similarly, for add-on services CPT codes 88364, 88366, 88369, 88373, 88374, and 88377, more than one unit of SL195 was included. We believe that the unit of the kit should be consistent between the base code and the add-on code. We will therefore include 1 unit of SL195 for CPT codes 88364, 88366, 88369, and 88377, and 0.75 units for CPT codes 88373 and 88374. We are also interested in learning more about why a partial kit would be used in furnishing the typical service.
CPT codes 88374 and 88377, which are add-on codes, contain more than one unit of supply item “kit, HER–2/neu DNA Probe” (SL196). Because these codes describe a service that includes a single specimen with one stain, we do not understand why more than one kit would be required. We have therefore included a unit of 1 for SL196 in CPT codes 88374 and 88377.
We also believe that the units of positive control slides and negative control slides should be consistent throughout this entire family. We note that CPT codes 88367, 88373, and 88374 included a recommended 0.2 units of positive and/or negative control slide; supply items SL118 and SL119 for CPT code 88367, supply items SL120 and SL121 for CPT code 88373, and supply items SL184 and SL185 for CPT code 88374.) However, for CPT codes 88368, 88369, and 88377, the recommendation included 0.5 units of the positive and/or negative control slide (supply item SL112 for CPT codes 88368 and 88369, and supply items SL184 and SL185 for CPT code 88377). No rationale was provided for why a greater quantity of the control slide would be required. Therefore, we will include 0.2 units of positive and/or negative control slides, as appropriate, to maintain consistency throughout this family of codes.
As with the positive and negative control slides, we believe that the number of units of supply item SL498 (“Kappa probe cocktails”) and SL499 (Lambda probe cocktails”) should be consistent across procedures. The recommendations for CPT codes 88367 and 88373 contain 28 ul of SL498 for 88367 and 27 ul of SL499 for 88373. Therefore, to maintain consistency, we refined the units of SL498 for CPT code 88368 and SL499 for CPT code 88369 to 28 ul.
The RUC recommended a quantity of 1.6 for SL497 “(EBER) DNA Probe Cocktail” for CPT code 88365. Since this procedure describes a single stain, and the stain needs to be added to the positive control slide and the specimen slide, we believe that a quantity of 2 is more appropriate. We have therefore included 2 units of SL497 for CPT code 88365.
The RUC recommendation also included a new equipment item “VP–2000 processor” (EP116). Among the purposes of this equipment item is to reduce the amount of technician time needed to complete the clinical labor task. However, in the recommendations we received, rather than the clinical labor time for these codes decreasing with the addition of this new equipment item, the RUC recommended increased clinical labor times associated with this task for CPT codes 88365, 88366, 88368, and 88377 increased. We are unable to reconcile as typical the new equipment item, which is intended to reduce technician time, with the increased technician time for this same clinical labor task. Therefore, we will not allocate time for equipment item “VP–2000 processor” (EP116) in CPT codes 88365, 88366, 88368, and 88377.
In reviewing the RUC recommendations for CPT code 88380, the work vignette indicated that the microdissection is performed by the pathologist. However, the PE worksheet also included several subtasks of “Microdissect each stained slide sequentially while reviewing H and E stained slide” that are performed by the cytotechnologist. Since we do not believe that both the pathologist and the cytotechnologist are completing these tasks, we have refined out the lines associated with the specific tasks we believe are completed by the pathologist. Table 31 details our refinements to the clinical labor tasks.
CPT code 93314 describes a service in which the acquisition and interpretation of images is furnished by a different practitioner than the placement of the
We received a RUC recommendation for CPT code 99183 (Physician or other qualified health care professional attendance and supervision of hyperbaric oxygen therapy, per session), which included significant increases to the direct PE inputs, which assumes a treatment time of 120 minutes. Currently, CPT code 99183 is used for both the professional attendance and supervision and the actual treatment delivery. Stakeholders have pointed out that although we include the PE inputs for treatment delivery in this code, the descriptor describes only attendance and supervision. We note that under the OPPS, the treatment is reported using separate treatment code C1300 (Hyperbaric oxygen under pressure, full body chamber, per 30 minute interval). After considering this issue, we believe the OPPS approach would also be appropriate for the PFS. We are therefore creating a G-code to report the treatment delivery and to maintain consistency with the OPPS coding. We will use the same descriptor as previously used for OPPS code C1300 for a timed 30-minute code, which can then be used across settings. To value this G-code, we used the RUC recommended direct PE inputs for 99183 and adjusted them to align with the 30 minute treatment interval.
In reviewing the recommended direct PE inputs, we observed that the quantity of oxygen increased significantly relative to the previous value. To better understand this change, we reviewed the instruction manual for the most commonly used HBOT chamber, which provide guidance regarding the quantity of Oxygen used. Based on our review, we determined that 12,000, rather than 47,000, was the typical number of units. Therefore, in aligning the direct PE inputs as described above, we first adjusted the units of oxygen to 12,000 for the recommended 120 minute time, and subsequently adjusted it to align with the 30 minute G-code.
(l) EOG VNG (CPT code 92543)
As described earlier in this section of this final rule with comment period, we are maintaining the CY 2014 work RVU for CPT code 92543 due to possible confusion among survey respondents. Similarly, we are also maintaining the CY 2014 direct PE inputs for 92543.
These refinements, as well as other applicable standard and common refinements for these codes, are reflected in the final CY 2015 PFS direct PE input database and detailed in Table 31.
We are proposing to add the new codes to the list of procedures subject to the DRA cap, effective January 1, 2015. The codes are: (76641 (Ultrasound breast complete), 76642 (Ultrasound breast limited), 77085 (Dxa bone density study), 77086 (Fracture assessment via dxa), 77387 (Guidance for radiaj tx dlvr), G6001 (Stereoscopic x-ray guidance), and G6002 (Echo guidance radiotherapy). These codes, which are new for CY 2015, replace codes deleted for CY 2015 that were subject to the cap, and meet the definition of imaging under section 5102(b) of the DRA. These codes are being added on an interim final basis and are open to public comment in this final rule with comment period.
According to our malpractice methodology discussed in section II.C, we are assigning malpractice RVUs for CY 2015 new, revised, and potentially misvalued codes by utilizing a crosswalk to a source code with a similar malpractice risk. We have reviewed the RUC recommended malpractice source code crosswalks for CY 2015 new, revised, and potentially misvalued codes, and we are accepting all of them on an interim final basis for CY 2015. For G-codes that we are creating, we are also assigning source code crosswalks to similar codes.
Table 32 lists the CY 2015 HCPCS codes and their respective source codes used to set the interim final CY 2015 MP RVUs. The MP RVUs for these services are reflected in Addendum B of this CY 2015 PFS final rule with comment period.
As we discussed in the CY 2013 PFS final rule with comment period, we are committed to supporting primary care and we have increasingly recognized care management as one of the critical components of primary care that contributes to better health for individuals and reduced expenditure growth (77 FR 68978). Accordingly, we have prioritized the development and implementation of a series of initiatives designed to improve payment for, and encourage long-term investment in, 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 November 2, 2011
• The testing of the Pioneer ACO model, designed for experienced health care organizations (described on the Centers for Medicare and Medicaid Innovation's (Innovation Center's) Web site at
• The testing of the Advance Payment ACO model, designed to support organizations participating in the Medicare Shared Savings Program (described on the Innovation Center's Web site at
• The Primary Care Incentive Payment (PCIP) Program (described on the CMS Web site at
• 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
• The Federally Qualified Health Center (FQHC) Advanced Primary Care Practice demonstration (described on the CMS Web site at
• The Comprehensive Primary Care (CPC) initiative (described on the Innovation Center's Web site at
In addition, HHS leads a broad initiative focused on optimizing health and quality of life for individuals with multiple chronic conditions. HHS's Strategic Framework on Multiple Chronic Conditions outlines specific objectives and strategies for HHS and private sector partners centered on strengthening the health care and public health systems; empowering the individual to use self-care management with the assistance of a healthcare provider who can assess the patient's health literacy level; equipping care providers with tools, information, and other interventions; and supporting targeted research about individuals with multiple chronic conditions and effective interventions. Further information on this initiative is available on the HHS Web site at
In coordination with all of these initiatives, we also have continued to explore potential refinements to the PFS that would appropriately value care management within Medicare's statutory structure for fee-for-service physician payment and quality reporting. For example, in the CY 2013 PFS final rule with comment period, we adopted a policy to pay separately for care management involving the transition of a beneficiary from care furnished by a treating physician during a hospital stay to care furnished by the beneficiary's primary physician in the community (77 FR 68978 through 68993).
In the CY 2014 PFS final rule with comment period, we finalized a policy to pay separately for care management services furnished to Medicare beneficiaries with two or more chronic
CCM is a unique PFS service designed to pay separately for non-face-to-face care coordination services furnished to Medicare beneficiaries with multiple chronic conditions. (See 78 FR 74414 for a more thorough discussion of the beneficiaries for whom this service may be billed and the scope of service elements.) In the CY 2014 PFS final rule with comment period, we indicated that, to recognize the additional resources required to furnish CCM services to patients with multiple chronic conditions, we were creating the following code to use for reporting this service (78 FR 74422):
•
Although this service is unique in that it was created to separately pay for care management services, other codes include care management components. To value CCM, we compared it to other codes that involve care management. In doing so, we concluded that the CCM services were similar in work (time and intensity) to that of the non-face-to-face portion of the lower level code for transitional care management (TCM) services (CPT code 99495 (Transitional Care Management Services with the following required elements: Communication (direct contact, telephone, electronic) with the patient and/or caregiver within 2 business days of discharge Medical decision making of at least moderate complexity during the service period face-to-face visit, within 14 calendar days of discharge)). Accordingly, we based the proposed inputs on the non-face-to-face portion of CPT code 99495.
Specifically, we proposed a work RVU for GXXX1 of 0.61, which is the portion of the work RVU for CPT code 99495 that remains after subtracting the work attributable to the face-to-face visit. (CPT code 99214 (Office/outpatient visit est) was used to value CPT code 99495, which has a work RVU of 1.50). Similarly, we proposed a work time of 15 minutes for HCPCS code GXXX1 for CY 2015 based on the time attributable to the non-face-to-face portion of CPT 99495.
For direct PE inputs, we proposed 20 minutes of clinical labor time. As established in the CY 2014 PFS final rule with comment period, in order to bill for this code, at least 20 minutes of CCM services must be furnished during the 30-day billing interval (78 FR 74422). Based upon input from stakeholders and the nature of care management services, we believed that many aspects of this service will be provided by clinical staff, and thus, clinical staff would be involved in the typical service for the full 20 minutes. CPT code 99495 has 45 minutes of non-face-to-face clinical labor time and we assumed the typical case for CCM would involve 20 minutes based upon the code descriptor and a broad eligible population that would require limited monthly services. The proposed CY 2015 direct PE input database reflected the input of 20 minutes of clinical labor time and is available on the CMS Web site under the supporting data files for the CY 2015 PFS proposed rule at
The proposed MP RVU of 0.04 was calculated using the weighted risk factors for the specialties that we believed would furnish this service. We believed the proposed malpractice risk factor would appropriately reflect the relative malpractice risk associated with furnishing CCM services.
We received many public comments on our proposed valuation. In general, the commenters commended CMS for ongoing recognition of the value of non-face-to-face time expended by physicians and staff to improve outcomes for beneficiaries with chronic conditions, and the proposal to pay separately for the non-face-to-face services. However, the commenters generally believed the proposed valuation for CCM services underestimated the resources involved with complex beneficiaries, and recommended various alternatives for valuing the services. We summarize these comments in the following paragraphs.
• Multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient;
• Chronic conditions place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline;
• Comprehensive care plan established, implemented, revised, or monitored).
Many of these commenters expressed a preference for the “per calendar month” used in the CPT descriptor to the “per 30 days” used in the G-code. The commenters said a calendar month rather than 30 days would be less complex administratively.
We had used 30 days rather than a calendar month as the service period for the G-code so that the number of days in the service period would not vary based upon when CCM services were initiated for a given period. For example, if the services were initiated near the end of a calendar month, using the CPT code's period of “per calendar month” would make it harder for the practitioner to meet the required minimum time for the month and be able to bill CMM for that month.
However, after learning about the administrative difficulties that the 30-day period would create, we believe that the calendar month creates a reasonable period. Accordingly, we will adopt CPT code 99490 for Medicare CCM services, effective January 1, 2015 instead of the G code.
Several commenters submitted recommendations for valuation based on their experience in CMS's Patient-Centered Medical Home multipayer initiative. Assuming CCM services are furnished by a care manager receiving an annual salary of $150,000, and taking into account a commonly accepted patient to care manager ratio of 1:150, these commenters believed that under the proposed payment rate, the average service time possible would be a ceiling of 23 minutes (not a floor of 20 minutes). Based on one tracking study of care manager activity in minutes per patient per month, they believed complex care management would require 42 minutes of face-to-face and non-face-to-face time per month. Assuming the same care manger salary and patient load, the commenters asserted that the monthly payment amount necessary to provide this amount of care would be $83 per beneficiary per month.
Several commenters suggested that CMS's comparison with TCM, CPT code 99495, was not an appropriate comparison. One commenter asked what codes other than CPT code 99495 CMS considered as similar to CCM for purposes of CCM valuation. This commenter believed the time and intensity required for the non-face-to-face portion of CPT code 99495 is not the same as for CCM services.
Several commenters suggested that CMS should develop PE RVUs for the service using alternative methodologies than for other PFS services. For example, several commenters stated that CMS should adjust the PE RVUs to account for major infrastructure and other costs required for CCM, especially health information technology, computer equipment, 24/7 beneficiary access, extensive documentation, nursing staff and other overhead costs. One commenter believed the proposed RVUs accounted for personnel costs but not the practice expense for health information technology, workforce retooling, and analytics.
We received many public comments on the appropriate work time and direct PE inputs for clinical staff time. Most suggested that the proposed inputs for time were too low and recommended using the RUC-recommended values (work time of 30 minutes and 60 minutes of clinical labor time). Regarding clinical labor time, some commenters believed the proposed 20 minutes of clinical labor was too low, being the 25th percentile for work time in the RUC survey, and they noted the significantly higher time reported in response to the RUC survey of 60 minutes of clinical labor time. Another commenter said that assuming 20 minutes of service time per month as typical significantly undervalues the service and questioned how CMS arrived at that number. Regarding the work time, several commenters addressed the work RVU, recommending that the proposed RVU be adjusted upwards but did not specify by how much. Several commenters noted that the RUC recommendation of 1.0 work RVU for CPT codes 99490 and 99487 (Cmplx chron care w/o pt visit) is based on median survey work times of 30 minutes and 26 minutes, respectively, for these CCM codes. (The long descriptor for CPT code 99487 is, Complex chronic care management services, with the following required elements:
• Multiple (two or more) chronic conditions expected to last at least 12 months, or until the death of the patient;
• Chronic conditions place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline;
• Establishment or substantial revision of a comprehensive care plan;
• Moderate or high complexity medical decision making;
• 60 minutes of clinical staff time directed by a physician or other qualified health care professional, per calendar month).
However several commenters did not object to the proposed valuation for GXXX1 and recommended that CMS monitor payment adequacy and appropriate valuation once the code is implemented.
We appreciate commenters' concerns regarding the various kinds of practice expense and malpractice liability costs that practices incur as they manage beneficiaries requiring CCM services. However, we continue to believe that our established PE and MP methodology used to value the wide ranges of services across the PFS assures that we have the appropriate relativity in our payments.
Although many commenters recommended that we use the time from the RUC survey of 60 minutes of clinical labor and 30 minutes of work time, we believe that since CCM is a new separately billable service, the survey data may be less reliable as the practitioners would have no experience with the code. Since at least 20 minutes of services are required to be furnished in order to report the service and our information, including comments, suggests that many beneficiaries who meet Medicare's criteria for CCM services would not need more than the minimum required minutes of service, we believe 60 minutes would overestimate the typical number of clinical labor minutes during one month for the typical eligible beneficiary. Accordingly, we are finalizing our proposed work and clinical labor times.
Many commenters recommended that CMS adopt the three CPT codes describing chronic care management. In addition to the CPT code that is similar to the G-code described above (CPT code 99490), there are two additional complex chronic care coordination codes (a base code and an add-on code). Since CY 2013 when the complex chronic care coordination codes became available, CMS has bundled these codes. The base code is CPT code 99487 (Cmplx chron care w/o pt visit), and the add-on is CPT code 99489 (Complex chronic care coordination services; each additional 30 minutes of clinical staff time directed by a physician or other qualified health care professional, per calendar month (list separately in addition to code for primary procedure).
Other commenters recommended using two codes to describe CCM for different patient populations, or a base code and an add-on code to describe CCM for a single patient population. Some commenters recommended adoption of GXXX1 or CPT code 99490, plus CPT code 99487 along with the RUC-recommended values, to describe CCM for the two distinct populations that require different services. These commenters stated that there is no “typical” patient that characterizes both groups of patients, and that a large number of eligible beneficiaries (those having 2 or more chronic conditions) have serious mental health and/or substance abuse disorders and would benefit greatly from CCM services). Other commenters recommended using two G-codes, one being an add-on code for each additional 20 minutes or other time spent caring for a beneficiary with more complex needs. One commenter urged CMS to adopt an add-on code for time increments over 60 minutes. Several commenters recommended a cap on additional minutes, particularly if CMS finalizes an applicable beneficiary coinsurance for CCM services. One commenter recommended that we finalize the proposed valuation for GXXX1, also recognize CPT code 99490 (Chron care mgmt srvc 20 min) with a higher payment amount, and then collect data on the impacts of differential payment amounts.
Other commenters recommended that CMS adopt CPT code 99487 (Cmplx chron care w/o pt visit) with the scope of services for GXXX1. One commenter recommended that CMS redefine its requirements and the scope of services for GXXX1 to be more consistent with chronic disease management, using CPT code 99487. The commenter believed we should adopt CPT code 99487 with the RUC-recommended valuation. One commenter more generally
After consideration of the comments received on this proposal, we are finalizing the proposal with the following modification. Rather than creating a G-code we are adopting the new CPT code, 99490, to describe CCM services effective January 1, 2015. We intend to evaluate this service closely to assess whether the service is targeted to the right population and whether the payment is appropriate for the services being furnished. As part of our evaluation, we will consider the whether this new service meets the care coordination needs of Medicare beneficiaries and if not how best to address the unmet needs.
In the CY 2014 PFS final rule with comment period (78 FR 74425 through 74427), we discussed how the policies relating to services furnished incident to a practitioner's professional services apply to CCM services. (In this discussion, the term practitioner means both physicians and NPPs who are permitted to bill for services furnished incident to their own professional services.) Specifically, we addressed the policy for counting clinical staff time for services furnished incident to the billing practitioner's services toward the minimum amount of service time required to bill for CCM services.
We established an exception to the usual rules that apply to services furnished incident to the services of a billing practitioner. Generally, under the “incident to” rules, practitioners may bill for services furnished incident to their own services if the services meet the requirements specified in our regulations at § 410.26. One of these requirements is that the “incident to” services must be furnished under direct supervision, which means that the supervising practitioner must be present in the office suite and be immediately available to provide assistance and direction throughout the service (but does not mean that the supervising practitioner must be present in the room where the service is furnished). We noted in last year's PFS final rule with comment period that, because one of the required elements of the CCM service is beneficiary access to the practice 24-hours-a-day, 7-days-a-week, to address the beneficiary's chronic care needs (78 FR 74426), we expect the beneficiary to be provided with a means to make timely contact with health care providers in the practice whenever necessary to address chronic care needs regardless of the time of day or day of the week. In those cases when the need for contact arises outside normal business hours, it is likely that the beneficiary's initial contact would be with clinical staff employed by the practice (for example, a nurse) and not necessarily with a practitioner. Under these circumstances, it would be unlikely that a practitioner would be available to provide direct supervision of the service.
Therefore, in the CY 2014 PFS final rule with comment period, we created an exception to the generally applicable requirement that “incident to” services must be furnished under direct supervision. Specifically, we finalized a policy to require only general, rather than direct, supervision when CCM services are furnished incident to a practitioner's services outside of the practice's normal business hours by clinical staff who are direct employees of the practitioner or practice. We explained that, given the potential risk to beneficiaries that the exception to direct supervision could create, we believed that it was appropriate to design the exception as narrowly as possible (78 FR 74426). The direct employment requirement was intended to balance the less stringent general supervision requirement by ensuring that there is a direct oversight relationship between the supervising practitioner and the clinical staff personnel who provide after-hours services.
In the CY 2015 PFS proposed rule, we proposed to revise the policy that we adopted in the CY 2014 PFS final rule with comment period. We also proposed to amend our regulations to codify the requirements for CCM and TCM services furnished incident to a practitioner's services. Specifically, we proposed to remove the requirement that, in order to count the time spent by clinical staff providing aspects of CCM services toward the CCM time requirement, the clinical staff person must be a direct employee of the practitioner or the practitioner's practice. (We note that the existing requirement that these services be provided by clinical staff, specifically, rather than by other auxiliary personnel is an element of the service for both CCM and TCM services, rather than a requirement imposed by the “incident to” rules themselves.) We also proposed to remove the restriction that services provided by clinical staff under general (rather than direct) supervision may be counted only if they are provided outside of the practice's normal business hours. Under our proposed revised policy, then, the time spent by clinical staff providing aspects of CCM services can be counted toward the CCM time requirement at any time, provided that the clinical staff are under the general supervision of a practitioner and all other requirements of the “incident to” regulations at § 410.26 are met.
We proposed to revise these aspects of the policy for several reasons. First, one of the required elements of the CCM service is the availability of a means for the beneficiary to make contact with
In conjunction with this proposed revision to the requirements for CCM services provided by clinical staff incident to the services of a practitioner, we also proposed to adopt the same requirements for equivalent purposes in relation to TCM services. As in the case of CCM, TCM explicitly includes separate payment for services that are not necessarily furnished face-to-face, such as coordination with other providers and follow-up with beneficiaries. It would also not be uncommon for auxiliary personnel to provide elements of the TCM services when the physician was not in the office. Generally, we believe that it is appropriate to treat separately billable care coordination services similarly whether in the form of CCM or TCM. We also believe that it would be appropriate to apply the same “incident to” rules that we are proposing for CCM services to TCM services. We did not propose to extend this policy to the required face-to-face portion of TCM. Rather, the required face-to-face portion of the service must still be furnished under direct supervision.
Therefore, we proposed to revise our regulation at § 410.26, which sets out the applicable requirements for “incident to” services, to permit TCM and CCM services provided by clinical staff incident to the services of a practitioner to be furnished under the general supervision of a physician or other practitioner. As with other “incident to” services, the physician (or other practitioner) supervising the auxiliary personnel need not be the same physician (or other practitioner) upon whose professional service the “incident to” service is based. We note that all other “incident to” requirements continue to apply and that the usual documentation of services provided must be included in the medical record.
Commenters uniformly supported our proposal to revise our regulation at § 410.26, which sets out the applicable requirements for “incident to” services, to permit TCM and CCM services provided by clinical staff incident to the services of a practitioner to be furnished under the general supervision of a physician or other practitioner. Under the revised regulation, then, the time spent by clinical staff providing aspects of TCM and CCM services can be counted toward the TCM or CCM time requirement at any time, provided that the clinical staff are under the general supervision of a practitioner and all requirements of the revised “incident to” regulations at § 410.26 are met.
After consideration of the comments, we are finalizing our proposal to revise our regulation at § 410.26, which sets out the applicable requirements for “incident to” services, to permit the CCM and non-face-to-face portion of the TCM services provided by clinical staff incident to the services of a practitioner
In the CY 2014 final rule with comment period (78 FR 74414 through 74428), we defined the elements of the scope of service for CCM that are required for a practitioner to bill Medicare for the CCM service. In addition, we indicated that we intended to develop standards for practices that furnish CCM services to ensure that the practitioners who bill for these services have the capability to fully furnish them (78 FR 74415, 74418). At that time, we anticipated that we would propose these standards in the CY 2015 PFS proposed rule. We actively sought input toward development of these standards by soliciting public comments on the CY 2014 PFS final rule with comment period, through outreach to stakeholders in meetings, by convening a Technical Expert Panel, and by collaborating with federal partners such as the Office of the Assistant Secretary for Planning and Evaluation, the Office of the Assistant Secretary for Health, the Office of the National Coordinator for Health Information Technology (ONC), and the Health Resources and Services Administration. Our goal is to recognize the trend toward practice transformation and overall improved quality of care, while preventing unwanted and unnecessary care.
As we worked to develop appropriate practice standards that would meet this goal, we consistently found that many of the standards we thought were important overlapped in significant ways with the scope of service or with the billing requirements for the CCM services that had been finalized in the CY 2014 final rule with comment period. In cases where the standards we identified were not unique to CCM requirements, we found that the standards overlapped with other Medicare requirements or other federal requirements that apply generally to health care practitioners. Based upon the feedback we received, we sought to avoid duplicating other requirements or, worse, imposing conflicting requirements on practitioners that would furnish CCM services. Given the standards and requirements that are already in place for health care practitioners and applicable to those who furnish and bill for CCM services, we decided not to propose an additional set of standards that would have to be met in order for practitioners to furnish and bill for CCM services. Instead of proposing a new set of standards applicable to only CCM services, we decided to emphasize that certain requirements are inherent in the elements of the existing scope of service for CCM services, and clarify that these must be met in order to bill for CCM services. The CCM scope of service elements finalized in the CY 2014 PFS final rule (78 FR 74414 through 74428) are as follows.
• The provision of 24-hour-a-day, 7-day-a-week access to address the patient's acute chronic care needs. To accomplish this, the patient must be provided with a means to make timely contact with health care providers in the practice to address the patient's urgent chronic care needs regardless of the time of day or day of the week.
• Continuity of care with a designated practitioner or member of the care team with whom the patient is able to get successive routine appointments.
• Care management for chronic conditions including systematic assessment of the patient's medical, functional, and psychosocial needs; system-based approaches to ensure timely receipt of all recommended preventive care services; medication reconciliation with review of adherence and potential interactions; and oversight of patient self-management of medications.
• In consultation with the patient, any caregiver and other key practitioners treating the patient, the practitioner furnishing CCM services must create a patient-centered care plan document to assure that care is provided in a way that is congruent with patient choices and values. The care plan is based on a physical, mental, cognitive, psychosocial, functional and environmental (re)assessment and an inventory of resources and supports. It is a comprehensive plan of care for all health issues, and typically includes, but is not limited to, the following elements: problem list, expected outcome and prognosis, measurable treatment goals, symptom management, planned interventions, medication management, community/social services ordered, how the services of agencies and specialists unconnected to the billing practice will be directed/coordinated, identify the individuals responsible for each intervention, requirements for periodic review and, when applicable, revision of the care plan. A full list of problems, medications and medication allergies in the EHR must inform the care plan, care coordination and ongoing clinical care.
• Management of care transitions within health care, including referrals to other clinicians, follow-up after the patient's visit to an emergency department, and follow-up after discharges from hospitals, skilled nursing facilities, or other health care facilities. The practice must facilitate communication of relevant patient information through electronic exchange of a summary care record with other health care providers regarding these transitions. The practice must also have qualified personnel who are available to deliver transitional care services to the patient in a timely way so as to reduce the need for repeat visits to emergency departments and readmissions to hospitals, skilled nursing facilities or other health care facilities.
• Coordination with home and community based clinical service providers required to support the patient's psychosocial needs and functional deficits. Communication to and from home and community based providers regarding these patient needs must be documented in the patient's medical record.
• Enhanced opportunities for the beneficiary and any relevant caregiver to communicate with the practitioner regarding the beneficiary's care through, not only telephone access, but also through the use of secure messaging, internet or other asynchronous non face-to-face consultation methods.
Similarly, we reminded stakeholders of the following additional billing requirements established in the CY 2014 final rule with comment period (in the following list, we have changed the service period from the 2015 proposed 30-day period to the final 2015 service period of one calendar month):
• Inform the beneficiary about the availability of the CCM services from the practitioner and obtain his or her written agreement to have the services provided, including the beneficiary's authorization for the electronic communication of the patient's medical information with other treating providers as part of care coordination.
• Document in the beneficiary's medical record that all elements of the CCM service were explained and offered to the beneficiary, and note the beneficiary's decision to accept or decline the service.
• Provide the beneficiary a written or electronic copy of the care plan and document in the electronic medical record that the care plan was provided to the beneficiary.
• Inform the beneficiary of the right to stop the CCM services at any time (effective at the end of a calendar month) and the effect of a revocation of the agreement to receive CCM services.
• Inform the beneficiary that only one practitioner can furnish and be paid for
In one area, electronic health records (EHRs), we were concerned that the existing elements of the CCM service could leave some gaps in assuring that beneficiaries consistently receive care management services that offer the benefits of advanced primary care as it was envisioned when this service was created. It is clear that effective care management can be accomplished only through regular monitoring of the patient's health status, needs, and services, and through frequent communication and exchange of information with the patient and among the various health care practitioners and providers treating the patient. After gathering input from stakeholders through the CY 2014 rulemaking cycle, for 2015 we proposed a new scope of service element that would require use of a certified EHR and electronic care planning to furnish CCM services. We believed that requiring those who furnish CCM services to utilize EHR technology that has been certified by a certifying body authorized by the National Coordinator for Health Information Technology was necessary to ensure that key patient information is stored, shared and reconciled among the many practitioners and providers involved in managing the patient's chronic conditions, otherwise care could not be coordinated and managed. Requiring a certified EHR would enable members of the interdisciplinary care team to have immediate access to the most updated information informing the care plan. Therefore we proposed that the billing practitioner must utilize EHR technology certified by a certifying body authorized by the National Coordinator for Health Information Technology to an edition of the EHR certification criteria identified in the then-applicable version of 45 CFR part 170. We proposed that at a minimum, the practice must utilize EHR technology that meets the certification criteria adopted at 45 CFR 170.314(a)(3), 170.314(a)(4), 170.314(a)(5), 170.314(a)(6), 170.314(a)(7) and 170.314(e)(2) pertaining to the capture of demographics, problem lists, medications, and other key elements related to the ultimate creation of an electronic summary care record. These sections of the regulation comprise the certification criteria for specific core technology capabilities (structured recording of demographics, problems, medications, medication allergies, and the creation of a structured clinical summary) for the 2014 edition. Under the proposal, practitioners furnishing CCM services beginning in CY 2015 would be required to utilize an EHR certified to at least these 2014 edition certification criteria. Given these 2014 edition criteria, the EHR technology would be certified to capture data and ultimately produce summary records according to the HL7 Consolidated Clinical Document Architecture standard (see 45 CFR 170.205(a)(3)).
In addition, when any of the CCM scope of service elements refers to a health or medical record, we proposed to require use of an EHR certified to at least the 2014 edition certification criteria to fulfill the scope of service element in relation to the health or medical record. As finalized in the CY 2014 PFS final rule, the scope of service elements that reference a health or medical record are:
• A full list of problems, medications and medication allergies in the EHR must inform the care plan, care coordination and ongoing clinical care.
• Communication to and from home and community based providers regarding the patient's psychosocial needs and functional deficits must be documented in the patient's medical record.
• Inform the beneficiary of the availability of CCM services and obtain his or her written agreement to have the services provided, including authorization for the electronic communication of his or her medical information with other treating providers. Document in the beneficiary's medical record that all of the CCM services were explained and offered, and note the beneficiary's decision to accept or decline these services.
• Provide the beneficiary a written or electronic copy of the care plan and document in the electronic medical record that the care plan was provided to the beneficiary.
Regarding the care plan in particular, we believed that requiring practitioners furnishing CCM services to maintain and share an electronic care plan would alleviate the errors that can occur when care plans are not systematically reconciled. To ensure that practices offering CCM services meet these needs, we proposed that CCM services must be furnished with the use of an EHR or other health IT or health information exchange platform that includes an electronic care plan that is accessible to all practitioners within the practice, including being accessible to those who are furnishing care outside of normal business hours, and that is available to be shared electronically with care team members outside of the practice. This was a more limited proposal compared to our CY 2014 proposal that we did not finalize that would have required members of the chronic care team who are involved in the after-hours care of the patient to have access to the beneficiary's full electronic medical record (78 FR 74416 through 74417).
Regarding the clinical summary, we proposed to require technology certified to the 2014 edition for the electronic creation of the clinical summary, formatted according to the standard adopted at 45 CFR 170.205(a)(3), but we did not specify that this format must be used for the exchange of beneficiary information (79 FR 40367). For instance, we did not propose that practitioners billing for CCM services must adopt certified technology related to the exchange of a summary care record such as the transmission standard related to Direct Project Transport in 45 CFR 170.314(b)(2)(ii).
We indicated that we believed our proposed new scope of service element for a certified EHR and electronic care planning would ensure that practitioners billing for CCM could fully furnish the services, allow practitioners to innovate around the systems that they use to furnish these services, and avoid overburdening small practices. We indicated that we believed that allowing flexibility as to how practitioners capture, update, and share care plan information was important at this stage given the maturity of current EHR standards and other electronic tools in use in the market today for care planning.
In addition to seeking comment on this new proposed scope of service element, we sought comment on any changes to the scope of service or billing requirements for CCM services that may be necessary to ensure that the practitioners who bill for these services have the capability to furnish them and that we can appropriately monitor billing for these services. With the addition of the electronic health information technology element that we proposed, we believed that the elements of the scope of service for CCM services, when combined with other important federal health and safety regulations, would provide sufficient assurance that practitioners billing for CCM could fully furnish the services, and that Medicare beneficiaries receiving CCM would receive appropriate services. However we expressed special interest in receiving public feedback regarding any meaningful elements of the CCM service or beneficiary protections that may be missing from the scope of service elements and billing requirements.
The following paragraphs summarize the comments we received regarding
Although commenters supported adoption of certified EHR technology (CEHRT) generally, many were concerned that an insufficient number of physicians have adopted CEHRT with the functionalities we proposed for CCM, especially interoperability with other providers. The commenters were also concerned that physicians practicing in rural or economically depressed areas would not have the resources to implement such technology and would be disqualified from furnishing separately billable CCM services. Many believed the proposal was laudable but premature, recommending that CMS delay adoption of the 2014 EHR certification criteria for CCM services by 3 to 4 years when they will be more widely adopted, or phase in the 2014 certification criteria over 2 years as a requirement for 2017. Several commenters recommended that we finalize our proposal but provide hardship exceptions for certain smaller or rural practices to enable them to bill separately for CCM services in the absence of an interoperable EHR in certain circumstances, provide financial incentives, or allow other flexibility around the requirements for physicians who cannot meet them at this time. One commenter supported the proposal but suggested we allow aspects of CCM services to be furnished using fax and secure messaging technology if physicians encounter challenges with interoperability. Until EHR systems are interoperable, some commenters suggested allowing practitioners to attest that all requirements for billing CCM were met using CEHRT or an alternative technology, or to attest that all members of the care team have timely access (24/7 access in “real time” or “near real time”) to the most updated information regarding the care plan through either electronic or non-electronic means, with ongoing efforts to implement interoperable EHRs. The commenters stated many practices are making patient information accessible in a timely manner to the entire care team, but have not yet fully implemented an interoperable EHR with other providers. Several commenters were concerned about the ability of current EHR technologies to share information across different providers and EHR systems. Commenters requested that CMS ensure that no certified EHR contains technological or business impediments to data sharing across disparate technology platforms used by multiple providers trying to coordinate care. In addition, many commenters were concerned about access to CCM services, and recommended that CMS prioritize access over adoption of CEHRT. Several commenters stated that not all types of physicians have access to an EHR that meets the needs of their specialty.
A number of commenters stated that CCM could be (and already is) effectively provided without any EHR or a without a certified EHR, and recommended that CMS rescind the proposal or make the EHR requirement optional. These commenters disagreed with the requirement that CCM services must be furnished with use of a certified EHR, information technology (IT) platform or exchange platform that includes a care plan, with some stating that certified EHR systems have not demonstrated improvements in the management of chronic conditions, especially complex cases, and suggested postponing the care plan and other EHR requirements until they are proven effective and adopted by most providers. Others stated that an EHR was necessary and that CMS should require an EHR that promotes communication among various professional on the care team, includes the patient as part of the team, and enables clinical monitoring and effective care planning. Commenters indicated that many physicians accomplish this through generating or receiving electronic discharge summaries, clinical documentation, and patient-centered plans of care, but are not using certified technologies to carry out these functions and should not be penalized.
One commenter stated that only about half of all physicians had an EHR system with advanced functionalities in 2013, many current systems were not designed with interoperability in mind and transition costs are high. The commenter believed the proposed payment amount would not sufficiently cover the cost of purchasing or upgrading an EHR system, and requiring a certified EHR would limit the number of eligible physicians without significantly adding value to CCM services. Another commenter stated that only 1,000 physicians and other eligible health professionals have achieved Stage 2 of Meaningful Use of certified EHR technology, compared with more than 300,000 physicians and eligible professionals who have achieved Stage 1.
In addition, several commenters requested that we clarify whether the care plan must be electronically accessible 24/7 to all providers treating the patient's chronic conditions, those within the billing practice, or those within the billing practice who are communicating with the patient after hours. The commenters noted that providers other than the billing practitioner may not use the same certified EHR, so it would be unreasonable to expect the same care plan and other relevant information to be accessible to all providers at all times. Other commenters believed we proposed flexibility around the certified EHR requirement in relation to the
In addition, we proposed that the electronic care plan must be available to be shared electronically with care team members outside the practice (who are not billing for CCM). We sought to convey that practitioners could satisfy these requirements related to the care plan without using the certified EHR technology. We specified that the certified EHR technology is only required to accomplish activities described in the scope of service elements that specifically mention a medical record or EHR. We said that a full list of problems, medications and medication allergies in the certified EHR (which would follow structured recording formats) must inform the care plan, not that the care plan itself must be created or transmitted among providers using certified EHR technology. We note that this was a limited proposal compared to our CY 2014 proposal that we did not finalize that would have required members of the chronic care team who are involved in the after-hours care of the patient to have access to the patient's full electronic medical record instead of just the care plan (78 FR 74416 through 74417).
Through separate requirements for the electronic care plan and the certified EHR, our intent was to require practitioners to use some form of electronic technology tool or service in fulfilling the care plan element (other than facsimile transmission), recognizing that certified EHR technology is limited in its ability to support electronic care planning at this time, and that practitioners must have flexibility to use a wide range of tools and services beyond certified EHR technology now available in the market to support electronic care planning. We intended that all care team members furnishing CCM services that are billed by a given practice (contributing to the minimum time required for billing) must have access to the electronic care plan at all times when furnishing CCM services. However, the electronic care plan would not have to be available at all times to other non-billing practices, recognizing that other practices may not be using compatible electronic technology or participating in a health information exchange.
We are finalizing the electronic care plan and 24/7 access elements as proposed, clarifying that to satisfy the care plan scope of service element, practitioners must electronically capture care plan information and make this information available to all care team members furnishing CCM services that are billed by a given practice (counting towards the minimum monthly service time), even when furnishing CCM outside of normal business hours. In addition, practitioners must electronically share care plan information as appropriate with other providers and practitioners who are furnishing care to the patient. We are not requiring that practitioners use a specific electronic technology to meet the requirement for 24/7 access to the care plan or its transmission, only that they use an electronic technology other than facsimile. For instance, practices may satisfy the 24/7 care plan access requirement through remote access to an EHR, web-based access to a care management application, or web-based access to a health information exchange service that captures and maintains care plan information. Likewise, we are not requiring that practitioners use a specific electronic technology to meet the requirement to share care plan information electronically with other practitioners and providers who are not billing for CCM. For instance, practitioners may meet this sharing requirement through the use of secure messaging or participation in a health information exchange with those practitioners and providers, although they may not use facsimile transmission.
While we are not requiring that practitioners use a specific electronic technology at this time (other than not allowing facsimile), we may revisit this requirement as standards-based exchange of care plan information becomes more widely available in the future. We remind stakeholders that for all electronic sharing of beneficiary information under our final CCM policies, HIPAA standards apply in the usual manner.
As discussed above, our final policy will allow practitioners billing the PFS for CCM services to use the edition(s) of certification criteria that is acceptable for the EHR Incentive Programs as of December 31st of each calendar year preceding each PFS payment year to meet the final core technology capabilities (structured recording of demographics, problems, medications, medication allergies, and the creation of a structured clinical summary). (Also practitioners must use this CCM certified technology to fulfill the CCM scope of service requirements whenever the requirements reference a health or medical record). Under this final policy, practitioners must format their structured clinical summaries according to, at a minimum, the standard that is acceptable for the EHR Incentive Programs as of December 31st of the calendar year preceding each PFS payment year.
We are finalizing our proposal that practitioners must communicate relevant patient information through electronic exchange of a summary care record to support transitions of care, with a clarification that practitioners do not have to use any specific content exchange standard in CY 2015. We did not propose and are not finalizing a requirement to use a specific tool or service to communicate beneficiary information, as long as providers do so electronically. We note however that faxing will not fulfill this requirement for exchange of the summary care record. We did not propose to modify our view, discussed in the CY 2014 PFS final rule with comment period, that practitioners furnishing and billing for CCM services must be able to support care transitions through the electronic exchange of beneficiary information in a summary care record (78 FR 74418). While certain 2014 edition certification criteria address a content standard and transmission method for exchange of a summary record, we continue to expect that only some practitioners could adopt and use such technology. Moreover, we recognize that providers are currently exchanging patient information to support transitions of care in a variety of meaningful ways beyond the methods specified in 2014 edition certification criteria. We continue to believe that at least for CY 2015, we should allow flexibility in the selection of the electronic tool or service that is used to transmit beneficiary information in support of care transitions, as long as practitioners electronically share beneficiary information to support transitions of care. Finally we remind stakeholders that for all electronic sharing of beneficiary information under our final CCM policies, HIPAA standards apply in the usual manner.
• Patient List Creation (45 CFR 170.314(a)(14)), which would support the required element of service for preventive services and routine appointments, and could help provide registry types of functions for the practice to use in managing patients who have agreed to participate in the chronic care management service.
• Patient-Specific Education Resources (§ 170.314(a)(15)), which would help assure the ability to provide the patient with relevant educational materials about their chronic disease conditions.
• Clinical Reconciliation (§ 170.314(b)(4)), which would serve support the medication reconciliation requirement and the requirement to review patient adherence to their medication regime.
• View/Download/Transmit to a 3rd Party (§ 170.314(e)(1)), which would enable patients to access their own electronic health record and have access to information related to their care at their own convenience.
• Secure Messaging, Ambulatory Setting Only (§ 170.314(e)(3)).
Regarding beneficiary consent, we believe written beneficiary consent and its documentation in the medical record is necessary because we are requiring practices to share beneficiaries' protected health information both within and outside of the billing practice in the course of furnishing CCM services and because beneficiaries will be required to pay coinsurance on non-face-to-face services. We do not believe the content or nature of the required consent is so complex that we should develop model formats. If we believe changes to the scope of service elements are warranted in the future, we will propose them through notice and comment rulemaking taking the comments we received to date into consideration.
In summary, we are finalizing our proposal for the CCM scope of service element for EHR technology as proposed, with the following modification. We are including as an element of the separately billable CCM service the use of, at a minimum, technology certified to the edition(s) of certification criteria that is acceptable for the EHR Incentive Programs as of December 31st of the calendar year prior to the PFS payment year (CCM certified technology), to meet the final core EHR capabilities (structured recording of demographics, problems, medications, medication allergies and the creation of a structured clinical summary record) and to fulfill all activities within the final scope of service elements that reference a health or medical record. For CCM payment in CY 2015, this policy will allow practitioners to use EHR technology certified to either the 2011 or 2014 edition(s) of certification criteria. The final scope of service elements that refer to a health or medical record, and that must be fulfilled using the CCM certified technology, are summarized in Table 33 and include the following:
• A full list of problems, medications and medication allergies in the EHR must inform the care plan, care coordination and ongoing clinical care.
• Communication to and from home and community based providers regarding the patient's psychosocial needs and functional deficits must be documented in the patient's medical record.
• Inform the beneficiary of the availability of CCM services and obtain his or her written agreement to have the services provided, including authorization for the electronic communication of his or her medical information with other treating providers. Document in the beneficiary's medical record that all of the CCM services were explained and offered, and note the beneficiary's decision to accept or decline these services.
• Provide the beneficiary a written or electronic copy of the care plan and document in the electronic medical record that the care plan was provided to the beneficiary.
We are finalizing our proposal regarding the electronic care plan scope of service element without modification. To satisfy this element, practitioners must at least electronically capture care plan information; make this information available on a 24/7 basis to all practitioners within the practice who are furnishing CCM services whose time counts towards the time requirement for the practice to bill the CCM code; and share care plan information electronically (other than by facsimile) as appropriate with other practitioners
Similarly, we are not requiring practitioners to use a specific tool or service to communicate clinical summaries in managing care transitions, as long as practitioners transmit the clinical summaries electronically, with the exception of faxing which will not fulfill the requirement for exchange of a summary care record. However practitioners must format their clinical summaries according to, at a minimum, the standard that is acceptable for the EHR Incentive Programs as of December 31st of the calendar year preceding each PFS payment year.
We remind stakeholders that for all electronic sharing of beneficiary information under our final CCM policies, HIPAA standards apply in the usual manner. We summarize the final requirements for the CCM scope of service elements and billing requirements for CY 2015 and their relationship to the final EHR requirements in Table 33.
As discussed in section II.G., several CMS models and demonstrations address payment for care management services. The Multi-payer Advanced Primary Care Practice (MAPCP) Demonstration and the Comprehensive Primary Care (CPC) Initiative both include payments for care management services that closely overlap with the scope of service for the new chronic care management services code. In these two initiatives, primary care practices are receiving per beneficiary per month payments for care management services furnished to Medicare fee-for-service beneficiaries attributed to their practices. We proposed that practitioners participating in one of these two models may not bill Medicare for CCM services furnished to any beneficiary attributed to the practice for purposes of participating in one of these initiatives, as we believe the payment for CCM services would be a duplicative payment for substantially the same services for which payment is made through the per beneficiary per month payment. However, we proposed that these practitioners may bill Medicare for CCM services furnished to eligible beneficiaries who are not attributed to the practice for the purpose of the practice's participation as part of one of these initiatives. As the Innovation Center implements new models or demonstrations that include payments for care management services, or as changes take place that affect existing models or demonstrations, we will address potential overlaps with the CCM service and seek to implement appropriate reimbursement policies. We solicited comments on this proposal. We also solicited comments on the extent to which these services may not actually be duplicative and, if so, how our reimbursement policy could be tailored to address those situations.
We received several comments that either supported or did not oppose our proposed policy regarding the payment of CCM services in CMS models and demonstrations that also pay for care management services.
The following is a summary of the other comments we received regarding our proposals on reimbursement policies.
In response to these comments, we will engage in extensive communications explaining to practices participating in CMMI models and demonstrations, specifically the CPC and MAPCP initiatives, the policies related to care management payments under these initiatives and the CCM service. We continue to believe the payment for CCM services would be a duplicative payment for substantially the same services included in the per beneficiary per month payment under the CPC and MAPCP models. Therefore, we are finalizing our proposed policy that CMS will not pay practitioners participating in one of these two initiatives for CCM services furnished to any beneficiary attributed by the initiative to the practice. These practitioners may bill Medicare for CCM services furnished to eligible beneficiaries who are not attributed by the initiative to the practice. As the Innovation Center implements new models or demonstrations that include payments for care management services, or as changes take place that affect existing models or demonstrations, we will address potential overlaps with the
Section 1833(g) of the Act requires application of annual, per beneficiary, limitations on the amount of expenses that can be considered as incurred expenses for outpatient therapy services under Medicare Part B, commonly referred to as “therapy caps.” There is one therapy cap for outpatient occupational therapy (OT) services and another separate therapy cap for physical therapy (PT) and speech-language pathology (SLP) services combined.
The therapy caps apply to outpatient therapy services furnished in all settings, including the once-exempt outpatient hospital setting (effective October 1, 2012) and critical access hospitals (effective January 1, 2014).
The therapy cap amounts under section 1833(g) of the Act are updated each year based on the Medicare Economic Index (MEI). Specifically, the annual caps are calculated by updating the previous year's cap by the MEI for the upcoming calendar year and rounding to the nearest $10.00. Increasing the CY 2014 therapy cap of $1,920 by the CY 2015 MEI of 0.8 percent and rounding to the nearest $10.00 results in a CY 2015 therapy cap amount of $1,940.
An exceptions process for the therapy caps has been in effect since January 1, 2006. Originally required by section 5107 of the Deficit Reduction Act of 2005 (DRA), which amended section 1833(g)(5) of the Act, the exceptions process for the therapy caps has been extended multiple times through subsequent legislation (MIEA–TRHCA, MMSEA, MIPPA, the Affordable Care Act, MMEA, TPTCCA, MCTRJCA, ATRA and PAMA). The Agency's current authority to provide an exceptions process for therapy caps expires on March 31, 2015.
After expenses incurred for the beneficiary's outpatient therapy services for the year have exceeded one or both of the therapy caps, therapy suppliers and providers use the KX modifier on claims for subsequent services to request an exception to the therapy caps. By use of the KX modifier, the therapist is attesting that the services above the therapy caps are reasonable and necessary and that there is documentation of medical necessity for the services in the beneficiary's medical record.
Under section 1833(g)(5)(C) of the Act, we are required to apply a manual medical review process to therapy claims when a beneficiary's incurred expenses for outpatient therapy services exceed a threshold amount of $3,700. There are two separate thresholds of $3,700, just as there are two separate therapy caps, one for OT services and one for PT and SLP services combined, and incurred expenses are counted towards the thresholds in the same manner as the caps. The statutorily required manual medical review expires March 31, 2015, consistent with the expiration of the Agency's authority to provide an exceptions process for the therapy caps. For information on the manual medical review process, go to
As discussed in the proposed rule (79 FR 40368), section 1861(pp) of the Act defines “colorectal cancer screening tests” and, under section 1861(pp)(1)(C), a “screening colonoscopy” is one of the recognized procedures. Among other things, section 1861(pp)(1)(D) of the Act authorizes the Secretary to modify the tests and procedures covered under this subsection, “with such frequency and payment limits, as the Secretary determines appropriate,” in consultation with appropriate organizations. The current definition of “colorectal cancer screening tests” at § 410.37(a)(1) includes “screening colonoscopies.” Until recently, the prevailing practice for screening colonoscopies has been moderate sedation provided intravenously by the endoscopist, without resort to separately provided anesthesia.
However, a recent study in
In light of these developments, we expressed our concern in the proposed rule that the mere reference to “screening colonoscopies” in the definition of “colorectal cancer screening tests” has become inadequate. Indeed, we were convinced that the growing prevalence of separately provided anesthesia services in conjunction with screening colonoscopies reflects a change in practice patterns. Therefore, consistent with the authority delegated by section 1861(pp)(1)(D) of the Act, we proposed to revise the definition of “colorectal cancer screening tests” to adequately reflect these new patterns. Specifically, we proposed to revise the definition of “colorectal cancer screening tests” at § 410.37(a)(1)(iii) to include anesthesia that is separately furnished in conjunction with screening colonoscopies (79 FR 40369).
We also stated that our proposal to revise the definition of “colorectal cancer screening tests” in this manner would further reduce our beneficiaries' cost-sharing obligations under Part B. Screening colonoscopies have been recommended with a grade of A by the United States Preventive Services Task Force (USPSTF) and § 410.152(l)(5) provides that Medicare Part B pays 100 percent of the Medicare payment amount established under the PFS for colorectal cancer screening tests except for barium enemas (which do not have a grade A or B recommendation from the USPSTF). This regulation is based on section 1833(a)(1) of the Act, as amended by section 4104 of the Affordable Care Act, which requires 100
In implementing the amendments made by section 4104 of the Affordable Care Act, we did not provide at that time for waiving the Part B deductible and coinsurance for covered anesthesia services separately furnished in conjunction with screening colonoscopies. At that time, we believed that our payment for the screening colonoscopy, which included payment for moderate sedation services, reflected the typical screening colonoscopy. Under the current regulations, Medicare beneficiaries who receive anesthesia from a different professional than the one furnishing the screening colonoscopy would be incurring costs for the coinsurance and deductible under Part B for those separate services. With the changes in the standard of care and shifting practice patterns toward increased use of anesthesia in conjunction with screening colonoscopy, beneficiaries who receive covered anesthesia services from a different professional than the one furnishing the colonoscopy would incur costs for any coinsurance and any unmet part of the deductible for this component of the service. However, our proposed revision to the definition of “colorectal cancer screening tests” would lead to Medicare paying 100 percent of the fee schedule amounts for screening colonoscopies, including any portion attributable to anesthesia services furnished by a separate practitioner in conjunction with such tests, under § 410.152(l)(5). Similarly, this revision would also mean that expenses incurred for a screening colonoscopy, and the anesthesia services furnished in conjunction with such tests, will not be subject to the Part B deductible and will not count toward meeting that deductible under § 410.160(b)(7). We believe the proposal encourages more beneficiaries to obtain a screening colonoscopy, which is consistent with the intent of the statutory provision to waive Medicare cost-sharing for certain recommended preventive services, and is consistent with the authority delegated to the Secretary in section 1861(pp)(1)(D) of the Act.
In light of the changing practice patterns for screening colonoscopies, continuing to require Medicare beneficiaries to bear the deductible and coinsurance expenses for separately billed anesthesia services furnished and covered by Medicare in conjunction with screening colonoscopies could become a significant barrier to these essential preventive services. As we noted when we implemented the provisions of the Affordable Care Act waiving the Part B deductible and coinsurance for these preventive services, the goal of these provisions was to eliminate financial barriers so that beneficiaries would not be deterred from receiving them (75 FR 73412). Therefore, we proposed to exercise our authority under section 1861(pp)(1)(D) of the Act to revise the definition of colorectal cancer screening tests to encourage beneficiaries to seek these services by extending the waiver of coinsurance and deductible to anesthesia or sedation services furnished in conjunction with a screening colonoscopy.
We noted in the proposed rule (79 FR 40370) that, in implementing these proposed revisions to the regulations, it would be necessary to establish a modifier for use when billing the relevant anesthesia codes for services that are furnished in conjunction with a screening colonoscopy, and thus, qualify for the waiver of the Part B deductible and coinsurance. Therefore, we noted that we would provide appropriate and timely information on this new modifier and its proper use so that physicians will be able to bill correctly for these services when the revised regulations become effective. We also noted that the valuation of colonoscopy codes, which include moderate sedation, would be subject to the same proposed review as other codes that include moderate sedation, as discussed in section II.B.6 of this final rule with comment period.
The following is a summary of the comments received on this proposal.
Our authority is limited by the language of the Medicare Act. Specifically, section 1834(d)(3)(D) of the Act states that, “[i]f during the course of such a screening colonoscopy, a lesion or growth is detected which results in a biopsy or removal of the lesion or growth, payment under this part shall not be made for the screening colonoscopy but shall be made for the procedure classified as a colonoscopy with such biopsy or removal.” As a result of this statutory provision, when an anticipated screening colonoscopy ends up involving a biopsy or polyp removal, Medicare cannot pay for this procedure as a screening colonoscopy. In these circumstances, Medicare pays 80 percent of the diagnostic colonoscopy procedure and the beneficiary is responsible for paying Part B coinsurance. Under the statute, when a polyp or other growth is removed, beneficiaries are responsible for Part B coinsurance for the diagnostic colonoscopy, and similarly, any Part B coinsurance for any covered anesthesia.
In general, Medicare makes one payment for the professional component of an imaging service for each technical component (TC) service that is furnished. Under “unusual circumstances,” physicians can bill for a secondary interpretation using modifier -77, for instance, when an emergency room physician conducts an x-ray, provides an interpretation, identified a questionable finding, and subsequently requests a second interpretation from a radiologist to inform treatment decisions. In all cases, a “professional component” (PC) interpretation service should only be billed for a full interpretation and report, rather than a “review,” which is paid for as part of an E/M payment.
In recent years, technological advances such as the integration of picture and archiving communications systems across health systems, growth in image sharing networks and health information exchange platforms through which providers can share images, and consumer-mediated exchange of images, have greatly increased physicians' access to existing diagnostic-quality radiology images. Accessing and utilizing these images to inform the diagnosis and record an interpretation in the medical record may allow physicians to avoid ordering duplicative tests.
We solicited comments on the appropriateness of more routine billing for secondary interpretations, although we did not propose to make any changes to the treatment of these services in 2015. We wanted to determine whether there were an expanded set of circumstances under which more routine Medicare payment for a second PC for radiology services would be appropriate, and whether such a policy would be likely to reduce the incidence of duplicative advanced imaging studies.
To achieve that goal, we solicited comments on the following: the circumstances under which physicians are currently conducting secondary interpretations and whether they are seeking payment for these interpretations; whether more routine payment for secondary interpretations should be restricted to certain high-cost advanced diagnostic imaging services; considerations for valuing secondary interpretation services; the settings in which secondary interpretations chiefly occur; and considerations for
Section 1861(p) of the Act defines outpatient therapy services to include physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP) services furnished by qualified occupational therapists, physical therapists, and speech-language pathologists in their offices and in the homes of beneficiaries. The regulations at §§ 410.59(c), 410.60(c), and 410.62(c) set forth special provisions for services furnished by therapists in private practice, including basic qualifications necessary to qualify as a supplier of OT, PT, and SLP services, respectively. As part of these basic qualifications, the current regulatory language includes descriptions of the various practice types for therapists' private practices. Based on our review of these three sections of our regulations, we became concerned that the language is not as clear as it could be—especially with regard to the relevance of whether a practice is incorporated. The regulations appear to make distinctions between unincorporated and incorporated practices, and some practice types are listed twice. Accordingly, we proposed changes to the regulatory language to remove unnecessary distinctions and redundancies within the regulations for OT, PT, and SLP. We noted that these changes are for clarification only, and do not reflect any change in our current policy.
To consistently specify the permissible practice types (a solo practice, partnership, or group practice; or as an employee of one of these) for suppliers of outpatient therapy services in private practice (specifically for occupational therapists, physical therapists and speech-language pathologists), we proposed to replace the regulatory text at § 410.59(c)(1)(ii)(A) through (E), § 410.60(c)(1)(ii)(A) through (E), and § 410.62(c)(1)(ii)(A) through (E) and to replace it with language listing the permissible practice types without limitations for incorporated or unincorporated.
Another commenter representing a membership association of rehabilitation physicians told us that, rather than clarifying or simplifying the existing regulations, the proposed language is more ambiguous. The commenter urged us to clarify that our proposed language would continue to allow therapists in private practice to be employed by physician groups as specified in current provisions.
Therefore, we are finalizing our proposed changes to the regulations for permissible practice types for therapists in private practice at § 410.59(c)(1)(ii)(A) through (E), § 410.60(c)(1)(ii)(A) through (E), and § 410.62(c)(1)(ii)(A) through(E).
In the CY 2005 PFS final rule with comment period (69 FR 66357 through 66359), we established criteria for furnishing outpatient per diem ESRD-related services in partial month scenarios. We specified that use of per diem ESRD-related services is intended to accommodate unusual circumstances when the outpatient ESRD-related services would not be paid for under the monthly capitation payment (MCP), and that use of the per diem services is limited to the circumstances listed below.
• Transient patients—Patients traveling away from home (less than full month);
• Home dialysis patients (less than full month);
• Partial month where there were one or more face-to-face visits without the comprehensive visit and either the patient was hospitalized before a complete assessment was furnished, dialysis stopped due to death, or the patient received a kidney transplant.
• Patients who have a permanent change in their MCP physician during the month.
Additionally, we provided billing guidelines for partial month scenarios in the Medicare claims processing manual, publication 100–04, chapter 8, section 140.2.1. For center-based patients, we specified that if the MCP practitioner furnishes a complete assessment of the ESRD beneficiary, the MCP practitioner should bill for the full MCP service that reflects the number of visits furnished during the month. However, we did not extend this policy to home dialysis (less than a full month) because the home dialysis MCP service did not include a specific frequency of required patient visits. In other words, unlike the ESRD MCP service for center-based patients, a visit was not required for the home dialysis MCP service as a condition of payment.
In the CY 2011 PFS final rule with comment period (75 FR 73295 through 73296), we changed our policy for the home dialysis MCP service to require the MCP practitioner to furnish at least one face-to-face patient visit per month as a condition of payment. However, we inadvertently did not modify our billing guidelines for home dialysis (less than a full month) to be consistent with partial month scenarios for center-based dialysis patients. As discussed in the CY
A summary of the comments on this proposal and our response is provided below.
The SGR is an annual growth rate that applies to physicians' services paid by Medicare. The use of the SGR is intended to control growth in aggregate Medicare expenditures for physicians' services. Payments for services are not withheld if the percentage increase in actual expenditures exceeds the SGR. Rather, the PFS update, as specified in section 1848(d)(4) of the Act, is adjusted based on a comparison of allowed expenditures (determined using the SGR) and actual expenditures. If actual expenditures exceed allowed expenditures, the update is reduced. If actual expenditures are less than allowed expenditures, the update is increased.
Section 1848(f)(2) of the Act specifies that the SGR for a year (beginning with CY 2001) is equal to the product of the following four factors:
(1) The estimated change in fees for physicians' services;
(2) The estimated change in the average number of Medicare fee-for-service beneficiaries;
(3) The estimated projected growth in real Gross Domestic Product per capita; and
(4) The estimated change in expenditures due to changes in statute or regulations.
In general, section 1848(f)(3) of the Act requires us to determine the SGRs for 3 different time periods, using the best data available as of September 1 of each year. Under section 1848(f)(3) of the Act, (beginning with the FY and CY 2000 SGRs) the SGR is estimated and subsequently revised twice based on later data. (The Act also provides for adjustments to be made to the SGRs for FY 1998 and FY 1999. See the February 28, 2003
Section 1848(f)(4)(A) of the Act defines the scope of physicians' services covered by the SGR. The statute indicates that “the term `physicians' services' includes other items and services (such as clinical diagnostic laboratory tests and radiology services), specified by the Secretary, that are commonly performed or furnished by a physician or in a physician's office, but does not include services furnished to a Medicare+Choice plan enrollee.”
We published a definition of physicians' services for use in the SGR in the November 1, 2001
As discussed in the CY 2010 PFS final rule with comment period (74 FR 61961), the statute provides the Secretary with clear discretion to decide whether physician-administered drugs should be included or excluded from the definition of “physicians' services.” Exercising this discretion, we removed physician-administered drugs from the definition of physicians' services in section 1848(f)(4)(A) of the Act for purposes of computing the SGR and the levels of allowed expenditures and actual expenditures beginning with CY 2010, and for all subsequent years. Furthermore, in order to effectuate fully the Secretary's policy decision to remove drugs from the definition of physicians' services, we removed physician-administered drugs from the calculation of allowed and actual expenditures for all prior years.
Thus, for purposes of determining allowed expenditures, actual expenditures for all years, and SGRs beginning with CY 2010 and for all subsequent years, we specified that physicians' services include the following medical and other health services if bills for the items and services are processed and paid by Medicare carriers (and those paid through intermediaries where specified) or the equivalent services processed by the Medicare Administrative Contractors:
• Physicians' services.
• Services and supplies furnished incident to physicians' services, except for the expenditures for “drugs and biologicals which are not usually self-administered by the patient.”
• Outpatient physical therapy services and outpatient occupational therapy services,
• Services of PAs, certified registered nurse anesthetists, certified nurse midwives, clinical psychologists, clinical social workers, nurse practitioners, and certified nurse specialists.
• Screening tests for prostate cancer, colorectal cancer, and glaucoma.
• Screening mammography, screening pap smears, and screening pelvic exams.
• Diabetes outpatient self-management training (DSMT) services.
• Medical Nutrition Therapy (MNT) services.
• Diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests (including outpatient diagnostic laboratory tests paid through intermediaries).
• X-ray, radium, and radioactive isotope therapy.
• Surgical dressings, splints, casts, and other devices used for the reduction of fractures and dislocations.
• Bone mass measurements.
• An initial preventive physical exam.
• Cardiovascular screening blood tests.
• Diabetes screening tests.
• Telehealth services.
• Physician work and resources to establish and document the need for a power mobility device.
• Additional preventive services.
• Pulmonary rehabilitation.
• Cardiac rehabilitation.
• Intensive cardiac rehabilitation.
• Kidney disease education (KDE) services.
• Personalized prevention plan services
We first estimated the CY 2015 SGR in March 2014, and we made the estimate available to the MedPAC and on our Web site. Table 34 shows the March 2014 estimate and our current estimates of the factors included in the 2015 SGR. Our March 2014 estimate of the SGR was −3.6 percent. Our current estimate of the 2015 SGR is −13.7 percent. The majority of the difference between the March estimate and our current estimate of the CY 2015 SGR is explained by adjustments to reflect intervening legislative changes that occurred after our March estimate was prepared. Subsequent to the display of the March 2014 estimate, section 101 of the Protecting Access to Medicare Act (PAMA) of 2014 continued a 0.5 percent update to the PFS conversion factor from April 1, 2014, through December 31, 2014 (relative to the 2013 conversion factor), in place of the 24.1 percent reduction that would have occurred under the SGR system on April 1, 2014. In addition, section 101 of PAMA also provides for a 0.0 percent update for services furnished on or after January 1, 2015, through March 31, 2015. While PAMA averted the large reduction in PFS rates scheduled to occur on April 1, 2014, there will be a large reduction in PFS rates on April 1, 2015, as a result of the expiration of the temporary 0.0 percent update. The law and regulation factor of the current estimate of the SGR is now a much larger reduction than previously estimated to account for the current law reduction in PFS rates scheduled to occur on April 1, 2015. We will provide more detail on the change in each of these factors below.
Our current estimate of the CY 2014 SGR is −0.8 percent. Table 35 shows our preliminary estimate of the CY 2014 SGR, which was published in the CY 2014 PFS final rule with comment period, and our current estimate. The majority of the difference between the preliminary estimate and our current estimate of the CY 2014 SGR is explained by adjustments to reflect intervening legislative changes that have occurred since publication of the CY 2014 PFS final rule with comment period. The PFS update reduction that would have occurred on April 1, 2014 was averted by PAMA, which has resulted in a much higher legislative factor than our estimate of the 2014 SGR in CY 2014 PFS final rule with comment period. We will provide more detail on the change in each of these factors below.
The SGR for CY 2013 is 1.3 percent. Table 36 shows our preliminary estimate of the CY 2013 SGR from the CY 2013 PFS final rule with comment period, our revised estimate from the CY 2014 PFS final rule with comment period, and the final figures determined using the best available data as of September 1, 2014. We will provide more detail on the change in each of these factors below.
All of the figures used to determine the CY 2015 SGR are estimates that will be revised based on subsequent data. Any differences between these estimates and the actual measurement of these figures will be included in future revisions of the SGR and allowed expenditures and incorporated into subsequent PFS updates.
This factor is calculated as a weighted average of the CY 2015 changes in fees for the different types of services included in the definition of physicians' services for the SGR. Medical and other health services paid using the PFS are estimated to account for approximately 89.6 percent of total allowed charges included in the SGR in CY 2015 and are updated using the percent change in the MEI. As discussed in section A of this final rule with comment period, the percent change in the MEI for CY 2015 is 0.8 percent. Diagnostic laboratory tests are estimated to represent approximately 10.4 percent of Medicare allowed charges included in the SGR for CY 2015. Medicare payments for these tests are updated by the Consumer Price Index for Urban Areas (CPI–U), which is 2.1 percent for CY 2015. Section 1833(h)(2)(A)(iv) of the Act requires that the CPI–U update applied to clinical laboratory tests be reduced by a multi-factor productivity adjustment (MFP adjustment) and, for each of years 2011 through 2015, by 1.75 percentage points (percentage adjustment). The MFP adjustment will not apply in a year where the CPI–U is zero or a percentage decrease. Further, the application of the MFP adjustment shall not result in an adjustment to the fee schedule of less than zero for a year. However, the application of the percentage adjustment may result in an adjustment to the fee schedule being less than zero for a year and may result in payment rates for a year being less than such payment rates for the preceding year. The applicable productivity adjustment for CY 2015 is −0.6 percent. Adjusting the CPI–U update by the productivity adjustment results in a 1.5 percent (2.1 percent (CPI–U) minus 0.6 percent (MFP adjustment)) update for CY 2015. Additionally, the percentage reduction of 1.75 percent is applied for CYs 2011 through 2015, as discussed previously. Therefore, for CY 2015, diagnostic laboratory tests will receive an update of −0.3 percent. Table 37 shows the weighted average of the MEI and laboratory price changes for CY 2015.
We estimate that the weighted average increase in fees for physicians' services in CY 2015 under the SGR (before applying any legislative adjustments) will be 0.7 percent.
This factor is our estimate of the percent change in the average number of fee-for-service enrollees from CY 2014 to CY 2015. Services provided to Medicare Advantage (MA) plan enrollees are outside the scope of the SGR and are excluded from this estimate. We estimate that the average number of Medicare Part B fee-for-service enrollees will increase by 3.9 percent from CY 2014 to CY 2015. Table 38 illustrates how this figure was determined.
An important factor affecting fee-for-service enrollment is beneficiary enrollment in MA plans. Because it is difficult to estimate the size of the MA enrollee population before the start of a CY, at this time we do not know how actual enrollment in MA plans will compare to current estimates. For this reason, the estimate may change substantially as actual Medicare fee-for-service enrollment for CY 2015 becomes known.
We estimate that the growth in real GDP per capita from CY 2014 to CY 2015 will be 0.7 percent (based on the annual growth in the 10-year moving average of real GDP per capita 2006 through 2015). Our past experience indicates that there have also been changes in estimates of real GDP per capita growth made before the year begins and the actual change in real
The statutory and regulatory provisions that will affect expenditures for CY 2015 relative to CY 2014 are estimated to have an impact on expenditures of −18.1 percent. This is primarily due to payment reductions for eligible professionals that are not meaningful users of health information technology, the estimated reduction in PFS rates that will occur on April 1, 2015 absent a change in law, and expiration of the work GPCI floor.
A more detailed discussion of our revised estimates of the four elements of the CY 2014 SGR follows.
This factor was calculated as a weighted-average of the CY 2014 changes in fees that apply for the different types of services included in the definition of physicians' services for the SGR in CY 2014.
We estimate that services paid using the PFS account for approximately 91.1 percent of total allowed charges included in the SGR in CY 2014. These services were updated using the CY 2014 percent change in the MEI of 0.8 percent. We estimate that diagnostic laboratory tests represent approximately 8.9 percent of total allowed charges included in the SGR in CY 2014. For CY 2014, diagnostic laboratory tests received an update of −0.8 percent.
Table 39 shows the weighted-average of the MEI and laboratory price changes for CY 2014.
After considering the elements described in Table 39, we estimate that the weighted-average increase in fees for physicians' services in CY 2014 under the SGR was 0.7 percent. Our estimate of this factor in the CY 2014 PFS final rule with comment period was 0.6 percent (78 FR 74393).
We estimate that the average number of Medicare Part B fee-for-service enrollees (excluding beneficiaries enrolled in Medicare Advantage plans) increased by 0.2 percent in CY 2014. Table 40 illustrates how we determined this figure.
Our estimate of the 0.2 percent change in the number of fee-for-service enrollees, net of Medicare Advantage enrollment for CY 2014 compared to CY 2013, is different than our estimate of an increase of 2.2 percent in the CY 2014 PFS final rule with comment period (78 FR 74393). While our current projection based on data from 8 months of CY 2014 differs from our estimate of 2.2 percent when we had no actual data, it is still possible that our final estimate of this figure will be different once we have complete information on CY 2014 fee-for-service enrollment.
We estimate that the growth in real GDP per capita will be 0.7 percent for CY 2014 (based on the annual growth in the 10-year moving average of real GDP per capita (2005 through 2014)). Our past experience indicates that there have also been differences between our estimates of real per capita GDP growth made prior to the year's end and the actual change in this factor. Thus, it is possible that this figure will change further as complete actual information on CY 2014 economic performance becomes available to us in CY 2015.
The statutory and regulatory provisions that affected expenditures in CY 2014 relative to CY 2013 are estimated to have an impact on expenditures of −2.4 percent. This impact is due to many different legislative or regulatory provisions affecting spending in 2014 relative to 2013 including a 0.5 percent update for PFS services in 2014.
A more detailed discussion of our final revised estimates of the four elements of the CY 2013 SGR follows.
This factor was calculated as a weighted average of the CY 2013 changes in fees that apply for the different types of services included in the definition of physicians' services for the SGR in CY 2013.
We estimate that services paid under the PFS account for approximately 90.1 percent of total allowed charges included in the SGR in CY 2013. These services were updated using the CY 2013 percent change in the MEI of 0.8 percent. We estimate that diagnostic laboratory tests represent approximately 9.9 percent of total allowed charges included in the SGR in CY 2013. For CY 2013, diagnostic laboratory tests received an update of −3.0 percent.
Table 41 shows the weighted-average of the MEI and laboratory price changes for CY 2013.
After considering the elements described in Table 41, we estimate that the weighted-average increase in fees for physicians' services in CY 2013 under the SGR (before applying any legislative adjustments) was 0.4 percent. This figure is a final one based on complete data for CY 2013.
We estimate the change in the number of fee-for-service enrollees (excluding beneficiaries enrolled in MA plans) from CY 2012 to CY 2013 was 0.5 percent. Our calculation of this factor is based on complete data from CY 2013. Table 42 illustrates the calculation of this factor.
We estimate that the growth in real per capita GDP was 0.9 percent in CY 2013 (based on the annual growth in the 10-year moving average of real GDP per capita (2004 through 2013)). This figure is a final one based on complete data for CY 2013.
Our final estimate for the net impact on expenditures from the statutory and regulatory provisions that affect expenditures in CY 2013 relative to CY 2012 is −0.5 percent. This impact is due to many different legislative or regulatory provisions affecting spending in 2013 relative to 2012, including provisions of the American Taxpayer Relief Act in 2013.
Section 1848(d) of the Act provides that the PFS update is equal to the product of the MEI and the UAF. The UAF is applied to make actual and target expenditures (referred to in the statute as “allowed expenditures”) equal. As discussed previously, allowed expenditures are equal to actual expenditures in a base period updated each year by the SGR. The SGR sets the annual rate of growth in allowed expenditures and is determined by a formula specified in section 1848(f) of the Act. We note that the conversion factor for the time period from January 1, 2015 through March 31, 2015 will reflect a 0.0 percent update based on section 101 of PAMA. Beginning on April 1, 2015 through December 31, 2015, the standard calculation of the PFS CF under the SGR formula would apply.
The calculation of the UAF is not affected by sequestration. Pursuant to 2 U.S.C. 906(d)(6), “The Secretary of Health and Human Services shall not take into account any reductions in payment amounts which have been or may be effected under [sequestration], for purposes of computing any adjustments to payment rates under such title XVIII.” Therefore, allowed charges, which are unaffected by sequestration, were used to calculate physician expenditures in lieu of Medicare payments plus beneficiary cost-sharing. As a result, neither actual expenditures nor allowed expenditures were adjusted to reflect the impact of sequestration.
Under section 1848(d)(4)(B) of the Act, the UAF for a year beginning with CY 2001 is equal to the sum of the following—
•
++ Computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians' services for the prior year (the year prior to the year for which the update is being determined) and the amount of the actual expenditures for those services for that year;
++ Dividing that difference by the amount of the actual expenditures for those services for that year; and
++ Multiplying that quotient by 0.75.
•
++ Computing the difference (which may be positive or negative) between the amount of the allowed expenditures for physicians' services from April 1, 1996, through the end of the prior year and the amount of the actual expenditures for those services during that period;
++ Dividing that difference by actual expenditures for those services for the prior year as increased by the SGR for the year for which the UAF is to be determined; and
++ Multiplying that quotient by 0.33.
Section 1848(d)(4)(E) of the Act requires the Secretary to recalculate allowed expenditures consistent with section 1848(f)(3) of the Act. As discussed previously, section 1848(f)(3) specifies that the SGR (and, in turn, allowed expenditures) for the upcoming CY (CY 2015 in this case), the current CY (that is, CY 2014) and the preceding CY (that is, CY 2013) are to be determined on the basis of the best data available as of September 1 of the current year. Allowed expenditures for a year generally are estimated initially and subsequently revised twice. The second revision occurs after the CY has ended (that is, we are making the second revision to CY 2013 allowed expenditures in this final rule with comment).
Table 43 shows the historical SGRs corresponding to each period through CY 2015.
Consistent with section 1848(d)(4)(E) of the Act, Table 43 includes our second revision of allowed expenditures for CY 2013, a recalculation of allowed expenditures for CY 2014, and our initial estimate of allowed expenditures for CY 2015. To determine the UAF for CY 2015, the statute requires that we use allowed and actual expenditures from April 1, 1996 through December 31, 2014 and the CY 2015 SGR. Consistent with section 1848(d)(4)(E) of the Act, we will be making revisions to the CY 2014 and CY 2015 SGRs and CY 2014 and CY 2015 allowed expenditures. Because we have incomplete actual expenditure data for CY 2014, we are using an estimate for this period. Any difference between current estimates and final figures will be taken into account in determining the UAF for future years.
We are using figures from EE10 in the following statutory formula:
Section 1848(d)(4)(D) of the Act indicates that the UAF determined under section 1848(d)(4)(B) of the Act for a year may not be less than −0.07 or greater than 0.03. Since 0.049 (4.9 percent) is greater than 0.03, the UAF for CY 2015 will be 3 percent.
Section 1848(d)(4)(A)(ii) of the Act indicates that 1.0 should be added to the UAF determined under section 1848(d)(4)(B) of the Act. Thus, adding 1.0 to 0.03 makes the UAF equal to 1.03.
The MEI is required by section 1842(b)(3) of the Act, which states that prevailing charge levels beginning after June 30, 1973, may not exceed the level from the previous year except to the extent that the Secretary finds, on the basis of appropriate economic index data, that the higher level is justified by year-to-year economic changes. The current form of the MEI was detailed in the CY 2014 PFS final rule (78 FR 74264), which revised and reclassified certain cost categories, price proxies, and expense categories.
The MEI measures the weighted-average annual price change for various inputs needed to produce physicians' services. The MEI is a fixed-weight input price index, with an adjustment for the change in economy-wide multifactor productivity. This index, which has CY 2006 base year weights, is comprised of two broad categories: (1) Physician's own time; and (2) physician's practice expense (PE).
The physician's compensation (own time) component represents the net income portion of business receipts and primarily reflects the input of the physician's own time into the production of physicians' services in physicians' offices. This category consists of two subcomponents: (1) Wages and salaries; and (2) fringe benefits.
The physician's practice expense (PE) category represents nonphysician inputs used in the production of services in physicians' offices. This category consists of wages and salaries and fringe benefits for nonphysician staff (who cannot bill independently) and other nonlabor inputs. The physician's PE component also includes the following categories of nonlabor inputs: office expenses; medical materials and supplies; professional liability insurance; medical equipment; medical materials and supplies; and other professional expenses.
Table 44 lists the MEI cost categories with associated weights and percent changes for price proxies for the CY 2015 update. The CY 2015 non-productivity adjusted MEI update is 1.7 percent and reflects a 1.9 percent increase in physician's own time and a 1.5 percent increase in physician's PE. Within the physician's PE, the largest increase occurred in postage, which increased 5.4 percent.
For CY 2015, the increase in the MEI is 0.8 percent, which reflects an increase in the non-productivity adjusted MEI of 1.7 percent and a productivity adjustment of 0.9 percent (which is based on the 10-year moving average of economy-wide private nonfarm business multifactor productivity). The BLS is the agency that publishes the official measure of private non-farm business MFP. Please see
The CY 2015 PFS CF for January 1, 2015 through March 31, 2015 is $35.8013. The CY 2015 PFS CF for April 1, 2015 through December 31, 2015 is $28.2239. The CY 2015 national average anesthesia CF for January 1, 2015 through March 31, 2015 is $22.5550. The CY 2015 national average anesthesia CF for April 1, 2015 through December 31, 2015 is $17.7913.
The formula for calculating the PFS update is set forth in section 1848(d)(4)(A) of the Act. In general, the PFS update is determined by multiplying the CF for the previous year by the percentage increase in the MEI less productivity times the UAF, which is calculated as specified under section 1848(d)(4)(B) of the Act.
Generally, the PFS CF for a year is calculated in accordance with section 1848(d)(1)(A) of the Act by multiplying the previous year's CF by the PFS update.
We note section 101 of the Medicare Improvements and Extension Act, Division B of the Tax Relief and Health Care Act of 2006 (MIEA–TRHCA) provided a 1-year increase in the CY 2007 CF and specified that the CF for CY 2008 must be computed as if the 1-year increase had never applied.
Section 101 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) provided a 6-month increase in the CY 2008 CF, from January 1, 2008, through June 30, 2008, and specified that the CF for the remaining portion of CY 2008 and the CFs for CY 2009 and subsequent years must be computed as if the 6-month increase had never applied.
Section 131 of the MIPPA extended the increase in the CY 2008 CF that applied during the first half of the year to the entire year, provided for a 1.1 percent increase to the CY 2009 CF, and specified that the CFs for CY 2010 and subsequent years must be computed as if the increases for CYs 2007, 2008, and 2009 had never applied.
Section 1011(a) of the DODAA and section 5 of the TEA specified a zero
Section 4 of the Continuing Extension Act of 2010 (CEA) extended the zero percent update for CY 2010 through May 31, 2010.
Subsequently, section 101(a)(2) of the PACMBPRA provided for a 2.2 percent update to the CF, effective from June 1, 2010 to November 30, 2010.
Section 2 of the Physician Payment and Therapy Relief Act of 2010 (Pub. L. 111–286) extended the 2.2 percent update through the end of CY 2010.
Section 101 of the MMEA provided a zero percent update for CY 2011, effective January 1, 2011 through December 31, 2011, and specified that the CFs for CY 2012 and subsequent years must be computed as if the increases in previous years had never applied.
Section 301 of the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) provided a zero percent update effective January 1, 2012 through February 29, 2012, and specified that the CFs for subsequent time periods must be computed as if the increases in previous years had never applied.
Section 3003 of the Middle Class Tax Relief and Job Creation Act of 2012 (Job Creation Act) provided a zero percent update effective March 1, 2012 through December 31, 2012, and specified that the CFs for subsequent time periods must be computed as if the increases in previous years had never applied.
Section 601 of the American Taxpayer Relief Act (ATRA) of 2012 (Pub. L. 112–240) provided a zero percent update for CY 2013, effective January 1, 2013 through December 31, 2013, and specified that the CFs for subsequent time periods must be computed as if the increases in previous years had not been applied.
Section 1101 of the Pathway for SGR Reform Act of 2013 (Pub. L. 113–67) provided a 0.5 percent update to the PFS CF, effective January 1, 2014 through March 31, 2014 and specified that the CFs for subsequent time periods must be computed as if the increases in previous years had not been applied.
Section 101 of the Protecting Access to Medicare Act of 2014 (Pub. L. 113–93) (PAMA) extended this 0.5 percent update through December 31, 2014. Section 101 of the PAMA also provides a 0.0 percent update for services furnished on or after January 1, 2015, through March 31, 2015, and specified that the CFs for subsequent time periods must be computed as if the increases in previous years had not been applied.
Therefore, under current law, the CF that would be in effect in CY 2014 had the prior increases specified above not applied is $27.2006.
In addition, when calculating the PFS CF for a year, section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or decreases in RVUs may not cause the amount of expenditures for the year to differ more than $20 million from what it would have been in the absence of these changes. If this threshold is exceeded, we must make adjustments to preserve budget neutrality. We estimate that CY 2015 RVU changes would result in an increase in Medicare physician expenditures of more than $20 million. Accordingly, we are decreasing the CF by 0.06 percent to offset this estimated increase in Medicare physician expenditures due to the CY 2015 RVU changes.
For January 1, 2015 through March 31, 2015, the PFS update will be 0.0 percent consistent with section 101 of PAMA. After applying the budget neutrality adjustment described above, the conversion factor for January 1, 2015 through March 31, 2015 will be $35.8013.
After March 31, 2015 the standard calculation of the PFS CF under the SGR formula would apply. Therefore, from April 1, 2015 through December 31, 2015 the conversion factor would be $28.2239. This final rule with comment period announces a reduction to payment rates for physicians' services of 21.2 percent during this time period in CY 2015 under the SGR formula.
