Agricultural Marketing Service
Forest Service
Census Bureau
International Trade Administration
National Institute of Standards and Technology
National Oceanic and Atmospheric Administration
National Telecommunications and Information Administration
Army Department
Centers for Medicare & Medicaid Services
Children and Families Administration
Food and Drug Administration
Health Resources and Services Administration
Indian Health Service
National Institutes of Health
Coast Guard
Bureau of Safety and Environmental Enforcement
Land Management Bureau
National Park Service
Ocean Energy Management Bureau
Antitrust Division
Justice Programs Office
Federal Aviation Administration
Federal Railroad Administration
Maritime Administration
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions.
Office of the Secretary, USDA.
Final rule.
This document amends the existing delegations of authority to provide for the designation of First Assistants to positions to which appointment is required to be made by the President with the advice and consent of the Senate.
Effective July 15, 2016.
Melissa McClellan, Office of the General Counsel, USDA, 3311-South Bldg., 1400 Independence Avenue SW., Washington, DC 20250, (202) 720–9425,
Section 3345 of title 5, United States Code, provides that when an officer of an Executive agency whose appointment is required to be made by the President with the advice and consent of the Senate dies, resigns, or is otherwise unable to perform the functions and duties of the office, the first assistant to the office of such officer (“First Assistant”) may perform temporarily the functions and duties of the office in an acting capacity. This rule authorizes the Secretary to establish a First Assistant to each office within the Department of Agriculture to which appointment is required to be made by the President with the advice and consent of the Senate (“PAS office”).
If there is a principal deputy position to the PAS office, the principal deputy position is the First Assistant. If there is no position with the title “principal deputy,” but there is one, and only one, deputy position to the PAS office, that deputy position is the First Assistant. If there is more than one deputy position to the PAS office, and the delegations of authority by the Secretary published in part 2 of title 7 of the CFR establish which deputy has the authority to perform all the duties and exercise all the powers of the PAS office, then that deputy delegated such authority is the First Assistant.
If there is no position or deputy that qualifies as a First Assistant under these tests, then the Secretary may designate in writing a First Assistant position to the PAS office, with the exception of the Inspector General.
This rule relates to internal agency management. Accordingly, pursuant to 5 U.S.C. 553, notice of proposed rulemaking and opportunity for comment are not required, and this rule may be made effective less than 30 days after publication in the
Authority delegations (Government agencies).
Accordingly, 7 CFR part 2 is amended as follows:
7 U.S.C. 6912(a)(1); 5 U.S.C. 301; Reorganization Plan No. 2 of 1953, 3 CFR 1949–1953 Comp., p. 1024.
(a) Every office within the Department to which appointment is required to be made by the President with the advice and consent of the Senate (“PAS Office”) may have a First Assistant within the meaning of 5 U.S.C. 3345–3349d.
(1) Where there is a position of principal deputy to the PAS Office, the principal deputy shall be the First Assistant.
(2) Where there is only one deputy position to the PAS Office, the official in that position shall be the First Assistant.
(3) Where there is more than one deputy position to the PAS Office, and this part establishes which deputy is delegated the authority to perform all the duties and exercise all the powers of the PAS Office during the absence or unavailability of the PAS official, the deputy delegated such authority shall be the First Assistant.
(4) Where neither paragraph (a)(1), (2), nor (3) of this section is applicable to the PAS Office, except as provided in paragraph (b) of this section, the Secretary may designate in writing the First Assistant position.
(b) The Inspector General of the Department shall determine any arrangements for the temporary performance of the functions and duties of the Inspector General when that office is vacant.
Nuclear Regulatory Commission.
Final rule; correcting amendments.
The U.S. Nuclear Regulatory Commission (NRC) published a final rule in the
This rule is effective on July 15, 2016.
Please refer to Docket ID NRC–2008–0664 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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•
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Michele Kaplan, Office of the Chief Financial Officer, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, telephone: 301–415–5256, email:
The NRC published a final rule in the
Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive the normal notice and comment requirements if it finds, for good cause, that they are impracticable, unnecessary, or contrary to the public interest. As authorized by 5 U.S.C. 553(b)(3)(B), the NRC finds good cause to waive notice and opportunity for comment on the amendments because they will have no substantive impact and are of a minor and administrative nature dealing with corrections to certain CFR sections related only to management, organization, procedure, and practice. Specifically, these amendments are to correct grammatical errors and to revise cross-references to comply with the Office of the Federal Register's Document Drafting Handbook. These amendments do not require action by any person or entity regulated by the NRC. Also, the final rule does not change the substantive responsibilities of any person or entity regulated by the NRC. Furthermore, for the reasons stated above, the NRC finds, pursuant to 5 U.S.C. 553(d)(3), that good cause exists to make this rule effective upon publication of this notice.
In FR Doc. 2016–11975 appearing on page 32617 in the
1. On page 32628, in the first column, the signature date is corrected to read as follows: Dated at Rockville, Maryland, this 6th day of May, 2016.
Annual charges, Byproduct material, Holders of certificates, registrations, approvals, Intergovernmental relations, Nonpayment penalties, Nuclear materials, Nuclear power plants and reactors, Source material, Special nuclear material.
For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is adopting the following correcting amendments to 10 CFR part 171:
Atomic Energy Act of 1954, secs. 11, 161(w), 223, 234 (42 U.S.C. 2014, 2201(w), 2273, 2282); Energy Reorganization Act of 1974, sec. 201 (42 U.S.C. 5841); 42 U.S.C. 2214; 44 U.S.C. 3504 note.
(e)(1) Each person holding an operating license for an SMR issued under 10 CFR part 50 or a combined license issued under 10 CFR part 52 after the Commission has made the finding under 10 CFR 52.103(g), shall pay the annual fee for all licenses held for an SMR site. The annual fee will be determined using the cumulative licensed thermal power rating of all SMR units and the bundled unit concept, during the fiscal year in which the fee is due. For a given site, the use of the bundled unit concept is independent of the number of SMR plants, the number of SMR licenses issued, or the sequencing of the SMR licenses that have been issued.
For the Nuclear Regulatory Commission.
Federal Aviation Administration (FAA), DOT.
Final special conditions.
These special conditions are issued for the Cirrus Design Corporation (Cirrus), model SF50 airplane. This airplane will have a novel or unusual design feature(s) associated with a whole airplane parachute recovery system. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
These special conditions are effective August 15, 2016 and are applicable on July 6, 2016.
Mr. Bob Stegeman, Federal Aviation Administration, Aircraft Certification Service, Small Airplane Directorate, ACE–111, 901 Locust; Kansas City, Missouri 64106; telephone (816) 329–4140; facsimile (816) 329–4090.
On September 9, 2008, Cirrus Design Corporation applied for a type certificate for their new SF50 airplane. The SF50 is a seven seat (five adults and two children), pressurized, retractable gear, carbon composite, single engine jet airplane. The airplane will have a Maximum Take-Off Weight of 6,000 pounds, a Maximum Operating Speed of 250 Knots Calibrated Airspeed (KCAS), and a Maximum Operating Altitude of 28,000 feet.
Cirrus intends to install a whole airplane ballistic parachute system (BPS) called the Cirrus Airframe Parachute System (CAPS). This installation couples the BPS with the automatic flight controls. The CAPS will be installed as standard equipment on the SF50 airplane. Unlike the SR20 and SR22 airplanes CAPS, the SF50 CAPS is a supplemental system and no credit for the system will be used to meet part 23 requirements. The SF50 CAPS design will require some performance enhancements over existing technology used in other BPS.
The system will consist of the recovery parachute, activation and deployment systems, and autopilot functions. The SF50 CAPS will be designed for a higher gross weight, maximum activation speed, and maximum operating altitude.
Whole airplane parachute recovery systems are intended to save the lives of the occupants in life-threatening situations for which normal emergency procedures have been exhausted. Potential emergencies include, but are not limited to—loss of power or thrust; loss of airplane control; pilot disorientation; pilot incapacitation with a passenger on board; mechanical or structural failure; icing; and accidents resulting from pilot negligence or error. The recovery system should prioritize protection from most probable hazards, but it is not reasonable to expect it to protect occupants from every possible situation.
This technology, which was originally developed for ultralight and experimental aircraft, was first approved for general aviation airplanes with a Supplemental Type Certificate for the Cessna model 150/152 airplanes. The FAA issued special conditions for these airplanes to incorporate ballistic recovery systems on October 22, 1987 (Special Condition No. 23–ACE–33; Ballistic Recovery System, Inc., Modified Cessna 150/A150 Series Airplanes and 152/A152 Model Airplanes to Incorporate the GARD–150 System; Docket No. 037CE) (FR Doc. 87–26420, November 11, 1987). These special conditions were later modified for the other general aviation airplanes (Special Condition No. 23–ACE–76; Ballistic Recovery Systems, Modified for Small General Aviation Airplanes; Docket No. 118CE) (FR Doc. 94–16233, August 5, 1994), including the Cirrus Design Corporation SR20 airplanes (Special Condition No. 23–ACE–88, Ballistic Recovery Systems Cirrus SR20 Installation, Docket No. 136CE) (FR Doc. 97–27504, October 15, 1997).
The previously FAA-approved BPS consists of a parachute packed in a compartment within the airframe. A solid propellant rocket motor, adjacent to the parachute pack, extracts the parachute. A mechanical pull handle mounted within reach of the pilot and copilot or passenger activates the system. At least two separate independent actions are necessary to activate the system.
In addition to a normal BPS, the SF50 CAPS system will incorporate an airbag to assist deployment and a system for sequencing deployment and interfacing with the airplane's avionics. The avionics interface is intended to bring the airplane within a valid deployment envelope speed (67–160 KCAS).
The SF50 CAPS is a non-required system that differs from other BPS in that it will interact with the flight control system and other airplane systems. The baseline special conditions must incorporate the required level of safety for the normal BPS as well as the aspect that interfaces with the airplane. Since it is a non required system, additional latitude exists to evaluate and substantiate the system so it will present no additional hazards.
Under the provisions of 14 CFR 21.17, Cirrus Design Corporation must show that the SF50 meets the applicable provisions of part 23, as amended by amendments 23–1 through 23–62 thereto.
If the Administrator finds that the applicable airworthiness regulations (
In addition to the applicable airworthiness regulations and special conditions, the SF50 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36 and the FAA must issue a finding of regulatory adequacy under section 611 of Public Law 92–574, the “Noise Control Act of 1972.”
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.17(a)(2).
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.
The SF50 will incorporate the following novel or unusual design features: A whole-airplane parachute recovery system that is a supplemental safety system and unlike any previously approved BPS, will add enhancements that assist deployment and autopilot functions that work to bring the airplane into an acceptable deployment envelope.
This system is a non-required system that will interact with the flight control system. These special conditions must incorporate the required level of safety for the normal ballistic parachute system as established by Special Condition 23–ACE–76 in addition to the aspect that interfaces with the airplane.
The FAA revised § 23.1309, Equipment, systems, and installations, in amendment 23–62 (76 FR 75736, December 2, 2011) to address two different types of equipment and systems installed in the airplane. This system operates at the limit of the normal operating envelope and challenges normal expectations of such a supplemental system. Amendment 23–62 preamble states: Section 23.1309 lists the qualifiers “under the airplane operating and environmental conditions”.
Section 23.1309, amendment 23–62 preamble also describes two actions for the applicant. First, the applicant must consider the full normal operating envelope of the airplane, as defined by the Airplane Flight Manual, with any modification to that envelope associated with abnormal or emergency procedures and any anticipated flightcrew action. Second, the applicant must consider the anticipated external and internal airplane environmental conditions, as well as any additional conditions where equipment and systems are assumed to “perform as intended”.
Section 23.1309(a)(2) requires analysis of any installed equipment or system with potential failure conditions that are catastrophic, hazardous, major, or minor, to determine their impact on the safe operation of the airplane. The applicant must show that they do not adversely affect proper functioning of the equipment, systems, or installations covered by § 23.1309 and do not otherwise adversely influence the safety of the airplane or its occupants.
Section 23.1309(a)(2) does not mandate that non-required equipment and systems function properly during all airplane operations once in service, provided all potential failure conditions have no effect on the safe operation of the airplane. The equipment or system must function in the manner expected by the manufacturer's operating manual for the equipment or system. An applicant's statement of intended function must be sufficiently detailed so the FAA can evaluate whether the system is appropriate for its intended function(s).
To incorporate the intent of amendment 23–62, the FAA issues these special conditions to include previous BPS special conditions, address the interaction CAPS with other airplane systems, and that it is a non-required system. The system must function within specified manufacturer's limits while operated within the manufacturers recommended envelope. Since it is a non-required system, the means of substantiation have been altered to reflect the bounds of the operating envelope, the means of analysis that can be substantiated with overlapping lower-level testing/analysis, and relieve in-flight deployment to avoid unnecessary expense and the inherent danger in performing this test.
All special condition requirements must meet two fundamental criteria:
• The installed system must not introduce unacceptable hazards prior to or after activation.
• The applicant must show that the system does not adversely affect proper functioning of the equipment, systems, or installations covered by § 23.1309 and do not otherwise adversely influence the safety of the airplane or its occupants.
Notice of proposed special conditions No. 23–16–01–SC for the Cirrus Design Corporation SF50 airplanes was published in the
The process of an applicant showing compliance to these BPS system special conditions is a complex and multi-tiered process. The applicant must conservatively demonstrate each function of the entire deployment event sequentially, from pulling the handle to securing the airplane after ground impact, to meet the special conditions. These separate events and functions can be demonstrated to satisfy the requirements of these special conditions with lower-level testing, normally using analysis supported by test. This is consistent with certification methods used on many other parts of the airplane.
The FAA decision to allow a means of compliance without requiring inflight deployment on a test airplane is not a complete elimination of testing or an evaluation of the system. The FAA believes that test or analysis supported by test will provide an acceptable level of safety to demonstrate that the system will perform its intended function; therefore, no in-flight deployment on a test airplane will be required.
The Cirrus SF50 BPS is a non-required safety device intended to improve occupant survivability in emergencies and under extreme conditions. The certification requirements contained in these special conditions are consistent with the requirements of §§ 23.1301(a) and 23.1309(a) for equipment that is not required for type certification or by the operating rules. Because the BPS is non-required equipment, its design must be shown to be appropriate for the intended function and it must not adversely affect safety. The FAA Aircraft Certification Service has evaluated the intended function, design, and installation of the SF50 BPS, and has considered what is required to meet an acceptable confidence level.
The potential operational decision to deploy the BPS in service would be the result of an emergency, one that will invariably result in a controlled crash. While the BPS is expected to improve occupant survivability in an emergency, the residual risk to the occupants is not completely eliminated. The primary hazard introduced while performing a comprehensive BPS flight test is the risk to the flight test crew when exposed to controlled crash conditions during a successful deployment. The FAA has determined the requirement to demonstrate the BPS via testing or testing supported by analysis to be “appropriate for the intended function and does not adversely affect safety”. Therefore, the FAA will not require a comprehensive flight test deployment.
Another commenter requested clarification of paragraph 1(c)(3), regarding definition of occupant protection after aircraft structure damage. To clarify, the FAA's intent of this paragraph was to ensure that the cabin can protect the occupants after a normal deployment even if the cabin experiences damage resulting from the deployment process or as a result of ground impact. The paragraph does not
As discussed above, these special conditions are applicable to the SF50. Should Cirrus apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, the special conditions would apply to that model as well.
Under standard practice, the effective date of final special conditions would be 30 days after the date of publication in the
This action affects only certain novel or unusual design features on one model of airplane. It is not a rule of general applicability and it affects only the applicant who applied to the FAA for approval of these features on the airplane.
Aircraft, Aviation safety, Signs and symbols.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 14 CFR 11.38, 11.39, 21.16 and 21.17.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Cirrus SF50 airplanes.
1. Whole Airplane Parachute Recovery System With Flight Control and Deployment Augmentation.
(a) System Validation.
(1) The applicant must demonstrate by test, or analysis supported by test, that the system will not cause an unacceptable hazard or otherwise exceed the system deployment design loads for the critical flight conditions.
(2) The recovery system activation envelope must include speeds at or near V
(b) Occupant Restraint.
Each seat in the airplane must be equipped with an approved restraint system, which will protect the occupants from serious head and upper torso injuries during a recovery system deployment and ground impact at the critical load conditions.
(c) Parachute Performance.
(1) A 1.5 factor of safety applied to the limit load must be used for all components of the recovery system as well as the attachment structure, the cabin structure surrounding the occupants, and any interconnecting structure of the airplane. Limit loads are defined as the parachute deployment forces developed within the operational envelope of the system. Lower factors of safety for airplane weight and velocity may be used, so that when combined in the energy equation, represent a 1.5 factor of safety of the energy equation.
(2) Stitching must be of a type that will not ravel when broken.
(3) The applicant must show via test, or analysis supported by test, that with the recovery parachute deployed and the airplane structure damaged, the airplane impact during touchdown will result in an occupant environment in which serious injury to the occupants is improbable.
(4) The applicant must show via test, or analysis supported by test, that with the recovery parachute deployed, the airplane can impact the ground in various adverse weather conditions, including winds up to 15 knots, without endangering the airplane occupants at and after touchdown.
(d) System Function and Operations.
(1) The installation design and location of the extraction device must consider fire hazards associated with the activation of the parachute system and reduce this potential as much as possible without compromising function of the extraction device.
(2) A system safety analysis will be conducted on the recovery system that will consider the effects of annunciated and un-annunciated failures. This analysis will address both losses of function as well as malfunction (including un-commanded system activation). The applicant must show that they do not adversely affect proper functioning of the equipment, systems, or installations covered by § 23.1309, and do not otherwise adversely influence the safety of the airplane or its occupants. It must be shown that reliable and functional deployment in the adverse weather conditions that the airplane is approved for have been considered. For example, if the airplane is certified for flight in icing conditions, and flight test in icing reveals that ice may cover the deployment area, then the possible adverse effects of ice or an ice layer covering the parachute deployment area should be analyzed.
(3) The recovery system must be designed to safeguard against inadvertent activation. Two separate and intentional actions will be required to activate the system.
(4) It must be demonstrated that the system can be activated without difficulty by occupants of various sizes, from a 10th percentile female to a 90th percentile male, while sitting in the pilot or copilot seat.
(5) The system must be labeled for identification, function, and operating limitations.
(6) The airplane must be equipped with ASTM F 2316–06 conforming placards suitable to draw attention of first responders. Section 11 of ASTM F 2316–06, specifies that the airplane should be marked with a “danger” placard placed adjacent to the exit point of each rocket/parachute, an “identifying” placard attached to each rocket, and “warning” placard(s) applied where occupant(s) enter the airplane or where rescue personnel can readily see the placard(s).
(e) Design and Construction.
(1) All components of the system must be protected against deterioration due to weathering, corrosion, and abrasion.
(2) Adequate provisions must be made for ventilation and drainage of the system compartments and associated structure to ensure the sound condition of the system.
(f) Materials and workmanship.
(1) The suitability and durability of materials used for parts, the failure of which could adversely affect safety, must—
i. Be established by experience or tests;
ii. Meet approved specifications that ensure their having the strength and other properties assumed in the design data; and
iii. Take into account the effects of environmental conditions, such as temperature and humidity, expected in service.
(2) Workmanship must be of a high standard.
(3) The parachute(s) must be identified with a data panel that defines the Manufacturer, Date of Manufacture, Part Number, and Serial Number.
(g) Systems Maintenance and Inspection.
(1) Instructions for continued airworthiness must be prepared for the system that meet the requirements of § 23.1529.
(2) Adequate means must be provided to permit the close examination of the system components to ensure proper functioning, alignment, lubrication, and adjustment during the required inspection of the system.
(h) Operating Limitations.
(1) Operating limitations must be prescribed to ensure proper operation of the system. A detailed discussion of the system, including operation, limitations, and deployment envelope must be included in the Airplane Flight Manual.
(2) Operating limitations must be prescribed for inspecting and overhauling the system components at approved intervals.
Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued for the Gulfstream Aerospace Corporation (Gulfstream) Model GVII–G500 airplane. This airplane will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport-category airplanes. This design feature is a digital systems architecture requiring isolation or protection from unauthorized internal access. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
This action is effective on Gulfstream on July 15, 2016. We must receive your comments by August 29, 2016.
Send comments identified by docket number FAA–2016–4237 using any of the following methods:
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Varun Khanna, FAA, Airplane and Flightcrew Interface Branch, ANM–111, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057–3356; telephone 425–227–1298; facsimile 425–227–1320.
The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions is unnecessary because the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon publication in the
We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.
We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.
On March 29, 2012, Gulfstream Aerospace Corporation applied for a type certificate for their new Model GVII–G500 airplane. The Model GVII–G500 airplane will be a business jet capable of accommodating up to 19 passengers. It will incorporate a low, swept-wing design with winglets and a T-tail. The powerplant will consist of two aft-fuselage-mounted Pratt & Whitney turbofan engines.
Under Title 14, Code of Federal Regulations (14 CFR) 21.17, Gulfstream must show that the Model GVII–G500 airplane meets the applicable provisions of 14 CFR part 25, as amended by Amendments 25–1 through 25–129.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, Model GVII–G500 airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36. The FAA must issue a finding of regulatory adequacy under § 611 of Public Law 92–574, the “Noise Control Act of 1972.”
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.17(a)(2).
The Model GVII–G500 airplane will incorporate the following novel or unusual design feature: A digital
Networks, both in safety-related and non-safety-related applications, have been implemented in existing commercial-production airplanes. However, network security considerations and functions have played a relatively minor role in the certification of such systems because of the isolation, protection mechanisms, and limited connectivity between these networks.
To provide an understanding of the airplane electronic equipment, systems, and assets, these special conditions use the concept of domains. However, this does not prescribe any particular architecture.
The aircraft-control domain consists of the airplane electronic systems, equipment, instruments, networks, servers, software and hardware components, databases, etc., which are part of the type design of the airplane and are installed in the airplane to enable the safe operation of the airplane. These can also be referred to as flight-safety-related systems, and include flight controls, communication, display, monitoring, navigation, and related systems.
The airline-information-services domain generally consists of functions that the airplane operator manages or controls, such as administrative functions, cabin-support functions, etc.
The passenger-information-services domain consists of all functions required to provide the passengers with information.
The Gulfstream Model GVII–G500 airplane design introduces the potential for access to aircraft-control domain and airline-information-services domain by unauthorized persons through the passenger-information-services domain; and the security vulnerabilities related to the introduction of viruses, worms, user mistakes, and intentional sabotage of airplane networks, systems, and databases.
For electronic systems-and-assets security in these domains, the level of protection provided against security threats should be based on a security-risk assessment, noting that the level of protection could differ between domains and within domains, depending on the security threat. For each security vulnerability and airplane electronic asset, Gulfstream should identify in which domain the asset will be addressed.
In addition, the operating systems for current airplane systems are usually and historically proprietary. Therefore, they are not as susceptible to corruption from worms, viruses, and other malicious actions as are more-widely used commercial operating systems, such as Microsoft Windows NT, because access to the design details of these proprietary operating systems is limited to the system developer and airplane integrator. Some systems installed on the Gulfstream Model GVII–500 will use operating systems that are widely used and commercially available from third-party software suppliers. The security vulnerabilities of these operating systems may be more widely known than are the vulnerabilities of proprietary operating systems that the avionics manufacturers currently use.
As discussed above, these special conditions are applicable to the Gulfstream Model GVII–G500 airplane. Should Gulfstream apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
This action affects only a certain novel or unusual design feature on one model series of airplanes. It is not a rule of general applicability.
The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, the FAA has determined that prior public notice and comment are unnecessary, and good cause exists for adopting these special conditions upon publication in the
The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Gulfstream Model GVII–G500 airplane.
1. Gulfstream must ensure that the Model GVII–G500 series airplane design provides isolation from, or airplane electronic-system security protection against, access by unauthorized sources internal to the airplane. The design must prevent inadvertent and malicious changes to, and all adverse impacts upon, airplane equipment, systems, networks, or other assets required for safe flight and operations.
2. Gulfstream must establish appropriate procedures to allow the operator to ensure that continued airworthiness of the Model GVII–G500 series airplane is maintained, including all post-type-certification modifications that may have an impact on the approved electronic-system security safeguards.
Pension Benefit Guaranty Corporation.
Final rule.
This final rule amends the Pension Benefit Guaranty Corporation's regulation on Benefits Payable in Terminated Single-Employer Plans to prescribe interest assumptions under the regulation for valuation dates in August 2016. The interest assumptions are used for paying benefits under terminating single-employer plans covered by the pension insurance system administered by PBGC.
Effective August 1, 2016.
Deborah C. Murphy (
PBGC's regulation on Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) prescribes actuarial assumptions—including interest assumptions—for paying plan benefits under terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions in the regulation are also published on PBGC's Web site (
PBGC uses the interest assumptions in Appendix B to Part 4022 to determine whether a benefit is payable as a lump sum and to determine the amount to pay. Appendix C to Part 4022 contains interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology. Currently, the rates in Appendices B and C of the benefit payment regulation are the same.
The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for August 2016.
The August 2016 interest assumptions under the benefit payments regulation will be 0.50 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for July 2016, these interest assumptions represent a decrease of 0.25 percent in the immediate annuity rate and are otherwise unchanged.
PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect current market conditions as accurately as possible.
Because of the need to provide immediate guidance for the payment of benefits under plans with valuation dates during August 2016, PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.
PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.
Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).
Employee benefit plans, Pension insurance, Pensions, Reporting and recordkeeping requirements.
In consideration of the foregoing, 29 CFR part 4022 is amended as follows:
29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.
Coast Guard, DHS.
Notice of temporary deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs Seattle Department of Transportation's (SDOT) Fremont Bridge, across the Lake Washington Ship Canal, mile 2.6, at Seattle, WA. The deviation is necessary to accommodate heavy pedestrian and cycling traffic across the bridge during the `Fun Ride' fundraising event. The deviation allows the bridge to remain in the closed-to-navigation position and need not open to maritime traffic.
This deviation is effective from 10:30 a.m. to 12:30 p.m. on August 14, 2016.
The docket for this deviation, [USCG–2016–0635] is available at
If you have questions on this temporary deviation, call or email Mr. Steven Fischer, Bridge Administrator, Thirteenth Coast Guard District; telephone 206–220–7282, email
Seattle Department of Transportation (SDOT) has requested a temporary deviation from the operating schedule for the Fremont Bridge, mile 2.6, crossing the Lake Washington Ship Canal at Seattle, WA. The deviation is necessary to accommodate heavy pedestrian and cycling traffic across the bridge during the `Fun Ride' fundraising event. To facilitate this event, the double bascule draw of the bridge will not open for vessel traffic during said date and time. The Fremont Bridge provides a vertical clearance of 14 feet (31 feet of vertical clearance for the center 36 horizontal feet) in the close-to-navigation position. The clearance is referenced to the mean water elevation of Lake Washington. The normal operating schedule for the Fremont Bridge is 33 CFR 117.1051. Waterway usage on the Lake Washington Ship Canal ranges from commercial tug and barge to small pleasure craft.
Vessels able to pass through the bridge in the closed-to-navigation position may do so at anytime. The bridge will be able to open for emergencies, and there is no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Metro-North Bridge across the Mianus River, mile 1.0, at Greenwich, Connecticut. This deviation is necessary to allow the bridge owner to perform superstructure repairs and replace timber ties.
This deviation is effective from 8 a.m. on September 12, 2016 to 8 a.m. on September 26, 2016.
The docket for this deviation, [USCG–2016–0632] is available at
If you have questions about this temporary deviation, call or email Judy Leung-Yee, Project Officer, First Coast Guard District, telephone (212) 514–4330, email
The Metro-North Bridge, mile 1.0, across the Mianus River, has a vertical clearance in the closed position of 20 feet at mean high water and 27 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.209.
The waterway is transited by seasonal recreational traffic.
Connecticut DOT, the owner of the bridge, requested a temporary deviation from the normal operating schedule to perform steel repairs and replace timber ties.
Under this temporary deviation, the Metro-North Bridge will operate according to the schedule below:
a. From September 12, 2016 8 a.m. to September 16, 2016 4 a.m. the bridge will not open to marine traffic.
b. From September 16, 2016 4 a.m. to September 19, 2016 8 a.m. the bridge will open fully on signal upon 24 hour advance notice.
c. From September 19, 2016 8 a.m. to September 23, 2016 4 a.m. the bridge will not open to marine traffic.
d. From September 23, 2016 4 a.m. to September 26, 2016 8 a.m. the bridge will open fully on signal upon 24 hour advance notice.
Vessels able to pass under the bridge in the closed position may do so at any time. The bridge will not be able to open for emergencies and there is no immediate alternate route for vessels to pass.
The Coast Guard will inform the users of the waterways through our Local Notice and Broadcast to Mariners of the change in operating schedule for the bridge so that vessel operations can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone on Lake Erie, Cleveland, OH. This safety zone is intended to restrict vessels from a portion of Lake Erie during the Lake Erie Open Water Classic open water swim on July 16, 2016. This temporary safety zone is necessary to protect swimmers from vessels operating in the area. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port Buffalo.
This rule is effective from 5:45 a.m. until 11:15 a.m. on July 16, 2016.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions about this proposed rulemaking, call or email LT Stephanie Pitts, Chief of Waterways Management, U.S. Coast Guard Marine Safety Unit Cleveland; telephone 216–937–0128, email
The Coast Guard is issuing this temporary 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 good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because doing so would be impracticable and contrary to the public interest. The final details for this event were not known to the Coast Guard until there was insufficient time remaining before the event to publish an NPRM. Thus, delaying the effective date of this rule to wait for a comment period to run would be both impracticable and contrary to the public interest because it would inhibit the Coast Guard's ability to protect spectators and vessels from the hazards associated with the presence of swimmers in open water.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this temporary rule effective less than 30 days after publication in the
The Coast Guard issues this rule under authority in 33 U.S.C. 1231. On July 16, 2016, between 5:45 a.m. and 11:15 a.m., a large scale swimming event will take place on Lake Erie in Cleveland, OH. The Captain of the Port Buffalo (COTP) has determined that a large scale swimming event on a navigable waterway will pose a significant risk to participants and the boating public. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone while the Open Water Classic is happening.
This rule establishes a safety zone from 5:45 a.m. to 11:15 a.m. on July 16, 2016. The safety zone will encompass all waters of Lake Erie, Cleveland, OH south of a line drawn between position 41°29′31″ N., 081°44′23″ W. and 41°29′24″ N., 081°45′05″ W. (NAD 83) to the shore. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The Captain of the Port or his designated representative may be contacted via VHF Channel 16.
We developed this rule after considering numerous statutes and executive orders (E.O.s) related to rulemaking. Below we summarize our analyses based on a number of these statutes and E.O.s, and we discuss First Amendment rights of protestors.
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 conclude that this rule is not a significant regulatory action because we anticipate that it will have minimal impact on the economy, will not interfere with other agencies, will not adversely alter the budget of any grant or loan recipients, and will not raise any novel legal or policy issues. The safety zone created by this rule will be relatively small and enforced for a relatively short time. Also, the safety zone is designed to minimize its impact on navigable waters. Under certain conditions, vessels may still transit through the safety zone when permitted by the Captain of the Port.
The Regulatory Flexibility Act of 1980, 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. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
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
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 E.O. 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 have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.
Also, this rule does not have tribal implications under E.O. 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. If you believe this rule has implications for federalism or Indian tribes, please 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.
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 (42 U.S.C. 4321–4370f), and have determined that 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 lasting less than 6 hours that will prohibit entry within a small area on Lake Erie. It 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
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a) The safety zone will encompass all waters of Lake Erie, Cleveland, OH south of a line drawn between position 41°29′31″ N., 081°44′23″ W. and 41°29′24″ N., 081°45′05″ W. (NAD 83) to the shore.
(b)
(c)
(2) This safety zone is closed to all vessel traffic, except as may be permitted by the Captain of the Port Buffalo or his designated on-scene representative.
(3) The “on-scene representative” of the Captain of the Port Buffalo is any Coast Guard commissioned, warrant or petty officer who has been designated by the Captain of the Port Buffalo to act on his behalf.
(4) Vessel operators desiring to enter or operate within the safety zone must contact the Captain of the Port Buffalo or his on-scene representative to obtain permission to do so. The Captain of the Port Buffalo or his on-scene representative may be contacted via VHF Channel 16. Vessel operators given permission to enter or operate in the safety zone must comply with all directions given to them by the Captain of the Port Buffalo, or his on-scene representative.
Federal Communications Commission.
Final rule; correction.
The Federal Communications Commission (FCC) published a
Effective July 15, 2016, except for the corrections to §§ 54.202, 54.405, 54.408, and 54.410, which contain information collection requirements that are not effective until approved by the Office of Management and Budget. The Federal Communications Commission will publish a separate document announcing such approval and the relevant effective date(s).
Christian Hoefly, Wireline Competition Bureau, Telecommunications Access Policy Division at (202) 418–3607 or at
In the
1. In the first column, paragraph 432 is corrected to read, “
2. In the second column, paragraph 433, remove “Sections 54.202(a)(6), (d), and (e) and 54.205(c)” and add in their place “Sections 54.202(a)(6), (d), and (e), 54.205(c), and 54.400(l)”.
3. In the second column, paragraph 434, add “54.400(f), (j), (m) through (o),” after “54.101”.
Office of Acquisition Management, Department of Energy.
Final rule.
The Department of Energy (DOE) is adopting as final, a rule amending the Department of Energy Acquisition Regulation (DEAR) to make technical and administrative changes to the DEAR, including changes to conform to the Federal Acquisition Regulation (FAR), remove out-of-date coverage, update references, and correct minor errors and omissions.
Lawrence Butler, U.S. Department of Energy, Office of Acquisition Management, MA–611, 1000 Independence Avenue SW., Washington, DC 20585–0121. Telephone: (202) 287–1945. Email:
The DEAR has outdated citations and minor errors of a technical nature. The objective of this final rule is to update the outdated citations and correct the errors and omissions in the existing DEAR to conform to the FAR. None of
DOE published a proposed rule at 80 FR 15737 on March 25, 2015; DOE did not receive any comments in response to the proposed rule. DOE made one change in the final rule in part 916. In the proposed rule, DOE proposed to change the title of the NNSA Task Order Ombudsman in Section 916.505, paragraph (b)(6)(i). However, DOE determined that because NNSA gets this authority from the delegations to the Senior Procurement Executive and Head of the Contracting Activity, it is not necessary to include it in the DEAR. Therefore, DOE has removed it from the final rule.
DOE amends the DEAR as follows:
1. Section 902.101, paragraph (2), is revised to change the title of the National Nuclear Security Administration (NNSA) Senior Procurement Executive (SPE).
2. Section 909.403, paragraphs (1) and (2), are revised to change the title of the NNSA SPE.
3. Section 916.505, paragraph (b)(6)(i), DOE proposed to change the title of the NNSA Task Order Ombudsman. However, DOE decided to remove the identification of the NNSA Task Order Ombudsman in the final rule because the delegations to the Senior Procurement Executive and the Head of the Contracting Activity allow NNSA to designate a task and delivery order ombudsman.
4. Section 917.602, paragraph (a), is revised to remove language that is no longer needed in the DEAR.
5. Section 922.804 is no longer needed in the DEAR and is removed.
6. Section 925.103, paragraph (a), is revised to correct the CFR reference.
7. Section 925.1001, paragraph (b), is revised to change the title of the NNSA SPE.
8. Section 931.205–18, paragraph (c)(2), is deleted in its entirety and replaced with a new paragraph (c).
9. Section 936.202–70 is no longer needed in the DEAR and is removed.
10. Section 942.705–3 is revised to update the circular number and remove the paragraph numbering.
11. Section 952.204–2, paragraph (j), is revised to inform contractors of the format for submitting Foreign Ownership, Control or Influence (FOCI) information. Paragraph (h)(2)(vi), is revised to remove Contractor requirement for submitting in writing information to the head of the cognizant local DOE Security Office concerning each uncleared applicant or uncleared employee who is selected for a position requiring an access authorization.
12. Section 952.204–73, paragraph (a), is revised to inform contractors of the format for submitting FOCI information.
13. Section 952.236–72 is no longer needed in the DEAR and is removed.
14. Section 952.250–70, paragraph (d)(1), is revised to raise the threshold as required by the Energy Policy Act of 2005.
15. Section 970.5215–3 is revised to update the Order number.
16. Section 970.5223–1 is revised to correct the prescription.
17. Section 970.5244–1, paragraph (f) is revised to reflect threshold increase in 48 CFR 28.102–2. Paragraph (g) is revised to reflect the threshold increase in DOE's class deviation for DEAR 970.5244–1.
18. Section 970.5245–1, Alternate I, paragraph (j)(3), is revised to update the Order number and to add language that clarifies the sentence.
This regulatory action has been determined not to be a “significant regulatory action” under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993). Accordingly, this final rule is not subject to review under that Executive Order by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB).
DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on January 18, 2011 (76 FR 3281 (Jan. 21, 2011)). Executive Order 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, agencies are required by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. DOE believes that this final rule is consistent with these principles, including the requirement that, to the extent permitted by law, agencies adopt a regulation only upon a reasoned determination that its benefits justify its costs and, in choosing among alternative regulatory approaches, those approaches maximize net benefits.
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996),
With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the United States Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or if it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.
The Regulatory Flexibility Act (5 U.S.C. 601
This final rule is to amend the DEAR to make technical and administrative changes as described in the summary. These changes are technical/minor in nature; therefore, DOE certifies that this rule would not have a significant economic impact on small entities because no substantive rights or obligations are altered by the amendment. Consequently, DOE did not prepare a regulatory flexibility analysis for this rulemaking.
This final rule does not impose a collection of information requirement subject to the Paperwork Reduction Act, 44 U.S.C. 3501
DOE has concluded that promulgation of this final rule falls into a class of actions which would not individually or cumulatively have significant impact on the human environment, as determined by DOE's regulations (10 CFR part 1021, subpart D) implementing the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321
Executive Order 13132, 64 FR 43255 (August 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. The Executive Order requires agencies to have an accountability process to ensure meaningful and timely input by state and local officials in the development of regulatory policies that have federalism implications.
On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations (65 FR 13735). DOE has examined the final rule and has determined that it does not preempt State law and does 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. No further action is required by Executive Order 13132.
The Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4) generally requires a Federal agency to perform a written assessment of costs and benefits of any rule imposing a Federal mandate with costs to State, local or tribal governments, or to the private sector, of $100 million or more. This rulemaking does not impose a Federal mandate on State, local or tribal governments or on the private sector.
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105–277), requires Federal agencies to issue a Family Policymaking Assessment for any rulemaking or policy that may affect family well-being. This rulemaking will have no impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use, 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to Office of Information and Regulatory Affairs (OIRA), of the Office of Management and Budget (OMB), a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. This final rule is not a significant energy action.
The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
Executive Order 13609 of May 1, 2012, “Promoting International Regulatory Cooperation,” requires that, to the extent permitted by law and consistent with the principles and requirements of Executive Order 13563 and Executive Order 12866, each Federal agency shall:
(a) If required to submit a Regulatory Plan pursuant to Executive Order 12866, include in that plan a summary of its international regulatory cooperation activities that are reasonably anticipated to lead to significant regulations, with an explanation of how these activities advance the purposes of Executive Order 13563 and this order;
(b) Ensure that significant regulations that the agency identifies as having significant international impacts are designated as such in the Unified Agenda of Federal Regulatory and Deregulatory Actions, on
(c) In selecting which regulations to include in its retrospective review plan, as required by Executive Order 13563, consider:
(i) Reforms to existing significant regulations that address unnecessary differences in regulatory requirements between the United States and its major trading partners, consistent with section 1 of this order, when stakeholders provide adequate information to the agency establishing that the differences are unnecessary; and
(ii) Such reforms in other circumstances as the agency deems appropriate; and
(d) For significant regulations that the agency identifies as having significant international impacts, consider, to the extent feasible, appropriate, and consistent with law, any regulatory approaches by a foreign government that the United States has agreed to consider under a regulatory cooperation council work plan.
DOE has reviewed this final rule under the provisions of Executive Order 13609 and determined that the rule complies with all requirements set forth in the order.
Issuance of this final rule has been approved by the Office of the Secretary of Energy.
As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).
Government procurement.
For the reasons set out in the preamble, the Department of Energy amends chapter 9 of title 48 of the Code of Federal Regulations as set forth below.
42 U.S.C. 7101
The revision reads as follows:
(b)
(ii) Proposals to add an article to the list of nonavailable articles at 48 CFR 25.104, with appropriate justifications, must be submitted for approval by the Senior Procurement Executive and submission to the appropriate council.
(c) In addition to all the other FAR requirements for allowability of IR&D costs, costs for IR&D are allowable under DOE contracts to the extent: They are not otherwise unallowable; and they have potential benefit or relationship to the DOE program. The term ”DOE program” encompasses the DOE total mission and its objectives. In addition to all the other FAR requirements for allowability of B&P costs, costs for B&P are allowable under DOE contracts to the extent they are not otherwise unallowable.
42 U.S.C. 2201; 2282a; 2282b; 2282c; 42 U.S.C. 7101
The revisions read as follows:
(h) * * *
(2) * * *
(vi) The Contractor must maintain a record of information concerning each uncleared applicant or uncleared employee who is selected for a position requiring an access authorization. Upon request only, the following information will be furnished to the head of the cognizant local DOE Security Office:
(j)
(a)
The revision reads as follows:
42 U.S.C. 2201; 2282a; 2282b; 2282c; 42 U.S.C. 7101
The revision reads as follows:
The revisions read as follows:
Office of the Secretary of Transportation (OST), U.S. Department of Transportation (DOT).
Final rule.
This final rule updates the regulations regarding classified information to reflect changes in organizational structure, update the legal authorities, incorporate new references, and refer historical researchers and former Presidential appointees to Executive Order 13526.
This final rule is effective July 15, 2016.
Joan Harris, Associate Director, Office of Security, 202–366–1827, or electronically at
A 2011 DOT final rule (76 FR 19707) announced changes regarding the authority to classify information, but did not update other parts of the rule. As a result, the Department's regulations at 49 CFR part 8 need to be updated. This final rule makes the following corrections: Executive Order 12958, “Classified National Security Information,” has been replaced by Executive Order 13526, so references to the outdated Executive Order have been removed. The “Interagency Classification Review Committee” is now the Interagency Security Classification Appeals Panel. As a result of reorganizations after the September 11, 2001, terrorist attacks, the U.S. Coast Guard is no longer a part of DOT, so references to that agency as a departmental component have been removed, and a representative from the Federal Highway Administration replaces the U.S. Coast Guard's representative on the Department's Personnel Security Review Board. This final rule also updates the names of some departmental offices, which have changed.
Section 8.19, which contained detailed instructions for submitting and processing requests for classification challenges and mandatory classification reviews, is also eliminated because of inconsistencies with the current regulations at 32 CFR 2001. Sections 8.15 (Mandatory review for classification) and 8.17 (Classification challenges) have been rewritten to cite the appropriate sections of 32 CFR 2001 regarding such requests.
The detailed instructions in Section 8.29, Access by historical researchers and former Presidential appointees, have been eliminated because they were outdated. Instead, the instructions have been replaced with a reference to Executive Order 13526, which describes the conditions that qualify such persons for access, and Executive Order 12968 which provides general guidelines for access to classified information.
This final rule is exempt from Administrative Procedure Act (APA) notice-and-comment requirements. This final rule does not affect any substantive changes to the regulations or alter any existing compliance obligations. This final rule would only make technical corrections to part 8 by correcting outdated references without affecting the substance of the underlying rulemaking document. For the reasons stated above, notice and comment procedures are unnecessary within the meaning of the APA. See 5 U.S.C. 553(b)(3)(B).
The Department finds good cause for this final rule to become effective immediately under 5 U.S.C. 553(d)(1). This final rule is only removing outdated, obsolete, and inconsistent language in the regulations without altering any existing compliance obligations contained in the current regulations. Since this final rule is nonsubstantive and will not affect any regulated entity's compliance with the current regulations, the Department finds good cause for it to become effective immediately.
The DOT has determined that this action is not a significant regulatory action within the meaning of Executive Order 12866, and within the meaning of DOT's regulatory policies and procedures. Since this rulemaking merely removes obsolete and inconsistent language and makes editorial corrections and does not have any substantive impact on the regulated community, DOT anticipates that this rulemaking will have no economic impact.
Additionally, this action fulfills the principles of Executive Order 13563, specifically those relating to retrospective analyses of existing rules. This rule is being issued as a result of the reviews of existing regulations that the Department periodically conducts. In addition, these changes will not interfere with any action taken or planned by another agency and would not materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs. Consequently, a full regulatory evaluation is not necessary.
Executive Order 13132 requires agencies to ensure meaningful and timely input by State and local officials in the development of regulatory policies that may 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. This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, dated August 4, 1999, and the DOT has determined that this action would not have a substantial direct effect or sufficient federalism implications on the States. The DOT has also determined that this action would not preempt any State law or regulation or affect the States' ability to discharge traditional State governmental functions. Therefore, consultation with the States is not necessary.
The DOT has analyzed this action under Executive Order 13175, dated November 6, 2000, and believes that the action would not have substantial direct effects on one or more Indian tribes, would not impose substantial direct compliance costs on Indian tribal governments, and would not preempt tribal laws. This final rule merely updates outdated terminology, and removes inconsistent language relating to compliance with the Department's classified information regulations. It does not impose any new requirements on Indian tribal governments. Therefore, a tribal summary impact statement is not required.
Since notice-and-comment rulemaking is not necessary for this rule, the provisions of the Regulatory Flexibility Act (Pub. L. 96–354, 5 U.S.C.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501,
This final rule would not impose unfunded mandates, as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4, 109 Stat. 48, March 22, 1995), as it will not result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $148.1 million or more in any one year (2 U.S.C. 1532).
The agency has analyzed the environmental impacts of this proposed action pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321
Classified Information (Government agencies), Classification/Declassification/Access (Government agencies).
For the reasons set forth in the preamble, OST amends 49 CFR part 8 as follows:
E.O. 10450, 18 FR 2489, 3 CFR, 1949–1953 Comp., p. 936, amended by E.O. 10491, 18 FR 6583, 3 CFR, 1949–1953 Comp., p. 973, E.O. 10531, 19 FR 3069, 3 CFR, 1949–1953 Comp., p. 973, E.O. 10548, 19 FR 4871, 3 CFR, 1954–1958 Comp., p. 200, E.O. 10550, 19 FR 4981, 3 CFR, 1954–1958 Comp., p. 200, E.O. 11605, 20 FR 2747, 3 CFR, 1971–1975 Comp., p. 580, E.O. 11785, 39 FR 20053, 3 CFR, 1971–1975 Comp., p. 874, E.O. 12107, 44 FR 1055, 3 CFR, 1978 Comp., p. 266; E.O. 12829, 58 FR 3479, 3 CFR, 1993 Comp., p. 570, amended by E.O. 12885, 58 FR 65863, 3 CFR, 1993 Comp., p. 684; E.O. 13526, 75 FR 707, 3 CFR, 2010 Comp., p. 298; E.O. 12968, 3 CFR, 1995 Comp., p. 391, amended by E.O. 13467, 73 FR 38103, 3 CFR, 2009 Comp., p. 196.
This part sets forth procedures for the classification, declassification, and availability of information that must be protected in the interest of national security, in implementation of Executive Order 13526 of December 29, 2010, “Classified National Security Information;” and for the review of decisions to revoke, or not to issue, national security information clearances, or to deny access to classified information, under Executive Order 12968 of August 2, 1995, “Access to National Security Information,” as amended by Executive Order 13467 of June 30, 2008, “Reforming Processes Related to Suitability for Government Employment, Fitness for Contractor Employees, and Eligibility for Access to Classified National Security Information.”
(a) Pursuant to section 5.4(d) of Executive Order 13526, and to section 6.1 of Executive Order 12968, the Assistant Secretary for Administration is hereby designated as the senior agency official of the Department of Transportation with assigned responsibilities to assure effective compliance with and implementation of Executive Order 13526, Executive Order 12968, Office of Management and
(a) The Department of Transportation Information Security Review Committee has the authority to:
(b) The Information Security Review Committee will be composed of the Assistant Secretary for Administration, who will serve as Chair; the General Counsel; and the Director of Security. When matters affecting a particular Departmental component are at issue, the Associate Administrator for Administration for that component (or for the Federal Aviation Administration, the Associate Administrator for Security and Hazardous Materials Safety) will participate as an ad hoc member, together with the Chief Counsel of that component. Any regular member may designate a representative with full power to serve in his/her place.
(a) Presidential Order of December 29, 2009, “Original Classification Authority” confers upon the Secretary of Transportation the authority to originally classify information as SECRET or CONFIDENTIAL with further authorization to delegate this authority.
(b) * * *
(1)
(2)
(c) Although the delegations of authority set out in paragraph (b) of this section are expressed in terms of positions, the authority is personal and is invested only in the individual occupying the position. The authority may not be exercised “by direction of” a designated official. The formal appointment or assignment of an individual to one of the identified positions or a designation in writing to act in the absence of one of these officials, however, conveys the authority to originally classify information as SECRET or CONFIDENTIAL.
(a) Mandatory declassification review requests will be processed in accordance with 32 CFR 2001.33.
(b) Except as provided in paragraph b of section 3.5 of Executive Order 13526, all information classified by the Department of Transportation under Executive Order 13526 or predecessor orders shall be subject to a review for declassification if:
(1) The request for review describes the information with sufficient specificity to enable its location with a reasonable amount of effort;
(2) The information has not been reviewed for declassification within the prior two years. If the information has been reviewed within the prior two years, or the information is the subject of pending litigation, the requestor will be informed of this fact, and of the Department's decision not to declassify the information and of his/her right to appeal the Department's decision not to declassify the information to the Interagency Security Classification Appeals Panel (ISCAP);
(3) The document or material containing the information responsive to the request is not contained within an operational file exempted from search and review, publication, and disclosure under 5 U.S.C. 552 in accordance with law; and
(4) The information is not the subject of pending litigation.
(c) All information reviewed for declassification because of a mandatory review will be declassified if it does not meet the standards for classification in Executive Order 13526. The information will then be released unless withholding is otherwise authorized and warranted under applicable law.
(d) Mandatory declassification review requests for information that has been classified by the Department of Transportation may be addressed to the Director of Security, U.S. Department of Transportation, 1200 New Jersey Avenue, Washington, DC 20590. The Director will forward the request to the appropriate Departmental Original Classification Authority for processing.
(e) Denied requests may be appealed to the DOT Information Security Review Committee (DISRC) through the Director of Security within 60 days of receipt of the denial. If the DISRC upholds the denial, it will inform the requestor of his or her final appeal rights to the ISCAP.
(a) Authorized holders of information classified by the Department of Transportation who, in good faith, believe that its classification status is improper are encouraged and expected to challenge the classification status of the information before the Original Classification Authority (OCA) having jurisdiction over the information. A formal challenge must be in writing, but need not be any more specific than to question why information is or is not classified, or is classified at a certain level.
(b) Classification challenges to DOT information must be addressed to the DOT Original Classification Authority (OCA) who is responsible for the information. If unsure of the OCA, address the challenge to the DOT Director of Security.
(c) Classification challenges will be processed according to 32 CFR 2001.14.
(a) The Department of Transportation Personnel Security Review Board will, on behalf of the Secretary of Transportation (except in any case in which the Secretary personally makes the decision), make the administratively final decision on an appeal arising in any part of the Department from:
(b) * * *
(1) Two persons appointed by the Assistant Secretary for Administration: One from the Office of Human Resource Management, and one, familiar with personnel security adjudication, from the Office of Security, who will serve as Chair;
(2) One person appointed by the General Counsel, who, in addition to serving as a member of the Board, will provide to the Board whatever legal services it may require;
(3) One person appointed by the Administrator of the Federal Aviation Administration; and
(4) One person appointed by the Administrator of the Federal Highway Administration.
(5) Any member may designate a representative, meeting the same criteria as the member, with full power to serve in his/her place.
Access to classified information may be granted to historical researchers and former Presidents and Vice-Presidents and their appointees as outlined in Executive Order 13526 or its successor order. The general guidelines for access to classified information are contained in Executive Order 12968.
The addition reads as follows:
(b) * * * Specifically, this regulation is DOD 5220.22–M, National Industrial Security Program Operating Manual, and is effective within the Department of Transportation. Appropriate security staff, project personnel, and contracting officers must assure that actions required by the regulation are taken.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; fishery closure.
NMFS is closing the U.S. pelagic longline fishery for bigeye tuna in the western and central Pacific Ocean because the fishery has reached the 2016 catch limit. This action is necessary to ensure compliance with NMFS regulations that implement decisions of the Western and Central Pacific Fisheries Commission (WCPFC).
Effective 12:01 a.m. local time July 22, 2016, through December 31, 2016.
NMFS prepared a plain language guide and frequently asked questions that explain how to comply with this rule; both are available at
Ariel Jacobs, NMFS Pacific Islands Region, 808–725–5182.
Pelagic longline fishing in the western and central Pacific Ocean is managed, in part, under the Western and Central Pacific Fisheries Convention Implementation Act (Act). Regulations governing fishing by U.S. vessels in accordance with the Act appear at 50 CFR part 300, subpart O.
NMFS established a calendar year 2016 limit of 3,554 metric tons (mt) of bigeye tuna (
In accordance with 50 CFR 300.224(e), this rule serves as advance notification to fishermen, the fishing industry, and the general public that the U.S. longline fishery for bigeye tuna in the Convention Area will be closed during the dates provided in the
During the closure, a U.S. fishing vessel may not retain on board, transship, or land bigeye tuna caught by longline gear in the Convention Area, except that any bigeye tuna already on board a fishing vessel upon the effective date of the restrictions may be retained on board, transshipped, and landed, provided that they are landed within 14 days of the start of the closure, that is, by August 5, 2016. This 14-day landing requirement does not apply to a vessel that has declared to NMFS, pursuant to 50 CFR 665.803(a), that the current trip type is shallow-setting.
Longline-caught bigeye tuna may be retained on board, transshipped, and landed if the fish are caught by a vessel with a valid American Samoa longline permit, or landed in the territories. In either case, the following conditions must be met:
(1) The fish is not caught in the U.S. Exclusive Economic Zone (EEZ) around Hawaii;
(2) Other applicable laws and regulations are followed; and
(3) The vessel has a valid permit issued under 50 CFR 660.707 or 665.801.
Bigeye tuna caught by longline gear during the closure may also be retained on board, transshipped, and/or landed if they are caught by a vessel that is included in a specified fishing agreement under 50 CFR 665.819(c), in accordance with 50 CFR 300.224(f)(1)(iv).
During the closure, a U.S. vessel is also prohibited from transshipping bigeye tuna caught in the Convention Area by longline gear to any vessel other than a U.S. fishing vessel with a valid permit issued under 50 CFR 660.707 or 665.801.
The catch limit and this closure do not apply to bigeye tuna caught by longline gear outside the Convention Area, such as in the eastern Pacific
(1) Longline fishing both inside and outside the Convention Area is not allowed during the same fishing trip. An exception would be a fishing trip that is in progress on July 22, 2016. In that case, the catch of bigeye tuna must be landed by August 5, 2016; and
(2) If a longline vessel fishes outside the Convention Area and the vessel then enters the Convention Area during the same fishing trip, the fishing gear must be stowed and not readily available for fishing in the Convention Area. Specifically, hooks, branch lines, and floats must be stowed and the mainline hauler must be covered.
The above two additional prohibitions do not apply to the following vessels:
(1) Vessels on declared shallow-setting trips pursuant to 50 CFR 665.803(a); and
(2) Vessels operating in the longline fisheries of the territories. This includes vessels included in a specified fishing agreement under 50 CFR 665.819(c), in accordance with 50 CFR 300.224(f)(1)(iv). This group also includes vessels with valid American Samoa longline permits and vessels landing bigeye tuna in one of the territories, as long as the bigeye tuna were not caught in the EEZ around Hawaii, the fishing was compliant with all applicable laws, and the vessel has a valid permit issued under 50 CFR 660.707 or 665.801.
There is good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment on this action, because it would be contrary to the public interest. This rule closes the U.S. longline fishery for bigeye tuna in the western and central Pacific as a result of reaching the applicable bigeye tuna catch limit. The limit is codified in Federal regulations and is based on agreed limits established by the Western and Central Pacific Fisheries Commission. NMFS forecasts that the fishery will reach the 2016 limit by July 22, 2016. Longline fishermen have been subject to longline bigeye tuna limits in the western and central Pacific since 2009. They have received ongoing, updated information about the 2016 catch and progress of the fishery in reaching the Convention Area limit via the NMFS Web site, social media, and other means. This constitutes adequate advance notice of this fishery closure. Additionally, the publication timing of this rule provides longline fishermen with seven days' advance notice of the closure date, and allows two weeks to return to port and land their catch of bigeye tuna.
For the reasons stated above, there is also good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness for this temporary rule. NMFS must close the fishery as soon as possible to ensure that fishery does not exceed the catch limit. According to NMFS stock-status-determination criteria, bigeye tuna in the Pacific Ocean are currently experiencing overfishing. NMFS implemented the catch limit to reduce the effects of fishing on bigeye tuna and restore the stock to levels capable of producing maximum sustainable yield on a continuing basis. Failure to close the fishery immediately would result in additional fishing pressure on this stock, in violation of Federal law and regulations that implement WCPFC decisions.
This action is required by 50 CFR 300.224 and is exempt from review under Executive Order 12866.
16 U.S.C. 6901
Agricultural Marketing Service, USDA.
Proposed rule.
This proposed rule would amend the Soybean Promotion, Research, and Consumer Information Order (Soybean Order) and the Beef Promotion and Research Order (Beef Order) to add provisions allowing soybean and beef producers to request, under certain circumstances, that their assessments paid to a State board or council authorized under their respective statutes, be redirected to the national program. The proposed rule also would make technical amendments to the Beef Order.
Written comments must be received by September 13, 2016. Pursuant to the Paperwork Reduction Act, comments on the information collection burden that would result from this proposal must be received by September 13, 2016.
Interested persons are invited to submit written comments on the Internet at
Pursuant to the Paperwork Reduction Act (PRA), send comments regarding the accuracy of the burden estimate, ways to minimize the burden, including the use of automated collection techniques or other forms of information technology, or any other aspect of this collection of information to the above address. Comments concerning the information collection under the PRA should also be sent to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503.
Please be advised that all comments submitted in response to this notice will be included in the record and will be made available to the public on the Internet at
Kevin Studer, Research and Promotion Division, at (202) 253–2380, fax (202) 720–1125, or by email at
The Office of Management and Budget (OMB) has waived the review process required by Executive Order 12866 for this action.
This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect.
The Agricultural Marketing Service (AMS) has assessed the impact of this proposed rule on Indian tribes and determined that this rule would not, to our knowledge, have tribal implications that require tribal consultation under Executive Order 13175. If a Tribe requests consultation, AMS will work with the Department of Agriculture's (USDA) Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions, and modifications are identified in this proposed rule.
The Soybean Promotion, Research, and Consumer Information Act (Soybean Act) (7 U.S.C. 6301–6311) provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 1971 of the Soybean Act, a person subject to the Soybean Order may file a petition with USDA stating that the Soybean Order, any provision of the Soybean Order, or any obligation imposed in connection with the Soybean Order, is not in accordance with the law and request a modification of the Soybean Order or an exemption from the Soybean Order. The petitioner is afforded the opportunity for a hearing on the petition. After a hearing, USDA would rule on the petition. The Soybean Act provides that district courts of the United States in any district in which such person is an inhabitant, or has their principal place of business, has jurisdiction to review USDA's ruling on the petition, if a complaint for this purpose is filed within 20 days after the date of the entry of the ruling.
Further, section 1974 of the Soybean Act provides, with certain exceptions, that nothing in the Soybean Act may be construed to preempt or supersede any other program relating to soybean promotion, research, consumer information, or industry information organized under the laws of the United States or any State. One exception in the Soybean Act concerns assessments collected by Qualified State Soybean Boards (QSSBs). The exception provides that to ensure adequate funding of the operations of QSSBs under the Soybean Act, no State law or regulation may limit or have the effect of limiting the full amount of assessments that a QSSB in that State may collect, and which is authorized to be credited under the Soybean Act. Another exception concerns certain referenda conducted during specified periods by a State relating to the continuation of a QSSB or State soybean assessment.
Section 11 of the Beef Research and Promotion Act of 1985 (Beef Act) (7 U.S.C. 2901–2911) provides that nothing in the Beef Act may be construed to preempt or supersede any other program relating to beef promotion organized and operated under the laws of the United States or any State.
The Soybean Act and the Soybean Order issued thereunder authorize the collection of an assessment from soybean producers of one-half of one percent (0.5 percent) of the net market value of soybeans, processed soybeans, or soybean products. In most cases, these assessments are collected by QSSBs that retain up to half of the assessments as authorized by the Soybean Act. The QSSBs as defined under Section 1967 (14) of the Soybean Act will forward the remainder to the United Soybean Board (Soybean Board), which administers the national soybean checkoff program.
(14) QUALIFIED STATE SOYBEAN BOARD. The term “qualified State soybean board” means a State soybean promotion entity that is authorized by State law. If no such entity exists in a State, the term “qualified State soybean board” means a soybean producer-governed entity)—(A) that is organized and operating within a State; (B) that receives voluntary contributions and conducts soybean promotion, research, consumer information, or industry information programs; and (C) that meets criteria established by the Board as approved by the Secretary relating to the qualifications of such entity to perform duties under the order and is recognized by the Board as the soybean promotion and research entity within the State.
Likewise, 7 CFR 1220.122 of the Soybean Order states:
The term
(a) That is organized and operating within a State; (b) That receives voluntary contributions and conducts soybean promotion, research, consumer information, or industry information programs; and (c) That meets the criteria, established by the Board and approved by the Secretary, relating to the qualifications of such entity to perform its duties under this part as determined by the Board, and is certified by the Board under § 1220.228(a)(2), with the approval of the Secretary.
The original Soybean Order, which became effective July 9, 1991, mandated that all producers marketing soybeans pay an assessment of one-half of one percent (0.5 percent) of the net market price of the market price of soybeans sold. The original Soybean Order contained a provision in § 1220.228(b)(5)(i), which required QSSBs that were authorized or required to pay refunds to producers to certify to the Soybean Board that they would honor any request from a producer for a refund from the QSSB by forwarding to the Soybean Board those contributions for which the producer received a credit, pursuant to § 1220.223(a)(3). In other words, this section implicitly authorized refunds by the QSSB if State law allowed or required the QSSB to pay refunds; it further directed that the producer receive a credit for those refunds, with the amount sent to the Soybean Board.
Refunds under the soybean program were discontinued on October 1, 1995, after the Secretary determined through a producer poll that continuation of refunds was not favored by a majority of producers. In late 1995, 7 CFR 1220.228(b)(5)(i) was removed as part of rulemaking to eliminate obsolete regulatory language. However, this action had an unintended effect of inadvertently allowing QSSBs to retain a portion of the assessment even if not required by State law, under any circumstances.
In States where payments to a QSSB are not required by State law, the opportunity for producers to choose to direct the full federal assessment to the Soybean Board is already AMS' current policy; this rule is intended to formalize the policy. Therefore, AMS proposes adding provisions that remedy the removal of the original refund language. A new provision would be added to the Soybean Order to (i) require producers in States where refunds are authorized to forward that refund to the Soybean Board and (ii) provide an opportunity for a refund if the QSSB is not authorized by State statute but is organized and operating within a State and is certified by the Soybean Board, as provided by § 1220.228(a)(2). AMS proposes to require that the form must be postmarked by the 30th day of the month following the month the soybeans were sold. Assessments would not be able to be retroactively redirected from the QSSB to the Soybean Board. Likewise, AMS proposes to require that the QSSB must respond by the last day of the month following the month in which the OMB-approved QSSB–1 form was received.
Regardless of a State's requirements or refunding provisions, a producer is required by the Soybean Act to pay an assessment of one-half of one percent (0.5 percent) of the net market value of soybeans, processed soybeans, or soybean products. Several States have additional producer assessments, mandated by State statutes that are collected in addition to the assessment required by the Soybean Act as set forth in the chart provided. If a QSSB offers a producer refund under a State statute, the QSSB can only refund to the producer any State assessment collected in excess of the assessment that the producer is required to pay under the Soybean Act. AMS proposes that the portion of the assessment compelled by the Soybean Act that the QSSB would normally keep can be redirected to the national program by the producer if State law allows.
• A soybean producer in California pays an assessment for a soybean sale. The assessment is collected by a certified Western Region Soybean Board, which keeps 50% and forwards the remaining 50% to the Soybean Board. California has no State law requiring a California assessment, so the California producer
• A soybean producer in Iowa pays an assessment for a soybean sale. The assessment is collected by Iowa Soybean Promotion Board, which keeps 50% and forwards the remaining 50% to the Soybean Board. Iowa has a State law with a refund provision, so the Iowa producer
• A soybean producer in Virginia pays an assessment for a soybean sale. The assessment is collected by the Virginia Soybean Board which keeps 50% and forwards the remaining 50% to the Soybean Board. Virginia has a State law with no refund provision, so the Virginia soybean producer
Similarly, the Beef Promotion and Research Act of 1985 (Beef Act) and the Beef Promotion and Research Order (Beef Order) issued thereunder authorize the collection of an assessment from cattle producers of $1.00 per head of cattle sold. In most cases, these assessments are collected by Qualified State Beef Councils (QSBCs) that retain up to one-half of the assessments as authorized by the Beef Act. The QSBCs, as defined under Section 3(14) of the Beef Act, are required to forward the remainder to the Cattlemen's Beef Promotion and Research Board (Beef Board), which administers the national beef checkoff program.
The original Beef Order, which became effective July 18, 1986, mandated that all producers owning and marketing cattle pay an assessment of $1.00 per head of cattle, to be collected each time cattle are sold. The original Beef Order contained a provision in § 1260.181(b)(5), which required QSBCs that were authorized or required by State law to pay refunds to producers to certify to the Beef Board that they would honor any request from a producer for a refund from the QSBC by forwarding to the Beef Board those contributions for which the producer received a credit, pursuant to § 1260.172(a)(3). In other words, this section authorized refunds by the QSBC if State law allowed or required the QSBC to pay refunds; it further directed that the producer receive a credit for those refunds, with the amount redirected to the Beef Board.
In a May 10, 1988, referendum conducted by the Secretary, cattle producers and importers voted to institute mandatory assessments. In late 1995, 7 CFR 1260.181(b)(5) was removed as part of rulemaking to eliminate obsolete regulatory language. However, this action had an unintended effect of inadvertently allowing QSBCs to retain a portion of the $1.00-per-head assessment even if not required by State law, under any circumstances. Therefore, AMS proposes adding provisions that would remedy the removal of the original language in § 1260.181(b)(5).
Furthermore, while the Beef Act and Beef Order authorize QSBCs to retain up to 50 cents per head of cattle assessed, neither the Beef Act nor the Beef Order require producers to contribute a portion of the $1.00-per-head assessment to a QSBC. Thus, unless State statutes require the collection of the $1.00-per-head assessment set forth in the Beef Act (the federal assessment) or require producers to contribute a portion of the $1.00-per-head federal assessment to the State beef council, producers may be able to choose not to contribute up to 50 cents per head of the federal assessment to their QSBC. While the original Beef Order did not address the specific situation that allows producers to choose not to contribute up to 50 cents per head of the federal assessment to a QSBC, AMS proposes to address this in the new language. A new provision would be added to the Beef Order to (i) require QSBCs in States where refunds to producers of the $1.00-per-head assessment collected per the Beef Act and Beef Order are authorized by State statute to forward that refund to the Beef Board, and (ii) provide an opportunity for producers to choose to direct the full $1.00-per-head federal assessment to the Beef Board in States where State law does not require the collection of the $1.00-per-head assessment set forth in the Beef Act (the federal assessment) or in States where State statutes do not require producers to contribute a portion of the $1.00-per head federal assessment to the State beef council. In States where payments to a QSBC are not required by State law, the opportunity for producers to choose to direct the full $1.00-per-head federal assessment to the Beef Board is already AMS' current policy; this rule is intended to formalize the policy. As QSBCs are responsible for collecting assessments on cattle sold in or originating in their State (§ 1260.172(a)(5) and § 1260.181(b)(3)), producers who are allowed refunds under State statutes and choose to redirect the full $1.00-per-head assessment to Beef Board must submit to the QSBC a written request on an approved request form. AMS proposes to require that the form must be postmarked by the 15th day of the month following the month the cattle were sold. Assessments would not be able to be retroactively redirected from the QSBC to the Beef Board, and QSBCs would be required to respond to such requests within 60 days.
Regardless of a State's requirements or refunding provisions, a producer is required by the Beef Act to pay an assessment of $1.00 on each head of cattle sold. Several States have additional producer assessments, mandated by State statutes, that are collected in addition to the $1.00-per-head assessment required by the Beef Act. If a QSBC offers a producer refund under a State statute, the QSBC can only refund to the producer any State assessment collected in addition to the $1.00-per-head assessment that the producer is required to pay under the Beef Act. AMS proposes that the portion of the $1.00-per-head federal assessment that the QSBC would normally keep under § 1260.181(b)(4) can be redirected to the national program by the producer if State law allows.
• A producer in Kansas pays the $1.00 federal assessment for a cattle sale. The Kansas Beef Council collects $1.00, keeps $0.50, and forwards $0.50 to the Beef Board. Since there is no Kansas law compelling producers to contribute to the Kansas Beef Council, the producer
• A producer in Colorado pays $1.00 in assessments for a cattle sale. The Colorado Beef Council collects $1.00, keeps $0.50, and forwards $0.50 to the Beef Board. Colorado State law requires an assessment but allows a refund. The producer
• A producer in California pays $1.00 in assessments for a cattle sale. The California Beef Council collects $1.00, keeps $0.50, and forwards $0.50 to the Beef Board. California law compels the collection of the $1.00-per-head assessment and does not provide for a refund. The producer
• A producer in Idaho pays the $1.00-per-head federal assessment plus the $0.50-per-head State-mandated assessment for a cattle sale. The Idaho Beef Council collects $1.50, keeps $1.00, and forwards $0.50 to the Beef Board. The producer requests a refund of all funds paid to the Idaho Beef Council. The Idaho Beef Council may refund the $0.50-per-head State assessment to the producer, but the producer is required to pay $1.00 under the Beef Act. Since Idaho State law only compels an assessment of $0.50, which is refundable, the producer
Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612), the Administrator of the AMS has considered the economic effect of this action on small entities and has determined that this proposed rule will not have a significant economic impact on a substantial number of small entities. The purpose of RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly burdened.
USDA's Farm Service Agency estimates that there are 569,998 soybean producers subject to the Soybean Order. This estimate comes from including all soybean producers engaged in the production of soybeans in the previous 2 years. The majority of producers subject to the Soybean Order are small
This proposed rule imposes no new burden on the soybean industry. It would provide soybean producers, under certain circumstances, the option of requesting that their assessments paid to a State board be directed to the national program.
However, the proposed rule could result in decreased assessment funds for some QSSBs, depending on whether a State statute is in place, whether refund provisions are included, and whether the producer chooses to exercise the refund provision.
The information collection requirements on QSSBs are minimal. QSSBs are already required to remit assessments to the national programs. We have not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
Accordingly, the Administrator of AMS has conducted this Initial Regulatory Flexibility Analysis and has determined that this proposed rule will not have a significant economic impact on a substantial number of small soybean entities. However, we invite comments concerning potential effects of this proposed rule.
In the February 2013, publication of “Farms, Land in Farms, and Livestock Operations,” USDA's National Agricultural Statistics Service (NASS) estimates that the number of operations in the United States with cattle in 2012 totaled approximately 915,000, down from 950,000 in 2009. The majority of these operations that are subject to the Beef Order may be classified as small entities. According to the NASS Web site “Farms, Land in Farms, and Livestock Operations,” the issues released between 2005 and 2013 included “Livestock Operations” in the title. Beginning in 2014, livestock operations data will be available in the Census of Agriculture and most recent data can be referenced from Census data. This proposed rule imposes no new burden on the beef industry. It would provide beef producers, under certain circumstances, the option of requesting that their assessments paid to a State council be directed to the national program.
However, the proposed rule could result in decreased assessment funds for some QSBCs, depending on whether a State statute is in place, whether refund provisions are included, and whether the producer chooses to exercise the refund provision. Currently, a number of States are in various stages of establishing or amending State laws regarding beef checkoff requirements, so this information is likely to change.
The information collection requirements on QSBCs are minimal. QSBCs are already required to remit assessments to the national programs. We have not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
Accordingly, the Administrator of AMS has conducted this Initial Regulatory Flexibility Analysis and has determined that this proposed rule will not have a significant economic impact on a substantial number of small cattle or beef entities. However, we invite comments concerning potential effects of this proposed rule.
The information collection and recordkeeping requirements that are imposed by the Soybean and Beef Orders have been approved previously under OMB control number 0581–0093. In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), this proposed rule also announces that AMS is seeking emergency approval for a new information collection request allowing soybean and beef producers, under certain circumstances, to request that assessments paid to a QSSB or QSBC be redirected to the Soybean Board or Beef Board, respectively. The additional burden is optional and is only imposed if a producer wants to divert assessments to the national program. According to the Beef Board, there have been very few requests from producers seeking redirection of assessments to the Beef Board. Additionally, the Soybean Board has not reported any requests from producers seeking redirection of assessments to the Soybean Board. Therefore, we estimate that annually a small number of soybean producers and beef producers might submit such a request and estimate that it would take an average of 5 minutes per person, resulting in an additional burden of 0.83 hour for the soybean program and 1.67 hours for the beef program.
AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and
The Soybean Act and Order and the Beef Act and Order authorize the collection of assessments from soybean and beef producers. In most cases, these assessments are collected by QSSBs or QSBCs that retain up to half of the assessments. The QSSBs and QSBCs forward the remainder to the Soybean Board and Beef Board, which administer the national soybean and beef checkoff programs.
The original Soybean and Beef Orders contained provisions directing QSSBs and QSBCs, if authorized or required by State law to pay refunds to producers, to honor producer refund requests by forwarding to the national Board that portion of such refunds equal to the amount of credit received by the producer for contributions to the State entities. Amendments to the Soybean and Beef Orders in 1995 to remove obsolete language concerning refunds had an unintended consequence, inadvertently allowing QSSBs and QSBCs to retain a portion of the assessment even if not required by State law, under certain circumstances. Therefore, we propose adding provisions that would remedy the removal of the original language. New provisions would be added to both Orders to (i) require QSSBs and QSBCs in States where refunds to producers are authorized by State statutes to forward such requested refunds to the national board and (ii) provide an opportunity for producers, in States where the State entity is not authorized by State statute or State statutes allow, to choose to direct the full federal assessment to the national Board.
An estimated 10 soybean respondents and 20 beef respondents will provide information to a QSSB or QSBC to request redirection of assessments. The estimated cost of providing the information to the QSSB or QSBC by respondents would be $82.17. This total has been estimated by multiplying 2.49 total hours required for reporting by $33.00, the average mean hourly earnings of various occupations involved in keeping this information. Data for computation of this hourly rate was obtained from the U.S. Department of Labor Statistics.
In turn, QSSBs or QSBCs will respond to those producers with the decision and will forward the assessments and records to the Soybean Board or Beef Board. The estimated cost of the QSSB or QSBC providing the information to producers and the Soybean Board or Beef Board would be $82.17. This total has been estimated by multiplying 2.49 total hours required for reporting by $33.00, the average mean hourly earnings of various occupations involved in keeping this information. Data for computation of this hourly rate was obtained from the U.S. Department of Labor Statistics.
The design of the forms has been carefully reviewed, and every effort has been made to minimize any unnecessary recordkeeping costs or requirements, including efforts to utilize information already submitted under other soybean and beef programs administered by the USDA and other State programs. In fact, the forms to be used by the QSSBs and QSBCs were designed to serve a dual purpose, both for informing producers of the outcome of their requests and for forwarding assessments and information to the Soybean Board and Beef Board. AMS has determined that there is no practical method for collecting the required information without the use of these forms. The forms would be available from the national boards, QSSBs, and QSBCs. The information collection would be used only by authorized QSSB, QSBC, Soybean Board, and Beef Board employees and representatives of USDA, including AMS staff. Authorized QSSB, QSBC, Soybean Board, and Beef Board employees will be the primary users of the information, and AMS will be the secondary user.
The forms require the minimum information necessary to effectively carry out producers' wishes to redirect to the national boards the portion of the assessments that the State entities would otherwise retain. Such information can be supplied without data processing equipment or outside technical expertise. In addition, there are no additional training requirements for individuals filling out the forms and remitting assessments to the QSSBs and QSBCs. The forms will be simple, easy to understand, and place as small a burden as possible on the person filing the form. The forms are entirely voluntary for producers, and QSSBs and QSBCs will only complete their forms as a result of producers' requests.
The form may be submitted at any time, though within the prescribed deadlines, so as to meet the needs of the industry while minimizing the amount of work necessary to complete the forms. In addition, the information to be included on these forms is not available from other sources because such information relates specifically to individual producers who are subject to the provisions of the Soybean or Beef Acts and because there is a need to ensure that producers are paying the full assessment required by law.
Therefore, there is no practical method for collecting the information without the use of these forms.
The request for approval of the new information collection is as follows:
(1) Form QSSB–1, Notification to Qualified State Soybean Board of intent to redirect assessments to the United Soybean Board.
(2) Form QSBC–1, Notification to Qualified State Beef Council of intent to redirect assessments to the Cattlemen's Beef Promotion and Research Board.
A 60-day period is provided to comment on the information collection
Comments concerning the information collection under the PRA should also be sent to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503.
In addition, several technical amendments are proposed to update information in the Beef Promotion and Research Order and rules and regulations:
Section 1260.181 (b)(4) currently requires QSBCs to remit assessments to the Beef Board by the last day of the month in which the QSBC received the assessment “unless the Board determines a different date.” The Beef Board's practice has been to require QSBCs to remit assessments by the 15th of the following month. This section would be updated to reflect actual practice.
Section 1260.315 would be amended to reflect the current QSBCs.
Administrative practice and procedure, Advertising, Agricultural research, Marketing agreements, Reporting and recordkeeping requirements, Soybeans and soybean products.
Administrative practice and procedure, Advertising, Agricultural research, Imports, Marketing agreement, Meat and meat products, Reporting and recordkeeping requirements.
For reasons set forth in the preamble, it is proposed that 7 CFR parts 1220 and 1260 be amended as follows:
7 U.S.C. 6301–6311 and 7 U.S.C. 7401.
(b) * * *
(5) If the entity is authorized or required to pay refunds to producers, certify to the Board that any requests from producers for such refunds for contributions to it by the producer will be honored by forwarding to the Board that portion of such refunds equal to the amount of credit received by the producer for contributions pursuant to § 1220.223(a)(3). Entities not authorized by State statute but organized and operating within a State and certified by the Board pursuant to paragraph (a)(2) of this section must provide producers an opportunity for a State refund and must forward that refunded portion to the Board. Producers receiving a refund from a State entity are required to remit that refunded portion to the Board in the manner and form required by the Secretary.
7 U.S.C. 2901–2911 and 7 U.S.C. 7401.
(b) * * *
(4) Certify to the Board that such organization shall remit to the Board assessments paid and remitted to the council, minus authorized credits issued to producers pursuant to § 1260.172(a)(3), by the 15th day of the month following the month in which the assessment was remitted to the qualified State beef council unless the Board determines a different date for remittance of assessments.
(5) Redirection of assessments. Qualified State beef councils which are authorized or required by State statutes to pay refunds to producers must certify to the Board that any requests from producers for refunds from the council for contributions to such council by the producer will be honored by redirecting to the Board that portion of such refunds equal to the amount of credit received by the qualified State beef councils. In States where State law does not require the collection of the $1.00-per-head assessment set forth in the Act (the federal assessment) or in States where State statutes do not require producers to contribute a portion of the $1.00-per head federal assessment to the State beef council, qualified State beef councils must provide an opportunity for producers to choose to direct the full $1.00-per-head federal assessment to the Board. The request to redirect funds to the Board must be submitted on the appropriate form and postmarked by the 15th day of the month following the month the cattle were sold. Requests may not be retroactive. Requests to redirect funds must be submitted by the producer who paid the assessment.
(c)
The following State beef promotion entities have been certified by the Board as qualified State beef councils:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to supersede Airworthiness Directive (AD) 2013–02–08, for all Bombardier, Inc. Model CL–600–2B19 (Regional Jet Series 100 & 440) airplanes. AD 2013–02–08 currently requires inspecting the trunnions and upper and lower pins of the horizontal stabilizer trim actuator (HSTA), and replacement or re-identification if necessary; and revising the maintenance program to include safe life limits and inspection requirements for the HSTA. Since we issued AD 2013–02–08, we determined that not all affected attachment pins and trunnions were included in the required inspections. In addition, for certain airplanes on which the replacement in AD 2013–02–08 was done, incorrect attachment hardware may have been used. This proposed AD would require measuring the diameter of certain bolts and attach holes, and, as applicable, measuring the diameter of the attach holes in the trunnions and pins, doing detailed visual inspections of the trunnions, pins, and spacers, doing corrective actions, and re-identifying trunnions and pins. This proposed AD also requires revising the maintenance or inspection program. This proposed AD also removes certain airplanes from the applicability. We are proposing this AD to prevent failure of the attachment pins and trunnions of the HSTA. This condition could result in separation of the horizontal stabilizer, and consequent loss of control of the airplane.
We must receive comments on this proposed AD by August 29, 2016.
You may send comments by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514–855–5000; fax 514–855–7401; email
You may examine the AD docket on the Internet at
Cesar Gomez, Aerospace Engineer, Airframe and Mechanical Systems Branch, ANE–171, FAA, New York Aircraft Certification Office, 1600 Stewart Avenue, Suite 410, Westbury, New York 11590; telephone (516) 228–7318; fax (516) 794–5531.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
On, January 16, 2013, we issued AD 2013–02–08, Amendment 39–17329 (78 FR 7647, February 4, 2013) (“AD 2013–02–08”). AD 2013–02–08 requires actions intended to address an unsafe condition on all Bombardier, Inc. Model CL–600–2B19 (Regional Jet Series 100 & 440) airplanes.
Since we issued AD 2013–02–08, we have determined that not all affected attachment pins and trunnions were included in the required inspections of AD 2013–02–08. In addition, for airplanes on which certain service information was incorporated, incorrect attachment hardware may have been used to re-install the HSTA attachment pins and trunnions.
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF–2016–08, dated March 30, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model CL–600–2B19 (Regional Jet Series 100 & 440) airplanes. The MCAI states:
After the issuance of [Canadian] AD CF–2011–45, it was discovered that the [Canadian] AD did not address all affected Horizontal Stabilizer Tim Actuator (HSTA) attachment pins and trunnions. In addition, it is possible that aeroplanes having incorporated the Initial issue or Revision A, of Bombardier Service Bulletin (SB) 601R–27–160 used incorrect attachment hardware to re-install the HSTA attachment pins or trunnions.
This [Canadian] AD mandates the inspection and rectification, as required, and the re-identification, as required, of the HSTA pins and trunnions and incorporation of a revised Airworthiness Limitation task.
The required actions include measuring the diameter of the bolts that attach the trunnions and pins, measuring the diameter of the attach holes in the aircraft structure, and, as applicable, measuring the diameter of the attach holes in the trunnions and pins, doing detailed visual inspections for gouges, scratches, and corrosion of the trunnions and pins, doing detailed visual inspections for damage of the spacers, doing corrective actions, and re-identifying trunnions and pins. Corrective actions include replacing bolts, trunnions, pins, and spacers, increasing the diameter of the attach holes, and repairing trunnions and pins.
This proposed AD also removes certain airplanes from the applicability to correspond with the MCAI, which removed them from its applicability.
You may examine the MCAI in the AD docket on the Internet at
Bombardier has issued Service Bulletin 601R–27–160, Revision D, dated October 22, 2015. The service information describes procedures for measuring the diameter of certain bolts and attach holes, and, as applicable, measuring the diameter of the attach holes in the trunnions and pins, doing detailed visual inspections of the trunnions, pins, and spacers, doing corrective actions, and re-identifying trunnions and pins.
Bombardier has also issued Bombardier Temporary Revision 2B–2245, dated October 17, 2014, to Appendix B—Airworthiness Limitations, of Part 2, Airworthiness Requirements, of the Bombardier CL–600–2B19 Maintenance Requirements Manual to incorporate a revised Airworthiness Limitation task. The service information describes safe life limits for the HSTA trunnion support and attaching hardware.
Bombardier has also issued Bombardier Temporary Revision 2B–2186, dated August 8, 2011, to Appendix B—Airworthiness Limitations, Part 2, Airworthiness Requirements, of the Bombardier CL–600–2B19 Maintenance Requirements Manual to incorporate a revised Airworthiness Limitation task. The service information describes an inspection of the upper and lower installation pins of the horizontal stabilizer pitch trim actuator.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
We estimate that this proposed AD affects 489 airplanes of U.S. registry.
We estimate that it would take about 8 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $332,520, or $680 per product.
In addition, we estimate that any necessary follow-on actions would take about 20 work-hours and require parts costing $4,391, for a cost of $6,091 per product. We have no way of determining the number of products that may need these actions.
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 August 29, 2016.
This AD replaces AD 2013–02–08, Amendment 39–17329 (78 FR 7647, February 4, 2013) (“AD 2013–02–08”).
This AD applies to Bombardier, Inc. Model CL–600–2B19 (Regional Jet Series 100 & 440) airplanes, certificated in any category, serial numbers 7003 through 8113 inclusive.
Air Transport Association (ATA) of America Code 27: Flight controls.
This AD was prompted by a determination that not all affected attachment pins and trunnions were included in the inspections required by AD 2013–02–08. In addition, for certain airplanes on which the replacement in AD 2013–02–08 was done, incorrect attachment hardware may have been used. We are issuing this AD to prevent failure of the attachment pins and trunnions of the horizontal stabilizer trim actuator (HSTA). This condition could result in separation of the horizontal stabilizer, and consequent loss of control of the airplane.
Comply with this AD within the compliance times specified, unless already done.
(1) For airplanes on which the detailed inspection specified in Bombardier Service Bulletin 601R–27–160, dated September 29, 2011; or Bombardier Service Bulletin 601R–27–160, Revision A, dated October 3, 2012, has not been done as of the effective date of this AD: At the earliest of the times specified in paragraphs (g)(1)(i), (g)(1)(ii), and (g)(1)(iii) of this AD, measure the diameter of the bolts that attach the trunnions and pins, measure the diameter of the attach holes in the aircraft structure, and, as applicable, measure the diameter of the attach holes in the trunnions and pins, do detailed visual inspections for gouges, scratches, and corrosion of the trunnions and pins, do detailed visual inspections for damage of the spacers, do corrective actions, and re-identify trunnions and pins, in accordance with Part A of the Accomplishment Instructions of Bombardier Service Bulletin 601R–27–160, Revision D, dated October 22, 2015; except as required by paragraph (h) of this AD. Do all applicable corrective actions before further flight.
(i) Within 5,000 flight hours after March 11, 2013 (the effective date of AD 2013–02–08).
(ii) Within 60 months after March 11, 2013 (the effective date of AD 2013–02–08).
(iii) Before the accumulation of 40,000 total flight cycles, or within 60 days after March 11, 2013 (the effective date of AD 2013–02–08), whichever occurs later.
(2) For airplanes on which the detailed inspection specified in Bombardier Service Bulletin 601R–27–160, dated September 29, 2011; or Bombardier Service Bulletin 601R–27–160, Revision A, dated October 3, 2012, has been done as of the effective date of this AD: Within 9,600 flight hours or 60 months after the effective date of this AD, whichever occurs first; measure the diameter of the bolts that attach the trunnions and pins, measure the diameter of the attach holes in the aircraft structure, and, as applicable, measure the diameter of the attach holes in the trunnions and pins, do detailed visual inspections for gouges, scratches, and corrosion of the trunnions and pins, do detailed visual inspections for damage of the spacers, do corrective actions, and re-identify trunnions and pins, in accordance with Part B of the Accomplishment Instructions of Bombardier Service Bulletin 601R–27–160, Revision D, dated October 22, 2015, except as required by paragraph (h) of this AD. Do all applicable corrective actions before further flight.
Where Bombardier Service Bulletin 601R–27–160, Revision D, dated October 22, 2015, specifies to contact Bombardier for disposition, before further flight, repair using a method approved by the Manager, New York Aircraft Certification Office (ACO), ANE–170, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO).
This paragraph provides credit for the actions specified in paragraph (g) of this AD, if those actions were performed before the effective date of this AD using the service information identified in paragraphs (i)(1) and (i)(2) of this AD, which are not incorporated by reference in this AD.
(1) Bombardier Service Bulletin 601R–27–160, Revision B, dated February 20, 2015.
(2) Bombardier Service Bulletin 601R–27–160, Revision C, dated May 3, 2015.
(1) Within 30 days after March 11, 2013 (the effective date of AD 2013–02–08), revise the maintenance or inspection program, as applicable, to incorporate the information specified in Bombardier Temporary Revision 2B–2186, dated August 8, 2011, to Appendix B—Airworthiness Limitations, Part 2, Airworthiness Requirements, of the Bombardier CL–600–2B19 Maintenance Requirements Manual. The compliance time for doing the initial inspection of the upper and lower installation pins of the horizontal stabilizer pitch trim actuator is before the accumulation of 40,000 landings or within 60 days after March 11, 2013, whichever occurs later.
(2) Within 30 days after the effective date of this AD, revise the maintenance or inspection program, as applicable, to incorporate the information specified in Bombardier Temporary Revision 2B–2245, dated October 17, 2014; to Appendix B—Airworthiness Limitations, Part 2, Airworthiness Requirements, of the Bombardier CL–600–2B19 Maintenance Requirements Manual. The compliance time for doing the initial replacement for the HSTA trunnion support and attaching hardware is before the accumulation of 80,000 landings or within 60 days after the effective date of this AD, whichever occurs later.
After accomplishing the revision required by paragraph (j) of this AD, no alternative actions (
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF–2016–08, dated March 30, 2016, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514–855–5000; fax 514–855–7401; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Bombardier, Inc. Model DHC–8–400 series airplanes. This proposed AD was prompted by a determination by the manufacturer that shims might not have been installed between certain longerons and longeron joint fittings. This proposed AD would require repetitive inspections of the external surface of the fuselage skin panel for loose or working fasteners, and corrective action if necessary; a detailed visual inspection of the longeron joint fittings for the existence of shims and, if necessary, repetitive inspections of the longeron and the longeron joint fittings for any cracking, and corrective action if necessary. This proposed AD would also provide terminating action for certain repetitive inspections. We are proposing this AD to detect and correct missing shims between the longerons and longeron joint fittings. Such missing shims could result in a gapping condition and lead to stress corrosion cracking of the longeron joint fittings, and could adversely affect the structural integrity of the wing-to-fuselage attachment joints.
We must receive comments on this proposed AD by August 29, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
You may examine the AD docket on the Internet at
Aziz Ahmed, Aerospace Engineer, Airframe and Mechanical Systems Branch, ANE–171, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516–228–7329; fax 516–794–5531.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF–2015–22, dated August 3, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model DHC–8–400 series airplanes. The MCAI states:
The aeroplane manufacturer has determined that shims may not have been installed between the longerons and longeron joint fittings at fuselage station X373–380, stringers 7 on the left and right hand side, on certain aeroplanes. The missing shims could result in a gapping condition and could lead to stress corrosion cracking of the longeron joint fittings.
Failure of the longeron joint fitting could compromise the structural integrity of the wing-to-fuselage attachment joint.
This [Canadian] AD mandates inspections in the area of the longeron joint fittings.
Bombardier, Inc. has issued Bombardier Service Bulletin 84–53–65, dated February 27, 2015. The service information describes procedures for inspections of the external surface of the fuselage skin panel for loose or working fasteners; a detailed visual inspection of the longeron joint fittings for the existence of shims; high frequency eddy current (HFEC) inspections of the longeron and the longeron joint fittings for any cracking; and replacement of longeron fittings, shims, and fasteners. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe
We estimate that this proposed AD affects 76 airplanes of U.S. registry.
We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $12,920, or $170 per product.
In addition, we estimate that any necessary follow-on actions would take about 3 work-hours for the inspection for missing shims, 9 work-hours for the replacement of longeron fittings and shims, and 1 work-hour for a reporting requirement; and would require parts costing $3,222; for a cost of up to $4,327 per product. We have no way of determining the number of aircraft that might need these actions. We have received no definitive data that would enable us to provide cost estimates for repair of loose or working fasteners or structural damage specified in this proposed AD.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this proposed AD is 2120–0056. The paperwork cost associated with this proposed AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this proposed AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES–200.
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 August 29, 2016.
None.
This AD applies to Bombardier, Inc. Model DHC–8–400, –401, and –402 airplanes, certificated in any category, serial numbers 4156 through 4453 inclusive, 4456, and 4457.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by a determination by the manufacturer that shims might not have been installed between the longerons and longeron joint fittings at station X373–380, stringer 7, on the left and right sides of the airplane. We are issuing this AD to detect and correct missing shims between the longerons and longeron joint fittings. Such missing shims could result in a gapping condition and lead to stress corrosion cracking of the longeron joint fittings, and could adversely affect the structural integrity of the wing-to-fuselage attachment joints.
Comply with this AD within the compliance times specified, unless already done.
At the time specified in paragraph (g)(1) or (g)(2) of this AD, as applicable, do a detailed visual inspection of the external surface of the fuselage skin panel for loose or working fasteners (fasteners that show signs of wear or fatigue corrosion) and structural damage, in accordance with paragraph 3.B. of the Accomplishment Instructions of Bombardier Service Bulletin 84–53–65, dated February 27, 2015.
(1) For airplanes that have accumulated less than 10,000 total flight hours, or less than 5 years in service since new, as of the effective date of this AD: Prior to accumulating 12,000 total flight hours or 6 years in service since new, whichever occurs first.
(2) For airplanes that have accumulated 10,000 total flight hours or more, or 5 years or more in service since new, as of the effective date of this AD: Within 2,000 flight hours or 12 months after the effective date of this AD, whichever occurs first.
If any loose or working fastener or any structural damage is found during any inspection required by this AD: Before further flight, repair using a method approved by the Manager, New York Aircraft Certification Office (ACO), FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO); and therafter do the inspections required by paragraph (i) of this AD. Accomplishment of a repair in accordance with a method approved by the Manager, New York ACO, FAA; or TCCA; or
Repeat the detailed visual inspection required by the introductory text to paragraph (g) of this AD at intervals not to exceed 12 months or 2,000 flight cycles, whichever occurs first after accomplishment of the most recent inspection, until the actions required by the introductory text to paragraph (j) of this AD are done.