By law, we are required to make these reductions in accordance with section 1848(d) and (f) of the Act, and these reductions can only be averted by an Act of Congress. While Congress has provided temporary relief from these reductions every year since 2003, a long-term solution is critical. We will continue to work with Congress to fix this untenable situation so doctors and beneficiaries no longer have to worry about the stability and adequacy of payments from Medicare under the PFS.
We illustrate the calculation of the CY 2015 PFS CF in Table 45.
We note payment for services under the PFS will be calculated as follows:
We calculate the anesthesia CFs as indicated in Table 46. Anesthesia services do not have RVUs like other PFS services. Therefore, we account for any necessary RVU adjustments through an adjustment to the anesthesia CF to simulate changes to RVUs. More specifically, if there is an adjustment to the work, PE, or malpractice RVUs, these adjustments are applied to the respective shares of the anesthesia CF as
The anesthesia CF in effect in CY 2014 is $22.6765. Section 101 of PAMA provides for a 0.0 percent update from January 1, 2015 through March 31, 2015. After applying the 0.9994 budget neutrality factor described above, the anesthesia CF in effect from January 1, 2015 through March 31, 2015 will be $22.5550.
The table below includes adjustments to the anesthesia CF that are analogous to the physician fee schedule CF with other adjustments that are specific to anesthesia. In order to calculate the CY 2015 anesthesia CF for April 1, 2015 through December 31, 2015, the statute requires us to calculate the CFs for all previous years as if the various legislative changes to the CFs for those years had not occurred. The resulting CF is then adjusted for the update (the MEI, less multi-factor productivity and increased by the UAF). The national average CF is then adjusted for anesthesia specific work, practice expense and malpractice factors that must be applied to the anesthesia CF as the anesthesia fee schedule does not have RVUs. Accordingly, under current law, the anesthesia CF in effect in CY 2015 for the time period from April 1, 2015 through December 31, 2015 is $17.7913. We illustrate the calculation of the CY 2015 anesthesia CFs in Table 45.
Section 146(a) of the 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.
The payment add-ons under section 1834(l)(13)(A) of the Act have been extended several times. Recently, section 1104(a) of the Pathway for SGR Reform Act of 2013, enacted on December 26, 2013, as Division B (Medicare and Other Health Provisions) of Pub L. 113–67, amended section 1834(l)(13)(A) of the Act to extend the payment add-ons described above through March 31, 2014. Subsequently, section 104(a) of the Protecting Access to Medicare Act of 2014 (Pub. L. 113–93, enacted on April 1, 2014) amended section 1834(l)(13)(A) of the Act to extend the payment add-ons again through March 31, 2015. Thus, these payment add-ons also apply to covered ground ambulance transports furnished before April 1, 2015. (For a discussion of past legislation extending section 1834(l)(13) of the Act, please see the CY 2014 PFS final rule (78 FR 74438 through 74439)).
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. In the CY 2015 PFS proposed rule (79 FR 40372), we proposed to revise § 414.610(c)(1)(ii) to conform the regulations to these statutory requirements. We received one comment regarding this proposal. A summary of the comment we received and our response are set forth below.
After consideration of the public comment received, we are finalizing our proposal to revise § 414.610(c)(1)(ii) to conform the regulations to these statutory requirements.
Section 414(c) of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Pub. L. 108–173, enacted on December 8, 2003) (MMA) added section 1834(l)(12) to 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
The Super Rural Bonus under section 1834(l)(12) of the Act has been extended several times. Recently, section 1104(b) of the Pathway for SGR Reform Act of 2013, enacted on December 26, 2013, as Division B (Medicare and Other Health Provisions) of Pub. L. 113–67, amended section 1834(l)(12)(A) of the Act to extend this rural bonus through March 31, 2014. Subsequently, section 104(b) of the Protecting Access to Medicare Act of 2014 (Pub. L. 113–93, enacted on April 1, 2014) amended section 1834(l)(12)(A) of the Act to extend this rural bonus again through March 31, 2015. 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 before April 1, 2015 where transportation originates in a qualified rural area. (For a discussion of past legislation extending section 1834(l)(12) of the Act, please see the CY 2014 PFS final rule (78 FR 74439 through 74440)).
These statutory provisions are self-implementing. Together, these statutory provisions require a 15-month extension of this rural bonus (which was previously established by the Secretary) through March 31, 2015, and do not require any substantive exercise of discretion on the part of the Secretary. In the CY 2015 PFS proposed rule (79 FR 40372), we proposed to revise § 414.610(c)(5)(ii) to conform the regulations to these statutory requirements. We received one comment regarding this proposal. A summary of the comment we received and our response are set forth below.
After consideration of the public comment received, we are finalizing our proposal to revise § 414.610(c)(5)(ii) to conform the regulations to these statutory requirements.
Under the ambulance fee schedule, the Medicare program pays for ambulance transportation services for Medicare beneficiaries when other means of transportation are contraindicated by the beneficiary's medical condition, and all other coverage requirements are met. Ambulance services are classified into different levels of ground (including water) and air ambulance services based on the medically necessary treatment provided during transport.
These services include the following levels of service:
• For Ground—
++ Basic Life Support (BLS) (emergency and non-emergency)
++ Advanced Life Support, Level 1 (ALS1) (emergency and non-emergency)
++ Advanced Life Support, Level 2 (ALS2)
++ Paramedic ALS Intercept (PI)
++ Specialty Care Transport (SCT)
• For Air—
++ Fixed Wing Air Ambulance (FW)
++ Rotary Wing Air Ambulance (RW)
Under sections 1834(l) and 1861(s)(7) of the Act, Medicare Part B (Supplemental Medical Insurance) covers and pays for ambulance services, to the extent prescribed in regulations, when the use of other methods of transportation would be contraindicated by the beneficiary's medical condition.
The House Ways and Means Committee and Senate Finance Committee Reports that accompanied the 1965 Social Security Amendments suggest that the Congress intended that—
• The ambulance benefit cover transportation services only if other means of transportation are contraindicated by the beneficiary's medical condition; and
• Only ambulance service to local facilities be covered unless necessary services are not available locally, in which case, transportation to the nearest facility furnishing those services is covered (H.R. Rep. No. 213, 89th Cong., 1st Sess. 37 and Rep. No. 404, 89th Cong., 1st Sess. Pt 1, 43 (1965)).
The reports indicate that transportation may also be provided from one hospital to another, to the beneficiary's home, or to an extended care facility.
Our regulations relating to ambulance services are set forth at 42 CFR part 410, subpart B and 42 CFR part 414, subpart H. Section 410.10(i) lists ambulance services as one of the covered medical and other health services under Medicare Part B. Therefore, ambulance services are subject to basic conditions and limitations set forth at § 410.12 and to specific conditions and limitations included at § 410.40 and § 410.41. Part 414, subpart H, describes how payment is made for ambulance services covered by Medicare.
Historically, the Medicare ambulance fee schedule has used the same geographic area designations as the acute care hospital inpatient prospective payment system (IPPS) and other Medicare payment systems to take into account appropriate urban and rural differences. This promotes consistency across the Medicare program, and it provides for use of consistent geographic standards for Medicare payment purposes.
The current geographic areas used under the ambulance fee schedule are based on OMB standards published on December 27, 2000 (65 FR 82228 through 82238), Census 2000 data, and Census Bureau population estimates for 2007 and 2008 (OMB Bulletin No. 10–02). For a discussion of OMB's delineation of Core-Based Statistical Areas (CBSAs) and our implementation of the CBSA definitions under the ambulance fee schedule, we refer readers to the preamble of the CY 2007 Ambulance Fee Schedule proposed rule (71 FR 30358 through 30361) and the CY 2007 PFS final rule (71 FR 69712 through 69716). On February 28, 2013, OMB issued OMB Bulletin No. 13–01, which established revised delineations for Metropolitan Statistical Areas (MSAs), Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. A copy of this bulletin may be obtained at
Although the revisions OMB published on February 28, 2013 are not as sweeping as the changes made when we adopted the CBSA geographic designations for CY 2007, the February 28, 2013 OMB bulletin does contain a number of significant changes. For example, we stated in the CY 2015 PFS proposed rule (79 FR 40373) that if we adopt the revised OMB delineations, there would be new CBSAs, urban counties that would become rural, rural counties that would become urban, and existing CBSAs that would be split apart. We have reviewed our findings and impacts relating to the new OMB delineations, and find no compelling reason to further delay implementation. We stated in the proposed rule that we believe it is important for the ambulance fee schedule to use the latest labor market area delineations available as soon as reasonably possible to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts.
Additionally, in the FY 2015 IPPS proposed rule (79 FR 28055), we also proposed to adopt OMB's revised delineations to identify urban areas and rural areas for purposes of the IPPS wage index. This proposal was finalized in the FY 2015 IPPS final rule (79 FR 49952). For the reasons discussed above, we believe it would be appropriate to adopt the same geographic area delineations for use under the ambulance fee schedule as are used under the IPPS and other Medicare payment systems. Thus, we proposed to implement the new OMB delineations as described in the February 28, 2013 OMB Bulletin No. 13–01 beginning in CY 2015 to more accurately identify urban and rural areas for ambulance fee schedule payment purposes. We believe that the updated OMB delineations more realistically reflect rural and urban populations, and that the use of such delineations under the ambulance fee schedule would result in more accurate payment. Under the ambulance fee schedule, consistent with our current definitions of urban and rural areas (§ 414.605), MSAs would continue to be recognized as urban areas, while Micropolitan and other areas outside MSAs, and rural census tracts within MSAs (as discussed below), would be recognized as rural areas.
In addition to the OMB's statistical area delineations, the current geographic areas used in the ambulance fee schedule also are based on rural census tracts determined under the most recent version of the Goldsmith Modification. These rural census tracts are considered rural areas under the ambulance fee schedule (see § 414.605). For certain rural add-ons, section 1834(l) of the Act requires that we use the most recent version of the Goldsmith Modification to determine rural census tracts within MSAs. In the CY 2007 PFS final rule (71 FR 69714 through 69716), we adopted the most recent (at that time) version of the Goldsmith Modification, designated as Rural-Urban Commuting Area (RUCA) codes. RUCA codes use urbanization, population density, and daily commuting data to categorize every census tract in the country. For a discussion about RUCA codes, we refer the reader to the CY 2007 PFS final rule (71 FR 69714 through 69716). As stated previously, on February 28, 2013, OMB issued OMB Bulletin No. 13–01, which established revised delineations for Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas, and provided guidance on the use of the delineations of these statistical areas. Several modifications of the RUCA codes were necessary to take into account updated commuting data and the revised OMB delineations. We refer readers to the U.S. Department of Agriculture's Economic Research Service Web site for a detailed listing of updated RUCA codes found at
As we stated in the CY 2015 PFS proposed rule (79 FR 40373 through 40374), the 2010 Primary RUCA codes are as follows:
(1) Metropolitan area core: primary flow with an urbanized area (UA).
(2) Metropolitan area high commuting: primary flow 30 percent or more to a UA.
(3) Metropolitan area low commuting: primary flow 10 to 30 percent to a UA.
(4) Micropolitan area core: primary flow within an Urban Cluster of 10,000 to 49,999 (large UC).
(5) Micropolitan high commuting: primary flow 30 percent or more to a large UC.
(6) Micropolitan low commuting: primary flow 10 to 30 percent to a large UC.
(7) Small town core: primary flow within an Urban Cluster of 2,500 to 9,999 (small UC).
(8) Small town high commuting: primary flow 30 percent or more to a small UC.
(9) Small town low commuting: primary flow 10 to 30 percent to a small UC.
(10) Rural areas: primary flow to a tract outside a UA or UC.
Based on this classification, and consistent with our current policy (71 FR 69715), we proposed to continue to designate any census tracts falling at or above RUCA level 4.0 as rural areas for purposes of payment for ambulance services under the ambulance fee schedule. As discussed in the CY 2007 PFS final rule (71 FR 69715), the Office of Rural Health Policy within the Health Resources and Services Administration (HRSA) determines eligibility for its rural grant programs through the use of the RUCA code methodology. Under this methodology, HRSA designates any census tract that falls in RUCA level 4.0 or higher as a rural census tract. In addition to designating any census tracts falling at or above RUCA level 4.0 as rural areas, under the updated RUCA code definitions, HRSA has also designated as rural census tracts those census tracts with RUCA codes 2 or 3 that are at least 400 square miles in area with a population density of no more than 35 people. We refer readers to
We stated in the CY 2015 PFS proposed rule (79 FR 40374) that the adoption of the most current OMB delineations and the updated RUCA codes would affect whether certain areas are recognized as rural or urban. The distinction between urban and rural is important for ambulance payment purposes because urban and rural transports are paid differently. The determination of whether a transport is urban or rural is based on the point of pick-up for the transport, and thus a transport is paid differently depending on whether the point of pick-up is in an urban or a rural area. During claims processing, a geographic designation of urban, rural, or super rural is assigned to each claim for an ambulance transport based on the point of pick-up ZIP code that is indicated on the claim.
Currently, section 1834(l)(12) of the Act (as amended by section 104(b) of the PAMA) specifies that, for services furnished during the period July 1, 2004 through March 31, 2015, the payment amount for the ground ambulance base rate is increased by a “percent increase” (Super Rural Bonus) where the ambulance transport originates in a “qualified rural area,” which is a rural area that we determine to be in the lowest 25th percentile of all rural populations arrayed by population density (also known as a “super rural area”). We implement this Super Rural Bonus in § 414.610(c)(5)(ii). We stated in the CY 2015 PFS proposed rule (79 FR 40374) that adoption of the revised OMB delineations and the updated RUCA codes would have no negative impact on ambulance transports in super rural areas, as none of the current super rural areas would lose their status due to the revised OMB delineations and the updated RUCA codes.
As we stated in the CY 2015 PFS proposed rule (79 FR 40374), the adoption of the new OMB delineations and the updated RUCA codes would affect whether or not transports would be eligible for other rural adjustments under the ambulance fee schedule statute and regulations. For ground ambulance transports where the point of pick-up is in a rural area, the mileage rate is increased by 50 percent for each of the first 17 miles (§ 414.610(c)(5)(i)). For air ambulance services where the point of pick-up is in a rural area, the total payment (base rate and mileage rate) is increased by 50 percent (§ 414.610(c)(5)(i)). Furthermore, under section 1834(l)(13) of the Act (as amended by section 104(a) of the PAMA), for ground ambulance transports furnished through March 31, 2015, transports originating in rural areas are paid based on a rate (both base rate and mileage rate) that is 3 percent higher than otherwise is applicable. (See also § 414.610(c)(1)(ii)).
We stated in the CY 2015 PFS proposed rule (79 FR 40374) that if we adopt OMB's revised delineations and the updated RUCA codes, ambulance providers and suppliers that pick up Medicare beneficiaries in areas that would be Micropolitan or otherwise outside of MSAs based on OMB's revised delineations or in a rural census tract of an MSA based on the updated RUCA codes (but are currently within urban areas) may experience increases in payment for such transports because they may be eligible for the rural adjustment factors discussed above, while those ambulance providers and suppliers that pick up Medicare beneficiaries in areas that would be urban based on OMB's revised delineations and the updated RUCA codes (but are currently in Micropolitan Areas or otherwise outside of MSAs, or in a rural census tract of an MSA) may experience decreases in payment for such transports because they would no longer be eligible for the rural adjustment factors discussed above.
The use of the revised OMB delineations and the updated RUCA codes would mean the recognition of new urban and rural boundaries based on the population migration that occurred over a 10-year period, between 2000 and 2010. In the CY 2015 PFS proposed rule (79 FR 40374), we stated that, based on the latest United States Postal Service (USPS) ZIP code file, there are a total of 42,914 ZIP codes in the U.S. We stated in the proposed rule that the geographic designations for approximately 99.48 percent of ZIP codes would be unchanged by OMB's revised delineations and the updated RUCA codes, and that a similar number of ZIP codes would change from rural to urban (122, or 0.28 percent) as would change from urban to rural (100, or 0.23 percent). We stated in the proposed rule that, in general, it was expected that ambulance providers and suppliers in 100 ZIP codes within 11 states may experience payment increases if we adopt the revised OMB delineations and the updated RUCA codes, as these areas would be redesignated from urban to rural. We stated that the state of Ohio would have the most ZIP codes changing from urban to rural with a total of 40, or 2.69 percent. We also stated in the CY 2015 PFS proposed rule that ambulance providers and suppliers in 122 ZIP codes within 22 states may experience payment decreases if we adopt the revised OMB delineations and the updated RUCA codes, as these areas would be redesignated from rural to urban. We stated that the state of West Virginia would have the most ZIP codes changing from rural to urban (17, or 1.82 percent), while Connecticut would have the greatest percentage of ZIP codes changing from rural to urban (15 ZIP codes, or 3.37 percent). Our findings were illustrated in Table 17 of the CY 2015 PFS proposed rule (79 FR 40375).
We stated in the CY 2015 PFS proposed rule (79 FR 40375 and 40376) that we believe the most current OMB statistical area delineations, coupled with the updated RUCA codes, more accurately reflect the contemporary urban and rural nature of areas across the country, and that use of the most current OMB delineations and RUCA codes under the ambulance fee schedule would enhance the accuracy of ambulance fee schedule payments. We solicited comments on our proposal to implement the new OMB delineations and the updated RUCA codes as discussed above beginning in CY 2015, for purposes of payment under the Medicare ambulance fee schedule.
We received four comments from two associations representing ambulance service providers and suppliers and two ambulance suppliers on our proposal to implement the new OMB delineations and the updated RUCA codes for purposes of payment under the Medicare ambulance fee schedule. Those comments are summarized below along with our responses.
We have completed an updated analysis of both the revised OMB delineations and the updated RUCA codes. Based on the latest United States Postal Service (USPS) ZIP code file, there are a total of 42,918 ZIP codes in the U.S. Based on our updated analysis, we have concluded that the geographic designations for approximately 92.02 percent of ZIP codes would be unchanged by OMB's revised delineations and the updated RUCA codes. There are more ZIP codes that would change from rural to urban (3,038 or 7.08 percent) than from urban to rural (387 or 0.90 percent). The differences in the data provided in the proposed rule compared to the final rule are due to inclusion of the updated RUCA codes. In general, it is expected that ambulance providers and suppliers in 387 ZIP codes within 41 states, may experience payment increases under the revised OMB delineations and the updated RUCA codes, as these areas have been redesignated from urban to rural. The state of California has the most ZIP codes changing from urban to rural with a total of 43, or 1.58 percent. Ambulance providers and suppliers in 3,038 ZIP codes within 46 states and Puerto Rico may experience payment decreases under the revised OMB delineations and the updated RUCA codes, as these areas have been redesignated from rural to urban. The state of Pennsylvania has the most ZIP codes changing from rural to urban (293, or 13.06 percent), while West Virginia has the greatest percentage of ZIP codes changing from rural to urban (269 ZIP codes, or 28.74 percent). Our findings are illustrated in Table 47.
As discussed above, in the CY 2015 PFS proposed rule (79 FR 40374), we proposed to designate as rural those census tracts that fall in RUCA codes 2 or 3 that are at least 400 square miles in area with a population density of no more than 35 people. However, upon further analysis, we have determined that it is not feasible to implement this proposal. Payment under the ambulance fee schedule is based on the ZIP codes; therefore, if the ZIP code is predominantly metropolitan but has some rural census tracts, we do not split the ZIP code areas to distinguish further granularity to provide different payments within the same ZIP code. We believe that payment for all ambulance transportation services at the ZIP code level provides a consistent payment system. Therefore, such census tracts were not considered rural areas in the updated analysis set forth above.
For more detail on the impact of these changes, in addition to Table 47, the following files are available through the Internet on the AFS Web site at
As reflected in Table 47, our findings are generally consistent with the commenters' findings that more than 1,500 ZIP codes would change from rural to urban (our updated analysis indicates that 3,038 ZIP codes are changing), and that about three times the number of ZIP codes identified in the proposed rule (100) would change from urban to rural (our updated analysis indicates 387 ZIP codes are changing).
As we stated in the proposed rule (79 FR 40374), none of the current super rural areas will lose their super rural status upon implementation of the revised OMB delineations and the updated RUCA codes.
Other commenters requested that the implementation of the geographic adjustments outlined in the proposed rule be delayed until such time as the data is available to complete a full and accurate analysis of the ZIP codes affected and the financial impact to industry. Absent such a delay, the commenters stated that the final rule must clarify, in a complete and transparent manner, the accuracy of the analysis used in the proposed rule.
As discussed above and in the CY 2015 PFS proposed rule, we believe the most current OMB statistical area delineations, coupled with the updated RUCA codes, more accurately reflect the contemporary urban and rural nature of areas across the country, and thus we believe the use of the most current OMB delineations and RUCA codes under the ambulance fee schedule will enhance the accuracy of ambulance fee schedule payments. We believe that it is important to use the most current OMB delineations and RUCA codes available as soon as reasonably possible to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts. Because we believe the revised OMB delineations and updated RUCA codes more accurately identify urban and rural areas and enhance the accuracy of the Medicare ambulance fee schedule, we do not believe a delay in implementation or a transition period would be appropriate. Areas that lose their rural status and become urban have become urban because of recent population shifts. We believe it is important to base payment on the most accurate and up-to-date geographic area delineations available. Furthermore, we believe a delay would disadvantage the ambulance providers or suppliers experiencing payment increases based on these updated and more accurate OMB delineations and RUCA codes.
Finally, given the relatively small percentage of ZIP codes affected by the revised OMB delineations and updated RUCA codes (a total of 3,425 ZIP codes changing their urban/rural status out of 42,918 ZIP codes, or 7.98 percent), we do not believe that a delay is warranted. As commenters requested, we have included in Table 47 our updated analysis of the impact of adopting the revised OMB delineations and the updated RUCA codes.
After consideration of the public comments received, and for the reasons discussed above, we are finalizing our proposals to adopt, beginning in CY 2015, the revised OMB delineations as set forth in OMB's February 28, 2013 bulletin (No. 13–01) and the most recent modifications of the RUCA codes for purposes of payment under the ambulance fee schedule. As we proposed, using the updated RUCA codes definitions, we will continue to designate any census tracts falling at or above RUCA level 4.0 as rural areas. However, as discussed above, we are not finalizing our proposal to designate as rural those census tracts that fall within RUCA codes 2 or 3 that are at least 400 square miles in area with a population density of no more than 35 people. Finally, as discussed above, none of the current super rural areas will lose their super rural status upon implementation of the revised OMB delineations and the updated RUCA codes.
In the CY 2014 PFS final rule with comment period (78 FR 74440 through 74445, 74820), we finalized a process under which we would reexamine the payment amounts for test codes on the Clinical Laboratory Fee Schedule (CLFS) for possible payment revision based on technological changes beginning with the CY 2015 proposed rule, and we codified this process at § 414.511. After we finalized this process, the Congress enacted the PAMA. Section 216 of the PAMA creates new section 1834A of the Act, which requires us to implement a new Medicare payment system for clinical diagnostic laboratory tests based on private payor rates. Section 216 of the PAMA also rescinds the statutory authority in section 1833(h)(2)(A)(i) of the Act for adjustments based on technological changes for tests furnished on or after April 1, 2014 (PAMA's enactment date). As a result of these provisions, we did not propose any revisions to payment amounts for test codes on the CLFS based on technological changes, and we proposed to remove § 414.511.
We did not receive any public comments on this proposal. Therefore, we are finalizing our proposal to remove § 414.511. In addition, we will establish through rulemaking the parameters for
Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) furnish physicians' services; services and supplies “incident to” the services of physicians: Nurse practitioner (NP), physician assistant (PA), certified nurse-midwife (CNM), clinical psychologist (CP), and clinical social worker (CSW) services; and services and supplies incident to the services of NPs, PAs, CNMs, CPs, and CSWs. They may also furnish diabetes self-management training and medical nutrition therapy (DSMT/MNT), transitional care management services, and in some cases, visiting nurse services furnished by a registered professional nurse or a licensed practical nurse. (For additional information on coverage requirements for services furnished in RHCs and FQHCs, see Chapter 13 of the CMS Benefit Policy Manual.)
In the May 2, 2014 final rule with comment period entitled “Prospective Payment System for Federally Qualified Health Centers; Changes to Contracting Policies for Rural Health Clinics; and Changes to Clinical Laboratory Improvement Amendments of 1988 Enforcement Actions for Proficiency Testing Referral” (79 FR 25436), we removed the regulatory requirements that NPs, PAs, CNMs, CSWs, and CPs furnishing services in a RHC must be employees of the RHC. RHCs are now allowed to contract with NPs, PAs, CNMs, CSWs, and CPs, as long as at least one NP or PA is employed by the RHC, as required under clause (iii) in the first sentence of the flush material following subparagraph (K) of section 1861(aa)(2) of the Act.
Services furnished in RHCs and FQHCs by nurses, medical assistants, and other auxiliary personnel are considered “incident to” a RHC or FQHC visit furnished by a RHC or FQHC practitioner. Sections 405.2413(a)(6), 405.2415(a)(6), and 405.2452(a)(6) currently state that services furnished incident to an RHC or FQHC visit must be furnished by an employee of the RHC or FQHC. Since there is no separate benefit under Medicare law that specifically authorizes payment to nurses, medical assistants, and other auxiliary personnel for their professional services, they cannot bill the program directly and receive payment for their services, and can only be remunerated when furnishing services to Medicare patients in an “incident to” capacity.
To provide RHCs and FQHCs with as much flexibility as possible to meet their staffing needs, we proposed to revise § 405.2413(a)(5), § 405.2415(a)(5) and § 405.2452(a)(5) and delete § 405.2413(a)(6), § 405.2415(a)(6) and § 405.2452(a)(6) to remove the requirement that services furnished incident to an RHC or FQHC visit must be furnished by an employee of the RHC or FQHC, in order to allow nurses, medical assistants, and other auxiliary personnel to furnish “incident to” services under contract in RHCs and FQHCs. We believe that removing the requirements will provide RHCs and FQHCs with additional flexibility without adversely impacting the quality or continuity of care.
We received 23 comments on our proposal. The following is a summary of the comments received.
A few commenters stated that they support removal of the employment requirement, provided that RHC and FQHC auxiliary personnel are held to the same high professional standards for the quality of care, regardless of whether they are working under contract or as employees. Commenters also added that all members of a physician-led health care team should be enabled to perform medical interventions that they are capable of performing according to their education, training, licensure, and experience.
After consideration of the public comments, we are finalizing this provision as proposed.
Section 3021 of the Affordable Care Act amended the Social Security Act to include a new section 1115A, which established the Center for Medicare and Medicaid Innovation (Innovation Center). Section 1115A tasks the Innovation Center with testing innovative payment and service delivery models that could reduce program expenditures while preserving and/or enhancing the quality of care furnished to individuals under titles XVIII, XIX, and XXI of the Act. The Secretary is also required to conduct an evaluation of each model tested.
Evaluations will typically include quantitative and qualitative methods to assess the impact of the model on quality of care and health care expenditures. To comply with the statutory requirement to evaluate all models conducted under section 1115A of the Act, we will conduct rigorous quantitative analyses of the impact of the model test on health care expenditures, as well as an assessment of measures of the quality of care furnished under the model test. Evaluations will also include qualitative analyses to capture the qualitative differences between model participants, and to form the context within which to interpret the quantitative findings. Through the qualitative analyses, we will assess the experiences and perceptions of model participants, providers, and individuals affected by the model.
In the evaluations we use advanced statistical methods to measure
Evaluations will need to consider such factors as outcomes, clinical quality, adverse effects, access, utilization, patient and provider satisfaction, sustainability, potential for the model to be applied on a broader scale, and total cost of care. Individuals receiving services from or who are the subjects of the intervention will be compared to clinically, socio-demographically, and geographically similar matched individuals along various process, outcome, and patient-reported measures. Research questions in a typical evaluation will include, but are not limited to, the following:
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++ Did the model improve or have a negative impact on clinical process measures, such as adherence to evidence-based guidelines? If so, how, how much, and for which individuals?
++ Did the model improve or have a negative impact on clinical outcome measures, such as mortality rates, and the incidence and prevalence of chronic conditions? If so, how, how much, and for which individuals?
++ Did the model improve or have a negative impact on access to care? If so, how, how much, and for which individuals?
++ Did the model improve or have a negative impact on care coordination among providers? If so, how, how much, and for which individuals?
++ Did the model improve or have a negative impact on medication management? If so, how, how much, and for which individuals?
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++ Did the model improve or have a negative impact on patient-provider communication? If so, how, how much, and for which individuals?
++ Did the model improve or have a negative impact on patient experiences of care, quality of life, or functional status? If so, how, how much, and for which individuals?
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++ Did the model result in decreased utilization of emergency department visits, hospitalizations, and readmissions? If so how, how much, and for which individuals?
++ Did the model result in increased utilization of physician or pharmacy services? If so how, how much, and for which individuals?
++ Did the model result in decreased total cost of care? Were changes in total costs of care driven by changes in utilization for specific types of settings or health care services? What specific aspects of the model led to these changes? Were any savings due to improper cost-shifting to the Medicaid program?
To carry out this research we must have access to patient records not generally available to us. As such, we proposed to exercise our authority in section 1115A(b)(4)(B) of the Act to establish requirements for states and other entities participating in the testing of past, present, and future models under section 1115A of the Act to collect and report information that we have determined is necessary to monitor and evaluate such models. Thus, we proposed to require model participants, and providers and suppliers working under the models operated by such participants, to produce such individually identifiable health information and such other information as the Secretary identifies as being necessary to conduct the statutorily mandated research described above. Such research will include the monitoring and evaluation of such models. Further, we view engagement with other payers, both public and private, as a critical driver of the success of these models. CMS programs constitute only a share of any provider's revenue. Therefore, efforts to improve quality and reduce cost are more likely to be successful if efforts are aligned across payers. Section 1115A of the Act specifically allows the Secretary of Health and Human Services to consider, in selecting which models to choose for testing, “whether the model demonstrates effective linkage with other public sector or private sector payers.” Multi-payer models, such as but not limited to the Comprehensive Primary Care model, will conduct quality measurement across all patients regardless of payer in order to maximize alignment and increase efficiency. Construction of multi-payer quality measures requires the ability to identify all individuals subject to the model test regardless of payer. In addition, section 1115A also permits the Secretary to consider models that allow states to test and evaluate systems of all-payer payment reform for the medical care of residents of the state, including dual eligible individuals. Under the State Innovation Model (SIM), the Innovation Center is testing the ability for state governments to accelerate transformation. The premise of the SIM initiative is to support Governor-sponsored, multi-payer models that are focused on public and private sector collaboration to transform the state's payment and delivery system. States have policy and regulatory authorities, as well as ongoing relationships with private payers, health plans, and providers that can accelerate delivery system reform. SIM models must impact the preponderance of care in the state and are expected to work with public and private payers to create multi-payer alignment. The evaluation of SIM will include all populations and payers involved in the state initiative, which in many cases includes private payers. The absence of identifiable data from private payers would result in considerable limitations on the level of evaluation conducted. Therefore, under this authority, we also proposed to require the submission of identifiable health and utilization information for patients of private payers treated by providers/suppliers participating in the testing of a model under section 1115A of the Act when an explicit purpose of the model test is to engage private sector payers. This regulation will provide clear legal authority for Health Insurance Portability and Accountability Act (HIPAA) Covered Entities to disclose any required protected health information. Identifiable data submitted by entities participating in the testing of models under section 1115A of the Act will meet CMS Acceptable Risks Safeguards (ARS) guidelines. When data is expected to be exchanged over the internet, such exchange will also meet all E-Gov requirements. In accordance with the requirements of the Privacy Act of 1974, upon receipt by CMS or its contractors, these data will be covered under a CMS-established system of records (System No. 09–70–0591), which serves as the Master system for all demonstrations, evaluations, and research studies administered by the Innovation Center. These data will be
Wherever possible, evaluations will make use of claims, assessment, and enrollment data available through CMS' existing administrative systems. However, evaluations will generally also need to include additional data not available through existing CMS administrative systems. As such, depending on the particular project, CMS or its contractor will require the production of the minimum data necessary to carry out the statutorily mandated research work described in section E.1. of this final rule with comment period. Such data may include the identities of the patients served under the model, relevant clinical details about the services furnished and outcomes achieved, and any confounding factors that might influence the evaluation results achieved through the delivery of such services. For illustrative purposes, below are examples of some of the types of information that could be required to carry out an evaluation, and for which the evaluator would need patient-level identifiers.
• Utilization data not otherwise available through existing Centers for Medicare & Medicaid Services (CMS) systems.
• Beneficiary, patient, participant, family, and provider experiences.
• Beneficiary, patient, participant, and provider rosters with identifiers that allow linkages across time and datasets.
• Beneficiary, patient, participant, and family socio-demographic and ethnic characteristics.
• Care management details, such as details regarding the provision of services, payments or goods to beneficiaries, patients, participants, families, or other providers.
• Beneficiary, patient, and participant functional status and assessment data.
• Beneficiary, patient, and participant health behaviors.
• Clinical data, such as, but not limited to lab values and information from EHRs.
• Beneficiary, patient, participant quality data not otherwise available through claims.
• Other data relevant to identified outcomes—for example, participant employment status, participant educational degrees pursued/achieved, and income.
We invited public comment on this proposal to mandate the production of the individually identifiable information necessary to conduct the statutorily mandated research under section 1115A of the Act.
In addition, we proposed a new subpart K in part 403 to implement section 1115A of the Act.
The following is a summary of the comments we received regarding our proposal to mandate the production of the individually identifiable information necessary to conduct the statutorily mandated research under section 1115A of the Act.
Reimbursement may be considered for future models, but if adopted, any such reimbursement, and any conditions for such reimbursement, would be prominently noted in the solicitation or modifications to model agreements. To the extent feasible, we also agree that it is important for potential model participants to understand the data collection requirements before the model begins, so that they may take these requirements into consideration. We do not agree, though, that model participants should be given the opportunity to opt out of producing the required information, as this would undermine the evaluation and skew results.
With respect to the specific data needed for evaluation purposes, in many models, the evaluators will be able to determine who the individuals are that are the subjects of the model test without the need to obtain identifiers from the model participants. In those cases, there is a beneficiary-specific payment under the model and the evaluator can use our existing administrative data systems to identify which beneficiaries are in the model. In this last example, although we may not need to obtain the identifiers, we may still need to obtain other person-level data, such as clinical information. In other models, where a specific beneficiary-level payment is not being made, the evaluation contractor will not have an ability to identify the individuals targeted by the model participants. In this latter circumstance, the participants will need to provide the identifiers that would then be used by the evaluator to link to existing administrative data systems. Although the exact data needs will vary by model, in some cases we would determine that only the identifiers (such as, but not limited to, the Medicare Health Insurance Claim number) are required. In other circumstances, it is possible the evaluators will need other data, such as clinical data not otherwise available in claims to properly account for severity of disease. In this manner we will limit data demands, and the attendant costs, to the data necessary to accomplish the required monitoring and assessment.
As HIPAA Business Associates, this data will be equally well protected when held by one of our evaluation contractors. In addition, the disclosure of substance abuse records will, where applicable, also be subject to the Part 2 regulations.
After consideration of the public comments we received, we are finalizing our proposal to mandate the production of the individually identifiable information necessary to conduct the statutorily mandated research under section 1115A of the Act. We are accepting the recommendations made by commenters to minimize participant burden, seek input from providers, and use independent researchers. In addition, we are finalizing our proposal to add a new subpart K in part 403 to implement section 1115A of the Act without modification.
The CY 2015 proposed rule (79 FR 40378 through 40380), section III.F., included discussion of a proposal to modify the existing process used by the Medicare Administrative Contractors (MACs) in developing local coverage determinations (LCDs) for clinical diagnostic laboratory tests. Briefly, the proposal would have expedited the timeline for LCD development for clinical diagnostic laboratory test LCDs by reducing the calendar days for some of the steps and by making optional or eliminating other steps within the current process. A detailed discussion of the proposal is available in section III.F. of the CY 2015 PFS Proposed Rule.
We would like to thank the numerous public commenters for their time in submitting thoughtful comments to the agency on this issue. Comments were received from individual members of the public, insurers, drug manufacturers, medical specialty societies, laboratory groups and individual laboratories. The commenters focused their comments on the following issues: The proposal to reduce the draft LCD public comment period to 30 days; the proposal for a meeting of the Carrier Advisory Committee to be optional; the proposal to remove the requirement for a public meeting; and the proposal to eliminate the 45-day notice period prior to final
Effective January 1, 1998, section 1802(b) of the Act permits certain physicians and practitioners to opt-out of Medicare if certain conditions are met, and to furnish through private contracts services that would otherwise be covered by Medicare. For those physicians and practitioners who opt-out of Medicare in accordance with section 1802(b) of the Act, the mandatory claims submission and limiting charge rules of section 1848(g) of the Act would not apply. As a result, if the conditions necessary for an effective opt-out are met, physicians and practitioners are permitted to privately contract with Medicare beneficiaries and to charge them without regard to Medicare's limiting charge rules. Regulations governing the requirements and procedures for private contracts appear at 42 CFR part 405, subpart D.
The private contracting regulation at § 405.450 describes certain opt-out determinations made by Medicare, and the process that physicians, practitioners, and beneficiaries may use to appeal those determinations. Section 405.450(a) describes the process available for physicians or practitioners to appeal Medicare enrollment determinations related to opting out of the program, and § 405.450(b) describes the process available to challenge payment determinations related to claims for services furnished by physicians who have opted out. Both provisions refer to § 405.803, the Part B claims appeals process that was in place at the time the opt-out regulations were issued (November 2, 1998). When those regulations were issued, a process for a physician or practitioner to appeal enrollment related decisions had not been implemented in regulation. Thus, to ensure an appeals process was available to physicians and practitioners for opt-out related issues, we chose to utilize the existing claims appeals process in § 405.803 for both enrollment and claims related appeals.
In May 16, 2012
The procedures set forth in current part 498 establish the appeals procedures regarding decisions made by Medicare that affect enrollment in the program. We believe this process, and not the appeal process in part 405, subpart I, is the appropriate channel for physicians and practitioners to challenge an enrollment related opt-out decision made by Medicare. There are now two different sets of appeal regulations for initial determinations; and the appeal of enrollment related opt-out determinations is more like the types of determinations now addressed under part 498 than those under part 405, subpart I. Specifically, the appeal process under part 405, subpart I focuses on reviews of determinations regarding beneficiary entitlement to Medicare and claims for benefits for particular services. The appeal process under part 498 is focused on the review of determinations regarding the participation or enrollment status of providers and suppliers. Enrollment related opt-out determinations involve only the status of particular physician or practitioners under Medicare, and do not involve beneficiary eligibility or claims for specific services. As such, the appeal process under part 498 is better suited for the review of enrollment related opt-out determinations.
However, we do not believe the enrollment appeals process established in part 498 is the appropriate mechanism for challenging payment decisions on claims for services furnished by a physician and practitioner who has opted out of the program. Appeals for such claims should continue to follow the appeals procedures now set forth in part 405 subpart I.
Section 405.400 sets forth certain definitions for purposes of the private contracting regulations. Among the defined terms is “Emergency care services” which means services furnished to an individual for treatment of an “emergency medical condition” as that term is defined in § 422.2. The cross-referenced regulation at § 422.2 included within the definition of emergency care services was deleted on June 29, 2000 (65 FR 40314) and at that time we inadvertently neglected to revise that cross-reference. The cross-reference within the definition of emergency care services should have been amended at that time to cite the definition of “emergency services” in § 424.101.
The private contracting regulations at § 405.420(e), § 405.425(a) and § 405.455 all use the term Medicare+Choice when referring to Part C plans. However, we no longer use the term Medicare+Choice when referring to Part C plans; instead the plans are referred to as Medicare Advantage plans. When part 422 of the regulations was updated on January 28, 2005 (70 FR 4741), we inadvertently neglected to revise § 405.420(e), § 405.425(a) and § 405.455 to replace the term Medicare+Choice with Medicare Advantage plan.
For the reasons discussed above, we proposed that a determination described in § 405.450(a) (relating to the status of opt-out or private contracts) is an initial determination for purposes of § 498.3(b), and a physician or practitioner who is dissatisfied with a Medicare determination under § 405.450(a) may utilize the enrollment appeals process currently available for providers and suppliers in part 498. In addition, we proposed that a determination described in § 405.450(b) (that payment cannot be made to a beneficiary for services furnished by a physician or practitioner who has opted out) is an initial determination for the purposes of § 405.924 and may be challenged through the existing claims appeals procedures in part 405 subpart I. Accordingly, we proposed that the cross
For the reasons discussed above, we also proposed that the definition of Emergency care services at § 405.400 be revised to cite the definition of Emergency services in § 424.101 and that all references to Medicare+Choice in § 405.420(e), § 405.425(a) and § 405.455 be replaced with the term “Medicare Advantage.”
The following is a summary of the comments we received regarding our proposals.
Because we did not receive any comments on our proposals, we are finalizing the rule as proposed.
In accordance with section 1842(b)(6) of the Act, no payment under Medicare Part B may be made to anyone other than to the beneficiary to whom a service was furnished or to the physician or other person who furnished the service. However, there are certain limited exceptions to this general prohibition. For example, section 1842(b)(6)(D) of the Act describes an exception for substitute physician billing arrangements, which states that “payment may be made to a physician for physicians' services (and services furnished incident to such services) furnished by a second physician to patients of the first physician if (i) the first physician is unavailable to provide the services; (ii) the services are furnished pursuant to an arrangement between the two physicians that (I) is informal and reciprocal, or (II) involves per diem or other fee-for-time compensation for such services; (iii) the services are not provided by the second physician over a continuous period of more than 60 days or are provided over a longer continuous period during all of which the first physician has been called or ordered to active duty as a member of a reserve component of the Armed Forces; and (iv) the claim form submitted to the [Medicare Administrative contractor (MAC)] for such services includes the second physician's unique identifier . . . and indicates that the claim meets the requirements of this subparagraph for payment to the first physician.” Section 1842(b)(6) of the Act is self-implementing and we have not interpreted the statutory provisions through regulations.
In practice, section 1842(b)(6)(D) of the Act generally allows for two types of substitute physician billing arrangements: (1) An informal reciprocal arrangement where doctor A substitutes for doctor B on an occasional basis and doctor B substitutes for doctor A on an occasional basis; and (2) an arrangement where the services of the substitute physician are paid for on a per diem basis or according to the amount of time worked. Substitute physicians in the second type of arrangement are sometimes referred to as “locum tenens” physicians. It is our understanding that locum tenens physicians are substitute physicians who often do not have a practice of their own, are geographically mobile, and work on an as-needed basis as independent contractors. They are utilized by physician practices, hospitals, and health care entities enrolled in Part B as Medicare suppliers to cover for physicians who are absent for reasons such as illness, pregnancy, vacation, or continuing medical education. Also, we have heard anecdotally that locum tenens physicians are used to fill staffing needs (for example, in physician shortage areas) or, on a temporary basis, to replace physicians who have permanently left a medical group or employer.
We are concerned about the operational and program integrity issues that result from the use of substitute physicians to fill staffing needs or to replace a physician who has permanently left a medical group or employer. For example, although our Medicare enrollment rules require physicians and physician groups or organizations to notify us promptly of any enrollment changes (including reassignment changes) (see § 424.516(d)), processing delays or miscommunication between the departing physician and his or her former medical group or employer regarding which party would report the change to Medicare could result in the Provider Transaction Access Number (PTAN) that links the departed physician and his or her former medical group remaining “open” or “attached” for a period of time. During such period, both the departed physician and the departed physician's former medical group might bill Medicare under the departed physician's National Provider Identifier (NPI) for furnished services. This could occur where a substitute physician is furnishing services in place of the departed physician in the departed physician's former medical group, while the departed physician is also furnishing services to beneficiaries following departure from the former group. Operationally, either or both types of claims could be rejected or denied, even though the claims filed by the departed physician were billed appropriately. Moreover, the continued use of a departed physician's NPI to bill for services furnished to beneficiaries by a substitute physician raises program integrity issues, particularly if the departed physician is unaware of his or her former medical group or employer's actions.
Finally, as noted above, section 1842(b)(6)(D)(iv) of the Act requires that the claim form submitted to the MAC include the substitute physician's unique identifier. Currently, the unique identifier used to identify a physician is the physician's NPI. Prior to the implementation of the NPI, the Unique Physician Identification Number (UPIN) was used. Because a substitute physician's NPI is not captured on the CMS–1500 claim form or on the appropriate electronic claim, physicians and other entities that furnish services to beneficiaries through the use of a substitute physician are required to enter a modifier on the CMS–1500 claim form or on the appropriate electronic claim indicating that the services were furnished by a substitute physician; and to keep a record of each service provided by the substitute physician, associated with the substitute physician's UPIN or NPI; and to make this record available to the MAC upon request. (See Medicare Claims
To help inform our decision whether and, if so, how to address the issues discussed in section III.H.1., and whether to adopt regulations interpreting section 1842(b)(6)(D) of the Act, we solicited comments on the policy for substitute physician billing arrangements. We noted that any regulations would be proposed in a future rulemaking with opportunity for public comment. Through this solicitation, we hoped to understand better current industry practices for the use of substitute physicians and the impact that policy changes limiting the use of substitute physicians might have on beneficiary access to physician services.
We received a few comments on the issues raised in this solicitation. We thank the commenters for their input, and we will carefully consider their comments in any future rulemaking on this subject.
In the February 8, 2013
The Open Payments program creates transparency around the nature and extent of relationships that exist between drug, device, biologicals and medical supply manufacturers, and physicians and teaching hospitals (covered recipients and physician owner or investors). The implementing regulations, which describe procedures for applicable manufacturers and applicable GPOs to submit electronic reports detailing payments or other transfers of value and ownership or investment interests provided to covered recipients and physician owners or investors, are codified at § 403.908.
Since the publication and implementation of the February 8, 2013 final rule, various stakeholders have provided feedback to CMS regarding certain aspects of these reporting requirements. Specifically, § 403.904(g)(1) excludes the reporting of payments associated with certain continuing education events, and § 403.904(c)(8) requires reporting of the marketed name for drugs and biologicals but makes reporting the marketed name of devices or medical supplies optional. We proposed a change to § 403.904(g) to correct an unintended consequence of the current regulatory text. Additionally, at § 403.904(c)(8), we proposed to make the reporting requirements consistent by requiring the reporting of the marketed name for drugs, devices, biologicals, or medical supplies which are associated with a payment or other transfer of value.
Additionally, at § 403.902, we proposed to remove the definition of a “covered device” because we believe it is duplicative of the definition of “covered drug, device, biological or medical supply” which is codified in the same section. We also proposed to require the reporting of the following distinct forms of payment: stock; stock option; or any other ownership interests specified in § 403.904(d)(3) to collect more specific data regarding the forms of payment.
In the February 8, 2013 final rule, many commenters recommended that accredited or certified continuing education payments to speakers should not be reported because there are safeguards already in place, and they are not direct payments to a covered recipient. In the final rule preamble, we noted that “industry support for accredited or certified continuing education is a unique relationship” (78 FR 9492). Section 403.904(g)(1) states that payments or other transfers of value provided as compensation for speaking at a continuing education program need not be reported if the following three conditions are met:
• The event at which the covered recipient is speaking must meet the accreditation or certification requirements and standards for continuing education for one of the following organizations: the Accreditation Council for Continuing Medical Education (ACCME); the American Academy of Family Physicians (AAFP); the American Dental Association's Continuing Education Recognition Program (ADA CERP); the American Medical Association (AMA); or the American Osteopathic Association (AOA).
• The applicable manufacturer does not pay the covered recipient speaker directly.
• The applicable manufacturer does not select the covered recipient speaker or provide the third party (such as a continuing education vendor) with a distinct, identifiable set of individuals to be considered as speakers for the continuing education program.
Since the implementation of § 403.904(g)(1), other accrediting organizations have requested that payments made to speakers at their events also be exempted from reporting. These organizations have stated that they follow the same accreditation standards as the organizations specified in § 403.904(g)(1)(i). Other stakeholders have recommended that the exemption be removed in its entirety stating
After consideration of these comments, we proposed to remove the language in § 403.904(g) in its entirety, in part because it is redundant with the exclusion in § 403.904(i)(1). That provision excludes indirect payments or other transfers of value where the applicable manufacturer is “unaware” of, that is, “does not know,” the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year. When an applicable manufacturer or applicable GPO provides funding to a continuing education provider, but does not either select or pay the covered recipient speaker directly, or provide the continuing education provider with a distinct, identifiable set of covered recipients to be considered as speakers for the continuing education program, CMS will consider those payments to be excluded from reporting under § 403.904(i)(1). This approach is consistent with our discussion in the preamble to the final rule, in which we explained that if an applicable manufacturer conveys “full discretion” to the continuing education provider, those payments are outside the scope of the rule (78 FR 9492). In contrast, for example, when an applicable manufacturer conditions its financial sponsorship of a continuing education event on the participation of particular covered recipients, or pays a covered recipient directly for speaking at such an event, those payments are subject to disclosure.
We considered two alternative approaches to address this issue. First, we explored expanding the list of organizations in § 403.904(g)(1)(i) by name; however, we believe that this approach might imply CMS's endorsement of the named continuing education providers over others. Second, we considered expansion of the organizations in § 403.904(g)(1)(i) by articulating accreditation or certification standards that would allow a CME program to qualify for the exclusion. This approach is not easily implemented because it would require evaluating both the language of the standards, as well as the enforcement of the standards of any organization professing to meet the criteria. We solicited comments on both alternatives presented, including commenters' suggestions about what standards, if any, CMS should incorporate.
The following is summary of the comments we received regarding both alternatives presented, and what standards, if any, CMS should incorporate.
Many commenters recommend modifying the indirect payment exclusion currently at § 403.904(i)(1) to specify a continuing education indirect payment should be excluded if the manufacturer did not know the identity of the covered recipient
Additionally, commenters suggested an alternative approach where CMS would adopt established criteria, such as the Standards for Commercial Support: Standards to Ensure Independence in CME Activities, in order to have payments provided to physicians at continuing education events excluded. Similar criteria suggested by commenters to modify the exclusion were: does not pay covered speakers or attendees directly, does not select covered recipient speakers or provide a third party with a distinct, identifiable set of individuals to be considered as speakers or attendees for the continuing education program, and does not control the continuing education program content.
We understand commenters concern regarding learning the identity of the physician during the reporting year or by the end of the second quarter of the following reporting year. In the situation of an applicable manufacturer providing an indirect payment through a continuing education organization and learning the identity of the physician covered recipient in the allotted timeframe (during the reporting year or by the end of the second quarter of the following reporting year) the indirect payment would not meet the criteria of the indirect payment exclusion and would need to be reported. However, payments or other transfers of value, including payments made to physician covered recipients for purposes of attending or speaking at continuing education events, which do not meet the definition of an indirect payment, as
Section 1128G(a)(1)(A)(vii) of the Act requires applicable manufacturers to report the name of the covered drug, device, biological or medical supply associated with that payment, if the payment is related to “marketing, education, or research” of a particular covered drug, device, biological, or medical supply. Section 403.904(c)(8)(i) requires applicable manufacturers to report the marketed name for each drug or biological related to a payment or other transfer of value. At § 403.904(c)(8)(ii), we require an applicable manufacturer of devices or medical supplies to report one of the following: the marketed name; product category; or therapeutic area. In the February 8, 2013, final rule, we provided applicable manufactures with flexibility when it was determined that the marketed name for all devices and medical supplies may not be useful for the general audience. We did not define product categories or therapeutic areas in § 403.904(c). However, since implementation of the February 8, 2013 final rule and the development of the Open Payments system, we have determined that aligning the reporting requirements for marketed name across drugs, biologics, devices and medical supplies will make the data fields consistent within the system, and also enhance consumer's use of the data.
Accordingly, we proposed to revise § 403.904(c)(8) to require applicable manufacturers to report the marketed name for all covered drugs, devices, biologicals or medical supplies. We believe this would facilitate consistent reporting for the consumers and researchers using the data displayed publicly on the Open Payments. Manufacturers would still have the option to report product category or therapeutic area, in addition to reporting the market name, for devices and medical supplies.
After consideration of comments received, we agree that displaying therapeutic areas or product categories are useful for the public reviewing data on the Open Payments public Web site because the public is not familiar with marketed names for devices and medical supplies. We agree therapeutic areas and products categories are more recognizable by the public. Yet, reporting marketed names for all covered products is necessary to achieve consistent reporting and to have the ability to aggregate all payments or other transfers of value associated with a specific device or medical supply. Therefore to achieve consistent reporting by manufacturers, we will require manufacturers to report marketed name and therapeutic area or product category for all covered drugs, devices, biologicals or medical supplies. We also agree with commenters that complying with this reporting requirement will require a change in manufacturers' reporting systems; therefore, data collection for this reporting requirement would begin January 1, 2016.
Section 403.904(d)(3) requires the reporting of stock, stock option, or any other ownership interest. We proposed to require applicable manufacturers to report such payments as distinct categories. This will enable us to collect more specific data regarding the forms of payment made by applicable manufacturers. After issuing the February 8, 2013 final rule and the development of the Open Payments system, we determined that this specificity will increase the ease of data aggregation within the system, and also enhance consumer's use of the data. We solicited comments on the extent to which users of this data set find this disaggregation to be useful, and whether this change presents operational or other issues on the part of applicable manufacturers.
The following is summary of the comments we received regarding the extent to which users of this data set find this disaggregation to be useful, requiring reporting of marketed name for covered devices and medical supplies, and whether this change presents operational or other issues on the part of applicable manufacturers.
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 (EPs) who participate in the Physician Quality Reporting System (PQRS) under section 1848 of the Act.
CMS launched the first phase of Physician Compare on December 30, 2010 (
Section 10331(a)(2) of the Affordable Care Act also requires that, no later than January 1, 2013, and for reporting periods that began no earlier than January 1, 2012, we implement a plan for making publicly available through Physician Compare information on physician performance that provides comparable information on quality and patient experience measures. We met this requirement in advance of January 1, 2013, as outlined below, and plan to continue addressing elements of the plan through rulemaking.
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 (PQRS).
• 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. We have established a 30-day preview period for all measurement performance data that will allow physicians and other EPs to view their data as it will appear on the Web site in advance of publication on Physician Compare (77 FR 69166 and 78 FR 74450). Details of the preview process will be communicated directly to those with measures to preview and will also be published on the Physician Compare Initiative page (
• 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
• 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, consistent with sections 1890(b)(7) and 1890A of the Act, when selecting quality measures for Physician Compare. We also continue to get general input from stakeholders on Physician Compare through a variety of means, including rulemaking and different forms of stakeholder outreach (for example, Town Hall meetings, Open Door Forums, webinars, education and outreach, Technical Expert Panels, etc.). 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 determines 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 MIPPA.
Under section 10331(f) of the Affordable Care Act, we are required 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 that will help them make informed decisions about their health care, while encouraging clinicians to improve the quality of care they provide to their patients. In accordance with section 10331 of the Affordable Care Act, we plan to publicly report physician performance information on Physician Compare.
Since the initial launch of the Web site, we have continued to build on and improve Physician Compare. On June 27, 2013, we launched a full redesign of Physician Compare bringing significant improvements including a complete overhaul of the underlying database and a new Intelligent Search feature, addressing two of our stakeholders' primary critiques of the site—the accuracy and currency of the database and the limitations of the search function—and considerably improving Web site functionality and usability. Provider Enrollment, Chain, and Ownership System (PECOS), as the sole source of verified Medicare professional information, is the primary source of administrative information on Physician Compare. With the redesign, however, we incorporated the use of Medicare Fee-For-Service claims information to verify the information in PECOS to help ensure only the most current and accurate information is included on the site. For example, claims information is used to determine which of the active and approved practice locations in PECOS are where the professional is currently providing services. Claims information helps confirm that only the most current group practice affiliations are included on the site. Our use of claims also helps ensure that we are posting on Physician Compare the most current and accurate information available about the professionals for Medicare consumers.
We received several comments about the enhancements made to the Physician Compare Web site and the data currently on the Web site.
Some commenters provided suggestions for future Physician Compare enhancements. A few commenters suggested continued improvements to the Intelligent Search functionality to better find health care professionals other than physicians and additional specialty labels for Advanced Practice Registered Nurses (APRNs) and allied health professionals.
The underlying database on Physician Compare is generated from PECOS, as well as Fee-For-Service (FFS) claims, and it is therefore critical that physicians, other health care professionals, and group practices ensure that their information is up-to-date and as complete as possible in the national PECOS database. Currently, the most immediate way to address inaccurate PECOS data on Physician Compare is by updating information via Internet-based PECOS at
There is a lag between when an edit is made in PECOS and when that edit is processed by the Medicare Administrative Contractor (MAC) and available in the PECOS data pulled for Physician Compare. This time is necessary for data verification but unfortunately results in a delay updating information. We are continually working to find ways to minimize this delay.
To update information not found in PECOS, such as hospital affiliation and foreign language, professionals and group practices should contact the Physician Compare support team directly at
Although we appreciate the concerns raised around the PECOS data included on Physician Compare, it is necessary to continue the use of the PECOS data as it is the sole, verified source of Medicare information. However, we are aware of its limitations. For these reasons, we have instituted the use of claims information and are continuing to work to find ways to further improve the data. The data are significantly better today than they were prior to the 2013 redesign and continues to improve. We strongly encourage all professionals and group practices listed on the site to regularly check their data and to contact the support team with any questions or concerns.
Currently, Web site users can view information about approved Medicare professionals such as name, primary and secondary specialties, practice locations, group affiliations, hospital affiliations that link to the hospital's profile on Hospital Compare as available, Medicare Assignment status, education, languages spoken, and American Board of Medical Specialties (ABMS) board certification information. In addition, for group practices, users can also view group practice names, specialties, practice locations, Medicare assignment status, and affiliated professionals.
We post on the Web site the names of individual EPs who satisfactorily report under PQRS, as well as those EPs who are successful electronic prescribers under the Medicare Electronic Prescribing (eRx) Incentive Program. Physician Compare contains a link to a downloadable database of all information on Physician Compare (
With the Physician Compare redesign, we added a quality programs section to each group practice profile page in order to indicate which group practices are satisfactorily reporting in the Group Practice Reporting Option (GPRO) under PQRS or are successful electronic prescribers under the eRx Incentive Program. We have also included a notation and check mark for individuals that successfully participate in the Medicare EHR Incentive Program, as authorized by section 1848(o)(3)(D) of the Act. We proposed (79 FR 40386) to continue to include this information annually in the year following the year it is reported (for example, 2015 data will be included on the Web site in 2016).
We did not receive any comments regarding our proposal regarding this PQRS GPRO. We are finalizing the proposal to include a notation for satisfactory PQRS GPRO reporters. As noted above, the eRx Incentive Program is ending in 2014, and therefore, there will not be data for this program in 2015 or beyond. We did receive comments regarding including a notation for individuals that successfully participate in the Medicare EHR Incentive Program.
We previously finalized a decision to publicly report the names of those EPs who report the 2014 PQRS Cardiovascular Prevention measures group in support of Million Hearts on Physician Compare in 2015, by including a check mark in the quality programs section of the profile page (78 FR 74450). We proposed (79 FR 40386) to also continue to include this information annually in the year following the year it is reported (for example, 2015 data will be included on Physician Compare in 2016).
• Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic.
• Preventive Care and Screening: Tobacco Use.
• Controlling High Blood Pressure.
• Preventive Care and Screening: Screening for High Blood Pressure and Follow-Up Documented.
All of these measures are available as individual measures under PQRS. Given that the Cardiovascular Prevention measure group is being eliminated from the PQRS, but that the remaining measures identified above will be available for individual reporting, we are modifying our final policy with regard to our proposal to support Million Hearts on Physician Compare. Specifically, we are finalizing that any EP that satisfactorily reports all four of the individual measures noted above will receive a green check mark indicating support for Million Hearts. A key strategy of the Million Hearts initiative is to reduce the number of heart attacks and strokes, and the program has found that reporting these quality measures is a first step toward performance improvement. We are committed to supporting this initiative, and even though the measure group is no longer available under PQRS, we think it is important to continue recognizing those individual EPs who are reporting these quality measures as individual measures. Even though the individual measures require that a potentially higher number of patients are reported on—50 percent of patients that meet the sample requirements versus just 20 patients for the measure group—we believe this does not increase burden on reporters because as currently available claims data show, significantly more EPs are already reporting these measures as individual PQRS measures versus as part of the Cardiovascular Prevention measures group. Ensuring these professionals are recognized for reporting these measures is important in ensuring we are continuing support for this important program despite the measure group no longer being available for reporting.
Finally, we will also indicate with a green check mark those individuals who have earned the 2014 PQRS Maintenance of Certification Incentive (Additional Incentive) on the Web site in 2015 (78 FR 74450).
We continue to implement our plan for a phased approach to public reporting performance information on Physician Compare. The first phase of this plan was finalized with the CY 2012 PFS final rule with comment period (76 FR 73419–73420), where we established that PQRS GPRO measures collected through the GPRO Web Interface for 2012 would be publicly reported on Physician Compare. The plan was expanded with the CY 2013 PFS final rule with comment period (77 FR 69166), where we established that the specific GPRO Web Interface measures that would be posted on Physician Compare would include the PQRS GPRO measures for Diabetes Mellitus (DM) and Coronary Artery Disease (CAD), and we noted that we would report composite measures for these measure groups in 2014, if technically feasible.
Measures must be based on reliable and valid data elements to be useful to consumers and thus included on Physician Compare. A reliable data element is consistently measuring the same thing regardless of when or where it is collected, while a valid data element is measuring what it is meant to measure. To address the reliability of performance scores, we will measure the extent to which differences in each quality measure are due to actual differences in clinician performance versus variation that arises from measurement error. Statistically, reliability depends on performance variation for a measure across clinicians (“signal”), the random variation in performance for a measure within a clinician's panel of attributed beneficiaries (“noise”), and the number of beneficiaries attributed to the clinician. High reliability for a measure suggests that comparisons of relative performance across clinicians are likely to be stable over different performance periods and that the performance of one clinician on the quality measure can confidently be distinguished from another. Potential reliability values range from zero to one, where one (highest possible reliability) means that all variation in the measure's rates is the result of variation in differences in performance, while zero (lowest possible reliability) means that all variation is a result of measurement error. Reliability testing methods included in the CMS Measures Management System Blueprint (
The validity of a measure refers to the ability to record or quantify what it claims to measure. To analyze validity, we can investigate the extent to which each quality measure is correlated with related, previously validated, measures. We can assess both concurrent and predictive validity. Predictive validity is most appropriate for process measures or intermediate outcome measures, in which a cause-and-effect relationship is hypothesized between the measure in question and a validated outcome measure. Therefore, the measure in question is computed first, and the validated measure is computed using data from a later period. To examine concurrent validity, the measure in question and a previously validated measure are computed using contemporaneous data. In this context, the previously validated measure should measure a health outcome related to the outcome of interest.
One commenter requested CMS publish the results of validity and reliability studies, as well as the methodology for choosing measures prior to posting on Physician Compare. Another commenter is concerned that measures related to patient behavior, preferences, or abilities do not provide a statistically valid portrayal of a health care professional's performance and should not be published unless the data is appropriately risk adjusted. Several other commenters also strongly urged CMS to move forward with expanding its risk adjustment methodology.
In the November 2011 Medicare Shared Savings Program final rule (76 FR 67948), we noted that because Accountable Care Organization (ACO) providers/suppliers that are EPs are considered to be a group practice for purposes of qualifying for a PQRS incentive under the Shared Savings Program, we would publicly report ACO performance on quality measures on Physician Compare in the same way as we report performance on quality measures for PQRS GPRO group practices. Public reporting of performance on these measures is presented at the ACO level only. The first sub-set of ACO measures was also published on the Web site in February 2014. ACO measures can be viewed by following the link for Accountable Care Organization (ACO) Quality Data on the homepage of the Physician Compare Web site (
As part of our public reporting plan for Physician Compare, in the CY 2013 PFS final rule with comment period (77 FR 69166 and 69167), we also finalized the decision to publicly report Clinician and Group Consumer Assessment of Healthcare Providers and Systems (CG–CAHPS) data for group practices of 100 or more eligible professionals reporting data in 2013 under the GPRO and for ACOs participating in the Shared Savings Program, if technically feasible. We anticipate posting these data on Physician Compare in late 2014, if available.
We continued to expand our plan for public reporting data on Physician Compare in the CY 2014 PFS final rule with comment period (78 FR 74449). In that final rule we finalized a decision that all measures collected through the GPRO Web Interface for groups of two or more EPs participating in 2014 under the PQRS GPRO and for ACOs participating in the Medicare Shared Savings Program would be available for public reporting in CY 2015. As with all measures we finalized with regard to Physician Compare, these data would include measure performance rates for measures reported that meet the minimum sample size of 20 patients and prove to be statistically valid and reliable. We also finalized a 30-day preview period prior to publication of quality data on Physician Compare. This will allow group practices to view their data as it will appear on Physician Compare before it is publicly reported. We decided that we will detail the process for the 30-day preview and provide a detailed timeline and instructions for preview in advance of the start of the preview period. ACOs will be able to view their quality data that will be publicly reported on Physician Compare through the ACO Quality Reports, which will be made available to ACOs for review at least 30 days prior to the start of public reporting on Physician Compare.
We also finalized a decision to publicly report in CY 2015 on Physician Compare performance on certain measures that group practices report via registries and EHRs in 2014 for the PQRS GPRO (78 FR 74451). Specifically, we finalized making available for public reporting performance on 16 registry measures and 13 EHR measures (78 FR 74451). These measures are consistent with the measures available for public reporting via the Web Interface. We will indicate the mechanism by which these data were collected and only those data deemed statistically comparable, valid, and reliable would be published on the site.
We also finalized publicly reporting patient experience survey-based measures from the CG–CAHPS measures for groups of 100 or more eligible professionals who participate in PQRS GPRO, regardless of GPRO submission method, and for Shared Savings Program ACOs reporting through the GPRO Web Interface or other CMS-approved tool or interface (78 FR 74452). For 2014 data, we finalized publicly reporting data for the 12 summary survey measures also finalized for groups of 25 to 99 for PQRS reporting requirements (78 FR 74452). These summary survey measures would be available for public reporting group practices of 100 or more EPs participating in PQRS GPRO, as well as group practices of 25 to 99 EPs when collected via any certified CAHPS vendor regardless of PQRS participation, as technically feasible. For ACOs participating in the Shared Savings Program, the patient experience measures that are included in the Patient/Caregiver Experience domain of the Quality Performance Standard under the Shared Savings Program (78 FR 74452) will be available for public reporting in 2015.
For 2014, we also finalized publicly reporting 2014 PQRS measure data
Finally, in support of the HHS-wide Million Hearts Initiative, we finalized a decision to publicly report, no earlier than CY 2015, performance rates on measures in the PQRS Cardiovascular Prevention measures group at the individual EP level for data collected in 2014 for the PQRS (78 FR 74454). See Table 48 for a summary of our final policies for public reporting data on Physician Compare.
We are continuing the expansion of public reporting on Physician Compare by making an even broader set of quality measures available for publication on the Web site. We started the phased approach with a small number of possible PQRS GPRO Web Interface measures for 2012 and have been steadily building on this to provide Medicare consumers with more information to help them make informed health care decisions. As a result, we proposed (79 FR 40388) to increase the measures available for public reporting in the CY 2015 proposed PFS rule.
Throughout this process, we have been engaging with consumers and stakeholders and regularly testing the site and the information to be included to ensure it is accurately presented and understood. We are also continually working to improve the Web site and the administrative and demographic information included. We continue to encourage physicians, other health care professionals, and group practices to ensure their information is updated in PECOS so that we can ensure the most accurate information is available on Physician Compare. We also encourage individuals and groups to reach out to the Physician Compare support team at
We proposed (79 FR 40388) to expand public reporting of group-level measures by making all 2015 PQRS GPRO measure sets across group reporting mechanisms—GPRO Web Interface, registry, and EHR—available for public reporting on Physician Compare in CY 2016 for groups of 2 or more EPs, as appropriate by reporting mechanism.
We also received comments specifically about EHR measures.
Given the value of these group-level data, and the successful publication of such data to date, we are finalizing our proposal to report all 2015 PQRS measures for all reporting options for group practices of 2 or more EPs participating in PQRS GPRO, and all 2015 measures reported by ACOs. Consistent with this final policy, we are making a conforming change to the regulation at § 425.308(e) to provide that all quality measures reported by ACOs will be reported on Physician Compare in the same way as for group practices that report under the PQRS.
We also proposed (79 FR 40389) that measures must meet the public reporting criteria of a minimum sample size of 20 patients.
We proposed to include an indicator of which reporting mechanism was used and to only include on the site measures deemed statistically comparable.
We proposed (79 FR 40389) to publicly report all measures submitted and reviewed and found to be statistically valid and reliable in the Physician Compare downloadable file. However, we proposed that not all of these measures necessarily would be included on the Physician Compare profile pages. As we noted, consumer testing has shown profile pages with too much information and/or measures that are not well understood by consumers can negatively impact a consumer's ability to make informed decisions. Our analysis of the collected measure data, along with consumer testing and stakeholder feedback, will determine specifically which measures are published on profile pages on the Web site. Statistical analyses will ensure the measures included are statistically valid and reliable and comparable across data collection mechanisms. Stakeholder feedback will ensure all measures meet current clinical standards. CMS will continue to reach out to stakeholders in the professional community, such as specialty societies, to ensure that the measures under consideration for public reporting remain clinically relevant and accurate. When measures are finalized significantly in advance of moment they are collected, it is possible that clinical guidelines can change rendering a measure no longer relevant. Publishing that measure can lead to consumer confusion regarding what best practices their health care professional should be subscribing to.
As we noted in the proposed rule (79 FR 40389), the primary goal of Physician Compare is to help consumers make informed health care decisions. If a consumer does not properly interpret a quality measure and thus misunderstands what the quality score represents, the consumer cannot use this information to make an informed decision. Through concept testing, CMS will test with consumers how well they understand each measure under consideration for public reporting. If a measure is not consistently understood and/or if consumers do not understand the relevance of the measure to their health care decision making process, CMS will not include the measure on the Physician Compare profile page as inclusion will not aid informed decision making. Finally, consumer testing will help ensure the measures included on the profile pages are accurately understood and relevant to consumers, thus helping them make informed decisions. This will be done to ensure that the information included on Physician Compare is consumer friendly and consumer focused.
We also received comments regarding stakeholder involvement and consumer testing.
We will also engage stakeholders for feedback, including input from the public, consumers, and health care professionals, as appropriate and feasible through such opportunities as Town Halls, Listening Sessions, Open Door Forums, and Webinars. We will review feedback for future consideration. Although we establish in rulemaking the subset of measures available for posting on the Physician Compare Web site, at this time, however, it is not possible for us to provide stakeholders with the exact list of measures that will be included on the Web site prior to our analysis of the reported data to know which measures meet the criteria we specified previously for public reporting.
As is the case for all measures published on Physician Compare, group practices will be given a 30-day preview period to view their measures as they will appear on Physician Compare prior to the measures being published. As in previous years, we will detail the process for the 30-day preview and provide a detailed timeline and instructions for preview in advance of the start of the preview period. ACOs will be able to view their quality data that will be publicly reported on Physician Compare through the ACO Quality Reports, which will be made available to ACOs for review at least 30 days prior to the start of public reporting on Physician Compare.
Group practices and EPs with available data for public reporting will be informed via email when the preview period is going to take place. Group practices and EPs will be provided instructions for previewing data and information for on how to request help
In addition to making all 2015 PQRS GPRO measures available for public reporting, we solicited comment (78 FR 40389) on creating composites using 2015 data and publishing composite scores in 2016 by grouping measures based on the PQRS GPRO measure groups, if technically feasible. We indicated we would analyze the data collected in 2015 and conduct psychometric and statistical analyses, looking at how the measures best fit together and how accurately they are measuring the composite concept, to create composites for certain PQRS GPRO measure groups, including but not limited to:
• Care Coordination/Patient Safety (CARE) Measures
• Coronary Artery Disease (CAD) Disease Module
• Diabetes Mellitus (DM) Disease Module
• Preventive (PREV) Care Measures
In particular, we would analyze the component measures that make up each of these measure groups to see if a statistically viable composite can be constructed with the data reported for 2015. Composite scores have proven to be beneficial in providing consumers a better way to understand quality measure data, as composites provide a more concise, easy to understand picture of physician quality.
Similar to composite scores, benchmarks are also important to ensuring that the quality data published on Physician Compare are accurately interpreted and appropriately understood. A benchmark will allow consumers to more easily evaluate the information published by providing a point of comparison between groups. We continue to receive requests from all stakeholders, but especially consumers, to add this information to Physician Compare. As a result, we proposed (79 FR 40389) to publicly report on Physician Compare in 2016 benchmarks for 2015 PQRS GPRO data using the same methodology currently used under the Shared Savings Program. This ACO benchmark methodology was previously finalized in the November 2011 Shared Savings Program final rule (76 FR 67898), as amended in the CY 2014 PFS final rule with comment period (78 FR 74759). Details on this methodology can be found on CMS.gov at
We proposed to calculate benchmarks using data at the group practice TIN level for all EPs who have at least 20 cases in the denominator. A benchmark per this methodology is the performance rate a group practice must achieve to earn the corresponding quality points for each measure. Benchmarks would be established for each percentile, starting with the 30th percentile (corresponding to the minimum attainment level) and ending with the 90th percentile (corresponding to the maximum attainment level). A quality scoring point system would then be determined. Quality scoring would be based on the group practice's actual level of performance on each measure. A group practice would earn quality points on a sliding scale based on level of performance: performance below the minimum attainment level (the 30th percentile) for a measure would receive zero points for that measure; performance at or above the 90th percentile of the performance benchmark would earn the maximum points available for the measure. The total points earned for measures in each measure group would be summed and divided by the total points available for that measure group to produce an overall measure group score of the percentage of points earned versus points available. The percentage score for each measure group would be averaged together to generate a final overall quality score for each group practice. The goal of including such benchmarks would be to help consumers see how each group practice performs on each measure, measure group, and overall in relation to other group practices.
Understanding the value consumers place on patient experience data and the commitment to reporting these data on Physician Compare, we proposed (79 FR 40390) publicly reporting in CY 2016 patient experience data from 2015 for all group practices of two or more EPs, who meet the specified sample size requirements and collect data via a CMS-specified certified CAHPS vendor. The patient experience data available are specifically the CAHPS for PQRS and CAHPS for ACO measures, which include the CG–CAHPS core measures. For group practices, we proposed to make available for public reporting these 12 summary survey measures:
• Getting Timely Care, Appointments, and Information.
• How Well Providers Communicate.
• Patient's Rating of Provider.
• Access to Specialists.
• Health Promotion & Education.
• Shared Decision Making.
• Health Status/Functional Status.
• Courteous and Helpful Office Staff.
• Care Coordination.
• Between Visit Communication.
• Helping You to Take Medication as Directed.
• Stewardship of Patient Resources.
We proposed that these 12 summary survey measures would be available for public reporting for all group practices. For ACOs participating in the Shared Savings Program, we proposed (79 FR 40390) that the patient experience measures that are included in the Patient/Caregiver Experience domain of the Quality Performance Standard under the Shared Savings Program in 2015 would be available for public reporting in 2016. We would review all quality measures after they are collected to ensure that only those measures deemed valid and reliable are included on the Web site.
We received a number of comments around our proposals to include CAHPS measures on Physician Compare.
One commenter supported the creation of benchmarks for CAHPS for PQRS measures, and suggested CMS clarify whether those benchmarks will be the same as the ACO CAHPS measure benchmarks, or whether the benchmarks will be specific to the PQRS program, but calculated using the same methodology.
We previously finalized in the 2014 PFS final rule with comment period (78 FR 74454) that 20 measures in the 2014 PQRS measures for individual EPs collected via registry, EHR, or claims would be available for public reporting in late 2015, if technically feasible. We proposed (79 FR 40390) to expand on this in two ways. First, we proposed to publicly report these same 20 measures for 2013 PQRS data in early 2015. We stated that publicly reporting these 2013 individual measures would help ensure individual level measures are made available as soon as possible. We believe that consumers are looking for measures about individual doctors and other health care professionals, and this would make these quality data available to the public sooner.
Second, we proposed (79 FR 40390) to make all individual EP-level PQRS measures collected via registry, EHR, or claims available for public reporting on Physician Compare for data collected in 2015 to be publicly reported in late CY 2016, if technically feasible.
We will continue to test the PQRS measures with consumers to ensure the measures are presented and described in a way that is accurately understood. We will only include on the Web site those measures that resonate with consumers to ensure they are not overwhelmed with too much information. Regarding concerns around the number of patients seen, only those measures that are reported for the accepted sample size of 20 patients will be publicly reported. Because of the overwhelming consumer demand for individual EP data and the value these data provide to patients, we are finalizing our proposal to publicly report all 2015 individual EP PQRS measures collected through a Registry, EHR, or claims, except for those measure that are new to PQRS and thus in their first year.
As noted above for group-level reporting, composite scores and benchmarks are critical in helping consumers best understand the quality measure information presented. For that reason, in addition to making all 2015 PQRS measures available for public reporting, we sought comment (79 FR 40390) to create composites and publish composite scores by grouping measures based on the PQRS measure groups, if technically feasible. We indicated that we would analyze the data collected in 2015 and conduct psychometric and statistical analyses to create composites for PQRS measure groups to be published in 2016, including:
• Coronary Artery Disease (CAD) (see Table 30)
• Diabetes Mellitus (DM) (see Table 32)
• General Surgery (see Table 33)
• Oncology (see Table 38)
• Preventive Care (see Table 41)
• Rheumatoid Arthritis (RA) (see Table 42)
• Total Knee Replacement (TKR) (see Table 45)
We would analyze the component measures that make up each of these measure groups to see if a statistically viable composite can be constructed with the data reported for 2015. As noted for group practices, we believe that providing composite scores will give consumers the tools needed to most accurately interpret the quality data published on Physician Compare. We would analyze the component measures that make up each of these measure groups to see if a statistically viable composite can be constructed with the data reported for 2015.
As noted above, we received multiple comments about creating composites at both the group practice and individual EP-level. Those comments are addressed above. Since we were only seeking
In addition, we proposed (79 FR 40390) to use the same methodology outlined above for group practices to develop benchmarks for individual practitioners. We believe that providing benchmarks will give consumers the tools needed to most accurately interpret the quality data published on Physician Compare. As discussed above, we received comments on the proposed benchmarking methodology for both group practices and individual EPs. Those comments were previously addressed. As noted, we are not finalizing this proposed benchmarking methodology at this time.
Previously, we indicated an interest in including specialty society measures on Physician Compare. In the proposed rule, we solicited comment (79 FR 40390) on posting these measures on the Web site. We also solicited comment on the option of linking from Physician Compare to specialty society Web sites that publish non-PQRS measures. Including specialty society measures on the site or linking to specific specialty society measures would provide the opportunity for more eligible professionals to have measures included on Physician Compare and thus help Medicare consumers make more informed choices. The quality measures developed by specialty societies that would be considered for future posting on Physician Compare are those that have been comprehensively vetted and tested and are trusted by the physician community. These measures would provide access to available specialty specific quality measures that are often highly regarded and trusted by the stakeholder community and, most importantly, by the specialties they represent. We indicated that we were working to identify possible societies to reach out to, and solicited comment on the concept, as well as potential specific society measures of interest.
Several commenters opposed posting non-PQRS data or linking to non-governmental, privately managed Web sites. One commenter stated CMS should maintain control over the public disclosure process to reduce potential for variable data. One commenter is concerned that the approach will lead to more confusion for consumers and added burden for physicians, and another commenter cautioned CMS to ensure measures that are meaningful to consumers and comparable to those reported upon under the PQRS. A few commenters sought additional information on this process if this becomes a formal proposal in future years.
Finally, we proposed (79 FR 40390) to make available on Physician Compare, 2015 Qualified Clinical Data Registry (QCDR) measure data collected at the individual level or aggregated to a higher level of the QCDR's choosing—such as the group practice level, if technically feasible. QCDRs are able to collect both PQRS measures and non-PQRS measures.
A number of commenters did not support the proposal, however. Most notably, commenters believed that public reporting first year data for new measures would be problematic. Other commenters opposed publicly reporting QCDR data until accurate benchmarking data can be developed, or professionals have the opportunity to analyze the data and make improvements. Several commenters requested NQF endorsement for all QCDR measures, and one commenter suggested that CMS develop rules and guidelines for measure stewards who develop non-PQRS measures housed in QCDR's. One commenter stated society-sponsored non-PQRS measures need to be subjected to the same reliability, validity, and consumer testing that CMS promises for other information on Physician Compare. Another commenter noted that QCDR measures are collected for quality improvement purposes and have not been vetted for public reporting.
We agree that it may be problematic to publicly report first year measures. Health care professionals should be afforded the opportunity to simply learn from the first year data, and not have this information shared publicly until the measure can be vetted for accuracy. As a result, we will not publicly report any QCDR measures newly available for reporting for at least one year. This is consistent with the VM policy regarding first year measures and addresses a significant number of the concerns raised, which were specifically in regard to not including first year measures for public reporting. If first year measures are not publicly reported this will provide us the necessary time to review and vet the QCDR measures to ensure that only those truly suitable for public reporting are posted on Physician Compare when they mature.
Several commenters supported the proposal only if the QCDR measures are posted on Physician Compare. One commenter believed this will streamline the public reporting process. One commenter noted that QCDRs Web sites are not intended for public consumption and would require new infrastructure, while another commenter was concerned with a potential conflict of interest by linking to nongovernmental Web sites. Two commenters support linking to the QCDR Web sites to view the data to reduce consumer confusion. Another commenter urged consistent and uniform public reporting.
QCDR data will only be publicly reported at the individual-EP level. We appreciate the commenters' concerns and support for group-level data. However, QCDR data is not necessarily aggregated to a level consistent with how PQRS defines a group practice. Therefore, aggregated data cannot be accommodated on Physician Compare at this time. And, under PQRS, only individual EPs can report via a QCDR. Therefore, only including individual-level QCDR data on Physician Compare is consistent with the PQRS program's implementation of the data. As with all data included on Physician Compare, only data deemed valid, reliable, and accurate will be publicly reported on the Web site.
Table 49 summarizes the Physician Compare proposals we are finalizing for with regard to 2015 data.
We received comments regarding the availability of measures at the individual and group-levels for certain types of specialties and for other health care professionals, but that were beyond the scope of this rule. We have summarized and addressed those comments below.
Section 10331(f) of the Affordable Care Act, requires that no later than January 1, 2015, we submit a report to Congress on the Physician Compare Web site that includes information on the efforts of and plans made by the Secretary of Health and Human Services to collect and publish data on physician quality and efficiency and on patient experience of care in support of consumer choice and value-based purchasing. We anticipate timely submission of this report, including discussion about the phase-in of the Web site and developments to date. The report will also address the expansion of data on the Web site, in regard to section 10331(g) of the Affordable Care Act, and future plans for the Web site.
This section contains the requirements for the Physician Quality Reporting System (PQRS). The PQRS, as set forth in sections 1848(a), (k), and (m) of the Act, is a quality reporting program that provides incentive payments (ending with 2014) and payment adjustments (beginning in 2015) to eligible professionals and group practices based on whether they satisfactorily report data on quality measures for covered professional services furnished during a specified reporting period or to individual eligible professionals that satisfactorily participate in a qualified clinical data registry (QCDR).
The requirements in this rule primarily focus on the 2017 PQRS payment adjustment, which will be based on an eligible professional's or a group practice's reporting of quality measures data during the 12-month calendar year reporting period occurring in 2015 (that is, January 1 through December 31, 2015). Please note that, during the comment period, we received comments that were not related to our specific proposals for the requirements for the 2017 PQRS payment adjustment in the CY 2015 PFS proposed rule. While we appreciate the commenters' feedback, these comments will not be specifically addressed in this CY 2015 PFS final rule with comment period, as they are beyond the scope of this rule. However, we will consider these comments when developing policies and program requirements for future years. Please note that we continue to focus on aligning our requirements with other quality reporting programs, such as the Medicare EHR Incentive Program for Eligible Professionals, the VM, and the Medicare Shared Savings Program, where and to the extent appropriate and feasible.