At the time specified in paragraph (j)(1) or (j)(2) of this AD, as applicable, do a detailed visual inspection of the longeron joint fittings for the existence of shims, in accordance with paragraph 3.C. of the Accomplishment Instructions of Bombardier Service Bulletin 84–53–65, dated February 27, 2015.
(1) For airplanes that have accumulated less than 10,000 total flight hours, or less than 5 years in service since new, as of the effective date of this AD: Prior to accumulating 18,000 total flight hours or 9 years in service since new, whichever occurs first.
(2) For airplanes that have accumulated 10,000 total flight hours or more, or 5 years or more in service since new, as of the effective date of this AD: Within 8,000 flight hours or 4 years after the effective date of this AD, whichever occurs first; but not to exceed 30,000 total flight hours or 144 months in service since new, whichever occurs first.
If the inspection required by the introductory text to paragraph (j) of this AD reveals that shims are installed in the longeron joint fittings, no further action is required by this AD.
If the inspection required by the introductory text to paragraph (j) of this AD reveals that any shim is missing from the longeron joint fittings: Before further flight, do an HFEC inspection of the longeron and the longeron joint fittings for any cracking, in accordance with paragraph 3.D. of the Accomplishment Instructions of Bombardier Service Bulletin 84–53–65, dated February 27, 2015.
(1) If any crack is found, or any indication is found with an amplitude of 50% or more of the calibration signal: Before further flight, replace the longeron joint fittings, in accordance with paragraph 3.E. of the Accomplishment Instructions of Bombardier Service Bulletin 84–53–65, dated February 27, 2015.
(2) After each inspection required by the introductory text to paragraph (l) and paragraph (l)(1) of this AD, report the inspection results at the applicable time specified in paragraph (l)(2)(i) or (l)(2)(ii) of this AD to Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
(i) If the inspection was done on or after the effective date of this AD: Within 30 days after that inspection.
(ii) If the inspection was done before the effective date of this AD: Within 30 days after the effective date of this AD.
(3) If any crack, or any indication with an amplitude of 50% or more of the calibration signal is not found: Repeat the HFEC inspection required by the introductory text to paragraph (l) of this AD at intervals not to exceed 12,000 flight hours or 6 years, whichever occurs first after accomplishment of the most recent HFEC inspection, in accordance with paragraph 3.D. of the Accomplishment Instructions of Bombardier Service Bulletin 84–53–65, dated February 27, 2015. If any crack is found, or any indication is found with an amplitude of 50% or more of the calibration signal: Before further flight, replace the longeron joint fittings, in accordance with paragraph 3.E. of the Accomplishment Instructions of Bombardier Service Bulletin 84–53–65, dated February 27, 2015.
Replacement of the longeron joint fittings, in accordance with paragraph 3.E. of the Accomplishment Instructions of Bombardier Service Bulletin 84–53–65, dated February 27, 2015, constitutes terminating action for the repetitive HFEC inspections required by paragraph (l)(3) of this AD.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF–2015–22, dated August 3, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Bombardier, Inc. Model BD–700–1A10 and BD–700–1A11 airplanes. This proposed AD was prompted by a determination that the existing instruction in a certain task in the aircraft maintenance manual (AMM)
We must receive comments on this proposed AD by August 29, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• 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 NPRM, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514–855–5000; fax 514–855–7401; email
You may examine the AD docket on the Internet at
Assata Dessaline, Aerospace Engineer, Avionics and Services Branch, ANE–172, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516–228–7301; fax 516–794–5531.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF–2015–06R1, dated April 22, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model BD–700–1A10 and BD–700–1A11 airplanes. The MCAI states:
It was discovered that the existing instruction in the Aircraft Maintenance Manual (AMM) Task 27–61–05–710–801 will not accomplish the intent of the Certification Maintenance Requirement (CMR) task number 27–61–05–201. This CMR task was required to test the Pitch Feel (PF) and Rudder Travel Limiter Actuator (RTLA) back-up modules in the Flight Control Unit (FCU) to detect dormant failures. If not detected, a dormant failure of both FCU back-up modules, in combination with other failures in the FCU, may result in the inability to maintain the Minimum Control Requirements for the PF and RTLA, which could create hazardous flight control inputs during flight.
The original issue of this [Canadian] AD mandated the performance of an operational test of the FCU back-up modules using the proper AMM task instructions [and repair if necessary].
Revision 1 of this [Canadian] AD is to correct the model number designation in the Applicability section.
You may examine the MCAI in the AD docket on the Internet at
We reviewed the following service information. This service information describes procedures for doing an operational test of the FCU back-up modules.
• Bombardier Global 5000, BD–700 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–48, dated October 5, 2015.
• Bombardier Global 5000, GL 5000 FEATURING GLOBAL VISION FLIGHT DECK—Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–24, dated October 5, 2015.
• Bombardier Global 6000, GL 6000 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–24, dated October 5, 2015.
• Bombardier Global Express, BD–700 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–78, dated October 5, 2015.
• Bombardier Global Express XRS, BD–700 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–47, dated October 5, 2015.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
The MCAI specifies accomplishing an operational test of the FCU back-up modules, but does not specify a corrective action if the test is failed. If any FCU fails any operational test, this proposed AD would require repair using a method approved by the Manager, New York Aircraft Certification Office (ACO), ANE–170, FAA; or TCCA; or
We estimate that this proposed AD affects 76 airplanes of U.S. registry.
We also estimate that it would take about 3 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $19,380, or $255 per product.
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this NPRM.
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 August 29, 2016.
None.
This AD applies to Bombardier, Inc. Model BD–700–1A10 and BD–700–1A11 airplanes, certificated in any category, serial numbers 9002 and subsequent.
Air Transport Association (ATA) of America Code 27, Flight controls.
This AD was prompted by a determination that the existing instruction in a certain task in the aircraft maintenance manual (AMM) will not accomplish the intent of a certification maintenance requirement (CMR). This CMR task tests the pitch feel (PF) and rudder travel limiter actuator (RTLA) back-up modules in the flight control unit (FCU) to detect dormant failures. We are issuing this AD to detect and correct a dormant failure of both FCU back-up modules. This condition, in combination with other failures in the FCU, may result in the inability to maintain the minimum control requirements for the PF and RTLA, which could create hazardous flight control inputs during flight.
Comply with this AD within the compliance times specified, unless already done.
(1) For airplanes with an FCU that has accumulated 3,000 total flight hours or more as of the effective date of this AD: Within 15 months or 700 hours flight hours, whichever occurs first, after the effective date of this AD, do an operational test of the FCU back-up modules, in accordance with the applicable service information specified in paragraph (h) of this AD.
(2) For airplanes with an FCU that has accumulated less than 3,000 hours total flight hours as of the effective date of this AD, and on which an operational test has been accomplished as specified in AMM Task 27–61–05–710–801 prior to the applicable AMM revisions specified in paragraph (i) of this AD: Within 15 months or 700 hours flight hours, whichever occurs first, after the effective date of this AD, do an operational test of the FCU back-up modules, in accordance with the applicable service information specified in paragraph (h) of this AD.
(3) For airplanes with an FCU that has accumulated less than 3,000 total flight hours as of the effective date of this AD, and on which an operational test has not been accomplished as specified in AMM task 27–61–05–710–801: Before the FCU accumulates 3,000 total flight hours, perform an operational test of the FCU back-up modules, in accordance with the applicable service information specified in paragraph (h) of this AD.
Do the actions required by paragraph (g) of this AD in accordance with the applicable service information specified in paragraphs (h)(1) through (h)(5) of this AD.
(1) Bombardier Global 5000, BD–700 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–48, dated October 5, 2015.
(2) Bombardier Global 5000 FEATURING GLOBAL VISION FLIGHT DECK, GL 5000 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–24, dated October 5, 2015.
(3) Bombardier Global 6000, GL 6000 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–24, dated October 5, 2015.
(4) Bombardier Global Express, BD–700 Aircraft Maintenance Manual—Part II, Temporary Revision No. 27–78, dated October 5, 2015.
(5) Bombardier Global Express ERS, BD0700 Airplane Maintenance Manual—Part II, Temporary Revision No. 27–47, dated October 5, 2015.
The following AMM revisions are used to comply with paragraph (g)(2) of this AD.
(1) For Model BD–700–1A10 airplanes: Use the AMM revision specified in paragraph (i)(1)(i), (ii), or (iii), as applicable.
(i) Bombardier Global Express GL700 AMM—Part II, Revision 61, dated March 3, 2014.
(ii) Bombardier Global Express GL XRS AMM—Part II, Revision 39, dated March 3, 2014.
(iii) Bombardier Global Express GL 6000 AMM—Part II, Revision 9, dated March 3, 2014.
(2) For Model BD–700–1A11 airplanes: Use Bombardier Global Express GL 5000 AMM—Part II, Revision 42, dated March 3, 2014; or
If any FCU fails any operational test required by this AD: Before further flight, repair using a method approved by the Manager, New York ACO, ANE–170, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO).
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF–2015–06R1, dated April 22, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514–855–5000; fax 514–855–7401; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all Rolls-Royce plc (RR) RB211–Trent 875–17, RB211–Trent 877–17, RB211–Trent 884–17, RB211–Trent 884B–17, RB211–Trent 892–17, RB211–Trent 892B–17, and RB211–Trent 895–17 turbofan engines. This proposed AD was prompted by a report of cracking and material release from an engine upper bifurcation fairing. This proposed AD would require repetitive inspections of the engine upper bifurcation fairing and repairing or replacing any fairing that fails inspection. We are proposing this AD to prevent failure of the engine fire protection system, engine fire, and damage to the airplane.
We must receive comments on this NPRM by September 13, 2016.
You may send comments by any of the following methods:
•
•
•
•
For service information identified in this proposed AD, contact Rolls-Royce plc, Corporate Communications, P.O. Box 31, Derby, England, DE24 8BJ; phone: 011–44–1332–242424; fax: 011–44–1332–249936; email:
You may examine the AD docket on the Internet at
Wego Wang, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781–238–7134; fax: 781–238–7199; email:
We invite you to send any written relevant data, views, or arguments about this NPRM. Send your comments to an address listed under the
We will post all comments we receive, without change, to
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2016–0084, dated April 28, 2016 (referred to hereinafter as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
Inspection of in-service Rolls-Royce RB211 Trent 800 engines has identified cracking and/or material release from the upper bifurcation fairing. This fairing hardware mates to the aeroplane thrust reverser upper bifurcation forward fire seal. Both sets of hardware create the engine firewall to isolate the engine compartment fire zone, which is a firewall feature of the aeroplane type design. Damage (missing materials and holes/
Failure to inspect the engine upper bifurcation fairing as proposed by this AD could result in failure of the engine fire protection system, engine fire, and damage to the airplane.
You may obtain further information by examining the MCAI in the AD docket on the Internet at
RR has issued Alert Non-Modification Service Bulletin (NMSB) RB.211–72–AJ165, dated March 31, 2016. The NMSB describes procedures for inspecting and, if necessary, repairing or replacing the engine upper bifurcation fairing.
This product has been approved by the aviation authority of the United Kingdom and is approved for operation in the United States. Pursuant to our bilateral agreement with the European Community, EASA has notified us of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design. This NPRM would require repetitive inspections of the engine upper bifurcation fairing and repairing or replacing any fairing that fails inspection.
We estimate that this proposed AD affects 125 engines installed on airplanes of U.S. registry. We estimate that it would take about 3.25 hours to inspect the upper bifurcation fairing do the inspection. We estimate that 5 engine fairings will require repair at 8 hours per engine and that an additional 5 engine fairings will require replacement at 30 hours per engine. We also estimate that materials and parts costs would be $500 for each engine. The cost for repair or replacement would be about $5,900 or $15,250 respectively. The average labor rate is $85 per hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $55,681.
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 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.
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 September 13, 2016.
None.
This AD applies to Rolls-Royce plc (RR) RB211–Trent 875–17, RB211–Trent 877–17, RB211–Trent 884–17, RB211–Trent 884B–17, RB211–Trent 892–17, RB211–Trent 892B–17, and RB211–Trent 895–17 turbofan engines.
This AD was prompted by a report of cracking and material release from an engine upper bifurcation fairing. We are issuing this AD to prevent failure of the engine fire protection system, engine fire, and damage to the airplane.
Comply with this AD within the compliance times specified, unless already done.
(1) Within 7,500 engine flight hours (EFHs) time since new, or since last inspection, or within 150 flight cycles after the effective date of this AD, whichever occurs later, inspect the engine upper bifurcation fairing for cracks or missing material. Use paragraph (e)(3) of this AD to perform the inspections.
(2) Repeat the inspection required by this AD within every 7,500 EFH time since last inspection.
(3) Inspect the engine upper bifurcation fairing as follows. Refer to Figure 1 of RR Alert Non-Modification Service Bulletin (NMSB) RB.211–72–AJ165, dated March 31, 2016, for guidance on upper bifurcation fairing inspection locations.
(i) Visually inspect upper bifurcation fairing seal face 22, seal support 23, and zone A for any cracks or material loss on the right side.
(A) If fairing seal face 22 is found to have released material, repair or replace the fairing before further flight.
(B) If there is a single crack found on fairing seal face 22, shorter than 6 mm, repair or replace the fairing within 100 engine flight cycles, or at the next shop visit, whichever occurs sooner.
(C) If there is a single crack found on fairing seal face 22, longer than 6 mm, repair or replace the fairing within 15 engine flight cycles or at the next shop visit, whichever occurs sooner.
(D) If there are two or more cracks found on fairing seal face 22, replace the fairing
(E) If there is any cracking or material loss found on seal support 23, replace the fairing within 15 engine flight cycles or at next shop visit, whichever occurs sooner.
(ii) If the visual inspection required by paragraph (e)(3)(i) of this AD does not detect any crack, fluorescent penetrant inspect zone A. Refer to AMM TASK 70–20–02, Water Washable Fluorescent Penetrant Inspection (Maintenance Process 213), or OMat 632, high sensitivity fluorescent penetrant inspection, for guidance on fluorescent penetrant inspection.
(A) If a crack shorter than 6 mm is detected, repair or replace the fairing within 100 engine flight cycles, or at the next shop visit, whichever occurs sooner.
(B) If a crack longer than 6 mm is detected, repair or replace the fairing within 15 engine flight cycles or at the next shop visit, whichever occurs sooner.
For the purpose of this AD, a “shop visit” is defined as induction of an engine into the shop for maintenance involving the separation of pairs of major mating engine flanges, except that the separation of engine flanges solely for the purposes of transportation without subsequent engine maintenance does not constitute an engine shop visit.
The Manager, Engine Certification Office, FAA, may approve AMOCs for this AD. Use the procedures found in 14 CFR 39.19 to make your request. You may email your request to:
(1) For more information about this AD, contact Wego Wang, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781–238–7134; fax: 781–238–7199; email:
(2) Refer to MCAI European Aviation Safety Agency AD 2016–0084, dated April 28, 2016, for more information. You may examine the MCAI in the AD docket on the Internet at
(3) RR NMSB RB.211–72–AJ165, dated March 31, 2016, can be obtained from RR, using the contact information in paragraph (g)(4) of this proposed AD.
(4) For service information identified in this proposed AD, contact Rolls-Royce plc, Corporate Communications, P.O. Box 31, Derby, England, DE24 8BJ; phone: 011–44–1332–242424; fax: 011–44–1332–249936; email:
(5) You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781–238–7125.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for Sikorsky Aircraft Corporation (Sikorsky) Model S–92A helicopters. This proposed AD would require inspecting the main transmission forward (fwd) and aft frame assembly and adjacent skins for a crack and loose fasteners and establishing life limits for certain frame assemblies. This proposed AD is prompted by fatigue analysis indicating stress concentrations as well as the discovery of a crack in the station (STA) 362 frame and skin on a Model S–92A helicopter. The proposed actions are intended to detect a crack in a frame assembly and prevent failure of a frame and subsequent loss of control of the helicopter.
We must receive comments on this proposed AD by September 13, 2016.
You may send comments by any of the following methods:
•
•
•
•
You may examine the AD docket on the Internet at
For service information identified in this proposed AD, contact Sikorsky Aircraft Corporation, Customer Service Engineering, 124 Quarry Road, Trumbull, CT 06611; telephone 1–800-Winged-S or 203–416–4299; email
Kristopher Greer, Aviation Safety Engineer, Boston Aircraft Certification Office, Engine & Propeller Directorate, 1200 District Avenue, Burlington, Massachusetts 01803; telephone (781) 238–7799; 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.
We propose to adopt a new AD for Sikorsky Model S–92A helicopters with certain part-numbered frame assemblies installed. This proposed AD is prompted by a fatigue analysis that indicates stress concentrations may develop at the steel doublers on the main transmission airframe support structure top deck, adjacent to the transmission feet. Additionally, a helicopter was discovered with a crack in the STA 362 frame and skin. This proposed AD would require inspecting the main transmission fwd and aft frame assemblies and adjacent skins for a crack and loose fasteners and replacing or repairing any cracked part or loose fastener. This proposed AD would also require establishing life limits for certain frame assemblies. The proposed actions are intended to detect a crack in the frame assemblies and to prevent failure of the main transmission frame assemblies and subsequent loss of control of the helicopter.
We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other helicopters of the same type design.
Sikorsky issued S–92 Alert Service Bulletin (ASB) 92–53–008, Basic Issue, dated June 13, 2012 (ASB 92–53–008); S–92 ASB 92–53–009, Basic Issue, dated December 6, 2012 (ASB 92–53–009); and S–92 ASB 92–53–012, Basic Issue, dated February 10, 2014 (ASB 92–53–012). ASB 92–53–008 provides procedures for a one-time inspection of the main transmission frames and beams for a crack, missing or loose fastener or collar, damage, deformation, and corrosion. ASB 92–53–009 specifies an inspection before the first flight of the day and a recurring 150-hour inspection of the interior and exterior surfaces of the upper flanges and beams. ASB 92–53–012 specifies altering the fwd and aft transmission support frames by replacing the fasteners in accordance with Sikorsky Special Service Instructions No. 92–074–E, Revision E, dated April 9, 2014. After this alteration, the parts are re-identified with a new part number. Sikorsky refers to this alteration as a service life extension program modification.
This proposed AD would establish a life limit for certain part-numbered frame assemblies by removing from service any part that has reached or exceeded its new life limit. Frame assemblies that are altered under Sikorsky's service life extension program and re-identified with a new part number must be removed from service upon accumulating the life limit of the old part-number or within certain hours TIS since the alteration, whichever occurs first.
This proposed AD would also require, for helicopters with certain part-numbered frame assemblies, within 24 clock-hours and thereafter before the first flight of each day or at intervals not to exceed 24 clock-hours, whichever occurs later, inspecting the top deck skin, straps, and fasteners for a crack and loose fasteners in two locations. If there is a loose fastener or a crack, this proposed AD would require repairing or replacing the cracked or loose part and performing additional inspections of the STA 328 frame, STA 362 frame, and the butt line (BL) 16.5 beams.
Finally, this proposed AD would require repetitively inspecting the STA 328 frame, STA 362 frame, and the BL 16.5 beams once the frame assembly exceeds certain hours TIS.
The service information requires providing certain information to Sikorsky and this proposed AD would not. The service information specifies performing a fluorescent penetrant inspection if there is a suspected crack and contacting Sikorsky if there is a crack, while this proposed AD would only require repairing or replacing any cracked part. Contacting Sikorsky would not be required.
We estimate that this proposed AD would affect 80 helicopters of U.S. Registry.
We estimate that operators may incur the following costs to comply with this AD. Labor costs are estimated at $85 per work-hour. We estimate a minimal cost to establish and revise the life limit of the frame assembly. We estimate it would take 1 work-hour to visually inspect the skin and 1 work-hour to inspect STA 328 and 362 frames. No parts would be needed for a total cost of $6,800 for the fleet for each inspection per inspection cycle. If a fastener is replaced, we estimate the cost to be minimal. If a frame is replaced, it would take 3,360 work-hours and a required parts cost of $296,000 for a total cost of $581,600 per helicopter.
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 S–92A helicopters, certificated in any category, with a forward (fwd) station (STA) 328 or aft STA 362 frame assembly with a part number (P/N) as shown in Table 1 to paragraph (e)(1), Table 2 to paragraph (e)(1), Table 3 to paragraph (e)(2), or Table 4 to paragraph (e)(3) of this AD.
This AD defines the unsafe condition as a crack in a main transmission airframe
We must receive comments by September 13, 2016.
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.
(1) For helicopters with a frame assembly with a P/N shown in Table 1 to paragraph (e)(1) or Table 2 to paragraph (e)(1) of this AD, before further flight, remove from service any part that has reached or exceeded its new life limit. Fwd STA 328 frame assemblies that are altered and changed to P/N 92070–20124–064, 92070–20124–067, 92070–20127–045, 92070–20124–065, 92070–20124–047, or 92070–20127–046 must be removed from service upon accumulating 12,000 hours TIS from the alteration or 28,500 hours TIS total (regardless of P/N), whichever occurs first.
(2) For helicopters with a frame assembly with a P/N shown in Table 1 to paragraph (e)(1), Table 2 to paragraph (e)(1), or Table 3 to paragraph (e)(2) of this AD: Within 24 clock-hours, and thereafter before the first flight of each day or at intervals not to exceed 24 clock-hours, whichever occurs later, using a 10X or higher power magnifying glass, inspect the skin, straps, and fasteners of the top deck for a crack and loose fasteners in two locations from the STA 328 frame to the STA 305 frame between the right butt line (BL) 16.5 beam and the left BL 16.5 beam, and from the STA 362 frame to the STA 379 frame between the right BL 16.5 beam and the left BL 16.5 beam. If there is a loose fastener or a crack:
(i) Repair or replace any cracked part and any loose fastener before further flight.
(ii) Inspect the STA 328 frame and STA 362 frame between the left and right BL16.5 beams and inspect the area on the left and right BL 16.5 beams six inches on either side of the mounting pads for a crack and loose fasteners. If there is a loose fastener or a crack, repair or replace any cracked part and any loose fastener before further flight.
(iii) Inspect the STA 328 and STA 362 outboard frames, left and right sides, from the BL 16.5 beam to water line 252.25 for a crack and loose fasteners. If there is a loose fastener or a crack, repair or replace any cracked part and any loose fastener before further flight.
(3) For each frame assembly listed in Table 1 to paragraph (e)(1) or Table 4 to paragraph (e)(3) of this AD with 1,801 or more hours TIS, and for each frame assembly listed in Table 2 to paragraph (e)(1) or Table 3 to paragraph (e)(2) of this AD with 1,301 or more hours TIS, within 150 hours TIS and thereafter at intervals not to exceed 150 hours TIS, perform the inspections in paragraphs (e)(2)(ii) and (e)(2)(iii) of this AD.
(1) The Manager, Boston Aircraft Certification Office, FAA, may approve AMOCs for this AD. Send your proposal to: Kristopher Greer, Aviation Safety Engineer, Engine & Propeller Directorate, 1200 District Avenue, Burlington, Massachusetts 01803; telephone (781) 238–7799; 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.
Sikorsky S–92 Alert Service Bulletin (ASB) 92–53–008, Basic Issue, dated June 13, 2012; ASB 92–53–009, Basic Issue, dated December 6, 2012; ASB 92–53–012, Basic Issue, dated February 10, 2014, and Sikorsky Special Service Instructions No. 92–074–E, Revision E, dated April 9, 2014, which are not incorporated by reference, contain additional information about the subject of this AD. For service information identified in this AD, contact Sikorsky Aircraft Corporation, Customer Service Engineering, 124 Quarry Road, Trumbull, CT 06611; telephone 1–800–Winged–S or 203–416–4299; email
You may review a copy of information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N–321, Fort Worth, Texas 76177.
Joint Aircraft Service Component (JASC) Code: 5311 Fuselage Main, Frame.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking.
This document contains proposed regulations under section 355 of the Internal Revenue Code (Code). The proposed regulations would clarify the application of the device prohibition and the active business requirement of section 355. The proposed regulations would affect corporations that distribute the stock of controlled corporations, their shareholders, and their security holders.
Written or electronic comments and requests for a public hearing must be received by October 13, 2016.
Send submissions to: CC:PA:LPD:PR (REG–134016–15), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20224. 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–134016–15), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20224. Submissions may also be sent electronically via the Federal eRulemaking Portal at
Concerning the proposed regulations, Stephanie D. Floyd or Russell P. Subin at (202) 317–6848; concerning submissions of comments and/or requests for a public hearing, Regina Johnson at (202) 317–6901 (not toll-free numbers).
This document contains proposed regulations that would amend 26 CFR part 1 under section 355 of the Code. The proposed regulations would provide additional guidance regarding the device prohibition of section 355(a)(1)(B) and provide a minimum threshold for the assets of one or more active trades or businesses, within the meaning of section 355(a)(1)(C) and (b), of the distributing corporation and each controlled corporation (in each case, within the meaning of section 355(a)(1)(A)).
This Background section of the preamble (1) summarizes the requirements of section 355, (2) discusses the development of current law and IRS practice under section 355 and the regulations thereunder, and (3) explains the reasons for the proposed regulations.
Generally, if a corporation distributes property with respect to its stock to a shareholder, section 301(b) provides that the amount of the distribution is equal to the amount of money and the fair market value of other property received. Under section 301(c), this amount is treated as (1) the receipt by the shareholder of a dividend to the extent of the corporation's earnings and profits, (2) the recovery of the shareholder's basis in the stock, and/or (3) gain from the sale or exchange of property. The corporation recognizes gain under section 311(b) to the extent the fair market value of the property distributed exceeds the corporation's adjusted basis in the property. However, section 355 provides that, under certain circumstances, a corporation (Distributing) may distribute stock and securities in a corporation it controls within the meaning of section 368(c) (Controlled) to its shareholders and security holders without causing either Distributing or its shareholders or security holders to recognize income, gain, or loss on the distribution.
Section 355 has numerous requirements for a distribution to be tax-free to Distributing and its shareholders. Some of these requirements are intended to prevent a distribution from being used inappropriately to avoid shareholder-level tax on dividend income. As examples, section 355(a)(1)(B) provides that the transaction must not be used principally as a device for the distribution of the earnings and profits of Distributing or Controlled or both (a device), and section 355(a)(1)(C) and (b) require Distributing and Controlled each to be engaged, immediately after the distribution, in the active conduct of a trade or business (an active business). To qualify for this purpose, an active business must have been actively conducted throughout the five-year period ending on the date of the distribution and must not have been acquired, directly or indirectly, within this period in a transaction in which gain or loss was recognized. Section 355(b)(2)(B), (C), and (D).
Distributions of the stock of Controlled generally take three different forms: (1) A pro rata distribution to Distributing's shareholders of the stock of Controlled (a spin-off), (2) a distribution of the stock of Controlled in redemption of Distributing stock (a split-off), or (3) a liquidating distribution in which Distributing distributes the stock of more than one Controlled, either pro rata or non-pro rata (in either case, a split-up).
The earliest predecessor of section 355 was section 202(b) of the Revenue Act of 1918, ch. 18 (40 Stat. 1057, 1060), which permitted a tax-free exchange by a shareholder of stock in a corporation for stock in another corporation in connection with a reorganization. This section did not allow tax-free spin-offs. In section 203(c) of the Revenue Act of 1924, ch. 234 (43 Stat. 253, 256), Congress amended this provision to allow tax-free spin-offs pursuant to plans of reorganization.
Taxpayers tried to use this provision to avoid the dividend provisions of the Code by having Distributing contribute surplus cash or liquid assets to a newly formed Controlled and distribute the Controlled stock to its shareholders.
In section 317(a) of the Revenue Act of 1951, ch. 521 (65 Stat. 452, 493), Congress re-authorized spin-offs pursuant to plans of reorganization:
During debate on this legislation, Senator Hubert Humphrey expressed concerns about spin-offs and argued that these restrictions were necessary.
Until 1954, a spin-off, split-off, or split-up was eligible for tax-free treatment only if Distributing transferred property to Controlled as part of a reorganization. In 1954, Congress adopted section 355 as part of the 1954 Code. As a significant innovation, section 355 allowed spin-offs, split-offs, and split-ups to be tax-free without a reorganization, and this innovation remains in effect.
Courts applying section 355 (or a predecessor provision) have generally
Other courts have found that a transaction does qualify under section 355 despite its failure to comply with all of the statutory requirements. For example, in
We think that the draftsmen of Section 355 intended these subsections to apply only to the bringing of new assets within the combined corporate shells of the distributing and the controlled corporations. Therefore, it is irrelevant in this case whether gain was recognized on the intercorporate transfer.
Regulations under section 355 of the 1954 Code were issued in 1955 (the 1955 regulations). TD 6152 (20 FR 8875). These regulations included § 1.355–2(b)(3), which provided the following:
In determining whether a transaction was used principally as a device for the distribution of the earnings and profits of the distributing corporation or of the controlled corporation or both, consideration will be given to all of the facts and circumstances of the transaction. In particular, consideration will be given to the nature, kind and amount of the assets of both corporations (and corporations controlled by them) immediately after the transaction. The fact that at the time of the transaction substantially all of the assets of each of the corporations involved are and have been used in the active conduct of trades or businesses which meet the requirements of section 355(b) will be considered evidence that the transaction was not used principally as such a device.
Additional regulations under section 355 were issued in 1989 (the 1989 regulations). TD 8238 (54 FR 283). These regulations provide substantially more guidance than the 1955 regulations to determine whether a distribution was a device. Section 1.355–2(d)(1) provides that “a tax-free distribution of the stock of a controlled corporation presents a potential for tax avoidance by facilitating the avoidance of the dividend provisions of the Code through the subsequent sale or exchange of stock of one corporation and the retention of the stock of another corporation. A device can include a transaction that effects a recovery of basis.”
This provision clarifies that, although the device prohibition primarily targets the conversion of dividend income to capital gain, a device can still exist if there would be a recovery of stock basis in lieu of receipt of dividend income and even if the shareholder's federal income tax rates on dividend income and capital gain are the same.
The 1989 regulations also expand on the statement in the 1955 regulations that the device analysis takes into account all of the facts and circumstances by specifying three factors that are evidence of device and three factors that are evidence of nondevice. One of the device factors, described in § 1.355–2(d)(2)(iv)(B), expands the statement in the 1955 regulations that consideration will be given to the nature, kind, and amount of the assets of Distributing and Controlled immediately after the transaction (the nature and use of assets device factor). First, this provision provides that “[t]he existence of assets that are not used in a trade or business that satisfies the requirements of section 355(b) is evidence of device. For this purpose, assets that are not used in a trade or business that satisfies the requirements of section 355(b) include, but are not limited to, cash and other liquid assets that are not related to the reasonable needs of a business satisfying such section.” This provision continues to provide that “[t]he strength of the evidence of device depends on all the facts and circumstances, including, but not limited to, the ratio for each corporation of the value of assets not used in a trade or business that satisfies the requirements of section 355(b) to the value of its business that satisfies such requirements.” Finally, the provision provides that “[a] difference in the ratio described in the preceding sentence for the distributing and controlled corporation is ordinarily not evidence of device if the distribution is not pro rata among the shareholders of the distributing corporation and such difference is attributable to a need to equalize the value of the stock distributed and the value of the stock or securities exchanged by the distributees.”
Although this provision describes the factor, it provides little guidance relating to the quality or quantity of the relevant assets and no guidance on how the factor relates to other device factors or nondevice factors.
The nondevice factors in § 1.355–2(d)(3) are the presence of a corporate business purpose, the fact that the stock of Distributing is publicly traded and widely held, and the fact that the distribution is made to certain domestic corporate shareholders.
Section 1.355–2(d)(5) specifies certain distributions that ordinarily are not considered a device, notwithstanding the presence of device factors, because they ordinarily do not present the potential for federal income tax avoidance in converting dividend income to capital gain or using stock basis to reduce shareholder-level tax. These transactions include a distribution that, in the absence of section 355, with respect to each distributee, would be a redemption to which sale-or-exchange treatment applies.
Section 1.355–3 provides rules for determining whether Distributing and Controlled satisfy the active business requirement. Proposed regulations issued in 2007 would amend § 1.355–3. REG–123365–03 (72 FR 26012). The Treasury Department and the IRS continue to study the active business requirement issues considered in those proposed regulations.
The fact that Distributing's or Controlled's qualifying active business
There is no requirement in section 355(b) that a specific percentage of the corporation's assets be devoted to the active conduct of a trade or business. In the instant case, therefore, it is not controlling for purposes of the active business requirement that the active business assets of the controlled corporation, Y, represent less than half of the value of the controlled corporation immediately after the distribution.
The IRS has taken the position, in letter rulings and internal memoranda, that an active business can satisfy the active business requirement regardless of its absolute or relative size. However, no published guidance issued by the Treasury Department or the IRS takes this position.
In 1996, the Treasury Department and the IRS issued Rev. Proc. 96–43 (1996–2 CB 330), which provided that (1) the IRS ordinarily would not issue a letter ruling or determination letter on whether a distribution was described in section 355(a)(1) if the gross assets of the active business would have a fair market value that was less than five percent of the total fair market value of the gross assets of the corporation directly conducting the active business, but (2) a ruling might be issued “if it can be established that, based upon all relevant facts and circumstances, the trades or businesses are not de minimis compared with the other assets or activities of the corporation and its subsidiaries.” This no-rule provision was eliminated in Rev. Proc. 2003–48 (2003–2 CB 86). Since that time, until the publication of Rev. Proc. 2015–43 (2015–40 IRB 467) and Notice 2015–59 (2015–40 IRB 459), discussed in Part D.1 of this Background section of the preamble, the IRS maintained its position that the relative size of an active business is a device factor rather than a section 355(b) requirement. The IRS issued numerous letter rulings on section 355 distributions involving active businesses that were de minimis in value compared to the other assets of Distributing or Controlled.
The IRS interpreted section 355(b) in this manner in part as a result of the mechanical difficulties of satisfying the active business requirement. These mechanical difficulties are discussed further in Part D.3.c of this Background section of the preamble.
As an example, until section 355(b) was amended by section 202 of the Tax Increase Prevention and Reconciliation Act of 2005, Public Law 109–222 (120 Stat. 345, 348); Division A, section 410 of the Tax Relief and Health Care Act of 2006, Public Law 109–432 (120 Stat. 2922, 2963); and section 4(b) of the Tax Technical Corrections Act of 2007, Public Law 110–172 (121 Stat. 2473, 2476) (the Separate Affiliated Group, or SAG, Amendments), if, immediately after the distribution, a corporation did not directly engage in an active business, it could satisfy the active business requirement only if substantially all of its assets consisted of stock and securities of corporations it controlled that were engaged in an active business (the holding company rule).
As another example, until 1992, no guidance provided that Distributing or Controlled could rely on activities conducted by a partnership to satisfy the active business requirement, even if Distributing or Controlled held a substantial interest in the partnership and participated in its management. This situation changed after the Treasury Department and the IRS published revenue rulings permitting this reliance.
The device prohibition continues to be important even though the federal income tax rates for dividend income and capital gain may be identical for many taxpayers. In Rev. Proc. 2003–48, the Treasury Department and the IRS announced that the IRS would no longer rule on whether a transaction is a device or has a business purpose. As a result, since the publication of Rev. Proc. 2003–48, the IRS has made only limited inquiries as to device and business purpose issues raised in requests for private letter rulings under section 355.
As explained in Part C of this Background section of the preamble, section 355 and its predecessors have had a long and contentious history. Despite the safeguards in the Code and regulations, and the courts' interpretations in accordance with congressionally-articulated statutory purposes, taxpayers have attempted to use section 355 distributions in ways that the Treasury Department and the IRS have determined to be inconsistent with the purpose of section 355.
On September 14, 2015, the Treasury Department and the IRS issued Rev. Proc. 2015–43 and Notice 2015–59 in response to concerns relating to distributions involving relatively small active businesses, substantial amounts of investment assets, and regulated investment companies (RICs) or real estate investment trusts (REITs). The notice states that the Treasury Department and the IRS are studying issues under sections 337(d) and 355 relating to these transactions and that these transactions may present evidence of device, lack an adequate business purpose or a qualifying active business, or circumvent the purposes of Code provisions intended to implement repeal of the
The proposed regulations in this notice of proposed rulemaking would address the device prohibition (including the business purpose requirement as it pertains to device) and the active business requirement. Congress has addressed certain other issues discussed in Notice 2015–59.
The commenter believes that new rules are not needed for transactions that raise the purely shareholder-level concerns that are the subject of the device prohibition. According to the commenter, those transactions likely do not qualify under section 355 under current law and are infrequent. Although largely agreeing with this statement, the Treasury Department and the IRS have determined that certain clarifying changes should be made to the device rules. As discussed in Part C.3.b of this Background section of the preamble, the current regulations relating to device are not specific as to the quality or quantity of assets relevant in the nature and use of assets device factor or the appropriate weighing of the device and nondevice factors. The Treasury Department and the IRS have determined that, in some situations, insufficient weight has been given to the nature and use of assets device factor and that device factors have not been balanced correctly against nondevice factors.
For example, if, after a distribution, Distributing or Controlled holds mostly liquid nonbusiness assets, the shareholders of that corporation can sell their stock at a price that reflects the value of the nonbusiness assets, and such a sale is economically similar to a distribution of the liquid nonbusiness assets to the shareholders that would have been treated as a dividend to the extent of earnings and profits of the corporation.
Taxpayers have taken the position that nondevice factors in the regulations can outweigh the substantial evidence of device presented in such distributions. For example, certain taxpayers have viewed even a weak business purpose, combined with the fact that the stock of Distributing is publicly traded, as offsetting evidence of device presented by distributions effecting a separation of nonbusiness assets from business assets, even if pressure from public shareholders was a significant motivation for the distribution. The Treasury Department and the IRS do not agree that these types of nondevice factors should outweigh the substantial evidence of device presented by a distribution that separates nonbusiness assets from business assets.
Accordingly, the Treasury Department and the IRS have determined that the regulations should provide clearer, more objective guidance regarding the nature and use of assets device factor and the appropriate weighing of device factors and nondevice factors. The Treasury Department and the IRS also have determined that if a high enough proportion of assets of Distributing or Controlled consists of nonbusiness assets, and if the assets of the other corporation include a much lower proportion of nonbusiness assets, the evidence of device is so strong that nondevice factors generally should not be allowed to overcome the evidence of device.
The commenter also noted that the importance of device, traditionally understood as reflecting shareholder-level policies, has diminished in the context of a unified rate regime for long-term capital gains and qualified dividend income for some taxpayers. However, because of continuing differences in the federal income tax treatment of capital gains and dividends, including the potential for basis recovery (
The commenter stated that section 355 is meant to apply to genuine separations of businesses, and that section 355(b) should not function as a formality. Nevertheless, the commenter does not believe that the active business requirement needs to be strengthened through the adoption of a requirement of a minimum amount of active business assets.
After studying this issue, the Treasury Department and the IRS have determined that Distributing or Controlled should not satisfy the active business requirement by holding a relatively de minimis active business. As described in the remainder of this Part D.3, the Treasury Department and the IRS have determined that interpreting section 355(b) as having meaning and substance and therefore requiring an active business that is economically significant is consistent with congressional intent, case law, and the reorganization provisions. In addition, given the developments in the tax law described in Part D.3.c of this Background section of the preamble, the Treasury Department and the IRS have determined that allowing a de minimis active business to satisfy the active business requirement is not necessary to reduce the burden of compliance with the active business requirement. Furthermore, requiring a minimum relative size for an active business is not inconsistent with the facts of Rev. Rul. 73–44 or with its conclusion.
Allowing section 355(b) to be satisfied with an active business that is economically insignificant in relation to other assets of Distributing or Controlled is not consistent with the congressional purpose for adopting the active business requirement. It is generally understood that Congress intended section 355 to be used to separate businesses, not to separate inactive assets from a business.
Further, as the Supreme Court held in
Accordingly, when a corporation that owns only nonbusiness assets and a relatively de minimis active business is separated from a corporation with another active business, the substance of the transaction is not a separation of businesses as contemplated by section 355.
In the past, the active business requirement was more difficult to satisfy than it is today, in part because of the limited application of the holding company rule, discussed in Part C.5 of this Background section of the preamble. However, several developments in the tax law have occurred that make the active business requirement easier to satisfy and negate the historical need to reduce the administrative burden of complying with section 355(b).
In the SAG Amendments, Congress amended section 355(b) to adopt the separate affiliated group rules of section 355(b)(3). Section 355(b)(3)(A) provides that, for purposes of determining whether a corporation meets the requirements of section 355(b)(2)(A), all members of the corporation's separate affiliated group (SAG) are treated as one corporation. Section 355(b)(3)(B) provides that a corporation's SAG is the affiliated group which would be determined under section 1504(a) if the corporation were the common parent and section 1504(b) did not apply.
Additionally, as discussed in Part C.5 of this Background section of the preamble, section 355(b) now can be satisfied through the ownership of certain interests in a partnership that is engaged in an active business.
Rev. Rul. 73–44 is sometimes cited in support of the proposition that a de minimis active business satisfies the section 355(b) requirement. However, Rev. Rul. 73–44 states only that there is no requirement in section 355(b) that a specific percentage of a corporation's assets be devoted to the active conduct of a trade or business, not that any size active business can satisfy section 355(b). In fact, the size of the active business in that ruling represented a substantial portion of Controlled's assets, although less than half of Controlled's value. Accordingly, Rev. Rul. 73–44 does not validate a section 355 distribution involving a de minimis active business, and the proposed regulations in this notice of proposed rulemaking addressing the minimum relative size of active businesses would not change the conclusion set forth in that revenue ruling. Nevertheless, the Treasury Department and the IRS intend to modify Rev. Rul. 73–44 with regard to the statement in the revenue ruling that there is no requirement that a specific percentage of a corporation's assets be devoted to the active conduct of a trade or business.
The Treasury Department and the IRS have observed, as noted in Notice 2015–59, that taxpayers may attempt to use section 355 distributions in ways that are inconsistent with the purpose of
The proposed regulations would modify § 1.355–2(d), which addresses transactions that are or are not a device. The proposed regulations would modify the nature and use of assets device factor in § 1.355–2(d)(2)(iv), modify the corporate business purpose nondevice factor in § 1.355–2(d)(3)(ii), and add a per se device test.
The Treasury Department and the IRS have determined that device potential generally exists either if Distributing or Controlled owns a large percentage of assets not used in business operations compared to total assets or if Distributing's and Controlled's percentages of these assets differs substantially. A proposed change to the nature and use of assets device factor in § 1.355–2(d)(2)(iv) would focus on assets used in a Business (Business Assets) (each as defined in proposed § 1.355–2(d)(2)(iv)(B)) rather than assets used in an active business meeting the requirements of section 355(b) (a Five-Year-Active Business, as defined in proposed § 1.355–9(a)(2)). In general, Business would have the same meaning as a Five-Year-Active Business, but without regard to whether the business has been operated or owned for at least five years prior to the date of the distribution or whether the collection of income requirement in § 1.355–3(b)(2)(ii) is satisfied. Business Assets would be gross assets used in a Business, including reasonable amounts of cash and cash equivalents held for working capital and assets required to be held to provide for exigencies related to a Business or for regulatory purposes with respect to a Business. The Treasury Department and the IRS have determined that the presence of
Rev. Proc. 2015–43 (now incorporated into Rev. Proc. 2016–3 (2016–1 IRB 126)) and Notice 2015–59 focus on investment assets (using a modified section 355(g) definition) of a corporation as assets that may raise device concerns. However, after further study, the Treasury Department and the IRS have determined that investment assets as defined therein may include certain assets that do not raise device concerns, such as cash needed by a corporation for working capital, and may not include other assets that do raise device concerns, such as real estate not related to the taxpayer's Business. The Treasury Department and the IRS have determined that focusing on Nonbusiness Assets, as defined in the proposed regulations, is a better method of evaluating device or nondevice as compared to using investment assets as described in Rev. Proc. 2016–3 and Notice 2015–59. Thus, the proposed regulations would focus on Nonbusiness Assets rather than investment assets.
The proposed regulations would provide thresholds for determining whether the ownership of Nonbusiness Assets (gross assets that are not Business Assets) and/or differences in the Nonbusiness Asset Percentages (the percentage of a corporation's Total Assets (its Business Assets and Nonbusiness Assets) that are Nonbusiness Assets) for Distributing and Controlled are evidence of device. If neither Distributing nor Controlled has Nonbusiness Assets that comprise 20 percent or more of its Total Assets, the ownership of Nonbusiness Assets ordinarily would not be evidence of device. Additionally, a difference in the Nonbusiness Asset Percentages for Distributing and Controlled ordinarily would not be evidence of device if such difference is less than 10 percentage points or, in the case of a non-pro rata distribution, if the difference is attributable to a need to equalize the value of the Controlled stock and securities distributed and the consideration exchanged therefor by the distributees. Accordingly, the Treasury Department and the IRS propose to treat such circumstances as ordinarily not constituting evidence of device.
The Treasury Department and the IRS also propose to revise the nondevice factor in § 1.355–2(d)(3)(ii), which relates to corporate business purpose for a transaction as evidence of nondevice. Under the proposed revision, a corporate business purpose that relates to a separation of Nonbusiness Assets from one or more Businesses or from Business Assets would not be evidence of nondevice, unless the business purpose involves an exigency that requires an investment or other use of the Nonbusiness Assets in a Business. The Treasury Department and the IRS have determined that, absent such an exigency, such separations are not consistent with the intent of Congress to prevent section 355 from applying to a distribution that is used principally as a device.
The Treasury Department and the IRS also propose to add a per se device test to the device determination in proposed § 1.355–2(d)(5). Under proposed § 1.355–2(d)(5), if designated percentages of Distributing's and/or Controlled's Total Assets are Nonbusiness Assets, the transaction would be considered a device, notwithstanding the presence of any other nondevice factors, for example, a corporate business purpose or stock being publicly traded and widely held. By their nature, these transactions present such clear evidence of device that the Treasury Department and the IRS have determined that the nondevice factors can never overcome the device potential. The only exceptions to this per se device rule would apply if the distribution is also described in § 1.355–2(d)(3)(iv) (distributions in which the corporate distributee would be entitled to a dividends received deduction under section 243(a) or 245(b)) or in redesignated § 1.355–2(d)(6) (§ 1.355–2(d)(5) of the current regulations, relating to transactions ordinarily not considered as a device).
The per se device test would have two prongs, both of which must be met for the distribution to be treated as a per se device.
The first prong would be if Distributing or Controlled has a Nonbusiness Asset Percentage of 66
The second prong of the test would compare the Nonbusiness Asset Percentage of Distributing with that of Controlled. The comparison would be similar to the comparison, in § 1.355–2(d)(2)(iv)(B) of the current regulations, between Distributing's ratio of assets not used in a Five-Year-Active Business to assets used in a Five-Year-Active Business and Controlled's ratio of such assets. However, the Treasury Department and the IRS recognize that valuation of assets may be difficult and that determining whether certain assets are Business Assets also may be difficult. Accordingly, rather than requiring Distributing and Controlled to make exact determinations of their Nonbusiness Asset Percentages, which would then be compared to the other corporation's Nonbusiness Asset Percentage, the second prong of the per se device test would provide for three bands in making this comparison. These bands generally would provide for the comparison of the Nonbusiness Asset Percentages of Distributing and Controlled but require less precision in asset valuation.
In the first band, if one corporation's Nonbusiness Asset Percentage is 66
If both prongs of the per se device test are met, that is, if the Nonbusiness Asset Percentage for either Distributing or Controlled is 66
In making the determination of which assets of a corporation are Business Assets and which are Nonbusiness Assets, if Distributing or Controlled owns a partnership interest or stock in
First, all members of a SAG with respect to which Controlled is the common parent (CSAG) and all members of a SAG with respect to which Distributing is the common parent excluding Controlled and its SAG (DSAG) would be treated as a single corporation. Thus, any stock owned by one member of a SAG in another member of the same SAG and any intercompany obligations between the same SAG members would be disregarded.
Second, a partnership interest would generally be considered a Nonbusiness Asset. However, if, by reason of a corporation's ownership interest or its ownership interest and participation in management of the partnership, the corporation is considered to be engaged in the Business conducted by such partnership (based on the criteria that would be used to determine whether such corporation is considered to be engaged in the Five-Year-Active Business of such partnership under Rev. Ruls. 92–17, 2002–49, and 2007–42), the fair market value of the partnership interest would be allocated between Business Assets and Nonbusiness Assets in the same proportion as the proportion of the fair market values of the Business Assets and the Nonbusiness Assets of the partnership.
Third, a rule similar to the partnership interest rule would apply for corporate stock owned by Distributing or Controlled. That is, stock in a corporation, other than a member of the DSAG or the CSAG, would generally be a Nonbusiness Asset. However, there would be an exception for stock in a Member of a 50-Percent-Owned Group. For this purpose, a 50-Percent-Owned Group would have the same meaning as SAG, except substituting “50-percent” for “80-percent,” and a Member of a 50-Percent-Owned Group would be a corporation that would be a member of a DSAG or CSAG, with such substitution. If a Member of a 50-Percent-Owned Group with respect to Distributing or Controlled owns stock in another Member of such 50-Percent-Owned Group (other than a member of the DSAG or the CSAG, respectively), the fair market value of such stock would be allocated between Business Assets and Nonbusiness Assets in the same proportion as the proportion of the fair market values of the Business Assets and the Nonbusiness Assets of the issuing corporation.
Fourth, the proposed regulations would provide for adjustments to prevent distortion if Distributing or Controlled owes money to or is owed money by a partnership or Member of a 50-Percent-Owned Group.
The partnership rules and the 50-Percent-Owned Group rules are designed to recognize that ownership of a partnership interest or stock in a Member of a 50-Percent-Owned Group may reflect an investment in Business Assets, Nonbusiness Assets, or both, while minimizing the significance of changes in the form of ownership of Business Assets and Nonbusiness Assets.
If a transaction involves distributions by Distributing of the stock of more than one Controlled, proposed §§ 1.355–2(d)(2)(iv) and 1.355–2(d)(5) would apply to all such Controlleds. To the extent any rule would require a comparison between characteristics of Distributing and Controlled, there would have to be a comparison between Distributing and each Controlled and between each Controlled and each other Controlled. If any comparison under proposed § 1.355–2(d)(2)(iv) or § 1.355–2(d)(5) would result in a determination that a distribution is a device, then all distributions involved in the transaction would be considered a device.
Section 355(b) does not literally provide a minimum absolute or relative size requirement for an active business to qualify under section 355(b). Nevertheless, as discussed in Part D.3 of the Background section of the preamble, the Treasury Department and the IRS have determined that Congress intended that section 355(b) would require that distributions have substance and that a distribution involving only a relatively de minimis active business should not qualify under section 355 because such a distribution is not a separation of businesses as contemplated by section 355.
To ensure that congressional intent is satisfied and to reduce uncertainty, the Treasury Department and the IRS propose to add new § 1.355–9. This section would provide that, for the requirements of section 355(a)(1)(C) and (b) to be satisfied with respect to a distribution, the Five-Year-Active-Business Asset Percentage (the percentage determined by dividing the fair market value of a corporation's Five-Year-Active-Business Assets by the fair market value of its Total Assets) of each of Controlled (or the CSAG) and Distributing (or the DSAG excluding Controlled and other CSAG members) must be at least five percent. Similar to the proposed definition of Business Assets, Five-Year-Active-Business Assets would include reasonable amounts of cash and cash equivalents held for working capital and assets required to be held to provide for exigencies related to a Five-Year-Active Business or for regulatory purposes with respect to a Five-Year-Active Business.
In making the determination of the percentage of a corporation's assets that are Five-Year-Active-Business Assets, if a corporation is considered to be engaged in a Five-Year-Active Business of a partnership, the fair market value of the partnership interest would be allocated between Five-Year-Active-Business Assets and Non-Five-Year-Active-Business Assets (assets other than Five-Year-Active-Business Assets) in the same proportion as the proportion of the fair market values of Five-Year-Active-Business Assets and Non-Five-Year-Active-Business Assets of the partnership.
Except in the case of a member of its SAG, neither Distributing nor Controlled would be considered to be engaged in the Five-Year-Active Business of a corporation in which it owns stock. Accordingly, such stock in a corporation would be considered a Non-Five-Year-Active-Business Asset. Although the proposed regulations relating to the device prohibition would provide an allocation rule for assets held by a Member of a 50-Percent-Owned Group, discussed in Part A.4 of this Explanation of Provisions section of the preamble, the Treasury Department and the IRS believe the SAG Amendments, discussed in Parts C.5 and D.3.c of the Background section of the preamble, limit the ability to take into account assets held by subsidiaries for purposes of the active business requirement. Accordingly, proposed § 1.355–9 would not provide a similar allocation rule for stock owned by Distributing or Controlled.
The commenter stated that the regulations should not provide a minimum size requirement for an active business in any distribution and that such a requirement could be especially problematic in intra-group distributions in preparation for a distribution outside of a group. Internal distributions often are necessary to align the proper assets within Distributing and Controlled prior to a distribution of the stock of Controlled outside the group. If a minimum size requirement is imposed on each of these internal distributions, taxpayers may have to undertake movements of active businesses within groups to meet the minimum size requirement for each internal distribution.
In enacting the SAG Amendments, Congress did not provide an exception to the requirements of section 355(b) for internal distributions that are preparatory to external distributions, although Congress permitted Distributing and Controlled to rely on active businesses held by members of their respective SAGs, even if such assets were distributed or sold within the SAG in a taxable transaction. Under the commenter's rationale, the regulations should not only permit an internal distribution with a de minimis active business, but could also permit tax-free treatment for taxable distributions or sales of assets within the SAG if such assets need to be moved in preparation of the external distribution. The Treasury Department and the IRS have determined that each distribution must meet all the requirements of section 355, including the requirement that Distributing and each Controlled conduct an active business immediately after the distribution. Accordingly, the proposed regulations would provide a five-percent minimum Five-Year-Active-Business Asset Percentage requirement for all distributions.
For purposes of determining whether a transaction would be considered a device and whether one or more Five-Year-Active Businesses would meet the five-percent minimum Five-Year-Active-Business Asset Percentage requirement of proposed § 1.355–9, the assets held by Distributing and by Controlled must be identified, and their character and fair market value must be determined. The assets under consideration would be the assets held by Distributing and by Controlled immediately after the distribution. Thus, for example, the stock of Controlled that is distributed would not be an asset of Distributing for this purpose. The character of the assets held by Distributing and by Controlled, as Business Assets or Nonbusiness Assets or as Five-Year-Active-Business Assets or Non-Five-Year-Active-Business Assets, also would be the character as determined immediately after the distribution.
The proposed regulations would provide, however, that the fair market value of assets would be determined, at the election of the parties on a consistent basis, either (a) immediately before the distribution, (b) on any date within the 60-day period before the distribution, (c) on the date of an agreement with respect to the distribution that was binding on Distributing on such date and at all times thereafter, or (d) on the date of a public announcement or filing with the Securities and Exchange Commission with respect to the distribution. The parties would be required to make consistent determinations between themselves, and use the same date, for purposes of applying the device rules of proposed § 1.355–2(d) and the five-percent minimum Five-Year-Active-Business Asset Percentage requirement of proposed § 1.355–9. If the parties do not meet these consistency requirements, the valuation would be determined as of immediately before the distribution unless the Commissioner determines that the use of such date is inconsistent with the purposes of section 355 and the regulations thereunder.
The proposed regulations would also provide anti-abuse rules. Under the anti-abuse rules, a transaction or series of transactions (such as a change in the form of ownership of an asset; an issuance, assumption or repayment of indebtedness; or an issuance or redemption of stock) would not be given effect if undertaken with a principal purpose of affecting the Nonbusiness Asset Percentage of any corporation in order to avoid a determination that a distribution was a device or affecting the Five-Year-Active-Business Asset Percentage of any corporation in order to avoid a determination that a distribution does not meet the requirements of § 1.355–9. The transactions covered by the anti-abuse rules generally would not include an acquisition or disposition of assets, other than an acquisition from or disposition to a person the ownership of whose stock would, under section 318(a) (other than paragraph (4) thereof), be attributed to Distributing or Controlled, or a transfer of assets between Distributing and Controlled. However, such transactions would not be given effect if they are transitory, for example, if Distributing contributes cash to Controlled and retains some of the stock of Controlled or Controlled debt instruments, and there is a plan or intention for Controlled to return the cash to Distributing in redemption of the stock or repayment of the debt.
IRS revenue procedures, revenue rulings, notices, and other guidance cited in this document are published in the Internal Revenue Bulletin (or Cumulative Bulletin) and are available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402, or by visiting the IRS Web site at
Section 3 of Notice 2015–59 is obsolete as of July 15, 2016. The IRS will modify Rev. Rul. 73–44, as of the date the Treasury decision adopting these regulations as final regulations is published in the
Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these proposed regulations. Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that these regulations primarily affect larger corporations operating more than one business and with a substantial number of shareholders. Thus, these regulations are not expected to affect a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Code, these regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any written or electronic comments that are submitted timely to the IRS as prescribed in this preamble under the
1. Whether there should be any exceptions to the application of proposed § 1.355–9.
2. Whether additional exceptions should be incorporated into the per se device rule in proposed § 1.355–2(d)(5).
3. The scope of the safe harbors relating to presence of Nonbusiness Assets as evidence of device under
4. Whether the definition of Business Assets in proposed § 1.355–2(d)(2)(iv)(B)(
5. Whether the operating rules applicable to proposed § 1.355–2(d)(2)(iv)(D)(
6. Whether the anti-abuse rules in the proposed regulations pertaining to device and the five-percent minimum Five-Year-Active-Business Assets requirement should be revised, for example, to include or exclude additional transactions or to include a reference to acquisitions of assets by Distributing or Controlled on behalf of shareholders.
7. Whether the absence of any device factor, for example, a small difference in Nonbusiness Asset Percentages for Distributing and Controlled, should be considered a nondevice factor.
All comments will be available at
A public hearing will be scheduled if requested in writing by any person that timely submits written or electronic comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the
The principal authors of these proposed regulations are Stephanie D. Floyd and Russell P. Subin of the Office of Associate Chief Counsel (Corporate). Other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
6 U.S.C. 7805 * * *
The revisions and additions read as follows:
(d) * * *
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(B) Definitions.
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(C) Presence of Nonbusiness Assets as evidence of device.
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(E) Anti-abuse rule.
(5) Distributions involving separation of Business Assets from Nonbusiness Assets.
(i) In general.
(ii) Definitions and operating rules.
(iii) Certain distributions involving separation of Nonbusiness Assets from Business Assets.
(iv) Anti-abuse rule.
(i) * * *
(1) Paragraph (d) of this section.
(i) In general.
(ii) Transition rule.
(2) Paragraph (g) of this section.
(a) Definitions.
(1) Distributing, Controlled.
(2) Five-Year-Active Business.
(3) Five-Year-Active-Business Assets.
(4) Non-Five-Year-Active-Business Assets.
(5) Total Assets.
(6) Five-Year-Active-Business Asset Percentage.
(7) Separate Affiliated Group, CSAG, and DSAG.
(b) Five percent minimum Five-Year-Active-Business Asset Percentage.
(c) Operating rules.
(1) Treatment of SAG and fair market value.
(2) Time to identify assets, determine character of assets, and determine fair market value of assets.
(3) Interest in partnership.
(i) In general.
(ii) Exception for certain interests in partnerships.
(d) Anti-abuse rule.
(e) Effective/applicability date.
(1) In general.
(2) Transition rule.
The revisions and additions read as follows:
(d) * * *
(1) * * * However, if a transaction is specified in paragraph (d)(5)(iii) of this section, then it is considered to have been used principally as a device unless it is also specified in paragraph (d)(3)(iv) of this section or paragraph (d)(6) of this section. If a transaction is specified in paragraph (d)(6) of this section, then it is ordinarily considered not to have been used principally as a device.
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(A) The Nonbusiness Asset Percentage of the distributing corporation or the controlled corporation is 66
(B) If the Nonbusiness Asset Percentage of the distributing corporation or the controlled corporation is—
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(iv)
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(A) Made pursuant to an agreement, resolution, or other corporate action that is binding on or before the date the Treasury decision adopting these regulations as final regulations is published in the
(B) Described in a ruling request submitted to the Internal Revenue Service on or before July 15, 2016; or
(C) Described in a public announcement or filing with the Securities and Exchange Commission on or before the date the Treasury decision adopting these regulations as final regulations is published in the
(2)
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(i) Made pursuant to an agreement, resolution, or other corporate action that is binding on or before the date the
(ii) Described in a ruling request submitted to the Internal Revenue Service on or before July 15, 2016; or
(iii) Described in a public announcement or filing with the Securities and Exchange Commission on or before the date the Treasury decision adopting these regulations as final regulations is published in the
Office of Justice Programs, Justice.
Notice of proposed rulemaking.
This rule proposes to make the following changes to current regulations implementing the Public Safety Officers' Benefits (PSOB) Act: Adopting the World Trade Center (WTC) Health Program's List of WTC-Related Health Conditions (List), the WTC Health Program's standards for certifying that an injury is covered for treatment under the Program, and related regulatory provisions, establishing payment offset provisions between the PSOB Program and the September 11th Victim Compensation Fund, and revising the provisions that define when the statutory presumption of line-of-duty death resulting from certain heart attacks, strokes, and vascular ruptures is rebutted. The proposed changes based on the WTC Health Program's List and related provisions would provide a means for claimants to establish that certain public safety officers with chronic, often latent, health conditions sustained a line-of-duty injury under the PSOB Act. The proposed payment offset provisions are intended to implement statutory amendments to the PSOB Act requiring such offset and to facilitate claims processing. Similarly, the proposed rule implementing the statutory presumption associated with certain heart attacks, strokes, and vascular ruptures is intended to amend the current regulation to conform to recent amendments to the PSOB Act and to improve the processing of such claims.
Written comments must be postmarked and electronic comments must be submitted on or before September 13, 2016. Comments received by mail will be considered timely if they are postmarked on or before that date. The electronic Federal Docket Management System (FDMS) will accept comments until Midnight Eastern Time at the end of that day.
Please address all comments regarding this rule by U.S. mail, to: Hope Janke, Bureau of Justice Assistance, Office of Justice Programs, 810 7th Street NW., Washington, DC 20531; or by telefacsimile to (202) 354–4135. To ensure proper handling, please reference OJP Docket No. 1716 on your correspondence. Comments may also be sent electronically through
Hope Janke, BJA, OJP, at (202) 514–6278, or toll-free at 1 (888) 744–6513.
Please note that all comments received are considered part of the public record and made available for public inspection online at
The Office of Justice Programs (OJP) does not require commenters to submit personal identifying information (such as your name, address, medical information, etc.) as part of your comment. However, if you wish to submit such information, but do not wish it to be posted online, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also locate all the personal identifying information that you do not want posted online in the first paragraph of your comment and identify what information you want the agency to redact. Personal identifying information identified and located as set forth above will be placed in the agency's public docket file, but not posted online.
If you wish to submit confidential business information as part of your comment but do not wish it to be posted online, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify confidential business information to be redacted within the comment. If a comment has so much confidential business information that it cannot be effectively redacted, the agency may choose not to post that comment (or to only partially post that comment) on
If you wish to inspect the agency's public docket file in person by appointment, please see the
The Public Safety Officers' Benefits (PSOB) Program, 42 U.S.C. 3796
Alternatively, the PSOB Program also provides a one-time financial payment directly to public safety officers determined to be permanently and totally disabled as the direct and proximate result of personal injury sustained in the line of duty, as well as educational assistance for their spouses and eligible children.
42 U.S.C. 3796(a) authorizes the payment, to statutory survivors, of a benefit of $250,000, currently adjusted for inflation at $339,881, when the administering agency determines, under its regulations “that a public safety officer has died as the direct and proximate result of a personal injury sustained in the line of duty.” Similarly, 42 U.S.C. 3796(b) authorizes the agency
Under the definition of injury in 28 CFR 32.3, a claimant must establish that a public safety officer sustained a “traumatic physical wound (or a traumatized physical condition of the body) directly and proximately caused by external force.” Under definitions related to causation in 28 CFR 32.3 (defining direct and proximate result of an injury and substantial factor), a claimant must also establish that the injury was the “substantial factor” in the officer's death or disability. “A factor substantially brings about a death, injury, [or] disability” if it was sufficient in and of itself to cause the death, injury, or disability, or no other factor (or combination of factors) “contributed to the death, injury, [or] disability . . . to so great a degree as it did.” 28 CFR 32.3 (defining substantial factor). Taken together, these regulations require that a claimant seeking benefits establish an injury,
In PSOB claims involving acute injuries caused by readily identifiable external forces such as a gunshot, motor vehicle accident, or other trauma with death occurring simultaneously or closely following injury, a claimant's burden in establishing the injury and causal link between injury and death may be straightforward and readily demonstrated. In such cases, a death certificate or an autopsy is generally sufficient to establish a traumatic wound or traumatized condition, the external force that caused the wound or condition, the officer's death, and a direct and proximate causal link between the injury and death.
In PSOB claims asserting injury or death resulting from exposure to unspecified toxins or hazards associated with line-of-duty activity, however, an autopsy may not sufficiently identify the mechanism of the injury, or adequately establish the direct and proximate causal link between the injury and the death (or permanent and total disability) necessary to support the approval of a claim under the PSOB Act. In such claims, more detailed medical evaluation may be required, and substantial medical evidence may need to be gathered and produced before PSOB determining officials may make the necessary findings to find the PSOB Act standards are met. For example, an autopsy usually is not sufficient evidence when the claims are based on the chronic, often latent, illnesses and conditions of 9/11 first responders;
Pursuant to the James Zadroga 9/11 Health and Compensation Act of 2010 (Pub. L. 111–347), as amended, the World Trade Center (WTC) Health Program, which is administered by the Director of the National Institute for Occupational Safety and Health (NIOSH), within the Centers for Disease Control and Prevention (a component of the U.S. Department of Health and Human Services), provides medical monitoring and treatment for WTC Health Program members with certain health conditions that are certified as related to the unique circumstances of the 9/11 explosions, ensuing conflagrations, and clean-up (9/11 disaster).
The List of WTC-Related Health Conditions is a list of illnesses or health conditions that, pursuant to an examination by a medical professional with expertise in treating or diagnosing the listed conditions, may be found to be related to a WTC Health Program member's exposure to airborne toxins, any other hazards, or any other adverse conditions resulting from the September 11, 2001, terrorist attacks. That a WTC Health Program member has a health condition or illness on the List of WTC-Related Health Conditions does not, by itself, establish that such health condition or illness was related to the 9/11 disaster and, therefore, is eligible for treatment in the WTC Health Program. Rather, the WTC Health Program also makes a specific decision as to whether a particular WTC Health Program member's exposure to the toxins, hazards, or other adverse conditions associated with the 9/11 disaster was “substantially likely to be a significant factor in aggravating, contributing to, or causing the illness or health condition.” 42 U.S.C. 300mm–22(a)(1)(A)(1). By law, such decision is based on an assessment of: (1) The individual's exposure to airborne toxins, any other hazard, or any other condition resulting from the terrorist attacks; and (2) the type of symptoms and temporal sequence of symptoms. 42 U.S.C. 300mm–22(a)(2). Together, the List of WTC-Related Health Conditions and individual assessment as to exposure and symptomatology comprise the general and specific findings that the WTC Health Program makes in establishing that a WTC Health Program member's particular illness or health condition is related to the 9/11 disaster.
To establish eligibility for death benefits under the PSOB Act, claimants must establish that a public safety officer suffered a personal injury in the line of duty that directly and proximately caused the officer's death. This statutory requirement excluded from coverage those conditions caused by stress and strain and occupational disease, such as practically speaking, most heart attacks and strokes.
The Hometown Heroes Survivors' Benefits Act of 2003 (Pub. L. 108–182) (Hometown Heroes Act) amended the PSOB Act by creating a statutory presumption in 42 U.S.C. 3796(k) of death by a line-of-duty injury, which may be rebutted by “competent medical evidence to the contrary,” in cases
In 2006 and 2008, OJP published final rules implementing the Hometown Heroes Act. The 2008 rule provided that the presumption attaches “unless it . . . is overcome by competent medical evidence to the contrary, when evidence indicates to a degree of medical probability that extrinsic circumstances, considered in combination (as one circumstance) or alone, were a substantial factor in bringing the heart attack or stroke about.”
OJP's experience is that consideration of cardiovascular disease risk factors and the concept of “risky behavior” have largely proven unworkable. In practice, medical examiners, even with a complete medical record, are rarely able to determine with medical precision whether an inadequately treated cardiovascular disease risk factor(s) was the substantial factor in the officer's fatal condition. As a result, the PSOB Program has expended significant time and resources on inconclusive results,
In January 2013, the Dale Long Public Safety Officers' Benefits Improvement Act of 2012 (Section 1086 of Pub. L. 112–239) (Dale Long Act) amended the rebuttal language in section 3796(k). As amended, the presumption is rebutted when “competent medical evidence establishes that the [public safety officer's] heart attack, stroke, or vascular rupture was unrelated to the [officer's] engagement or participation or was directly and proximately caused by something other than the mere presence of cardiovascular-disease risk factors.” As the amendment repealed the statutory language upon which OJP regulations implementing the presumption are based,
Because of the medical and scientific evaluation that informs the List of WTC-Related Health Conditions (List), BJA proposes to use the List as a means for streamlining its own claim-specific evaluation, where a claim for PSOB Program benefits is based on a medical condition (not otherwise excluded from coverage under the PSOB Program) included in the List. Similarly, BJA also proposes, consistent with the law, regulations, policies, and procedures governing the WTC Health Program's certification of an individual's injuries as covered for treatment under the Program, and in conjunction with the List, to assess the individual public safety officer's exposure to toxins, hazards, and other adverse conditions resulting from the terrorist attacks as well as the type of symptoms and temporal sequence of symptoms. Under the proposed rule, BJA will independently use the WTC Health Program's “standards” for certification, which includes the Program's regulations, policies, and procedures, to establish an injury under the PSOB Act.
The proposed rule would establish a means by which claimants could establish that a public safety officer who suffered physical injury as a result of line-of-duty activity at a 9/11 crash site sustained an injury under the PSOB Act. More specifically, the rule would adopt the WTC Health Program standards for establishing injury or illness for public safety officers who responded to the9/11 disaster based on the medical and scientific evidence underlying those standards and to promote consistency in the process for determining claims resulting from exposure to a 9/11 crash site. Under the proposed rule, evidence demonstrating that a public safety officer (1) performed line-of-duty activity at a 9/11 crash site, (2) was diagnosed with a physical illness or condition on the List of WTC-Related Health Conditions as defined in 42 CFR part 88, (3) whose physical injury was directly and proximately caused by an illness or condition on the List, and (4) whose exposure to the hazards, toxins, and adverse conditions of the 9/11 disaster are found by the PSOB determining official to be substantially likely to have been a significant factor in aggravating, contributing to, or causing the responder's health condition, would establish an injury for purposes of the PSOB Act. Consistent with the VCF, which payments are treated by law as duplicative of PSOB Program payments and required to be offset, 42 U.S.C. 3796(f)(3), a claimant's injury would be limited to “physical harm” as defined 28 CFR 104.2(c).
BJA proposes to adopt the List of WTC-Related Health Conditions (other than mental health conditions) because these are illnesses or health conditions for which exposure to airborne toxins, any other hazard, or any other adverse condition resulting from the September 11, 2001, terrorist attacks, have been found by another federal program to potentially be related to 9/11 exposures. Because the PSOB Program already excludes mental health conditions from its coverage, the proposed rule would not extend its application to any mental health conditions on the List.
In addition, the adoption of the List and the WTC Health Program standards for assessing injury is warranted based on the unique circumstances associated with the response to the 9/11 disaster, the chronic, often latent, nature of health conditions linked to the response, and the rigorous evidentiary burden faced by PSOB claimants in establishing an injury under current regulations implementing the PSOB Act. PSOB claimants would still be required
The proposed rule would cover those circumstances in which a claimant lacked a WTC Health Program certification or its equivalent,
This regulatory approach would promote the efficient resolution of issues related to injury (and in some cases, causation) without the need for the PSOB Program to conduct an individual review and investigation of the available medical literature in every claim associated with a 9/11 injury. It would promote consistency in federal decision making by allowing the complex medical decisions of another federal program (the WTC Health Program) to streamline the PSOB Program's own evaluation of the same medical issues. It also would lessen the burden on claimants who otherwise may face significant challenges in obtaining and producing significant medical documentation necessary to establish an injury.
Under the proposed rule, the PSOB Program would rely upon and apply the List and WTC Health Program standards to its independent determination of injury only where the claimant otherwise has established all of the applicable elements normally required for a PSOB claim;
To maintain consistency with the September 11th Victim Compensation Fund of 2001 (VCF), as amended,
The 2013 amendment to the PSOB Act established, in the PSOB Act itself, a limitation on payments by declaring that benefit payments made under the PSOB Act are in addition generally to any other benefit except payments under the VCF. 42 U.S.C. 3796(f)(3). Therefore, OJP proposes to add a new provision in 28 CFR 32.6, describing how and when the PSOB Program would pay benefits under the PSOB Act to persons who have received payments from the VCF.
Under the proposed rule, no death or disability benefits under the PSOB program would be payable when the VCF has made payments to or with respect to a public safety officer that are equal to or exceed the amount of such benefits payable under the PSOB Act. To account for circumstances when a PSOB claimant has a pending claim for VCF benefits, or the VCF has made payment to a PSOB claimant that is less than the amount payable under the PSOB Act, the proposed rule would clarify that nothing in the PSOB Act or the rule itself precludes payment of PSOB benefits before the VCF makes payment of compensation. In so doing, the PSOB Program could pay benefits to VCF claimants without waiting for the VCF to issue its payments. To prevent overpayments and ensure the offset is applied, before the PSOB Program pays any benefits based on injuries sustained in the 9/11 disaster, it would verify with the VCF the amount of any payments made or payable to a VCF claimant.
The proposed rule would also clarify that the offset does not extend to educational assistance payable under the PSOB Act, 42 U.S.C. 3796d—3796d–7. When viewed in the context of a statutory scheme providing for the payment of a particular one-time death or disability benefit, the agency believes that the ordinary meaning of “the benefit payable under this subchapter” suggests that the scope of the offset is limited to the death and disability benefit payable under 42 U.S.C. 3796. However, under current regulations that were promulgated before the offset statute was enacted, educational assistance may, with one exception, be paid only when PSOB Program death or disability benefits have been paid. As OJP has determined the offset does not extend to educational assistance, the proposed rule would revise the definition of “Eligible public safety officer” in current § 32.33 to authorize payment of educational assistance where death or disability benefits would have been paid but for the operation of the offset in 42 U.S.C. 3796(f).
As the Dale Long Act has amended 42 U.S.C. 3796(k), OJP proposes to amend its implementing regulations in 28 CFR 32.13 and 32.14 to reflect the revised statutory language. In implementing revised section 3796(k), the proposed rule would define in proposed § 32.13 the two circumstances when the presumption of death directly and proximately resulting from a line-of-duty injury associated with certain heart attacks, strokes, and vascular ruptures as provided in section 3796(k) is rebutted—
Under the proposed rule, an officer's heart attack, stroke, or vascular rupture would be considered as “unrelated to an [officer's] engagement or participation” if competent medical evidence established that an independent event or occurrence significantly contributed in bringing about the officer's heart attack, stroke, or vascular rupture. OJP believes that defining this rebuttal factor in terms of “an independent event or occurrence,” that is, something that happens to an officer, appropriately ensures that an off-duty heart attack, stroke, or vascular rupture caused by a clearly unrelated event, such as an off-duty officer's accident, is not covered by the presumption.
For example, a police officer's fatal heart attack due to electrocution suffered while performing home repair, established by competent medical evidence, would not be covered by the presumption despite occurring only 12 hours after the officer engaged in a situation involving nonroutine stressful or strenuous physical law enforcement activity. The heart attack is not covered by the presumption because competent medical evidence establishes that an independent event or occurrence (electrocution sustained while repairing home wiring) separate and apart from the officer's qualifying activity,
Turning to the other rebuttal factor in the proposed rule, an officer's heart attack, stroke, or vascular rupture would be considered to be caused by “something other than the mere presence of cardiovascular-disease risk factors” when competent medical evidence establishes that the officer's heart attack, stroke, or vascular rupture was directly and proximately caused by the officer's ingestion of controlled substances on Schedule I of the drug control and enforcement laws or the officer's abuse of controlled substances on Schedules II–V of the drug control and enforcement laws. OJP believes that by defining this particular rebuttal factor in terms of intentional behaviors that are well established as adversely affecting cardiovascular health, that exceed the mere presence of cardiovascular disease risk factors, and that are readily attributable to an officer's actions, the proposed rule would appropriately rebut the presumption and preclude payment consistent with the language of the statute.
In addition to implementing the amended statutory language of the presumption, the proposed changes to § 32.13 would reduce the evidentiary burden on claimants seeking death benefits under section 3796(k) and streamline the processing of such claims by reducing the circumstances under which the PSOB Program would seek expert medical review and additional medical evidence. Towards this end, the proposed rule would eliminate as a basis for rebutting the presumption certain actions of the officer previously defined in regulations as “risky behaviors,”
Consistent with the amendments to the statutory rebuttal provision, the proposed rule would also eliminate from § 32.13 provisions defining “Competent medical evidence to the contrary,” “Excessive consumption of alcohol,” “Extrinsic circumstances,” “Risky behavior,” and “Undertaking of treatment.” In addition, the proposed rule would eliminate § 32.14(c), requiring the PSOB Office to provide notice to claimants when it determines the existence of competent medical evidence to the contrary. As the statute no longer includes such language, the provision is unnecessary.
This proposed rule has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), Principles of Regulation, and in accordance with Executive Order 13563, “Improving Regulation and Regulatory Review,” section 1(b), General Principles of Regulation. 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). As explained below, OJP has assessed the costs and benefits of this proposed rule as required by Executive Order 12866 and has determined that the benefits of the proposed rule justify the costs.
OJP's experience is that PSOB claimants have been largely unsuccessful in establishing an “injury” for delayed-onset medical conditions or illnesses, particularly cancer. As the proposed rule establishes an evidentiary standard intended for the unique circumstances of public safety officers who sustained an injury related to the 9/11 disaster, OJP estimates that the proposed rule would likely affect all of the 29 claims based on 9/11 injury (27 death/2 disability) currently pending in the PSOB Program without a WTC Health Program certification or its equivalent by enabling these claimants to establish an “injury” under the PSOB Act. Although there are currently 161 total PSOB death and disability claims pending with assertions of injuries based on 9/11 exposure, this estimate pertains only to the 29 claims not covered under OJP's current regulatory authority, as benefits paid through OJP's process of determining PSOB claims based on “certifications” issued by the WTC Health Program Administrator (or equivalent) under 28 CFR 32.5(b) would not be impacted as a result of this regulatory change.
If all 29 such claims were paid, the total PSOB Program death and disability benefit cost would be $8,778,198.80. Based on amounts appropriated in FY2016 for PSOB Program death benefits (“such sums as necessary”—estimated at $71,323,000) and disability and education benefits ($16,300,000), OJP knows that it could pay the death claims from its current appropriations, and estimates that it could pay the disability claims from its current appropriations. OJP's estimate does not account for any offset to PSOB Program payments based on VCF payments, which would reduce the amount of PSOB Program payments made; however, OJP is unable to estimate how many of the 29 claims would be approved by VCF. Regardless of whether a PSOB payment were offset by a VCF payment, there is no additional benefit cost, as the amounts that would be required are covered by current appropriations (with respect to death claims) and appear to be covered by such appropriations with respect to disability claims, and, barring unforeseen circumstances, would not exceed such amounts. As PSOB claims based on 9/11 injury would be processed by existing staff, OJP would not incur additional administrative or
The primary benefit of the proposed rule is that, pursuant to statute, it permits the PSOB Program to pay benefits to PSOB claimants who are awaiting a decision on eligibility for VCF benefits, pending receipt of VCF payments, or are in receipt of VCF payments less than the maximum PSOB Program death or disability payment. A secondary benefit is that it clarifies that claimants who would be eligible for payment of death or disability benefits under the PSOB Act but for the operation of the offset, would be eligible for educational assistance.
Estimating annual costs for public safety officers' educational assistance is difficult because of the nature of the payment.
The primary benefit of the proposed rule is the reduced burden on both claimants and the agency in determining claims under 42 U.S.C. 3796(k). In defining the circumstances that warrant rebuttal in terms of readily ascertainable facts, OJP believes that the PSOB Program will, in most cases, be able to rely upon the evidence of injury and death ordinarily submitted with a claim,
This reduction in evidentiary development is also expected to result in cost savings for medical reviews as well as the costs associated with obtaining medical records for such reviews. For every claim that does not require independent medical review, OJP estimates a savings of $1,652, which represents the average cost to the program of obtaining certain medical opinions in claims for PSOB Program death benefits from 2009 through 2015. OJP also estimates a savings to the claimant of $603 for the cost of obtaining medical records (an average of 900 pages in the claims sampled). This estimate is based on the maximum fees permitted by law, which vary by state,
In terms of benefit costs, OJP estimates that there will not be a significant increase in claims approved as compared to the previous regulatory criteria. Accordingly, the proposed rule does not significantly increase benefit costs. And, as these claims would be processed by existing staff, OJP would not incur additional administrative or personnel costs in processing these claims.
This proposed rule would impose no costs on state, local, or tribal governments, or on the private sector.
Although not an economically significant rulemaking under Executive Orders 12866 and 13563, The Office of Justice Programs has determined that this proposed rule is a “significant regulatory action” under section 3(f) of the Executive Order, and accordingly this rule has been reviewed by the Office of Management and Budget (OMB).
This proposed rule would not have substantial direct effects on the States, on the relationship between the federal government and the States, or on distribution of power and responsibilities among the various levels of government. The PSOB program statutes provide benefits to individuals and do not impose any special or unique requirements on States or localities. Therefore, in accordance with Executive Order No. 13132, it is determined that this proposed rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.
This proposed rule meets the applicable standards set forth in sections 3(a) & (b)(2) of Executive Order No. 12988. Pursuant to section 3(b)(1)(I) of the Executive Order, nothing in this proposed rule or any previous rule (or in any administrative policy, directive, ruling, notice, guideline, guidance, or writing) directly relating to the Program that is the subject of this rule is intended to create any legal or procedural rights enforceable against the United States, except as the same may be contained within part 32 of title 28 of the Code of Federal Regulations.
The Office of Justice Programs hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities for the following reasons: This proposed rule addresses federal agency procedures; furthermore, this proposed rule would make amendments to clarify existing regulations and agency practice concerning public safety officers' death, disability, and education benefits and would do nothing to increase the financial burden on any small entities. Therefore, an analysis of the impact of this proposed rule on such entities is not required under the Regulatory Flexibility Act (5 U.S.C. 601
This proposed rule would impose reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501
The proposed rule includes paperwork requirements in three collections of information previously approved by OMB for the PSOB Program. OJP published in the
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OJP estimates that no more than 350 respondents will apply each year. Each application takes approximately 120 minutes to complete. OJP estimates that the total public burden (in hours) associated with the collection can be calculated as follows: Total Annual Reporting Burden: 350 x 120 minutes per application = 42,000 minutes/by 60 minutes per hour = 700 hours.
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OJP estimates that no more than 350 respondents will apply each year. Each application takes approximately 240 minutes to complete. OJP estimates that the total public burden (in hours) associated with the collection can be calculated as follows: Total Annual Reporting Burden: 350 × 240 minutes per application = 84,000 minutes/by 60 minutes per hour = 1400 hours.
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OJP estimates that no more than 100 respondents will apply each year. Each application takes approximately 300 minutes to complete. OJP estimates that the total public burden (in hours) associated with the collection can be calculated as follows: Total Annual Reporting Burden: 100 × 300 minutes
This proposed rule would not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments. The PSOB program is a federal benefits program that provides benefits directly to qualifying individuals. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
Administrative practice and procedure, Claims, Disability benefits, Education, Emergency medical services, Firefighters, Law enforcement officers, Reporting and recordkeeping requirements, Rescue squad.
Accordingly, for the reasons set forth in the preamble, part 32 of chapter I of Title 28 of the Code of Federal Regulations is proposed to be amended as follows:
42 U.S.C. ch. 46, subch. XII; 42 U.S.C. 3782(a), 3787, 3788, 3791(a), 3793(a)(4) & (b), 3795a, 3796c–1, 3796c–2; sec. 1601, title XI, Pub. L. 90–351, 82 Stat. 239; secs. 4 through 6, Pub. L. 94–430, 90 Stat. 1348; secs. 1 and 2, Pub. L. 107–37, 115 Stat. 219.
(1) At 42 U.S.C. 300mm–22(a)(3); or
(2) On the List of WTC-Related Health Conditions in 42 CFR part 88.
(j) Physical harm suffered by a public safety officer as a direct and proximate result of a condition on the List of WTC-Related Health Conditions shall be understood to be a line-of-duty injury if, as determined by the PSOB determining official, and pursuant to the standards governing the World Trade Center Health Program's certification of injuries as covered by the program, such officer's exposure to airborne toxins, any other hazards, and any other adverse conditions resulting from the September 11, 2001, terrorist attacks is substantially likely to have been a significant factor in aggravating, contributing to, or causing the illness or health condition.
(f)(1) If compensation under the September 11th Victim Compensation Fund of 2001 (49 U.S.C. 40101 note)) has been paid with respect to an injury, the total amount payable under subpart B or C of this part, with respect to the same injury, shall be reduced by the amount of such payment of compensation.
(2) Nothing in paragraph (f)(1) of this section, or in the Act, at 42 U.S.C. 3796(f)(3), shall be understood to preclude payment under this part before the final payment of compensation under such Fund.
(3) Nothing in the Act, at 42 U.S.C. 3796(f)(3), shall be understood to require reduction of any amount payable under subpart D of this part.
The additions read as follows:
(1) Ingestion of controlled substances included on Schedule I of the drug control and enforcement laws (see 21 U.S.C. 812(a)); or
(2) Abuse of controlled substances included on Schedule II, III, IV, or V of the drug control and enforcement laws (see 21 U.S.C. 812(a)).
(1) With respect to whose death, benefits under subpart B of this part properly—
(i) Have been paid; or
(ii) Would have been paid but for operation of the Act, at 42 U.S.C. 3796(f); or
(2) With respect to whose disability, benefits under subpart C of this part properly—
(i) Have been paid; or
(ii) Would have been paid, but for operation of—
(A) Paragraph (b)(1) of § 32.6; or
(B) The Act, at 42 U.S.C. 3796(f).
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard proposes to amend the anchorage regulations for Delaware Bay and River. The Coast Guard conducted a review of the Delaware Bay and River anchorage
Comments and related material must be received by the Coast Guard on or before August 15, 2016.
You may submit comments identified by docket number USCG–2016–0110 using the Federal eRulemaking Portal at
If you have questions about this rulemaking, call or email Lieutenant Brennan Dougherty, U.S. Coast Guard, Sector Delaware Bay, Chief Waterways Management Division, telephone (215) 271–4851, email
The Delaware Bay and River anchorage grounds are largely used by commercial vessel traffic. General regulations covering the anchorage of vessels in the port are set out in 33 CFR 110.157. In 1992, the Delaware River Main Channel Deepening project was authorized for construction by Public Law 102–580, Section 101 (6) of the Water Resources Development Act (WRDA) 1992; modified by Public Law 106–53, Section 308 of WRDA 1999 and further modified by Public Law 106–541, Section 306 of WRDA 2000. This project includes deepening the existing Delaware River Federal Navigation Channel from 40 to 45 feet from Philadelphia, Pennsylvania, and Camden, New Jersey to the mouth of the Delaware Bay. The Army Corps of Engineers (USACE) along with non-Federal sponsor, the Philadelphia Regional Port Authority (PRPA), commenced dredging for this project in 2010. This project, once completed, will allow for deeper draft vessels within the port and increase overall traffic, and anchorage usage. Due to this anticipated increase in marine traffic a review of the current Delaware Bay and River anchorage grounds was conducted by the Waterways Management Division Sector Delaware Bay, Philadelphia, PA in coordination with the Mariners Advisory Committee (MAC). Upon review it was found that multiple anchorage grounds in 33 CFR 110.157 were unusable for some larger vessels due to lack of depth needed to safely anchor. Other anchorage grounds are unusable because they spanned underneath bridges where it would be impractical for vessels to anchor, and posed an increased and unnecessary safety risk of bridge allision. The proposed changes to the Delaware Bay and River anchorages would eliminate unusable anchorage grounds and maximize usable anchorage grounds within the anchorage boundaries while continuing to safely support current and future port demands. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1231.
The following changes are being proposed for seven Delaware Bay and River anchorage grounds.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive Orders.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget.
This proposed rule is not a significant regulatory action because it would not interfere with existing maritime activity on the Delaware River. Rather, it would enhance navigational safety along the Delaware River by providing safer locations for vessels to anchor, improving navigation safety near bridges and reducing the potential for disruption to maritime traffic by anchored vessels potentially within the federal channel. Vessels may navigate in, around, and through the modified anchorages.
The Regulatory Flexibility Act of 1980, 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. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
The proposed rule would affect owners and operators of vessels wishing to anchor in the Delaware Bay and River anchorages. Boundaries of some of the current anchorages would be modified, reduced, or increased depending on the water depth and relation of the anchorage to bridges along the Delaware Bay and River. The impact of the proposed rule changes would be minimal because the changes increase usable anchorage grounds and enable vessels to safely anchor in the anchorage boundaries.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
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 proposed 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
This proposed rule would 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 proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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. If you believe this proposed rule has implications for federalism or Indian tribes, please 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 proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed 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 (42 U.S.C. 4321–4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves directly with establishing, disestablishing, and modifying anchorage grounds. Normally such actions are categorically excluded from further review under paragraph 34(f) of Figure 2–1 of Commandant Instruction M16475.lD. A preliminary environmental analysis checklist and Categorical Exclusion Determination are available in the docket where indicated under
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at
Anchorage grounds.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 110 as follows:
33 U.S.C. 471, 1221 through 1236, 2071; 33 CFR 1.05–1; Department of Homeland Security Delegation No. 0170.1.
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Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to revise the current federal Clean Water Act selenium water quality criteria applicable to the San Francisco Bay and Delta to ensure that the criteria are set at levels that protect aquatic life and aquatic-dependent wildlife, including federally listed threatened and endangered species. The San Francisco Bay and Delta ecosystem is at risk due to environmental degradation, including impacts from elevated levels of selenium, and state and federal actions are underway to restore the waterway. Scientific evidence indicates that elevated selenium levels can contribute to the decline of fish and aquatic-dependent birds. EPA promulgated the San Francisco Bay and Delta's existing selenium criteria in 1992 as part of the National Toxics Rule, using EPA's recommended aquatic life criteria values at the time. However, the latest science on selenium fate and bioaccumulation indicates that the existing criteria are not protective of aquatic life and aquatic-dependent wildlife in the San Francisco Bay and Delta. Therefore, EPA is proposing to revise the existing selenium criteria, taking into account available science, legal requirements, and EPA policies and guidance. EPA's proposal will address the Administrator's determination—described in this preamble—that EPA's previously promulgated water quality criteria are not adequate to protect the designated uses for these waters.
Comments must be received on or before September 13, 2016.
Submit your comments, identified by Docket ID No. EPA–HQ–OW–2015–0392, at
Two public hearings will be held on Tuesday, August 23, 2016, one at 9:00 a.m. and one at 2:00 p.m., at EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105. Additionally, EPA will offer a virtual public hearing on the proposed rule via the internet on Monday evening, August 22, 2016 from 6:00 p.m. to 8:00 p.m. For details on these public hearings, as well as registration information, please visit:
Erica Fleisig, Office of Water, Standards and Health Protection Division (4305T), U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW., Washington, DC 20460; telephone number: (202) 566–1057; email address:
This proposed rule is organized as follows:
This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities that could be indirectly affected by this action. Any parties or entities who depend upon or contribute to the water quality of the San Francisco Bay and Delta could be affected by this proposed rule. To determine whether your facility or activities could be affected by this action, you should carefully examine this proposed rule. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the
CWA section 101(a)(2) (33 U.S.C. 1251(a)(2)) establishes a national goal, wherever attainable, of “water quality which provides for the protection and propagation of fish, shellfish, and wildlife and provides for recreation in and on the water . . .” In this proposal, the relevant goals are the protection and propagation of fish, shellfish, and wildlife.
CWA section 303(c) (33 U.S.C. 1313(c)) directs states to adopt WQS for their waters subject to the CWA. CWA section 303(c)(2)(A) and EPA's implementing regulations at 40 CFR part 131 require, among other things, that a state's WQS specify appropriate designated uses of the waters and water quality criteria that protect those uses. EPA's regulations at 40 CFR 131.11(a)(1) provide that “[s]uch criteria must be based on sound scientific rationale and must contain sufficient parameters or constituents to protect the designated use.” For waters with multiple use designations, the criteria must support the most sensitive use (40 CFR 131.11(a)(1)). In addition, 40 CFR 131.10(b) provides that “[i]n designating uses of a water body and the appropriate criteria for those uses, the [s]tate shall take into consideration the water quality standards of downstream waters and shall ensure that its water quality standards provide for the attainment and maintenance of the water quality standards of downstream waters.”
States are required to review applicable WQS at least once every three years and, if appropriate, revise or adopt new standards (CWA section 303(c)(1)). Any new or revised WQS must be submitted to EPA for review and approval or disapproval (CWA section 303(c)(2)(A) and (c)(3)). Under CWA section 303(c)(4)(B), the Administrator is authorized to determine, even in the absence of a state submission, that a new or revised standard is needed to meet CWA requirements.
Under CWA section 304(a), EPA periodically publishes criteria recommendations for states to consider when adopting water quality criteria for particular pollutants to meet the CWA section 101(a)(2) goals. In establishing numeric criteria, states should adopt water quality criteria based on EPA's CWA section 304(a) criteria, section 304(a) criteria modified to reflect site-specific conditions, or other scientifically defensible methods (40 CFR 131.11(b)(1)). CWA section 303(c)(2)(B) requires states to adopt numeric criteria for all toxic pollutants listed pursuant to CWA section 307(a)(1) for which EPA has published 304(a) criteria, as necessary to support the states' designated uses.