The PQRS regulations are located at § 414.90. The program requirements for the 2007 through 2014 PQRS incentives and the 2015 and 2016 PQRS payment adjustment that were previously established, as well as information on the PQRS, including related laws and established requirements, are available at
We note that eligible professionals in critical access hospitals billing under Method II (CAH–IIs) were previously not able to participate in the PQRS. Due to a change we made in the manner in which Medicare reimburses eligible professionals in CAH–IIs, it is feasible for eligible professionals in CAH–IIs to participate in the PQRS for reporting beginning in 2014. Although eligible professionals in CAH–IIs are not able to use the claims-based reporting mechanism to report PQRS quality measures data in 2014, beginning in 2015, these eligible professionals in CAH–IIs may participate in the PQRS using ALL reporting mechanisms available, including the claims-based reporting mechanism. Finally, please note that in accordance with section 1848(a)(8) of the Act, all eligible professionals who do not meet the criteria for satisfactory reporting or satisfactory participation for the 2017 PQRS payment adjustment will be subject to the 2017 PQRS payment adjustment with no exceptions.
In addition, in the CY 2013 PFS final rule with comment period, we introduced the reporting of the Agency for Healthcare Research and Quality's (AHRQ's) Clinician & Group (CG) Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey measures, referenced at
The PQRS includes the following reporting mechanisms: claims; qualified registry; EHR (including direct EHR products and EHR data submission vendor products); the Group Practice Reporting Option (GPRO) web interface; certified survey vendors, for the CAHPS for PQRS survey measures; and the QCDR. Under the existing PQRS regulation, § 414.90(h) through (k) govern which reporting mechanisms are available for use by individuals and group practices for the PQRS incentive and payment adjustment. This section III.K.1 contains our proposals to change the qualified registry, direct EHR and EHR data submission vendor products, QCDR, and GPRO web interface reporting mechanisms, as well as public comments and our final decisions on those proposals. Please note that we did not propose to make changes to the claims-based reporting mechanism.
Please note that, in the CY 2015 PFS proposed rule, we solicited comments on whether, in future years, we should allow for more frequent submissions, such as quarterly or year-round submissions, for PQRS quality measures data submitted via the qualified registry, EHR, QCDR, and GPRO web interface reporting mechanisms (79 FR 40392, 40393, and 40395 respectively). Many commenters supported this concept, as it would provide vendors and their products greater flexibility in data submission. However, some of these commenters who expressed support for more frequent submissions of data preferred that the ability to provide more frequent submission of data be optional, not mandatory. We appreciate the commenters' support for this concept and will consider the commenters' feedback if and when we propose this policy in future rulemaking.
In the CY 2013 and 2014 PFS final rules with comment period, we established certain requirements for entities to become qualified registries for the purpose of verifying that a qualified registry is prepared to submit data on PQRS quality measures for the reporting period in which the qualified registry seeks to be qualified (77 FR 69179 through 69180 and 78 FR 74456). Specifically, in the CY 2014 PFS final rule with comment period, in accordance with the satisfactory reporting criterion we finalized for individual eligible professionals or group practices reporting PQRS quality measures via qualified registry, we finalized the following requirement that a qualified registry must be able to collect all needed data elements and transmit to CMS the data at the TIN/NPI level for at least 9 measures covering at least 3 of the National Quality Strategy (NQS) domains (78 FR 74456).
As we explain in further detail in this section III.K, we proposed that—in addition to requiring that an eligible professional or group practice report on at least 9 measures covering 3 NQS domains—an eligible professional or group practice who sees at least 1 Medicare patient in a face-to-face encounter, as we define that term in section III.K.2.a., and wishes to meet the criterion for satisfactory reporting of PQRS quality measures via a qualified registry for the 2017 PQRS payment adjustment would be required to report on at least 2 cross-cutting PQRS measures specified in Table 52. In accordance with this proposal, we proposed to require that, in addition to being required to be able to collect all needed data elements and transmit to CMS the data at the TIN/NPI level for at least 9 measures covering at least 3 of the NQS domains for which a qualified registry transmits data, a qualified registry would be required to be able to collect all needed data elements and transmit to CMS the data at the TIN/NPI level for ALL cross-cutting measures specified in Table 52 for which the registry's participating eligible professionals are able to report.
Furthermore, in the CY 2013 PFS final rule, we noted that qualified registries have until the last Friday of February following the applicable reporting period (for example, February 28, 2014, for reporting periods ending in 2013) to submit quality measures data on behalf of its eligible professionals (77 FR 69182). We continue to receive stakeholder feedback, particularly from qualified registries currently participating in the PQRS, urging us to extend this submission deadline due to the time it takes for these qualified registries to collect and analyze the quality measures data received after the end of the reporting period. Although, at the time, we emphasized the need to have quality measures data received by CMS no later than the last Friday of the February occurring after the end of the applicable reporting period, we believe it is now feasible to extend this deadline. Therefore, we proposed to
In the CY 2013 PFS final rule with comment period, we finalized requirements that although EHR vendors and their products would no longer be required to undergo the previously existing qualification process, we would only accept the data if the data are: (1) 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 vendor products that 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); and (2) in compliance with a CMS-specified secure method for data submission (77 FR 69183 through 69187). To further clarify, EHR vendors and their products must be able to submit data in the form and manner specified by CMS. Accordingly, direct EHRs and EHR data submission vendors must comply with CMS Implementation Guides for both the QRDA–I and QRDA–III data file formats. The Implementation Guides for 2014 are available at
For 2015 and beyond, we also proposed to have the eligible professional or group practice provide the CMS EHR Certification Number of the product used by the eligible professional or group practice for direct EHRs and EHR data submission vendors. We believe this requirement is necessary to ensure that the eligible professionals and group practices that are using EHR technology are using a product that is certified EHR technology (CEHRT) and will allow CMS to ensure that the eligible professional or group practice's data is derived from a product that is CEHRT. We solicited but received no public comment on this proposal. However, we do not believe it is feasible for us to collect this information at this time, because we do not have a venue in which to store this information. Therefore, we are not finalizing this proposal.
In accordance with the criterion for satisfactory participation in a QCDR that we proposed for the 2017 PQRS payment adjustment, we proposed to require a QCDR to possess at least 3 outcome measures (or, in lieu of 3 outcome measures, at least 2 outcome measures and at least 1 of the following other types of measures—resource use, patient experience of care, or efficiency/appropriate use) (79 FR 40393). We solicited and received the following comment on this proposal:
To establish the minimum number of measures (9 measures covering at least 3 NQS domains) a QCDR may report for the PQRS, we placed a limit on the number of non-PQRS measures (20) that a QCDR may submit on behalf of an eligible professional at this time (78 FR 74476). We proposed to change this limit from 20 measures to 30 (79 FR 40393). We solicited and received the following public comment on this proposal:
Additionally, CMS' experience during the 2014 self-nomination process shed light on clarifications needed on what is considered a non-PQRS measure. Therefore, to clarify the definition of non-PQRS measures, we proposed the following parameters for a measure to be considered a non-PQRS measure:
• A measure that is not contained in the PQRS measure set for the applicable reporting period.
• A measure that may be in the PQRS measure set but has substantive differences in the manner it is reported by the QCDR. For example, PQRS measure 319 is reportable only via the GPRO Web interface. A QCDR wishes to report this measure on behalf of its eligible professionals. However, as CMS has only extracted the data collected from this quality measure using the GPRO Web interface, in which CMS utilizes a claims-based assignment and sampling methodology to inform the groups on which patients they are to report, the reporting of this measure would require changes to the way that the measure is calculated and reported to CMS via a QCDR instead of through the GPRO Web interface. Therefore, due to the substantive changes needed to report this measure via a QCDR, PQRS measure 319 would be considered a non-PQRS measure. In addition, CAHPS for PQRS is currently reportable only via a CMS-certified survey vendor. However, although CAHPS for PQRS is technically contained in the PQRS measure set, we consider the changes that will need to be made to be available for reporting by individual eligible professionals (and not as a part of a group practice) significant enough as to treat CAHPS for PQRS as a non-PQRS measure for purposes of reporting CAHPS for PQRS via a QCDR.
To the extent that further clarification on the distinction between a PQRS and a non-PQRS measure is necessary, we will provide additional guidance on our Web site at
Furthermore, under our authority to establish the requirements for an entity to be considered a QCDR under section 1848(m)(3)(E)(i) of the Act, we established certain requirements for an entity to be considered a QCDR in the CY 2014 PFS final rule with comment period (78 FR 74467 through 74473). Under this same authority, we proposed here to add the following requirement that an entity must meet to serve as a QCDR under the PQRS for reporting periods beginning in 2015:
• Require that the entity make available to the public the quality measures data for which its eligible professionals report.
To clarify this proposal, we proposed that, at a minimum, the QCDR publicly report the following quality measures data information that we believe will give patients adequate information on the care provided by an eligible professional: The title and description of the measures that a QCDR reports for purposes of the PQRS, as well as the performance results for each measure the QCDR reports. We solicited and received the following public comment on this proposal:
However, although we do not believe we should further delay requiring public report of QCDR quality measures data, we do agree with the commenters on delaying public posting of measures information until a measure has been tested for validity and reliability. Therefore, we are providing an exception to this requirement for new measures (both PQRS and non-PQRS measures) that are in their first year of reporting by a QCDR under the PQRS. We define a measure being introduced in the PQRS for the first time as the first time a quality measure is either introduced in the PQRS measure set in rulemaking as a new measure for that reporting period or, for non-PQRS measures that can be reported by a QCDR, the first time a QCDR submits a measure (including its measure specifications) for reporting for the PQRS for the first time. Please note that, to the extent that a QCDR first reports on a non-PQRS measure that is already being reported by another QCDR, we would consider the measure a measure that is in its first year of reporting for that respective QCDR who is reporting the measure for the first time. We believe that providing QCDRs with one year to test and validate new measures provides sufficient time for QCDRs to find potential data issues and correct those issues prior to a measure's second year of reporting in the PQRS.
Based on the comments received and for the reasons stated in the proposed rule, we are finalizing this proposal to require that the entity make available to the public the quality measures data for which its eligible professionals report. However, as we explained above, we are providing an exception to this requirement for new PQRS and non-PQRS measures that are in their first year of reporting by a QCDR under the PQRS. Therefore, quality measure data for a PQRS or non-PQRS measure that is being reported by a QCDR in the
Please note that, in finalizing these requirements on public reporting, we defer to the entity in terms of the method it will use to publicly report the quality measures data it collects for the PQRS. For example, to meet this requirement, it would be sufficient for a QCDR to publicly report performance rates of eligible professionals through means such as board or specialty Web sites, or listserv dashboards or announcements. We also note that a QCDR would meet this public reporting requirement if the QCDR's measures data were posted on Physician Compare. In addition, we defer to the QCDR to determine whether to report performance results at the individual eligible professional level or aggregate the results for certain sets of eligible professionals who are in the same practice together (but who are not registered as a group practice for the purposes of PQRS reporting). We believe it is appropriate to allow a QCDR to publicly report performance results at an aggregate level for certain eligible professionals when those who are in the same practice contribute to the overall care provided to a patient.
• With respect to when the quality measures data must be publicly reported, we proposed that the QCDR must have the quality measures data by April 31 of the year following the applicable reporting period (that is, April 31, 2016, for reporting periods occurring in 2015). The deadline of April 31 will provide QCDRs with one month to post quality measures data and information following the March 31 deadline for the QCDRs to transmit quality measures data for purposes of the PQRS payment adjustments. Please note that we erroneously stated the proposed deadline as April 31, which does not exist in the calendar. We intended to propose a deadline that falls at the end of April—specifically, a deadline of April 30, not April 31, of the year following the applicable reporting period (that is, April 30, 2016, for reporting periods occurring in 2015). This was an inadvertent technical error, and we are therefore correcting this proposal here and our responses to comments below to reflect our intention to propose a deadline of April 30 of the year following the applicable reporting period. We believe this does not materially modify this proposal, and as April 31 does not exist in the calendar, we believe that the public and commenters could reasonably infer that we intended to refer to the end of April in this proposed deadline, which is April 30 and thus reasonably foresee that we would adopt such a deadline. Therefore, we will address the comments and frame our responses below as they relate to an April 30 deadline of the year following the applicable reporting period (that is, April 30, 2016, for reporting periods occurring in 2015). We also proposed that this data be available on a continuous basis and be continuously updated as the measures undergo changes in measure title and description, as well as when new performance results are calculated. We solicited and received the following public comments on this proposal:
Based on our experience with the qualifying entities wishing to become QCDRs for reporting periods occurring in 2014, we received feedback from many organizations who expressed concern that the entity wishing to become a QCDR may not meet the requirements of a QCDR solely on its own. Therefore, we provided the following proposals beginning in 2015 on situations where an entity may not meet the requirements of a QCDR solely on its own but, in conjunction with another entity, may be able to meet the requirements of a QCDR and therefore be eligible for qualification:
• We proposed to allow that an entity that uses an external organization for purposes of data collection, calculation or transmission may meet the definition of a QCDR so long as the entity has a signed, written agreement that specifically details the relationship and responsibilities of the entity with the external organizations effective as of January 1 the year prior to the year for which the entity seeks to become a QCDR (for example, January 1, 2014, to be eligible to participate for purposes of data collected in 2015). Entities that have a mere verbal, non-written agreement to work together to become a QCDR by January 1 the year prior to the year for which the entity seeks to become a QCDR would not fulfill this proposed requirement. We solicited and received the following public comment on this proposal:
• In addition, we proposed that an entity that has broken off from a larger organization may be considered to be in existence for the purposes of QCDR qualification as of the earliest date the larger organization begins continual existence. We received questions from entities who used to be part of a larger organization but have recently become independent from the larger organization as to whether the entities would meet the requirement established in the CY 2014 PFS final rule with comment period that the entity be in
In the CY 2014 PFS final rule with comment period, in accordance with the submission deadline of quality measures data for qualified registries, we noted a deadline of the last Friday in February occurring after the end of the applicable reporting period to submit quality measures data to CMS (78 FR 74471). In accordance with our proposal to extend this deadline for qualified registries, we proposed to extend the deadline for QCDRs to submit quality measures data calculations and results by March 31 following the end of the applicable reporting period (that is, March 31, 2016, for reporting periods ending in 2015).
We solicited and received the following public comments on this proposal:
In the CY 2014 PFS final rule with comment period (78 FR 74456), we finalized our proposal to require “that group practices register to participate in the GPRO by September 30 of the year in which the reporting period occurs (that is September 30, 2014 for reporting periods occurring in 2014), as proposed.” However, we noted that, in order “to respond to the commenters concerns to provide timelier feedback on performance on CG CAHPS in the future, we anticipate proposing an earlier deadline for group practices to register to participate in the GPRO in future years” (78 FR 74456). Indeed, to provide timelier feedback on performance on CAHPS for PQRS, we proposed to modify the deadline that a group practice must register to participate in the GPRO to June 30 of the year in which the reporting period occurs (that is, June 30, 2015, for reporting periods occurring in 2015). Specifically, although we still seek to provide group practices with as much time as feasible to decide whether to register to participate in the PQRS as a GPRO, we weigh this priority with others, such as our desire to provide more timely feedback to participants of the PQRS, as well as other CMS quality reporting programs such as the VM. Therefore, in an effort to provide timelier feedback, we proposed to change the deadline by which a group practice must register to participate in the GPRO to June 30 of the applicable 12-month reporting period (that is, June 30, 2015, for reporting periods occurring in 2015). This proposed change would allow us to provide timelier feedback while still providing group practices with over 6 months to determine whether they should participate in the PQRS GPRO or, in the alternative, participate in the PQRS as individual eligible professionals. Although this proposed GPRO registration deadline would provide less time for a group practice to decide whether to participate in the GPRO, we believe the benefit of providing timelier feedback reports outweighs this concern. We solicited and received the following public comments on these proposals:
Section 1848(a)(8) of the 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 (including the fee schedule amount for purposes of determining a payment based on such amount) shall be equal to the applicable percent of the fee schedule amount that would otherwise apply to such services. For 2016 and subsequent years, the applicable percent is 98.0 percent.
In the CY 2014 PFS final rule with comment period (see Table 47 at 78 FR 74479), we finalized the following criteria for satisfactory reporting for the submission of individual quality measures via claims and registry for the 2014 PQRS incentive: For the 12-month reporting period for the 2014 PQRS incentive, the eligible professional would report at least 9 measures, covering at least 3 of the NQS domains, OR, if less than 9 measures apply to the eligible professional, report 1—8 measures, AND report each measure for at least 50 percent of the 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 9 measures covering less than 3 NQS domains via the claims- or registry-based reporting mechanism, the eligible professional would be subject to the measure application validity (MAV) process, which would allow us to determine whether the eligible professional should have reported quality data codes for additional measures.
To be consistent with the satisfactory reporting criterion we finalized for the 2014 PQRS incentive, for the 2017 PQRS payment adjustment, we proposed to modify § 414.90(j) and proposed the following criterion for individual eligible professionals reporting via claims and registry: For the 12-month reporting period for the 2017 PQRS payment adjustment, the eligible professional would report at least 9 measures, covering at least 3 of the NQS domains 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. Of the measures reported, if the eligible professional sees at least 1 Medicare patient in a face-to-face encounter, as we proposed to define that term below, the eligible professional would report on at least 2 measures contained in the proposed cross-cutting measure set specified in Table 52. If less than 9 measures apply to the eligible professional, the eligible professional would report up to 8 measure(s), AND report each measure for at least 50 percent of the 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 (79 FR 40395).
We noted that, unlike the criterion we finalized for the 2014 PQRS incentive, we proposed to require an eligible professional who sees at least 1 Medicare patient in a face-to-face encounter, as we defined that term below, during the 12-month 2017 PQRS payment adjustment reporting period to report at least 2 measures contained in the cross-cutting measure set specified in Table 52. As we noted in the CY 2014 PFS proposed rule (78 FR 43359), we are dedicated to collecting data that provides us with a better picture of the overall quality of care furnished by eligible professionals, particularly for the purpose of having PQRS reporting being used to assess quality performance under the VM. We believe that requiring an eligible professional to report on at least 2 broadly applicable, cross-cutting measures will provide us with quality data on more varied aspects of an eligible professional's practice. We also noted that in its 2014 pre-rulemaking final report (available at
For what defines a “face-to-face” encounter, for purposes of reporting of at least 2 cross-cutting measures specified in Table 52, we proposed to determine whether an eligible professional had a “face-to-face” encounter by seeing whether the eligible professional billed for services under the PFS that are associated with face-to-face encounters, such as whether an eligible professional billed general office visit codes, outpatient visits, and surgical procedures. We would not include telehealth visits as face-to-face encounters for purposes of the required reporting of at least 2 cross-cutting measures specified in Table 52 (79 FR 40395 and 40396).
In addition, we understand that there may be instances where an eligible professional may not have at least 9 measures applicable to an eligible professional's practice. In this instance, like the criterion we finalized for the 2014 PQRS incentive (see Table 47 at 78
We solicited public comment on our satisfactory reporting criterion for individual eligible professionals reporting via claims or registry for the 2017 PQRS payment adjustment. The following is a summary of the comments we received regarding our proposal for satisfactory reporting criterion for individual eligible professionals reporting via claims or registry for the 2017 PQRS payment adjustment.
Furthermore, with respect to those commenters concerned that an eligible professional may not have 9 measures covering at least 3 NQS domains applicable to his/her practice, in the proposed rule we noted that in this instance, like the criterion we finalized for the 2014 PQRS incentive (see Table 47 at 78 FR 74479), an eligible professional reporting on less than 9 measures would still be able to meet the satisfactory reporting criterion via claims and registry if the eligible professional reports on 1–8 measures, as applicable, to the eligible professional's practice. If an eligible professional reports on 1–8 measures, the eligible professional would be subject to the MAV process, which would allow us to determine whether an eligible professional should have reported quality data codes for additional measures. In addition, the MAV process will also allow us to determine whether a group practice should have reported on any of the cross-cutting measures specified in Table 52. As such, under this proposed criteria for satisfactory reporting for the 2017 PQRS payment adjustment, an eligible professional who does not have at least 9 measures covering at least 3 NQS domains applicable to his/her practice may still meet the criteria for satisfactory reporting for the 2017 PQRS payment
Based on the comments received and for the reasons stated above and in the proposed rule, we are finalizing our proposal to require the reporting of 9 measures covering at least 3 NQS domains to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment.
In the case that an eligible professional may not have at least 9 measures applicable to an eligible professional's practice, the eligible professional may still be able to meet the satisfactory reporting criterion via claims and/or registry for the 2017 PQRS payment adjustment if the eligible professional reports on 1–8 measures. The eligible professional would be required to report as many measures as are applicable to the eligible professional's practice. If reporting less than 9 measures covering 3 NQS domains, the eligible professional would be subject to the MAV process, which would allow us to determine whether an eligible professional should have reported quality data codes for additional measures.
Please also note that this does not bring the total number of measures required to be reported under this criterion to 10 measures. Rather, if an eligible professional sees at least 1 Medicare patient in a face-to-face encounter during the 12-month PQRS payment adjustment reporting period, 1 of the 9 measures the eligible professional reports must be measures contained in the cross-cutting measure set. Therefore, an eligible professional would report at least 1 cross-cutting measure and 8 additional PQRS measures covering 3 NQS domains.
In the instance where an eligible professional may not have at least 9 measures applicable to his/her practice, the eligible professional would still be required to report at least 1 cross-cutting measure, if applicable. As we noted, we believe we sufficiently exclude eligible professionals for which the cross-cutting measures do not apply by only proposing this requirement for eligible professionals who see at least 1 Medicare patient in a face-to-face encounter.
After reviewing the comments, we are finalizing our proposal to modify § 414.90(j) and finalize the following criterion for individual eligible professionals reporting via claims and registry:
For the 12-month reporting period for the 2017 PQRS payment adjustment, report at least 9 measures, covering at least 3 of the NQS domains 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. Of the measures reported, if the eligible professional sees at least 1 Medicare patient in a face-to-face encounter, the eligible professional will report on at least 1 measure contained in the proposed cross-cutting measure set specified in Table 52. If less than 9 measures apply to the eligible professional, the eligible professional would report up to 8 measure(s), AND report each measure for at least 50 percent of the 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.
We understand that there may be instances where an eligible professional may not have at least 9 measures applicable to an eligible professional's practice. In this instance, an eligible professional reporting on less than 9 measures would still be able to meet the satisfactory reporting criterion via claims and registry if the eligible professional reports on 1–8 measures, as applicable, to the eligible professional's practice. If an eligible professional reports on 1–8 measures, the eligible professional would be subject to the MAV process, which would allow us to determine whether an eligible professional should have reported quality data codes for additional measures. In addition, the MAV process will also allow us to determine whether a group practice should have reported on any of the cross-cutting measures specified in Table 52. The MAV process we will implement for claims and registry for the 2017 PQRS payment adjustment is the same process that was established for reporting periods occurring in 2014 for the 2014 PQRS incentive. For more information on the claims MAV process, please visit
In the CY 2013 PFS final rule with comment period, we finalized the
To be consistent with the criterion we finalized for the 2014 PQRS incentive, as well as to continue to align with the final criterion for meeting the clinical quality measure (CQM) component of achieving meaningful use under the Medicare EHR Incentive Program, we proposed to modify § 414.90(j) and proposed the following criterion for the satisfactory reporting for individual eligible professionals to report individual measures via a direct EHR product that is CEHRT or an EHR data submission vendor product that is CEHRT for the 2017 PQRS payment adjustment: The eligible professional would report 9 measures covering at least 3 of the NQS domains. If an eligible professional's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional would be required to report all of the measures for which there is Medicare patient data. An eligible professional would be required to report on at least 1 measure for which there is Medicare patient data.
We solicited public comment on this proposal.
The following is summary of the comments we received regarding our proposed criterion for the satisfactory reporting for individual eligible professionals to report individual measures via a direct EHR product that is CEHRT or an EHR data submission vendor product that is CEHRT for the 2017 PQRS payment adjustment.
After reviewing the comments, we are finalizing our proposal as proposed to modify § 414.90(j) and to indicate the following criterion for the satisfactory reporting for individual eligible professionals to report individual measures via a direct EHR product that is CEHRT or an EHR data submission vendor product that is CEHRT for the 2017 PQRS payment adjustment: For the 12-month reporting period for the 2017 PQRS payment adjustment, report 9 measures covering at least 3 of the NQS domains. If an eligible professional's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the eligible professional would be required to report all of the measures for which there is Medicare patient data. An eligible professional would be required to report on at least 1 measure for which there is Medicare patient data.
In the CY 2013 PFS final rule with comment period, we finalized the following criterion for the satisfactory reporting for individual eligible professionals to report measures groups via registry for the 2014 PQRS incentive: For the 12-month reporting period for the 2014 PQRS incentive, report at least 1 measures group AND report each measures group for at least 20 patients, the majority (11 patients) of which must be Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate will not be counted (see Table 47 at 78 FR 74479).
To be consistent with the criterion we finalized for the 2014 PQRS incentive, we proposed to modify § 414.90(j) to indicate the following criterion for the satisfactory reporting for individual eligible professionals to report measures groups via registry for the 2017 PQRS payment adjustment: For the 12-month reporting period for the 2017 PQRS payment adjustment, the eligible professional would report at least 1 measures group AND report each measures group for at least 20 patients, the majority (11 patients) of which would be required to be Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate would not be counted.
Although we proposed a satisfactory reporting criterion for individual eligible professionals to report measures groups via registry for the 2017 PQRS payment adjustment that is consistent with criterion finalized for the 2014 PQRS incentive, please note that in section III.K of this final rule with comment period, we are changing the definition of a PQRS measures group.
We solicited but received no public comment on our proposed satisfactory reporting criterion for individual eligible professionals reporting measures groups via registry for the 2017 PQRS payment adjustment. Therefore, we are finalizing our proposal as proposed to modify § 414.90(j) to indicate the following criterion for the satisfactory reporting for individual eligible professionals to report measures groups via registry for the 2017 PQRS payment adjustment: For the 12-month reporting period for the 2017 PQRS payment adjustment, report at least 1 measures group AND report each measures group for at least 20 patients, the majority (11 patients) of which are required to be Medicare Part B FFS patients. Measures groups containing a measure with a 0 percent performance rate will not be counted.
Section 601(b) of the ATRA amended section 1848(m)(3) of the Act, by redesignating subparagraph (D) as subparagraph (F) and adding new subparagraphs (D) and (E), to provide for a new standard for individual eligible professionals to satisfy the PQRS beginning in 2014, based on satisfactory participation in a QCDR.
Section 1848(a)(8) of the 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. For 2016 and subsequent years, the applicable percent is 98.0 percent.
Section 1848(m)(3)(D) of the Act, as added by section 601(b) of the ATRA, authorizes the Secretary to treat an individual eligible professional as satisfactorily submitting data on quality measures under section 1848(m)(3)(A) of the Act if, in lieu of reporting measures under section 1848(k)(2)(C) of the Act, the eligible professional is satisfactorily participating in a QCDR for the year. “Satisfactory participation” is a new standard under the PQRS and is a substitute for the underlying standard of “satisfactory reporting” data on covered professional services that eligible professionals must meet to avoid the PQRS payment adjustment. Currently, § 414.90(e)(2) states that individual eligible professionals must be treated as satisfactorily reporting data on quality measures if the individual eligible professional satisfactorily participates in a QCDR.
In the CY 2014 PFS final rule with comment period, although we finalized satisfactory participation criteria for the 2016 PQRS payment adjustment that are less stringent than the satisfactory participation criteria we finalized for the 2014 PQRS incentive, we noted that it was “our intention to fully move towards the reporting of 9 measures covering at least 3 domains to meet the criteria for satisfactory participation for the 2017 PQRS payment adjustment” (78 FR 74477). Specifically, we finalized the following two criteria for the satisfactory participation in a QCDR for the 2014 PQRS incentive at § 414.90(i)(3): For the 12-month 2014 reporting period, report at least 9 measures available for reporting under the QCDR covering at least 3 of the NQS domains,
To be consistent with the number of measures reported for the satisfactory participation criterion we finalized for the 2014 PQRS incentive, for purposes of the 2017 PQRS payment adjustment (which would be based on data reported during the 12-month period that falls in CY 2015), we proposed to modify § 414.90(k) to add the following criteria for individual eligible professionals to satisfactorily participate in a QCDR for the 2017 PQRS payment adjustment: For the 12-month reporting period for the 2017 PQRS payment adjustment, the eligible professional would report at least 9 measures available for reporting under a QCDR covering at least 3 of the NQS domains, AND report each measure for at least 50 percent of the eligible professional's patients. Of these measures, the eligible professional would report on at least 3 outcome measures, OR, if 3 outcomes measures are not available, report on at least 2 outcome measures and at least 1 of the following types of measures—resource use, patient experience of care, or efficiency/appropriate use.
Unlike the satisfactory participation criteria that were established for the 2014 PQRS incentive, we proposed to modify § 414.90(k)(4) to require that an eligible professional report on not only 1 but at least 3 outcome measures (or, 2 outcome measures and at least 1 resource use, patient experience of care, or efficiency/appropriate use if 3 outcomes measures are not available). We proposed this increase because it is our goal to, when appropriate, move towards the reporting of more outcome measures. We believe the reporting of outcome measures (for example, unplanned hospital readmission after a procedure) better captures the quality of care an eligible professional provides than, for example, process measures (for example, whether a Hemoglobin A1c test was performed for diabetic patients). In establishing this proposal, we understood that a QCDR may not have 3 outcomes measures within its quality measure data set. Therefore, as an alternative to a third outcome measure, we proposed to allow an eligible professional to report on at least 1 resource use, patient experience of care, or efficiency/appropriate use measure in lieu of an outcome measure.
We solicited public comment on these proposals. The following is summary of the comments we received regarding on these proposals.
In addition, we note that we are adding another category—patient safety—of measures that an eligible professional may report in lieu of an outcome measure. While we did not include this category before, we believe the addition of the patient safety category is appropriate, as we believe that it is equally important to measure patient safety, as it is to measure resource use, patient experience of care, or appropriate use. Furthermore, we believe the addition of another category of measures that may be reported in lieu of an outcome measure benefits eligible professionals and QCDRs and is responsive to some of the commenters' concerns regarding having enough measures to report, as it provides more options in terms of the measures an eligible professional may report in lieu of an outcome measure. We define the term “patient safety” as it applies to QCDRs in the QCDR measure section in III.K.6 below.
As a result of the comments, we are revising our proposal to modify § 414.90(k) to indicate the following criterion for satisfactory participation in a QCDR for the 2017 PQRS payment adjustment: For the 12-month reporting period for the 2017 PQRS payment adjustment, report at least 9 measures available for reporting under a QCDR covering at least 3 of the NQS domains, AND report each measure for at least 50 percent of the eligible professional's patients. Of these measures, the eligible professional would report on at least 2 outcome measures, OR, if 2 outcomes measures are not available, report on at least 1 outcome measures and at least 1 of the following types of measures—resource use, patient experience of care, efficiency/appropriate use, or patient safety.
In lieu of reporting measures under section 1848(k)(2)(C) of the Act, section 1848(m)(3)(C) of the Act provides the Secretary with the authority to establish and have in place a process under which eligible professionals in a group practice (as defined by the Secretary) shall be treated as satisfactorily submitting data on quality measures. Accordingly, this section III.K.4 contains our satisfactory reporting criteria for group practices selected to participate in the GPRO. Please note that, for a group practice to participate in the PQRS GPRO in lieu of participating as individual eligible professionals, a group practice is required to register to participate in the PQRS GPRO. For more information on GPRO participation, please visit
Consistent with the group practice reporting requirements under section 1848(m)(3)(C) of the Act, we proposed to modify § 414.90(j) to incorporate the following criterion for the satisfactory reporting of PQRS quality measures for group practices registered to participate in the GPRO for the 12-month reporting period for the 2017 PQRS payment adjustment using the GPRO web interface for groups practices of 25–99 eligible professionals: The group practice would report on all measures included in the web interface; AND populate data fields for the first 248 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 248, then the group practice would 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 248 patients on which a group practice may report, particularly those group practices on the smaller end of the range of 25–99
In addition, we proposed to modify § 414.90(j) to incorporate the following criteria for the satisfactory reporting of PQRS quality measures for group practices that registered to participate in the GPRO for the 12-month reporting period for the 2017 PQRS payment adjustment using the GPRO web interface for groups practices of 100 or more eligible professionals: The group practice would report all CAHPS for PQRS survey measures via a certified survey vendor. In addition, the group practice would report on all measures included in the GPRO web interface; AND populate data fields for the first 248 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 248, then the group practice would report on 100 percent of assigned beneficiaries. A group practice would be required to report on at least 1 measure for which there is Medicare patient data.
To maintain consistency in this reporting criteria, we note that this criteria is similar to the criterion we finalized 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 PQRS incentives for group practices of 100 or more eligible professionals in the CY 2013 PFS final rule with comment period (see Table 49 at 78 FR 74486). However, we proposed to reduce the patient sample size on which a group practice is required to report quality measures data from 411 to 248. We examined the sample size of this reporting criterion and determined that the sample size we proposed reduces provider reporting burden while still allowing for statistically valid and reliable performance results. For the 25–99 sized groups reporting via the web interface, we recognized the proposal to move from reporting 218 to 248 patients per sample represents a slight increase in reporting. However, based on experience with the 218 count and subsequent statistical analysis, we believe that there are increased performance reliabilities and validities gained when changing the minimum reporting requirement to 248. We believe statistical reliability and validity is extremely important when measuring provider performance, particularly given the implications of the Physician VM and Physician Compare public reporting, discussed in section III.N and section III.J respectively. Therefore, we believe this criterion improves on the criterion previously finalized.
For assignment of patients for group practices reporting via the GPRO web interface, in previous years, we have aligned with the Medicare Shared Savings Program methodology of beneficiary assignment (see 77 FR 69195). We note that, in section III.N. of the CY 2015 PFS proposed rule, we proposed to use a beneficiary attribution methodology for the VM for the claims-based quality measures and cost measures that is slightly different from the Medicare Shared Savings Program methodology, namely (1) eliminating the primary care service pre-step that is statutorily required for the Shared Savings Program and (2) including NPs, PA, and CNSs in step 1 rather than in step 2 of the attribution process. We believe that aligning with the VM's proposed method of attribution is appropriate, as the VM is directly tied to participation in the PQRS. Therefore, to achieve further alignment with the VM and for the reasons proposed in section III.N., we proposed to adopt the attribution methodology changes proposed for the VM into the GPRO web interface beneficiary assignment methodology. We invited public comment on these proposals. The following is summary of the comments we received regarding on these proposals.
As a result of the comments, we are finalizing the following criteria for satisfactory reporting for the 2017 PQRS payment adjustment for group practices comprised of 25 to 99 eligible professionals using the GPRO web interface: report on all measures included in the web interface; AND populate data fields for the first 248 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample for each module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 248, then the group practice must report on 100 percent of assigned beneficiaries. In other words, we understand that, in some instances, the sampling methodology we provide will not be able to assign at least 248 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 248 Medicare beneficiaries, then the group practice must report on 100 percent of its assigned beneficiaries. A group practice must report on at least 1 measure for which there is Medicare patient data.
In addition, we note that, in the past, we have not provided guidance on those group practices that choose the GPRO web interface to report PQRS quality measures but have seen no Medicare patients for which the GPRO measures are applicable, or if they have no (that is, 0 percent) responses for a particular module or measure. Since we are moving solely towards the implementation of PQRS payment adjustments, we sought to clarify this scenario here. If a group practice has no Medicare patients for which any of the GPRO measures are applicable, the group practice will not meet the criteria for satisfactory reporting using the GPRO web interface. Therefore, to meet the criteria for satisfactory reporting using the GPRO web interface, a group practice must be assigned and have sampled at least 1 Medicare patient for any of the applicable GPRO web interface measures (specified in Table 52). If a group practice does not typically see Medicare patients for which the GPRO web interface measures are applicable, we advise the group practice to participate in the PQRS via another reporting mechanism.
Please note that the discussion in this section III.K.4.a is limited to the criteria for satisfactory reporting for the 2017 PQRS payment adjustment for group practices comprised of 25–99 eligible
For registry reporting in the GPRO, in the CY 2014 PFS final rule with comment period (see Table 49 at 78 FR 74486), we finalized the following satisfactory reporting criteria for the submission of individual quality measures via registry for group practices comprised of 2 or more eligible professionals in the GPRO for the 2014 PQRS incentive: Report at least 9 measures, covering at least 3 of the NQS domains, OR, if less than 9 measures covering at least 3 NQS domains apply to the group practice, report 1–8 measures covering 1–3 NQS domains for which there is Medicare patient data, 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 0 percent performance rate would not be counted. In the CY 2014 PFS final rule with comment period, we signaled that it was “our intent to ramp up the criteria for satisfactory reporting for the 2017 PQRS payment adjustment to be on par or more stringent than the criteria for satisfactory reporting for the 2014 PQRS incentive” (78 FR 74465).
Consistent with the criterion finalized for the 2014 PQRS incentive and the group practice reporting requirements under section 1848(m)(3)(C) of the Act, for those group practices that choose to report using a qualified registry, we modified § 414.90(j) to include the following satisfactory reporting criterion via qualified registry for ALL group practices who select to participate in the GPRO for the 2017 PQRS payment adjustment: The group practice would report at least 9 measures, covering at least 3 of the NQS domains. Of these measures, if a group practice sees at least 1 Medicare patient in a face-to-face encounter, the group practice would report on at least 2 measures in the cross-cutting measure set specified in Table 52. If less than 9 measures covering at least 3 NQS domains apply to the eligible professional, the group practice would report up to 8 measures covering 1–3 NQS domains for which there is Medicare patient data, 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.
As with individual reporting, we understand that there may be instances where a group practice may not have at least 9 measures applicable to a group practice's practice. In this instance, like the criterion we finalized for the 2014 PQRS incentive (see Table 49 at 78 FR 74486), a group practice reporting on less than 9 measures would still be able to meet the satisfactory reporting criterion via registry if the group practice reports on as many measures as are applicable to the group practice's practice. If a group practice reports on less than 9 measures, the group practice would be subject to the MAV process, which would allow us to determine whether a group practice should have reported quality data codes for additional measures and/or measures covering additional NQS domains. Please note that this MAV process does not apply to the application of the cross-cutting measure reporting requirement, as we require that all group practices report on at least 1 cross-cutting measure if an eligible professional in the group practice see at least sees at least 1 Medicare patient in a face-to-face encounter. The MAV process we proposed to implement for registry reporting is the same process that was established for reporting periods occurring in 2014 for the 2014 PQRS incentive. For more information on the registry MAV process, please visit
For EHR reporting, consistent with the criterion finalized for the 2014 PQRS incentive that aligns with the criteria established for meeting the CQM component of meaningful use under the Medicare EHR Incentive Program and in accordance with the group practice reporting requirements under section 1848(m)(3)(C) of the Act, for those group practices that choose to report using an EHR, we proposed to modify § 414.90(j) to indicate the following satisfactory reporting criterion via a direct EHR product that is CEHRT or an EHR data submission vendor that is CEHRT for ALL group practices who select to participate in the GPRO for the 2017 PQRS payment adjustment: For the 12-month reporting period for the 2017 PQRS payment adjustment, the group practice would report 9 measures covering at least 3 domains. If the group practice's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is patient data. A group practice must report on at least 1 measure for which there is Medicare patient data. We invited public comment on these proposals. The following is summary of the comments we received regarding on these proposals.
Furthermore, with respect to those commenters concerned that a group practice may not have 9 measures covering at least 3 NQS domains applicable to his or her practice, in the proposed rule, with respect to reporting via registry, we noted that “as with individual reporting, we understand that there may be instances where a group practice may not have at least 9 measures applicable to a group practice's practice. In this instance, like the criterion we finalized for the 2014 PQRS incentive (see Table 49 at 78 FR 74486), a group practice reporting on less than 9 measures would still be able to meet the satisfactory reporting criterion via registry if the group practice reports on as many measures as are applicable to the group practice's practice” (79 FR 40399). Under this proposed criterion for satisfactory reporting for the 2017 PQRS payment adjustment for group practices reporting via registry, a group practice who does not have at least 9 measures covering at least 3 NQS domains applicable to the practice may still meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment provided that the group practice reports all measures as are applicable to his or her practice.
With respect to reporting via an EHR, we noted that if the group practice's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.
Based on the comments received and for the reasons stated above and in the proposed rule, we are finalizing our proposal to require the reporting of 9 measures covering at least 3 NQS domains via registry and EHR to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment.
Please note that this does not bring the total number of measures required to be reported under this criterion to 10 measures. Rather, if a group practice sees at least 1 Medicare patient in a face-to-face encounter during the 12-month PQRS payment adjustment reporting period, 1 of the 9 measures the group practice reports must be measures contained in the cross-cutting measure set. Therefore, a group practice would report at least 1 cross-cutting measure and 8 additional PQRS measures.
In the instance where a group practice may not have at least 9 measures applicable to his/her practice, the eligible professional would still be required to report at least 1 cross-cutting measure, if applicable. If a group practice reporting on less than 9 measures does not have at least 1 cross-cutting measure applicable to his or her practice, then the group practice would report on as many measures as our applicable to his or her practice.
Because of the comments, we are finalizing our proposal to modify § 414.90(j) and finalize the following criteria for satisfactory reporting for group practices participating in the GPRO via registry and EHR for the 2017 PQRS payment adjustment:
For group practices comprised of 2–99 eligible professionals reporting for the 12-month reporting period for the 2017 PQRS payment adjustment via registry, report at least 9 measures, covering at least 3 of the NQS domains. Of these measures, if a group practice sees at least 1 Medicare patient in a face-to-face encounter, the group practice would report on at least 1 measure in the cross-cutting measure set specified in Table 52. If less than 9 measures covering at least 3 NQS domains apply to the group practice, the group practice would report up to 8 measures covering 1–3 NQS domains for which there is Medicare patient data, AND report each measure for at least 50 percent of the group'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.
We understand that there may be instances where a group practice may not have at least 9 measures applicable to an eligible professional's practice. In this instance, a group practice reporting on less than 9 measures would still be able to meet the satisfactory reporting criterion via claims and registry if the group practice reports on 1–8 measures, as applicable, to the group's practice. If a group practice reports on 1–8 measures, the group practice would be subject to the MAV process, which would allow us to determine whether a group practice should have reported quality data codes for additional measures. In addition, the MAV will also allow us to determine whether a group practice should have reported on any of the cross-cutting measures specified in Table 52. The MAV process we will implement for claims and registry for the 2017 PQRS payment adjustment is the same process that was established for reporting periods occurring in 2014 for the 2014 PQRS incentive. For more information on the claims MAV process, please visit
For group practices comprised of 2–99 eligible professionals reporting for the 12-month reporting period for the 2017 PQRS payment adjustment via EHR: report 9 measures covering at least 3 domains. If the group practice's CEHRT does not contain patient data for at least 9 measures covering at least 3 domains, then the group practice must report the measures for which there is patient data. A group practice must report on at least 1 measure for which there is Medicare patient data.
Please note that the discussion in this section III.K.4.b is limited to the criteria for the satisfactory reporting of group practices registered to participate in the GPRO for the 2017 PQRS payment adjustment using the EHR-based reporting mechanism to group practices comprised of 2–99 eligible professionals. The final criteria for group practices comprised of 100 or more eligible professionals are addressed in section III.K.1.c. following this section.
In the CY 2014 PFS final rule with comment period, we introduced satisfactory reporting criterion for the 2014 PQRS incentive related to reporting the CG CAHPS survey measures via a CMS-certified survey vendor (see Table 49 at 78 FR 74486). Consistent with the criterion finalized for the 2014 PQRS incentive and the group practice reporting requirements under section 1848(m)(3)(C) of the Act, we proposed 3 options (of which a group practice would be able to select 1 out of the 3 options) for satisfactory reporting for the 2017 PQRS payment adjustment for group practices comprised of 25 or more eligible professionals (79 FR 40399).
Furthermore, as was required for group practices reporting via the GPRO web interface for the reporting periods
However, as CAHPS for PQRS was optional for group practices comprised of 25–99 eligible professionals in 2014 (78 FR 74485) and whereas we proposed to require reporting of CAHPS for PQRS for group practices comprised of 100 or more eligible professionals, we proposed that CAHPS for PQRS would be optional for groups of 25–99 and 2–24 eligible professionals. We noted that all group practices that would be required to report or voluntarily elect to report CAHPS for PQRS would need to select and pay a CMS-certified survey vendor to administer the CAHPS for PQRS survey on their behalf.
We invited public comment on these proposals related to our proposals to require reporting of CAHPS for PQRS for group practices comprised of 100 or more eligible professionals that register to participate in the PQRS GPRO as well as our proposal making the reporting of CAHPS for PQRS optional for group practices comprised of 2–99 eligible professionals that registry to participate in the PQRS GPRO to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment. The following is a summary of the comments we received regarding on these proposals.
We are also finalizing our proposal to make the reporting of CAHPS for PQRS optional for group practices comprised of 2–99 eligible professionals that register to participate in the PQRS GPRO to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment.
Furthermore, we understand the commenters' concerns regarding having the group practices bear the cost of administering the CAHPS for PQRS survey, particularly for those group practices who will be required to report CAHPS for PQRS to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment. However, it is not feasible for us to continue to bear the cost of administering the CAHPS for PQRS survey. We believe that bearing the cost of the CAHPS for PQRS survey for 2013 and 2014 provided adequate time for group practices to become familiar with administering the CAHPS for PQRS survey as well as signaled our commitment to reporting of the CAHPS for PQRS survey into the future.
Because of the comments received, we are finalizing the following final criteria for satisfactory reporting for the 2017 PQRS payment adjustment for group practices comprised of 2 or more eligible professionals. The following options are voluntary ways to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment for groups comprised of 2–99 eligible professionals. However, group practices comprised of 100 or more eligible professionals that are registered to participate in the GPRO must select one of these options to meet the criteria for satisfactory reporting for the 2017 PQRS payment adjustment.
Consistent with the group practice reporting option solely using a qualified registry for the 2017 PQRS payment adjustment, we understand that there may be instances where a group practice may not have at least 6 measures applicable to a group practice's practice. In this instance, a group practice reporting on less than 6 measures would still be able to meet the satisfactory reporting criterion via registry if the group practice reports on as many measures as are applicable to the group practice's practice, including the measures in the cross-cutting measure set specified in Table 52. If a group practice reports on less than 6 individual measures using the qualified registry reporting mechanism in conjunction with a CMS-certified survey vendor to report CAHPS for PQRS, the group practice would be subject to the MAV process, which would allow us to determine whether a group practice should have reported quality data codes for additional measures and/or measures covering additional NQS domains. For more information on the registry MAV process, please visit
Tables 50 and 51 provide a summary of the final criteria for satisfactory reporting—or, in lieu of satisfactory reporting, satisfactory participation in a QCDR—for the 2017 PQRS payment adjustment for eligible professionals and group practices. As you can see below, there are a total of 5 individual reporting options and 9 group practice reporting options. Therefore, there are a total of 14 reporting options under the PQRS for purposes of meeting the criteria for satisfactory reporting—or, in lieu of satisfactory reporting, satisfactory participation in a QCDR—for the 2017 PQRS payment adjustment.
In addition to CAHPS for PQRS, we received comments last year supporting the inclusion of the Consumer Assessment of Healthcare Providers Surgical Care Survey (S–CAHPS). The S–CAHPS expands on the CG–CAHPS by focusing on aspects of surgical quality, which are important from the patient's perspective and for which the patient is the best source of information. The survey asks patients to provide feedback on surgical care, surgeons, their staff, and anesthesia care. It assesses patients' experiences with surgical care in both the inpatient and outpatient settings by asking respondents about their experience before, during and after surgery. The commenters stated that the CG–CAHPS survey would not accurately reflect the care provided by single- or multispecialty surgical or anesthesia groups. The commenters noted that S–CAHPS has been tested by the same standards as CG–CAHPS and follows the same collection mechanism as the CG–CAHPS. We agree with the commenters on the importance of allowing for the administration of S–CAHPS reporting and wish to allow for reporting of S–CAHPS in the PQRS for reporting mechanisms other than the QCDR. However, at this time, due to the cost and time it would take to find vendors to collect S–CAHPS data, it is not technically feasible to implement the reporting of the S–CAHPS survey measures for the 2017 PQRS payment adjustment. In the CY 2015 PFS proposed rule (79 FR 40400), we solicited comments on how to allow for reporting of the S–CAHPS survey measures for the 2018 PQRS payment adjustment and beyond. In addition, we sought comments on how to allow for reporting of the S–CAHPS survey measures for the 2018 PQRS payment adjustment and beyond. The following is a summary of the comments we received on these proposal:
CMS undergoes an annual Call for Measures that solicits new measures from the public for possible inclusion in the PQRS. During the Call for Measures, we request measures for inclusion in PQRS that meet the following statutory and non-statutory criteria.
Sections 1848(k)(2)(C) and 1848(m)(3)(C)(i) of the Act, respectively, govern the quality measures reported by individual eligible professionals and group practices under the PQRS. 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 section 1890(a) of the Act, which is currently the National Quality Forum (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 Ambulatory Quality Alliance (AQA). 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) of the Act (that is, the NQF) and are silent as to how the measures that are submitted to the NQF for endorsement are 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 need to be 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, which was added by section 3014(b) of the Affordable Care Act, requires that the Secretary establish a pre-rulemaking process under which certain steps occur with respect to the selection of certain categories of quality and efficiency measures, one of which is that the entity with a contract with the Secretary under section 1890(a) of the Act (that is, the NQF) convene multi-stakeholder groups to provide input to the Secretary on the selection of such measures. These categories are described in section 1890(b)(7)(B) of the Act, and include such measures as the quality measures selected for reporting under the PQRS. In accordance with section 1890A(a)(1) of the Act, the NQF convened multi-stakeholder groups by creating the
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, as long as due consideration is given to measures that have been endorsed or adopted by a consensus organization identified by the Secretary. 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:
• Measures that are not duplicative of another existing or proposed measure.
• Measures that are further along in development than a measure concept.
• CMS is not accepting claims-based-only reporting measures in this process.
• Measures that are outcome-based are preferred to clinical process measures.
• Measures that address patient safety and adverse events.
• Measures that identify appropriate use of diagnosis and therapeutics.
• Measures that identify care coordination and communication.
• Measures that identify care coordination of patient experience and patient-reported outcomes.
• Measures that address efficiency, cost and resource use.
Taking into consideration the statutory and non-statutory criteria we described previously, this section contains our responses to our proposals related to the measures in the PQRS for 2015 and beyond. We classified all measures against six domains based on the NQS's six priorities, as follows:
(1)
(2)
(3)
(4)
(5)
(6)
Please note that the PQRS quality measure specifications for any given PQRS individual quality measure may differ from specifications for the same quality measure used in prior years. For example, for the PQRS quality measures that were selected for reporting in 2014 and beyond, please note that detailed measure specifications, including the measure's title, for the 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 have been finalized for 2013, 2014, 2015, and potentially subsequent years of the EHR Incentive Program for Eligible Professionals, we note that the measure titles for measures available for reporting via EHR may change. To the extent that the EHR Incentive Program for Eligible Professionals updates its measure titles to include version numbers (77 FR 13744), we will use these version numbers to describe the PQRS EHR measures that will also be available for reporting for the EHR Incentive Program for Eligible Professionals. 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 substantively change the nature of the measure. Examples of such changes could be updated diagnosis or procedure codes or changes to exclusions to the patient population or definitions. We believe these types of maintenance changes are distinct from substantive changes to measures that result in what are considered new or different measures. Further, we believe that non-substantive maintenance changes of this type do not trigger the same agency obligations under the Administrative Procedure Act.
In the CY 2013 PFS final rule with comment period, we finalized our proposal providing that if the NQF updates an endorsed measure that we have adopted for the PQRS in a manner that we consider to not substantively 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 (77 FR 69207). We believe this adequately balances our need to incorporate non-substantive NQF
CMS is not the measure steward for most of the measures available for reporting under the PQRS. We rely on outside measure stewards and developers to maintain these measures. In Table 55, we proposed that certain measures be removed from the PQRS measure set due to the measure owner/developer indicating that it will not be able to maintain the measure. We noted that this proposal is contingent upon the measure owner/developer not being able to maintain the measure. Should we learn that a certain measure owner/developer is able to maintain the measure, or that another entity is able to maintain the measure in a manner that allows the measure to be available for reporting under the PQRS for the CY 2017 PQRS payment adjustment, we proposed to keep the measure available for reporting under the PQRS and therefore not finalize our proposal to remove the measure. In addition, if, after the display of this final rule with comment period, we discover additional measures within the current PQRS measure set that a measure owner/developer can no longer maintain, we proposed to remove these measures from reporting for the PQRS beginning in 2015. We will discuss any such instances in the PQRS measure tables below.
In addition, we noted that we have received feedback from stakeholders, particularly first-time participants who find it difficult to understand which measures are applicable to their particular practice. In an effort to aid eligible professionals and group practices to determine what measures best fit their practice, and in collaboration with specialty societies, we are beginning to group our final measures available for reporting according to specialty. The current listing of our measures by specialty can be found on our Web site at
In the CY 2014 PFS final rule with comment period, we stated that “unless there are errors discovered in updated electronic measure specifications, the PQRS intends to use the most recent, updated versions of electronically specified clinical quality measures for that year” (78 FR 74489). We proposed that, if we discovered errors in the most recently updated electronic measure specifications for a certain measure, we would use the version of electronic measure specifications that immediately precedes the most recently updated electronic measure specifications. Any such change to a measure is also described in the PQRS measure tables below.
Additionally, we noted that, with respect to the following e-measure CMS140v2, Breast Cancer Hormonal Therapy for Stage IC–IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer (NQF 0387), a substantive error was discovered in the June 2013 version of this electronically specified clinical quality measure. Therefore, the PQRS required the use of the prior, December 2012 version of this measure, which is CMS140v1 (78 FR 74489). Please note that, consistent with other EHR measures, since a more recent and corrected version of this measure has been developed, we will require the reporting of the most recent, updated versions of the measure Breast Cancer Hormonal Therapy for Stage IC–IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer (NQF 0387)—currently version CMS140v3—for the year.
In accordance with our criteria for the satisfactory reporting of PQRS measures for the 2017 PQRS payment adjustment via claims and registry that requires an eligible professional or group practice to report on at least 2 cross-cutting measures, we proposed 18 cross-cutting measure set specified in Table 21 in the CY 2015 PFS proposed rule for 2015 and beyond (79 FR 40404). Please note that we are finalizing all measures as proposed (see Table 52). We are also adding a measure to the list of cross-cutting measures, based on comments that were submitted. Please note that our response and final decision for each of these measures is found in Table 52. We have also indicated the PQRS reporting mechanism or mechanisms through which each measure could be submitted. Please note that we are changing some of the reporting mechanisms available for certain cross-cutting measures in Table 52 from the reporting options we proposed would be available in the CY 2015 PFS proposed rule (79 FR 40404). To the extent that changes to the reporting mechanisms for the cross-cutting measures specified in Table 52 were made from what was specified in the proposed rule, we provide the explanation and rationale for those changes in Table 53.
The following are high-level comments regarding our proposals related to the proposed cross-cutting measure set:
Table 22 in the CY 2015 PFS proposed rule (79 FR 40410) contained the additional measures we proposed to include in the PQRS measure set for CY 2015 and beyond. In Table 53, we provide our response to the comments we received on these measures as well as our final decisions on these proposed measures. We have also indicated the PQRS reporting mechanism or mechanisms through which each measure could be submitted. As stated above, please note that the following tables may also contain discussions of comments we received related to proposed changes to the measures included in the quality performance standard under the Shared Savings Program.
In Table 54, we provide our responses and final decisions on the measures for which we proposed a NQS domain change for reporting under the PQRS (79 FR 40419). Please note that we received comments regarding the process for changing a measure's domain. With respect to these comments, we appreciate the commenters' suggestions regarding the process for domain changes for measures and will take these comments under consideration. We are developing guidelines for assigning measure domains and will use these guidelines to assign each measure in the PQRS program to a NQS domain when measure stewards submit measures through the Call for Measures process each program year. We value feedback from measure developers and are dedicated to making updates to the PQRS program a transparent and collaborative process as it works to establish measures that are applicable to various domain categories.
In Table 55, we provide the responses and final decisions related to the measures we proposed to remove from reporting under the PQRS (79 FR 40426).
In Table 56, we provide our responses and final decisions related to our proposals to change the way in which previously established measures in the PQRS will be reported beginning in 2015 (79 FR 40441).
Section 414.90(b) defines a measures group as a subset of four or more PQRS measures that have a particular clinical condition or focus in common. The denominator definition and coding of the measures group identifies the condition or focus that is shared across the measures within a particular measures group.
In the CY 2014 PFS proposed rule, we proposed (78 FR 43448) to increase the number of measures that may be included in a measures group from a minimum of 4 measures to a minimum of 6. We proposed increasing the minimum number of measures that may be contained in a measures group in accordance with increasing the number of individual measures to be reported via claims and registry. However, we did not finalize this proposal, stating that, although we still plan to increase the minimum number of measures in a measures group in the future, we would work with the measure developers and owners of these measures groups appropriately to add measures to measures groups that only contain four measures within the measures group (78 FR 74730). For CY 2015, we again we proposed to modify § 414.90(b) to define a measures group as a subset of six or more PQRS measures that have a particular clinical condition or focus in common (79 FR 40457). We solicited and received the following public comment on this proposal:
In addition, we proposed to add two new measures groups that will be available for reporting in the PQRS beginning in 2015: The Sinusitis and Acute Otitis Externa (AOE) measures groups (79 FR 40457).
Furthermore, we proposed to remove the following measures groups (79 FR 40457):
• Perioperative care measures group;
• Back pain measures group;
• Cardiovascular prevention measures group;
• Ischemic Vascular Disease (IVD) measures group;
• Sleep Apnea measures group; and
• Chronic obstructive pulmonary disease (COPD) measures group.
We received the following comments on our proposals related to our proposals related to either the proposed addition or removal of the following measures groups:
Tables 57 through 79 specify our final measures groups in light of the reasons stated in the proposed rule and the comments received. Please note that some measures groups were not addressed above. With respect to the measures groups that were not addressed above, we did not receive any comments on these proposed measures groups and are therefore finalizing the respective measures groups as proposed.
We finalized the measures that are available for reporting in the GPRO web interface for 2014 and beyond in the CY 2013 PFS final rule (77 FR 69269). However, we proposed to remove and add measures in the GPRO web interface measure set as reflected in Tables 47 and 48 in the CY 2015 PFS proposed rule for 2015 and beyond (79 FR 40468). Specifically, Table 47 specified the measures we proposed to remove for reporting from the GPRO web interface, and Table 48 specified the measures we proposed to add for reporting in the GPRO web interface. CMS proposed to adopt Depression Remission at Twelve Months (NQF #0710) in the 2015 GPRO Web Interface reporting option for ACOs and group practices (79 FR 40469). This measure is currently reportable in the PQRS program through the EHR reporting option only and has not been tested using claims level data or sampling methodology. Depression Remission at Twelve Months (NQF #0710) requires a look-back period and a look-forward period possibly spanning multiple calendar years. Additionally, this measure requires utilization of a PHQ–9 depression screening tool with a score greater than 9 and a diagnosis of depression/dysthymia to identify the beginning of the episode (initial patient population). Successful completion of the quality action for this measure looks for a PHQ–9 score of less than 5 at the twelve month mark (plus or minus 30 days) from the initial onset of the episode. CMS solicited comments regarding these proposals, and the comments are addressed in Tables 79 and 80.
In the CY 2014 PFS final rule with comment period, we finalized the CG–CAHPS survey available for reporting under the PQRS for 2014 and beyond (78 FR 74750 through 74751), to which we are now referring as the CAHPS for PQRS. Please note that, in the CY 2014 PFS final rule with comment period, we classified the CAHPS for PQRS survey under the care coordination and communication NQS domain. We noted that this was an error on our part, as the CAHPS for PQRS survey has typically been classified under the Person and Caregiver-Centered Experience and Outcomes domain as the CAHPS for PQRS survey assesses beneficiary experience of care and outcomes. Therefore, as we indicated in Table 21 of the CY 2015 proposed rule, we proposed to reclassify the CAHPS for PQRS survey under the Person and Caregiver-Centered Experience and Outcomes domain. We invited public comment on this proposal. Please note that the comments on this proposal are addressed in Table 54, where the domain change for CAHPS for PQRS as well as other PQRS measures is indicated.
For the measures which eligible professionals participating in a QCDR must report, section 1848(m)(3)(D) of the Act, as amended and added by section 601(b) of the ATRA, provides that the Secretary shall treat eligible professionals as satisfactorily submitting data on quality measures if they satisfactorily participate in a QCDR. Section 1848(m)(3)(E) of the Act, as added by section 601(b) of the ATRA, provides some flexibility with regard to the types of measures applicable to satisfactory participation in a QCDR, by specifying that for measures used by a QCDR, sections 1890(b)(7) and 1890A(a) of the Act shall not apply, and measures endorsed by the entity with a contract with the Secretary under section 1890(a) of the Act may be used.
In the CY 2014 PFS final rule with comment period, we finalized requirements related to the parameters for the measures that would have to be reported to CMS by a QCDR for the purpose of its individual eligible professionals meeting the criteria for satisfactory participation under the PQRS (78 FR 74751 through 74753). Although we did not propose to remove any of the requirements we finalized related to these parameters, we proposed to modify the following parameters we finalized in the CY 2014 PFS final rule with comment period related to measures that may be reported by a QCDR (79 FR 40472 through 40473):
• The QCDR must have at least 1 outcome measure available for reporting, which is a measure that assesses the results of health care that are experienced by patients (that is, patients' clinical events; patients' recovery and health status; patients' experiences in the health system; and efficiency/cost).
As we proposed that for an eligible professional to meet the criterion for satisfactory participation in a QCDR for the 2017 PQRS payment adjustment, the eligible professional must report on at least 3 outcome measures or, in lieu of 3 outcome measures, at least 2 outcome measures and 1 resource use, patient experience of care, or efficiency/appropriate use measure, we modified this requirement to conform to this satisfactory participation criterion. Therefore, we proposed that a QCDR must have at least 3 outcome measures available for reporting, which is a measure that assesses the results of health care that are experienced by patients (that is, patients' clinical events; patients' recovery and health status; patients' experiences in the health system; and efficiency/cost). In lieu of having 3 outcome measures available for reporting, the QCDR must have at least 2 outcome measures available for reporting and at least 1 resource use, patient experience of care, or efficiency/appropriate use measure (79 FR 40473). We solicited and received the following comments on this proposal:
We proposed to define resource use, patient experience of care, or efficiency/appropriate use measures in the following manner (79 FR 40473):
• A resource use measure is a measure that is a comparable measure of actual dollars or standardized units of resources applied to the care given to a specific population or event, such as a specific diagnosis, procedure, or type of medical encounter. We did not receive any comments on this proposed definition of a resource use measure. As such, we are finalizing this definition of a resource use measure as proposed.
• A patient experience of care measure is a measure of person- or family-reported experiences (outcomes) of being engaged as active members of the health care team and in collaborative partnerships with providers and provider organizations. We did not receive any comments on this proposed definition of a patient experience of care measure. As such, we are finalizing this definition of a patient experience of care measure as proposed.
• An efficiency/appropriate use measure is a measure of the appropriate use of health care services (such as diagnostics or therapeutics) based upon evidence-based guidelines of care, or for which the potential for harm exceeds the possible benefits of care. We did not receive any comments this proposed definition of an efficiency/appropriate use measure. As such, we are finalizing this definition of an efficiency/appropriate use measure as proposed.
Please note that, for purposes of meeting the criteria for satisfactory participation in a QCDR, we allow QCDRs to report on any measure if it meets the measure parameters we finalize. We noted that we would allow and encourage the reporting of the Consumer Assessment of Healthcare Providers Surgical Care Survey (S–CAHPS) through a QCDR.
Finally, in the CY 2014 PFS final rule with comment period, we stated that a QCDR must provide to CMS descriptions and narrative specifications for the measures for which it will report to CMS by no later than March 31, 2014. In keeping with this timeframe, we proposed that a QCDR must provide to CMS descriptions for the measures for which it will report to CMS for a particular year by no later than March 31 of the applicable reporting period for which the QCDR wishes to submit quality measures data. We solicited and received the following comments on this proposal:
Related to this proposal, we proposed that, 15 days following CMS approval of these measure specifications, the QCDR must publicly post the measures specifications for the measures it intends to report for the PQRS using any public format it prefers. Immediately following posting of the measures specification information, the QCDR must provide CMS with the link to where this information is posted. CMS will then post this information when it provides its list of QCDRs for the year. We believe providing this information will further aid in creating transparency of reporting. We solicited and received the following comment on this proposal:
In the CY 2013 PFS final rule with comment period (77 FR 69289), we established 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.” As stated in the CY 2013 PFS final rule with comment period, we believed this deadline provided ample time for eligible professionals and group practices after their respective claims begin to be adjusted due to the payment adjustment. However, because PQRS data is used to establish the quality composite of the VM, we believe it is necessary to expand the informal review process to allow for some limited corrections of the PQRS data to be made. Therefore, we proposed to modify the payment adjustment informal review deadline to within 30 days of the release of the feedback reports. For example, if the feedback reports for the 2016 payment adjustment (based on data collected for 2014 reporting periods) were released on August 31, 2015, an eligible professional or group practice would be required to submit a request for an informal review by September 30, 2015. We believe that by being able to notify eligible professionals and group practices of CMS' decision on the informal review request much earlier than we would have been able to do with the previous informal review request deadline we can provide a brief period for an eligible or group practice to make some limited corrections to its PQRS data. This resubmitted data could then be used to make corrections to the VM calculations, when appropriate.
The PQRS regulations at § 414.90(m)(1) currently require an eligible professional or group practice to submit an informal review request to CMS within 90 days of the release of the feedback reports. Therefore, we proposed to revise § 414.90(m)(1) to require the request of the informal review within 30 days of release of the feedback reports.
Regarding the eligible professional's or group practice's ability to provide additional information to assist in the informal review process, we proposed to provide the following limitations as to what information might be taken into consideration:
• CMS would only allow resubmission of data that was submitted using a third-party vendor using the qualified registry, EHR data submission vendor, or QCDR reporting mechanisms. Therefore, CMS would not allow resubmission of data submitted via claims, direct EHR, or the GPRO web interface reporting mechanisms. We are limiting resubmission to third-party vendors, because we believe that third-party vendors are more easily able to detect errors than direct users.
• CMS would only allow resubmission of data that was already previously submitted to CMS. Submission of new data—such as new measures data not previously submitted or new data for eligible professionals for which data was not submitted during the original submission period—would not be accepted.
• For any given resubmission period, CMS would only accept data that was previously submitted for the reporting periods for which the corresponding informal review period applies. For example, the resubmission period immediately following the informal review period for the 2017 PQRS payment adjustment would only allow resubmission for data previously submitted for the 2017 PQRS payment adjustment reporting periods occurring in 2015.
As such, we proposed to add § 414.90(m)(3) to reflect this proposal as follows: (3) If, during the informal review process, CMS finds errors in data that was submitted using a third-party vendor using either the qualified registry, EHR data submission vendor, or QCDR reporting mechanisms, CMS may allow for the resubmission of data to correct these errors. (i) CMS will not allow resubmission of data submitted via claims, direct EHR, and the GPRO web interface reporting mechanisms. (ii) CMS will only allow resubmission of data that was already previously submitted to CMS. (iii) CMS will only accept data that was previously submitted for the reporting periods for which the corresponding informal review period applies.
We invited public comment on these proposals. The following is summary of the comments we received regarding on these proposals.
• CMS would only allow resubmission of data that was submitted by a third-party vendor on behalf of an eligible professional or group practice using the qualified registry, EHR data submission vendor, or QCDR reporting mechanisms. Therefore, CMS would not allow resubmission of data submitted via claims, direct EHR, or the GPRO web interface reporting mechanisms. We are limiting resubmission to third-party vendors, because we believe that third-party vendors are more easily able to detect errors than direct users.
• CMS would only allow resubmission of data that was already previously submitted to CMS. Submission of new data—such as new measures data not previously submitted or new data for eligible professionals for which data was not submitted during the original submission period—would not be accepted.
• For any given resubmission period, CMS would only accept data that was previously submitted for the reporting periods for which the corresponding informal review period applies. For example, the resubmission period immediately following the informal review period for the 2017 PQRS payment adjustment would only allow resubmission for data previously submitted for the 2017 PQRS payment adjustment reporting periods occurring in 2015.
Because of the comments received and for the reasons stated above and in the proposed rule, we are finalizing our proposal to modify the payment adjustment informal review deadline to within 60 days of the release of the feedback reports. In addition, to allow resubmission of data, we are finalizing our proposal, as proposed, to add § 414.90(m)(3) as follows: (3) If, during the informal review process, CMS finds errors in data that was submitted using a third-party vendor using either the qualified registry, EHR data submission vendor, or QCDR reporting mechanisms, CMS may allow for the resubmission of data to correct these errors. (i) CMS will not allow resubmission of data submitted via claims, direct EHR, and the GPRO web interface reporting mechanisms. (ii) CMS will only allow resubmission of data that was already previously submitted to CMS. (iii) CMS will only accept data that was previously submitted for the reporting periods for which the corresponding informal review period applies.
The HITECH Act (Title IV of Division B of the ARRA, together with Title XIII of Division A of the ARRA) authorizes incentive payments under Medicare and Medicaid for the adoption and meaningful use of certified EHR technology (CEHRT). Section 1848(o)(2)(B)(iii) of the Act requires that in selecting CQMs for eligible professionals (EPs) to report under the EHR Incentive Program, and in establishing the form and manner of reporting, the Secretary shall seek to avoid redundant or duplicative reporting otherwise required. As such, we have taken steps to establish alignments among various quality reporting and payment programs that include the submission of CQMs.
For CY 2012 and subsequent years, § 495.8(a)(2)(ii) requires an EP to successfully report the clinical quality measures selected by CMS to CMS or the states, as applicable, in the form and manner specified by CMS or the states, as applicable.
In the CY 2014 PFS final rule with comment period (78 FR 74756), we finalized our proposal to require EPs who seek to report CQMs electronically under the Medicare EHR Incentive Program to use the most recent version of the electronic specifications for the CQMs and have CEHRT that is tested and certified to the most recent version of the electronic specifications for the CQMs. We noted it is important for EPs to electronically report the most recent versions of the electronic specifications for the CQMs as updated measure versions correct minor inaccuracies found in prior measure versions. We stated that to ensure that CEHRT products can successfully transmit CQM data using the most recent version of the electronic specifications for the CQMs, it is important that the product be tested and certified to the most recent version of the electronic specifications for the CQMs.
Since finalizing this proposal, we have received feedback from stakeholders regarding the difficulty and expense of having to test and recertify CEHRT products to the most recent version of the electronic specifications for the CQMs. Although we still believe EPs should test and certify their products to the most recent version of the electronic specifications for the CQMs when feasible, we understand the burdens associated with this requirement. Therefore, to eliminate this added burden, we proposed that, beginning in CY 2015, EPs would not be required to ensure that their CEHRT products are recertified to the most recent version of the electronic specifications for the CQMs. Please note that, although we are not requiring recertification, EPs must still report the most recent version of the electronic specifications for the CQMs.
In the CY 2014 PFS final rule with comment period, we established the requirement that EPs who seek to report CQMs electronically under the Medicare EHR Incentive Program must use the most recent version of the electronic specifications for the CQMs (78 FR 74756). We solicited and received the following public comments on these proposals:
Additionally, we noted in the proposed rule that, with respect to the following measure CMS140v2, Breast Cancer Hormonal Therapy for Stage IC–IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer (NQF 0387), a substantive error was discovered in the June 2013 version of this electronically specified clinical quality measure (79 FR 40474). If an EP chooses to report this measure electronically under the EHR Incentive Program in CY 2014, the prior, December 2012 version of the measure, which is CMS140v1, must be used (78 FR 74757). In the proposed rule (79 FR 40474), we stated that because a more recent and corrected version of this measure has been developed, we will require the reporting of the most recent, updated version of the measure Breast Cancer Hormonal Therapy for Stage IC–IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer (NQF 0387), if an EP chooses to report the measure electronically in CY 2015.
In the EHR Incentive Program Stage 2 final rule, we established CQM reporting options for the Medicare EHR Incentive Program for CY 2014 and subsequent years that include one individual reporting option that aligns with the PQRS's EHR reporting option (77 FR 54058) and two group reporting options that align with the PQRS GPRO and Medicare Shared Savings Program (MSSP) and Pioneer ACOs (77 FR 54076 to 54078). In the CY 2014 PFS final rule with comment period, we finalized two additional aligned options for EPs to report CQMs for the Medicare EHR Incentive Program for CY 2014 and subsequent years with the intention of minimizing the reporting burden on EPs (78 FR 74753 through 74757). One of the aligned options finalized in the CY 2014 PFS final rule with comment period (78 FR 74754 through 74755) is a reporting option for CQMs for the Medicare EHR Incentive Program under which EPs can submit CQM information using qualified clinical data registries, according the definition and requirements for qualified clinical data registries established under the PQRS.
The second aligned option finalized in the CY 2014 PFS final rule with comment period (78 FR 74755 through 74756) is a group reporting option for CQMs for the Medicare EHR Incentive Program beginning in CY 2014 under which EPs who are part of a Comprehensive Primary Care (CPC) initiative practice site that successfully reports at least nine electronically specified CQMs across three domains for the relevant reporting period in accordance with the requirements established for the CPC initiative and using CEHRT would satisfy the CQM reporting component of meaningful use for the Medicare EHR Incentive Program. If a CPC practice site is not successful in reporting, EPs who are part of the site would still have the opportunity to report CQMs in accordance with the requirements established for the Medicare EHR Incentive Program in the Stage 2 final rule. Additionally, only those EPs who are beyond their first year of demonstrating meaningful use may use this CPC group reporting option. The CPC practice sites must submit the CQM data in the form and manner required by the CPC initiative. Therefore, whether CPC required electronic submission or attestation of CQMs, the CPC practice site must submit the CQM data in the form and manner required by the CPC initiative.
The CPC initiative, under the authority of section 3021 of the Affordable Care Act, is a multi-payer initiative fostering collaboration between public and private health care payers to strengthen primary care. Under this initiative, we will pay participating primary care practices a care management fee to support enhanced, coordinated services. Simultaneously, participating commercial, state, and other federal insurance plans are also offering enhanced support to primary care practices that provide high-quality primary care. There are approximately 483 CPC practice sites across 7 health care markets in the U.S. More details on the CPC initiative can be found at
Under the CPC initiative, CPC practice sites are required to report to CMS a subset of the CQMs that were selected in the EHR Incentive Program Stage 2 final rule for EPs to report under the EHR Incentive Program beginning in CY 2014 (for a list of CQMs that were selected in the EHR Incentive Program Stage 2 final rule for EPs to report under the EHR Incentive Program beginning in CY 2014, see 77 FR 54069 through 54075). We proposed to retain the group reporting option for CPC practice sites as finalized in the CY 2014 PFS final rule, but to relax the requirement for the CQMs to cover three domains. Instead, we proposed that, for CY 2015 only, under this group reporting option, the CPC practice site must report a minimum of nine CQMs from the CPC subset, and the nine CQMs reported must cover at least 2 domains, although we strongly encouraged practice sites to report across more domains if feasible. Although the requirement to report across three domains is important because the domains are linked to the National Quality Strategy and used throughout CMS quality programs, the CPC practice sites are required to report from a limited number of CQMs that were selected for the EHR Incentive Program and are focused on a primary care population. Therefore, these CPC practice sites may not have measures to select from that cover three domains. Additionally, CPC practice sites are assessed for quality performance on measures other than electronically specified CQMs which do cover other National Quality Strategy domains. We invited public comment on this proposal.
The following is a summary of the comments we received regarding our proposal on the group reporting option for CPC practice sites.
The CPC measure subset includes a total of 11 measures, of which 7 fall in the clinical process/effectiveness domain, 3 in the population health domain, and 1 in the safety domain. We proposed to reduce the number of domains required to at least 2 domains to allow CPC practice sites that would be unable to obtain in their EHR the one safety CQM in the CPC measure subset to meet the MU CQM requirement. This would provide CPC practice sites an opportunity to successfully report to the CPC model and satisfy the CQM reporting component of meaningful use, so they would not have to report quality measures twice to both CPC and the Medicare EHR Incentive Program.
After consideration of the comments received, and for the reasons stated previously, we are finalizing the proposal to reduce the required number of domains for CY 2015 only as proposed.
Under section 1899 of the Act, CMS has established the 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 health care costs. Eligible groups of providers and suppliers, including physicians, hospitals, and other health care 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 November 2, 2011
Section 1899(b)(3)(A) of the Act requires the Secretary to determine appropriate measures to assess the quality of care furnished by ACOs, such as measures of clinical processes and outcomes; patient, and, wherever practicable, caregiver experience of care; and utilization such as rates of hospital admission for ambulatory sensitive conditions. Section 1899(b)(3)(B) of the Act requires ACOs to submit data in a form and manner specified by the Secretary on measures that the Secretary determines necessary for ACOs to report to evaluate the quality of care furnished by ACOs. Section 1899(b)(3)(C) of the Act requires the Secretary to establish quality performance standards to assess the quality of care furnished by ACOs, and to seek to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both for the purposes of assessing the quality of care. Additionally, section 1899(b)(3)(D) of the Act gives the Secretary authority to incorporate reporting requirements and incentive payments related to the PQRS, EHR Incentive Program and other similar initiatives under section 1848 of the Act. Finally, section 1899(d)(1)(A) of the Act states that an ACO is eligible to receive payment for shared savings, if they are generated, only after meeting the quality performance standards established by the Secretary.
In the November 2011 final rule establishing the Shared Savings Program, we established the quality performance standards that ACOs must meet to be eligible to share in savings that are generated (76 FR 67870 through 67904). Quality performance measures are submitted by ACOs through a CMS web interface, currently the group practice reporting option (GPRO) web interface, calculated by CMS from internal and claims data, and collected through a patient and caregiver experience of care survey.
Consistent with the directive under section 1899(b)(3)(C) of the Act, we believe the existing Shared Savings Program regulations incorporate a built in mechanism for encouraging ACOs to improve care over the course of their 3-year agreement period, and to reward quality improvement over time. During the first year of the agreement period, ACOs can qualify for the maximum sharing rate by completely and accurately reporting all quality measures. After that, ACOs must meet certain thresholds of performance, which are currently phased in over the course of the ACO's first agreement period, and are rewarded for improved performance on a sliding scale in which higher levels of quality performance translate to higher rates of shared savings (or, for ACOs subject to performance-based risk that demonstrate losses, lower rates of shared losses). In this way, the quality performance standard increases over the course of the ACO's agreement period.
Additionally, we have made an effort to align quality performance measures, submission methods, and incentives under the Shared Savings Program with the PQRS. Eligible professionals participating in an ACO may qualify for the PQRS incentive payment under the Shared Savings Program or avoid the downward PQRS payment adjustment when the ACO satisfactorily reports the ACO GPRO measures on their behalf using the GPRO web interface.
Since the November 2011 final rule establishing the Shared Savings Program was issued, we have revisited certain aspects of the quality performance standard in the annual PFS rulemaking out of a desire to ensure thoughtful alignment with the agency's other quality incentive programs that are addressed in that rule. Specifically, we have updated our rules to align with PQRS and the EHR Incentive Program, and addressed issues related to benchmarking and scoring ACO quality performance (77 FR 69301 through 69304; 78 FR 74757 through 74764). This year, as part of the CY 2015 Physician Fee Schedule proposed rule, we addressed several issues related to the Shared Savings Program quality performance standard and alignment with other CMS quality initiatives. Specifically, we revisited the current quality performance standard, proposed changes to the quality measures, and sought comment on future quality performance measures. We also proposed to modify the timeframe between updates to the quality performance benchmarks, to establish an additional incentive to reward ACO quality improvement, and to make several technical corrections to the regulations in subpart F of Part 425.
As discussed previously, section1899(b)(3)(C) of the Act states that the Secretary may establish quality performance standards to assess the quality of care furnished by ACOs and “seek to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both. . . .” In the November 2011 Shared Savings Program final rule, we established a quality performance standard that consists of 33 measures. These measures are submitted by the ACO through the GPRO web interface, calculated by CMS from administrative and claims data, and collected via a patient experience of care survey based on the Clinician and Group Consumer Assessment of Healthcare Providers and Systems (CG–CAHPS) survey. Although the patient experience of care survey used for the Shared Savings Program includes the core CG–CAHPS modules, this patient experience of care survey also includes some additional modules. Therefore, we will refer to the patient experience of care survey that is used under the Shared Savings Program as CAHPS for ACOs. The measures span four domains, including patient experience of care,
In selecting the 33 measure set, we balanced a wide variety of important considerations. Given that many ACOs were expected to be newly formed organizations, in the November 2011 Shared Savings Program final rule (76 FR 67886), we concluded that ACO quality measures should focus on discrete processes and short-term measurable outcomes derived from administrative claims and limited medical record review facilitated by a CMS-provided web interface to lessen the burden of reporting. Because of the focus on Medicare FFS beneficiaries, our measure selection emphasized prevention and management of chronic diseases that have high impact on these beneficiaries such as heart disease, diabetes mellitus, and chronic obstructive pulmonary disease. We believed that the quality measures used in the Shared Savings Program should be tested, evidence-based, target conditions of high cost and high prevalence in the Medicare FFS population, reflect priorities of the National Quality Strategy, address the continuum of care to reflect the requirement that ACOs accept accountability for their patient populations, and align with existing quality programs and value-based purchasing initiatives.
At this time, we continue to believe it is most appropriate to focus on quality measures that directly assess the overall quality of care furnished to FFS beneficiaries. The set of 33 measures that we adopted in the November 2011 Shared Savings Program final rule includes measures addressing patient experience, outcomes, and evidence-based care processes. Thus far, we have not included any specific measures addressing high cost services or utilization since we believe that the potential to earn shared savings offers an important and direct incentive for ACOs to address utilization issues in a way that is most appropriate for their organization, patient population, and local healthcare environment. We note that while the quality performance standard is limited to these 33 measures, the performance of ACOs is measured on many more metrics and ACOs are informed of their performance in these areas. For example, an assessment of an ACO's utilization of certain resources is provided to the ACO via quarterly reports that contain information such as the utilization of emergency services or the utilization of CTs and MRIs.
As we have stated previously (76 FR 67872), our principal goal in selecting quality measures for ACOs was to identify measures of success in the delivery of high-quality health care at the individual and population levels. We believe endorsed measures have been tested, validated, and clinically accepted, and therefore, selected the 33 measures with a preference for NQF-endorsed measures. However, the statute does not limit us to using endorsed measures in the Shared Savings Program. As a result we also exercised our discretion to include certain measures that we believe to be high impact but that are not currently endorsed, for example, ACO#11, Percent of PCPs Who Successfully Qualify for an EHR Incentive Program Payment.
In selecting the final set of 33 measures, we sought to include both process and outcome measures, including patient experience of care (76 FR 67873). Because ACOs are charged with improving and coordinating care and delivering high quality care, but also need time to form, acquire infrastructure and develop clinical care processes, we continue to believe it is important to have a combination of both process and outcomes measures. We note, however, that as other CMS quality reporting programs, such as PQRS, move to more outcomes-based measures and fewer process measures over time, we may also revise the quality performance standard for the Shared Savings Program to incorporate more outcomes-based measures over time.
Therefore, we viewed the 33 measures adopted in the November 2011 Shared Savings Program final rule as a starting point for ACO quality measurement. As we stated in that rule (67 FR 67891), we plan to modify the measures in future reporting cycles to reflect changes in practice and improvements in quality of care and to continue aligning with other quality reporting programs and will add and/or retire measures as appropriate through the rulemaking process. In addition, we are working with the measures community to ensure that the specifications for the measures used under the Shared Savings Program are up-to-date. We note that we must balance the timing of the release of specifications so they are as up-to-date as possible, while also giving ACOs sufficient time to review specifications. Our intention is to issue the specifications annually, prior to the start of the reporting period for which they will apply.
In the November 2011 Shared Savings Program final rule (76 FR 67873), we combined care coordination and patient safety into a single domain to better align with the National Quality Strategy and to emphasize the importance of ambulatory patient safety and care coordination. We also intended to continue exploring ways to best capture ACO care coordination metrics and noted that we would consider adding new care coordination measures for future years (67 FR 67877).
Since the November 2011 Shared Savings Program final rule, we have continued to review the quality measures used for the Shared Savings Program to ensure that they are up to date with current clinical practice and are aligned with the GPRO web interface reporting for PQRS. Based on these reviews, in the CY 2015 Physician Fee Schedule proposed rule, we proposed a number of measure additions, deletions and other revisions that we believed would be appropriate for the Shared Savings Program. An overview of changes we proposed is provided in Table 50 of the proposed rule (79 FR 40479 through 40481) which lists the measures that we proposed would be used to assess ACO quality under the Shared Savings Program starting in 2015. To summarize, we proposed to add 12 new measures and retire eight measures. We also proposed to rename the EHR measure in order to reflect the transition from an incentive payment to a payment adjustment under the EHR Incentive Program and to revise the component measures within the Diabetes and CAD composites. In total, we proposed to use 37 measures for establishing the quality performance standard that ACOs must meet to be eligible for shared savings. Although the total number of measures would increase from the current 33 measures to 37 measures under this proposal, we stated we did not anticipate that this would increase the reporting burden on ACOs because the increased number of measures is accounted for by measures
Finally, as part of the proposed changes, we proposed to replace the current five component diabetes composite measure with a new four component diabetes composite measure. In addition, we proposed to replace the current two component coronary artery disease composite measure with a new four component coronary artery disease composite measure. Under this proposal, 21 measures would be reported by ACOs through the GPRO web interface and scored as 15 measures.
Below, we summarize and group comments received on these proposals by first responding to general comments on our proposals and then by the method of data submission for the measure as listed in Table 50 of the proposed rule (79 FR 40479 through 40481) (that is, survey, claims, EHR incentive program, and the CMS web interface). In order to align the measures submitted through the CMS web interface with the PQRS and VM programs, we discuss specific comments in response to the proposed changes to the measures submitted through the CMS web interface with the comments received for these same measures for the PQRS and the VM programs. See Tables 79 and 80 in section III.K., for a discussion of and response to these comments.
Other commenters supported adding the new measures. One commenter, for example, stated that “the expanded measures are important utilization and management measures that our developing ACO would have likely considered and built into our ACO Cost, Utilization, and Risk dashboard anyway. From a clinical and system standpoint, these additions are key components of better managing avoidable utilization and costs. They are measures we would want to know regardless of the Proposed Rule.” MedPAC suggested that CMS move quality measurement for ACOs, MA plans, and FFS Medicare in the direction of a small set of population-based outcome measures, such as potentially preventable inpatient hospital admissions, emergency department visits, and readmissions.
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The following is a summary of the comments we received regarding our proposal to add these three new claims-based measures for All-Cause Unplanned Admissions for Patients with DM, HF and MCC.
• Percent of PCPs who Successfully Meet Meaningful Use Requirements.
Because downward adjustments to Medicare payments will begin in 2015 under the EHR Incentive Program, we proposed to modify the name and specifications for ACO #11 Percent of PCPs who Successfully Qualify for an EHR Incentive Program Payment so that it more accurately depicts successful use and adoption of EHR technology in the coming years. We note this measure would continue to be doubly weighted.
To align with PQRS, we proposed to add several measures submitted through the CMS web interface that we believed were appropriate for the ACO quality performance standard. The measures we proposed to add were:
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Additionally, we identified a number of the existing measures submitted through the CMS web interface that have not kept up with clinical best practice, are redundant with other measures that make up the quality performance standard, or that could be replaced by similar measures that are more appropriate for ACO quality reporting. For the reasons specified in the proposed rule, we proposed to no longer collect data on the following measures, and these measures would no longer be used for establishing the quality performance standards that ACOs must meet to be eligible to share in savings:
• ACO #12,
• ACO #22,
• ACO #23,
• ACO #24,
• ACO #25,
• ACO #29,
• ACO #30,
• ACO #32,
Finally, given these proposed changes, we also proposed updates and revisions to the Diabetes and CAD Composite measures. We proposed that the Diabetes Composite include the following measures:
• ACO #26: Diabetes Mellitus: Daily Aspirin or Antiplatelet Medication Use for Patients with Diabetes Mellitus and Ischemic Vascular Disease.
• ACO #27: Diabetes: Hemoglobin A1c Poor Control.
• ACO #41: Diabetes: Foot Exam.
• ACO #42: Diabetes: Eye Exam.
We further proposed that the CAD Composite include the following measures:
• ACO #33: Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy—Diabetes or Left Ventricular Systolic Dysfunction (LVEF<40%).
• ACO #43: Antiplatelet Therapy.
• ACO #44: Symptom Management.
• ACO #45: Beta-Blocker Therapy—Prior Myocardial Infarction (MI) or Left Ventricular Systolic Dysfunction (LVEF<40%).
We solicited comment on these composite measures and whether there are any concerns regarding the calculation of a composite score. Given the general concerns around composite measures and their use, we also solicited comment on how we combine and incorporate component measure scoring for the composite.
We do, however, wish to note some specific comments relevant to our final policy decisions with respect to the quality performance measures used in the Shared Savings Program: (1) Commenters noted that the Patient Health Questionnaire 9 (PHQ–9) is specified for use in the Depression Remission measure (proposed ACO # 40), and that this tool is only one of several options available to practitioners. These commenters suggested not adding this measure until ACOs have had the opportunity to uniformly phase in the use of the PHQ–9 in order to meet the measure specification requirements. Additionally, commenters suggested that their ability to perform well on this measure may be limited if they cannot access the PHQ–9 score data from mental health care providers. (2) Many commenters did not support the proposed addition of the CAD: Symptom Management measure (proposed ACO # 44), stating they believe the measure lack primary care focus and that there are potential challenges in data collection. CMS also received a comment supporting the proposed addition of the CAD: Antiplatelet Therapy measure (proposed ACO # 43), however, this commenter recommended that if added, the measure only be used for pay-for-reporting. (3) Some commenters did not support the retirement of the 4 Diabetes Composite measures and 1 CAD Composite measure proposed to be removed due to the resources already invested in reporting these 5 measures. (4) CMS received comments suggesting that the quality performance standard under the Shared Savings Program should focus on broader categories of measures (such as preventive health measures) that are generalizable across providers and care settings, rather than measures that target specific providers or care settings.
Given the concerns raised by commenters, included in Table 80 of section III.K, regarding our proposal to use PHQ–9 for the Depression Remission measure, we will not finalize our proposal that the measure would be phased-in to pay-for-performance during the second and third performance years of an ACO's first agreement period. We will, however, finalize our proposal to use the measure to assess ACO quality, but only as pay-for-reporting for all three performance years of an ACO's first agreement period. We believe this approach will provide flexibility for ACOs to continue to use tools other than the PHQ–9, while providing the opportunity for ACOs to begin adopting this tool without harming their ability to achieve full points on the measure. Additionally, as noted above, the HIPAA Privacy Rule generally provides the same protections for mental health information as it does for all protected health information (with the exception of psychotherapy notes). We therefore do not believe there would be any unusual impediments to accessing the information required for reporting of this particular measure.
After consideration of the comments received and in order to align with the final measures that will be used in the PQRS program, we will not finalize the CAD: Symptom Management (proposed ACO–44) and CAD: Antiplatelet Therapy (proposed ACO–43) measures for the Shared Savings Program. See section III.K, Table 79, for comment discussion and response.
We believe it is important to make changes in the measures used to assess ACO quality to address the statutory mandate in section 1899(b)(3)(A) of the Act which requires the Secretary to determine appropriate measures to assess the quality of care furnished by the ACO, reflect current clinical practice, promote high quality care, and alignment with PQRS and National Quality Strategy. We therefore disagree with commenters that internal operational challenges that arise from changes in the measure set outweigh the benefit of such changes.
After considering the comments received regarding the proposed new measures, we are finalizing our proposal to add the following new measures that will be submitted by the ACO through the CMS web interface:
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For the reasons stated in section III.K., we decline to finalize our proposals to add the following measures:
• Diabetes: Foot Exam (NQF #0056)
• CAD: Antiplatelet Therapy (NQF #0067)
• CAD: Symptom Management
• CAD: Beta-Blocker Therapy—Prior Myocardial Infarction or Left Ventricular Systolic Dysfunction (LVSD) (NQF #0070)
We are not finalizing our proposal to add the CAD: Antiplatelet Therapy (NQF #0067) measure and instead will keep the measure it was designed to replace, ACO #30,
Additionally, we are finalizing our proposal to remove certain measures from the ACO quality performance standard including the following:
• ACO #12,
• ACO #22,
• ACO #23,
• ACO #24,
• ACO #25,
• ACO #29,
• ACO #32,
Finally, given these changes, we are revising the Diabetes Composite to include the following measures:
• ACO #27: Diabetes: Hemoglobin A1c Poor Control (NQF #0059).
• ACO #42: Diabetes: Eye Exam (NQF #0055).
Although not previously proposed, in order to align with PQRS and in response to commenter concerns about using this measure outside the composite, we are removing ACO #26, Diabetes Mellitus: Daily Aspirin or Antiplatelet Medication Use for Patients with Diabetes Mellitus and Ischemic Vascular Disease. While we believe the measure may be valid apart from the composite, we are swayed by the concerns raised by commenters as discussed in Table 79 in section III.K. We believe removing ACO–26 is consistent with our proposals to align with the PQRS program and remove redundancy of measures within the Shared Savings Program measure set. In addition, we believe removing this measure will reduce reporting burden for ACOs and may also help to improve performance on the diabetes composite. We also note that the removal of this measure would additionally alleviate some redundancy with ACO #30
The CAD Composite will be removed since there is only one CAD measure remaining.
We believe that the final measure set as adopted in this final rule is appropriate for purposes of the ACO quality performance standard and in order to align with changes being made to the PQRS for the reasons specified above and in Tables 79 and 80 in section III.K. Additionally, we believe that our final decision to remove certain measures will improve alignment with best practices and reduce reporting burden for ACOs.
We are finalizing the ACO quality performance measures as follows. In total, we will use 33 measures to establish the quality performance standards that ACOs must meet to be eligible for shared savings. Although the number of measures in the measure set remains at 33, we are reducing the number of measures reported through the CMS web interface by 5 to reduce burden. In addition, as discussed in section III.K., we are also reducing the number of patients ACOs are required to report on for each measure. This change will also reduce the burden of quality reporting for ACOs. The new measures will be pay-for-reporting for the first two performance years for all ACOs. After this initial period, the measures will be phased in to pay-for-performance over the course of an ACO's first agreement period with the exception of Depression Remission at 12 Months which will stay at pay-for-reporting for all three performance years.
Specifically, we are finalizing the following changes to the Shared Savings Program quality measure set (see Table 81 for a list of the final measures and for further details of phase in to pay-for-performance during the agreement period):
• Add the CAHPS: Stewardship of Patient Resources measure as pay-for-reporting in the first performance year of an ACO's first agreement period and pay-for-performance in the second and third performance years.
• Add SNF 30-Day All-Cause Readmission measure and All-Cause Unplanned Admissions measures for Patients with Multiple Clinical Conditions, Heart Failure, and Diabetes as pay-for-reporting for the first two years of an ACO's first agreement period before transitioning to pay-for-performance in performance year three.
• Add Depression Remission at 12 Months (NQF #0710) measure as pay-for-reporting for all three performance years of an ACO's first agreement period.
• Replace ACO–12 Medication Reconciliation (NQF #0097) with “Documentation of Current Medications in the Medical Record” (NQF #0419).
• Add Diabetes: Eye Exam (NQF #0055).
• Modify name and specifications of ACO–11 from Percent of PCPS who successfully Qualify for an EHR Incentive Program Payment to the Percent of PCPs who Successfully Meet MU Requirements.
In addition, we are finalizing the retirement of 6 of the 7 measures we proposed to delete because they do not align with updated clinical guidelines or are similar to existing measures (ACO–22, 23, 24, 25, 29, and 32). We are not finalizing our proposal to remove ACO–30 Ischemic Vascular Disease: Use of Aspirin or Another Antithrombotic and are removing ACO–26 Diabetes Mellitus: Daily Aspirin or Antiplatelet Medication Use for Patients with Diabetes Mellitus and Ischemic Vascular Disease due to comments received and for the reasons discussed above and in section III.K, Table 79.
We are also not finalizing the following proposed measures, but instead will continue to consider them for the future given the measurement gaps and high-cost, high-volume conditions these measures address for the quality performance standard as discussed in Table 79 in section III.K:
• Diabetes: Foot Exam (NQF #0056).
• CAD: Antiplatelet therapy (NQF #0067).
• CAD: Symptom management.
• CAD: Beta-blocker therapy—prior Myocardial Infarction (MI) or LVSD (NQF #0070).
An overview of the changes we are finalizing is provided in Table 81, which lists the measures that will be used to assess ACO quality under the Shared Savings Program starting with the 2015 performance year.
The current quality scoring methodology is explained in the regulations at § 425.502 and in the preamble to the November 2011 final
• Patient/Caregiver Experience of Care—8 measures
• Care Coordination/Patient Safety—10 measures
• Preventive Health—8 measures
• At Risk Population—6 measures (including 5 individual measures and a 2-component diabetes composite measure)
Table 82 provides a summary of the number of measures by domain and the total points and domain weights that will be used for scoring purposes under these changes. Otherwise, the current methodology for calculating an ACO's overall quality performance score will continue to apply. Table 83 provides the measures that are retired/replaced.
We believe that these modifications to the quality measure set for the Shared Savings Program will further enhance the quality of care patients receive from ACO participants and ACO providers/suppliers, better reflect clinical practice guidelines, streamline measures reporting, and enhance alignment with PQRS and the EHR Incentive Program.
For example, assume a new measure is scheduled to phase in with reporting in PY1, reporting in PY2, and performance in PY3. Further assume that an ACO with a 2014 start date will be in its second performance year (PY2) when the measure becomes effective. In this example, according to the performance year phase-in schedule, the ACO would be responsible for complete and accurate reporting of the new measure in PY2 and for performance on the measure in PY3. However, because the measure is new and will be pay-for-reporting for the 2015 and 2016 reporting periods, this overrides the phase-in schedule because we would not have benchmark information for this ACO's PY3. In this example, if the ACO renews its participation agreement for a new agreement period then the ACO would be responsible for performance on the measure in PY1 of its new agreement period, because the measure was scheduled to be pay-for-performance in PY3 of the previous agreement period. If we change the assumptions in the example to an ACO with a start date of 2015, under the phase-in schedule the ACO would be responsible for performance in PY3 which corresponds with the 2017 reporting period, the first year in which the measure is available to be used for pay-for-performance. In other words, each new measure is pay-for-reporting until it is possible to use it as pay-for-performance, and whether the ACO is subject to pay-for-performance at that time is determined by the phase-in schedule in Table 81.
We are also revising § 425.502(a)(4) to provide that the quality performance standard for a newly introduced measure is set at the level of complete and accurate reporting for the first two reporting periods for which reporting of the measure is required. For subsequent reporting periods, the quality performance standard for the measure
In order to align with the policy being finalized for PQRS, we are reducing the required number of consecutively ranked patients reported for each measure module through the CMS web interface from 411 to 248. Because ACOs report using the same web interface tool used by PQRS, this reduction in the required sample size for reporting will reduce burden, while ensuring statistical validity and reliability is maintained. It also ensures consistency and equal treatment for all groups reporting through the GPRO web interface.
In the proposed rule (79 FR 40483), we indicated that in addition to the changes to the current set of measures for the Shared Savings Program discussed above, we were interested in public comment on additional measures that we may consider in future rulemaking. We particularly welcomed comments regarding the following issues:
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We believe that certified EHR technology used in a meaningful way is one piece of a broader health information technology infrastructure needed to reform the health care system and improve health care quality, efficiency, and patient safety. Through our programs such as the Medicare and Medicaid EHR Incentive Programs and the Stage 2 meaningful use (MU) requirements we seek to expand the meaningful use of certified EHR technology (CEHRT). Adoption of CEHRT by ACO participants and ACO providers/suppliers may help support efforts to achieve improvements in patient care and quality, including reductions in medical errors, increased access to and availability of records and data, improved clinical decision support, and the convenience of electronic prescribing. Additionally, we believe that the potential for the Shared Savings Program to achieve its goals could be further advanced by direct EHR-based quality data reporting by ACOs and their ACO participants and ACO providers/suppliers. This could help reinforce the use of CEHRT, reduce errors in quality measure submission, and achieve data submission efficiencies. We believe ACOs and their providers should be leaders in encouraging EHR adoption and should be using CEHRT to improve quality of care and patient safety and to reduce errors.
Furthermore, beginning in 2015, eligible professionals that do not successfully demonstrate meaningful use of CEHRT will be subject to a downward payment adjustment under Medicare that starts at −1 percent and increases each year that an eligible professional does not demonstrate meaningful use, to a maximum of −5 percent. A final rule establishing the requirements of Stage 2 of the Medicare EHR Incentive Program appeared in the September 4, 2012
Additionally, under a group reporting option established for the Medicare EHR Incentive Program (77 FR 54076 through 54078), EPs participating in an ACO under the Shared Savings Program who extract the data necessary for the ACO to satisfy the quality reporting requirements of the Shared Savings Program from CEHRT would satisfy the CQM reporting component of meaningful use as a group for the Medicare EHR Incentive Program. In addition to submitting CQMs as part of an ACO, EPs have to individually satisfy the other objectives and associated measures for their respective stage of meaningful use.
However, we clarified that if an EP intends to use this group reporting option to meet the CQM reporting component of meaningful use, then the EP would have to extract all of its CQM data from a CEHRT and report it to the ACO (in a form and manner specified by the ACO) in order for the EP to potentially qualify for the Medicare EHR Incentive Program. The ACO must also report the GPRO web interface measures and satisfy the reporting requirements under the Shared Savings Program in order to its EPs to satisfy the CQM reporting component of meaningful use for the Medicare EHR Incentive Program.
Although these group reporting requirements were established under the Medicare EHR Incentive Program, the Shared Savings Program regulations were not amended to reflect these reporting requirements. Therefore, we proposed to amend the regulations governing the Shared Savings Program to align with the requirements previously adopted under the Medicare EHR Incentive Program in order to provide that EPs participating in an ACO under the Shared Savings Program can satisfy the CQM reporting component of meaningful use for the Medicare EHR Incentive Program when the ACO reports GPRO web interface measures by adding new paragraph (d) to § 425.506. We proposed that this new paragraph would provide that EPs participating in an ACO under the Shared Savings Program satisfy the CQM reporting component of meaningful use for the Medicare EHR Incentive Program when: (1) The eligible professional extracts data necessary for the ACO to satisfy its quality reporting requirements from CEHRT; and (2) the ACO satisfactorily reports the ACO GPRO measures through a CMS web interface.
Although we did not propose any new requirements regarding EHR based reporting under the Shared Savings Program, we welcomed suggestions and comments about issues which we would consider in developing any future proposals. We especially solicited comment on the feasibility of an ACO to be a convener and submitter of quality measures through an EHR or alternative method of electronically reporting quality measures to us. We indicated our interest in the opportunities and barriers to ACO EHR quality measure reporting, as well as ways to overcome any barriers. We also welcomed suggestions on alternative ways that we might implement EHR-based reporting of quality measures in the Shared Savings Program, such as directly from EHRs or via data submission vendors. We solicited comment on whether EHR reporting should be a requirement for all Shared Savings Program ACOs or if the requirement for EHR reporting should be phased in gradually, for instance through a separate risk track or by the establishment of a “core and menu” quality measure set approach in which we would establish a core set of required quality measures and then supplement these required measures with a menu of additional measures (such as EHR-based reporting) from which an ACO could choose. This approach could provide ACOs with additional flexibility and allow them to report on quality measures that better reflect any special services they provide. As an alternative, we also solicited comment on whether ACO providers/suppliers could use a local registry-like version of the GPRO web interface to capture relevant clinical information and to monitor performance on all Medicare patients throughout the year and to more easily report quality data to CMS annually.
We will continue to work toward electronic reporting of quality measures, keeping in mind the unique relationship ACOs have with their ACO participants and ACO providers/suppliers. We understand and appreciate the feedback from those stakeholders who raised important concerns about the readiness of ACOs and EHR systems to report quality electronically under the Shared Savings Program. We will use the information provided by commenters to work with ACOs and other stakeholders to develop possible ways to encourage EHR adoption taking into account input from ACOs on challenges for ACO electronic collection and submission of measures. In addition, we will consider the input we have received from stakeholders when deciding what additional requirements should be proposed in future rulemaking to encourage EHR adoption and use by ACOs and their ACO participants and ACO providers/suppliers.
After consideration of the comments received regarding this proposal, we are finalizing our proposal to codify in the Shared Savings Program rules for 2015 and beyond that an eligible professional that is an ACO provider/supplier can satisfy the CQM reporting component of
Although this amendment to the regulations will align the Medicare Shared Savings Program regulations with the existing requirements under the Medicare EHR Incentive Program, we intend to take steps in the future to better align and integrate EHR use into quality reporting under the Shared Savings Program.
Section 1899(b)(3)(C) of the Act directs the Secretary to “establish quality performance standards to assess the quality of care furnished by ACOs” and to “seek to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both for purposes of assessing such quality of care.” Under the current Shared Savings Program regulations at § 425.502, the following requirements with regard to establishing a quality performance benchmark for measures apply: (1) During the first performance year of an ACO's agreement period, the quality performance standard is set at the level of complete and accurate reporting; (2) during subsequent performance years, the quality performance standard will be phased in such that ACOs will be assessed on their performance on certain measures (see Table 1 of the November 2011 Shared Savings Program final rule (76 FR 67889 through 67890), for details of the transition for each of the 33 measures); (3) we designate a quality performance benchmark and minimum attainment level for each measure, and establish a point scale for the level of achievement on each measure; and (4) we define quality performance benchmarks using FFS Medicare data or using flat percentages when the 60th percentile is equal to or greater than 80.00 percent.
Section 425.502(b)(2) governs the data that CMS uses to establish the quality performance benchmarks for quality performance measures under the Shared Savings Program. Consistent with section 1899(b)(3)(C) of the Act, which requires CMS to seek to improve the quality of care furnished by ACOs participating in the Shared Savings Program over time, § 425.500(b)(3) states that in establishing the measures to assess the quality of care furnished by an ACO, CMS seeks to improve the quality of care furnished by ACOs over time by specifying higher standards, new measures, or both.
Subsequently, we discussed several issues related to the establishment of quality performance benchmarks in the CY 2014 PFS final rule with comment period (78 FR 74759 through 74764). In that rule (78 FR 74760), we finalized a proposal to combine all available Medicare FFS quality data, including data gathered under PQRS (through both the GPRO web interface tool and other quality reporting mechanisms) and other relevant FFS quality data reported to CMS (including data submitted by Shared Savings Program and Pioneer ACOs) to set the quality performance benchmarks for 2014 and subsequent reporting periods. In establishing this policy, we determined that it was appropriate to use all FFS data rather than only ACO data, at least in the early years of the program, to avoid the possibility of punishing high performers where performance is generally high among all ACOs. We did not finalize a proposal to use Medicare Advantage (MA) data alone or in combination with FFS data in the short-term. Instead, we stated in the CY 2014 PFS final rule with comment period (78 FR 74760) that we intended to revisit the policy of using MA data in future rulemaking when we have more experience setting benchmarks for ACOs.
Additionally, in the CY 2014 PFS final rule with comment period, we retained the ability to use flat percentages to set benchmarks when many reporters demonstrate high achievement on a measure, so that ACOs with high performance on a measure are not penalized (78 FR 74760). More specifically, we will now use all available FFS data to calculate benchmarks, including ACO data, except where performance at the 60th percentile is equal to or greater than 80 percent for individual measures. In these cases, a flat percentage will be used to set the benchmark for the measure. This policy allows ACOs with high scores to earn maximum or near maximum quality points while still allowing room for improvement and rewarding that improvement in subsequent years.
As previously discussed, the first performance year of an ACO's agreement period is pay for reporting only, so ACOs earn their maximum sharing rate for completely and accurately reporting all 33 quality measures. Quality performance benchmarks are released in subregulatory guidance prior to the start of the quality reporting period for which they apply so that as we phase in measures to pay for performance, ACOs are aware of the actual performance rates they will need to achieve to earn the maximum quality points under each domain. In the November 2011 Shared Savings Program final rule, we indicated our intent to gradually raise the minimum attainment level to continue to incentivize quality improvement over time and noted that we would do so through future rulemaking after providing sufficient advance notice with a comment period to allow for industry input (76 FR 67898). In the CY 2014 PFS final rule with comment period, we reiterated our policy of setting quality performance benchmarks prior to the reporting year for which they would apply (78 FR 74759). Specifically, we use data submitted in 2013 for the 2012 reporting period to set the quality performance benchmarks for the 2014 reporting period. However, we recognize that in the first few years of the Shared Savings Program, we will only have a limited amount of data for some measures, which may cause the benchmarks for these measures to fluctuate, possibly making it difficult for ACOs to improve upon their previous year's performance. Stakeholders have also told us that they prefer to have a stable benchmark target so that they can be rewarded for quality improvement from one year to the next. Therefore, instead of modifying quality performance benchmarks annually, in the CY 2014 PFS final rule with comment period (78 FR 74761) we stated that we would set the benchmarks for the 2014 reporting year in advance using data submitted during 2013 for the 2012 reporting year, and continue to use that benchmark for 2 reporting years (specifically, the 2014 and 2015 reporting years). We further indicated our intention to revisit this issue in future rulemaking to allow for public comment on the appropriate number of years that a benchmark should apply before it is updated.
In the discussion of measures in the CY 2015 Physician Fee Schedule proposed rule, we indicated that some measures may be topped out, meaning that all but a very few organizations achieve near perfect performance on the measure. Since publication of the quality performance benchmarks for the 2014 and 2015 quality reporting years, a number of ACOs have noted that using available national FFS data has resulted in some benchmarks where the 80th or 90th percentiles approach 100 percent performance on the measure. Stakeholders have suggested it is unreasonable to hold organizations, especially very large organizations such as ACOs to this high standard and that it may be easier for smaller and medium size physician practices to achieve higher levels of performance given their smaller patient populations. We believe these concerns have merit because we have looked at the FFS data submitted to CMS and agree it is possible that smaller practices or practices with smaller populations may be able to achieve these higher levels of performance more easily than larger practices or organizations with larger patient populations. Therefore, we proposed certain modifications to our benchmarking methodology to address the way that such “topped out” measures are treated for purposes of evaluating an ACO's performance. Specifically, when the national FFS data results in the 90th percentile for a measure are greater than or equal to 95 percent, we would use flat percentages for the measure, similar to our policy under § 425.502(b)(2)(ii) of using flat percentages when the 60th percentile is greater than 80 percent to address clustered measures. We believe this approach would address concerns about how topped out measures affect the quality performance standard while continuing to reward high performance, and being readily understandable to all. We proposed to revise § 425.502(b)(2)(ii) to reflect this policy. We invited comments on this proposal. We also invited comments on other potential approaches for addressing topped out measures. We indicated that we would use any comments received to help develop any future proposals regarding topped out measures. For example, we welcomed comments on whether we should drop topped out measures from the measures set, fold them into composites, or retain them but make them pay for reporting only.
As discussed previously, during an ACO's first participation agreement period, the quality performance standard during the first performance year is initially set at the level of complete and accurate reporting, and then, during performance years 2 and 3 within the ACO's first agreement period, the quality performance standard is phased in such that the ACO is assessed on its performance on selected measures. We did not directly indicate the quality performance standard that would apply if an ACO were to subsequently enter into a second or subsequent participation agreement. However, § 425.502(a)(1) provides that during the first performance year of an ACO's agreement period, CMS will define the quality performance standard at the level of complete and accurate reporting of all quality measures. As drafted, this regulation could be read to imply that the quality performance standard for ACOs in the first performance year of a subsequent agreement period would also be set at the standard of full and accurate reporting. We do not believe it is appropriate for an ACO in a second or subsequent agreement period to report quality measures on a pay-for-reporting basis if they have previously reported these measures in a prior agreement period. The ACO would have gained experience reporting the quality measures during the earlier agreement period, and as a result, we do not believe it would be necessary to provide any further transition period. Rather, we believe it would be appropriate to assess the ACO's actual performance on measures that have been designated as pay for performance during all 3 years of the second or subsequent participation agreement period.
Accordingly, we proposed to revise our regulations to expressly provide that during a second or subsequent participation agreement period, the ACO would continue to be assessed on its performance on each measure that has been designated as pay for performance. That is, the ACO would continue to be assessed on the quality performance standard that would otherwise apply to an ACO if it were in the third performance year of the first agreement period. We will do this by modifying § 425.502(a)(1) and (a)(2) to
As discussed in the CY 2014 PFS final rule with comment (78 FR 74761), we have further considered suggestions from ACOs regarding the appropriate number of years that a benchmark should apply before it is updated. ACOs suggested that there be a longer period of time to gain experience with the performance measure, before the benchmark is further updated. ACOs also indicated that it would be desirable to set and leave benchmarks static for additional performance years so that they have a quality improvement target to strive for that does not change frequently. ACOs believe that a stable benchmark would enhance their ability to be rewarded for quality improvement, as well as quality achievement, from one year to the next. We recognize, however, that there could be some concerns about lengthening the period between updates to the quality performance benchmarks. The current benchmarks as discussed previously, for example, are based on a combination of all available Medicare FFS quality data, including data gathered under PQRS, the Shared Savings Program and Pioneer ACO Model, but not MA quality data. To the extent that the benchmarks are based on quality data reported by a large number of ACOs and other FFS entities, we believe it is reasonable to use them to assess the quality performance of ACOs. Furthermore, as discussed in the 2014 PFS final rule with comment period (78 FR 74761), we are also persuaded that we should establish a longer period between updates to the benchmarks in order to provide ACOs with a more stable target for measuring quality improvement. In the absence of this stability, it could be very difficult to assess quality improvement from year to year.
In the 2014 PFS final rule with comment period, we noted that we intended to address the number of years between updates to the benchmarks again in future rulemaking in order to allow for public comment. Therefore, we considered how long benchmarks should be in place before they are updated. We considered a range of options, from setting benchmarks every 2 years to setting benchmarks every 5 years. For example, we considered the option of setting benchmarks every 3 years. However, we note that ACO agreement periods are 3 years long and a new cohort of ACOs enters the program each year. As a result, setting benchmarks every 3 years might advantage some ACOs over others, particularly ACOs that have an agreement period during which benchmarks are not updated. Therefore, we proposed to update benchmarks every 2 years. We believe 2 years is an appropriate amount of time because the Shared Savings Program is relatively new and we do not have extensive experience in setting benchmarks under the Shared Savings Program. Updating the benchmarks every 2 years would enable us to be more flexible and give us the ability to make adjustments more frequently if appropriate. We note, however, that we may revisit this policy as more ACOs enter the program, more FFS data is collected which could help us better understand to what extent benchmarks should vary from year to year, or if we make any future proposals regarding the use of MA quality data for setting benchmarks.
Accordingly, we proposed to revise § 425.502(b) to add a new paragraph (b)(4)(i), which would provide that CMS will update benchmarks every 2 years. To illustrate this proposed policy, the existing quality performance benchmarks, which are based on data submitted in 2013 for the 2012 reporting period would apply for a total of 2 performance years (the 2014 and 2015 performance years) after which we would reset the benchmarks for all ACOs based on data for the 2014 reporting period that is reported during 2015. These updated benchmarks would apply for the 2016 and 2017
We solicited comment on this proposal. We specifically solicited comment on the appropriate number of years that a benchmark should remain stable before it is updated. We also welcomed comments about when annual updates might be appropriate such as when there is a substantive specification change to a measure between years. For instance, the age range used for the breast cancer screening measure is different in 2014 than in 2013, or when the measure owner modifies or retires a measure. Additionally, although we proposed to retain our current policy of using the most recent available data to set the quality performance benchmarks, we also solicited comment on whether data from other reporting periods should also be considered in establishing benchmarks that will apply for 2 performance years. Specifically, we sought input on whether data from multiple years should be used to help provide more stable benchmarks. For example, should data submitted for the 2013 and 2014 reporting periods be combined to set benchmarks for the 2016 and 2017 performance years?
We are finalizing our proposal to set benchmarks for two years to provide ACOs with stable targets for quality improvement. In addition, we will use up to three years of FFS data to set benchmarks, if available. The use of multiple years of FFS data to set benchmarks will apply to all newly established benchmarks, but will not affect existing benchmarks, which apply to the 2014 and 2015 performance years. We are finalizing our proposal to revise § 425.502(b) to add a new paragraph (b)(4)(i) providing that CMS will update benchmarks every 2 years. In light of our decision to set the quality performance standard for a newly introduced measure at the level of complete and accurate reporting for the first two reporting periods for which the measure is in use, we are revising proposed § 425.502(b)(4)(ii) to provide that for newly introduced measures that transition to pay for performance in the second year of the 2-year benchmarking cycle, the benchmark will be established in that year and updated along with the other measures at the start of the next 2-year benchmarking cycle. For example, if a new measure is scheduled to become pay for performance in 2017 after being used for pay-for-reporting for 2015 and 2016, it will be set for the 2017 performance year and subsequently reset at the beginning of the next 2-year benchmarking cycle (2018–2019). In other words, such a measure would have its benchmark set for a single year before phasing into the biennial benchmarking schedule outlined in Table 84.
ACOs must meet a CMS-specified quality performance standard in order to be eligible to share in savings. The Shared Savings Program quality performance standard currently consists of a set of quality measures spanning four domains that are collected via the patient and caregiver experience of care survey, calculated by CMS from internal administrative and claims data, and submitted by the ACO through the CMS web interface. The four domains include patient/caregiver experience of care, care coordination/patient safety, preventive health, and at-risk populations. The measures collected
Under current policy, the quality performance standard is defined at the level of full and complete reporting for the first performance year of an ACO's agreement period. After that, an ACO must meet certain thresholds of performance and is rewarded on a sliding scale in which higher levels of quality performance translate to higher rates of shared savings. This scale, therefore, rewards improvement over time, since higher performance translates to higher shared savings. For example, an ACO that performs at the 80th percentile one year and then at the 90th percentile the next year would receive a higher level of shared savings in its second year than its first year, based on its improved quality performance. In this way, ACOs are rewarded for both attainment and improvement. This is particularly true when benchmarks are stable for more than one year, as discussed earlier in this section.
We recognize that rewards for both quality attainment, as well as quality improvement are not always built in to pay-for-performance initiatives. For example, in HVBP (Hospital Value-Based Purchasing) hospitals are scored based on the higher of their achievement or improvement on specified quality measures, with some hospitals receiving incentive payments if their overall performance is high enough relative to their peers. In the November 2011 final rule establishing the Shared Savings Program (76 FR 67897), we indicated in response to comments that we believe the approach of offering more points for better quality performance also offers an implicit incentive for continuous quality improvements, since it incorporates a sliding scale in which higher levels of quality performance translate to higher sharing rates. We believed that high performing ACOs should do well under this approach since it recognizes and provides incentives for ACOs to maintain high quality performance in order to maximize their share of savings and minimize their share of losses.
ACOs and other stakeholders have suggested that the current quality points scale described above does not adequately reward ACOs for both quality attainment and improvement. They request that we further strengthen the incentives for quality improvement by including an additional explicit reward for those ACOs that improve from one year to the next.
As discussed previously, the existing quality performance standard includes a sliding point scale that rewards ACOs for certain levels of attainment. In addition, we note that under the final policy discussed above in which we will establish a stable quality performance benchmark for a period of 2 years, there should be an even greater opportunity for every ACO to demonstrate improvement and be rewarded for that improvement from year to year. However, we were persuaded by suggestions from stakeholders that an additional, more explicit reward should be included for ACOs that improve their quality scores from year to year. Therefore, we proposed to revise our existing quality scoring strategy to explicitly recognize and reward ACOs that make year-to-year improvements in their quality performance scores on individual measures.
To develop such an approach, we looked to the MA program, which has already successfully developed and implemented a formula for measuring quality improvement. The MA five star rating program computes an improvement change score which is defined as the score for a measure in a performance year minus the score in the previous performance year. The MA five star rating program then measures each plan's net quality improvement by calculating the total number of significantly improved quality measures and subtracting the total number of significantly declined quality measures. This is an approach that we believed was also appropriate for measuring quality improvement for ACOs. (For more details on the formula for calculating the MA quality improvement measure, see the discussion in “Medicare 2014 Part C & D Star Rating Technical Notes”, Attachment I, page 80, which can be downloaded from the CMS Web site at
We continue to believe it is important to recognize that the Shared Savings Program is not a managed care program. Unlike MA, this program's design retains FFS flexibility and the freedom of choice available to beneficiaries under Medicare Parts A and B which generally necessitates different program requirements. However, in this case we believe there would be significant advantages for the Shared Savings Program to adopt the formula for a quality improvement measure that MA has already developed and implemented rather than attempt to develop a new formula for a quality improvement measure. In particular, the MA measure formula has already been fully developed and vetted with stakeholders, in the context of the MA program, with detailed operational specifications and previously shared with the public.
In addition, we believe it is important to add a quality improvement measure to the Shared Savings Program in a manner that would minimize disruption for ACOs. We believe it would be undesirable for both ACOs and the program if the quality improvement measure were added in a way that required extensive revisions to the current quality measurement methodology, for example, reweighting of the four quality measure domains. Therefore, we proposed to add a quality improvement measure to award bonus points for quality improvement to each of the existing four quality measure domains. For each quality measure domain, we proposed to award an ACO up to two additional bonus points for quality performance improvement on the quality measures within the domain. These bonus points would be added to the total points that the ACO achieved within each of the four domains. Under this proposal, the total possible points that could be achieved in a domain, including up to 2 bonus points, could not exceed the current maximum total points achievable within the domain.
ACOs would achieve bonus points for this quality improvement measure in a domain if they achieve statistically significant levels of quality improvement for measures within the domain, as discussed below. Otherwise, the current methodology for calculating the ACO's overall quality performance score would continue to apply (see § 425.502(e) and 76 FR 67895 through 67900). Additional details about the proposal to incorporate bonus points into the quality performance scoring methodology are discussed in the CY 2015 Physician Fee Schedule proposed rule (79 FR 40490 through 40492). Highlights of the methodology we proposed are as follows:
The quality improvement measure scoring for a domain would be based on
In general, for a measure to be eligible to be included for purposes of determining quality improvement and awarding bonus points in a domain for a performance year, the measure must be a measure for which an ACO was scored in both the performance year and the immediately preceding performance year. Measures that were not scored in both the performance year and the immediately preceding performance year, for example, new measures, would not be included in the assessment of improvement. Otherwise, for purposes of determining quality improvement and awarding bonus points, we would include all of the individual measures within the domain, including both pay-for-reporting measures and pay-for-performance measures. In determining improvement, the actual performance score achieved by the ACO on the measure would be used, not the score used to determine shared savings. In other words, we would calculate a performance score for each measure, regardless of whether it is pay for reporting or pay for performance, and include the score in the report we provide to the ACO. For example, all measures are pay for reporting in the first year of an ACO's first agreement period, but even though the ACO will receive full credit for all reported measures, its actual performance on those measures will also be scored and provided to the ACO for informational purposes. We believe it is appropriate to use these actual performance scores to assess improvement on a measure from year to year, regardless of whether the measure is designated as a pay for reporting or a pay for performance measure in that performance year because the performance scores achieved by the ACO provide the best indication of the actual change in quality performance by the ACO.
If the ACO is in its first performance year of its first agreement period, then it would not be possible, of course, to measure quality improvement. Therefore, for these ACOs the existing scoring methodology would continue to apply and no bonus points would be awarded. If an ACO in its second or subsequent performance year does not experience an improvement nor a decline in quality performance for any of the selected measures compared to its previous reporting period, or it experiences an improvement for some measures but has an equal or greater number of measures where quality performance has declined, then the ACO would likewise not be awarded any bonus points. If an ACO renews a participation agreement, then the measurement of quality improvement would be based on a comparison between performance in the first year of the new agreement period and performance in the 3rd year of the previous agreement period.
For each qualifying measure, we would determine whether there was a significant improvement or decline between the two performance years by applying a common standard statistical test. (See the discussion of the t-test for calculating the MA quality improvement measure in “Medicare 2014 Part C & D Star Rating Technical Notes”, Attachment I, page 80, which can be downloaded from the CMS Web site at
The awarding of bonus points would be based on an ACO's net improvement within a domain, and would be calculated by determining the total number of significantly improved measures and subtracting the total number of significantly declined measures. Up to 2 bonus points would be awarded on a sliding scale based on the ACO's net improvement for the domain compared to the total number of individual measures in the domain.
Consistent with our current quality methodology, the total points earned for measures in each domain, including any quality improvement points, would be summed and divided by the total points available for that domain to produce an overall domain score of the percentage of points earned versus points available. The percentage score for each domain will be averaged together to generate a final overall quality performance score and sharing rate for each ACO that will be used to determine the amount of shared savings or, if applicable the amount of losses it owes, consistent with the requirements under § 425.502(e).
In developing this proposal to award bonus points for quality improvement, we considered several alternative options. Specifically, we considered whether it would be more appropriate not to award bonus points but instead to include a computed quality improvement measure that would be incorporated into the current scoring methodology just as any other measure would be added. Under this alternative approach, we would increase the total possible points that could be awarded in a domain. However, we did not propose that approach because we believe that awarding bonus points would provide the desired incentive, would be more understandable and less disruptive, and would not require extensive changes to the quality performance standard. By awarding bonus points we also avoid the need to develop ways to avoid unfairly penalizing new ACOs. Similarly, ACOs that have already achieved a very high level of quality for an individual measure may not be able to achieve further statistically significant improvement for the measure. Such ACOs could otherwise be disadvantaged if they were not able to earn performance points for a new quality improvement measure added to the total measures in the domain. We believe our quality improvement proposal mitigates these concerns because the measure recognizes incremental improvement at higher levels of performance and does not impose any penalty on ACOs that have already achieved a high level of performance.
We also considered whether we should provide an even greater additional incentive by increasing the total possible bonus points, perhaps up to 4 points to provide a higher incentive for greater levels of quality improvement. However, we did not propose that option because we were concerned that awarding 4 points for the quality improvement measure could overweight the additional incentive for quality improvement given that the program already rewards higher performance with a greater share of any savings.
In addition, we had some concerns about whether it would be appropriate to use the “pay for reporting” data reported to us, given that this information does not affect an ACO's quality performance score in the first
We proposed to add a new paragraph (e)(4) to § 425.502 to incorporate this process for calculating bonus points for quality improvement into the quality performance scoring methodology. We solicited comments on this proposal and welcomed comments on the alternative approaches discussed in the proposed rule. We also solicited comments on whether there are other alternative approaches to explicitly rewarding quality improvement for ACOs, and whether the implicit reward for quality improvement provided under the current regulations is sufficient.
We also welcomed any suggestions on how the Shared Savings Program might integrate elements of other quality improvement methodologies such as those employed by HVBP or MA. Such comments would be considered in developing possible future proposals to further align with other Medicare quality improvement programs.
The calculation of the quality improvement measure for each domain would generally be based on the formula used for the MA five star rating program, as follows:
Improvement Change Score = score for a measure in performance year minus score in previous performance year.
For each qualifying measure, we will determine whether there was a significant improvement or decline between the two performance years by applying a “t-test” which is a common standard statistical test, at a 95 percent
The bonus points, up to a maximum of 4 points, will be awarded in direct proportion to the ACO's net improvement for the domain to the total number of individual measures in the domain. For example, there are eight individual measures for the patient/caregiver experience of care domain. If an ACO achieves a significant quality increase in all eight measures then the ACO would be awarded the maximum of four bonus points for this domain. However, if the ACO achieved a significant quality increase in only one of the eight measures in this domain and no significant quality decline on any of the measures then the ACO would be awarded bonus points for quality improvement in the domain that is 1/8 times 4 = 0.50. The total points that the ACO could achieve in this domain could still not exceed the current maximum of 16 points shown in Table 82. We are also finalizing our proposal to add a new paragraph (4) to § 425.502(e) to incorporate the new bonus points scoring methodology, but are revising the proposed language in order to reflect our decision to award up to 4 bonus points per domain.
Currently § 425.502(d)(2)(ii) states that ACOs must score above the minimum attainment level determined by CMS on 70 percent of the measures in each domain. If an ACO fails to achieve the minimum attainment level on at least 70 percent of the measures in a domain, CMS will take the actions described in § 425.216(c). We note that § 425.216, which addresses the actions we may take prior to termination of an ACO from the Shared Savings Program does not include a paragraph (c). To encompass all of the actions we may take prior to termination, we believe the correct reference should be to § 425.216 generally, and therefore, proposed to make a technical correction to § 425.502(d)(2)(ii) to eliminate the specific reference to paragraph (c) of § 425.216. We also proposed to correct a typographical error in this provision by revising “actions describe” to read “actions described.”
In addition, we also proposed to make a technical correction to § 425.502(a)(2). This provision currently states that ACOs will be assessed on performance based on the minimum attainment level for certain measures. However, as explained above and in the November 2011 Shared Savings Program final rule (76 FR 67895 through 67896), ACO performance on a measure is assessed not only based on the minimum attainment level for the measure but also based upon the quality performance benchmark that has been established for that measure. This methodology for calculating the performance score for a measure is codified in the regulations at § 425.502(c). Accordingly, we proposed to amend § 425.502(a)(2) to state that ACO performance will be assessed based on the quality performance benchmark and minimum attainment level for certain measures.
We requested comments on these proposed technical corrections.
We received no objections to correcting the typographical errors and making these other minor technical corrections and are finalizing them as proposed.
Section 1848(p) of the Act requires that we establish a value-based payment modifier (VM) and apply it to specific physicians and groups of physicians the Secretary determines appropriate starting January 1, 2015, and to all physicians and groups of physicians by January 1, 2017. On or after January 1, 2017, section 1848(p)(7) of the Act provides the Secretary discretion to apply the VM to eligible professionals as defined in section 1848(k)(3)(B) of the Act. Section 1848(p)(4)(C) of the Act requires the VM to be budget neutral. The VM program continues CMS's initiative to increase the transparency of health care quality information and to assist providers and beneficiaries in improving medical decision-making and health care delivery.
In the CY 2013 PFS final rule with comment period, we discussed the goals of the VM and also established that specific principles should govern the implementation of the VM (77 FR 69307). We refer readers to that rule for a detailed discussion and list those principles here for reference.
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In the CY 2013 PFS final rule with comment period (77 FR 69310), we finalized policies to phase-in the VM by applying it beginning January 1, 2015, to Medicare PFS payments to physicians in groups of 100 or more eligible professionals. A summary of the
As a general summary, we proposed the following VM policies in the CY 2015 PFS proposed rule:
• To apply the VM to all physicians and nonphysician eligible professionals in groups with two or more eligible professionals and to solo practitioners starting in CY 2017.
• To make quality-tiering mandatory for groups and solo practitioners within Category 1 for the CY 2017 VM. Where solo practitioners and groups with two to nine eligible professionals would be subject only to any upward or neutral adjustment determined under the quality-tiering methodology.
• To tailor the application of the VM to physicians and nonphysician eligible professionals participating in the Medicare Shared Savings Program (Shared Savings Program), the Pioneer ACO Model, the CPC Initiative, or other similar Innovation Center models or CMS initiatives starting in CY 2017.
• To clarify the exclusion of non-assigned claims for non-participating providers from the VM.
• To increase the amount of payment at risk under the VM from 2.0 percent in CY 2016 to 4.0 percent in CY 2017.
• To align the quality measures and quality reporting mechanisms for the VM with those available to groups and individuals under the PQRS during the CY 2015 performance period.
• To expand the current informal inquiry process to allow additional corrections for the CY 2015 payment adjustment period.
• To address the concerns raised by NQF regarding the per capita cost measures in the cost composite.
In this final rule with comment period, we discuss the proposed policies, the comments received, our responses to the comments, and a brief statement of our final policy.
Another commenter suggested that we add an additional adjustment for SNF CPT codes to account for higher costs of beneficiaries in this location. One commenter suggested that CMS exclude beneficiaries who receive a major organ transplant from our cost and quality measures because he believes that prospective HCC risk adjustment would not account for these added costs in the performance period. Another commenter stated that beneficiaries who receive care at home typically have high HCC scores and higher costs. This commenter suggested that CMS should consider exempting practices from the VM who treat a high number of beneficiaries with the highest HCC scores or those with more than a certain number of chronic conditions or activities of daily living dependencies, change the risk adjustment methodology to include the frailty adjuster used in the PACE program, or add “recognition of savings from expected costs.”
We note that high costs within the post-acute and long-term care settings present a unique opportunity for these providers to improve performance on cost and quality measures. While we continue to encourage providers to report quality measures for patients in these settings and to use the information contained in their QRUR to improve and achieve high levels of performance, we will continue to monitor these groups and solo practitioners' performance under the VM and continue to explore potential risk adjustment refinements..
As noted in section III.N.1, section 1848(p)(4)(B)(iii)(II) of the Act requires the Secretary to apply the VM to items and services furnished under the PFS beginning not later than January 1, 2017, for all physicians and groups of physicians. Therefore, we proposed to apply the VM in CY 2017 and each subsequent calendar year payment adjustment period to physicians in groups of physicians with two or more eligible professionals and to physicians who are solo practitioners (79 FR 40493–40495). For purposes of the VM, we defined a physician, a group of physicians, and an eligible professional in the CY 2013 PFS final rule with comment period (77 FR 69307–69310). We proposed to define a “solo practitioner” at § 414.1205 as a single Tax Identification Number (TIN) with one eligible professional who is identified by an individual National
In the proposed rule, we stated our belief that we can validly and reliably apply the VM to groups with two or more eligible professionals and to solo practitioners (79 FR 40494). We noted that we conducted statistical reliability analysis on the PQRS quality measures and the VM cost measures reported in the 2010 and 2011 group and individual Quality and Resource Use Reports (QRURs) (78 FR 43500 through 43502) and found that 98 percent of the PQRS measures included in the analysis, which were substantially similar to the PQRS measures that will be assessed during performance period CY 2015 for purposes of the VM, were highly reliable. As stated in the proposed rule, we believe that these results suggest that we can reliably apply these measures to solo practitioners and groups (79 FR 40494). In section III.N.4.h, we discuss the reliability of the all-cause readmission measure and the policy we are finalizing to address reliability concerns regarding that measure.
In Table 55 of the proposed rule, we presented the number of groups, eligible professionals, physicians, and nonphysician eligible professionals in groups of various sizes based on an analysis of CY 2012 claims with a 90-day run-out period (79 FR 40494). We estimated that our proposals to apply the VM to all groups with two or more eligible professionals and to all solo practitioners in CY 2017 would affect approximately 83,500 groups and 210,000 solo practitioners (as identified by their TINs). We further estimated that the groups consist of approximately 815,000 physicians and 315,000 nonphysician eligible professionals (79 FR 40493).
For this final rule with comment period, we have updated Table 55 from the proposed rule, using CY 2013 claims with a 90-day claim run-out period and including TINs that participated in the Shared Savings Program, the Pioneer ACO Model, or the Comprehensive Primary Care Initiative in 2013. Table 86 shows the number of groups, eligible professionals, physicians, and nonphysician eligible professionals in groups of various sizes. We note that the number of eligible professionals includes other practitioners, such as physician assistants and nurse practitioners, in addition to physicians. We estimate that final policy to apply the VM to all physicians in groups with two or more eligible professionals and to all physicians who are solo practitioners in CY 2017 would affect approximately 900,000 physicians.
In the proposed rule (79 FR 40494), we stated that in the CY 2014 PFS final rule with comment period, we finalized the proposal that if we are unable to attribute a sufficient number of beneficiaries to a group of physicians subject to the VM, and thus, are unable to calculate any of the cost measures with at least 20 cases, then the group's cost composite score would be classified as “average” under the quality-tiering methodology (78 FR 74780 through 74781). However, we noted this policy was codified in § 414.1270(b)(5) as a group of physicians subject to the value-based payment modifier will receive a cost composite score that is classified as “average” under § 414.1275(b)(2) if such group does not have at least one cost measure with at least 20 cases. We stated that we believe the regulation text at § 414.1270(b)(5) better reflects the intent of this policy, and accordingly, we proposed to clarify that the description of this policy in the preamble of the CY 2014 PFS final rule with comment period (78 FR 74780 through 74781) should be the same as the regulation text at § 414.1270(b)(5). We also proposed to apply the same policy to groups and solo practitioners beginning in CY 2017. That is, a group or solo practitioner would receive a cost composite score that is classified as “average” under the quality-tiering methodology if the group or solo practitioner does not have at least one cost measure with at least 20 cases. We proposed to revise § 414.1270 accordingly.
We proposed to revise § 414.1210 to reflect that beginning in the CY 2017 payment adjustment period, the VM would be applied to physician and nonphysician eligible professionals in groups with two or more eligible professionals and to solo practitioners based on the performance period described at § 414.1215 (79 FR 40495). Accordingly, we proposed to amend the regulations under subpart N to add references to solo practitioners. We solicited comments on all of these proposals.
The following is summary of the comments we received on these proposals.
The application of the VM to groups of two to nine eligible professionals and to solo practitioners in CY 2017 is consistent with our principle to focus on a gradual implementation of the VM. The financial impact of applying the VM to groups of two to nine eligible professionals and to solo practitioners will be eased since, we are finalizing a policy to hold them harmless from any downward payment adjustments under quality-tiering in CY 2017 (as discussed in section III.N.4.c.) and also finalizing a smaller downward payment adjustment under the VM for these groups and solo practitioners that are in Category 2 in CY 2017 (as discussed in section III.N.4.f below). Please note that in section III.N.4.b of this final rule with comment period, we are finalizing that the VM will apply to nonphysician eligible professionals in groups subject to the VM and to nonphysician eligible professionals who are solo practitioners beginning in the CY 2018 payment adjustment period.
We conducted an additional analysis of the cost measures for the VM, using our specialty benchmarking methodology and found the per capita cost measures to be reliable for solo practitioners and groups of two or more eligible professionals. That analysis may be found at:
Physicians have sufficient flexibility to choose the quality reporting method–PQRS GPRO web-interface, claims, registries, qualified clinical data registries, and EHR reporting mechanisms, as well as the measures on which to report information. The expansion of the GPRO to registries in 2013 and to EHRs in 2014 allowed sub-specialists to participate in PQRS as members of a group practice, such that the group could report data on measures of broad applicability (77 FR 69315). The claims-based outcome measures used in the VM afford groups and solo practitioners an additional opportunity to earn a quality composite score that is above average. Where a group or solo practitioner falls in Category 1 under the VM (that is, meets the criteria to avoid the CY 2017 PQRS payment adjustment), but the group or solo practitioner does not have at least 20 cases for each PQRS measure on which it reports as required for inclusion in the quality composite of the VM, the group or solo practitioner's quality composite score would be based on the three claims-based outcome measures described at § 414.1230, provided that the group or solo practitioner has at least 20 cases for at least one of the claims-based outcome measures.
In addition, as discussed in section III.N.4.h of this final rule with comment period, eligible professionals and groups should note that PQRS has a Measure Applicability Validation (MAV) process. MAV determines PQRS incentive eligibility or potential applicability of the payment adjustment for eligible professionals and groups reporting less than nine measures across three domains or nine or more across less than three domains. We recommend that commenters refer to the Measure Application Validation (MAV) Process to alleviate concerns that lack of applicable measures would result in an automatic downward adjustment under the VM .
More importantly, we believe our final policy to hold harmless groups with two to nine eligible professionals and solo practitioners from any downward payment adjustments under quality-tiering in CY 2017 would likely mitigate unintended consequences that could occur (see section III.N.4.c of this final rule). We note that in the 2013 QRUR Experience Report, which will be released in the next few months, we will provide a detailed analysis of the impact of the 2015 VM policies on groups of 100 or more eligible professionals subject to the VM in CY 2015, including findings based on the data contained in the 2013 QRURs for all groups of physicians and solo practitioners.
As we expand the application of the VM to all physicians, we will continue to monitor the VM program and continue to examine the characteristic of those groups of physicians and solo practitioners that could be subject to an upward or downward payment adjustment under our quality-tiering
After considering the public comments, we are finalizing the proposal and regulation text at § 414.1210(a)(3) that, beginning with the CY 2017 payment adjustment period, the VM will apply to physicians in groups with two or more eligible professionals and to physicians who are solo practitioners based on the performance period described at § 414.1215. We are finalizing the definition of a “solo practitioner” at § 414.1205 and amending the regulations under subpart N to add references to solo practitioners. We are also finalizing our proposal and the regulation text at § 414.1270(c)(5) that beginning in CY 2017 a group or solo practitioner will receive a cost composite score that is classified as “average” under the quality-tiering methodology if the group or solo practitioner does not have at least one cost measure with at least 20 cases. We are also finalizing our proposal to clarify that the description of this policy in the preamble of the CY 2014 PFS final rule with comment period (78 FR 74780 through 74781) for groups of physicians should be the same as the regulation text at § 414.1270(b)(5).
As noted above, section 1848(p) of the Act requires that we establish the VM and apply it to items and services furnished under the PFS 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. Section 1848(p)(7) of the Act provides the Secretary discretion to apply the VM on or after January 1, 2017 to eligible professionals as defined in section 1848(k)(3)(B) of the Act. As previously finalized in the CY 2013 PFS final rule with comment period, in payment adjustment years CY 2015 and CY 2016, we will apply the VM to Medicare payments for items and services billed under the PFS by physicians in groups (as identified by their Medicare-enrolled TIN) subject to the VM, but not to the other eligible professionals that also may bill under the TIN (77 FR 69312). We finalized in the CY 2013 PFS final rule with comment period (77 FR 69307 through 69310) that physicians, as defined in section 1861(r) of the Act, include doctors of medicine or osteopathy, doctors of dental surgery or dental medicine, doctors of podiatric medicine, doctors of optometry, and chiropractors.
In section III.N.4.a of this final rule with comment period, we finalized our proposal to apply the VM in the CY 2017 payment adjustment period and each subsequent calendar year payment adjustment period to physicians in groups of physicians with two or more eligible professionals and to physicians who are solo practitioners as required by section 1848(p)(4)(B)(iii)(II) of the Act.
In the CY 2015 PFS proposed rule, based on the Secretary's discretion under section 1848(p)(7) of the Act, we proposed to apply the VM beginning in the CY 2017 payment adjustment period to all of the eligible professionals in groups with two or more eligible professionals and to eligible professionals who are solo practitioners (79 FR 40495–40496). That is, we proposed to apply the VM beginning in CY 2017 to the items and services billed under the PFS by all of the physicians and nonphysician eligible professionals who bill under a group's TIN. We proposed to apply the VM beginning in CY 2017 to groups that consist only of nonphysician eligible professionals (for example, groups with only nurse practitioners or physician assistants). We also proposed to modify the definition of “group of physicians” under § 414.1205 to also include the term “group” to reflect these proposals. We also proposed to apply the VM beginning in CY 2017 to nonphysician eligible professionals who are solo practitioners. Additionally, we proposed that physicians and nonphysician eligible professionals would be subject to the same VM policies established in earlier rulemakings and under 42 CFR part 414, subpart N. For example, nonphysician eligible professionals would be subject to the same amount of payment at risk and quality-tiering policies as physicians. We proposed to modify the regulations under 42 CFR part 414, subpart N, accordingly.
We finalized in the CY 2013 PFS final rule with comment period (77 FR 69307 through 69310) that, for purposes of establishing group size, we will 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: Physician assistant, nurse practitioner, clinical nurse specialist, certified registered nurse anesthetist, certified nurse-midwife, clinical social worker, clinical psychologist, registered dietician, or nutrition professional; (3) a physical or occupational therapist or a qualified speech-language pathologist; or (4) a qualified audiologist.
Beginning CY 2017, under our proposal, the VM would apply to all of the eligible professionals, as specified in section 1848(k)(3)(B) of the Act, that bill under a group's TIN based on the TIN's performance during the applicable performance period. During the payment adjustment period, all of the nonphysician eligible professionals who bill under a group's TIN would be subject to the same VM that would apply to the physicians who bill under that TIN.
This proposal was consistent with our stated principle that the VM should focus on shared accountability (77 FR 69307). We continue to believe that the VM can facilitate shared accountability by assessing performance at the group practice level and by focusing on the total costs of care, not just the costs of care furnished by an individual physician.
Moreover, section 1848(p)(5) of the Act requires us to, as appropriate, apply the VM “in a manner that promotes systems-based care.” We stated in the CY 2013 PFS proposed rule that, 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.
As mentioned above, we also proposed to apply the VM to groups that consist only of nonphysician eligible professionals, as well as solo practitioners who are nonphysician eligible professionals beginning in CY 2017 (79 FR 40496). Consistent with the application of the VM to groups of
The following is summary of the comments we received on all of our proposed policies for applying the VM to nonphysician eligible professionals beginning in CY 2017.
Most of the commenters urged CMS to delay implementation of the VM for nonphysician eligible professionals and suggested that CMS adopt a phased approach that gives nonphysician eligible professionals more time to understand and prepare for the implementation of the VM. One commenter was specifically concerned about nonphysician eligible professionals who are solo practitioners or in groups with two to nine eligible professionals not having time to prepare for the implementation of the VM. Commenters expressed concern that nonphysician eligible professionals have not been sufficiently prepared for the VM because: prior PFS rules did not indicate that nonphysician eligible professionals may be included in the VM in the future; nonphysician eligible professional groups have not yet received a QRUR; nonphysician eligible professionals have not received targeted education regarding application of the VM to them; and the proposal does not allow nonphysician eligible professionals the same phased-in approach to the VM that CMS provided to physician groups. One commenter recommended that CMS not apply the VM to nonphysician eligible professionals until CMS adopts meaningful specialty designations. Other commenters indicated that some nonphysician eligible professionals groups will not be attributed cost measures since they do not bill evaluation and management codes. A few commenters were concerned about the low participation rates of nonphysician eligible professionals in the PQRS program. A few commenters proposed a phased-in approach for implementation of the VM for nonphysician eligible professionals, which they stated would be consistent with the implementation of the VM for physician groups.
We believe that delaying the implementation of the VM to nonphysician eligible professionals until CY 2018 is consistent with our stated objective to focus on gradual implementation of the VM. The delay would also provide additional time for nonphysician eligible professionals to learn about how to participate in the PQRS program and to become knowledgeable about the policies for calculating the VM. Information about the VM is available on the VM/QRUR Web site at
Under our final policy, we will apply the VM beginning in CY 2018 to the items and services billed under the PFS by all of the physicians and nonphysician eligible professionals who bill under a group's TIN. We are finalizing that we will apply the VM beginning in CY 2018 to groups that consist only of nonphysician eligible professionals (for example, groups with only nurse practitioners or physician assistants). Beginning in CY 2018, the VM will apply to all of the eligible professionals, as specified in section 1848(k)(3)(B) of the Act, that bill under a group's TIN based on the TIN's performance during the applicable performance period. During the payment adjustment period, all of the nonphysician eligible professionals who bill under a group's TIN will be subject to the same VM that will apply to the physicians who bill under that TIN. We are finalizing the proposed modification to the definition of “group of physicians” under § 414.1205 to also include the term “group” to reflect these final policies. We are also finalizing the policy to apply the VM beginning in CY 2018 to nonphysician eligible professionals who are solo practitioners.
Additionally, we are finalizing that beginning in CY 2018, physicians and nonphysician eligible professionals will be subject to the same VM policies established in earlier rulemakings and under subpart N. For example, nonphysician eligible professionals will be subject to the same amount of payment at risk and quality-tiering policies as physicians. We are finalizing the proposed modifications to the regulations under subpart N accordingly.
However, since CY 2018 will be the first year that groups that consist only of nonphysician eligible professionals and solo practitioners who are nonphysician eligible professionals will be subject to the VM, we are finalizing a policy to hold these groups and solo practitioners harmless from downward adjustments under the quality-tiering methodology in CY 2018. We will add regulation text under § 414.1270 to reflect this policy when we establish the policies for the VM for the CY 2018 payment adjustment period in future rulemaking.
In the CY 2014 PFS final rule with comment period (78 FR 74767–74768), we adopted a policy to categorize groups of physicians subject to the VM in CY 2016 based on a group's participation in the PQRS. Specifically, we categorize groups of physicians eligible for the CY 2016 VM into two categories. Category 1 includes groups of physicians that (a) meet the criteria for satisfactory reporting of data on PQRS quality measures through the GPRO for the CY 2016 PQRS payment adjustment or (b) do not register to participate in the PQRS as a group practice in CY 2014 and that have at least 50 percent of the group's eligible professionals meet the criteria for satisfactory reporting of data on PQRS quality measures as individuals for the CY 2016 PQRS payment adjustment, or in lieu of satisfactory reporting, satisfactorily participate in a PQRS-qualified clinical data registry for the CY 2016 PQRS payment adjustment. For a group of physicians that is subject to the CY 2016 VM to be included in Category 1, the criteria for satisfactory reporting (or the criteria for satisfactory participation, if the PQRS-qualified clinical data registry reporting mechanism is selected) must be met during the CY 2014 reporting period for the PQRS CY 2016 payment adjustment. For the CY 2016 VM, Category 2 includes those groups of physicians that are subject to the CY 2016 VM and do not fall within Category 1. For those groups of physicians in Category 2, the VM for CY 2016 is -2.0 percent.
We proposed to use a similar two-category approach for the CY 2017 VM based on participation in the PQRS by groups and solo practitioners (79 FR 40496). To continue to align the VM with the PQRS and accommodate the various ways in which EPs can participate in the PQRS, for purposes of the CY 2017 VM, we proposed that Category 1 would include those groups that meet the criteria for satisfactory reporting of data on PQRS quality measures via the GPRO (through use of the web-interface, EHR, or registry reporting mechanisms, as proposed in section III.K of the proposed rule) for the CY 2017 PQRS payment adjustment. Our proposed criteria for satisfactory reporting of data on PQRS quality measures via the GPRO for the PQRS payment adjustment for CY 2017 are described in section III.K of the proposed rule. We also proposed to include in Category 1 groups that do not register to participate in the PQRS as a group practice participating in the PQRS group practice reporting option (GPRO) in CY 2015 and that have at least 50 percent of the group's eligible professionals meet the criteria for satisfactory reporting of data on PQRS quality measures as individuals (through the use of claims, EHR, or registry reporting mechanism,) for the CY 2017 PQRS payment adjustment, or in lieu of satisfactory reporting, satisfactorily participate in a PQRS-qualified clinical data registry for the CY 2017 PQRS payment adjustment, all as proposed in section III.K of the proposed rule. We noted that these proposals are consistent with the policies for inclusion in Category 1 as established for the CY 2016 VM (78 FR 74767 through 74768). We would maintain the 50 percent threshold for the CY 2017 VM as we expand the application of the VM to all groups and solo practitioners in CY 2017. Our proposed criteria for satisfactory reporting by individual eligible professionals for the claims, EHR, and registry reporting mechanisms and for satisfactory participation in a qualified clinical data registry for the CY 2017 PQRS payment adjustment are described in section III.K of the proposed rule. Lastly, we proposed to include in Category 1 those solo practitioners that meet the criteria for satisfactory reporting of data on PQRS quality measures as individuals (through the use of claims, registry, or EHR reporting mechanism) for the CY 2017 PQRS payment adjustment, or in lieu of satisfactory reporting, satisfactorily participate in a PQRS-qualified clinical data registry for the CY 2017 PQRS payment adjustment, all as proposed in section III.K of the proposed rule. Category 2 would include those groups and solo practitioners that are subject to the CY 2017 VM and do not fall within Category 1. As discussed in the proposed rule (79 FR 40505), for CY 2017, we proposed to apply a -4.0 percent VM to groups with two or more eligible professionals and solo practitioners that fall in Category 2. We solicited comment on these proposals.
The following is summary of the comments we received on these proposals.
Furthermore, we do not believe that comparing quality composite scores based on PQRS GPRO measures or individually reported PQRS measures would create inequities because a group's performance reflects the underlying eligible professionals on whose behalf the group reports and the quality measure benchmarks are inclusive of data gathered through both PQRS GPRO and individually-reported PQRS measures. Lastly, we note that the inclusion of individual PQRS measure in the VM provides an additional mechanism and reduces additional reporting burden for groups that are subject to the VM and do not report under the PQRS as a group to avoid an automatic VM downward payment adjustment.
After consideration of the comments received, and for the reasons stated previously, we are finalizing the two-category approach for the CY 2017 VM based on participation in the PQRS by groups and solo practitioners as proposed. For purposes of the CY 2017 VM, Category 1 will include those groups that meet the criteria for satisfactory reporting of data on PQRS quality measures via the GPRO (through use of the web-interface, EHR, or registry reporting mechanism, as
For a group and a solo practitioner subject to the CY 2017 VM to be included in Category 1, the criteria for satisfactory reporting (or the criteria for satisfactory participation, in the case of solo practitioners and the 50 percent option described above for groups) must be met during the reporting periods occurring in CY 2015 for the CY 2017 PQRS payment adjustment. As noted in section III.5.g of this final rule with comment period earlier, CY 2015 is the performance period for the CY 2017 payment adjustment period for the VM.
In the CY 2014 PFS final rule with comment period (78 FR 74768–74770), we finalized that the quality-tiering methodology will apply to all groups in Category 1 for the VM for CY 2016, except that groups of physicians with between 10 and 99 eligible professionals would be subject only to upward or neutral adjustments derived under the quality-tiering methodology, while groups of physicians with 100 or more eligible professionals would be subject to upward, neutral, or downward adjustments derived under the quality-tiering methodology. In other words, we finalized that groups of physicians in Category 1 with between 10 and 99 eligible professionals would be held harmless from any downward adjustments derived from the quality-tiering methodology for the CY 2016 VM.
For the CY 2017 VM, we proposed to continue a similar phase-in of the quality-tiering based on the number of eligible professionals in the group (79 FR 40497). We proposed to apply the quality-tiering methodology to all groups and solo practitioners in Category 1 for the VM for CY 2017, except that groups with two to nine eligible professionals and solo practitioners would be subject only to upward or neutral adjustments derived under the quality-tiering methodology, while groups with 10 or more eligible professionals would be subject to upward, neutral, or downward adjustments derived under the quality-tiering methodology. That is, we proposed that solo practitioners and groups with two to nine eligible professionals in Category 1 would be held harmless from any downward adjustments derived from the quality-tiering methodology for the CY 2017 VM. Accordingly, we proposed to revise § 414.1270 to reflect these proposals. We believe this approach would reward groups and solo practitioners that provide high-quality/low-cost care, reduce program complexity, and would also fully engage groups and solo practitioners into the VM as we complete the phase-in of the VM in CY 2017. We solicited comments on these proposals.
We stated in the CY 2015 PFS proposed rule (79 FR 40497) that we believe it is appropriate to hold groups with two to nine eligible professionals and solo practitioners in Category 1 harmless from any downward adjustments under the quality-tiering methodology, which is similar to the policy we apply to groups with between 10 and 99 eligible professionals during the first year the VM applies to them (CY 2016). We noted that we anticipate applying the CY 2018 VM with both upward and downward adjustments based on a performance period of CY 2016 to all groups and solo practitioners, and therefore, we would make proposals in future rulemaking accordingly.
We stated that, for groups with between 10 and 99 eligible professionals, we believe it is appropriate to begin both the upward and the downward payment adjustments under the quality-tiering methodology for the CY 2017 VM. As stated in the CY 2014 PFS final rule with comment period (78 FR 74769), on September 16, 2013, we made available to all groups of 25 or more eligible professionals an annual QRUR based on 2012 data to help groups estimate their quality and cost composites. As discussed in section III.N.4.a. of this final rule with comment period, in September 2014, we made available QRURs based on CY 2013 data to all groups of physicians and physicians who are solo practitioners. These QRURs contain performance information on the quality and cost measures used to calculate the quality and cost composites of the VM and show how all TINs fare under the policies established for the VM for the CY 2015 payment adjustment period. As noted above, we are considering providing semi-annual QRURs with updated cost and resource use information to groups and solo practitioners. Then, during the summer of 2015, we intend to disseminate QRURs based on CY 2014 data to all groups and solo practitioners, and the reports would show how all TINs would fare under the policies established for the VM for the CY 2016 payment adjustment period. The QRURs will also include additional information about the TINs' performance on the MSPB measure, individually-reported PQRS measures, and the specialty-adjusted cost measures.
Thus, we stated that we believe groups with between 10 and 99 eligible
Based on an analysis of CY 2012 claims, we estimate that approximately 6 percent of all eligible professionals are in a Category 1 TIN that would be classified in tiers that would earn an upward adjustment by having a composite score that is at least 1 standard deviation away from the mean composite and it is statistically significant, approximately 11 percent of all eligible professionals are in a Category 1 TIN that would be classified in tiers that would receive a downward adjustment by having a composite score that is at least 1 standard deviation away from the mean composite and it is statistically significant, and approximately 83 percent of all eligible professionals are in a Category 1 TIN that would receive no payment adjustment in CY 2017. These results suggest that our quality-tiering methodology identifies a small number of groups and solo practitioners that are outliers—both high and low performers—in terms of whose payments would be affected by the VM, thus limiting any widespread unintended consequences.
We stated in the CY 2015 PFS proposed rule that we will continue to monitor the VM program and continue to examine the characteristics of those groups that could be subject to an upward or downward payment adjustment under our quality-tiering methodology to determine whether our policies create anomalous effects in ways that do not reflect consistent differences in performance among physicians and physician groups.
The following is a summary of the comments we received on these proposals.
With regard to the commenters' concerns over the impact of the proposed maximum −4.0 percent downward adjustments on small practices, as discussed in section III.N.4.f of this final rule with comment period, we are finalizing a policy to apply a −2.0 percent VM to groups with two to nine eligible professionals and solo practitioners that fall in Category 2. We believe the revised policy will alleviate some of the commenters' concerns about the financial impact of applying quality-tiering to small groups and solo practitioners in CY 2017.
With regard to the suggestion that physicians in groups of 10 to 24 eligible professionals have not had sufficient experience with the quality measures used in the VM, we note that on September 30, 2014, we made QRURs available to all group of physicians and physicians who are solo practitioners based on their performance in CY 2013. Each QRUR contains the group or solo practitioner's performance information on the quality and cost measures used to calculate the quality and cost composites of the VM and show how the TIN would fare under the policies established for the VM for the CY 2015 payment adjustment period. As we stated in the CY 2015 PFS proposed rule, we believe it is appropriate to hold groups with two to nine eligible professionals and solo practitioners in Category 1 harmless from any
After considering the public comments received, we are finalizing the application of the quality-tiering methodology to all groups and solo practitioners in Category 1 for the VM for CY 2017, except that groups with two to nine eligible professionals and solo practitioners would be subject only to upward or neutral adjustments derived under the quality-tiering methodology, while groups with 10 or more eligible professionals would be subject to upward, neutral, or downward adjustments derived under the quality-tiering methodology. In other words, solo practitioners and groups with two to nine eligible professionals in Category 1 would be held harmless from any downward adjustments derived from the quality-tiering methodology for the CY 2017 VM.
We established a policy in the CY 2013 PFS final rule with comment period (77 FR 69313) to not apply the VM in CY 2015 and CY 2016 to groups of physicians that participate in the Shared Savings Program Accountable Care Organizations (ACOs), the Pioneer ACO Model, the Comprehensive Primary Care (CPC) Initiative, or other similar Innovation Center or CMS initiatives. We stated in the CY 2014 PFS final rule with comment period (78 FR 74766) that from an operational perspective, we will apply this policy to any group of physicians that otherwise would be subject to the VM, if one or more physician(s) in the group participate(s) in one of these programs or initiatives during the relevant performance period (CY 2013 for the CY 2015 VM, and CY 2014 for the CY 2016 VM).
Although section 1848(p)(4)(B)(iii)(I) of the Act gives the Secretary discretion to apply the VM beginning on January 1, 2015 to specific physicians and groups of physicians the Secretary determines appropriate, section 1848(p)(4)(B)(iii)(II) of the Act requires application of the VM beginning not later than January 1, 2017 to all physicians and groups of physicians. Therefore, as discussed in section III.N.4.a. of this final rule with comment period, we proposed to apply the VM to all physicians in groups with two or more eligible professionals and to solo practitioners who are physicians starting in CY 2017. In section III.N.4.b of this final rule with comment period, we discussed our proposal to also apply the VM starting in CY 2017 to all nonphysician eligible professionals in groups with two or more eligible professionals and to solo practitioners who are nonphysician eligible professionals. We describe in this section how we proposed to apply the VM beginning in the CY 2017 payment adjustment period to the physicians and nonphysician eligible professionals in groups, as well as those who are solo practitioners, participating in the Shared Savings Program, Pioneer ACO Model, the CPC Initiative, or other similar Innovation Center models or CMS initiatives.
(a) Application of the VM to participants in the Shared Savings Program. Beginning with the CY 2017 payment adjustment period, we proposed to apply the VM to physicians and nonphysician eligible professionals in groups with two or more eligible professionals and to physicians and nonphysician eligible professionals who are solo practitioners participating in the Shared Savings Program (79 FR 40497). Groups and solo practitioners participate in the Shared Savings Program as part of an ACO as provided in section 1899 of the Act. Under the Shared Savings Program, an ACO may consist of multiple participating groups and solo practitioners (as identified by the ACO participants' TINs). As of April 1, 2014, there are 338 ACOs participating in the Shared Savings Program. This number includes 31 ACOs that consist of only one ACO participant TIN. The ACO submits quality data on behalf of all the ACO participant TINs in that ACO under the Shared Savings Program.
After considering the public comments on this proposal, we are finalizing our policy to apply the VM, beginning with the CY 2017 payment adjustment period, to physicians in groups with two or more eligible professionals and physicians who are solo practitioners that participate in an ACO under the Shared Savings Program.
We note that, in response to commenters' concerns, we are not finalizing the proposal to apply the VM to nonphysician eligible professionals in the CY 2017 payment adjustment period that participate in an ACO under the Shared Savings Program, consistent with the final policy for groups and solo practitioners that do not participate in the Shared Savings Program as discussed in section III.N.4.b of this final rule with comment period. Also, consistent with our policy discussed in section III.N.4.b to apply the VM beginning with the CY 2018 payment adjustment period to nonphysician eligible professionals who are not in an ACO under the Shared Savings Program, we will apply the VM beginning with the CY 2018 payment adjustment period to nonphysician eligible professionals in groups with two or more eligible professionals and nonphysician eligible professionals who are solo practitioners that participate in an ACO under the Shared Savings Program. We further note that, based in part on concerns identified by commenters, we are finalizing policies in sections III.N.4.d.1(b) and (c) of this final rule with comment period that take into consideration a group or solo practitioner's participation in an ACO under the Shared Savings Program during the performance period for the VM, rather than participation during the payment adjustment period for the VM as proposed.
(b) Calculation of the cost composite of the VM for Shared Savings Program participants. Beginning with the CY 2017 payment adjustment period, we proposed to classify the cost composite for the VM as “average cost” for groups and solo practitioners (as identified by the ACO's participant TINs) that participate in the Shared Savings Program during the payment adjustment period (for example, CY 2017) (79 FR 40498). We proposed to apply “average cost” to these groups and solo practitioners regardless of whether they participated in the Shared Savings Program during the performance period (for example, in CY 2015 for the CY 2017 VM). We believe that it would not be appropriate to apply the quality-tiering methodology to calculate the cost composite for these groups and solo practitioners because of the differences in the methodology used to calculate the cost benchmarks under the Shared Savings Program and the VM. Under the Shared Savings Program, cost benchmarks are based on the actual historical Medicare fee-for-service expenditures for beneficiaries that would have been assigned to the ACO during the historical benchmark period, and are updated to reflect changes in national FFS spending; however, the cost benchmarks under the VM are based on national averages. We believe that these are significant differences in the methodology for calculating the cost benchmarks under the two programs. Consequently, we believe that any attempt to calculate the VM cost composite for groups and solo practitioners participating in the Shared Savings Program using the VM quality-tiering methodology would create two sets of standards for ACOs for their cost performance. We believe that having two sets of standards for participants in ACOs for cost performance would be inappropriate and confusing and could send conflicting messages and create conflicting incentives. We solicited comments on our proposals to classify the cost composite as “average cost” for groups and solo practitioners who participate in the Shared Savings Program during the payment adjustment period.
For groups and solo practitioners who participate in the Shared Savings Program during the performance period (for example, CY 2015), but no longer participate in the Shared Savings Program during the payment adjustment period (for example, CY 2017), we proposed to apply the quality-tiering methodology to calculate the cost composite for the VM for the payment adjustment period based on the groups' and solo practitioners' performance on the cost measures, as identified under § 414.1235, during the performance period (79 FR 40499). We stated that it would be appropriate to calculate their cost composite under the quality-tiering methodology because these groups and solo practitioners are no longer part of the Shared Savings Program during the payment adjustment period.
After considering the public comments received, we are finalizing our policy to classify the cost composite as “average cost” for groups and solo practitioners that participate in an ACO under the Shared Savings Program. Unlike our proposed policy, which considered participation in a Shared Savings Program ACO during the payment adjustment period for the VM (for example, CY 2017), we are finalizing a policy that, if a group or solo practitioner participates in a Shared Savings Program ACO during the applicable performance period (for example, the CY 2015 performance period for the CY 2017 payment adjustment period), then that group or solo practitioner's cost composite will be classified as “average cost,” regardless of whether the group or solo practitioner participates in a Shared Savings Program ACO during the payment adjustment period. In addition to addressing some of the concerns raised by commenters, we believe this final policy is consistent with our existing policy for CYs 2015 and 2016, under which a group's participation in the Shared Savings Program during the performance period (CYs 2013 and 2014, respectively) is relevant for purposes of determining whether to exempt the group from application of the VM during the relevant payment adjustment period. Further, utilizing the performance period for the purpose of determining whether the group or solo practitioner is a Shared Savings Program ACO participant eliminates the need for us to calculate preliminary payment adjustment factors prior to the beginning of the payment adjustment period, and then recalculate the payment adjustment factors after the final ACO participation list is completed, as we had proposed to do (79 FR 40506).
As requested by commenters, this final policy is also simpler than our proposal, because it does not take into account a group's status during the payment adjustment period.
(c) Calculation of the quality composite under the VM for Shared Savings Program participants. Beginning with the CY 2017 payment adjustment period, we proposed to calculate the quality of care composite score for the VM for groups and solo practitioners who participate in an ACO under the Shared Savings Program in accordance with the following policies (79 FR 40498–40499):
• We proposed to calculate the quality of care composite score based on the quality-tiering methodology using quality data submitted by the ACO, as discussed in section III.N.4.h of this final rule with comment period, from the performance period and apply the same score to all of the groups and solo practitioners under the ACO during the payment adjustment period. In other words, using CY 2017 as an example, we proposed to calculate the quality of care composite score for the CY 2017 VM for all of the groups and solo practitioners participating in the ACO in CY 2017 based on the ACO's CY 2015 quality data. We note that in section III.N.4.h of this final rule with comment period, we are finalizing our proposal to exclude the claims-based outcome measures identified under § 414.1230 from the calculation of the quality of care composite score for groups and solo practitioners who participate in the Shared Savings Program as described in section III.N.4.d.1 of this final rule with comment period.