On December 22, 1992, EPA promulgated
The currently applicable selenium criteria for the protection of aquatic life in the San Francisco Bay and Delta were based on EPA's CWA section 304(a) recommended criteria values at the time that EPA promulgated the criteria in the NTR. These recommendations are documented in EPA's
EPA derived the 1987 freshwater aquatic life recommended criteria values for selenium from observed impacts on fish populations at a contaminated lake, Belews Lake, in North Carolina. The lake, a cooling water reservoir, had been affected by selenium loads from a coal-fired power plant. Since aquatic life was exposed to selenium from both the water column and diet, the criteria reflect both types of exposure in Belews Lake. EPA derived the 1987 saltwater aquatic life recommended criteria values for selenium using data from lab studies. EPA calculated the criteria in accordance with EPA's
In the NTR, EPA promulgated selenium criteria for the San Francisco
Since then, EPA has taken steps to revise the 1987 CWA 304(a) recommended criteria for selenium to better account for bioaccumulation through the food chain in different ecosystems. EPA recently published a revised CWA 304(a) freshwater recommended criterion for selenium:
On May 18, 2000, EPA promulgated
As required by section 7 of the Endangered Species Act (ESA) (16 U.S.C. 1531
In September 2002, EPA, the Services, the U.S. Geological Survey (USGS), and the State of California met to discuss the development of revised selenium water quality criteria and recommended that California-specific selenium water quality criteria be developed as wildlife criteria. The agencies agreed that criteria should first be developed to protect aquatic life and aquatic-dependent wildlife using the Luoma-Presser (USGS) bioaccumulation model
Starting in 2003, EPA and the Services provided assistance to the USGS to model selenium fate and biological uptake in the San Francisco Bay and Delta using the USGS bioaccumulation model. USGS completed its report, entitled
In 2013, two organizations filed a legal complaint against EPA, based in part on the fact that work on updating the reserved acute freshwater selenium criterion from the 2000 CTR had not yet been completed while EPA had previously determined, in the proposed CTR, that the criterion was among those necessary to implement section 303(c)(2)(B) of the CWA (62 FR 42160, August 5, 1997). EPA ultimately consented to a court-ordered resolution of these claims.
The State of California has nine Regional Water Quality Control Boards (Regional Boards), each located in and overseeing different areas of the state. The State Water Resources Control Board (SWRCB) in Sacramento oversees the actions of the nine Regional Boards and periodically establishes policy and standards for consistency across the Regional Boards. The San Francisco Bay Regional Water Quality Control Board (SFRWQCB) and the Central Valley Regional Water Quality Control Board (CVRWQCB) oversee different parts of the Bay and Delta. The SFRWQCB oversees all parts of the San Francisco Bay including the South San Francisco Bay, Lower San Francisco Bay, Central San Francisco Bay, San Pablo Bay, Carquinez Strait and Suisun Bay, and a small portion of the western side of Sacramento-San Joaquin Delta. The CVRWQCB oversees the remaining areas of the Delta which include the confluences of the Sacramento and the San Joaquin Rivers. Each Regional Board has a regional water quality
In 1978, the SWRCB adopted a comprehensive plan for the Bay and Delta estuary:
The site-specific selenium criteria in this proposed rule are intended to protect aquatic life and aquatic-dependent wildlife, including federally listed threatened and endangered species, in the San Francisco Bay and Delta. The designated uses in the SWRCB water quality control plan for the protection of aquatic life and aquatic-dependent wildlife are listed in Table 1. The proposed criteria will establish levels of selenium that protect California's designated uses for the estuary.
The proposed criteria are being set at levels that will protect aquatic life and aquatic-dependent wildlife consistent with WARM, COLD, EST, WILD and RARE uses, as well as protect aquatic life consistent with MIGR and SPWN uses.
Under the CWA, Congress gave states primary responsibility for developing and adopting WQS for their waters (CWA section 303(a)–(c)). Although EPA is proposing selenium criteria for the protection of aquatic life and aquatic-dependent wildlife for marine and estuarine waters in California's San Francisco Bay and Delta, California continues to have the option to adopt and submit to EPA protective selenium criteria for these waters consistent with CWA section 303(c) and EPA's implementing regulations at 40 CFR part 131. EPA encourages California to expeditiously adopt protective criteria. Consistent with CWA section 303(c)(4), if California adopts and submits selenium criteria for the protection of aquatic life and aquatic-dependent wildlife, and EPA approves such criteria before finalizing this proposed rule, EPA would not proceed with the promulgation for those waters for which EPA approves California's criteria.
If EPA finalizes this proposed rule and California subsequently adopts and submits selenium criteria for the protection of aquatic and aquatic-dependent wildlife for marine and estuarine waters in the estuary, EPA proposes that once EPA approves California's WQS, the EPA-approved criteria in California's WQS would become the applicable criteria for CWA purposes and EPA's promulgated criteria would no longer be applicable criteria. EPA would undertake a rulemaking to withdraw the federal criteria for selenium, but that process would not delay California's approved criteria from becoming the sole applicable criteria for CWA purposes. EPA solicits comment on this approach.
Selenium is an element that occurs naturally in sediments of marine origin and enters the aquatic environment when rainwater comes into contact with deposits. Selenium can be further mobilized through anthropogenic activities such as agriculture irrigation, mining and petroleum refining. Once inorganic selenium is converted into a bioavailable form, it enters the food chain and can bioaccumulate. Depending on environmental conditions, one or another form of selenium such as selenate, selenite and organo-selenium, which differ in transformation rates and bioavailability, may predominate in the aquatic environment.
Selenium is an essential micro-nutrient, but the range between essential and toxic levels is narrow. A long-standing hypothesis is that toxicity occurs through biochemical pathways where excess selenium substitutes for sulphur in proteins, which alters their structure and function. More recent studies indicate that selenium may affect organisms through oxidative stress (see
Scientific studies indicate that selenium toxicity to aquatic life and aquatic-dependent wildlife is driven by diet (
The headwaters of both rivers originate from snowmelt in the Sierra Nevada. The Sacramento River flows north to south into the Delta, and drains the northern portion of the Central Valley. The San Joaquin River flows east to west, then turns and flows south to north into the Delta, and drains the southern and central portions of the Central Valley, which are used extensively for farming. The two rivers meet in the Delta near Antioch and flow west into the northern reaches of the Bay, then southwest to the Pacific Ocean.
Selenium concentrations in the San Joaquin River are elevated from selenium enriched soils on the west side of the Central Valley. Agricultural irrigation practices mobilize naturally occurring selenium in the heavy soils derived from marine shale and sediment. Selenium concentrations in the Sacramento River are much lower than in the San Joaquin River and are generally at natural background levels.
The San Joaquin watershed is much drier than the Sacramento watershed, and flows to the Bay from the San Joaquin River are significantly smaller than those from the Sacramento River. In addition, dams for hydropower and flood control further limit flows from the San Joaquin. Flow volume from the
Although flows from the San Joaquin are much smaller than flows from the Sacramento, selenium concentrations have been significantly higher than concentrations in the Sacramento. In 1998 and 1999, concentrations of dissolved selenium in the San Joaquin River averaged 0.71 µg/L, and ranged from 0.40 to 1.07 µg/L at Vernalis.
Concentrations of dissolved selenium in the Delta and in the northern and central portions of the Bay from 1998–1999 ranged from 0.070 to 0.320 µg/L.
Between 1986 and 1996, before construction of the Grassland Bypass Project and implementation of the TMDLs, selenium loads in the San Joaquin at Patterson and Crows Landing below the confluence of the Merced River averaged 8,129 pounds per year (lbs/year). Since 2000, selenium loads have ranged from 1,526–6,353 lbs/year, with the lowest loads in recent years.
Although conditions have improved from reduced agriculture and refinery loads, ambient levels of selenium are not consistently below harmful levels in all parts of the estuary. Revised criteria are necessary to help ensure that protective levels are attained in all parts of the water body and are maintained in the future to protect designated uses. Several indigenous species are listed under the ESA as threatened or endangered, including green sturgeon, Chinook salmon, steelhead trout, delta smelt and the California Ridgway's rail, and many migratory bird species use the estuary as a wintering ground, including greater and lesser scaup, and white-winged, surf, and black scoter. The analyses to develop the fish tissue and the avian egg tissue benchmarks used in the modeling, and the modeling results used to derive the proposed water column criteria, indicate the health of these species would be negatively impacted from exposure to selenium water column concentrations above 0.2 µg/L, which would be allowed to occur under the existing NTR selenium criterion of 5.0 µg/L. Accordingly, EPA finds that it is necessary to propose revised and more protective criteria for selenium in order to help ensure the continued protection of these vulnerable species and associated designated uses.
Because California's existing aquatic life criteria for selenium in the salt and estuarine waters of the San Francisco Bay, upstream to and including Suisun Bay and the Sacramento-San Joaquin Delta, as promulgated by EPA in the NTR, are not protective of the applicable designated uses per the CWA and EPA's regulations at 40 CFR 131.11, EPA determines under CWA section 303(c)(4)(B) that new or revised WQS for the protection of aquatic life and aquatic-dependent wildlife are necessary to meet the requirements of the CWA for these California waters. EPA, therefore, proposes the revised selenium aquatic life and aquatic-dependent wildlife criteria in this rule in accordance with this 303(c)(4)(B) determination. EPA's determination is not itself a final action, nor part of a final action, at this time. After consideration of comments on the proposed rule, EPA will take final agency action on this rulemaking. It is at that time that any change to the water quality standards applicable in California would occur.
Starting in 2003, USGS worked with the Services and EPA to model the San Francisco Bay and Delta using various scenarios and endpoints (see the USGS Report). Using the best available data for the estuary, USGS modeled a clam-based food web from the Golden Gate through Suisun Bay to Chipps Island and an insect-based food web from Benicia to Rio Vista (in the Sacramento River Delta area) and to Stockton (in the San Joaquin River Delta area). Using site-specific partitioning coefficients to determine rates of selenium transformation between dissolved and particulate phases, the model can predict how efficiently selenium enters the base of the food web. Once selenium enters the food web, using site-specific trophic transfer factors, which relate selenium concentrations in a species to selenium concentrations in its food, the model can predict how efficiently selenium moves up into prey food and to a predator species. Alternatively, a protective tissue level of selenium in an upper trophic level fish species or in a terrestrial wildlife species (any predator species) can be used to back-calculate and predict the protective concentration of selenium in the species' prey, and the protective concentration of dissolved and particulate selenium at the base of its food web in the aquatic environment.
EPA considered various protective (benchmark) tissue values for representative fish and avian wildlife species to use in the modeling. EPA found that the most appropriate tissue benchmark values for fish species in the estuary are the recommended values in EPA's recent national recommended freshwater aquatic life criterion for selenium
EPA modeled two food webs in the estuary, a clam-based web and an insect-based web, to determine protective dissolved, particulate and prey-tissue selenium values. EPA modeled a clam-based food chain for fish and two clam-based food chains for birds that consume
EPA modeled two clam-based food web scenarios for at-risk avian wildlife to represent two different patterns of avian clam-consumption in the estuary. The California Ridgway's rail (formerly the California clapper rail) is a small, endangered, indigenous bird that lives year-round in the estuary and eats mostly mollusks, but only a small percentage of
Lastly, EPA modeled insect-eating fish to represent two important anadromous species, the endangered Chinook salmon and the threatened steelhead trout, and an important, threatened, indigenous species in the estuary, the delta smelt. Since anadromous species use the estuary as a migratory corridor, and adults returning to spawn do not feed during in-migration, EPA considered the diet of juveniles as they out-migrate through the estuary to the Pacific Ocean. Delta smelt, and juvenile Chinook salmon and steelhead trout, consume mainly insects, and do not feed on
The model results indicate that clam-eating fish and clam-eating bird species are the most vulnerable species, and require lower dissolved and particulate water column selenium concentrations in the estuary than insect-eating fish in order to ensure that tissue levels stay below concentrations that may cause adverse effects. EPA considered the dissolved water column, particulate water column, and prey-tissue values necessary to protect all three categories of species in setting the proposed regulatory criteria values.
Water quality criteria establish the maximum allowable pollutant level that is protective of the designated uses of a water body. States (or in this case, EPA) adopt criteria as part of water quality standards. Under the CWA, water quality standards are used to derive effluent limitations in permits for point source dischargers, thereby limiting the amount of pollutants that may be discharged into a water body to maintain its designated uses. EPA is proposing selenium water quality criteria for the San Francisco Bay and Delta in tissue and in the water column (both dissolved and particulate selenium concentrations). EPA is proposing selenium tissue concentration criteria because they reflect biological uptake through diet, the predominant pathway for selenium toxicity, and because they are most predictive of the observed biological endpoint of concern: reproductive toxicity. However, tissue concentrations present challenges when attempting to use them to regulate or limit sources of pollutants. In order to facilitate monitoring and regulation of pollutant discharges, EPA is also proposing dissolved and particulate water column selenium concentration criteria needed to ensure the tissue concentration criteria are met. Because EPA used site-specific species and hydrologic information in the Ecosystem-Scale Selenium Model to determine the protective dissolved and particulate water column and prey selenium concentrations associated with the predator tissue concentrations, EPA proposes that the criteria in different media are equivalently protective and exceedance of any one medium would indicate an impairment of the designated use.
The proposed tissue criteria consist of fish tissue criteria, a whole body criterion of 8.5 micrograms per gram (µg/g) dry weight (dw) or a muscle criterion of 11.3 µg/g dw, and a clam (or prey) tissue criterion of 15 µg/g dw. EPA is proposing each of these tissue criteria as an instantaneous measurement not to be exceeded. The proposed chronic water column criterion is a dissolved selenium criterion of 0.2 µg/L, and the proposed particulate criterion is 1 µg/g. Each of these two values is a 30-day average, not to be exceeded more than once in three years.
Although selenium may cause acute toxicity at high concentrations,
The proposed criteria apply to all waters of the San Francisco Bay and Delta with salinities of greater than 1 part per thousand (ppt) 95% or more of the time.
California will have considerable discretion to implement these selenium criteria, once finalized, through various water quality control programs, including the NPDES program, which limits discharges to waters except in compliance with an NPDES permit. Among other things, EPA's regulations: (1) Specify how states and authorized tribes establish, modify or remove designated uses, (2) specify the requirements for establishing criteria to protect designated uses, including criteria modified to reflect site-specific conditions, (3) authorize states and authorized tribes to adopt WQS variances to provide time to achieve the applicable WQS, and (4) allow states and authorized tribes to include compliance schedules in NPDES permits to provide time for dischargers to achieve effluent limits based on the applicable WQS. Designated uses, site-specific criteria, variances, and compliance schedules are discussed in more detail below.
In 1990, EPA concluded that before a permitting authority can include a compliance schedule for a WQBEL in an NPDES permit, the state or authorized tribe must authorize its use in its WQS or implementing regulations.
California is authorized to administer the NPDES program in the state, and has adopted several mechanisms to authorize compliance schedules in NPDES permits. In 2008, California adopted a statewide CSAP that EPA subsequently approved under CWA section 303(c), the
Pursuant to section 7(a) of the ESA, EPA is consulting with the FWS and NMFS concerning EPA's rulemaking action for selenium water quality criteria in the San Francisco Bay and Delta. EPA will initiate informal consultation, and will transmit to the Services documentation that supports the selenium water quality criteria in this proposed rule. As a result of this consultation, EPA may modify some provisions of this proposed rule. The basis for the selenium criteria in this proposed rule stems from many years of ongoing collaboration between EPA and the Services. EPA, FWS and NMFS will continue to work closely together on this ESA consultation process.
POTWs and industrial point sources that discharge to the Bay and Delta may incur some incremental compliance actions and costs as a result of the proposed criteria. California has NPDES permitting authority for these dischargers, and retains considerable discretion in implementing standards. EPA evaluated the potential costs to the municipal and industrial NPDES dischargers associated with state implementation of EPA's proposed dissolved water column criterion. EPA did not evaluate the potential costs associated with state implementation of EPA's proposed particulate water column criterion because particulate data are not available and because the state has discretion concerning implementation. This analysis is documented in
NPDES-permitted facilities that discharge selenium to affected portions of the Bay and Delta could potentially incur compliance costs. The types of affected facilities could include industrial facilities and POTWs discharging wastewater to surface waters (
EPA did not identify incremental compliance costs for nonpoint sources. Unlike point sources, California typically does not require nonpoint sources to achieve numeric WQBELs; instead, these sources often have best management practice (BMP) requirements, as well as load allocations associated with TMDLs. Regional Boards have already established TMDLs for selenium in the Lower San Joaquin River and the North San Francisco Bay, and EPA assumes the proposed selenium criteria will not result in the need for additional controls by nonpoint sources in those areas. It is uncertain to what extent nonpoint sources contribute selenium loadings to the Lower and South San Francisco Bay. EPA assumes that naturally-occurring selenium may be the primary source of selenium in the Lower and South San Francisco Bay, and as such, the incremental controls and costs for nonpoint sources as a result of the proposed criteria will not be significant.
Potentially affected facilities include those discharging to waters subject to the proposed criteria (
For all potentially affected facilities, EPA used the last five years of effluent data (when available) and ambient monitoring data from the relevant monitoring station to determine whether there is reasonable potential for the facility to cause or contribute to an excursion above the proposed dissolved water column criterion for selenium. For those facilities that have reasonable potential, EPA calculated projected effluent limits. EPA conducted reasonable potential analyses and calculated effluent limitations for each facility based on California's permitting practices.
EPA assumed that dischargers would pursue the least cost means of compliance with WQBELs. Incremental compliance actions attributable to the proposed rule may include process optimization, source controls, end-of-pipe treatment, and alternative compliance mechanisms (
Of the 16 potentially affected facilities that EPA identified, 14 were found to have reasonable potential to cause or contribute to an excursion above the proposed criterion. For compliance with revised WQBELs under the proposed rule, EPA estimates the total annual cost to be approximately $16 million across the 14 facilities. Of these costs, nearly all are attributable to POTW dischargers (
This action is not a significant regulatory action and was, therefore, not submitted to the Office of Management and Budget (OMB) for review. The proposed rule does not establish any requirements directly applicable to regulated entities or other sources of toxic pollutants. However, these WQS may serve as a basis for development of NPDES permit limits. California has NPDES permitting authority, and retains considerable discretion in implementing WQS. In the spirit of Executive Order 12866, EPA evaluated the potential costs to NPDES dischargers associated with state implementation of EPA's proposed criteria. This analysis,
This action does not impose an information collection burden under the PRA. While actions to implement these WQS could entail additional paperwork burden, this action does not directly contain any information collection, reporting, or record-keeping requirements.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. Small entities, such as small businesses or small governmental jurisdictions, are not directly regulated by this rule.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531–1538, and does not significantly or uniquely affect small governments. As these water quality criteria are not self-implementing, the action imposes no enforceable duty on any state, local or tribal governments or the private sector.
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 responsibilities among the various levels of government. This rule does not alter California's considerable discretion in implementing these WQS, nor would it preclude California from adopting WQS that meet the requirements of the CWA, either before or after promulgation of the final rule, which would eliminate the need for federal standards upon EPA approval of the state WQS. Thus, Executive Order 13132 does not apply to this action.
In the spirit of Executive Order 13132 and consistent with EPA policy to promote communications between EPA and state and local governments, EPA specifically solicits comments on this proposed action from state and local officials.
This action does not have tribal implications as specified in Executive Order 13175. This proposed rule does not impose substantial direct compliance costs on federally recognized tribal governments, nor does it substantially affect the relationship between the federal government and tribes, or the distribution of power and
Consistent with the EPA Policy on Consultation and Coordination with Indian Tribes, EPA consulted with tribal officials during the development of this action. EPA will continue to communicate with the tribes prior to its final action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2–202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
This proposed rulemaking does not involve technical standards.
The human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations. The criteria in this proposed rule will support the health and abundance of aquatic life and aquatic-dependent wildlife in the San Francisco Bay and Delta and will, therefore, benefit all communities that rely on these ecosystems.
Environmental protection, Indians-lands, Intergovernmental relations, Reporting and recordkeeping requirements, Water pollution control.
For the reasons set forth in the preamble, EPA proposes to amend 40 CFR part 131 as follows:
33 U.S.C. 1251
(d) * * *
(10) * * *
(ii) * * *
(b)(1) * * *
Footnotes to Table in Paragraph (b)(1):
p. The [Reserved] criterion referenced by this footnote does not supersede any selenium criterion set out in 40 CFR 131.36 for: Waters of the San Francisco Bay, upstream to and including Suisun Bay and the Sacramento-San Joaquin Delta; and waters of Salt Slough, Mud Slough (north) and the San Joaquin River, Sack Dam to the mouth of the Merced River. The criteria set out in 40 CFR 131.38(b)(3) apply to the salt and estuarine waters of the San Francisco Bay, upstream to and including Suisun Bay and the Sacramento-San Joaquin Delta, subject to 40 CFR 131.38(c)(3)(v). The State of California adopted and EPA approved a site specific criterion for the San Joaquin River, mouth of Merced to Vernalis; therefore, the criterion referenced by this footnote does not apply to these waters.
q. The 5 µg/L criterion referenced by this footnote does not supersede any selenium criterion set out in 40 CFR 131.36 for: Waters of the San Francisco Bay, upstream to and including Suisun Bay and the Sacramento-San Joaquin Delta; and waters of Salt Slough, Mud Slough (north) and the San Joaquin River, Sack Dam to Vernalis. The criteria set out in 40 CFR 131.38(b)(3) apply to the salt and estuarine waters of the San Francisco Bay, upstream to and including Suisun Bay and the Sacramento-San Joaquin Delta, subject to 40 CFR 131.38(c)(3)(v). The State of California adopted and EPA approved a site-specific criterion for the Grasslands Water District, San Luis National Wildlife Refuge, and the Los Banos State Wildlife Refuge; therefore, the criterion referenced by this footnote does not apply to these waters.
(3) The selenium criteria in Table 1 to this paragraph (b)(3) apply to all the waters of San Francisco Bay upstream to and including Suisun Bay and the Sacramento-San Joaquin Delta where the salinity is greater than 1 part per thousand 95% or more of the time, subject to paragraph (c)(3)(v).
(c) * * *
(3) * * *
(ii) For waters in which the salinity is equal to or greater than 10 parts per thousand 95% or more of the time, the applicable criteria are the saltwater criteria in Column C.
(iv) Notwithstanding paragraphs (c)(3)(ii) and (iii) of this section, for waters of San Francisco Bay upstream to and including Suisun Bay and the Sacramento-San Joaquin Delta with salinity greater than 1 part per thousand 95% or more of the time, the selenium criteria provided in paragraph (b)(3) of this section are the only applicable selenium criteria, subject to paragraph (c)(3)(v).
(v) The criteria in paragraph (b)(3) of this section apply concurrently with any water quality criteria adopted by the state, except where California adopts site-specific selenium criteria for a segment of the estuary that EPA determines meet the requirements of Clean Water Act section 303(c) and 40 CFR part 131, in which case California's criteria will apply and not the criteria in paragraph (b)(3) of this section.
Coast Guard, DHS.
Notice of availability with request for comments.
The Coast Guard announces the availability of a draft update to the Marine Safety Manual (MSM), Volume III, Marine Industry Personnel, and the corresponding Commandant Change Notice that highlights the changes made
Guidance documents discussed in this document should be available in the online docket within 3 business days of July 15, 2016. Comments must be received by the Coast Guard on or before September 13, 2016.
You may submit comments identified by docket number “USCG–2016–0669” using the Federal eRulemaking Portal at
For information about this document call of email Lieutenant Commander Corydon Heard, U.S. Coast Guard; telephone 409–978–2704, email
Volume III of the Marine Safety Manual (MSM) provides information and interpretations on international conventions and U.S. statutes and regulations relating to marine industry personnel. The last updates to Volume III of the MSM were released on July 30, 2014 (79 FR 45451, Aug. 5, 2014). This document announces updates to portions of Part B and C.
Specifically, substantive changes include: (1) Updated guidance to align with the Howard Coble Coast Guard and Maritime Transportation Act of 2014; (2) manning scales for towing vessels certificated under 46 CFR Subchapter M from the recently published Inspection of Towing Vessels final rule (81 FR 40003, June 20, 2016); and (3) various policy updates involving vessel manning.
In addition to red-lining proposed changes and annotating each changed page with CH–2 in the footer, we have created a change matrix identifying proposed changes. Both of these documents are available for viewing in the public docket.
It should be noted that the proposed revisions in this draft change are not intended to preempt or take the place of separate policy initiatives regarding specific decisions on appeal or future regulations. Future changes to the MSM may be released if the Coast Guard promulgates new regulations or issues appeal decisions, which may affect the guidance and information contained within the MSM.
We encourage you to submit comments (or related material) on our draft Commandant Change Notice 16000, CH–2 to the Marine Safety Manual, Volume III, Marine Industry Personnel, COMDTINST M16000.8B, which is in the docket and contains substantive changes to Parts B and C of MSM Volume III. We will consider all submissions and may adjust our final action based on your comments. If you submit a comment, please include the docket number for this notice, indicate the specific section of the Commandant Change Notice to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
This document is issued under authority of 5 U.S.C. 552(a).
United States African Development Foundation.
Notice of meeting.
The U.S. African Development Foundation (USADF) will hold its quarterly meeting of the Board of Directors to discuss the agency's programs and administration.
The meeting date is Tuesday, July 19, 11 a.m. to 12 p.m. Executive session 12 p.m.
The meeting location is USADF, 1400 I St. NW., Suite 1000, Washington, DC 20005.
Aysha House, 202–233–8863.
Pub. L. 96–533 (22 U.S.C. 290h).
Forest Service, USDA.
Notice of meeting.
The Fishlake Resource Advisory Committee (RAC) will meet in Richfield, Utah. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held August 3, 2016 at 6 p.m. (MDT).
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the Fishlake National Forest Supervisor's Office, 115 E 900 N., Richfield, Utah.
Written comments may be submitted as described under
John Zapell, RAC Coordinator by phone at (435) 896–1070 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to:
1. Review, prioritize and recommend projects for funding.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by July 25, 2016 to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to John Zapell, Designated Federal Officer, 115 E. 900 N., Richfield, Utah 84701; or by email to
Forest Service, USDA.
Notice of meeting.
The Cherokee Resource Advisory Committee (RAC) will meet in Alcoa, Tennessee. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held August 24, 2016, at 1:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at McGhee Tyson Airport—Airfield Maintenance Operations Center, 2950 Airfield Service Drive, Alcoa, Tennessee.
Written comments may be submitted as described under
Terry McDonald, RAC Coordinator, by phone at 423–476–9729 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to:
1. Discuss new committee membership outreach and recruiting efforts,
2. Review projects discussed at the last meeting, and
3. Recommend projects to the Forest Service for Cocke County and Monroe County, Tennessee.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by August 15, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Terry McDonald, RAC Coordinator, 2800 Ocoee Street North, Cleveland, Tennessee 37312; by email to
July 27, 2016, 1:00 p.m. EDT
U.S. Chemical Safety Board, 1750 Pennsylvania Ave. NW., Suite 910, Washington, DC 20006.
Open to the public.
The Chemical Safety and Hazard Investigation Board (CSB) will convene a public meeting on July 27, 2016, starting at 1:00 p.m. EDT in Washington, DC, at the CSB offices located at 1750 Pennsylvania Avenue NW., Suite 910. The Board will provide an update on the 2016–2020 strategic plan, the status of Office of the Inspector General audits, open investigations, and the agency's action plan. The Board will also discuss financial and organizational updates. An opportunity for public comment will be provided.
The meeting is free and open to the public. If you require a translator or interpreter, please notify the individual listed below as the “Contact Person for Further Information,” at least three business days prior to the meeting.
A conference call line will be provided for those who cannot attend in person. Please use the following dial-in number to join the conference: 1–888–466–9863, passcode 7176 237#.
The CSB is an independent federal agency charged with investigating accidents and hazards that result, or may result, in the catastrophic release of extremely hazardous substances. The agency's Board Members are appointed by the President and confirmed by the Senate. CSB investigations look into all aspects of chemical accidents and hazards, including physical causes such as equipment failure as well as inadequacies in regulations, industry standards, and safety management systems.
The time provided for public statements will depend upon the number of people who wish to speak. Speakers should assume that their presentations will be limited to three minutes or less, but commenters may submit written statements for the record.
Hillary Cohen, Communications Manager, at
Bureau of the Census, Commerce.
Notice of request for nominations.
The Secretary of Commerce is requesting nominations of individuals to the Federal Economic Statistics Advisory Committee. The Secretary will consider nominations received in response to this notice, as well as from other sources. The
Please submit nominations by August 15, 2016.
Please submit nominations by Email to
James R. Spletzer, Designated Federal Official, Department of Commerce, U.S. Census Bureau, Research and Methodology Directorate, Room 5K175, 4600 Silver Hill Road, Washington, DC 20233, telephone 301–763–4069, email:
The Federal Economic Statistics Advisory Committee (the “Committee”) was established in accordance with the Federal Advisory Committee Act (Title 5, United States Code, Appendix 2). The following provides information about the Committee, membership, and the nomination process.
1. The Committee is administratively housed at the Economics and Statistics Administration (ESA), U.S. Department of Commerce. The Committee advises the Directors of ESA's two statistical agencies, the Bureau of Economic Analysis (BEA) and the U.S. Census Bureau (Census), and the Commissioner of the Department of Labor's Bureau of Labor Statistics (BLS) (collectively called “the agencies”) on statistical methodology and other technical matters related to the collection, tabulation, and analysis of federal economic statistics.
2. The Committee functions solely as an advisory committee to the senior officials of BEA, Census, and BLS in consultation with the Committee chairperson.
3. Important aspects of the Committee's responsibilities include, but are not limited to:
a. Recommending research to address important technical problems arising in federal economic statistics.
b. Identifying areas in which better coordination of the agencies activities would be beneficial.
c. Establishing relationships with professional associations with an interest in federal economic statistics.
d. Coordinating (in its identification of agenda items) with other existing academic advisory committees chartered to provide agency-specific advice for the purpose of avoiding duplication of effort.
4. The Committee reports to the Under Secretary for Economic Affairs who, as head of ESA, coordinates and collaborates with the agencies.
1. The Committee consists of approximately fourteen members who serve at the pleasure of the Secretary of Commerce.
2. Members are nominated by the Department of Commerce, in consultation with the agencies, under the coordination of the Under Secretary for Economic Affairs, and are appointed by the Secretary.
3. Committee members are economists, statisticians, survey methodologists, and behavioral scientists, and are chosen to achieve a balanced membership across those disciplines.
4. Members shall be prominent experts in their fields, and recognized for their scientific and professional achievements and objectivity.
a. Members serve as Special Government Employees (SGEs) and are subject to ethics rules applicable to SGEs.
b. Members serve three-year terms. Members may be reappointed to any number of additional three-year terms.
c. Should a Committee member be unable to complete a three-year term, a new member may be selected to complete that term for the duration of the time remaining or begin a new term of three years.
d. The agencies, by consensus agreement, shall appoint the chairperson annually from the Committee membership. Chairpersons shall be permitted to succeed themselves.
1. Members of the Committee will not be compensated for their services, but will be reimbursed for travel expenses upon request.
2. The Committee meets approximately twice a year, budget permitting. Special meetings may be called when appropriate.
1. Nominations are requested as described above.
2. Nominees must be economists, statisticians, survey methodologists, and behavioral scientists and will be chosen to achieve a balanced membership across those disciplines. Nominees must be prominent experts in their fields, and recognized for their scientific and professional achievements and objectivity. Such knowledge and expertise are needed to advise the agencies on statistical methodology and other technical matters related to the collection, tabulation, and analysis of federal economic statistics.
3. Individuals, groups, and/or organizations may submit nominations on behalf of an individual candidate. A summary of the candidate's qualifications (resumé or curriculum vitae) must be included along with the nomination letter. Nominees must be able to actively participate in the tasks of the Committee including, but not limited to, regular meeting attendance, committee meeting discussant responsibilities, review of materials, as well as participation in conference calls, webinars, working groups, and special committee activities.
4. The Department of Commerce is committed to equal opportunity in the workplace and seeks diverse Committee membership.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (“the Department”) is rescinding the administrative review of the antidumping duty order on polyethylene terephthalate film, sheet, and strip (“PET film”) from the People's Republic of China (“PRC”) for the period November 1, 2014, through October 31, 2015.
Jonathan Hill, Office IV, Enforcement & Compliance, International Trade Administration, Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–3518.
On January 7, 2016, based on a timely request for review by Mitsubishi Polyester Film, Inc. and SKC, Inc. (collectively, “Petitioners”), the Department published in the
Pursuant to 19 CFR 351.213(d)(1), the Department will rescind an administrative review, in whole or in part, if the party that requested the review withdraws its request within 90 days of the publication of the notice of initiation of the requested review. In this case, Petitioners timely withdrew
The Department will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties on all appropriate entries. Because the Department is rescinding this administrative review in its entirety, the entries to which this administrative review pertained shall be assessed antidumping duties that are equal to the cash deposits of estimated antidumping duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). The Department intends to issue appropriate assessment instructions to CBP within 15 days after the publication of this 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 Department's presumption that reimbursement of the antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
This notice also serves as a final 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, 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.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (“the Department”) is rescinding the administrative review, in part, of the antidumping duty order on certain frozen warmwater shrimp from the Socialist Republic of Vietnam (“Vietnam”) for the period February 1, 2015 through January 31, 2016.
Effective July 15, 2016.
Irene Gorelik, 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) 482–6905.
On April 7, 2016, based on timely requests for review for 62 companies by Ad Hoc Shrimp Trade Action Committee (“Petitioner”),
On June 30, 2016, Quoc Viet and Thong Thuan withdrew their respective requests for administrative review.
Pursuant to 19 CFR 351.213(d)(1), the Department will rescind an administrative review, in whole or in part, if the party that requested the review withdraws its request within 90 days of the publication of the notice of initiation of the requested review. Because Petitioner, ASPA, and the individual companies all withdrew their requests for administrative review within 90 days of the date of publication of the
The Department will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties on all appropriate entries at a rate equal to the cash deposit of estimated antidumping duties required at the time of entry, or
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 Department's presumption that reimbursement of the antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
This notice also serves as a final 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(a)(3), 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.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Department) is amending the preliminary determination of the antidumping duty (AD) investigation of circular welded carbon-quality steel pipe (CWP) from the Socialist Republic of Vietnam (Vietnam) to correct significant ministerial errors.
Effective July 15, 2016.
Nancy Decker or Andrew Huston, AD/
On June 8, 2016, the Department published its affirmative preliminary determination that CWP from Vietnam is being, or is likely to be, sold in the United States at less than fair value, as provided by section 733 of the Tariff Act of 1930, as amended (the Act).
The petitioners
For a full description of the scope of this investigation,
The Department will analyze any comments received and, if appropriate, correct any significant ministerial error by amending the preliminary determination according to 19 CFR 351.224(e). A ministerial error is defined in 19 CFR 351.224(f) as “an error in addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and any other similar type of unintentional error which the Secretary considers ministerial.” Further, a significant ministerial error is defined in 19 CFR 351.224(g) as a ministerial error, the correction of which, singly or in combination with other errors, would result in: (1) A change of at least five absolute percentage points in, but not less than 25 percent of, the weighted-average dumping margin calculated in the original (erroneous) preliminary determination; or (2) a difference between a weighted-average dumping margin of zero (or
In accordance with 19 CFR 351.224(e) and (g)(2), the Department is amending the
For a complete analysis of the ministerial error allegations,
We are correcting the preliminary dumping margin for Hongyuan. Consequently, we are also amending the preliminary separate rate for Hoa Phat Steel Pipe Co. (Hoa Phat). SeAH's preliminary dumping margin is unchanged.
The collection of cash deposits and suspension of liquidation will be revised according to the rates calculated in this amended preliminary determination. Because Hongyuan's and Hoa Phat's amended rates are now above
In accordance with section 733(f) of the Act, we notified the International Trade Commission of our amended preliminary determination.
The Department intends to disclose calculations performed in connection with this amended preliminary determination within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
This amended preliminary determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act and 19 CFR 351.224(e).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) is conducting a new shipper review (NSR) of the antidumping duty order on certain pasta (pasta) from Turkey. The NSR covers one exporter and producer of subject merchandise, Durum Gida Sanayi ve Ticaret A.S. (Durum). The period of review (POR) is July 1, 2014 through June 30, 2015. The Department preliminarily determines that Durum did not make a
Effective July 15, 2016.
Fred Baker or Robert James, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–2924 and (202) 482–0649, respectively.
On September 2, 2015, the Department published a notice of initiation of a new shipper review of the antidumping duty order on pasta from Turkey.
The Department has exercised its discretion to toll all administrative deadlines due to the closure of the Federal Government because of Snowstorm “Jonas.” Thus, all of the deadlines in this segment of the proceeding were extended by four business days. The revised deadline for the preliminary results of this review, after the four business-day extension, was February 29, 2016.
Imports covered by this review are shipments of certain non-egg dry pasta in packages of five pounds (2.27 kilograms) or less, whether or not enriched or fortified or containing milk or other optional ingredients such as chopped vegetables, vegetable purees, milk, gluten, diastases, vitamins, coloring and flavorings, and up to two percent egg white.
For a full description of the scope of the order,
The Department is conducting this review in accordance with section 751(a)(2)(B) of the Tariff Act of 1930, as amended (the Act) and 19 CFR 351.214. For a full description of the methodology underlying our conclusions,
As discussed in the
Because the non-
Interested parties may submit case briefs no later than 30 days after the date of publication of the preliminary results of review.
Interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement & Compliance, U.S. Department of Commerce, within 30 days after the date of publication of this notice.
All submissions, with limited exceptions, must be filed electronically using ACCESS. An electronically filed document must be received successfully in its entirety by the Department's electronic records system, ACCESS, by 5 p.m. Eastern Time (ET) on the due date. Documents excepted from the electronic submission requirements must be filed manually (
The Department intends to issue the final results of this NSR, which will include the results of its analysis of issues raised in any briefs received, no later than 90 days after the date these preliminary results of review are issued pursuant to section 751(a)(2)(B) of the Act.
If the Department proceeds to a final rescission of Durum's NSR, the assessment rate to which Durum's shipments will be subject will not be affected by this review. If the Department does not proceed to a final rescission of this new shipper review, pursuant to 19 CFR 351.212(b)(1), we will calculate importer-specific (or customer-specific) assessment rates based on the final results of this review.
Effective upon publication of the final rescission or the final results of this NSR, the Department will instruct CBP to discontinue the option of posting a bond or security in lieu of a cash deposit for entries of Durum's subject merchandise. If the Department proceeds to a final rescission of this NSR, Durum's cash deposit rate will continue to be the all-others rate. If the Department issues final results for this NSR, the Department will instruct CBP to collect cash deposits, effective upon the publication of the final results, at the rates established therein.
This notice also serves as a preliminary 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 Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing these results in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On December 22, 2014, the United States Court of International Trade (CIT) entered its final judgment in
Effective April 15, 2016.
Eric B. Greynolds, or James Terpstra. AD/
On October 1, 2012, the Department issued the
In
In the Second Remand Results, the Department continued to respectfully disagree with the Court that the “commercial availability” of a product in the country in question, in a third country or in the United States bars the Department from reaching an affirmative anti-circumvention determination under the minor alteration provision of the statute.
In
In its decision in
Because there is now a final court decision, we are amending the
Accordingly, the Department will instruct CBP to continue to suspend liquidation of the subject merchandise and, as of January 1, 2015, the effective date for the
This notice is issued and published in accordance with sections 516A(e)(1), 751(a)(1), and 777(i)(1) of the Act.
National Institute of Standards and Technology, Commerce.
Notice.
The Commission on Enhancing National Cybersecurity will meet Tuesday, August 23, 2016, from 9:00 a.m. until 5:00 p.m. Central Time at the University of Minnesota's TCF Bank Stadium-DQ Club Room. The primary purpose of the meeting is to discuss the challenges and opportunities for organizations and consumers in securing the digital economy. In particular, the meeting will address: (1) Challenges confronting consumers in the digital economy; (2) innovation (Internet of Things, healthcare, and other areas); and (3) assured products and services. The meeting will support detailed recommendations to strengthen cybersecurity in both the public and private sectors while protecting privacy, ensuring public safety and economic and national security, fostering discovery and development of new technical solutions, and bolstering partnerships between Federal, State, local, tribal and territorial governments and the private sector in the development, promotion, and use of cybersecurity technologies, policies, and best practices. All sessions will be open to the public.
The meeting will be held on Tuesday, August 23, 2016, from 9:00 a.m. until 5:00 p.m. Central Time.
The meeting will be held at the University of Minnesota's TCF Bank Stadium-DQ Club Room, 3rd Level, located at 420 SE 23rd Avenue, Minneapolis, Minnesota 55455. The meeting is open to the public and interested parties are requested to contact Sara Kerman at the contact information indicated in the
Sara Kerman, Information Technology Laboratory, National Institute of Standards and Technology, 100 Bureau Drive, Stop 2000, Gaithersburg, MD 20899–8900, telephone: 301–975–4634, or by email at:
Pursuant to the Federal Advisory Committee Act, as amended, 5 U.S.C. App., notice is hereby given that the Commission on Enhancing National Cybersecurity (“the Commission”) will meet Tuesday, August 23, 2016, from 9:00 a.m. until 5:00 p.m. Central Time. All sessions will be open to the public. The Commission is authorized by Executive Order 13718, Commission on Enhancing National Cybersecurity.
The agenda is expected to include the following items:
Speakers who wish to expand upon their oral statements, those who had wished to speak but could not be accommodated on the agenda, and those who were unable to attend in person are invited to submit written statements. In addition, written statements are invited and may be submitted to the Commission at any time. All written statements should be directed to the Commission Executive Director, Information Technology Laboratory, 100 Bureau Drive, Stop 8900, National Institute of Standards and Technology, Gaithersburg, MD 20899–8900 or by email at:
National Institute of Standards and Technology, Department of Commerce.
Notice; request for information.
The National Institute of Standards and Technology (NIST), an agency of the United States Department of Commerce, is establishing the Flow Cytometry Quantitation Consortium and invites organizations to participate in this Consortium. The Consortium will develop reference materials including reference fluorophore solutions and biological reference materials, reference data and reference methods for assigning equivalent number of reference fluorophores (ERF) values and for assessing the associated uncertainties and utilities. Participation in this Consortium is open to all eligible organizations, as described below.
NIST will accept responses for participation in this Consortium on an ongoing basis. The Consortium's activities will commence on August 15, 2016 (“Commencement Date”). Acceptance of participants into the Consortium after the Commencement Date will depend on the availability of NIST resources.
Information in response to this notice and requests for additional information about the Consortium can be directed via mail to the Consortium Manager, Dr. Lili Wang, Biosystems and Biomaterials Division of NIST's Material Measurement Laboratory, 100 Bureau Drive, Gaithersburg, Maryland 20899–8312, or via electronic mail to
For further information about partnership opportunities or about the terms and conditions of NIST's Cooperative Research and Development Agreement (CRADA), please contact Honeyeh Zube, CRADA and License Officer, National Institute of Standards and Technology's Technology Partnerships Office, by mail to 100 Bureau Drive, Mail Stop 2200, Gaithersburg, Maryland 20899, by electronic mail to
Flow cytometry is a widely used technique for a single cell and particle analysis. It is an essential tool for immunological research, drug and device development, clinical trials, disease diagnosis, and therapy monitoring. The annual expenditure on flow cytometry-related diagnostics is upwards of $1.2 Billion and growing at more than 10 percent per year, testifying to the economic importance of this technology. The measurements made on the different instrument platforms at different times and locations, however, cannot be compared accurately, which makes diagnostic decisions unreliable and slows down advances in biomedical research. In response to this limitation, NIST and International Society for Advancement of Cytometry (ISAC) have developed a methodology to implement quantitation in flow cytometry. The first step is to calibrate the fluorescence signal from microparticles in terms of a unit of equivalent number of reference fluorophores (ERF) on three laser excitations, 405 nm, 488 nm, and 633 nm. The ERF unit gives the number of reference fluorophores in solution which produce the same fluorescence signal as a single dyed microsphere.
The second step uses a biological cell, with known number of specific biomarkers, as a reference material to translate the ERF unit to a unit of antibodies bound per cell (ABC). The ABC unit is most relevant to immunological measurements. To support the calibration of microparticles in terms of ERF, NIST has developed standard reference material (SRM 1934), which includes four solutions of fluorophore: Fluorescein, Nile Red, Coumarin 30 and Allophycocyanin. Microparticles that have been assigned ERF values using SRM 1934 will enable the calibration and characterization of flow cytometers, and the standardization of the fluorescence intensity scale in quantitative ERF units. The results of the collaboration under this Consortium will allow the industry to further research, develop and adopt reference fluorophore solutions for other laser excitations and reference material standards recommended by the expert user community.
NIST is establishing this five-year Consortium to collaborate with manufacturers of microparticles to develop methodologies for assigning ERF values for the microparticles provided to NIST under the scope of the Consortium. The results from this Consortium will also allow NIST to develop the capability that NIST would require to provide a calibration service.
The certificate of analysis for NIST SRM 1934 and NIST's finalized standard operating procedure (SOP) for assigning ERF value will be used for performing the ERF value assignments for participants' microparticles. This SOP includes four steps and is published at J. Res. Natl. Inst. Stand. Technol. 121: 269–286 (2016). As described in the SOP, the ERF value of the major microparticle population is calculated on the basis of the ratio of mean fluorescence intensity values of the major microparticle population to all microparticle populations.
A summary of the ERF value assignments will include ERF values of major microparticle populations, associated combined uncertainties per laser excitation, and reference fluorophore. The combined uncertainty will be derived from all steps of the ERF value assignment, from weighing reference solutions, spectrofluorimeter calibration, CCD response calibration, microparticle concentration measurements by flow cytometer and light obscuration, and measurement of the emission spectrum of microparticles to determine ERF values for major microparticle populations. NIST will also share with each participant any digital emission spectral data of the major microparticle populations. In addition, a participant may request reports for specific ERF value assignments for its microparticles under this Consortium. NIST intends to
An organization responding to this notice should provide the following information to NIST's Consortium Manager:
(1)
(2)
(3) Experience in production and characterization of microparticles, antibodies, and biological cells, and analysis of large data sets.
A responding organization should not include any business proprietary information in its response to this request for information. NIST will not treat any information provided in response to this request as proprietary information. NIST will notify each organization of its eligibility. In order to participate in this Consortium, each eligible organization must sign a Cooperative Research and Development Agreement (CRADA) for this Consortium. All participants to this Consortium will be bound by the same terms and conditions.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of a public meeting via Webinar.
The Gulf of Mexico Fishery Management Council will hold a meeting of its Standing and
The meeting will be held on Tuesday, August 2, 2016, from 1 p.m. to 3:30 p.m. (EDT), to view the agenda, see
The meeting will be held via Webinar; you may registering, at
Steven Atran, Senior Fishery Biologist, Gulf of Mexico Fishery Management Council;
— Meeting Adjourns—
Please register for SSC Meeting: Standing and
The Agenda is subject to change, and the latest version along with other meeting materials will be posted on the Council's file server. To access the file server, the URL is
The meeting will be webcast over the Internet. A link to the webcast will be available on the Council's Web site,
Although other non-emergency issues not on the agenda may come before the Scientific and Statistical Committee for discussion, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act, those issues may not be the subject of formal action during this meeting. Actions of the Scientific and Statistical Committee will be restricted to those issues specifically identified in the agenda and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Council's intent to take action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Kathy Pereira, at the Gulf Council Office (see
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public hearings and scoping meetings.
The South Atlantic Fishery Management Council (Council) will hold a series of public hearings pertaining to Framework Amendment 4 to the Coastal Migratory Pelagic (CMP) Fishery Management Plan for the Gulf of Mexico and South Atlantic addressing management measures for Atlantic cobia in federal waters, and Amendment 41 to the Snapper Grouper Fishery Management Plan for the South Atlantic addressing measures for mutton snapper in federal waters. Scoping comments will also be accepted for options being considered in Joint Dolphin Wahoo Amendment 10 and Snapper Grouper Amendment 44 to address allocations for dolphin fish and yellowtail snapper in federal waters. Question and Answer sessions for Framework Amendment 4 to the CMP Fishery Management Plan and for Amendment 41 to the Snapper Grouper Fishery Management Plan will also be held via webinar. A Question and Answer session for Joint Dolphin Wahoo Amendment 10 and Snapper Grouper Amendment 44 will be held as part of the scoping session.
The Q&A sessions and series of public hearings/scoping meetings will be held from August 1 through August 17, 2016. All webinars and meetings will begin at 6 p.m.
Registration is required for the Q&A sessions and public hearing/scoping meetings held via webinar. Registration information will be posted on the SAFMC Web site at
Kim Iverson, Public Information Officer, SAFMC; phone: (843) 571–4366 or toll free (866) SAFMC–10; fax: (843) 769–4520; email:
The Council is soliciting public hearing comments on proposed measures in CMP Framework Amendment 4 addressing proposed management measures for Atlantic cobia in federal waters from the Florida/Georgia line northward to New York. The Atlantic cobia fishery was closed to recreational harvest on June 20, 2016 in federal waters after NOAA Fisheries determined that the recreational annual catch limit had been exceeded in 2015. Exceeding the 2015 annual catch limit triggered the accountability measures in place for Atlantic cobia to prevent overfishing, resulting in the shortened recreational season in 2016. Measures proposed in Framework Amendment 4 are designed to help ensure consistent and stable fishing opportunities for all participants in the fishery and include: (1) Reducing the recreational bag limit with a preferred alternative to reduce the daily bag limit from 2 per person/day to 1 per person/day; (2) establishing a recreational vessel limit with a preferred alternative of 3 per vessel/day; (3) modifying the recreational fishing year with a preferred alternative for the year to begin May 1st; (4) modifying the recreational minimum size limit; (5) modifying the current accountability measure; and (6) changes to the commercial harvest limit.
The Council is also soliciting public hearing comments on Snapper Grouper Amendment 41 addressing proposed management measures for mutton snapper. Stakeholders have expressed concerns about fishing pressure that occurs each spring as mutton snapper gather to spawn. Measures in Amendment 41 include actions to: (1) Modify the current annual catch limit for mutton snapper based on the most recent stock assessment; (2) reduce the current bag limit of 10 fish per person/day within the snapper aggregate with a preferred alternative of 3 fish per person/day year round; (3) establish a commercial trip limit with the preferred alternative of 300 pounds and 3 fish per person/day during the spawning season months (April-June); and (4) modify the current minimum size limit with the preferred alternative to increase the limit from 16 to 18 inches total length.
Public scoping comments are being solicited for measures proposed in Joint Dolphin Wahoo Amendment 10/Snapper Grouper Amendment 44 addressing potential allocation measures for dolphin fish and yellowtail snapper. Public scoping occurs early in the amendment development process and the Council is soliciting input on proposed options that include a common pool allocation, a reserve category, temporary shifts in allocation, combined annual catch limits, a permanent allocation shift for dolphin and/or yellowtail snapper, and allocations by gear type for the commercial sector in the dolphin fishery. Measures proposed for dolphin would apply in federal waters along the entire Atlantic coast.
1. August 3, 2016—Crowne Plaza Hotel, 4831 Tanger Outlet Boulevard, N. Charleston, SC 29418; phone: (843) 744–4422.
2. August 8, 2016—Holton Restaurant, 13711 E. Oglethorpe Highway, Midway, GA 31320; phone: (912) 884–9151.
3. August 9, 2016—Hilton Virginia Beach, 3001 Atlantic Avenue, Virginia Beach, VA 23451; phone: (757) 213–3001.
4. August 9, 2016—Hampton Inn, 29 William Pope Drive, Bluffton, SC 29909; phone: (843) 705–9000.
5. August 10, 2016—NC Division of Marine Fisheries, Central District Office, 5285 Highway 70 West, Morehead City, NC 28557; phone: (252) 499–9200.
6. August 11, 2016—Hilton Garden Inn, 5353 N. Virginia Dare Trail, Kitty Hawk, NC 27949; phone: (252) 261–1290.
7. August 11, 2016—Murrells Inlet Community Center, 4462 Murrells Inlet Road, Murrells Inlet, SC 29576; phone: (904) 396–5100.
1. August 15, 2016—Hilton Garden Inn—Ft. Lauderdale Airport, 180 SW 18th Avenue, Dania Beach, FL 33004; phone: (954) 924–9204.
2. August 16, 2016—Hawks Cay Resort, 61 Hawks Cay Blvd., Duck Key, FL 33050; phone: (305) 743–7000.
3. August 17, 2016—Marriott Beachside Hotel, 3841 N. Roosevelt Blvd., Key West, FL 33040; phone: (305) 296–8100.
The Council requests that written comments be submitted using the online public comment form. Comments submitted using the online comment form are immediately posted to the Council's Web site at
The comment period will open on July 18, 2016 once amendment materials are posted to the Web site. All written comments are due by 5 p.m. on August 19, 2016.
Comments may be submitted by mail to: Gregg Waugh, Executive Director, SAFMC, 4055 Faber Place Drive, Suite 201, North Charleston, SC 29405. Fax comments to (843) 769–4520. Comments using the online public comment form: Use the comment form links on the Public Hearing and Scoping Meeting page on the Council's Web site to submit comments on each amendment. All comments submitted will be automatically posted to the Web site and accessible for the public to view. The direct link to the Public Hearing and Scoping meeting page is:
Copies of the public hearing documents, scoping document, and other relevant informational material will be posted on the Council's Web site at
These meetings are physically accessible to people with disabilities. Requests for auxiliary aids should be directed to the council office (see
The times and sequence specified in this agenda are subject to change.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The Mid-Atlantic Fishery Management Council's (Council's) Summer Flounder, Scup, and Black Sea Bass Advisory Panel will hold a public meeting, jointly with the Atlantic States Marine Fisheries Commission's (ASMFC) Summer Flounder, Scup, and Black Sea Bass Advisory Panel.
The meeting will be held on Friday, July 29, 2016, from 10 a.m. until 12:30 p.m.
The meeting will be held via webinar with a telephone-only connection option. Details on webinar registration and telephone-only connection details will be posted at:
Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526–5255.
The purpose of this meeting is for the Advisory Panels to review and comment on recent stock assessment information, as well as the reports and recommendations of the Council's Scientific and Statistical Committee (SSC) and the Summer Flounder, Scup, and Black Sea Bass Monitoring Committee regarding previously implemented fishery specifications (
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to M. Jan Saunders, (302) 526–5251, at least 5 days prior to the meeting date.
National Telecommunications and Information Administration, U.S. Department of Commerce.
Notice of open meeting.
This notice announces a public meeting of the Commerce Spectrum Management Advisory Committee (Committee). The Committee provides advice to the Assistant Secretary of Commerce for Communications and Information and the National Telecommunications and Information Administration (NTIA) on spectrum management policy matters.
The meeting will be held on August 1, 2016, from 1:00 p.m. to 4:00 p.m., Mountain Daylight Time (MDT).
The meeting will be held at the National Institute of Standards and Technology, Boulder Campus, 325 Broadway Street, Boulder, CO 80305. Additional information regarding the location and registration for attendance at this meeting is included in the
David J. Reed, Designated Federal Officer, at (202) 482–5955 or
This Committee is subject to the Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2, and is consistent with the National Telecommunications and Information Administration Act, 47 U.S.C. 904(b). The Committee functions solely as an advisory body in compliance with the FACA. For more information about the Committee visit:
NTIA will post a detailed agenda on its Web site,
The meeting will be open to the public and members of the press on a first-come, first-served basis as space is limited. The public meeting is physically accessible to people with disabilities. Individuals requiring accommodations, such as sign language interpretation or other ancillary aids, are asked to notify Mr. Reed at (202) 482–5955 or
Drug Enforcement Administration, Department of Justice.
General notice.
The Drug Enforcement Administration (DEA) announces, in coordination with U.S. Customs and Border Protection (CBP), a pilot test of the International Trade Data System (ITDS) involving the electronic submission of data related to the importation and exportation of controlled substances and listed chemicals. The pilot program will test the electronic transmission through the CBP's Automated Commercial Environment (ACE) system, of data, forms and documents required by the DEA using the Partner Government Agency (PGA) Message Set and the Document Image System (DIS). The data, forms and documents will be transmitted for review by the DEA. CBP's PGA Message Set and DIS enable importers, exporters, and brokers to electronically transmit data required by the DEA directly to ACE. This electronic process will replace certain paper-based processes currently used during the pilot program for pilot participants.
The test will commence no earlier than August 1, 2016, and will continue until concluded by publication of a notice in the
For PGA-related questions, contact Elizabeth McQueen at
The Customs Modernization provisions in the North American Free Trade Agreement Implementation Act (Pub. L. 103–183, 107 Stat. 2057, 2170, December 8, 1993) provide the Commissioner of CBP with authority to conduct limited test programs or procedures designed to evaluate planned components of the National Customs Automation Program (NCAP), which includes ACE. The PGA Message Set/DIS test described in this notice is in furtherance of the NCAP goals.
This test is also in furtherance of the International Trade Data System (ITDS) key initiatives to achieve the vision of ACE as the “single window” for the U.S. Government and trade community, set forth in section 405 of the Security and Accountability for Every Port Act of 2006 (“SAFE Port Act”) (Pub. L. 109–347, 120 Stat. 1884, 1929, Oct. 13, 2006), and section 107 of the Trade Facilitation and Trade Enforcement Act of 2015 (Pub. L. 114–125, 130 Stat. 122, 135, Feb. 24, 2016). The purpose of ITDS, as stated in section 405 of the SAFE Port Act, is to eliminate redundant information requirements, efficiently regulate the flow of commerce, and effectively enforce laws and regulations relating to international trade, by establishing a single portal system, operated by CBP, for the collection and distribution of standard electronic import and export data required by all participating Federal agencies. CBP is developing ACE as the “single window” for the trade community to transmit electronically all required information related to the cargo imported or exported and to comply with the ITDS requirement established by the SAFE Port Act. On October 13, 2015, CBP promulgated an interim final rule providing that, as of November 1, 2015, ACE is a CBP authorized Electronic Data Interchange (EDI) system which may be used for the filing of entries and entry summaries. 80 FR 61278. On February 29, 2016, CBP published a notice in the
Executive Order 13659 of February 19, 2014,
On December 13, 2013, CBP published in the
On April 6, 2012, CBP announced the DIS test (77 FR 20835) allowing any party who files an ACE entry/cargo release or ACE Entry Summary certified for cargo release to submit electronically digital copies of specified CBP and PGA forms and documents via a CBP-approved EDI. On January 30, 2015, CBP modified the DIS test to allow specified Animal and Plant Health Inspection Service forms and documents to be transmitted as attachments to an email. 80 FR 5126. On October 15, 2015, CBP announced it would permit any DIS eligible form or document to be submitted as an attachment to an email. 80 FR 62082. As CBP frequently updates the list of forms and documents eligible to be transmitted using DIS, the complete list will be maintained on the CBP Web site, at the following address:
Current DEA regulations require applications for permits, declarations, and other required notices and reports to be filed utilizing designated forms which can be filed in paper form or by electronic means. During the pilot, the DEA import and export application and filing processes will continue to remain separate from (and in advance of) the ITDS single window. Entities will continue to use the DEA application and filing processes; however, the processes will be electronic rather than paper. After the DEA's approval or notification of receipt as appropriate, the DEA will
In support of ITDS and the use of CBP's PGA Message Set and DIS, the DEA will utilize an automated system to ensure compliance with import and export regulations. The DEA's system will electronically transmit reference data to CBP, expediting the conditional release of shipments for the purpose of inspection, prior to the final release into the commerce of the United States.
Once deployed, ACE/ITDS will replace the Automated Commercial System (ACS), the current EDI. ACE will be the official “single-window” system of record. ACE will require that all data related to cargo release be submitted electronically using either the PGA Message Set or DIS.
The DEA and/or CBP will analyze the PGA Message Set data, forms and documents transmitted using DIS to determine whether inspection of a shipment is required. The data in ACE will also enable CBP to make the determination that a shipment may be conditionally released for inspection.
The DEA is authorized by the Controlled Substances Act (CSA) (21 U.S.C. 801
This notice announces DEA's plan to conduct a test concerning the electronic transmission of the data contained in these forms to ACE using the PGA Message Set and the transmission of certain DEA permits, forms and documents using DIS. This new DEA PGA Message Set and DIS capability will satisfy the DEA data and electronic document requirements for any CBP entry filed electronically in ACE. As noted above, this test also applies to the exportation of the commodities subject to this test and requires the electronic submission of required export data through AES in Automated Export System Trade Interface Requirements (AESTIR) or American National Standards Institute (ANSI) X12, or in ACE AESDirect using an ACE portal, bulk upload or weblink. The AES DEA data elements are documented in Appendix Q of the AESTIR Implementation Guidelines (Appendix Q) and in the ACE AESDirect portal view. The Web site to Appendix Q is
This new capability will also enable the trade community to have a CBP-managed “single window” for the electronic submission of data and documents required by the DEA during the cargo importation/exportation and review process. The technical requirements for submitting DEA data elements are set forth in the supplemental Customs and Trade Automated Interface Requirements (CATAIR) guidelines for the DEA. These technical requirements, including the ACE CATAIR chapter, may be found at the following link:
The list of forms and documents, including DEA documents, which may be transmitted using DIS may be found at
This test will apply to any entry filed in ACE at any port of entry and to cargo imported or exported using any mode of transportation. As a condition of the pilot, entries filed in ACE with the PGA Message Set must be transmitted using a software program that has completed ACE certification testing.
This initial pilot will include the DEA PGA Message Set and the DIS components of ACE for imports, and the use of AES for exports. As mentioned above, DIS allows participants to transmit required PGA data to ACE through the use of electronic copies of DEA permits, forms and documents. For information regarding the use of DIS and a list of PGA forms and documents that may be transmitted to ACE using DIS, please see
Importers, exporters and brokers who participate in this pilot will transmit PGA Message Set data to ACE using the electronic data interchange known as the ABI, and for exports, data will be transmitted via the AESTIR or the ACE Secure Data Portal. The data elements in the PGA Message Set are generally those found on the DEA forms, permits, and declarations subject to this test. The DEA data is required in order to determine whether inspection of the shipment is required and to provide CBP with information to determine whether to conditionally release the cargo. Details related to this data will be provided to pilot participants. The DEA anticipates that this pilot program will help prepare for a successful transition from the paper-based process to the electronic entry and transmission of data to ACE.
Importers, exporters and brokers who participate in this PGA Message Set/DIS pilot will be required to:
• Submit by electronic means through the DEA Office of Diversion Control's secure network application, DEA Registered Importers/Exporters Permit Applications (DEA Forms 357, 161, 161R), and Import/Export Declarations (DEA Forms 236, 486, and 486A).
• Retrieve and print from the DEA Office of Diversion Control's secure network application, color copies of DEA issued import and export permits (DEA Forms 35 and 36).
• Obtain the required PGA Message Set Data and electronic DIS copy of the permit or declaration from the DEA registrant or regulated person.
• File, when applicable, data elements contained in Appendix Q.
• Include PGA Message Set import filings only as part of an ACE Entry or Entry Summary certified for cargo release.
• Use a software program that has completed ACE certification testing for the PGA Message Set and/or DIS.
• Transmit import filings to CBP via ACE.
• Transmit only information to CBP that has been requested by CBP or DEA.
• File export data through AES in AESTIR or ANSI X12, or in ACE AESDirect using an ACE portal, bulk upload or weblink.
Pursuant to the authority of 21 U.S.C. 871(b), for the purposes of this test, the DEA waives for pilot participants those provisions of 21 CFR parts 1312 and 1313 that are inconsistent with the terms of this test. This document does not waive any recordkeeping requirements found in 21 CFR parts 1304, 1310, 1312, and 1313. For purposes of this test, those provisions of 21 CFR 1312.13(e), 1312.14(a), 1312.14(c), 1312.19(a), 1312.19(b), 1312.23(e), 1312.24(a), 1312.24(b), 1312.28(c), 1312.28(d), 1313.14(c), and 1313.23(c) that are inconsistent with the terms of this test are waived for test participants.
This change does not institute a new collection of information but instead proposes modifying the way that information is gathered. The collection of information contained in this DEA PGA Message Set/DIS test has been previously approved by the Office of Management and Budget (OMB) in accordance with the requirements of the Paperwork Reduction Act (44 U.S.C. 3507) and assigned OMB control numbers 1117–0009 and 1117–0023. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.
Data submitted and entered into the ACE Portal includes information that is exempt or restricted from disclosure by law, such as by the Trade Secrets Act (18 U.S.C. 1905). Participation in this or any of the previous ACE tests is not confidential and the name(s) of an approved participant(s) may be disclosed by CBP.
Committee for Purchase From People Who are Blind or Severely Disabled.
Proposed additions to and deletions from the Procurement List.
The Committee is proposing to add a product and service to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and delete products and services previously furnished by such agencies.
Comments must be received on or before: 8/14/2016.
Committee for Purchase From People Who Are Blind Or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia 22202–4149.
For further information or to submit comments contact Barry S. Lineback, Telephone: (703) 603–7740, Fax: (703) 603–0655, or email
This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51–2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
If the Committee approves the proposed additions, the entities of the Federal Government identified in this notice will be required to procure the product and service listed below from nonprofit agencies employing persons who are blind or have other severe disabilities.
The following product and service are proposed for addition to the Procurement List for production by the nonprofit agencies listed:
The following products and services are proposed for deletion from the Procurement List:
Committee for Purchase From People Who are Blind or Severely Disabled.
Additions to the Procurement List.
This action adds products to the Procurement List that will be furnished by a nonprofit agency employing persons who are blind or have other severe disabilities.
Effective 8/14/2016.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia, 22202–4149.
Barry S. Lineback, Telephone: (703) 603–7740, Fax: (703) 603–0655, or email
On 5/6/2016 (81 FR 27419–27420) and 5/20/2016 (81 FR 31917–31918), the Committee for Purchase from People Who are Blind or Severely Disabled published notices of proposed additions to the Procurement List.
After consideration of the material presented to it concerning capability of qualified nonprofit agencies to provide the products and impact of the additions on the current or most recent contractors, the Committee has determined that the products listed below are suitable for procurement by the Federal Government under 41 U.S.C. 8501–8506 and 41 CFR 51–2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organization that will furnish the products to the Government.
2. The action will result in authorizing a small entity to furnish the products to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501–8506) in connection with the products proposed for addition to the Procurement List.
Accordingly, the following products are added to the Procurement List:
Bureau of Consumer Financial Protection.
Supervisory Highlights; notice.
The Bureau of Consumer Financial Protection (CFPB) is issuing its eleventh edition of its Supervisory Highlights. In this issue, the CFPB shares findings from supervisory examination work in mortgage servicing between January 2014 and April 2016. The issue also discusses Supervision's approach mortgage to servicing exams, including a description of recent changes to the mortgage servicing chapter of the CFPB Supervision and Examination Manual.
The Bureau released this edition of the
Christopher J. Young, Managing Senior Counsel and Chief of Staff, Office of Supervision Policy, 1700 G Street NW., 20552, (202) 435–7408.
Mortgage servicers play a central role in homeowners' lives by managing their mortgage loans. Servicers collect and apply payments, work out modifications to loan terms, and handle the difficult process of foreclosure. As the financial crisis made clear, weak customer support, lost paperwork, and mishandled accounts can lead to many wrongful foreclosures and other serious harm. Since consumers do not choose their mortgage servicers they cannot take their business elsewhere.
To improve practices in the servicing market, the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) imposed new requirements on servicers and gave the Consumer Financial Protection Bureau (CFPB) the authority to implement those new requirements and adopt additional rules to protect consumers. The CFPB released rules, effective January 10, 2014, to improve the information consumers receive from their servicers, to enhance the protections available to consumers to address servicer errors, and to establish baseline servicing requirements that provide additional protections for consumers who have fallen behind on their mortgage payments. Supervisory examinations of mortgage servicers now generally focus on reviewing for compliance with these servicing rules and for unfair, deceptive, and abusive acts or practices.
To assist industry in its efforts to comply Federal consumer financial law, this Special Edition of
The magnitude and persistence of compliance challenges since 2014, particularly in the areas of loss mitigation and servicing transfers, show that while the servicing market has made investments in compliance, those investments have not been sufficient across the marketplace. Outdated and deficient servicing technology continues to pose considerable risk to consumers in the wider servicing market. These shortcomings are compounded by lack of proper training, testing, and auditing of technology-driven processes, particularly to handle more individualized situations related to delinquencies and loss mitigation processes. None of these problems is insurmountable, however, with the proper focus on making necessary improvements, especially in the information technology systems necessary for effective implementation. Supervisory examinations do show that some servicers have significantly improved their compliance positions, and this edition concludes by sharing how these servicers have strengthened their compliance.
To determine which mortgage servicers to examine, we use a prioritization framework that considers a broad range of factors to predict the likelihood of consumer harm.
Our prioritization approach counterbalances this size consideration with what we call field and market intelligence. We consider qualitative and quantitative factors for each servicer such as the strength of compliance management systems, the existence of other regulatory actions, findings from our prior examinations, servicing transfer activity, the number, severity and trends of consumer complaints, as well as input from housing counselors and other stakeholders about institutional performance based on their experience.
In fall 2011, we published the initial mortgage servicing chapter of the CFPB Supervision and Examination Manual. We update the manual periodically, most recently in May 2016, to reflect regulatory changes, to make technical corrections and to update examination priorities.
Generally, our examinations review compliance management systems and evaluate compliance through transaction testing of specific loan files. In many instances, examiners conduct specific transaction testing based on consumer complaints submitted to housing counselors or the CFPB's Office of Consumer Response, particularly where the servicer did not provide a sufficient response or remedy. The scope for the content of our examinations reflects the size and risk profile of each servicer, and as a result, the content of our transaction testing may vary across market participants.
Our supervisory work also has included use of the Equal Credit Opportunity Act (ECOA) Baseline Modules, which are part of the CFPB
Where we observe more significant violations during an examination, we may refer matters to our Action Review Committee.
Additionally, we have identified potential risk areas and provided general compliance suggestions related to mortgage servicing by publishing several compliance bulletins. The bulletins issued to date have covered the following topics: Permanent Change of Station Orders,
In examining for compliance with the servicing rules, Supervision has addressed issues across servicing business areas, and most extensively in the areas of loss mitigation acknowledgement notices (3.1); loss mitigation offers and related communications (3.2); loan modification denial notices (3.3); policies and procedures (3.4); and servicing transfers (3.5). The following findings reflect information obtained from supervisory activities as captured in examination reports or supervisory letters. In some instances, not all corrective actions, including through enforcement, have been completed at the time of this report's publication.
Before the new servicing rules, gaps in servicer communication and coordination kept many distressed consumers in the dark about available options to avoid foreclosure. Consumers who applied for such options sometimes found themselves stuck in a cycle of lost paperwork and redundant document requests while their foreclosure dates grew nearer.
To address this set of issues, the servicing rules now require that if a servicer receives a loss mitigation application 45 days or more before a foreclosure sale, it must notify the borrower in writing within five days to acknowledge receipt of the application and whether it is complete or incomplete.
CFPB examiners have found multiple violations related to these critical process requirements. Examiners found that one or more servicers failed to send any loss mitigation acknowledgment notices due to a repeated loss mitigation processing platform malfunction over a significant period of time. Supervision cited the servicer(s) for violating Regulation X and directed the servicer(s) to remediate affected borrowers, including for interest, fees, and any additional harm incurred.
Supervision also found deceptive statements in loss mitigation acknowledgement notices. One or more servicers sent acknowledgement notices that represented homes would not be foreclosed on before the deadline passed for submitting missing documents. But the servicer(s) foreclosed on homes before the submission deadline. Supervision determined the representations to be deceptive, independent of whether or not the servicing rules permitted the servicer(s) to foreclose on the specific borrower(s) at that time. Supervision directed the servicer(s) to undertake remedial and corrective actions which are under review.
Supervision also observed deficiencies with the timeliness and content of acknowledgment notices. One or more servicers sent acknowledgement notices more than five days after receiving a borrower's loss mitigation application. And at one or more servicers, the noncompliant acknowledgment notices for incomplete loss mitigation applications:
• Failed to state the additional documents and information for borrowers to submit to complete the application, such as income and tax forms that the servicer's internal records showed were necessary at that time,. Instead, the servicer(s) separately requested the necessary documents several weeks after the acknowledgment notice.
• Requested documents, sometimes dozens in number, inapplicable to borrower circumstances and which were not needed to evaluate borrowers for loss mitigation.
• Requested documents that borrowers already submitted.
• Failed to include any reasonable date by which borrowers must return additional documents and information.
• Gave borrowers 30 days to submit additional documents, but the servicer(s) then denied borrowers' applications for loss mitigation before 30 days.
• Failed to include a statement that borrowers should consider contacting servicers of any other mortgage loans
Supervision cited the servicer(s) above for violating Regulation X and directed them to revise deficient acknowledgement notices to meet Regulation X requirements.
Supervision also found serious violations of Federal consumer financial law with servicer loss mitigation offer letters, loss mitigation offers, and related communications. In offering proprietary modifications, one or more servicers engaged in deceptive and abusive practices in connection with communicating whether and when outstanding fees, charges, and advances would be assessed. Specifically, one or more servicers engaged in a deceptive practice by misrepresenting to borrowers that it would defer such charges to the maturity date of the loan, when in fact it often assessed hundreds of dollars in these charges after the borrowers signed and returned the permanent modification agreements. Additionally, one or more servicers took unreasonable advantage of borrowers' lack of understanding of the material risks of the loan modification and took unreasonable advantage of borrowers' inability to protect their interests in selecting or using the modification because the language in the proprietary modification offer made it impossible for a borrower to understand the true nature of how and when these charges would be assessed. Without such knowledge, a borrower could not have understood the material risks of the modification, nor could he adequately protect himself from the potential payment shock from the assessment of such charges. Supervision cited the servicer(s) for deceptive and abusive practices and required the servicer(s) to provide accurate information regarding fee assessment practices about its proprietary loss mitigation options to borrowers.
Furthermore, one or more servicers sent loss mitigation offer letters with response deadlines that had already passed or were about to pass by the time the borrower received the letter. The servicer(s) generated the letters in timely fashion, but delayed sending them to borrowers for a substantial number of days. Supervision cited this practice as unfair and directed the servicer(s) to undertake remedial and corrective actions which are under review.
With respect to permanent modification agreements, one or more servicers sent agreements to some borrowers that did not match the terms approved by its underwriting software. Many borrowers signed and returned the agreements, but then the agreements were not executed by the servicer(s). Instead, after substantial delays, the servicer(s) sent updated modification agreements with materially different terms to the borrowers. These misrepresentations about the available terms affected the ultimate payments the borrowers would make, influencing both whether they would accept the modification and how they could subsequently budget based on their expected payment. Supervision determined that the servicer(s) engaged in a deceptive practice in connection with these modifications and directed the servicer(s) to undertake remedial and corrective actions, which are under review.
One or more servicers represented in loan modification trial period plans that borrowers would receive a permanent modification after making three trial payments. However, after borrowers made the required trial payments, the servicer(s) could still deny the permanent modification based on the results of a title search. The servicer(s) did not communicate to borrowers that permanent loan modifications were contingent on a title search in the trial period offer letter. Supervision determined the practice to be deceptive and directed the servicer(s) to provide accurate information to borrowers about loss mitigation options.
Against investor guidelines, one or more servicers treated borrower self-employed gross income as net income when evaluating loss mitigation applications. The practice inflated borrower income and may have led to less affordable modifications. Supervision traced the practice to an underwriting error and cited the servicer(s) for violating Regulation X.
One or more servicers failed to convert a substantial number of trial modifications to permanent modifications timely after borrowers successfully completed trial modifications. The delays harmed borrowers who then owed higher amounts of accrued interest under the finalized permanent modifications than they would have owed under a timely conversion. During the delay, the interest accrued at the original contractual rate, rather than at the lower rate provided under the modification's terms. The servicer then capitalized the additional interest into the principal balance owed under the permanent modification. The servicer(s) also continued to report borrowers that had been delinquent at the beginning of their trial modifications as delinquent to the consumer reporting agencies during the length of the delay. Some affected borrowers filed complaints with the CFPB's Office of Consumer Response describing how the uncertainty of the loan modification decisions hurt their ability to plan for the future. Supervision determined that the substantial delays, combined with the negative consequences attributable to the delays, constituted an unfair practice and directed the servicer(s) to undertake remedial and corrective actions which are under review.
Supervision found a deceptive practice related to how one or more servicers disclosed the terms of a payment plan that deferred mortgage payments for daily simple interest mortgage loans.
Supervision found that one or more servicers sent notices warning that foreclosure would be imminent to borrowers who were current on their low-balance home equity lines of credit (HELOCs) and no monthly payment due. Supervision cited the practice as deceptive and directed servicer(s) to cease sending collection letters that
Additionally, Supervision has repeatedly identified waivers of consumer rights in loss mitigation agreements. Regulation Z states that a “contract or other agreement relating to a consumer credit transaction secured by a dwelling . . . may not be applied or interpreted to bar a consumer from bringing a claim in court pursuant to any provision of law for damages or other relief in connection with any alleged violation of any Federal law.”
Where servicers deny complete loss mitigation applications for any trial or permanent loan modification option, denial notices help borrowers understand the reasons and, where appropriate, provide relevant information about the appeals process. Generally, the servicing rules require that denial notices provide the specific reason or reasons for denying the borrower the trial or permanent loan modification option and, if applicable, that the borrower was not evaluated on other criteria. The rules enable a borrower to appeal a denial of a trial or permanent loan modification option so long as the borrower's complete loss mitigation application is received 90 days or more before a foreclosure sale or during the pre-foreclosure review period.
Supervision found that denial notices at one or more servicers failed to state the correct reason(s) for denying a trial or permanent loan modification option as required by Regulation X.
One or more servicers' notices also stated “Not Available*” as the reason for denying loss mitigation applications. The asterisk elaborated: “Not Available means this program was not considered due to an eligibility requirement or requirements not met.”
Supervision cited the two practices above for violating Regulation X and directed the servicer(s) to state the specific reason or reasons for its denial of each trial or permanent loan modification option and, if applicable, that the borrower was not evaluated on other criteria.
When a borrower has the right to appeal the denial of a trial or permanent loan modification, a servicer must, in its notice after evaluating the borrower's complete loss mitigation application, inform the borrower of the appeal right and the amount of time the borrower has to file the appeal.
To undergird the loss mitigation application process, Regulation X requires servicers to maintain policies and procedures reasonably designed to achieve specific objectives that include: Providing timely and accurate information; properly evaluating loss mitigation applications; facilitating oversight of and compliance by service providers; and facilitating transfer of information during servicing transfers.
• Providing a borrower with accurate and timely information and documents in response to the borrower's requests for information with respect to the borrower's mortgage loan. One or more servicers failed to provide information and loss mitigation application forms to a substantial number of borrowers who called in to request such information.
• Upon the death of a borrower, promptly identifying and facilitating communication with the successor in interest of the deceased borrower with respect to the property secured by the deceased borrower's mortgage loan.
• Identifying with specificity all loss mitigation options for which a borrower may be eligible pursuant to any requirements established by an owner or assignee of the borrower's mortgage loan.
• Providing prompt access to all documents and information submitted by a borrower in connection with a loss mitigation option to servicer personnel assigned to assist the borrower under the rules.
• Properly evaluating a loss mitigation application for all options for which the borrower may be eligible based on the loan owner's requirements.
• Facilitating the sharing of accurate and current information regarding the status of any evaluation of a borrower's loss mitigation application and the status of any foreclosure proceeding among appropriate servicer personnel, including service provider personnel. One or more servicer(s)' foreclosure attorneys sent a foreclosure referral letter to the borrower after the borrower entered into a loss mitigation agreement with the servicer.
• As a transferee servicer, ensuring that it can identify necessary documents or information that may not have been transferred by a transferor and obtain such documents from the transferor servicer. One or more transferee(s) failed to identify necessary documents, including loss mitigation agreements and mortgage notes not transmitted by the transferor.
In the above cases where Supervision detected policies, procedures, or requirements not in compliance with Regulation X, Supervision directed servicers to implement policies, procedures, and requirements compliant with the Rule and to monitor for their effectiveness.
Transferring loans during the loss mitigation process heightens risks to consumers, including the risk that documents and information might not be accurately transferred.
Additionally, one or more servicers failed to honor the terms of in-place trial modifications after transfer. Some borrowers who completed trial payments with the new servicer nevertheless encountered substantial delays before receiving a permanent loan modification. Supervision concluded that the delay caused substantial injury as trial payments were less than the amounts required by the promissory note, and consumers continuing to make trial payments while waiting for the permanent modification accrued interest on the unpaid principal balance. Such delays were exacerbated by the transferee(s)' failure to obtain timely access to an online workout tool required by the investor. Supervision cited this practice as unfair and directed the transferee servicers(s) to develop and implement policies, procedures, training, and audits to promptly identify and honor prior loss mitigation agreements, whether completed or in-flight at the time of transfer.
Supervision also observed some servicers improve transfer policies, procedures, and practices. For example, in response to Supervision's direction to one or more transferee servicers to identify in-flight modifications, the transferee(s) began to use certain tools generally available to industry participants—the HomeSavers Solutions Network and the HAMP Reporting Tool—to reconcile loan data during transfer. Supervision noted that this approach gave transferee(s) the ability to identify more in-flight modifications. Despite this improvement, Supervision observed that transferee(s) still failed to recognize modifications not registered by the transferor or not otherwise in the databases and could benefit from conducting a post-transfer review for in-flight loss mitigation. The transferee(s) agreed to further enhance transfer protocols.
Also in connection with servicing transfers, one or more transferee(s) found that delays in honoring in-flight modifications were caused by their dependence on the information technology department to manually override data fields whenever the servicing platform rejected transferor data. By granting override authority to loss mitigation staff, the transferee(s) reduced the time required to honor in-flight modifications.
While Supervision continues to be concerned about the range of legal violations identified at various mortgage servicers, it also recognizes efforts made by certain servicers to properly staff effective compliance management programs. Some servicers have made significant improvements in the last several years, in part by enhancing and monitoring their servicing platforms, staff training, coding accuracy, auditing, and allowing for greater flexibility in operations. More generally, Supervision found compliance audits that thoroughly assessed the business unit's internal control environment, clearly identified issues with compliance, detailed management's response, set a target date for resolving the identified issues, and completed the necessary adjustments promptly. At one or more servicers, these audits included reviews of service providers and were part of a wider and appropriately resourced compliance framework. One or more servicers also conducted formal reviews of information technology structures that identified the root causes of earlier compliance weaknesses, including platform outages. These reviews led the servicer(s) to replace outdated technology, such as document management systems.
Supervision also observed that servicers are actively reviewing complaints for allegations of law violations. One or more servicers used analytic tools to search, review, and track complaint records with content indicating regulatory violations. One or more servicers also created a complaint governance committee to oversee all customer complaints to ensure they receive appropriate engagement, including remediation as appropriate. One or more servicers also designated management level employees as primary contacts for Federal and State regulators and other government bodies for discussing complaints and inquiries from borrowers who are in default or have applied for loan modifications.
As the above observations show, improvements and investments in servicing technology, staff training, and monitoring can be essential to achieving an adequate compliance position. However, such improvements have not been uniform across market participants and Supervision continues to observe compliance risks, particularly in the areas of loss mitigation and servicing transfers. A growing point of emphasis for Supervision in achieving needed improvements in servicer compliance will be to require servicers to submit specific and credible plans describing how changes in their information technology systems will offer assurance that they can systematically and effectively implement the changes made to resolve the issues identified by Supervision.
This
Department of the Army, U.S. Army Corps of Engineers, DOD.
Notice of request for nominations.
The Department of the Army is publishing this notice to request nominations to serve as representatives on the Inland Waterways Users Board, sponsored by the U.S. Army Corps of Engineers. Section 302 of Public Law 99–662 established the Inland Waterways Users Board. The Board is an independent Federal advisory committee. The Secretary of the Army appoints its 11 (eleven) representative organizations. This notice is to solicit nominations for 11 (eleven) appointments for terms that will begin by May 27, 2017. For additional information about the Board, please visit the committee's Web site at
Institute for Water Resources, U.S. Army Corps of Engineers, ATTN: Mr. Mark R. Pointon, Designated Federal Officer (DFO) for the Inland Waterways Users Board, CEIWR–GM, 7701 Telegraph Road, Casey Building, Alexandria, VA 22315–3868; by telephone at 703–428–6438; and by email at
Alternatively, contact Mr. Kenneth E. Lichtman, the Alternate Designated Federal Officer (ADFO), in writing at the Institute for Water Resources, U.S. Army Corps of Engineers, ATTN: CEIWR–GW, 7701 Telegraph Road, Casey Building, Alexandria, VA 22315–3868; by telephone at 703–428–8083; and by email at
The selection, service, and appointment of representative organizations to the Board are covered by provisions of section 302 of Public Law 99–662. The substance of those provisions is as follows:
Individuals, firms or associations may nominate representative organizations to serve on the Board. Nominations will:
(1) Include the commercial operations of the carrier and/or shipper representative organization being nominated. This commercial operations information will show the actual or estimated ton-miles of each commodity carried or shipped on the inland waterways system in a recent year (or years), using the waterway regions and commodity categories previously listed.
(2) State the region(s) to be represented.
(3) State whether the nominated representative organization is a carrier, shipper or both.
(4) Provide the name of an individual to be the principle person representing the organization and information pertaining to their personal qualifications, to include a current biography or resume.
Previous nominations received in response to notices published in the
e.
Missile Defense Agency, Department of Defense.
Notice of public comment period extension.
The purpose of this notice is to announce an extension to the 45-day public comment period of the Notice of Availability for the Draft Environmental Impact Statement (EIS) for the potential deployment of a Continental United States (CONUS) Interceptor Site (CIS) published by the Missile Defense Agency (MDA) on May 31, 2016 (81 FR 34315–34316). The public comment period is extended 30 days and ends on August 17, 2016.
The extended 75-day public comment period for the Draft EIS began on June 3, 2016, with the publication of the Notice of Availability in the
Comments on the Draft EIS should be received by August 17, 2016 by one of the following methods:
•
•
Public comments on the Draft EIS are requested pursuant to the NEPA. All written comments received during the comment period will become part of the public record. Providing private address information with your comment is voluntary and such personal information will be kept confidential unless release is required by law. All comments received by the public, including at public meetings, will be addressed in the Final EIS. A NOA will be published notifying the public of the final EIS.
Mr. Christopher Johnson, MDA Public Affairs, at 571–231–8212, or by email:
If deployed, a CIS would be an extension of the existing Ground-based Midcourse Defense (GMD) element of the Ballistic Missile Defense System. To the extent practicable, the CIS would be built as a contiguous Missile Defense Complex, similar to that found at Fort Greely, Alaska, and would consist of a deployment of up to a total of 60 Ground-Based Interceptors (GBIs) in up to three GBI fields. The GBIs would not be fired from their deployment site except in the Nation's defense and no test firing would be conducted at a CIS. The overall system architecture and baseline requirements for a notional CIS include, but are not limited to, the GBI fields, Command Launch Equipment, In-Flight Interceptor Communication System Data Terminals, GMD Communication Network, supporting facilities, such as lodging and dining, recreation, warehouse and bulk storage, vehicle storage and maintenance, fire station, hazardous materials/waste storage, and roads and parking where necessary.
Defense Health Agency, DoD.
Notice to alter a system of records.
The Defense Health Agency proposes to alter an existing system of records, EDHA 12, entitled “Third Party Collection System.” This system is used to provide the Military Services medical billing, collections, and reporting processes for users at multiple locations, and to serve as the single source of financial information for the accounting of uniform business office accounts receivable.
Comments will be accepted on or before August 15, 2016. This proposed action will be effective the date following the end of the comment period unless comments are received which result in a contrary determination.
You may submit comments, identified by docket number and title, by any of the following methods:
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Ms. Linda S. Thomas, Chief, Defense Health Agency Privacy and Civil Liberties Office, 7700 Arlington Boulevard, Suite 5101, Falls Church, VA 22042–5101, or by phone at (703) 275–6363.
The Defense Health Agency notices for systems of records subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
The proposed system report, as required by 5 U.S.C. 552a(r) of the Privacy Act of 1974, as amended, was submitted on June 23, 2016, to the House Committee on Oversight and Government Reform, the Senate Committee on Governmental Affairs, and the Office of Management and Budget (OMB) pursuant to paragraph 4 of Appendix I to OMB Circular No. A–130, “Federal Agency Responsibilities for Maintaining Records About Individuals,” revised November 28, 2000 (December 12, 2000 65 FR 77677).
Third Party Collection System (November 18, 2013, 78 FR 69076)
Changes
Delete entry and replace with “Primary: General Dynamics Information Technology, Corporate Office Properties Trust (COPT) Data Center Solutions DC–6, 9651 Hornbaker Road, Manassas, VA 20109–3976.
For a complete listing of all facility addresses write to the system manager.”
Categories of individuals covered by the system:
Delete entry and replace with “Members of the Uniformed Services (including Reserve and National Guard personnel) and their dependents and retired military members and their dependents who receive or have received health services approved by DoD; contractors participating in military deployments or related operations who receive or have received medical or dental care at a military treatment facility (MTF); DoD civilian employees (to include non-appropriated fund employees), and other individuals who receive or have received medical or dental care at an MTF.”
Delete entry and replace with “Individual Data: Patient name, DoD Identification Number (DoD ID Number), Social Security Number (SSN) (or foreign identification), citizenship, whether treatment was outpatient or inpatient, outpatient visit date and time, date of birth, address, email address, home and cell phone telephone numbers, gender, marital status, emergency contact information, driver's license number, family member prefix, and relationship to policy holder; sponsor or insurance policy holder name, SSN or DoD ID Number, and date of birth; other covered family member name(s), SSN, and date of birth; and, if applicable, Medicare and Medicaid coverage data.
Delete entry and replace with “10 U.S.C. 1079b, Procedures for charging fees for care provided to civilians; retention and use of fees collected; 10 U.S.C. 1095, Health care services incurred on behalf of covered beneficiaries: Collection from third-party payers; 42 U.S.C. Chapter 32, Third Party Liability For Hospital and Medical Care; 28 CFR part 43, Recovery of Costs of Hospital and Medical Care and Treatment Furnished by the United States; 32 CFR part 199, Civilian Health and Medical Program for the Uniformed Services (CHAMPUS); 32 CFR part 220, Collection from Third Party Payers of Reasonable Charges for Healthcare Services; DoD Instruction 6015.23, Foreign Military Personnel Care and Uniform Business Offices in Military Treatment Facilities (MTFs); and E.O. 9397 (SSN), as amended.”
Delete entry and replace with “To provide the Military Services medical billing, collections, and reporting processes for users at multiple locations, and to serve as the single source of financial information for the accounting of uniform business office accounts receivable.
To assist the Defense Finance Accounting Service (DFAS) in collecting delinquent debts.”
Routine uses of records maintained in the system, including categories of users and the purposes of such uses:
Delete entry and replace with “In addition to those disclosures generally permitted under 5 U.S.C. 552a(b) of the Privacy Act, as amended, these records may specifically be disclosed outside the DoD as a routine use pursuant to 5 U.S.C. 552a(b)(3) as follows:
To interface with all commercial insurance carriers and parties against whom recovery has been sought by the DoD Military Health System (MHS), as well as all parties involved in support of the collection activities for health care approved by the DoD.
To the Departments of Treasury, Veterans Affairs, and Homeland Security in order to obtain reimbursement to the DoD for medical services provided by the MHS to beneficiaries and workforce members of such Departments.
To other persons or organizations, including other health insurers, Medicare, and Medicaid, who may be liable for payment for health care and medical services provided to an individual by the MHS.
To data clearinghouses for the purpose of converting the medical and pharmacy claims to an industry-wide format then forwarding to insurance companies (and other payers) electronically for payment.
Except as stipulated in NOTE 1 and NOTE 2 below, the DoD Blanket Routine Uses set forth at the beginning of the Defense Privacy and Civil Liberties Division compilation of systems of records notices may apply to this system. The complete list of DoD Blanket Routine Uses can be found online at:
Policies and practices for storing, retrieving, accessing, retaining, and disposing of records in the system:
Delete entry and replace with “Paper records and electronic storage media.”
Delete entry and replace with “Patient name, SSN (or foreign identification) or DoD ID Number, insurance company name, date range, sponsor name, sponsor SSN or DoD ID Number, or patient identification number.”
Delete entry and replace with “Physical access to the information technology (IT) system location is restricted by visitor escort, access rosters, and photo identification. Adequate locks are on doors and server components are secured in a locked computer room with limited access. Each end user device is protected within a locked storage container, room, or building outside of normal business hours. All visitors and other persons that require access to facilities that house servers and other network devices supporting the IT system that do not have authorization for access are escorted by appropriately screened/cleared personnel at all times.
Access to the IT system is role-based and a valid user account is required. The system is Public Key Infrastructure-enforced with two-factor authentication and can be accessed by use of Common Access Card and personal identification number. Authorized personnel must have appropriate Information Assurance training, HIPAA training, and Privacy Act training.
Paper records are protected by the security and policies in place at the locations where they are held. All locations are within or under contract with the MHS, and require personnel to undergo appropriate training.”
Delete entry and replace with “Close out at end of the calendar year in which received. Destroy 10 year(s) after cut off.”
Delete entry and replace with “Program Manager, DHA Solutions Delivery Division, Clinical Support, Fort Sam Houston, San Antonio, TX 78234–2639.”
Delete entry and replace with “Individuals seeking to determine whether information about themselves is contained in this system of records should address written inquiries to the Chief, Freedom of Information Act (FOIA) Service Center, Defense Health Agency Privacy and Civil Liberties Office, 7700 Arlington Boulevard, Suite 5101, Falls Church, VA 22042–5101.
Requests should contain the name and number of this system of records notice, the individual's full name, current address, home or cell phone telephone number, SSN or DoD ID Number, and signature.
In addition, the requester must provide a notarized statement or an unsworn declaration made in accordance with 28 U.S.C. 1746, in the following format:
If executed outside the United States: ‘I declare (or certify, verify, or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date). (Signature).'
If executed within the United States, its territories, possessions, or commonwealths: ‘I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct. Executed on (date). (Signature).'
If requesting information about a minor or legally incompetent person, the request must be made by the custodial parent, legal guardian, or person with legal authority to make decisions on behalf of the individual. Written proof of that status may be required before the existence of any information will be confirmed.”
Delete entry and replace with “Individuals seeking access to records about themselves contained in this system of records should address written inquiries to the Chief, FOIA Service Center, Defense Health Agency Privacy and Civil Liberties Office, 7700 Arlington Boulevard, Suite 5101, Falls Church, VA 22042–5101.
Requests should contain the name and number of this system of records notice, the individual's full name, current address, home or cell phone telephone number, SSN or DoD ID Number, and signature.
In addition, the requester must provide a notarized statement or an unsworn declaration made in accordance with 28 U.S.C. 1746, in the following format:
If executed outside the United States: ‘I declare (or certify, verify, or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date). (Signature).'
If executed within the United States, its territories, possessions, or commonwealths: ‘I declare (or certify, verify, or state) under penalty of perjury that the foregoing is true and correct. Executed on (date). (Signature).'
If requesting information about a minor or legally incompetent person, the request must be made by the custodial parent, legal guardian or person with legal authority to make decisions on behalf of the individual. Written proof of that status may be required before any records will be provided.”
Delete entry and replace with “The Office of the Secretary of Defense (OSD) rules for accessing records, for contesting contents and appealing initial agency determinations are published in OSD Administrative Instruction 81, 32 CFR part 311, or may be obtained from the system manager.”
Delete entry and replace with “The Composite Health Care System (CHCS) and the individual.”
Federal Student Aid (FSA), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501
Interested persons are invited to submit comments on or before September 13, 2016.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Beth Grebeldinger, 202–377–4018.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
Environmental Protection Agency (EPA).
Notice of charter renewal.
Notice is hereby given that the Environmental Protection Agency (EPA) has determined that, in accordance with the provisions of the Federal Advisory Committee Act (FACA), 5 U.S.C. App. 2, the EPA Board of Scientific Counselors Advisory Board (BOSC) is a necessary committee that is in the public interest. Accordingly, the BOSC will be renewed for an additional two-year period. The purpose of BOSC is to provide advice and recommendations to the Administrator regarding science and engineering research, programs and plans, laboratories, and research management practices. Inquiries may be directed to Tom Tracy, U.S. EPA, (Mail Code 8104R), 1200 Pennsylvania Avenue NW., Washington, DC 20460, telephone (202) 564–6518, or
Environmental Protection Agency (EPA).
Notice.
With this document, EPA is opening the public comment period for several registration review cases. Registration review is EPA's periodic review of pesticide registrations to ensure that each pesticide continues to satisfy the statutory standard for registration, that is, the pesticide can perform its intended function without unreasonable adverse effects on human health or the environment. Registration review dockets contain information that will assist the public in understanding the types of information and issues that the Agency may consider during the course of registration reviews. Through this program, EPA is ensuring that each pesticide's registration is based on current scientific and other knowledge, including its effects on human health and the environment. For dicamba, EPA is seeking comment on the preliminary work plan, the ecological problem formulation, and the human health draft risk assessment. This document also announces the Agency's intent not to open a registration review docket for alachlor (case #: 0063) and propachlor (case #: 0177). These pesticides do not currently have any actively registered pesticide products and are not, therefore, scheduled for review under the registration review program.
Comments must be received on or before September 13, 2016.
Submit your comments identified by the docket identification (ID) number for the specific pesticide of interest provided in the table in Unit III.A., by one of the following methods:
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This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, farmworker, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
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EPA is initiating its reviews of the pesticides identified in this document pursuant to section 3(g) of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) (7 U.S.C. 136a(g)) and the Procedural Regulations for Registration Review at 40 CFR part 155, subpart C. Section 3(g) of FIFRA provides, among other things, that the registrations of pesticides are to be reviewed every 15 years. Under FIFRA, a pesticide product may be registered or remain registered only if it meets the statutory standard for registration given in FIFRA section 3(c)(5) (7 U.S.C. 136a(c)(5)). When used in accordance with widespread and commonly recognized practice, the pesticide product must perform its intended function without unreasonable adverse effects on the environment; that is, without any unreasonable risk to man or the environment, or a human dietary risk from residues that result from the use of a pesticide in or on food.
As directed by FIFRA section 3(g), EPA is reviewing the pesticide registrations identified in the table in this unit to assure that they continue to satisfy the FIFRA standard for registration—that is, they can still be used without unreasonable adverse effects on human health or the environment. A pesticide's registration review begins when the Agency establishes a docket for the pesticide's registration review case and opens the docket for public review and comment. At present, EPA is opening registration review dockets for the cases identified in the following table.
For dicamba (case #: 0065), EPA is seeking comment on the preliminary work plan, the ecological problem formulation, and the human health draft risk assessment. EPA is also announcing that it will not be opening a docket for alachlor (case #: 0063) and propachlor (case #: 0177) because these pesticides are not included in any products actively registered under FIFRA section 3 or 24(c). The Agency will take separate action to propose revocation of any affected tolerances that are not supported for import purposes only.
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• An overview of the registration review case status.
• A list of current product registrations and registrants.
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• Risk assessments.
• Bibliographies concerning current registrations.
• Summaries of incident data.
• Any other pertinent data or information.
Each docket contains a document summarizing what the Agency currently knows about the pesticide case and a preliminary work plan for anticipated data and assessment needs. Additional documents provide more detailed information. During this public comment period, the Agency is asking that interested persons identify any additional information they believe the Agency should consider during the registration reviews of these pesticides. The Agency identifies in each docket the areas where public comment is specifically requested, though comment in any area is welcome.
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• To ensure that EPA will consider data or information submitted, interested persons must submit the data or information during the comment period. The Agency may, at its discretion, consider data or information submitted at a later date.
• The data or information submitted must be presented in a legible and useable form. For example, an English
• Submitters must clearly identify the source of any submitted data or information.
• Submitters may request the Agency to reconsider data or information that the Agency rejected in a previous review. However, submitters must explain why they believe the Agency should reconsider the data or information in the pesticide's registration review.
As provided in 40 CFR 155.58, the registration review docket for each pesticide case will remain publicly accessible through the duration of the registration review process; that is, until all actions required in the final decision on the registration review case have been completed.
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
This notice announces EPA's final order for the amendments to terminate uses, voluntarily requested by the registrants and accepted by the Agency, of the products listed in Table 1, pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). This cancellation order follows a June 10, 2015
The cancellations are effective July 15, 2016.
Ricardo Jones, Pesticide Re-Evaluation Division (7508P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460–0001; main telephone number: (703) 347–0493; email address:
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
The docket for this action, identified by docket identification (ID) number EPA–HQ–OPP–2015–0317, is available at
This notice announces the amendments to terminate uses, as requested by registrants of products registered under FIFRA section 3 (7 U.S.C. 136a). These registrations are listed in sequence by registration number in Table 1 of this unit.
Table 2 of this unit includes the names and addresses of record for all registrants of the products in Table 1 of this unit, in sequence by EPA company number.
During the public comment period provided, EPA received no comments in response to the June 10, 2015
Pursuant to FIFRA section 6(f) (7 U.S.C. 136d(f)), EPA hereby approves the requested amendments to terminate uses of clothianidin and chloroxylenol registrations identified in Table 1 of Unit II. Accordingly, the Agency orders that the product registrations identified in Table 1 of Unit II. are hereby amended to terminate the affected uses. The effective date of the amendments to terminate affected uses is July 15, 2016. Any distribution, sale, or use of existing stocks of the products identified in Table 1 of Unit II. in a manner inconsistent with any of the provisions for disposition of existing stocks set forth in Unit VI. will be considered a violation of FIFRA.
Section 6(f)(1) of FIFRA (7 U.S.C. 136d(f)(1)) provides that a registrant of a pesticide product may at any time request that any of its pesticide registrations be canceled or amended to terminate one or more uses. FIFRA further provides that, before acting on the request, EPA must publish a notice of receipt of any such request in the
EPA's existing stocks policy published in the
Existing stocks are those stocks of registered pesticide products which are currently in the United States and which were packaged, labeled, and released for shipment prior to the effective date of the cancellation action. The effective date of this cancellation is July 15, 2016. The cancellation order that is the subject of this notice includes the following existing stock provisions:
The registrant may sell and distribute existing stocks of products listed in Table 1 of Unit II. until July 17, 2017. Persons other than the registrant may sell and distribute existing stocks of products listed in Table 1 of Unit II. until exhausted. Use of the products listed in Table 1 of Unit II. may continue until existing stocks are exhausted, provided that such use is consistent with the terms of the previously approved labeling on, or that accompanied, the canceled products.
7 U.S.C. 136
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
The U.S. Coast Guard and the Maritime Administration are joint lead agencies for the above project.
The U.S. Department of Energy (DOE) has adopted the Federal Energy Regulatory Commission's Final EIS #20150233 filed 08/14/2015 with EPA. DOE was a cooperating agency, therefore recirculation of the document is not necessary under Section 1506.3(b) of the CEQ Regulations.
Revision to FR Notice Published 04/29/2016; The U.S. Fish and Wildlife Service has reopened the comment period to end 07/29/2016
Revision to FR Notice Published 06/03/2016; Extending Comment Period from 07/18/2016 to 08/17/2016
Federal Communications Commission.
Notice.
In accordance with the Federal Advisory Committee Act, the Federal Communications Commission (FCC) announces that the charter for the World Radiocommunication Conference Advisory Committee (WRCAC) has been renewed by the General Services Administration (GSA) for a two-year period. The WRCAC is a federal advisory committee under the Federal Advisory Committee Act. This notice advises interested persons that the initial meeting of the WRCAC will be held to begin preparations for the 2019 World Radiocommunication Conference.
Tuesday, August 2, 2016; 11:00 a.m.
Federal Communications Commission, 445 12th Street SW., Room TW–C305, Washington, DC 20554.
Dante Ibarra, Designated Federal Official, World Radiocommunication Conference Advisory Committee, FCC International Bureau, Global Strategy and Negotiation Division, at (202) 418–0610. Email:
In accordance with the Federal Advisory Committee Act, Public Law 92–463, as amended, this notice advises interested persons that the GSA has renewed the charter of the WRCAC through April 8, 2018. Its scope of activities is to address issues contained in the agenda for the International Telecommunication Union (ITU) World Radiocommunication Conferences. The WRCAC will continue
This notice advises interested persons of the first meeting of the WRCAC. Additional information regarding the WRC–19 and the WRCAC is available on the WRCAC's Web site,
Open captioning will be provided for this event. Other reasonable accommodations for people with disabilities are available upon request. Requests for such accommodations should be submitted via email to
The proposed agenda for the first meeting is as follows:
Federal Communications Commission, 445 12th Street SW., Room TW–C305, Washington, DC 20554, August 2, 2016; 11:00 a.m.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The applications will also be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than August 12, 2016.
A. Federal Reserve Bank of New York (Ivan Hurwitz, Vice President) 33 Liberty Street, New York, New York 10045–0001. Comments can also be sent electronically to
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The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than August 1, 2016.
A. Federal Reserve Bank of Minneapolis (Jacquelyn K. Brunmeier, Assistant Vice President) 90 Hennepin Avenue, Minneapolis, Minnesota 55480–0291:
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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 August 10, 2016.
Interested parties may file a comment at
Linda K. Badger, (415–848–5151), FTC Western Region, 901 Market Street, Suite 570, San Francisco, CA 94103.
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 July 11, 2016), 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 August 10, 2016. Write “In the Matter of Warner Bros. Home Entertainment Inc., File No. 152 3034—Consent Agreement” 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, manufacturing processes, or customer names.
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 “In the Matter of Warner Bros. Home Entertainment Inc., File No. 152 3034—Consent Agreement” 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 (“FTC” or “Commission”) has accepted, subject to final approval, an agreement containing consent order from Warner Bros. Home Entertainment Inc. (“Warner Bros.” or “respondent”). The proposed consent order (“proposed 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 (30) 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 involves respondent's use of social media influencers to advertise the video game,
The complaint also alleges that while Warner Bros. instructed the YouTube influencers to provide a disclosure that their videos had been sponsored, it specified that the disclosure be written, and placed in the description box
The Commission's complaint further alleges that when YouTube influencers posted their
According to the complaint, in numerous instances, YouTube influencers did not disclose or adequately disclose that Warner Bros., through Plaid Social, offered compensation to the influencers in exchange for creating and uploading gameplay videos as part of a
The proposed order includes injunctive relief to address these alleged violations and requires Warner Bros. to follow certain monitoring and compliance procedures related to its use of influencer campaigns.
Part I of the proposed order prohibits Warner Bros., in connection with the advertising of any home entertainment product or service, from misrepresenting in any influencer campaign that an influencer or endorser of such product or service is an independent user or ordinary consumer of the product or service.
Part II of the proposed order requires Warner Bros., in connection with the advertising of any home entertainment product or service by means of an endorsement, in any influencer campaign, to disclose clearly and conspicuously a material connection, if one exists, between the influencer or endorser and Warner Bros.
Part III of the proposed order sets out certain monitoring and compliance obligations to ensure that Warner Bros., or any entity it engages to conduct an influencer campaign, comply with Parts I and II of the proposed order. These obligations include: Obtaining signed acknowledgements from such influencers that they will disclose their material connection to Warner Bros.; monitoring the influencers' representations and disclosures; maintaining records of monitoring efforts; and, under certain circumstances, terminating and ceasing payment to influencers who misrepresent their independence, or fail to properly disclose any material connection to Warner Bros. Part III specifically provides that if Warner Bros. engages an entity to conduct an influencer campaign, Warner Bros. must take steps to ensure that the entity complies with this Part, and to monitor its compliance. If the entity fails to comply with this Part, Warner Bros. must cease payment to the entity until it cures any noncompliance. Furthermore, Warner Bros. is required to disqualify the entity from conducting future influencer campaigns upon a repeat incident, unless it reasonably concludes that the entity's failure to comply was inadvertent.
Part IV of the proposed order contains recordkeeping requirements for relevant documents.
Parts V through VII of the proposed order require the company to: Provide copies of the order to certain personnel having responsibilities with respect to the subject matter of the order; notify the Commission of changes in corporate structure that might affect compliance obligations under the order; and file compliance reports with the Commission.
Part VIII of the proposed order provides that the order will terminate after twenty (20) years, with certain exceptions.
The purpose of this analysis is to facilitate public comment on the proposed order, and it is not intended to constitute an official interpretation of the complaint or proposed order, or to modify the proposed order's terms in any way.
By direction of the Commission.
Centers for Medicare & Medicaid Services, HHS.
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (the PRA), federal agencies are required to publish notice in the
Comments must be received by September 13, 2016.
When commenting, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
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2.
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of the following:
1. Access CMS' Web site address at
2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to
3. Call the Reports Clearance Office at (410) 786–1326.
Reports Clearance Office at (410) 786–1326.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the PRA (44 U.S.C. 3501–3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires federal agencies to publish a 60-day notice in the
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Centers for Medicare & Medicaid Services (CMS), HHS.
Notice.
This notice launches a challenge related to the new Merit-based Incentive Payment System (MIPS) program, which will assist the Centers for Medicare & Medicaid Services (CMS) in accelerating the transition from the traditional fee-for-service payment model to a system that rewards health care providers for providing better care, not just more care. This challenge will address one of the most important aspects of our programs, which is educating and providing outreach to the potential hundreds of thousands of MIPS eligible clinicians.
Important dates concerning the Challenge include the following:
Stan Ostrow, (410) 786–7207 for inquiry on Information Systems Group.
The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114–10, enacted April 16, 2015) (MACRA) requires the Secretary to establish a new Merit-based Incentive Payment System (MIPS) program, which
One of the most important aspects and challenges of our program is educating and providing outreach to the potential hundreds of thousands of MIPS eligible clinicians. Feedback we have received from our customers/end users is that they want more real-time information and access to assistance so they can successfully report to our programs. Therefore, we are launching a MIPS mobile challenge to find innovative ways of improving communication to educate physicians, support staff, health organization leadership, data vendors, and others impacted parties. Due to the multiple user types and facets of the MIPS program we are looking at utilizing a mobile platform, which could be a mobile site or application to determine how to best keep our customers/end users informed and meet their specific needs. We also want to provide the capability to access assistance to help MIPS eligible clinicians learn and get help with specific areas. This challenge has the potential to make a significant impact as not only are there hundreds of thousands of MIPS eligible clinicians but also millions of people who support the success of these MIPS eligible clinicians. Having key information and access to the right support at the right time reduces burden and provides increased satisfaction for the MIPS eligible clinicians and their supporting entities. The challenge will run in the two phases listed below in this section. Phase I participants can move onto Phase II even if their Phase I design was not selected. The focus of the two phases are as follows:
• Phase I: Creation of an initial mobile platform that will feature innovative ways of transmitting educational materials or fostering collaboration among users to provide meaningful education. This will entail creating wireframes, storyboards, mobile screen mock-ups and initial usability testing focused on the design and user experience. In addition, participants will co-design with end users to understand their needs to influence their submission.
• Phase II: Development and functional integration of any features from Phase I, and user experience testing. During this phase, the participants must submit the object and source code, as well as a detailed description showing that the output meets section 508 compliance per the Rehabilitation Act of 1973 (29 U.S.C. 794d), as amended by the Workforce Investment Act of 1998 (Pub. L. 105–220, enacted August 7, 1998) (WIA) including at least instructions on how to install and operate, and system requirements for running the mobile platform. Participants may submit, as part of the submission, additional software documentation, if they believe it provides a more complete description of the mobile platforms.
To be eligible to win a prize under this challenge, participants (individual or entity) must comply with each and every rule set forth in this section:
1. Shall register to participate in the competition under the rules promulgated below by the Department of Health and Human Services (HHS).
2. In the case of a private entity, shall be incorporated in and maintain a primary place of business in the United States, and in the case of an individual, whether participating individually or in a group, shall be a citizen or permanent resident of the United States.
3. HHS Employees may participate in the MIPS Mobile Challenge, but may not submit in the scope of their employment and may not pursue an application while in the federal workplace or while on duty.
4. Shall not be an employee of the CMS.
5. Federal grantees may not use federal funds to develop the America COMPETES Reauthorization Act of 2010 (Pub. L. 111–358, enacted January 4, 2011) (COMPETES Act) challenge applications unless consistent with the purpose of their grant award.
6. Federal contractors may not use federal funds from a contract to develop COMPETES Act challenge applications or to fund efforts in support of a COMPETES Act challenge submission.
7. Applicants must agree to provide the federal government an irrevocable, royalty-free, non-exclusive worldwide license in the winning work(s) or component parts thereof, in the event that they are prize winner(s). HHS shall be granted the rights to reproduce, distribute copies to the public, publicly display, create derivative works, and publicly post, link to, and share the winning work(s) or parts thereof.
A submission may be disqualified if, in CMS's sole judgment:
• Fails to function as expressed in the detailed description,
• The detailed description is significantly inaccurate or incomplete, or
• Malware or other security threats are present.
Participants agree that we may conduct testing on the submitted code to determine whether malware or other security threats may be present such that they may damage the equipment or operating environments of the Federal Government or those acting on its behalf.
An individual or entity shall not be deemed ineligible because the individual or entity used federal facilities or consulted with federal employees during a competition if the facilities and employees are made available to all individuals and entities participating in the competition on an equitable basis.
Challenge participants will sign a liability release as part of the contest registration process. The liability release will use the following language:
By participating in this competition, I agree to assume any and all risks and waive claims against the federal government and its related entities, except in the case of willing misconduct, for any injury, death, damage, or loss of property, revenue, or profits, whether direct, indirect, or consequential, arising from my participation in this prize contest, whether the injury, death, damage, or loss arises through negligence or otherwise.
The top three to five winners for Phase I of the challenge will be provided a monetary cash prize totaling $10,000 per winner. The Phase II final challenge winner will be provided a monetary cash prize totaling $25,000.
Challenge submissions will be judged by a panel selected by CMS with relevant expertise in current CMS
++ Ease in which a user can navigate Usability and Design;
++ Evidence of design with User feedback;
++ Innovation in Design; and
++ Look and Feel.
++ Ease in which a user can navigate Usability and Design;
++ Evidence of design with User feedback;
++ Innovation in Design;
++ Functionality/Accuracy; and
++ Look and Feel.
Challenge participants will draw from existing information provided on
This document does not impose information collection requirements, that is, reporting, recordkeeping or third-party disclosure requirements. Consequently, there is no need for review by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
• Currently, there are twenty two grantees (respondents) in the program and the semi-annual progress, which includes the data and information required, is submitted twice per year.
• The request covers one form (Form I. attached) which includes eight data points. Based on experience (the information was provided by technical assistance service provider in the past), it takes about two hours per respondent per six months (
• No survey will be undertaken since the collection of this data (information) is part of the implementation process of the project and its collection and reporting does not constitute a separate and additional cost to the grantees (respondents). The cost is covered by the grant the grantee receives. The grantees have Down Home database which captures and stores the data required for reporting. The grantee uploads the semi-annual report in Grant Solution where it is stored. ORR derives the data it requires for reporting and management decision from Grant Solution.
• Currently, there are twenty three grantees (respondents) in the program and the semi-annual progress.
• The request covers one form (Form II. attached) which includes seven data points. It takes about two hours per respondent per six months (
• The collection of this data (information) is part of the process and its collection and reporting does not include separate and additional cost to the grantees (respondents). The cost is covered by the grant the grantee receives. The grantees have database which captures and stores the data required for reporting. The grantee uploads the data required in Grant Solution where it is stored. ORR derives the data it requires for reporting and management decision from Grant Solution.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA) is announcing the availability of the draft guidance entitled “Principles for Codevelopment of an In Vitro Companion Diagnostic Device with a Therapeutic Product.” This draft guidance is intended to be a practical guide to assist therapeutic product sponsors and in vitro diagnostic device (IVD) sponsors in developing a therapeutic product with an accompanying IVD companion diagnostic, a process referred to as codevelopment. This draft guidance is also intended to assist FDA staff participating in the review of such IVD companion diagnostics or their associated therapeutic products. This draft guidance is not final nor is it in effect at this time.
Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the Agency considers your comment of this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by October 13, 2016.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
•
An electronic copy of the draft guidance s available for download from the Internet. See the
Pamela Bradley, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Silver Spring, MD 20993–0002, 240–731–3734; or Stephen Ripley, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993, 240–402–7911; or Christopher Leptak, Center for Drug Evaluation and Research, 10903 New Hampshire Ave., Bldg. 22, Rm. 6462, Silver Spring, MD 20993, 301–796–0017.
This draft guidance is intended to be a practical guide to assist therapeutic product sponsors and IVD sponsors in developing a therapeutic product, with an accompanying IVD companion diagnostic, a process referred to as codevelopment. This draft guidance is also intended to assist FDA staff participating in the review of such IVD companion diagnostics or their associated therapeutic products.
This draft guidance describes general principles to guide codevelopment to support obtaining contemporaneous marketing authorization for a therapeutic product and its corresponding IVD companion diagnostic; certain regulatory requirements that sponsors should be aware of as they develop such products; considerations for planning and executing a therapeutic product clinical trial that also includes the investigation of an IVD companion diagnostic; and administrative issues in the submission process for the therapeutic product and the IVD companion diagnostic.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the Agency's current thinking on “Principles for Codevelopment of an In Vitro Companion Diagnostic Device with a Therapeutic Product.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
Persons interested in obtaining a copy of the draft guidance may do so by downloading an electronic copy from the Internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at
This draft guidance refers to previously approved collections of information found in FDA regulations and guidance documents. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The collections of information in 21 CFR parts 801 and 809 have been approved under OMB control number 0910–0485; the collections of information in parts 50 and 56 have been approved under OMB control number 0910–0130; the collections of information in 21 CFR part 812 have been approved under OMB control number 0910–0078; the collections of information in 21 CFR part 814 subparts B and E have been approved under OMB control number 0910–0231; the collections of information in 21 CFR part 814, subpart H, have been approved under OMB control number 0910–0332; the collections of information in 21 CFR part 807, subpart E, have been approved under OMB control number 0901–0120; the collections of information in 21 CFR part 820 have been approved under OMB control number 0910–0073; the collections of information in 21 CFR part 601 have been approved under OMB control number 0910–0338; the collections of information in 21 CFR part 312 have been approved under OMB control number 0910–0014; the collections of information in 21 CFR part 314 have been approved under OMB control number 0910–0001; and the collections of information resulting from special protocol assessments have been approved under OMB control number 0910–0470.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is requesting that any industry organizations interested in participating in the selection of a nonvoting industry representative of the tobacco manufacturing industry to serve on the Tobacco Products Scientific Advisory Committee for the Center for Tobacco Products (CTP), notify FDA in writing. FDA is also requesting nominations for a nonvoting industry representative of the tobacco manufacturing industry to serve on the Tobacco Products Scientific Advisory Committee, and an alternate to this representative. A nominee may either be self-nominated or nominated by an organization to serve as a nonvoting industry representative. Nominations will be accepted for current vacancies effective with this notice.
Any industry organization interested in participating in the selection of an appropriate nonvoting member to represent industry interests must send a letter stating that interest to the FDA by August 15, 2016 (see sections I and II of this document for further details). Concurrently, nomination materials for prospective candidates should be sent to FDA by August 15, 2016.
All statements of interest from industry organizations interested in participating in the selection process should be sent to Caryn Cohen (see
Caryn Cohen, Office of Science, Center for Tobacco Products, Food and Drug Administration, Center for Tobacco Products Document Control Center, Bldg. 71, Rm. G335, 10903 New Hampshire Ave., Silver Spring, MD 20993–0002, 1–877–287–1373 (choose Option 5), email:
The Agency intends to add nonvoting industry representatives to the following advisory committee.
The Tobacco Products Scientific Advisory Committee (the Committee) advises the Commissioner of Food and Drugs (the Commissioner) or designee in discharging responsibilities related to the regulation of tobacco products. The Committee reviews and evaluates safety, dependence, and health issues relating to tobacco products and provides appropriate advice, information, and recommendations to the Commissioner.
Any industry organization interested in participating in the selection of an appropriate nonvoting member to represent industry interests should send a letter stating that interest to the FDA contact (see
Individuals may self-nominate and/or an organization may nominate one or more individuals to serve as a nonvoting industry representative. Contact information, current curriculum vitae, and the name of the committee of interest should be sent to the FDA Advisory Committee Membership Nomination Portal (see
FDA seeks to include the views of women and men, members of all racial and ethnic groups, and individuals with and without disabilities on its advisory committees and, therefore, encourages
This notice is issued under the Federal Advisory Committee Act (5 U.S.C. app. 2) and 21 CFR part 14, relating to advisory committees.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA) is announcing the availability of a revised guidance for industry entitled “Registration and Product Listing for Owners and Operators of Domestic Tobacco Product Establishments.” This guidance is intended to assist persons making tobacco product establishment registration and product listing submissions to FDA.
Submit either electronic or written comments on Agency guidances at any time.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Submit written requests for single copies of this guidance to the Center for Tobacco Products, Food and Drug Administration, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993–0002. Send one self-addressed adhesive label to assist that office in processing your request or include a fax number to which the guidance document may be sent. See the
Katherine Collins, Center for Tobacco Products, Food and Drug Administration, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993–0002, email:
FDA is announcing the availability of a revised guidance for industry entitled, “Registration and Product Listing for Owners and Operators of Domestic Tobacco Product Establishments.” This guidance is intended to assist persons making tobacco product establishment registration and product listing submissions to FDA. We are issuing this guidance consistent with our good guidance practices (GGP) regulation (§ 10.115 (21 CFR 10.115)). We are implementing this guidance without prior public comment because we have determined that prior public participation is not feasible or appropriate given the requirement that registration and listing submissions be submitted by December 31, 2016 (§ 10.115(g)(2)). We made this determination because the guidance presents a less burdensome policy consistent with the public health. Although this guidance document is immediately in effect, it remains subject to comment in accordance with FDA”s GGP regulation.
The Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) (Pub. L. 111–31) added section 905 to the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 387e), establishing requirements for tobacco product establishment registration and product listing.
FDA revised the registration and listing guidance to include newly deemed tobacco products. Cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco were immediately covered by FDA's tobacco product authorities in chapter IX of the FD&C Act, including section 905, when the Tobacco Control Act went into effect. As for other types of tobacco products, section 901(b) of the FD&C Act (21 U.S.C. 387a) grants FDA authority to deem those products subject to chapter IX of the FD&C Act. Pursuant to that authority, FDA issued a proposed rule seeking to deem all other products that meet the statutory definition of tobacco product, set forth in section 201(rr) of the FD&C Act (21 U.S.C. 321(rr)) (except for accessories of those products) (79 FR 23142). After review and consideration of comments on the proposed rule, FDA published the final rule on May 10, 2016 (81 FR 28974) (“the deeming rule”) and it will become effective on August 8, 2016. As a result, owners and operators of domestic establishments engaged in the manufacture, preparation, compounding, or processing of tobacco products subject to the deeming rule are now required to comply with chapter IX of the FD&C Act, including the establishment registration and product listing requirements in section 905.
This guidance is being issued consistent with FDA's good guidance practices regulation (§ 10.115). The guidance represents the current thinking of FDA on registration and product listing for owners and operators of domestic tobacco product establishments. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This guidance contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). The time required to complete this information collection is estimated to average 3.75 hours per response, including the time to review instructions, search existing data sources, gather the data needed, and complete and review the information collection. Send comments regarding this burden estimate or suggestions for reducing this burden to: Food and Drug Administration, Center for Tobacco Products, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993–0002.
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 number for this information collection is 0910–0650 (expires June 30, 2019).
Persons with access to the Internet may obtain an electronic version of the guidance at either
Health Resources and Services Administration, HHS.
Notice.
The Health Resources and Services Administration (HRSA) is requesting nominations to fill vacancies on the Council on Graduate Medical Education (COGME). COGME is authorized by Section 762 of the Public Health Service (PHS) Act (42 U.S.C. 294o), as amended. The Advisory Council is governed by the provisions of the Federal Advisory Act (FACA) (5 U.S.C. Appendix 2), as amended, which sets forth standards for the formation and use of advisory committees, and applies to the extent that the provisions of FACA do not conflict with the requirements of PHS Act Section 762.
The agency will receive nominations on a continuous basis.
All nominations should be submitted to Advisory Council Operations, Bureau of Health Workforce, HRSA, 11W45C, 5600 Fishers Lane, Rockville, Maryland 20857. Mail delivery should be addressed to Advisory Council Operations, Bureau of Health Workforce, HRSA, at the above address, or via email to:
Joan Weiss, Ph.D., RN, CRNP, FAAN, Designated Federal Official, COGME at 301–443–0430 or email at
COGME provides advice and makes policy recommendations to the Secretary of the U.S. Department of Health and Human Services (Secretary) and ranking members of the Senate Committee on Health, Education, Labor and Pensions, and the U.S. House of Representatives Committee on Energy and Commerce on matters concerning the supply and distribution of physicians in the United States, physician workforce trends, training issues, and financing policies. Meetings are held twice a year.
Specifically, HRSA is requesting nominations for voting members of COGME representing: Practicing primary care physicians, national and specialty physician organizations, foreign medical graduates, medical student and house staff associations, as well as representatives of schools of medicine, schools of osteopathic medicine, public and private teaching hospitals, health insurers, business, and labor. Among these nominations, medical students, residents, and/or fellows from these programs are encouraged to apply.
The Department of Health and Human Services (HHS) will consider nominations of all qualified individuals with the areas of subject matter expertise noted above. Individuals may nominate themselves or other individuals, and professional associations and organizations may nominate one or more qualified persons for membership. Nominations shall state that the nominee is willing to serve as a member of COGME and appears to have no conflict of interest that would preclude COGME membership. Potential candidates will be asked to provide detailed information concerning financial interests, consultancies, research grants, and/or contracts that might be affected by recommendations of COGME to permit evaluation of possible sources of conflicts of interest.
A nomination package should include the following information for each nominee:
(1) A letter of nomination from an employer, a colleague, or a professional organization stating the name, affiliation, and contact information for the nominee, the basis for the nomination (
(2) A letter of self-interest stating the reasons the nominee would like to serve on COGME;
(3) A biographical sketch of the nominee and a copy of his/her curriculum vitae; and
(4) The name, address, daytime telephone number, and email address at which the nominator can be contacted.
Department of Health and Human Services.
Notice of public availability of FY 2015 Service Contract Inventories.
In accordance with Section 743 of Division C of the Consolidated Appropriations Act of 2010 (Pub. L. 111–117), Department of Health and Human Services (HHS) is publishing this notice to advise the public of the availability of its FY 2015 Service Contract Inventory. This inventory provides information on service contract actions over $25,000 that was awarded in FY 2015. The information is organized by function to show how contracted resources are distributed throughout the agency. The inventory has been developed in accordance with guidance issued on November 5, 2010 and December 19, 2011 by the Office of Management and Budget's Office of Federal Procurement Policy (OFPP). OFPP's guidance is available at
Questions regarding the service contract inventory should be directed to Dr. Angela Billups, Associate Deputy Assistant Secretary for Acquisition, Senior Procurement Executive HHS/Office of the Secretary, Assistant Secretary for Financial Resources at 202–260–6187 or
The Indian Health Service (IHS) is accepting competitive cooperative agreement applications for the National Indian Health Outreach and Education, Policy/Budget/Diabetes (NIHOE–I) limited competition cooperative agreement program. This award includes the following four components, as described in this announcement: “Line Item 128 Health Education and Outreach funds,” “Health Care Policy Analysis and Review,” “Budget Formulation,” and “Tribal Leaders Diabetes Committee” (TLDC). This program is authorized under the Snyder Act, codified at 25 U.S.C. 13. The TLDC component is authorized by section 330C of the Public Health Service Act, codified at 42 U.S.C. 254c–3. This program is described in the Catalog of Federal Domestic Assistance under 93.933.
The NIHOE–I program carries out health program objectives in American Indian and Alaska Native (AI/AN) communities in the interest of improving Indian health care for all 567 Federally-recognized Tribes, including Tribal governments operating their own health care delivery systems through self-determination contracts with the IHS and Tribes that continue to receive health care directly from the IHS. This program addresses health policy and health program issues and disseminates educational information to all AI/AN Tribes and villages. This program requires that public forums be held at Tribal educational consumer conferences to disseminate changes and updates in the latest health care information. This program also requires that regional and national meetings be coordinated for information dissemination as well as the inclusion of planning and technical assistance and health care recommendations on behalf of participating Tribes to ultimately inform IHS based on Tribal input through a broad based consumer network.
The purpose of this IHS cooperative agreement is to further IHS's mission and goals related to providing quality health care to the AI/AN community through outreach and education efforts with the sole outcome of improving Indian health care. This award includes the following four health services components: Line Item 128 Health Education and Outreach funds, Health Care Policy Analysis and Review, Budget Formulation, and TLDC.
Competition for the award included in this announcement is limited to
Cooperative Agreement.
The total amount of funding identified for the current fiscal period covering (FY) 2016–2018 is approximately $2,475,000 or approximately $825,000 per FY. Three hundred thousand dollars ($300,000) per fiscal year is estimated for outreach, education, and support to Tribes who have elected to leave their Tribal shares with the IHS (this amount could vary based on Tribal shares assumptions; Line Item 128 Health Education and Outreach funding will be awarded in partial increments based on availability and amount of funding); $200,000 per fiscal year for the Health Care Policy Analysis and Review; $75,000 per fiscal year for Budget Formulation; and $250,000 per fiscal year associated with providing legislative education, outreach and communications support to the IHS TLDC and to facilitate Tribal consultation on the Special Diabetes Program for Indians (SDPI). The amount of funding available for both competing and continuation awards issued under this announcement is subject to the availability of appropriations and budgetary priorities of the Agency. The IHS is under no obligation to make awards that are selected for funding under this announcement.
One award will be issued under this program announcement comprised of the following four components: Line Item 128 Health Education and Outreach; Health Care Policy Analysis and Review; Budget Formulation; and TLDC.
The project period will run for three years from September 15, 2016 through September 14, 2019.
Cooperative agreements awarded by HHS are administered under the same policies as a grant. The funding agency (IHS) is required to have substantial programmatic involvement in the project during the entire award segment. Below is a detailed description of the level of involvement required for both IHS and the grantee. IHS will be responsible for activities listed under section A and the grantee will be responsible for activities listed under section B as stated:
1. The IHS assigned program official will work in partnership with the awardee in all decisions involving strategy, hiring of personnel, deployment of resources, release of public information materials, quality assurance, coordination of activities, any training, reports, budget and evaluation. Collaboration includes data analysis, interpretation of findings and reporting.
2. The IHS assigned program official will monitor the overall progress of the awardee's execution of the requirements of the award noted below, as well as their adherence to the terms and conditions of the cooperative agreement. This includes providing guidance for required reports, development of tools and other products, interpreting program findings and assisting with evaluation and overcoming any slippages encountered.
3. The IHS assigned program official will coordinate review and provide final approval of any deliverables, including printed materials, reports, testimony, and PowerPoint slides, prior to their distribution or dissemination to HHS, Tribes, or the public.
4. The IHS assigned program official will also coordinate the following:
• Discussion and release of any and all special grant conditions upon fulfillment.
• Monthly scheduled conference calls.
• Appropriate dissemination of required reports to each participating IHS program.
5. IHS will jointly with the awardee, plan and set an agenda for an annual conference that:
• Shares the outcomes of the outreach and health education training provided.
• Fosters collaboration amongst the participating IHS program offices.
• Increases visibility for the partnership between the awardee and IHS.
• Includes HHS Conference Policy:
6. IHS will provide guidance in preparing articles for publication and/or presentations of program successes, lessons learned and new findings.
7. IHS staff will review articles concerning the HHS for accuracy and may, if requested by the awardee, provide relevant articles.
8. IHS will communicate, via monthly conference calls and meetings, individual or collective (all participating programs) site visits to the awardee.
9. IHS will provide technical assistance to the awardee as requested.
10. IHS staff may, at the request of the entity's board, participate on study groups, attend board meetings, and recommend topics for analysis and discussion.
The awardee must obtain written IHS approval of all deliverables produced with award funds, including printed materials, reports, testimony, and PowerPoint slides, prior to their distribution or dissemination to HHS, Tribes, or the public.
The awardee must comply with relevant Office of Management and Budget (OMB) Circular provisions regarding lobbying, any applicable lobbying restrictions provided under other law and any applicable restriction on the use of appropriated funds for lobbying activities.
1. Pre-Conference Grant Requirements. The awardee is required to comply with the “HHS Policy on Promoting Efficient Spending: Use of Appropriated Funds for Conferences and Meeting Space, Food, Promotional Items, and Printing and Publications,” dated December 16, 2013 (“Policy”), as applicable to conferences funded by grants and cooperative agreements. The Policy is available at
The awardee is required to:
Provide a separate detailed budget justification and narrative for each conference anticipated. The cost categories to be addressed are as follows: (1) Contract/Planner, (2) Meeting Space/Venue, (3) Registration Web site, (4) Audio Visual, (5) Speakers Fees, (6) Non-Federal Attendee Travel, (7) Registration Fees, (8) Other (explain in detail and cost breakdown). For additional questions please contact Ms. Michelle EagleHawk on (301) 443–1104 or email her at
2. Line Item 128 Health Education and Outreach funding is utilized for outreach, health education, and support to Tribes—approximately $300,000 per fiscal year funding is available totaling $900,000.
The awardee is expected to fulfill the following:
a. Host an annual conference to disseminate changes and updates on health care information relative to AI/AN.
a. Host a mid-year consumer conference(s) as appropriate to disseminate changes and updates on health care information relative to AI/AN.
a. Conduct regional and national meeting coordination as appropriate.
b. Conduct health care information dissemination as appropriate.
c. Coordinate planning and technical assistance needs on behalf of Tribes/Tribal organizations (T/TO) with IHS.
d. Convey health care recommendations on behalf of T/TO to IHS.
3. Health Care Policy Analysis and Review.
This funding component requires the awardee to provide IHS with research and analysis of the impact of Centers for Medicare and Medicaid Services (CMS) programs on AI/AN beneficiaries and the health care delivery system that serves these beneficiaries. $200,000 funding is available per fiscal year totaling $600,000 for analysis of CMS programs that affect AI/AN beneficiaries.
The awardee will produce measurable outcomes to include:
a. Analytical reports, policy review and recommendation documents—The products will be in the form of written (hard copy and/or electronic files) documents that contain analysis of relevant health care issues to be reported on a monthly or quarterly basis and face-to-face meetings with hard copies submitted to the Director, IHS/Office of Resource, Access and Partnerships (ORAP).
b. Qualitative and quantitative analysis of the overall impact of the Affordable Care Act (ACA) implementation, including the regulations and policies, on the Indian health care system, in terms of whether or not it is working as intended. That is, whether Tribes and AI/AN consumers are receiving the benefits of the special provisions for Indians, and whether all of the necessary stakeholders including Indian Health Service/Tribes/Urbans (I/T/Us), qualified health plans, providers, and consumers have the information and capacity to ensure successful outcomes and are working cooperatively and effectively to that end.
c. Policy recommendations, based on the analysis, that include in particular, direct service Tribes' perspectives incorporating real-time information on how the structure of the Federal system should support the I/T/U healthcare delivery system. If deficiencies are found, provide recommendations on improvement and solutions. Issues of analysis may include improving access to care, obtaining affordable coverage, network contracting and enforcement of Section 206 of the Indian Health Care Improvement Act (IHCIA).
d. Educational and informational materials to be disseminated by the awardee and communicated to IHS and Tribal health program staff during monthly and quarterly conferences, the annual consumer conference, meetings and training sessions. This can be in the form of PowerPoint presentations, informational brochures, and/or handout materials.
The IHS will provide guidance and assistance as needed. Copies of all deliverables shall be submitted to the IHS/ODSCT and IHS/ORAP.
4. Tribal Budget Consultation—Budget Formulation.
The awardee will provide assistance and technical support to IHS, Tribes, and the Budget Formulation Workgroup with the National Budget Formulation work session, the HHS Tribal Consultation meeting, and the Budget Formulation Evaluation and Planning meeting. The awardee will develop the National Tribal Budget Recommendation document, briefing documents, and Tribal Leaders presentation and talking points, by performing the activities described below in coordination with and support of the IHS Tribal Budget Consultation process. $75,000 is available per fiscal year for Budget Formulation. Budget consultation is required by the Indian Self-Determination and Education Assistance Act, 25 U.S.C. 450j–1(i).
a. Registration of National Budget Formulation Work Session attendees. The Awardee shall assist with the registration of all attendees as they enter the Budget Formulation Work Session.
b. The awardee shall distribute prepared budget formulation packages to all attendees.
a. Minutes should be recorded in a clear and concise manner and identify all speakers including presenters and any individuals contributing comments or motions.
b. Minutes will be recorded in an objective manner.
c. Minutes shall include a record of any comments, votes, or recommendations made, as well as notation of any handouts and other materials referenced by speakers, documented by the speaker's name and affiliation.
d. Minutes shall document any written materials that were distributed at the meeting. These materials will be included with the submission of the transcription and the summary page outlining all key topics.
e. Minutes will include information regarding the next meeting, including the date, time and location and a list of topics to be addressed.
f. The minutes must be submitted to IHS/OFA in final draft within five working days after the conclusion of the work session.
The awardee shall:
a. Package and distribute results of the work session to IHS/OFA within five working days, which includes minutes and the final set of agreed upon national budget priorities; and
b. Provide final documents needed for the IHS budget formulation Web site.
The Tribal testimony is a combined effort that is written and presented by the National Tribal Budget Formulation Workgroup. The testimony is presented to the Secretary of HHS and related staff as part of the Annual National U.S. Department of Health and Human Services Tribal Budget and Policy Consultation.
The awardee will assist the National Tribal Budget Formulation Workgroup to prepare for the HHS Consultation meeting by:
a. Arranging a workgroup meeting;
b. Preparing testimony and a PowerPoint presentation with talking points, with the content of both based on input from the workgroup and technical team and with the awardee responsible for formatting and design of the products;
c. Submitting testimony and the draft PowerPoint presentation to IHS for review and clearance ten working days prior to the presentation to HHS;
d. Packaging and distributing final materials, once clearance from IHS is obtained; and
e. Delivering the final testimony to the IHS/OFA/DBF five working days prior to the presentation.
a. Minutes should be recorded in a clear and concise manner and identify all speakers including presenters and any individuals contributing comments or motions.
b. Minutes will be recorded in an objective manner.
c. Minutes shall include a record of any comments, votes, or recommendations made, as well as notation of any handouts and other materials referenced by speakers, documented by the speaker's name and affiliation.
d. Minutes shall document any written materials that were distributed at the meeting. These materials will be included with the submission of the transcription and the summary page outlining all key topics.
e. Minutes will include information regarding the next meeting, including the date, time and location and a list of topics to be addressed.
f. The minutes must be submitted to IHS/OFA in final draft within five working days after the conclusion of the meeting.
The awardee shall package and distribute results of the meeting in final:
a. To OFA within five working days; and
b. The documents needed for IHS budget formulation Web site.
• All expenses will be itemized.
• If costs are projected to exceed the estimated cost for any part of this Scope of Work, approval from IHS/OFA must be granted before any release of funds.
• Preapproval from IHS is required before any subcontract may be awarded at a price above the estimated cost.
5. Provide Support for TLDC Meetings and Provide Education, Outreach and Communications Support.
A total of $250,000 per fiscal year totaling $750,000 is available for tasks associated with providing meeting support for the TLDC and providing education, outreach and communications support on the activities of the TLDC, the SDPI grant program and related diabetes/chronic disease issues.
a. Provide logistical support for TLDC meetings and workgroup sessions.
i. Face-to-Face TLDC meetings (up to quarterly).
1. Location to be determined by TLDC members and the IHS Principal Deputy Director or designee. Every effort will be made to utilize Federal meeting space for TLDC meetings where appropriate.
2. In consultation with DDTP, provide timely pre-meeting logistical support for TLDC meetings, including reserving TLDC meeting space, establishing hotel sleeping room block(s) at government per diem rate for all meeting attendees, setting up transportation for attendees if sleeping rooms are at a location separate from the meeting site, and other support services as needed to ensure the smooth and timely organization of TLDC meetings.
(a) Note that, for the purpose of this cooperative agreement, TLDC meeting attendees include TLDC members/alternates, TLDC advisors, federal participants (
3. Provide on-site logistical support for TLDC meetings, including coordination of meeting activities; provision of appropriate audiovisual equipment, including sufficient number and type of microphones (
1. When requested by DDTP, schedule conference calls and/or webinars for four TLDC workgroups.
2. Record and provide minutes of TLDC workgroup sessions.
Minutes will be completed as follows:
(a) Minutes will be recorded in a clear and concise manner and identify all speakers including presenters and any individuals contributing comments or motions.
(b) Minutes will be recorded in an objective manner.
(c) Minutes shall include a record of any comments or recommendations made, as well as notation of any handouts and other materials referenced by speakers, documented by the speaker's name and affiliation.
(d) Minutes shall document any written materials that were distributed at the meeting.
(e) Minutes will include information regarding the next meeting, including the date, time and location, and a list of topics to be addressed.
(f) The minutes must be submitted to DDTP for review and approval within five working days after each TLDC workgroup meeting.
(g) Provide final minutes and pertinent documents to DDTP within five working days of receiving DDTP's edits on the draft versions.
b. Coordinate travel planning and travel/per diem reimbursement in accordance with the approved TLDC charter for 12 TLDC members (or their assigned alternate) and five technical advisors to attend up to four quarterly TLDC meetings per year. Additionally, coordinate travel planning and travel/per diem reimbursement for up to two IHS-approved non-Federal speakers per TLDC in-person meeting.
i. Travel planning and reimbursement process will include:
1. Direct communication with TLDC members (and alternates, as necessary), technical advisors, and speakers to assist in travel arrangements.
2. Provide logistical information to TLDC members, advisors, and speakers for meeting location and lodging.
3. Prepare and distribute reimbursement forms with clear instructions in advance of the meeting and serve as the point of contact for communicating any additional travel information that is required.
4. Collect reimbursement forms and provide timely reimbursement of approved participants' expenses within 30 days of the receipt of the claim forms.
5. Provide a detailed travel reimbursement report to DDTP within 60 days of the TLDC meeting.
6. Maintain an active TLDC email directory in order to assist DDTP and TLDC with disseminating related meeting, travel and reimbursement information and soliciting related feedback.
7. Include identified DDTP staff on all email correspondence to TLDC members and technical advisors.
a. Communicate with Tribal leaders and Indian organizations about the activities of the TLDC, the SDPI grant program, and related diabetes/chronic disease issues.
i. Provide factual information, review and analysis of legislative and policy issues that are relevant to diabetes and related chronic conditions in AI/ANs and on related health care disparities in written and email format for the purpose of keeping TLDC membership up-to-date on such information and for sharing with other Tribal leadership, Indian organizations, and others.
ii. Coordinate sharing DDTP-approved information with national non-profit organizations, such as the Juvenile Diabetes Research Foundation and the American Diabetes Association, for the purpose of strengthening outreach to Tribes and Tribal communities as well as education and outreach to non-Indian communities in the United States about AI/ANs living with diabetes and other chronic diseases.
iii. Support registration, presentation, and exhibit costs for up to five DDTP staff and assignees to potentially include a plenary and up to four workshop presentations on diabetes, SDPI, and related chronic disease at meetings such as:
1. National Indian Health Board (NIHB) Public Health Summit and the NIHB Annual Consumer Conference; and
2. Other national Tribal health care conferences/meetings such as the National Congress of American Indians Annual Convention.
iv. Support exhibit opportunity for SDPI grant programs to display programmatic information at the 2017–2020 NIHB Public Health Summits.
To be eligible for this “New/Competing Continuation Announcement,” an eligible applicant must be a 501(c)(3) national Indian organization that has demonstrated expertise as follows:
• Representing all Tribal governments and providing a variety of services to Tribes, area health boards, Tribal organizations, and Federal agencies, and playing a major role in focusing attention on Indian health care needs, resulting in improved health outcomes for Tribes.
• Promoting and supporting Indian education and coordinating efforts to inform AI/AN of Federal decisions that affect Tribal government interests including the improvement of Indian health care.
• Administering national health policy and health programs.
• Maintaining a national AI/AN constituency and clearly supporting critical services and activities within the IHS mission of improving the quality of health care for AI/AN people.
• Supporting improved healthcare in Indian Country.
Applicants must provide proof of non-profit status with the application. The national Indian organization must have the infrastructure in place to accomplish the work under the proposed program.
Please refer to Section IV.2 (Application and Submission Information/Subsection 2, Content and Form of Application Submission) for additional proof of applicant status documents required such as Tribal resolutions, proof of non-profit status, etc.
The IHS does not require matching funds or cost sharing for grants or cooperative agreements.
If application budgets exceed the highest dollar amount outlined under the “Estimated Funds Available” section within this funding announcement, the application will be considered ineligible and will not be reviewed for further consideration. If deemed ineligible, IHS will not return the application. The applicant will be notified by email by the Division of Grants Management (DGM) of this decision.
The following documentation is required:
Organizations claiming non-profit status must submit proof. A copy of the 501(c)(3) Certificate must be received with the application submission by the Application Deadline Date listed under
An applicant submitting any of the above additional documentation after the initial application submission due date is required to ensure the information was received by the IHS by obtaining documentation confirming delivery (
The application package and detailed instructions for this announcement can be found at
Questions regarding the electronic application process may be directed to Mr. Paul Gettys at (301) 443–2114 or (301) 443–5204.
The applicant must include the project narrative as an attachment to the application package. Mandatory documents for all applicants include:
• Table of contents.
• Abstract (one page) summarizing the project.
• Application forms:
○ SF–424, Application for Federal Assistance.
○ SF–424A, Budget Information—Non-Construction Programs.
○ SF–424B, Assurances—Non-Construction Programs.
• Budget Justification and Narrative (must be single spaced and not exceed five pages).
• Project Narrative (must be single spaced and not exceed ten pages for each of the four components listed).
○ Background information on the organization.
○ Proposed scope of work, objectives, and activities that provide a description of what will be accomplished, including a one-page Timeframe Chart.
• Letter of support from organization's Board of Directors.
• 501(c)(3) Certificate (if applicable).
• Position descriptions for key personnel.
• Resumes of key personnel.
• Contractor/Consultant resumes or qualifications and scope of work.
• Disclosure of Lobbying Activities (SF–LLL).
• Certification Regarding Lobbying (GG-Lobbying Form).
• Copy of current Negotiated Indirect Cost rate (IDC) agreement (required) in order to receive IDC.
• Organizational chart (optional).
• Documentation of current OMB A–133 or other required Financial Audit (if applicable).
Acceptable forms of documentation include:
○ Email confirmation from Federal Audit Clearinghouse (FAC) that audits were submitted; or
○ Face sheets from audit reports. These can be found on the FAC Web site:
All Federal-wide public policies apply to IHS grants and cooperative agreements with exception of the discrimination policy.
A. Project Narrative: This narrative should be a separate Word document that is no longer than ten pages per each component and must: Be single-spaced, be type written, have consecutively numbered pages, use black type not smaller than 12 characters per one inch, and be printed on one side only of standard size 8–1/2” × 11” paper.
Be sure to succinctly address and answer all questions listed under each part of the narrative and place all responses and required information in the correct section (noted below), or they shall not be considered or scored. These narratives will assist the Objective Review Committee (ORC) in becoming familiar with the applicant's activities and accomplishments prior to this grant award. If the narrative exceeds the page limit, only the first ten pages of each of the four components will be reviewed. The ten pages per component page limit for the narrative does not include the work plan, standard forms, table of contents, budget, budget narrative justifications, and/or other appendix items.
There are three parts to the narrative: Part A—Program Information; Part B—Program Planning and Evaluation; and Part C—Program Report. See below for additional details about what must be included in the narrative.
Describe how the national Indian organization has the expertise to provide outreach and education efforts on a continuing basis regarding the pertinent changes and updates in health care for each of the four components listed herein.
Describe fully and clearly how the national Indian organization plans to address the NIHOE1 requirements, including how the national Indian organization plans to demonstrate improved health education and outreach services to all 567 Federally-recognized Tribes for each of the four components described herein. Include proposed timelines as appropriate and applicable.
Describe fully and clearly how the outreach and education efforts will impact changes in knowledge and awareness in Tribal communities. Identify anticipated or expected benefits for the Tribal constituency.
Section 1: Describe major accomplishments over the last 24 months. Please identify and describe significant program achievements associated with the delivery of quality health outreach and education services for each of the four components. Provide a comparison of the actual accomplishments to the goals established for the project period, or if applicable, provide justification for the lack of progress.
Section 2: Describe major activities over the last 24 months. Please identify and summarize recent major health related project activities of the work done regarding each of the four components during the project period.
B. Budget Narrative: This narrative must include a line item budget with a narrative justification for all expenditures identifying reasonable and allowable costs necessary to accomplish the goals and objectives as outlined in the project narrative. The budget narrative should match the scope of work described in the project narrative. The budget narrative should not exceed five pages.
Applications must be submitted electronically through
If technical challenges arise and assistance is required with the electronic application process, contact
If the applicant needs to submit a paper application instead of submitting electronically through
Executive Order 12372 requiring intergovernmental review is not applicable to this program.
• Pre-award costs are not allowable.
• The available funds are inclusive of direct and appropriate indirect costs.
• Only one grant/cooperative agreement will be awarded per applicant.
• IHS will not acknowledge receipt of applications.
All applications must be submitted electronically. Please use the
If the applicant receives a waiver to submit paper application documents, the applicant must follow the rules and timelines that are noted below. The applicant must seek assistance at least ten days prior to the Application Deadline Date listed in the Key Dates section on page one of this announcement.
Applicants that do not adhere to the timelines for System for Award Management (SAM) and/or
Please be aware of the following:
• Please search for the application package in
• If you experience technical challenges while submitting your application electronically, please contact
• Upon contacting
• If it is determined that a waiver is needed, the applicant must submit a request in writing (emails are acceptable) to
• If the waiver is approved, the application should be sent directly to the DGM by the Application Deadline Date listed in the Key Dates section on page one of this announcement.
• Applicants are strongly encouraged not to wait until the deadline date to begin the application process through
• Please use the optional attachment feature in
• All applicants must comply with any page limitation requirements described in this funding announcement.
• After electronically submitting the application, the applicant will receive an automatic acknowledgment from
• Email applications will not be accepted under this announcement.
All IHS applicants and grantee organizations are required to obtain a DUNS number and maintain an active registration in the SAM database. The DUNS number is a unique 9-digit identification number provided by D&B which uniquely identifies each entity. The DUNS number is site specific; therefore, each distinct performance site may be assigned a DUNS number. Obtaining a DUNS number is easy, and there is no charge. To obtain a DUNS number, please access it through
All HHS recipients are required by the Federal Funding Accountability and Transparency Act of 2006, as amended (“Transparency Act”), to report information on sub-awards. Accordingly, all IHS grantees must notify potential first-tier sub-recipients that no entity may receive a first-tier sub-award unless the entity has provided its DUNS number to the prime grantee organization. This requirement ensures the use of a universal identifier to enhance the quality of information available to the public pursuant to the Transparency Act.
Organizations that were not registered with Central Contractor Registration and have not registered with SAM will need to obtain a DUNS number first and then
Additional information on implementing the Transparency Act, including the specific requirements for DUNS and SAM, can be found on the IHS Grants Management, Grants Policy Web site:
The instructions for preparing the application narrative also constitute the evaluation criteria for reviewing and scoring the application. Weights assigned to each section are noted in parentheses. The ten page narrative allowed per each of the four components page narrative should include only the first year of activities; information for multi-year projects should be included as an appendix. See “Multi-year Project Requirements” at the end of this section for more information. The narrative section should be written in a manner that is clear to outside reviewers unfamiliar with prior related activities of the applicant. It should be well organized, succinct, and contain all information necessary for reviewers to understand the project fully. Points will be assigned to each evaluation criteria adding up to a total of 100 points. A minimum score of 60 points is required for funding. Points are assigned as follows:
(1) Describe the organization's current health, education and technical assistance operations as related to the broad spectrum of health needs of the AI/AN community. Include what programs and services are currently provided (
(2) Describe the organization's current technical assistance ability. Include what programs and services are currently provided, programs and services projected to be provided, memorandums of agreement with other national Indian organizations that deem the applicant as the primary source of health policy information for AI/AN, memorandums of agreement with other area Indian health boards, etc.
(3) Describe the population to be served by the proposed projects.
(4) Identify all previous IHS cooperative agreement awards received, dates of funding and summaries of the projects' accomplishments. State how previous cooperative agreement funds facilitated education, training and technical assistance nationwide forAI/ANs and relate the progression of health care information delivery and development relative to the current proposed projects. (Copies of reports will not be accepted.)
(5) Describe collaborative and supportive efforts with national, area and local Indian health boards.
(6) Explain the need/reason for your proposed projects by identifying specific gaps or weaknesses in services or infrastructure that will be addressed by the proposed projects. Explain how these gaps/weaknesses have been assessed.
(7) If the proposed projects include information technology (
(8) Describe the effect of the proposed projects on current programs (
(9) Describe how the projects relate to the purpose of the cooperative agreement by addressing the following: Identify how the proposed projects will address outreach and education regarding each of the four components: Line Item 128 Health Education and Outreach funds, Health Care Policy Analysis and Review, Budget Formulation, and TLDC.
(1) Identify the proposed objective(s) for each of the four projects, as applicable. Objectives should be:
• Measurable and (if applicable) quantifiable.
• Results oriented.
• Time-limited.
Goals must be clear and concise. Objectives must be measurable, feasible and attainable for each of the selected projects.
(2) Address how the proposed projects will result in change or improvement in program operations or processes for each proposed project objective for all of the projects. Also address what tangible products, if any, are expected from the projects, (
(3) Address the extent to which the proposed projects will provide, improve, or expand services that address the need(s) of the target population. Include a current strategic plan and business plan that includes the expanded services. Include the plan(s) with the application submission.
(4) Submit a work plan in the appendix which includes the following information:
• Provide the action steps on a timeline for accomplishing each of the projects' proposed objective(s).
• Identify who will perform the action steps.
• Identify who will supervise the action steps.
• Identify what tangible products will be produced during and at the end of the proposed projects' objective(s).
• Identify who will accept and/or approve work products during the duration of the proposed projects and at the end of the proposed projects.
• Include any training that will take place during the proposed projects and who will be attending the training.
• Include evaluation activities planned in the work plans.
(5) If consultants or contractors will be used during the proposed project, please include the following information in their scope of work (or note if consultants/contractors will not be used):
• Educational requirements.
• Desired qualifications and work experience.
• Expected work products to be delivered on a timeline.
If a potential consultant/contractor has already been identified, please include a resume in the Appendix.
(6) Describe what updates will be required for the continued success of the proposed projects. Include when these updates are anticipated and where funds will come from to conduct the update and/or maintenance.
Each proposed objective requires an evaluation component to assess its progression and ensure its completion. Also, include the evaluation activities in the work plan.
Describe the proposed plan to evaluate both outcomes and process. Outcome evaluation relates to the results identified in the objectives, and process evaluation relates to the work plan and activities of the project.
(1) For outcome evaluation, describe:
• What will the criteria be for determining success of each objective?
• What data will be collected to determine whether the objective was met?
• At what intervals will data be collected?
• Who will collect the data and their qualifications?
• How will the data be analyzed?
• How will the results be used?
(2) For process evaluation, describe:
• How will each project be monitored and assessed for potential problems and needed quality improvements?
• Who will be responsible for monitoring and managing each project's improvements based on results of ongoing process improvements and their qualifications?
• How will ongoing monitoring be used to improve the projects?
• Describe any products, such as manuals or policies, that might be developed and how they might lend themselves to replication by others.
• How will the organization document what is learned throughout each of the projects' periods?
(3) Describe any evaluation efforts planned after the grant period has ended.
(4) Describe the ultimate benefit to the AI/AN population that the applicant organization serves that will be derived from these projects.
This section outlines the broader capacity of the organization to complete the project outlined in the work plan. It includes the identification of personnel responsible for completing tasks and the chain of responsibility for successful completion of the projects outlined in the work plan.
(1) Describe the organizational structure of the organization beyond health care activities, if applicable.
(2) Describe the ability of the organization to manage the proposed projects. Include information regarding similarly sized projects in scope and financial assistance, as well as other cooperative agreements/grants and projects successfully completed.
(3) Describe what equipment (
(4) List key personnel who will work on the projects. Include title used in the work plans. In the appendix, include position descriptions and resumes for all key personnel. Position descriptions should clearly describe each position and duties, indicating desired qualifications and experience requirements related to the proposed projects. Resumes must indicate that the proposed staff member is qualified to carry out the proposed projects' activities. If a position is to be filled, indicate that information on the proposed position description.
(5) If personnel are to be only partially funded by this cooperative agreement, indicate the percentage of time to be allocated to the projects and identify the resources used to fund the remainder of the individual's salary.
This section should provide a clear estimate of the projects' program costs and justification for expenses for the entire cooperative agreement period. The budgets and budget justifications should be consistent with the tasks identified in the work plans.
(1) Provide a categorical budget for each of the 12-month budget periods requested for each of the four projects.
(2) If indirect costs are claimed, indicate and apply the current negotiated rate to the budget. Include a copy of the rate agreement in the appendix.
(3) Provide a narrative justification explaining why each line item is necessary/relevant to the proposed project. Include sufficient cost and other details to facilitate the determination of cost allowability (
Projects requiring a second and/or third year must include a brief project narrative and budget (one additional page per year) addressing the developmental plans for each additional year of the project.
• Work plan, logic model and/or time line for proposed objectives.
• Position descriptions for key staff.
• Resumes of key staff that reflect current duties.
• Consultant or contractor proposed scope of work and letter of commitment (if applicable).
• Current Indirect Cost Agreement.
• Organizational chart.
• Map of area identifying project location(s).
• Additional documents to support narrative (
Each application will be prescreened by the DGM staff for eligibility and completeness as outlined in the funding announcement. Applications that meet the eligibility criteria shall be reviewed for merit by the ORC based on evaluation criteria in this funding announcement. The ORC could be composed of both Tribal and Federal reviewers appointed by the IHS program to review and make recommendations on these applications. The technical review process ensures selection of quality projects in a national competition for limited funding. Incomplete applications and applications that are non-responsive to the eligibility criteria will not be referred to the ORC. The applicant will be notified via email of this decision by the Grants Management Officer of the DGM. Applicants will be notified by DGM, via email, to outline minor missing components (
To obtain a minimum score for funding by the ORC, applicants must address all program requirements and provide all required documentation.
The Notice of Award (NoA) is a legally binding document signed by the Grants Management Officer and serves as the official notification of the grant award. The NoA will be initiated by the DGM in our grant system, GrantSolutions (
Applicants who received a score less than the recommended funding level for approval, 60 points, and were deemed to be disapproved by the ORC, will receive an Executive Summary Statement from the IHS program office within 30 days of the conclusion of the ORC outlining the strengths and weaknesses of their application submitted. The IHS program office will also provide additional contact information as needed to address questions and concerns as well as provide technical assistance if desired.
Approved but unfunded applicants that met the minimum scoring range and were deemed by the ORC to be “Approved,” but were not funded due to lack of funding, will have their applications held by DGM for a period of one year. If additional funding becomes available during the course of FY 2016 the approved but unfunded application may be re-considered by the awarding program office for possible funding. The applicant will also receive an Executive Summary Statement from the IHS program office within 30 days of the conclusion of the ORC.
Any correspondence other than the official NoA signed by an IHS grants management official announcing to the project director that an award has been made to their organization is not an authorization to implement their program on behalf of IHS.
Cooperative agreements are administered in accordance with the following regulations, policies, and OMB cost principles:
A. The criteria as outlined in this Program Announcement.
B. Administrative Regulations for Grants:
• Uniform Administrative Requirements for HHS Awards, located at 45 CFR part 75.
C. Grants Policy:
• HHS Grants Policy Statement, Revised 01/07.
D. Cost Principles:
Uniform Administrative Requirements for HHS Awards, “Cost Principles,” located at 45 CFR part 75, subpart E.
E. Audit Requirements:
• Uniform Administrative Requirements for HHS Awards, “Audit Requirements,” located at 45 CFR part 75, subpart F.
This section applies to all grant recipients that request reimbursement of indirect costs (IDC) in their grant application. In accordance with HHS Grants Policy Statement, part II–27, IHS requires applicants to obtain a current IDC rate agreement prior to award. The rate agreement must be prepared in accordance with the applicable cost principles and guidance as provided by the cognizant agency or office. A current rate covers the applicable grant activities under the current award's budget period. If the current rate is not on file with the DGM at the time of award, the IDC portion of the budget will be restricted. The restrictions remain in place until the current rate is provided to the DGM.
Generally, IDC rates for IHS grantees are negotiated with the Division of Cost Allocation (DCA)
The grantee must submit required reports consistent with the applicable deadlines. Failure to submit required reports within the time allowed may result in suspension or termination of an active grant, withholding of additional awards for the project, or other enforcement actions such as withholding of payments or converting to the reimbursement method of payment. Continued failure to submit required reports may result in one or both of the following: (1) The imposition of special award provisions; and (2) the non-funding or non-award of other eligible projects or activities. This requirement applies whether the delinquency is attributable to the failure of the grantee organization or the individual responsible for preparation of the reports. Per DGM policy, all reports are required to be submitted electronically by attaching them as a “Grant Note” in GrantSolutions. Personnel responsible for submitting reports will be required to obtain a login and password for GrantSolutions. Please see the Agency Contacts list in section VII for the systems contact information.
The reporting requirements for this program are noted below.
Program progress reports are required semi-annually within 30 days after the budget period ends. These reports must include a brief comparison of actual accomplishments to the goals established for the period, or, if applicable, provide sound justification for the lack of progress and other pertinent information as required. A final report must be submitted within 90 days of expiration of the budget/project period.
Federal Financial Report FFR (SF–425), Cash Transaction Reports are due 30 days after the close of every calendar quarter to the Payment Management Services, HHS at:
Grantees are responsible and accountable for accurate information being reported on all required reports: The Progress Reports and Federal Financial Report.
This award may be subject to the Transparency Act sub-award and executive compensation reporting requirements of 2 CFR part 170.
The Transparency Act requires the OMB to establish a single searchable database, accessible to the public, with information on financial assistance awards made by Federal agencies. The Transparency Act also includes a requirement for recipients of Federal grants to report information about first-tier sub-awards and executive compensation under Federal assistance awards.
IHS has implemented a Term of Award into all IHS Standard Terms and Conditions, NoAs and funding announcements regarding the FSRS
The following requirements were enacted in section 3003 of the Consolidated Continuing Appropriations Act, 2013, and Section 119 of the Continuing Appropriations Act, 2014;
For additional questions please contact Ms. Michelle EagleHawk by telephone at (301) 443–1104 or email her at
Recipients of federal financial assistance (FFA) from HHS must administer their programs in compliance with federal civil rights law. This means that recipients of HHS funds must ensure equal access to their programs without regard to a person's race, color, national origin, disability, age and, in some circumstances, sex and religion. This includes ensuring your programs are accessible to persons with limited English proficiency. HHS provides guidance to recipients of FFA on meeting their legal obligation to take reasonable steps to provide meaningful access to their programs by persons with limited English proficiency. Please see
The HHS Office for Civil Rights (OCR) also provides guidance on complying with civil rights laws enforced by HHS. Please see
Pursuant to 45 CFR 80.3(d), an individual shall not be deemed subjected to discrimination by reason of his/her exclusion from benefits limited by federal law to individuals eligible for benefits and services from the IHS.
Recipients will be required to sign the HHS–690 Assurance of Compliance form which can be obtained from the following Web site:
The IHS is required to review and consider any information about the applicant that is in the Federal Awardee Performance and Integrity Information System (FAPIIS) before making any award in excess of the simplified acquisition threshold (currently $150,000) over the period of performance. An applicant may review and comment on any information about itself that a federal awarding agency previously entered. IHS will consider any comments by the applicant, in addition to other information in FAPIIS in making a judgment about the applicant's integrity, business ethics, and record of performance under federal awards when completing the review of risk posed by applicants as described in 45 CFR 75.205.
As required by 45 CFR part 75 Appendix XII of the Uniform Guidance, non-Federal entities (NFEs) are required to disclose in FAPIIS any information about criminal, civil, and administrative proceedings, and/or affirm that there is no new information to provide. This applies to NFEs that receive federal awards (currently active grants, cooperative agreements, and procurement contracts) greater than $10,000,000 for any period of time during the period of performance of an award/project.
As required by 2 CFR part 200 of the Uniform Guidance, and the HHS implementing regulations at 45 CFR part 75, effective January 1, 2016, the IHS must require a non-Federal entity or an applicant for a federal award to disclose, in a timely manner, in writing to the IHS or pass-through entity all violations of federal criminal law involving fraud, bribery, or gratutity violations potentially affecting the federal award.
Submission is required for all applicants and recipients, in writing, to the IHS and to the HHS Office of Inspector General all information related to violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award. 45 CFR 75.113.
Disclosures must be sent in writing to: U.S. Department of Health and Human Services, Indian Health Service, Division of Grants Management, ATTN: Robert Tarwater, Director, 5600 Fishers Lane, Mailstop 09E70, Rockville, Maryland 20857. (Include “Mandatory Grant Disclosures” in subject line). Ofc: (301) 443–5204, Fax: (301) 594–0899, email:
U.S. Department of Health and Human Services, Office of Inspector General, ATTN: Mandatory Grant Disclosures, Intake Coordinator, 330 Independence Avenue SW., Cohen Building, Room 5527, Washington, DC 20201, URL:
Failure to make required disclosures can result in any of the remedies described in 45 CFR 75.371. Remedies for noncompliance, including suspension or debarment (See 2 CFR parts 180 and 376 and 31 U.S.C. 3321).
1. Questions on the programmatic issues may be directed to: Ms. Michelle EagleHawk, Deputy Director, ODSCT, Mail Stop: 8E17, 5600 Fishers Lane, Rockville, Maryland 20857, Telephone: (301) 443–1104, email:
2. Questions on grants management and fiscal matters may be directed to: Ms. Patience Musikikongo, Grants Management Specialist, Division of Grants Management, Mail Stop: 09E70, 5600 Fishers Lane, Rockville, MD 20857, Telephone: (301) 443–2059, Fax: (301) 594–0899, email:
3. Questions on systems matters may be directed to: Mr. Paul Gettys, Grant Systems Coordinator, Division of Grants Management, Mail Stop: 09E70, 5600 Fishers Lane, Rockville, MD 20857, Phone: (301) 443–2114; or the DGM main line (301) 443–5204, Fax: (301) 594–0899, email:
The Public Health Service strongly encourages all cooperative agreement and contract recipients to provide a smoke-free workplace and promote the non-use of all tobacco products. In addition, Public Law 103–227, the Pro-Children Act of 1994, prohibits smoking in certain facilities (or in some cases, any portion of the facility) in which regular or routine education, library, day care, health care, or early childhood development services are provided to children. This is consistent with the HHS mission to protect and advance the physical and mental health of the American people.
The Indian Health Service (IHS) is accepting competitive applications for two limited competition cooperative agreements under the National Indian Health Outreach and Education (NIHOE–II) program: The Behavioral Health (BH)—to include the Substance Abuse and Suicide Prevention (SASP) program, formerly known as the Methamphetamine and Suicide Prevention Intervention, and the Domestic Violence Prevention (DVP) program, formerly known as the Domestic Violence Prevention Initiative—national awareness, visibility, advocacy, outreach and education award and the Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS) outreach and education award. The BH national awareness, visibility, advocacy, and education award is funded by IHS and is authorized under the Snyder Act, codified at 25 U.S.C. 13; the Transfer Act, codified at 42 U.S.C. 2001; the Consolidated Appropriations Act, 2016, Public Law 114–113. The HIV/AIDS outreach and education award is funded by the Office of the Secretary (OS), Department of Health and Human Services (HHS). Funding for the HIV/AIDS award will be provided by OS via an Intra-Departmental Delegation of Authority dated May 1st, 2016 to IHS to permit obligation of funding appropriated by the Consolidated Appropriations Act, 2016, Public Law 114–113. Each award is funded through a separate funding stream by each respective Agency's appropriations. The awardee is responsible for accounting for each of the two awards separately and must provide two separate financial reports per year of funding (one for each award), as indicated below. This program is described in the Catalog of Federal Domestic Assistance under 93.933.
The NIHOE program carries out health program objectives in the American Indian/Alaska Native (AI/AN) community in the interest of improving Indian health care for all 567 Federally-recognized Tribes including Tribal governments operating their own health care delivery systems through Indian Self-Determination and Education Assistance Act (ISDEAA) contracts and compacts with the IHS and Tribes that continue to receive health care directly from the IHS. This program addresses health policy and health programs issues and disseminates educational information to all AI/AN Tribes and villages. The NIHOE II BH and HIV/AIDS awards require that public forums be held at Tribal educational consumer conferences to disseminate changes and updates in the latest health care information. These awards also require that regional and national meetings be coordinated for information dissemination as well as for the inclusion of planning and technical assistance and health care recommendations on behalf of participating Tribes to ultimately inform IHS and the HHS based on Tribal input through a broad based consumer network.
The purpose of these cooperative agreements is to further IHS health program objectives in the AI/AN community with awareness, visibility, advocacy, and education efforts for the BH and HIV/AIDS programs on a national scale and in the interest of improving Indian health care. This announcement includes two separate awards, each of which will be awarded as noted below. The purpose of the BH award is to promote behavioral health as central to the health and well-being of AI/AN communities.
The purpose of the HIV/AIDS award is to further the goals of the national HIV/AIDS program. HIV and AIDS are a critical and growing health issue within the AI/AN population. The IHS National HIV/AIDS Program seeks to avoid complacency and to increase awareness of the impact of HIV/AIDS on AI/ANs. All activities are part of the IHS's implementation plan to meet the three goals of the President's National HIV/AIDS Strategy (NHAS) to reduce the
Competition for both of the awards included in this announcement is limited to national Indian health care organizations with at least ten years of experience providing national awareness, visibility, advocacy, education and outreach on a national scale. This limitation ensures that the awardee will have: (1) A national information-sharing infrastructure which will facilitate the timely exchange of information between HHS and Tribes and Tribal organizations on a broad scale; (2) a national perspective on the needs of AI/AN communities that will ensure that the information developed and disseminated through the projects is appropriate, useful and addresses the most pressing needs of AI/AN communities; and (3) established relationships with Tribes and Tribal organizations that will foster open and honest participation by AI/AN communities. Regional or local organizations will not have the mechanisms in place to conduct communication on a national level, nor will they have an accurate picture of the health care needs facing AI/ANs nationwide. Organizations with less experience will lack the established relationships with Tribes and Tribal organizations throughout the country that will facilitate participation and the open and honest exchange of information between Tribes and HHS. With the limited funds available for these projects, HHS must ensure that the education and outreach efforts described in this announcement reach the widest audience possible in a timely fashion, are appropriately tailored to the needs of AI/AN communities throughout the country, and come from a source that AI/ANs recognize and trust. For these reasons, this is a limited competition announcement.
Cooperative Agreement.
The total amount of funding identified for the current funding period covering fiscal year (FY) 2016–2018 is approximately $1,200,000 (
Two awards will be issued under this program announcement. It is the intention of IHS and the OS that one entity will receive both awards. OS and IHS will concur on the final decision as to who will receive both awards.
The project periods for each award will be for three consecutive years and will run from September 15, 2016 with completion by September 14, 2019.
Cooperative agreements awarded by the HHS are administered under the same policies as a grant. The funding agency (IHS and OS) is required to have substantial programmatic involvement in the project during the entire award segment. Below is a detailed description of the level of involvement required for both IHS, acting on behalf of the OS for the HIV/AIDS award, and the grantee. IHS will be responsible for activities listed under section A and the grantee will be responsible for activities listed under section B as stated:
The IHS assigned program official will monitor the overall progress of the awardee's execution of the requirements of the two awards: IHS award and OS award noted below as well as their adherence to the terms and conditions of the cooperative agreements. This includes providing guidance for required reports, developing of tools, and other products, interpreting program findings, and assisting with evaluations and overcoming any difficulties or performance issues encountered. The IHS assigned program official must approve all presentations, electronic content, and other materials, including mass emails, developed by awardee pursuant to these awards and any supplemental awards prior to the presentation or dissemination of such materials to any party.
i. The IHS assigned program official will work in partnership with the awardee to elevate the priority of behavioral health by coordinating in-person and virtual meetings of the National Tribal Advisory Committee on Behavioral Health and represent the National Indian Health Board on Action Alliance for Suicide Prevention's AI/AN Task Force to assist in national awareness, visibility, and advocacy to promote behavioral health and wellness.
ii. The IHS assigned program official will work in partnership with the awardee to promote a national premier AI/AN behavioral health conference, to include a SASP grantee, and DVP grantee meeting with the ultimate goal of reducing the outstanding behavioral health disparities among AI/AN people.
IHS staff will provide support for the HIV/AIDS award as follows:
i. The IHS assigned program official will work in partnership with the awardee in all decisions involving strategy, hiring of grantee personnel, deployment of resources, release of public information materials, quality assurance, coordination of activities, training, reports, budgets, and evaluations. Collaboration includes data analysis, interpretation of findings, and reporting.
ii. The IHS assigned program official will work closely with OS and all participating IHS health services/programs, as appropriate, to coordinate award activities.
iii. The IHS assigned program official will coordinate the following for OS and the participating IHS program offices and staff:
• Discussion and release of any and all special grant conditions upon fulfillment.
• Monthly scheduled conference calls.
• Appropriate dissemination of required reports to each participating program.
iv. The IHS will, jointly with the awardee, plan and set an agenda for each of the conferences mentioned in this announcement that:
• Shares the training and/or accomplishments.
• Fosters collaboration amongst the participating program offices, agencies, and/or departments.
• Increases visibility for the partnership between the awardee and the IHS and OS.
v. IHS will provide guidance in addressing deliverables and requirements.
vi. IHS will provide guidance in preparing articles for publication and/or presentations of program successes, lessons learned, and new findings.
vii. IHS will communicate via monthly conference calls, individual or collective site visits, and monthly meetings.
viii. IHS staff will review articles concerning the HHS, OS, and the Agency for accuracy and may, as requested by the awardee, provide relevant articles.
ix. IHS will provide technical assistance to the entity as requested.
x. IHS staff may, at the request of the entity's board, participate on study groups and may recommend topics for analysis and discussion.
The awardee must comply with relevant Office of Management and Budget (OMB) Circular provisions regarding lobbying, any applicable lobbying restrictions provided under other law and any applicable restriction on the use of appropriated funds for lobbying activities.
The awardee is responsible for the following in addition to fulfilling all requirements noted for each award component: BH and HIV/AIDS.
i. To succinctly and independently address the requirements for each of the two awards listed below: BH and HIV/AIDS.
ii. To facilitate a forum or forums at which concerns can be heard that are representative of all Tribal governments in the area of health care policy analysis and program development for each of the two components listed above.
iii. To assure that health care outreach and education is based on Tribal input through a broad-based consumer network involving the Area Indian health boards or health board representatives from each of the 12 IHS Areas.
iv. To establish relationships with other national Indian organizations, professional groups, and Federal, State, and local entities supportive of AI/AN health programs.
v. To improve and expand access for AI/AN Tribal governments to all available programs within the HHS.
vi. To disseminate timely health care information to Tribal governments, AI/AN health boards, other national Indian organizations, professional groups, Federal, State, and local entities.
vii. To provide periodic dissemination of health care information, including publication of a newsletter four times a year that features articles on BH, SASP, DVP, and HIV/AIDS health promotion/disease/prevention activities and models of best or promising practices, health policy, and funding information relevant to AI/AN, etc.
In alignment with the above program and independent from HIV/AIDS activities (both via fiscal resources and programmatic implementation), the awardee shall:
• Facilitate and host an annual in-person meeting and virtual meeting of the National Tribal Advisory Committee on Behavioral Health.
• Provide leadership for the National Action Alliance for Suicide Prevention's American Indian/Alaska Native Task Force.
• Host and promote, in partnership with program official, a national premier AI/AN conference on current and pressing Behavioral Health topics, including meetings of the SASP and DVP grantees, provide workshops, pre-conference institutes, and/or presentations including, but not limited to, suicide, substance use, domestic violence, sexual assault, mental health illness, wellness, promising practices, and/or best practices of Tribal BH programs (venue location, theme and content of presentations to be agreed upon by the awardee and the IHS assigned program official).
• Increase capacity at the tribal level on grant writing to increase the likelihood of awards from various Federal agencies.
• Develop, maintain, and disseminate comprehensive information on tribal BH programs, curricula, findings, articles, and strategies to all Tribal BH programs.
In alignment with the above program and independent from BH activities (both via fiscal resources and programmatic implementation), the awardee shall:
• Disseminate existing HIV/AIDS messages to AI/AN audiences in a format designed to solicit, collect, and report on community-level feedback and generate discussion regarding the disease and its prevention. This may include electronic and emerging means of communication. At least four distinct audiences (such as women, young people, etc.) will be addressed and engaged. Preference will be given to reaching audiences with the highest HIV burden or potential increases as supported by the NHAS.
• Disseminate existing IHS HIV/AIDS program and other HIV/AIDS training materials to educators, health care providers, and other key audiences. Collect and report on relevant evaluation criteria, including impacts on underlying knowledge, attitudes, or beliefs about HIV acquisition, testing, or treatment.
• Deliver HIV/AIDS technical assistance and activity support program. Engage in documented partnerships with AI/AN communities to expand their capacity relevant to HIV/AIDS education and prevention efforts. Local activity support may include sub-awards of resources and distribution of incentives to qualified AI/AN-serving community organizations increasing HIV/AIDS education and prevention in their populations. Sub-award eligibility standards and management controls will be proposed by the awardee and will be subject to IHS approval. These activities must be conducted in accordance with Federal grant policies and procedures. Awardee will collect and maintain relevant evaluation materials and generate reports that highlight progress towards the President's NHAS goals on the community level and that collect best practices for dissemination to other communities.
• Contribute technical expertise to the IHS HIV/AIDS program and develop formal written documents responding to information requests from the public regarding HIV/AIDS initiatives.
• Develop and launch anti-stigma messaging for at least one audience, coordinated with other local activities to increase HIV screening and increase access to services, or increase positive role modeling for people living with, or at risk of, acquiring HIV/AIDS.
• Support and document issue-specific discussions with Tribal Leaders as needed to address effective prevention interventions for AI/AN populations as noted in the President's NHAS.
• Obtain approval from the IHS assigned program official of all presentations, electronic content, and other materials, including mass emails, developed by awardee pursuant to this award and any supplemental awards prior to the presentation or dissemination of such materials to any party, allowing for a reasonable amount of time for IHS review.
To be eligible for this “New/Competing Continuation Announcement”, an applicant must:
Provide proof of non-profit status with the application,
Be a national Indian health care organizations with at least ten years of experience providing national awareness, visibility, advocacy, education and outreach on a national scale to ensure:
(1) A national information-sharing infrastructure which will facilitate the timely exchange of information between HHS and Tribes and Tribal organizations on a broad scale with the infrastructure in place to accomplish the work under the proposed program;
(2) A national perspective on the needs of AI/AN communities that will ensure that the information developed and disseminated through the projects is appropriate, useful and addresses the most pressing needs of AI/AN communities; and,
(3) Established relationships with Tribes and Tribal organizations that will foster open and honest participation by AI/AN communities.
Organizations with less experience will lack the established relationships with Tribes and Tribal organizations throughout the country to facilitate participation and the open and honest exchange of information between Tribes and HHS.
Demonstrate expertise in the following areas:
• Representing all Tribal governments and providing a variety of services to Tribes, Area health boards, Tribal organizations, and Federal agencies, and playing a major role in focusing attention on Indian health care needs, resulting in improved health outcomes for AI/ANs.
• Promotion and support of Indian education and coordinating efforts to inform AI/AN of Federal decisions that affect Tribal government interests including the improvement of Indian health care.
• National health policy and health programs administration.
• Have a national AI/AN constituency and clearly support critical services and activities within the IHS mission of improving the quality of health care for AI/AN people.
• Portray evidence of their solid support of improved health care in Indian Country.
• Provide evidence of at least ten years of experience providing education and outreach on a national scale.
Regional and or local organizations that do not have mechanisms in place to conduct communication on a national level to meet the health care needs facing AI/ANs nationwide as outlined in this funding announcement will not be considered eligible.
With the limited funds available for these projects, HHS must ensure that the education and outreach efforts described in this announcement reach the widest audience possible in a timely fashion; are appropriately tailored to the needs of AI/AN communities throughout the country, and come from a source that AI/ANs recognize and trust.
Please refer to Section IV.2 (Application and Submission Information/Subsection 2, Content and Form of Application Submission) for additional proof of applicant status documents required such as Tribal resolutions, proof of non-profit status, etc.
The IHS does not require matching funds or cost sharing for grants or cooperative agreements.
If application budgets exceed the highest dollar amount outlined under the “Estimated Funds Available” section within this funding announcement, the application will be considered ineligible and will not be reviewed for further consideration. If deemed ineligible, IHS will not return the application. The applicant will be notified by email by the Division of Grants Management (DGM) of this decision.
Organizations claiming non-profit status must submit proof. A copy of the 501(c)(3) Certificate must be received with the application submission by the Application Deadline Date listed under the Key Dates section on page one of this announcement.
An applicant submitting any of the above additional documentation after the initial application submission due date is required to ensure the information was received by the IHS by obtaining documentation confirming delivery (
The application package and detailed instructions for this announcement can be found at
Questions regarding the electronic application process may be directed to Mr. Paul Gettys at (301) 443–2114 or (301) 443–5204.
Two complete separate signed applications are required. Both applications should address all the following components separately in each application. Each separate application must include the project narrative as an attachment to the application package. Mandatory documents for all applicants include:
• Table of contents.
• Abstract (one page) summarizing the project.
• Application forms:
○ SF–424, Application for Federal Assistance.
○ SF–424A, Budget Information—Non-Construction Programs.
○ SF–424B, Assurances—Non-Construction Programs.
• Budget Justification and Narrative (must be single spaced and not exceed five pages).
• Project Narrative (must be single spaced and not exceed 20 pages).
○ Background information on the organization.
○ Proposed scope of work, objectives, and activities that provide a description of what will be accomplished, including a one-page Timeframe Chart.
• Letter of Support from Organization's Board of Directors.
• 501(c)(3) Certificate (if applicable).
• Position Descriptions for all key personnel.
• Contractor/Consultant resumes or qualifications and scope of work.
• Disclosure of Lobbying Activities (SF–LLL).
• Certification Regarding Lobbying (GG–Lobbying Form).
• Copy of current Negotiated Indirect Cost (IDC) rate agreement (required) in order to receive IDC.
• Organizational Chart (optional).
• Documentation of current Office of Management and Budget (OMB) 45 CFR part 75 or other required Financial Audit (if applicable). Acceptable forms of documentation include:
○ Email confirmation from Federal Audit Clearinghouse (FAC) that audits were submitted; or
○ Face sheets from audit reports. These can be found on the FAC Web site:
All Federal-wide public policies apply to IHS grants and cooperative agreements with exception of the Discrimination policy.
Be sure to succinctly address and answer all questions listed under the narrative and place them under the evaluation criteria (refer to Section V.1, Evaluation criteria in this announcement) and place all responses and required information in the correct section (noted below), or they shall not be considered or scored. These narratives will assist the Objective Review Committee (ORC) in becoming familiar with the applicant's activities and accomplishments prior to this cooperative agreement award. If the narrative exceeds the page limit, only the first 20 pages will be reviewed. The 20-page limit for the narrative does not include the work plan, standard forms, Tribal resolutions, table of contents, budget, budget justifications, narratives, and/or other appendix items.
There are three parts to the narrative: Part A—Program Information; Part B—Program Planning and Evaluation; and Part C—Program Report. See below for additional details about what must be included in the narrative.
Describe how the national Indian organization has the experience to provide outreach and education efforts regarding the pertinent changes and updates in health care for each of the two components listed herein: BH and HIV/AIDS.
Describe fully and clearly how the national Indian organization plans to address the NIHOE II BH and HIV/AIDS requirements, including how the national Indian organization plans to demonstrate improved health education and outreach services to all 567 Federally-recognized Tribes for each of the two components described herein.
Describe fully and clearly how the outreach and education efforts will impact changes in knowledge and awareness in Tribal communities regarding both components. Identify anticipated or expected benefits for the Tribal constituency.
Identify and describe significant program achievements associated with the delivery of quality health outreach and education. Provide a comparison of the actual accomplishments to the goals established for the project period for both components, or if applicable, provide justification for the lack of progress.
Identify and summarize recent major health related outreach and education project activities of the work performed for both components during the last project period.
Applications must be submitted electronically through
If technical challenges arise and assistance is required with the electronic application process, contact
If the applicant needs to submit a paper application instead of submitting electronically through
Executive Order 12372 requiring intergovernmental review is not applicable to this program.
• Pre-award costs are not allowable.
• The available funds are inclusive of direct and appropriate indirect costs.
• Only one grant/cooperative agreement will be awarded per component.
• IHS will not acknowledge receipt of applications.
All applications must be submitted electronically. Please use the
If the applicant receives a waiver to submit paper application documents, they must follow the rules and timelines that are noted below. The applicant must seek assistance at least ten days prior to the Application Deadline Date listed in the Key Dates section on page one of this announcement.
Applicants that do not adhere to the timelines for System for Award Management (SAM) and/or
Please be aware of the following:
• Please search for the application package in
• If you experience technical challenges while submitting your application electronically, please contact
• Upon contacting
• If it is determined that a waiver is needed, the applicant must submit a request in writing (emails are acceptable) to
• If the waiver is approved, the application should be sent directly to the DGM by the Application Deadline Date listed in the Key Dates section on page one of this announcement.
• Applicants are strongly encouraged not to wait until the deadline date to begin the application process through
• Please use the optional attachment feature in
• All applicants must comply with any page limitation requirements described in this Funding Announcement.
• After electronically submitting the application, the applicant will receive an automatic acknowledgment from
• Email applications will not be accepted under this announcement.
All IHS applicants and grantee organizations are required to obtain a DUNS number and maintain an active registration in the SAM database. The DUNS number is a unique 9-digit identification number provided by D&B which uniquely identifies each entity. The DUNS number is site specific; therefore, each distinct performance site may be assigned a DUNS number. Obtaining a DUNS number is easy, and there is no charge. To obtain a DUNS number, please access it through
All HHS recipients are required by the Federal Funding Accountability and Transparency Act of 2006, as amended (“Transparency Act”), to report information on sub-awards. Accordingly, all IHS grantees must notify potential first-tier sub-recipients that no entity may receive a first-tier sub-award unless the entity has provided its DUNS number to the prime grantee organization. This requirement ensures the use of a universal identifier to enhance the quality of information available to the public pursuant to the Transparency Act.
Organizations that were not registered with Central Contractor Registration (CCR) and have not registered with SAM will need to obtain a DUNS number first and then access the SAM online registration through the SAM home page at
Additional information on implementing the Transparency Act, including the specific requirements for DUNS and SAM, can be found on the IHS Grants Management, Grants Policy Web site:
The instructions for preparing the application narrative also constitute the evaluation criteria for reviewing and scoring the application. Weights assigned to each section are noted in parentheses. The 20-page narrative should include only the first year of activities; information for multi-year projects should be included as an appendix. See “Multi-year Project Requirements” at the end of this section for more information. The narrative section should be written in a manner that is clear to outside reviewers unfamiliar with prior related activities of the applicant. It should be well organized, succinct, and contain all information necessary for reviewers to understand the project fully. Points will be assigned to each evaluation criteria adding up to a total of 100 points. A minimum score of 60 points is required for funding. Points are assigned as follows:
(1) Describe the organization's current health, education and technical assistance operations as related to the broad spectrum of health needs of the AI/AN community. Include what programs and services are currently provided (
(2) Describe the organization's current technical assistance ability. Include what programs and services are currently provided, programs and services projected to be provided, and describe any memorandums of agreement with other national Indian organizations that deem the applicant as the primary source of health policy information for AI/ANs, or any other memorandums of agreement with other Area Indian health boards, etc.
(3) Describe the population to be served by the proposed projects. Are they hard to reach? Are there barriers? Include a description of the number of Tribes who currently benefit from the technical assistance provided by the applicant.
(4) Describe the geographic location of the proposed project including any geographic barriers experienced by the recipients of the technical assistance to the health care information provided.
(5) Identify all previous IHS cooperative agreement awards received, dates of funding and summaries of the projects' accomplishments. State how previous cooperative agreement funds facilitated education, training and technical assistance nationwide for AI/ANs. (Copies of reports will not be accepted.)
(6) Describe collaborative and supportive efforts with national, Area, and local Indian health boards.
(7) Explain the need/reason for the proposed projects by identifying specific gaps or weaknesses in services or infrastructure that will be addressed by the proposed projects. Explain how these gaps/weaknesses have been assessed.
(8) Explain what measures were taken or will be taken to ensure the proposed projects will not create new gaps or weaknesses in services or infrastructure.
(9) Describe the effect of the proposed project on current programs (
(10) Describe how the projects relate to the purpose of the cooperative agreement by identifying how the proposed project will address national Indian health care outreach and education regarding various health data listed,
(1) Identify the proposed project objective(s) for each of the two projects, as applicable, addressing the following:
• Measurable and (if applicable) quantifiable.
• results oriented.
• time-limited.
Example: Issue four quarterly newsletters, provide alerts and quantify number of contacts with Tribes. Goals must be clear and concise.
(2) Address how the proposed projects will result in change or improvement in program operations or processes for each proposed project objective for the selected projects. Also address what tangible products, if any, are expected from the project, (
(3) Address the extent to which the proposed projects will provide, improve, or expand services that address the need(s) of the target population. Include a strategic plan and business plan currently in place that are being used that will include the expanded services. Include the plan(s) with the application submission.
(4) Submit a work plan in the Appendix that:
• Provides the action steps on a timeline for accomplishing each of the projects' proposed objective(s).