• For groups and solo practitioners who participate in the ACO during the payment adjustment period (for
• If the ACO did not exist during the performance period (for example, CY 2015), then we would not have the ACO's quality data to use in the calculation of the quality of care composite score for the payment adjustment period (for example, CY 2017). Therefore, if the ACO exists during the payment adjustment period but did not exist during the performance period, we proposed to classify the quality of care composite for all groups and solo practitioners who participate in the ACO during the payment adjustment period as “average quality” for the payment adjustment period. We proposed to apply this policy to groups and solo practitioners regardless of their status during the performance period—in other words, regardless of whether they participated in the Shared Savings Program as part of a different ACO, or did not exist during the performance period (for example, a TIN forms or newly enrolls in Medicare after the end of the performance period). We believed this proposal was appropriate since we would not have the ACO's quality data from the performance period to calculate a quality of care composite for all of the groups and solo practitioners participating in the ACO during the payment adjustment period. We noted that some of these groups and solo practitioners may have participated in the PQRS during the performance period; therefore, we would have quality data for those groups and solo practitioners. If they were part of a different ACO during the performance period, then we would also have that ACO's quality data. We stated that we did not, however, believe that it would be appropriate to use the groups' and solo practitioners' PQRS or other ACO quality data from the performance period to calculate a quality of care composite because the groups and solo practitioners are part of a new ACO during the payment adjustment period. We stated our belief that this approach would be consistent with our policy not to “track” or “carry” an individual professional's performance from one TIN to another TIN (see 77 FR 69308 through 69310). In this case, if a TIN's status changes from the performance period to the payment adjustment period (that is, participating in ACO 2 or not participating in the Shared Savings Program in the performance period, to participating in ACO 1 in the payment adjustment period), then we proposed that we would not “track” or “carry” ACO 2's quality data or the TIN's PQRS quality data to determine the quality of care composite for groups and solo practitioners who participate in ACO 1.
• For groups and solo practitioners who participate in the Shared Savings Program during the performance period (for example, CY 2015) but no longer participate in the Shared Savings Program during the payment adjustment period (for example, CY 2017), we proposed to classify the quality of care composite as “average quality” for the VM for the payment adjustment period. Since these groups and solo practitioners were part of an ACO during the performance period, we would have the ACO's quality data from that period. We stated that we did not believe it would be appropriate to use the ACO's quality data from the performance period to calculate a quality of care composite because the groups and solo practitioners are no longer part of the ACO during the payment adjustment period. We stated this approach is also consistent with our policy not to “track” or “carry” an individual professional's performance from one TIN to another TIN (see 77 FR 69308 through 69310). Even though we proposed to classify the quality of care composite for these groups and solo practitioners as “average quality,” we solicited comments on whether we should use the ACO's quality data from the performance period to calculate the quality composite for these groups and solo practitioners for the payment adjustment period.
We solicited comments on all of our proposals to calculate the quality composite for groups and solo practitioners participating in the Shared Savings Program. We provided a summary of the proposals in the proposed rule in Table 56 using TIN A and ACO 1 and ACO 2 as examples (79 FR 40499).
In the proposed rule (79 FR 40498), we stated that if a group or solo practitioner was in ACO 2 in the performance period and then joined ACO 1 in the payment adjustment period, we would use ACO 1's quality performance to calculate the quality composite for that group or solo practitioner. Although we did not receive specific comments on this policy, we believe that based on the other comments received and the policy we are finalizing it would no longer be appropriate to use ACO 1's quality data to calculate a quality composite for these groups and solo practitioners. Given that in all other scenarios, we are finalizing policies that we will consider the group or solo practitioner's (as identified by taxpayer identification number (TIN)) status during the performance period, rather than the payment adjustment period to determine how the group's or solo practitioner's quality and cost composite should be calculated, we also believe this is the appropriate approach for groups and solo practitioners that move between ACOs. We have previously stated our rationale for using the performance period to determine a TIN's association with an ACO and we believe that reasoning applies to this scenario as well. Furthermore, it would be unnecessarily complex to apply a different policy for groups and solo practitioners in this scenario (where the TIN is part of one ACO during the performance period and a different ACO during the payment adjustment period) than in the other scenarios previously discussed.
After considering the public comments received, we are finalizing a policy to calculate a quality of care composite score based on the quality-tiering methodology using quality data submitted by a Shared Savings Program ACO during the performance period and apply the same quality composite to all of the groups and solo practitioners, as identified by TIN, under that ACO. Unlike our proposed policy, which considered whether a group or solo practitioner participates in a Shared Savings Program ACO during the payment adjustment period for the VM (for example, CY 2017), our final policy is if a group or solo practitioner participates in a Shared Savings Program ACO during the applicable performance period (for example, the CY 2015 performance period for the CY 2017 payment adjustment period), then that group or solo practitioner's quality composite is calculated using the ACO-level quality data from the performance period, regardless of whether the group or solo practitioner participates in a Shared Savings Program ACO during the payment adjustment period. The VM calculated under this policy will apply to all physicians billing under the group's TIN in the CY 2017 payment adjustment period, and beginning in the CY 2018 payment adjustment period, to all physician and nonphysician eligible professionals billing under the group's TIN, regardless of whether the professional was part of the group in the performance period. This is consistent with our policy for other groups subject to the VM, in that we will not “track” or “carry” an individual professional's performance from one TIN to another TIN.
(d) Treatment of groups with two to nine eligible professionals and solo practitioners in the Shared Savings Program. In section III.N.4.c of this final rule with comment period, we discussed our proposal to hold groups with two to nine eligible professionals and solo practitioners who are in Category 1 harmless from any downward adjustments under the quality-tiering methodology for the CY 2017 payment adjustment period. We proposed to also hold harmless from any downward adjustments groups with two to nine eligible professionals and solo practitioners who participate in ACOs under the Shared Savings Program during the CY 2017 payment adjustment period based on their size during the performance period. We would follow our established process for determining group size, which is described at § 414.1210(c). Therefore, to the extent that a quality of care composite can be calculated for an ACO, and the cost composite would be classified as “average cost,” groups with 10 or more eligible professionals participating in the Shared Savings Program would be subject to an upward, neutral, or downward payment adjustment in CY 2017, and groups with two to nine eligible professionals and solo practitioners would be subject to an upward or neutral payment adjustment in CY 2017. We also proposed that groups and solo practitioners participating in ACOs under the Shared Savings Program would be eligible for the additional upward payment adjustment of +1.0x for caring for high-risk beneficiaries, as proposed in section III.N.4.f. We proposed to modify § 414.1210 to reflect these proposals.
Consistent with final policies in this final rule with comment period to use a group or solo practitioner's status in the performance period to determine participation in the Shared Savings Program, we are finalizing a policy to hold harmless from any downward adjustments groups with two to nine eligible professionals and solo practitioners who participate in ACOs under the Shared Savings Program during the performance period (for example, the CY 2015 performance period for the CY 2017 payment adjustment period) based on their size during the performance period.
We have modified § 414.1210 to reflect these final policies for application of the VM beginning with the CY 2017 payment adjustment period to groups and solo practitioners that participate in an ACO under the Shared Savings Program ACO.
Section 1115A of the Act authorizes the Innovation Center to test innovative payment and service delivery models to reduce Medicare, Medicaid, or Children's Health Insurance Program (CHIP) expenditures, while preserving or enhancing the quality of care furnished to beneficiaries under those programs. Therefore, all models tested by the Innovation Center would be expected to assess participating entities (for example, providers, ACOs, states) based on quality and cost performance. As noted above, we established a policy in the CY 2013 PFS final rule with comment period (77 FR 69313) to not apply the VM in CY 2015 and CY 2016 to groups of physicians that are participating in the Pioneer ACO Model, the CPC Initiative, or in other Innovation Center initiatives or other CMS programs which also involve shared savings and where participants make substantial investments to report quality measures and to furnish higher quality, more efficient and effective healthcare.
The Pioneer ACO Model and the CPC Initiative are scheduled to end on December 31, 2016. Therefore, the relevant performance periods for consideration for participants in these initiatives are CY 2015 for the CY 2017 VM payment adjustment period and potentially CY 2016 for the CY 2018 VM payment adjustment period. Under the Pioneer ACO Model, an ACO may consist of practitioners from multiple participating groups and solo practitioners (as identified by their individual TIN/NPI combination). Thus, a group practice may consist of one or more eligible professionals who participate in the Pioneer ACO Model and other eligible professionals who do not participate in the Pioneer ACO Model. In the case of the CPC Initiative, a practice site may participate in the model even if one or more other practice sites that use the same TIN does not participate.
(a) Application of the VM to participants in the Pioneer ACO Model and CPC Initiative. Beginning with the CY 2017 payment adjustment period, we proposed to apply the VM to physicians and nonphysician eligible professionals in groups with two or more eligible professionals and to physicians and nonphysician eligible professionals who are solo practitioners who participate in the Pioneer ACO Model or the CPC Initiative during the relevant performance period in accordance with the policies described below (79 FR 40500).
After considering the public comments on this proposal, we are finalizing a policy to apply the VM in the CY 2017 payment adjustment period, to physicians in groups with two or more eligible professionals in which at least one eligible professional participates in the Pioneer ACO Model or the CPC Initiative during the performance period, and to physicians who are solo practitioners that participate in the Pioneer ACO Model or the CPC Initiative during the performance period.
We note that, in response to commenters' concerns, we are not finalizing the proposal to apply the VM to nonphysician eligible professionals in the CY 2017 payment adjustment period that participate in the Pioneer ACO Model or CPC Initiative. This policy is consistent with the policy for the Shared Savings Program in the CY 2017 payment adjustment period described in section III.M.4.d.1 and for groups and solo practitioners that do not participate in these models or in the Shared Savings Program, as discussed in section III.N.4.b of this final rule with comment period.
(b) Calculation of the cost and quality composite of the VM for Pioneer ACO and CPC Initiative participants.
• For groups and solo practitioners who participate in the Pioneer ACO Model or the CPC Initiative during the performance period for the VM, we proposed policies for how we would calculate the cost and quality composites in a number of scenarios depending on whether or not all eligible professionals in the group participate in the model, whether or not the group or solo practitioner report through PQRS outside of the model, and if so, through which reporting mechanism, and whether or not the group or solo practitioner participate in the Shared Savings Program in the payment adjustment period. Additionally, we described several alternatives that we considered to the proposed policies. Specifically, we described two alternatives to Scenario 2 described in the proposed rule (79 FR 40501). Under one alternative, for groups that have some eligible professionals participating
We solicited comments on these proposals and the alternatives considered.
After considering the public comments, we are finalizing a policy that for solo practitioners and groups with at least one eligible professional participating in the Pioneer ACO Model or CPC Initiative during the performance period, we will classify the cost composite as “average cost” and the quality composite as “average quality” for the CY 2017 payment adjustment period. This policy is similar to the alternative to scenario 2 we considered in the proposed rule (79 FR 40501), though with a broader application to address commenters' concerns about the level of complexity in the proposals. We are not finalizing our proposals regarding the requirements for groups and solo practitioners in the Pioneer ACO Model and CPC Initiative to avoid Category 2 and the downward payment adjustment. Instead, for the CY 2017 payment adjustment period, the policy to classify the cost composite as “average cost” and the quality composite as “average quality” will apply to all solo practitioners who participate in the Pioneer ACO Model or the CPC Initiative in the performance period and all groups with at least one eligible professional who participates in the Pioneer ACO Model or the CPC Initiative in the performance period. Given the concerns about distracting from the goals of the models in which these groups and solo practitioners participate, the complexity of determining whether groups that have some eligible professionals in the model and some who are not in the model successfully reported quality performance data, and the commenters' requests for a simpler policy, we believe this is an appropriate policy.
The VM calculated under this policy will apply to all physicians billing under the group's TIN in the CY 2017 payment adjustment period regardless of whether the physician was part of the group in the performance period. This is consistent with our policy for other groups subject to the VM, in that we will not “track” or “carry” an individual professional's performance from one TIN to another TIN.
(c) Treatment of groups of two to nine eligible professionals and solo practitioners that participate in the Pioneer ACO Model or CPC Initiative.
In section III.N.4.c of this final rule with comment period, we discussed our proposal to hold groups with two to nine eligible professionals and solo practitioners who are in Category 1 harmless from any downward adjustments under the quality-tiering methodology for the CY 2017 payment adjustment period. We proposed to also hold harmless from any downward adjustments for CY 2017 groups with two to nine eligible professionals, where one or more eligible professionals participate in the Pioneer ACO Model or the CPC, and solo practitioners who participate in the Pioneer ACO Model or the CPC during the CY 2015 performance period based on their size during the performance period. We would follow our established process for determining group size, which is described at § 414.1210(c). We also proposed that groups where one or more eligible professionals participate in the Pioneer ACO Model or the CPC during the performance period, and solo practitioners participating in the Pioneer ACO Model or the CPC during the performance period would be eligible for the additional upward payment adjustment of +1.0x for caring for high-risk beneficiaries, as proposed in section III.N.4.f below.
Given the modified policy we are finalizing for group practices and solo practitioners participating in the Pioneer ACO Model and CPC Initiative to classify the cost composite as “average cost” and the quality composite as “average quality,” these proposals are no longer relevant and will not be finalized.
(d) In addition, beginning with the CY 2017 payment adjustment period, we proposed to apply the VM to physicians and nonphysician eligible professionals in groups with two or more eligible professionals and to physicians and nonphysician eligible professionals who are solo practitioners who participate in other similar Innovation Center models or CMS initiatives during the relevant performance period for the VM in accordance with the proposed policies described above for the Pioneer ACO Model and the CPC Initiative. We are unable to propose an exhaustive list of the models and initiatives that would fall under this category because many of them have not yet been developed. In addition, it is possible that the timeline for implementing some of these new models and initiatives may not coincide with the timeline for rulemaking for the VM. To address these issues, we proposed to rely on the following general criteria to determine whether a model or initiative would fall in this “other similar” category and thus would be subject to the policies described above for the Pioneer ACO Model and the CPC Initiative: (1) The model or initiative evaluates the quality of care and/or requires reporting on quality measures; (2) the model or initiative evaluates the cost of care and/or requires reporting on cost measures; (3) participants in the model or initiative receive payment based at least in part on their performance on quality measures and/or cost measures; (4) potential for conflict between the methodologies used for the VM and the methodologies used for the model or initiative; or (5) other relevant factors specific to a model or initiative. We noted that a model or initiative would not have to satisfy or address all of these criteria to be included in this “other similar” category. Rather, the criteria are intended to serve as a general framework for evaluating models and initiatives with regard to the application of the VM to groups and solo practitioners who participate (79 FR 40502). We solicited public comment on these or other appropriate criteria for determining which models or initiatives we should classify as “other similar” models, for the purposes of applying the policies for the Pioneer ACO Model and the CPC Initiative described above.
After consideration of the comments, we are finalizing our general criteria as proposed for determining if a model or initiative should be classified as an “other similar” model or initiative. We will apply the final policies adopted for applying the VM to groups and solo practitioners that participate in the Pioneer Model or the CPC Initiative to Innovation Center models and CMS initiatives that we determine are “similar” based on these criteria.
We recognize that the policies we finalize for the Pioneer ACO Model and the CPC Initiative might not be applicable to all of the various models and initiatives that could be developed in future years. If we believe a different approach to applying the VM would be appropriate for a model or initiative, we intend to address it in future rulemaking. In addition, if we were to determine that a model or initiative falls under this “other similar” category based on the general criteria, we will provide notice to participants in the model or initiative through the methods of communication that are typically used for the model or initiative.
Additionally, consistent with our final policies for the Pioneer ACO Model and CPC Initiative, Shared Savings Program, and groups and solo practitioners that do not participate in these programs or models, we will not apply the VM to nonphysician eligible professionals in similar Innovation Center models or CMS initiatives in the CY 2017 payment adjustment period.
We modified § 414.1210 to reflect all of these policies.
In addition to the comments described above, we received a few comments that were outside the scope of what was proposed in this rule:
In the CY 2013 PFS final rule with comment period in which we established a number of key policies for the VM, we stated that we had received few comments on our proposal to apply the VM to the Medicare paid amounts for the items and services billed under the PFS so that beneficiary cost-sharing or coinsurance would not be affected (77 FR 69309). These commenters generally agreed with the proposal to apply the VM to the Medicare paid amounts for the items and services billed under the PFS at the TIN level so that beneficiary cost-sharing would not be affected. Therefore, we finalized this policy and accordingly established a definition of the VM at § 414.1205 that was consistent with the proposal and the statutory requirement to provide for differential payment to a physician or a group of physicians under the fee schedule based upon the quality of care furnished compared to cost during a performance period.
We continue to believe that it is important that beneficiary cost-sharing not be affected by the VM and that the VM should be applied to the amount that Medicare pays to physicians. However, in previous rulemaking, we did not directly address whether the VM would be applied to both assigned services for which Medicare makes payment to the physician, and to non-assigned services for which Medicare makes payment to the beneficiary. Participating physicians are those who have signed an agreement in accordance with section 1842(h)(1) of the Act to accept payment on an assignment-related basis for all items and services furnished to Medicare beneficiaries. In other words, participating physicians agree to accept the Medicare approved amount as payment in full and to charge the beneficiary only the Medicare deductible and coinsurance amount. In contrast, non-participating physicians have not signed an agreement to accept assignment for all services furnished to beneficiaries, but they can still choose to accept assignment for individual services. If they choose not to accept assignment for particular services, non-participating physicians can charge the beneficiary more than the Medicare-approved amount, up to a limit called the “limiting charge.” The limiting charge is defined at section 1848(g)(2)(C) of the Act as 115 percent of the recognized payment amount for nonparticipating physicians. In contrast, if a non-participating physician chooses to accept assignment for a service, they receive payment from Medicare at the approved amount for non-participating physicians, which is 95 percent of the fee schedule amount. Over 99 percent of Medicare physician services are billed on an assignment related basis by both participating and non-participating physicians and other suppliers, with the remainder billed as non-assigned services by non-participating physicians and other suppliers.
For assigned claims, Medicare makes payment directly to the physician. In accordance with section 1848(p)(1) of the Act and the regulations at § 414.1205 and § 414.1210(a), the VM should be applied to assigned claims. However, for non-assigned claims, the limiting charge (the amount that the physician can bill a beneficiary for a non-assigned service) would not be affected if the VM were applied to the claim. This is so, because for non-assigned claims, application of the VM would not affect the limiting charge. Rather, Medicare makes payment for the non-assigned services directly to the beneficiary and the physician receives all payment for a non-assigned service directly from the beneficiary. If the VM were to be applied to non-assigned services, then the Medicare payment to a beneficiary would be increased when the VM is positive and decreased when the VM is negative. The application of the VM to non-assigned claims would therefore directly affect beneficiaries and not physicians, contrary to our intent as discussed in previous rulemaking (77 FR 69309). On that basis, we proposed to clarify that we would apply the VM only to assigned services and not to non-assigned services starting in CY 2015 (79 FR
The following is summary of the comments we received on this proposed clarification.
With regard to the comment that a similar policy for non-assigned claims be applied to the PQRS and EHR meaningful use adjustments, we believe the comment is outside of the scope of the proposed rule, although we note that the VM is quite different from the PQRS and EHR-meaningful use adjustments, which apply to the Medicare allowed amount rather than the Medicare paid amount.
After considering the public comments, we are finalizing the proposed clarification to not apply the VM to non-assigned claims for non-participating physicians, and nonphysician eligible professionals to the extent the VM is applied to them.
Section 1848(p) of the Act does not specify the amount of payment that should be subject to the adjustment for the VM; however, section 1848(p)(4)(C) of the Act requires the VM be implemented in a budget neutral manner. Budget neutrality means that payments will increase for some groups and solo practitioners based on high performance and decrease for others based on low performance, but the aggregate expected amount of Medicare spending in any given year for physician and nonphysician eligible professional services paid under the Medicare PFS will not change as a result of application of the VM.
In the CY 2014 PFS final rule with comment period (78 FR 74770–74771), we adopted a policy to apply a maximum downward adjustment of −2.0 percent for the CY 2016 VM for those groups of physicians with 10 or more eligible professionals that are in Category 2 and for groups of physicians with 100 or more eligible professionals that are in Category 1 and are classified as low quality/high cost groups.
In the CY 2013 PFS final rule with comment period, we adopted a modest payment reduction of −1.0 percent for groups of physicians in Category 1 that elected quality tiering and were classified as low quality/high cost and for groups of physicians in Category 2 (77 FR 69323–24). Although we received comments suggesting that larger payment adjustments (both upward and downward) would be necessary to more strongly encourage quality improvements, we finalized our proposed adjustments as we believed they better aligned with our goal to gradually phase in the VM. However, we noted that as we gained experience with our VM methodologies we would likely consider ways to increase the amount of payment at risk, as suggested by some commenters (77 FR 69324).
We believe that we can increase the amount of payment at risk because we can reliably apply the VM to groups with two or more eligible professionals and to solo practitioners in CY 2017 as discussed in section III.N.4.a of this final rule with comment period. Therefore, we proposed to increase the downward adjustment under the VM by doubling the amount of payment at risk from −2.0 percent in CY 2016 to −4.0 percent in CY 2017 (79 FR 40505–40506). That is, for CY 2017, we proposed to apply a −4.0 percent VM to groups with two or more eligible professionals and solo practitioners that fall in Category 2. In addition, we proposed to increase the maximum downward adjustment under the quality-tiering methodology in CY 2017 to −4.0 percent for groups and solo practitioners classified as low quality/high cost and to set the adjustment to −2.0 percent for groups and solo practitioners classified as either low quality/average cost or average quality/high cost. However, as discussed in section III.N.4.c of this final rule with comment period, we proposed to hold solo practitioners and groups with two to nine eligible professionals that are in Category 1 harmless from any downward adjustments under the quality-tiering methodology in CY 2017. Consistent with our previous policy, we note that the estimated funds derived from the application of the downward adjustments to groups and solo practitioners in Category 1 and Category 2 would be available to all groups and solo practitioners eligible for VM upward payment adjustments. Accordingly, we also proposed to increase the maximum upward adjustment under the quality-tiering methodology in CY 2017 to +4.0x for groups and solo practitioners classified as high quality/low cost and to set the adjustment to +2.0x for groups and solo practitioners classified as either average quality/low cost or high quality/average cost (79 FR 40505). We also proposed to continue to provide an additional upward payment adjustment of +1.0x to groups and solo practitioners that care for high-risk beneficiaries (as evidenced by the average HCC risk score of the attributed beneficiary population). Lastly, we proposed to revise § 414.1270 and § 414.1275(c) and (d) to reflect the changes to the payment adjustments under the VM for the CY 2017 payment adjustment period. Table 87 shows the proposed quality-tiering payment adjustment amounts for CY 2017 (based on CY 2015 performance). We believe that the VM amount differentiates between cost and quality-tiers in a more meaningful way. We solicited comments on all of these proposals.
The following is summary of the comments we received on all these proposals.
Other commenters noted that the cumulative impact of penalties for PQRS, EHR, and the VM would add up to a potential −9.0 percent adjustment to Medicare payments and expressed that this cumulative impact would be overly burdensome. One commenter indicated that the proposed changes would occur in a post-sequester payment environment where providers already experience a −2.0 percent reduction in Medicare payment. Some commenters indicated it was unfair to hold solo practitioners and groups with two to nine eligible professionals at −4.0 percent for the first year of the VM when groups with of 10 to 99 eligible professionals and groups with 100 or more eligible professionals EPs were at risk for only −2.0 percent and −1.0 percent respectively in their first year of the VM. These commenters suggested that we reduce their Category 2 downward payment adjustment for groups and solo practitioners during their first year in the VM.
By contrast, some supported all of our VM payment adjustment proposals and expressed their belief that a −4.0 percent downward adjustment and +4.0x upward adjustment factor was not sufficient to incentivize physicians to improve quality. A few of these commenters suggested that the amount at risk should eventually be approximately 10.0 percent and that CMS should create a plan in the final rule to continually increase the weight of the VM over time. One commenter noted that there is evidence in the private sector that higher incentives and penalties have a great impact on quality improvement.
For groups with ten or more eligible professionals, we are finalizing the payment adjustments as proposed for CY 2017 (79 FR 40505–40506). As stated in the proposed rule (79 FR 40505), we believe that we can increase the amount of payment at risk because groups of this size will have had sufficient experience with the VM prior to the CY 2017 payment adjustment period. By CY 2017, groups with 10 or more eligible professionals will have had at least one year experience under the VM program. As stated in the CY 2014 PFS final rule with comment period (78 FR 74769), on September 16, 2013, we made available to all groups of 25 or more eligible professionals an annual QRUR based on 2012 data to help groups estimate their quality and cost composites. As discussed in section III.N.4.a. of this final rule with comment period, in September 2014, we made available QRURs based on CY 2013 data to all groups of physicians and physicians who are solo practitioners. We believe that groups of 10 or more eligible professionals will have had adequate data to improve performance on the quality and cost measures that will be used to calculate the VM in CY 2017. As a result, we believe it is appropriate to increase the amount of payment at risk for groups with ten or more eligible professionals in CY 2017.
Consequently, for CY 2017, we will apply a −4.0 percent VM to groups with ten or more eligible professionals that fall in Category 2. In addition, we will set the maximum downward adjustment under the quality-tiering methodology in CY 2017 to −4.0 percent for groups with ten or more eligible professionals classified as low quality/high cost and set the adjustment to −2.0 percent for groups with ten or more eligible professionals classified as either low quality/average cost or average quality/high cost. We will also set the maximum upward adjustment under the quality-tiering methodology in CY 2017 to +4.0x for groups with ten or more eligible professionals classified as high quality/low cost and set the adjustment to +2.0x for groups with ten or more eligible professionals classified as either average quality/low cost or high quality/average cost. Table 89 shows the final quality-tiering payment adjustment amounts for CY 2017 (based on CY 2015 performance) for groups with ten or more eligible professionals.
We are also finalizing our proposal to continue to provide an additional upward payment adjustment of +1.0x to groups with two or more eligible professionals and solo practitioners that care for high-risk beneficiaries (as evidenced by the average HCC risk score of the attributed beneficiary population). Lastly, we are finalizing the revisions at § 414.1270(c) and § 414.1275(c) and (d) to reflect the payment adjustments under the VM for the CY 2017 payment adjustment period. Tables 88 and 89 show the quality-tiering payment adjustment amounts for CY 2017 (based on CY 2015 performance). We believe that these final policies will alleviate commenters' concern that our proposals were too aggressive for smaller groups and solo practitioners that are new to the VM in CY 2017, while continuing the gradual phase-in of the VM for groups with ten or more eligible professionals with an emphasis on the importance of reporting under the PQRS program and improving the quality and efficiency of services provided to Medicare beneficiaries.
Consistent with the policy adopted in the CY 2013 PFS final rule with comment period (77 FR 69324 through 69325), the upward payment adjustment factor (“x” in Tables 88 and 89) will be determined after the performance period has ended based on the aggregate amount of downward payment adjustments. We noted in the proposed rule that the estimated funds derived from the application of the downward adjustments to groups and solo practitioners in Category 1 and Category 2 would be available to all groups and solo practitioners eligible for VM upward payment adjustments (79 FR 40504).
In section III.N.4.d of the proposed rule (79 FR 40506), we discussed our proposal to apply the VM to physicians in groups with two or more eligible professionals and to physicians who are solo practitioners that participate in the Shared Savings Program during the payment adjustment period beginning with the CY 2017 payment adjustment period. We noted in the CY 2015 PFS proposed rule that will have the final list of ACOs that will participate in the Shared Savings Program during the
We did not receive any comments on these proposals.
As discussed in section III.N.4.d of this final rule with comment period, we are finalizing a policy to use the performance period to determine which groups and solo practitioners participate in the Shared Savings Program for purposes of calculating their VM in CY 2017. Therefore, we are not finalizing our proposal to calculate preliminary payment adjustment factors (“x” in Tables 88 and 89) prior to the beginning of the payment adjustment period, and then recalculating the payment adjustment factors after the final ACO participation list is completed. However, we are finalizing our proposal that we may update the payment adjustment factors, depending on the outcome of the informal inquiry process described later at section III.N.4.i of this final rule with comment period.
In the CY 2014 PFS final rule with comment period (78 FR 74771 through 74772), we adopted a policy that performance on quality and cost measures in CY 2015 will be used to calculate the VM that is applied to items and services for which payment is made under the PFS during CY 2017. Accordingly, we added a new paragraph (c) to § 414.1215 to indicate that the performance period is CY 2015 for VM adjustments made in the CY 2017 payment adjustment period.
In the CY 2014 PFS final rule with comment period (78 FR 74773), we aligned our policies for the VM for CY 2016 with the PQRS group reporting mechanisms available to groups in CY 2014 and the PQRS reporting mechanisms available to individual eligible professionals in CY 2014, such that data that groups submit for quality reporting purposes through any of the PQRS group reporting mechanisms in CY 2014 and the data that individual eligible professionals submit through any of the individual PQRS reporting mechanisms in CY 2014 will be used for calculating the quality composite under the quality-tiering approach for the VM for CY 2016. Moreover, all of the quality measures for which groups and individual eligible professionals are eligible to report under the PQRS in CY 2014 would be used to calculate the VM for a group for CY 2016 to the extent the group or individual eligible professionals in the group submits data on such measure in accordance with our 50 percent threshold policy (78 FR 74768). We also noted that, in accordance with 42 CFR 414.1230, three additional quality measures (outcome measures) for groups subject to the VM will continue to be included in the quality measures used for the VM in CY 2016. These measures are: (1) A composite of rates of potentially preventable hospital admissions for heart failure, chronic obstructive pulmonary disease, and diabetes; (2) a composite rate of potentially preventable hospital admissions for dehydration, urinary tract infections, and bacterial pneumonia; and (3) rates of an all-cause hospital readmissions measure (77 FR 69315).
We proposed that groups with two or more eligible professionals would be able to elect to include the patient experience of care measures collected through the PQRS CAHPS survey for CY 2015 in their VM for CY 2017 (79 FR 40506). We also proposed to continue to include the three outcome measures in § 414.1230 in the quality measures used for the VM in CY 2017. For groups that are assessed under the “50 percent option” for the CY 2017 VM, we proposed to calculate the group's performance rate for each measure reported by at least one eligible professional in the group by combining the weighted average of the performance rates of those eligible professionals reporting the measure. We also proposed for groups that are assessed under the “50 percent option” for the CY 2017 VM to classify a group's quality composite score as “average” under the quality-tiering methodology, if all of the eligible professionals in the group satisfactorily participate in a PQRS qualified clinical data registry in CY 2015 and we are unable to receive quality performance data for those eligible professionals. We wish to clarify that in this proposal, the phrase “all of the eligible professionals in the group” refers to the at least 50 percent of eligible professionals in the group who report as individuals under PQRS. In other words, we proposed for groups that are assessed under the “50 percent option” for the CY 2017 VM, where all of the eligible professionals in the group who report as individuals under PQRS do so by satisfactorily participating in a PQRS qualified clinical data registry in CY 2015, and we are unable to receive quality performance data for those eligible professionals, then we would classify the group's quality composite score as “average” under the quality-tiering methodology. If some EPs in the group report data using a qualified clinical data registry and we are unable to obtain the data, but other EPs in the group report data using the other PQRS reporting mechanisms for individuals, we would calculate the group's score based on the reported performance data that we obtain through those other mechanisms (79 FR 40507).
Although we finalized policies in the CY 2014 final rule with comment period that would allow groups assessed under the “50 percent option” to have data reported through a PQRS qualified clinical data registry in CY 2014 used for the purposes of their CY 2016 VM to the extent performance data are available, we noted that we did not directly address the issue of how we
We noted that the PQRS administrative claims option described in § 414.1230, is no longer available through PQRS (79 FR 40507). However, we are clarifying that the three claims-based outcome measures described in § 414.1230, are still used in calculating the quality composite for purposes of the VM. We proposed to clarify that we calculate benchmarks for those outcome measures described in § 414.1230 using the national mean for a measure's performance rate during the year prior to the performance period in accordance with our regulation at § 414.1250(b) (79 FR 40507). We welcomed public comment on this proposal.
The following is summary of the comments we received on these proposals.
As we stated in section III.N.4.a of this final rule with comment period, where a group or solo practitioner falls in Category 1 under the VM (that is, meets the criteria to avoid the CY 2017 PQRS payment adjustment), but the group or solo practitioner does not have at least 20 cases for each PQRS measure on which it reports as required for inclusion in the quality composite of the VM, the group or solo practitioner's quality composite score would be based on the three claims-based outcome measures described at § 414.1230, provided that the group or solo practitioner has at least 20 cases for at least one of the claims-based outcome measures. As discussed in section III.N.4.h of this final rule with comment period, eligible professionals and groups concerned about the lack of specialty measures to meet PQRS reporting requirements should note that PQRS has a Measure Applicability Validation (MAV) process. MAV determines PQRS incentive eligibility for eligible professionals and groups reporting less than nine measures across three domains or nine or more across less than three domains. We recommend that commenters refer to the Measure Application Validation (MAV) Process to alleviate concerns that lack of applicable measures would result in an automatic downward adjustment under the VM .
With regard to the commenters' suggestion that the VM should include only measures on which physicians have reported under PQRS for at least one year, we note that we are maintaining the policy set forth in § 414.1250 that benchmarks for the quality of care measures are the national mean of a measure's performance rate during the year prior to the performance period. Measures reported through a PQRS qualified clinical data registry that are new to PQRS would not be included in the quality composite for the VM because we would not be able to calculate benchmarks for them. We acknowledge the interest in ensuring that physicians report on measures for at least one year before they are included in the VM. Our current policy achieves that end by precluding the use of measures for which no benchmarking data is available. We acknowledge the comments suggesting that CMS expand the data collected on the patient experience of care (CAHPS) measures and note that we seek to align with the PQRS program in order to minimize reporting burden and align incentives across CMS incentive payment programs. We will consider these suggestions for any future refinements to the patient experience measures included in the PQRS program and the VM. CMS will provide survey results and post benchmarks for the patient experience of care measures; this data as well as the survey questions that can be accessed on the CMS Web site can be
After consideration of the comments, we are finalizing our proposal to use all of the quality measures that are available to be reported under these various PQRS reporting mechanisms to calculate a group or solo practitioner's VM in CY 2017, to the extent that a group (or individual eligible professionals in the group, in the case of the “50 percent option”) or solo practitioner submits data on these measures. We are finalizing our policy that groups with two or more eligible professionals can elect to include the patient experience of care measures collected through the PQRS CAHPS survey for CY 2015 in their VM for CY 2017. We are finalizing our policy to continue to include the three outcome measures in § 414.1230 in the quality measures used for the VM in CY 2017. We are finalizing our policy that for groups that are assessed under the “50 percent option” for the CY 2017 VM, we will calculate the group's performance rate for each measure reported by at least one eligible professional in the group by combining the weighted average of the performance rates of those eligible professionals reporting the measure.
We are finalizing our policy at § 414.1270(c)(4) that, for groups that are assessed under the “50 percent option” for the CY 2017 VM, where all of the eligible professionals in the group who report as individuals under PQRS do so by satisfactorily participating in a PQRS qualified clinical data registry in CY 2015, and we are unable to receive quality performance data for those eligible professionals, then we will classify the group's quality composite score as “average” under the quality-tiering methodology. Because this is the same policy as for the CY 2016 payment adjustment period, we are also making a conforming revision to § 414.1270(b)(4).
We are finalizing a policy that, for groups that are assessed under the “50 percent option” where some EPs in the group report data using a qualified clinical data registry and we are unable to obtain the data, but other EPs in the group report data using the other PQRS reporting mechanisms for individuals, then we will calculate the group's score based on the reported performance data that we obtain through those other PQRS reporting mechanisms. We are finalizing a policy that, beginning with the CY 2014 performance period, measures reported through a PQRS qualified clinical data registry that are new to PQRS will not be included in the quality composite for the VM until such time as we have historical data to calculate benchmarks for them. Once we have historical data from measures submitted via QCDRs, the benchmark for quality of care measures will be the national mean for the measure's performance rate during the year prior to the performance period (§ 414.1250). We are finalizing our proposed clarification that we calculate benchmarks for the outcome measures described in § 414.1230 using the national mean for a measure's performance rate during the year prior to the performance period in accordance with our regulation at § 414.1250(b). Although we did not include proposed regulation text for this proposed clarification of our policy, we are finalizing revisions to regulation text at 414.1250(b) to reflect this final policy.
With regard to quality measures, we noted that there is substantial overlap between those used to evaluate the ACOs under the Shared Savings Program and those used in the PQRS program and for the value modifier payment adjustment. For the CY 2017 payment adjustment period and subsequent payment adjustment periods, to determine a quality composite for the VM for groups and solo practitioners who participate in an ACO under the Shared Savings Program, we proposed to use the quality measures that are identical for the two programs. Specifically, for the CY 2017 payment adjustment period, we proposed to use the PQRS GPRO Web Interface measures and the outcome measure described at § 414.1230(c) to determine a quality composite for groups and solo practitioners who participate in an ACO under the Shared Savings Program. Because the ACO GPRO Web Interface measures and PQRS GPRO Web Interface measures will be the same in CY 2015, we proposed to use the GPRO Web Interface measures reported by ACOs in determining the quality composite for groups and solo practitioners participating in ACOs under the Shared Savings Program in CY 2017 (79 FR 40507). Utilizing these GPRO Web Interface measures in this regard further encourages successful quality reporting for Shared Savings Program ACOs. Additionally, we stated our belief that the all-cause hospital readmissions measure as calculated for ACOs under the Shared Savings Program is equivalent to the all-cause hospital readmissions measure we have adopted for the VM at § 414.1230(c), and therefore, proposed use of that measure as calculated for ACOs in the Shared Savings Program for inclusion in the VM for the CY 2017 payment adjustment period (79 FR 40507). We note that the outcome measures described at § 414.1230(a) and § 414.1230(b) are not currently calculated for ACOs in the Shared Savings Program. These measures are: (1) A composite of rates of potentially preventable hospital admissions for heart failure, chronic obstructive pulmonary disease, and diabetes; and (2) a composite rate of potentially preventable hospital admissions for dehydration, urinary tract infections, and bacterial pneumonia. Because we have no experience with these measures in the Shared Savings Program, at this time, we did not propose to include these measures for groups and solo practitioners who participate in ACOs under that program. We proposed to modify the regulations at § 412.1210 accordingly.
The following is summary of the comments we received on these proposals.
A few medical societies supported the proposals, recognizing CMS's intent to align the measures and quality improvement goals of the Shared Savings Program and VM program. Several commenters suggested allowing groups that are new to GPRO Web Interface reporting to have at least one
Further, we believe it is appropriate to use the Shared Savings Program ACOs' all-cause readmission measure for calculating the VM for the CY 2017 payment adjustment period. As we stated in the proposed rule, we believe that the Shared Savings Program ACO all-cause readmission measure is equivalent to the all-cause hospital readmission measure adopted for the VM. The use of this measure will not impose any additional reporting burden on Shared Savings Program ACOs (79 FR 40508).
After considering the public comments, we are finalizing a policy to use the ACO Group Practice Reporting Option (GRPO) Web Interface measures and the Shared Savings Program ACO all-cause readmission measure to calculate a quality composite score for groups and solo practitioners who participate in an ACO under the Shared Savings Program.
To determine the standardized scores for these quality measures for use with those participating in ACOs under the Shared Savings Program, we proposed to apply the benchmark policy for quality measures for the VM as described under § 414.1250. Under this policy, the VM benchmarks are the national mean for a measure's performance rate based on data from one year prior to the performance period. We believe these are the appropriate benchmarks to use when determining the value modifier payment adjustment because they are the same benchmarks used to determine the value modifier payment adjustment for other groups and solo practitioners and they are similar to the benchmarks used under the Shared Savings Program. As stated above, within the Shared Savings Program, ACOs will be measured against national benchmarks that are calculated using Medicare fee-for service data and the VM program also develops benchmarks using all available Medicare fee-for-service data. We believe that use of the VM benchmarks creates a reasonable comparison among groups and solo practitioners and it is appropriate to evaluate those that participate in Shared Savings Program ACOs on the same basis as those that do not participate in the Shared Savings Program for the purpose of the value modifier. We believe that the VM benchmarks are appropriate because they include all PQRS data available (77 FR 69322), including quality data used for the Shared Savings Program. We stated that, while the Shared Savings Program develops benchmarks using all available Medicare fee-for-service data, we do not believe it is appropriate to use benchmarks from the Shared Savings Program to determine standardized scores for the quality composite of the value modifier payment adjustment. We do not think this enables a fair comparison among groups and solo practitioners subject to the value modifier because the Shared Savings Program benchmarks use gradients by decile (including the median) of national performance based on data two years prior to the performance period (78 FR 74759 through 74760).
The following is summary of the comments we received on these proposals.
Based on 2012 data, we found that the average reliability for the all-cause hospital readmissions measure was
After examining the reliability of the all-cause hospital readmissions measure data for 2012 across all group sizes and considering its impacts on the cost composite of the VM as discussed below, we proposed to change the reliability policy (minimum number of cases) with respect to this measure. Specifically, beginning with the CY 2017 payment adjustment period, we proposed to change the reliability policy (minimum number of cases) with respect to the all-cause hospital readmissions measure as described in § 414.1230(c) from a minimum of 20 cases to a minimum of 200 cases for this measure to be included in the quality composite for the VM. For this measure only, we proposed to exclude the measure from the quality domain for a group or solo practitioner if the group or solo practitioner has fewer than 200 cases for the measure during the relevant performance period. In implementing this proposal, we noted that we would only apply it to the all-cause hospital readmissions measure as it is calculated for groups or solo practitioners who are not part of a Shared Savings Program ACO. In instances where we are including Shared Savings Program data for groups or solo practitioners who are part of a Shared Savings Program ACO, we would include their all-cause hospital readmissions measure as it is calculated for the Shared Savings Program. This approach to implementing this proposal is appropriate because the Shared Savings Program has taken into consideration the size of its groups in finalizing inclusion of this measure, and we value consistency with the Shared Savings Program's reporting requirements for its participants, to the extent it is practicable. We would continue to include the measure in the VM quality domain for groups or solo practitioners who have 200 or more cases. We proposed to modify § 414.1265 to reflect this proposal. We welcomed comments on this proposal.
We noted that, if we were to revise the minimum case size for the all-cause hospital readmissions measure for the quality composite of the VM, poor performance on controlling readmissions would continue to have an effect on the VM for groups with between 20 and 199 cases through the cost composite of the VM. The Medicare Spending per Beneficiary (MSPB) measure, as finalized in the CY 2014 PFS final rule (78 FR 74775–74780), is a measure of all Medicare Part A and Part B payments during an episode spanning from 3 days prior to an index hospital admission through 30 days post-discharge with certain exclusions. Since all Part A and Part B spending is included in the 30 day post-discharge window, Medicare Part A payments for a readmission that are included in an MSPB episode will increase the MSPB amount relative to an MSPB episode without a readmission in the 30-day post-discharge window. Additionally, the cost of readmissions is incorporated as part of the 5 total per capita cost measures that comprise the remainder of the cost composite of the VM. The 5 total per capita cost measures are annual measures that include the costs of all Part A and Part B spending during the year, including the costs of readmissions. Therefore, readmission costs will have the effect of increasing total per capita cost spending for the groups attributed these patients' costs. As a result, poor performance on controlling readmissions already will have an adverse effect on an attributed group's cost composite of the VM, even if poor performance on the all-cause hospital readmissions measure would no longer be reflected in certain groups' or solo practitioners' quality composite of the VM due to having fewer than 200 all-cause hospital readmission cases. Even for those groups for which the all-cause hospital readmissions measure would be excluded from the quality composite calculations, groups would continue to have incentive to control readmissions, since doing so would reduce readmission costs, thereby improving performance on the payment-standardized, risk-adjusted cost measures used for the cost composite of the VM.
The following is summary of the comments we received on this proposal.
One commenter stated that this measure is not appropriate for physician practices because 2012 data indicates that the measure could not meet a 0.4 percent reliability threshold at a 20-case minimum. This commenter also questioned the justification for including a measure that will be applicable only to 30 percent of groups with 10 or more practitioners and three percent of smaller groups, even when the proposed minimum 200 case threshold is utilized.
With regard to commenters' concerns related to the issue of socioeconomic status adjustment, we continue to monitor activities at the National Quality Forum (NQF), such as the July 23, 2014 decision by the NQF Board in which the Board approved a trial period to test the impact of sociodemographic factor risk adjustment of performance measures (available at
After consideration of the comments, we are finalizing the policy, beginning with the CY 2017 payment adjustment period, to increase the case minimum from 20 cases to 200 cases for the all-cause hospital readmissions measure as described in § 414.1230(c) to be included in the quality composite for the VM as proposed. Therefore, we are finalizing the proposal to exclude the measure from the quality domain for a group or solo practitioner if the group or solo practitioner has fewer than 200 cases for the measure during the relevant performance period and all remaining measures in the domain will be given equal weight. We are codifying this change with a revision to the regulation at § 414.1265.
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 VM;
• The evaluation of the quality of care composite, including the establishment of appropriate measures of the quality of care;
• The evaluation of the cost composite, including the establishment of appropriate measures of costs;
• The dates of implementation of the VM;
• The specification of the initial performance period and any other performance period;
• The application of the VM; and
• The determination of costs.
These statutory requirements regarding limitations of review are reflected in § 414.1280. Despite the preclusion of administrative and judicial review, we previously indicated in the CY 2013 PFS final rule with comment period (77 FR 69326) that we believed an informal review mechanism is appropriate for groups of physicians to review and to identify any possible errors prior to application of the VM, and we established an informal inquiry process at § 414.1285. We stated that we intend to disseminate reports containing CY 2013 data in the fall of 2014 to groups of physicians subject to the VM in 2015 and that we will make a help desk available to address questions related to the reports.
We stated it would be appropriate to align with PQRS to consider requests for informal review of whether a group or solo practitioner successfully reported under the PQRS program and requests for reconsideration of PQRS data as described in section III.K, as well as to expand our current informal inquiry process to accept requests from groups and solo practitioners to review and correct certain other errors related to the VM, such as errors made by CMS in assessing the eligibility of a group or solo practitioner for the value modifier based on participation in a Shared Savings Program ACO, the Pioneer ACO Model, the CPC Initiative, or other similar Innovation Center models or CMS initiatives; computing standardized scores; computing domain scores; computing composite scores; or computing outcome or cost measures. We are working to develop and operationalize the necessary infrastructure to support such a corrections process, but at this time, we do not believe we would be able to implement the process until 2016 at the earliest.
Therefore, for the CY 2015 payment adjustment period, to align with PQRS, we proposed to expand the informal inquiry process at § 414.1285 to establish an initial corrections process that would allow for some limited corrections to be made (79 FR 40509). Specifically, under this initial corrections process, for the CY 2015 payment adjustment period, we proposed to establish a deadline of January 31, 2015 for a group to request correction of a perceived error made by CMS in the determination of its CY 2015 VM payment adjustment. Alternatively, we solicited comment on a deadline of no later than the end of February 2015 to align with the PQRS informal review process. We would then make a determination regarding the request. At this time, we do not anticipate it would be operationally feasible for us to fully evaluate errors with regard to quality measure data and accept data as described above under section III.K. for the CY 2015 payment adjustment period, and thus we proposed to classify a TIN as “average quality” in the event we determine that we have made an error in the calculation of quality composite. We proposed to recompute a TIN's cost composite in the event we determine that we have made an error in its calculation. We proposed to adjust a TIN's quality-tier if we make corrections to a TIN's quality and/or cost composites as a result of this initial corrections process. We noted that there would be no administrative or judicial review of the determinations resulting from this expanded informal inquiry process under section 1848(p)(10) of the Act.
Starting with the CY 2016 payment adjustment period (which has a performance period of CY 2014), we proposed to continue the expanded informal inquiry process at § 414.1285 as described above. However, in anticipation of having the necessary operational infrastructure to support the reconsideration of quality measure data, we proposed to establish a 30-day period that would start after the release of the QRURs for the applicable performance period for a group or solo practitioner to request correction of a perceived error made by CMS in the determination of the group or solo practitioner's VM for that payment adjustment period. These QRURs contain performance information on the quality and cost measures used to calculate the quality and cost composites of the VM and will show how all TINs would fare under the policies established for the VM for the CY 2015 payment adjustment period. Similar to our proposal for the initial corrections process in CY 2015, we would then make a determination regarding the requests received. Since we anticipate it would be operationally feasible for us to fully evaluate errors with regard to quality measure data at that point, and accept data, consistent with PQRS policies, as described above under section III.K. for the CY 2016 payment adjustment period, we
We welcomed comment on these proposals.
The following is summary of the comments we received on both the initial corrections process in the CY 2015 payment adjustment period and the corrections process we proposed beginning with the CY 2016 payment adjustment period.
• For 2015, most commenters supported establishing a deadline of no later than the end of February 2015, rather than January 31, to align with the PQRS informal review process.
• For subsequent years, most commenters requested a longer period of 60 to 90 days (rather than 30 days) that would start after the release of the QRURs for the applicable performance period for a group or individual to request a correction of a perceived error related to the VM calculation.
In addition, some commenters objected to the proposal for 2015 to classify a TIN as “average quality” in the event we determined that we have made an error in the calculation of the quality composite. These commenters believe it would be inappropriate to deem a group “average quality” simply because CMS does not have the capacity to correct its own errors, especially if an “average quality” rating could potentially lead to penalties or lost incentive payments. Some commenters suggested that we consider requests for providers to resubmit their quality data. Other commenters asked that we provide additional clarification regarding what situations will be considered in the informal review process.
Finally, as we discussed in the proposal and above, it is not operationally feasible to fully evaluate errors with regard to quality measure data and accept data as described above under section III.K. for the CY 2015 payment adjustment period. Therefore, to minimize the impact on providers, we will classify a TIN as “average quality” in the event that we determine that we have made an error in the calculation of the quality composite. However, we understand the point made by a few commenters about this policy. It is possible that an “average quality” rating for the CY 2015 payment adjustment period could potentially result in a higher or lower VM payment adjustment amount for an individual TIN than if the quality composite were recalculated. Therefore, we are working to develop the operational infrastructure to allow us to re-compute a TIN's quality composite and accept data, consistent with PQRS quality data resubmission policies, as described above under section III.K. for the CY 2016 payment adjustment period in the event we determine that we have made an error in the calculation.
After consideration of the public comments received:
• For the CY 2015 payment adjustment period, we are: (1) Finalizing a February 28, 2015, deadline for a group to request correction of a perceived error made by CMS in the determination of its VM, and (2) finalizing a policy to classify a TIN as “average quality” in the event we determined that we have made an error in the calculation of the quality composite.
• Beginning with the CY 2016 payment adjustment period, (1) we are finalizing a deadline of 60 days that would start after the release of the QRURs for the applicable performance period for a group or solo practitioner to request a correction of a perceived error related to the VM calculation, and (2) we will take steps to establish a process for accepting requests from providers to correct certain errors made by CMS or a third-party vendor (for example, registry). We intend to design this process as a means to re-compute a TIN's quality composite and/or cost composite in the event we determine that we initially made an erroneous calculation. We note that if the operational infrastructure is not available to allow this re-computation, we will continue the approach for the CY 2015 payment adjustment period to classify a TIN as “average quality” in the event we determine that we have made an error in the calculation of the quality composite.
For both the CY 2015 payment adjustment period and future adjustment periods, we will adjust a TIN's quality-tier if we make a correction to a TIN's quality and/or cost composites as a result of this corrections process. We will provide additional operational details as necessary in sub-regulatory guidance.
We further note that there is no administrative or judicial review of the determinations resulting from this expanded informal inquiry process under section 1848(p)(10) of the Act.
In the CY 2013 PFS final rule with comment period (77 FR 69322), we established a policy to create a cost composite for each group subject to the VM that includes five payment-standardized and risk-adjusted annual per capita cost measures. To calculate each group's per capita cost measures, we first attribute beneficiaries to the group. We attribute beneficiaries using a two-step attribution methodology that is based on the assignment methodology used for the Shared Savings Program and the PQRS GPRO and that focuses on
In the CY 2014 PFS final rule with comment period (78 FR 74780), we finalized inclusion of the Medicare Spending Per Beneficiary (MSPB) measure as proposed in the cost composite beginning with the CY 2016 VM, with a CY 2014 performance period. As we proposed, we are using the MSPB amount as the measure's performance rate rather than converting it to a ratio as is done under the Hospital Inpatient Quality Reporting (IQR) and VBP Programs. We finalized that the MSPB measure is added to the total per capita costs for all attributed beneficiaries domain and equally weighted with the total per capita cost measure in that domain. Additionally, we finalized that an MSPB episode is attributed to a single group of physicians that provides the plurality of Part B services (as measured by standardized allowed charges) during the index admission, for the purpose of calculating that group's MSPB measure rate. Finally, we finalized a minimum of 20 MSPB episodes for inclusion of the MSPB measure in a physician group's cost composite.
Additionally, in the CY 2014 PFS final rule with comment period (78 FR 74780), we finalized our proposal to use the specialty adjustment method to create the standardized score for each group's cost measures beginning with the CY 2016 VM. That is, we refined our current peer group methodology to account for specialty mix using the specialty adjustment method. We also finalized our proposal to include this policy in our cost composite methodology. Additionally, we finalized our proposal to identify the specialty for each EP based on the specialty that is listed on the largest share of the EP's Part B claims.
As discussed in the CY 2014 PFS final rule with comment period (78 FR 74781), we submitted the total per capita cost measure for National Quality Forum (NQF) endorsement in January 2013. In the final voting in September 2013, the NQF Cost and Resource Use Committee narrowly voted against the measure by a count of 12 in support and 13 in opposition. We proposed to address two of the major concerns that Committee raised in its review of the measure. First, we proposed modifications to our two-step attribution methodology. Second, we proposed to reverse the current exclusion of certain Medicare beneficiaries during the performance period. We stated that these proposals would apply beginning with the CY 2017 payment adjustment period for the VM and would apply to all five of the total per capita cost measures under § 414.1235(a)(1) through (5) (79 FR 40510). The modifications to the two-step attribution methodology also would apply to the methodology used for attributing beneficiaries for the computation of claims based quality measures under § 414.1230, except for participants in the Shared Savings Program as described later.
The attribution methodology for the five total per capita cost measures and claims based quality measures in the VM, as finalized in the CY 2013 PFS final rule with comment period (77 FR 66318 through 66320), includes two steps. Before applying the two steps, however, we first identify all beneficiaries who have had at least one primary care service rendered by a physician in the group. Primary care services include evaluation and management visits in office, other outpatient, skilled nursing facility, and home settings. After this “pre-step”, we assign, under Step 1, beneficiaries to the group practice who had a plurality of primary care services (as measured by allowed charges) rendered by primary care physicians in the group, which include Family Practice, Internal Medicine, General Practice, and Geriatric Medicine. If a beneficiary is non-assigned under Step 1, we proceed to Step 2, which is to assign beneficiaries to the group practice whose affiliated non-primary care physicians, nurse practitioners (NPs), physician assistants (PAs), and clinical nurse specialists (CNSs) together provided the plurality of primary care services (as measured by allowed charges), as long as at least one primary care service was provided by a non-primary care physician in the group.
To address NQF concerns regarding the attribution methodology of the total per capita cost measure, we proposed two modifications to the two-step attribution methodology as applied to the five total per capita cost measures, as well as the claims based quality measures in the VM. NQF Committee members discussed how primary care services often are provided by NPs, PAs, or CNSs, but Step 1 of the attribution methodology assigns beneficiaries to the group who had a plurality of primary care services rendered by primary care physicians in the group. After further consideration, we agreed that it is appropriate to include NPs, PAs, and CNSs in Step 1 of the attribution method insofar as they provide primary care services. Consequently, we proposed to move these NPs, PAs, and CNSs from Step 2 of the attribution method to Step 1. This change would affect all five of the total per capita cost measures under § 414.1235(a)(1) through (5) and the claims-based quality measures under § 414.1230.
Additionally, we proposed to remove the “pre-step” described above for the purposes of the value modifier. The “pre-step” was included in the Shared Savings Program assignment methodology to comply with the statutory requirement (77 FR 67851) that beneficiary assignment be based upon the utilization of primary care services furnished by a physician. However, no such limitation exists for the VM. Consequently, we proposed to remove the “pre-step” that identifies a pool of assignable beneficiaries that have had at least one primary care service furnished by a physician in the group. Removing the “pre-step” would result in streamlining the attribution process and attributing beneficiaries based on a plurality of primary care services according to Step 1 and Step 2. In addition, we believe that this proposal would help ensure that beneficiaries can be assigned to group practices made up of nonphysician eligible professionals because it would eliminate the criterion that a beneficiary have at least one primary care service furnished by a physician in the group practice. This change (removing the “pre-step”) would affect all five of the total per capita cost measures under § 414.1235(a)(1) through (5) and the claims-based quality measures under § 414.1230.
The two-step attribution rule would remain intact after these two modifications, and the method would continue to be generally consistent with the method of assignment of beneficiaries under the Shared Savings Program, as specified under § 414.1240. As discussed previously, the “pre-step” would be removed. We would assign, under Step 1, beneficiaries to the group who had a plurality of primary care services (as measured by allowed charges) rendered by primary care physicians, NPs, PAs, or CNSs in the group. If a beneficiary is non-assigned under Step 1, we still would proceed to Step 2, which would assign beneficiaries to the group practice whose affiliated non-primary care physicians provided the plurality of primary care services (as measured by allowed charges). We proposed these modifications only for groups and solo practitioners who are not participating in the Shared Savings Program. We noted that for groups and solo practitioners who participate in the Shared Savings Program, we would not remove the pre-step or change the attribution methodology for quality
One of the reasons we originally proposed this two-step attribution process for the total per capita cost measures and claims based quality measures was that it was aligned with the attribution methodologies used by the Shared Savings Program and also the PQRS GPRO Web interface (77 FR 69318 through 69320). We recognize that these programs may seek to establish changes to their methodologies, and noted that for the purposes of the VM, we intended to retain the two-step beneficiary attribution methodology that was described in the CY 2013 PFS final rule with comment period (77 FR 69318 through 69320), subject to the changes proposed above. However, to address the concerns raised by NQF, we believe the proposed modification to the two-step beneficiary attribution method would more appropriately reflect the multiple ways in which primary care services are provided, which are not limited to physician groups. We welcomed comments on our proposed modification to the two-step attribution methodology as applied to the five total per capita cost measures under § 414.1235(a)(1) through (a)(5) and to the claims-based quality measures under § 414.1230 of the VM.
The following is summary of the comments we received on our proposed modification to the two-step attribution methodology as applied to the five total per capita cost measures under § 414.1235(a)(1) through (5) and to the claims-based quality measures under § 414.1230 for the VM.
We are finalizing our policy as proposed. Beginning in the CY 2017 payment adjustment period, we will move NPs, PAs, and CNSs from step 2 of the attribution method to step 1. Additionally we are removing the pre-step under which we first identify all beneficiaries who have had at least one primary care service rendered by a physician in the group. These changes apply to all five total per capita cost measures under § 414.1235(a)(1) through (5) and the claims-based quality measures under § 414.1230.
Second, NQF committee members raised concerns about the exclusion of certain beneficiaries in the methodology used for the total per capita cost measure. Committee members expressed concern that end-of-life costs were not being captured by the measure. We considered this argument and agreed that it is important to include certain beneficiaries with these costs during the performance period. As a result, we proposed to include certain part-year Medicare FFS beneficiaries. This change would affect all five of the total per capita cost measures under § 414.1235(a)(1) through (a)(5). The change would provide a more complete assessment of end of life costs associated with the patients a physician group sees during the year (79 FR 40510).
We proposed to continue excluding other part-year beneficiaries (those who spend part of the performance period in a Medicare Advantage (Part C) plan and those enrolled in Part A only or Part B only for part of the performance period and both Part A and Part B for the remainder of the performance period) (79 FR 40511). Since 2012 we have applied the same attribution rule as that used for the Medicare Shared Savings Program and the PQRS GPRO Web Interface (77 FR 69318–20). In this regard, excluding part-year Medicare Advantage enrollees would remain consistent with the Shared Savings Program and PQRS GPRO Web interface reporting policy. If we were to include these part-year Medicare Advantage enrollees, we would need to determine a method to impute their costs for the portion of the performance period in which they were enrolled in FFS Medicare Parts A and B so that we could compare beneficiaries' annual per capita costs appropriately. Similarly, Medicare Part A only or Medicare Part B only enrollees who were enrolled in both Part A and Part B for only part of the performance period would also require a method to impute their costs if they
We proposed including Medicare FFS beneficiaries who are newly enrolled to Medicare during the performance period and enrolled in both Part A and Part B while in Medicare FFS. Additionally, we noted that while the inclusion of new enrollees is inconsistent with GPRO's methodology, it would be consistent with the Shared Savings Program's methodology (79 FR 40511). We welcomed comments on the inclusion of these part-year beneficiaries. We also welcomed comments on whether other part-year Medicare FFS beneficiaries (that is, those who are part-year Medicare Advantage enrollees or part-year Medicare Part A only or Part B only enrollees) should be included in the five total per capita cost measures under § 414.1235(a)(1) through (5) in the VM.
We are finalizing our policies as proposed. Beginning in the CY 2017 payment adjustment period, we will include certain part-year beneficiaries in the five total per capita cost measures under § 414.1235(a)(1) through (5). These part-year beneficiaries include Medicare FFS beneficiaries who are at the end of life in the performance period and Medicare FFS beneficiaries who are newly enrolled in Medicare during the performance period and enrolled in both Part A and Part B while in Medicare FFS.
In this final rule with comment period, we chose not to address the other concerns about the total per capita cost measures that were raised by NQF. First, we deferred addressing the issue of whether to incorporate socioeconomic status in our measures until after the NQF has finalized its guidance regarding risk adjustment for resource use measures. Second, we did not propose to include Part D data in the total per capita cost measures at this time due to the complexity of the issue and uncertainty of how to fairly and equitably incorporate the costs. Based on data compiled by the Medicare Payment Advisory Commission (MedPAC), we estimated that approximately 60 percent of Medicare FFS beneficiaries were enrolled in stand-alone Part D in 2013.
We also received the following comment, which we believe is outside of the scope of our proposals:
We considered including or allowing groups that include hospital-based physicians or solo practitioners who are hospital-based to elect the inclusion of Hospital Value-Based Purchasing (VBP) Program performance in their VM calculation in future years of the program. We stated that would include hospital performance for the hospital or hospitals in which they practice. We would propose such a change through future notice and comment rulemaking, taking into consideration public comment and any relevant empirical evidence available at that time. We considered this potential policy to expand the performance data included for hospital-based physicians and to better align incentives for quality improvement and cost control across CMS programs. Such a policy would also address public comments we received on the CY 2014 PFS proposed rule (78 FR 74775), suggesting that the Hospital VBP Program total performance score for the hospital in which a specialist practices should be used in the VM. Commenters made this suggestion, noting that there were limited measures that apply to certain specialties and that those specialties may exercise wide influence over the quality of care provided in a hospital. We noted that a hospital's final Hospital VBP Program performance for a given performance period would not be available to a group at the time that they registered for PQRS reporting, so if we were to establish a voluntary policy where groups could elect to include hospital performance, they would make the election to have that performance included in their VM for a payment adjustment period based on the hospital's historic VBP Program performance which would be known to the TIN at the time of election.
We sought public comment on the appropriate methodology to identify hospital-based groups and solo practitioners for the purpose of having Hospital VBP Program data included or allowing them to elect inclusion of Hospital VBP Program performance data in the VM at the TIN level (70 FR 40511–40512). We suggested that we could either allow self-nomination or set a threshold based on physician billing, in order to determine whether a given physician was hospital-based. We sought comment on whether we should set a threshold for a certain proportion of a group's physicians that would have to meet the criteria, in order for hospital-level performance to be included in the group's VM calculation. We also sought comment on whether to use a set of criteria to determine whether non-physician eligible professionals should be allowed to self-nominate or should automatically have hospital-level performance data included in the calculation of their VM. We requested public comment on potential methods for determining which hospital or hospitals' Hospital VBP Program performance data should be included in a physician TIN's VM and how to weight the hospitals, if more than one was included (79 FR 40512). We welcomed public comment on the approaches we considered, as well as alternative approaches for inclusion of all or part of the Hospital VBP Program TPS into the VM. In the interest of aligning the HVBP and VM programs, we sought public comment on what criteria we should consider in selecting a subset of Hospital VBP Program measures or domains in the VM, if we were to adopt such a policy. Finally, we requested public comment on the most appropriate approach for including Hospital VBP Program performance into a TIN's VM.
Section 1848(n) of the Act requires us to provide confidential reports to physicians (and, as determined appropriate by the Secretary, to groups of 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 2014, we made available the QRURs based on CY 2013 data to all physicians (that is, TINs of any size) even though groups with fewer than 100 eligible professionals will not be subject to the VM in CY 2015. These reports provide clinically meaningful and actionable information on several aspects of the performance of a group practice or solo practitioner. The reports present not only data assessing a group practice's or solo practitioner's performance on cost measures and information about the services and procedures contributing most to beneficiaries' costs, but also provide data on their performance on quality measures they report under the PQRS as well as the three outcome measures under § 414.1230. For groups of 100 or more eligible professionals that are subject to the VM starting in 2015, the QRURs provide information on how the group's quality and cost performance affects their physicians' Medicare payments in 2015. The reports also contain additional supplementary information on the specialty adjusted benchmarks; inclusion of the individual PQRS measures for informational purposes for EPs reporting PQRS measures as individuals; enhanced drill down tables; and a dashboard with key performance measures. The reports are based on the VM policies that were finalized in the CY 2013 PFS final rule (77 FR 69310) for physician payment adjustments under the VM beginning January 1, 2015, and they provide groups with an opportunity to see how the policies adopted will apply to them.
Section 1848(n)(9)(A) of the Act requires CMS to develop an episode grouper and include episode-based costs in the QRURs. An episode of care consists of medical and/or procedural services that address a specific medical condition or procedure that are delivered to a patient within a defined time period and are captured by claims data. An episode grouper organizes administrative claims data into episodes.
We developed a prototype set of episodes that expands upon the set of episodes that were described in the CY 2014 PFS final rule with comment period (78 FR 74785). In summer 2014, we distributed Supplemental QRURs based on 2012 data to a greater number of groups (groups with at least 100 EPs
We did not receive any general comments on the three medical and three surgical episode measures that we included in the 2012 Supplemental QRURs.
Attribution for the six clinical episode-based measures at the group level are the same as the rules used for comparable types of the 20 episode subtypes in the 2012 Supplemental QRURs as discussed above. Attribution rules varied depending on whether a clinical episode-based measure was one of the three surgical (or procedural) episodes or one of the three medical (or acute condition) episodes. Further details on attribution rules can be found in “Detailed Methods of the 2012 Medical Group Practice Supplemental Quality and Resource Use Reports (QRURs)” at
Specifications for these six clinical episode-based measures, including the MS–DRG and procedure codes used to identify each of the episodes, and details of episode construction methodology, are available in “Detailed Methods of the 2012 Medical Group Practice Supplemental Quality and Resource Use Reports (QRURs)” at
The following is summary of the comments we received on these specifications and the construction of the six clinical episode-based measures that we included in the 2012 Supplemental QRURs.
CMS' episodes will continue to evolve over the coming years as more experience is gained. More information about the Supplemental QRURs can be found at
We will continue to seek stakeholder input as we develop the episode
The following is summary of the comments we received on the specifications included on the Web site and the construction of the episode-based payment measures that we considered.
In the proposed rule, we stated that we will continue to develop and refine the annual QRURs in an iterative manner and we will seek to further improve the reports by welcoming suggestions from our stakeholders.
As noted previously, on September 30, 2014, we made available the QRURs based on CY 2013 data to all physicians (that is, TINs of any size) even though groups with fewer than 100 eligible professionals will not be subject to the VM in CY 2015. These reports contain performance on the quality and cost measures used to score the composites and additional information to help physicians coordinate care and improve the quality of care furnished. We also intend to provide semi-annual reports with updated cost and utilization data. We will again solicit feedback from physicians and continue to work with our partners to improve them. We note that physicians will have some time to determine the impact of our revised policies and revise their practices accordingly before the new policies impact them. We look forward to continue working with the physician community to improve the QRURs.
We received the following general comments on the Physician Feedback Program:
In the May 2, 2014
In the FQHC PPS final rule with comment period, we invited comments from FQHCs and RHCs on how payment for CCM services could help to promote integrated and coordinated care in FQHCs and RHCs. We cited the CCM information in the CY 2014 PFS final rule with comment period (78 FR 74230) for physicians billing under the PFS in 2015. We encouraged FQHCs and RHCs to review this information and submit comments to us on how the CCM services payment could be adapted for FQHCs and RHCs to promote integrated and coordinated care.
We received a few comments regarding how the CCM services payment could be adapted for FQHCs in CY 2015 to provide integrated and coordinated care in FQHCs. Commenters supported adopting the CCM provisions in FQHCs but had concerns about the unique challenges FQHCs would face implementing these provisions. The following is a summary of these comments.
FQHCs receive enhanced payment to reflect all costs associated with a visit in a single day by a Medicare beneficiary, regardless of the length or complexity of the visit or the number or type of practitioners seen. Under the all-inclusive rate (AIR) system, an exception to the one encounter payment per day policy was made for situations when a patient comes into the FQHC for a medically necessary visit, and after leaving the FQHC, has a medical issue that was not present at the visit earlier that day, such as an injury or unexpected onset of illness. In these situations, the FQHC has been paid separately for two visits on the same day for the same beneficiary. Under the AIR system, we also allowed separate payment for mental health services furnished on the same day as a medical visit, separate payment for diabetes self-management training/medical nutrition therapy (DSMT/MNT), and separate payment for the initial preventive physical exam (IPPE).
In the FQHC PPS proposed rule, published in the September 23, 2013
An analysis of data from Medicare FQHC claims with dates of service between January 1, 2011 and June 30, 2012, indicated that multiple visits billed on the same day constituted less than 0.5 percent of all visits, even though the ability to do so has been in place since 1992 for subsequent illness/injury, since 1996 for mental health services, and since 2007 for DSMT/MNT. We concluded that even allowing for any underreporting in the data, eliminating the ability to bill for multiple visits on the same day would not significantly impact either the FQHC payment or a beneficiary's access to care. Therefore, we proposed to revise § 405.2463(b) to remove the exception to the single encounter payment per day for FQHCs paid under the proposed PPS, and we stated that this policy is consistent with an all-inclusive methodology and reasonable cost principles and would simplify billing and payment procedures.
In the FQHC PPS proposed rule, we solicited comments to address whether there are factors that we have not considered, particularly in regards to the provision of mental health services, and whether this change would impact access to these services or the integration of services in underserved communities.
Although we did not receive any information that showed a direct link between multiple billing on the same day and increasing access to care, we modified our proposal in the final rule and stated that we will allow separate billing for subsequent illness or injury occurring on the same day as another medical visit. We also modified our proposal in the FQHC PPS final rule to allow separate billing for mental health services furnished on the same day as a medical visit, as the comments we received led us to conclude that this had the potential to increase access to care, even if the current claims data did not show that this option was being utilized. We invited comments on these modifications.
We received many comments on the modifications to our proposed policy, which would allow an exception to the per diem PPS payment for subsequent injury or illness and for mental health services furnished on the same day as a medical visit. All of the commenters were supportive of this modification; however, most of the commenters requested additional exceptions to the per diem PPS payment. The following is a summary of these comments.
Many of the commenters who supported our modification allowing subsequent injury or illness and mental health services to be billed separately when furnished on the same day as another billable visit also requested additional exceptions to the PPS per diem payment system. They noted that under the AIR payment system, DSMT/MNT services and the IPPE can be billed separately when furnished on the same day as another billable visit, and requested that these services also have an exception under the PPS. Commenters particularly emphasized the need for separate payment for DSMT/MNT services and suggested that not being able to bill separately for a DSMT/MNT visit that occurs on the same day as another billable medical visit would deter efficient provision of these services.
Commenters are correct that IPPE and DSMT/MNT can be billed as a separate visit under the AIR payment system when furnished on the same day as another medical visit, and that we did not include IPPE or DSMT/MNT in the exceptions under the PPS. As explained in the FQHC PPS proposed rule, an analysis of claims data from FQHCs indicated that the estimated cost per encounter was approximately 33 percent higher when a FQHC furnished care to a patient that was new to the FQHC or to a beneficiary receiving an IPPE or an annual wellness visit (AWV). If we allowed FQHCs to bill separately for an IPPE that occurred on the same day as another medical visit, we would be overpaying the FQHC for the cost of the IPPE. To accurately pay FQHCs for the costs of furnishing an IPPE, we added an adjustment factor of 1.333 to the PPS rate when an IPPE is furnished at a FQHC. We also extended the adjustment factor to both initial and subsequent AWVs, in order to appropriately compensate FQHCs for the costs of furnishing these services.
In the FQHC PPS proposed rule and final rules, we discussed that we did not include an exception to the per-diem payment for DSMT/MNT because an analysis of the claims and cost reporting data did not justify either a separate per-diem payment or an adjustment to the PPS rate. We also stated our belief that a DSMT/MNT visit is part of the broad category of primary care services that are included in the services of a FQHC and are part of the PPS per diem payment. We noted that visits with multiple practitioners that occur on the same day, including visits for different conditions or visits with a specialist physician, are not separately payable in a FQHC, and we do not believe that DSMT/MNT visits should be considered differently than other primary care services.
Although the comments we received did not persuade us to allow DSMT/MNT to be billed separately in a FQHC when it occurs on the same day as another billable medical visit, or to add an adjustment to the PPS rate for DSMT/MNT when it is furnished on the same day as another billable visit, we believe it is a valuable service, particularly in FQHCs that serve areas with high rates of people with diabetes and related illnesses, and we encourage FQHCs to furnish this service as necessary.
We are retaining § 405.2463(c)(4)(i) and § 405.2463(c)(4)(ii) as finalized in 79 FR 25478, which states that for FQHCs billing under the PPS, Medicare pays for more than 1 visit per day when the patient (i) suffers an illness or injury subsequent to the first visit that requires additional diagnosis or treatment on the same day; or (ii) has a medical visit and a mental health visit on the same day.
In the FQHC PPS proposed rule (78 FR 58386), we cited section 1833(a)(1)(Z) of the Act and proposed that Medicare payment under the FQHC PPS would be 80 percent of the lesser of the provider's actual charge or the PPS rate. Commenters were concerned that comparing actual charges with a bundled PPS rate would distort the true cost of services furnished and would result in FQHCs either being forced to increase their charges, or receive payment far below actual cost of furnishing services. In response to these comments, we established a new set of HCPCS G-codes to report an established Medicare patient visit, a new or initial patient visit, and an IPPE or AWV.
We stated that a FQHC would set its charge for the specific payment codes based on its own determination of what would be appropriate for the services normally provided and the population served at that FQHC, and that the charge for a specific payment code would reflect the sum of regular rates charged to both beneficiaries and other paying patients for a typical bundle of services that would be furnished per diem to a Medicare beneficiary. We emphasized that the use of these payment codes does not dictate to providers how to set their charges, and that detailed HCPCS coding with the associated line item charges would continue to be required along with the payment codes when billing Medicare under the PPS. Medicare would pay FQHCs 80 percent of either the actual charge reported for the specific payment code or the PPS rate on each claim, whichever is lower.
We stated that establishing HCPCS G-codes for FQHCs to report and bill for Medicare visits would allow comparison between the PPS per diem rate and a FQHC's charge for a per diem visit (as defined by the specific payment codes), and that this would be responsive to commenters' concerns. As we did not propose the establishment of HCPCS G-codes in the proposed rule, nor did we receive public comments specifically requesting such codes, we invited comments on the establishment of G-codes for FQHCs to report and bill FQHC visits to Medicare under the FQHC PPS.
We received several comments on the establishment of G-codes for FQHCs to report and bill FQHC visits to Medicare under the FQHC PPS. Most commenters favored using G-codes to report and bill FQHC visits under the PPS; however, commenters expressed concerns about the complexity and administrative burden of implementing these codes. The following is a summary of these comments.
Although many of the commenters were supportive of the establishment of G-codes for FQHCs to report and bill FQHC visits to Medicare under the FQHC PPS, many of these commenters stated that the process of developing charges for typical bundles of services will be complex for FQHCs. Commenters stated that FQHCs have had limited experience working with payors who use a “lesser of” or “actual charges” payment methodology. Commenters acknowledged that Medicare regulations require that
We noted in the FQHC PPS final rule that although FQHCs set their own charges, FQHCs that receive grant funding under section 330 of the PHS Act are required to maintain charges that are both consistent with locally prevailing rates or charges and are also reflective of their reasonable costs of operation. Therefore, we do not expect that the FQHCs will use the payment G-codes to artificially inflate their charges.
FQHCs may bill for services furnished incident to a visit on the same claim, even if they occur on a different day, as long as the services are furnished in a medically appropriate time frame. For example, if a patient has their blood drawn at the FQHC on a Monday, and sees the FQHC practitioner the following Wednesday, the FQHC would include the venipuncture on the same claim as the visit with the practitioner.
The FQHC G-codes are defined in program instructions in accordance with statutory and regulatory requirements and will be implemented as described.
In the FQHC PPS proposed rule (78 FR 58386), we proposed that for FQHC claims that include a mix of preventive and non-preventive services, FQHCs would use payments under the PFS to determine the proportional amount of coinsurance that should be waived for payments based on the PPS encounter rate. Since Medicare payment under the FQHC PPS is required to be 80 percent of the lesser of the FQHC's charges or the PPS rate, we proposed that we would continue to use FQHC-reported charges to determine the amount of coinsurance that should be waived for payments based on the FQHC's charge, and that total payment to the FQHC, including both Medicare and beneficiary liability, would not exceed the lesser of the FQHC's charge or the PPS rate.
We acknowledged that our proposed approach for waiving coinsurance for preventive services when furnished with other services was complex and may be difficult for FQHCs to implement, and we invited public comment on how this proposal would impact a FQHC's administrative procedures and billing practices. Commenters responded that the proposed system to calculate coinsurance was too complex and burdensome and requested that a simplified system be established.
In the final rule referenced above, we agreed with the commenters, and decided to retain the current method used under the AIR system for calculating coinsurance, with certain modifications. Under the new FQHC PPS, the dollar value of the FQHC's reported line-item charge for the preventive service will be subtracted from the full payment amount, whether payment is based on the FQHC's charge or the PPS rate. Medicare will pay the FQHC 100 percent of the dollar value of the FQHC's reported line-item charge for the preventive service, up to the total payment amount. Medicare also will pay a FQHC 80 percent of the remainder of the full payment amount, and beneficiary coinsurance would be assessed at 20 percent of the remainder of the full payment amount. If the reported line-item charge for the preventive service equals or exceeds the full payment amount, Medicare will pay 100 percent of the full payment amount and the beneficiary will not be responsible for any coinsurance.
We believe that this revised methodology is responsive to commenters request for a simpler method of calculating coinsurance and will be more transparent to beneficiaries. We invited comments on this approach to waiving coinsurance for preventive services based on the dollar value of the FQHC's reported line-item charge for preventive services.
We received many comments on how our finalized policy for calculation of coinsurance for preventive services would affect a FQHC's administrative procedures and billing practices. Most commenters appreciated that we are striving for policies that ease administrative burden; however, many of the commenters thought that our revised approach is still too complex and burdensome to implement. The following is a summary of these comments.
We are not clear why one commenter suggested that the method for calculating coinsurance could create an incentive for FQHCs to offer fewer services at each visit and request patients to return on different days for
We are retaining § 405.2410(b)(2)(i), § 405.2410(b)(2)(ii), and § 405.2462(d) of the Medicare regulations as finalized in 79 FR 25475 and will use the current approach to waiving coinsurance for preventive services, whether total payment is based on the FQHC's charge or the PPS rate, by subtracting the dollar value of the FQHC's reported line-item charge for the preventive services from the full payment amount.
We received many comments requesting that we provide further information through subregulatory guidance to the stakeholder community regarding same-day visits, development of G-code charges, the calculation of coinsurance when a mixture of preventive and non-preventive services are furnished, what is considered the technical and the professional component of preventive services, billing procedures and processing of claims for same-day visits. Several commenters requested specific examples on calculating coinsurance when the claim contains a mixture of preventive and non-preventive services.
We received some comments that were not related to our specific proposals for the FQHC PPS. Although we appreciate the commenters' feedback on billing for vaccines under Medicare part D, billing for costs relating to language assistance and other enabling services, adjustments to the California GAF, FQHC PPS rate risk adjusters, and the FQHC PPS implementation date, payment for furnishing services to dually eligible Medicare and Medicaid beneficiaries, these topics are beyond the scope of our specific proposals that we specified were subject to public comment in the FQHC PPS.
In this final rule with comment period, we are making a conforming technical revision in § 411.15(p)(2) and § 489.20(s). In the May 2, 2014, interim final rule (79 FR 25462), we updated § 405.2411(b)(2) so that it reflects section 1888(e)(2)(A)(iv) of the Act (as amended by section 410 of the MMA), which excludes certain RHC and FQHC practitioner services from consolidated billing and allows such services to be separately billable under Part B when furnished to a resident of a SNF during a covered Part A stay. This statutory provision was effective with services furnished on or after January 1, 2005 and was previously implemented through program instruction (CMS Pub 100–04, Medicare Claims Processing Manual, Chapter 6, Section 20.1.1).
However, in making this revision, we inadvertently neglected to make a conforming change in § 411.15(p)(2), which enumerates the individual services that are excluded from the SNF consolidated billing provision, as well as in § 489.20(s), which specifies compliance with consolidated billing as a requirement of the SNF's Medicare provider agreement. Accordingly, we are now rectifying that omission.
Regarding the technical corrections to parts 411 and 489 of the regulations discussed above, we note that we would ordinarily publish a notice of proposed rulemaking in the
In the May 2, 2014 final rule (79 FR 25436), we added transitional care management (TCM) to § 405.2463(a)(1)(ii). To clarify that TCM does not necessarily require a face-to-face visit, we revised this section of the regulation for RHCs, but neglected to add the appropriate reference for
Section 1877 of the Act prohibits a physician from referring a Medicare beneficiary for certain designated health services (DHS) to an entity with which the physician (or a member of the physician's immediate family) has a financial relationship, unless an exception applies. Section 1877 of the Act also prohibits the DHS entity from submitting claims to Medicare or billing the beneficiary or any other entity for Medicare DHS that are furnished as a result of a prohibited referral.
Section 1877(h)(6) of the Act and § 411.351 of our regulations specify that the following services are DHS:
• Clinical laboratory services
• Physical therapy services
• Occupational therapy services
• Outpatient speech-language pathology services
• Radiology services
• Radiation therapy services and supplies
• Durable medical equipment and supplies
• Parenteral and enteral nutrients, equipment, and supplies
• Prosthetics, orthotics, and prosthetic devices and supplies
• Home health services
• Outpatient prescription drugs
• Inpatient and outpatient hospital services
In § 411.351, we specify that the entire scope of four DHS categories is defined in a list of CPT/HCPCS codes (the Code List), which is updated annually to account for changes in the most recent CPT and HCPCS Level II publications. The DHS categories defined and updated in this manner are:
• Clinical laboratory services
• Physical therapy, occupational therapy, and outpatient speech-language pathology services
• Radiology and certain other imaging services
• Radiation therapy services and supplies
The Code List also identifies those items and services that may qualify for either of the following two exceptions to the physician self-referral prohibition:
• EPO and other dialysis-related drugs furnished in or by an ESRD facility (§ 411.355(g))
• Preventive screening tests, immunizations, or vaccines (§ 411.355(h))
The definition of DHS at § 411.351 excludes services that are reimbursed by Medicare as part of a composite rate (unless the services are specifically identified as DHS and are themselves payable through a composite rate, such as home health and inpatient and outpatient hospital services). Effective January 1, 2011, EPO and dialysis-related drugs furnished in or by an ESRD facility (except drugs for which there are no injectable equivalents or other forms of administration), have been reimbursed under a composite rate known as the ESRD prospective payment system (ESRD PPS) (75 FR 49030). Accordingly, EPO and any dialysis-related drugs that are paid for under ESRD PPS are not DHS and are not listed among the drugs that could qualify for the exception at § 411.355(g) for EPO and other dialysis-related drugs furnished by an ESRD facility.
Drugs for which there are no injectable equivalents or other forms of administration were scheduled to be paid under ESRD PPS beginning January 1, 2014 (75 FR 49044). However, on January 3, 2013, Congress enacted the American Taxpayer Relief Act of 2012 (ATRA), (Pub. L.112–240), which will delay payment of these drugs under ESRD PPS until January 1, 2016. In the meantime, such drugs furnished in or by an ESRD facility are not reimbursed as part of a composite rate and thus, are DHS. For purposes of the exception at § 411.355(g), only those drugs that are required for the efficacy of dialysis may be identified on the List of CPT/HCPCS Codes as eligible for the exception. As we have explained previously in the CY 2010 PFS final rule (75 FR 73583), we do not believe any of these drugs are required for the efficacy of dialysis. Therefore, we have not included any such drugs on the list of drugs that can qualify for the exception.