• Identifies who will perform the action steps.
• Identifies who will supervise the action steps taken.
• Identifies what tangible products will be produced during and at the end of the proposed project objective(s).
• Identifies who will accept and/or approve work products during the duration of the proposed projects and at the end of the proposed projects.
• Identifies any training that will take place during the proposed projects and who will be attending the training.
• Identifies evaluation activities proposed in the work plans.
(5) If consultants or contractors will be used during the proposed project, please include the following information in their scope of work (or note if consultants/contractors will not be used):
• Educational requirements.
• Desired qualifications and work experience.
• Expected work products to be delivered on a timeline.
If a potential consultant/contractor has already been identified, please include a resume in the Appendix.
(6) Describe what updates will be required for the continued success of the proposed project. Include when these updates are anticipated and where funds will come from to conduct the update and/or maintenance.
Each proposed objective requires an evaluation component to assess its progress and ensure its completion. Also, include the evaluation activities in the work plan.
Describe the proposed plan to evaluate both outcomes and process. Outcome evaluation relates to the results identified in the objectives, and process evaluation relates to the work plan and activities of the project.
(1) For outcome evaluation, describe:
• What will the criteria be for determining success of each objective?
• What data will be collected to determine whether the objective was met?
• At what intervals will data be collected?
• Who will collect the data and their qualifications?
• How will the data be analyzed?
• How will the results be used?
(2) For process evaluation, describe:
• How will the projects be monitored and assessed for potential problems and needed quality improvements?
• Who will be responsible for monitoring and managing project improvements based on results of ongoing process improvements and what are their qualifications?
• How will ongoing monitoring be used to improve the projects?
• Describe any products, such as manuals or policies, that might be developed and how they might lend themselves to replication by others.
• How will the organization document what is learned throughout the projects' grant periods?
(3) Describe any evaluation efforts planned after the grant period has ended.
(4) Describe the ultimate benefit to the AI/AN population served by the applicant organization that will be derived from these projects.
This section outlines the broader capacity of the organization to complete the project outlined in the work plan. It includes the identification of personnel responsible for completing tasks and the chain of responsibility for successful completion of the projects outlined in the work plans.
(1) Describe the organizational structure of the organization beyond health care activities, if applicable.
(2) Describe the ability of the organization to manage the proposed projects. Include information regarding similarly sized projects in scope and financial assistance, as well as other cooperative agreements/grants and projects successfully completed.
(3) Describe what equipment (
(4) List key personnel who will work on the projects. Include title used in the work plans. In the Appendix, include position descriptions and resumes for all key personnel. Position descriptions should clearly describe each position and duties, indicating desired qualifications and experience requirements related to the proposed project. Resumes must indicate that the proposed staff member is qualified to carry out the proposed project activities. If a position is to be filled, indicate that information on the proposed position description.
(5) If personnel are to be only partially funded by this cooperative agreement, indicate the percentage of time to be allocated to this project and identify the resources used to fund the remainder of the individual's salary.
This section should provide a clear estimate of the program costs and justification for expenses for the entire cooperative agreement period for each award. The budgets and budget justifications should be consistent with the tasks identified in the work plans. Because each of the two awards included in this announcement are funded through separate funding streams, the applicant must provide a separate budget and budget narrative for each of the two components and must account for costs separately.
(1) Provide a categorical budget for each of the 12-month budget periods requested for each of the two projects. One additional page per year addressing the developmental plans for each additional year of the project.
(2) If IDC are claimed, indicate and apply the current negotiated rate to the budget. Include a copy of the rate agreement in the Appendix.
(3) Provide a narrative justification explaining why each line item is necessary or relevant to the proposed project. Include sufficient costs and other details to facilitate the determination that the cost is allowable (
Projects requiring a second and/or third year must include a brief project narrative and budget (one additional page per year) addressing the developmental plans for each additional year of the project.
• Work plan, logic model and/or time line for proposed objectives.
• Position descriptions for key staff.
• Resumes of key staff that reflect current duties.
• Consultant or contractor proposed scope of work and letter of commitment (if applicable).
• Current Indirect Cost Agreement.
• Organizational chart.
• Map of area identifying project location(s).
• Additional documents to support narrative (
Each application will be prescreened by the DGM staff for eligibility and completeness as outlined in the funding announcement. Applications that meet the eligibility criteria shall be reviewed for merit by the ORC based on evaluation criteria in this funding announcement. The ORC could be composed of both Tribal and Federal reviewers appointed by the Office of Direct Service and Contracting Tribes (ODSCT) to review and make recommendations on these applications. The technical review process ensures selection of quality projects in a national competition for limited funding. Incomplete applications and applications that are non-responsive to the eligibility criteria will not be referred to the ORC. The applicant will be notified via email of this decision by the Grants Management Officer of the DGM. Applicants will be notified by DGM, via email, to outline minor missing components (
To obtain a minimum score for funding by the ORC, applicants must address all program requirements and provide all required documentation.
The Notice of Award (NoA) is a legally binding document signed by the Grants Management Officer and serves as the official notification of the grant award. The NoA will be initiated by the DGM in our grant system, GrantSolutions (
Applicants who received a score less than the recommended funding level for approval, 60 points, and were deemed to be disapproved by the ORC, will receive an Executive Summary Statement from the ODSCT within 30 days of the conclusion of the ORC outlining the strengths and weaknesses of their application submitted. The ODSCT will also provide additional contact information as needed to address questions and concerns as well as provide technical assistance if desired.
Approved but unfunded applicants that met the minimum scoring range and were deemed by the ORC to be “Approved”, but were not funded due to lack of funding, will have their applications held by DGM for a period of one year. If additional funding becomes available during the course of FY 2016 the approved but unfunded application may be re-considered by the awarding program office for possible funding. The applicant will also receive an Executive Summary Statement from the IHS program office within 30 days of the conclusion of the ORC.
Any correspondence other than the official NoA signed by an IHS Grants Management Official announcing to the Project Director that an award has been made to their organization is not an authorization to implement their program on behalf of IHS.
Cooperative agreements are administered in accordance with the following regulations, policies, and OMB cost principles:
A. The criteria as outlined in this Program Announcement.
B. Administrative Regulations for Grants:
• Uniform Administrative Requirements for HHS Awards, located at 45 CFR part 75.
C. Grants Policy:
• HHS Grants Policy Statement, Revised 01/07.
D. Cost Principles:
• Uniform Administrative Requirements for HHS Awards, “Cost Principles,” located at 45 CFR part 75, subpart E.
E. Audit Requirements:
• Uniform Administrative Requirements for HHS Awards, “Audit Requirements,” located at 45 CFR part 75, subpart F.
This section applies to all grant recipients that request reimbursement of IDC in their grant application. In accordance with HHS Grants Policy Statement, Part II–27, IHS requires applicants to obtain a current IDC rate agreement prior to award. The rate agreement must be prepared in accordance with the applicable cost principles and guidance as provided by the cognizant agency or office. A current rate covers the applicable grant activities under the current award's budget period. If the current rate is not on file with the DGM at the time of award, the IDC portion of the budget will be restricted. The restrictions remain in place until the current rate is provided to the DGM.
Generally, IDC rates for IHS grantees are negotiated with the Division of Cost Allocation (DCA)
The grantee must submit required reports consistent with the applicable deadlines. Failure to submit required reports within the time allowed may result in suspension or termination of an active grant, withholding of additional awards for the project, or other enforcement actions such as withholding of payments or converting to the reimbursement method of payment. Continued failure to submit required reports may result in one or both of the following: (1) The imposition of special award provisions; and (2) the non-funding or non-award of other eligible projects or activities. This requirement applies whether the delinquency is attributable to the failure of the grantee organization or the individual responsible for preparation of the reports. Per DGM policy, all reports are required to be submitted electronically by attaching them as a “Grant Note” in GrantSolutions. Personnel responsible for submitting reports will be required to obtain a login and password for GrantSolutions. Please see the Agency Contacts list in section VII for the systems contact information.
The reporting requirements for this program are noted below.
Program progress reports are required semi-annually within 30 days after the budget period ends. These reports must include a brief comparison of actual accomplishments to the goals established for the period, or, if applicable, provide sound justification for the lack of progress, and other pertinent information as required. A final report must be submitted within 90 days of expiration of the budget/project period.
Federal Financial Report FFR (SF–425), Cash Transaction Reports are due 30 days after the close of every calendar quarter to the Payment Management Services, HHS at:
Grantees are responsible and accountable for accurate information being reported on all required reports: The Progress Reports and Federal Financial Report.
This award may be subject to the Transparency Act sub-award and executive compensation reporting requirements of 2 CFR part 170.
The Transparency Act requires the OMB to establish a single searchable database, accessible to the public, with information on financial assistance awards made by Federal agencies. The Transparency Act also includes a requirement for recipients of Federal grants to report information about first-tier sub-awards and executive compensation under Federal assistance awards.
IHS has implemented a Term of Award into all IHS Standard Terms and Conditions, NoAs and funding announcements regarding the FSRS reporting requirement. This IHS Term of Award is applicable to all IHS grant and cooperative agreements issued on or after October 1, 2010, with a $25,000 sub-award obligation dollar threshold met for any specific reporting period. Additionally, all new (discretionary) IHS awards (where the project period is made up of more than one budget period) and where: (1) The project period start date was October 1, 2010 or after and (2) the primary awardee will have a $25,000 sub-award obligation dollar threshold during any specific reporting period will be required to address the FSRS reporting. For the full IHS award term implementing this requirement and additional award applicability information, visit the DGM Grants Policy Web site at: http://www.ihs.gov/dgm/policytopics/.
Recipients of federal financial assistance (FFA) from HHS must administer their programs in compliance with federal civil rights law. This means that recipients of HHS funds must ensure equal access to their programs without regard to a person's race, color, national origin, disability, age and, in some circumstances, sex and religion. This includes ensuring your programs are accessible to persons with limited English proficiency. HHS provides guidance to recipients of FFA on meeting their legal obligation to take reasonable steps to provide meaningful access to their programs by persons with limited English proficiency. Please see
The HHS Office for Civil Rights (OCR) also provides guidance on complying with civil rights laws enforced by HHS. Please see
Pursuant to 45 CFR 80.3(d), an individual shall not be deemed subjected to discrimination by reason of his/her exclusion from benefits limited by federal law to individuals eligible for benefits and services from the IHS.
Recipients will be required to sign the HHS–690 Assurance of Compliance form which can be obtained from the following Web site:
The IHS is required to review and consider any information about the applicant that is in the Federal Awardee Performance and Integrity Information System (FAPIIS) before making any award in excess of the simplified acquisition threshold (currently $150,000) over the period of performance. An applicant may review and comment on any information about itself that a federal awarding agency previously entered. IHS will consider any comments by the applicant, in addition to other information in FAPIIS in making a judgment about the applicant's integrity, business ethics, and record of performance under federal awards when completing the review of risk posed by applicants as described in 45 CFR 75.205.
As required by 45 CFR part 75 Appendix XII of the Uniform Guidance, non-federal entities (NFEs) are required to disclose in FAPIIS any information about criminal, civil, and administrative proceedings, and/or affirm that there is no new information to provide. This applies to NFEs that receive federal awards (currently active grants, cooperative agreements, and procurement contracts) greater than $10,000,000 for any period of time during the period of performance of an award/project.
As required by 2 CFR part 200 of the Uniform Guidance, and the HHS implementing regulations at 45 CFR part 75, effective January 1, 2016, the Indian Health Service must require a non-federal entity or an applicant for a federal award to disclose, in a timely manner, in writing to the IHS or pass-through entity all violations of federal criminal law involving fraud, bribery, or gratutity violations potentially affecting the federal award.
Submission is required for all applicants and recipients, in writing, to the IHS and to the HHS Office of Inspector General all information related to violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award. 45 CFR 75.113
Disclosures must be sent in writing to: U.S. Department of Health and Human Services, Indian Health Service, Division of Grants Management, ATTN: Robert Tarwater, Director, 5600 Fishers Lane, Mailstop: 09E70, Rockville, Maryland 20857. (Include “Mandatory Grant Disclosures” in subject line.)
Failure to make required disclosures can result in any of the remedies described in 45 CFR 75.371 Remedies for noncompliance, including suspension or debarment (See 2 CFR parts 180 and 376 and 31 U.S.C. 3321).
1. Questions on the programmatic issues may be directed to: Ms. Michelle EagleHawk, Deputy Director, ODSCT, 5600 Fishers Lane, Mail Stop: 8E17, Rockville, Maryland 20857,
2. Questions on grants management and fiscal matters may be directed to: Ms. Patience Musikikongo, DGM, Grants Management Specialist, 5600 Fishers Lane, Mail Stop: 09E70, Rockville, MD 20857,
3. Questions on systems matters may be directed to: Paul Gettys, Grant Systems Coordinator, 5600 Fishers Lane, Mail Stop: 09E70, Rockville, MD 20857,
The Public Health Service strongly encourages all cooperative agreement and contract recipients to provide a smoke-free workplace and promote the non-use of all tobacco products. In addition, Public Law 103–227, the Pro-Children Act of 1994, prohibits smoking in certain facilities (or in some cases, any portion of the facility) in which regular or routine education, library, day care, health care, or early childhood development services are provided to children. This is consistent with the HHS mission to protect and advance the physical and mental health of the American people.
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.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Written comments and/or suggestions from the public and affected agencies are invited to address one or more of the following points: (1) Whether the proposed collection of information is necessary for the proper performance of the function of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) 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, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
The Global Cancer Project Map (GCPM) is a new, interactive, web-based tool that enables healthcare professionals and researchers to make informed decisions, initiate partnerships, and develop ideas for collaborations in cancer control. Its features allow people to (1) search for collaborators and projects by cancer type, project type, and country; (2) visualize information pertinent to each project on an interactive world map; (3) initiate contact with principal investigators and program directors; and (4) overlay heat maps of epidemiological measures that provide a representation of the burden of cancer by country.
The primary goals of GCPM are to facilitate the building of collaborations across organizations; accelerate progress, ensure a balanced investment of resources, and align global cancer care and control efforts; and continue data collection from national and international organizations to develop the Map as a resource to view and better understand international efforts in cancer research and control.
OMB approval is requested for 3 years. There are no costs to respondents other than their time. The total estimated annualized burden hours are 167.
Office of the Assistant Secretary for Community Planning and Development, HUD.
Notice.
This Notice identifies unutilized, underutilized, excess, and surplus Federal property reviewed by HUD for suitability for use to assist the homeless.
Juanita Perry, Department of Housing and Urban Development, 451 Seventh Street SW., Room 7266, Washington, DC 20410; telephone (202) 402–3970; TTY number for the hearing- and speech-impaired (202) 708–2565 (these telephone numbers are not toll-free), call the toll-free Title V information line at 800–927–7588 or send an email to
In accordance with 24 CFR part 581 and section 501 of the Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11411), as amended, HUD is publishing this Notice to identify Federal buildings and other real property that HUD has reviewed for suitability for use to assist the homeless. The properties were reviewed using information provided to HUD by Federal landholding agencies regarding unutilized and underutilized buildings and real property controlled by such agencies or by GSA regarding its inventory of excess or surplus Federal property. This Notice is also published in order to comply with the December 12, 1988 Court Order in
Properties reviewed are listed in this Notice according to the following categories: Suitable/available, suitable/unavailable, and suitable/to be excess, and unsuitable. The properties listed in the three suitable categories have been reviewed by the landholding agencies, and each agency has transmitted to HUD: (1) Its intention to make the property available for use to assist the homeless, (2) its intention to declare the property excess to the agency's needs, or (3) a statement of the reasons that the property cannot be declared excess or made available for use as facilities to assist the homeless.
Properties listed as suitable/available will be available exclusively for homeless use for a period of 60 days from the date of this Notice. Where property is described as for “off-site use only” recipients of the property will be required to relocate the building to their own site at their own expense. Homeless assistance providers interested in any such property should send a written expression of interest to HHS, addressed to: Ms. Theresa M. Ritta, Chief Real Property Branch, the Department of Health and Human Services, Room 12–07, Parklawn Building, 5600 Fishers Lane, Rockville, MD 20857, (301) 443–2265 (This is not a toll-free number.) HHS will mail to the interested provider an application packet, which will include instructions for completing the application. In order to maximize the opportunity to utilize a suitable property, providers should submit their written expressions of interest as soon as possible. For complete details concerning the processing of applications, the reader is encouraged to refer to the interim rule governing this program, 24 CFR part 581.
For properties listed as suitable/to be excess, that property may, if subsequently accepted as excess by GSA, be made available for use by the homeless in accordance with applicable law, subject to screening for other Federal use. At the appropriate time, HUD will publish the property in a Notice showing it as either suitable/available or suitable/unavailable.
For properties listed as suitable/unavailable, the landholding agency has decided that the property cannot be declared excess or made available for use to assist the homeless, and the property will not be available.
Properties listed as unsuitable will not be made available for any other purpose for 20 days from the date of this Notice. Homeless assistance providers interested in a review by HUD of the determination of unsuitability should call the toll free information line at 1–800–927–7588 or send an email to
For more information regarding particular properties identified in this Notice (
Bureau of Land Management, Interior.
Notice of public meeting.
In accordance with the Federal Land Policy and Management Act of 1976 and the Federal Advisory Committee Act of 1972, the U.S. Department of the Interior, Bureau of Land Management (BLM) Wyoming Resource Advisory Council (RAC) will meet as indicated below.
The meeting is scheduled for, Tuesday, August 9, 2016, from 1 p.m. to 5 p.m.; Wednesday, August 10, 2016, from 8 a.m. to 5 p.m.; and Thursday, August 11, 2016, from 8 a.m. to noon.
The meeting will be conducted at the BLM Worland Field Office, 101 South 23rd, Worland, Wyoming.
Kristen Lenhardt, Chief of Communications, Wyoming State Office, 5353 Yellowstone Road, Cheyenne, WY 82009; telephone: 307–775–6015; email:
Persons who use a telecommunications device for the deaf may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 to contact the above individual during normal business hours. The FIRS is available 24 hours a day, 7 days a week, to leave a message or question with the above individual. You will receive a reply during normal business hours.
This 10-member RAC advises the Secretary of the Interior on a variety of management issues associated with public land management in Wyoming. Planned agenda topics for the August meeting (see
Bureau of Land Management, Interior.
Notice.
Linn Energy Holdings LLC, MBI Oil and Gas LLC, Montana Oil Properties Inc., Slawson Exploration Company Inc. and Stewart Geological Inc. have timely filed a petition for reinstatement of competitive oil and gas lease NDM 98943, which is located in Mountrail County, North Dakota. The
Kimberly Werven, Chief, Fluids Adjudication Section, Bureau of Land Management Montana State Office, 5001 Southgate Drive, Billings, Montana 59101–4669, 406–896–5091,
In connection with this lease reinstatement, the lessees agree to new lease terms for rentals and royalties specified in the applicable regulations—$10 per acre, or fraction thereof, per year, and 16-
• Original terms and conditions of the lease;
• Additional and amended stipulations as specified in the Reinstatement Certification;
• Increased rental of $10 per acre;
• Increased royalty of 16-
• $163 cost of publishing this Notice.
National Park Service, Interior.
Notice of Availability.
The National Park Service (NPS) has prepared and approved a Record of Decision for the General Management Plan/Wilderness Study/Final Environmental Impact Statement (GMP/WS/EIS) for Hawaii Volcanoes National Park. Approval of the GMP/WS/EIS culminates an extensive public engagement and environmental impact analysis effort that began in 2009.
Those wishing to review the Record of Decision may obtain a copy by submitting their request to the Superintendent, Hawaii Volcanoes National Park, P.O. Box 52, Hawaii National Park, HI 96718–0052.
Cindy Orlando, Superintendent, telephone (808) 985–6026 or email
This process was conducted pursuant to the National Environmental Policy Act of 1969 (42 U.S.C. 4321
For a park that protects two of the most continuously active shield volcanoes in the world, the new Hawaii Volcanoes National Park GMP defines a clear direction for resource preservation and visitor experience over the next 20 years. The GMP provides a framework for proactive decision making, which will allow park managers to effectively address future opportunities and problems. The approved GMP will also serve as the basis for future detailed management documents, such as wilderness stewardship plans, trails management plans, and project implementation plans.
National Park Service, Interior.
Notice.
The National Park Service is soliciting comments on the significance of properties nominated before June 25, 2016, for listing or related actions in the National Register of Historic Places.
Comments should be submitted by August 1, 2016.
Comments may be sent via U.S. Postal Service to the National Register of Historic Places, National Park Service, 1849 C St. NW., MS 2280, Washington, DC 20240; by all other carriers, National Register of Historic Places, National Park Service, 1201 Eye St. NW., 8th Floor, Washington, DC 20005; or by fax, 202–371–6447.
The properties listed in this notice are being considered for listing or related actions in the National Register of Historic Places. Nominations for their consideration were received by the National Park Service before June 25, 2016. Pursuant to section 60.13 of 36 CFR part 60, written comments are being accepted concerning the significance of the nominated properties under the National Register criteria for evaluation.
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.
A request for removal has been received for the following resources:
60.13 of 36 CFR part 60.
Notice is hereby given that, on June 9, 2016, pursuant to section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and Model-CFM intends to file additional written notifications disclosing all changes in membership.
On May 17, 2011, Model-CFM filed its original notification pursuant to section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on September 26, 2011. A notice was published in the
In accordance with Departmental Policy, 28 CFR 50.7, notice is hereby given that a proposed consent order in
This proposed Order Amending Memorandum Opinion Filed October 22, 2014, concerns a complaint filed by the United States against John Hubenka and LeClair Irrigation District under Sections 309(b) and (d) of the Clean Water Act, 33 U.S.C. 1319(b) and (d), to obtain injunctive relief from both Defendants and impose civil penalties on Mr. Hubenka for violating the Clean Water Act by discharging pollutants without a permit into waters of the United States. The Northern Arapaho Tribe and the Eastern Shoshone Tribe intervened as Plaintiffs. The proposed Order Amending Memorandum Opinion Filed October 22, 2014, resolves these allegations by, among other things, requiring the Defendants to restore the impacted areas and requiring Mr. Hubenka to pay a civil penalty.
The Department of Justice will accept written comments relating to this proposed Order Amending Memorandum Opinion Filed October 22, 2014, for thirty (30) days from the date of publication of this Notice. Please address comments to Alan D. Greenberg, Senior Attorney, United States Department of Justice, Environment and Natural Resources Division, Environmental Defense Section, 999 18th Street, Suite 370—South Terrace, Denver, CO 80202 and refer to
The proposed Order Amending Memorandum Opinion Filed October 22, 2014, may be examined at the Clerk's Office, United States District Court for the District of Wyoming, 2120 Capitol Avenue, Room 2131, Cheyenne, WY 82001. In addition, the Master Settlement Agreement, including the proposed Order Amending Memorandum Opinion Filed October 22, 2014, may be examined electronically at
National Institute of Justice, Justice.
Notice.
The National Institute of Justice (NIJ) announces publication of
Jack Harne, by telephone at (202) 598–9412 [Note: this is not a toll-free telephone number], or by email at
National Institute of Justice, Justice.
Notice and request for comments.
The National Institute of Justice (NIJ) seeks feedback from the public on a draft document that defines generic baseline specifications for law enforcement service pistols with additional technology to enhance the security of the firearms, published here:
Comments must be received by 5 p.m. Eastern Time on September 13, 2016.
Mark Greene, Office of Science and Technology, National Institute of Justice, 810 7th Street NW., Washington, DC 20531; telephone number: (202) 598–9412; email address:
On April 29, 2016, the U.S. Departments of Justice (DOJ), Homeland Security (DHS), and Defense (DoD) submitted a joint report to the President outlining a strategy to expedite deployment of gun safety technology, found here:
The report was published in response to Presidential Memorandum,
To address these issues, the report called on law enforcement agencies to develop “baseline specifications,” which would outline the agencies' operational requirements for any firearms equipped with gun safety technology. By developing baseline specifications, federal, state, and municipal law enforcement agencies can make clear to private manufacturers what they expect from this technology.
DOJ and DHS recently assembled a working group of experts in firearms technology to identify operational needs and prepare a draft document that defines generic baseline specifications for law enforcement service pistols with additional technology to enhance the security of firearms. The additional security specifications that may be addressed by smart gun technology are distinguished from more familiar firearm safety mechanisms. The distinction between safety and security can be nuanced, and the additional security specifications may also function as safety features under certain circumstances. However, this distinction forms the basis of the use of the different terminology.
The working group was led by NIJ and was comprised of subject matter experts from various federal law enforcement agencies. The pistols defined by this document are semi-automatic, recoil-operated, magazine-fed, striker-fired, and fire 9 mm Luger or .40 S&W ammunition. The information detailed in this document is informed in part by specifications enumerated in recent handgun solicitations by the Federal Bureau of Investigation (FBI) and Immigration of Customs Enforcement (ICE), which are publicly available on FedBizOpps (
Legal Services Corporation.
Change notice.
On July 12, 2016, the Legal Services Corporation (LSC) published a notice in the
This change is effective July 13, 2016.
Katherine Ward, Executive Assistant to the Vice President for Legal Affairs and General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007; (202) 295–1500;
Nuclear Regulatory Commission.
Regulatory guide; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is issuing Revision 5 of Regulatory Guide (RG) 1.29, “Seismic Design Classification for Nuclear Power Plants.” This RG describes a method that the staff of the NRC considers acceptable for use in identifying and classifying those features of light-water-reactor (LWR) nuclear power plants that must be designed to withstand the
Please refer to Docket ID NRC–2015–0220 when contacting the NRC about the availability of information regarding this document. You may obtain publically-available information related to this document, using the following methods:
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Regulatory guides are not copyrighted, and NRC approval is not required to reproduce them.
Yiu Law, Office of New Reactors, telephone: 301–415–0523, email:
The NRC is issuing a revision to an existing guide in the NRC's “Regulatory Guide” series. This series was developed to describe and make available to the public information regarding methods that are acceptable to the NRC staff for implementing specific parts of the agency's regulations, techniques that the staff uses in evaluating specific issues or postulated events, and data that the staff needs in its review of applications for permits and licenses.
Revision 5 of RG 1.29 was issued with a temporary identification of Draft Regulatory Guide, DG–1315. Revision 5 of RG 1.29 contains minor non-substantive changes that do not present new regulatory requirements, but clarifies content in Section C, “Staff Regulatory Guidance,” by (1) addition of a reference to the definition of the reactor coolant pressure boundary in section 50.2 of title 10 of the
The DG–1315 was published in the
The RG 1.29 describes a method that the staff of the NRC considers acceptable for use in identifying and classifying those features of LWR nuclear power plants that must be designed to withstand the effects of the SSE. Issuance of this RG does not constitute backfitting as defined in 10 CFR 50.109 (the Backfit Rule) and is not otherwise inconsistent with the issue finality provisions in 10 CFR part 52. As discussed in the “Implementation” section of this RG, the NRC has no current intention to impose this RG on holders of current operating licenses or combined licenses.
This RG may be applied to applications for operating licenses, combined licenses, early site permits, and certified design rules docketed by the NRC as of the date of issuance of the final regulatory guide, as well as future applications submitted after the issuance of the regulatory guide. Such action would not constitute backfitting as defined in the Backfit Rule or be otherwise inconsistent with the applicable issue finality provision in 10 CFR part 52, inasmuch as such applicants or potential applicants are not within the scope of entities protected by the Backfit Rule or the relevant issue finality provisions in part 52.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
License amendment application; opportunity to comment, request a hearing, and petition for leave to intervene; order.
The U.S. Nuclear Regulatory Commission (NRC) is considering issuance of an amendment to Facility Operating License No. NPF–63, issued to Duke Energy Progress, Inc., for operation of the Shearon Harris Nuclear Power Plant, Unit 1. The amendment would revise the Shearon Harris Nuclear Power Plant, Unit 1, Technical Specifications (TSs) by relocating specific surveillance frequencies to a licensee-controlled program with the implementation of Nuclear Energy Institute (NEI) 04–10, “Risk-Informed Technical Specifications Initiative 5b, Risk-Informed Method for Control of Surveillance Frequencies.” Additionally, the change would add a new program, the Surveillance Frequency Control Program, to TS Section 6, “Administrative Controls.” The amendment application contains sensitive unclassified non-safeguards information (SUNSI).
Submit comments by August 15, 2016. A requests for a hearing or petition for leave to intervene must be filed by September 13, 2016. Any potential party as defined in § 2.4 of title 10 of the
You may submit comments by any of the following methods (unless
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•
For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Dennis Galvin, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington DC 20555–0001; telephone: 301–415–6256, email:
Please refer to Docket ID NRC–2016–0136 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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•
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Please include Docket ID NRC–2016–0136 in your comment submission.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC posts all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
The NRC is considering issuance of an amendment to Facility Operating License No. NPF–63, issued to Duke Energy Progress, Inc., for operation of the Shearon Harris Nuclear Power Plant, Unit 1, located in Wake and Chatham Counties, North Carolina.
The amendment request was submitted August 18, 2015, and supplemented by letters dated September 29, 2015, February 5, 2016, April 28, 2016, and May 19, 2016. Publicly-available versions are in ADAMS under Accession Nos. ML15236A265 (Package), ML15272A443, ML16036A091, ML16119A326, and ML16141A048, respectively. The supplemental letters to this amendment request dated February 5 and April 28, 2016, contain SUNSI. The NRC staff previously made a proposed determination that the amendment request dated August 18, 2015, involves no significant hazards considerations (80 FR 76319; December 8, 2015). Subsequently, by letter dated May 19, 2016, the licensee provided additional information that expanded the scope of the amendment request as originally noticed. Accordingly, this notice supersedes the previous notice in its entirety.
The amendment would revise the Shearon Harris Nuclear Power Plant, Unit 1, TSs by relocating specific surveillance frequencies to a licensee-controlled program with the implementation of NEI 04–10, “Risk-Informed Technical Specifications Initiative 5b, Risk-Informed Method for Control of Surveillance Frequencies” (ADAMS Accession No. ML071360456). Additionally, the change would add a new program, the Surveillance Frequency Control Program, to TS Section 6, “Administrative Controls” (ADAMS Accession No. ML052860283). The changes are consistent with the NRC-approved Technical Specification Task Force (TSTF) Improved Standard Technical Specifications Change Traveler–425, Revision 3, “Relocate Surveillance Frequencies to Licensee Control—RITSTF [Risk-Informed Technical Specification Task Force] Initiative 5b” (ADAMS Accession No. ML090850642). In the supplement dated May 19, 2016, the licensee requested additional surveillance frequencies be relocated to a licensee-controlled program.
Before any issuance of the proposed license amendment, the NRC will need to make the findings required by the Atomic Energy Act of 1954, as amended (the Act), and the NRC's regulations.
The NRC has made a proposed determination that the license amendment request involves no significant hazards consideration. Under the NRC's regulations in 10 CFR 50.92, this means that operation of the facility in accordance with the proposed amendment would not (1) involve a significant increase in the probability or consequences of an accident previously evaluated; or (2) create the possibility of a new or different kind of accident from any accident previously evaluated; or (3) involve a significant reduction in a margin of safety. As required by 10 CFR 50.91(a), the licensee has provided its analysis of the issue of no significant hazards consideration, which is presented below:
1. Does the proposed change involve a significant increase in the probability or consequences of any accident previously evaluated?
The proposed change relocates the specified frequencies for periodic surveillance requirements to licensee control under a new Surveillance Frequency Control Program. Surveillance frequencies are not an initiator to any accident previously evaluated. As a result, the probability of any accident previously evaluated is not significantly increased. The systems and components required by the technical specifications for which the surveillance frequencies are relocated are still required to be operable, meet the acceptance criteria for the surveillance requirements, and be capable of performing any mitigation function assumed in the accident analysis. As a result, the consequences of any accident previously evaluated are not significantly increased.
2. Does the proposed change create the possibility of a new or different kind of accident from any previously evaluated?
No new or different accidents result from utilizing the proposed change. The changes do not involve a physical alteration of the plant (
Therefore, the proposed changes do not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Does the proposed change involve a significant reduction in the margin of safety?
The design, operation, testing methods, and acceptance criteria for systems, structures, and components (SSCs), specified in applicable codes and standards (or alternatives approved for use by the NRC) will continue to be met as described in the plant licensing basis (including the final safety analysis report and bases to TS), since these are not affected by changes to the surveillance frequencies. Similarly, there is no impact to safety analysis acceptance criteria as described in the plant licensing basis. To evaluate a change in the relocated surveillance frequency, Duke Energy will perform a probabilistic risk evaluation using the guidance contained in NRC approved NEI 04–10, Revision 1, in accordance with the TS Surveillance Frequency Control Program. NEI 04–10, Revision 1, methodology provides reasonable acceptance guidelines and methods for evaluating the risk increase of proposed changes to surveillance frequencies consistent with Regulatory Guide 1.177.
Therefore, the proposed changes do not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the license amendment request involves a no significant hazards consideration.
The NRC is seeking public comments on this proposed determination that the license amendment request involves no significant hazards consideration. Any comments received within 30 days after the date of publication of this notice will be considered in making any final determination.
Normally, the Commission will not issue the amendment until the expiration of 60 days after the date of publication of this notice. The Commission may issue the license amendment before expiration of the 60-day notice period if the Commission concludes the amendment involves no significant hazards consideration. In addition, the Commission may issue the amendment prior to the expiration of the 30-day comment period if circumstances change during the 30-day comment period such that failure to act in a timely way would result, for example, in derating or shutdown of the facility. If the Commission takes action prior to the expiration of either the comment period or the notice period, it will publish in the
Within 60 days after the date of publication of this notice, any person(s) whose interest may be affected by this action may file a request for a hearing and a petition to intervene with respect to issuance of the amendment to the subject facility operating license or combined license. Requests for a hearing and a petition for leave to intervene shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested person(s) should consult a current copy of 10 CFR 2.309, which is available at the NRC's PDR, located at One White Flint North, Room O1–F21, 11555 Rockville Pike (first floor), Rockville, Maryland 20852. The NRC's regulations are accessible electronically from the NRC Library on the NRC's Web site at
As required by 10 CFR 2.309, a petition for leave to intervene shall set forth with particularity the interest of the petitioner in the proceeding, and how that interest may be affected by the results of the proceeding. The petition should specifically explain the reasons why intervention should be permitted with particular reference to the following general requirements: (1) The name, address, and telephone number of the requestor or petitioner; (2) the nature of the requestor's/petitioner's right under the Act to be made a party to the proceeding; (3) the nature and extent of the requestor's/petitioner's property, financial, or other interest in the proceeding; and (4) the possible effect of any decision or order which may be entered in the proceeding on the requestor's/petitioner's interest. The petition must also set forth the specific contentions which the requestor/petitioner seeks to have litigated at the proceeding.
Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the requestor/petitioner shall provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the requestor/petitioner intends to rely in proving the contention at the hearing. The requestor/petitioner must also provide references to those specific sources and documents of which the petitioner is aware and on which the requestor/petitioner intends to rely to establish those facts or expert opinion. The petition must include sufficient information to show that a genuine dispute exists with the applicant on a material issue of law or fact. Contentions shall be limited to matters within the scope of the amendment under consideration. The contention must be one which, if proven, would entitle the requestor/petitioner to relief. A requestor/petitioner who fails to satisfy these requirements with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene, and have the opportunity to participate fully in the conduct of the hearing with respect to resolution of that person's admitted contentions, including the opportunity to present evidence and to submit a cross-examination plan for cross-examination of witnesses, consistent with NRC's regulations, policies and procedures.
Petitions for leave to intervene must be filed no later than 60 days from the date of publication of this notice. Requests for hearing, petitions for leave to intervene, and motions for leave to file new or amended contentions that are filed after the 60-day deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i)–(iii).
If a hearing is requested, and the Commission has not made a final determination on the issue of no significant hazards consideration, the Commission will make a final determination on the issue of no significant hazards consideration. The final determination will serve to decide when the hearing is held. If the final determination is that the amendment request involves no significant hazards consideration, the Commission may issue the amendment and make it immediately effective, notwithstanding the request for a hearing. Any hearing held would take place after issuance of the amendment. If the final determination is that the amendment request involves a significant hazards consideration, then any hearing held would take place before the issuance of any amendment unless the Commission finds an imminent danger to the health or safety of the public, in which case it will issue an appropriate order or rule under 10 CFR part 2.
A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h)(1). The petition should state the nature and extent of the petitioner's interest in the proceeding. The petition should be submitted to the Commission by September 13, 2016. The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document, and should meet the requirements for petitions for leave to intervene set forth in this section, except that under § 2.309(h)(2) a State, local governmental body, or Federally-recognized Indian Tribe, or agency thereof does not need to address the standing requirements in 10 CFR 2.309(d) if the facility is located within its boundaries. A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof may also have the opportunity to participate under 10 CFR 2.315(c).
If a hearing is granted, any person who does not wish, or is not qualified, to become a party to the proceeding may, in the discretion of the presiding officer, be permitted to make a limited appearance pursuant to the provisions of 10 CFR 2.315(a). A person making a limited appearance may make an oral or written statement of position on the issues, but may not otherwise participate in the proceeding. A limited appearance may be made at any session of the hearing or at any prehearing conference, subject to the limits and conditions as may be imposed by the presiding officer. Persons desiring to make a limited appearance are requested to inform the Secretary of the Commission by September 13, 2016.
All documents filed in NRC adjudicatory proceedings, including a request for hearing, a petition for leave to intervene, any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities participating under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Participants may not submit paper copies of their filings unless they seek an exemption in accordance with the procedures described below.
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public Web site at
If a participant is electronically submitting a document to the NRC in accordance with the E-Filing rule, the participant must file the document using the NRC's online, Web-based submission form. In order to serve documents through the Electronic Information Exchange System, users will be required to install a Web browser plug-in from the NRC's Web site. Further information on the Web-based submission form, including the installation of the Web browser plug-in, is available on the NRC's public Web site at
Once a participant has obtained a digital ID certificate and a docket has been created, the participant can then submit a request for hearing or petition for leave to intervene. Submissions should be in Portable Document Format (PDF) in accordance with NRC guidance available on the NRC's public Web site at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC Meta System Help Desk through the “Contact Us” link located on the NRC's public Web site at
Participants who believe that they have a good cause for not submitting documents electronically must file an
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
For further details with respect to this action, see the application for license amendment dated August 18, 2015, as supplemented on September 29, 2015, February 5, 2016, April 28, 2016, and May 19, 2016.
A. This Order contains instructions regarding how potential parties to this proceeding may request access to documents containing SUNSI.
B. Within 10 days after publication of this notice of hearing and opportunity to petition for leave to intervene, any potential party who believes access to SUNSI is necessary to respond to this notice may request such access. A “potential party” is any person who intends to participate as a party by demonstrating standing and filing an admissible contention under 10 CFR 2.309. Requests for access to SUNSI submitted later than 10 days after publication of this notice will not be considered absent a showing of good cause for the late filing, addressing why the request could not have been filed earlier.
C. The requester shall submit a letter requesting permission to access SUNSI to the Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555–0001, Attention: Rulemakings and Adjudications Staff, and provide a copy to the Associate General Counsel for Hearings, Enforcement and Administration, Office of the General Counsel, Washington, DC 20555–0001. The expedited delivery or courier mail address for both offices is: U.S. Nuclear Regulatory Commission, 11555 Rockville Pike, Rockville, Maryland 20852. The email address for the Office of the Secretary and the Office of the General Counsel are
(1) A description of the licensing action with a citation to this
(2) The name and address of the potential party and a description of the potential party's particularized interest that could be harmed by the action identified in C.(1); and
(3) The identity of the individual or entity requesting access to SUNSI and the requester's basis for the need for the information in order to meaningfully participate in this adjudicatory proceeding. In particular, the request must explain why publicly-available versions of the information requested would not be sufficient to provide the basis and specificity for a proffered contention.
D. Based on an evaluation of the information submitted under paragraph C.(3) the NRC staff will determine within 10 days of receipt of the request whether:
(1) There is a reasonable basis to believe the petitioner is likely to establish standing to participate in this NRC proceeding; and
(2) The requestor has established a legitimate need for access to SUNSI.
E. If the NRC staff determines that the requestor satisfies both D.(1) and D.(2) above, the NRC staff will notify the requestor in writing that access to SUNSI has been granted. The written notification will contain instructions on how the requestor may obtain copies of the requested documents, and any other conditions that may apply to access to those documents. These conditions may include, but are not limited to, the signing of a Non-Disclosure Agreement or Affidavit, or Protective Order
F. Filing of Contentions. Any contentions in these proceedings that are based upon the information received as a result of the request made for SUNSI must be filed by the requestor no later than 25 days after the requestor is granted access to that information. However, if more than 25 days remain between the date the petitioner is granted access to the information and the deadline for filing all other contentions (as established in the notice of hearing or opportunity for hearing), the petitioner may file its SUNSI contentions by that later deadline. This provision does not extend the time for filing a request for a hearing and petition to intervene, which must comply with the requirements of 10 CFR 2.309.
G. Review of Denials of Access.
(1) If the request for access to SUNSI is denied by the NRC staff after a determination on standing and need for access, the NRC staff shall immediately notify the requestor in writing, briefly
(2) The requester may challenge the NRC staff's adverse determination by filing a challenge within 5 days of receipt of that determination with: (a) The presiding officer designated in this proceeding; (b) if no presiding officer has been appointed, the Chief Administrative Judge, or if he or she is unavailable, another administrative judge, or an administrative law judge with jurisdiction pursuant to 10 CFR 2.318(a); or (c) officer if that officer has been designated to rule on information access issues.
H. Review of Grants of Access. A party other than the requester may challenge an NRC staff determination granting access to SUNSI whose release would harm that party's interest independent of the proceeding. Such a challenge must be filed with the Chief Administrative Judge within 5 days of the notification by the NRC staff of its grant of access.
If challenges to the NRC staff determinations are filed, these procedures give way to the normal process for litigating disputes concerning access to information. The availability of interlocutory review by the Commission of orders ruling on such NRC staff determinations (whether granting or denying access) is governed by 10 CFR 2.311.
I. The Commission expects that the NRC staff and presiding officers (and any other reviewing officers) will consider and resolve requests for access to SUNSI, and motions for protective orders, in a timely fashion in order to minimize any unnecessary delays in identifying those petitioners who have standing and who have propounded contentions meeting the specificity and basis requirements in 10 CFR part 2. Attachment 1 to this Order summarizes the general target schedule for processing and resolving requests under these procedures.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Director's decision under 10 CFR 2.206; issuance.
The U.S. Nuclear Regulatory Commission (NRC or the Commission) has issued a director's decision with regard to a petition dated March 10, 2014, as supplemented, filed by the Southern Alliance for Clean Energy (SACE, the petitioner), requesting that the NRC take action with regard to St. Lucie Plant, Unit No. 2 (SL–2). The petitioner's requests and the director's decision are included in the
Please refer to Docket ID NRC–2015–0235 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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Notice is hereby given that the Director, Office of Nuclear Reactor Regulation, has issued director's decision DD–16–02 (ADAMS Accession No. ML16167A086) on a petition filed by the petitioner on March 10, 2014 (ADAMS Accession No. ML14071A431), as supplemented.
The petitioner requested a hearing on what the petitioner characterized as a
The Commission, by a memorandum and order (CLI–14–04) dated April 1, 2014 (ADAMS Accession No. ML14091B118), denied SACE's request to stay the restart of SL–2 from the March 3, 2014, refueling outage. Subsequently, by a memorandum and order (CLI–14–11) dated December 19, 2014 (ADAMS Accession No. ML14353A114), the Commission denied SACE's hearing request, concluded that the NRC did not issue the licensee a
By letter dated September 28, 2015 (ADAMS Accession No. ML15205A313), the NRC acknowledged receipt of SACE's 10 CFR 2.206 petition and notified SACE of the NRC's acceptance of a portion of the petition (
The staff's September 28, 2015, letter explained why the NRC did not accept the remaining portion of the petition for review under the 10 CFR 2.206 process. This portion of the petition raised safety concerns related to (1) inspection of the replacement SGs and (2) the effects of the EPU on SG tube inservice inspection and flow-induced effects on the SG internals. These concerns met the criteria for rejection in NRC Management Directive 8.11, “Review Process for 10 CFR 2.206 Petitions,” dated October 25, 2000 (ADAMS Accession No. ML041770328), because the concerns had already been reviewed, evaluated, and resolved by the NRC staff.
By letters to the petitioner and licensee dated May 24, 2016 (ADAMS Accession Nos. ML16055A311 and ML16055A330, respectively), the NRC issued the proposed director's decision (ADAMS Accession No. ML16055A284) for comment. The petitioner and the licensee were asked to provide comments within 15 days on any part of the proposed director's decision that was considered to be erroneous or any issues in the petition that were not addressed. The NRC staff did not receive any comments on the proposed director's decision.
The Director of the Office of Nuclear Reactor Regulation has denied the petitioner's requested enforcement actions against the licensee. The reasons for this decision are explained in director's decision DD–16–02 pursuant to 10 CFR 2.206 of the Commission's regulations.
The NRC will file a copy of the director's decision with the Secretary of the Commission for the Commission's review in accordance with 10 CFR 2.206. As provided by this regulation, the director's decision will constitute the final action of the Commission 25 days after the date of the decision unless the Commission, on its own motion, institutes a review of the director's decision in that time.
For the Nuclear Regulatory Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to amend its Fees Schedule. The text of the proposed rule change is available on the Exchange's Web site (
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 amend its Fees Schedule, effective July 1, 2016. Specifically, the Exchange proposes to adopt a program that offers a monthly subsidy to Trading Permit Holders (“TPHs”) with executing agent operations
To participate in the ETH Executing Agent Subsidy Program, a TPH must be a designated ETH executing agent. To become a designated ETH executing agent, a TPH must submit a form to the Exchange.
A designated ETH executing agent will be eligible to receive a $5,000 monthly subsidy if it executes at least 1,000 contracts on behalf of customers (including public and broker-dealer customers) during ETH in a calendar month (which is an average of 50 contracts per ETH trading session, assuming a 20-trading day month). Within two business days following the end of a calendar month, in order to receive the subsidy for that month, the designated ETH executing agent must submit to the Exchange (in a form and manner determined by the Exchange) documentation and other evidence it executed at least 1,000 contracts on behalf of customers during ETH that month.
The Exchange believes this program will incentivize TPHs to conduct executing agent operations during ETH to increase customer accessibility to the ETH trading session. The purpose of the subsidy is to help TPHs offset the costs that accompany this type of operation during ETH, including costs related to staffing and clearing.
The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
In particular, the ETH Executing Agent Subsidy Program is reasonable because it incentivizes TPHs to conduct executing agent operations willing to accept orders from all customers during ETH to increase customer accessibility to the ETH trading session, which removes impediments to and perfects the mechanism of a free and open market and a national market system. By encouraging TPHs to conduct this type
The Exchange believes limiting the program to TPHs conducting executing agent operations willing to accept orders from all customers is equitable and not unfairly discriminatory due to the additional risks and potential costs (including those related to staffing and clearing) associated with this type of business, as well as the benefits this type of operation may provide during ETH (including increased customer accessibility to the ETH trading session). All TPHs that conduct this type of operation during ETH have an opportunity to become a designated ETH executing agent and thus eligible for the monthly subsidy.
The Exchange believes the amount of the subsidy is reasonable based on its understanding of the additional costs and risks associated with the executing agent operation during ETH. Additionally, the Exchange believes the 1,000 contract volume threshold is reasonable based on current ETH volumes.
CBOE does not believe the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. All TPHs that conduct executing agent operations willing to accept orders from all customers have an opportunity to be eligible for the program, and thus the monthly subsidy. The Exchange believes limiting the program to TPHs conducting this type of operation is equitable and not unfairly discriminatory due to the additional risks and potential costs (including those related to staffing and clearing) associated with this type of business, as well as the benefits this type of operation may provide during ETH (including increased customer accessibility to the ETH trading session). All designated ETH executing agents must meet the same volume threshold to qualify for the same monthly subsidy. The subsidy is designed to provide opportunities for more customers to submit orders during ETH, which generates more order flow and liquidity during that trading session and benefits all market participants.
As CBOE is the only Exchange currently offering an ETH session, the Exchange does not believe the proposed rule change will impose any burden on intermarket competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes, should this program make CBOE more attractive for trading, market participants can always elect to become TPHs and take part in this program, and take advantage of potential increased trading volume and opportunities during ETH that may result from the program.
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
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 amend the Exchange's transaction fees at Rule 7018 to: (i) Eliminate a $0.0017 per share executed credit tier that is provided for an order that accesses liquidity; and (ii) eliminate a $0.0019 per share executed fee tier charged for providing liquidity to the System.
While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on July 1, 2016.
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 the proposed rule change is to: (i) Eliminate a credit tier provided for an order that accesses liquidity; and (ii) eliminate a fee tier charged for providing liquidity to the System.
The purpose of the first proposed change is to eliminate a $0.0017 per share executed credit tier provided for an order that accesses liquidity. The Exchange currently provides a $0.0017 per share executed credit for an order that accesses liquidity (excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with Midpoint pegging) entered by a member that accesses liquidity equal to or exceeding 0.20% of total Consolidated Volume
The purpose of the second proposed change is to eliminate a $0.0019 per share executed fee tier charged for providing liquidity to the System. The Exchange currently assesses a fee of $0.0019 per share executed for a displayed order entered by a member that adds liquidity equal to or exceeding 0.10% of total Consolidated Volume during a month. The Exchange also has two other fee tiers based on Consolidated Volume. Specifically, the Exchange assesses a $0.0017 per share executed and $0.0014 per share executed charge for a displayed order entered by a member that adds liquidity equal to or exceeding 0.15% or 0.25% of total Consolidated Volume during a month, respectively. All other displayed orders that provide liquidity are assessed a fee of $0.0020 per share executed. The Exchange has observed that few members qualify for the $0.0019 per share executed fee. Thus, the $0.0019 per share executed fee tier has been ineffective at providing incentive to members to provide the level of Consolidated Volume needed to qualify for the reduced fee and the Exchange believes that removing the tier from the fee schedule is appropriate.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
The Exchange believes that eliminating the $0.0017 per share executed credit tier provided for an order that accesses liquidity is reasonable because it is not providing adequate incentive to market participants to remove liquidity from the Exchange. The Exchange must, from time to time, assess the effectiveness of the criteria it applies in providing reduced charges and credits, including the nature of the market improving behavior required to receive the reduced charge or credit. The Exchange will modify or eliminate such criteria when it believes the criteria are ineffective, which in turn may allow the Exchange to offer other incentives instead. The Exchange may also adjust the level or reduced charge or credit based on its observations of market participant behavior. In this instance, the Exchange believes that both the criteria for the $0.0017 per share executed credit and the level of the credit itself were ineffective at providing meaningful incentive to market participants to improve the market appreciably. The Exchange is limited in terms of the levels of reduced fees and credits that it can offer, and has consequently determined that it should eliminate the credit tier at this juncture. The Exchange notes that it is continuing to provide other opportunities for members to receive credits, including credit tiers that are based on Consolidated Volume. Eliminating the credit tier will apply to all market participants equally, and will impact only a small number of members that,
The Exchange believes that elimination of the $0.0019 per share executed fee tier charged for providing liquidity to the System is reasonable because it is not providing adequate incentive to market participants to remove liquidity from the Exchange. As discussed above, the Exchange must, from time to time, assess the effectiveness of the criteria it applies in providing reduced charges and credits, including the nature of the market improving behavior required to receive the reduced charge or credit. The Exchange has observed that very few members qualify for the $0.0019 per share executed fee, with more members qualifying for the lower fee tiers. The Exchange believes that both the criteria for the $0.0019 per share executed fee and the level of the reduced fee itself were ineffective at providing meaningful incentive to market participants to improve the market appreciably. As a consequence, the Exchange has determined to eliminate the fee tier at this juncture. The Exchange notes that it is continuing to provide other opportunities for members to receive reduced fees, including reduced fee tiers that are based on Consolidated Volume. Eliminating the fee tier will apply to all market participants equally, and will impact only a small number of members that in any given month qualify for the reduced fee. All members, including the small number that currently would qualify for the eliminated fee tier, will continue to have opportunity to qualify for the lower Consolidated Volume-based fee tiers. Thus, the Exchange believes that elimination of the $0.0019 per share executed fee tier is an equitable allocation and is not unfairly discriminatory.
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. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited.
In this instance, the proposed changes to the charges assessed and credits available to member firms for execution of securities in securities of all three Tapes do not impose a burden on competition because the Exchange's execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. The proposed changes to the charges assessed and credits provided to members for execution of orders do not impose a burden on competition because the Exchange's execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. The proposed changes are reflective of this competition and the Exchange's desire to offer lower fees and credits in return for market-improving liquidity, which is ultimately limited by the Exchange's need to cover costs and make a profit. Thus, the Exchange must carefully adjust its fees and credits with the understanding that if the proposed changes are unattractive to market participants, it is likely that the Exchange will lose market share to other exchanges and off-exchange venues as a result. In this proposal, the Exchange is eliminating a credit tier and a fee tier, neither of which have proved effective at providing market participants with incentive to provide the market-improving behavior required to qualify for the two tiers. Accordingly, the Exchange is eliminating the tiers, and may offer other tiers in the future better designed to provide incentive to market participants to improve the market. The Exchange believes that the changes are pro-competitive, since any other market is free to provide similar, if not better, incentives fees and credits should they choose to do so, which may attract market participants to those markets to the detriment of the Exchange. For these reasons, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets.
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 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.
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 Arca Rule 3.3 (Board Committees) to delete an outdated reference. 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 proposes to amend NYSE Arca Rule 3.3(a)(1)(B) to delete an outdated reference to “a director of NYSE Regulation, Inc. that satisfies the Public Director requirements set forth in Section 3.02(a) of the Bylaws of the Exchange.”
In 2015, the Exchange amended, among other rules, Rule 3.3 in order to establish a Regulatory Oversight Committee (“ROC”) as a committee of the SRO Board.
The intercompany RSA terminated on February 16, 2016. As of that date, NYSE Regulation ceased to provide regulatory services to the Exchange, which re-integrated its regulatory functions. NYSE Regulation has also since been merged out of existence. The reference to a director of NYSE Regulation in Rule 3.3 is thus obsolete. The ROC currently consists of Exchange directors that satisfy the Exchange's independence requirements.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Exchange Act
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. The proposed rule change is not intended to address competitive issues but rather to delete obsolete references, thereby increasing transparency, reducing confusion, and making the Exchange's rules easier to understand and navigate.
No written comments were solicited or received with respect to the proposed rule change.
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 prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b–4(f)(6)(iii) thereunder.
A proposed rule change filed under Rule 19b–4(f)(6)
The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. The proposal will reduce confusion and add clarity to the Exchange's rulebook by removing an outdated reference. Accordingly, the Commission hereby waives the 30-day operative delay and designates the proposed rule change as 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 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.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission Advisory Committee on Small and Emerging Companies will hold a public meeting on Tuesday, July 19, 2016, in Multi-Purpose Room LL–006 at the Commission's headquarters, 100 F Street NE., Washington, DC.
The meeting will begin at 9:30 a.m. (EDT) and will be open to the public. Seating will be on a first-come, first-served basis. Doors will open at 9:00 a.m. Visitors will be subject to security checks. The meeting will be webcast on the Commission's Web site at
On June 27, 2016, the Commission published notice of the Committee meeting (Release No. 33–10105), indicating that the meeting is open to the public and inviting the public to submit written comments to the Committee. This Sunshine Act notice is being issued because a majority of the Commission may attend the meeting.
The agenda for the meeting includes matters relating to rules and regulations affecting small and emerging companies under the federal securities laws.
For further information, please contact Brent J. Fields in the Office of the Secretary at (202) 551–5400.
On March 23, 2016, NYSE Arca, Inc. (“Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Exchange Rule 6.64 sets forth the OX automated opening process.
(A) The system will determine a single price at which a particular option series will be opened.
(B) Orders and quotes in the system will be matched up with one another based on price-time priority; provided, however, that Orders will have priority over Market Maker quotes at the same price.
(C) Orders in the OX Book that were not executed during the Auction Process, other than Opening Only orders, shall become eligible for the Core Trading Session immediately after the conclusion of the Auction Process.
(D) The OX System will not conduct an Auction Process if the bid-ask differential for that series is not within an acceptable range. For the purposes of this rule, an acceptable range shall mean within the bid-ask differential guidelines established pursuant to Rule 6.37(b)(1)(A)–(E).
(E) If the OX System does not open a series with an Auction Process, the OX System shall open the series for trading after receiving notification of an initial NBBO disseminated by OPRA for the series or on a Market Maker quote, provided that the bid-ask differential does not exceed the bid-ask differential specified under Rule 6.37A(b)(4).
In addition, Rule 6.64(c) provides for how the OX System will determine the opening price of a series when an Auction Process is conducted.
The Exchange proposes several changes to Exchange Rule 6.64 and the OX opening process. The proposed changes would also affect the process of re-opening an options series after a trading halt.
First, the Exchange proposes to amend Exchange Rule 6.64(b) so that trading in an options series will be opened automatically once the primary market for the underlying security disseminates both a quote and a trade that is at or within the quote.
The Exchange also proposes to modify Exchange Rule 6.64(b)(E) so that if the OX System does not open a series with an Auction Process, trading in an options series could no longer open on a local Market Maker quote, but would
In addition, the Exchange proposes to amend Rule 6.64(c). As noted, current Rule 6.64(c) provides that if there is no initial uncrossed NBBO disseminated by OPRA, the System instead determines an opening price that is “at the midpoint of the best quotes and offers in the OX Book.” The Exchange originally proposed to modify Rule 6.64(c) by eliminating this language so that the rule would no longer provide that the opening price of a series could be determined by reference to the best quote bids and offers in the System Book.
In Amendment No. 1, the Exchange proposes further modifications to Rule 6.64(c) to clarify and detail how the Exchange would determine the opening price upon dissemination of an NBBO from OPRA. Under proposed Rule 6.64(c), as modified by Amendment No. 1, “[t]he opening price of a series will be the price, as determined by the System, at which the greatest number of contracts will trade at a price at or between the NBBO disseminated by OPRA.”
Finally, the Exchange proposes a new provision to permit the Exchange to deviate from the standard manner of the Auction Process, including adjusting the timing of the Auction Process in any option class, when the Exchange believes it to be necessary in the interest of a fair and orderly market.
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 the Exchange's proposal to require both a disseminated quote and a trade within the quote in an underlying security before opening trading in the related options series, instead of either one or the other, is reasonably designed ensure that the underlying security has been opened pursuant to a robust price discovery process before the overlying option begins trading.
The Exchange proposes that if it does not open a series with an Auction Process, it will open the series for trading after receiving notification of an initial uncrossed NBBO disseminated by OPRA.
Further, the Exchange proposes that if it does open a series with an Auction Process, the opening price of a series will be the price, as determined by the System, at which the greatest number of contracts will trade at a price at or between the NBBO disseminated by OPRA. The Exchange further proposes to specify how the System will determine an opening price if the same number of contracts can trade at multiple prices.
In addition, the Commission believes it is appropriate to allow the Exchange the discretion to deviate from the standard manner of the Auction Process,
The Commission further believes that the proposed rule change will provide transparency and enhance investors' understanding of the operation of the Exchange's opening process. For these reasons, the Commission believes that the proposed rule change, as modified by Amendment No. 1, is consistent with the Act.
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 Exchange 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.
The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the 30th day after the date of publication of notice of Amendment No. 1 in the
Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Exchange Act,
IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Exchange 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”)
FINRA is proposing to amend Section 4 of Schedule A to the FINRA By-Laws to address the transition of the Regulatory Element of Continuing Education (“CE”) to the FINRA CE Online System®.
The text of the proposed rule change is available on FINRA's Web site at
In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
As part of the transition to CE Online, FINRA is phasing out test center delivery of the CE Regulatory Element.
Currently, pursuant to Section 4(f) of Schedule A to the FINRA By-Laws, FINRA assesses a session fee of $100 to each participant for each scheduled session to complete the Regulatory Element at a test center, and it assesses a session fee of $55 to each participant who completes the Regulatory Element through the CE Online System. In conjunction with phasing out test center delivery of the Regulatory Element, FINRA is proposing to amend Section 4(f) of Schedule A to the FINRA By-Laws to assess a session fee of $55 for the Regulatory Element regardless of whether the session is completed at a test center or through the CE Online System. However, as noted above, only participants who apply for an accommodation would be eligible to complete their CE Regulatory Element session at a test center.
In addition, Section 4(c) of Schedule A to the FINRA By-Laws includes additional fees for taking the Regulatory Element session outside the United States, failing to appear on time for an appointment or cancelling or rescheduling an appointment. FINRA is proposing to make technical changes to Sections 4(c)(3) and (4) of Schedule A to the FINRA By-Laws to clarify that such additional fees are only applicable to test center-based sessions. Further, because these additional fees are based on the initial session fee, which FINRA is proposing to reduce, the proposed rule change would result in a reduction of the total fees charged under these sections for completing the Regulatory Element at a test center.
FINRA has filed the proposed rule change for immediate effectiveness.
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(5) of the Act,
FINRA 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. As described above, participants who need an accommodation pursuant to the Americans with Disabilities Act may apply for an accommodation and complete their CE Regulatory Element session at a test center. FINRA is proposing to reduce the session fee for a test center-based session of the CE Regulatory Element for such participants.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
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 amend Chapter VII, Section 6(f), entitled “Automated Removal of Quotes.”
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 proposes to amend BX Rules at Chapter VII, Section 6(f), entitled “Automated Removal of Quotes” to modify the minimum Specified Percentage (as described below). A BX Options Market Maker
Today, Chapter VII, Section 6(f) permits BX Options Market Makers to monitor risk arising from multiple executions across multiple options series of a single underlying security. A BX Options Market Maker may provide a specified time period and a specified percentage by which the Exchange's System will automatically remove a BX Options Market Maker's quotes in all series of an underlying security submitted through designated BX protocols, as specified by the Exchange, during a specified time period not to exceed 15 seconds (“Percentage-Based Specified Time Period”).
For each series in an option, the System determines: (i) The percentage that the number of contracts executed in that series represents relative to the BX Options Market Maker's disseminated size of each side in that series (“Series Percentage”); and (ii) the sum of the Series Percentage in the option issue (“Issue Percentage”). The Exchange proposes herein to replace the term “disseminated size” with the more precise phrase “number of contracts available at the time of execution plus the number of contracts executed in unexpired prior executions.”
The System tracks and calculates the net impact of positions in the same option issue during the Percentage-Based Specified Time Period. Specifically, the System tracks transactions,
The Percentage-Based Specified Time Period commences for an option every time an execution occurs in any series in such option and continues until the System removes quotes as described in Chapter VII, Section 6(f)(iv) or (v) or the Percentage-Based Specified Time Period expires. The Percentage-Based Specified Time Period operates on a rolling basis among all series in an option in that there may be multiple Percentage-Based Specified Time Periods occurring simultaneously and such Percentage-Based Specified Time periods may overlap.
The Exchange proposes to lower the minimum Specified Percentage, which
BX Options Market Makers will be able to more precisely customize their risk settings within the System. BX Options Market Makers will be able to consider factors such as present and anticipated market conditions, news in an option, and a sudden change in volatility of an option. BX Options Market Makers are required to utilize either the Percentage Based Threshold or the Volume Based Threshold. BX Options Market Makers that select to utilize the Percentage-Based Threshold will be able to adopt more precise controls with this proposal based on the BX Options Market Maker's risk tolerance level. BX Options Market Makers must utilize either the Percentage-Based
By way of example, if a BX Options Market Maker has set the percentage setting to 50% and a Specified Time Period of 15 seconds and the Order Book reflects:
MM1 has a displayed quote of 1.10 (100) × 1.20 (100) for IBM May 20, 2016 70 puts and MM1 is the only displayed size on BX and an order is submitted to buy 75 IBM May 20, 2016 70 Puts for 1.20.
Chapter VII, Section 6(f) would cause the following:
(1) Provide MM1 with an execution —Sld [sic] 75 @ 1.20; and
(2) Trigger the Percentage-Based Threshold and remove MM1's quotes in IBM.
Another example is with multiple executions. Presume the following:
MM1 has set the percentage setting to 80% by 5 seconds and MM1 has a displayed quote of 2.00 (100) × 2.25 (100) for IBM May 20, 2016 70 puts and he is the only displayed size on the BX. Also, presume an order comes in to buy 50 IBM May 20, 2016 70 puts for 2.25.
Chapter VII, Section 6(f) would cause the following:
(1) Provide MM1 with an execution—Sold 50 @ 2.25;
(2) Update MMI [sic] quote to 2.00 (100) × 2.25 (50);
(3) Within 1 second an order comes in to buy 45 IBM May 20, 2016 70 puts for 2.25;
(4) Provide MM1 with an execution—Sold 45 @ 2.25; and
(5) Trigger the Percentage-Based Threshold and remove MM1's quotes in IBM.
The Exchange also proposes to replace the term “disseminated size” with a quantitative description to add transparency with respect to the calculation of Series Percentage. The language proposed amends the original definition of disseminated size. With respect to the disseminated size, the Exchange previously defined disseminated size as “. . . the original size quoted by the Participant.”
The Exchange proposes to amend the definition as follows: “For each series in an option, the System will determine: (i) The percentage that the number of contracts executed in that series represents relative to the number of contracts available at the time of execution plus the number of contracts executed in unexpired prior executions of each side in that series (“Series Percentage”); and (ii) the sum of the Series Percentage in the option issue (“Issue Percentage”).” The Exchange counts Specialized Quote Feed (“SQF”)
By way of example, with the proposed definition, if a BX Options Market Maker with a Percentage-Based Specified Time Period of 10 seconds and a Specified Percentage of 100% submits a quote over SQF of 1.00 (100) × 1.10 (100) and a buy order executes 75, the remaining size would be 1.00 (100) × 1.10 (25). Thereafter a new Percentage-Based Specified Time Period begins and current Series Percentage executed is 75 and three seconds pass and the BX Options Market Maker re-quotes 1.00 (100) × 1.10 (100), an incoming buy order of 43 would cause the Issue Percentage to meet the Percentage-Based Threshold. This is due to a counted size of 175 (the executed 75 plus the newly quoted 100) and rounding (0.75 + 43/175 = 0.9957 rounds up to 100%). If the former definition applied, the size would have been 100 and an execution of only 25 contracts on the same side would have caused the Issue Percentage to meet the Percentage-Based Threshold, which is not the case. In other words, the current SQF quote on that side for that series (for that BX Options Market Maker) in addition to all the executions that have occurred on that side for that series (for that BX Options Market Maker) within the Percentage-Based Specified Time Period would comprise the size.
This new definition accurately represents the manner in which the Issue Percentage is calculated. Also, the more precise language within the rule text will provide BX Options Market Makers with a more accurate description of the operation of this risk mechanism. The Exchange has always calculated the BX Options Market Maker's size in this fashion. The definition, as described in the prior rule change, was not accurate and the Exchange seeks to amend the definition with this proposal and memorialize the definition within the rule.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
BX Options Market Makers are obligated to submit continuous two-sided quotations in a certain number of series in their appointed option classes for a certain percentage of each trading session.
By allowing the Specified Percentage provided by the BX Options Market Maker to be reduced from 100% to 1%, the Exchange provides its BX Options Market Makers the desired flexibility to take into account such factors as present and anticipated market conditions, news in an option or sudden change in volatility of an option without any limitation regarding the Specified Percentage. This should encourage BX Options Market Makers to provide additional depth and liquidity to the Exchange's markets, thereby removing impediments to and perfecting the mechanisms of a free and open market and a national market system and, in general, protecting investors and the public interest.
The proposal is consistent with the Act because the reduction of the Specified Percentage to not less than 1% provides more alternatives to BX Options Market Makers in setting their percentage without impacting their firm quote obligations. The System operates consistently with the firm quote obligations of a broker-dealer pursuant to Rule 602 of Regulation NMS. Specifically, with respect to BX Options Market Makers, their obligation to provide continuous two-sided quotes on a daily basis is not diminished by the removal of such quotes by the Percentage-Based Threshold. BX Options Market Makers are required to provide continuous two-sided quotes on a daily basis.
This risk feature will continue to remove impediments to and perfect the mechanism of a free and open market and a national market system and protect investors and the public interest by allowing BX Options Market Makers to remove their quotes in the event that market conditions warrant, based on their own risk tolerance level. BX Options Market Makers provide liquidity to the market place and have obligations unlike other market participants.
Further, it is important to note that any interest that is executable against a BX Options Market Maker's quotes and orders that are received
The Exchange notes that Miami International Securities Exchange, LLC (“MIAX”) implemented a rule that changed its Allowable Engagement Percentage from a minimum of 100% to any percentage established by the Market Maker.
Amending the definition of disseminated size will provide market participants with greater information on the manner in which the Exchange computes the Issue Percentage. The Exchange believes that the manner in which the Exchange calculates the number of contracts, which are counted for the Issue Percentage, is consistent with the Act. The counting method permits the Exchange to update the reference number to include the executed contracts. While this method differs from the method previously described, the Exchange believes that there is no industry standard for counting and its method permits market participants to achieve the desired risk protection. With the proposed definition, each execution uses the Percentage-Based Specified Time Period that existed at the time of the execution. BX Options Market Makers can change the Percentage-Based Specified Time Period at any time. If a BX Options Market Maker is using a Percentage-Based Specified Time Period of 15 seconds when an execution happens, then changes the Percentage-Based Specified Time Period to half a second, that first execution will not expire until 15 seconds have passed. The selected Percentage-Based Specified Time Period will persist for 15 seconds and the number of executed contracts will be included in the denominator of subsequent executions for a full 15 seconds.
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 Percentage-Based Threshold is intended to protect BX Options Market Makers from exposure to excessive risk. The Exchange believes this proposal will foster competition by providing BX Options Market Makers with the ability to enhance and customize their percentage in order to compete for executions and order flow. Specifically, the proposal does not impose a burden on intra-market or inter-market competition; rather, it provides BX Options Market Makers with the opportunity to avail themselves of similar risk tools, which are currently available on other exchanges.
The Exchange is proposing this rule change to continue to permit BX Options Market Makers to reduce their risk in the event the BX Options Market Maker is suffering from a system issue or due to the occurrence of unusual or unexpected market activity. Reducing such risk will enable BX Options Market Makers to enter quotations without any fear of inadvertent exposure to excessive risk, which in turn will benefit investors through increased liquidity for the execution of their orders. Reducing risk by utilizing the proposed risk protections enables BX Options Market Makers, specifically, to enter quotations with larger size, which in turn will benefit investors through increased liquidity for the execution of their orders. Such increased liquidity benefits investors because they receive better prices and because it lowers volatility in the options market.
The Exchange believes that amending the definition of disseminated size does not create an undue burden on competition because the Exchange will uniformly calculate the Percentage-Based Threshold in a uniform manner for all BX Options Market Makers. The Exchange is memorializing the definition within the Rule.
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) 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 change 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”)
FINRA is proposing to amend Rule 12403 of the Code of Arbitration Procedure for Customer Disputes (“Code”) concerning customer cases with three arbitrators, to increase the number of public arbitrators on the list that FINRA sends parties during the arbitration panel selection process from 10 arbitrators to 15 arbitrators. FINRA would also increase the number of strikes that parties may make to the public list from four to six strikes to keep the proportion of strikes the same under the amended rule as it is under the current rule.
The text of the proposed rule change is available on FINRA's Web site at
In its filing with the Commission, FINRA 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. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
FINRA allows parties to participate in selecting the arbitrators who serve on their cases. Parties select their arbitration panel from computer generated lists of arbitrators that FINRA sends them. Under FINRA Rule 12403(a), in customer cases with three arbitrators,
When parties collectively strike all of the non-public arbitrators from the list, FINRA fills all three panel seats from the two 10-person lists of public arbitrators. Specifically, the Code provides that when parties collectively strike all of the arbitrators appearing on the non-public list, FINRA returns to the public list to select the next highest ranked available arbitrator to fill the seat. If no public arbitrators remain available to fill the vacancy, FINRA returns to the chair-qualified public list to select the next highest ranked public chair. In doing so, there is a likelihood that FINRA will appoint an arbitrator who the parties accepted, but ranked lower on the public or chair-qualified public lists.
In 2014, FINRA formed the FINRA Dispute Resolution Task Force (“Task Force”) to suggest strategies to enhance the transparency, impartiality, and efficiency of FINRA's securities dispute resolution forum for all participants. The Task Force discussed panel selection in customer cases. During its discussions, the Task Force reviewed statistics on how often parties were striking all of the non-public arbitrators on the list. The data indicated that between September 30, 2013 (the effective date of the rule change providing for all public panels) and January 16, 2015, claimants struck all non-public arbitrators in 69 percent of cases. Given the data on strikes, the Task Force concluded that in many cases, the parties are selecting the three public arbitrators from the 20 candidates appearing on the public lists. The Task Force recommended that in instances where parties collectively strike all the non-public arbitrators, FINRA should provide a new list of 10 public arbitrators to fill the third public arbitrator seat.
FINRA agrees with the Task Force that FINRA should provide parties with greater choice of public arbitrators in cases with all public panels. However, if FINRA waits until the parties collectively strike all the non-public arbitrators from the list before it provides the parties with additional names of public arbitrators, the panel selection process is likely to take at least one additional month to complete. Also, FINRA is concerned about the additional time and expense the parties would incur in vetting an additional list of 10 public arbitrators.
To address the Task Force's recommendation without delaying the panel selection process, or unduly burdening the parties, FINRA is proposing to amend Rule 12403(a)(1) to increase the number of arbitrators on the public arbitrator list FINRA sends the parties from 10 to 15. In doing so, FINRA would provide greater choice of
FINRA is also proposing to amend Rule 12403(c)(2) to increase the number of strikes to the public arbitrator list from four to six, so that the proportion of strikes is the same under the amended rule as it is under the current rule. Task Force members felt strongly that parties wanted additional public arbitrators to choose from because they did not want FINRA to appoint lower ranked arbitrators to the panel. We are proposing to increase the number of strikes the parties can make to the newly increased public list to improve the likelihood that FINRA will appoint the parties' preferred arbitrators to the panel.
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
FINRA 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. Current rules permit parties to an arbitration to strike a specified number of arbitrators from each list of arbitrators that FINRA sends them and require them to rank order the remaining arbitrators. The propensity to strike all non-public arbitrators combined with the current rules for selecting the panel has led to concerns that panels may include a party's least preferred arbitrator, thereby diminishing a party's overall satisfaction with the arbitration process at the forum.
To remedy this concern, FINRA proposes to expand the number of arbitrators on the public arbitrator list. The longer list will increase the parties' choice of arbitrators during the panel selection process, and will improve the likelihood that FINRA will appoint the parties' preferred arbitrators to the panel.
Forum users are likely to incur costs in vetting the five additional public arbitrators on the list FINRA would send them. However, forum practitioners have indicated that they would willingly incur the additional expense in order to have greater choice in selecting arbitrators.
Written comments were neither solicited nor received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such 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 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 May 16, 2016, The Options Clearing Corporation (“OCC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change SR–OCC–2016–007 pursuant to Section 19(b)(1) of the Securities and Exchange Act of 1934 (“Act”)
OCC is changing its rules to: (i) Vest the authority to approve or disapprove
This proposed rule change will streamline OCC's membership approval process by: (i) Allowing OCC's Executive Chairman or President to approve pro forma applications for clearing membership, and (ii) vesting ultimate authority with OCC's Risk Committee, not its Board, to approve or disapprove applications for clearing membership that are not approved by either OCC's Executive Chairman or President. The practical effect of the proposed rule change is that either OCC's Executive Chairman or President will approve most applications for clearing membership at OCC since most applicants for clearing membership choose to have their application presented for approval only when such approval is pro forma in nature (
OCC believes that its membership criteria are objective standards that are designed not to unfairly discriminate in the admission of participants to OCC,
Moreover, since the rules of the Commission and the Commodity Futures Trading Commission require OCC to have rules that do not unfairly discriminate in the admission of participants and provide fair and open access,
OCC proposed amending Article V, Section 2 of its By-Laws to vest the authority to approve or disapprove new applicants for clearing membership with the Risk Committee. OCC believes that the members of the Board comprising the Risk Committee are capable of appropriately acting on membership applications. The Risk Committee is currently delegated the authority to (1) review applications for clearing membership and recommend approval or disapproval thereof to the Board, (2) conduct hearings if requested by applicants whose applications are proposed to be disapproved, and (3) review and approve or disapprove requests by clearing members to expand clearing activities.
In order to effect the foregoing, and in addition to proposed changes to Article V, Section 2 of the By-Laws, OCC proposed conforming changes to Article V, Sections 1 and 3 of the By-Laws as well as the Board and Risk Committee Charters.
OCC has stated that, in order to better streamline OCC's membership application approval process, and allow the Board and the Risk Committee to more efficiently allocate their time, it proposed additional amendments to Article V, Section 2 of its By-Laws to allow OCC's Executive Chairman or its President to approve certain applications for clearing membership. As described above: (i) OCC believes that, based on the applicable rules of the Commission and the Commodity Futures Trading Commission, applications for clearing membership that clearly meet OCC's membership criteria must be approved,
Section 19(b)(2)(C) of the Act
The Commission finds that the proposed rule change is consistent with Section 17A(b)(3)(F)
The proposed rules also delegate to the Executive Chairman or the President the authority to approve new applications provided that: (i) It is not recommended that the Risk Committee impose additional membership criteria upon the applicant pursuant to Section 1, Interpretation and Policy .06 of Article V of OCC's By-Laws, and (ii) the Risk Committee is given not less than five business days to determine that the application should be reviewed at a meeting of the Risk Committee and the Risk Committee has not requested that the application be reviewed at a meeting of the Risk Committee within such five day period. The authority to disapprove applications is not delegated to the Executive Chairman or the President. The rules, as revised, continue to provide Board-level oversight of the membership approval process by ensuring involvement of the Risk Committee. For the above reasons, although the revised rules will streamline the membership approval process, the Commission believes that they are designed to protect investors and the public interest. Additionally, the revised rules are not designed to permit unfair discrimination because they do not alter the criteria considered for the approval of new membership.
Additionally, the Commission finds that the revised rules are consistent with Rule 17Ad–22(d)(8) under the Act.
On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of Act, and in particular, with the requirements of Section 17A of the Act
IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On March 24, 2016, the Public Company Accounting Oversight Board (the “Board” or the “PCAOB”) filed with the Securities and Exchange Commission (the “Commission”), pursuant to Section 107(b)
On February 26, 2016, the Board adopted amendments to Rule 4003 to (i) require that at least five percent of registered public accounting firms that play a substantial role in the preparation or furnishing of an audit report be inspected on an annual basis, (ii) maintain the requirement to inspect all firms that issue an audit report for an issuer but provide the Board the discretion to forego an inspection, on a case-by-case basis, for a firm that does not subsequently issue an audit report for two consecutive years, (iii) qualify the term “audit report” to keep relevant portions of the rule consistent with the original meaning, and (iv) specify that no inspection requirement arises solely because a firm consented to an issuer's use of a previously issued audit report.
Under the Proposed Rules, the triennial inspection requirement for registered public accounting firms that play a substantial role in audits but do not issue audit reports (“substantial role only”)
Under the Proposed Rules, Rule 4003(b) will continue to retain the requirement to inspect any registered public accounting firm that issues an audit report with respect to an issuer. However, Proposed Rule 4003(e) is added to provide the Board with the discretion to forego the inspection of a registered public accounting firm that has not issued any audit reports in two consecutive years.
Under the Proposed Rules, Rule 4003(d) is amended to add the phrase “with respect to an issuer” to qualify the term “audit report” within the rule. The added qualification is needed to clarify that the Proposed Rules apply only to the audits of issuers because, after the original rule was adopted, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”)
The Proposed Rules would become effective upon approval by the Commission and apply to the audits of all issuers, including audits of emerging growth companies (“EGCs”),
As noted above, the Commission received two comment letters
Section 103(a)(3)(C) of the Sarbanes-Oxley Act requires that any rules of the Board “requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements (auditor discussion and analysis)” shall not apply to an audit of an EGC.
In proposing application of the Proposed Rules to audits of all issuers, including EGCs, the Board requested that the Commission make the determination required by Section 103(a)(3)(C). To assist the Commission in making its determination under Section 103(a)(3)(C), the PCAOB prepared and submitted to the Commission its own EGC analysis, which was included in the Commission's public notice soliciting comment on the Proposed Rules. In its analysis, the Board states that the Proposed Rules do not change or add to the requirements that apply to the audits of any issuers, including EGCs. Any inspection of an audit of an EGC would be conducted in the same manner as it would have under existing PCAOB rules. The Proposed Rules only impact the frequency with which the PCAOB may inspect a small number of firms.
The Board does not anticipate that the Proposed Rules would impact the audit quality for audits of EGCs by altering auditors' perception regarding inspection likelihood. Specifically, the Board does not believe that the Proposed Rules will affect an auditor's perception, during an audit of an EGC, of the possibility of such audit being inspected or the nature of any inspection or review, if conducted.
Based on the PCAOB's EGC analysis, we believe the information in the record is sufficient for the Commission to make the requested EGC determination in relation to the Proposed Rules. The Commission notes that because only a small number of firms fall within the categories of the Proposed Rules, the impact on the inspection frequency of the audits of EGCs is likely limited. Further, as to the “substantial role only” firms, the PCAOB is merely codifying its current practice.
The Commission has carefully reviewed and considered the Proposed Rules and the information submitted therewith by the PCAOB, including the PCAOB's EGC analysis, and the comment letters received. In connection with the PCAOB's filing and the Commission's review,
A. The Commission finds that the Proposed Rules are consistent with the requirements of the Sarbanes-Oxley Act and the securities laws and are necessary or appropriate in the public interest or for the protection of investors; and
B. Separately, the Commission finds that the application of the Proposed Rules to EGC audits is necessary or appropriate in the public interest, after considering the protection of investors and whether the action will promote efficiency, competition, and capital formation.
IT IS THEREFORE ORDERED, pursuant to Section 107 of the Sarbanes-Oxley Act and Section 19(b)(2) of the Exchange Act, that the Proposed Rules (File No. PCAOB–2007–04) be and hereby are approved.
By the Commission.
On March 23, 2016, NYSE MKT LLC (“Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Exchange Rule 952NY sets forth the Exchange System's automated opening process.
(A) The system will determine a single price at which a particular option series will be opened.
(B) Orders and quotes in the system will be matched up with one another based on price-time priority; provided, however, that Orders will have priority over Market Maker quotes at the same price.
(C) Orders in the System Book that were not executed during the Auction Process shall become eligible for the Core Trading Session immediately after the conclusion of the Auction Process.
(D) The System will not conduct an Auction Process if the bid-ask differential for that series is not within an acceptable range. For the purposes of this rule, an acceptable range shall mean within the bid-ask differential guidelines established pursuant to Rule 952NY(b)(4).
(E) If the System does not open a series with an Auction Process, the System shall open the series for trading after receiving notification of an initial NBBO disseminated by OPRA for the series or on a Market Maker quote, provided that the bid-ask differential does not exceed the bid-ask differential specified under Rule 952NY(b)(5).
In addition, Rule 952NY(c) provides for how the System will determine the opening price of a series when an Auction Process is conducted.
The Exchange proposes several changes to Exchange Rule 952NY and the System opening process. The proposed changes would also affect the process of re-opening an options series after a trading halt.
First, the Exchange proposes to amend Exchange Rule 952NY(b) so that trading in an options series will be opened automatically once the primary market for the underlying security disseminates both a quote and a trade that is at or within the quote.
The Exchange also proposes to modify Exchange Rule 952NY(b)(E) so that if the System does not open a series with an Auction Process, trading in an options series could no longer open on a local Market Maker quote, but would instead require an initial uncrossed NBBO disseminated by OPRA.
In addition, the Exchange proposes to amend Rule 952NY(c). As noted, current Rule 952NY(c) provides that if there is no initial uncrossed NBBO disseminated by OPRA, the System instead determines an opening price that is “at the midpoint of the best quotes and offers in the System Book.” The Exchange originally proposed to modify Rule 952NY(c) by eliminating this language so that the rule would no longer provide that the opening price of a series could be determined by reference to the best quote bids and offers in the System Book.
In Amendment No. 1, the Exchange proposes further modifications to Rule 952NY(c) to clarify and detail how the Exchange would determine the opening price upon dissemination of an NBBO from OPRA. Under proposed 952NY(c), as modified by Amendment No. 1, “[t]he opening price of a series will be the price, as determined by the System, at which the greatest number of contracts will trade at a price at or between the NBBO disseminated by OPRA.”
Finally, the Exchange proposes a new provision to permit the Exchange to deviate from the standard manner of the Auction Process, including adjusting the timing of the Auction Process in any option class, when the Exchange believes it to be necessary in the interest of a fair and orderly market.
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 the Exchange's proposal to require both a disseminated quote and a trade within the quote in an underlying security before opening trading in the related options series, instead of either one or the other, is reasonably designed ensure that the underlying security has been opened pursuant to a robust price discovery process before the overlying option begins trading.
The Exchange proposes that if it does not open a series with an Auction Process, it will open the series for trading after receiving notification of an initial uncrossed NBBO disseminated by OPRA.
Further, the Exchange proposes that if it does open a series with an Auction Process, the opening price of a series will be the price, as determined by the System, at which the greatest number of contracts will trade at a price at or between the NBBO disseminated by OPRA. The Exchange further proposes to specify how the System will determine an opening price if the same number of contracts can trade at multiple prices.
In addition, the Commission believes it is appropriate to allow the Exchange the discretion to deviate from the standard manner of the Auction Process, as the proposal provides, when it believes it is necessary in the interests of a fair and orderly market. The Commission believes that the ability to exercise such discretion can be important in situations when, for example, the primary market for an options class is unable to open due to a systems or technical issue or if some other unanticipated circumstance arises. The Commission notes that it has previously approved provisions of this kind as consistent with the Act.
The Commission further believes that the proposed rule change will provide transparency and enhance investors' understanding of the operation of the Exchange's opening process. For these reasons, the Commission believes that the proposed rule change, as modified by Amendment No. 1, is consistent with the Act.
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 Exchange 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.
The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the 30th day after the date of publication of notice of Amendment No. 1 in the
Accordingly, the Commission finds good cause, pursuant to Section 19(b)(2) of the Exchange Act,
IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Exchange 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 proposes to amend the rules of the NASDAQ Options Market LLC (“NOM”) at Chapter VII, Section 6(f), entitled “Automated Removal of Orders and Quotes.”
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 proposes to amend a NOM Rule at Chapter VII, Section 6(f), entitled “Automated Removal of Orders and Quotes” to modify the minimum Specified Percentage (as described below). A NOM Market Maker
Today, Chapter VII, Section 6(f) permits NOM Market Makers to monitor risk arising from multiple executions across multiple options series of a single underlying security. A NOM Market Maker may provide a specified time period and a specified percentage by which the Exchange's System will automatically remove a NOM Market Maker's quotes and orders in all series of an underlying security submitted through designated NOM protocols, as specified by the Exchange, during a specified time period not to exceed 15 seconds (“Percentage-Based Specified Time Period.”).
For each series in an option, the System determines: (i) The percentage that the number of contracts executed in that series represents relative to the NOM Market Maker's disseminated size of each side in that series (“Series Percentage”); and (ii) the sum of the Series Percentage in the option issue (“Issue Percentage”). The Exchange proposes herein to replace the term “disseminated size” with the more precise phrase “number of contracts available at the time of execution plus the number of contracts executed in unexpired prior executions.”
The System tracks and calculates the net impact of positions in the same option issue during the Percentage-Based Specified Time Period. Specifically, the System tracks transactions,
The Percentage-Based Specified Time Period commences for an option every time an execution occurs in any series in such option and continues until the System removes quotes and orders as described in Chapter VII, Section 6(f)(iv) or (v) or the Percentage-Based Specified Time Period expires. The Percentage-Based Specified Time Period operates on a rolling basis among all series in an option in that there may be multiple Percentage-Based Specified Time Periods occurring simultaneously and such Percentage-Based Specified Time periods may overlap.
The Exchange proposes to lower the minimum Specified Percentage, which is set by the NOM Market Maker, from 100% to 1%. The proposal would
NOM Market Makers will be able to more precisely customize their risk settings within the System. NOM Market Makers will be able to consider factors such as present and anticipated market conditions, news in an option, and a sudden change in volatility of an option. NOM Market Makers are required to utilize either the Percentage Based Threshold or the Volume Based Threshold. NOM Market Makers that select to utilize the Percentage-Based Threshold will be able to adopt more precise controls with this proposal based on the NOM Market Maker's risk tolerance level.
NOM Market Makers must utilize either the Percentage-Based
By way of example, if a NOM Market Maker has set the percentage setting to 50% and a Specified Time Period of 15 seconds and the Order Book reflects:
MM1 has a displayed quote of 1.10 (100) × 1.20 (100) for IBM May 20, 2016 70 puts and MM1 is the only displayed size on NOM and an order is submitted to buy 75 IBM May 20, 2016 70 Puts for 1.20.
Chapter VII, Section 6(f) would cause the following:
(1) Provide MM1 with an execution—Sold 75 @ 1.20; and
(2) Trigger the Percentage-Based Threshold and remove MM1's quotes in IBM.
Another example is with multiple executions. Presume the following:
MM1 has set the percentage to 80% by 5 seconds and MM1 has a displayed quote of 2.00 (100) × 2.25 (100) for IBM May 20, 2016 70 puts and he is the only displayed size on the NOM. Also, presume an order comes in to buy 50 IBM May 20, 2016 70 puts for 2.25.
Chapter VII, Section 6(f) would cause the following:
(1) Provide MM1 with an execution—Sold 50 @ 2.25;
(2) Update MMI [sic] quote to 2.00 (100) × 2.25 (50);
(3) Within 1 second an order comes in to buy 45 IBM May 20, 2016 70 puts for 2.25;
(4) Provide MM1 with an execution—Sold 45 @ 2.25; and
(5) Trigger the Percentage-Based Threshold and remove MM1's quotes in IBM.
The Exchange also proposes to replace the term “disseminated size” with a quantitative description to add transparency with respect to the calculation of Series Percentage. The language proposed amends the original definition of disseminated size. With respect to the disseminated size, the Exchange previously defined disseminated size as “. . . the original size quoted by the Participant.”
The Exchange proposes to amend the definition as follows: “For each series in an option, the System will determine: (i) The percentage that the number of contracts executed in that series represents relative to the number of contracts available at the time of execution plus the number of contracts executed in unexpired prior executions of each side in that series (“Series Percentage”); and (ii) the sum of the Series Percentage in the option issue (“Issue Percentage”).” The Exchange counts Specialized Quote Feed (“SQF”)
By way of example, with the proposed definition, if a NOM Market Maker with a Percentage-Based Specified Time Period of 10 seconds and a Specified Percentage of 100% submits a quote over SQF of 1.00(100) × 1.10(100) and a buy order executes 75, the remaining size would be 1.00(100) × 1.10(25). Thereafter a new Percentage-Based Specified Time Period begins and current Series Percentage executed is 75 and three seconds pass and the NOM Market Maker re-quotes 1.00(100) × 1.10 (100), an incoming buy order of 43 would cause the Issue Percentage to meet the Percentage-Based Threshold. This is due to a counted size of 175 (the executed 75 plus the newly quoted 100) and rounding (0.75 + 43/175 = 0.9957 rounds up to 100%). If the former definition applied, the size would have been 100 and an execution of only 25 contracts on the same side would have caused the Issue Percentage to meet the Percentage-Based Threshold, which is not the case. In other words, the current SQF quote and all OTTO orders on that side for that series (for that NOM Market Maker) in addition to all the executions that have occurred on that side for that series (for that NOM Market Maker) within the Percentage-Based Specified Time Period would comprise the size.
This new definition accurately represents the manner in which the Issue Percentage is calculated. Also, the more precise language within the rule text will provide NOM Market Makers with a more accurate description of the operation of this risk mechanism. The Exchange has always calculated the NOM Market Maker's size in this fashion. The definition, as described in the prior rule change, was not accurate and the Exchange seeks to amend the definition with this proposal and memorialize the definition within the rule.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act
NOM Market Makers are obligated to submit continuous two-sided quotations in a certain number of series in their appointed option classes for a certain percentage of each trading session.
By allowing the Specified Percentage provided by the NOM Market Maker to be reduced from 100% to 1%, the Exchange provides its NOM Market Makers the desired flexibility to take into account such factors as present and anticipated market conditions, news in an option or sudden change in volatility of an option without any limitation regarding the Specified Percentage. This should encourage NOM Market Makers to provide additional depth and liquidity to the Exchange's markets, thereby removing impediments to and perfecting the mechanisms of a free and open market and a national market system and, in general, protecting investors and the public interest.
The proposal is consistent with the Act because the reduction of the Specified Percentage to not less than 1% provides more alternatives to NOM Market Makers in setting their percentage without impacting their firm quote obligations. The System operates consistently with the firm quote obligations of a broker-dealer pursuant to Rule 602 of Regulation NMS. Specifically, with respect to NOM Market Makers, their obligation to provide continuous two-sided quotes on a daily basis is not diminished by the removal of such quotes and orders by the Percentage-Based Threshold. NOM Market Makers are required to provide continuous two-sided quotes on a daily basis.
This risk feature will continue to remove impediments to and perfect the mechanism of a free and open market and a national market system and protect investors and the public interest by allowing NOM Market Makers to remove their quotes and orders in the event that market conditions warrant, based on their own risk tolerance level. NOM Market Makers provide liquidity to the market place and have obligations unlike other market participants.
Further, it is important to note that any interest that is executable against a NOM Market Maker's quotes and orders that are received
The Exchange notes that Miami International Securities Exchange, LLC (“MIAX”) implemented a rule that changed its Allowable Engagement Percentage from a minimum of 100% to any percentage established by the Market Maker.
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 Percentage-Based Threshold is intended to protect NOM Market Makers from exposure to excessive risk. The Exchange believes this proposal will foster competition by providing NOM Market Makers with the ability to enhance and customize their percentage in order to compete for executions and order flow. Specifically, the proposal does not impose a burden on intra-market or inter-market competition; rather, it provides NOM Market Makers with the opportunity to avail themselves of similar risk tools, which are currently available on other exchanges.
The Exchange is proposing this rule change to continue to permit NOM Market Makers to reduce their risk in the event the NOM Market Maker is suffering from a system issue or due to the occurrence of unusual or unexpected market activity. Reducing such risk will enable NOM Market Makers to enter quotations without any fear of inadvertent exposure to excessive risk, which in turn will benefit investors through increased liquidity for the execution of their orders. Reducing risk by utilizing the proposed risk protections enables NOM Market Makers, specifically, to enter quotations with larger size, which in turn will benefit investors through increased liquidity for the execution of their orders. Such increased liquidity benefits investors because they receive better prices and because it lowers volatility in the options market.
The Exchange believes that amending the definition of disseminated size does not create an undue burden on competition because the Exchange will uniformly calculate the Percentage-Based Threshold in a uniform manner for all NOM Market Makers. The Exchange is memorializing the definition within the Rule.
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) 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 change 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.
Norfolk Southern Railway Company (NSR) has filed a verified notice of exemption under 49 CFR part 1152, subpart F—
NSR has certified that: (1) No local traffic has moved over the Line for at least two years; (2) because the Line is not a through route, no overhead traffic has operated, and, therefore, none needs to be rerouted over other lines; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line is pending either with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication) and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance of service shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) to subsidize continued rail service has been received, this exemption will be effective on August 16, 2016, unless stayed pending reconsideration. Petitions to stay that do not involve environmental issues and formal expressions of intent to file an OFA to subsidize continued rail service under 49 CFR 1152.27(c)(2)
A copy of any petition filed with the Board should be sent to NSR's representative: William A. Mullins, Baker & Miller PLLC, 2401 Pennsylvania Ave. NW., Suite 300, Washington, DC 20037.
If the verified notice contains false or misleading information, the exemption is void ab initio.
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Watco Holdings, Inc. (Watco), a noncarrier, has filed a verified notice of exemption pursuant to 49 CFR 1180.2(d)(2) to continue in control of Kanawha River Railroad, LLC (KNWA), upon KNWA's becoming a Class III rail carrier. Watco owns, indirectly, 100% of the issued and outstanding stock of KNWA, a limited liability company.
This transaction is related to a concurrently filed verified notice of exemption in
The transaction may be consummated on or after July 31, 2016, the effective date of the exemption, 30 days after the supplemental notice of exemption was filed.
Watco currently controls, indirectly, 33 Class III rail carriers and one Class II rail carrier, collectively operating in 23 states. For a complete list of these rail carriers, and the states in which they operate, see Watco's notice of exemption filed on July 1, 2016. The notice is available on the Board's Web site at
Watco represents that: (1) The rail lines to be operated by KNWA do not connect with any other railroads operated by the carrier in the Watco's corporate family; (2) the continuance in control is not part of a series of anticipated transactions that would connect the rail lines to be operated by KNWA with any other railroad in applicant's corporate family; and (3) the transaction does not involve a Class I rail carrier. Therefore, the transaction is exempt from the prior approval requirements of 49 U.S.C. 11323.
Under 49 U.S.C. 10502(g), the Board may not use its exemption authority to relieve a rail carrier of its statutory obligation to protect the interests of its employees. Section 11326(c), however, does not provide for labor protection for transactions under 11324 and 11325 that involve only Class III rail carriers. Accordingly, the Board may not impose labor protective conditions here, because all of the carriers involved are Class III carriers.
If the notice contains false or misleading information, the exemption
An original and 10 copies of all pleadings, referring to Docket No. FD 36029, must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423–0001. In addition, one copy of each pleading must be served on Robert A. Wimbish, Fletcher & Sippel LLC, 29 N. Wacker Drive, Suite 920, Chicago, IL 60606, and Karl Morell, Karl Morell & Associates, Suite 225, 655 Fifteenth St. NW., Washington, DC 20005.
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Paul Didelius (Didelius), an individual and noncarrier,
This transaction is related to a concurrently filed verified notice of exemption in
The transaction may be consummated on or after July 30, 2016, the effective date of the exemption (30 days after the verified notice of exemption was filed).
Didelius represents that: (1) The rail properties that will be operated and controlled by Didelius, namely LRY, YCR, CCET, WRL, and CWW, do not physically connect; (2) there are no plans to acquire additional rail lines for the purpose of making a connection; and (3) each of the carriers involved in the continuance in control transaction is a Class III carrier. Therefore, the transaction is exempt from the prior approval requirements of 49 U.S.C. 11323.
Under 49 U.S.C. 10502(g), the Board may not use its exemption authority to relieve a rail carrier of its statutory obligation to protect the interests of its employees. Section 11326(c), however, does not provide for labor protection for transactions under §§ 11324 and 11325 that involve only Class III rail carriers. Accordingly, the Board may not impose labor protective conditions here, because all of the carriers involved are Class III carriers.
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than June 22, 2016 (at least seven days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 36045, must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423–0001. In addition, one copy of each pleading must be served on James H.M. Savage, 22 Rockingham Court, Germantown, MD 20874.
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Chesapeake Western Railway (CW), a wholly owned subsidiary of Norfolk Southern Railway Company, filed a verified notice of exemption under 49 CFR part 1152 subpart F—
CW has certified that: (1) No local traffic has moved over the Line for at least two years; (2) no overhead traffic has moved over the Line for at least two years, and if there were any overhead traffic, it could be rerouted over other lines; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line either is pending before the Surface Transportation Board or any U.S. District Court or has been decided in favor of a complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication), and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) to subsidize continued rail service has been received, this exemption will become effective on August 16, 2016 (50 days after the filing of the exemption), unless stayed pending reconsideration. Petitions to stay that do not involve environmental issues and formal expressions of intent to file an OFA to subsidize continued
A copy of any petition filed with the Board should be sent to CW's representative: William A. Mullins, 2401 Pennsylvania Ave. NW., Suite 300, Washington, DC 20037.
If the verified notice contains false or misleading information, the exemption is void ab initio.
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
CWW, LLC (CWW), a noncarrier, has filed a verified notice of exemption under 49 CFR 1150.31 to lease from the Port of Columbia, Wash. and to operate, approximately 37.1 miles of rail line, referred to as the Dayton Line, between milepost 33.0 near Walla Walla, Wash. and milepost 70.1 at Dayton, Wash., pursuant to an executed lease and operating agreement.
This transaction is related to a concurrently filed verified notice of exemption in
CWW certifies that the projected annual revenues as a result of this transaction do not exceed those that would qualify it as a Class III rail carrier and states the projected annual revenues of CWW shall not exceed $5 million dollars.
The transaction may be consummated on August 5, 2016, the effective date of the exemption (30 days after the verified notice of exemption was filed).
An original and 10 copies of all pleadings, referring to Docket No. FD 36044 must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423–0001. In addition, a copy of each pleading must be served on applicant's representative, James H.M. Savage, 22 Rockingham Court, Germantown, MD 20874.
According to CWW, this action is categorically excluded from environmental review under 49 CFR 1105.6(c).
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Kanawha River Railroad, LLC (KNWA), a noncarrier, has filed a verified notice of exemption under 49 CFR 1150.41 to lease and operate nine rail segments totaling 308.85 miles from Norfolk Southern Railway Company (NSR). These line segments run (1) between mileposts V 382.0 at Maben, W. Va., and V 435.0 at DB (Deepwater Bridge), W. Va.; (2) between milepost RR 7.0 at Refugee, Ohio, and milepost RR 116.5 at Hobson Yard, Ohio; (3) between milepost WV 125.6 at Conco, Ohio and milepost WV 253.4 at Cornelia, W. Va.; (4) between milepost VC 0.0 at Vaco Junction, W. Va., and milepost VC 0.84 at Deepwater W. Va.; (5) between Hitop RT at milepost TP 0.0 at Charleston, W. Va., and the end of the track at milepost TP 1.0; (6) between Jones IT at milepost JT 0.0 at Jones, W. Va., and the end of the track at milepost JT 1.3; (7) between milepost VG 0.0 at Virwest, W. Va., and milepost VG 12.1 at Bolt, W. Va., (8) between milepost MY 0.0 at Milam, W. Va., and the end of the track at MY 1.01; and (9) between milepost PE 0.0 at Putt, W. Va., and milepost PE 2.3 at Putt End Branch, W. Va.
This transaction is related to a concurrently filed verified notice of exemption in
KNWA plans to lease and increase operations on the subject rail lines in Ohio and West Virginia (189 miles of the subject lines are in active service; the remainder of the track is idled or has been taken out of service by NSR).
KNWA has certified that its projected annual revenues that will result from the proposed transaction will not result in KNWA becoming a Class II or Class I rail carrier. KNWA has further certified that its projected annual rail freight revenues, including the lines to be operated pursuant to this notice, will exceed $5 million. Accordingly, as required by 49 CFR 1150.42(e), KNWA has certified that on May 18 and 19,
The transaction may be consummated on or after July 31, 2016, the effective date of the exemption (30 days after the supplemental notice of exemption was filed).
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than July 22, 2016 (at least 7 days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 36028, must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423–0001. In addition, a copy of each pleading must be served on Robert A. Wimbish, Fletcher & Sippel LLC, 29 N. Wacker Drive, Suite 920, Chicago, IL 60606, and Karl Morell, Karl Morell & Associates, Suite 225, 655 Fifteenth St. NW., Washington, DC 20005.
According to KNWA, this action is categorically excluded from environmental review under 49 CFR 1105.6(c).
Board decisions and notices are available on our Web site at
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Federal Aviation Administration (FAA), DOT.
Notice.
Under the provisions of title 49, U.S.C. 47153(c), notice is being given that the FAA is considering a request from the Jackson Municipal Airport Authority to waive the requirement that a 130 acre parcel of surplus property, located on Jackson-Medgar Wiley Evers International Airport, be used for aeronautical purposes.
Comments must be received on or before August 15, 2016.
Comments on this notice may be mailed or delivered in triplicate to the FAA at the following address: Jackson Airports District Office, Attn: Jeff Orr, Program Manager, 100 West Cross Street, Suite B, Jackson, MS 39208–2307.
In addition, one copy of any comments submitted to the FAA must be mailed or delivered to Mr. Carl Newman, Chief Executive Officer, Jackson Municipal Airport Authority at the following address: P.O. Box 98109, Jackson, MS 39298–8109.
Jeff Orr, Program Manager, Jackson Airports District Office, 100 West Cross Street, Suite B, Jackson, MS 39208–2307, (601) 664–9885. The application may be reviewed in person at this same location.
If the proposal is approved, the airport layout plan will be updated to reflect the change in the land use on 130 acres from aeronautical to non-aeronautical. The property will then be leased for Commercial Development. The location of the land relative to existing or anticipated aircraft noise contours greater than 65 DNL are not considered to be an issue. The proceeds from the lease of this property will be used for airport purposes. The proposed use of this property is compatible with airport operations.
Any person may inspect the request in person at the FAA office listed above under
In addition, any person may, upon request, inspect the request, notice and other documents germane to the request in person at the Jackson-Medgar Wiley Evers International Airport.
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Notice and request for comments.
Under the Paperwork Reduction Act of 1995 (PRA), this notice announces FRA is forwarding the renewal of the information collection requirements (ICR) abstracted below to the Office of Management and Budget (OMB) for review and comment. The ICR describes the nature of the information collection and its expected burden. On February 25, 2016, OMB approved Form FRA F 1680.167 for 180 days under emergency clearance procedures. FRA seeks regular clearance of this form for the maximum period (3 years) to comply with Fixing America's Surface Transportation Act (FAST Act) requirements. The
Comments must be submitted on or before August 15, 2016.
Mr. Robert Brogan, Information Collection Clearance Officer, Office of Railroad Safety, Safety Regulatory Analysis Division, RRS–21, Federal Railroad Administration, 1200 New Jersey Avenue SE., Mail Stop 25, Washington, DC 20590, (202) 493–6292, or Ms. Kimberly Toone, Information Collection Clearance Officer, Office of Administration, Office of Information Technology, RAD–20, Federal Railroad Administration, 1200 New Jersey Avenue SE., Mail Stop 35, Washington, DC 20590, (202) 493–6132. These telephone numbers are not toll-free.
The PRA, 44 U.S.C. 3501–3520, and its implementing regulations, Title 5 Code of Federal Regulations (CFR) part 1320, require Federal agencies to issue two notices seeking public comment on information collection activities before OMB may approve paperwork packages.
AAR commented that FRA expects the railroads will provide information on (i) the type of bridge (superstructure) and (ii) type of structure (substructure). AAR states “there are different interpretations of these terms that fulfill the requirements of the FAST Act, including that the `type of bridge' means its material composition and `type of structure' means its superstructure.” FRA finds that AAR's comment is reasonable and FRA will interpret “type of bridge” to mean its material composition and “type of structure” to mean its superstructure. As examples, the combination of type of bridge and structure could yield descriptions such as: Stone Arch, Steel Through Plate Girder on Concrete Abutments, Steel Multi-beams on Stone Abutments and Steel Column Bents, and Concrete Box Beams on Reinforced Concrete Piers and Abutments.
Additionally, AAR commented that FRA will require railroads to respond to the inspection report request within 30 days. AAR explains that “as the FAST Act does not require a railroad to respond to a request in a set time period, FRA should allow a railroad additional time to respond to a request for multiple public bridge inspection reports.” FRA believes that 30 days is sufficient time for railroads to respond. However, FRA will consider longer periods on a case-by-case basis if there are extenuating circumstances.
Before OMB decides whether to approve these proposed collections of information, it must provide 30 days for public comment.
The summary below describes the ICR and its expected burden. The renewal request is being submitted for OMB clearance as the PRA requires.
FRA previously revised its currently approved information collection to account for the additional burden States and political subdivisions of States will incur for requesting a public version of a bridge inspection report generated by a railroad for a bridge located within its respective jurisdiction. FRA developed a new form titled “Bridge Inspection Report Public Version Request Form” to facilitate such State and their political subdivisions' requests. Additionally, FRA revised its currently approved information collection to account for the additional burden railroads will incur to provide the public version of a bridge inspection report upon FRA request.
As background, on July 15, 2010, FRA published its Bridge Safety Standards Final Rule.
FRA uses the information collected to ensure railroads/track owners meet Federal standards for bridge safety and comply with all the requirements of this regulation. In particular, FRA uses the collection of information to confirm that railroads/track owners adopt and implement bridge management programs to properly inspect, maintain, modify, and repair all bridges that carry trains over them and for which they are responsible. Railroads/track owners must conduct annual inspections of railroad bridges. Further, railroads/track owners must incorporate provisions for internal audits into their bridge management program and must conduct internal audits of bridge inspection reports. Railroads/track owners use the internal audit information to verify the inspection provisions of the bridge management program are being followed and to continually evaluate the effectiveness of their bridge management program and bridge inspection activities. FRA uses this information to ensure railroads/track owners implement a safe and effective bridge management program and bridge inspection regime.
A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this notice in the
44 U.S.C. 3501–3520.
In accordance with part 211 of title 49 Code of Federal Regulations (CFR), this provides the public notice that by a document dated April 1, 2016, Union Pacific Railroad (UP) has petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain provisions of the Federal railroad safety regulations contained at 49 CFR part 229—Railroad Locomotive Safety Standards. FRA assigned the petition Docket Number FRA–2016–0055.
Specifically, UP is seeking an exemption, until October 1, 2018, from the requirements of 49 CFR 229.135(b)(5) and (6), which require the use of a crash-hardened memory module as specified in Appendix D to part 229.
Title 49 CFR 229.135(b)(5) and (6) allow for a phased-in approach for upgrading the memory modules. Railroads are not required to replace functioning modules installed prior to the availability of crash-worthy modules (CHM) until the locomotives are remanufactured. Similarly, outside of the remanufacturing process, railroads have been permitted to use replacement modules that do not meet Appendix D requirements if the modules were originally manufactured prior to 2010.
As background, in September 2011, UP submitted a Request for Proposal to multiple vendors to procure a Locomotive Data Acquisition Recording System (LDARS) to meet FRA's requirement to calibrate/synchronize the event recorder and Positive Train Control (PTC) data feeds into a CHM. UP awarded the contract in March 2012 for the development of a crash-worthy LDARS in accordance with the Federal requirements. These modules would capture and synchronize existing FRA-required event-recorder data and FRA-required PTC information. In addition, UP specified LDARS be capable of recording event-recorder data feeds from a variety of locomotive control systems and data collection devices and integrating with currently installed event recorders. The vendor promised a scheduled delivery date of April 2014. However, UP did not receive a production-capable LDARS unit until September 2014. UP purchased and had planned to deploy 1,500 LDARS systems starting in the fourth quarter of 2014 but due to technology issues with LDARS, the purchased units had to be shipped back to the vendor for rework, and subsequent production of LDARS units stopped. The vendor has certified LDARS as being U.S. Department of Transportation crashworthy.
As a result of these unanticipated issues, UP experienced significant delay in accepting and installing LDARS products. There were several issues contributing to the delay, specifically, issues with the memory module firmware and LSI interface, resulting in gaps in the recorded data and gaps in the video and audio feed. These issues have required UP to “shop” the locomotives for a third time for installation of PTC onboard components.
Of the 5,656 planned PTC locomotives UP intends to replace, roughly 1,100 event recorders are not capable of integration with LDARS. There are 2,000 crash-hardened integrated data recorders that will be replaced with LDARS to meet FRA calibration requirements.
UP has more than 2,500 locomotives that have all of the equipment installed for PTC with the exception of LDARS. After UP qualifies LDARS, installation will be scheduled on the 90-day periodic maintenance inspection cycle for the 2,500 locomotives which are PTC ready, except for LDARS that are in the fleet today. The balance will be installed as UP continues to equip through September 2018, roughly 1,100 locomotives per year.
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested party desires an opportunity for oral comment, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request.
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
•
•
•
•
Communications received by August 29, 2016 will be considered by FRA before final action is taken. Comments received after that date will be considered as far as practicable.
Anyone is able to search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its processes. DOT posts these comments, without edit, including any personal information the commenter provides, to
Maritime Administration, Department of Transportation
Notice of availability; notice of public meeting; request for comments.
The Maritime Administration (MARAD), in cooperation with the U.S. Coast Guard (USCG) and the Federal Energy Regulatory Commission (FERC), announces the availability of the Draft Environmental Impact Statement (DEIS) for the Delfin LNG deepwater port license application for the exportation of natural gas. Delfin LNG, LLC (Delfin LNG), is the applicant.
A Notice of Application that summarized the original Delfin LNG license application was published in the
The proposed Delfin LNG deepwater port would be located in Federal waters within the Outer Continental Shelf (OCS) approximately 37.4 to 40.8 nautical miles off the coast of Cameron Parish, Louisiana.
The proposed Delfin LNG deepwater port incorporates onshore components, which are subject to FERC jurisdiction. These facilities are described in the section of this Notice titled “FERC Application.”
Publication of this notice begins a 45-day comment period, requests public participation in the environmental impact review process, provides information on how to participate in the process and announces informational open houses and public meetings in Cameron, Louisiana and Beaumont, Texas.
The Maritime Administration will hold two public meetings in connection with the license application DEIS. The first public meeting will be held in Cameron, Louisiana, on August 9, 2016, from 6 p.m. to 8 p.m. The second public meeting will be held in Beaumont, Texas, on August 10, 2016, from 6 p.m. to 8 p.m. Each public meeting will be preceded by an open house from 4:30 p.m. to 5:30 p.m. The public meeting may end later than the stated time, depending on the number of persons who wish to make a comment on the record. Additionally, material you submit in response to the request for comments must reach
The open house and public meeting in Cameron, Louisiana will be held at the Johnson Bayou Community Center, 5556 Gulf Beach Highway, Cameron, LA, 70631; telephone: 337–569–2454. Free parking is available at the Community Center. The open house and public meeting in Beaumont, Texas will be held at the Holiday Inn Beaumont Plaza, 3950 Walden Road, Beaumont, Texas 77705; telephone: 409–842–5995. Free parking is available at the Holiday Inn Beaumont Plaza.
The license application, comments, supporting information and the DEIS are available for viewing at the
We encourage you to submit comments electronically through the Federal eRulemaking Portal at
Mr. Roddy Bachman, USCG, telephone: 202–372–1451, email:
We request public comments or other relevant information related to the DEIS for the proposed Delfin LNG deepwater port. These comments will inform our preparation of the FEIS. We encourage attendance at the open houses and public meetings; however, you may submit comments electronically. It is preferred that comments be submitted electronically. Regardless of the method you use to submitting comments or material, all submissions will be posted, without change, to the Federal Docket Operations Facility Web site (
You are invited to learn about the proposed Delfin LNG deepwater port at either of the informational open houses and to comment on the proposed action and the environmental impact analysis contained in the DEIS. Speakers may register upon arrival and will be recognized in the following order: Elected officials, public agency representatives, then individuals or groups in the order in which they registered. In order to accommodate all speakers, speaker time may be limited, meeting hours may be extended, or both. Speakers' transcribed remarks will be included in the public docket. You may also submit written material for inclusion in the public docket. Written material must include the author's name. We ask attendees to respect the meeting procedures in order to ensure a constructive information-gathering session. Please do not bring signs or banners inside the meeting venue. The presiding officer will use his/her discretion to conduct the meeting in an orderly manner.
Public meeting locations are wheelchair accessible; however, attendees who require special assistance such as sign language interpretation or other reasonable accommodation, please notify the USCG (see
On May 8, 2015, as supplemented on June 19, 2015, MARAD and USCG received a license application from Delfin LNG for all Federal authorizations required for a license to own, construct and operate a deepwater port for the export of natural gas. The proposed deepwater port would be located in Federal waters approximately 37.4 to 40.8 nautical miles off the coast of Cameron Parish, Louisiana. Louisiana and Texas were designated as Adjacent Coastal States (ACS) for the Delfin LNG license application.
The Federal agencies involved held two public scoping meetings in connection with the original Delfin LNG license application. The first public scoping meeting was held in Lake Charles, Louisiana on August 18, 2015; the second public scoping meeting was held in Beaumont, Texas on August 19, 2015. Transcripts of the scoping meetings are included in the public docket. After the public scoping meetings concluded, Delfin LNG advised MARAD, the USCG and FERC of its intent to amend the original license application.
In anticipation of the amended license application, MARAD and USCG issued a regulatory “stop-clock” letter to Delfin LNG on September 18, 2015. That letter commenced a regulatory “stop-clock,” effective September 18, 2015, which remained in effect until MARAD and USCG received the amended license application and determined it contained sufficient information to continue the Federal review process. On November 19, 2015, Delfin LNG submitted its amended license application to MARAD and USCG.
Working in coordination with participating Federal and State agencies, MARAD commenced processing the amended license application and completed the DEIS. The purpose of the DEIS is to analyze reasonable alternatives to, and the direct, indirect and cumulative environmental impacts of, the proposed action. The DEIS is currently available for public review at the Federal docket Web site:
Delfin LNG is proposing to construct, own, operate and eventually decommission a deepwater port in the Gulf of Mexico to liquefy domestically-sourced natural gas for export. Exports are proposed to both Free Trade Agreement nations and non-Free Trade Agreement nations, in accordance with Department of Energy export license approvals.
The proposed Delfin LNG deepwater port has both onshore and offshore components. As previously described, the proposed Delfin LNG deepwater port would be located in Federal waters within the OCS West Cameron Area, West Addition Protraction Area (Gulf of Mexico) approximately 37.4 to 40.8 nautical miles off the coast of Cameron Parish, Louisiana, in water depths ranging from approximately 64 to 72 feet (19.5 to 21.9 meters). The Delfin LNG deepwater port would consist of four semi-permanently moored Floating Liquefied Natural Gas Vessels (FLNGVs) located as follows: #1 (29°8′13.1″ N./93°2′2.2″ W.), #2 (29°6′13.6″ N./93° 32′42.4″ W.), #3 (29°6′40.7″ N./93°30′10.1″ W.) and #4 (29°4′40.9″ N./93°30′51.8″ W.) located in West Cameron (WC) lease blocks 319, 327, 328 and 334, respectively. The Delfin LNG deepwater port would reuse and repurpose two existing offshore natural gas pipelines; the former U–T Operating System (UTOS) pipeline and the High Island Operating System (HIOS) pipeline. Four new 30-inch diameter pipeline laterals, each approximately 6,400 feet in length, connecting the HIOS pipeline to each of the FLNGVs, would be constructed. In addition, a 700-foot 42-inch diameter new pipeline would be constructed to bypass a platform at WC lease block 167 (WC 167) and connect the UTOS and HIOS pipelines. Feed gas would be supplied through the new pipeline laterals to each of the FLNGVs where it would be super-cooled to produce LNG. The LNG would be stored onboard the FLNGVs and transferred via ship-to-ship transfer to properly certified LNG tankers. Each of the FLNGVs would be semi-permanently moored to four new weathervaning tower yoke mooring systems (TYMS).
The onshore components in Cameron Parish, Louisiana are described specifically in an application submitted to FERC. The onshore components of the Delfin LNG deepwater port will consist of constructing and operating a new natural gas compressor station, gas supply header and a metering station at an existing gas facility. The proposal would require: (1) Reactivation of approximately 1.1 miles of existing 42-inch pipeline, formerly owned by UTOS, which runs from Transcontinental Gas Pipeline Company Station No. 44 (Transco Station 44) to the mean highwater mark along the Cameron Parish Coast; (2) installation of 120,000 horsepower of new compression; (3) construction of 0.25 miles of 42-inch pipeline to connect the former UTOS line to the new meter station; and (4) construction of 0.6 miles of twin 30-inch pipelines between Transco Station 44 and the new compressor station.
Onshore pipeline quality natural gas from the interstate grid would be sent to the existing, but currently idle, 42-inch UTOS pipeline. The gas transported through the UTOS pipeline would then bypass the existing manifold platform located at WC 167 via a newly installed pipeline segment, 700 feet in length, connecting to the existing 42-inch HIOS pipeline.
The bypass of the WC 167 platform would be trenched so that the top of the pipe is a minimum of 3 feet below the seafloor. From the bypass, the feed gas would then be transported further offshore using the HIOS pipeline portion leased by Delfin LNG between WC 167 and High Island A264. The existing UTOS and HIOS pipelines transect OCS Lease Blocks WC 314, 318, 319, 327, and 335, and would transport feed gas from onshore to offshore (one-directional flow). Delfin LNG proposes to install four new lateral pipelines along the HIOS pipeline, starting approximately 16.0 nautical miles south of the WC 167 platform. Each subsea lateral pipeline would be 30 inches in diameter and approximately 6,400 feet in length, extending from the HIOS pipeline to the Delfin LNG deepwater port. The maximum allowable operating pressure of the pipeline system (UTOS, bypass, HIOS and laterals) would be 1,250 pounds per square inch gauge (psig).
The FLNGVs would receive pipeline quality natural gas via the laterals and TYMS where it would be cooled sufficiently to completely condense the gas and produce LNG. The produced LNG would be stored in International Maritime Organization (IMO) type B, prismatic, independent LNG storage tanks aboard each of the FLNGVs. Each vessel would have a total LNG storage capacity of 210,000 cubic meters (m
An offloading mooring system would be provided on each FLNGV to moor an LNG tanker side-by-side for cargo transfer of LNG through loading arms or cryogenic hoses using ship-to-ship transfer procedures. LNG tankers would be moored with pilot and tug assist. The FLNGVs would be equipped with fenders and quick-release hooks to facilitate mooring and unmooring operations. The offloading system would be capable of accommodating standard LNG tankers with nominal cargo capacities up to 170,000 m
The FLNGVs would be self-propelled vessels and have the ability to disconnect from the TYMS and set sail to avoid hurricanes or to facilitate required inspections, maintenance and repairs.
In the nominal design case, based on an estimated availability of 92 percent and allowance for consumption of feed gas during the liquefaction process, each of the four FLNGVs would produce approximately 146 billion standard cubic feet per year (Bscf/y) of gas (approximately 3.0 million metric tonnes per annum [MMtpa]) for export in the form of LNG. Together, the four FLNGVs are designed to have the capability to export 585 Bscf/y of gas (approximately 12.0 MMtpa).
As detailed engineering and equipment specification advances during the design process and operating efficiencies are gained post-commissioning, the liquefaction process could perform better than this nominal design case. It is anticipated that LNG output could improve to as much as 657.5 Bscf/y in the optimized design case (approximately 13.2 MMtpa) which is the amount Delfin LNG is requesting authorization to export.
The proposed Delfin LNG deepwater port would take a modular implementation approach to allow for early market entry and accommodate market shifts. Offshore construction activities are proposed to begin at the end of first quarter of 2018 and would be completed in four stages, with each stage corresponding to the commissioning and operation of an FLNGV. The anticipated commissioning of FLNGV 1 is the third quarter of 2019 with start-up of commercial operation of FLNGV 1 by the end of 2019. It is anticipated that FLNGVs 2 through 4 would be commissioned 12 months apart. Following this schedule and barring unforeseen events, the Delfin deepwater port would be completed and all four FLNGVs would be fully operational by the summer of 2022.
Should a license be issued, the Delfin LNG deepwater port would be designed, fabricated, constructed, commissioned, maintained, inspected and operated in accordance with applicable codes and standards and with USCG oversight as regulated under Title 33, Code of Federal Regulations (CFR), subchapter NN-Deepwater Ports (33 CFR 148, 149 and 150). This includes applicable waterways management and regulated navigations areas, maritime safety and security requirements, risk assessment and compliance with domestic and international laws and regulations for vessels that may call at the port.
On May 8, 2015, Delfin LNG filed its original application with FERC requesting authorizations pursuant to the Natural Gas Act and 18 CFR part 157 for the onshore components of the proposed deepwater port terminal including authorization to use the existing pipeline infrastructure, which includes leasing a segment of pipeline from HIOS extending from the terminus of the UTOS pipeline offshore. On May 20, 2015, FERC issued its
On November 19, 2015, High Island Offshore System, LLC filed an application (FERC Docket No. CP16–20–000) to abandon certain offshore facilities in the Gulf of Mexico, including its 66-mile-long mainline, an offshore platform and related facilities (“HIOS Repurposed Facilities”). Accordingly, on November 19, 2015, Delfin LNG filed an amended application in FERC Docket No. CP15–490–001 to use the HIOS Repurposed Facilities and to revise the onshore component of its deepwater port project. On December 1, 2015, FERC issued a
The amended FERC application specifically discusses the onshore facility and adjustments to the onshore operations that would involve reactivating approximately 1.1 miles of the existing UTOS pipeline; the addition of four new onshore compressors totaling 120,000 horsepower of new compression; activation of associated metering and regulation facilities; the installation of new supply header pipelines (which would consist of 0.25 miles of new 42-inch-diameter pipeline to connect the former UTOS line to the new meter station); and 0.6 miles of new twin 30-inch-diameter pipelines between Transco Station 44 and the new compressor station site.
Additional information regarding the details of Delfin LNG's original and amended application to FERC is on file and open to public inspection. Project filings may be viewed on the web at
Regardless of the method used for submitting comments or materials, all submissions will be posted, without change, to
33 U.S.C. 1501
By Order of the Maritime Administrator.
Department of Transportation.
Notice of Order to Show Cause (Order 2016–7–5) Dockets DOT–OST–2015–0043 and DOT–OST–2015–0044.
The Department of Transportation is directing all interested
Persons wishing to file objections should do so no later than July 25, 2016
Objections and answers to objections should be filed in Dockets DOT–OST–2015–0043 and DOT–OST–2015–0044 and addressed to the Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE., West Building Ground Floor, Room W12–140, Washington, DC and should be served upon the parties listed in Attachment A to the order.
Damon D. Walker, Air Carrier Fitness Division, (X–56, Office W86–469), U.S. Department of Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590, (202) 366–9721.
Department of Transportation.
Notice of Order to Show Cause (Order 2016–7–6) DOT–OST–2016–0015.
The Department of Transportation is directing all interested persons to show cause why it should not issue an order tentatively finding Rectrix Aviation, Inc., fit, willing, and able to provide scheduled passenger service as a commuter air carrier using small aircraft pursuant to Part 135 of the Federal Aviation Regulations.
Persons wishing to file objections should do so no later than July 25, 2016.
Objections and answers to objections should be filed in Docket DOT–OST–2016–0015 and addressed to U.S. Department of Transportation, Docket Operations (M–30, Room W12–140), 1200 New Jersey Avenue SE., West Building Ground Floor, Washington, DC 20590, and should be served upon the parties listed in Attachment A to the order.
Venk Paluvai, Office of Aviation Analysis (X–53, Room W86–497), U.S. Department of Transportation, 1200 New Jersey Avenue SE., Washington, DC 20590, (202) 366–5432.
Centers for Medicare & Medicaid Services (CMS), HHS.
Proposed rule.
This major proposed rule addresses changes to the physician fee schedule and other Medicare Part B payment policies, such as changes to the Value Modifier, 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. This proposed rule also includes proposals related to the Medicare Shared Saving Program, and the release of certain pricing data from Medicare Advantage bids and medical loss ratio reports from Medicare health and drug plans. In addition, this rule proposes to expand the Medicare Diabetes Prevention Program model.
To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on September 6, 2016.
In commenting, please refer to file code CMS–1654–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one of the ways listed):
1.
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.
Jessica Bruton, (410) 786–5991 for issues related to any physician payment issues not identified below.
Gail Addis, (410) 786–4522, for issues related to diabetes self-management training.
Jaime Hermansen, (410) 786–2064, for issues related to moderate sedation coding and anesthesia services.
Jessica Bruton, (410) 786–5991, for issues related to identification of potentially misvalued services.
Roberta Epps, (410) 786–4503, for issues related to PAMA section 218(a) policy and the transition from traditional x-ray imaging to digital radiography.
Ken Marsalek, (410) 786–4502, for issues related to telehealth services.
Ann Marshall, (410) 786–3059, for primary care issues related to chronic care management (CCM), burden reduction and evaluation and management services.
Emily Yoder, (410) 786–1804, for primary care issues related to resource intensive services and other primary care issues.
Lindsey Baldwin, (410) 786–1694, for primary care issues related to behavioral health integration services.
Geri Mondowney, (410) 786–4584, and Donta Henson, (410) 786–1947, for issues related to geographic practice cost indices.
Michael Soracoe, (410) 786–6312, for issues related to the target and phase-in provisions, the practice expense methodology, impacts, conversion factor, and the valuation of surgical procedures.
Pamela West, (410) 786–2302, for issues related to therapy.
Patrick Sartini, (410) 786–9252, for issues related to malpractice RVUs, radiation treatment, mammography and other imaging services.
Kathy Bryant, (410) 786–3448, for issues related to collecting data on resources used in furnishing global services.
Donta Henson, (410) 786–1947, for issues related to pathology and ophthalmology services.
Corinne Axelrod, (410) 786–5620, for issues related to rural health clinics or federally qualified health centers for comprehensive care management services furnished incident to.
Simone Dennis (410) 786–8409, for issues related to FQHC-specific market basket.
JoAnna Baldwin (410) 786–7205, or Sarah Fulton (410) 786–2749, for issues related to appropriate use criteria for advanced diagnostic imaging services.
Erin Skinner (410) 786–0157, for issues related to open payments.
Sean O'Grady (410) 786–2259, or Julie Uebersax (410) 786–9284, for issues related to release of pricing data from Medicare Advantage bids and release of medical loss ratio data submitted by Medicare Advantage organizations and Part D sponsors.
Sara Vitolo (410) 786–5714, for issues related to prohibition on billing qualified Medicare beneficiary individuals for Medicare cost-sharing.
Michelle Peterman (410) 786–2591, for issues on the technical correction for PQRS.
Katie Mucklow (410) 786–0537 or John Spiegel (410) 786–1909, for issues related to Provider Enrollment Medicare Advantage Program.
Jen Zhu (410) 786–3725, Carlye Burd (410) 786–1972, or Nina Brown (410)
Rabia Khan or Terri Postma, (410) 786–8084 or
Sabrina Ahmed (410) 786–7499, or Fiona Larbi (410) 786–7224, for issues related to Value-based Payment Modifier and Physician Feedback Program.
Lisa Ohrin Wilson (410) 786–8852, or Gabriel Scott (410) 786–3928, for issues related to physician self-referral updates.
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 proposed rule, 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 proposed rule are available through the Internet on the CMS Web site at
Throughout this proposed rule, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2015 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 proposed rule proposes to revise payment polices under the Medicare Physician Fee Schedule (PFS) and make other policy changes related to Medicare Part B payment. These changes would be applicable to services furnished in CY 2017. In addition, this proposed rule includes proposals related to: the Medicare Shared Savings Program and release of pricing data submitted to CMS by Medicare Advantage (MA) organizations; and medical loss ratio reports submitted by MA plans and Part D plans. These additional proposals are addressed in section III. of this proposed rule.
The statute 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 statute 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 paid under the PFS, incorporating geographic adjustments to reflect the variations in the costs of furnishing services in different geographic areas. In this major proposed rule, we are proposing to establish RVUs for CY 2017 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 proposed rule includes discussions and proposals regarding:
• Potentially Misvalued PFS Codes.
• Telehealth Services.
• Establishing Values for New, Revised, and Misvalued Codes.
• Target for Relative Value Adjustments for Misvalued Services.
• Phase-in of Significant RVU Reductions.
• Chronic Care Management (CCM) and Transitional Care Management (TCM) Supervision Requirements in Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs).
• FQHC-Specific Market Basket.
• Appropriate Use Criteria for Advanced Diagnostic Imaging Services.
• Reports of Payments or Other Transfers of Value to Covered Recipients: Solicitation of Public Comments.
• Release of Part C Medicare Advantage Bid Pricing Data and Part C and Part D Medical Loss Ratio (MLR) Data.
• Prohibition on Billing Qualified Medicare Beneficiary Individuals for Medicare Cost-Sharing.
• Recoupment or Offset of Payments to Providers Sharing the Same Taxpayer Identification Number.
• Accountable Care Organization (ACO) Participants Who Report Physician Quality Reporting System (PQRS) Quality Measures Separately.
• Medicare Advantage Provider Enrollment.
• Proposed Expansion of the Diabetes Prevention Program (DPP) Model.
• Medicare Shared Savings Program.
• Value-Based Payment Modifier and the Physician Feedback Program.
• Physician Self-referral Updates.
The statute requires that annual adjustments to PFS RVUs may not cause annual estimated expenditures to differ by more than $20 million from what
We have determined that this major proposed rule is economically significant. For a detailed discussion of the economic impacts, see section VI. of this proposed rule.
Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Social Security Act (the Act), “Payment for Physicians' Services.” The 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 major proposed rule, 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 cooperative agreement with the Department of Health and Human Services (HHS). In constructing the code-specific vignettes used in determining the original physician work RVUs, Harvard worked with panels of experts, both inside and outside the federal government, and obtained input from numerous physician specialty groups.
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. 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.
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.B.2. of this proposed rule.
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.
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 proposed rule, in accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs cause 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 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 work, PE, and MP in an area compared to the national average costs for each component.
RVUs are converted to dollar amounts through the application of a CF, which is calculated based on a statutory formula by CMS's Office of the Actuary (OACT). The formula for calculating the Medicare fee schedule payment amount for a given service and fee schedule area can be expressed as:
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 ensure 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.
Section 220(d) of the Protecting Access to Medicare Act of 2014 (Pub. L. 113–93, enacted on April 1, 2014) (PAMA) added a new subparagraph (O) to section 1848(c)(2) of the Act to establish an annual target for reductions in PFS expenditures resulting from adjustments to relative values of misvalued codes. If the estimated net reduction in expenditures for a year is equal to or greater than the target for that year, the provision specifies that reduced expenditures attributable to such adjustments shall be redistributed in a budget-neutral manner within the PFS. The provision specifies that the amount by which such reduced expenditures exceed the target for a given year shall be treated as a reduction in expenditures for the subsequent year for purposes of determining whether the target for the subsequent year has been met. The provision also specifies that an amount equal to the difference between the target and the estimated net reduction in expenditures, called the target recapture amount, shall not be taken into account when applying the budget neutrality requirements specified in section 1848(c)(2)(B)(ii)(II) of the Act. The PAMA amendments originally made the target provisions applicable for CYs 2017 through 2020 and set the target for reduced expenditures at 0.5 percent of estimated expenditures under the PFS for each of those 4 years.
Subsequently, section 202 of the Achieving a Better Life Experience Act of 2014 (Division B of Pub. L. 113–295, enacted December 19, 2014) (ABLE) accelerated the application of the target, amending section 1848(c)(2)(O) of the Act to specify that target provisions apply for CYs 2016, 2017, and 2018; and setting a 1 percent target for reduced expenditures for CY 2016 and a 0.5 percent target for CYs 2017 and 2018. The implementation of the target legislation was finalized in the CY 2016 PFS final rule with comment period, and proposed revisions are discussed in section II.G. of this proposed rule.
Section 1848(c)(7) of the Act, as added by section 220(e) of the PAMA, specified that for services that are not new or revised codes, if the total RVUs for a service for a year would otherwise be decreased by an estimated 20 percent or more as compared to the total RVUs for the previous year, the applicable
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 physicians' 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 Medicare Economic Index (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). We have incorporated the available utilization data for interventional cardiology, which became a recognized Medicare specialty during 2014. We finalized the use of a proxy PE/HR value for interventional cardiology in the CY 2016 final rule with comment period (80 FR 70892), as there are no PPIS data for this specialty, by crosswalking the PE/HR for from
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 proposed rule describes the current data sources for specialty-specific indirect costs used in our PE calculations. We allocated the indirect costs to the code level on the basis of the direct costs specifically associated with a code and the greater of either the clinical labor costs or the 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 used 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. That is, 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 a total PE RVUs of 8.00 (2.00 is 25 percent of 8.00 and 6.00 is 75 percent of 8.00).
• Next, we added 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 incorporated 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. 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. For this reason, 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 composed 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). We also direct interested readers to the file called “Calculation of PE RVUs under Methodology for Selected Codes” which is available on our Web site under downloads for the CY 2017 PFS proposed rule at
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.
We use an average of the 3 most recent years of available Medicare claims data to determine the specialty mix assigned to each code. As we stated in the CY 2016 final rule with comment period (80 FR 70894), we believe that the 3-year average will mitigate the need to use dominant or expected specialty instead of the claims data. Because we are incorporating CY 2015 claims data for use in the CY 2017 proposed rates, we believe that the proposed PE RVUs associated with the CY 2017 PFS proposed rule provide a first opportunity to determine whether service-level overrides of claims data are necessary. Currently, in the development of PE RVUs we apply only the overrides that also apply to the MP RVU calculation. Since the proposed PE RVUs include a new year of claims into the 3 year average for the first time, we are seeking comment on the proposed CY 2017 PFS rates and whether or not the incorporation of a new year of utilization data into a three year average mitigates the need for alternative service-level overrides such as a claims-based approach (dominant specialty) or stakeholder-recommended approach (expected specialty) in the development of PE (and MP) RVUs for low-volume codes. Prior year RVUs are available at several locations on the PFS Web site located at
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 the download file called “Calculation of PE RVUs under Methodology for Selected Codes”, 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.
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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 (MPPRs). 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 we use the average allowed charge when simulating RVUs; therefore, the RVUs as calculated already reflect the payments as adjusted by modifiers, and no volume adjustments are necessary. However, a time adjustment of 33 percent is made only for medical direction of two to four cases since that is the only situation where a single practitioner is involved with multiple beneficiaries concurrently, so that counting each service without regard to the overlap with other services would overstate the amount of time spent by the practitioner furnishing these services.
•
The equipment cost per minute is calculated as:
Stakeholders have often suggested that particular equipment items are used less frequently than 50 percent of the time in the typical setting and that CMS should reduce the equipment utilization rate based on these recommendations. We appreciate and share stakeholders' interest in using the most accurate assumption regarding the equipment utilization rate for particular equipment items. However, we believe that absent robust, objective, auditable data regarding the use of particular items, the 50 percent assumption is the most appropriate within the relative value system. We welcome the submission of data that illustrates an alternative rate.
We continue to investigate potential avenues for determining equipment maintenance costs across a broad range of equipment items.
This section focuses on specific PE inputs. The direct PE inputs are included in the CY 2017 direct PE input database, which is available on our Web site under downloads for the CY 2017 PFS proposed rule at
Prior to the CY 2015 PFS rulemaking cycle, the RUC provided a recommendation regarding the PE inputs for digital imaging services. Specifically, the RUC recommended that we remove supply and equipment items associated with film technology from a previously specified list of codes since these items were no longer typical resource inputs. The RUC also recommended that the Picture Archiving and Communication System (PACS) equipment be included for these imaging services since these items had been become typically used in furnishing imaging services. However, since we did not receive any invoices for the PACS system prior to that year's proposed rule, we were unable to determine the appropriate pricing to use for the inputs. For CY 2015, we finalized our proposal to remove the film supply and equipment items, and to create a new equipment item as a proxy for the PACS workstation as a direct expense (79 FR 67561–67563). We used the price associated with ED021 (computer, desktop, w-monitor) to price the new item, ED050 (PACS Workstation Proxy), pending receipt of invoices to facilitate pricing specific to the PACS workstation. Subsequent to establishing payment rates for CY 2015, we received information from several stakeholders regarding pricing for items related to the digital acquisition and storage of images. We received invoices from one stakeholder that facilitated a proposed price update for the PACS workstation in the CY 2016 PFS proposed rule, and we updated the price for the PACS workstation to $5,557 in the CY 2016 PFS final rule with comment period (80 FR 70899).
In addition to the workstation used by the clinical staff acquiring the images and furnishing the TC of the services, a stakeholder also submitted more detailed information regarding a workstation used by the practitioner interpreting the image in furnishing the PC of many of these services.
As we stated in the CY 2015 PFS final rule with comment period (79 FR 67563), we generally believe that workstations used by these practitioners
We stated in the CY 2016 PFS final rule with comment period that the costs of the professional workstation may be analogous to costs related to the use of film previously incorporated as direct PE inputs for these services. We also solicited comments on whether including the professional workstation as a direct PE input for these codes would be appropriate, given that the resulting PE RVUs would be assigned to the global and technical components of the codes. Commenters responded by indicating their approval of the concept of a professional PACS workstation used for interpretation of digital images. We received invoices for the pricing of a professional PACS workstation, as well as additional invoices for the pricing of a mammography-specific version of the professional PACS workstation. The RUC also included these new equipment items in its recommendations for the CY 2017 PFS rulemaking cycle.
Based on our analysis of submitted invoices, we are proposing to price the professional PACS workstation (ED053) at $14,616.93. We are not proposing a change in price for the current technical PACS workstation (ED050), which will remain at a price of $5,557.00.
The price of the professional PACS workstation is based upon individual invoices submitted for the cost of a PC Tower ($1531.52), a pair of 3 MP monitors ($10,500.00 in total), a keyboard and mouse ($84.95), a UPS power backup devices for TNP ($1098.00), and a switch for PACS monitors/workstations ($1402.46).
We are proposing to add the professional PACS workstation to many CPT codes in the 70000 series that use the current technical PACS workstation (ED050) and include professional work for which such a workstation would be used. We are not proposing to add the equipment item to add-on codes since the base codes would include minutes for the item. We are also not proposing to add the item to codes that are therapeutic in nature, as the professional PACS workstation is intended for use in diagnostic services. We are therefore not proposing to add the item to codes in the Radiation Therapy section (77261 through 77799) or the Nuclear Medicine Cardiology section (78414–78499). We also are not proposing to add the item to image guidance codes where the dominant provider is not a radiologist (77002, 77011, 77071, 77077, and 77081) according to the most recent year of claims data, since we believe a single workstation would be more typical in those cases. We have identified approximately 426 codes to which we are proposing to add a professional PACS workstation. Please see Table 4 for the full list of affected codes.
For the professional PACS workstation, we are proposing to assign equipment time equal to the intraservice work time plus half of the preservice work time associated with the codes, since the work time generally reflects the time associated with the professional interpretation. We are proposing half of the preservice work time for the professional PACS workstation, as we do not believe that the practitioner would typically spend all of the preservice work period using the equipment. For older codes that do not have a breakdown of physician work time by service period, and only have an overall physician work time, we are proposing to use half the total work time as an approximation of the intraservice work time plus one half of the preservice work time. In our review of services that contained an existing PACS workstation and had a breakdown of physician work time, we found that half of the total time was a reasonable approximation for the value of intraservice work time plus one half of preservice work time where no such breakdown existed. We also considered using an equipment time formula of the physician intraservice time plus 1 minute (as a stand-in for the physician preservice work time). We are seeking public comment on the most accurate equipment time formula for the professional PACS workstation.
We are seeking public comment on the proposed list of codes that would incorporate either the professional PACS workstation. We are interested in public comment on the codes for which a professional PACS workstation should be included, and whether one of these professional workstations should be included for codes outside the 70000 series. In cases within the 70000 series where radiologists are not the typical specialty reporting the code, such as CPT codes 77002 and 77011, we are asking whether it would be appropriate to add one of the professional PACS workstations to these services.
As we noted in the CY 2015 PFS rule (79 FR 67640–67641), we continue to work on revisions to the direct PE input database to provide the number of clinical labor minutes assigned for each task for every code in the database instead of only including the number of clinical labor minutes for the preservice, service, and postservice periods for each code. In addition to increasing the transparency of the information used to set PE RVUs, this improvement would allow us to compare clinical labor times for activities associated with services across the PFS, which we believe is important to maintaining the relativity of the direct PE inputs. This information would facilitate the identification of the usual numbers of minutes for clinical labor tasks and the identification of exceptions to the usual values. It would also allow for greater transparency and consistency in the assignment of equipment minutes based on clinical labor times. Finally, we believe that the
In the following paragraphs, we address a series of issues related to clinical labor tasks, particularly relevant to services currently being reviewed under the misvalued code initiative.
In the CY 2015 PFS rule, we noted that the RUC recommendation regarding inputs for digital imaging services indicated that, as each code is reviewed under the misvalued code initiative, the clinical labor tasks associated with digital technology (instead of film) would need to be addressed. When we reviewed that recommendation, we did not have the capability of assigning standard clinical labor times for the hundreds of individual codes since the direct PE input database did not previously allow for comprehensive adjustments for clinical labor times based on particular clinical labor tasks. Therefore, consistent with the recommendation, we proposed to remove film-based supply and equipment items but maintain clinical labor minutes that were assigned based on film technology.
As noted in the paragraphs above, we continue to improve the direct PE input database by specifying for each code the minutes associated with each clinical labor task. Once completed, this work would allow adjustments to be made to minutes assigned to particular clinical labor tasks related to digital technology that occur in multiple codes, consistent with the changes that were made to individual supply and equipment items. In the meantime, we believe it would be appropriate to establish standard times for clinical labor tasks associated with all digital imaging services for purposes of reviewing individual services at present, and for possible broad-based standardization once the changes to the direct PE input database facilitate our ability to adjust time across services. During the CY 2016 PFS rulemaking cycle, we proposed appropriate standard minutes for five different clinical labor tasks associated with services that use digital imaging technology. In the CY 2016 PFS final rule with comment period (80 FR 70901), we finalized appropriate standard minutes for four of those five activities, which are listed in Table 5.
We did not finalize standard minutes for the activity “Technologist QC's images in PACS, checking for all images, reformats, and dose page.” We agreed with commenters that this task may require a variable length of time depending on the number of images to be reviewed. We stated that it may be appropriate to establish several different standard times for this clinical labor task for a low/medium/high quantity of images to be reviewed, in the same fashion that the clinical labor assigned to clean a surgical instrument package has two different standard times depending on the use of a basic pack (10 minutes) or a medium pack (30 minutes). We solicited public comment and feedback on this subject, with the anticipation of including a proposal in the CY 2017 proposed rule.
We received many comments suggesting that this clinical labor activity should not have a standard time value. Commenters stated that the number of minutes varies significantly for different imaging modalities; and the time is not simply based on the quantity of images to be reviewed, but also the complexity of the images. The commenters recommended that time for this clinical labor activity should be assigned on a code by code basis. We agree with the commenters that the amount of clinical labor needed to check images in a PACS workstation may vary depending on the service. However, we do not believe that this precludes the possibility of establishing standards for clinical labor tasks as we have done in the past by creating multiple standard times, for example, those assigned to cleaning different kinds of scopes. We continue to believe that the use of clinical labor standards provides greater consistency among codes that share the same clinical labor tasks and can improve relativity of values among codes. We are proposing to establish a range of appropriate standard minutes for the clinical labor activity Technologist QCs images in PACS, checking for all images, reformats, and dose page. These standard minutes will be applied to new and revised codes that make use of this clinical labor activity when they are reviewed by us for valuation. We are proposing 2 minutes as the standard for the simple case, 3 minutes as the standard for the intermediate case, and 4 minutes as the standard for the complex case. We are proposing the simple case of 2 minutes as the standard for the typical procedure code involving routine use of imaging. These values are based upon a review of the existing minutes assigned for this clinical labor activity; we have determined that 2 minutes is the duration for most services and a small number of codes with more complex forms of digital imaging have higher values. We are proposing to use 2 minutes for services involving routine x-rays (simple), 3 minutes for services involving CTs and MRIs (intermediate), and 4 minutes for the most highly complex services which would exceed these more typical cases. We are soliciting comments regarding the most accurate category—simple, intermediate, or complex for existing codes, and in particular what criteria
As with the clinical labor tasks associated with digital imaging, many of the currently assigned times for the specialized clinical labor tasks associated with pathology services are not consistent across codes. In reviewing past RUC recommendations for pathology services, we have not identified information that supports the judgment that the same tasks take significantly more or less time depending on the individual service for which they are performed, especially given the high degree of specificity with which the tasks are described. We continue to believe that, in general, a clinical labor task will tend to take the same amount of time to perform as the same clinical labor task when it is performed in a clinically similar service.
Therefore, we developed standard times for clinical labor tasks that we have used in finalizing direct PE inputs in recent years, starting in the CY 2012 PFS final rule with comment period (76 FR 73213). These times were based on our review and assessment of the current times included for these clinical labor tasks in the direct PE input database. We proposed in the CY 2016 PFS proposed rule to establish standard times for a list of 17 clinical labor tasks related to pathology services, and solicited public feedback regarding our proposed standards. Many commenters stated in response to our proposal that they did not support the standardization of clinical labor activities across pathology services. Commenters stated that establishing a single standard time for each clinical labor task was infeasible due to the differences in batch size or number of blocks across different pathology procedures. Several commenters indicated that it might be possible to standardize across codes with the same batch sizes, and urged us to consider pathology-specific details, such as batch size and block number, in the creation of any future standard times for clinical labor tasks related to pathology services.
As we stated in the CY 2016 PFS proposed rule, we developed the proposed standard times based on our review and assessment of the current times included for these clinical labor tasks in the direct PE input database. We believe that, generally speaking, clinical labor tasks with the same description are comparable across different pathology procedures. We believe this to be true based on the comparability of clinical labor tasks in non-pathology services, as well as the high degree of specificity with which most pathology tasks are described relative to clinical labor tasks associated with other PFS services. We concurred with commenters that accurate clinical labor times for pathology codes may be dependent on the number of blocks or batch size typically used for each individual service. However, we also believe that it is appropriate and feasible to establish “per block” standards or standards varied by batch size assumptions for many clinical labor activities that would be comparable across a wide range of individual services. We have received detailed information regarding batch size and number of blocks during review of individual pathology services on an intermittent basis in the past. We requested regular submission of these details on the PE worksheets supplied by the RUC as part of the review process for pathology services, as a means to assist in the determination of the most accurate direct PE inputs.
We also stated our belief that many of the clinical labor activities for which we proposed to establish standard times were tasks that do not depend on number of blocks or batch size. Clinical labor activities such as “Clean room/equipment following procedure” and “Dispose of remaining specimens” would typically remain standard across different services without varying by block number or batch size, with the understanding that additional time may be required above the standard value for a clinical labor task that is part of an unusually complex or difficult service. As a result, we ultimately finalized standard times for 6 of the 17 proposed clinical labor activities in the CY 2016 final rule with comment period (80 FR 70902). We have listed the finalized standard times in Table 6. We are currently proposing no further action on the remaining 11 clinical labor activities pending further action by the RUC (see below).
We remain committed to the process of establishing standard clinical labor times for tasks associated with pathology services. This may include establishing standards on a per-block or per-batch basis, as we indicated during the previous rulemaking cycle. However, we are aware that the PE Subcommittee of the RUC is currently working to standardize the pathology clinical labor activities they use in making their recommendations. We believe the RUC's efforts to narrow the current list of several hundred pathology clinical labor tasks to a more manageable number through the consolidation of duplicative or highly similar activities into a single description may serve PFS relativity and facilitate greater transparency in PFS ratesetting. We also believe that the RUC's standardization of pathology clinical labor tasks would facilitate our capacity to establish standard times for pathology clinical labor tasks in future rulemaking. Therefore, we are not proposing any additional change to clinical labor tasks associated with pathology services at this time.
During our routine reviews of direct PE input recommendations, we have regularly found unexplained inconsistencies involving the use of scopes and the video systems associated with them. Some of the scopes include video systems bundled into the
To promote appropriate relativity among the services and facilitate the transparency of our review process, during review of recommended direct PE inputs for the CY 2017 PFS proposed rule, we developed a structure that separates the scope and the associated video system as distinct equipment items for each code. Under this approach, we are proposing standalone prices for each scope, and separate prices for the video systems that are used with scopes. We would define the scope video system as including: (1) A monitor; (2) a processor; (3) a form of digital capture; (4) a cart; and (5) a printer. We believe that these equipment components represent the typical case for a scope video system. Our model for this system is the “video system, endoscopy (processor, digital capture, monitor, printer, cart)” equipment item (ES031), which we are proposing to re-price as part of this separate pricing approach. We obtained current pricing invoices for the endoscopy video system as part of our investigation of these issues involving scopes, which we are proposing to use for this re-pricing. We understand that there may be other accessories associated with the use of scopes; we are proposing to separately price any scope accessories, and individually evaluate their inclusion or exclusion as direct PE inputs for particular codes as usual under our current policy based on whether they are typically used in furnishing the services described by the particular codes.
We are also proposing standardizing refinements to the way scopes have been defined in the direct PE input database. We believe that there are four general types of scopes: Non-video scopes; flexible scopes; semi-rigid scopes, and rigid scopes. Flexible scopes, semi-rigid scopes, and rigid scopes would typically be paired with one of the video scope systems, while the non-video scopes would not. The flexible scopes can be further divided into diagnostic (or non-channeled) and therapeutic (or channeled) scopes. We are proposing to identify for each anatomical application: (1) A rigid scope; (2) a semi-rigid scope; (3) a non-video flexible scope; (4) a non-channeled flexible video scope; and (5) a channeled flexible video scope. We are proposing to classify the existing scopes in our direct PE database under this classification system, to improve the transparency of our review process and improve appropriate relativity among the services. We plan to propose input prices for these equipment items through future rulemaking.
We have proposed these changes only for the reviewed codes that make use of scopes; this applies to the codes in the Flexible Laryngoscopy family (CPT codes 31575, 31576, 31577, 31578, 315X1, 315X2, 315X3, 31579) (see section II.L) and the Laryngoplasty family (CPT codes 31580, 31584, 31587, 315Y1, 315Y2, 315Y3, 315Y4, 315Y5, 315Y6) (see section II.L) along with updated prices for the equipment items related to scopes utilized by these services. We are also soliciting comment on this separate pricing structure for scopes, scope video systems, and scope accessories, which we could consider proposing to apply to other PFS codes in future rulemaking.
Subsequent to the publication of the CY 2016 PFS final rule with comment period, stakeholders alerted us to several clerical inconsistencies in the direct PE database. We propose to correct these inconsistencies as described below and reflected in the CY 2017 direct PE input database displayed on our Web site under downloads for the CY 2017 PFS proposed rule at
For CY 2017, we are proposing the following technical corrections:
• For CPT codes 72081–72084, a stakeholder informed us that the equipment time for the PACS workstation (ED050) should be equal to the clinical labor during the service period; the equipment time formula we used for these codes for CY 2016 erroneously included 4 minutes of preservice clinical labor. We agree with the stakeholder that the PACS workstation should use the standard equipment time formula for a PACS workstation for these codes. As a result, we are proposing to refine the ED050 equipment time to 21 minutes for CPT code 72081, 36 minutes for CPT code 72082, 44 minutes for CPT code 72083, and 53 minutes for CPT code 72084 to reflect the clinical labor time associated with these codes. This same commenter also indicated that a number of clinical labor activities had been entered in the database in the incorrect service period for CPT codes 37215, 50432, 50694, and 72081. These clinical labor activities were incorrectly listed in the “postservice” period instead of the “service post” period. We are proposing to make these technical corrections as well so that the minutes are assigned to the appropriate service period within the direct PE input database.
• Another stakeholder alerted us that Ileoscopy codes 44380, 44381 and 44382 did not include the direct PE input equipment item called the Gomco suction machine (EQ235) and indicated that this omission appeared to be inadvertent. We agree that it was. We have included the item EQ235 in the proposed direct PE input database for CPT code 44380 at a time of 29 minutes, for CPT code 44381 at a time of 39 minutes, and to CPT code 44382 at a time of 34 minutes.
The PE RVUs displayed in Addendum B on our Web site were calculated with the inputs displayed in the CY 2017 direct PE input database.
Several of the PE worksheets included in the RUC recommendations for CY 2016 contained time for the equipment item “xenon light source” (EQ167). Because there appeared to be two special light sources already present (the fiberoptic headlight and the endoscope itself) in the services for which this equipment item was recommended by the RUC, we believed that the use of only one of these light sources would be typical and removed the xenon light equipment time. In the CY 2016 PFS final rule with comment period, we restored the xenon light (EQ167) and removed the fiberoptic headlight (EQ170) with the same number of equipment minutes for CPT codes 30300, 31295, 31296, 31297, and 92511.
We received comments expressing approval for the restoration of the xenon light. However, the commenters also stated that the two light sources were not duplicative, but rather, both a headlight and a xenon light source are required concurrently for otolaryngology procedures when scopes are utilized. The commenters requested that the fiberoptic headlight be restored to these codes.
We agree with the commenters that the use of both light sources would be typical for these procedures. We are therefore proposing to add the fiberoptic headlight (EQ170) to CPT codes 30300,
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. For CY 2017, we are proposing the following price updates for existing direct PE inputs:
Several commenters wrote to discuss the price of the Antibody Estrogen Receptor monoclonal (SL493). We received information including three invoices with new pricing information regarding the SL493 supply. We are proposing to use this information to propose for the supply item SL493 a price of $14.00 per test, which is the average price based on the invoices that we received in total for the item.
We are also proposing to update the price for two supplies in response to the submission of new invoices. The proposed price for “antigen, venom” supply (SH009) reflects an increase from $16.67 to $20.14 per milliliter, and the proposed price for “antigen, venom, tri-vespid” supply (SH010) reflects an increase from $30.22 to $44.05 per milliliter.
We routinely accept public submission of invoices as part of our process for developing payment rates for new, revised, and potentially misvalued codes. Often these invoices are submitted in conjunction with the RUC recommended values for the codes. For CY 2017, we note that some stakeholders have submitted invoices for new, revised, or potentially misvalued codes since the February deadline established for code valuation recommendations. To be included a given year's proposed rule, we generally need to receive invoices by the same February deadline. Of course, we will consider invoices submitted as public comments during the comment period following the publication of the proposed rule, and will consider any invoices received after February and/or outside of the public comment process as part of our established annual process for requests to update supply and equipment prices.
Section 1848(c) of the Act requires that each service paid under the PFS be composed of three components: Work, PE, and malpractice expense (MP). As required by section 1848(c)(2)(C)(iii) 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. In the CY 2015 PFS final rule with comment period, we implemented the third review and update of MP RVUs. For a comprehensive discussion of the third review and update of MP RVUs see the CY 2015 proposed rule (79 FR 40349 through 40355) and final rule with comment period (79 FR 67591 through 67596).
To determine MP RVUs for individual PFS services, our MP methodology uses three primary kinds of data: Specialty-level risk factors based on the collection of specialty-specific MP premium data that represent the actual expense incurred by practitioners to obtain MP insurance; Medicare claims data to determine service level risk factors based on a weighted average risk factors of the specialties that furnish each service, and the higher of the work RVU or clinical labor RVU to adjust the service level risk factor for the intensity and complexity of the service. Prior to CY 2016, MP RVUs were only updated once every 5 years, except in the case of new and revised codes.
As explained in the CY 2011 PFS final rule with comment period (75 FR 73208), MP RVUs for new and revised codes effective before the next 5-year review of MP RVUs were determined either by a direct crosswalk from a similar source code or by a modified crosswalk to account for differences in work RVUs between the new/revised code and the source code. For the modified crosswalk approach, we adjust (or scale) the MP RVU for the new/revised code to reflect the difference in work RVU between the source code and the new/revised work RVU (or, if greater, the difference in the clinical labor portion of the fully implemented PE RVU) for the new code. For example, if the proposed work RVU for a revised code were 10 percent higher than the work RVU for its source code, the MP RVU for the revised code would be increased by 10 percent over the source code MP RVU. Under this approach the same risk factor is applied for the new/revised code and source code, but the work RVU for the new/revised code is used to adjust the MP RVUs for risk.
In the CY 2016 PFS final rule with comment period (80 FR 70906 through 70910), we finalized a policy to begin conducting annual MP RVU updates to reflect changes in the mix of practitioners providing services (using Medicare claims data), and to adjust MP RVUs for risk for intensity and complexity (using the work RVU or clinical labor RVU). We also finalized a policy to modify the specialty mix assignment methodology (for both MP and PE RVU calculations) to use an average of the 3 most recent years of data instead of a single year of data. We stated that under this approach, the specialty-specific risk factors would continue to be updated through notice and comment rulemaking every 5 years using updated premium data, but would remain unchanged between the 5-year reviews.
For CY 2016, we did not propose to discontinue our current approach for determining MP RVUs for new/revised codes. For the new and revised codes for which we proposed work RVUs and PE inputs, we also published the proposed MP crosswalks used to determine their MP RVUs. We address comments regarding valuation of new and revised codes in section II.L of this proposed rule, which makes clear the codes with interim final values for CY 2016 have newly proposed values for CY 2017, all of which are again open for comment. The MP crosswalks for new and revised codes with interim final values were established in the CY 2016 PFS final rule with comment period; we will respond to comments regarding these interim final values in the CY 2017 PFS final rule.
The proposed CY 2017 GPCI update (eighth update), discussed in section II.E of this proposed rule, reflects updated MP premium data, collected for the purpose of proposing updates to the MP GPCIs. While we could use the updated MP premium data obtained for the purposes of the proposed eighth GPCI update to propose updates to the specialty risk factors used in the calculation of MP RVUs, this would not be consistent with the policy we previously finalized in the CY 2016 PFS final rule with comment period. In that rule, we indicated that the specialty-specific risk factors would continue to be updated through notice and comment rulemaking every 5 years using updated premium data, but would remain unchanged between the 5-year reviews. Additionally, consistent with the statutory requirement at section 1848(e)(1)(C) of the Act, only
Several conditions must be met for Medicare to make payments for telehealth services under the PFS. The service must be on the list of Medicare telehealth services and meet all of the following additional requirements:
• The service must be furnished via an interactive telecommunications system.
• The service must be furnished by a physician or other authorized practitioner.
• The service must be furnished to an eligible telehealth individual.
• The individual receiving the service must be located in a telehealth originating site.
When all of these conditions are met, Medicare pays a facility fee to the originating site and makes a 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 stand-alone 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 § 410.78(a)(1), asynchronous store-and-forward is the transmission of medical information from an originating site for review by the distant site physician or practitioner at a later time.
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 is an individual enrolled under Part B who receives a telehealth service furnished at a telehealth 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 MACs 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 facility 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 area (MSA).
Historically, we have defined rural HPSAs to be those located outside of MSAs. Effective January 1, 2014, we modified the regulations regarding originating sites to define rural HPSAs as those located in rural census tracts as determined by the Office of Federal Rural Health Policy (FORHP) of the Health Resources and Services Administration (HRSA) (78 FR 74811). Defining “rural” to include geographic areas located in rural census tracts within MSAs allows for broader inclusion of sites within HPSAs as telehealth originating sites. Adopting the more precise definition of “rural” for this purpose expands access to health care services for Medicare beneficiaries located in rural areas. HRSA has developed a Web site tool to provide assistance to potential originating sites to determine their geographic status. To access this tool, see the CMS Web site at
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 status for an originating site would be established and maintained on an annual basis, consistent with other telehealth payment policies (78 FR 74400). Geographic status 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 telehealth services, see the CMS Web site at
Requests to add services to the list of Medicare telehealth services must be submitted and received no later than December 31 of each calendar year to be considered for the next rulemaking cycle. For example, qualifying requests submitted before the end of CY 2016 will be considered for the CY 2018 proposed rule. 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. Because we use the annual PFS rulemaking process as a vehicle for making changes to the list of Medicare telehealth services, requesters should be advised that any information submitted is subject to public disclosure for this purpose. For more information on submitting a request for an addition to the list of Medicare telehealth services, including where to mail these requests, 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 for 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, but 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 2015 to add various services as Medicare telehealth services effective for CY 2017. The following presents a discussion of these requests, and our proposals for additions to the CY 2017 telehealth list. Of the requests received, we found that four services were sufficiently similar to ESRD-related services currently on the telehealth list to qualify on a category 1 basis. Therefore, we propose to add the following services to the telehealth list on a category 1 basis for CY 2017:
• CPT codes 90967 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients younger than 2 years of age; 90968 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients 2–11 years of age; 90969 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients 12–19 years of age); and 90970 (End-stage renal disease (ESRD) related services for dialysis less than a full month of service, per day; for patients 20 years of age and older).
As we indicated in the CY 2015 final rule (80 FR 41783) for the ESRD-related services (CPT codes 90963–90966) added to the telehealth list for CY 2016, the required clinical examination of the catheter access site must be furnished face-to-face “hands on” (without the use of an interactive telecommunications system) by a physician, CNS, NP, or PA. This requirement also applies to CPT codes 90967–90970.
While we did not receive a specific request, we also propose to add two advance care planning services to the telehealth list. We have determined that these services are similar to the annual wellness visits (HCPCS codes G0438 & G0439) currently on the telehealth list:
• CPT codes 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 care professional; first 30 minutes, face-to-face with the patient, family member(s), or surrogate); and 99498 (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 care professional; each additional 30 minutes (list separately in addition to code for primary procedure)).
We also received requests to add services to the telehealth list that do not meet our criteria for Medicare telehealth services. We are not proposing to add the following procedures for the reasons noted:
• 99217 (observation care discharge day management (this code is to be utilized to report all services provided to a patient on discharge from “observation status” if the discharge is on other than the initial date of “observation status.” To report services to a patient designated as “observation status” or “inpatient status” and discharged on the same date, use the codes for observation or inpatient care services [including admission and discharge services, 99234–99236 as appropriate.]));
• 99218 (initial observation care, per day, for the evaluation and management
• 99219 (initial observation care, per day, for the evaluation and management of a patient, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of moderate complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the problem(s) requiring admission to “observation status” are of moderate severity. Typically, 50 minutes are spent at the bedside and on the patient's hospital floor or unit);
• 99220 (initial observation care, per day, for the evaluation and management of a patient, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of high complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the problem(s) requiring admission to “observation status” are of high severity. Typically, 70 minutes are spent at the bedside and on the patient's hospital floor or unit);
• 99224 (subsequent observation care, per day, for the evaluation and management of a patient, which requires at least two of these three key components: Problem focused interval history; problem focused examination; medical decision making that is straightforward or of low complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the patient is stable, recovering, or improving. Typically, 15 minutes are spent at the bedside and on the patient's hospital floor or unit);
• 99225 (subsequent observation care, per day, for the evaluation and management of a patient, which requires at least two of these three key components: An expanded problem focused interval history; an expanded problem focused examination; medical decision making of moderate complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the patient is responding inadequately to therapy or has developed a minor complication. Typically, 25 minutes are spent at the bedside and on the patient's hospital floor or unit);
• 99226 (subsequent observation care, per day, for the evaluation and management of a patient, which requires at least two of these three key components: A detailed interval history; a detailed examination; medical decision making of high complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the patient is unstable or has developed a significant complication or a significant new problem. Typically, 35 minutes are spent at the bedside and on the patient's hospital floor or unit);
• 99234 (observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, which requires these three key components: A detailed or comprehensive history; a detailed or comprehensive examination; and medical decision making that is straightforward or of low complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually the presenting problem(s) requiring admission are of low severity. Typically, 40 minutes are spent at the bedside and on the patient's hospital floor or unit);
• 99235 (observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of moderate complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually the presenting problem(s) requiring admission are of moderate severity. Typically, 50 minutes are spent at the bedside and on the patient's hospital floor or unit);
• 99236 (observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date, which requires these three key components: A comprehensive history; a comprehensive examination; and medical decision making of high complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually the presenting problem(s) requiring admission are of high severity. Typically, 55 minutes are spent at the bedside and on the patient's hospital floor or unit);
The request to add these observation services referenced various studies supporting the use of observation units. The studies indicated that observation units provide safe, cost effective care to patients that need ongoing evaluation and treatment beyond the emergency department visit by having reduced hospital admissions, shorter lengths of stay, increased safety and reduced cost. Additional studies cited indicated that observation units reduce the work load on emergency department physicians, and reduce emergency department overcrowding.
In the CY 2005 PFS proposed rule (69 FR 47510), we considered a request but did not propose to add the observation CPT codes 99217–99220 to the list of Medicare telehealth services on a category two basis for the reasons described in that rule. The most recent request did not include any information that would cause us to question the previous evaluation under the category one criterion, which has not changed, regarding the significant differences in patient acuity between these services and services on the telehealth list. (69 FR 66277) While the request included evidence of the general benefits of observation units, it did not include specific information demonstrating that the services described by these codes provided clinical benefit when furnished via telehealth, which is necessary for us to consider these codes on a category two basis. Therefore, we are not proposing to add these services to the list of approved telehealth services.
• 99281 (emergency department visit for the evaluation and management of a patient, which requires these three key components: A problem focused history; a problem focused examination; and straightforward medical decision making. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the presenting problem(s) are self-limited or minor);
• 99282 (emergency department visit for the evaluation and management of a patient, which requires these three key components: An expanded problem focused history; an expanded problem focused examination; and medical decision making of low complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the presenting problem(s) are of low to moderate severity);
• 99283 (emergency department visit for the evaluation and management of a patient, which requires these three key components: An expanded problem focused history; an expanded problem focused examination; and medical decision making of moderate complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the presenting problem(s) are of moderate severity);
• 99284 (emergency department visit for the evaluation and management of a patient, which requires these three key components: A detailed history; a detailed examination; and medical decision making of moderate complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the presenting problem(s) are of high severity, and require urgent evaluation by the physician, or other qualified health care professionals but do not pose an immediate significant threat to life or physiologic function); and
• 99285 (emergency department visit for the evaluation and management of a patient, which requires these three key components within the constraints imposed by the urgency of the patient's clinical condition and mental status: A comprehensive history; a comprehensive examination; and medical decision making of high complexity. Counseling and coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and family's needs. Usually, the presenting problem(s) are of high severity and pose an immediate significant threat to life or physiologic function).
In the CY 2005 PFS proposed rule (69 FR 47510), we considered a request but did not propose to add the emergency department visit CPT codes 99281–99285 to the list of Medicare telehealth services for the reasons described in that rule.
The current request to add the emergency department E/M services stated that the codes are similar to outpatient visit codes (CPT codes 99201–99215) that have been on the telehealth list since CY 2002. As we noted in the CY 2005 PFS final rule, while the acuity of some patients in the emergency department might be the same as in a physician's office; we believe that, in general, more acutely ill patients are more likely to be seen in the emergency department, and that difference is part of the reason there are separate codes describing evaluation and management visits in the Emergency Department setting. The practice of emergency medicine often requires frequent and fast-paced patient reassessments, rapid physician interventions, and sometimes the continuous physician interaction with ancillary staff and consultants. This work is distinctly different from the pace, intensity, and acuity associated with visits that occur in the office or outpatient setting. Therefore, we are not proposing to add these services to the list of approved telehealth services on a category one basis.
The requester did not provide any studies supporting the clinical benefit of managing emergency department patients with telehealth which is necessary for us to consider these codes on a category two basis. Therefore, we are not proposing to add these services to the list of approved telehealth services on a category two basis.
Many requesters of additions to the telehealth list urged us to consider the potential value of telehealth for providing beneficiaries access to needed expertise. We note that if clinical guidance or advice is needed in the emergency department setting, a consultation may be requested from an appropriate source, including consultations that are currently included on the list of telehealth services.
• 99291 (critical care, evaluation and management of the critically ill or critically injured patient; first 30–74 minutes); and 99292 (critical care, evaluation and management of the critically ill or critically injured patient; each additional 30 minutes (list separately in addition to code for primary service).
We previously considered and rejected adding these codes to the list of Medicare telehealth services in the CY 2009 PFS final rule (74 FR 69744) on a category 1 basis because, due to the acuity of critically ill patients, we did not believe critical care services are similar to any services on the current list of Medicare telehealth services. In that rule, we said that critical care services must be evaluated as category 2 services. Because we considered critical care services under category 2, we needed to evaluate whether these are services for which telehealth can be an adequate substitute for a face-to-face encounter, based on the category 2 criteria at the time of that request. We had no evidence suggesting that the use of telehealth could be a reasonable surrogate for the face-to-face delivery of this type of care.
The American Telemedicine Association (ATA) submitted a new request for CY 2016 that cited several studies to support adding these services on a category 2 basis. To qualify under category 2, we would need evidence that the service furnished via telehealth is still described accurately by the requested code and produces a clinical benefit for the patient via telehealth. However, in reviewing the information provided by the ATA and a study titled, “Impact of an Intensive Care Unit Telemedicine Program on Patient Outcomes in an Integrated Health Care System,” published July 2014 in
This year, requesters cited additional studies to support adding critical care
However, according to the literature, the management of stroke via telehealth requires more than a single practitioner and is distinct from the work described by the E/M codes. One additional study cited involved pediatric patients, while another noted that the Department of Defense has used telehealth to provide critical care services to hospitals in Guam for many years. Another reference study indicated that consulting intensivists thought that telemedicine consultations were superior to telephone consultations. In all of these cases, we believe the evidence demonstrates that interaction between these patients and distant site practitioners can have clinical benefit. However, we do not agree that the kinds of services described in the study are those that are included in the critical care E/M codes. We note that CPT guidance makes clear that a variety of other services are bundled into the payment rates for critical care, including gastric intubations and vascular access procedures among others We do not believe these kinds of services are furnished via telehealth. Public comments, included cited studies, can be viewed at
However, we are persuaded by the requests that we recognize the potential benefit of critical care consultation services that are furnished remotely. We note that there are currently codes on the telehealth list that could be reported when consultation services are furnished to critically ill patients. But in consideration of these public requests, we recognize that there may be greater resource costs involved in furnishing these services relative to the existing telehealth consultation codes. We also agree with the requesters that there may be potential benefits of remote care by specialists for these patients. For these reasons, we think it would be advisable to create a coding distinction between telehealth consultations for critically ill patients relative to telehealth consultations for other hospital patients. Such a coding distinction would allow us to recognize the additional resource costs in terms of time and intensity involved in furnishing such services under the conditions where remote, intensive consultation is required to provide access to appropriate care for the critically ill patient. We recognize that the current set of codes may not adequately describe such services because current E/M coding presumes that the services are occurring in-person, in which case the expert care would be furnished in a manner described by the current codes for critical care.
Therefore, we are proposing to make payment through new codes, initial and subsequent, used to describe critical care consultations furnished via telehealth. This coding would provide a mechanism to report an intensive telehealth consultation service, initial or subsequent, for the critically ill patient under the circumstance when a qualified health care professional has in-person responsibility for the patient but the patient benefits from additional services from a distant-site consultant specially trained in providing critical care services. We propose limiting these services to once per day per patient. Like the other telehealth consultations, these services would be valued relative to existing E/M services (see Section II.L.2.b for proposed code valuations).
More details on the new coding (GTTT1 and GTTT2) and proposed valuation for these services are discussed in section II.L. of this proposed rule and the proposed RVUs for this service are included in Addendum B of this proposed rule. Like the other telehealth consultation codes, we are proposing that these services would be added to the telehealth list and would be subject to the geographic and other statutory restrictions that apply to telehealth services.
We request comment on this proposal, specifically as to whether the use of new coding would create a helpful distinction between telehealth consultations for critically ill patients relative to telehealth consultations for other hospital patients. We are also specifically interested in comments on how these services would be distinguished from existing critical care services and examples of different scenarios when each code would be appropriate. Such comments will help us to refine provider communication materials.
• 96101 (psychological testing (includes psychodiagnostic assessment of emotionality, intellectual abilities, personality and psychopathology,
• 96102 psychological testing (includes psychodiagnostic assessment of emotionality, intellectual abilities, personality and psychopathology,
• 96118 Neuropsychological testing (
• 96119 Neuropsychological testing (
Requesters indicated that there is nothing in the Minnesota Multiphasic Personality Inventory (MMPI), the Rorschach inkblot test, the Wechsler Adult Intelligence Scale (WAIS), the Halstead-Reitan Neuropsychological Battery and Allied Procedures, or the Wisconsin Card Sorting Test (WCST), that cannot be done via telehealth nor is different than neurological tests done for Parkinson's disease, seizure medication side effects, gait assessment, nor any of the many neurological examinations done via telehealth with the approved outpatient office visit and inpatient visit CPT codes currently on the telehealth list. As an example, requesters indicated that the MPPI is administered by a computer, which generates a report that is interpreted by the clinical psychologist, and that the test requires no interaction between the clinician and the patient.
We previously considered the request to add these codes to the Medicare telehealth list in the CY 2015 final rule (79 FR 67600). We decided not to add these codes, indicating that these services are not similar to other services on the telehealth list because they require close observation of how a patient responds. We noted that the requesters did not submit evidence supporting the clinical benefit of furnishing these services via telehealth so that we could evaluate them on a
• 92507 (treatment of speech, language, voice, communication, and auditory processing disorder; individual); and, 92508 (treatment of speech, language, voice, communication, and auditory processing disorder; group, 2 or more individuals); 92521 (evaluation of speech fluency (
The statute defines who is an authorized practitioner of telehealth services. Physical therapists, occupational therapists and speech-language pathologists are not authorized practitioners of telehealth under section 1834(m)(4)(E) of the Act, as defined in section 1842(b)(18)(C) of the Act. Because the above services are predominantly furnished by physical therapists, occupational therapists and speech-language pathologists, we do not believe it would be appropriate to add them to the list of telehealth services at this time. One requester suggested that we can add telehealth practitioners without legislation, as evidenced by the addition of nutritional professionals. However, we do not believe we have such authority and note that nutritional professionals are included as practitioners in the definition at section 1834(b)(18)(C)(vi) of the Act, and thus, are within the statutory definition of telehealth practitioners. Therefore, we are not proposing to add these services to the list of Medicare telehealth services for CY 2017.
In summary, we propose to add the following codes to the list of Medicare telehealth services beginning in CY 2017 on a category 1 basis:
• ESRD-related services 90967 through 90970. The required clinical examination of the catheter access site must be furnished face-to-face “hands on” (without the use of an interactive telecommunications system) by a physician, CNS, NP, or PA.
• Advance care planning (CPT codes 99497 and 99498).
• Telehealth Consultations for a Patient Requiring Critical Care Services (GTTT1 and GTTT2)
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 2018, these requests must be submitted and received by December 31, 2016. 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
CMS has received multiple requests from various stakeholders to establish a POS code to identify services furnished via telehealth. These requests have come from other payers, but may also be related to confusion concerning whether to use the POS where the distant site physician is located or the POS where the patient is located. The process for establishing POS codes, is managed by the POS Workgroup within CMS, is available for use by all payers, and is not contingent upon Medicare PFS rulemaking. However, if such a POS code were to be created, in order to make it valid for use in Medicare, we would have to determine the appropriate payment rules associated with the code. Therefore, we are proposing how a POS code for telehealth would be used under the PFS with the expectation that, if such a code is available, it would be used as early as January 1, 2017. We propose that the physicians or practitioners furnishing telehealth services would be required to report the telehealth POS code to
Our proposed requirement for physicians and practitioners to use the telehealth POS code to report that telehealth services were furnished from a distant site would improve payment accuracy and consistency in telehealth claims submission. Currently, for services furnished via telehealth, we have instructed practitioners to report the POS code that would have been reported had the service been furnished in person. However, some practitioners use the POS where they are located when the service is furnished, while others use the POS corresponding to the patient's location.
Under the PFS, the POS code determines whether a service is paid using the facility or non-facility practice expense relative value units (PE RVUs). The facility rate is paid when a service is furnished in a location where Medicare is making a separate facility payment to an entity other than the physician or practitioner that is intended to reflect the facility costs associated with the service (clinical staff, supplies and equipment). We note that in accordance with section 1834(m)(2)(B) of the Act, the payment amount for the telehealth facility fee paid to the originating site is a national fee, paid without geographic or site of service adjustments that generally are made for payments to different kinds of Medicare providers and suppliers. In the case of telehealth services, we believe that facility costs (clinical staff, supplies, and equipment) associated with the provision of the service would generally be incurred by the originating site, where the patient is located, and not by the practitioner at the distant site. And, by statute, the Medicare pays a fee to the site that hosts the patient. This is analogous to the circumstances under which the facility PE RVUs are used to pay for services under the PFS. Therefore, we are proposing to use the facility PE RVUs to pay for telehealth services reported by physicians or practitioners with the telehealth POS code. We note that there are only three codes on the telehealth list with a difference greater than 1.0 PE RVUs between the facility PE RVUs and the non-facility PE RVUs. The remainder of the physician payments for telehealth services would be unchanged by this proposal. We do not anticipate that this proposal would result in a significant change in the total payment for the majority of services on the telehealth list. Moreover, many practitioners already use a facility POS when billing for telehealth services (those that report the POS of the originating site where the beneficiary is located). The proposed policy to use the telehealth POS code for telehealth services would not affect payment for telehealth services for these practitioners.
The POS code for telehealth would not apply to originating sites billing the facility fee. Originating sites are not furnishing a service via telehealth since the patient is physically present in the facility. Accordingly, the originating site would continue to use the POS code that applies to the type of facility where the patient is located.
We are also proposing a change to our regulation at § 414.22(b)(5)(i)(A) that addresses the PE RVUs used in different settings. These proposed revisions would improve clarity regarding our current and proposed policies. Specifically, we are proposing to amend this section to specify that the facility PE RVUs are paid for practitioner services furnished via telehealth under § 410.78. In addition, we are proposing a change to resolve any potential ambiguity and clarify that payment under the PFS is made at the facility rate (facility PE RVUs) when services are furnished in a hospital but for which the hospital is not being paid. Finally, to streamline the existing regulation, we are also proposing to delete § 414.32 of our regulation that refers to the calculating of payments for certain services prior to 2002.
This proposed change is aligned with regulatory changes being proposed in the “Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Procurement Organization Reporting and Communication; Transplant Outcome Measures and Documentation Requirements; Electronic Health Record (EHR) Incentive Programs; Payment to Certain Off-Campus Provider-Based Departments” proposed rule to implement section 603 of the Bipartisan Budget Act of 2015. In that proposed rule, we discuss payment rates for services furnished to patients in off-campus provider-based departments.
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) to 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 II.B. of this proposed rule, 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 System (PQRS) 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 for our review. 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 and requires us to take into account the results of consultations with organizations representing physicians who provide the services. 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 (
As MedPAC noted in its March 2009 Report to Congress (
• Codes that have experienced the fastest growth.
• Codes that have experienced substantial changes in practice expenses.
• Codes that describe new technologies or services within an appropriate time period (such as 3 years) after the relative values are initially established for such codes.
• Codes which are 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 that have not been subject to review since implementation of the fee schedule.
• Codes that account for the majority of spending under the physician fee schedule.
• 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 practice expense relative value units.
• Codes with high cost supplies.
• Codes as determined appropriate by the Secretary.
Section 1848(c)(2)(K)(iii) of the Act also specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In addition, the Secretary may conduct surveys, other data collection activities, studies, or other analyses, as the Secretary determines to be appropriate, to facilitate the review and appropriate adjustment of potentially misvalued services. This section also authorizes the use of analytic contractors to identify and analyze potentially misvalued codes, conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of potentially misvalued services. Additionally, this section provides that the Secretary may coordinate the review and adjustment of any RVU with the periodic review described in section 1848(c)(2)(B) of the Act. 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 in these areas over the upcoming 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 1,671 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 PFS 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 PFS 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 (76 FR 32410), we requested recommendations from the RUC to aid in our review of Harvard-valued codes with annual utilization of greater than 30,000. In the CY 2013 PFS final rule with comment period, we identified specific 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 PFS 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 2016 PFS final rule with comment period, we finalized for review a list of potentially misvalued services, which included eight codes in the neurostimulators analysis-programming family (CPT 95970–95982). We also finalized as potentially misvalued 103 codes identified through
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 to be appropriate to facilitate the validation of RVUs of services.
In the CY 2011 PFS proposed rule (75 FR 40068) and CY 2012 PFS proposed rule (76 FR 42790), we solicited public comments on possible approaches, methodologies, and data sources that we should consider for a validation process. A summary of the comments along with our responses are included in the CY 2011 PFS final rule with comment period (75 FR 73217) and the CY 2012 PFS final rule with comment period (73054 through 73055).
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 develop empirical time estimates based on data collected from several health systems with multispecialty group practices. The Urban Institute collected data by directly observing the delivery of services and through the use of electronic health records for services selected by the contractor in consultation with CMS and is using this data to produce objective time estimates. We expect the final Urban Institute report will be made available on the CMS Web site later this summer.
The second contract is with the RAND Corporation, which used 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 consulted with a technical expert panel on model design issues and the test results. The RAND report is available under downloads on the Web site for the CY 2015 PFS Final Rule with Comment Period at
After posting RAND's report on the models and results on our Web site, we received comments indicating that the models did not adequately address global surgery services due to the lack of available data on included visits. Therefore, we modified the RAND contract to include the development of G-codes that could be used to collect data about post-surgical follow-up visits on Medicare claims to meet the requirements in section 1848(c)(8)(B) of the Act regarding collection of data on global services. Our proposals related to this data collection requirement are discussed in section II.D.6. Also, the data from this project would provide information that would allow the time for these services to be included in the model for validating RVUs.
Because routine E/M is included in the valuation of codes with 0-, 10-, and 90-day global periods, Medicare only makes separate payment for E/M services that are provided in excess of those considered included in the global procedure. In such cases, the physician would report the additional E/M service with Modifier 25, which is defined as a significant, separately identifiable E/M service performed by the same physician on the day of a procedure above and beyond other services provided or beyond the usual preservice and postservice care associated with the procedure that was performed. Modifier 25 allows physicians to be paid for E/M services that would otherwise be denied as bundled.
In reviewing misvalued codes, both CMS and the RUC have often considered how frequently particular codes are reported with E/M codes to account for potential overlap in resources. Some stakeholders have expressed concern with this policy especially with regard to the valuation of 0-day global services that are typically billed with a separate E/M service with the use of Modifier 25. For example, when we established our valuation of the osteopathic manipulation services, described by CPT codes 98925–98929, we did so with the understanding that these codes are usually reported with E/M codes.
Medicare claims data for CY 2015 show that 19 percent of the codes that describe 0-day global services were billed over 50 percent of the time with an E/M with Modifier 25. Since routine E/M is included in the valuation of 0-day global services, we believe that the routine billing of separate E/M services may indicate a possible problem with the valuation of the bundle, which is intended to include all the routine care associated with the service.
We believe that reviewing the procedure codes typically billed with an E/M with Modifier 25 as potentially misvalued may be one avenue to improve valuation of these services. To develop the CY 2017 proposed list of potentially misvalued services in this category, we identified 0-day global codes billed with an E/M 50 percent of the time or more, on the same day of service, with the same physician and same beneficiary. To prioritize review of these potentially misvalued services, we are identifying the codes that have not been reviewed in the last 5 years, and with greater than 20,000 allowed services. Table 7 lists the 83 codes that meet these review criteria and we are proposing these as potentially misvalued for CY 2017. We request public input on additional ways to address appropriate valuations for all services that are typically billed with an E/M with Modifier 25.
In the CY 2004 PFS final rule with comment period (68 FR 63216), we established new Level II HCPCS G-codes for end-stage renal disease (ESRD) services and established payment for those codes through monthly capitation payment (MCP) rates. For ESRD center-based patients, payment for the G-codes varied based on the age of the beneficiary and the number of face-to-face visits furnished each month (for example, 1 visit, 2–3 visits and 4 or more visits). We believed that many physicians would provide 4 or more visits to center-based ESRD patients and a small proportion will provide 2–3 visits or only one visit per month. Under the MCP methodology, to receive the highest payment, a physician would have to provide at least four ESRD-related visits per month. However, payment for home dialysis MCP services only varied by the age of beneficiary. Although we did not initially specify a frequency of required visits for home dialysis MCP services, we stated that we expect physicians to provide clinically appropriate care to manage the home dialysis patient.
The CPT Editorial Panel created new CPT codes to replace the G-codes for monthly ESRD-related services, and we accepted the new codes for use under the PFS in CY 2009. The CPT codes created were 90963–90966 for monthly ESRD-related services for home dialysis patient and CPT codes 90967–90970 for dialysis with less than a full month of services.
In a GAO report titled “END-STAGE RENAL DISEASE Medicare Payment Refinements Could Promote Increased Use of Home Dialysis” dated October 2015,
In the report, the GAO noted that CMS intended for the existing payment structure to create an incentive for physicians to prescribe home dialysis, because the monthly payment rate for managing the dialysis care of home patients, which requires a single in-person visit, was approximately equal to the rate for managing and providing two to three visits to ESRD center-based patients. However, GAO found that, in 2013, the rate of $237 for managing home patients was lower than the average payment of $266 and maximum payment of $282 for managing ESRD center-based patients. The GAO stated that this difference in payment rates may discourage physicians from prescribing home dialysis.
Physician associations and other physicians GAO interviewed stated that the visits with home patients are often longer and more comprehensive than in-center visits; this is in part because physicians may conduct visits with individual home patients in a private setting, but they may be able to more easily visit multiple in-center patients on a single day as they receive dialysis. The physician associations GAO interviewed also said that they may spend a similar amount of time outside of visits to manage the care of home patients and that they are required to provide at least one visit per month to perform a complete assessment of the patient.
It is important to note that, as stated in the CY 2011 PFS final rule with comment period (75 FR 73296), we believe that furnishing monthly face-to-face visits is an important component of high quality medical care for ESRD patients being dialyzed at home and generally would be consistent with the current standards of medical practice. However, we also acknowledged that extenuating circumstances may arise that make it difficult for the MCP physician (or NPP) to furnish a visit to a home dialysis patient every month. Therefore, we allow Medicare contractors the discretion to waive the requirement for a monthly face-to-face visit for the home dialysis MCP service on a case-by-case basis, for example, when the MCP physician's (or NPP's) notes indicate that the MCP physician (or NPP) actively and adequately managed the care of the home dialysis patient throughout the month.
The GAO recommended, and we agreed, that CMS examine Medicare policies for monthly payments to physicians to manage the care of dialysis patients and revise them if necessary to ensure that these policies are consistent with our goal of encouraging the use of home dialysis among patients for whom it is appropriate. Therefore, we are proposing to identify CPT codes 90963 through 90970 as potentially misvalued codes based on the volume of claims submitted for these services relative to those submitted for facility ESRD services.