The Code List was last updated in Addendum K of the CY 2014 PFS final rule with comment period.
We received no public comments relating to the Code List that became effective January 1, 2014.
The updated, comprehensive Code List effective January 1, 2015, is available on our Web site at
Additions and deletions to the Code List conform it to the most recent publications of CPT and HCPCS Level II, and to changes in Medicare coverage policy and payment status.
Tables 90 and 91 identify the additions and deletions, respectively, to the comprehensive Code List that become effective January 1, 2015. Tables 90 and 91 also identify the additions and deletions to the list of codes used to identify the items and services that may qualify for the exception in § 411.355(g) (regarding dialysis-related outpatient prescription drugs furnished in or by an ESRD facility) and in § 411.355(h) (regarding preventive screening tests, immunizations, and vaccines).
We will consider comments regarding the codes listed in Tables 90 and 91. Comments will be considered if we receive them by the date specified in the
The American Recovery and Reinvestment Act of 2009 (Pub. L. 111–5) (ARRA) amended titles XVIII and XIX of the Act to authorize incentive payments to EPs, eligible hospitals, and critical access hospitals (CAHs), and Medicare Advantage (MA) organizations to promote the adoption and meaningful use of CEHRT. Sections 1848(o), 1853(l) and (m), 1886(n), and 1814(l) of the Act provide the statutory basis for the Medicare incentive payments made to meaningful EHR users. These statutory provisions govern EPs, MA organizations (for certain qualifying EPs and hospitals that meaningfully use CEHRT), subsection (d) hospitals, and CAHs, respectively. Sections 1848(a)(7), 1853(l) and (m), 1886(b)(3)(B), and 1814(l) of the Act also establish downward payment adjustments, beginning with calendar or fiscal year 2015, for EPs, MA organizations, subsection (d) hospitals and CAHs that are not meaningful users of CEHRT for certain associated reporting periods. Sections 1903(a)(3)(F) and 1903(t) of the Act provide the statutory basis for Medicaid incentive payments, but do not provide for downward payment adjustments.
Sections 1848(a)(7)(B), 1886(b)(3)(B)(ix)(II), and 1814(l)(4)(C) of the Act provide that the Secretary may, on a case-by-case basis, exempt an EP, eligible hospital, or CAH that is not a meaningful EHR user for an EHR reporting period for the year from the application of the payment adjustment if the Secretary determines that compliance with the requirement for being a meaningful EHR user would result in a significant hardship, such as in the case of an EP, eligible hospital, or CAH that practices or is located in a rural area without sufficient internet access. The exception is subject to annual renewal, but in no case may an exception be granted for more than 5 years.
In the September 4, 2014
However, following publication of the 2014 CEHRT Flexibility rule, we became aware that providers were confused over their ability to use flexible options provided under the 2014 CEHRT Flexibility rule, especially given the unchanged attestation deadlines. We received numerous letters from various health care associations, multiple questions from stakeholders on provider calls, and numerous emails from providers and EHR vendors, all expressing confusion and seeking clarification about whether they could use the flexible options provided under the 2014 CEHRT Flexibility rule. Specifically, providers were unsure how they could use the flexible options given that the attestation deadlines for both eligible professionals (October 1, 2014) and eligible hospitals (July 1, 2014) would have occurred on or before the effective date of the 2014 CEHRT Flexibility rule (October 1, 2014). Providers were extremely concerned that their inability to use the flexible options specified in the 2014 CEHRT Flexibility rule would subject them to a payment adjustment in 2015 under Medicare for failing to demonstrate meaningful use of CEHRT. This fear was compounded by the fact that the hardship exception application deadlines for both eligible professionals (July 1, 2014) and eligible hospitals (April 1, 2014) had already passed.
In particular, we became aware that eligible professionals who never successfully attested to meaningful use for the EHR Incentive Program were especially affected by this issue because they would not be able to use the flexibility options outlined in the 2014 CEHRT Flexibility rule before the October 1, 2014 deadline to avoid the payment adjustment in CY 2015, because these options could not be made available in the CMS Registration and Attestation System prior to the October 1, 2014 effective date of the 2014 CEHRT Flexibility rule. We also became aware that eligible professionals also faced uncertainty if they joined practices that were already using 2011 Edition CEHRT and experienced delays in full implementation of 2014 Edition CEHRT. Therefore, we understood that eligible professionals were concerned that the inability to attest by October 1, 2014 using the flexible options under the 2014 CEHRT Flexibility rule would potentially subject them to the payment adjustment in CY 2015 authorized under the Medicare EHR Incentive Program if they could not receive a hardship exception.
Accordingly, to ensure that all providers can use the flexible options recently finalized under the 2014 CEHRT Flexibility rule for an EHR reporting period in 2014, and ensure that providers are not potentially subjected to the 2015 payment adjustment under the Medicare EHR Incentive Program, we are recognizing a hardship exception under the established category of “extreme and uncontrollable circumstances” under 42 CFR § 495.102(d)(4)(iii) for eligible professionals and § 412.64(d)(4)(ii)(B) for eligible hospitals, pursuant to the Secretary's discretionary hardship exception authority. Under this IFC, we will consider that an extreme and uncontrollable circumstance hardship exists for an eligible professional or
For CAHs, although we would recognize a hardship exception for CAHs under these circumstances, this exception would have little impact on CAHs because the hardship exception application deadline for CAHs for the 2015 payment adjustment does not occur until November 30, 2015. Accordingly, CAHs will have ample time to attest using the flexibility options under the 2014 CEHRT Flexibility rule and will not be impacted in the same manner as eligible hospitals or eligible professionals, whose attestation and hardship exception application deadlines have since passed. However, as explained below, to maximize flexibility in the hardship exception application submission process for all providers under the hardship exception categories, so that we avoid similar situations in the future, like the ones prompting this IFC, we are amending § 413.70(a)(6) to allow CMS the flexibility to specify an alternate hardship exception application submission deadline for certain hardship categories other than November 30th.
Section 495.102(d)(4) provides the categories of hardship exceptions for EPs, including insufficient internet access, newly practicing EPs, extreme circumstances outside of an EP's control, lack of control over the availability of CEHRT for EPs practicing in multiple locations, lack of face-to-face patient interactions and lack of need for follow-up care, and certain primary specialties. With the exception of the newly practicing EP hardship exception category, the EP is required to file a hardship exception application to CMS for the remaining hardship categories no later than July 1st of the year before the payment adjustment year.
Similar to eligible professionals, § 412.64(d)(4) provides the categories of hardship exceptions for eligible hospitals, which include insufficient internet access, new eligible hospitals, and extreme and uncontrollable circumstances outside of an eligible hospital's control. Under the hardship exception categories for insufficient internet access and extreme and uncontrollable circumstances, the eligible hospital is required to file a hardship exception application to CMS no later than April 1st of the year before the payment adjustment year.
Similar to eligible hospitals, § 413.70(a)(6) provides the categories of hardship exceptions that CAHs could apply for, which include insufficient internet access, new CAHs, and extreme and uncontrollable circumstances outside of a CAH's control. Under all hardship exception categories, the CAH is required to file a hardship exception application to CMS no later than November 30th after the close of the applicable EHR reporting period for a payment adjustment year to be considered for a hardship exception.
For purposes of the 2015 payment adjustment under the Medicare EHR Incentive Program, the hardship exception application deadlines for both eligible hospitals and eligible professionals have ended. However, we need to accommodate the extreme and uncontrollable circumstance hardship exception recognized under this IFC. Therefore, for purposes of the 2015 payment adjustment under the Medicare EHR Incentive Program, we are extending the hardship exception application submission deadline for both eligible hospitals and eligible professionals to November 30, 2014. We believe that extending the hardship exception application deadline to November 30, 2014 will allow ample time for those eligible hospitals and eligible professionals that could not fully implement 2014 Edition CEHRT due to 2014 Edition CEHRT availability delays and that could not attest by their applicable attestation deadline using the flexibility options provided in the 2014 CEHRT flexibility rule to file an application for the hardship exception recognized under this IFC.
The extension of the hardship exception application submission deadline to November 30, 2014, applies only to those providers who meet the criteria described under this IFC. We will not extend, reopen, or reconsider the hardship exception application deadline for the 2015 payment adjustment for any other reason. Further, as explained above, because CAHs have still not reached their November 30, 2015 hardship exception application deadline, they are not affected in the same manner as eligible hospitals and eligible professionals, and are still eligible to file a hardship exception application until November 30th under any of the categories specified under § 413.70(a)(6).
Next, to extend the hardship exception application deadline to November 30, 2014, for eligible hospitals and eligible professionals, we must amend under this IFC the July 1st hardship exception application deadline for extreme and uncontrollable circumstances under § 495.102(d)(4)(iii) for eligible professionals and the April 1st deadline under § 412.64(d)(4)(ii)(B) for eligible hospitals. For eligible professionals, the new amendment to § 495.102(d)(4)(iii) will include, following the July 1st hardship exception application submission deadline specified in the regulation, language that would enable CMS to specify a later deadline. For eligible hospitals, the new amendment to § 412.64(d)(4)(ii)(B) will include, following the April 1st hardship exception application submission deadline specified in the regulation, language that would enable CMS to specify a later deadline. We are making these regulatory amendments under this IFC to allow eligible hospitals and eligible professionals to take advantage of the extreme and uncontrollable circumstances hardship exception outlined under this IFC. Without such changes, eligible hospitals and eligible professionals would be unable to apply for this hardship exception because the application deadlines have already passed.
Finally, we note that, as with the circumstances described in this IFC that caused us to extend the deadline to November 30, 2014, there may be situations in the future that would warrant extending the July 1st deadline for eligible professionals, the April 1st deadline for eligible hospitals, and the November 30th deadline for CAHs. Accordingly, to ensure that we do not face similar timing constraints in the future and to reduce administrative burden on providers who wish to request a hardship exception, we are amending the regulation text for the other hardship exception categories to enable CMS to specify a later deadline
Specifically, for eligible professionals, in addition to the amendments we cited above for § 495.102(d)(4)(iii) relating to the extreme and uncontrollable circumstances hardship exception category, we are also amending § 495.102(d)(4)(i) (insufficient internet access) and (d)(4)(iv) (multiple locations/lack of face-to-face encounters and need for follow-up/certain primary specialties) to add similar language.
For eligible hospitals, in addition to the amendments we cited above for § 412.64(d)(4)(ii)(B) relating to the extreme and uncontrollable circumstances hardship exception category, we are also amending § 412.64(d)(4)(ii)(A) (lack of internet access) to add similar language.
For CAHs, we are amending § 413.70(a)(6)(ii) to add language similar to the language added to the regulation text for eligible professionals and eligible hospitals, as discussed above. We believe that the flexibility to specify a later hardship exception application submission deadline as set forth above will prevent situations such as the one addressed under this IFC where, for example, an unforeseen circumstance occurred, which could justify a hardship exception, but the hardship exception application submission deadline has passed. However, we emphasize that we do not intend to exercise this flexibility to extend the hardship exception application submission deadline frequently. Rather, to maintain the consistency needed for our operations, providers should expect to adhere to the dates specified in the regulation text and not rely on the possibility of changes to the hardship application submission period occurring on a frequent basis.
Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
Unless noted otherwise, we used data from the U.S. Bureau of Labor Statistics for all salary estimates. The estimates include the cost of fringe benefits, calculated at 35 percent of salary, which is based on the Bureau's June 2012 Employer Costs for Employee Compensation report.
In the CY 2015 PFS proposed rule (79 FR 40317), we solicited public comment on each of the section 3506(c)(2)(A)-required issues for the following information collection requirements (ICRs).
This provision removes the requirement that nonphysician RHC or FQHC practitioners be W–2 employees. This action does not require the modification of existing contracts or the creation of new contracts, nor does CMS collect any information on contracting. Consequently, the provision is not subject to the requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
This provision concerns the evaluation of models tested under, section 1115A of the Act. Section 1115(A)(d)(3) of the Act provides that the Paperwork Reduction Act (44 U.S.C. 3501
The proposed Clinical Diagnostic Laboratory LCD Process will not be finalized. Consequently, the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The proposed rule solicited comment on substitute billing arrangements and did not set out any new or revised collection of information requirements. Consequently, the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
With regard to the following provisions, no PRA-related comments were received. The proposed provisions are being adopted without change.
In § 403.904(c)(8), applicable manufacturers and applicable group purchasing organizations (GPOs) must report the marketed name and therapeutic area or product category of covered drugs, devices, biologicals and medical supplies. The amendment has non-measurable effect on current burden estimates since the manufacturers and GPOs are already required to report the marketed name for drugs and biologicals and report the marketed name, therapeutic area, or product category for devices and medical supplies. While the requirement has no burden implications, the provision will be submitted to OMB for approval under control number 0938–1173 (CMS–10419).
In § 403.904(d)(3), applicable manufacturers and applicable GPOs must report the form of payment or other transfers of value as: Cash or cash equivalent, in-kind items or services, stock, stock option, or any other ownership investment. The burden associated with this provision is the time and effort it will take each applicable manufacturer and applicable GPO to revise their reporting system to report the form of payment.
The removal of § 403.904(g) requires that applicable manufacturers and applicable GPOs of covered drugs, devices, biologicals, and medical supplies report annually to CMS all payments or other transfers of value provided as compensation for speaking at a continuing education program. The ongoing burden associated with this provision is the time and effort it will take each applicable manufacturer and applicable GPO to report payments or other transfers of value to CMS which were provided to physicians at a continuing education program. We estimate that it will take 1.0 hour to report payments or other transfers of value to CMS which were provided to physician at a continuing education program.
We estimate that it will take 1.0 hour to report payments or other transfers of value to CMS which were provided to physician covered recipients as
In deriving these figures, we used the following hourly labor rates and estimated the time to complete each task: $26.39/hr and 1.0 hours for support staff to report payments or other transfers of value to CMS which were provided to physician covered recipients as compensation for speaking at a continuing education program and $4+7.55/hr and 0.5 hours for support to revise their reporting system to report the form of payment.
The preceding requirements and burden estimates will be added to the existing PRA-related requirements and burden estimates that have been approved by OMB under control number 0938–1173 (CMS–10419).
With regard to the following provisions, no PRA-related comments were received. The proposed provisions are being adopted without change.
The annual burden estimate is calculated separately for the 2017 PQRS payment adjustment (the reporting periods of which occur in 2015): (1) Individual eligible professionals and group practices using the claims (for eligible professionals only), (2) qualified registry and QCDR, (3) EHR-based reporting mechanisms, and (4) group practices using the group practice reporting option (GPRO). Please note that we are grouping group practices using the qualified registry and EHR-based reporting mechanisms with the burden estimate for individual eligible professionals using the qualified registry and EHR-based reporting mechanisms because we believe the criteria for satisfactory reporting for group practices using these 2 reporting mechanisms under the GPRO are similar to the satisfactory reporting criteria for eligible professionals using these reporting mechanisms.
According to the 2012 Reporting Experience, “more than 1.2 million eligible professionals were eligible to participate in the 2012 PQRS, Medicare Shared Savings Program, and Pioneer ACO Model.”
In 2012, 435,871 eligible professionals (36 percent of eligible professionals, including those who belonged to group practices that reported under the GPRO and eligible professionals within an ACO that participated in the PQRS via the Shared Savings Program or Pioneer ACO model) participated in the PQRS, Medicare Shared Savings Program, or Pioneer ACO Model.
With respect to the PQRS, the burden associated with the requirements of this voluntary reporting initiative is the time and effort associated with individual eligible professionals identifying applicable quality measures for which they can report the necessary information, selecting a reporting option, and reporting the information on their selected measures or measures group to CMS using their selected reporting option.
We believe the labor associated with eligible professionals and group practices reporting quality measures data in the PQRS is primarily handled by an eligible professional's or group practice's billing clerk or computer analyst trained to report quality measures data. Therefore, we will consider the hourly wage of a billing clerk and computer analyst in our estimates. For purposes of this burden estimate, we assume that a billing clerk will handle the administrative duties associated with participating in the PQRS. According to information published by the Bureau of Labor Statistics, available at
Please note that, in assessing PQRS-specific burden estimates, to account for benefits and overhead associated with labor in addition to the hourly wage costs described above, we are doubling the wage rates in our estimates. While we accounted for fringe benefits in the NPRM's wage estimates, we did not double the wage rates in those estimates.
For individual eligible professionals, the burden associated with the requirements of this reporting initiative is the time and effort associated with eligible professionals identifying applicable quality measures for which they can report the necessary information, collecting the necessary information, and reporting the information needed to report the eligible professional's measures. We believe it is difficult to accurately quantify the burden because eligible professionals may have different processes for integrating the PQRS into their practice's work flows. Moreover, the time needed for an eligible professional to review the quality measures and other information, select measures applicable to his or her patients and the services he or she furnishes to them, and incorporate the use of quality data codes into the office work flows is expected to vary along with the number of measures that are potentially applicable to a given professional's practice. Since eligible professionals are generally required to report on at least 9 measures covering at least 3 National Quality Strategy domains criteria for
For eligible professionals who are participating in PQRS for the first time, we will assign 5 total hours as the amount of time needed for an eligible professional's billing clerk to review the PQRS measures list, review the various reporting options, select the most appropriate reporting option, identify the applicable measures or measures groups for which they can report the necessary information, review the measure specifications for the selected measures or measures groups, and incorporate reporting of the selected measures or measures groups into the office work flows. The measures list contains the measure title and brief summary information for the eligible professional to review. Assuming the eligible professional has received no training from his/her specialty society, we estimate it will take an eligible professional's billing clerk up to 2 hours to review this list, review the reporting options, and select a reporting option and measures on which to report. If an eligible professional has received training, then we believe this would take less time. CMS believes 3 hours is plenty of time for an eligible professional to review the measure specifications of 9 measures or 1 measures group they select to report for purposes of participating in PQRS and to develop a mechanism for incorporating reporting of the selected measures or measures group into the office work flows. Therefore, we believe that the start-up cost for an eligible professional to report PQRS quality measures data is 5 hours × $32/hour = $160.
We continue to expect the ongoing costs associated with PQRS participation to decline based on an eligible professional's familiarity with and understanding of the PQRS, experience with participating in the PQRS, and increased efforts by CMS and stakeholders to disseminate useful educational resources and best practices.
We believe the burden associated with reporting the quality measures will vary depending on the reporting mechanism selected by the eligible professional. As such, we break down the burden estimates by eligible professionals and group practices participating in the GPRO according to the reporting mechanism used.
According to the 2011 PQRS and eRx Experience Report, in 2011, 229,282 of the 320,422 eligible professionals (or 72 percent) of eligible professionals used the claims-based reporting mechanism. According to the 2012 Reporting Experience, 248,206 eligible professionals participated in the PQRS using the claims-based reporting mechanism in 2012.
According to the historical data cited above, while the claims-based reporting mechanism is still the most widely-used reporting mechanism, we are seeing a decline in the use of the claims-based reporting mechanism in the PQRS. While these eligible professionals continue to participate in the PQRS, these eligible professionals have started to shift towards the use of other reporting mechanisms—mainly the GPRO Web interface (whether used by a PQRS GPRO or an ACO participating in the PQRS via the Medicare Shared Savings Program or the Pioneer ACO Model), registry, or the EHR-based reporting mechanisms. For purposes of this burden estimate, based on PQRS participation using the claims-based reporting mechanism in 2012 and 2013, we assume that approximately 250,000 eligible professionals will participate in the PQRS using the claims-based reporting mechanism.
For the claims based reporting option, eligible professionals must gather the required information, select the appropriate quality data codes (QDCs), and include the appropriate QDCs on the claims they submit for payment. The PQRS will collect QDCs as additional (optional) line items on the existing HIPAA transaction 837 P and/or CMS form CMS–1500 (OMB control number 0938–0999). We do not anticipate any new forms and or any modifications to the existing transaction or form. We also do not anticipate changes to the 837 P or CMS–1500 for CY 2015.
We estimate the cost for an eligible professional to review the list of quality measures or measures groups, identify the applicable measures or measures groups for which they can report the necessary information, incorporate reporting of the selected measures into the office work flows, and select a PQRS reporting option to be approximately $410 per eligible professional ($82 per hour × 5 hours).
Based on our experience with the Physician Voluntary Reporting Program (PVRP), we continue to estimate that the time needed to perform all the steps necessary to report each measure (that is, reporting the relevant quality data code(s) for 9 measures measure) would range from 15 seconds (0.25 minutes) to over 12 minutes for complicated cases and/or measures, with the median time being 1.75 minutes. To report 9 measures, we estimate that it will take approximately 2.25 minutes to 108 minutes to perform all of the necessary reporting steps.
Per measure, at an average labor cost of $82/hour per practice, the cost associated with this burden will range from $0.34 to about $16.40 for more complicated cases and/or measures, with the cost for the median practice being $2.40. To report 9 measures, using an average labor cost of $82/hour, we estimated that the cost of reporting for an eligible professional via claims will range from $3.07 (2.25 minutes or 0.0375 hours × $82/hour) to $147.60 (108 minutes or 1.8 hours × $82/hour) per reported case.
The total estimated annual burden for this requirement will also vary along with the volume of claims on which quality data is reported. In previous years, when we required reporting on 80 percent of eligible cases for claims based reporting, we found that on average, the median number of reporting instances for each of the PQRS measures was 9. Since we reduced the required reporting rate by over one-third to 50 percent, then for purposes of this burden analysis we assume that an eligible professional or eligible professional in a group practice will need to report each selected measure for 6 reporting instances. The actual number of cases on which an eligible professional or group practice is required to report quality measures data will vary, however, with the eligible professional's or group practice's patient population and the types of measures on which the eligible professional or group practice chooses to report (each measure's specifications includes a required reporting frequency).
Based on these assumptions, we estimate that the total annual reporting burden per individual eligible professional associated with claims based reporting will range from 13.5 minutes (0.25 minutes per measure × 9 measures × 6 cases per measure) to 648 minutes (12 minutes per measure × 9 measures × 6 cases per measure), with the burden to the median practice being
In 2011, approximately 50,215 (or 16 percent) of the 320,422 eligible professionals participating in PQRS used the qualified registry-based reporting mechanism. According to the 2012 Reporting Experience, 36,473 eligible professionals reported individual measures via the registry-based reporting mechanism, and 10,478 eligible professionals reporting measures groups via the registry-based reporting mechanism in 2012.
We believe that the rest of the eligible professionals not participating in other PQRS reporting mechanisms will use either the registry or QCDR reporting mechanisms for the following reasons:
• The PQRS measures set is moving away from use of claims-based measures and moving towards the use of registry-based measures.
• We believe the number of QCDR vendors will increase as the QCDR reporting mechanism evolves.
Therefore, based on these assumptions, we expect to see a significant jump from 47,000 eligible professionals to approximately 165,000 eligible professionals using either the registry-based reporting mechanism or QCDR in 2015. We believe the majority of these eligible professionals will participate in the PQRS using a QCDR, as we presume QCDRs will be larger entities with more members.
For qualified registry based and QCDR-based reporting, there will be no additional time burden for eligible professionals or group practices to report data to a qualified registry as eligible professionals and group practices opting for qualified registry based reporting or use of a QCDR will more than likely already be reporting data to the qualified registry for other purposes and the qualified registry will merely be repackaging the data for use in the PQRS. Little, if any, additional data will need to be reported to the qualified registry or QCDR solely for purposes of participation in the PQRS. However, eligible professionals and group practices will need to authorize or instruct the qualified registry or QCDR to submit quality measures results and numerator and denominator data on quality measures to CMS on their behalf. We estimate that the time and effort associated with this will be approximately 5 minutes per eligible professional or eligible professional within a group practice.
Please note that, unlike the claims-based reporting mechanism that would require an eligible professional to report data to CMS on quality measures on multiple occasions, an eligible professional would not be required to submit this data to CMS, as the qualified registry or QCDR would perform this function on the eligible professional's behalf.
According to the 2011 PQRS and eRx Experience Report, in 2011, 560 (or less than 1 percent) of the 320,422 eligible professionals participating in PQRS used the EHR-based reporting mechanism. In 2012 there was a sharp increase in reporting via the EHR-based reporting mechanism. Specifically, according to the 2012 Reporting Experience, in 2012, 19,817 eligible professionals submitted quality data for the PQRS through a qualified EHR.
We believe the number of eligible professionals and group practices using the EHR-based reporting mechanism will steadily increase as eligible professionals become more familiar with EHR products and more eligible professionals participate in programs encouraging the use of an EHR, such as the EHR Incentive Program. In particular, we believe eligible professionals will transition from using the claims-based to the EHR-based reporting mechanism. To account for this anticipated increase, we continue to estimate that approximately 50,000 eligible professionals, whether participating as an individual or part of a group practice under the GPRO, would use the EHR-based reporting mechanism in CY 2015.
For EHR-based reporting, which includes EHR reporting via a direct EHR product and an EHR data submission vendor's product, the eligible professional or group practice must review the quality measures on which we will be accepting PQRS data extracted from EHRs, select the appropriate quality measures, extract the necessary clinical data from his or her EHR, and submit the necessary data to the CMS-designated clinical data warehouse.
For EHR based reporting for the PQRS, the individual eligible professional or group practice may either submit the quality measures data directly to CMS from their EHR or utilize an EHR data submission vendor to submit the data to CMS on the eligible professional's or group practice's behalf. To submit data to CMS directly from their EHR, the eligible professional or eligible professional in a group practice must have access to a CMS specified identity management system, such as IACS, which we believe takes less than 1 hour to obtain. Once an eligible professional or eligible professional in a group practice has an account for this CMS specified identity management system, he or she will need to extract the necessary clinical data from his or her EHR, and submit the necessary data to the CMS designated clinical data warehouse. With respect to submitting the actual data file for the respective reporting period, we believe that this will take an eligible professional or group practice no more than 2 hours, depending on the number of patients on which the eligible professional or group practice is submitting. We believe that once the EHR is programmed by the vendor to allow data submission to CMS, the burden to the eligible professional or group practice associated with submission of data on quality measures should be minimal as all of the information required to report the measure should already reside in the eligible professional's or group practice's EHR.
As we noted in last year's estimate, according to the 2011 Experience Report, approximately 200 group practices participated in the GPRO in 2011. According to the 2012 Reporting Experience, 66 practices participated in
With respect to the process for group practices to be treated as satisfactorily submitting quality measures data under the PQRS, group practices interested in participating in the PQRS through the GPRO must complete a self-nomination process similar to the self-nomination process required of qualified registries. However, since a group practice using the GPRO web interface would not need to determine which measures to report under PQRS, we believe that the self-nomination process is handled by a group practice's administrative staff. Therefore, we estimate that the self-nomination process for the group practices for the PQRS involves approximately 2 hours per group practice to review the PQRS GPRO and make the decision to participate as a group rather than individually and an additional 2 hours per group practice to draft the letter of intent for self-nomination, gather the requested TIN and NPI information, and provide this requested information. It is estimated that each self-nominated entity will also spend 2 hours undergoing the vetting process with CMS officials. We assume that the group practice staff involved in the group practice self-nomination process has an average practice labor cost of $32 per hour. Therefore, assuming the total burden hours per group practice associated with the group practice self-nomination process is 6 hours, we estimate the total cost to a group practice associated with the group practice self-nomination process to be approximately $192 ($32 per hour × 6 hours per group practice).
The burden associated with the group practice reporting requirements under the GPRO is the time and effort associated with the group practice submitting the quality measures data. For physician group practices, this would be the time associated with the physician group completing the web interface. We estimate that the time and effort associated with using the GPRO web interface will be comparable to the time and effort associated to using the PAT. As stated above, the information collection components of the PAT have been reviewed by OMB and are approved under control number 0938–0941(form CMS–10136) with an expiration date of July 31, 2015, for use in the PGP, MCMP, and EHR demonstrations. As the GPRO was only recently implemented in 2010, it is difficult to determine the time and effort associated with the group practice submitting the quality measures data. As such, we will use the same burden estimate for group practices participating in the GPRO as we use for group practices participating in the PGP, MCMP, and EHR demonstrations. Since these changes will not have any impact on the information collection requirements associated with the PAT and we will be using the same data submission process used in the PGP demonstration, we estimate that the burden associated with a group practice completing data for PQRS under the web interface will be the same as for the group practice to complete the PAT for the PGP demonstration. In other words, we estimate that, on average, it will take each group practice 79 hours to submit quality measures data via the GPRO web interface at a cost of $82 per hour. Therefore, the total estimated annual cost per group practice is estimated to be approximately $6,478.
Section 3022 of the Affordable Care Act exempts any collection of information associated with the Medicare Shared Savings Program from the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
This rule does not impose new or alter existing reporting, recordkeeping, or third-party disclosure requirements. Consequently, it need not be reviewed by OMB under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
With regard to the hardship application, this rule will not impose any new or revised reporting, recordkeeping, or third-party disclosure requirements and therefore, does not require additional OMB review under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The application's information collection requirements and burden have been approved by OMB under OMB control number 0938–1158 (CMS–10336).
Table 92 summarizes this rule's requirements and burden estimates.
We have submitted a copy of this rule to OMB for its review of the rule's information collection and recordkeeping requirements. These requirements are not effective until they have been approved by OMB.
To obtain copies of the supporting statement and any related forms for the paperwork collections referenced above, access CMS' Web site at
When commenting on the stated information collections, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be received by the OMB desk officer via one of the following transmissions:
Mail: OMB, Office of Information and Regulatory Affairs, Attention: CMS Desk Officer, Fax: (202) 395–5806 OR, Email:
PRA-specific comments must be received by December 1, 2014.
Because of the large number of public comments we normally receive on
We ordinarily publish a notice of proposed rulemaking in the
We utilize HCPCS codes for Medicare payment purposes. The HCPCS is a national coding system comprised of Level I (CPT) codes and Level II (HCPCS National Codes) that are intended to provide uniformity to coding procedures, services, and supplies across all types of medical providers and suppliers. Level I (CPT) codes are copyrighted by the AMA and consist of several categories, including Category I codes which are 5-digit numeric codes, and Category III codes which are temporary codes to track emerging technology, services, and procedures.
The AMA issues an annual update of the CPT code set each Fall, with January 1 as the effective date for implementing the updated CPT codes. The HCPCS, including both Level I and Level II codes, is similarly updated annually on a CY basis. Annual coding changes are not available to the public until the Fall immediately preceding the annual January update of the PFS. Because of the timing of the release of these new and revised codes, it is impracticable for us to provide prior notice and solicit comment on these codes and the RVUs assigned to them in advance of publication of the final rule that implements the PFS. Yet, it is imperative that these coding changes be accounted for and recognized timely under the PFS for payment because services represented by these codes will be furnished to Medicare beneficiaries by physicians and practitioners during the CY in which they become effective. Moreover, regulations implementing HIPAA (42 CFR parts 160 and 162) require that the HCPCS be used to report health care services, including services paid under the PFS. We assign interim RVUs to any new and revised codes based on a review of the RUC recommendations for valuing these services. We also assign interim RVUs to certain codes for which we did not receive specific RUC recommendations, but that are components of new combined codes. We set interim RVUs for the component codes in order to conform them to the value of the combined code. Finally, we assign interim RVUs to certain codes for which we received RUC recommendations for only one component (work or PE) but not both. By reviewing these RUC recommendations for the new and revised codes, we are able to assign RVUs to services based on input from the medical community and to establish payment for them, on an interim basis, that corresponds to the relative resources associated with furnishing the services. We are also able to determine, on an interim final basis, whether the codes will be subject to other payment policies. If we did not assign RVUs to new and revised codes on an interim basis, the alternative would be to either not pay for these services during the initial CY or have each Medicare contractor establish a payment rate for these new codes. We believe both of these alternatives are contrary to the public interest, particularly since the RUC process allows for an assessment of the valuation of these services by the medical community prior to our establishing payment for these codes on an interim basis. Therefore, we believe it would be contrary to the public interest to delay establishment of fee schedule payment amounts for these codes until notice and comment procedures could be completed.
This final rule with comment period revises the process we will use to address new, revised in order to minimize the need to establish RVUs on an interim final basis beginning with rulemaking for CY 2017. However, for the reasons previously outlined in this section, we find good cause to waive the notice of proposed rulemaking for the interim RVUs for selected procedure codes identified in Addendum C and to establish RVUs for these codes on an interim final basis for CY 2015. We are providing a 60-day public comment period.
Section II.E. of this final rule with comment period discusses our review and decisions regarding the RUC recommendations. Similar to the RUC recommendations for new and revised codes previously discussed, due to the timing of the RUC recommendations for the services identified as potentially misvalued codes, it is impracticable for CMS to provide for notice and comment regarding specific revisions prior to publication of this final rule with comment period. We believe it is in the public interest to implement the revised RVUs for the codes that were identified as misvalued, and that have been reviewed and re-evaluated by the RUC, on an interim final basis for CY 2015. The revised RVUs for these codes will establish a more appropriate payment that better corresponds to the relative resources involved in furnishing these services. A delay in implementing revised values for these misvalued codes would not only perpetuate the known misvaluation for these services, it would also perpetuate distortion in the payment for other services under the PFS. Implementing the changes on an interim basis allows for a more equitable resource-based distribution of payments across all PFS services. We believe a delay in implementation of these revisions would be contrary to the public interest, particularly since the RUC process allows for an assessment of the valuation of these services by the medical community prior to the RUC's recommendation to CMS. This final rule with comment period revises the process we will use to address misvalued codes in order to minimize the need to establish RVUs on an interim final basis beginning with
We ordinarily publish a notice of proposed rulemaking in the
In the May 2, 2014, interim final rule (79 FR 25462), we updated § 405.2411(b)(2) so that it reflects section 1888(e)(2)(A)(iv) of the Act (as amended by section 410 of the MMA), which excludes certain RHC and FQHC practitioner services from consolidated billing and allows such services to be separately billable under Part B when furnished to a resident of a SNF during a covered Part A stay.
However, in making this revision, we inadvertently neglected to make a conforming change in § 411.15(p)(2), which enumerates the individual services that are excluded from the SNF consolidated billing provision, as well as in § 489.20(s), which specifies compliance with consolidated billing as a requirement of the SNF's Medicare provider agreement. Accordingly, we are now rectifying that omission in this final rule with comment period, by making a conforming technical revision in § 411.15(p)(2) and § 489.20(s).
These particular revisions merely provide technical corrections to the regulations, without making any substantive changes. Therefore, for good cause, we waive notice and comment procedures for the revisions to the regulations text in parts 411 and 489.
We ordinarily publish a notice of proposed rulemaking in the
With regard to the interim revisions to the Electronic Health Record (EHR) Incentive Program, we find good cause to waive the notice-and-comment procedure as contrary to the public interest. We believe that providing notice and a comment period would prevent us from providing relief from the circumstances outlined in section III.Q. A delay would interfere with the ability of eligible professionals and eligible hospitals to request a hardship exception for the extreme and uncontrollable circumstances specified under this IFC given that the hardship applications deadlines have since passed for both eligible professionals and eligible hospitals. Any delay to this IFC would potentially subject providers to the 2015 payment adjustment under the Medicare EHR Incentive Program and potentially decrease participation in the EHR Incentive Programs, thereby creating a negative impact to the forward movement of the EHR Incentive Programs. For these reasons, we find good cause to waive the notice of proposed rulemaking for these revisions to the EHR Incentive Program and to establish these revisions on an interim final basis. We are providing a 60-day public comment period.
We ordinarily provide a 60-day delay in the effective date of final rules after the date they are issued. The 60-day delay in effective date can be waived, however, if the agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued. The delayed effective date may also be waived in the case of a substantive rule which grants or recognizes an exemption or relieves a restriction. For the reasons set forth below, we believe it would be contrary to the public interest to delay the effective date of the interim final revisions to the EHR Incentive Program described in section III.Q of this final rule with comment period We also believe these interim final revisions relieve a restriction.
The IFC recognizes a hardship exception based on extreme and uncontrollable circumstances, which could potentially provide relief from the application of the 2015 payment adjustment under the Medicare EHR Incentive Program to certain providers. This IFC would also relieve a restriction by amending the existing deadlines in the regulation text for providers to apply for hardship exceptions from the payment adjustments. Unless these amendments to the deadlines are made effective immediately, eligible hospitals and eligible professionals would not have enough time to take advantage of the November 30th extended hardship exception application submission period specified in this IFC, given that their hardship exception application submission deadlines have since passed. We find good cause to waive the delayed effective date of the interim final revisions to the EHR Incentive Program and find that they relieve an existing restriction by changing the deadlines by which providers must apply for hardship exceptions. These provisions will be effective on October 31, 2014.
This final rule with comment period is necessary to make payment and policy changes under the Medicare PFS and to make required statutory changes under the Pathway for SGR Reform Act of 2013 and the PAMA. This final rule with comment period also is necessary to make changes to Part B payment policy for clinical diagnostic lab tests and other Part B related policies. This rule also implements aspects of the data collection required under section 1115A(b)(4) of the Act.
We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (February 2, 2013), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects
The RFA requires that we analyze regulatory options for small businesses and other entities. We prepare a regulatory flexibility analysis unless we certify that a rule would not have a significant economic impact on a substantial number of small entities. The analysis must include a justification concerning the reason action is being taken, the kinds and number of small entities the rule affects, and an explanation of any meaningful options that achieve the objectives with less significant adverse economic impact on the small entities.
Approximately 95 percent of practitioners, other providers and suppliers are considered to be small entities, based upon the SBA standards. There are over 1 million physicians, other practitioners, and medical suppliers that receive Medicare payment under the PFS. Because many of the affected entities are small entities, the analysis and discussion provided in this section as well as elsewhere in this final rule with comment period is intended to comply with the RFA requirements.
In addition, section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined, and the Secretary certifies, that this final rule with comment period would not have a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits on State, local, or tribal governments or on the private sector before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2014, that threshold is approximately $141 million. This final rule with comment period would impose no mandates on state, local, or tribal governments or on the private sector.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this regulation does not impose any costs on State or local governments, the requirements of Executive Order 13132 are not applicable.
We have prepared the following analysis, which together with the information provided in the rest of this preamble, meets all assessment requirements. The analysis explains the rationale for and purposes of this final rule with comment period; details the costs and benefits of the rule; analyzes alternatives; and presents the measures we would use to minimize the burden on small entities. As indicated elsewhere in this final rule with comment period, we are implementing a variety of changes to our regulations, payments, or payment policies to ensure that our payment systems reflect changes in medical practice and the relative value of services, and to implement statutory provisions. We provide information for each of the policy changes in the relevant sections of this final rule with comment period. We are unaware of any relevant federal rules that duplicate, overlap, or conflict with this final rule with comment period. The relevant sections of this final rule with comment period contain a description of significant alternatives if applicable.
Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or decreases in RVUs may not cause the amount of expenditures for the year to differ by more than $20 million from what expenditures would have been in the absence of these changes. If this threshold is exceeded, we make adjustments to preserve budget neutrality.
Our estimates of changes in Medicare revenues for PFS services compare payment rates for CY 2014 with payment rates for CY 2015 using CY 2013 Medicare utilization as the basis for the comparison. The payment impacts reflect averages for each specialty based on Medicare utilization. The payment impact for an individual physician could vary from the average and would depend on the mix of services the physician furnishes. The average change in total revenues would be less than the impact displayed here because physicians furnish services to both Medicare and non-Medicare patients and specialties may receive substantial Medicare revenues for services that are not paid under the PFS. For instance, independent laboratories receive approximately 83 percent of their Medicare revenues from clinical laboratory services that are not paid under the PFS.
We note that these impacts do not include the effect of the April 2015 conversion factor changes under current law. The annual update to the PFS conversion factor is calculated based on a statutory formula that measures actual versus allowed or “target” expenditures, and applies a sustainable growth rate (SGR) calculation intended to control growth in aggregate Medicare expenditures for physicians' services. This update methodology is typically referred to as the “SGR” methodology, although the SGR is only one component of the formula. Medicare PFS payments for services are not withheld if the percentage increase in actual expenditures exceeds the SGR. Rather, the PFS update, as specified in section 1848(d)(4) of the Act, is adjusted to eventually bring actual expenditures back in line with targets. If actual expenditures exceed allowed expenditures, the update is reduced. If actual expenditures are less than allowed expenditures, the update is increased. By law, we are required to apply these updates in accordance with sections 1848(d) and (f) of the Act, and any negative updates can only be averted by an Act of the Congress.
Tables 93 shows the payment impact on PFS services. To the extent that there are year-to-year changes in the volume and mix of services provided by physicians, the actual impact on total Medicare revenues will be different from those shown in Table 93 (CY 2015 PFS Final Rule with Comment Period Estimated Impact on Total Allowed Charges by Specialty).
The following is an explanation of the information represented in Table 93:
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The changes in work RVU impacts are almost entirely attributable to the payment for CCM services beginning in CY 2015. We finalized this separately billable CCM service in the CY 2014 final rule with comment period, effective beginning in CY 2015 (78 FR 74414 through 74427). We are finalizing a payment rate for CCM services for CY 2015 (see section II.G. of this final rule with comment period.) Payment for this service is expected to result in modest payment increases for family practice, internal medicine, and geriatrics.
Payment for CCM services also has a positive impact on the PE RVUs attributable to family practice, internal medicine, and geriatrics. The most widespread specialty impacts in PE RVUs are generally related implementing the RUC recommendation regarding the film-to-digital migration of imaging inputs, which primarily affects portable x-ray suppliers, diagnostic testing facilities, and interventional radiology. Other impacts result from adjustments of PE RVUs for services as discussed in section II.A. of this final rule with comment period.
The changes in MP RVUs are primarily attributable to the changes made as part of the statutorily required review of MP RVUs every five years as described in section II.C of this final rule with comment period. Of particular note are the impacts on the specialties of ophthalmology (−2 percent) and optometry (−1 percent). In the course of preparation of the proposed MP RVUs, we discovered that we had made an error in calculating the MP RVUs for ophthalmology codes in the last five year review CY that resulted in higher MP RVUs for ophthalmology and optometry for CY 2010 than would have resulted had the MP RVUs been calculated correctly. The MP RVUs have been at a level higher than they would have been had they been calculated correctly since CY 2010.
Column F of Table 93 displays the estimated CY 2015 combined impact on total allowed charges by specialty of all the RVU changes. These impacts are estimated prior to the application of the negative CF update effective April 1, 2015, applicable under the current statute.
Table 94 (Impact of Final rule with comment period on CY 2015 Payment for Selected Procedures) shows the estimated impact on total payments for selected high volume procedures of all of the changes discussed previously. We have included payment rates for the period of January 1, 2015 through March 31, 2015, as well as those for April 1, 2015 through December 31, 2015. We selected these procedures for the sake of illustration from among the most commonly furnished by a broad spectrum of specialties. The change in both facility rates and the nonfacility rates are shown. For an explanation of facility and nonfacility PE, we refer readers to Addendum A of this final rule with comment period.
As discussed in section II.E. of this final rule with comment period, we are finalizing the addition of several new codes to the list of Medicare telehealth services. Although we expect these changes to increase access to care in
As discussed in section II.D of this final rule with comment period, we are required to review and revise the GPCIs at least every 3 years and phase in the adjustment over 2 years (if there has not been an adjustment in the past year). For CY 2015, we are not making any revisions related to the data or the methodologies used to calculate the GPCIs except in regard to the Virgin Islands locality discussed in section II.D. However, since the 1.0 work GPCI floor provided in section 1848(e)(1)(E) of the Act is set to expire on March 31, 2015, we have included two set of GPCIs and GAFs for CY 2015—one set for January 1, 2015 through March 31, 2015 and another set for April 1, 2015 through December 31, 2015. The April 1, 2015 through December 31, 2015 GPCIs and GAFs reflect the statutory expiration of the 1.0 work GPCI floor.
The statutory ambulance extender provisions are self-implementing. As a result, there are no policy proposals associated with these provisions or associated impact in this rule. We are finalizing our proposal to correct the dates in the Code of Federal Regulations (CFR) at § 414.610(c)(1)(ii) and § 414.610(c)(5)(ii) to conform the regulations to these self-implementing statutory provisions.
The geographic designations for approximately 92.02 percent of ZIP codes would be unchanged if we adopt OMB's revised statistical area delineations and the updated RUCA codes. There are more ZIP codes that would change from rural to urban (3,038 or 7.08 percent) than from urban to rural (387 or 0.90 percent). The differences in the data provided in the proposed rule compared to the final rule are due to inclusion of the updated RUCA codes. In general, it is expected that ambulance providers and suppliers in 387 ZIP codes within 41 states may experience payment increases under the revised OMB delineations and the updated RUCA codes, as these areas have been redesignated from urban to rural. Ambulance providers and suppliers in 3, 038 ZIP codes within 46 states and Puerto Rico may experience payment decreases under the revised OMB delineations and the updated RUCA codes, as these areas have been redesignated from rural to urban. None of the current super rural areas will lose their status upon implementation of the revised OMB delineations and the updated RUCA codes. We estimate that the adoption of the revised OMB delineations and the updated RUCA codes would have a small fiscal impact on the Medicare program.
There is no impact because we are merely deleting language from the Code of Federal Regulations.
The removal of employment requirements for services furnished “incident to” RHC and FQHC visits will provide RHCs and FQHCs with greater flexibility in meeting their staffing needs, which may result in increasing access to care in underserved areas. There is no cost to the federal government, and we cannot estimate a cost savings for RHCs or FQHCs.
Given that, in general, participants in Innovation Center models receive funding support to participate in model tests, we do not anticipate an impact. In those cases where there is a cost associated with the data reporting, such costs will vary by project, and thus cannot be laid out with specificity here. We do, however, expect the costs to be covered by payments associated with the model test.
The Local Coverage Determination Process for Clinical Diagnostic Laboratory Tests will not be finalized. Therefore, there is no impact to CY 2015 physician payments under the PFS.
We corrected cross-references and outdated terminology in the regulations that we inadvertently neglected to revise, and changed the appeals process used for certain appeals relating to opt-out private contracting. We anticipate no or minimal impact as a result of these corrections.
We did not issue any new or revised requirements. There is no impact.
The changes to the Transparency Reports and Reporting of Physician Ownership or Investment Interests in section III.I of this final rule with comment period would not impact CY 2015 physician payments under the PFS.
There will be no impact for the Physician Compare Web site because we are not collecting any new information specifically for the Physician Compare Web site. The information derived for Physician Compare comes from other programs that already collect data, including but not limited to the Physician Quality Reporting System (PQRS) and the Medicare Shared Savings Program.
According to the 2012 Reporting Experience, “more than 1.2 million eligible professionals were eligible to participate in the 2012 PQRS, Medicare Shared Savings Program, and Pioneer ACO Model.”
Historically, the PQRS has never experienced 100 percent participation in reporting for the PQRS. Therefore, we believe that although 1.2 million eligible professionals will be subject to the 2017 PQRS payment adjustment, not all eligible participants will actually report quality measures data for purposes of the 2017 PQRS payment adjustment. In this burden estimate, we will only provide burden estimates for the eligible professionals and group practices who attempt to submit quality measures data for purposes of the 2017 PQRS payment
For participation in the PQRS using the claims-based reporting mechanism, according to the 2011 PQRS and eRx Experience Report, in 2011, 229,282 of the 320,422 eligible professionals (or 72 percent) of eligible professionals used the claims-based reporting mechanism. According to the 2012 Reporting Experience, 248,206 eligible professionals participated in the PQRS using the claims-based reporting mechanism in 2012.
For participation in the PQRS using a qualified registry or QCDR, in 2011, approximately 50,215 (or 16 percent) of the 320,422 eligible professionals participating in PQRS used the qualified registry-based reporting mechanism. According to the 2012 Reporting Experience, 36,473 eligible professionals reported individual measures via the registry-based reporting mechanism, and 10,478 eligible professionals reporting measures groups via the registry-based reporting mechanism in 2012.
For participation in the PQRS using the EHR-based reporting mechanism, according to the 2011 PQRS and eRx Experience Report, in 2011, 560 (or less than 1 percent) of the 320,422 eligible professionals participating in PQRS used the EHR-based reporting mechanism. 2012 saw a sharp increase in reporting via the EHR-based reporting mechanism. Specifically, according to the 2012 Reporting Experience, in 2012, 19,817 eligible professionals submitted quality data for the PQRS through a qualified EHR.
For participation in the PQRS using the GPRO web interface, as we noted in last year's estimate, according to the 2011 Experience Report, approximately 200 group practices participated in the GPRO in 2011. According to the 2012 Reporting Experience, 66 practices participated in the PQRS GPRO.
Please note that, while we are finalizing the reporting of CAHPS survey measures using a CMS-certified survey vendor, we are not including this reporting mechanism in this impact statement as we believe that eligible professionals wishing to report CAHPS survey measures will do so for purposes other than the PQRS.
For the PQRS, the burden associated with the requirements of this voluntary reporting initiative is the time and effort associated with individual eligible professionals identifying applicable quality measures for which they can report the necessary information, selecting a reporting option, and reporting the information on their selected measures or measures group to CMS using their selected reporting option.
We believe the labor associated with eligible professionals and group practices reporting quality measures data in the PQRS is primarily handled by an eligible professional's or group practice's billing clerk or computer analyst trained to report quality measures data. Therefore, we will consider the hourly wage of a billing clerk and computer analyst in our estimates. For purposes of this burden estimate, we will assume that a billing clerk will handle the administrative duties associated with participating in the PQRS. According to information published by the Bureau of Labor Statistics, available at
For individual eligible professionals, the burden associated with the requirements of this reporting initiative is the time and effort associated with eligible professionals identifying applicable quality measures for which they can report the necessary information, collecting the necessary information, and reporting the information needed to report the eligible professional's measures. We believe it is difficult to accurately quantify the burden because eligible professionals may have different processes for integrating the PQRS into their practice's work flows. Moreover, the time needed for an eligible professional to review the quality measures and other information, select measures applicable to his or her patients and the services he or she furnishes to them, and incorporate the use of quality data codes into the office work flows is expected to vary along with the number of measures that are potentially applicable to a given professional's practice. Since eligible professionals are generally required to report on at least 9 measures covering at least 3 National Quality Strategy domains criteria for satisfactory reporting (or, in lieu of satisfactory reporting, satisfactory participation in a QCDR) for the 2017 PQRS payment adjustment, we will assume that each eligible professional reports on an average of 9 measures for this burden analysis.
For eligible professionals who are participating in PQRS for the first time, we will assign 5 total hours as the amount of time needed for an eligible professional's billing clerk to review the PQRS Measures List, review the various reporting options, select the most appropriate reporting option, identify the applicable measures or measures groups for which they can report the necessary information, review the measure specifications for the selected measures or measures groups, and incorporate reporting of the selected measures or measures groups into the office work flows. The measures list contains the measure title and brief summary information for the eligible professional to review. Assuming the eligible professional has received no training from his/her specialty society, we estimate it will take an eligible professional's billing clerk up to 2 hours to review this list, review the reporting options, and select a reporting option and measures on which to report. If an eligible professional has received training, then we believe this would take less time. We believe 3 hours is plenty of time for an eligible professional to review the measure specifications of 9 measures or 1 measures group they select to report for purposes of participating in PQRS and to develop a mechanism for incorporating reporting of the selected measures or measures group into the office work flows. Therefore, we believe that the start-up cost for an eligible professional to report PQRS quality measures data is 5 hours × $32/hour = $160.
We believe the burden associated with actually reporting the quality measures will vary depending on the reporting mechanism selected by the eligible professional. As such, we break down the burden estimates by eligible professionals and group practices participating in the GPRO according to the reporting mechanism used.
For the claims-based reporting option, eligible professionals must gather the required information, select the appropriate quality data codes (QDCs), and include the appropriate QDCs on the claims they submit for payment. The PQRS will collects QDCs as additional (optional) line items on the existing HIPAA transaction 837–P and/or CMS Form 1500 (OCN: 0938–0999). We do not anticipate any new forms and or any modifications to the existing transaction or form. We also do not anticipate changes to the 837–P or CMS Form 1500 for CY 2015.
We estimate the cost for an eligible professional to review the list of quality measures or measures groups, identify the applicable measures or measures group for which they can report the necessary information, incorporate reporting of the selected measures into the office work flows, and select a PQRS reporting option to be approximately $410 per eligible professional ($82 per hour × 5 hours).
Based on our experience with the Physician Voluntary Reporting Program (PVRP), we continue to estimate that the time needed to perform all the steps necessary to report each measure (that is, reporting the relevant quality data code(s) for 9 measures measure) would range from 15 seconds (0.25 minutes) to over 12 minutes for complicated cases and/or measures, with the median time being 1.75 minutes. To report 9 measures, we estimate that it would take approximately 2.25 minutes to 108 minutes to perform all the steps necessary to report 9 measures.
Per measure, at an average labor cost of $82/hour per practice, the cost associated with this burden will range from $0.34 in labor to about $16.40 in labor time for more complicated cases and/or measures, with the cost for the median practice being $2.40. To report 9 measures, using an average labor cost of $82/hour, we estimated that the time cost of reporting for an eligible professional via claims would range from $3.07 (2.25 minutes or 0.0375 hours × $82/hour) to $147.60 (108 minutes or 1.8 hours × $82/hour) per reported case.
The total estimated annual burden for this requirement will also vary along with the volume of claims on which quality data is reported. In previous years, when we required reporting on 80 percent of eligible cases for claims-based reporting, we found that on average, the median number of reporting instances for each of the PQRS measures was 9. Since we reduced the required reporting rate by over one-third to 50 percent, then for purposes of this burden analysis we will assume that an eligible professional or eligible professional in a group practice will need to report each selected measure for
Based on the assumptions discussed previously, we estimate the total annual reporting burden per individual eligible professional associated with claims-based reporting will range from 13.5 minutes (0.25 minutes per measure × 9 measures × 6 cases per measure) to 648 minutes (12 minutes per measure × 9 measures × 6 cases per measure), with the burden to the median practice being 94.5 minutes (1.75 minutes per measure × 9 measures × 6 cases). We estimate the total annual reporting cost per eligible professional or eligible professional in a group practice associated with claims-based reporting will range from $18.36 ($0.34 per measure × 9 measures × 6 cases per measure) to $885.60 ($16.40 per measure × 9 measures × 6 cases per measure), with the cost to the median practice being $129.60 per eligible professional ($2.40 per measure × 9 measures × 6 cases per measure).
For qualified registry-based and QCDR-based reporting, there will be no additional time burden for eligible professionals or group practices to report data to a qualified registry as eligible professionals and group practices opting for qualified registry-based reporting or use of a QCDR will more than likely already be reporting data to the qualified registry for other purposes and the qualified registry will merely be re-packaging the data for use in the PQRS. Little, if any, additional data will need to be reported to the qualified registry or QCDR solely for purposes of participation in the PQRS. However, eligible professionals and group practices will need to authorize or instruct the qualified registry or QCDR to submit quality measures results and numerator and denominator data on quality measures to CMS on their behalf. We estimate that the time and effort associated with this will be approximately 5 minutes per eligible professional or eligible professional within a group practice.
Based on the assumptions discussed above and in Part B of this supporting statement, Table 95 provides an estimate of the total annual burden hours and total annual cost burden associated with eligible professionals using the qualified registry-based or QCDR-based reporting mechanism. Please note that, unlike the claims-based reporting mechanism that would require an eligible professional to report data to us on quality measures on multiple occasions, an eligible professional would not be required to submit this data to us, as the qualified registry or QCDR would perform this function on the eligible professional's behalf.
For EHR-based reporting, which includes EHR reporting via a direct EHR product and an EHR data submission vendor's product, the eligible professional or group practice must review the quality measures on which we will be accepting PQRS data extracted from EHRs, select the appropriate quality measures, extract the necessary clinical data from his or her EHR, and submit the necessary data to the our designated clinical data warehouse.
For EHR-based reporting for the PQRS, the individual eligible professional or group practice may either submit the quality measures data directly to us from their EHR or utilize an EHR data submission vendor to submit the data to us on the eligible professional's or group practice's behalf. To submit data to us directly from their EHR, the eligible professional or eligible professional in a group practice must have access to our specified identity management system, such as IACS, which we believe takes less than 1 hour to obtain. Once an eligible professional or eligible professional in a group practice has an account for our specified identity management system, he or she will need to extract the necessary clinical data from his or her EHR, and submit the necessary data to the our designated clinical data warehouse. With respect to submitting the actual data file for the respective reporting period, we believe that this will take an eligible professional or group practice no more than 2 hours, depending on the number of patients on which the eligible professional or group practice is submitting. We believe that once the EHR is programmed by the vendor to allow data submission to us, the burden to the eligible professional or group practice associated with submission of data on quality measures should be minimal as all of the information required to report the measure should already reside in the eligible professional's or group practice's EHR.
With respect to the process for group practices to be treated as satisfactorily submitting quality measures data under the PQRS, group practices interested in participating in the PQRS through the group practice reporting option (GPRO) must complete a self-nomination process similar to the self-nomination process required of qualified registries. However, since a group practice using the GPRO web interface would not need to determine which measures to report under PQRS, we believe that the self-nomination process is handled by a group practice's administrative staff. Therefore, we estimate that the self-nomination process for the group practices for the PQRS involves approximately 2 hours per group practice to review the PQRS GPRO and make the decision to participate as a group rather than individually and an additional 2 hours per group practice to draft the letter of intent for self-nomination, gather the requested TIN and NPI information, and provide this requested information. It is estimated that each self-nominated entity will also spend 2 hours undergoing the vetting process with CMS officials. We assume that the group practice staff involved in the group practice self-nomination process has an average practice labor cost of $32 per hour. Therefore, assuming the total burden hours per group practice associated with the group practice self-nomination process is 6 hours, we estimate the total cost to a group practice associated with the group practice self-nomination process to be approximately $192 ($32 per hour × 6 hours per group practice).
The burden associated with the group practice reporting requirements under the GPRO is the time and effort associated with the group practice submitting the quality measures data. For physician group practices, this would be the time associated with the physician group completing the web interface. We estimate that the time and effort associated with using the GPRO web interface will be comparable to the time and effort associated to using the PAT. As stated above, the information collection components of the PAT have been reviewed by OMB and was approved under OMB control number 0938–0941—Form 10136, with an expiration date of December 31, 2011 for use in the PGP, MCMP, and EHR demonstrations. As the GPRO was only
Tables 95 and 96 provide our total estimated costs for reporting in the PQRS for the 2017 PQRS payment adjustment, the reporting periods of which occur in CY 2015.
The changes to the EHR Incentive Program in section III.L of this final rule with comment period would not impact CY 2015 physician payments under the PFS.
The requirements for participating in the Medicare Shared Saving Program and the impacts of these requirements were established in the final rule implementing the Medicare Shared Savings Program that appeared in the
Section 1848(p) of the Act requires that we establish a VM and apply it to specific physicians and groups of physicians the Secretary determines appropriate starting January 1, 2015 and to all physicians and groups of physicians by January 1, 2017. Section 1848(p)(4)(C) of the Act requires the VM to be budget neutral. Budget-neutrality means that, in aggregate, the increased payments to high performing physicians and groups of physicians equal the reduced payments to low performing physicians and groups of physicians.
The changes to the VM in section III.N of this final rule with comment period will not impact CY 2015 physician payments under the PFS. We finalized the VM policies that would impact the CY 2015 physician payments under the PFS in the CY 2013 PFS final rule with comment period (77 FR 69306–69326).
In the CY 2013 PFS final rule with comment period, we finalized policies to phase-in the VM by applying it starting January 1, 2015 to payments under the Medicare PFS for physicians in groups of 100 or more eligible professionals. We identify a group of physicians as a single taxpayer identification number (TIN). We apply the VM to the items and services billed by physicians under the TIN, not to other eligible professionals that also may bill under the TIN. We established
We finalized policies to determine the amount of the VM for CY 2015 by categorizing groups of physicians with 100 or more eligible professionals into two categories. Category 1 includes groups of physicians that either (a) self-nominate for the PQRS as a group and report at least one measure or (b) elect the PQRS Administrative Claims option as a group. Category 2 includes groups that do not fall within either of the two subcategories (a) or (b) of Category 1. Groups within Category 1 may elect to have their VM for CY 2015 calculated using the quality-tiering methodology, which could result in an upward, neutral, or downward adjustment amount. The VM for groups of physicians in Category 1 that do not elect-quality tiering is 0.0 percent, meaning that these groups will not receive a payment adjustment under the VM for CY 2015. For the groups that are in Category 2, the VM for the CY 2015 payment adjustment period is −1.0 percent.
Under the quality-tiering approach, each group's quality and cost composites are classified into high, average, and low categories depending upon whether the composites are at least one standard deviation above or below the mean. We compare the group's quality of care composite classification with the cost composite classification to determine the VM adjustment for the CY 2015 payment adjustment period according to the amounts in Table 97.
To ensure budget neutrality, we first aggregate the downward payment adjustments in Table 97 for those groups in Category 1 that have elected quality tiering with the −1.0 percent downward payment adjustments for groups of physicians subject to the VM that fall within Category 2. Using the aggregate downward payment adjustment amount, we then calculate the upward payment adjustment factor (x). These calculations will be done after the performance period has ended.
In the proposed rule, we presented estimates on the number of eligible professionals and physician groups, by group size, based on CY 2012 claims data that were used to produce the 2012 QRURs, which were available to groups of 25 or more eligible professionals on September 16, 2013. The findings from the CY 2012 QRURs are available on the CMS Web site at
On September 30, 2014, we made QRURs available to all groups of physicians and physicians who are solo practitioners based on their performance in CY 2013. We also completed the analysis of the impact of the VM in CY 2015 on physicians in groups with 100 or more eligible professionals based on their performance in CY 2013 and present a summary of the findings below. Please note that the impact of the policies for the CY 2017 VM finalized in this final rule with comment period will be discussed in the PFS rule for CY 2017.
Based on the methodology codified in § 414.1210(c), there are 1,010 groups of 100 or more eligible professionals (as identified by their Taxpayer Identification Numbers (TINs)) whose physicians' payments under the Medicare PFS will be subject to the VM in the CY 2015 payment adjustment period. Of these 1,010 groups subject to the CY 2015 VM, 706 groups met the criteria for inclusion in Category 1. As noted above, Category 1 for the CY 2015 VM includes groups of physicians that either (a) self-nominate for the PQRS as a group and report at least one measure or (b) elect the PQRS Administrative Claims option as a group.
Of the 706 groups in Category 1, 133 groups elected in 2013 to have their CY 2015 VM calculated using the quality-tiering methodology; therefore, these groups will receive an upward, neutral, or downward adjustment in CY 2015 based on their performance on the quality and cost measures finalized for the CY 2015 VM in the CY 2013 PFS final rule with comment period (77 FR 69306–69326). We note that there were 21 groups for which we had insufficient data to calculate their quality or cost composite; therefore, these groups will receive a neutral adjustment to their payments in CY 2015. Of the 112 groups for which we were able to calculate both quality and cost composites, we found that 16 groups are in tiers that will result in an upward adjustment of +1.0x; 9 groups are in tiers that will result in a downward adjustment of between −0.5 and −1.0 percent; and 87 groups are in tiers that will result in a neutral adjustment to their payments in CY 2015. Of the groups that are eligible for an upward adjustment, none of the groups are eligible to receive an additional +1.0x adjustment to their Medicare payments for treating high-risk beneficiaries. Table 98 shows the distribution of the 112 groups that elected quality-tiering into the various quality and cost tiers. Please note that CMS will announce the upward payment adjustment factor (x) in the Fall of 2014 on the CMS Web site at
Of the 706 groups in Category 1, 573 groups elected to not have their CY 2015 VM calculated using the quality-tiering methodology; therefore, their VM will be 0.0 percent, meaning that these groups will not receive a payment adjustment under the VM in CY 2015.
Of the 1,010 groups subject to the CY 2015 VM, 304 groups met the criteria for inclusion in Category 2. As noted above, Category 2 includes groups that do not fall within either of the two subcategories (a) or (b) of Category 1. There were 289 groups that did not self-nominate for the PQRS as a group, and 15 groups that self-nominated for the PQRS as a group, but did not report at least one measure. Groups in Category 2 will be subject to a −1.0 percent payment adjustment under the VM during the CY 2015 payment adjustment period.
Please note that in CY 2015, only the physicians in groups with 100 or more eligible professionals that are in Category 1 and elected quality-tiering will be subject to upward, downward, or no payment adjustment under the VM according to Table 98. Additionally, physicians in groups with 100 or more eligible professionals that fall in Category 2 will be subject to the −1.0 percent VM in CY 2015.
We note that in the 2013 QRUR Experience Report, which will be released in the next few months, we will provide a detailed analysis of the impact of the 2015 VM policies on groups of 100 or more eligible professionals subject to the VM in CY 2015, including findings based on the data contained in the 2013 QRURs for all groups of physicians and solo practitioners.
This interim final rule will allow us flexibility in setting the deadline for significant hardship exception applications. We refer readers to the impact analyses included in the final rule titled “Medicare and Medicaid Programs; Electronic Health Record Incentive Program—Stage 2” (77 FR 53698 through 54162) and Medicare and Medicaid Programs; Modifications to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs for 2014 and Other Changes to the EHR Incentive Program; and Health Information Technology; Revisions to the Certified EHR Technology Definition and EHR Certification Changes Related to Standards; Final Rule (79 FR 52911–52933).
This final rule with comment period contains a range of policies, including some provisions related to specific statutory provisions. The preceding preamble provides descriptions of the statutory provisions that are addressed, identifies those policies when discretion has been exercised, presents rationale for our final policies and, where relevant, alternatives that were considered.
There are a number of changes in this final rule with comment period that would have an effect on beneficiaries. In general, we believe that many of the changes, including the refinements of the PQRS with its focus on measuring, submitting, and analyzing quality data; establishing the basis for the value-based payment modifier to adjust physician payment beginning in CY 2015; improved accuracy in payment through revisions to the inputs used to calculate payments under the PFS; and revisions to payment for Part B drugs will have a positive impact and improve the quality and value of care provided to Medicare beneficiaries.
Most of the aforementioned policy changes could result in a change in beneficiary liability as relates to coinsurance (which is 20 percent of the fee schedule amount if applicable for the particular provision after the beneficiary has met the deductible). To illustrate this point, as shown in Table 94, the CY 2014 national payment amount in the nonfacility setting for CPT code 99203 (Office/outpatient visit, new) is $108.18, which means that in CY 2014 a beneficiary would be responsible for 20 percent of this amount, or $21.64. Based on this final rule with comment period, using the January 1–March 31, 2015 CF of 35.8013, the CY 2015 national payment amount in the nonfacility setting for CPT code 99203, as shown in Table 94, is $109.19, which means that, in CY 2015, the beneficiary coinsurance for this service would be $21.84. In addition, we are finalizing a change in our definition of colorectal cancer screening test. As a result, beneficiary liability will not be applied to anesthesia billed in conjunction with a colorectal cancer screening test.
As required by OMB Circular A–4 (available at
The analysis in the previous sections, together with the remainder of this preamble, provides an initial “Regulatory Flexibility Analysis.” The previous analysis, together with the preceding portion of this preamble, provides a Regulatory Impact Analysis.
In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.
Grant programs-health, Health insurance, Hospitals, Intergovernmental relations, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medical devices, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays.
Health facilities, Health professions, Kidney diseases, Laboratories, Medicare, Reporting and recordkeeping requirements, Rural areas, X-rays.
Kidney diseases, Medicare, Physician Referral, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Medicare, Puerto Rico, Reporting and recordkeeping requirements.
Health facilities, Kidney diseases, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health professions, Medicare, and Reporting and recordkeeping requirements.
Health facilities, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Electronic health records, Health facilities, Health professions, Health maintenance organizations (HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below:—
42 U.S.C. 1395b–3 and Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
The revisions and additions read as follows:
(c) * * *
(8)
(i) For drugs and biologicals, if the marketed name has not yet been selected, applicable manufacturers must indicate the name registered on
(ii) Applicable manufacturers may report the marketed name and therapeutic area or product category for payments or other transfers of value related to a non-covered drug, device, biological, or medical supply.
(iii) Applicable manufacturers must indicate if the related drug, device, biological, or medical supply is covered or non-covered.
(iv) Applicable manufacturers must indicate if the payment or other transfer
(d) * * *
(3) Stock.
(4) Stock option.
(5) Any other ownership interest.
(6) Dividend, profit or other return on investment.
(f) * * *
(1) * * *
(iv) Name(s) of any related covered drugs, devices, biologicals, or medical supplies (subject to the requirements specified in paragraph (c)(8) of this section), for drugs and biologicals, the relevant National Drug Code(s), if any, for devices and medical supplies and report a therapeutic area or product category if a marketed name is not available.
The regulations in this subpart implement section 1115A of the Act. The intent of that section is to enable CMS to test innovative payment and service delivery models to reduce program expenditures while preserving and/or enhancing the quality of care furnished to individuals under titles XVIII, XIX, and XXI of the Act. The Secretary is also required to conduct an evaluation of each model tested.
For purposes of this subpart—
(a)
(1) The quality of care furnished under the model, including the measurement of patient-level outcomes and patient-centeredness criteria determined appropriate by the Secretary.
(2) The changes in spending under the applicable titles by reason of the model.
(b)
Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874, 1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a), 1302, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 263a).
(b) * * *
(15) A claim not payable to a beneficiary for the services of a physician who has opted-out.
The revision reads as follow:
(a) * * *
(5) Furnished under the direct supervision of a physician.
The revision reads as follows:
(a) * * *
(5) Furnished under the direct supervision of a nurse practitioner, physician assistant, or certified nurse- midwife.
The revision reads as follows:
(a) * * *
(5) Furnished under the direct supervision of a clinical psychologist or clinical social worker.
(a)
(i) Face-to-face encounter between a RHC patient and one of the following:
(A) Physician.
(B) Physician assistant.
(C) Nurse practitioner.
(D) Certified nurse midwife.
(E) Visiting registered professional or licensed practical nurse.
(G) Clinical psychologist.
(H) Clinical social worker.
(ii) Qualified transitional care management service.
(2) For FQHCs, a visit is either of the following:
(i) A visit as described in paragraph (a)(1)(i) or (ii) of this section.
(ii) A face-to-face encounter between a patient and either of the following:
(A) A qualified provider of medical nutrition therapy services as defined in part 410, subpart G, of this chapter.
(B) A qualified provider of outpatient diabetes self-management training services as defined in part 410, subpart H, of this chapter.
(b)
(i) Physician.
(ii) Physician assistant.
(iii) Nurse practitioner.
(iv) Certified nurse midwife.
(v) Visiting registered professional or licensed practical nurse.
(2) A medical visit for a FQHC patient may be either of the following:
(i) Medical nutrition therapy visit.
(ii) Diabetes outpatient self-management training visit.
(3)
(i) Clinical psychologist.
(ii) Clinical social worker.
(iii) Other RHC or FQHC practitioner, in accordance with paragraph (b)(1) of this section, for mental health services.
(c)
(i) Suffers an illness or injury subsequent to the first visit that requires additional diagnosis or treatment on the same day;
(ii) Has a medical visit and a mental health visit on the same day; or
(iii) Has an initial preventive physical exam visit and a separate medical or mental health visit on the same day.
(2) For RHCs and FQHCs that are authorized to bill under the reasonable cost system, Medicare pays RHCs and FQHCs for more than 1 visit per day when the conditions in paragraph (c)(1) of this section are met.
(3) For FQHCs that are authorized to bill under the reasonable cost system, Medicare pays for more than 1 visit per day when a DSMT or MNT visit is furnished on the same day as a visit described in paragraph (c)(1) of this section are met.
(4) For FQHCs billing under the prospective payment system, Medicare pays for more than 1 visit per day when the patient—
(i) Suffers an illness or injury subsequent to the first visit that requires additional diagnosis or treatment on the same day; or
(ii) Has a medical visit and a mental health visit on the same day.
Secs. 1102, 1834, 1871, 1881, and 1893 of the Social Security Act (42 U.S.C. 1302, 1395m, 1395hh, and 1395ddd.
(b) * * *
(5) In general, services and supplies must be furnished under the direct supervision of the physician (or other practitioner). Services and supplies furnished incident to transitional care management and chronic care management services can be furnished under general supervision of the physician (or other practitioner) when these services or supplies are provided by clinical staff. The physician (or other practitioner) supervising the auxiliary personnel need not be the same physician (or other practitioner) upon whose professional service the incident to service is based.
(6) Services and supplies must be furnished by the physician, practitioner with an incident to benefit, or auxiliary personnel.
(a) * * *
(1) * * *
(iii) Screening colonoscopies, including anesthesia furnished in conjunction with the service.
(c) * * *
(1) * * *
(ii) Engage in the private practice of occupational therapy on a regular basis as an individual, in one of the following practice types: a solo practice, partnership, or group practice; or as an employee of one of these.
(c) * * *
(1) * * *
(ii) Engage in the private practice of physical therapy on a regular basis as an individual, in one of the following practice types: a solo practice, partnership, or group practice; or as an employee of one of these.
(c) * * *
(1) * * *
(ii) Engage in the private practice of speech-language pathology on a regular basis as an individual, in one of the following practice types: a solo practice, partnership, or group practice; or as an employee of one of these.
(b)
(f)
Secs. 1102, 1860D–1 through 1860D–42, 1871, and 1877 of the Social Security Act (42 U.S.C. 1302, 1395w–101 through 1395w–152, 1395hh, and 1395nn).
(p) * * *
(2) * * *
(xvii) Those RHC and FQHC services that are described in § 405.2411(b)(2) of this chapter.
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh), sec. 124 of Pub. L. 106–113 (113 Stat. 1501A–332), sec. 1206 of Pub. L. 113–67, and sec. 112 of Pub. L. 113–93.
Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and (n), 1861(v), 1871, 1881, 1883 and 1886 of the Social Security Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of Pub. L. 106–113 (113 Stat. 1501A–332), sec. 3201 of Pub. L. 112–96 (126 Stat. 156), and sec. 632 of Pub. L. 112–240 (126 Stat. 2354).
Secs. 1102, 1871, and 1881(b)(l) of the Social Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).
The revisions and addition read as follows:
(a)
(b)
(c)
(1)
(2)
The revisions read as follows:
(b) * * *
(j) * * *
(4)
(i)
(
(
(ii)
(
(
(
(iii)
(iv)
(7)
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(B) [Reserved]
(k) * * *
(4)
(i) For the 12-month 2017 PQRS payment adjustment reporting period, report at least 9 measures available for reporting under a QCDR covering at least 3 of the NQS domains, and report each measure for at least 50 percent of the eligible professional's patients. Of these measures, report on at least 2 outcome measures, or, if 2 outcomes measures are not available, report on at least 2 outcome measures and at least 1 of the following types of measures—resource use, patient experience of care, efficiency/appropriate use or patient safety.
(ii) [Reserved]
(m) * * *
(1) To request an informal review for reporting periods that occur prior to 2014, an eligible professional or group practice must submit a request to CMS within 90 days of the release of the feedback reports. To request an informal review for reporting periods that occur in 2014 and subsequent years, an eligible professional or group practice must submit a request to CMS within 60 days of the release of the feedback reports. The request must be submitted in writing and summarize the concern(s) and reasons for requesting an informal review and may also include information to assist in the review.
(3) If, during the informal review process, CMS finds errors in data that was submitted by a third-party vendor on behalf of an eligible professional or group practice using either the qualified registry, EHR data submission vendor, or QCDR reporting mechanisms, CMS may allow for the resubmission of data to correct these errors.
(i) CMS will not allow resubmission of data submitted via claims, direct EHR, and the GPRO web interface reporting mechanisms.
(ii) CMS will only allow resubmission of data that was already previously submitted to CMS.
(iii) CMS will only accept data that was previously submitted for the reporting periods for which the corresponding informal review period applies.
(c) * * *
(1) * * *
(ii) For services furnished during the period July 1, 2008 through March 31, 2015, ambulance services originating in:
(5) * * *
(ii) For services furnished during the period July 1, 2004 through March 31, 2015, the payment amount for the ground ambulance base rate is increased by 22.6 percent where the point of pickup is in a rural area determined to be in the lowest 25 percent of rural population arrayed by population density. The amount of this increase is based on CMS's estimate of the ratio of the average cost per trip for the rural areas in the lowest quartile of population compared to the average cost per trip for the rural areas in the highest quartile of population. In making this estimate, CMS may use data provided by the GAO.
(a)
(b) * * *
(5) Additional measures for groups and solo practitioners.
The addition and revisions read as follows:
The additions and revision reads as follows:
(a) * * *
(3) For the CY 2017 payment adjustment period and each subsequent calendar year payment adjustment period, to physicians in groups with 2 or more eligible professionals and to physicians who are solo practitioners based on the performance period for the payment adjustment period as described at § 414.1215.
(4) For the CY 2018 payment adjustment period and each subsequent calendar year payment adjustment period, to nonphysician eligible professionals in groups with 2 or more eligible professionals and to nonphysician eligible professionals who are solo practitioners based on the performance period for the payment adjustment period as described at § 414.1215.
(b) * * *
(2)
(i) For the CY 2017 payment adjustment period and each subsequent calendar year payment adjustment period, the value-based payment modifier is applicable to physicians in groups with 2 or more eligible professionals and to physicians who are solo practitioners that participate in an ACO under the Shared Savings Program during the performance period for the payment adjustment period as described at § 414.1215. The value-based payment modifier for a group or solo practitioner that participates in an ACO under the Shared Savings Program during the performance period is determined based on paragraphs (b)(2)(i)(A) through (D) of this section.
(A) The cost composite is classified as “average” under § 414.1275(b).
(B) The quality composite score is calculated under § 414.1260(a) using quality data reported by the ACO for the performance period through the ACO GPRO Web interface as required under § 425.504(a)(1) or another mechanism specified by CMS and the ACO all-cause readmission measure.
(C) For the CY 2017 payment adjustment period, the value-based payment modifier adjustment will be equal to the amount determined under § 414.1275 for the payment adjustment period, except that if the ACO does not successfully report quality data as described in paragraph (b)(2)(i)(B) of this section for the performance period, such adjustment will be equal to −4% for groups with 10 or more eligible professionals and equal to −2% for groups with two to nine eligible professionals and for solo practitioners.
(D) The same value-based payment modifier adjustment will be applied in the payment adjustment period to all groups based on size as specified under § 414.1275 and solo practitioners that participated in the ACO during the performance period.
(ii) For the CY 2018 payment adjustment period and each subsequent calendar year payment adjustment period, the value-based payment modifier is applicable to nonphysician eligible professionals in groups with 2 or more eligible professionals and to nonphysician eligible professionals who are solo practitioners that participate in an ACO under the Shared Savings Program during the performance period for the payment adjustment period as described at § 414.1215. The value-based payment modifier for nonphysician eligible professionals is determined in the same manner as for physicians as described under paragraphs (b)(2)(i)(A) through (D) of this section.
(3)
(i) For the CY 2017 payment adjustment period, the value-based payment modifier is applicable to physicians in groups with 2 or more eligible professionals and to physicians who are solo practitioners that participate in the Pioneer ACO Model or the Comprehensive Primary Care (CPC) Initiative during the performance period for the payment adjustment period as described at § 414.1215. For purposes of the value-based payment modifier, a group or solo practitioner is considered to be participating in the Pioneer ACO Model or CPC Initiative if at least one eligible professional billing under the TIN in the performance period is participating in the Pioneer ACO Model or CPC Initiative in the performance period. The value-based payment modifier for groups and solo practitioners that participate in the Pioneer ACO Model or the CPC Initiative during the performance period is determined based on paragraphs (b)(3)(i)(A) through (C) of this section.
(A) The cost composite is classified as “average” under § 414.1275(b).
(B) The quality composite is classified as “average” under § 414.1275(b).
(C) The same value-based payment modifier adjustment will be applied in the payment adjustment period to all groups based on size as specified under § 414.1275 and solo practitioners that participated in the Pioneer ACO or CPC site during the performance period.
(4)
(i) For the CY 2017 payment adjustment period and each subsequent calendar year payment adjustment period, the value-based payment modifier is applicable to physicians in groups with 2 or more eligible professionals and to physicians who are solo practitioners that participate in other similar Innovation Center models or CMS initiatives during the performance period for the payment adjustment period as described at § 414.1215. For purposes of the value-based payment modifier, a group or solo practitioner is considered to be participating in a similar Innovation Center model or CMS initiative if at least one eligible professional billing under the TIN in the performance period is participating in the model or initiative in the performance period. The value-based payment modifier for groups and solo practitioners that participate in a similar Innovation Center model or CMS initiative is determined based on paragraphs (b)(3)(i)(A) through (C) of this section.
(ii) [Reserved]
(c)
All of the quality measures for which solo practitioners and groups (or individual eligible professionals within such groups) are eligible to report under the Physician Quality Reporting System in a given calendar year are used to calculate the value-based payment modifier for the applicable payment adjustment period, as defined in § 414.1215, to the extent a solo practitioner or a group (or individual eligible professionals within such group) submit data on such measures.
The value-based payment modifier includes the following additional quality measures (outcome measures) as applicable for all groups and solo practitioners subject to the value-based payment modifier:
(a) Beneficiaries are attributed to groups and solo practitioners subject to the value-based payment modifier using a method generally consistent with the method of assignment of beneficiaries under § 425.402 of this chapter, for measures other than the Medicare Spending per Beneficiary measure.
(b) For the Medicare Spending per Beneficiary (MSPB) measure, an MSPB episode is attributed to the group or the solo practitioner subject to the value-based payment modifier whose eligible professionals submitted the plurality of claims (as measured by allowable charges) under the group's or solo practitioner's TIN for Medicare Part B services, rendered during an inpatient hospitalization that is an index admission for the MSPB measure during the applicable performance period described at § 414.1215.
(a) The benchmark for quality of care measures reported through the PQRS using the claims, registries, EHR, or web interface is the national mean for that measure's performance rate (regardless of the reporting mechanism) during the year prior to the performance period. In calculating the national benchmark, solo practitioners' and groups' (or individual eligible professionals' within such groups) performance rates are weighted by the number of beneficiaries used to calculate the solo practitioners' or groups' (or individual eligible professionals' within such groups) performance rate.
(b) The benchmark for each outcome measure under § 414.1230, is the national mean for that measure's performance rate during the year prior to the performance period. In calculating the national benchmark, solo practitioners' and groups' (or individual eligible professionals' within such groups) performance rates are weighted by the number of beneficiaries used to calculate the solo practitioners' or groups' (or individual eligible professionals' within such groups) performance rate.
(b) Beginning with the CY 2016 payment adjustment period, the cost measures of a group and solo practitioner subject to the value-based payment modifier are adjusted to account for the group's and solo practitioner's specialty mix, by computing the weighted average of the national specialty-specific expected costs. Each national specialty-specific expected cost is weighted by the proportion of each specialty in the group, the number of eligible professionals of each specialty in the group, and the number of beneficiaries attributed to the group.
(c) The national specialty-specific expected costs referenced in paragraph (b) of this section are derived by calculating, for each specialty, the average cost of beneficiaries attributed to groups and solo practitioners that include that specialty.
To calculate a composite score for a quality measure or a cost measure, a group or solo practitioner subject to the value-based payment modifier must have 20 or more cases for that measure.
(a) In a performance period, if a group or solo practitioner has fewer than 20 cases for a measure, that measure is excluded from its domain and the remaining measures in the domain are given equal weight.
(1) Starting with the CY 2017 payment adjustment period, the exception to this paragraph (a) is the all-cause hospital readmissions measure described at § 414.1230(c). In a performance period, if a group or a solo practitioner has fewer than 200 cases for this all-cause hospital readmissions measure, that measure is excluded from its domain and the remaining measures in the domain are given equal weight.
(2) [Reserved]
(b) * * *
(4) If at least fifty percent of the eligible professionals in the group meet the criteria as individuals to avoid the PQRS payment adjustment for CY 2016 as specified by CMS, and all of those eligible professionals use a qualified clinical data registry and CMS is unable to receive quality performance data for them, the quality composite score for such group will be classified as “average” under § 414.1275(b)(1).