Stakeholders have raised concerns about potential inconsistencies with the inputs and the prices related to endoscopic procedures in the direct PE database. Upon review, we noted that there are 45 different pieces of endoscope related-equipment and 25 different pieces of endoscope related-supplies that are currently associated with these services. Relative to other kinds of equipment items in the direct PE input, these items are much more varied and used for many fewer services. Given the frequency with which individual codes can be reviewed and the importance of standardizing inputs for purposes of maintaining relativity across PFS services, we believe that this unusual degree of variation is likely to result in code misvaluation. To facilitate efficient review of this particular kind of misvaluation, and because we believe that stakeholders will prefer the opportunity to contribute to such standardization, we request that stakeholders like the RUC review and make recommendations on the appropriate endoscopic equipment and supplies typically provided in all endoscopic procedures for each anatomical body region, along with their appropriate prices.
We identified a potential inconsistency in instances where there are direct PE inputs included in the facility postservice period even though post-operative visit is not included in a service. We identified 13 codes that are affected by this issue and we are unclear if the discrepancy is caused by inaccurate direct PE inputs or inaccurate post-operative data in the work time file. We request that stakeholders including the RUC review these discrepancies and provide their recommendations on the appropriate direct PE inputs for the codes listed in Table 8.
Stakeholders have urged CMS to create new coding describing the insertion and removal of drug delivery implants for buprenorphine hydrochloride, formulated as a 4 rod, 80 mg, long acting subdermal drug implant for the treatment of opioid addiction. These stakeholders have suggested that current coding that describes insertion and removal of drug delivery implants is too broad and that new coding is needed to account for specific additional resource costs associated with particular treatment. We are identifying existing CPT codes 11981 (Insertion, non-biodegradable drug delivery implant), 11982 (Removal, non-biodegradable drug delivery implant), and 11983 (Removal with reinsertion, non-biodegradable drug delivery implant) as potentially misvalued codes and are seeking comment and information regarding whether the current resource inputs in work and practice expense for these codes appropriately account for variations in the service relative to which devices and related drugs are inserted and removed.
The CPT manual identifies more than 400 diagnostic and therapeutic procedures (listed in Appendix G) for which the CPT Editorial Committee has determined that moderate sedation is an inherent part of furnishing the procedure. In developing RVUs for these services, we include the resource costs associated with moderate sedation in the valuation since the CPT codes include moderate sedation as an inherent part of the procedure. Therefore, only the procedure code is currently reported when furnishing the service. Endoscopic procedures constitute a significant portion of the services identified in Appendix G. In the CY 2015 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, meaning that the resource costs associated with sedation were no longer incurred by the practitioner reporting the Appendix G procedure. We indicated that, in order to reflect apparent changes in medical practice, we were considering establishing a uniform approach to the appropriate valuation of all Appendix G services for which moderate sedation is no longer inherent, rather than addressing the issue at the procedure level as individual codes are revalued. We solicited public comment on approaches to the appropriate valuation of these services.
In the CY 2016 PFS proposed rule (80 FR 41707), we again solicited public comment and recommendations on approaches to address the appropriate valuation of moderate sedation related to Appendix G services. In response to our comment solicitation, the CPT Editorial Panel created CPT codes for separately reporting moderate sedation services in association with the elimination of Appendix G from the CPT Manual for CY 2017. This coding change would provide for payment for
We direct readers to section II.L. of this proposed rule, which includes more details regarding our proposed valuation of the new moderate sedation codes and our proposed uniform methodology for revaluation of the procedural codes previously identified in Appendix G. We believe that the RVUs assigned under the PFS should reflect the overall resource costs of PFS services, regardless of how many codes are used to report the services. Therefore, our proposed methodology for valuation of Appendix G procedural services would maintain current resource assumptions for the procedures when furnished with moderate sedation and redistribute the RVUs associated with moderate sedation (previously included in Appendix G procedural codes) to other PFS services. We believe that our proposed uniform methodology for revaluation of Appendix G services without moderate sedation is consistent with our general principle that the overall resource costs for the procedures do not change based solely on changes in coding.
We also note that stakeholders presented information to CMS regarding specialty group survey data for physician work. The stakeholders shared survey results for physician work involved in furnishing moderate sedation that demonstrated a significant bimodal distribution between procedural services furnished by gastroenterologists (GI) and procedural services furnished by other specialties. Since we believe that gastroenterologists furnish the highest volume of services previously identified in Appendix G, and services primarily furnished by gastroenterologists prompted the concerns that led to our identification of changes in medical practice and potentially duplicative payment for these codes, we have addressed the variations between the GI and other specialties in our review of the new moderate sedation CPT codes and their recommended values. We again direct readers to section II.L. of this proposed rule where we discuss our proposal to augment the new CPT codes for moderate sedation with an endoscopy-specific moderate sedation code, as well as proposed valuations reflecting the differences in the physician survey data between GI and other specialties.
Under the PFS, certain services, such as surgery, are valued and paid for as part of global packages that include the procedure and the services typically furnished in the periods immediately before and after the procedure. For each of these global packages, 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 packages include the surgical procedure and the pre-operative and post-operative services furnished by the physician on the day of the service. The 10-day global packages include these services and, in addition, visits related to the procedure during the 10 days following the day of the procedure. The 90-day global packages 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 Chapter 12 of the Claims Processing Manual (Pub. 100–04) defines the global surgical package to include the following services related to the surgery when furnished during the global period by the same physician or another practitioner in the same group practice:
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In the CY 2015 PFS proposed and final rules we extensively discussed the problems with accurate valuation of 10-and 90-day global packages. Our concerns included the fact that we do not use actual data on services furnished in order to update the rates, questions regarding the accuracy of our current assumptions about typical services, whether we will be able to adjust values on a regular basis to reflect changes in the practice of medicine and health care delivery, and how our global payment policies affect what services are actually furnished (79 FR 67582 through 67585). In finalizing a policy to transform all 10-day and 90-day global codes to 0-day global codes in CY 2017 and CY 2018, respectively, to improve the accuracy of valuation and payment for the various components of global packages, including pre- and post-operative visits and the procedure itself, we stated that we were adopting this policy because we believe it is critical that PFS payment rates be based upon RVUs that reflect the resource costs of furnishing the services. We also stated our belief that transforming all 10- and 90-day global codes to 0-day global packages would:
• Increase the accuracy of PFS payment by setting payment rates for individual services that more closely reflect the typical resources used in furnishing the procedures;
• Avoid potentially duplicative or unwarranted payments when a beneficiary receives post-operative care from a different practitioner during the global period;
• 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 packages; and
• Facilitate the availability of more accurate data for new payment models and quality research.
Section 523(a) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10, enacted April 16, 2015) prohibits the Secretary from implementing the policy, described above, that would have transformed all 10-day and 90-day global surgery packages to 0-day global packages.
Section 1848(c)(8)(B) of the Act, which was also added by section 523(a) of the MACRA, requires us to collect data to value surgical services. Section 1848(c)(8)(B)(i) of the Act requires us to develop, through rulemaking, a process to gather information needed to value surgical services from a representative sample of physicians, and requires that the data collection begin no later than January 1, 2017. The collected information must include the number and level of medical visits furnished during the global period and other items and services related to the surgery and furnished during the global period, as appropriate. This information must be reported on claims at the end of the global period or in another manner specified by the Secretary. Section 1848(c)(8)(B)(ii) of the Act requires that, every 4 years, we reassess the value of this collected information; and allows us to discontinue the collection of this information if the Secretary determines that we have adequate information from other sources to accurately value global surgical services. Section 1848(c)(8)(B)(iii) of the Act specifies that the Inspector General shall audit a sample of the collected information to verify its accuracy. Section 1848(c)(9) of the Act (added by section 523(b) of the MACRA) authorizes the Secretary, through rulemaking, to delay up to 5 percent of the PFS payment for services for which a physician is required to report information under section 1848(c)(8)(B)(i) of the Act until the required information is reported.
Section 1848(c)(8)(C) of the Act, which was also added by section 523(a) of the MACRA, requires that, beginning in CY 2019, we must use the information collected as appropriate, along with other available data, to improve the accuracy of valuation of surgical services under the PFS.
As noted above, section 1848(c)(8)(C) of the Act mandates that we use the collected data to improve the accuracy of valuation of surgery services beginning in 2019. We described in the CY 2015 PFS final rule (79 FR 67582 through 67591) the limitations and difficulties involved in the appropriate valuation of the global packages, especially when the resources and the related values assigned to the component services are not defined. To gain input from stakeholders on implementation of this data collection, we sought comment on various aspects of this task in the CY 2016 proposed rule (80 FR 41707 through 41708). We solicited comments from the public regarding the kinds of auditable, objective data (including the number and type of visits and other services furnished during the post-operative period by the practitioner furnishing the procedure) needed to increase the accuracy of the values for surgical services. We also solicited comment on the most efficient means of acquiring these data as accurately and efficiently as possible. For example, we sought information on the extent to which individual practitioners or practices may currently maintain their own data on services, including those furnished during the post-operative period, and how we might collect and objectively evaluate those data for use in increasing the accuracy of the values beginning in CY 2019.
We received many comments regarding potential methods of valuing the individual components of the global surgical package. A large number of comments expressed strong support for our proposal to hold an open door forum or town hall meetings with the public. Toward this end, we held a national listening session on January 20, 2016. Prior to the listening session, the topics for which guidance was being sought were sent electronically to those who registered for the session and made available on our Web site. The topics were:
• Mechanisms for capturing the types of services typically furnished during the global period.
• Determining the representative sample for the claims-based data collection.
• Determining whether we should collect data on all surgical services or, if not, which services should be sampled.
• Potential for designing data collection elements to interface with existing infrastructure used to track follow-up visits within the global period.
• Consideration of use of 5 percent withhold until required information is furnished.
The 658 participants in the national listening session provided valuable information on this task. A written transcript and an audio recording of this session are available at
We considered both the comments submitted on the CY 2016 PFS proposed rule and the input provided at the listening session as we developed this proposal for data collection. When relevant, we discuss this stakeholder input below without distinguishing between comments on the proposed rule and input provided at the national listening session.
Resource-based valuation of individual physicians' services is a critical foundation for Medicare payment to physicians. It is essential 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 make appropriate payment and preserve relativity among services. For global surgical packages, this requires using objective data on all of the resources used to furnish the services that are included in the package. Not having such data for some components may significantly skew relativity and create unwarranted payment disparities within the PFS.
The current valuations for many services valued as global packages are based upon the total package as a unit rather than by determining the resources used in furnishing the procedure and each additional service/visit and summing the results. As a result, we do not have the same level of information about the components of global packages as we do for other services. To value global packages accurately and
While we believe that most of the services furnished in the global period are visits for follow-up care, we do not have accurate information on the number and level of visits typically furnished because those billing for global services are not required to submit claims for post-operative visits. A May 2012 Office of Inspector General (OIG) report, entitled Cardiovascular Global Surgery Fees Often Did Not Reflect the Number of Evaluation and Management Services Provided (
Claims data plays a major role in PFS rate-setting. Specifically, Medicare claims data is a primary driver in the allocation of indirect PE RVUs and MP RVUs across the codes used by particular specialties, and in making overall budget neutrality and relativity adjustments. In most cases, a claim must be filed for all visits. Such claims provide information such as the place of service, the type and, if relevant, the level of the service, the date of the service, and the specialty of the practitioner furnishing the services. Because we have not required claims reporting of visits included in global surgical packages, we do not have any of this information for the services bundled in the package.
In addition to the lack of information about the number and level of visits actually furnished, the current global valuations rely on crosswalks to E/M visits, based upon the assumption that the resources, including work, used in furnishing pre- and post-operative visits are similar to those used in furnishing E/M visits. We are unaware of any studies or surveys that verify this assertion. Although we generally value global packages using the same direct PE inputs as are used for the E/M services, for services for which the RUC recommendations include specific PE inputs in addition to those typically included for E/M services, we generally use the additional inputs in the global package valuation. Of note, when a visit included in a global package would use fewer resources than a comparable E/M service, the RUC generally does not include recommendations to decrease the PE inputs of the visit included in the global package, and we have not generally made comparable reductions. Another inconsistency with our current global package valuation approach is that even though we effectively assume that the E/M codes are appropriate for valuing pre- and post-operative services, the indirect PE inputs used for calculating payments for global services are based upon the specialty mix furnishing the global service, not the specialty mix of the physicians furnishing the E/M services, resulting in a different valuation for the E/M services contained in global packages than for separately billable E/M services. There is a critical need to obtain complete information if we are to value global packages accurately and in a way that preserves relativity across the fee schedule.
To meet the requirement under section 1848(c)(8)(B)(i) of the Act, we develop, through rulemaking, a process to gather information needed to value surgical services. Therefore, we are proposing a rigorous data collection effort that we believe would provide us the data needed to accurately value the 4,200 codes with a 10- or 90-day global period. Using our authority under sections 1848(c)(2)(M) and (c)(8)(B)(i) of the Act, we propose to gather the data needed to determine how to best structure global packages with post-operative care that is typically delivered days, weeks or months after the procedure and whether there are some procedures for which accurate valuation for packaged post-operative care is not possible. Finally, we believe these data would provide useful information to assess the resources used in furnishing pre- and post-operative care. To accurately do so, we need to know the volume and costs of the resources typically used. Although it may not be possible to gather all the necessary data and to complete the analysis required to re-value all of the codes currently valued as 10- or 90-day global packages by January 1, 2019, we believe the proposed data collection would provide the foundation for such valuations and would allow us to re-value, as appropriate, the surgical services on a flow basis, starting in rulemaking for CY 2019.
We are proposing a three-pronged approach to collect timely and accurate data on the frequency of, and inputs involved in furnishing, global services including the procedure and the pre-operative visits, post-operative visits, and other services for which payment is included in the global surgical payment. By analyzing these data, we would not only have the most comprehensive information available on the resources used in furnishing these services, but also would be able to determine the appropriate packages for such services. Specifically, the effort would include:
• Comprehensive claims-based reporting about the number and level of pre- and post-operative visits furnished for 10- and 90-day global services.
• A survey of a representative sample of practitioners about the activities involved in and the resources used in providing a number of pre- and post-operative visits during a specified, recent period of time, such as two weeks.
• A more in-depth study, including direct observation of the pre- and post-operative care delivered in a small number of sites, including some ACOs.
This work is critical to understanding and characterizing the work and other resources involved in furnishing services throughout the current global periods assigned to specific surgical procedures. The information collected and analyzed through the activities would be the first comprehensive look at the volume and level of services in a global period, and the activities and inputs involved in furnishing global services. The data from these activities would ultimately inform our revaluation of global surgical packages.
As described above, section 1848(c)(8)(B)(i) of the Act requires us to develop, through rulemaking, a process to gather information needed to value surgical services from a representative sample of physicians. The statute requires that the collected information include the number and level of medical visits furnished during the global period and other items and services related to the surgery and furnished during the global period, as appropriate.
In addition, section 1848(c)(2)(M) of the Act, which was added to the Act by section 220 of the PAMA, authorizes the Secretary to collect or obtain information on resources directly or indirectly related to furnishing services for which payment is made under the PFS. Such information may be collected or obtained from any eligible professional or any other source. Information may be collected or obtained from surveys of physicians, other suppliers, providers of services, manufacturers, and vendors. That section also authorizes the Secretary to collect information through any other mechanism determined appropriate. When using information gathered under this authority, the statute requires the Secretary to disclose the information source and discuss the use of such information in the determination of relative values through notice and comment rulemaking.
As described above, to gain all the information that is needed to determine the appropriate packages for global services and to revalue those services, we need to conduct a comprehensive study on the resources used in furnishing such services. Through such a study, we would have much more robust data to use in valuation than has been typically available. We anticipate that such efforts would inform how to more regularly collect data on the resources used in furnishing physicians' services. To the extent that such mechanisms prove valuable, they may be used to collect data for valuing other services. To achieve this significant data collection, we are proposing to collect data under the authority of both section 1848(c)(8)(B) and (c)(2)(M) of the Act.
This section describes our proposal for claims-based data collection that would be applicable to 10- and 90-day global services furnished on or after January 1, 2017, including who would be required to report, what they would be required to report, and how reports would be submitted.
A key element of claims-based reporting is using codes that appropriately reflect the services furnished. In response to the comment solicitation in the CY 2016 PFS proposed rule and in the January 2016 listening session, we received numerous recommendations for the information to be reported on claims. The most frequently recommended approach was for practitioners to report the existing CPT code for follow-up visits included in the surgical package (CPT 99024—Postoperative follow-up visit, normally included in the surgical package, to indicate that an E/M service was performed during a postoperative period for a reason(s) related to the original procedure). Others suggested using this code for outpatient visits and using length of stay data for estimating the number of inpatient visits during the global period. In response to our concerns that CPT code 99024 would provide only the number of visits and not the level of visits as required by the statute, one commenter suggested using modifiers in conjunction with CPT code 99024 to indicate the level of the visit furnished. Others recommended using existing CPT codes for E/M visits to report post-operative care. One commenter suggested that CMS analyze data from a sample of large systems and practices that are using electronic health records that require entry of some CPT code for every visit to capture the number of post-operative visits. After noting that the documentation requirements and PEs required for post-operative visits differ from those of E/M visits outside the global period, one commenter encouraged us to develop a separate series of codes to capture the work of the post-operative services and to measure, not just estimate, the number and complexity of visits during the global period.
Other commenters opposed the use of a new set of codes or the use of modifiers to report post-operative visits. Commenters also noted several issues for us to consider in developing data collection mechanisms, including that many post-operative services do not have CPT codes to bill separately, that surgeons perform a wide range of collaborative care services, and that patient factors, including disease severity and comorbidities, influence what post-operative care is furnished.
To assist us in determining appropriate coding for claims-based reporting, we added a task to the RAND contract for developing a model to validate the RVUs in the PFS, which was awarded in response to a requirement in the Affordable Care Act. Comments that we received on RAND's report suggested the models did not adequately address global surgery services due to the lack of available data on included visits. Therefore, we modified the RAND contract to include the development of G-codes that could be used to collect data about post-surgical follow-up visits on Medicare claims for valuing global services under MACRA and so that this time could be included in the model for validating RVUs.
To inform its work, RAND conducted interviews with surgeons and other physicians/non-physician practitioners (NPP) who provide post-operative care. A technical expert panel (TEP), convened by RAND, reviewed the findings of the interviews and provided input on how to best capture care provided in the post-operative period on claims.
In summarizing the input from the interviews and the TEP, RAND indicated that several considerations were important in developing a claims-based method for capturing post-operative services. First, a simple system to facilitate reporting was needed. Since it was reported that a majority of post-operative visits are straightforward, RAND found that a key for any proposed system is identifying the smaller number of complex post-operative visits. Another consideration for RAND was not using the existing CPT E/M structure to capture postoperative care because of concerns that E/M codes are inadequately designed to capture the full scope of post-operative care and that using such codes might create confusion. Another consideration was that the TEP was most enthusiastic about a set of codes that used site of care, time, and complexity to report visits. RAND also believed it was important to distinguish—particularly in the inpatient setting—between circumstances where a surgeon is providing primary versus secondary management of a patient. Finally, a mechanism for reporting the postoperative care occurs outside of in-person visits and by clinical staff was needed. RAND noted that in the inpatient setting in particular, surgeons spend considerable time reviewing test results and coordinating care with other practitioners.
After reviewing various approaches, RAND recommended a set of time-based, post-operative visit codes that could be used for reporting care provided during the post-operative period.
The recommended codes are distinguished by the setting of care and whether they are furnished by a physician/NPP or by clinical staff. All codes are intended to be reported in 10-minute increments. A copy of the report is available available on the CMS Web site under downloads for the CY 2017 PFS proposed rule with comment period at
Based upon the work done by RAND, we are proposing the following codes be used for reporting on claims the services actually furnished but not paid separately because they are part of global packages. No separate payment would be made for these codes.
Our coding proposal includes three codes for reporting inpatient pre- and post-operative visits that distinguish the intensity involved in furnishing the services. The typical inpatient visit would be reported using HCPCS code GXXX1, Inpatient visit, typical, per 10 minutes, included in surgical package. The activities listed in Table 10 are those that RAND recommended to be reported as a typical visit. Under our proposal, visits that involve any combination or number of the services listed in Table 10 would be reported using GXXX1. Based on the findings from the interviews and the TEP, RAND reports that the vast majority of inpatient post-operative visits would be expected to be reported using GXXX1.
Inpatient pre- and post-operative visits that are more complex than typical visits but do not qualify as critical illness visits would be coded using GXXX2 (Inpatient visit, complex, per 10 minutes, included in surgical package). To report this code, the practitioner would be required to furnish services beyond those included in a typical visit and have documentation that indicates what services were provided that exceeded those included in a typical visit. Some circumstances that might merit the use of the complex visit code are secondary management of a critically ill patient where another provider such as an intensivist is providing the primary management, primary management of a particularly complex patient such as a patient with numerous comorbidities or high likelihood of significant decline or death, management of a significant complication, or complex procedures outside of the operating room (For example, significant debridement at the bedside).
The highest level of inpatient pre- and post-operative visits, critical illness visits (GXXX3—Inpatient visit, critical illness, per 10 minutes, included in surgical package) would be reported when the physician is providing primary management of the patient at a level of care that would be reported using critical care codes if it occurred outside of the global period. This involves acute impairment of one or more vital organ systems such that there is a high probability of imminent or life threatening deterioration in the patient's condition.
Similar to how time is now counted for the existing CPT critical care codes, all time spent engaged in work directly related to the individual patient's care would count toward the time reported with the inpatient visit codes; this includes time spent at the immediate bedside or elsewhere on the floor or unit, such as time spent with the patient and family members, reviewing test results or imaging studies, discussing care with other staff, and documenting care.
Our proposal includes three codes that would be used for reporting post-operative visits in the office or other outpatient settings. For these three codes, time would be defined as the face-to-face time with patient, which reflects the current rules for time-based outpatient codes.
Under our proposal, GXXX4 (Office or other outpatient visit, clinical staff, per 10 minutes, included in surgical package) would be used for visits in which the clinical care is provided by clinical staff.
GXXX5 (Office or other outpatient visit, typical, per 10 minutes, included in surgical package) would be used for reporting any combination of activities in Table 10. Based on the findings from the interviews and the TEP, RAND reports that the vast majority of office or other outpatient visits would be expected to be reported using the GXXX5 code.
Accordingly, we would expect the office or other outpatient visit code, complex, GXXX6 (Office or other outpatient visit, complex, per 10 minutes, included in surgical package), to be used infrequently. Examples of when it might be used include management of a particularly complex patient such as a patient with numerous comorbidities or high likelihood of dying, management of a significant complication, or management or discussion of a complex diagnosis (For
Only face-to-face time spent by the practitioner with the patient and their family members would count toward the time reported with the office visit codes. Therefore, even though the codes for both inpatient and outpatient settings use the same time increment, the services that are included differ by setting, consistent with the variation in existing coding conventions.
Services that are provided via phone, the internet, or other electronic means outside the context of a face-to-face visit would be reported using GXXX7 when furnished by a practitioner and GXXX8 when furnished by clinical staff. We are proposing that practitioners would not report these services if they are furnished the day before, the day of, or the day after a visit as we believe these would be included in the pre- and post-service activities in the typical visit. However, we are proposing that these codes be used to report non-face-to-face services provided by clinical staff prior to the primary procedure since global surgery codes are typically valued with assumptions regarding pre-service clinical labor time. Given that some practitioners have indicated that services they furnish commonly include activities outside the face-to-face service, we believe it is important to capture information about those activities in both the pre- and post-service periods. We believe these requirements to report on clinical labor time are consistent with and no more burdensome than those used to report clinical labor time associated with chronic care management services, which similarly describe care that takes place over more than one patient encounter.
In addition, for services furnished via interactive telecommunications that meet the requirements of a Medicare telehealth service visit, the appropriate global service G-code for the services should be reported with the GT modifier to indicate that the service was furnished “via interactive audio and video telecommunications systems.”
One commenter indicated that the documentation requirements and PEs for post-operative visits differ from those of other E/M visits, and encouraged us to develop a separate series of codes to capture the work of the post-operative services and to measure, not just estimate, the number and complexity of visits during the global period. Others opposed the use of a new set of codes or the use of modifiers to collect information on post-operative visits. After considering the RAND report, the comments and other stakeholder input that we have received, and our needs for data to fulfill our statutory mandate and to value surgical services appropriately, we are proposing this new set of codes because we believe it provides us the most robust data upon which to determine the most appropriate way and amounts to pay for PFS surgical services. We believe that the codes being proposed would provide data of the kind that can reasonably collected through claims data and that reflect what we believe are key issues in the post-operative care where the service is provided, who furnishes the service, its relative complexity, and the time involved in the service.
We seek public comments about all aspects of these codes, including the nature of the services described, the time increment, and any other areas of interest to stakeholders. We are particularly interested in any pre- or post-operative services furnished that could not be appropriately captured by these codes. Although RAND developed this set of codes to collect data on post-operative services, we are proposing to also use such codes to collect data on pre-operative services. We are seeking comments on whether the codes discussed above are appropriate for collecting data on pre-operative services or whether additional codes should be added to distinguish in the data collected the resources used for pre-operative services from those used for post-operative services. We also seek comment on any activities that should be added to the list of activities in Table 10 to reflect typical pre-operative visit activities.
As noted above, many stakeholders expressed strong support for the use of CPT code 99024 (Postoperative follow-up visit, normally included in the surgical package, to indicate that an evaluation and management service was performed during a postoperative period for a reason(s) related to the original procedure) to collect data on post-operative care. Stakeholders suggest that practitioners are familiar with this existing CPT code and the burden on practitioners would be minimized by only having to report that a visit occurred, not the level of the visit. We do not believe that this code alone would provide the information that we need for valuing surgical services nor do we believe it alone can meet the statutory requirement that we collect data on the number and level of visits because it does not provide any information beyond the number of visits. Although we are proposing to use the G-codes detailed above to measure pre- and post-operative visits, given the strong support that many stakeholders have for the use of CPT code 99024, we are soliciting comments specifically on how we could use this code to capture the statutorily required data on the number and level of visits and the data that we would need to value global services in the future.
Some have suggested using CPT code 99024 with modifiers to indicate to which of the existing levels of E/M codes the visit corresponds. As outlined in the RAND report, E/M visits may not accurately capture what drives greater complexity in post-operative visits. E/M billing requirements are built upon complexity in elements such as medical history, review of systems, family history, social history, and how many organ systems are examined. In the context of a post-operative visit, many of these elements may be irrelevant. RAND also noted that there was significant concern from interviewees and the expert panel about documentation that is required for reporting E/M codes. Specifically, they argued that documentation requirements for surgeons to support the relevant E/M visit code would place undue administrative burden on surgeons. RAND reported that many surgeons currently use minimal documentation when they provide a postoperative visit. Moreover, to value surgical packages accurately we need to understand the activities involved in furnishing post-operative care and as discussed above, we lack information that would demonstrate that activities involved in post-operative care are similar to those in E/M services. In addition, the use of modifiers to report levels of services is more difficult to operationalize than using unique HCPCS codes. However, we would be interested in whether, and if so, why, practitioners would find it easier to report CPT code 99024 with modifiers corresponding to the proposed G-code levels rather than the new G-codes, as proposed. We are also seeking comment on whether practitioners would find it difficult to use this for pre-operative visits since the CPT code descriptor specifically defines it as a “post-operative follow-up” service.
We are also seeking comment on whether time of visits could alone be a proxy for the level of visit. If pre- and post-operative care varies only by the time the practitioner spends care so that time could be a proxy for complexity of the service, then we could use the reporting of CPT code 99024 in 10-minute increments to meet the statutory requirement of collecting claims-based data on the number and level of visits. In addition to comments on whether time is an accurate proxy for level of visit, we are seeking comment on the feasibility and desirability of reporting CPT 99024 in 10-minute increments.
We propose that the G-codes detailed above would be reported for services related to and within 10- and 90-day global periods for procedures furnished on or after January 1, 2017. Services related to the procedure furnished following recovery and otherwise within the relevant global period would be required to be reported. These codes would be included on claims filed through the usual process. Through this mechanism, we would collect all of the information reported on a claim for services, including information about the practitioner, service furnished, date of service, and the units of service. By not imposing special reporting requirements on the reporting of these codes, we intend to allow practitioners the flexibility to report the services on a rolling basis as they are furnished or to report all of the services on one claim once all have been furnished, as long as the filed claims meet the requirements for filing claims. As with all other claims, we would expect the patient's medical record to include documentation of the services furnished. Documentation that would be expected is an indication that a visit occurred or a service was furnished and sufficient information to determine that the appropriate G-code was reported.
We are not proposing any special requirements for inclusion of additional data on claims that could be used for linking the post-operative care furnished to a particular service. To use the data reported on post-operative visits for analysis and valuation, we will link the data reported on post-operative care to the related procedure using date of service, practitioner, beneficiary, and diagnosis. We believe this approach to matching will allow us to accurately link the preponderance of G-codes to the related procedure. However, we solicit comment on the extent to which post-operative care may not be appropriately linked to related procedures whether we should consider using additional variables to link these aspects of the care, and whether additional data should be required to be reported to enable a higher percentage of matching.
We are seeking comment on whether special provisions are needed to capture the pre- and post-operative services provided by residents in teaching settings. If the surgeon is present for the key portion of the visit, should the surgeon report the joint time spent by the resident and surgeon with the patient? If the surgeon is not present for the key portion of the visit, should the resident report the service? If we value services without accounting for services provided by residents that would otherwise be furnished by the surgeon in non-teaching settings, subsequent valuations based upon the data we collect may underestimate the resources used, particularly for the types of surgeries typically furnished in teaching facilities. However, there is also a risk of overvaluing services if the reporting includes services that are provided by residents when those services would otherwise be furnished by a physician other than the surgeon, such as a hospitalist or intensivist, and as such, should not be valued in the global package.
In both the comments on the CY 2016 proposed rule and in the national listening session, there was a great deal of discussion regarding the challenges that we are likely to encounter in obtaining adequate data to support appropriate valuation. Some indicated that a broad sample and significant cooperation from physicians would be necessary to understand what is happening as part of the global surgical package. One commenter suggested that determining a representative sample would be difficult and, due to the variability related to the patient characteristics, it would be easier to have all practitioners report. Many suggested that we conduct an extensive analysis across surgical specialties with a sample that is representative of the entire physician community and covers the broad spectrum of the various types of physician practice to avoid problems that biased or inadequate data collection would cause. Suggestions of factors to account for in selecting a sample include specialty, practice size (including solo practices), practice setting, volume of claims, urban, rural, type of surgery, and type of health care delivery systems. Another commenter pointed out that small sample sizes may lead to unreliable data. On the other hand, some commenters stated that requiring all practitioners to report this information is unreasonable and would be an insurmountable burden. A participant acknowledged that it would be difficult for practitioners to report on only certain procedures, while another stated that this would not be an administrative burden.
After considering the input of stakeholders, we are proposing that any practitioner who furnishes a procedure that is a 10- or 90-day global report the pre- and post-operative services furnished on a claim using the codes proposed above. We agree with stakeholders that it is necessary to obtain data from a broad, representative sample across specialties, geographic location, and practice size, practice model, patient acuity, and differing practice patterns. However, as we struggled to develop a sampling approach that would result in statistically reliable and valid data, it became apparent that we do not have adequate information about how post-operative care is delivered, how it varies and, more specifically, what drives variation in post-operative care. In its work to develop the coding used for its study, RAND found a range of opinions on what drives variation in post-operative care. (The report is available on the CMS Web site under downloads for the CY 2017 PFS proposed rule with comment period at
In addition to concerns about achieving an appropriate, sufficient, and unbiased representative sample of practitioners, we have significant operational concerns with collecting data from a limited sample of practitioners or on a limited sample of services. These include how to gain sufficient information on practitioners to sufficiently stratify the sample, how to identify the practitioners who must report, determining which services, and for those who practice in multiple settings and/or with multiple groups in which settings the practitioner would report. Establishing the rules to govern
With the limited time between the issuance of the CY 2017 PFS final rule with comment period and the beginning of reporting on January 1st, it would be challenging to make sure that affected practitioners are aware of the requirement to report and have an ability to determine which post-operative care to report. If, instead, we require all practitioners to report, we can take a uniform approach to notifying practitioners. The national medical and coding organizations are routinely relied upon by practitioners for information on new coding and billing requirements and play a major role in the expeditious adoption of new coding or billing requirements. Similarly, adjustments to software used for medical records and coding are made by national organizations. We have concerns that if this requirement is only applied to a small segment of practitioners that these organizations will not be able to ensure that the affected practitioners are aware and easily able to comply with the requirements.
The more robust the reported data, the more accurate our ultimate valuations can be. Given the importance of data on visits in accurate valuations for global packages, we believe that collecting data on all pre- and post-operative visits in the global period is the best way to accurately value surgical procedures with global packages.
We recognize that reporting of all pre- and post-operative visits would require submission of additional claims by those practitioners furnishing global services, but we believe the benefits of accurate data for valuation of services merits the imposition of this requirement. By using the claims system to report the data, we believe the additional burden is minimized. Stakeholders have reported that many practitioners are already required by their practice or health care system to report a code for each visit for internal control purposes and some of these systems already submit claims for these services, which are denied. For these practices, the additional burden would be minimal. We believe that requiring only some physicians to report this information, or requiring reporting for only some services, could actually be more burdensome to physicians than requiring this information from all physicians on all services because of the additional steps necessary to determine whether a report is required for a particular service and adopting a mechanism to assure that data is collected and reported when required. Moreover, we believe the challenges with implementing a limited approach at the practice level as compared to a requirement for all global services would result in less reliable data being reported.
As we analyze the data collected and make decisions about valuations, we would reassess the data needed and what should be required from whom. Under section 1848(c)(8)(B)(ii) of the Act, we are required to reassess every 4 years whether continued collection of these data is needed. However, we can modify through rulemaking what data is collected at any time, as appropriate. By collecting data on all procedures with a 10- or 90-day global package, we would have the information to assess whether the post-operative care furnished varies by factors such as specialty, geography, practice setting, and practice size, and thus, the information needed for a selection of a representative sample. By initially collecting information from all practitioners that furnish surgical services, we believe we would be able to reduce required reporting in the future if we find that adequate information can be obtained by selective reporting. Without the broader set of data we would not be able to evaluate the variability of pre- and post-operative care in order to identify a useful targeted data collection.
While section 1848(c)(8)(B) of the Act requires us to collect data from a representative sample of physicians on the number and level of visits provided during the global period, it does not prohibit us from collecting data from a broad set of physicians. In addition, section 1848(c)(2)(M) of the Act authorizes the collection of data from a wide range of physicians. Given the benefits of more robust data, including avoiding sample bias, obtaining more accurate data, and facilitating operational simplicity, we believe collecting data on all post-operative care initially is the best way to undertake an accurate valuation of surgical services in the future.
We agree with commenters that we need more information than is currently provided on claims and that we should utilize a number of different data sources and collection approaches to collect the data needed to assess and revalue global surgery services. In addition to the claims-based reporting, we are proposing to survey a large, representative sample of practitioners and their clinical staff in which respondents would report information about approximately 20 discrete pre-operative and post-operative visits and other global services like care coordination and patient training. The proposed survey would produce data on a large sample of pre-operative and post-operative visits and is being designed so that we could analyze the data collected in conjunction with the claims-based data that we would be collecting. We expect to obtain data from approximately 5,000 practitioners.
We have contracted with RAND to develop and, if our proposal is finalized, conduct this survey. RAND would also assist us in analyzing data collected under this survey and the claims-based data. While the primary data collection would be via a survey instrument, RAND would conduct semi-structured interviews and direct observations of data in a small number of pilot sites to inform survey design, validate survey results, and collect information that is not conducive to survey-based reporting.
Our proposed sampling approach would sample practitioners rather than for procedures or visits to streamline survey data collection and minimize respondent burden. Specifically, we propose to representative and random sample from a frame of providers who billed Medicare for more than a minimum threshold of surgical procedures with a 10- or 90-day global period (for example, 200 procedures) in the most recent available prior year of claims data. We expect to survey approximately 5,000 practitioners, stratified by specialty, geography, and practice type. Based upon preliminary analysis we believe this number of participants will allow us to collect information on post-operative care following the full range of CPT level-2 surgical procedure code groups. A smaller sample size would reduce the precision of estimates from the survey and more importantly risk missing important differences in post-operative care for specific specialties or following different types of surgical procedures. We expect a response rate in excess of 50 percent.
We are not proposing that respondents report on the entire period of post-operative care for individual patients, as a 90-day follow-up window (for surgeries currently with a 90-day global period) is too long to implement practically in this study setting and would be more burdensome to practitioners. Instead, we propose to collect information on a range of different post-operative services resulting from surgeries furnished by
Each sampled practitioner will be assigned to a specified and brief (for example, 2-week) reporting period. Given the proposed overall data collection period, the selected sample of providers will be randomly divided into 6 subsets within each specialty, each of which will be assigned to a specified reporting period. Practitioners will be asked to describe 20 post-operative visits furnished to Medicare beneficiaries or other patients during the reporting period. The information collected through the survey instrument, which will be developed based upon direct observation and discussions in a small number of pilot sites, will include contextual information to describe the background for the post-operative care, including, for example:
• Procedure codes(s) and date of service for procedure upon which the global period is based.
• Procedure place of service (type).
• Whether or not there were complications during or after the procedure.
• The number in sequence of the follow-up visit (for example, the first visit after the procedure).
The survey instrument will also collect information on the visit in question including, for example:
• Which level of visit using the finalized no-pay codes.
• Specific pre-service, face-to-face, and post-service activities furnished during the visit.
• Times for each activity.
• Identify who performed each activity (physician or other practitioner).
• PE components used during the visit, for example supplies like surgical dressings and clinical staff time.
Finally, the instrument will ask respondents to report other prior or anticipated care furnished to the patient by the practice outside of the context of a post-operative visit, for example non-face-to-face services.
The survey approach will complement the claims data collection by collecting detailed information on the activities, time, intensity, and resources involved in delivering global services. The resulting visit-level survey data would allow us to explore in detail the variation in activities, time, intensity, and resources associated with global services within and between physicians and procedures, and would help to validate the information gathered through claims. A summary of the work that RAND would be doing is available on the CMS Web site under downloads for the CY 2017 PFS proposed rule with comment period at
Using the authority we are provided under sections 1848(c)(8) and 1848(c)(2)(M) of the Act, we are proposing to require all practitioners who furnish a 10- or 90-day global service to submit a claim(s) providing information on all services furnished within the relevant global service period in the form and manner described below, beginning with surgical or procedural services furnished on or after January 1, 2017. We are also proposing to require participation by practitioners selected for the broad-based survey through which we are proposing to gather additional data needed to value surgical services, such as the clinical labor and equipment involved that cannot be efficiently collected on claim (see below).
Given the importance of the proposed survey effort, making sure that we get valid data is critical. By eliminating the bias that would be associated with using only data reported voluntarily, we believe we will get more accurate and representative data. In addition to the potential bias inherent in voluntary surveys, we are concerned that relying on voluntary data reporting would limit the adequacy of the volume of data we obtain, will require more effort to recruit participation, and may make it impossible to obtain data for valuation for CY 2019 as required by the statute.
Based on our previous experience with requesting voluntary cooperation in data collection activity, voluntary participation poses a significant challenge in data collection. Specifically, the Urban Institute's work (under contract with us) to validate work RVUs by conducting direct observation of the time it took to furnish certain elements of services paid under the physician fee schedule provides evidence of this challenge. (See
Section 1848(a)(9) of the Act authorizes us, through rulemaking, to withhold payment of up to 5 percent of the payment for services on which the practitioner is required to report under section 1848(c)(8)(B)(i) of the Act until the practitioner has completed the required reporting. Some commenters opposed the imposition of this payment withhold, and others said it was too large of a penalty. While we believe this is a way to encourage practitioners to report on claims the information we propose to require on care that is furnished in the global period, we are not proposing to implement this option at this time. We believe that requiring physicians to report the information on claims, combined with the incentive to report complete information so that we can make appropriate revisions when we revalue payments for global surgical services, would result in compliance with the reporting requirements. However, we note that if we find that compliance with required claims-based reporting is not acceptable, we would consider in future rulemaking imposing up to a 5 percent payment withhold as authorized by the statute.
Consistent with the requirements of section 1848(c)(2)(M) of the Act, should the data collected under this requirement be used to determine RVUs, we will disclose the information source and discuss the use of such information in such determination of relative values through future notice and comment rulemaking.
We are particularly interested in knowing whether physicians and practices affiliated with ACOs expend greater time and effort in providing post-operative global services in keeping with their goal of improving care coordination for their assigned beneficiaries. ACOs are organizations in which practitioners and hospitals voluntarily come together to provide high-quality and coordinated care for their patients. Because such organizations share in the savings realized by Medicare, their incentive is to minimize post-operative visits while maintaining high quality post-operative care for patients. In addition, we believe that such organizations offer us the opportunity to gain more in-depth information about delivery of surgical services.
We propose to collect primary data on the activities and resources involved in delivering services in and around surgical events in the ACO context by surveying a small number of ACOs (Pioneer and Next Generation ACOs).
We recognize that the some of the data collection activity proposed here varies greatly from how the data is currently gathered to support PFS valuations for global surgery services. However, we believe the proposed claims-based data collection is generally consistent with how claims data is reported for other kinds of services paid under the PFS. We believe that the authority and requirements included in the statute through the MACRA and PAMA were intended to expand and enhance data that might be available to enhance the accuracy of PFS payments. Because these are new approaches to collecting data and in an area—global surgery—where very little data has previously been collected, we cannot describe exactly how this information would be used in valuing services. What is clear is that the claims-based data would provide information parallel to the kinds of claims-data used in developing RVUs for other PFS services and that by collecting these data, we would know far more than we do now about how post-operative care is delivered and gain insight to support appropriate packaging and valuation. We would include any revaluation proposals based on these data in subsequent notice and comment rulemaking.
In recent years, we have undertaken ongoing efforts to support primary care and patient-centered care management within the PFS as part of HHS' broader efforts to achieve better care, smarter spending and healthier people through delivery system reform. We have recognized the need to improve payment accuracy for primary care and patient-centered care management over several years, especially beginning in the CY 2012 PFS proposed rule (76 FR 42793) and continuing in each subsequent year of rulemaking. In the CY 2012 proposed rule, we acknowledged the limitations of the current code set that describes evaluation & management (E/M) services within the PFS. For example, E/M services represent a high proportion of PFS expenditures but have not been recently revalued to account for significant changes in the disease burden of the Medicare patient population and changes in health care practice that are underway, to meet the current population's health care needs. These trends in the Medicare population and health care practice have been widely recognized in the provider community and by health services researchers and policymakers alike.
This has resulted in minimal service variation for ongoing primary care, care management and coordination, and cognitive services relative to other PFS services, and in potential misvaluation of E/M services under the PFS (76 FR 42793). Some stakeholders believe that there is substantial misvaluation of physician work within the PFS, and that the current service codes fail to capture the range and intensity of nonprocedural physician activities (E/M services) and the “cognitive” work of certain specialties (
Recognizing the inverse for specialties that furnish other kinds of services, MedPAC has noted that the PFS allows some specialties to more easily increase the volume of services they provide (and therefore their revenue from Medicare) relative to other specialties, particularly those that spend most of their time providing E/M services. (MedPAC March 2015 Report to the Congress, available at
In recent years, we have been engaged in an ongoing incremental effort to update and improve the relative value of primary care, care management/coordination, and cognitive services within the PFS by identifying gaps in appropriate payment and coding. These efforts include changes in payment and coding for a broad range of PFS services. This effort is particularly vital in the context of the forthcoming transition to the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) incentives under The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10, enacted April 16, 2015), since MIPS and many APMs will adopt and build on PFS coding, RVUs and PFS payment as their foundation.
In CY 2013, we began by focusing on post-discharge care management and transition of beneficiaries back into the community, establishing new codes to pay separately for transitional care management (TCM) services. Next we finalized new coding and separate payment beginning in CY 2015 for chronic care management (CCM) services provided by clinical staff. Most recently, in the CY 2016 PFS proposed rule (80 FR 41708 through 41711), we solicited public comments on three additional policy areas of consideration: (1) Improving payment for the professional work of care management
In the CY 2016 PFS final rule with comment period (80 FR 70919 through 70921), we summarized the many public comments we received in response to last year's comment solicitation. Instead of the specific policies we sought comment on, several commenters recommended an overhaul and complete revaluation of the E/M codes through a major research initiative akin to that undertaken when the PFS was first established. Many other commenters recommended that, until a major research initiative could be conducted to fully address the deficiencies in the current E/M code set, CMS should make separate payment under Medicare for a number of existing CPT codes to improve payment in the areas in which we solicited comments, including the codes used to describe complex CCM services (CPT codes 99487 and 99489). Other commenters also suggested that care management services may be beneficial to a number of other patient populations in addition to those transitioning into the community from an inpatient setting and those with multiple chronic conditions.
Also in response to our CY 2016 comment solicitation, the AMA restructured its existing CPT/RUC workgroup on these issues and convened the relevant individual specialty societies to develop new CPT coding that would address these issues. We understand that these efforts are ongoing, and that at this time, two sets of new codes are scheduled to be included in the CY 2018 CPT code set in response to our 2016 comment solicitation. One is a set of new codes describing services furnished under the psychiatric CoCM and the other is a code for assessment and care planning services for patients with cognitive impairment. Several stakeholders have urged us to facilitate Medicare payment for these and other new primary care, care management, and cognitive services sooner than CY 2018 by proposing payment using G-codes for CY 2017.
In response to our comment solicitation in the CY 2016 proposed rule, MedPAC commented that the PFS is an ill-suited payment mechanism for primary care and cognitive care generally. MedPAC recommended that Congress replace the expired Primary Care Incentive Payment (PCIP) with a capitated payment mechanism and expressed preference for codes like CCM that are beneficiary-centered and do not pay for each distinct care coordination activity.
Finally, many public commenters recommended a number of modifications to the current CCM payment rules. According to many commenters, current payment does not cover the cost of furnishing these services, and therefore, the codes are underutilized. As referenced in section II.E.3 on improving access and payment for CCM services, our assessment of claims data for CY 2015 for CPT code 99490 suggests that CCM services may be underutilized relative to the intended eligible patient population.
After considering the commenters' perspective and recommendations, as well as monitoring the ongoing efforts at the AMA/RUC and CPT to respond with new/revised coding, for CY 2017 we are proposing a number of changes to coding and payment policies under the PFS. These proposals are intended to accomplish the following:
• Improve payment for care management services provided in the care of beneficiaries with behavioral health conditions (including services for substance use disorder treatment) through new coding, including three codes used to describe services furnished as part of the psychiatric CoCM and one to address behavioral health integration more broadly.
• Improve payment for cognition and functional assessment, and care planning for beneficiaries with cognitive impairment.
• Adjust payment for routine visits furnished to beneficiaries whose care requires additional resources due to their mobility-related disabilities.
• Recognize for Medicare payment the additional CPT codes within the Chronic Care Management family (for Complex CCM services) and adjust payment for the visit during which CCM services are initiated (the initiating CCM visit) to reflect resources associated with the assessment for, and development of, a new care plan.
• Recognize for Medicare payment CPT codes for non-face-to-face Prolonged E/M services by the physician (or other billing practitioner) that are currently bundled, and increase payment rates for face-to-face prolonged E/M services by the physician (or other billing practitioner) based on existing RUC recommended values.
We are aware that CPT has approved a code to describe assessment and care planning for patients with cognitive impairment; however, it will not be ready in time for valuation in CY 2017. Therefore, we are proposing to make payment using a G-code (GPPP6—see below) for this service in 2017. We are also aware that CPT has approved three codes that describe services furnished consistent with the psychiatric CoCM, but that they will also not be ready in time for valuation in CY 2017. We discuss these services in more detail in the next section of this proposed rule. To facilitate separate payment for these services furnished to Medicare beneficiaries during CY 2017, we are proposing to make payment through the use of three G-codes (GPPP1, GPPP2, and GPPP3—see below) that parallel the new CPT codes, as well as a fourth G-code (GPPPX—see below) to describe services furnished using a broader application of behavioral health integration in the primary care setting. We intend for these to be temporary codes (for perhaps only one year) and will consider whether to adopt and establish values for the new CPT codes under our standard process, presumably for CY 2018. While we recognize that there may be overlap in the patient populations for the proposed new G-codes, we note that time spent by a practitioner or clinical staff cannot be counted more than once for any code (or assigned to more than one patient), consistent with PFS coding conventions.
Proposed payment for services described by new coding are as follows (please note that the descriptions included for GPPP1, GPPP2, and GPPP3 are from
• GPPP1: Initial psychiatric collaborative care management, first 70 minutes in the first calendar month of behavioral health care manager activities, in consultation with a psychiatric consultant, and directed by the treating physician or other qualified
++ Outreach to and engagement in treatment of a patient directed by the treating physician or other qualified health care professional;
++ Initial assessment of the patient, including administration of validated rating scales, with the development of an individualized treatment plan;
++ Review by the psychiatric consultant with modifications of the plan if recommended;
++ Entering patient in a registry and tracking patient follow-up and progress using the registry, with appropriate documentation, and participation in weekly caseload consultation with the psychiatric consultant; and
++ Provision of brief interventions using evidence-based techniques such as behavioral activation, motivational interviewing, and other focused treatment strategies.
• GPPP2: Subsequent psychiatric collaborative care management, first 60 minutes in a subsequent month of behavioral health care manager activities, in consultation with a psychiatric consultant, and directed by the treating physician or other qualified health care professional, with the following required elements:
++ Tracking patient follow-up and progress using the registry, with appropriate documentation;
++ Participation in weekly caseload consultation with the psychiatric consultant;
++ Ongoing collaboration with and coordination of the patient's mental health care with the treating physician or other qualified health care professional and any other treating mental health providers;
++ Additional review of progress and recommendations for changes in treatment, as indicated, including medications, based on recommendations provided by the psychiatric consultant;
++ Provision of brief interventions using evidence-based techniques such as behavioral activation, motivational interviewing, and other focused treatment strategies;
++ Monitoring of patient outcomes using validated rating scales; and relapse prevention planning with patients as they achieve remission of symptoms and/or other treatment goals and are prepared for discharge from active treatment.
• GPPP3: Initial or subsequent psychiatric collaborative care management, each additional 30 minutes in a calendar month of behavioral health care manager activities, in consultation with a psychiatric consultant, and directed by the treating physician or other qualified health care professional (List separately in addition to code for primary procedure) (Use GPPP3 in conjunction with GPPP1, GPPP2).
• GPPPX: Care management services for behavioral health conditions, at least 20 minutes of clinical staff time, directed by a physician or other qualified health care professional time, per calendar month.
• GPPP6: Cognition and functional assessment using standardized instruments with development of recorded care plan for the patient with cognitive impairment, history obtained from patient and/or caregiver, by the physician or other qualified health care professional in office or other outpatient setting or home or domiciliary or rest home.
• GPPP7: Comprehensive assessment of and care planning by the physician or other qualified health care professional for patients requiring chronic care management services, including assessment during the provision of a face-to-face service (billed separately from monthly care management services) (Add-on code, list separately in addition to primary service).
• GDDD1: Resource-intensive services for patients for whom the use of specialized mobility-assistive technology (such as adjustable height chairs or tables, patient lifts, and adjustable padded leg supports) is medically necessary and used during the provision of an office/outpatient evaluation and management visit (Add-on code, list separately in addition to primary procedure).
Additionally, we are aware that other codes are being developed through the CPT process. We have noted with interest that the CPT Editorial Panel and AMA/RUC restructured the former Chronic Care Coordination Workgroup to establish a new Emerging CPT and RUC Issues Workgroup that we hope will continue to consider the issues raised in this section of our CY 2017 proposed rule. We are continuing to consider possible additional codes for CCM services that would describe the time of the physician or other billing practitioner. We also remain interested in whether there should be changes under the PFS to reflect additional models of inter-professional collaboration for health conditions, in addition to those we are proposing for behavioral health integration.
For additional details on the coding and proposed valuation related to these proposals, see section II.L of this proposed rule for Valuation of Specific Codes. We note that the development of coding for these and other kinds of services across the PFS is typically an iterative process that responds to changes in medical practice and may be best refined over several years, with PFS rulemaking and the development of CPT codes as important parts of that process. Thus, we anticipate continuing the multi-year process of implementing initiatives designed to improve payment for, and recognize long-term investment in, primary care, care management and cognitive services, and patient-centered services.
In public comments to the CY 2016 PFS proposed rule, many commenters recommended that CMS should establish separate payment for non-face-to-face prolonged E/M service codes that we currently consider to be “bundled” under the PFS (CPT codes 99358, 99359). The CPT descriptors are:
• CPT code 99358 (Prolonged evaluation and management service before and/or after direct patient care, first hour); and
• CPT code 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).
Commenters believed that separate payment for these existing CPT codes would provide a means for physicians and other billing practitioners to receive payment that more appropriately accounts for time that they spend providing non-face-to-face care. We agree that these codes would provide a means to recognize the additional resource costs of physicians and other practitioners when they spend an extraordinary amount of time outside the in-person office visit caring for the individual needs of their patients. And we believe that doing so in the context of the ongoing changes in health care practice to meet the current population's health care needs would be beneficial for Medicare beneficiaries and consistent with our overarching goals related to patient-centered care.
These non-face-to-face prolonged service codes are broadly described (although they include only time spent personally by the physician or other billing practitioner) and have a relatively high time threshold (the time counted must be beyond the usual service time for the primary or companion E/M code that is also billed). We believe this makes them sufficiently distinct from the other codes we propose to pay in CY 2017 as part of our
We propose to require the services to be furnished on the same day by the same physician or other billing practitioner as the companion E/M code. However, in reviewing the CPT guidance for CPT codes 99358 and 99359, we noted that CPT codes 99358 and 99359 should not be reported during the same service period as complex CCM services (CPT codes 99487, 99489) or TCM services (CPT codes 99495, 99496). One reason for excluding TCM and complex CCM services from concurrent billing would be that, like prolonged services, TCM and complex CCM services include substantial non-face-to-face work by the billing physician or other practitioner (an E/M visit and/or medical decision-making of moderate or high complexity). However, the CPT prolonged service with patient contact codes are billable on the same day an E/M service is furnished, and the CPT prolonged service codes without direct patient contact are services furnished during a single day that are directly related to a discrete face-to-face service. In contrast, TCM and CCM codes are billed monthly and focused on a broader episode of patient care. We are seeking public input on the intersection of the prolonged service codes with CCM and TCM services. We are also seeking public comment on the potential intersection of the prolonged service CPT codes 99358 and 99359 with proposed code GPPP7 (Comprehensive assessment of and care planning for patients requiring CCM services). Specifically, we are seeking comment regarding how distinctions among these services can be clearly delineated, including how the prolonged time can be clearly distinguished from typical pre- and post-service time, which is continued to be bundled with other codes. For all of these services, we have concerns that there may potentially be program integrity risks as the same non-face-to-face activities could be undertaken to meet the billing requirements for any of the above. We are seeking public comment to help us identify the full extent of program integrity considerations, as well as options for mitigating program integrity risks associated with these and other potentially overlapping codes.
In the CY 2016 PFS final rule with comment period (80 FR 70920), we stated that we believed the care and management for Medicare beneficiaries with behavioral health conditions may include extensive discussion, information sharing and planning between a primary care physician and a specialist. We refer to this practice broadly as “Behavioral Health Integration” (BHI). In CY 2016 rulemaking, we described that in recent years, many randomized controlled trials have established an evidence base for an approach to caring for patients with behavioral health conditions called the psychiatric Collaborative Care Model (CoCM). A specific model for BHI, CoCM typically is provided by a primary care team, consisting of a primary care provider and a care manager who works in collaboration with a psychiatric consultant, such as a psychiatrist. Care is directed by the primary care team and includes structured care management with regular assessments of clinical status using validated tools and modification of treatment as appropriate. The psychiatric consultant provides regular consultations to the primary care team to review the clinical status and care of patients and to make recommendations. As we previously noted, several resources have been published that describe the psychiatric CoCM in greater detail and assess the impact of the model, including pieces from the University of Washington (
After consideration of the comments, we are proposing to begin making separate payment for services furnished using the psychiatric CoCM beginning January 1, 2017. We are aware that CPT, recognizing the need for new coding for services under this model of care, has approved three codes to describe psychiatric collaborative care that is consistent with this model, but the codes will not be ready in time for valuation in CY 2017. Current CPT coding does not accurately describe or facilitate appropriate payment for the treatment of Medicare beneficiaries under this model of care. For example, under current Medicare payment policy, there is no payment made specifically for regular monitoring of patients using validated clinical rating scales or for regular psychiatric caseload review and consultation that does not involve face-to-face contact with the patient. We believe that these resources are directly involved in furnishing ongoing care management services to specific patients with specific needs, but they are not appropriately recognized under current coding and payment mechanisms. Because PFS valuation is based on the relative resource costs of the PFS services furnished to Medicare beneficiaries, we believe that appropriate coding for these services for CY 2017 will facilitate accurate payment for these and other PFS services. Therefore, we are proposing separate payment for services under the psychiatric CoCM using three new G-codes, as detailed above: GPPP1, GPPP2, and GPPP3, which would parallel the CPT codes that are being created to report these services. We intend for these to be temporary codes (for perhaps only one year) and will consider whether to adopt and establish values for the new CPT codes under our standard process, presumably for CY 2018.
Services in the psychiatric CoCM are provided under the direction of a treating physician or other qualified health care professional during a calendar month. These services are provided when a patient has a diagnosed psychiatric disorder that requires a behavioral health care assessment; establishing, implementing, revising, or monitoring a care plan; and provision of brief interventions. The diagnosis may be either pre-existing or made by the billing practitioner. These services are reported by the treating physician or other qualified health care
• The attainment of targeted treatment goals, which typically results in the discontinuation of care management services and continuation of usual follow-up with the treating physician or other qualified healthcare professional; or
• Failure to attain targeted treatment goals culminating in referral to a psychiatric care provider for ongoing treatment; or
• Lack of continued engagement with no psychiatric collaborative care management services provided over a consecutive six month calendar period (break in episode).
A new episode of care starts after a break in episode of six calendar months or more.
The treating physician or other qualified health care professional directs the behavioral health care manager and continues to oversee the patient's care, including prescribing medications, providing treatments for medical conditions, and making referrals to specialty care when needed. Medically necessary E/M and other services may be reported separately by the treating physician or other qualified health care professional, or other physicians or practitioners, during the same calendar month. Time spent by the treating physician or other qualified health care professional on activities for services reported separately may not be included in the services reported using GPPP1, GPPP2, and GPPP3. The behavioral health care manager under this model of care is a member of the treating physician or other qualified health care professional's clinical staff with formal education or specialized training in behavioral health (which could include a range of disciplines, for example, social work, nursing, and psychology) who provides care management services, as well as an assessment of needs, including the administration of validated rating scales,
The behavioral health care manager may or may not be a professional who meets all the requirements to independently furnish and report services to Medicare. If otherwise eligible, then that individual may report separate services furnished a beneficiary receiving the services described by GPPP1, GPPP2, GPPP3, and GPPPX in the same calendar month. These could include: psychiatric evaluation (90791, 90792), psychotherapy (90832, 90833, 90834, 90836, 90837, 90838), psychotherapy for crisis (90839, 90840), family psychotherapy (90846, 90847), multiple family group psychotherapy (90849), group psychotherapy (90853), smoking and tobacco use cessation counseling (99406, 90407), and alcohol or substance abuse structured screening and brief intervention services (99408, 99409). Time spent by the behavioral health care manager on activities for services reported separately may not be included in the services reported using time applied to GPPP1, GPPP2, and GPPP3.
The psychiatric consultant involved in the “incident to” care furnished under this model is a medical professional trained in psychiatry and qualified to prescribe the full range of medications. The psychiatric consultant advises and makes recommendations, as needed, for psychiatric and other medical care, including psychiatric and other medical diagnoses, treatment strategies including appropriate therapies, medication management, medical management of complications associated with treatment of psychiatric disorders, and referral for specialty services, that are communicated to the treating physician or other qualified health care professional, typically through the behavioral health care manager. The psychiatric consultant does not typically see the patient or prescribe medications, except in rare circumstances, but can and should facilitate a referral to a psychiatric care provider when clinically indicated.
In the event that the psychiatric consultant furnishes services to the beneficiary directly in the calendar month described by other codes, such as E/M services or psychiatric evaluation (90791, 90792), the services may be reported separately by the psychiatric consultant. Time spent by the psychiatric consultant on activities for services reported separately may not be included in the services reported using GPPP1, GPPP2, and GPPP3.
We also note that, although the psychiatric CoCM has been studied extensively in the setting of specific behavioral health conditions (for example, depression), we received persuasive comments last year recommending that we not specify particular diagnoses required for use of the codes for several reasons, including that: there may be overlap in behavioral health conditions; there are concerns that there could be modification of diagnoses to fit within payment rules which could skew the accuracy of submitted diagnosis code data; and for many patients for whom specialty care is not available, or who choose for other reasons to remain in primary care, primary care treatment will be more effective if it is provided within a model of integrated care that includes care management and psychiatric consultation.
We recognize that the psychiatric CoCM is prescriptive and that much of its demonstrated success may be attributable to adherence to a set of elements and guidelines of care as described in the preceding paragraphs. Therefore, we are proposing the use of these codes to pay accurately for this specific model of care for the benefit of Medicare beneficiaries, given its wide-spread adoption and recognized effectiveness. However, we note that PFS coding, in general, does not dictate how physicians practice medicine and believe that it should, instead, reflect the practice of medicine. We also recognize that there are primary care practices that are incurring, or may
Therefore, to recognize the resource costs associated with furnishing behavioral health care management services to Medicare beneficiaries under related but different models of care without paying for each activity separately, we are also proposing to make payment using a new G-code that describes care management for beneficiaries with diagnosed behavioral health conditions under a broader application of integration in the primary care setting. We believe that for this subset of Medicare beneficiaries, the resources associated with medically necessary care management services are not otherwise adequately reflected under the PFS. The proposed code is GPPPX (Care management services for behavioral health conditions, at least 20 minutes of clinical staff time, directed by a physician or other qualified health care professional time, per calendar month). We note that we expect this coding to be refined over time as we receive more information about other behavioral health care models being used and how they are implemented.
We are seeking stakeholder input on whether we should consider requiring a longer duration of time for this code or an add-on to the code that would allow, for example, additional 20 minute increments. In addition, while we recognize that services inherent to models of BHI provided under this code may range in resource costs, we hope that appropriate payment for these services will lead to appropriate use of BHI models of care, which, in turn, will inform further refinement of the valuation in the future. For additional information on proposed valuation of these codes, see section II.L of this proposed rule.
Similar to CCM services (see section II.E.4), we propose to require an initiating visit for the BHI codes (both the psychiatric CoCM model and the general BHI code), that would be billable separately from the services themselves. We propose that the same services that can serve as the initiating visit for CCM services (see section II.E.3 of this proposed rule) can serve as the initiating visit for the proposed BHI codes. The initiating visit would establish the beneficiary's relationship with the billing practitioner (most aspects of the BHI services would be furnished incident to the billing practitioner's professional services), ensure the billing treating physician or other qualified health care professional assesses the patient prior to initiating other care management processes, and provides an opportunity to obtain beneficiary consent (discussed below). We welcome public comment on the types of services that are appropriate for an initiating visit for the BHI codes, and within what timeframe the initiating visit should be conducted prior to furnishing BHI services.
Commenters to the CY 2016 PFS proposed rule indicated that they did not believe a specific patient consent for BHI services is necessary and, in fact, that requiring special informed consent for these services may reduce access due to stigma associated with behavioral health conditions. Instead, the commenters recommended requiring a more general consent prior to initiating these services whereby the beneficiary gives the initiating physician or practitioner permission to consult with relevant specialists, which would include conferring with a psychiatric consultant. Accordingly, we propose to require a general beneficiary consent to consult with relevant specialists prior to initiating these services, recognizing that applicable rules continue to apply regarding privacy. The proposed general consent would encompass conferring with a psychiatric consultant when furnishing the psychiatric CoCM codes (GPPP1, GPPP2, and GPPP3) or the broader BHI code (GPPPX). Similar to the proposed beneficiary consent process for CCM services (see section II.E.4 of this proposed rule), we propose that the billing practitioner must document in the beneficiary's medical record that the beneficiary's consent was obtained to consult with relevant specialists including a psychiatric consultant, and that, as part of the consent, the beneficiary is informed that there is beneficiary cost-sharing, including potential deductible and coinsurance amounts, for both in-person and non-face-to-face services that are provided. We welcome stakeholder comments on this proposal.
We recognize that special informed consent can also be helpful in cases when a particular service is limited to being billed by a single practitioner for a particular beneficiary. We do not believe that there are circumstances where it would reasonable for multiple practitioners to be reporting these codes during the same month. However, we are not proposing a formal limit at this time. We are seeking comment on whether such a limitation would be beneficial or whether there are circumstances under which a beneficiary might reasonably receive BHI services from more than one practitioner during a given month.
In recent months, many stakeholders have advised that we should waive the applicable Part B coinsurance for services such as those included in our proposed BHI codes. However, we currently lack statutory authority to waive the coinsurance for services such as these.
Beginning in CY 2015, we implemented separate payment for chronic care management (CCM) services under CPT code 99490 (Chronic care management services, at least 20 minutes of clinical staff time directed by a physician or other qualified health professional, per calendar month, 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;
• Comprehensive care plan established, implemented, revised, or monitored.
We finalized a proposal to make separate payment for CCM services as one initiative in a series of initiatives designed to improve payment for, and encourage long-term investment in, care management services (79 FR 67715). In particular, we sought to address an issue raised to us by the physician community, which asserted that the care management included in many of the existing E/M services, such as office visits, does not adequately describe the
Therefore, in the CY 2014 PFS final rule with comment period, we established a separate payment under the PFS for CPT code 99490 (78 FR 43341 through 43342). We sought to include a relatively broad eligible patient population within the code descriptor, established a moderate payment amount, and established bundled payment for concurrently new CPT codes that were reserved for beneficiaries requiring “complex” CCM services (base CPT code 99487 and its add-on code 99489) (79 FR 67716 through 67719). We stated that we would evaluate the services reported under CPT code 99490 to assess whether the service is targeted to the right population and whether the payment amount is appropriate (79 FR 67719). We remind stakeholders that CMS did not limit the eligible population to any particular list of chronic conditions other than the language in the CPT code descriptor. Accordingly, one or more of the chronic conditions being managed through CCM services could be chronic mental health or behavioral health conditions or chronic cognitive disorders, as long as the chronic conditions meet the eligibility language in the CPT code descriptor for CCM services and the billing practitioner meets all of Medicare's requirements to bill the code including comprehensive, patient-centered care planning for all health conditions (see Table 11).
In finalizing separate payment for CPT code 99490, we considered whether we should develop standards to ensure that physicians and other practitioners billing the service would have the capability to fully furnish the service (79 FR 67721). We sought to make certain that the new PFS code(s) would provide beneficiary access to appropriate care management services that are characteristic of advanced primary care, such as patient support for chronic diseases to achieve health goals; 24/7 patient access to care and health information; receipt of preventive care; patient, family and caregiver engagement; and timely coordination of care through electronic health information exchange. Accordingly, we established a set of scope of service elements and payment rules in addition to or in lieu of those established in CPT guidance (in the CPT code descriptor and CPT prefatory language), that the physician or nonphysician practitioner must satisfy to fully furnish CCM services and report CPT code 99490 (78 FR 74414 through 74427, 79 FR 67715 through 67730, and 80 FR 14854). We established requirements to furnish a preceding qualifying visit, obtain advance written beneficiary consent, use certified electronic health record (EHR) technology to furnish certain elements of the service, share the care plan and clinical summaries electronically, document specified activities, and other items summarized in Table 11. For the CCM service elements for which we required use of a certified EHR, the billing practitioner must use, at a minimum, technology meeting the edition(s) of certification criteria that is acceptable for purposes of the EHR Incentive Programs as of December 31st of the calendar year preceding each PFS payment year. (For the CY 2017 PFS payment year, this would mean technology meeting the 2014 edition of certification criteria). These elements and requirements for separately payable CCM services are extensive and generally exceed those required for payment of codes describing procedures, diagnostic tests, or other E/M services under the PFS. In addition, both CPT guidance and our rules specify that only a single practitioner who assumes the care management role for a given beneficiary can bill CPT code 99490 per service period (calendar month). Because the new CCM service closely overlapped with several Medicare demonstration models of advanced primary care (the Multi-Payer Advanced Primary Care Practice (MAPCP) demonstration and the Comprehensive Primary Care Initiative (CPCI)), we provided that practitioners participating in one of these two initiatives could not be paid for CCM services furnished to a beneficiary attributed by the initiative to their practice (79 FR 67729).
Given the non-face-to-face nature of CCM services, we also sought to ensure that beneficiaries would receive advance notice that Part B cost sharing applies since we currently have no legislative authority to “waive” cost sharing for this service. Also since only one practitioner can bill for CCM each service period, we believed the beneficiary notice requirement would help prevent duplicate payment to multiple practitioners.
Since the establishment of CPT code 99490 for separate payment of CCM services, in a number of forums and in public comments to the CY 2016 PFS final rule (80 FR 70921), many practitioners have stated that the service elements and billing requirements are burdensome, redundant and prevent them from being able to provide the services to beneficiaries who could benefit from them. Stakeholders have stated that CPT 99490 is underutilized because it is underpaid relative to the resources involved in furnishing the services, especially given the extensive Medicare rules for payment, and they have suggested a number of potential changes to our current payment rules. Stakeholders continue to believe that many of the CCM payment rules are duplicative of other statutory and regulatory provisions, and to recommend that we reduce the rules and expand CCM coding and payment to distinguish among different levels of patient complexity. We also note that section 103 of the MACRA requires CMS to assess and report to Congress (no later than December 31, 2017) on access to CCM services by underserved rural and racial and ethnic minority populations and to conduct an outreach/education campaign that is underway.
Our assessment of claims data for CY 2015 for CPT code 99490 suggests that
In light of this stakeholder feedback and our mandate under MACRA section 103 to encourage and report on access to CCM services, we are proposing several changes in the payment rules for CCM services. Our primary goal and statutory mandate is to pay as accurately as possible for services furnished to Medicare beneficiaries based on the relative resources required to furnish PFS services, including CCM services. In so doing, we also expect to facilitate beneficiaries' access to reasonable and necessary CCM services that improve health outcomes. First, for CY 2017 we are proposing to more appropriately recognize and pay for the other codes in the CPT family of CCM services (CPT codes 99487 and 99489 describing complex CCM), consistent with our general practice to price services according to their relative ranking within a given family of services. We direct the reader to section II.L of this proposed rule for a discussion of proposed valuation for base CPT code 99487 and its add-on CPT code 99489. The CPT code descriptors are:
• CPT code 99487—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.
• CPT code 99489—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).
As CPT provides, less than 60 minutes of clinical staff time in the service period could not be reported separately, and similarly, less than 30 minutes in addition to the first 60 minutes of complex CCM in a service period could not be reported. We would require 60 minutes of services for reporting CPT code 99487 and 30 additional minutes for each unit of CPT code 99489.
We propose to adopt the CPT provision that CPT codes 99487, 99489, 99490 may only be reported once per service period (calendar month) and only by the single practitioner who assumes the care management role with a particular beneficiary for the service period. That is, a given beneficiary would be classified as eligible to receive either complex or non-complex CCM during a given service period (calendar month), not both, and only one professional claim could be submitted to the PFS for CCM for that service period by one practitioner.
Except for differences in the CPT code descriptors, we propose to require the same CCM service elements for CPT codes 99487, 99489 and 99490. In other words, all the requirements in Table 11 would apply whether the code being billed for the service period is CPT code 99487 (plus 99489 if applicable) or CPT code 99490. These three codes would differ in the amount of clinical staff service time provided; the complexity of medical decision-making as defined in the E/M guidelines (determined by the problems addressed by the reporting practitioner during the month); and the nature of care planning that was performed (establishment or substantial revision of the care plan for complex CCM versus establishment, implementation, revision or monitoring of the care plan for non-complex CCM). Billing practitioners could consider identifying beneficiaries who require complex CCM services using criteria suggested in CPT guidance (such as number of illnesses, number of medications or repeat admissions or emergency department visits) or the profile of typical patients in the CPT prefatory language, but these would not comprise Medicare conditions of eligibility for complex CCM.
We are proposing several changes to our current scope of service elements for CCM, and are proposing that the same scope of service elements, as amended, would apply to all codes used to report CCM services beginning in 2017 (
As provided in the CY 2014 PFS final rule with comment period (78 FR 74425) and subregulatory guidance (available at
We continue to believe that we should require an initiating visit in advance of furnishing CCM services, separate from the services themselves, because a face-to-face visit establishes the beneficiary's relationship with the billing practitioner
We are also proposing for CY 2017 to create a new add-on G-code that would improve payment for visits that qualify as initiating visits for CCM services. The code would be billable for beneficiaries who require extensive face-to-face assessment and care planning by the billing practitioner (as opposed to clinical staff), through an add-on code to the initiating visit, GPPP7 (Comprehensive assessment of and care planning by the physician or other qualified health care professional for patients requiring chronic care management services (billed separately from monthly care management services) (Add-on code, list separately in addition to primary service). We propose that when the billing practitioner initiating CCM personally performs extensive assessment and care planning outside of the usual effort described by the billed E/M code (or AWV or IPPE code), the practitioner could bill GPPP7 in addition to the E/M code for the initiating visit (or in addition to the AWV or IPPE), and in addition to the CCM CPT code 99490 (or proposed 99487 and 99489) if all requirements to bill for CCM services are also met. See section II.L for proposed valuation of GPPP7.
The code GPPP7 would account specifically for additional work of the billing practitioner in personally performing a face-to-face assessment of a beneficiary requiring CCM services, and personally performing CCM care planning (the care planning could be face-to-face and/or non-face-to-face) that is not already reflected in the initiating visit itself (nor in the monthly CCM service code). We believe GPPP7 might be particularly appropriate to bill when the initiating visit is a less complex visit (such as a level 2 or 3 E/M visit), although GPPP7 could be billed along with higher level visits if the billing practitioner's effort and time exceeded the usual effort described by the initiating visit code. It could also be appropriate to bill GPPP7 when the initiating visit addresses problems unrelated to CCM, and the billing practitioner does not consider the CCM-related work he or she performs in determining what level of initiating visit to bill. We believe that this proposal will more appropriately recognize the relative resource costs for the work of the billing practitioner in initiating CCM services, specifically for extensive work assessing the beneficiary and establishing the CCM care plan that is reasonable and necessary, and that is not accounted for in the billed initiating visit or in the unit of the CCM service itself that is billed for a given service period. In addition, we believe this proposal will help ensure that the billing practitioner personally performs and meaningfully contributes to the establishment of the CCM care plan when the patient's complexity warrants it.
Consistent with general coding guidance, the work that is reported under GPPP7 (including time) could not also be reported under or counted towards the reporting of any other billed code, including any of the monthly CCM services codes. The care plan that the practitioner must create in order to bill GPPP7 would be subject to the same requirements as the care plan included in the monthly CCM services, namely it must be an electronic patient-centered care plan based on a physical, mental, cognitive, psychosocial, functional and environmental (re)assessment and an inventory of resources and supports; a comprehensive care plan for all health issues. This would distinguish it from the more limited care plan included in the BHI codes GPPP1, GPPP2, GPPP3 or GPPPX which focus on behavioral health issues, or the care plan included in GPPP6 which focuses on cognitive status. We are seeking public input on potential overlap among these codes and further clinical input as to how the assessments and care planning that is included in them would differ.
Finally, although not part of our proposals for 2017, we have noted with interest a recent CPT coding proposal for a code that would potentially identify and separately pay for monthly CCM work that is personally performed by the billing physician or other practitioner. We will continue to follow any CPT developments in this area.
We propose several revisions to the scope of service elements of 24/7 Access to care and Continuity of Care. We continue to believe these elements are important aspects of CCM services, but that it would be appropriate to improve alignment with CPT provisions and remove the requirement for the care plan to be available remotely to individuals providing CCM services after hours. Studies have shown that after-hours care is best implemented as part of a larger practice approach to access and continuity (see for example, the peer-review article available at
We recognize that some models of care require more significant investment in practice infrastructure than others, for example resources in staffing or health information technology. In addition, we believe there is room to reduce the administrative complexity of our current payment rules for CCM services to accommodate a range of potential care models. In re-examining what should be included in the CCM scope of service elements for 24/7 Access to Care and Continuity of Care, we believe the CPT language adequately and more appropriately describes the services that should, at a minimum, be included in these service elements. Therefore, we propose to adopt the CPT language for these two elements. For 24/7 Access to Care, the scope of service element would be to provide 24/7 access to physicians or other qualified health care professionals or clinical staff including providing patients/caregivers with a means to make contact with health care professionals in the practice to address urgent needs regardless of the time of day or day of week. We believe
We recognize that health information systems that include remote access to the care plan or the full EHR after hours, or a feedback loop that communicates back to the primary care physician and others involved in the beneficiary's care regarding after-hours care or advice provided, are extremely helpful (
For Continuity of Care, we currently require the ability to obtain successive routine appointments “with the practitioner or a designated member of the care team,” while CPT only references successive routine appointments “with a designated member of the care team.” We do not believe there is any practical difference between these two phrases and therefore are proposing to omit the words “practitioner or” from our requirement. The billing practitioner is a member of the CCM care team, so the CPT language already allows for successive routine appointments either with the billing practitioner or another appropriate member of the CCM care team.
Based on review of extensive public comment and stakeholder feedback, we have come to believe that we should not require individuals providing the beneficiary with the required 24/7 access to care for urgent needs to have access to the care plan as a condition of CCM payment. As discussed above, we believe that in general, provision of effective after-hours care of the beneficiary would require access to the care plan, if not the full EHR. However, we have heard from rural and other practices that remote access to the care plan is not always necessary or possible because urgent care needs after-hours are often referred to a practitioner or care team member who established the care plan or is familiar with the beneficiary. In some instances, the care plan does not need to be available in order to address urgent patient needs after business hours. In addition, we have not required the use of any certified or non-certified health information technology in the provision of any other PFS services (including various other care management services). We are concerned that imposing EHR-related requirements at the service level as a condition of PFS payment could distort the relative valuation of services priced under the fee schedule. Therefore, we propose to change the CCM service element to require timely electronic sharing of care plan information within and outside the billing practice, but not necessarily on a 24/7 basis, and to allow transmission of the care plan by fax.
We acknowledge that it is best for practitioners and providers to have access to care plan information any time they are providing services to beneficiaries who require CCM services. This proposal is not intended to undermine the significance of electronic communication methods other than fax transmission in providing effective, continuous care. On the contrary, we believe that fax transmission, while commonly used, is much less efficient and secure than other methods of communicating patient health information, and we encourage practitioners to adopt and use electronic technologies other than fax for transmission and exchange of the CCM care plan. We continue to believe the best means of exchange of all relevant patient health information is through standardized electronic means. However, we recognize that other CMS initiatives may be better mechanisms to incentivize increased interoperability of health information systems than conditions of payment assigned to particular services under the PFS. We believe our proposal would still allow timely availability of health information within and outside the practice for purposes of providing CCM, and would simplify the rules governing provision of the service and improve access to the service. These proposed revisions would better align the service with appropriate CPT prefatory language, which may reduce unnecessary administrative complexity for practitioners in navigating the differences between CPT guidance and Medicare rules.
The CCM scope of service element Management of Care Transitions includes a requirement for the creation and electronic transmission and exchange of continuity of care documents referred to as “clinical summaries” (see Table 11). We patterned our requirements regarding clinical summaries after the EHR Incentive Program requirement that an eligible professional who transitions their patient to another setting of care or provider of care, or refers their patient to another provider of care, should
Based on review of extensive public comment and stakeholder feedback, we have come to believe that we should not require the use of any specific electronic technology in managing a beneficiary's care transitions as a condition of payment for CCM services. Instead we are proposing more simply to require the billing practitioner to create and exchange/transmit continuity of care document(s) timely with other practitioners and providers. To avoid confusion with the requirements of the EHR Incentive Programs, and since we would no longer require standardized content for the CCM continuity of care document(s), we would refer to them as continuity of care documents instead of clinical summaries. We would no longer specify how the billing practitioner must transport or exchange these document(s), as long as it is done timely and consistent with the Care Transitions Management scope of service element. We welcome public input on how we should refer to these document(s), noting that CPT does not provide model language specific to CCM services. The proposed term “continuity of care document(s)” draws on CPT prefatory language for TCM services, which CPT provides may include “obtaining and reviewing the discharge information (for example, discharge summary, as available, or continuity of care document).”
Again, this proposal is not intended to undermine the significance of a standardized, electronic format and means of exchange (other than fax) of all relevant patient health information, for achieving timely, seamless care across settings especially after discharge from a facility. On the contrary, we believe that fax transmission, while commonly used, is much less efficient and secure than other methods of communicating patient health information, and we encourage practitioners to adopt and use electronic technologies other than fax for transmission and exchange of continuity of care documents in providing CCM services. We continue to believe the best means of exchange of all relevant patient health information is through standardized electronic means. However, as we discussed above regarding the CCM care plan, we have not applied similar requirements to other PFS services specifically (including various other care management services) and have concerns about how doing so may create disparities between these services and others under the PFS. We also recognize that other CMS initiatives may be better mechanisms to incentivize increased interoperability of health information systems than conditions of payment assigned to particular services under the PFS. However, we also anticipate that our proposals will contribute to practitioners' capacity to invest in the best tools for managing the care of Medicare beneficiaries.
We propose to simplify the current requirement to provide the beneficiary with a written or electronic copy of the care plan, by instead adopting the CPT language specifying more simply that a copy of the care plan must be given to the patient or caregiver. While we believe beneficiaries should and must be provided a copy of the care plan, and that practitioners may choose to provide the care plan in hard copy or electronic form in accordance with patient preferences, we do not believe it is necessary to specify the format of the care plan that must be provided as a condition of CCM payment. Additionally, we recognize that there may be times that sharing the care plan with the caregiver (in a manner consistent with applicable privacy and security rules and regulations) may be appropriate.
We continue to believe that obtaining advance beneficiary consent to receive CCM services is important to ensure the beneficiary is informed, educated about CCM services, and is aware of applicable cost sharing. We also believe that querying the beneficiary about whether another practitioner is already providing CCM services helps to reduce the potential for duplicate provision or billing of the services. However, we believe the consent process could be simplified, and that it should be left to the practitioner and the beneficiary to decide the best way to establish consent. Therefore, we propose to continue to require billing practitioners to inform the beneficiary of the currently required information (that is, inform the beneficiary of the availability of CCM services; inform the beneficiary that only one practitioner can furnish and be paid for these services during a calendar month; and inform the beneficiary of the right to stop the CCM services at any time (effective at the end of the calendar month)). However, we propose to specify that the practitioner could document in the beneficiary's medical record that this information was explained and note whether the beneficiary accepted or declined CCM services instead of obtaining a written agreement.
We also propose to remove the language requiring beneficiary authorization for the electronic communication of his or her medical information with other treating providers as a condition of payment for CCM services, because under the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule (45 CFR 164.506), a covered entity is permitted to use or disclose protected health information for purposes of treatment without patient authorization. Moreover, if such disclosure is electronic, the HIPAA Security Rule requires secure transmission (45 CFR 164.312(e)). In previous regulations we have reminded practitioners that for all electronic sharing of beneficiary information in the provision of CCM services, HIPAA Privacy and Security Rule standards apply in the usual manner (79 FR 67728).
We have heard from practitioners that the requirements to document certain information in a certified EHR format are redundant because the CCM billing rules already require documentation of core clinical information in a certified EHR format. Specifically, we already require structured recording of demographics, problems, medications and medication allergies, and the creation of a clinical summary record, using a qualifying certified EHR; and that a full list of problems, medications and medication allergies in the EHR must inform the care plan, care coordination and ongoing clinical care. Therefore, we propose to no longer require the use of a qualifying certified EHR to document communication to and from home- and community-based providers regarding the patient's psychosocial needs and functional deficits and to document beneficiary consent. We would continue to require documentation in the medical record of beneficiary consent (discussed above) and of communication to and from home- and community-based providers
In summary, we believe our proposed changes would retain elements of the CCM service that are most characteristic of the changes in medical practice toward advanced primary care, while eliminating redundancy, simplifying provision of the services, and improving access without compromising quality of care and beneficiary privacy or advance notice and consent. We also anticipate that improved accuracy of payment for care management services and reduced administrative burden associated with billing for these services will contribute to practitioners' capacity to invest in the best tools for managing the care of Medicare beneficiaries.
RHCs and FQHCs have been authorized to bill for CCM services since January 1, 2016, and are paid based on the Medicare PFS national average non-facility payment rate when CPT code 99490 is billed alone or with other payable services on a RHC or FQHC claim. The RHC and FQHC requirements for billing CCM services have generally followed the requirements for practitioners billing under the PFS, with some adaptations based on the RHC and FQHC payment methodologies.
To assure that CCM requirements for RHCs and FQHCs are not more burdensome than those for practitioners billing under the PFS, we are proposing revisions for CCM services furnished by RHCs and FQHCs similar to the revisions proposed under the section above entitled, “Reducing Administrative Burden and Improving Payment Accuracy for Chronic Care Management (CCM) Services” for RHCs and FQHCs. Specifically, we propose to:
• Require that CCM be initiated during an AWV, IPPE, or comprehensive E/M visit only for new patients or patients not seen within one year. This would replace the requirement that CCM could only be initiated during an AWV, IPPE, or comprehensive E/M visit where CCM services were discussed.
• Require 24/7 access to a RHC or FQHC practitioner or auxiliary staff with a means to make contact with a RHC or FQHC practitioner to address urgent health care needs regardless of the time of day or day of week. This would replace the requirement that CCM services be available 24/7 with health care practitioners in the RHC or FQHC who have access to the patient's electronic care plan to address his or her urgent chronic care needs, regardless of the time of day or day of the week.
• Require timely electronic sharing of care plan information within and outside the RHC or FQHC, but not necessarily on a 24/7 basis, and allow transmission of the care plan by fax. This would replace the requirement that the electronic care plan be available on a 24/7 basis to all practitioners within the RHC or FQHC whose time counts towards the time requirement for the practice to bill the CCM code, and removes the restriction on allowing the care plan to be faxed.
• Require that in managing care transitions, the RHC or FQHC creates, exchanges, and transmits continuity of care document(s) in a timely manner with other practitioners and providers. This would replace the requirements that clinical summaries must be created and formatted according to certified EHR technology, and the requirement for electronic exchange of clinical summaries by a means other than fax.
• Require that a copy of the care plan be given to the patient or caregiver. This would remove the description of the format (written or electronic) and allows the care plan to be provided to the caregiver when appropriate (and in a manner consistent with applicable privacy and security rules and regulations).
• Require that the RHC or FQHC practitioner documents in the beneficiary's medical record that all the elements of beneficiary consent (for example, that the beneficiary was informed of the availability of CCM services; only one practitioner can furnish and be paid for these services during a calendar month; the beneficiary may stop the CCM services at any time, effective at the end of the calendar month, etc.) were provided, and whether the beneficiary accepted or declined CCM services. This would replace the requirement that RHCs and FQHCs obtain a written agreement that these elements were discussed, and removes the requirement that the beneficiary provide authorization for the electronic communication of his or her medical information with other treating providers as a condition of payment for CCM services.
• Require that communication to and from home- and community-based providers regarding the patient's psychosocial needs and functional deficits be documented in the patient's medical record. This would replace the requirement to document this patient health information in a certified EHR format.
We note that we are not proposing an additional payment adjustment for patients who require extensive assessment and care planning as part of the initiating visit, as payments for RHC and FQHC services are not adjusted for length or complexity of the visit.
We believe these proposed changes would keep the CCM requirements for RHCs and FQHCs consistent with the CCM requirements for practitioners billing under the PFS, simplify the provision of CCM services by RHCs and FQHCs, and improve access to these services without compromising quality of care, beneficiary privacy, or advance notice and consent.
For CY 2017 we are proposing a G-code that would provide separate payment to recognize the work of a physician (or other appropriate billing practitioner) in assessing and creating a care plan for beneficiaries with cognitive impairment, GPPP6 (Cognition and functional assessment using standardized instruments with development of recorded care plan for the patient with cognitive impairment, history obtained from patient and/or caregiver, in office or other outpatient setting or home or domiciliary or rest home). We understand that a similar code was recently approved by the CPT Editorial Panel and is scheduled to be included in the CY 2018 CPT code set. We intend for GPPP6 to be a temporary code (perhaps for only one-year) and will consider whether to adopt and establish relative value units for the new CPT code under our standard process, presumably for CY 2018.
We reviewed the list of service elements that were proposed at CPT, and are proposing the following as required service elements of GPPP6:
• Cognition-focused evaluation including a pertinent history and examination.
• Medical decision making of moderate or high complexity (defined by the E/M guidelines).
• Functional assessment (for example, Basic and Instrumental Activities of Daily Living), including decision-making capacity.
• Use of standardized instruments to stage dementia.
• Medication reconciliation and review for high-risk medications, if applicable.
• Evaluation for neuropsychiatric and behavioral symptoms, including depression, including use of standardized instrument(s).
• Evaluation of safety (for example, home), including motor vehicle operation, if applicable.
• Identification of caregiver(s), caregiver knowledge, caregiver needs, social supports, and the willingness of caregiver to take on caregiving tasks.
• Advance care planning and addressing palliative care needs, if applicable and consistent with beneficiary preference.
• Creation of a care plan, including initial plans to address any neuropsychiatric symptoms and referral to community resources as needed (for example, adult day programs, support groups); care plan shared with the patient and/or caregiver with initial education and support.
The proposed valuation of GPPP6 (discussed in section II.E.1) assumes that this code would include services that are personally performed by the physician (or other appropriate billing practitioner) and would significantly overlap with services described by certain E/M visit codes, advance care planning services, and certain psychological or psychiatric service codes that are currently separately payable under the PFS. Accordingly, we propose that GPPP6 must be furnished by the physician (or other appropriate billing practitioner) and could not be billed on the same date of service as CPT codes 90785 (Psytx complex interactive), 90791 (Psych diagnostic evaluation), 90792 (Psych diag eval w/med srvcs), 96103 (Psycho testing admin by comp), 96120 (Neuropsych tst admin w/comp), 96127 (Brief emotional/behav assmt), 99201–99215 (Office/outpatient visits new), 99324–99337 (Domicil/r-home visits new pat), 99341–99350 (Home visits new patient), 99366–99368 (Team conf w/pat by hc prof), 99497 (Advncd care plan 30 min), 99498 (Advncd care plan addl 30 min)), since these codes all reflect face-to-face services provided by the physician or other billing practitioner for related services that are separately payable. In addition, we are proposing to prohibit billing of GPPP6 with other care planning services, such as care plan oversight services (CPT code 99374), home health care and hospice supervision (G0181, G0182), or our proposed add-on code for comprehensive assessment and care planning by the billing practitioner for patients requiring CCM services (GPPP7). We are seeking comment on whether there are circumstances where multiple care planning codes could be furnished without significant overlap. We propose to specify that GPPP6 may serve as a companion or primary E/M code to the prolonged service codes (those that are currently separately paid, and those we propose to separately pay beginning in 2017), but are interested in
We do not believe the services described by GPPP6 would significantly overlap with proposed or current medically necessary CCM services (CPT codes 99487, 99489, 99490); TCM services (99495, 99496); or the proposed behavioral health integration service codes (GPPP1, GPPP2, GPPP3, GPPPX). Therefore we propose that GPPP6 could be billed on the same date-of-service or within the same service period as these codes (CPT codes 99487, 99489, 99490, 99495, 99496, GPPP1, GPPP2, GPPP3, GPPPX). There may be overlap in the patient population eligible to receive these services and the population eligible to receive the services described by GPPP6, but we believe there would be sufficient differences in the nature and extent of the assessments, interventions and care planning, as well as the qualifications of individuals providing the services, to allow concurrent billing for services that are medically reasonable and necessary. We welcome public comment on potential overlap between GPPP6 and existing PFS billing codes, as well as the other primary care/cognitive services addressed in this section of the proposed rule.
People with disabilities face significant challenges accessing the health care system. Medicare beneficiaries who are under age 65 with disabilities are three times more likely to report having difficulties finding a doctor who accepts Medicare than beneficiaries age 65 and older.
One way to help improve access to high-quality physicians' services for people with disabilities is to ensure Medicare Physician Fee Schedule payments are based on the accurate relative resource costs of services furnished to people with disabilities.
As described in section I.B. of this proposed rule, PFS payments are required to be based on the relative resources involved in furnishing a service. To determine the relative resources required to furnish a service described by a specific HCPCS code, CMS considers the “typical” Medicare service described by that code, and identifies the resources involved in that scenario. This approach assumes that while practitioners might incur greater or fewer costs in furnishing any specific service to any particular beneficiary, RVUs are allocated appropriately based on a “typical” Medicare case-mix.
For HCPCS codes that describe narrowly-defined procedures and tests, PFS payment rates based on the typical resources may be accurate for most kinds of practitioners and many beneficiaries, because the granularity of coding corresponds with practitioners' use of resources based on the specific medical needs of their patients. However, the HCPCS codes that describe the office/outpatient E/M services are broadly defined, so the typical service billed using one of those HCPCS codes matches a much smaller percentage of all the services billed using that HCPCS code. Medicare payment rates for these kinds of services under the PFS do not vary by the population being served, or by the particular practitioner furnishing the services. Payment for these kinds of service vary only based on the delineations among the level of visits, despite the reality that adequately serving certain patients requires much greater resources in ways that are generally not reflected in the described differentiation between visit levels.
For example, the same codes and rates are used to pay for routine care of all patients, including furnishing care to patients with disabilities that often require greater resources relating to equipment, clinical staff, and physician time relative to the resource costs associated with providing the same kind of care to other Medicare beneficiaries. Thus, the payment rate for the code may not accurately reflect the resources involved in providing the service to certain categories of beneficiaries. For these reasons, the resources involved in furnishing care, including and especially routine care of both acute and chronic illness, to beneficiaries with disabilities may be routinely and systematically underestimated under PFS payment made on the basis of the broadly described visit codes. This effectively reduces overall payment relative to resource needs for practitioners who more frequently serve such patients, which could negatively impact access or quality of care for beneficiaries with disabilities.
We estimate that about 7 percent of all Medicare beneficiaries have a potentially disabling mobility-related diagnosis (the Medicare-only prevalence is 5.5 percent and the prevalence for Medicare-Medicaid dual eligible beneficiaries is 11 percent), using 2010 Medicare (and for dual eligible beneficiaries, Medicaid) claims data.