(c) For the CY 2017 payment adjustment period:
(1) A downward payment adjustment of −2.0 percent will be applied to a group with two to nine eligible professionals and a solo practitioner and a downward payment adjustment of -4.0 percent will be applied to a group with 10 or more eligible professionals subject to the value-based payment modifier if, during the applicable performance period as defined in § 414.1215, the following apply:
(i) Such group does not self-nominate for the PQRS GPRO and meet the criteria as a group to avoid the PQRS payment adjustment for CY 2017 as specified by CMS; and
(ii) Fifty percent of the eligible professionals in such group do not meet the criteria as individuals to avoid the PQRS payment adjustment for CY 2017 as specified by CMS; or
(iii) Such solo practitioner does not meet the criteria as an individual to avoid the PQRS payment adjustment for CY 2017 as specified by CMS.
(2) For a group comprised of 10 or more eligible professionals that is not included in paragraph (c)(1) of this section, the value-based payment modifier adjustment will be equal to the amount determined under § 414.1275(c)(3)(i).
(3) For a group comprised of between two to nine eligible professionals and a solo practitioner that are not included in paragraph (c)(1) of this section, the value-based payment modifier adjustment will be equal to the amount determined under § 414.1275(c)(3)(ii).
(4) If at least fifty percent of the eligible professionals in the group meet the criteria as individuals to avoid the PQRS payment adjustment for CY 2017 as specified by CMS, and all of those eligible professionals use a qualified clinical data registry and CMS is unable to receive quality performance data for them, the quality composite score for such group will be classified as “average” under § 414.1275(b)(1).
(5) A group and a solo practitioner subject to the value-based payment modifier will receive a cost composite score that is classified as “average” under § 414.1275(b)(2) if such group and solo practitioner do not have at least one cost measure with at least 20 cases.
The revision and additions read as follows:
(a) The value-based payment modifier amount for a group and a solo practitioner subject to the value-based payment modifier is based upon a comparison of the composite of quality of care measures and a composite of cost measures.
(c) * * *
(3) The following value-based payment modifier percentages apply to the CY 2017 payment adjustment period:
(i) For groups with 10 or more eligible professionals:
(ii) For groups with two to nine eligible professionals and solo practitioners:
(d) * * *
(2) Groups and solo practitioners subject to the value-based payment modifier that have an attributed beneficiary population with an average risk score in the top 25 percent of the risk scores of beneficiaries nationwide and for the CY 2017 payment adjustment period are subject to the quality-tiering approach, receive a greater upward payment adjustment as follows:
(i) Classified as high quality/low cost receive an upward adjustment of +5x (rather than +4x) if the group has 10 or more eligible professionals or +3x (rather than +2x) if a solo practitioner or the group has two to nine eligible professionals; and
(ii) Classified as either high quality/average cost or average quality/low cost receive an upward adjustment of +3x (rather than +2x) if the group has 10 or more eligible professionals or +2x (rather than +1x) if a solo practitioner or the group has two to nine eligible professionals.
Secs. 1102, 1106, 1871, and 1899 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
(e)
The revision and additions read as follows:
(a) * * *
(2) During subsequent performance years of the ACO's first agreement period, the quality performance standard will be phased in such that the ACO must continue to report all measures but the ACO will be assessed on performance based on the quality performance benchmark and minimum attainment level of certain measures.
(3) Under the quality performance standard for each performance year of an ACO's subsequent agreement period, the ACO must continue to report on all measures but the ACO will be assessed on performance based on the quality performance benchmark and minimum attainment level of certain measures.
(4) The quality performance standard for a newly introduced measure is set at the level of complete and accurate reporting for the first two reporting periods for which reporting of the measure is required. For subsequent reporting periods, the quality performance standard for the measure will be assessed according to the phase-in schedule for the measure.
(b) * * *
(4)(i) CMS will update the quality performance benchmarks every 2 years.
(ii) For newly introduced measures that transition to pay for performance in the second year of the 2-year benchmarking cycle, the benchmark will be established for that year and updated along with the other measures at the start of the next 2-year benchmarking cycle.
(iii) CMS will use up to three years of data, as available, to set the benchmark for each quality measure.
(e) * * *
(4)(i) ACOs that demonstrate quality improvement on established quality measures from year to year will be eligible for up to 4 bonus points per domain.
(ii) Bonus points are awarded based on an ACO's net improvement in measures within a domain, which is calculated by determining the total number of significantly improved measures and subtracting the total number of significantly declined measures.
(iii) Up to four bonus points are awarded based on a comparison of the ACO's net improvement in performance on the measures for the domain to the total number of individual measures in the domain.
(iv) When bonus points are added to points earned for the quality measures in the domain, the total points received for the domain may not exceed the maximum total points for the domain in the absence of the quality improvement measure.
(v) If an ACO renews its participation agreement for a subsequent agreement period, quality improvement will be measured based on a comparison between performance in the first year of the new agreement period and performance in the third year of the previous agreement period.
(d) Eligible professionals participating in an ACO under the Shared Savings Program satisfy the CQM reporting component of meaningful use for the Medicare EHR Incentive Program when the following occurs:
(1) The eligible professional extracts data necessary for the ACO to satisfy the quality reporting requirements under this subpart from certified EHR technology.
(2) The ACO reports the ACO GPRO measures through a CMS web interface.
Secs. 1102, 1128I and 1871 of the Social Security Act (42 U.S.C. 1302, 1320a-7j, and 1395hh).
(s) * * *
(17) Those RHC and FQHC services that are described in § 405.2411(b)(2) of this chapter.
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
Secs. 1102, 1128I and 1871 of the Social Security Act (42 U.S.C. 1302, 1320a-7j, and 1395hh).
(b) * * *
(19) Whether a physician or practitioner has failed to properly opt-out, failed to maintain opt-out, failed to timely renew opt-out, failed to privately contract, or failed to properly terminate opt-out.
Environmental Protection Agency.
Supplemental notice of proposed rulemaking; Notice of public hearing.
This action proposes amendments in addition to those proposed on November 25, 2011, and April 15, 2013, for the Mineral Wool Production and Wool Fiberglass Manufacturing source categories. This action addresses comments received on previous proposals, explains changes to previously proposed limits for sources in these industries and clarifies our use of the upper prediction limit (UPL) in setting MACT floors. The Environmental Protection Agency (EPA) is taking comments on only aspects of the proposed rules that are discussed in this document. When finalized, these proposed standards would increase the level of environmental protection.
Submit your comments on the proposed Mineral Wool risk and technology review (RTR) amendments, identified by EPA–HQ–OAR–2010–1041; or the wool fiberglass area source rule and the major source Wool Fiberglass RTR amendments, identified by Docket ID Number EPA–HQ–OAR–2010–1042; by one of the following methods:
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For questions about these proposed actions, contact Ms. Susan Fairchild, Sector Policies and Programs Division (D243–04), Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Research Triangle Park, North Carolina 27711; telephone number: (919) 541–5167; fax number: (919) 541–5450; and email address:
Table 1 of this preamble lists the NESHAP and associated regulated industrial source categories that are the subject of this proposal. Table 1 is not intended to be exhaustive but rather to provide a guide for readers regarding the entities that this proposed action is likely to affect. These proposed standards, once promulgated, will be directly applicable to the affected sources. Federal, state, local and tribal government entities would not be affected by this proposed action. As defined in the “Initial List of Categories of Sources Under Section 112(c)(1) of the CAA Amendments of 1990” (see 57 FR 31576, July 16, 1992), the Mineral Wool Production source category is any facility engaged in producing mineral wool fiber from slag, rock or other materials, excluding sand or glass. The Wool Fiberglass Manufacturing source category is any facility engaged in the manufacture of wool fiberglass on a rotary spin manufacturing line or on a flame attenuation manufacturing line.
In addition to being available in the dockets, an electronic copy of this action is available on the Internet through the EPA's Technology Transfer Network (TTN) Web site, a forum for information and technology exchange in various areas of air pollution control. Following signature by the EPA Administrator, the EPA will post a copy of this proposed action at:
On November 25, 2011, (76 FR 72770), the EPA proposed revisions to the Mineral Wool Production and the Wool Fiberglass Manufacturing NESHAP, 40 CFR part 63, subparts DDD and NNN, respectively, to address the results of the RTR that the EPA is required to conduct under sections 112(d)(6) and 112(f)(2) (76 FR 72770). In the November 25, 2011, document, we proposed several amendments to both NESHAP and announced our intention to list and regulate area sources in the wool fiberglass area source category pending the collection of new test data.
On April 15, 2013, (78 FR 22369), the EPA published a supplemental proposal that made corrections to the November 2011 proposal for the Mineral Wool Production and Wool Fiberglass Manufacturing source categories, addressed certain comments received on the earlier November 25, 2011 proposal, added gas-fired glass-melting furnaces at area sources in the Wool Fiberglass Manufacturing source category to the category list, under CAA sections 112(c)(3) and 112(k)(3)(B), and proposed first time standards for these sources under CAA section 112(d)(5).
This document also proposes revisions and clarifications to the previous proposals, including, but not limited to:
• Additional explanation of the upper prediction limit (UPL) approach;
• an explanation of our approach to limited datasets;
• an explanation of why we are withdrawing the proposed provisions establishing an affirmative defense to civil penalties for violations caused by malfunctions;
• proposed basis for our determination on ecological effects of pollutants emitted from major sources in these source categories;
• work practice requirements at startup and shutdown for Mineral Wool Production and Wool Fiberglass Manufacturing source categories under CAA section 112(h)(2);
• changes to previously proposed emission limits for the Mineral Wool Production source category;
• changes to previously proposed standards for both major and area sources in the Wool Fiberglass Manufacturing source category.
We are requesting comments on only these aspects of the previously proposed requirements for the Mineral Wool Production RTR, the Wool Fiberglass Manufacturing RTR, and the Wool Fiberglass Manufacturing generally
In the 2011 proposal, we proposed to eliminate two provisions that exempt sources from the requirement to comply with the otherwise applicable CAA section 112(d) emission standards during periods of SSM. We also included provisions for affirmative defense to civil penalties for violations of emission standards caused by malfunctions. Periods of startup, normal operations, and shutdown are all predictable and routine aspects of a source's operations. Malfunctions, in contrast, are neither predictable nor routine. Instead they are, by definition sudden, infrequent and not reasonably preventable failures of emissions control, process or monitoring equipment. As explained in the 2011 proposal, the EPA interprets CAA section 112 as not requiring emissions that occur during periods of malfunction to be factored into development of CAA section 112 standards. Under section 112, emissions standards for new sources must be no less stringent than the level “achieved” by the best controlled similar source and for existing sources generally must be no less stringent than the average emission limitation “achieved” by the best performing 12 percent of sources in the category. There is nothing in section 112 that directs the Agency to consider malfunctions in determining the level “achieved” by the best performing sources when setting emission standards. As the D.C. Circuit has recognized, the phrase “average emissions limitation achieved by the best performing 12 percent of” sources “says nothing about how the performance of the best units is to be calculated.”
Further, accounting for malfunctions in setting emission standards would be difficult, if not impossible, given the myriad different types of malfunctions that can occur across all sources in the category and given the difficulties associated with predicting or accounting for the frequency, degree and duration of various malfunctions that might occur. As such, the performance of units that are malfunctioning is not “reasonably” foreseeable. See,
In the event that a source fails to comply with the applicable CAA section 112 standards as a result of a malfunction event, the EPA would determine an appropriate response based on, among other things, the good faith efforts of the source to minimize emissions during malfunction periods, including preventative and corrective actions, as well as root cause analyses to ascertain and rectify excess emissions. The EPA would also consider whether the source's failure to comply with the CAA section 112 standard was, in fact, “sudden, infrequent, not reasonably preventable” and was not instead “caused in part by poor maintenance or careless operation.” 40 CFR 63.2 (definition of malfunction).
If the EPA determines in a particular case that enforcement action against a source for violation of an emission standard is warranted, the source can raise any and all defenses in that enforcement action and the federal district court will determine what, if any, relief is appropriate. The same is true for citizen enforcement actions. Similarly, the presiding officer in an administrative proceeding can consider any defense raised and determine whether administrative penalties are appropriate.
In summary, the EPA interpretation of the CAA and, in particular, section 112 is reasonable and encourages practices that will avoid malfunctions. Administrative and judicial procedures for addressing exceedances of the standards fully recognize that violations may occur despite good faith efforts to comply and can accommodate those situations.
As noted above, the 2011 proposal included an affirmative defense to civil penalties for violations caused by malfunctions. EPA included the affirmative defense in the 2011 proposal as it had in several prior rules in an effort to create a system that incorporates some flexibility, recognizing that there is a tension, inherent in many types of air regulation, to ensure adequate compliance while simultaneously recognizing that despite the most diligent of efforts, emission standards may be violated under circumstances entirely beyond the control of the source. Although the EPA recognized that its case-by-case enforcement discretion provides sufficient flexibility in these circumstances, it included the affirmative defense in the 2011 proposal and in several prior rules to provide a more formalized approach and more regulatory clarity. See
In light of NRDC, the EPA is withdrawing its proposal to include a regulatory affirmative defense provision in this rulemaking and in this proposal has eliminated the provisions related to affirmative defense contained in §§ 63.1180 and 63.1386 (the affirmative defense provisions in the proposed rule published in the
In our April 2013 proposal, we proposed an alternative compliance provision that would allow sources subject to the Mineral Wool Production NESHAP, the Wool Fiberglass Manufacturing NESHAP and the Wool Fiberglass Manufacturing GACT standard to demonstrate compliance with applicable standards during startup and shutdown. (78 FR 22378 and 22388). Specifically, we proposed that sources would keep records showing that emissions were routed to the air pollution control devices and that these control devices were operated at the parameters established during the most recent performance test that showed compliance with the emission limit. For electric cold-top furnaces in the Wool Fiberglass Manufacturing source category, we also proposed limiting raw material content at startup and shutdown to only cullet because using cullet reduces hazardous air pollutant (HAP) emissions, and this particular furnace design does not allow the control device to be operated continuously during startup. For all other glass melting furnaces, we also added a requirement for preheating the empty furnace using only natural gas as a means of demonstrating compliance with the emission limits at startup. (78 FR 22388). However, we did not specifically propose these requirements under CAA section 112(h)(2).
After our April 2013 document, we received and reviewed information from the mineral wool and wool fiberglass industries regarding the work practices used during periods of startup and shutdown.
At this time, we are proposing under CAA section 112(h)(2) that mineral wool production and wool fiberglass manufacturing facilities comply with work practice standards that are used by the best performers during periods of startup and shutdown (as described in Section III.D.6. of this preamble. (Work practice standards for previously unregulated HCl and HF emissions from glass-melting furnaces at major sources.)
The work practice standards for startup and shutdown are also being incorporated into the GACT standards for wool fiberglass manufacturing area sources.
In order to promulgate a work practice standard in lieu of an emission standard, the EPA must demonstrate that measurement of the emissions is not practicable due to technological and economic limitations. In the case of these source categories, emissions are not at steady state during startup and shutdown (a necessary factor for accurate emissions testing), and the varying stack conditions, gas compositions, and flow rates make accurate emission measurements impracticable. In addition, startup period for mineral wool cupolas, typically 2 hours, is too short a time to conduct source testing.
In the November 25, 2011 proposal we stated that we did not believe there was a potential for adverse environmental effects because “all chronic non-cancer HQ values considering actual emissions are less than 1 using human health reference values.” Since that time we conducted an environmental risk screening assessment for both source categories in this rulemaking. Additional information on this analysis is available in the risk assessment document titled “Draft Residual Risk Assessment for the Mineral Wool Production and Wool Fiberglass Manufacturing Source Categories” dated October 2014 and available in the docket.
Of the seven pollutants included in the environmental risk screen, the source categories in this rulemaking emit lead, mercury (elemental and divalent), cadmium, hydrogen fluoride and hydrogen chloride. In the Tier I screening analysis for PB–HAP other than lead (which was evaluated differently, as noted in the reference above), none of the individual modeled concentrations for any facility in the source categories exceed any of the ecological benchmarks (either the LOAEL or NOAEL) for mercury or cadmium. Therefore, we did not conduct a Tier II screening assessment. For lead, we did not estimate any exceedances of the secondary lead NAAQS. For HCL and HF, the average
The UPL is the statistical methodology the EPA uses as the primary tool to account for emissions variability when setting emissions standards under CAA section 112. The UPL is used to calculate the average emissions limitation achieved over time by the best performing source or sources.
There are several key points that underlie the EPA's methodology for calculating MACT floor standards through the use of the UPL. First, the floor standards reasonably account for variability in the emissions of the sources used to calculate the standards. This variability occurs due to a number of factors, including operation of control technologies, variation in combustion materials and combustion conditions, variation in operation of the unit itself and variation associated with the emission measurement techniques. Second, because the emissions data available to the EPA are in the form of short-term stack tests and the standards must be complied with at all times, the agency uses the UPL to estimate the average emissions performance of the units used to establish the MACT floor standards at times other than when the stack tests were conducted. Thus, the UPL results in a limit that represents the average emissions limitation achieved by the best performing sources over time, accounting for variability in emissions performance.
In establishing MACT floors, we use the available information to determine the average performance of the best performing sources (for existing source floors) and the average performance of the best-controlled similar source (for new source floors). Each MACT standard is based on data from sources whose emissions are expected to vary over their long term performance. For this reason, and because sources must comply with the MACT standards at all times, consideration of variability is a key factor in establishing these standards. In order to account for variability that is reflected in the available data that we use to calculate MACT floors, we use the UPL. For more information regarding the general use of the UPL and why it is appropriate for calculating MACT floors, see the memorandum titled,
Furthermore, with regard to calculation of MACT Floor limits based on limited datasets, we considered additional factors as summarized below and described in more details in the memorandum titled,
In previous (November 2011 and April 2013) proposals we first ranked the test data by the arithmetic average of each source's emissions test results and we then performed a UPL calculation for the MACT floor population for new and existing sources, using the average emissions data from the best performing source or sources. We have recently further evaluated the way we apply the UPL where we have limited data sets.
The UPL approach addresses variability of emissions data from the best performing source or sources in setting MACT standards. The UPL also accounts for uncertainty associated with emission values in a dataset, which can be influenced by components such as the number of samples available for developing MACT standards and the number of samples that will be collected to assess compliance with the emission limit. The UPL approach has been used in many environmental science applications.
With regard to the derivation of MACT limits using limited datasets, the D.C. Circuit Court of Appeals raised questions regarding the application of the UPL to limited datasets in its recent decision in
For further explanation on the approach we used to calculate MACT floors based on limited datasets, including the specific MACT floor calculations for the proposed mineral wool and wool fiberglass emission limits, please see the Limited Datasets Memo and the MACT Floor Memo in the dockets for these rules. We are requesting comment on this proposed approach.
3. How did we apply the approach for limited datasets to limited datasets in the Mineral Wool Production and Wool Fiberglass Manufacturing source categories?
The standards where we had limited datasets are listed in sections III C and D below. For the Mineral Wool Production source category, we have
We are proposing revised emission limits for cupolas and for bonded lines as a result of new representative detection limit (RDL) values, new source test data and our approach for calculating MACT floors based on limited data sets, as introduced in section III.B of this preamble.
The updated draft risk assessment for the Mineral Wool Production source category, located in the docket for this rulemaking, contains updated estimates of risk based on actual emissions currently emitted by the industry. The risk estimates for actual emissions were updated to incorporate the following model and model reference library updates:
• AERMOD version 11103 was updated to version 14134.
• HEM version 1.3.0 was updated to version 1.3.1.
• Census input files were updated from the 2000 census to the 2010 census.
• Meteorological input files were updated from 1991 data to 2011 data. The number of meteorological stations contained in the input files increased from approximately 200 to more than 800.
• The dose response input library was revised to include the latest updates.
• The target organ endpoint input library was revised to include the latest updates.
The revisions listed above did not change our estimate of risk from actual emissions when compared to the risk assessment conducted for the April 15, 2013, supplemental proposal. The risk from mineral wool production is driven by formaldehyde and continues to be well within a level we consider to be acceptable (that is, a maximum individual risk (MIR) less than 100-in-1 million). The MIR for cancer for actual baseline emissions remains 10-in-1 million, with the acute noncancer hazard quotient (HQ) remaining at 20 for the reference exposure level (REL) and at 1 for the AEGL–1. The MIR from mineral wool production emissions under the original MACT standard is estimated to be 30-in-1 million (formaldehyde). The MIR for emissions after implementation of this proposal is estimated to be 10-in-1 million. Therefore, the MIR based on allowable emissions (what sources are permitted to emit) after implementation of the RTR decreases by a factor of 3 from MACT allowable levels.
The April 15, 2013 proposal contained a revised emissions limit for new and reconstructed closed-top mineral wool cupolas of 0.025 pounds (lb)/ton of melt. However, this proposed emission limit is very close to the test method detection limit of approximately 0.02 lb/ton melt.
That is the case here with the carbonyl sulfide (COS) limit for new and reconstructed closed-top cupolas. The calculated standard (not accounting for the inherent analytical variability in the measurements) is approximately 0.02 lb/ton melt. In order to account for measurement variability, we multiplied the highest reported minimum detection level for the analytic method by a factor of three which results in a level of 0.061 lb/ton melt. This represents the lowest level that can be reliably measured using this test method, and we therefore believe that it is the lowest level we can set as the MACT limit taking the appropriate measurement variability into account.
In addition to our updated approach for determining the new source limits based on a limited dataset as discussed in section III. B of this preamble, we are proposing to change the proposed limits for formaldehyde, phenol and methanol emissions from horizontal collection/curing lines from previously proposed limits (November 25, 2011 (76 FR 72770 at 72789), and April 15, 2013 (78 FR 22370 at 22386)) due to new test data we received subsequent to our April 2013 proposal. We have since conducted a thorough review of both the first test, upon which the November 2011 proposed limits were based, and the second test, which supported industry's comments on the level of the standard.
In our review of the new test data, we found that emissions were measured at very different production rates than during the first test. We held discussions during several teleconferences with the company managers, environmental managers and the hired testing contractors to obtain additional information that would explain the widely divergent results from the first and second tests. We questioned the contracting company that conducted the source testing to explain under what situation the process tested using the same test method would yield such widely divergent results (which varied up to an order of magnitude).
Each of the source tests included three test runs measuring pollutant concentrations at a single stack to which emissions from both the collection process and the curing oven are vented. Of the three test runs conducted in the
In our review of the second test, we found that all three runs yielded similar results and that the laboratory reported to have received the same amount of sample that the tester reported was collected for analysis; these were important factors in our quality review of the test data.
For these reasons we concluded that the proper action would be to abandon the first test in its entirety due to the sample collection and reporting errors, and use the second test in its place because those samples were collected and reported correctly. The replacement of the first erroneous test with the second correct test changes the emission limits for the horizontal collection/curing subcategory. The revised emission limits being proposed are summarized in Table 2 of this preamble.
Setting aside the issue of whether the source adhered to proper sampling and analysis methods, we considered whether using data from all six test runs from both the first and second tests would have resulted in a significantly different emission limit, even though the first test was invalid. We found that while the correct action is to accept only the valid emission testing, emission limits using all the test data would not have yielded appreciably different emission limits than the limits we are proposing in today's rule. We are requesting comment on the emission limits for horizontal combined collection and curing lines.
As a result of our updated approach to evaluate limited datasets (as discussed in Section III.B of this preamble), we are proposing the following for mineral wool cupolas:
• Hydrogen fluoride (HF) and hydrochloric acid (HCl) emissions limits for two subcategories of new cupolas (those processing slag and those not processing slag),
• HCl emission limits for existing cupolas processing slag, and
• COS emission limits for new and existing open top cupolas.
The MACT floor dataset for each pollutant from cupola subcategory (e.g., open-top, processing slag and not processing slag) includes less than seven test runs from multiple cupolas. For each subcategory of cupola, we also identified the best performing unit based on average emissions performance. After determining the dataset distribution for each pollutant and ensuring that we used the correct equation for each distribution, we calculated the MACT floor emission limit for both existing and new sources.
Also based on our updated approach to limited datasets, we are proposing phenol, formaldehyde and methanol emission limits for three subcategories of new and existing bonded lines. Because one source exists in each of the three subcategories of combined collection and curing lines, existing and new source limits are equal. However, as a result of using our updated approach for limited datasets, the emission limits for phenol, formaldehyde and methanol we are proposing at this time for three subcategories of new and existing bonded lines are lower than those previously proposed. The MACT floor dataset for each pollutant from each new combined collection and curing line subcategory (e.g., vertical, horizontal and drum) includes less than seven test runs from a single line that we identified as the best performing unit based on average emissions performance. After determining the dataset distribution for each pollutant and ensuring that we used the correct equation for the distribution, we calculated the MACT floor emission limit for both existing and new sources. Table 2 indicates where changes to previously proposed emission limits are being newly proposed.
For each of the limited datasets (for both new and existing source floors), we evaluated the reasonableness of the calculated limit based on two factors. First, we reviewed the range of the test runs for each pollutant and process (i.e., an evaluation of the variance of the data). In general, we found the variance was determined to be acceptable because all measurements were within the expected range. Second, we compared the calculated UPL to the arithmetic average and found that the calculated limit was always within approximately 2.5 times the arithmetic average, a range we find when evaluating larger datasets.
Additionally, for new source emission limits, we compared the UPL equation components for the individual unit with those of the units in the existing source floor to determine if our identification of the best unit was reasonable.
The analyses and evaluations we performed for the proposed emissions limits are discussed in detail in the “MACT Floor Memo for the Mineral Wool Production Source Category” and in the “Limited Datasets Memo for the Mineral Wool Production Source Category,” available in the docket for this rule.
In Table 2 below we present all the emission limits for new and existing major sources in the Mineral Wool Production Source Category as proposed in the 2011 proposal, the 2013 supplemental proposal and in this supplemental proposal. We request comments on the proposed limits that have changed from what we previously proposed.
We are proposing several changes based on comments we received to our April 15, 2013, proposed rules for glass-melting furnaces and bonded lines. These changes include requirements for annual performance tests, extended compliance deadlines and changes to previously proposed emission limits based on our updated approach for calculating MACT standards where there are limited data sets.
We also are proposing work practice standards for HF and HCl emissions from all furnaces subject to 40 CFR part 63, subpart NNN, under CAA section 112(h)(2). We are seeking comments on only these issues or aspects of requirements that are being presented in this document.
The updated draft risk assessment for wool fiberglass manufacturing, located in the docket for this rulemaking, contains updated estimates of risk based on actual emissions currently emitted by the industry. The risk estimates for actual emissions were updated to incorporate the following emissions data, model and model reference library updates:
• Changes were made to the actual emissions data to reflect 2012 facility testing data.
• AERMOD version 11103 was updated to version 14134.
• HEM version 1.3.0 was updated to version 1.3.1.
• Census input files were updated from the 2000 census to the 2010 census.
• Meteorological input files were updated from 1991 data to 2011 data. The number of meteorological stations contained in the input files increased from approximately 200 to more than 800.
• The dose response input library was revised to include the latest updates.
• The target organ endpoint input library was revised to include the latest updates.
The revisions listed above did not change our estimate of risk from actual emissions when compared to the risk assessment conducted for the April 15, 2013 supplemental proposal. The risk from wool fiberglass manufacturing is driven by formaldehyde and hexavalent chromium and continues to be well within a level we consider to be acceptable (that is, a MIR less than 100-in-1 million). The MIR cancer for actual baseline emissions remains 20-in-1 million (formaldehyde), with the acute noncancer HQ remaining at 30 for the REL and at 2 for the AEGL–1 (formaldehyde). The MIR from wool fiberglass manufacturing emissions allowed under the original MACT standard is estimated to be 60-in-1 million (formaldehyde).
After implementation of the emission limits, emissions of formaldehyde and chromium will be reduced. As a result, the MIR from wool fiberglass manufacturing emissions after implementation of this proposal is estimated to be 5-in-1 million, with the acute noncancer HQ at 7 for the REL and at 0.3 for the acute exposure guideline levels (AEGL)-1 (formaldehyde). In addition, the number of individuals exposed to cancer risks above 10-in-1 million will be reduced from 6,900 for actual emissions to zero for this proposal, and the number of individuals exposed to cancer risks above 1-in-1 million will be reduced from 1.2 million for actual emissions to 21,000 for this proposal.
Based on information provided by industry, we evaluated eight different approaches to reducing chromium from gas-fired wool fiberglass furnaces. This included seven new options, and a re-evaluation of the costs associated with a sodium hydroxide scrubber control option discussed in the previous proposal. These air pollution control technologies or practices were identified by industry as potential compliance options to meet the standard. These options are as follows:
• Raw material substitution—discontinued use of green glass cullet in the raw material furnace charge; this is also a pollution prevention option;
• Furnace rebuild, when chromium emissions approach the limit, and before the end of the furnace's useful life;
• Installation of high efficiency particulate air (HEPA) filters at the outlet of the dry electrostatic precipitator (DESP);
• Installation of Venturi scrubber technology at the outlet of the DESP;
• Installation of a 3-stage filter at the outlet of the DESP;
• Installation of a 3-stage filter with water cleaning at the outlet of the DESP;
• Installation of a membrane baghouse at the outlet of the DESP;
• Installation of a caustic scrubber at the outlet of the DESP, as previously proposed, but with new cost analyses.
According to the results of our analyses, rebuilding the furnace when chromium emissions approach the limit is the most cost-effective approach, and the remaining cost discussion in this section concerns that control option. Our full analysis of the cost effectiveness of the various chromium emission reduction approaches is available in the technology review memo located in the docket to this proposed rule.
As a result, we are revising our analyses regarding how a wool fiberglass manufacturer would choose to meet the limits of this proposed rule. We are not revising the proposed limits or their applicability to all gas-fired glass-melting furnaces.
Based on information from industry (voluntary information collection request (ICR), CAA section 114 responses, emissions test data), there are currently 16 gas-fired glass-melting furnaces among both major and area sources in this source category, 14 of which were tested for chromium emissions. We estimate that there are six gas-fired furnaces located at four facilities that currently do not meet the proposed chromium compounds emission limit.
We first proposed that a wool fiberglass facility could choose to rebuild the furnace as a way to comply with the chromium emission limits in November 25, 2011, document, at 76 FR 72804. We stated that “both NaOH scrubbers and a furnace rebuild are considered cost effective when hexavalent chromium levels are high.” At that time, we surmised that a wool fiberglass manufacturer would choose non-chromium refractories with which to rebuild the furnace. In that document, we expected that the highest chromium emitting wool fiberglass furnace emitting 550 lb chromium per year would choose to rebuild the furnace to meet the proposed chromium compounds limit. We since learned from industry that the high chromium refractory is needed to withstand the high internal temperature, reactivity, corrosivity and erosivity of the furnace environment, but that some wool fiberglass furnaces are structurally and/or functionally designed to emit chromium at very low levels. As shown by the test data, 10 of the existing 16 gas-fired glass-melting furnaces meet the chromium limit without additional control beyond the DESP.
We now estimate the cost impact for impacted furnaces based on the example from industry practice that high-emitting furnaces may be rebuilt (or replaced) earlier than they might have been otherwise. The associated costing of this scenario is referred to as the net present value (NPV) approach which is described in the EPA Air Pollution Control Cost Manual (EPA/452/B–02–001), January 2002.
As part of the data collection effort associated with this rulemaking, we collected source test data
Of the 14 tested furnaces, all 4 furnaces over 12 years old exceeded the proposed chromium limit. Of the 10 furnaces under 12 years old, three exceeded the limit (one only marginally), and seven tested in compliance with (i.e., below) the proposed chromium limit.
We considered two early furnace replacement scenarios based on information we received. In the first, based solely on CAA section 114 responses and test data, the expected furnace life is 12 years and is reduced to 10 years for compliance with the chromium limit. In the second, based on statements from industry stakeholders, industry press releases and technical literature, the expected furnace life of 10 years is reduced to 7 years for compliance with the chromium limit.
We decided to use the second (i.e., the 10/7 NPV) scenario as the basis for this industry's NPV approach in an effort to
Consequently, for this cost analyses, the NPV approach uses the following assumptions: (1) Furnace rebuild cost = $10 million; (2) normal furnace life cycle = 10 years; (3) chromium compliant furnace life cycle = 7 years; and (4) industry interest rate = 7 percent. As an overview summary, the capital recovery cost is calculated by multiplying the NPV incremental cost by the capital recovery factor. Using the 7-year furnace life and a 7 percent interest (discount) rate, the annualized capital recovery cost was calculated to be $212,000 per furnace. A more detailed example calculation of the NPV approach is provided in the Cost Impacts memo located in the docket to this proposed rulemaking.
We found evidence from the industry that several companies chose to rebuild high-chromium emitting furnaces that were more than 6 years old. Data show that three furnaces initially tested in 2010 were rebuilt and re-tested in 2012 and the results submitted to the EPA. While we do not have a complete set of data showing total chromium emission reductions as a result of all furnace rebuilds, we found that of the available test data for furnaces that were rebuilt, retested and reported, all three achieved chromium emission reductions as a result of the rebuild. In total, chromium emissions were reduced by 47 pounds per year, as shown in Table 3 below.
The results of this new cost analysis were total annualized costs of approximately $716,000 per year and chromium emissions reductions of 567 lb/year. The cost per lb of emission reduction is approximately $1,300 per pound. We consider this cost per pound reasonable considering the high toxicity of hexavalent chromium and this cost is consistent with the costs per pound in other recent rulemakings. Because the chromium limit previously proposed under section 112(d)(6) is still cost effective, we are not changing the limit in this proposal. See section V.B for more detailed information on cost impacts.
In our April 2013 proposal, we also proposed reduced testing requirements for sources with emissions that are 75 percent or less of the proposed chromium limit. Specifically, we proposed chromium testing once every three years for sources testing no higher than 75 percent of the proposed chromium limit, i.e., at least 25 percent below the proposed chromium limit (78 FR 22387). Subsequent to our proposal, we conducted an additional review of existing test data and found that source tests show a sudden ramp-up of chromium emissions (at an exponential rate) with furnace age. Therefore, a potential testing period of three years could allow significant emissions of hexavalent chromium to occur before the source realized emissions were increasing. For this reason, we no longer believe that reduced testing frequency is appropriate and, therefore, we are proposing that all gas-fired glass-melting furnaces at both major and area sources would be required to conduct annual emissions performance testing for chromium compounds using EPA Method 29.
We previously proposed (on November 25, 2011, at 76 FR 72793, and on April 15, 2013, at 78 FR 22383–84), a 1-year compliance deadline for affected sources to meet the chromium emission limits of the rule. We received several comments requesting additional time to install new controls that would be effective in removing chromium compounds. In response to these comments, we are proposing up to 2 years from the effective date of this proposed rule for affected sources to comply with the chromium emission limits.
Standards promulgated under CAA section 112(f)(2) shall not apply until 90 days after the effective date of the final action amending this rule and sources may have up to 2 years after the effective date of the standard to comply if the EPA finds that such period is necessary for the installation of controls. (CAA section 112(f)(2)(B).) Under CAA section 112(i)(3), we must require sources to comply as expeditiously as practicable, but no later than 3 years after promulgation of the standard. (Ass'n of Battery Recyclers v. EPA, 716 F.3d 667, 405 U.S. App. DC 100, 2013 U.S. App. LEXIS 10637, 76 ERC (BNA) 1609, 43 ELR 20113, 2013 WL 2302713 (D.C. Cir. 2013).
We consulted our records from voluntary ICR responses, CAA section 114 responses regarding furnace ages and rebuilds, and statements by industry regarding furnace replacements. These sources of information regarding the time period required to replace furnace refractory range from a few weeks (in the case of a “hot repair,” done while the furnace is operating), to 20 months for a complete furnace deconstruction and reconstruction.
While we no longer believe based on available information that add-on controls would necessarily be used to reduce chromium, we agree that more than 1 year may be needed for sources to decommission the old furnace and install a new furnace (particularly if the new furnace is of a different design than the one it is replacing, and emits chromium at lower rates as it ages).
We also see no reason to allow area sources a longer period of time to install, because we found no difference between furnaces at major and those at area source facilities and companies have demonstrated that “expeditiously as possible” is a period less than 2 years. Further, we are proposing that area and major sources be subject to similar requirements and unnecessary delays reducing the levels of chromium compound emissions to the atmosphere should be avoided for protection of human health. Therefore, we are making no distinction between major and area sources for the chromium compounds emission limit compliance deadline, and instead proposing that affected
In our November 2011 proposal, consistent with the Brick MACT decision, we proposed MACT limits for HF and HCl (at 76 FR 72791) that reflected the average of the best performing 12 percent of existing sources, considering variability. We received comments that these pollutants were emitted at such low levels as to not be measurable and hence may not be emitted by most furnaces. When we reviewed the test data we also found that testing for these HAP indicated levels that were generally well below the detection limit of the test method used. Specifically, over 80 percent of all tests for HCl and 85 percent of all tests for HF were below the detection level of the method. In light of this information, we proposed to require work practice standards for the acid gases HF and HCl from furnaces at major sources in our April 15, 2013, supplemental proposal, under CAA section 112(h)(2). (78 FR 22387.) We did not however, specify the applicable work practice standards at that time.
We note that in response to our April 2013 proposal, wool fiberglass manufacturing owner/operators explained to us that emissions of the acid gases HF and HCl originate from the chloride- and fluoride-bearing constituents of the raw materials used to manufacture fiberglass. Refined raw mineral sands may contain trace amounts of fluorides and chlorides, and certain sources of external glass cullet typically contain significant concentrations of chlorides and fluorides, which undergo chemical transformation in the furnace environment to form the acid gases HCl and HF. These acid gases are undesirable in the wool fiberglass furnace environment because they cause damage to the furnace instruments (thermal sensors, cameras, flow rate sensors, etc.). Due to their location within the continuous high-temperature process, the replacement or repair of furnace components (and problems occurring as a result of compromised furnace components) is very costly. In order to protect furnace components, wool fiberglass facilities identify, isolate and screen out fluoride- and chloride-bearing materials.
According to these facilities, chlorides, fluorides and fluorine are components of glass from industrial (also known as continuous strand, or textile) fiberglass, cathode ray tubes (CRT), computer monitors that include CRT, glass from microwave ovens and glass from televisions. HF and HCl emissions occur when recycled glass from these types of materials enters the external cullet stream from the recycling center. We have used this information to develop and propose the work practice standard for wool fiberglass manufacturers in this action.
Wool fiberglass facilities ensure their feedstock does not contain chloride-, fluoride-, or fluorine-bearing cullet by one of two approaches. First, the facility may require the providers of external cullet to verify that the cullet does not include waste glass from the chloride-, fluoride- or fluorine-bearing sources mentioned above. Alternatively, facilities may sample their raw materials to show the cullet entering the furnace does not contain glass from these types of sources. The furnace emissions testing shows this is an effective work practice to reduce emissions of these acid gases.
In this document, we are, therefore, proposing work practice standards for the Wool Fiberglass Manufacturing source category that would require wool fiberglass facilities to maintain records from either cullet suppliers or their internal inspections showing that the external cullet is free of components that would form HF or HCl in the furnace exhaust (i.e., chlorides, fluorides and fluorine). Facilities would maintain quality assurance records for raw materials and/or records of glass formulations indicating the facility does not process fluoride-, fluorine-, or chloride-bearing materials in their furnaces, and that they thereby maintain low HF and HCl emissions. Major source facilities would be required to make these records available for inspection by the permitting authority upon demand. Failure to maintain such records would constitute a violation from the requirement.
Only the new source MACT limits are changing as a result of our updated approach to limited datasets. For each of the limited datasets, we evaluated the reasonableness of the calculated limit based on three factors. First, we reviewed the range of the test runs for each pollutant and process (i.e., an evaluation of the variance of the data). In general, we found the variance was determined to be acceptable because all measurements were within the expected range. Second, we compared the calculated UPL to the arithmetic average, and found that the calculated limit was always within approximately 2.5 times the arithmetic average, a range we find when evaluating larger datasets. Third, we compared the UPL equation components for the individual unit with those of the units in the existing source floor to determine if our identification of the best unit was reasonable.
We are proposing phenol, formaldehyde and methanol emission limits for new sources in both rotary spin (RS) and flame attenuation (FA) subcategories as a result of our updated approach to evaluate limited datasets.
Additionally, we found that one new source limit, the methanol limit for the FA subcategory, was previously proposed equal to the limit for existing sources (0.5 lb/ton of glass pulled). The new source MACT floor dataset for methanol from FA lines includes three test runs from a single line (Johns Manville, Defiance) that we identified as the best performing unit based on average emissions performance.
After determining that the dataset is best represented by a lognormal distribution and ensuring that we used the correct equation for that distribution, we compared the performance of the best controlled similar source to the performance of each of the units in the existing source floor to determine whether our identification of the best controlled similar source was reasonable. Based on our evaluation of the available data, we are now proposing that the MACT floor is 0.35 lb/ton glass pulled for methanol from new FA lines.
For further explanation on the updated approach we are proposing to use for limited datasets, including for the MACT floor calculation for methanol emissions from FA lines please see the “Limited Datasets Memo for the Wool Fiberglass Manufacturing Source Category” and the “MACT Floor Memo for the Wool Fiberglass Manufacturing Source Category” in the dockets for these rules. We are requesting comment on this proposed approach.
Table 4 presents a summary of all the proposed emission limits for new and existing major sources in the Wool Fiberglass Manufacturing source category. We are taking comment only on the changes to previously proposed limits. However, to provide transparency and a complete set of
In a change from our April 15, 2013, proposal, we are no longer proposing to establish particulate matter (PM) limits, in addition to the chromium compound limits, for gas-fired glass-melting furnaces at wool fiberglass manufacturing area sources. In the April 15, 2013, document, we proposed both PM and chromium compounds emission limits under CAA section 112(d)(5) (GACT) for wool fiberglass manufacturing gas-fired glass-melting furnaces at area sources. We received comments objecting to the EPA requiring area sources to meet emission limits for both PM and chromium compounds. In one commenter's opinion, separate emission limits for PM and for chromium compounds are inappropriate because PM would no longer be a surrogate for non-mercury HAP metals, and limits for every metal HAP would have to be established. Similarly, another commenter stated that we should set emission limits for either PM or for chromium compounds, but not for both. This commenter further recommended the EPA establish only the PM limit for wool fiberglass manufacturing area sources.
After considering these comments, we are no longer proposing to establish PM limits, in addition to chromium compounds, limits for gas-fired glass-melting furnaces that are located at wool fiberglass manufacturing area sources. As explained in our April 2013 supplemental proposal, chromium compounds are a significant component of the refractory used above the glass melt line in gas-fired glass-melting furnaces.
As explained in our April 15, 2013 supplemental proposal, chromium emissions can be still fairly significant after the emission stream passes through any existing PM air pollution control device. Setting emission limits for PM alone would not achieve the objective of the Urban Air Toxics Strategy
For the proposed amendments to the Mineral Wool Production source category, the air quality, water quality, solid waste and energy impacts were determined based on the need for additional control technologies and actions required to meet the proposed emissions limits. These proposed amendments would maintain emissions of COS, formaldehyde, phenol and methanol emissions at their current low levels.
We do not anticipate any adverse water quality or solid waste impacts from the proposed amendments to the 1999 MACT rule because the proposed requirements would not change the existing requirements that impact water quality or solid waste.
In this supplemental proposal, we have revised the emission limits for horizontal collection and curing activities based on new test data and reevaluated the associated costs. The costs presented below in Table 5 replace those estimated in the April 2013 proposed rule.
As explained in our April 15, 2013, supplemental proposal (78 FR 22370, at 22385), all existing lines that use slag in the raw materials receive the slag from the iron and steel industry. Some slags contain residual amounts of chlorides and fluorides which vary by process and location.
All existing lines with closed-top cupolas are fitted with RTO which convert the high concentrations of COS in the cupola exhaust gas to energy that is returned to the cupola. This technology reduces the consumption of coke up to 30 percent and, because of the cost of coke, this technology pays for itself over a period of several years. Emissions of COS are below 0.02 lb COS per ton melt when a regenerative thermal oxidizer (RTO) is installed for energy recovery and new source MACT for closed-top cupolas is based upon the use of this technology. Open-top cupolas do not accommodate RTO. This proposed rule establishes a limit of 3.2 lbs COS per ton melt for new lines with open-top cupolas, and 6.8 lbs COS per ton melt for existing lines. All lines currently in operation can meet this limit without new control equipment or different input materials, and thus will not incur additional costs.
The total annualized costs for these proposed amendments are estimated at $48,800 (2013 dollars) for additional testing and monitoring. Table 6 below provides a summary of the estimated costs and emissions reductions associated with these proposed amendments to the Mineral Wool Production NESHAP.
We performed an economic impact analysis for mineral wool consumers and producers nationally, using the annual compliance costs estimated for this proposed rule. The impacts to producers affected by this proposed rule are annualized costs of less than 0.01 percent of their revenues, using the most current year available for revenue data. Prices and output for mineral wool products should increase by no more than the impact on cost to revenues for producers; thus, mineral wool prices should increase by less than 0.01 percent. Hence, the overall economic impact of this proposed rule should be low on the affected industries and their consumers. For more information, please refer to the Economic Impact and Small Business Analysis for this proposed rulemaking that is in the docket (EPA–HQ–OAR–2010–1042).
We evaluated the impacts to the affected sources based on all available information. Two significant sources of information were the 2010 and 2011/2012 emissions testing and subsequent conversations with the North American Insulation Manufacturers Association and individuals operating industry facilities. According to the 2010 and 2012 emissions test data, there are three glass-melting furnaces at two major source facilities that do not meet the proposed chromium compound emission limit.
Our assessment of impacts is based on the data from tested gas-fired glass-melting furnaces only, and may not be representative of untested furnaces. We anticipate that 10 of the 30 wool fiberglass manufacturing facilities currently operating in the United States are currently major sources and would be affected by these proposed
We expect that these proposed RTR amendments would result in reductions of 558 lb of chromium compounds. Hexavalent chromium can be as much as 93 percent (or 547 lb) of the total chromium compounds emitted from wool fiberglass glass-melting furnaces.
Available information indicates that all affected facilities will be able to comply with this proposed work practice standards for HF and HCl without additional controls, and that there will be no measurable reduction in emissions of these gases. Also, we anticipate that there will be no reductions in PM emissions due to these proposed PM standards because all sources currently meet the previously proposed PM limit.
Indirect or secondary air quality impacts include impacts that will result from the increased electricity usage associated with the operation of control devices. We do not anticipate significant secondary impacts from the proposed amendments to the Wool Fiberglass MACT.
The capital costs for each facility were estimated based on the ability of each facility to meet the proposed emissions limits for PM, chromium compounds, formaldehyde, phenol and methanol. The memorandum,
Under these proposed amendments, eight of the 10 major source wool fiberglass facilities will not incur any capital costs to comply with the proposed emissions limits. Five facilities would be subject to new costs for compliance testing on gas-fired glass-melting furnaces, which will total $80,000 annually for the entire industry. At this time, there are two facilities with a total of three gas-fired glass-melting furnaces that do not meet the proposed emissions limit for chromium compounds. We anticipate that these facilities would opt to reduce the operational life cycle for each of the three gas-fired glass-melting furnaces. The estimated capital cost of reducing the operational furnace life from 10 years to 7 years is $1,144,000 per furnace with a total annualized cost of $212,000 per furnace. There are a total of eight gas-fired glass-melting furnaces located at five major source facilities. Annual performance testing costs would be $10,000 per glass-melting furnace, resulting in total glass-melting furnace testing costs of $80,000.
The 10 major source facilities would incur total annualized costs of $80,400 for additional compliance testing on their FA and RS manufacturing lines and two of those facilities would incur a total cost of $1,144,000 for reducing the operational life cycle of three gas-fired glass-melting furnaces due to the proposed rule emission limits. The total annualized costs for the proposed amendments are estimated at $1.49 million (2013 dollars).
Table 6 below summarizes the costs and emission reductions associated with the proposed amendments.
The impacts presented in this section include the air quality, cost, non-air quality and economic impacts of complying with the proposed GACT rule for wool fiberglass manufacturing located at area source facilities.
We have estimated the potential emission reductions from implementation of the proposed GACT emission standards to be 54 lb of chromium compounds per year.
We considered the costs and benefits of achieving the proposed emission limits and identified five facilities with a total of eight glass-melting furnaces that would be subject to the proposed requirements. All eight glass-melting furnaces would have to conduct annual testing to demonstrate compliance. Based on the emission testing conducted in 2011 and 2012, three of the eight glass-melting furnaces would need to reduce their emissions to meet the proposed chromium compound emission limits. We estimated that using a reduced life cycle approach for those furnaces would have a capital equipment cost of $1,144,000 for each furnace and the total annualized costs would be $212,000 per furnace.
Costs are also incurred for compliance testing, monitoring, recordkeeping, and reporting requirements of the proposed rule. The annual performance testing costs are $10,000 per gas-fired glass-melting furnace. Since there are a total of eight gas-fired glass-melting furnaces at the five facilities, the total annual testing cost is $80,000. The total annualized cost for the wool fiberglass manufacturing industry to comply with subpart NN requirements is $716,000. The estimated HAP reduction is 50 lb of chromium compounds.
While we do not anticipate the construction of any new wool fiberglass manufacturing facilities in the next 5 years, we do expect most, if not all, of the 10 major source facilities to convert to non-HAP binders and become area sources. However, we did not estimate new source cost impacts for any additional facilities to avoid double
The analysis is documented in the memorandum,
We performed an economic impact analysis for wool fiberglass consumers and producers nationally, using the annual compliance costs estimated for this proposed rule. The impacts to producers affected by this proposed rule are annualized costs of less than 0.02 percent of their revenues, using the most current year available for revenue data. Prices and output for wool fiberglass products should increase by no more than the impact on cost to revenues for producers; thus, wool fiberglass prices should increase by less than 0.02 percent. Hence, the overall economic impact of this proposed rule should be low on the affected industries and their consumers. For more information, please refer to the Economic Impact and Small Business Analysis for this proposed rulemaking that is in the docket (EPA–HQ–OAR–2010–1042).
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” because it does not raise novel legal or policy issues. Accordingly, the EPA has not submitted this action to OMB for review under Executive Order 12866 and Executive Order 13563 (76 FR 3821, January 21, 2011).
In addition, the EPA prepared an analysis of the potential costs and benefits associated with this action. This analysis is contained in
The information collection requirements in this proposed rule have been submitted for approval to OMB under the
The information requirements are based on notification, recordkeeping, and reporting requirements in the NESHAP General Provisions (40 CFR part 63, subpart A), which are mandatory for all operators subject to national emission standards. These recordkeeping and reporting requirements are specifically authorized by CAA section 114 (42 U.S.C. 7414). All information submitted to the EPA pursuant to the recordkeeping and reporting requirements for which a claim of confidentiality is made is safeguarded according to agency policies set forth in 40 CFR part 2, subpart B.
This proposed rule would require maintenance inspections of the control devices, and some notifications or reports beyond those required by the General Provisions. The recordkeeping requirements require only the specific information needed to determine compliance. The information collection activities in this ICR include the following: Performance tests, operating parameter monitoring, preparation of a site-specific monitoring plan, monitoring and inspection, one-time and periodic reports and the maintenance of records. Some information collection activities included in the NESHAP may occur within the first 3 years, and are presented in this burden estimate, but may not occur until 4 or 5 years following promulgation of the proposed standards for some affected sources. To be conservative in our estimate, the burden for these items is included in this ICR. An initial notification is required to notify the Designated Administrator of the applicability of this subpart, and to identify gas-fired glass-melting furnaces subject to this subpart. A notification of performance test must be submitted, and a site-specific test plan written for the performance test, along with a monitoring plan. Following the initial performance test, the source must submit a notification of compliance status that documents the performance test and the values for the operating parameters. A periodic report submitted every 6 months documents the values for the operating parameters and deviations. Owners or operators of mineral wool production and wool fiberglass manufacturing facilities are required to keep records of certain parameters and information for a period of 5 years. We estimate 20 wool fiberglass facilities will be subject to 40 CFR part 63, subpart NN; 10 wool fiberglass facilities are currently subject to 40 CFR part 63, subpart NNN; and 8 mineral wool facilities are currently subject to 40 CFR part 63, subpart DDD. The annual testing, annual monitoring, reporting and recordkeeping burden for this collection (averaged over the first 3 years after the effective date of the standards) is summarized as follows:
These estimates include initial and annual performance tests, conducting and documenting semiannual excess emission reports, maintenance inspections, developing a monitoring plan, notifications and recordkeeping. Monitoring and testing cost were also included in the cost estimates presented in the control costs impacts estimates in section IV of this preamble. The total burden (defined at 5 CFR 1320.3(b)) for the federal government (averaged over the first 3 years after the effective date of the standard) is estimated to be:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9.
To comment on the agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, the EPA has established public dockets for these rules, which include these ICRs, under Docket ID numbers EPA–HQ–OAR–2010–1042 (subpart DDD) and EPA–HQ–OAR–2010–1042 (subparts NNN and NN). Submit any comments related to the ICRs to the EPA and the OMB. See
The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act, or any other statute, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations and small governmental jurisdictions.
For purposes of assessing the impacts of this proposed rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA's) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. For this source category, which has the general NAICS code 327993 (i.e., Mineral Wool Production and Wool Fiberglass Manufacturing), the SBA small business size standard is 750 employees according to the SBA small business standards definitions.
After considering the economic impacts of this proposed rule on small entities in the Mineral Wool Production and Wool Fiberglass Manufacturing source categories, I certify that this action will not have a significant economic impact on a substantial number of small entities. Five of the seven mineral wool production parent companies affected in this proposed rule are considered to be small entities per the definition provided in this section. There are no small businesses in the Wool Fiberglass Manufacturing source category. We estimate that this proposed rule will not have a significant economic impact on any of those companies.
While there are some costs imposed on affected small businesses as a result of this rulemaking, the costs associated with this action are less than the costs associated with the limits proposed on November 25, 2011. Specifically, the cost to small entities in the Mineral Wool Production source category due to the changes in COS, HF and HCl are lower as compared to the limits proposed on November 25, 2011, and April 15, 2013. None of the five small mineral wool parent companies are expected to have an annualized compliance cost of greater than one percent of its revenues. All other affected parent companies are not small businesses according to the SBA small business size standard for the affected NAICS code (NAICS 327993). Therefore, we have determined that the impacts for this proposed rule do not constitute a significant economic impact on a substantial number of small entities.
Although these proposed rules would not have a significant economic impact on a substantial number of small entities, the EPA nonetheless has tried to mitigate the impact that these rules would have on small entities. The actions we are proposing to take to mitigate impacts on small businesses include less frequent compliance testing for the entire mineral wool industry and subcategorizing the Mineral Wool Production source category in developing the proposed COS, HF and HCl emissions limits than originally required in the November 25, 2011, proposal. For more information, please refer to the economic impact and small business analysis that is in the docket. We continue to be interested in the potential impacts of the proposed rule on small entities and welcome comments on issues related to such impacts.
This rule does not contain a federal mandate that may result in expenditures of $100 million or more for state, local and tribal governments, in the aggregate, or the private sector in any 1 year. The total annualized cost of these rules is estimated to be no more than $2.3 million (2013$) in any 1 year. Thus, these rules are not subject to the requirements of sections 202 or 205 of UMRA.
This proposed rule is also not subject to the requirements of section 203 of UMRA, because they contain no regulatory requirements that might significantly or uniquely affect small governments. These rules only impact mineral wool and wool fiberglass manufacturing facilities, and, thus, do not impact small governments uniquely or significantly.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and
In the spirit of Executive Order 13132, and consistent with the EPA policy to promote communications between the EPA and state and local governments, the EPA specifically solicits comment on this proposed action from state and local officials.
This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). These proposed rules impose requirements on owners and operators of specified area and major sources, and not tribal governments. There are no wool fiberglass manufacturing facilities or mineral wool production facilities owned or operated by Indian tribal governments. Thus, Executive Order 13175 does not apply to this action. The EPA specifically solicits additional comment on this proposed action from tribal officials.
The EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying to those regulatory actions that concern health or safety risks, such that the analysis required under section 5–501 of the Executive Order has the potential to influence the regulation. This action is not subject to Executive Order 13045, because it is based solely on technology performance.
This action is not subject to Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not a significant regulatory action under Executive Order 12866.
Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA), Public Law No. 104–113 12(d) (15 U.S.C. 272 note) directs the EPA to use voluntary consensus standards (VCS) in its regulatory activities, unless to do so would be inconsistent with applicable law or otherwise impractical. VCS are technical standards (
This rulemaking involves technical standards. Therefore, the agency conducted searches for the Wool Fiberglass Manufacturing Area Source NESHAP through the Enhanced National Standards Systems Network (NSSN) Database managed by the American National Standards Institute (ANSI). We also contacted voluntary consensus standards (VCS) organizations and accessed and searched their databases.
Under 40 CFR part 63, subpart NN, searches were conducted for EPA Methods 5 and 29. The search did not identify any other VCS that were potentially applicable for this rule in lieu of EPA reference methods.
We proposed VCS under the NTTAA for Wool Fiberglass Manufacturing (NNN) and for Mineral Wool Production (DDD) in November 2011. Commenters asked to have the option to use other EPA methods to measure their emissions for compliance purposes. These are not VCS and as such are not subject to this requirement.
The EPA welcomes comments on this aspect of the proposed rulemaking, and, specifically, invites the public to identify potentially applicable VCS, and to explain why such standards should be used in this regulation.
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies and activities on minority populations and low-income populations in the United States.
The EPA has determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations, because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population.
An analysis of demographic data shows that the average percentage of minorities, percentages of the population below the poverty level and the percentages of the population 17 years old and younger, in close proximity to the sources, are similar to the national averages, with percentage differences of 3, 1.8 and 1.7, respectively, at the 3-mile radius of concern. These differences in the absolute number of percentage points from the national average indicate a 9.4-percent, 14.4-percent and 6.6-percent over-representation of minority populations, populations below the poverty level and the percentages of the population 17 years old and younger, respectively.
In determining the aggregate demographic makeup of the communities near affected sources, the EPA used census data at the block group level to identify demographics of the populations considered to be living near affected sources, such that they have notable exposures to current emissions from these sources. In this approach, the EPA reviewed the distributions of different socio-demographic groups in the locations of the expected emission reductions from this proposed rule. The review identified those census block groups with centroids within a circular distance of a 0.5, 5, and 5 miles of affected sources, and determined the demographic and socio-economic composition (
The EPA defines Environmental Justice to include meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations and policies. To promote meaningful involvement, the EPA has developed a communication and outreach strategy to ensure that interested communities have access to this proposed rule, are aware of its content, and have an opportunity to comment during the comment period. During the comment period, the EPA will publicize the rulemaking via environmental justice newsletters, Tribal newsletters, environmental justice listservs and the Internet, including the EPA Office of Policy Rulemaking Gateway Web site (
Environmental protection, Administrative practice and procedure, Air pollution control, Hazardous substances, Incorporation by reference, Intergovernmental relations, Reporting and recordkeeping requirements, Wool fiberglass manufacturing.
For the reasons stated in the preamble, part 63 of title 40, chapter I, of the Code of Federal Regulations is proposed to be amended as follows:
42 U.S.C. 7401
(l) * * *
(8) SW–846–8260B, Volatile Organic Compounds by Gas Chromatography/Mass Spectrometry (GC/MS), Revision 2, December 1996, in EPA Publication No. SW–846, Test Methods for Evaluating Solid Waste, Physical/Chemical Methods, Third Edition,
(9) SW–846–8270D, Semivolatile Organic Compounds by Gas Chromatography/Mass Spectrometry (GC/MS), Revision 4, February 2007, in EPA Publication No. SW–846, Test Methods for Evaluating Solid Waste, Physical/Chemical Methods, Third Edition,
(a) Except as provided in paragraphs (b) and (c) of this section, the requirements of this subpart apply to the owner or operator of each wool fiberglass manufacturing facility that is an area source or is located at a facility that is an area source.
(b) The requirements of this subpart apply to emissions of particulate matter (PM) and chromium compounds, as measured according to the methods and procedures in this subpart, emitted from each new and existing gas-fired glass-melting furnace located at a wool fiberglass manufacturing facility that is an area source.
(c) The provisions of subpart A of this part that apply and those that do not apply to this subpart are specified in Table 1 of this subpart.
(d) Gas-fired glass-melting furnaces that are not subject to subpart NNN of this part are subject to this subpart.
(e) Gas-fired glass-melting furnaces using electricity as a supplemental energy source are subject to this subpart
Terms used in this subpart are defined in the Clean Air Act, in § 63.2, or in this section as follows:
(a)
(i) For each existing, new, or reconstructed gas-fired glass-melting furnace you must not discharge or cause to be discharged into the atmosphere in excess of 0.00006 lb of chromium (Cr) compounds per ton of glass pulled (60 lb per million tons glass pulled).
(ii) [Reserved]
(2)
(b)
(1)(i) You must initiate corrective action within one hour of an alarm from a bag leak detection system and complete corrective actions in a timely manner according to the procedures in the operations, maintenance, and monitoring plan.
(ii) You must implement a Quality Improvement Plan (QIP) consistent with the compliance assurance monitoring provisions of 40 CFR part 64, subpart D when the bag leak detection system alarm is sounded for more than five percent of the total operating time in a 6-month block reporting period.
(2)(i) You must initiate corrective action within one hour when any 3-hour block average of the monitored electrostatic precipitator (ESP) parameter is outside the limit(s) established during the performance test as specified in § 63.884 and complete corrective actions in a timely manner according to the procedures in the operations, maintenance, and monitoring plan.
(ii) You must implement a QIP consistent with the compliance assurance monitoring provisions of 40 CFR part 64 subpart D when the monitored ESP parameter is outside the limit(s) established during the performance test as specified in § 63.884 for more than five percent of the total operating time in a 6-month block reporting period.
(iii) You must operate the ESP such that the monitored ESP parameter is not outside the limit(s) established during the performance test as specified in § 63.884 for more than 10 percent of the total operating time in a 6-month block reporting period.
(3)(i) You must initiate corrective action within one hour when any 3-hour block average value for the monitored parameter(s) for a gas-fired glass-melting furnace, which uses no add-on controls, is outside the limit(s) established during the performance test as specified in § 63.884 and complete corrective actions in a timely manner according to the procedures in the operations, maintenance, and monitoring plan.
(ii) You must implement a QIP consistent with the compliance assurance monitoring provisions of 40 CFR part 64, subpart D when the monitored parameter(s) is outside the limit(s) established during the performance test as specified in § 63.884 for more than five percent of the total operating time in a 6-month block reporting period.
(iii) You must operate a gas-fired glass-melting furnace, which uses no add-on technology, such that the monitored parameter(s) is not outside the limit(s) established during the performance test as specified in § 63.884 for more than 10 percent of the total operating time in a 6-month block reporting period.
(4)(i) You must initiate corrective action within one hour when the average glass pull rate of any 4-hour block period for gas-fired glass-melting furnaces equipped with continuous glass pull rate monitors, or daily glass pull rate for glass-melting furnaces not so equipped, exceeds the average glass pull rate established during the performance test as specified in § 63.884, by greater than 20 percent and complete corrective actions in a timely manner according to the procedures in the operations, maintenance, and monitoring plan.
(ii) You must implement a QIP consistent with the compliance assurance monitoring provisions of 40 CFR part 64, subpart D when the glass pull rate exceeds, by more than 20 percent, the average glass pull rate established during the performance test as specified in § 63.884 for more than five percent of the total operating time in a 6-month block reporting period.
(iii) You must operate each gas-fired glass-melting furnace such that the glass pull rate does not exceed, by more than 20 percent, the average glass pull rate established during the performance test as specified in § 63.884 for more than 10 percent of the total operating time in a 6-month block reporting period.
(5)(i) You must initiate corrective action within one hour when the average pH (for a caustic scrubber) or pressure drop (for a venturi scrubber) for any 3-hour block period is outside the limits established during the performance tests as specified in § 63.884 for each wet scrubbing control device and complete corrective actions in a timely manner according to the procedures in the operations, maintenance, and monitoring plan.
(ii) You must implement a QIP consistent with the compliance assurance monitoring provisions of 40 CFR part 64, subpart D when any scrubber parameter is outside the limit(s) established during the performance test as specified in § 63.884 for more than five percent of the total operating time in a 6-month block reporting period.
(iii) You must operate each scrubber such that each monitored parameter is not outside the limit(s) established during the performance test as specified in § 63.884 for more than 10 percent of the total operating time in a 6-month block reporting period.
You must meet all applicable monitoring requirements contained in subpart NNN of this part.
(a) If you are subject to the provisions of this subpart you must conduct a performance test to demonstrate compliance with the applicable emission limits in § 63.882. Compliance is demonstrated when the emission rate of the pollutant is equal to or less than each of the applicable emission limits in § 63.882. You must conduct the performance test according to the procedures in subpart A of this part and in this section.
(b) You must meet all applicable performance test requirements contained in subpart NNN of this part.
(a) You must use the following methods to determine compliance with the applicable emission limits:
(1) Method 1 (40 CFR part 60, appendix A–1) for the selection of the sampling port location and number of sampling ports;
(2) Method 2 (40 CFR part 60, appendix A–1) for volumetric flow rate;
(3) Method 3 or 3A (40 CFR part 60, appendix A–2) for O
(4) Method 4 (40 CFR part 60, appendix A–4) for moisture content of the stack gas;
(5) Method 29 (40 CFR part 60, appendix A–8) for the concentration of chromium compounds. Each run must consist of a minimum run time of two hours and a minimum sample volume of two dscm.
(6) An alternative method, subject to approval by the Administrator.
(b) Each performance test shall consist of three runs. You must use the average of the three runs in the applicable equation for determining compliance.
You must meet all applicable notification, recordkeeping and reporting requirements contained in subpart NNN of this part.
(a)
(1) Except as noted in paragraph (a)(3) of this section, the compliance date for an owner or operator of an existing plant or source subject to the provisions in this subpart would be [2 YEARS AFTER EFFECTIVE DATE OF FINAL RULE].
(2) Except as noted in paragraph (a)(3) of this section, the compliance date for new and reconstructed plants or sources is upon startup of a new gas-fired glass-melting furnace or on [EFFECTIVE DATE OF FINAL RULE].
(3) The compliance date for the provisions related to the electronic reporting provisions of § 63.886 is on [EFFECTIVE DATE OF FINAL RULE].
(b)
(a) The provisions set forth in this subpart apply at all times.
(b) You must not shut down items of equipment that are required or utilized for compliance with the provisions of this subpart during times when emissions are being routed to such items of equipment, if the shutdown would contravene requirements of this subpart applicable to such items of equipment. This paragraph (b) does not apply if you must shut down the equipment to avoid damage due to a contemporaneous startup or shutdown, of the affected source or a portion thereof.
(c) Startup begins when the wool fiberglass gas-fired glass-melting furnace has any raw materials added. Startup ends when molten glass begins to flow from the glass-melting furnace.
(d) Shutdown begins when the heat sources to the glass-melting furnace are reduced to begin the glass-melting furnace shut down process. Shutdown ends when the glass-melting furnace is empty or the contents are sufficiently viscous to preclude glass flow from the glass-melting furnace.
(e) For a new or existing affected source, to demonstrate compliance with the gas-fired glass-melting furnace emission limits in § 63.882 during periods of startups and shutdowns, demonstrate compliance in accordance with paragraph (f) of this section.
(f) During periods of startups you may demonstrate compliance with the emission limits in § 63.882 by keeping records showing that you used only natural gas or other clean fuels to heat your furnace. During both periods of startups and shutdowns you may demonstrate compliance with the emission limits in § 63.882 by keeping records showing that furnace emissions were controlled using air pollution control devices operated at the parameters established by the most recent performance test that showed compliance with the standard.
(a) * * *
(2) Limit emissions of carbonyl sulfide (COS) from each existing, new, or reconstructed closed-top cupola to the following:
(i) 3.4 lb of COS per ton melt or less for existing closed-top cupolas.
(ii) 0.062 lb of COS per ton melt or less for new or reconstructed closed-top cupolas.
(3) Limit emissions of COS from each existing, new, or reconstructed open-top cupola to the following:
(i) 6.8 lb of COS per ton melt or less for existing open-top cupolas.
(ii) 3.2 lb of COS per ton melt or less for new or reconstructed open-top cupolas.
(4) Limit emissions of hydrogen fluoride (HF) from each existing, new, or reconstructed cupola to the following:
(i) 0.16 lb of HF per ton of melt or less for existing cupolas using slag as a raw material.
(ii) 0.015 lb of HF per ton of melt or less for new or reconstructed cupolas using slag as a raw material.
(iii) 0.13 lb of HF per ton of melt or less for existing cupolas that do not use slag as a raw material.
(iv) 0.018 lb of HF per ton of melt or less for new or reconstructed cupolas that do not use slag as a raw material.
(5) Limit emissions of hydrogen chloride (HCl) from each existing, new, or reconstructed cupola to the following:
(i) 0.44 lb of HCl per ton of melt or less for existing cupolas using slag as a raw material.
(ii) 0.012 lb of HCl per ton of melt or less for new or reconstructed cupolas using slag as a raw material.
(iii) 0.43 lb of HCl per ton of melt or less for existing cupolas that do not use slag as a raw material.
(iv) 0.015 lb of HCl per ton of melt or less for new or reconstructed cupolas that do not use slag as a raw material.
(a) You must control emissions from each existing and new combined collection/curing operations by limiting emissions of formaldehyde, phenol, and methanol to the following:
(1) For combined drum collection/curing operations:
(i) 0.17 lb of formaldehyde per ton melt or less,
(ii) 0.85 lb of phenol per ton melt or less, and
(iii) 0.28 lb of methanol per ton melt or less.
(2) For combined horizontal collection/curing operations:
(i) 0.63 lb of formaldehyde per ton melt or less,
(ii) 0.12 lb of phenol per ton melt or less, and
(iii) 0.049 lb of methanol per ton melt or less.
(3) For combined vertical collection/curing operations:
(i) 2.4 lb of formaldehyde per ton melt or less,
(ii) 0.71 lb of phenol per ton melt or less, and
(iii) 0.92 lb of methanol per ton melt or less.
(b) You must meet the following operating limits for each combined collection/curing operations subcategory:
(d) At all times, you must operate and maintain any affected source, including associated air pollution control equipment and monitoring equipment, in a manner consistent with safety and good air pollution control practices for minimizing emissions. Determination of whether such operation and maintenance procedures are being used will be based on information available to the Administrator which may include, but is not limited to, monitoring results, review of operation and maintenance procedures, review of operation and maintenance records, and inspection of the source.
(a) The provisions set forth in this subpart apply at all times.
(b) You must not shut down items of equipment that are utilized for compliance with this subpart.
(c)
(d)
(e) During periods of startups and shutdowns you may demonstrate compliance with the emission limits in § 63.1178 according to one of the following methods:
(1) You may keep records showing that you used only clean fuels during startup and shutdown; or
(2) You may keep records showing that your emissions were controlled using air pollution control devices operated at the parameters established by the most recent performance test that showed compliance with the standard; or
(3) You may keep records showing the oxygen level in the cupola exceeds 24 percent.
(b) * * *
(3) Each new and existing flame attenuation wool fiberglass manufacturing line producing a bonded product.
(a) * * *
(1)
(i) For each existing, new, or reconstructed glass-melting furnace you must not discharge or cause to be discharged into the atmosphere in excess of 0.33 pound (lb) of particulate matter (PM) per ton glass pulled;
(ii) For each existing, new, or reconstructed gas-fired glass-melting furnace you must not discharge or cause to be discharged into the atmosphere in excess of 6.0E–5 lb of chromium (Cr) compounds per ton glass pulled (0.06 lb per thousand tons glass pulled).
(iii) For each existing, new, or reconstructed gas-fired glass-melting furnace you must either:
(A) Require cullet providers to provide records of their inspections showing that the cullet is free of chloride-, fluoride-, and fluorine-bearing constituents; or
(B) Sample your raw materials and maintain records of your sampling showing that the cullet is free of chloride-, fluoride-, and fluorine-bearing constituents.
(2)
(i) For each existing rotary spin (RS) manufacturing line you must not discharge or cause to be discharged into the atmosphere in excess of:
(A) 0.19 lb of formaldehyde per ton glass pulled;
(B) 0.26 lb of phenol per ton glass pulled; and
(C) 0.83 lb of methanol per ton glass pulled.
(ii) For each new or reconstructed RS manufacturing line you must not discharge or cause to be discharged into the atmosphere in excess of:
(A) 0.066 lb of formaldehyde per ton glass pulled;
(B) 0.060 lb of phenol per ton glass pulled; and
(C) 0.29 lb of methanol per ton glass pulled.
(3)
(i) For each existing flame attenuation (FA) manufacturing line you must not discharge or cause to be discharged into the atmosphere in excess of:
(A) 5.6 lb of formaldehyde per ton glass pulled;
(B) 1.4 lb of phenol per ton glass pulled; and
(C) 0.50 lb of methanol per ton glass pulled.
(ii) For each new or reconstructed FA manufacturing line you must not discharge or cause to be discharged into the atmosphere in excess of:
(A) 2.6 lb of formaldehyde per ton glass pulled;
(B) 0.44 lb of phenol per ton glass pulled; and
(C) 0.35 lb of methanol per ton glass pulled.
(d) Following the initial performance or compliance test to be conducted within 90 days of the promulgation date of this rule to demonstrate compliance with the chromium compounds emissions limit specified in § 63.1382(a)(i), you must conduct an annual performance test for chromium compounds emissions from each glass-melting furnace (no later than 12 calendar months following the previous compliance test).
(e) Following the initial performance or compliance test to demonstrate compliance with the PM, formaldehyde, phenol, and methanol emissions limits specified in § 63.1382, you must conduct a performance test to demonstrate compliance with each of the applicable PM, formaldehyde, phenol, and methanol emissions limits in § 63.1382 at least once every five years.
(a) * * *
(5) Method 5 (40 CFR part 60, appendix A–3) for the concentration of total PM. Each run must consist of a minimum run time of two hours and a minimum sample volume of two dry standard cubic meters (dscm). The probe and filter holder heating system may be set to provide a gas temperature no greater than 120±14°C (248±25°F);
(6) Method 318 (appendix A of this part) for the concentration of formaldehyde, phenol, and methanol. Each test run must consist of a minimum of 10 spectra;
(11) Method 316 (appendix A of this part) for the concentration of formaldehyde. Each test run must consist of a minimum of two hours and two dry standard cubic meters (dscm) of sample volume;
(12) Method SW–846 8260B (§ 63.14(l)(8)) for the concentration of phenol. Each test run must consist of a minimum of three hours;
(13) Method SW–846 8270D (§ 63.14(l)(9)) for the concentration of phenol. Each test run must consist of a minimum of three hours;
(14) Method 308 (appendix A of this part) for the concentration of methanol. Each test run must consist of a minimum of two hours;
(15) Method 29 (40 CFR part 60, appendix A–8) for the concentration of chromium compounds. Each test run must consist of a minimum of three hours and three dscm of sample volume.
(c)
(2) For each failure to meet a standard record and retain a list of the affected source or equipment, an estimate of the volume of each regulated pollutant emitted over the standard for which the source failed to meet the standard, and a description of the method used to estimate the emissions.
(3) Record actions taken to minimize emissions in accordance with § 63.1382, including corrective actions to restore process and air pollution control and monitoring equipment to its normal or usual manner of operation.
(4) If an affected unit fails to meet a standard, report such events in the notification of compliance status required by § 63.1386(a)(7). Report the number of failures to meet a standard since the prior notification. For each instance, report the date, time and duration of each failure. For each failure the report must include a list of the affected units or equipment, an estimate of the volume of each regulated pollutant emitted over the standard, and a description of the method used to estimate the emissions.
(d) * * *
(2) * * *
(x) You must maintain records of your cullet sampling or records of inspections from cullet providers.
(a) * * *
(2) The compliance dates for existing plants and sources are:
(i) [DATE 2 YEARS AFTER PUBLICATION OF THE FINAL RULE IN THE
(ii) [Reserved]
(a) The provisions set forth in this subpart apply at all times.
(b) You must not shut down items of equipment that are required or utilized for compliance with the provisions of this subpart during times when emissions are being, or are otherwise
(c) Startup begins when the wool fiberglass glass-melting furnace has any raw materials added and reaches 50 percent of its typical operating temperature. Startup ends when molten glass begins to flow from the wool fiberglass glass-melting furnace.
(d) Shutdown begins when the heat sources to the glass-melting furnace are reduced to begin the glass-melting furnace shut down process. Shutdown ends when the glass-melting furnace is empty or the contents are sufficiently viscous to preclude glass flow from the glass-melting furnace.
(e) During periods of startups you may demonstrate compliance with the emission limits in § 63.1382:
(1) by keeping records showing that you used only natural gas or other clean fuels to heat your furnace; or
(2) by keeping records showing that you used only cullet as a raw material in your cold-top furnace.
(f) During both periods of startups and shutdowns you may demonstrate compliance with the emission limits in § 63.1382 by keeping records showing that furnace emissions were controlled using air pollution control devices operated at the parameters established by the most recent performance test that showed compliance with the standard.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final rule.
We, the National Marine Fisheries Service (NMFS), issue a final rule to designate critical habitat for three species of rockfish listed under the Endangered Species Act (ESA): the threatened yelloweye rockfish (
This final rule responds to and incorporates public comments received on the proposed rule and supporting documents, as well as peer reviewer comments received on our draft biological report.
This final rule will take effect on February 11, 2015.
Reference materials regarding this rulemaking can be obtained via the Internet at:
Dan Tonnes, NMFS, West Coast Region, Protected Resources Division, at the address above or at 206–526–4643; or Dwayne Meadows, NMFS, Office of Protected Resources, Silver Spring, MD, 301–427–8403.
On April 28, 2010, we listed the Puget Sound/Georgia Basin Distinct Population Segments (DPSs) of yelloweye rockfish and canary rockfish as threatened under the Endangered Species Act (ESA), and bocaccio as endangered (75 FR 22276, updated 79 FR 20802, April 14, 2014). A proposed critical habitat rule for the listed DPSs of rockfish was published in the
We considered various alternatives to the critical habitat designation for yelloweye rockfish, canary rockfish, and bocaccio of the Puget Sound/Georgia Basin. The alternative of not designating critical habitat for each species would impose no economic, national security, or other relevant impacts, but would not provide any conservation benefit to the species. This alternative was considered and rejected because it does not meet the legal requirements of the ESA and would not provide for the conservation of each species. The alternative of designating all potential critical habitat areas (i.e., no areas excluded) also was considered and rejected because for some areas the benefits of exclusion outweighed the benefits of inclusion. An alternative to designating all potential critical habitat areas is the designation of critical habitat within a subset of these areas. Under section 4(b)(2) of the ESA, we must consider the economic impacts, impacts on national security, and other relevant impacts of designating any particular area as critical habitat. The Secretary of Commerce (Secretary) has the discretion to exclude an area from designation as critical habitat if the benefits of exclusion (i.e., the impacts that would be avoided if an area were excluded from the designation) outweigh the benefits of designation (i.e., the conservation benefits to these species if an area were designated), so long as exclusion of the area will not result in extinction of the species. We prepared an analysis describing our exercise of discretion, which is contained in our final Section 4(b)(2) Report (NMFS, 2014c). Under this alternative we are excluding Indian lands as well as several areas under the control of the Department of Defense (DOD). We selected, and are implementing, this alternative because the benefits of excluding these areas outweigh the benefits of including these areas and result in a critical habitat designation that provides for the conservation of listed rockfish while avoiding impacts to Indian lands and impacts to national security. This alternative also meets the requirements under the ESA and our joint NMFS–U.S. Fish and Wildlife Service (USFWS) regulations concerning critical habitat. We estimated a total annualized incremental administrative cost of approximately $123,000 (discounted at 7 percent) for designating the five specific areas as listed rockfish critical habitat.
The ESA defines critical habitat under section 3(5)(A) as: “(i) The specific areas within the geographical area occupied by the species, at the time it is listed . . . , on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection; and (ii) specific areas outside the geographical area occupied by the species at the time it is listed . . . upon a determination by the Secretary [of Commerce] that such areas are essential for the conservation of the species.”
Section 4(a) of the ESA precludes military land from designation, where that land is covered by an Integrated Natural Resource Management Plan that the Secretary has found in writing will benefit the listed species.
Section 4(b)(2) of the ESA requires us to designate critical habitat for threatened and endangered species “on the basis of the best scientific data available and after taking into consideration the economic impact, the impact on national security, and any other relevant impact, of specifying any particular area as critical habitat.” It grants the Secretary discretion to exclude any area from critical habitat if she determines “the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat.” The decision to
Once critical habitat is designated, section 7 of the ESA requires Federal agencies to ensure they do not fund, authorize, or carry out any actions that are likely to destroy or adversely modify that habitat. This requirement is in addition to the section 7 requirement that Federal agencies ensure their actions are not likely to jeopardize the continued existence of listed species.
Our final Biological Report (NMFS, 2014a) describes the life histories of yelloweye rockfish, canary rockfish and bocaccio in detail, which are summarized here. The U.S. portion of the Puget Sound/Georgia Basin that is occupied by yelloweye rockfish, canary rockfish, and bocaccio can be divided into five areas, or Basins, based on the distribution of each species, geographic conditions, and habitat features. These five interconnected Basins are: (1) The San Juan/Strait of Juan de Fuca Basin, (2) Main Basin, (3) Whidbey Basin, (4) South Puget Sound, and (5) Hood Canal. We describe habitat usage in these Basins where we have available information, in addition to available information about life history and habitat usage outside of these areas. The life histories of listed rockfish include pelagic larval and juvenile stages, followed by a juvenile stage in shallower waters, and a sub-adult/adult stage. Much of the life history of these three species is similar, with differences noted below.
Rockfishes are iteroparous (i.e., have multiple reproductive cycles during their lifetime) and are typically long-lived (Love
Rockfishes fertilize their eggs internally and the young are extruded as larvae. Upon parturition (birth), larval rockfishes can occupy the full water column, but generally occur in the upper 80 m (262 ft) (Love
Larvae occur throughout the water column (Love
Depth is generally the most important determinant in the distribution of many rockfish species of the Pacific coast (Chen, 1971; Williams and Ralston, 2002; Anderson and Yoklavich, 2007; Young
Adult yelloweye rockfish, canary rockfish, and bocaccio most readily use habitats within and adjacent to areas that are highly rugose (rough). These are benthic habitats with moderate to extreme steepness, complex bathymetry, and/or substrates consisting of fractured bedrock, rock, and boulder-cobble complexes (Yoklavich
Though areas near rocky habitats or other complex structure are most readily used by adults of each species, non-rocky benthic habitats are also occupied. In Puget Sound, adult yelloweye rockfish, canary rockfish, and bocaccio have been documented in areas with non-rocky substrates such as sand, mud, and other unconsolidated sediments (Haw and Buckley, 1971; Washington, 1977; Miller and Borton, 1980; Reum, 2006).
Food sources for yelloweye rockfish, canary rockfish, and bocaccio occur throughout Puget Sound. However, each of the Basins has unique biomass and species compositions of fishes and
Larval and juvenile rockfish feed on very small organisms such as zooplankton, copepods and phytoplankton, small crustaceans, invertebrate eggs, krill, and other invertebrates (Moser and Boehlert, 1991; Love
We solicited public comment for a total of 90 days on the proposed designation of critical habitat for the Puget Sound/Georgia Basin DPSs of yelloweye rockfish, canary rockfish and bocaccio. We received written comments from five commenters, and these are available online at:
In December 2004, the Office of Management and Budget (OMB) issued a Final Information Quality Bulletin for Peer Review pursuant to the Information Quality Act (IQA). The Bulletin was published in the
Two documents supporting this final designation of critical habitat for listed rockfishes are considered influential scientific information and subject to peer review. In accordance with the OMB policies and the Information Quality Act (IQA) (Section 515 of Public Law 106–554), we solicited pre-dissemination peer review of the draft Biological Report (NMFS, 2013a) from three reviewers. We also solicited peer review of the draft Economic Analysis (NMFS, 2013b) from two reviewers. We received two sets of peer review comments on the draft Biological Report in advance of proposing critical habitat for listed rockfishes, and they are included in the Peer Review Report (
Though we did not formulate our designation of critical habitat based on the life-history requirements of larval listed rockfishes, we note that some of the waters of Puget Sound used by this life-stage are nonetheless designated as critical habitat for listed rockfishes. The final critical habitat designation includes not only the benthic features with the specific designated areas, but also the marine waters above these habitats within these areas. As indicated by the inclusion of water quality as an essential feature in our proposed rule, we did intend for the designation to include not just the benthic substrate in the areas proposed, but also the water above it that is used by larval listed rockfishes.
We agree with the commenter that there is a lack of documented occurrences of canary rockfish on the west side of Bainbridge Island (bocaccio have been documented there), but each species has been documented in waters near Bainbridge Island. Since our knowledge about the historical or contemporary locations of listed rockfishes is hindered by the lack of systematic surveys in most of the Basins of the Puget Sound, we assessed the evidence that the species occupied the Basin, and the habitat characteristics of particular areas of each Basin, as described in our final Biological Report (NMFS, 2014a). Our final designation of the nearshore area of Bellingham Bay does not include many acres of unconsolidated sediment near the Nooksack River delta that are unlikely to provide beneficial rearing conditions for canary rockfish and bocaccio, in part because of the lack of suitable substrates to support kelp (NMFS, 2014a).
In our proposed critical habitat designation we determined relative seafloor complexity by using the rugosity tool (used in the Benthic Terrain Modeler (BTM) version compatible with ArcGIS 9.3), which was calculated as the ratio of surface area to planar area (Kvitek
Our proposed and final GIS methods resulted in the designation of some habitats that are adjacent to areas of high rugosity. The designation of these areas next to highly rugose habitats is supported by our understandings of the life history of yelloweye rockfish, canary rockfish and bocaccio, including movement of adult fish and ontogenetic movement. While most of these habitats near areas of high rugosity likely consist of unconsolidated materials such as mud and sand mixtures, yelloweye rockfish, canary rockfish and bocaccio have been documented in these types of habitats within and outside of the Puget Sound Georgia Basin (NMFS, 2014a). In Puget Sound, adult yelloweye rockfish, canary rockfish, and bocaccio have been documented in areas with non-rocky substrates such as sand, mud, and other generally unconsolidated sediments (Haw and Buckley, 1971; Washington, 1977; Miller and Borton, 1980; Reum, 2006). Surveys from outside the range of these DPSs also have documented each species in relatively less complex habitats, though generally on a less frequent basis than more complex habitats. Yelloweye rockfish have also been documented in areas with mud and mud/cobble habitats in waters off the coasts of Washington (Wang, 2005), California (Yoklavich
Our use of this rugosity threshold and additional GIS procedures was informed by habitat characteristics mapped by Greene and Barrie (2007) in the San Juan Basin, additional data reported in Palsson
Aside from OA, future climate-induced changes to rockfish habitat could alter their productivity (Drake
Global sea level has risen by an average of 0.067 inch +/−0.012 inch per year (1.7 +/−0.3 mm) since 1950, after remaining relatively stable for approximately the last 3000 years (Church and White, 2006). However, satellite data collected more recently (from 1993–2009) recorded rates of 0.12 inch +/−0.015 inch per year (3.3 +/−0.4mm), suggesting that SLR may be accelerating (Ablain
More research is needed to further understand rockfish-specific responses and possible adaptations to OA, climate change and sea level rise within the Puget Sound/Georgia Basin. As mentioned previously, we are developing a Recovery Plan for listed rockfishes, and research regarding OA and climate change will likely be a significant component of the draft plan.
This area is critical habitat for Southern Resident killer whales and thus we assessed the extent of Navy consultations for actions in this operating area. We have no consultation records for Navy actions within Navy 3, indicating that use of this area by the Navy is limited or sporadic. According to the Navy, activities in this Operating Area involve surface ship operations, including basic tactical operations, formation maneuvers, engineering trials and testing electronic equipment. We have determined that surface ship operations are not a special management consideration, and such operations conducted by the Navy are unlikely to alter the physical and biological features of rockfish critical habitat and specifically benthic areas with complex bathymetry. Any consultation for Navy action in this Operating Area would require a section 7 jeopardy analysis for rockfish. As discussed generally in our final Economic Analysis (NMFS 2014b) the adverse modification analysis for the Navy would be an incremental impact from designating a subset of this area as critical habitat. As a result there would be a low administrative burden to the Navy for subsequent section 7 consultations that assess rockfish critical habitat in Navy 3 because their use of this area appears relatively infrequent, actions in this area are unlikely to result in alteration to physical and biological features for listed rockfishes, and any subsequent consultation would undergo a jeopardy analysis as well.
Further, areas designated as critical habitat within Navy 3 for listed rockfishes are centrally located between the San Juan Islands and the mainland to the south, thus providing important spatial structure to listed rockfish populations. In addition, the large size of the Navy 3 area (65.4 sq mi, 169.4 sq km) makes it likely that future Federal activities will occur there that could adversely affect rockfish critical habitat. For instance, a recent analysis shows that this area is potentially affected by the open-water dredge disposal activities (DMMP, 2012). This area also encompasses portions of several popular recreational and commercial fishing areas including Smith Island Bank, McArthur Bank and Partridge Bank and has accumulated several derelict fishing nets. The designation of critical habitat in this area for listed rockfishes will allow future analysis of these activities that may adversely affect listed rockfish critical habitat in an area of high value to the species (NMFS, 2014a).
These specific examples of consultations would occur with other Federal agencies, and thus would not constitute an administrative burden to the Navy, but would potentially bring conservation benefits to important listed rockfish habitats. For these reasons we continue to conclude that the benefits to national security of excluding this particular area do not outweigh the benefits to rockfish conservation of designating it (for a full description of our analysis see Appendix C of our 4(b)(2) report).
In the following sections, we describe the relevant definitions and requirements in the ESA and our
We followed a five-step process in order to identify these specific areas: (1) Determine the geographical area occupied by the species at the time of listing, (2) identify physical or biological habitat features essential to the conservation of the species, (3) delineate specific areas within the geographical area occupied by the species on which are found the physical or biological features, (4) determine whether the features in a specific area may require special management considerations or protections, and (5) determine whether any unoccupied areas are essential for conservation. As described later, we did not identify any unoccupied areas that are essential for conservation.
Once we identified specific areas, we then considered the economic impact, impact on national security, and any other relevant impacts. The Secretary has the discretion to exclude an area from designation if she determines the benefits of exclusion (that is, avoiding the impact that would result from designation) outweigh the benefits of designation based on the best available scientific and commercial information. In addition, military lands subject to INRMPs pursuant to Section 4(a)(3) the ESA are ineligible for designation if the Secretary certifies that the INRMPs provide benefits to the listed species. Our evaluation and determinations are described in detail in the following sections.
In the status review and final ESA listing for each species, we identified a Puget Sound/Georgia Basin DPS for yelloweye rockfish, canary rockfish, and bocaccio (Drake
Agency regulations at 50 CFR 424.12(b) interpret the statutory phrase “physical or biological features essential to the conservation of the species.” The regulations state that these features include space for individual and population growth and for normal behavior; food, water, air, light, minerals, or other nutritional or physiological requirements; cover or shelter; sites for breeding, reproduction, and rearing of offspring; and habitats that are protected from disturbance or are representative of the historical geographical and ecological distribution of a species.
Based on the best available scientific information regarding natural history and habitat needs, we developed a list of physical and biological features essential to the conservation of adult and juvenile yelloweye rockfish, canary rockfish, and bocaccio and relevant to determining whether specific areas are consistent with the above regulations and the ESA section (3)(5)(A) definition of “critical habitat.” Because larval rockfish are nearly impossible to identify to species visually until they are several months old (Love
Benthic habitats or sites deeper than 30 m (98ft) that possess or are adjacent to areas of complex bathymetry consisting of rock and or highly rugose habitat are essential to conservation because these features support growth, survival, reproduction, and feeding opportunities by providing the structure for rockfishes to avoid predation, seek food and persist for decades. Several attributes of these sites determine the quality of the habitat and are useful in considering the conservation value of the associated feature, and whether the feature may require special management considerations or protection. These attributes are also relevant in the evaluation of the effects of a proposed action in a section 7 consultation if the specific area containing the site is designated as critical habitat. These attributes include: (1) Quantity, quality, and availability of prey species to support individual growth, survival, reproduction, and feeding opportunities, (2) water quality and sufficient levels of dissolved oxygen to support growth, survival, reproduction, and feeding opportunities, and (3) the type and amount of structure and rugosity that supports feeding opportunities and predator avoidance.
Juvenile settlement habitats located in the nearshore with substrates such as sand, rock and/or cobble compositions that also support kelp (families Chordaceae, Alariaceae, Lessoniacea, Costariaceae, and Laminaricea) are essential for conservation because these features enable forage opportunities and refuge from predators and enable behavioral and physiological changes needed for juveniles to occupy deeper adult habitats. Several attributes of these sites determine the quality of the area and are useful in considering the conservation value of the associated
After determining the geographical area of the Puget Sound/Georgia Basin occupied by adult and juvenile yelloweye rockfish, canary rockfish, and bocaccio, and the physical and biological features essential to their conservation, we next identified the specific areas within the geographical area occupied by the species that contain the essential features. The U.S. portion of Puget Sound/Georgia Basin that is occupied by yelloweye rockfish, canary rockfish, and bocaccio can be divided into five biogeographic Basins or areas based on the presence and distribution of adult and juvenile rockfish, geographic conditions, and habitat features (Figure 1). These interconnected basins are separated by relatively shallow sills. The configuration of sills and deep basins results in the partial recirculation of water masses in the Puget Sound and the retention of contaminants, sediment, and biota (Strickland, 1983). The sills largely define the boundaries between the Basins and contribute to the generation of relatively fast water currents during portions of the tidal cycle. The sills, in combination with bathymetry, freshwater input, and tidal exchange, influence environmental conditions such as the movement and exchange of biota from one region to the next, water temperatures and water quality, and they also restrict water exchange (Ebbesmeyer
We considered the distribution of the essential features within these areas. We used available geographic data to delineate and map the essential features within each of the specific areas.
We modified our proposed critical habitat designation by using newly acquired best available data and GIS tools to better identify areas of essential features that include high rugosity. We also used an updated gridded depth data model created by the Nature Conservancy to identify the 30-meter depth contour. This new bathymetry grid provided a more refined representation of the seafloor than used in our proposed designation in part because it included data from updated surveys conducted in the San Juan area (Greene and Aschoff, 2013). We used ArcGIS, version 10.2, Spatial Analyst (an extension to ArcGIS) and the BTM (Wright
We binned the rugosity values into two groups using the Geometric Interval method (Price, 2011). This method results in groups of classes in a geometric series by each class being multiplied by a constant coefficient to produce the next higher class. We determined the threshold value of high rugosity by using the ArcGIS 10.2 geometrical interval classification method (which is appropriate for the rugosity value data distribution). The geometrical interval method resulted in two classes, and the resultant threshold value for high rugosity was 0.001703 and higher. We refer to benthic areas with rugosity values of 0.001703 or higher as “high rugosity.” All areas of high rugosity (deeper than 30 meters (98 ft)) served as anchor points for critical habitat for each species.
We also designated some habitat between and adjacent to high rugosity by using several generalization geoprocessing tools. The high rugosity polygons were the initial input data, set to the following procedures: (1) The Smooth Polygon Tool was used with the Polynomial Approximation with Exponential Kernel smoothing algorithm with a 600-meter (1,968 ft) tolerance; (2) a 200-meter (656 ft) buffer was run on results from Step 1; (3) the Aggregate Polygons tool was run on results of Step 2 using an aggregation distance of 600 meters; and (4) small resultant non-adult critical habitat polygons that were 0.25 square miles (0.65 sq km) in area or less in waters deeper than 30 meters and having low rugosity were incorporated into surrounding “deepwater” critical habitat. Isolated polygons representing depths deeper than 30 meters that were smaller than 0.25 square miles in area and were entirely surrounded by only nearshore critical habitat were incorporated into nearshore critical habitat making those areas more cohesive.
To assess how well the BTM identified documented rocky areas within the DPSs, we used rocky habitat maps published by Green and Barrie (2011) in the San Juan Island area. We found there were 7.5 square kilometers (2.9 sq mi) of rocky habitat in the San Juan area that was not determined to be high rugosity by the BTM, which is approximately 7 percent of the rocky habitat of this area (Greene and Barrie, 2011). We designated these rocky areas as critical habitat. This mapped rocky habitat was incorporated as critical habitat by either: (1) Incorporating mapped rock into immediately adjacent high rugosity areas, or (2) a 200-meter buffer was run on those rocky areas.
We found that our GIS methods to identify areas of essential features that include high rugosity in conjunction with the four steps described above, encompassed the vast majority of the documented occurrences with precise spatial data of yelloweye rockfish, canary rockfish and bocaccio within the range of the DPSs. In addition, the spatial area designated as critical habitat for listed rockfish accounts for the movement of individual fish as they grow and move as adults. We further assessed the locations where yelloweye rockfish, canary rockfish and bocaccio had been documented outside of areas of high rugosity. For listed rockfish locations that were outside of the spatial area identified as critical habitat and were reliable and precise, we incorporated these specific locations as critical habitat by creating a 200-meter buffer on the location. These GIS steps resulted in the designation of habitats adjacent to benthic habitat with high rugosity. The designation of these areas next to highly rugose habitats is supported by our understandings of the life history of yelloweye rockfish, canary rockfish and bocaccio, including movement of adult fish and ontogenetic movement.
In delineating juvenile settlement sites in Puget Sound, we focused on the area contiguous with the shoreline from extreme high water out to a depth no greater than 30 meters relative to MLLW because this area coincides with the maximum depth of the photic zone in Puget Sound and thus, with appropriate substrates that can support the growth of kelp and rearing canary rockfish and bocaccio. To determine the distribution of essential features of nearshore habitats for juvenile canary rockfish and bocaccio, we used the Washington State DNR ShoreZone inventory (Berry, 2001) in combination with the benthic habitat classifications of the BTM related to the locations where moderate and large rivers enter Puget Sound (NMFS, 2014a).
The DNR ShoreZone habitat classifications are available for all of the shoreline within the ranges of the DPSs. We used the habitat characteristics described in the ShoreZone inventory to assist in determining if essential features for juvenile canary rockfish and bocaccio occur along particular nearshore areas. The ShoreZone
To determine which shorelines contained the essential features for juvenile canary rockfish and bocaccio, we reviewed their geomorphic classifications to see if they possessed “substrates such as sand, rock and/or cobble compositions.” In addition, we assessed the relative overlap of mapped kelp in these shoreline types. All but the “Estuary Wetland” and “Mud Flat” type shoreline segments had at least 20 percent of the segment with “continuous” or “sporadic” kelp mapped by DNR. The Estuary Wetland and Mud Flat type segments had very small portions of kelp (1.5 and 2.6 percent, respectively). We found that the Estuary Wetland and Mud Flat type shoreline segments longer than one-half lineal mile in length lack essential features for canary rockfish and bocaccio.
To assess nearshore estuaries and deltas of moderate and large rivers that enter Puget Sound, we used information from Burns (1983) and Teizeen (2012) to determine the location and annual flows of these rivers. These rivers input various volumes of sediment and fresh water into Puget Sound (Downing, 1983; Burns, 1985; Czuba
The DNR ShoreZone survey did not delineate the geomorphic extent of shoreline segments associated with estuaries and deltas. Thus we determined the geographical extent of these estuaries and shelves from the BTM “shelf” seafloor designation associated with the particular river because it indicates the geomorphic extension of the tidal and sub-tidal delta where fresh water enters Puget Sound. Not all of the shorelines associated with estuaries and deltas were labeled as “estuary wetland” and “mud flat” by DNR, thus we delineated juvenile settlement sites located in the nearshore at the border of these deltas at the geomorphic terminus of the delta at the 30 m (98 ft) contour and/or at the shoreline segment mapped with kelp by the DNR. By doing this, we did not include some of the other ShoreZone geomorphic shoreline types in the critical habitat designation because available information did not support the presence of essential features at some specific areas adjacent to moderate to large rivers (see NMFS, 2014a).
An occupied area cannot be designated as critical habitat unless it contains physical or biological features that “may require special management considerations or protection.” Agency regulations at 50 CFR 424.02(j) define “special management considerations or protection” to mean “any methods or procedures useful in protecting physical and biological features of the environment for the conservation of listed species.” Many forms of human activities have the potential to affect the essential features of listed rockfish species: (1) Nearshore development and in-water construction (e.g., beach armoring, pier construction, jetty or harbor construction, pile driving construction, residential and commercial construction); (2) dredging and disposal of dredged material; (3) pollution and runoff; (4) underwater construction and operation of alternative energy hydrokinetic projects (tidal or wave energy projects) and cable laying; (5) kelp harvest; (6) fisheries; (7) non-indigenous species introduction and management; (8) artificial habitats; (9) research activities; (10) aquaculture, and; (11) activities that lead to global climate change and ocean acidification. All of these activities may have an effect on one or more physical or biological features via their potential alteration of one or more of the following: adult habitats, food resources, juvenile settlement habitat, and water quality. Further detail regarding the biological and ecological effect of these species management considerations is found in the final Biological Report (NMFS, 2014a).
We describe the five Basins (the specific areas) of the Puget Sound below and summarize their biological condition and attributes; full details are found in the final biological report supporting this designation (NMFS, 2014a). Each Basin has different levels of human impacts related to the sensitivity of the local environment, and degree and type of human-derived impacts. We have also included examples of some of the activities that occur within these Basins that affect the essential features such that they may require special management considerations or protection.
The San Juan/Strait of Juan de Fuca Basin has the most rocky shoreline and benthic habitats of the U.S. portion of the DPSs. Most of the Basin's numerous islands have rocky shorelines with extensive, submerged aquatic vegetation and floating kelp beds necessary for juvenile canary rockfish and bocaccio settlement sites.
This Basin also contains abundant sites deeper than 30 meters that possess or are adjacent to areas of complex bathymetry. Approximately 93 percent of the rocky benthic habitats of the U.S. portion of the range of all three DPSs are in this Basin (Palsson
Yelloweye rockfish, canary rockfish, and bocaccio have been documented in the San Juan Archipelago, in addition to the southern portion of this Basin along the Strait of Juan de Fuca (Washington, 1977; Moulton and Miller, 1987; Pacunski, 2013). The southern portion of this Basin has several pinnacles that include Hein, Eastern, Middle, MacArthur, Partridge, and Coyote Banks. Yelloweye rockfish were once commonly caught by anglers along these areas, particularly Middle Bank (Olander, 1991).
As described in more detail in the final Biological Report (NMFS, 2014a), there are several activities that occur in this Basin that affect the essential features such that they may require special management considerations. Commercial and recreational fisheries occur here, as well as scientific research. The highest concentration of derelict fishing nets within the range of the DPSs remain here, including over 199 nets in waters deeper than 100 ft (30.5 m) (NRC, 2014), and an estimated 241 nets in waters shallower than 100 ft (30.5 m) (NRC, 2014). Because this Basin has the most kelp within the range of the DPSs, commercial harvest of kelp could be proposed for the San Juan Islands area. The Ports of Bellingham and Anacortes are located in this Basin, and numerous dredging and dredge disposal projects and nearshore development, such as new docks, piers, and bulkheads occur in this Basin. These development actions have the potential to alter juvenile settlement sites of canary rockfish and bocaccio. Two open-water dredge disposal sites are located in the Basin, one in Rosario Strait and the other northwest of Port Townsend. These are termed dispersive sites because they have higher current velocities; thus, dredged material does not accumulate at the disposal site and settles on benthic environments over a broad area (Army Corps of Engineers, 2010). Sediment disposal activities in this specific area may temporarily alter water quality (dissolved oxygen levels) and feeding opportunities (the ability of juvenile rockfish to seek out prey). There are several areas with contaminated sediments along the eastern portion of this Basin, particularly in Bellingham Bay and Guemes Channel near Anacortes.
Most of the nearshore of the Whidbey Basin consists of bluff-backed beaches with unconsolidated materials ranging from mud and sand to mixes of gravels and cobbles (McBride, 2006). Some of these nearshore areas support the growth of kelp. Some of the northern part of this Basin is relatively shallow with moderately flat bathymetry near the Skagit, Stillaguamish and Snohomish River deltas and does not support kelp growth because it lacks suitable areas for holdfast attachment, such as rock and cobble.
Benthic areas in this Basin contain sites deeper than 30 meters that possess or are adjacent to areas of complex bathymetry. The southern portion of the Basin has more complex bathymetry compared to the north, with deeper waters adjacent to Whidbey Island, southern Camano Island, and near the City of Mukilteo.
Yelloweye rockfish, canary rockfish, and bocaccio have been documented in the Whidbey Basin, with most occurrences within the southern portion near south Camano Island, Hat (Gedney) Island, and offshore of the City of Mukilteo. It is not known if the southern portion of the Whidbey Basin has more attractive rockfish habitat compared to the northern portion, or if most documented occurrences are a reflection of uneven sampling effort over the years.
As described in more detail in the biological report, there are several activities that occur in this Basin that affect the essential features such that they may require special management considerations. Activities include commercial and recreational fisheries, scientific research, dredging projects and dredge disposal operations, nearshore development projects, aquaculture and potential tidal energy projects. An estimated 3 derelict nets remain in waters deeper than 100 ft (30.5 m) and 3 nets in deeper waters in this Basin (NRC, 2014). A planned tidal energy site is located within the Deception Pass area, at the northern tip of Whidbey Island. Pollution and runoff are also concerns in this Basin, mostly near the Port Gardner area. There are several areas with contaminated sediments along the eastern portion of this Basin, particularly near the Cities of Mukilteo and Everett.
Approximately 33 percent (439.3 mi (707 km)) of Puget Sound's shoreline occurs within this Basin and nearshore
Yelloweye rockfish, canary rockfish, and bocaccio have been documented at Possession Point, near the port of Kingston and Apple Cove, and along much of the eastern shoreline of this Basin (Washington, 1977; Moulton and Miller, 1987).
As described in more detail in the biological report, there are several activities that occur in this Basin that affect the essential features such that they may require special management considerations. Activities include commercial and recreational fisheries, scientific research, dredging projects and dredge disposal operations, nearshore development projects, aquaculture and planned tidal energy projects. An estimated 20 derelict nets in waters shallower than 100 ft (30.5 m), and one in deeper waters remain in this Basin (NRC, 2014). A planned tidal energy site is located within the Admiralty Inlet area off Whidbey Island. Pollution and runoff are also concerns in this Basin because of extensive amounts of impervious surface located on its eastern side. Two open-water dredge disposal sites are located in the Basin, one located in Elliot Bay and the other in Commencement Bay. These are non-dispersive disposal sites, which are areas where currents are slow enough that dredged material is deposited on the disposal target area rather than dispersing broadly with prevailing currents (Army Corps of Engineers, 2010). An estimated 36 percent of the shoreline in this area has been modified by human activities (Drake
Wide assortments of sediments are found in the nearshore and intertidal areas of this Basin (Bailey
With a mean depth of 121 ft (37 m), this Basin is the shallowest of the five Basins (Burns, 1985). Benthic areas deeper than 98 ft (30 m) occur in portions of the Tacoma Narrows and Dana Passage and around the rims of the Basin. Sediments in Tacoma Narrows and Dana Passage consist primarily of gravel and sand. The rims of South Puget Sound beyond the nearshore feature complex bathymetry, with slopes and areas of high rugosity.
Yelloweye rockfish, canary rockfish, and bocaccio have been documented within the South Puget Sound (NMFS, 2014a). Canary rockfish may have been historically most abundant in the South Puget Sound (Drake
As described in more detail in the biological report, there are several activities that occur in this Basin that affect the essential features such that they may require special management considerations. Activities include commercial and recreational fisheries, scientific research, dredging and dredge disposal, nearshore development, pollution and runoff, aquaculture operations, and potential tidal energy projects. An estimated 7 derelict nets in waters shallower than 100 ft (30.5 m) remain in this Basin (Northwest Straits Initiative, 2011). A non-dispersive dredge disposal site is located off Anderson/Ketron Island (Army Corps of Engineers, 2010). A potential tidal energy site is located in the Tacoma Narrows area. Important point sources of waste include sewage treatment facilities, and about 5 percent of the nutrients (as inorganic nitrogen) entering greater Puget Sound enter this Basin through nonpoint sources (Embrey and Inkpen, 1998). An estimated 34 percent of the shoreline in this area has been modified by human activities (Drake
The intertidal and nearshore zone consists mostly of mud (53.4 ± 89.3 percent of the intertidal area), with
Benthic areas deeper than 98 ft (30 m) occur along the rim of nearly all of Hood Canal, and these areas feature complex bathymetry, with slopes and areas of high rugosity.
Bocaccio have been documented in Hood Canal (NMFS, 2014a). Yelloweye and canary rockfish have also been documented at several locations and have been caught in relatively low numbers for the past several years (WDFW, 2011).
As described in more detail in the biological report, there are several activities that occur in this Basin that affect the essential features such that they may require special management considerations. Activities in Hood Canal include commercial and recreational fisheries, scientific research, nearshore development, non-indigenous species management, aquaculture, and pollution and runoff. An estimated three derelict nets in waters shallower than 100 ft (30.5 m) and two in deeper waters remain in this Basin (NRC, 2014). The unique bathymetry and low water exchange have led to episodic periods of low dissolved oxygen (Newton
As previously described, we updated our methods to determine the final critical habitat designation by using newly acquired best available bathymetry data and GIS tools. We used ArcGIS, version 10.2 and updated 30-meter bathymetry data provided to us by the Nature Conservancy. We used the new BTM within ArcGIS 10.2 (Wright
Consistent with current agency regulations we refined the designation and provide a critical habitat map that clearly delineates where the essential features are found within the specific areas and, consistent with our proposed designation, are only designating those areas that are mapped. Current agency regulations state that instead of designating critical habitat using lines on a map, we may show critical habitat on a map, with additional information discussed in the preamble of the rulemaking and in agency records (50 CFR 424.12(c)), rather than requiring long textual description in the Code of Federal Regulations (CFR). In adopting this regulation, we stated in response to comments:
[I]n instances where there are areas within a bigger area that do not contain the physical and biological features necessary for the conservation of the species, the Services would have the option of drawing the map to reflect only those parts of the area that do contain those features (77 FR 25611, May 1, 2012).
The maps we developed for the present designation conform to this new regulation. In addition, in agency records, and available on our Web site, we provide the GIS plot points used to create these maps, so interested persons may determine whether any place of interest is within critical habitat boundaries (
Section 3(5)(A)(ii) of the ESA authorizes the designation of “specific areas outside the geographical area occupied at the time [the species] is listed” if these areas are essential for the conservation of the species. Regulations at 50 CFR 424.12(e) emphasize that the agency “shall designate as critical habitat areas outside the geographical area presently occupied by a species only when a designation limited to its present range would be inadequate to ensure the conservation of the species.” We conducted a review of the documented occurrences of each listed rockfish species in the five biogeographic Basins of Puget Sound (NMFS, 2014a). We found that each of the Basins is currently occupied by listed rockfish and our biological review did not identify any unoccupied areas that are essential to conservation and thus have not identified any unoccupied areas as candidates for critical habitat designation (NMFS, 2014a).
Section 3(5)(C) of the ESA provides that “[e]xcept in those circumstances determined by the Secretary, critical habitat shall not include the entire geographical area which can be occupied by the threatened or endangered species.” In this case we are proposing to designate all the specific areas that possess essential features that can be mapped (such as complex bathymetry in waters deeper than 30 meters, and nearshore areas such as sand, rock and/or cobble compositions that also support kelp) and as described above, we are only designating those portions of the specific areas that actually contain the essential features. We acknowledge that some listed rockfishes have been documented to occur outside of the mapped areas that we designate as critical habitat (NMFS, 2014a) and that larval listed rockfishes could occur throughout the specific areas. Therefore, although each specific area contains designated critical habitat, we conclude that the designation does not constitute “the entire geographical area which can be occupied” by the listed rockfish species.
Section 4(a)(3) of the ESA precludes the Secretary from designating military lands as critical habitat if those lands are subject to an INRMP under the Sikes Act that the Secretary certifies in writing benefits the listed species. The Navy has not determined the extent of marine waters covered by INRMPs, nor has it set forth a process or timeline to determine this. In considering the benefits of the INRMPs for rockfishes we have determined that they may influence habitat of the nearshore (78 FR 47635; August 6, 2013). These areas are contiguous with the shoreline from
We found that Naval Station Everett is covered by an INRMP that would benefit listed rockfishes, but we also found the nearshore of this area does not overlap with essential features for listed rockfishes and we are not designating it as critical habitat. We identified habitat meeting the statutory definition of critical habitat at all of the other installations and reviewed the INRMPs, as well as other information available, regarding the management of these military lands. Our review indicates that each of these INRMPs addresses listed rockfish habitat, and all contain measures that provide benefits to the listed rockfish DPSs. Examples of the types of benefits include actions that improve shoreline conditions, control erosion and water quality, prevent or ensure prompt response to chemical and oil spills, and monitor listed species and their habitats. As a result, we conclude that the areas identified within INRMPs are not eligible for critical habitat designation (see Appendix C of NMFS, 2014c).
We have determined that approximately 644.7 square miles (1,669.8 sq km) of nearshore habitat for juvenile canary rockfish and bocaccio, and 438.5 square miles (1,135.7 sq km) of deepwater habitat for yelloweye rockfish, canary rockfish, and bocaccio meet the definition of critical habitat (Table 1).
Management Considerations Codes: (1) Nearshore development and in-water construction (e.g., beach armoring, pier construction, jetty or harbor construction, pile driving construction, residential and commercial construction); (2) dredging and disposal of dredged material; (3) pollution and runoff; (4) underwater construction and operation of alternative energy hydrokinetic projects (tidal or wave energy projects) and cable laying; (5) kelp harvest; (6) fisheries; (7) non-indigenous species introduction and management; (8) artificial habitats; (9) research; (10) aquaculture; and (11) activities that lead to global climate change and ocean acidification. Commercial kelp harvest does not occur presently, but would probably be concentrated in the San Juan/Georgia Basin. Artificial habitats could be proposed to be placed in each of the Basins. Non-indigenous species introduction and management could occur in each Basin.
The foregoing discussion describes those areas that are eligible for designation as critical habitat—the specific areas that fall within the ESA section 3(5)(A) definition of critical habitat, not including lands owned or controlled by the DOD, or designated for its use, that are covered by an INRMP that the Secretary has determined in writing provides a benefit to the species. Specific areas eligible for designation are not automatically designated as critical habitat. As described above, Section 4(b)(2) of the ESA requires that the Secretary first consider the economic impact, impact on national security, and any other relevant impact. The Secretary has the discretion to exclude an area from designation if she determines the benefits of exclusion (that is, avoiding the impact that would result from designation) outweigh the benefits of designation, based on the best available scientific and commercial information. The Secretary may not exclude an area from designation if
The first step in conducting an ESA section 4(b)(2) analysis is to identify the “particular areas” to be analyzed. Section 3(5)(A) of the ESA defines critical habitat as “specific areas,” while section 4(b)(2) of the ESA requires the agency to consider certain factors before designating any “particular area.” Depending on the biology of the species, the characteristics of its habitat, and the nature of the impacts of designation, “specific” areas might be different from, or the same as, “particular” areas. For this designation, we identified the “specific” areas as (1) The San Juan/Strait of Juan de Fuca Basin, (2) Main Basin, (3) Whidbey Basin, (4) South Puget Sound, and (5) Hood Canal. For our economic impact analysis we defined the “particular” areas as equivalent to the “specific” areas. This approach allowed us to most effectively consider the conservation value of the different areas when balancing conservation benefits of designation against economic benefits of exclusion. However, to assess impacts of designation on national security and Indian lands, we instead used a delineation of “particular” areas based on ownership or control of the area. These “particular” areas consisted of marine areas that overlap with designated military areas and Indian lands. This approach allowed us to consider impacts and benefits associated with management by the military or land ownership and management by Indian tribes.
Section 4(b)(2) of the ESA provides that the Secretary shall consider “the economic impact, impact on national security, and any other relevant impact of specifying any particular area as critical habitat.” The primary impact of a critical habitat designation stems from the requirement under section 7(a)(2) of the ESA that Federal agencies ensure their actions are not likely to result in the destruction or adverse modification of critical habitat. Determining this impact is complicated by the fact that section 7(a)(2) contains the overlapping requirement that Federal agencies must ensure their actions are not likely to jeopardize the species' continued existence. The true impact of designation is the extent to which Federal agencies modify their actions to ensure their actions are not likely to destroy or adversely modify the critical habitat of the species, beyond any modifications they would make because of listing and the jeopardy requirement for the species. Additional impacts of designation include state and local protections that may be triggered as a result of the designation.
In determining the impacts of designation, we assessed the incremental change in Federal agency actions as a result of critical habitat designation and the adverse modification prohibition, beyond the changes predicted to occur as a result of listing and the jeopardy provision. In August 2013 the USFWS and NMFS published a final rule to amend our joint regulations at 50 CFR 424.19 to make clear that in considering impacts of designation as required by Section 4(b)(2) we would consider the incremental impacts (78 FR 53058; August 24, 2013). This approach is in contrast to our 2005 critical habitat designations for salmon and steelhead (70 FR 52630; September 2, 2005) where we considered the “coextensive” impact of designation. The consideration of co-extensive impacts was in accordance with a Tenth Circuit Court decision (
Consistent with our new regulations (78 FR 53058; August 24, 2013), the more recent court cases, and more recent agency practice, we estimated the incremental impacts of designation, beyond the impacts that would result from the listing and jeopardy provision. In addition, because these designations almost completely overlap our previous salmonid, killer whale and green sturgeon critical habitat designations in Puget Sound, and the essential features defined for those species in previous designations are similar to those for listed rockfishes (NMFS, 2014a), we estimated only the incremental impacts of designation beyond the impacts already imposed by those prior designations.
To determine the impact of designation, we examined what the state of the world would be with and without the designation of critical habitat for listed rockfishes. The “without critical habitat” scenario represents the baseline for the analysis. It includes process requirements and habitat protections already afforded listed rockfishes under their Federal listing or under other Federal, state, and local regulations. Such regulations include protections afforded listed rockfish habitat from other co-occurring ESA listings and critical habitat designations, such as those for Pacific salmon and steelhead (70 FR 52630; September 2, 2005), North American green sturgeon (74 FR 52300; October 9, 2009), Southern Resident killer whales (71 FR 69054; November 29, 2006), and bull trout (75 FR 63898; October 18, 2010) (see the Final Economic Analysis for listed rockfish (NMFS, 2014a) for examples of protections for other species that would benefit listed rockfishes). The “with critical habitat” scenario describes the incremental impacts associated specifically with the designation of critical habitat for listed rockfishes. The primary impacts of critical habitat designation we found were: (1) The economic costs associated with additional administrative effort of including a critical habitat analysis in section 7 consultations for these three DPSs, (2) impacts to national security, and (3) the possible harm to our working relationship with Indian tribes and landowners and entities with conservation plans.
Our Economic Analysis sought to determine the impacts on land uses and
When critical habitat is designated, section 7 requires Federal agencies to ensure that their actions are not likely to result in the destruction or adverse modification of critical habitat, in addition to ensuring that the actions are not likely to jeopardize the continued existence of the species. The added administrative costs of considering critical habitat in section 7 consultations and the additional impacts of implementing project modifications to protect critical habitat are the direct result of the designation of critical habitat. These costs are not in the baseline, and are considered incremental impacts of the rulemaking.
Incremental economic impacts may include the direct costs associated with additional effort for future consultations, reinitiated consultations, new consultations occurring specifically because of the designation, and additional project modifications that would not have been required to avoid jeopardizing the continued existence of the species. Additionally, incremental economic impacts may include indirect impacts resulting from reaction to the potential designation of critical habitat (e.g., developing habitat conservation plans in an effort to avoid designation of critical habitat), triggering of additional requirements under State or local laws intended to protect sensitive habitat, and uncertainty and perceptional effects on markets.
To evaluate the potential administrative and project modification costs of designating critical habitat we examined our ESA section 7 consultation record for rockfishes for the years 2010 and 2011. As further explained in the supporting Economic Analysis (NMFS, 2014b), to quantify the economic impact of designation, we employed the following three steps:
(1) Define the geographic study area for the analysis, and identify the units of analysis (the “particular areas”). In this case, we defined the five biogeographic Basins of the Puget Sound/Georgia Basin that encompass occupied marine areas as the particular areas.
(2) Identify potentially affected economic activities and determine how management may increase due to the designation of listed rockfish critical habitat, both in terms of project administration and potential project modification.
(3) Estimate the economic impacts associated with both potential administrative costs and costs from project modifications. In this critical habitat designation we did not identify potential systematic project modification costs (NMFS, 2014b).
We estimated that the additional effort to address adverse modification of critical habitat in an ESA section 7 consultation is equivalent to one third of the effort already devoted to the consultation to consider the species. This is based on estimates of additional USFWS effort for bull trout consultations in the Northwest, which was considered relevant to the current critical habitat designation (NMFS, 2014b). That is, for every 3 hours spent considering a jeopardy analysis for rockfishes, an additional hour would be needed to consider rockfish critical habitat. Based on that assumption, we estimated a total annualized incremental administrative cost of approximately $123,000 (discounted at 7 percent) for designating the five specific areas as listed rockfish critical habitat. The greatest costs are associated with nearshore work, transportation, water quality, and utilities (see NMFS, 2014b for more details). The estimated annual incremental costs across the five biogeographic Basins range from $32,100 in the San Juan/Strait of Juan de Fuca Basin to $10,200 in Hood Canal (NMFS, 2014b).
For the second category of impacts, we consider it unlikely there will be incremental costs for project modifications specific to rockfish critical habitat for most individual project types. This is because of the existing high level of protection afforded by previous salmonid, green sturgeon and killer whale critical habitat designations that have generally similar biological features, and the protections already afforded listed rockfishes through the separate jeopardy analysis (see NMFS, 2014b for more details). The results of our Economic Analysis are discussed in greater detail in a separate report that is available for public review (NMFS, 2014b).
During preparations for the proposed designation we sent a letter to the DOD seeking information to better understand their activities taking place in areas owned or controlled by them and the potential impact of designating critical habitat in these areas. We received two letters from the DOD in response to our initial inquiry. A single letter from the U.S. Air Force and U.S. Army stated that these services did not foresee any adverse impacts to their national security or training missions from proposed rockfish critical habitat designations. The second letter, from the U.S. Navy, identified 14 Restricted Areas, Operating Areas and Danger Zones (security zones) within the range of listed rockfishes in the five Basins of the Puget Sound. The Navy confirmed that it uses all of these security zones, and assessed the potential for critical habitat designation to adversely affect operations, testing, training, and other essential military activities. Of the 14 security zones identified by the Navy, only one area is already designated as critical habitat for other ESA-listed species (Southern Resident killer whales). The Navy letter identified several aspects of potential impacts to national security from critical habitat designation and requested that areas owned or controlled by the Navy be excluded from designation. We had several conversations with the Navy subsequent to their letter to further understand their uses of the areas, concerns identified in their response letter, and any related habitat protections resulting from Navy policies and initiatives (NMFS, 2014c).
The Navy sent us a letter and subsequent electronic communications in response to our proposed critical habitat designation. The Navy clarified that Hood Canal and Dabob Bay Naval Non-Explosive Torpedo Testing Area and Dabob Bay, Whitney Point Naval Restricted Area are covered by the INRMP for Naval Station Kitsap in addition to several other security areas (see above). In addition, the Navy specifically requested that Operating Area R–6713 (Navy 3) not be designated as critical habitat and requested clarification on our proposed nearshore designation in some areas of the Puget Sound. We contacted the Navy regarding their uses and concerns regarding our proposed critical habitat designation of Operating Area R–6713. In 2009 we designated critical habitat for green sturgeon (74 FR 52300; October 9, 2009). Prior to the green sturgeon final critical habitat designation the Navy provided us
During preparations for the proposed designation we sent a letter to Puget Sound Indian tribes, notifying them of our intent to propose critical habitat for listed rockfishes. We identified several areas under consideration for critical habitat designation that overlap with Indian lands in each of the specific areas (see the final 4(b)(2) report and Figures 2 and 3). The federally recognized tribes with lands potentially affected are the Lummi, Swinomish, Tulalip, Puyallup, Squaxin Island, Skokomish, Port Gamble, and Port Madison. In addition to the economic impacts described above, designating these tribes' Indian lands would have an impact on Federal policies promoting tribal sovereignty and self-governance. The longstanding and distinctive relationship between the Federal and tribal governments is defined by treaties, statutes, executive orders, secretarial orders, judicial decisions, and agreements, which differentiate tribal governments from the other entities that deal with, or are affected by, the U.S. Government. This relationship has given rise to a special Federal trust responsibility involving the legal responsibilities and obligations of the United States toward Indian tribes with respect to Indian lands, tribal trust resources, and the exercise of tribal rights. Pursuant to these authorities, lands have been retained by Indian tribes or have been set aside for tribal use. These lands are managed by Indian tribes in accordance with tribal goals and objectives within the framework of applicable treaties and laws.
Tribal governments have a unique status with respect to salmon, steelhead, and other marine resources in the Pacific Northwest, where they are co-managers of these resources throughout the region. The co-manager relationship crosses tribal, Federal, and state boundaries, and addresses all aspects of the species' life cycle. The positive working relationship between the Federal government and tribes can be seen in Federal-tribal participation within the
Section 10(a)(1)(B) of the ESA authorizes us to issue to non-Federal entities a permit for the incidental take of endangered and threatened species. This permit allows a non-Federal landowner/entity to proceed with an activity that is legal in all other respects, but that results in the incidental taking of a listed species (i.e., take that is incidental to, and not the purpose of, the carrying out of an otherwise lawful activity). The ESA specifies that an application for an incidental take permit (ITP) must be accompanied by a conservation plan, and specifies the content of such a plan. The purpose of such conservation plans is to describe and ensure that the effects of the permitted action on covered species are adequately minimized and mitigated, and that the action does not appreciably reduce the likelihood of the survival and recovery of the species. Conservation plans that cover habitat actions are common for terrestrial and freshwater species and can benefit species threatened by land use activities. Conservation plans that cover fisheries are less common and can benefit species and habitats threatened by fishing activities.
Conservation agreements with non-Federal landowners and other entities enhance species conservation by extending species' protections beyond those available through section 7 consultations. We have encouraged non-Federal landowners to enter into conservation agreements, based on a view that we can achieve greater species' conservation on non-Federal land through such partnerships than we can through coercive methods (61 FR 63854; December 2, 1996). In past critical habitat designations we have found there is a benefit to excluding some areas covered by conservation agreements when there is affirmative evidence that the conservation partner considered exclusion beneficial to our relationship and beneficial to implementation of the conservation agreement (e.g., for Pacific salmon, 70 FR 52630; September 2, 2005). We considered the benefit of exclusion to be a conservation benefit to the affected species because of the enhanced implementation of the agreement and the incentive for others to enter into conservation agreements with us to further protect the species.
In the case of the listed rockfish species, there are two conservation agreements that partially or wholly overlap with critical habitat. The first is with the Washington DNR and covers geoduck harvest on lands managed by the department. The second is with the Washington Department of Fish and Wildlife (WDFW) and covers fisheries and research in Puget Sound that incidentally take the listed rockfishes and other listed species and may also affect rockfish habitat.
Benefits of critical habitat designation are those conservation benefits to the species, while benefits of exclusion result from avoiding the impacts of designation identified above. For the present designation, we decided to balance benefits of designation against benefits of exclusion because some impacts of designation implicate competing Federal values, such as national security and tribal sovereignty and self-governance (see NMFS, 2014c).
The principal benefit of designating critical habitat is that ESA section 7 requires every Federal agency to ensure that any action it authorizes, funds, or carries out is not likely to result in the destruction or adverse modification of designated critical habitat. This complements the Section 7 provision that Federal agencies ensure their actions are not likely to jeopardize the continued existence of a listed species. The requirement that agencies avoid adversely modifying critical habitat is in addition to the requirement that they avoid jeopardy to the species, thus the benefit of designating critical habitat is “incremental” to the benefit that comes with listing. Another possible benefit is that the designation of critical habitat can serve to educate the public regarding the potential conservation value of an area. Systematic analysis and delineation of important rockfish habitat has not been previously conducted in the Puget Sound, so designating critical habitat may focus and contribute to conservation efforts by
Ideally the consideration and balancing of benefits would involve first translating all benefits into a common metric. Executive branch guidance from the Office of Management and Budget (OMB) suggests that benefits should first be monetized—converted into dollars. Benefits that cannot be monetized should be quantified (for example, numbers of fish saved). Where benefits can neither be monetized nor quantified, agencies are to describe the expected benefits (OMB, 2003).
It may be possible to monetize benefits of critical habitat designation for a threatened or endangered species in terms of willingness-to-pay (OMB, 2003). However, we are not aware of any available data at the scale of our designation (the five Basins of Puget Sound Sound) that would support such an analysis for listed rockfishes. In addition, section 4(b)(2) requires analysis of impacts other than economic impacts that are equally difficult to monetize, such as impacts to national security of including areas from critical habitat. In the case of rockfish designations, impacts to Northwest Indian tribes or to our program to promote voluntary conservation agreements are “other relevant” impacts that also may be difficult to monetize.
Because we could not monetize or quantify the conservation benefit of designating the particular areas as critical habitat, we qualitatively describe their conservation value to the listed species. The rockfish critical habitat we have identified consists of only five areas. Each area is a biogeographic Basin that represents a unique ecological setting with unique habitats and biological communities. This diversity of habitats is important to maintaining long-term viability of the DPSs. Four of the five areas are also relatively spatially isolated in terms of water circulation and exchange of some biota. Although we lack detailed genetic information to confirm that this isolation has led to reproductive isolation among Basins, it is likely that there is some degree of reproductive isolation and that the unique habitat conditions in each Basin have therefore resulted in important adaptations. The diversity this creates in the population, like the diversity in habitats, is important to long-term viability. These factors suggest that all of the populations and Basins are important in maintaining the diversity and spatial structure of each DPS. Though we have not yet developed a final Recovery Plan for these DPSs, it is likely that all five areas are important to recovery of the listed DPSs and therefore have high conservation value (NMFS, 2014a).
In our 2005 final and 2013 proposed critical habitat designations for salmon and steelhead, we balanced conservation benefits of designation against economic benefits of exclusion and excluded particular areas for many of the affected species. Our approach was informed by both biology and policy (78 FR 2725, January 14, 2013; 70 FR 52630, September 2, 2005). In deciding to balance benefits, we noted that salmon and steelhead are widely distributed and their range includes areas that have both high and low conservation value; thus, it may be possible to construct different scenarios for achieving conservation. We also noted Administration policy regarding regulations, as expressed in Executive Order 12866, which directs agencies to select regulatory approaches that “maximize net benefits,” and to “design regulations in the most cost-effective manner to achieve the regulatory objective.”
For the salmon and steelhead designations, we used a cost effectiveness approach in which we identified areas to consider for economic exclusion by balancing relative conservation value against relative economic impact. Where the relative conservation value of an area was lower than the relative economic impact, we considered the area eligible for exclusion. Relying on policies that promote conservation of threatened and endangered species in general and salmon in particular, we did not consider areas for exclusion if exclusion would significantly impede conservation. We concluded that exclusion of high conservation value areas would significantly impede conservation and therefore we did not consider any high conservation value areas for exclusion for salmon and steelhead.
In considering economic exclusions for listed rockfishes, we considered the following factors: (1) Section 2 of the ESA provides that a purpose of the act is “to provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved”; (2) in listing the three listed rockfish DPSs under the ESA, we concluded that degradation of rocky habitat, loss of eelgrass and kelp, introduction of non-native habitat-modifying species, and degraded water quality were all threats to the species; (3) that rocky habitats are rare in Puget Sound and have been affected by or are threatened by derelict fishing gear, development, and construction and dredging activities; (4) as described above, there are only five habitat areas and all are of high conservation value; and (5) the economic impacts of designating any particular area are small (the largest impact is $32,100 in the San Juan/Strait of Juan de Fuca Basin), as is the economic impact of designating the entire area ($123,000).
For these reasons, we conclude that the economic benefit of excluding any of these particular areas does not outweigh the conservation benefit of designation. Therefore, none of the areas were eligible for exclusion based on economic impacts.
We balanced the conservation benefits to rockfishes of designation against the benefits of exclusion for Indian lands in light of the unique Federal tribal relationship, the unique status of Indian lands, and the Federal policies promoting tribal sovereignty and self-determination, among others. Indian lands potentially affected by a critical habitat designation occur within the range of the listed rockfishes and are specific to nearshore juvenile rearing sites for canary rockfish and bocaccio. We are not designating any nearshore areas of Puget Sound as critical habitat for yelloweye rockfish (NMFS, 2014a). There are eight tribes with Indian lands that overlap the critical habitat in all five Basins. Approximately 64.1 lineal miles (103 km) of shoreline within reservation boundaries overlap with the nearshore component of critical habitat.
The principal benefit of designating critical habitat is section 7's requirement that Federal agencies ensure their actions are not likely to result in adverse modification of that habitat. To understand the benefit of designating critical habitat on Indian lands, we considered the number of miles of shoreline affected, and the types of activities occurring there that would be likely to undergo a section 7 consultation along this shoreline area. The types of activities occurring in these areas that would be likely to undergo a section 7 consultation include activities associated with: Nearshore development, utilities, dredging, water quality projects, transportation, and other project types.
The benefit of excluding these areas is that Federal agencies acting on behalf of, funding, or issuing permits to the tribes would not need to reinitiate consultation on ongoing activities for which consultation has been completed. Reinitiation of consultation would likely require some commitment of
Based on our consideration, and given the preceding factors, we concluded that the benefits to conservation of listed rockfishes from full tribal participation in Puget Sound recovery efforts mitigates the potential loss of conservation benefits that could result from designation of tribal lands as critical habitat. With this mitigating conservation benefit in mind, we further concluded that the benefits to tribal governments, with whom the Federal Government has a unique trust relationship, particularly with regard to land held by the Federal Government in trust for the tribes, outweigh the conservation benefits of designation for listed rockfishes (NMFS, 2014c).
The Indian lands specifically excluded are those defined in the Secretarial Order 3206, including: (1) Lands held in trust by the United States for the benefit of any Indian tribe; (2) lands held in trust by the United States for any Indian tribe or individual subject to restrictions by the United States against alienation; (3) fee lands, either within or outside the reservation boundaries, owned by the tribal government; and (4) fee lands within the reservation boundaries owned by individual Indians. Our consideration of whether these exclusions would result in extinction of listed rockfishes is described below.
Our consideration of the DNR and WDFW conservation plans is described in detail in the ESA Section 4(b)(2) Report (NMFS, 2014c). We balanced the conservation benefits to rockfishes of critical habitat designation against the benefits of exclusion (referring to the impacts of designation section above) of the areas covered in each conservation plan. Each plan covers several activities that may take listed species and harm critical habitat in Puget Sound. Congress added section 10 to the ESA to encourage “creative partnerships between the private sector and local, state, and Federal agencies for the protection of endangered species and habitat conservation” (
In general, the benefits of designating the covered areas of each conservation plan is that once critical habitat is designated, section 7(a)(2) of the ESA provides that Federal agencies must ensure any actions they authorize, fund, or carry out are not likely to result in the destruction or adverse modification of designated critical habitat. An additional benefit of inclusion is that a systematic analysis and delineation of important rockfish habitat has not been previously conducted in the Puget Sound. Thus, for non-Federal activities occurring in the covered areas, designation may raise public awareness of habitats important to rockfishes and encourage additional conservation measures and voluntary conservation agreements within the section 10 program. The benefits of designating areas covered by these two conservation plans may be less than what they would be on areas not covered by conservation plans because of the fact that the permit holder has put conservation measures in place through provisions of the plan. These measures provide protection when actions are allowed that could affect critical habitat (geoduck harvest and management by DNR, and fisheries by WDFW). However, these conservation plans are unlike other land-based conservation plans in the Northwest (such as forestry conservation plans) because the DNR and WDFW plans cover a small subset of potential actions that could be affected by future Federal actions in Puget Sound (i.e., Federal permits for nearshore development, fisheries that cause new derelict fishing nets, tidal energy or cable-laying, and others).
The benefits of excluding these covered areas from designation include the potential furtherance of our ongoing relationship with these entities; in particular, the potential that the exclusion of these areas may provide an incentive for other entities to seek conservation plans, and the general promotion of the section 10 conservation program. Conservation agreements on non-federally controlled areas of Puget Sound provide important benefits to listed species. Section 7 applies to only Federal agency actions. Its requirements protect listed fishes only when a Federal permit or funding is involved; thus, its reach is limited. Neither DNR nor WDFW identified any potential impacts to our relationship or implementation of each conservation plan.
For each rockfish DPS we considered the areas each conservation plan covered and the types of Federal activities in those areas that would likely undergo section 7 consultation. We also considered the degree to which DNR and WDFW believe the designation would affect the ongoing relationship that is essential to the continued successful implementation of the conservation plan and the extent to which exclusion provides an incentive to other entities.
Based on our consideration, and given the following factors, we concluded that the benefits of excluding the areas covered by each conservation plan do not outweigh the benefits of designation. We considered the following factors in reaching this conclusion: (1) DNR and WDFW did not identify any impacts to our ongoing relationship, nor did they comment on
Based on information provided by the three branches of the military on impacts to national security of potential critical habitat designations described above, we consulted with DOD to better understand the potential impact of designating critical habitat at these sites. The DOD confirmed that all of the security zones are used by the Navy, and confirmed the potential for critical habitat designation to impact national security by adversely affecting their ability to conduct operations, testing, training, and other essential military activities. The Navy letter identified several aspects of potential impacts from critical habitat designation that include the possible prevention, restriction, or delay of training or testing exercises and delayed response time for ship deployments. We had several conversations with the Navy subsequent to its letter to further understand its uses of the security zones concerns identified in its response letter, and any related habitat protections derived by Navy policies and initiatives. We also had further discussions with the Navy regarding the extent of the proposed designation associated with these sites. The Navy agreed to refine the delineation of offshore areas in Puget Sound where the Navy has established security zones. Similar to the salmonid critical habitat designation (NMFS, 2005) the Navy agreed that the military zone could be designated in all or a portion of the nearshore in one of their security zones that is not covered by an INRMP, and we clarified which areas of the nearshore are designated as critical habitat in our final 4(b)(2) report (see NMFS, 2014c) and in this final rule. Because many of the activities affecting rockfishes in the nearshore zone are land-based, this refinement allowed us to retain most of the conservation benefit of designating nearshore areas as critical habitat in one area while still retaining the benefit to national security of excluding offshore military areas (NMFS, 2014c).
We balanced the conservation benefits of designation to rockfishes against the benefits of exclusion for security zones as ultimately defined by the Navy in the Puget Sound/Georgia Basin. Prior to the publication of the proposed rule (78 FR 47635; August 6, 2013) the Navy requested that 14 areas be excluded from critical habitat designation, including four in the San Juan/Strait of Juan de Fuca Basin, three in Hood Canal, two in the Whidbey Basin, four in the Main Basin, and one in South Puget Sound based on the impacts to national security. In response to the proposed rule the Navy clarified that Hood Canal and Dabob Bay Naval Non-Explosive Torpedo Testing Area and Dabob Bay, Whitney Point Naval Restricted Area are covered by the INRMP for Naval Station Kitsap. The Navy also clarified that the two Naval Restricted Areas in the Strait of Juan de Fuca, Eastern End; off the Westerly Shore of Whidbey Island, the Port Townsend, Indian Island, Walan Point Naval Restricted Area, Port Orchard Naval Restricted Area and the Puget Sound, Manchester Fuel Depot, Naval Restricted Area are also covered by an INRMP. For the security zones that occur solely within the nearshore we did not conduct the balancing exercise, as each falls completely within the provisions of the Sikes Act.
The factors we consider relevant to assessing the impact to national security and the benefits of exclusion include: (1) The percent of the military area that would be designated; and (2) the importance of the area activity to national security and likelihood an activity would need to be changed to avoid adverse modification.
The factors we consider relevant to assessing the benefits of designation to rockfish conservation include: (1) The percent of the nearshore and deepwater critical habitat that would be designated in that Basin; (2) uniqueness and conservation role of the habitat in particular DOD areas; (3) the likelihood that Navy activities would destroy or adversely modify critical habitat; and (4) the likelihood habitat would be adversely modified by other Federal or non-Federal activities, considering Navy protections (this factor considers the type and frequency of Navy actions that occur in each site and their potential effect on rockfish habitat features, which informs the benefit to conservation that would occur by a section 7 consultation that considers rockfish critical habitat).
All but the quantitative factors were given a qualitative rating of high, medium, or low (NMFS, 2014c). Based on our analysis, we are excluding all but one of the areas requested by the Navy. We do not exclude Operating Area R–6713 (Navy 3). We contacted the Navy regarding its uses and concerns regarding our proposed critical habitat designation of this area, and assessed the additional information provided to us by the Navy. We continue to conclude that the benefits to national security of excluding this particular area do not outweigh the benefits to rockfish conservation of designating it. This area is a polygon off the western side of Naval Air Station Whidbey Island (appearing on NOAA Chart 18400) which is used in conjunction with the restricted area under 33 CFR 334.1180 for surface vessel training activities. For this area we found moderate benefits of exclusion to the Navy because the percent of the military area that would be designated is relatively small, the area is only sporadically used by the Navy, suggesting little value of the area to the Navy mission, and the additional analysis required for consultation addressing the potential for adverse modification is likely minimal (NMFS, 2014c). We found moderate benefits to designating the area as critical habitat because of the uniqueness and conservation role of the area, and the likelihood that habitat could be adversely modified by other Federal or non-Federal activities, and considering Navy restrictions on non-Navy activities (NMFS, 2014c). Because the benefit of exclusion does not outweigh the benefit of designation, we do not exclude Navy 3. The excluded areas total approximately 15.7 nearshore sq mi (40.7 sq km) and 20.1 square miles (52.1 sq km) of deepwater critical habitat.
Critical habitat is designated in a narrow nearshore zone (from the extreme high tide datum down to MLLW) within the Admiralty Inlet Naval Restricted Area. Critical habitat is designated from extreme high tide to a depth of 30 meters at Carr Inlet Naval Restricted Area. The following Department of Defense areas are not included as critical habitat:
(1) Small Arms Danger Zone off Western Side of Naval Air Station Whidbey Island and additional Accident Potential Zone restricted areas—In the waters located in the San Juan De Fuca Strait beginning on the beach of NAS Whidbey Island, Oak Harbor, Washington at latitude 48°19′20.00″ N, longitude 122°42′6.92″
(2) Strait of Juan de Fuca Naval Air-to-Surface Weapon Range Restricted Area—A circular area immediately west of Smith Island with a radius of 1.25 nautical mi (2.32 km) having its center at latitude 48°19′11″ N and longitude 122°54′12″ W.
(3) Hood Canal and Dabob Bay Naval Non-Explosive Torpedo Testing Area—All waters of Hood Canal between latitude 47°46′00″ N and latitude 47°42′00″ N, exclusive of navigation lanes one-fourth nautical mile (0.46 km) wide along the west shore and along the east shore south from the town of Bangor (latitude 47°43′28″ N). All waters of Dabob Bay beginning at latitude 47°39′27″ N, longitude 122°52′22″ W; thence northeasterly to latitude 47°40′19″ N, longitude 122°50′10″ W; thence northeasterly to a point on the mean high water line at Takutsko Pt.; thence northerly along the mean high water line to latitude 47°48′00″ N; thence west on latitude 47°48′00″ N to the mean high water line on the Bolton Peninsula; thence southwesterly along the mean high water line of the Bolton Peninsula to a point on longitude 122°51′06″ W; thence south on longitude 122°51′06″ W to the mean high water line at Whitney Pt.; thence along the mean high water line to a point on longitude 122°51′15″ W; thence southwesterly to the point of beginning. The nearshore from Tsuktsko Pt. 47°41′30.0″ N latitude, 122°49′48″ W longitude to the north at 47°50′0.0″ N latitude, 122°47′30″ W longitude.
(4) Admiralty Inlet Naval Restricted Area—This area begins at Point Wilson Light thence southwesterly along the coast line to latitude 48°07′00″ N; thence northwesterly to a point at latitude 48°15′00″ N longitude 123°00′00″ W; thence due east to Whidbey Island; thence southerly along the coast line to latitude 48°12′30″ N; thence southerly to the point of beginning.
(5) Port Gardner, Everett Naval Base, Naval Restricted Area—The waters of Port Gardner and East Waterway surrounding Naval Station Everett begin at a point near the northwest corner of Naval Station Everett at latitude 47°59′40″ N, longitude 122°13′23.5″ W and thence to latitude 47°59′40″ N, longitude 122°13′30″ W ; thence to latitude 47°59′20″ N, longitude 122°13′33″ W ; thence to latitude 47°59′13″ N, longitude 122°13′38″ W; thence to latitude 47°59′05.5″ N, longitude 122°13′48.5″ W; thence to latitude 47°58′51″ N, longitude 122°14′04″ W; thence to latitude 47°58′45.5″ N, longitude 122°13′53″ W; thence to latitude 47°58′45.5″ N, longitude 122°13′44″ W; thence to latitude 47°58′48″ N, longitude 122°13′40″ W; thence to latitude 47°58′59″ N, longitude 122°13′30″ W; thence to latitude 47°59′14″ N, longitude 122°13′18″ W (Point 11); thence to latitude 47°59′13″ N, longitude 122°13′12″ W; thence to latitude 47°59′20″ N, longitude 122°13′08″ W; thence to latitude 47°59′20″ N, longitude 122°13′02.5″ W, a point upon the Naval Station's shore in the northeast corner of East Waterway.
(6) Hood Canal, Bangor Naval Restricted Areas—The Naval restricted area described in 33 CFR 334.1220 has two areas. Area No. 1 is bounded by a line commencing on the east shore of Hood Canal in relation to the property boundary and area No. 2 encompasses waters of Hood Canal with a 1,000 yard (0.91 km) radius diameter from a central point. Area No. 1 is bounded by a line commencing on the east shore of Hood Canal at latitude 47°46′18″ N longitude 122°42′18″ W; thence to latitude 47°46′32″ N, longitude 122°42′20″ W; thence to latitude 47°46′38″ N, longitude 122°42′52″ W; thence to latitude 47°44′15″ N, longitude 122°44′50″ W; thence to latitude 47°43′53″ N, longitude 122°44′58″ W; thence to latitude 47°43′17″ N, longitude 122°44′49″ W. Area 2 is waters of Hood Canal within a circle of 1,000 yards (0.91 km) diameter centered on a point located at latitude 47°46′26″ N, longitude 122°42′49″ W.
(7) Port Orchard Naval Restricted Area—The Naval restricted area described in 33 CFR 334.1230 is shoreward of a line beginning at a point on the west shoreline of Port Orchard bearing 90° from stack (at latitude 47°42′01″ N, longitude 122°36′54″ W); thence 90°, approximately 190 yards (174 m), to a point 350 yards (320 m) from stack; thence 165°, 6,000 yards (5.49 km), to a point bearing 179°, 1,280 yards (1.17 km), from Battle Point Light; thence westerly to the shoreline at latitude 47°39′08″ N (approximate location of the Brownsville Pier).
(8) Sinclair Inlet Naval Restricted Areas—The Naval restricted area described in 33 CFR 334.1240 to include: Area No. 1—All the waters of Sinclair Inlet westerly of a line drawn from the Bremerton Ferry Landing at latitude 47°33′48″ N, longitude 122°37′23″ W; on the north shore of Sinclair Inlet and latitude 47°32′52″ N, longitude 122°36′58″ W; on the south shore of Sinclair Inlet; and Area No. 2—That area of Sinclair Inlet to the north and west of an area bounded by a line commencing at latitude 47°33′43″ N, longitude 122°37′31″ W thence south to latitude 47°33′39″ N, longitude 122°37′27″ W thence southwest to latitude 47°33′23″ N, longitude 122°37′45″ W thence southwest to latitude 47°33′19″ N, longitude 122°38′12″ W thence southwest to latitude 47°33′10″ N, longitude 122°38′19″ W thence southwest to latitude 47°33′07″ N, longitude 122°38′29″ W thence west to latitude 47°33′07″ N, longitude 122°38′58″ W thence southwest to latitude 47°33′04″ N, longitude 122°39′07″ W thence west to the north shore of Sinclair Inlet at latitude 47°33′04.11″ N, longitude 122°39′41.92″ W.
(9) Dabob Bay, Whitney Point Naval Restricted Area—The Naval restricted area described in 33 CFR 334.1260 beginning at the high water line along the westerly shore of Dabob Bay at the Naval Control Building located at latitude 47°45′36″ N and longitude 122°51′00″ W. The western shoreline boundary is 100 yards (91 m) north and 100 yards (91 m) south from that point. From the north and south points, go eastward 2,000 yards (1.83 km) into Dabob Bay. The eastern boundary is a virtual vertical line between the two points (200 yards (189.2 m) in length).
(10) Carr Inlet, Naval Restricted Area—The Naval restricted area described in 33 CFR 334.1250 to include: The area in the Waters of Carr Inlet bounded on the southeast by a line running from Gibson Point on Fox Island to Hyde Point on McNeil Island, on the northwest by a line running from Green Point (at latitude 47°16′54″ N, longitude 122°41′33″ W) to Penrose Point; plus that portion of Pitt Passage
(11) Port Townsend, Indian Island, Walan Point Naval Restricted Area—The Naval restricted area described in 33 CFR 334.1270 to include: The waters of Port Townsend Bay bounded by a line commencing on the north shore of Walan Point at latitude 48°04′42″ N, longitude 122°44′30″ W; thence to latitude 48°04′50″ N, longitude 122°44′38″ W; thence to latitude 48°04′52″ N, longitude 122°44′57″ W; thence to latitude 48°04′44″ N, longitude 122°45′12″ W; thence to latitude 48°04′26″ N, longitude 122°45′21″ W; thence to latitude 48°04′10″ N, longitude 122°45′15″ W; thence to latitude 48°04′07″ N, longitude 122°44′49″ W; thence to a point on the Walan Point shoreline at latitude 48°04′16″ N, longitude 122°44′37″ W.
(12) NAS Whidbey Island, Crescent Harbor—The waters of Puget Sound adjacent to Whidbey Island Naval Air Station that include: the waters of Crescent Harbor starting at Maylor Point at latitude 48°16′4″ N, longitude 122°37′28″ W; thence to 6/10 mile (0.97 km) south of Maylor Point latitude 48°15′32″ N, longitude 122°37′28″ W; thence to 6/10 mile (0.97 km) south of Polnell Point latitude 48°15′47″, longitude 122°33′25″ W; thence to 500 ft (152 m) southeast of Polnell Point latitude 48°16′16″ N, longitude 122°33′27″ W; thence to Polnell Point latitude 48°16′19″ N, longitude 122°33′34″ W.
(13) Puget Sound, Manchester Fuel Depot, Naval Restricted Areas—The waters of Puget Sound surrounding the Manchester Fuel Depot bounded by a line commencing along the northern shoreline of the Manchester Fuel Depot at latitude 47°33′55″ N, longitude 122°31′55″ W; thence to latitude 47°33′37″ N, longitude 122°31′50″ W; thence to latitude 47°33′32″ N, longitude 122°32′06″ W; thence to latitude 47°33′45.9″ N, longitude 122°32′16.04″ W, a point in Puget Sound on the southern shoreline of the Manchester Fuel Depot then back to the original point.
Section 4(b)(2) of the ESA limits our discretion to exclude areas from designation if exclusion will result in extinction of the species. We have not excluded any habitat areas based on economic impacts or 10(a)(1)(B) permits (conservation plans). We have excluded 64.1 lineal mi (103.1 km) of marine habitat adjacent to Indian lands and approximately 35.8 sq mi (92.7 sq km) of marine habitat area (15.7 sq mi of nearshore, 20.1 sq mi of deepwater) controlled by the Navy as described above. We conclude that excluding Indian lands—and thereby furthering the Federal government's policy of promoting respect for tribal sovereignty and self-governance—in addition to several areas controlled by the Navy, will not result in extinction of listed rockfishes. Listed rockfish habitat on Indian lands represents a small proportion of total area occupied by these DPSs, and the Tribes are actively engaged in fisheries management, habitat management and Puget Sound ecosystem recovery programs that benefit listed rockfishes.
Listed rockfish habitat within areas controlled by the Navy represents approximately 8 percent of the nearshore area and approximately 6 percent of the deepwater area we determined to have essential features. In addition to the small size of these exclusions, the Navy actively seeks to protect actions that would impact their mission and these protections provide ancillary protections to rockfish habitat by restricting actions that may harm the Navy mission and rockfishes in the respective area (NMFS, 2014c). Thus the benefit of designating these areas as critical habitat would be reduced.
For the following reasons, we conclude that the exclusions described above, in combination, will not result in the extinction of the yelloweye rockfish, canary rockfish or bocaccio DPSs: (1) The Indian land exclusions involve nearshore habitats that are already managed by the tribes for conservation; (2) the Navy exclusions involve nearshore and deepwater habitats that are already afforded some protections by the Navy, and (3) the extent of Indian lands exclusions and Navy exclusions are spread amongst each of the five biogeographic Basins of Puget Sound, and cumulatively total a fraction of the overall habitats that have essential features for listed rockfishes.
In total we designate approximately 590.4 square miles (1,529 sq km) of nearshore habitat for canary rockfish and bocaccio, and 414.1 sq mi (1,072.5 sq km) of deepwater habitat for yelloweye rockfish, canary rockfish and bocaccio within the geographical area occupied by the DPSs (Figures 2 and 3). Aside from some deepwater areas designated as critical habitat for rockfishes in Hood Canal, all other critical habitat overlaps with designated critical habitat for other species.
Other co-occurring ESA-listed species with designated critical habitat that, collectively, almost completely overlap with rockfish critical habitat include Pacific salmon (70 FR 52630; September 2, 2005), North American green sturgeon (74 FR 52300; October 9, 2009), Southern Resident killer whales (71 FR 69054; November 29, 2006), and bull trout (75 FR 63898; October 18, 2010). The areas designated are all within the geographical area occupied by the species and contain physical and biological features essential to the conservation of the species and that may require special management considerations or protection. No unoccupied areas were identified that are considered essential for the conservation of the species. All of the areas designated have high conservation value (NMFS, 2014a). As a result of the balancing process for some military
On May 1, 2012, NMFS and the USFWS revised the critical habitat implementing regulations to eliminate the requirement to publish textual descriptions of proposed (NMFS only) and final (NMFS and USFWS) critical habitat boundaries in the Regulation Promulgation section of the
Section 3(5)(A)(ii) of the ESA authorizes the designation of “specific areas outside the geographical area occupied at the time [the species] is listed” if these areas are essential for the conservation of the species. Regulations at 50 CFR 424.12(e) emphasize that the agency “shall designate as critical habitat areas outside the geographical area presently occupied by a species only when a designation limited to its present range would be inadequate to ensure the conservation of the species.” We conducted a review of the documented occurrences of each listed rockfish in the five biogeographic Basins (NMFS, 2014a). We found that each of the Basins is currently occupied by yelloweye rockfish, canary rockfish, and bocaccio. We have not identified any unoccupied areas as candidates for critical habitat designation.
Section 7(a)(2) of the ESA requires Federal agencies to ensure that any action authorized, funded, or carried out by the agency (agency action) is not likely to jeopardize the continued existence of any threatened or endangered species or destroy or adversely modify designated critical habitat.
When a species is listed or critical habitat is designated, Federal agencies must consult with NMFS on any agency actions to be conducted in an area where the species is present or that may affect the species or its critical habitat. During the consultation, we evaluate the agency action to determine whether the action may adversely affect listed species or critical habitat and issue our findings in a biological opinion or concurrence letter. If we conclude in the biological opinion that the agency action would likely result in the destruction or adverse modification of critical habitat, we would also recommend any reasonable and prudent alternatives to the action. Reasonable and prudent alternatives (defined in 50 CFR 402.02) are alternative actions identified during formal consultation that can be implemented in a manner consistent with the intended purpose of the action, that are consistent with the scope of the Federal agency's legal authority and jurisdiction, that are economically and technologically feasible, and that would avoid the destruction or adverse modification of critical habitat.
Regulations at 50 CFR 402.16 require Federal agencies that have retained discretionary involvement or control over an action, or where such discretionary involvement or control is authorized by law, to reinitiate consultation on previously reviewed actions in instances where: (1) Critical habitat is subsequently designated; or (2) new information or changes to the action may result in effects to critical habitat not previously considered in the biological opinion. Consequently, some Federal agencies may request reinitiation of a consultation or conference with us on actions for which formal consultation has been completed,
Activities subject to the ESA section 7 consultation process include activities on Federal lands and activities on private or state lands requiring a permit from a Federal agency (e.g., a Clean Water Act, Section 404 dredge or fill permit from U.S. Army Corps of Engineers (USACE)) or some other Federal action, including funding (e.g., Federal Highway Administration funding for transportation projects). ESA section 7 consultation would not be required for Federal actions that are not likely to affect listed species or critical habitat and for actions on non-Federal and private lands that are not Federally funded, authorized, or carried out.
ESA section 4(b)(8) requires in any final regulation to designate critical habitat an evaluation and brief description of those activities (whether public or private) that may adversely modify such habitat or that may be affected by such designation. A wide variety of activities may affect the critical habitat and may be subject to the ESA section 7 consultation process when carried out, funded, or authorized by a Federal agency. These include water and land management actions of Federal agencies (e.g., the Department of Defense, USACE, the Department of Defense, the Federal Energy Regulatory Commission, and the Environmental Protection Agency and related or similar federally regulated projects). Other actions of concern include dredging and filling, and bank stabilization activities authorized or conducted by the USACE, and approval of water quality standards and pesticide labeling and use restrictions administered by the EPA.
Private or non-Federal entities may also be affected by these critical habitat designations if the activity requires a Federal permit, receives Federal funding, or the entity is involved in or receives benefits from a Federal project. For example, private entities may need Federal permits to build or repair a bulkhead, or install an artificial reef. These activities will need to be evaluated with respect to their potential to destroy or adversely modify critical habitat for yelloweye rockfish, canary rockfish, or bocaccio of the Puget Sound/Georgia Basin.
Questions regarding whether specific activities will constitute destruction or adverse modification of critical habitat should be directed to NMFS (see
The data and analyses supporting this action have undergone a pre-dissemination review and have been determined to comply with applicable information quality guidelines implementing the Information Quality Act (IQA) (Section 515 of Public Law 106–554). In December 2004, OMB issued a Final Information Quality Bulletin for Peer Review pursuant to the IQA. The Bulletin was published in the
Under the Regulatory Flexibility Act (5 U.S.C. 601
The impacts to small businesses were assessed for the following broad categories of activities: utilities, nearshore work, transportation, water quality and other activities. Small entities were defined by the Small Business Administration size standards for each activity type, which were updated for Finfish fishing, shellfish fishing, and Other Marine Fishing (78 FR 37398; June 20, 2013). Taking this change as well as public comment into consideration, we have identified no additional significant alternatives that accomplish statutory objectives and minimize any significant economic impacts of the final rule on small entities. We do not forecast any costs to small entities related to utilities projects because the only consultation associated with utilities are pre-consultation/technical assistance and programmatic consultations, which do not include any cost to third parties; therefore, we do not expect any impacts to small entities related to utilities.
We estimated the annualized costs associated with ESA section 7 consultations incurred per small business under a scenario intended to provide a measure of uncertainty regarding the number of small entities that may be affected by the designations for each project category (NMFS, 2014c). It is uncertain whether small entities will be project proponents for these types of consultations, so the analysis conservatively assumes that all consultations will be undertaken by small entities, and that all such consultation will be formal. Under these assumptions, the costs to entities engaged in nearshore work are an estimated $27,000 annually, or $1,900 per entity. This cost represents less than 0.1 percent of annual revenues in this sector. The costs to entities engaged in transportation projects are an estimated $46,000 annually, or $7,700 for entities in this sector. This cost represents 0.29 percent of annual revenues. The costs to entities engaged in water quality projects is an estimated $23,000 annually, or $9,100 per entity. This cost represents 1.3 percent of annual revenues for entities in this sector. The costs for other entities, including fishing, would be approximately $18,000 annually, or $2,600 per entity. This cost represents 1.1 percent of annual revenues for entities in this sector.
In accordance with the requirements of the Regulatory Flexibility Act (as amended by the Small Business Regulatory Enforcement Fairness Act of 1996) this analysis considered various
At the guidance of OMB and in compliance with Executive Order 12866, “Regulatory Planning and Review,” Federal agencies measure changes in economic efficiency in order to understand how society, as a whole, will be affected by a regulatory action. Our analysis of economic impacts can be found in NMFS (2014b), and this rule has been determined to be not significant under Executive Order 12866.
On May 18, 2001, the President issued an executive order on regulations that significantly affect energy supply, distribution, and use. Executive Order 13211 requires agencies to prepare Statements of Energy Effects when undertaking any action that promulgates or is expected to lead to the promulgation of a final rule or regulation that (1) is a significant regulatory action under Executive Order 12866 and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy.
We have considered the potential impacts of this action on the supply, distribution, or use of energy and find the designation of critical habitat will not have impacts that exceed the thresholds identified above (NMFS, 2014b).
In accordance with the Unfunded Mandates Reform Act, NMFS makes the following findings:
(a) This final rule will not produce a Federal mandate. In general, a Federal mandate is a provision in legislation, statute or regulation that would impose an enforceable duty upon state, local, tribal governments, or the private sector and includes both “Federal intergovernmental mandates” and “Federal private sector mandates.” These terms are defined in 2 U.S.C. 658(5)–(7). “Federal intergovernmental mandate” includes a regulation that “would impose an enforceable duty upon State, local, or tribal governments” with two exceptions. It excludes “a condition of Federal assistance.” It also excludes “a duty arising from participation in a voluntary Federal program,” unless the regulation “relates to a then-existing Federal program under which $500,000,000 or more is provided annually to state, local, and tribal governments under entitlement authority,” if the provision would “increase the stringency of conditions of assistance” or “place caps upon, or otherwise decrease, the Federal Government's responsibility to provide funding” and the state, local, or tribal governments “lack authority” to adjust accordingly. (At the time of enactment, these entitlement programs were: Medicaid; Aid to Families with Dependent Children work programs; Child Nutrition; Food Stamps; Social Services Block Grants; Vocational Rehabilitation State Grants; Foster Care, Adoption Assistance, and Independent Living; Family Support Welfare Services; and Child Support Enforcement.)
“Federal private sector mandate” includes a regulation that “would impose an enforceable duty upon the private sector, except (i) a condition of Federal assistance; or (ii) a duty arising from participation in a voluntary Federal program.” The designation of critical habitat does not impose a legally binding duty on non-Federal government entities or private parties. Under the ESA, the only regulatory effect is that Federal agencies must ensure that their actions do not destroy or adversely modify critical habitat under section 7. While non-Federal entities which receive Federal funding, assistance, permits or otherwise require approval or authorization from a Federal agency for an action may be indirectly impacted by the designation of critical habitat, the legally binding duty to avoid destruction or adverse modification of critical habitat rests squarely on the Federal agency. Furthermore, to the extent that non-Federal entities are indirectly impacted because they receive Federal assistance or participate in a voluntary Federal aid program, the Unfunded Mandates Reform Act would not apply; nor would critical habitat shift the costs of the large entitlement programs listed above to state governments.
(b) Due to the existing protection afforded to the designated critical habitat from existing critical habitat for salmon (70 FR 52630; September 2, 2005), Southern DPS of green sturgeon (74 FR 52300; October 9, 2009), bull trout (70 FR 56212; September 26, 2005), and the southern resident killer whale (71 FR 69054; November 29, 2006), we do not anticipate that this rule will significantly or uniquely affect small governments. As such, a Small Government Agency Plan is not required.
Under Executive Order 12630, Federal agencies must consider the effects of their actions on constitutionally protected private property rights and avoid unnecessary takings of property. A taking of property includes actions that result in physical invasion or occupancy of private property, and regulations imposed on private property that substantially affect its value or use. In accordance with Executive Order 12630, this final rule does not have significant takings implications. A takings implication assessment is not required. The designation of critical habitat affects only Federal agency actions. We do not expect the critical habitat designations will impose additional burdens on land use or affect property values. Additionally, the critical habitat designations do not preclude the development of Conservation Plans and issuance of incidental take permits for non-Federal actions. Owners of areas included within the critical habitat designations would continue to have the opportunity to use their property in ways consistent with the survival of listed rockfishes.
In accordance with Executive Order 13132, we determined that this final rule does not have significant Federalism effects and that a Federalism assessment is not required. In keeping with Department of Commerce policies, we request information from, and will continue to coordinate with, appropriate state resource agencies in Washington regarding this critical habitat designation. The designations may have some benefit to state and local resource agencies in that the areas essential to the conservation of the species are more clearly defined, and the essential features of the habitat necessary for the survival of the subject DPSs are specifically identified. It may also assist local governments in long-range planning (rather than waiting for case-by-case ESA section 7 consultations to occur).
Pursuant to Executive Order 13175 and Secretarial Order 3206, we contacted the affected Indian Tribes when considering the designation of critical habitat in an area that may impact tribal trust resources, tribally owned fee lands or the exercise of tribal rights. The responding tribes expressed
For the general reasons described in the Impacts to Tribal Sovereignty and Self-Governance section above, the ESA Section 4(b)(2) analysis has led us to exclude of all Indian lands in our critical habitat designations for yelloweye rockfish, canary rockfish, and bocaccio.
The Department of Commerce has determined that this final rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of Executive Order 12988. We are designating critical habitat in accordance with the provisions of the ESA. This rule uses standard property descriptions and identifies the essential features within the designated areas to assist the public in understanding the habitat needs of yelloweye rockfish, canary rockfish, and bocaccio of the Puget Sound/Georgia Basin.
This final rule does not contain new or revised information collection requirements for which OMB approval is required under the Paperwork Reduction Act (PRA). This rule will not impose recordkeeping or reporting requirements on state or local governments, individuals, businesses, or organizations. Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.
We have determined that an environmental analysis as provided for under NEPA is not required for critical habitat designations made pursuant to the ESA. See
Under section 307(c)(1)(A) of the CZMA (16 U.S.C. 1456(c)(1)(A)) and its implementing regulations, each Federal activity within or outside the coastal zone that has reasonably foreseeable effects on any land or water use or natural resource of the coastal zone shall be carried out in a manner which is consistent to the maximum extent practicable with the enforceable policies of approved State coastal management programs. We have determined that any coastal effects of this proposed designation of critical habitat on Washington State coastal uses and resources are not reasonably foreseeable at this time. This proposed designation does not restrict any coastal uses, affect land ownership, or establish a refuge or other conservation area; rather the designation only affects the ESA section 7 consultation process. Through the consultation process, we will receive information on proposed Federal actions and their effects on listed rockfishes and the designated critical habitat upon which we base our consultation. It will then be up to the Federal action agencies to decide how to comply with the ESA in light of our opinion, as well as to ensure that their actions comply with the CZMA's Federal consistency requirement. At this time, we do not anticipate that this designation is likely to result in any additional management measures by other Federal agencies. We have determined that this proposed designation of critical habitat is consistent to the maximum extent practicable with the enforceable policies of the approved coastal management programs of Washington State. The determination has been submitted to the responsible agencies in the aforementioned states for review.
A complete list of all references cited in this rulemaking can be found on our Web site at
Endangered and threatened species.
For the reasons set out in the preamble, 50 CFR part 226 is amended to read as follows:
16 U.S.C. 1533.
Critical habitat is designated in the following states and counties for the following DPSs as depicted in the maps below and described in paragraphs (a) through (d) of this section. The maps can be viewed or obtained with greater resolution (
(a) Critical habitat is designated for the following DPSs in the following state and counties:
(b)
(c)(1)
(i) Quantity, quality, and availability of prey species to support individual growth, survival, reproduction, and feeding opportunities; and
(ii) Water quality and sufficient levels of dissolved oxygen to support growth, survival, reproduction, and feeding opportunities.
(2) Nearshore areas are contiguous with the shoreline from the line of extreme high water out to a depth no greater than 30 meters (98 ft) relative to mean lower low water.
(d)
(1) Quantity, quality, and availability of prey species to support individual growth, survival, reproduction, and feeding opportunities;
(2) Water quality and sufficient levels of dissolved oxygen to support growth, survival, reproduction, and feeding opportunities; and
(3) The type and amount of structure and rugosity that supports feeding opportunities and predator avoidance.