When a beneficiary with a mobility-related disability goes to a physician or other practitioner's office for an E/M visit, the resources associated with providing the visit can exceed the resources required for the typical E/M visit. An E/M visit for a patient with a mobility-related disability can require more physician and clinical staff time to provide appropriate care because the patient may require skilled assistance throughout the visit to carefully move and adjust his/her body. Furthermore, an E/M visit for a patient with a mobility-related disability commonly requires specialized equipment such as a wheel chair accessible scale, floor and overhead lifts, a movable exam table, padded leg supports, a stretcher and transfer board. The current E/M visit payment rates, based on an assumption of “typical” resources involved in furnishing an E/M visit to a “typical” patient, do not accurately reflect these additional resources associated with furnishing appropriate care to many beneficiaries with mobility-related disabilities.
When furnishing E/M services to beneficiaries with mobility-related
Each of these scenarios is potentially problematic. The first two scenarios suggest that the quality of care for this beneficiary population might be compromised by assumptions under the PFS regarding relative resource costs in furnishing services to this population. The third scenario reflects an obvious access problem for these beneficiaries. To improve payment accuracy and help ameliorate potential disparity in access and quality for beneficiaries with mobility-related disabilities, we propose to create a new add-on G-code, effective for CY 2017, to describe the additional services furnished in conjunction with E/M services to beneficiaries with disabilities that impair their mobility:
• GDDD1: Resource-intensive services for patients for whom the use of specialized mobility-assistive technology (such as adjustable height chairs or tables, patient lifts, and adjustable padded leg supports) is medically necessary and used during the provision of an office/outpatient evaluation and management service visit (Add-on code, list separately in addition to primary procedure).
Effective January 1, 2017, we propose that this add-on code could be billed with new and established patient office/outpatient E/M codes (CPT codes 99201 through 99205, and 99212 through 99215), as well as transitional care management codes (CPT codes 99495 and 99496), when the additional resources described by the code are medically necessary and used in the provision of care. In addition to seeking comment on this proposal, we are also seeking comment on other HCPCS codes that may be appropriate base codes for this proposed add-on code, including those describing preventive visits and services. We remind potential commenters that the rationale for this proposal is based in large part on the broad use and lack of granularity in coding for E/M services relative to other PFS services in conjunction with the additional resources used.
The proposed inputs and valuation for this code are detailed in section II.L of this proposed rule.
When furnishing care to a beneficiary with a mobility-related disability, the current E/M visit payment rates may not fully reflect the associated resource costs that are being incurred by practitioners. We recognize that there are other populations for which payment adjustment may be appropriate. Our proposal regarding beneficiaries with mobility-related disabilities reflects the discrete nature of the additional resource costs for this population, the clear lack of differentiation in resource costs regarding particular kinds of frequently-furnished services, and the broad recognition of access problems. We recognize that some physician practices may frequently furnish services to particular populations for which the relative resource costs are similarly systemically undervalued and we seek comment regarding other circumstances where these dynamics can be discretely observed.
Our current regulations in § 410.26(b) provide for an exception to allow general supervision of CCM services (and similarly, for the non-face-to-face portion of TCM services), because these are non-face-to-face care management/care coordination services that would commonly be provided by clinical staff when the billing practitioner, and hence, the supervising physician, is not physically present; and the CPT codes are comprised solely (or largely) of non-face-to-face services provided by clinical staff. A number of codes that we are proposing to establish for separate payment in CY 2017 under our initiative to improve payment accuracy for primary care and care management are similar to CCM services in that a critical element of the services is non-face-to-face care management/care coordination services provided by clinical staff when the billing practitioner may not be physically present. Accordingly, we are proposing to amend § 410.26(a)(3) and § 410.26 (b) to better define general supervision and to allow general supervision not only for CCM services and the non-face-to-face portion of TCM services, but also for proposed codes GPPP1, GPPP2, GPPP3, GPPPX, CPT code 99487, and CPT code 99489. Instead of adding each of these proposed codes requiring general supervision to the regulation text on an individual basis, we propose to revise our regulation under paragraph (b)(1) of § 410.26 to allow general supervision of the non-face-to-face portion of designated care management services, and we would designate the applicable services through notice and comment rulemaking.
Section 1861(s)(2)(S) of the Act specifies that medical and other health services include DSMT services as defined in section 1861(qq) of the Act. DSMT services are intended to educate beneficiaries in the successful self-management of diabetes. DSMT includes, as applicable, instructions in self-monitoring of blood glucose; education about diet and exercise; an insulin treatment plan developed specifically for the patient who is insulin-dependent; and motivation for patients to use the new skills for self-management (see § 410.144(a)(5)). DSMT services are reported under HCPCS codes G0108 (Diabetes outpatient self-management training services, individual, per 30 minutes) and G0109 (Diabetes outpatient self- management training services, group session (2 or more), per 30 minutes). The benefit, as specified at § 410.141, consists of 1 hour of individual and 9 hours of group training unless special circumstances warrant more individual training or no group session is available within 2 months of the date the training is ordered.
Section 1861(qq) of the Act specifies that DMST services are furnished by a certified provider, defined as a physician or other individual or entity that also provides, in addition to DSMT, other items or services for which payment may be made under Medicare. The physician, individual or entity that furnishes the training also must meet certain quality standards. The physician, individual or entity can meet standards established by us or standards originally established by the National Diabetes Advisory Board and subsequently revised by organizations who participated in their establishment, or can be recognized by an organization that represents individuals with diabetes as meeting standards for furnishing the services.
We require that all those who furnish DSMT services be accredited as meeting quality standards by a CMS-approved national accreditation organization (NAO). In accordance with § 410.144, a CMS-approved NAO may accredit an
An article titled “Use of Medicare's Diabetes Self-Management Training Benefit” was published in the
We understand there are a number of issues that may contribute to the low utilization of these services. Some of the issues that have been brought to our attention by the DSMT community and NAOs are:
• Concerns that claims have been rejected or denied because of confusion about the credentials of the individuals who furnish DSMT services. In entities following the National Standards, the credentials of the educators actually providing the training are determined by the NAO and are not to be determined by the Medicare Administrative Contractor. Many individuals who actually furnish DSMT services, such as registered nurses and pharmacists, do not qualify to enroll in Medicare as certified providers, as that term is defined at section 1861(qq)(2)(A) of the Act, and codified in our regulations at § 410.140 as approved entit(ies).
• Questions about when individual (rather than group) DSMT services are available. As noted above, the benefit consists of 1 hour of individual and 9 hours of group training unless special circumstances warrant more individual training or no group session is available within 2 months of the date the training is ordered. The special circumstances are when the beneficiary's physician or qualified NPP documents in the beneficiary's medical record that the beneficiary has special needs resulting from conditions such as severe vision, hearing, or language limitations that would hinder effective participation in a group training session. In all cases, however, the physician or NPP must order individual training.
• Concerns that the Medicare Benefit Policy Manual, Chapter 15, section 300 does not clarify the settings and locations in which DSMT services may be provided. As a result, some providers (and perhaps some Medicare contractors) are confused. In regard to this issue, we note that a forthcoming manual update will reiterate the guidance we provided to the DSMT community, including the NAOs, in a response to their letter requesting clarification regarding the settings and locations in which DSMT services can be provided. The manual update will clarify that: (a) In the case of DSMT services furnished by an entity that submits professional claims to the A/B Medicare Administrative Contractor (MAC), such as a physician's office or an RD's practice, DSMT services may be furnished at alternate locations used by the entity as a practice location; and (b) when the DSMT services are furnished by an entity that is a hospital outpatient department (HOPD), these DSMT services must be furnished in the hospital (including a provider-based department) and cannot be furnished at alternate non-hospital locations. We plan to address and clarify the above issues through Medicare program instructions as appropriate. We also recognize the possibility that Medicare payment for these services may not fully reflect the resources required to provide them and this may be contributing to relatively low utilization. There may also be other barriers to access of which we are not aware. We are seeking public comment on such barriers to help us identify and address them. We also seek comment and information on whether Medicare payment for these services is accurate. In particular, we would appreciate information on the time and intensity of services provided, and on the services and supplies that should be included in the calculation of practice expenses. We will consider this information to determine whether to propose an update to resource inputs used to develop payment rates for these services in future rulemaking.
Section 1848(c)(2)(O) of the Act establishes an annual target for reductions in PFS expenditures resulting from adjustments to relative values of misvalued codes. Under section 1848(c)(2)(O)(ii) of the Act, if the estimated net reduction in expenditures for a year as a result of adjustments to the relative values for misvalued codes is equal to or greater than the target for that year, reduced expenditures attributable to such adjustments shall be redistributed in a budget-neutral manner within the PFS in accordance with the existing budget neutrality requirement under section 1848(c)(2)(B)(ii)(II) of the Act. The provision also specifies that the amount by which such reduced expenditures exceeds the target for a given year shall be treated as a net reduction in expenditures for the succeeding year, for purposes of determining whether the target has been met for that subsequent year. Section 1848(c)(2)(O)(iv) of the Act defines a target recapture amount as the difference between the target for the year and the estimated net reduction in expenditures under the PFS resulting from adjustments to RVUs for misvalued codes. Section 1848(c)(2)(O)(iii) of the Act specifies that, if the estimated net reduction in PFS expenditures for the year is less than the target for the year, an amount equal to the target recapture amount shall not be taken into account when applying the budget neutrality requirements specified in section 1848(c)(2)(B)(ii)(II) of the Act. Under section 1848(c)(2)(O)(v) of the Act, the target that applies to calendar years (CYs) 2017 and 2018 is calculated as 0.5 percent of the estimated amount of expenditures under the PFS for the year.
In CY 2016 PFS rulemaking, we proposed and finalized a methodology to implement this statutory provision.
Because the annual target is calculated by measuring changes from one year to the next, for CY 2016, we considered how to account for changes in values that are best measured over 3 years, instead of 2 years. As we described in the CY 2016 final rule with comment period (80 FR 70932), our general valuation process for potentially misvalued, new, and revised codes was to establish values on an interim final basis for a year in the PFS final rule with comment period. Then, during the 60-day period following the publication of the final rule with comment period, we would accept public comment about those valuations. In the final rule with comment period for the subsequent year, we would consider and respond to public comments received on the interim final values, and make any appropriate adjustments to values based on those comments. Under that process for revaluing new, revised, and misvalued codes, we believe the overall change in valuation for many codes would best measured across values for 3 years: Between the original value in the first year; the interim final value in the second year; and the finalized value in the third year. However, the target calculation for a year would only be comparing changes in RVUs between 2 years and not among 3 years, so the
For recent years, interim final values for misvalued codes (year 2) have generally reflected reductions relative to original values (year 1), and for most codes, the interim final values (year 2) are maintained and finalized (year 3). However, when values for particular codes have changed between the interim final (year 2) and final values (year 3) based on public comment, the general tendency has been that codes increase in the final value (year 3) relative to the interim final value (year 2), even in cases where the final value (year 3) represents a decrease from the original value (year 1). Therefore, for these codes, the year 2 changes compared to year 1 would risk over-representing the overall reduction, while the year 3 to year 2 changes would represent an increase in value. We noted that if there were similar targets in every PFS year, and a similar number of misvalued code changes made on an interim final basis, the incongruence in measuring what is really a 3-year change in 2-year increments might not be particularly problematic since each year's calculation would presumably include a similar number of codes measured between years 1 and 2 and years 2 and 3.
However, including changes that take place over 3 years generated challenges in calculating the target for CY 2016. Because there was no target for CY 2015, any reductions that occurred on an interim final basis for CY 2015 were not counted toward achievement of a target. If we had then included any upward adjustments made to these codes based on public comment as “misvalued code” changes for CY 2016, we would effectively be counting the service-level increases for 2016 (year 3) relative to 2015 (year 2) against achievement of the target without any consideration to the service-level changes relative to 2014 (year 1), even in cases where the overall change in valuation was negative.
Therefore, we proposed and finalized the decision to exclude code-level input changes for CY 2015 interim final values from the calculation of the CY 2016 misvalued code target since the misvalued change occurred over multiple years, including years not applicable to the misvalued code target provision.
For the CY 2017 final rule with comment period, we will be finalizing values (year 3) for codes that were interim final in CY 2016 (year 2). Unlike codes that were interim final for CY 2015, the codes that are interim final for CY 2016 were included as misvalued codes and will fall within the range of years for which the misvalued code target provision applies. Thus, overall changes in values for these codes would be measured in the target across 3 full years: The original value in the first year (CY 2015); the interim final value in the second year (CY 2016); and the finalized value in the third year (CY 2017). The changes in valuation for these CY 2016 interim final codes were previously measured and counted towards the target during their initial change in valuation between years 1 and 2.
As such, we are proposing to include changes in values of the CY 2016 interim final codes toward the CY 2017 misvalued code target. We believe that this is consistent with the approach that we finalized in last year's final rule with comment period. The changes in values of CY 2015 interim final codes were not counted towards the misvalued code target in CY 2016 since the valuation change occurred over multiple years, including years not applicable to the misvalued code target provision. However, both of the changes in valuation for the CY 2016 interim final codes, from year 1 to year 2 (CY 2015 to CY 2016) and from year 2 to year 3 (CY 2016 to CY 2017), have taken place during years that occur within the misvalued code target provision. We therefore believe that any adjustments made to these codes based on public comment should be considered towards the achievement of the target for CY 2017, just as any changes in valuation for these same CY 2016 interim final codes previously counted towards the achievement of the target for CY 2016.
We seek public comments regarding this proposal. We also remind commenters that we have revised our process for revaluing new, revised and misvalued codes so that we will be proposing and finalizing values for most of the misvalued codes during a single calendar year. After this year, there will be far fewer instances of interim final codes and changes that are best measured over 3 years far.
We refer readers to the regulatory impact analysis section of this proposed rule for our estimate of the proposed net reduction in expenditures relative to the 0.5 percent target for CY 2017, and the resulting adjustment required to be made to the conversion factor. Additionally, we refer readers to the public use file that provides a comprehensive description of how the target is calculated as well as the estimated impact by code family on the CMS Web site under the supporting data files for the CY 2017 PFS proposed rule at
Section 1848(c)(7) of the Act specifies that for services that are not new or revised codes, if the total RVUs for a service for a year would otherwise be decreased by an estimated 20 percent or more as compared to the total RVUs for the previous year, the applicable adjustments in work, PE, and MP RVUs shall be phased in over a 2-year period.
In the CY 2016 PFS rulemaking, we proposed and finalized a methodology to implement this statutory provision. To determine which services are described by new or revised codes for purposes of the phase-in provision, we apply the phase-in to all services that are described by the same, unrevised code in both the current and update year, and exclude codes that describe different services in the current and update year.
Because the phase-in of significant reductions in RVUs falls within the budget neutrality requirements specified in section 1848(c)(2)(B)(ii)(II) of the Act, we estimate the total RVUs for a service prior to the budget-neutrality redistributions that result from implementing phase-in values. In implementing the phase-in, we consider a 19 percent reduction as the maximum 1-year reduction for any service not described by a new or revised code. This approach limits the year one reduction for the service to the maximum allowed amount (that is, 19 percent), and then phases in the remainder of the reduction.
The statute provides that the applicable adjustments in work, PE, and MP RVUs shall be phased in over a 2-year period when the RVU reduction for a code for a year is estimated to be equal to or greater than 20 percent. Since CY 2016 was the first year in which we applied the phase-in transition, CY 2017 will be the first year in which a single code could be subject to RVU reductions greater than 20 percent for 2 consecutive years.
Under our finalized policy, the only codes that are not subject to the phase-in are those that are new or revised, which we defined as those services that are not described by the same, unrevised code in both the current and update year, or by the same codes that describe different services in the current and update year. Since CY 2016 was the first year for which the phase-in provision applied, we did not address how we would handle codes with
The significant majority of codes with reductions in RVUs that are greater than 20 percent in year one would not be likely to meet the 20 percent threshold in a consecutive year. However, in a few cases, significant changes (for example, in the input costs included in the valuation of a service) could produce reductions of 20 percent or greater in consecutive years.
We believe that a consistent methodology regarding the phase-in transition should be applied to these cases. We propose to reconsider in each year, for all codes that are not new or revised codes and including codes that were assigned a phase-in value in the previous year, whether the total RVUs for the service would otherwise be decreased by an estimated 20 percent or more as compared to the total RVUs for the previous year. Under this proposed policy, the 19 percent reduction in total RVUs would continue to be the maximum one-year reduction for all codes (except those considered new and revised), including those codes with phase-in values in the previous year. In other words, for purposes of the 20 percent threshold, every service is evaluated anew each year, and any applicable phase-in is limited to a decrease of 19 percent. For example, if we were to adopt a 50 percent reduction in total RVUs for an individual service, the reduction in any particular year would be limited to a decrease of 19 percent in total RVUs. Because we do not set rates 2 years in advance, the phase-in transition continues to apply until the year-to-year reduction for a given code does not meet the 20 percent threshold.
We are soliciting comments regarding this proposal.
The list of codes proposed to be subject to the phase-in and the associated proposed RVUs that result from this methodology are available on the CMS Web site under downloads for the CY 2017 PFS proposed rule 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 malpractice (MP)). The PFS localities are discussed in section II.E.3. of this proposed rule. 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, 2015. Section 201 of the MACRA amended the statute to extend the 1.0 floor for the work GPCIs through CY 2017 (that is, for services furnished no later than December 31, 2017).
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 GPCI adjustment, the adjustment to be applied in the first year of the next adjustment shall be half of the adjustment that otherwise would be made. Therefore, since the previous GPCI update was implemented in CY 2014 and CY 2015, we are proposing to phase in 1/2 of the latest GPCI adjustment in CY 2017.
We have completed a review of the GPCIs and are proposing new GPCIs in this proposed rule. We also calculate a geographic adjustment factor (GAF) for each PFS locality. The GAFs are a weighted composite of each area's work, PE and malpractice expense GPCIs using the national GPCI cost share weights. While we do not actually use GAFs in computing the fee schedule payment for a specific service, they are useful in comparing overall areas costs and payments. The actual effect on payment for any actual service would deviate from the GAF to the extent that the proportions of work, PE and MP RVUs for the service differ from those of the GAF.
As noted above, section 201 of the MACRA extended the 1.0 work GPCI floor for services furnished through December 31, 2017. Therefore, the proposed CY 2017 work GPCIs and summarized GAFs 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 2017. See Addenda D and E to this proposed rule for the proposed CY 2017 GPCIs and summarized GAFs available on the CMS Web site under the supporting documents section of the CY 2017 PFS proposed rule located at
The proposed updated GPCI values were calculated by a contractor. There are three GPCIs (work, PE, and MP), and all GPCIs are calculated through comparison to a national average for each. Additionally, each of the three GPCIs relies on its own data source(s) and methodology for calculating its value as described below. Additional information on the CY 2017 GPCI update may be found in our contractor's draft report, “Draft Report on the CY 2017 Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule,” which is available on our Web site. It is located under the supporting documents section for the CY 2017 PFS proposed rule located at
The work GPCIs are designed to reflect the relative costs of physician labor by Medicare PFS locality. As required by statute, the work GPCI reflects one quarter of the relative wage differences for each locality compared to the national average.
To calculate the work GPCIs, we use wage data for seven professional specialty occupation categories, adjusted to reflect one-quarter of the relative cost differences for each locality compared to the national average, as a proxy for physicians' wages. Physicians' wages are not included in the occupation categories used in calculating the work GPCI because Medicare payments are a key determinant of physicians' earnings. Including physician wage data in calculating the work GPCIs would potentially introduce some circularity to the adjustment since Medicare payments typically contribute to or influence physician wages. That is, including physicians' wages in the physician work GPCIs would, in effect, make the indices, to some extent, dependent upon Medicare payments.
The work GPCI updates in CYs 2001, 2003, 2005, and 2008 were based on professional earnings data from the 2000 Census. However, for the CY 2011 GPCI update (75 FR 73252), the 2000 data were outdated and wage and earnings data were not available from the more recent Census because the “long form” was discontinued. Therefore, we used the median hourly earnings from the 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) wage data as a replacement for the 2000 Census data. The BLS OES data meet several criteria that we consider to be important for selecting a data source for purposes of calculating the GPCIs. For example, the BLS OES wage and employment data are derived from a large sample size of approximately 200,000 establishments of varying sizes nationwide from every metropolitan area and can be easily accessible to the public at no cost. Additionally, the BLS OES is updated regularly, and includes a comprehensive set of occupations and industries (for example, 800 occupations in 450 industries). For the CY 2014 GPCI update, we used updated BLS OES data (2009 through 2011) as a replacement for the 2006 through 2008 data to compute the work GPCIs.
Because of its reliability, public availability, level of detail, and national scope, we believe the BLS OES continues to be the most appropriate source of wage and employment data for use in calculating the work GPCIs (and as discussed in section II.E.2.b the employee wage component and purchased services component of the PE GPCI). Therefore, for the proposed CY 2017 GPCI update, we used updated BLS OES data (2011 through 2014) as a replacement for the 2009 through 2011 data to compute the work GPCIs.
The PE GPCIs are designed to measure the relative cost difference in the mix of goods and services comprising practice expenses (not including malpractice expenses) among the PFS localities as compared to the national average of these costs. Whereas the physician work GPCIs (and as discussed later in this section, the MP GPCIs) are comprised of a single index, the PE GPCIs are comprised of four component indices (employee wages; purchased services; office rent; and equipment, supplies and other miscellaneous expenses). The employee wage index component measures geographic variation in the cost of the kinds of skilled and unskilled labor that would be directly employed by a physician practice. Although the employee wage index adjusts for geographic variation in the cost of labor employed directly by physician practices, it does not account for geographic variation in the cost of services that typically would be purchased from other entities, such as law firms, accounting firms, information technology consultants, building service managers, or any other third-party vendor. The purchased services index component of the PE GPCI (which is a separate index from employee wages) measures geographic variation in the cost of contracted services that physician practices would typically buy. (For more information on the development of the purchased service index, we refer readers to the CY 2012 PFS final rule with comment period (76 FR 73084 through 73085)). The office rent index component of the PE GPCI measures relative geographic variation in the cost of typical physician office rents. For the medical equipment, supplies, and miscellaneous expenses component, we believe there is a national market for these items such that there is not significant geographic variation in costs. Therefore, the equipment, supplies and other miscellaneous expense cost index component of the PE GPCI is given a value of 1.000 for each PFS locality.
For the previous update to the GPCIs (implemented in CY 2014) we used 2009 through 2011 BLS OES data to calculate the employee wage and purchased services indices for the PE GPCI. As discussed in section II.E.2.a., because of its reliability, public availability, level of detail, and national scope, we continue to believe the BLS OES is the most appropriate data source for collecting wage and employment data. Therefore, in calculating the proposed CY 2017 GPCI update, we used updated BLS OES data (2011 through 2014) as a replacement for the 2009 through 2011 data for purposes of calculating the employee wage component and purchased service index of the PE GPCI.
The MP GPCIs measure the relative cost differences among PFS localities for the purchase of professional liability insurance (PLI). The MP GPCIs are calculated based on insurer rate filings of premium data for $1 million to $3 million mature claims-made policies (policies for claims made rather than services furnished during the policy term). For the CY 2014 GPCI update (seventh update) we used 2011 and 2012 malpractice premium data (78 FR 74382). The proposed CY 2017 MP GPCI update reflects 2014 and 2015 premium data. Additionally, the proposed CY 2017 MP GPCI update reflects several proposed technical refinements to the MP GPCI methodology as discussed later in section 5.
For the proposed CY 2017 GPCIs, we are continuing to use the current cost share weights for determining the PE GPCI values and locality GAFs. We refer readers to the CY 2014 PFS final rule with comment period (78 FR 74382 through 74383), for further discussion regarding the 2006-based MEI cost share weights revised in CY 2014 that were also finalized for use in the CY 2014 (seventh) GPCI update.
The proposed GPCI cost share weights for CY 2017 are displayed in Table 12.
Section 10324(c) of the Affordable Care Act added a new subparagraph (I) under section 1848(e)(1) of the Act to establish a 1.0 PE GPCI floor for physicians' services furnished in frontier states effective January 1, 2011. In accordance with section 1848(e)(1)(I) of the Act, beginning in CY 2011, we applied a 1.0 PE GPCI floor for physicians' services furnished in states determined to be frontier states. In general, a frontier state is one in which at least 50 percent of the counties are “frontier counties,” which are those that have a population per square mile of less than 6. For more information on the criteria used to define a frontier state, we refer readers to the FY 2011 Inpatient Prospective Payment System (IPPS) final rule (75 FR 50160 through 50161). There are no changes in the states identified as Frontier States for the CY 2017 proposed rule. The qualifying states are: Montana, Wyoming, North Dakota, South Dakota, and Nevada. In accordance with statute, we would apply a 1.0 PE GPCI floor for these states in CY 2017.
As explained above in the background section, the periodic review and adjustment of GPCIs is mandated by section 1848(e)(1)(C) of the Act. At each update, the proposed GPCIs are published in the PFS proposed rule to provide an opportunity for public comment and further revisions in response to comments prior to implementation. The proposed CY 2017 updated GPCIs for the first and second year of the 2-year transition, along with the GAFs, are displayed in Addenda D and E to this proposed rule available on our Web site under the supporting documents section of the CY 2017 PFS proposed rule Web page at
The current PFS locality structure was developed and implemented in 1997. There are currently 89 total PFS localities; 34 localities are statewide areas (that is, only one locality for the entire state). There are 52 localities in the other 16 states, with 10 states having 2 localities, 2 states having 3 localities, 1 state having 4 localities, and 3 states having 5 or more localities. The combined District of Columbia, Maryland, and Virginia suburbs; Puerto Rico; and the Virgin Islands are the remaining three localities of the total of 89 localities. The development of the current locality structure is described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and the subsequent final rule with comment period (61 FR 59494). We note that the localities generally represent a grouping of one or more constituent counties.
Prior to 1992, Medicare payments for physicians' services were made under the reasonable charge system. Payments were based on the charging patterns of physicians. This resulted in large differences in payment for physicians' services among types of services, geographic payment areas, and physician specialties. Recognizing this, the Congress replaced the reasonable charge system with the Medicare PFS in the Omnibus Budget Reconciliation Act (OBRA) of 1989, and the PFS went into effect January 1, 1992. Payments under the PFS are based on the relative resources involved with furnishing services, and are adjusted to account for geographic variations in resource costs as measured by the GPCIs.
Payment localities originally were established under the reasonable charge system by local Medicare carriers based on their knowledge of local physician charging patterns and economic conditions. These localities changed little between the inception of Medicare in 1967 and the beginning of the PFS in 1992. Shortly after the PFS took effect, we undertook a study in 1994 that culminated in a comprehensive locality revision that was implemented in 1997 (61 FR 59494).
The revised locality structure reduced the number of localities from 210 to the current 89, and the number of statewide localities increased from 22 to 34. The revised localities were based on locality resource cost differences as reflected by the GPCIs. For a full discussion of the methodology, see the CY 1997 PFS final rule with comment period (61 FR 59494). The current 89 fee schedule areas are defined alternatively by state boundaries (for example, Wisconsin), metropolitan areas (for example, Metropolitan St. Louis, MO), portions of a metropolitan area (for example, Manhattan), or rest-of-state areas that exclude metropolitan areas (for example, Rest of Missouri). This locality configuration is used to calculate the GPCIs that are in turn used to calculate payments for physicians' services under the PFS.
As stated in the CY 2011 PFS final rule with comment period (75 FR 73261), changes to the PFS locality structure would generally result in changes that are budget neutral within a state. For many years, before making any locality changes, we have sought consensus from among the professionals whose payments would be affected. In recent years, we have also considered more comprehensive changes to locality configuration. In 2008, we issued a draft comprehensive report detailing four different locality configuration options (
Section 220(h) of the PAMA added a new section 1848(e)(6) to the Act, that modifies the fee schedule areas used for payment purposes in California beginning in CY 2017.
Currently, the fee schedule areas used for payment in California are based on the revised locality structure that was implemented in 1997 as previously discussed. Beginning in CY 2017, section 1848(e)(6)(A)(i) of the Act requires that the fee schedule areas used for payment in California must be Metropolitan Statistical Areas (MSAs) as defined by the Office of Management and Budget (OMB) as of December 31 of the previous year; and section 1848(e)(6)(A)(ii) of the Act requires that all areas not located in an MSA must be treated as a single rest-of-state fee schedule area. The resulting modifications to California's locality structure would increase its number of localities from 9 under the current locality structure to 27 under the MSA-based locality structure.
However, section 1848(e)(6)(D) of the Act defines transition areas as the fee schedule areas for 2013 that were the rest-of-state locality, and locality 3, which was comprised of Marin county, Napa county, and Solano county. Section 1848(e)(6)(B) specifies that the GPCI values used for payment in a transition area are to be phased in over 6 years, from 2017 through 2021, using a weighted sum of the GPCIs calculated under the new MSA-based locality structure and the GPCIs calculated under the current PFS locality structure. That is, the GPCI values applicable for
Additionally, section 1848(e)(6)(C) of the Act establishes a hold harmless for transition areas beginning with CY 2017 whereby the applicable GPCI values for a year under the new MSA-based locality structure may not be less than what they would have been for the year under the current locality structure. There are a total of 58 counties in California, 50 of which are in transition areas as defined in section 1848(e)(6)(D) of the Act. Therefore, 50 counties in California are subject to the hold harmless provision. The other 8 counties, which are metropolitan counties that are not defined as transition areas, are not held harmless for the impact of the new MSA-based locality structure, and may therefore potentially experience slight decreases in their GPCI values as a result of the provisions in section 1848(e)(6) of the Act, insofar as the locality in which they are located now newly includes data from adjacent counties that decreases their GPCI values relative to those that would have applied had the new data not been incorporated. Therefore, the GPCIs for these eight counties under the MSA-based locality structure may be less than they would have been under the current GPCI structure. The eight counties that are not within transition areas are: Orange; Los Angeles; Alameda; Contra Costa; San Francisco; San Mateo; Santa Clara; and Ventura counties.
We emphasize that while transition areas are held harmless from the impact of the GPCI changes using the new MSA-based locality structure, because we are proposing other updates for CY 2017 as part of the eighth GPCI update, including the use of updated data, transition areas would still be subject to impacts resulting from those other updates. Table 13 illustrates using GAFs, for CY 2017, the isolated impact of the MSA-based locality changes and hold-harmless for transition areas required by section 1848(e)(6) of the Act, the impact of the proposed use of updated data for GPCIs, and the combined impact of both of these proposed changes.
Additionally, for the purposes of calculating budget neutrality and consistent with the PFS budget neutrality requirements as specified under section 1848(c)(2)(B)(ii)(II) of the Act, we are proposing to start by calculating the national GPCIs as if the current localities are still applicable nationwide; then for the purposes of payment in California, we will override the GPCI values with the values that are applicable for California consistent with the requirements of section 1848(e)(6) of the Act. This approach is consistent with the implementation of the GPCI floor provisions that have previously been implemented—that is, as an after-the-fact adjustment that is implemented for purposes of payment after both the GPCIs and PFS budget neutrality have already been calculated.
As discussed above, under section 1848(e)(6) of the Act, counties that were previously in the rest-of-state locality or locality 3 and are now in MSAs would have their GPCI values under the new MSA-based locality structure phased in gradually, in increments of one-sixth over 6 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 GPCI 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. While section 1848(e)(6)(B) of the Act establishes a blended phase-in for the MSA-based GPCI values, it does not explicitly state whether or how that provision is to be reconciled with the requirement at section 1848(e)(1)(C) of the Act. We believe that since section 1848(e)(6)(A) of the Act requires that we must make the change to MSA-based fee schedule areas for California GPCIs notwithstanding the preceding provisions of section 1848(e) of the Act, and subject to the succeeding provisions of section 1848(e)(6) of the Act, that applying the two-year phase-in specified by the preceding provisions simultaneously with the six-year phase-in would undermine the incremental 6-year phase-in specified in section 1848(e)(6)(B) of the Act. Therefore, we are proposing that the requirement at section 1848(e)(1)(C) of the Act to phase in
As previously stated, the resulting modifications to California's locality structure increase its number of localities from 9 under the current locality structure to 27 under the MSA-based locality structure. However, both the current localities and the MSA-based localities are comprised of various component counties, and in some localities only some of the component counties are subject to the blended phase-in and hold harmless provisions required by section 1848(e)(6)(B) and (C) of the Act. Therefore, the application of these provisions may produce differing GPCI values among counties within the same fee schedule area under the MSA-based locality structure. For example, the MSA-based San Jose-Sunnyvale-Santa Clara locality, is comprised of 2 constituent counties—San Benito county, and Santa Clara county. San Benito County is in a transition area (2013 rest-of-state), while Santa Clara county is not. Hence, although the counties are in the same MSA, the requirements of section 1848(e)(6)(B) and (C) of the Act may produce differing GPCI values for each county. To address this issue, we propose to assign a unique locality number to the counties that would be impacted in the aforementioned manner. As a result, although the modifications to California's locality structure increase the number of localities from 9 under the current locality structure to 27 under the MSA-based locality structure, for purposes of payment, the actual number of localities under the MSA-based locality structure would be 32 to account for instances where unique locality numbers are needed as described above. Additionally, while the fee schedule area names are consistent with the MSAs designated by OMB, we are proposing to maintain 2-digit locality numbers to correspond to the existing fee schedule areas. Pursuant to the implementation of the new MSA-based locality structure for California, the total number of PFS localities would increase from 89 to 112. Table 14 displays the current fee schedule areas in California, and Table 15 displays the MSA-based fee schedule areas in California required by section 1848(e)(6) of the Act. Additional information on the California locality update may be found in our contractor's draft report, “Draft Report on the CY 2017 Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule,” which is available on the CMS Web site.
In calculating GPCIs within U.S. states, we use county-level wage data from the Bureau of Labor Statistics (BLS) Occupational Employment Statistics Survey (OES), county-level residential rent data from the American Community Survey (ACS), and malpractice insurance premium data from state departments of insurance. In calculating GPCIs for the U.S. territories, we currently use three distinct methodologies—one for Puerto Rico, another for the Virgin Islands, and a third for the Pacific Islands (Guam, American Samoa, and Northern Marianas Islands). These three methodologies were adopted at different times based primarily on the data that were available at the time they were adopted. At present, because Puerto Rico is the only territory where county-level BLS OES, county-level ACS, and malpractice premium data are available, it is the only territory for which we use territory-specific data to calculate GPCIs. For the Virgin Islands, because county-level wage and rent data are not available, and insufficient malpractice premium data are available, CMS has set the work, PE, and MP GPCI values for the Virgin Islands payment locality at the national average of 1.0 even though,
As noted above, currently Puerto Rico is the only territory for which we calculate GPCIs using the territory-specific information relative to data from the U.S. States. For several years stakeholders in Puerto Rico have raised concerns regarding the applicability of the proxy data in Puerto Rico relative to their applicability in the U.S. states. We believe that these concerns may be consistent across island territories, but lack of available, appropriate data has made it difficult to quantify such variation in costs. For example, some stakeholders previously indicated that shipping and transportation expenses increase the cost of acquiring medical equipment and supplies in islands and territories relative to the mainland. While we have previously attempted to locate data sources specific to geographic variation in such shipping costs, we found no comprehensive national data source for this information (we refer readers to 78 FR 74387 through 74388 for the detailed discussion of this issue). Therefore, we have not been able to quantify variation in costs specific to island territories in the calculation of the GPCIs.
For all the island territories other than Puerto Rico, the lack of comprehensive data about unique costs for island territories has had minimal impact on GPCIs because we have used either the Hawaii GPCIs (for the Pacific territories) or used the unadjusted national averages (for the Virgin Islands). In an effort to provide greater consistency in the calculation of GPCIs given the lack of comprehensive data regarding the validity of applying the proxy data used in the States in accurately accounting for variability of costs for these island territories, we are proposing to treat the Caribbean Island territories (the Virgin Islands and Puerto Rico) in a consistent manner. We propose to do so by assigning the national average of 1.0 to each GPCI index for both Puerto Rico and the Virgin Islands. We are not proposing any changes to the GPCI methodology for the Pacific Island territories (Guam, American Samoa, and Northern Marianas Islands) where we already consistently assign the Hawaii GPCI values for each of the three GPCIs. Additional information on the Proposed Update to the Methodology for Calculating GPCIs in the U.S. Territories may be found in our contractor's draft report, “Draft Report on the CY 2017 Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule,” which is available on our Web site. It is located under the supporting documents section of the CY 2017 PFS proposed rule located at
In the process of calculating MP GPCIs for the purposes of this proposed rule, we identified several technical refinements to the methodology that yield improvements over the current method. We are also proposing refinements that conform to our proposed methodology for calculating the GPCIs for the U.S. Territories described above. Specifically, we are proposing modifications to the methodology to account for missing data used in the calculation of the MP GPCI. Under the methodology used in the CY 2014 GPCI update (78 FR 74380 through 74391), we first calculated the average premiums by insurer and specialty, then imputed premium values for specialties for which we did not have specific data, before adjusting the specialty-specific premium data by market share weights. We are proposing to revise our methodology to instead calculate the average premiums for each specialty using issuer market share for only available companies. This proposed methodological improvement would reduce potential bias resulting from large amounts of imputation, an issue that is prevalent for insurers that only write policies for ancillary specialties for which premiums tend to be low. The current method would impute the low premiums for ancillary specialties across the remaining specialties, and generally greater imputation leads to less accuracy. Additional information on the MP GPCI methodology, and the proposed refinement to the MP GPCI methodology may be found in our contractor's draft report, “Draft Report on the CY 2017 Update of the Geographic Practice Cost Index for the Medicare Physician Fee Schedule,” which is available on our Web site. It is located under the supporting documents section of the CY 2017 PFS proposed rule located at
Section 502(a)(1) of the Consolidated Appropriations Act of 2016 (H.R. 2029) amended section 1848(b) of the Act by establishing new paragraph (b)(9). Effective for services furnished beginning January 1, 2017, section 1848(b)(9)(A) of the Act reduces by 20 percent the payment amounts under the PFS for the technical component (TC) (including the TC portion of a global service) of imaging services that are X-rays taken using film. The reduction is made prior to any other adjustment under this section and without application of this new paragraph.
Section 1848(b)(9)(B) of the Act provides for a 7 percent reduction in payments for imaging services made under the PFS that are X-rays (including the X-ray component of a packaged service) taken using computed radiology furnished during CY 2018, 2019, 2020, 2021, or 2022, and for a 10 percent reduction for such imaging services taken using computed radiology furnished during CY 2023 or a subsequent year. Computed radiology technology is defined for purposes of this paragraph as cassette-based imaging, which utilizes an imaging plate to create the image involved. Section 1848(b)(9) of the Act also requires implementation of the reductions in payment for X-rays through appropriate mechanisms, which can include the use of modifiers. In accordance with section 1848(c)(2)(B)(v)(X), the adjustments under section 1848(b)(9)(A) of the Act are exempt from budget neutrality.
In this section of the rule, we discuss the proposed implementation of the reduction in payment for X-rays taken using film provided for in section 1848(b)(9)(A) of the Act. Because the required reductions in PFS payment for imaging services (including the imaging portion of a service) that are X-rays taken using computed radiography technology does not apply for CY 2017, we will address implementation of section 1848(b)(9)(B) of the Act in future rulemaking.
To implement the provisions of sections 1848(b)(9)(A) of the Act relating to the PFS payment reduction for X-rays taken using film that are furnished during CY 2017 or subsequent years, in this proposed rule, we are proposing to establish a new modifier (modifier “XX”) to be used on claims, as allowed under the section 1848(b)(9)(D) of the Act. The list of CY 2017 applicable HCPCS codes describing imaging services that are X-ray services are on
Effective January 1, 2012, we implemented an MPPR of 25 percent on the professional component (PC) of advanced imaging services. The reduction applies when multiple imaging procedures are furnished by the same physician (or physician in the same group practice) to the same patient, in the same session, on the same day. Full payment is made for the PC of the highest priced procedure. Payment for the PC of subsequent services is reduced by 25 percent.
Section 502(a)(2)(A) of the Consolidated Appropriations Act, 2016 (Pub. L. 114–113, enacted on December 18, 2015) added a new section 1848(b)(10) of the Act which revises the payment reduction from 25 percent to 5 percent, effective January 1, 2017. Section 502(a)(2)(B) added a new subclause at section 1848(c)(2)(B)(v)(XI) which exempts the reduced expenditures attributable to the revised 5 percent MMPR on the PC of imaging from the PFS budget neutrality provision. We propose to implement these provisions for services furnished on or after January 1, 2017. We refer readers to section VI.C of this proposed rule regarding the necessary adjustment to the proposed PFS conversion factor to account for the mandated exemption from PFS budget neutrality.
We note that the lists of services for the upcoming calendar year that are subject to the MPPR on diagnostic cardiovascular services, diagnostic imaging services, diagnostic ophthalmology services, and therapy services; and the list of procedures that meet the definition of imaging under section 5102(b) of the DRA, and therefore, are subject to the OPPS cap, are displayed in the public use files for the PFS proposed and final rules for each year. The public use files for CY 2017 are available on our Web site under downloads for the CY 2017 PFS proposed rule with comment period at
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 make sure 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 5-year review process, which resulted in revised work RVUs for CY 1997, CY 2002, CY 2007, and CY 2012, and revised PE RVUs in CY 2001, CY 2006, and CY 2011. Under the 5-year review process, revisions in RVUs were proposed and finalized via rulemaking. In addition to the 5-year reviews, beginning with CY 2009, CMS and the RUC have identified a number of potentially misvalued codes each year using various identification screens, as discussed in section II.B.5. of this proposed rule. Historically, when we received RUC recommendations, our process had been to establish interim final RVUs for the potentially misvalued codes, new codes, and any other codes for which there were coding changes in the final rule with comment period for a year. Then, during the 60-day period following the publication of the final rule with comment period, we accepted public comment about those valuations. For services furnished during the calendar year following the publication of interim final rates, we paid for services based upon the interim final values established in the final rule with comment period. In the final rule with comment period for the subsequent year, we considered and responded to public comments received on the interim final values, and typically made any appropriate adjustments and finalized those values.
In the CY 2015 PFS final rule with comment period, we finalized a new process for establishing values for new, revised and potentially misvalued codes. Under the new process, we include proposed values for these services in the proposed rule, rather than establishing them as interim final in the final rule with comment period. Beginning with this CY 2017 proposed rule, the new process will be applicable to all codes, except for new codes that describe truly new services. For CY 2017, we are proposing new values in this proposed rule for the vast majority of new, revised, and potentially misvalued codes for which we received complete RUC recommendations by February 10, 2016. To complete the transition to this new process, for codes where we established interim final values in the CY 2016 PFS final rule with comment period, we reviewed the comments received during the 60-day public comment period following release of the CY 2016 PFS final rule with comment period, and are re-proposing values for those codes in this CY 2017 proposed rule.
We will consider public comments received during the 60-day public comment period for this proposed rule before establishing final values in the final rule with comment period, and adopt interim final values only in the case of wholly new services for which there are no predecessor codes or values and for which we do not receive recommendations in time to propose values. Recommendations regarding any new or revised codes received after February 10th will be considered in the next year's proposed rule (that is, CY 2018 PFS rulemaking).
We conduct a review of each code identified in this section and review the current work RVU (if any), RUC-recommended work RVU, intensity, time to furnish the preservice, intraservice, and postservice activities, as well as other components of the service that contribute to the value. Our review of recommended work RVUs and time inputs generally includes, but is not limited to, a review of information provided by the RUC, HCPAC (Health Care Professionals Advisory Committee), and other public commenters, medical literature, and comparative databases, as well as a comparison with other codes within the PFS, consultation with other physicians and health care professionals within CMS and the federal government, as well as Medicare claims data. 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 the recommendations. In the CY 2011 PFS final rule with comment period (75
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 building block components could be the CPT codes that make up the bundled code and the inputs associated with those codes. Magnitude estimation refers to a methodology for valuing work that determines the appropriate work RVU for a service by gauging the total amount of work for that service relative to the work for a similar service across the PFS without explicitly valuing the components of that work. In addition to these methodologies, we have frequently utilized an incremental methodology in which we value a code based upon its incremental difference between another code or another family of codes. The statute specifically defines the work component as the resources in time and intensity required in furnishing the service. Also, the published literature on valuing work has recognized the key role of time in overall work. For particular codes, we refine the work RVUs in direct proportion to the changes in the best information regarding the time resources involved in furnishing particular services, either considering the total time or the intraservice time.
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 value services appropriately when they have common billing patterns. In cases where a service is typically furnished to a beneficiary on the same day as an 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. Our longstanding adjustments have reflected a broad assumption that at least one-third of the work 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 multiplied by 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, now addresses the overlap in time and work when a service is typically furnished on the same day as an E/M service.
We note that many commenters and stakeholders have expressed concerns with our ongoing adjustment of work RVUs based on changes in the best information we have regarding the time resources involved in furnishing individual services. We are particularly concerned with the RUC's and various specialty societies' objections to our approach given the significance of their recommendations to our process for valuing services and since much of the information we have used to make the adjustments is derived from their survey process. As explained in the CY 2016 PFS final rule with comment period (80 FR 70933), we recognize that adjusting work RVUs for changes is not always a straightforward process, so we apply various methodologies to identify several potential work values for individual codes. However, we want to reiterate that we are statutorily obligated to consider both time and intensity in establishing work RVUs for PFS services.
We have observed that for many codes reviewed by the RUC, final recommended work RVUs appear to be incongruous with recommended assumptions regarding the resource costs in time. This is the case for a significant portion of codes for which we have recently established or proposed work RVUs that are based on refinements to the RUC-recommended values. When we have adjusted work RVUs to account for significant changes in time, we begin by looking at the change in the time in the context of the RUC-recommended work RVU. When the recommended work RVUs do not appear to account for significant changes in time, we employ the different approaches to identify potential values that reconcile the recommended work RVUs with the recommended time values. Many of these methodologies, such as survey data, building blocks, crosswalks to key reference or similar codes, and magnitude estimation have long been used in developing work RVUs under the PFS. In addition to these we sometimes use the relationship between the old time values and the new time values for particular services to identify alternative work RVUs based on changes in time components.
In so doing, rather than ignoring the RUC-recommended value, we are using the recommended values as a starting reference and then applying one of these several methodologies to account for the reductions in time that we believe have not otherwise been reflected in the RUC recommended value. When we believe that such changes in time have already been accounted for in the RUC recommendation, then we do not make such adjustments. Likewise, we do not arbitrarily apply time ratios to current work RVUs to calculate proposed work RVUs. We use the ratios to identify potential work RVUs and consider these work RVUs as potential options relative to the values developed through other options.
We want to make it clear that we are not implying that the decrease in time as reflected in survey values must equate to a one-to-one or linear decrease in newly valued work RVUs. Instead, we believe that since the two components of work are time and intensity that absent an obvious or explicitly stated rationale for why the relative intensity of a given procedure has increased, that significant decreases in time should be reflected in decreases
Several commenters, including the RUC, in general have objected to our use of these methodologies and deemed our actions in adjusting the recommended work RVUs as inappropriate. We received several specific comments regarding this issue in response to the CY 2016 PFS final rule with comment period, those comments are summarized below.
Regarding the validity of comparing new times to the old times, we, too, hope that time estimates have improved over many years especially when many years have elapsed since the last time the service in question was valued. However, we also believe that our operating assumption regarding the validity of the pre-existing values as a point of comparison is critical to the integrity of the relative value system as currently constructed. Pre-existing times are a very important element in the allocation of indirect PE RVUs by specialty, and had the previously recommended times been overestimated, the specialties that furnish such services would be benefitting from these times in the allocation of indirect PE RVUs. As long time observers of the RUC process, we also recognize that the material the RUC uses to develop overall work recommendations includes the data
We understand stakeholders' concerns regarding how best to consider changes in time in improving the accuracy of work RVUs and have considered all of the issues raised by commenters. In conjunction with our review of recommended code values for CY 2017, we conducted a preliminary analysis to identify general tendencies in the relationship between changes in time and changes in work RVUs for CY 2014 and CY 2015. We looked at services for which there were no coding changes to simplify the analysis. The intent of this preliminary analysis was to examine commenters' beliefs that CMS is only considering time when making refinements to RUC recommended work values. For CY 2014, we found that in the aggregate, the average difference between the RUC recommended intraservice time and existing intraservice time was −17 percent, but the average difference between the RUC recommended work RVU and existing work RVU was only −4 percent. However, the average difference between the CMS refined work RVU and existing work RVU was −7 percent. For CY 2015, the average difference between the RUC recommended intraservice time and existing intraservice time was −17 percent, but the average difference between the RUC recommended work RVU and existing work RVU was 1 percent, and the average difference between the CMS refined work RVU and existing work RVU was −6 percent. This preliminary analysis demonstrates that we are not making refinements solely in consideration of time, if that were the case, the changes in the work RVU values that we adopted would be comparable to the changes in the time that we adopted, but that is not the case.
We believe that we should account for efficiencies in time when the recommended work RVU does not account for those efficiencies, otherwise relativity across the PFS can be significantly skewed over periods of time. For example, if when a code is first valued, a physician was previously able to do only 5 procedures per day, but due to new technologies, the same physician can now do 10 procedures per day, resource costs in time have empirically been lessened, and we believe that relative reduction in resources involved in furnishing that service should be accounted for in the assignment of work RVUs for that service, since the statute explicitly identifies time as one of the two components of work. Of course, if more resource intensive technology has allowed for the increased efficiency in furnishing the procedure, then the nonfacility PE RVUs for the service should also be adjusted to account for this change. Additionally, we believe it may be that the intensity per minute of the procedure may have changed with the greater efficiency in time. Again, that is why we do not generally reduce work RVUs in strict proportion to changes in time. We understand that intensity is not entirely linear, and that data related to time as obtained in the RUC survey instrument may improve over time, and that the number of survey respondents may improve over time. However, we also understand time as a tangible resource cost in furnishing PFS services, and a cost that by statute, is one of the two kinds of resources to be considered as part of the work RVU.
Therefore, we are interested in receiving comments on whether, within the statutory confines, there are alternative suggestions as to how changes in time should be accounted for when it is evident that the survey data and/or the RUC recommendation regarding the overall work RVU does not reflect significant changes in the resource costs of time for codes describing PFS services. We are also seeking comment on potential alternatives, including the application of the reverse building block methodology, to making the adjustments that would recognize overall estimates of work in the context of changes in the resource of time for particular services.
Table 16 contains a list of codes for which we are proposing work RVUs; this includes all RUC recommendations received by February 10, 2016, and codes for which we established interim final values in the CY 2016 PFS final rule with comment period. When the proposed work RVUs vary from those recommended by the RUC or for which we do not have RUC recommendations, we address those codes in the portions of this section that are dedicated to particular codes. The proposed work RVUs and other payment information for all proposed CY 2017 payable codes are available in Addendum B. Addendum B is available on the CMS Web site under downloads for the CY 2017 PFS proposed rule with comment period at
On an annual basis, the RUC provides us 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. Like our review of recommended work RVUs, our review of recommended direct PE inputs generally includes, but is not limited to, a review of information provided by the RUC, HCPAC, and other public commenters, medical literature, and comparative databases, as well as a comparison with other codes within the PFS, consultation with physicians and health care professionals within CMS and the federal government, as well as Medicare claims data. 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 the recommendations. 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, consistent with the principles of relativity, and reflect our payment policies, we use those direct PE inputs to value a service. If not, we refine the recommended 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.
Our review and refinement of RUC-recommended direct PE inputs includes many refinements that are common across codes as well as refinements that are specific to particular services. Table 16 details our proposed refinements of the RUC's direct PE recommendations at the code-specific level. In this proposed rule, we address several refinements that are common across codes, and refinements to particular codes are addressed in the portions of this section that are dedicated to particular codes. We note that for each refinement, we indicate the proposed impact on direct costs for that service. We note that, on average, in any case where the impact on the direct cost for a particular refinement is $0.32 or less, the refinement has no impact on the proposed PE RVUs. This calculation
We also note that the proposed direct PE inputs for CY 2017 are displayed in the proposed CY 2017 direct PE input database, available on the CMS Web site under the downloads for the CY 2017 proposed rule at
Some direct PE inputs are directly affected by revisions in work time. Specifically, changes in the intraservice portions of the work time and changes in the number or level of postoperative visits associated with the global periods result in corresponding changes to direct PE inputs. The direct PE input recommendations generally correspond to the work time values associated with services. We believe that inadvertent discrepancies between work time values and direct PE inputs should be refined or adjusted in the establishment of proposed direct PE inputs to resolve the discrepancies.
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 over several years of rulemaking, indicating that we consider equipment time as the time within the intraservice 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 those services for which we allocate cleaning time to portable equipment items, because the portable equipment does not need to be cleaned in the room where the service is furnished, we do not include that cleaning time for the remaining equipment items, as those items and the room are both available for use for other patients during that time. In addition, when a piece of equipment is typically used during follow-up post- operative 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 preservice or postservice tasks performed by clinical labor staff on the day of the procedure (the clinical labor service period) and are typically available for other patients even when one member of the clinical staff may be occupied with a preservice or postservice task related to the procedure. We also note that we believe these same assumptions would apply to inexpensive equipment items that are used in conjunction with and located in a room with non-portable highly technical equipment items since any items in the room in question would be available if the room is not being occupied by a particular patient. For additional information, we refer readers to our discussion of these issues in the CY 2012 PFS final rule with comment period (76 FR 73182) and the CY 2015 PFS final rule with comment period (79 FR 67639).
In general, the preservice, intraservice, 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 RUC-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, we review the deviations from the standards and any rationale provided for the deviations. When we do not accept the RUC-recommended exceptions, we refine the proposed direct PE inputs to conform to the standard times for those tasks. In addition, in cases when a service is typically billed with an E/M service, we remove the preservice clinical labor tasks to avoid duplicative inputs and to reflect the resource costs of furnishing the typical service.
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.” We believe that continual addition of new and distinct clinical labor tasks each time a code is reviewed under the misvalued code initiative is likely to degrade relativity between newly reviewed services and those with already existing inputs. This is because codes more recently reviewed would be more likely to have a greater number of clinical labor tasks as a result of the general tendency to increase the number of clinical labor tasks. To mitigate the potential negative impact of these additions, we review these tasks to determine whether they are fully distinct from existing clinical labor tasks, typically included for other clinically similar services under the PFS, and thoroughly explained in the recommendation. For those tasks that do not meet these criteria, we do not accept these newly recommended clinical labor tasks.
In some cases, the PE worksheets included with the RUC recommendations include items that are not clinical labor, disposable supplies, or medical equipment or that cannot be allocated to individual services or patients. We have addressed these kinds of recommendations in previous rulemaking (78 FR 74242), and we do not use items included in these recommendations as direct PE inputs in the calculation of PE RVUs.
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, however, include supply or equipment items that are not currently in the direct PE input database. In these cases, the RUC has historically recommended that a new item be created and has facilitated our pricing of that item by working with the specialty societies to provide us copies of sales invoices. For CY 2017, we received invoices for several new supply and equipment items. Tables 16 and 17 detail the invoices received for new and existing items in the direct PE database. As discussed in section II.A. of this proposed rule with comment
We remind stakeholders that due to the relativity inherent in the development of RVUs, reductions in existing prices for any items in the direct PE database increase the pool of direct PE RVUs available to all other PFS services. Tables 16 and 17 also include the number of invoices received, as well as the number of nonfacility allowed services for procedures that use these equipment items. We provide the nonfacility allowed services so that stakeholders will note the impact the particular price might have on PE relativity, as well as to identify items that are used frequently, since we believe that stakeholders are more likely to have better pricing information for items used more frequently. A single invoice may not be reflective of typical costs and we encourage stakeholders to provide additional invoices so that we might identify and use accurate prices in the development of PE RVUs.
In some cases, we do not use the price listed on the invoice that accompanies the recommendation because we identify publicly available alternative prices or information that suggests a different price is more accurate. In these cases, we include this in the discussion of these codes. In other cases, we cannot adequately price a newly recommended item due to inadequate information. Sometimes, no supporting information regarding the price of the item has been included in the recommendation. In other cases, the supporting information does not demonstrate that the item has been purchased at the listed price (for example, vendor price quotes instead of paid invoices). In cases where the information provided on the item allows us to identify clinically appropriate proxy items, we might use existing items as proxies for the newly recommended items. In other cases, we have included the item in the direct PE input database without any associated price. Although including the item without an associated price means that the item does not contribute to the calculation of the proposed PE RVU for particular services, it facilitates our ability to incorporate a price once we obtain information and are able to do so.
Generally speaking, our proposed inputs do not include clinical labor minutes assigned to the service because the cost of clinical labor during the service period for a procedure in the facility setting is not considered a resource cost to the practitioner since Medicare makes separate payment to the facility for these costs. We address proposed code-specific refinements to clinical labor in the individual code sections.
We note that the public use files for the PFS proposed and final rules for each year display both the services subject to the MPPR lists on diagnostic cardiovascular services, diagnostic imaging services, diagnostic ophthalmology services and therapy services and the list of procedures that meet the definition of imaging under section 1848(b)(4)(B) of the Act, and therefore, are subject to the OPPS cap for the upcoming calendar year. The public use files for CY 2017 are available on the CMS Web site under downloads for the CY 2017 PFS proposed rule with comment period at
The proposed CY 2017 malpractice crosswalk table is displayed in the public use files for the PFS proposed and final rules. The public use files for CY 2017 are available on the CMS Web site under downloads for the CY 2017 PFS proposed rule with comment period at
In the CY 2016 PFS final rule with comment period, we established the RUC-recommended work value as interim final for CPT codes 10035 and 10036. We also made standard refinements to remove duplicative clinical labor and utilize standard equipment time formulas for the PACS workstation proxy (ED050).
We are also proposing to maintain the interim final work RVUs for CPT codes 10035 and 10036.
In the CY 2016 PFS final rule with comment period, we established an interim final work RVU of 9.56 for CPT code 26356 after considering both its similarity in time to CPT code 25607 (Open treatment of distal radial extra-articular fracture) and the recommended reduction in time relative to the current times assumed for this procedure. We established an interim final work RVU of 10.53 for CPT code 26357 based on a direct crosswalk from CPT code 27654 (Repair, secondary, Achilles tendon, with or without graft), as we believed that this work RVU better reflected the changes in time for this procedure. For the last code in the family, we established an interim final work RVU of 12.13 for CPT code 26358, based on the RUC recommended increment of 1.60 work RVUs relative to CPT code 26357.
We are proposing to maintain the current direct PE inputs for all three codes.
For CY 2016, the CPT Editorial Panel established CPT code 43210 to describe trans-oral esophagogastric fundoplasty. The RUC recommended a work RVU of 9.00 for CPT code 43210. We noted our determination that a work RVU of 7.75, which corresponds to the 25th percentile survey result, more accurately reflects the resources used in furnishing the service associated with CPT code 43210. Therefore, for CY 2016 we established an interim final work RVU of 7.75 for CPT code 43210.
These codes were revalued with new recommendations at the October 2015
For CY 2016, we established an interim final work RVU of 2.35 for CPT code 49185 based on a crosswalk from CPT code 62305 (Myelography via lumbar injection, including radiological supervision and interpretation; 2 or more regions (
Additionally, we did not receive any information regarding SH062 that supports maintaining an input of 300 mL, and as noted above, this level far exceeds the volume associated with other CPT codes; therefore, we are proposing to refine the direct practice expense inputs for SH062 from 300 mL to 10 mL, which is the highest level associated with other CPT codes utilizing SH062.
In the CY 2016 PFS final rule with comment period, we established as interim final the RUC-recommended work RVUs for all three codes. We did not receive any comments on the work values for these codes, and we are proposing to maintain all three at their current work RVUs.
The RUC recommended the inclusion of “room, angiography” (EL011) for this family of codes. As we discussed in the CY 2016 PFS final rule with comment period, we did not believe that an angiography room would be used in the typical case for these procedures, and we therefore replaced the recommended equipment item “room, angiography” with equipment item “room, radiographic-fluoroscopic” (EL014) for all three codes on an interim final basis. We also stated our belief that since the predecessor procedure codes generally did not include an angiography room and we did not have a reason to believe that the procedure would have shifted to an angiography room in the course of this coding change, we did not believe that the use of an angiography room would be typical for these procedures.
We do not believe that these codes describe the same clinical work either. CPT code 50387 is for the “Removal and replacement of externally accessible transnephric ureteral stent” while CPT code 50606 describes an “Endoluminal biopsy of ureter and/or renal pelvis”, CPT code 50705 refers to “Ureteral embolization or occlusion”, and CPT code 50706 details “Balloon dilation, ureteral stricture.” Additionally, the codes do not have the same global periods, which makes comparisons between CPT code 50387 and CPT codes 506060, 50705, and 50706 even more difficult. We note that despite the commenter's claim that CPT code 50387 was provided as a reference for these procedures, 50387 is not in fact listed as a reference for any of these three codes, or mentioned at all in the codes' respective summary of recommendations. However, we acknowledge that among the procedures that are provided as references, many of them include the use of an angiography room, such as CPT code 36227 (Selective catheter placement, external carotid artery) and CPT code 37233 (Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, each additional vessel). Therefore, we agree that the use of the angiography room in these procedures, or at least some of its component parts, may be warranted.
We will include all of the above components except the Provis Injector, as commenters have indicated that its use would not be typical for these procedures. We welcome additional comment regarding if these or other components are typically used in these Genitourinary procedures. We currently lack pricing information for these components; we are therefore proposing to include each of these components in the direct PE input database at a price of $0.00 and we are soliciting invoices from the public for their costs so that we may be able to price these items for use in developing final PE RVUs for CY 2017
We also note that we believe that this issue illustrates a potentially broad problem with our use of equipment “rooms” in the direct PE input database. For most services, we only include equipment items that are used and unavailable for other uses due to their use during the services described by a particular code. However, for items included in equipment “rooms,” we allocate costs regardless of whether the individual items that comprise the room are actually used in the particular service.
To maintain relativity among different kinds of procedures, we are interested in obtaining more information specifying the exact resources used in furnishing services described by different codes. We hope to address this subject in greater detail in future rulemaking.
In the CY 2016 PFS final rule with comment period, we established an interim final work RVU of 21.36 for CPT code 55866 based on a direct crosswalk to CPT code 55840 (Prostatectomy, retropubic radical, with or without nerve sparing). We stated that we believed these codes were medically similar procedures with nearly identical time values, and we did not believe that the difference in intensity between CPT code 55840 and CPT code 55866 was significant enough to warrant the RUC-recommended difference of 5.50 work RVUs. We also compared CPT code 55866 to the work RVU of 25.18 for CPT code 55845, and stated our belief that, in general, a laparoscopic procedure would not require greater resources than an open procedure.
For CY 2016, we established interim final work RVUs of 15.00 for CPT code 61645, 10.00 for CPT code 61650 and 4.25 for CPT code 61651. The RUC-recommended values for CPT codes 61645, 61650 and 61651 were 17.00, 12.00 and 5.50, respectively. We valued CPT code 61645 by applying the ratio between the RUC-recommended reference code's, CPT 37231 (revascularization, endovascular, open or percutaneous, tibial, peroneal artery, unilateral, initial vessel; with transluminal stent placement(s) and atherectomy, includes angioplasty within the same vessel, when performed), work and time to CPT code 61645. We valued CPT code 61650 based on a crosswalk to CPT code 37221 (revascularization, endovascular, open or percutaneous, iliac artery, unilateral, initial vessel; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed), due to similar intensity and intraservice time. We valued CPT code 61651 based on a crosswalk to CPT code 37223 (revascularization, endovascular, open or percutaneous, iliac artery, each additional ipsilateral iliac vessel; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed (list separately in addition to the code for primary procedure, due to similar intraservice time and intensity.
Both CPT codes 61645 and 61650 included postservice work time associated with CPT code 99233 (Subsequent hospital care, per day, for the evaluation and management of a patient, which requires at least 2 of these 3 key components: A detailed interval history; A detailed examination; Medical decision making of high complexity. Counseling and/or coordination of care with other physicians, other qualified health care professionals, or agencies are provided consistent with the nature of the problem(s) and the patient's and/or family's needs. Usually, the patient is unstable or has developed a significant complication or a significant new problem. Typically, 35 minutes are spent at the bedside and on the patient's hospital floor or unit). In the CY 2016 PFS final rule with comment period, we stated that we believe that for the typical patient, these services would be considered hospital outpatient services, not inpatient services. As a result the intraservice time of the hospital observation care service was valued in the immediate postservice time. We refined the work time for CPT code 61645 by removing 55 minutes of work time associated with CPT code 99233, and added 30 minutes of time from CPT code 99233 to the immediate postservice. Therefore the total time for CPT code 61645 was reduced to 241 minutes and the immediate postservice time increased to 83 minutes. We also removed the inpatient visit from CPT code 61650, which reduced the total time to 206 minutes and increased the postservice time to 75 minutes.
We are also seeking comment on the inclusion of post-operative visits in a 0-day global. Both CPT codes 61645 are 0-day global codes, and the refinements described above reflect changes to more appropriate value these codes as 0-day codes. We do not believe that 0-day globals codes should include post-operative visits; rather, if global codes require post-operative visits, they are more appropriately assigned 10- or 90-day global periods based on our current criteria. Our policy has been to remove the visit from the post-operative period and the associated minutes from the total time while adding 30 minutes to the immediate postservice period without necessarily making an adjustment to the work RVU (see the CY 2010 PFS proposed rule, 74 FR 33557; also see the CY 2011 PFS proposed rule, 75 FR 40072).
In CY 2015, the CPT Editorial Panel created three new codes to describe paravertebral block injections at single or multiple levels, as well as for continuous infusion for the administration of local anesthetic for post-operative pain control and thoracic and abdominal wall analgesia. For the CY 2016 PFS final rule with comment period, we established the RUC-recommended work RVUs, 1.75 and 1.10, as interim final for CPT codes 64461 and 64462, respectively.
For CPT code 64463, we utilized a direct crosswalk from three other injection codes (CPT codes 64416 (Injection, anesthetic agent; brachial plexus, continuous infusion by catheter (including catheter placement), 64446 (Injection, anesthetic agent; sciatic nerve, continuous infusion by catheter (including catheter placement), and 64449 (Injection, anesthetic agent; lumbar plexus, posterior approach, continuous infusion by catheter (including catheter placement)) which all had a work RVU of 1.81 as we believed this crosswalk more accurately reflected the work involved in furnishing this service.
The RUC identified CPT codes 64553 and 64555 as a site of service anomaly during the CY 2016 PFS rulemaking cycle. In the Medicare claims data, these services were typically reported in the nonfacility setting, yet the survey data was predicated on a facility-based procedure. We agreed with the RUC that these two codes should be referred to the CPT Editorial Panel to better define the services, in particular to investigate the possibility of establishing one code to describe temporary or testing implantation and another code to describe permanent implantation. We maintained the CY 2015 work RVUs and direct PE inputs for these two codes on an interim basis until receiving updated recommendations from CPT and the RUC.
Additionally, we were alerted to a discrepancy regarding the times for these codes in the CY 2016 work time file. Our proposed CY 2017 work time file addresses this discrepancy by reflecting the RUC recommended times of 155 minutes for CPT code 64553 and 140 minutes for CPT code 64555.
In CY 2015, the RUC identified CPT code 65780 as potentially misvalued through a misvalued code screen for 90-day global services that included more than 6 office visits. The RUC recommended a direct work RVU crosswalk from CPT code 27829 (Open treatment of distal tibiofibular joint (syndesmosis) disruption, includes internal fixation, when performed). After examining comparable codes, we determined the RUC-recommended work RVU of 8.80 for CPT code 65780 would likely overstate the work involved in the procedure given the change in intraservice and total times compared to the previous values. We believed that the ratio of the total times (230/316) applied to the work RVU (10.73) more accurately reflected the work involved in this procedure. Therefore, we established an interim final work RVU of 7.81 for CPT code 65780.
In CY 2015, the RUC identified CPT code 65855 as potentially misvalued through the review of 10-day global services with more than 1.5 postoperative visits. The RUC noted that the code was changed from a 90-day to a 10-day global period when it was last valued in 2000. However, the descriptor was not updated to reflect that change. CPT code 65855 describes multiple laser applications to the trabecular meshwork through a contact lens to reduce intraocular pressure. The current practice is to perform only one treatment session during a 10-day period and then wait for the effect on the intraocular pressure. The descriptor for CPT code 65855 has been revised and removes the language “1 or more sessions” to clarify this change in practice.
The RUC recommended a work RVU of 3.00 for CPT code 65855. While the RUC-recommended value represents a reduction from the CY 2015 work RVU of 3.99, we stated that significant reductions in the intraservice time, the total time, and the change in the office visits represent a more significant change in the work resources involved in furnishing the typical service. The intraservice and total times were decreased by approximately 33 percent while the elimination of two post-operative visits (CPT code 99212) alone would reduce the overall work RVU by at least 24 percent under the reverse building block method. However, the RUC-recommended work RVU only represents a 25 percent reduction relative to the previous value. To identify potential work RVUs for this service, we calculated an intraservice time ratio between the CY 2015 intraservice time, 15 minutes, and the RUC-recommended intraservice time, 10 minutes, and applied this ratio to the current work RVU of 3.99 to arrive at a work RVU of 2.66 for CPT code 65855, which we established as interim final for CY 2016.
The RUC identified CPT codes 66170 and 66172 as potentially misvalued through a screen for 90-day global codes that included more than 6 office visits). We believed the RUC-recommended work RVU of 13.94 for CPT code 66170 did not accurately account for the reductions in time. Specifically, the survey results indicated reductions of 25 percent in intraservice time and 28 percent in total time. These reductions suggested that the RUC-recommended work RVU for CPT code 66170 overstated the work involved in furnishing the service, since the recommended value only represented a reduction of approximately seven percent. We believed that applying the intraservice time ratio, the ratio between the CY 2015 intraservice time, 60 minutes, and the RUC-recommended intraservice time, 45 minutes, applied to the current work RVU, 15.02, resulted in a more appropriate work RVU. Therefore, for CY 2016, we established an interim final work RVU of 11.27 for CPT code 66170.
For CPT code 66172, the RUC recommended a work RVU of 14.81. After comparing the RUC-recommended work RVU for this code to the work RVU for similar codes (for example, CPT code 44900 (Incision and drainage of appendiceal abscess, open) and CPT code 52647 (Laser coagulation of prostate, including control of postoperative bleeding, complete (vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or dilation, and internal urethrotomy are included if performed))), we believed the RUC-recommended work RVU of 14.81 overstated the work involved in this procedure. For the same reasons and following the same valuation methodology utilized above, we applied the intraservice time ratio between the CY 2015 intraservice time and the survey intraservice time, 60/90, to the CY 2015 work RVU of 18.86. This resulted in a work RVU of 12.57 for CPT code 66172. Therefore, for CY 2016, we established an interim final work RVU of 12.57 for CPT code 66172.
CPT codes 67107, 67108, 67110 and 67113 were identified as potentially misvalued through a screen for 90-day global post-operative visits. The RUC recommended a work RVU of 16.00 for CPT code 67107, which corresponded to the 25th percentile of the survey. While the RUC recommendation represented a five percent reduction from the current work RVU of 16.71, we believed the RUC recommendation still overvalued the service given the 15 percent reduction in intraservice time and 25 percent reduction in total time. We used the intraservice time ratio between the existing and new time values to identify an interim final work RVU of 14.06. We believed this value accurately reflected the work involved in this service and was comparable to other codes that have the same global period and similar intraservice time and total time. For CY 2016, we established an interim final work RVU of 14.06 for CPT code 67107.
For CPT code 67108, the RUC recommended a work RVU of 17.13 based on the 25th percentile of the survey, which reflected a 25 percent reduction from the current work RVU. The survey results reflected a 53 percent reduction in intraservice time and a 42 percent reduction in total time. We believe the RUC-recommended work RVU overestimated the work, given the significant reductions in intraservice time and total time and does not maintain relativity among the codes in this family. To determine the appropriate value for this code and maintain relativity within the family, we preserved the 1.13 work RVU increment recommended by the RUC between this code and CPT code 67107 and applied that increment to the interim final work RVU of 14.06 for CPT code 67107. Therefore, we established an interim final work RVU of 15.19 for CPT code 67108.
For CPT code 67110, the RUC recommended maintaining the current work RVU of 10.25. To maintain appropriate relativity with the work RVUs established for the other services within this family, we used the RUC-recommended −5.75 RVU differential between CPT code 67107 and CPT code 67110 to establish the CY 2016 interim final work RVU of 8.31 for CPT code 67110. For CPT code 67113, the RUC recommended and we established an interim final work RVU of 19.00 based on the 25th percentile of the survey.
CPT codes 67107, 67108, and 67110 were referred to the CY 2016 multi-specialty refinement panel per commenters' request. The outcome of the refinement panel was a median of 16.00, 17.13, and 10.25 work RVUs; respectively. After consideration of the comments and the results of the refinement panel, we are proposing a work RVU of 16.00, 17.13, and 10.25 for CPT codes 67107, 67108, and 66110, respectively, for CY 2017.
For CY 2016, we established the RUC-recommended work RVU of 3.00 as interim final for CPT code 74712. We established an interim final work RVU of 1.78 for CPT code 74713 based on a refinement of the RUC-recommended work RVU of 1.85 using the ratio of work to time for both codes. This proposed value also corresponds to the 25th percentile survey result.
In CY 2016 PFS final rule with comment period, we established an interim final value for CPT code 77790 without a work RVU, consistent with the RUC's recommendation. We did not use the RUC-recommended work RVU to establish the interim final values for CPT code 77778. We stated that the specialty society survey included a work time that was significantly higher than the RUC-recommended work time without a commensurate change in RVU. For CY 2016, we established the 25th percentile work RVU survey result of 8.00 as interim final for CPT code 77778.
In establishing CY 2016 interim final values, we accepted the RUC-recommended work RVUs for CPT codes 78265 and 78266. We believed that the RUC-recommended RVU of 0.80 overestimated the work involved in furnishing CPT code 78264 and as a result, we established an interim final work RVU of 0.74 based on a crosswalk to CPT code 78226 (hepatobiliary system imaging, including gallbladder when present), due to similar intraservice times and intensities.
In the CY 2016 PFS final rule with comment period, we made a series of refinements to the recommended direct PE inputs for this family of codes. We removed the equipment time for the solvent recycling system (EP038) and the associated clinical labor described by the tasks “Recycle xylene from stainer” and “Order, restock, and distribute specimen containers and or slides with requisition forms” due to our belief that these were forms of indirect PE. This refinement applied to all seven codes in the family. We also noticed what appeared to be an error in the quantity of non-sterile gloves (SB022), impermeable staff gowns (SB027), and eye shields (SM016) assigned to CPT codes 88108 and 88112. The recommended value of these supplies was a quantity of 0.2, which we believed was intended to be a quantity of 2. We therefore refined the value of these supplies to 2 for CPT codes 88108 and 88112.
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 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. In the past for similar procedures in this family, the RUC recommended a work RVU for the add-on code (CPT code 88364) that was 60 percent of the base code (CPT code 88365). In the CY 2015 PFS final rule with comment period, we stated that the relative resources involved in furnishing an add-on service in this family would be reflected appropriately using the same 60 percent metric and subsequently established an interim final work RVU of 0.42 for CPT code 88341, which was 60 percent of the work RVU of the base CPT code 88342 (0.70). In the CY 2016 PFS proposed rule, we revised the add-on codes from 60 percent to 76 percent of the base code and subsequently revalued CPT code 88341 at 0.53 work RVUs. However, we inadvertently published work RVUs for CPT code 88341 in Addendum B without explicitly discussing it in the preamble text. In the CY 2016 PFS final rule with comment period, we maintained CPT code 88341's CY 2015 work RVU of 0.53 as interim final for CY 2016 and requested public comment. Also, in the CY 2016 PFS final rule with comment period, we established an interim final value of 0.70 work RVUs for CPT codes 88342 and 88344.
For CY 2016, we finalized a work RVU of 0.56 for CPT code 88350 which represented 76 percent of 0.74, the RVU for the base code. To maintain consistency within this code family, we are proposing to revalue CPT code 88350 using the 20 percent discount discussed above. To value CPT code 88350, we multiplied the work RVU of CPT code 88346, 0.74, by 80 percent, and then subtracted the product from 0.74, resulting in a work RVU of 0.59 for CPT code 88350. Therefore, for CY 2017, we are proposing a work RVU of 0.59 for CPT code 88350.
A stakeholder has suggested to us that an error was made in the implementation of direct PE inputs for code 88341 and several other related codes. This stakeholder stated that when CMS reclassified equipment code EP112 (Benchmark ULTRA automated slide preparation system) and EP113 (E-Bar II Barcode Slide Label System) into a single equipment item, with a price of $150,000 using equipment code EP112,
We appreciate the additional information, and are soliciting additional information on this topic through public comment on this proposed rule to assess whether it would be appropriate to add the former EP113 minutes into EP112. We are specifically seeking comment from other stakeholders, including the RUC, since the assigned number of minutes was originally based on a RUC recommendation. This information would be potentially relevant for CPT codes 88341 (Immunohistochemistry or immunocytochemistry, per specimen; each additional single antibody stain procedure), 88342 (Immunohistochemistry or immunocytochemistry, per specimen; initial single antibody stain procedure), 88344 (Immunohistochemistry or immunocytochemistry, per specimen; each multiplex antibody stain procedure), 88360 (Morphometric analysis, tumor immunohistochemistry, quantitative or semiquantitative, per specimen, each single antibody stain procedure; manual), and 88361 (Morphometric analysis, tumor immunohistochemistry, quantitative or semiquantitative, per specimen, each single antibody stain procedure; using computer-assisted technology).
For CY 2015, the CPT editorial panel revised the code descriptors for the in situ hybridization procedures, CPT codes 88365, 88367 and 88368, to specify “each separately identifiable probe per block.” Additionally, three new add-on codes (CPT codes 88364, 88369, 88373,) were created to specify “each additional separately identifiable probe per slide.” 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. We believed this accurately reflected the resources used in furnishing these add-on codes and subsequently established 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).
For CY 2016, the RUC re-reviewed these services due to the specialty society's initially low survey response rate. In our review of these codes, we noticed that the latest RUC recommendation was identical to the RUC recommendation provided for CY 2015. Therefore, we proposed to retain the CY 2015 work RVUs and work time for CPT codes 88367 and 88368 for CY 2016. For CPT code 88365 we finalized a work RVU of 0.88.
For CPT codes 88364 and 88369, we increased the work RVUs of these add-on codes from 0.53 to 0.67, which reflected 76 percent of the work RVUs of the base procedures for these services. However, we inadvertently omitted the rationale for this revision to the work RVUs in the proposed rule. Consequently, we maintained the CY 2015 interim final values of the work RVU of 0.67 for CPT codes 88464 and 88369 and sought comment on these values for CY 2016. For CPT code 88373 we finalized a work RVU of 0.43.
Therefore, for CY 2017, we are proposing a work RVU of 0.70 for CPT codes 88364 and 88369 which represents a 20 percent discount from the base code. As the relationship between the base code and add-on code now represents a 20 percent difference we are proposing to revalue CPT code 88373 at 0.58 work RVUs. Therefore, for CY 2017 we are proposing a work RVU of 0.58 for CPT code 88373.
For CY 2016, we received a RUC recommendation of 0.27 RVU for CPT code 91200. After careful review of the recommendation, we established the RUC-recommended work RVU and direct PE inputs as interim final for CY 2016.
The anesthesia procedure CPT codes 00740 and 00810 are used for anesthesia furnished in conjunction with lower gastrointestinal (GI) procedures. In the CY 2016 PFS proposed rule (80 FR 41686), we discussed that in reviewing Medicare claims data, a separate anesthesia service is now reported more than 50 percent of the time that several types of colonoscopy procedures are reported. We discussed that given the significant change in the relative frequency with which anesthesia codes are reported with colonoscopy services, we believe the relative values of the anesthesia services should be reexamined. We proposed to identify CPT codes 00740 and 00810 as potentially misvalued and sought public comment regarding valuation for these services.
The RUC recommended maintaining the base unit value of 5 as an interim base value for both CPT code 00740 and 00810 on an interim basis, due to their concerns about the specialty society surveys. The RUC suggested that the typical patient vignettes used in the surveys for both CPT codes 00740 and 00810 were not representative of current typical practice and recommended that the codes be resurveyed with updated vignettes. We agree that it is premature to propose any changes to the valuation of CPT codes 00740 and 00810, but continue to believe that these services are potentially misvalued and look forward to receiving input from interested parties and specialty societies for consideration during future notice and comment rulemaking.
We identified CPT code 11730 (Avulsion of nail plate, partial or complete, simple; single) through a screen of high expenditures by specialty. The HCPAC recommended a work RVU of 1.10. We believe the recommendation for this service overestimates the work involved in performing this procedure, specifically given the decrease in physician intraservice and total time concurrently recommended by the HCPAC. We believe that a work RVU of 1.05, which corresponds to the 25th percentile of the survey results, more accurately represents the time and intensity of furnishing the service. To further support the validity of the use of the 25th percentile of the survey, a work RVU of 1.05, we identified two crosswalk CPT codes, 20606 (Arthrocentesis, aspiration and/or injection, intermediate joint or bursa), with a work RVU of 1.00, and 50389 (Removal of nephrostomy tube, requiring fluoroscopic guidance) with a work RVU of 1.10, both of which have identical intraservice times, similar total times and similar intensity. We note that our proposed work RVU of 1.05 for CPT code 11730 falls halfway between the work RVUs for these two crosswalk-codes. CPT Code 11730 may be reported with add-on CPT code 11732 to report performance of the same procedure for each additional nail plate procedure.
Since CPT code 11732 was not reviewed by the HCPAC for CY 2017, we are proposing a new work value to maintain the consistency of this add-on code with the base code, CPT code 11730. We are proposing to remove 2 minutes from the physician intraservice time to maintain consistency with the HCPAC-recommended reduction of 2 minutes from the physician intraservice time period for the base code. We are using a crosswalk from the value for CPT code 77001 (Fluoroscopic guidance for central venous access device placement, replacement (catheter only or complete), or removal (includes fluoroscopic guidance for vascular access and catheter manipulation, any necessary contrast injections through access site or catheter with related venography radiologic supervision and interpretation, and radiographic documentation of final catheter position) (List separately in addition to code for primary procedure)), which has similar physician intraservice and total time values; therefore, we are proposing a work RVU of 0.38 for CPT code 11732. As further support for this proposal, we note that this proposed RVU reduction is similar to the value obtained by subtracting the incremental difference in the current and recommended work RVUs for the base code from the current value of CPT code 11732.
We are proposing to use the HCPAC-recommended direct PE inputs for CPT code 11730. We are proposing to apply some of HCPAC-recommended refinements for CPT code 11730 to11732, including the removal of the penrose drain (0.25in x 4in), lidocaine 1%–2% inj (Xylocaine), applicator (cotton-tipped, sterile) and silver sulfadiazene cream (Silvadene), as well as the reduction of the swab-pad, alcohol from 2 to 1. In addition, we are proposing not to include the recommended the supply items “needle, 30g, and syringe, 10–12ml” since other similar items are present, and we think inclusion of these additional supply items would be duplicative. For clinical labor, we are proposing to assign 8 minutes to “Assist physician in performing procedure” for to maintain a reduction that is proportionate to that recommended for 11730. For the supply item “ethyl chloride spray,” we believe that the listed input price of $4.40 per ounce overestimates the cost of this supply item, and we are seeking comment on the accuracy of this supply item price. Finally, we are adding two equipment items as was done in the base code, basic instrument pack and mayo stand, and are proposing to adjust the times for all pieces of equipment to 8 minutes to reflect the clinical service period time.
In CY 2014, CPT code 20245 was identified by the RUC's 10-Day Global Post-Operative Visits Screen.
For CY 2017, the RUC recommended a value of 6.50 work RVUs for CPT code 20245, including a change in global period from 10- to 0- days. We disagree with this value given the significant reductions in the intraservice time, total time, and the change in the office visits assuming the change in global period. The intraservice and total times were decreased by approximately 33 and 53 percent respectively; while the elimination of three post-operative visits (one CPT code 99214 and two CPT code 99213 visits) alone would reduce the overall work RVU by at least 38 percent under the reverse building block methodology. We also note that the RUC-recommended work RVU of 6.50 only represents a 27 percent reduction relative to the previous work RVU of 8.95. To develop a work RVU for this service, we used a crosswalk from CPT code 19298 (Placement of radiotherapy after loading brachytherapy catheters (multiple tube and button type) into the breast for interstitial radioelement application following (at the time of or subsequent to) partial mastectomy, includes imaging guidance), since we believe the codes share similar intensity and total time and the same intraservice time of 60 minutes. Therefore, for CY
For CY 2016, the CPT Editorial Panel converted two Category III codes to Category I codes describing the insertion of an interlaminar/interspinous process stability device (CPT codes 228X1 and 228X4) and developed two corresponding add-on codes (CPT codes 228X2 and 228X5). The RUC recommended a work RVU of 15.00 for CPT code 228X1, 4.00 for CPT code 228X2, 7.39 for CPT code 228X4, and 2.34 for CPT code 228X5.
We believe that the RUC recommendations for CPT codes 228X1 and 228X4 overestimate the work involved in furnishing these services. We believe that a crosswalk to CPT code 36832 (Revision, open, arteriovenous fistula; without thrombectomy, autogenous or nonautogenous dialysis graft (separate procedure)) which has a work RVU of 13.50 is an accurate comparison. CPT code 36832 is similar in total time, work intensity, and number of visits to 228X1. This is supported by the ratio between total time and work in the key reference service, CPT code 63047 (Laminectomy, facetectomy and foraminotomy (unilateral or bilateral with decompression of spinal cord, cauda equina and/or nerve root[s], [e.g., spinal or lateral recess stenosis]), single vertebral segment; lumbar). Therefore, we are proposing a work RVU of 13.50 for CPT code 228X1. For CPT code 228X4, we believe that CPT code 29881 (Arthroscopy, knee, surgical; with meniscectomy (medial OR lateral, including any meniscal shaving) including debridement/shaving of articular cartilage (chondroplasty), same or separate compartment(s), when performed) is an appropriate crosswalk based on clinical similarity as well as intensity and total time. CPT code 29881 has an RVU of 7.03; therefore, we are proposing a work RVU of 7.03 for CPT code 228X4. We are proposing to accept the RUC-recommended work RVU for CPT codes 228X2 and 228X5 without refinement.
For CY 2016, the CPT Editorial Panel established three new category I add-on codes and deleted one code to provide a more detailed description of the placement and attachment of biomechanical spinal devices. For CPT code 22X81, the RUC recommended a work RVU of 4.88. For CPT code 22X82, and CPT code 22X83, the recommended work RVUs are 5.50 and 6.00, respectively.
In reviewing the code descriptors, descriptions of work and vignettes associated with CPT codes 22X82 and 22X83, we determined that the two procedures, in addition to having identical work time, contain many clinical similarities and do not have quantifiable differences in overall intensity. Therefore, we are proposing the RUC-recommended work RVU of 5.50 for both CPT code 22X82 and CPT code 228X3. We believe that the RUC-recommended work RVU for CPT code 22X81 overestimates the work in the procedure relative to the other codes in the family. We are proposing a work RVU of 4.25 for CPT code 228X1 based a crosswalk from CPT code 37237 (Transcatheter placement of an intravascular stent(s) (except lower extremity artery(s) for occlusive disease, cervical carotid, extracranial vertebral or intrathoracic carotid, intracranial, or coronary), open or percutaneous, including radiological supervision and interpretation and including all angioplasty within the same vessel, when performed; each additional artery (List separately in addition to code for primary procedure)), which is similar in time and intensity to the work described by CPT code 22X81.
For CY 2017, the CPT Editorial Panel deleted CPT codes 27193 and 27194 and replaced them with two new codes, 271X1 and 271X2, and the RUC recommended a work RVU of 5.50 for CPT code 27193, and a work RVU of 9.00 for CPT code 271X2 to describe closed treatment of pelvic ring fracture. We are proposing to change the global period for these services from 90 days to 0 days because these codes typically represent emergent procedures with which injuries beyond pelvic ring fractures are likely to occur; we believe it is typical that multiple practitioners would be involved in providing post-operative care and it is likely that a practitioner furnishing a different procedure is more likely to be providing the primary post-operative care. If other practitioners are typically furnishing care in the post-surgery period, we believe that the six postservice visits included in CPT code 271X1, and the seven included in 271X2, would likely not occur. This is similar to our CY 2016 review and valuation of CPT codes 21811 (Open treatment of rib fracture(s) with internal fixation, includes thoracoscopic visualization when performed, unilateral; 1–3 ribs), 21812 (Open treatment of rib fracture(s) with internal fixation, includes thoracoscopic visualization when performed, unilateral; 4–6 ribs), and 21813 (Open treatment of rib fracture(s) with internal fixation, includes thoracoscopic visualization when performed, unilateral; 7 or more ribs). In our valuation of those codes, we determined that a 0-day, rather than a 90-day global period was preferable, in part because those codes describe rib fractures that would typically occur along with other injuries, and the patient would likely already be receiving post-operative care because of the other injuries. We believe that the same rationale applies here. To establish a work RVU for 271X1, we are crosswalking this code to CPT code 65800 (Paracentesis of anterior chamber of eye (separate procedure); with removal of aqueous), due to its identical intraservice time and similar total time, after removing the work associated with postoperative visits, and its similar level of intensity. Therefore, we are proposing a work RVU of 1.53 for CPT code 271X1. For 271X2, we are crosswalking to CPT code 93452 (Left heart catheterization including intraprocedural injection(s) for left ventriculography, imaging supervision and interpretation, when performed) which has an identical intraservice time and similar total time after removing the work associated with postoperative visits from 271X2. We are proposing a work RVU of 4.75 for code 271X2.
The RUC identified CPT Code 28293 as a 90-day global service with more than 6 office visits and CPT codes 28290–28299 as part of the family of services. In October 2015, the CPT Editorial Panel created two new CPT codes (282X1, 282X2), deleted CPT codes 28290, 28293, 28294 and revised CPT codes 28289, 28292, 28296, 28297, 28298 and 28299 based on the rationale that more accurate descriptions of the services needed to be developed.
For CPT codes 28289, 28292, 28296, 28297, 28298, and 28299 the RUC recommended and we are proposing work RVUs of 6.90, 7.44, 8.25, 9.29, 7.75, and 9.29 respectively. For CPT code 282X1, the RUC recommended a work RVU of 8.01 based on the 25th percentile of the survey. We believe the recommendation for this service overestimates the overall work involved in performing this procedure given the decrease in intraservice time, total time, and post-operative visits when compared to deleted predecessor CPT code 28293. Due to similarity in
For CPT code 282X2, the RUC recommended a work RVU of 8.57 based on the 25th percentile of the survey. We believe the recommendation for this service overestimates the work involved in performing this procedure given the similarity in the intensity of the services and identical intraservice and total times as CPT code 28296. Therefore, we propose a direct RVU crosswalk from CPT code 28296 to CPT code 282X2. For CY 2017, we are proposing a work RVU of 8.25 for CPT code 282X2.
In the CY 2016 PFS final rule with comment period (80 FR 70914), we identified CPT code 31500 as potentially misvalued. The specialty societies surveyed this code, and after reviewing the survey responses, including increases in time, the RUC recommended an increase in work RVUs to 3.00 for CPT code 31500. After reviewing the RUC's recommendation, we are proposing a work RVU of 2.66, based on a direct crosswalk to CPT code 65855, which has similar intensity and service times as reflected in the survey data reported by the specialty groups.
The CPT Editorial Panel deleted category III code 0281T (Percutaneous transcatheter closure of the left atrial appendage with implant, including fluoroscopy, transseptal puncture, catheter placement(s), left atrial angiography, left atrial appendage angiography, radiological supervision and interpretation) and created new CPT code 333X3 to describe percutaneous transcatheter closure of the left atrial appendage with implant. The RUC recommended a work RVU of 14.00, which is the 25th percentile survey result. After reviewing that recommendation, we are proposing a work RVU of 13.00 for CPT code 333X3, which is the minimum survey result. Based on our clinical judgment and that the key reference codes discussed in the RUC recommendations have higher intraservice and total service times than the median survey results for CPT code 333X3, we believe a work RVU of 13.00 more accurately represents the work value for this service.
The CPT Editorial Committee created new codes to describe valvuloplasty procedures and deleted existing CPT code 33400 (Valvuloplasty, aortic valve; open, with cardiopulmonary bypass). New CPT code 334X1 represents a simple valvuloplasty procedure and new CPT code 334X2 describes a more complex valvuloplasty procedure. We are proposing to use the RUC-recommended values for CPT code 334X1. For CPT code 334X2, the RUC recommended a work RVU of 44.00, the 25th percentile survey result. The RUC estimated that approximately 70 percent of the services previously reported using CPT code 33400 would have been reported using CPT code 334X2 with 30 percent reported using new CPT code 334X1. Therefore, the typical service previously reported with 33400 ought to now be reported with 334X2. Compared to deleted CPT code 33400, the survey results for CPT 334X2 showed the median intraservice time to be similar but total service time to be decreased. Therefore, we do not believe the increase recommended by the RUC is warranted, and we are proposing a work RVU of 41.50 for CPT code 334X2. This is the current value of CPT code 33400, and given that the typical service should remain consistent between the two codes, we believe the work RVU should remain consistent as well.
In January 2015, a CPT/RUC workgroup identified the following CPT codes as being frequently reported together in various combinations: 35475 (Transluminal balloon angioplasty, percutaneous; brachiocephalic trunk or branches, each vessel), 35476 (Transluminal balloon angioplasty, percutaneous; venous), 36147 (Introduction of needle and/or catheter, arteriovenous shunt created for dialysis (graft/fistula); initial access with complete radiological evaluation of dialysis access, including fluoroscopy, image documentation and report), 36148 (Introduction of needle and/or catheter, arteriovenous shunt created for dialysis (graft/fistula); additional access for therapeutic intervention), 37236 (Transcatheter placement of an intravascular stent(s) (except lower extremity artery(s) for occlusive disease, cervical carotid, extracranial vertebral or intrathoracic carotid, intracranial, or coronary), open or percutaneous, including radiological supervision and interpretation and including all angioplasty within the same vessel, when performed; initial artery), 37238 (Transcatheter placement of an intravascular stent(s), open or percutaneous, including radiological supervision and interpretation and including angioplasty within the same vessel, when performed; initial vein), 75791 (Angiography, arteriovenous shunt (
For CPT code 369X1, we are proposing a work RVU of 2.82 instead of the RUC-recommended work RVU of 3.36. When we compared CPT code 369X1 against other codes in the RUC database, we found that the RUC-recommended work RVU of 3.36 would be the highest value in the database among the 32 0-day global codes with 25 minutes of intraservice time. Generally speaking, we are particularly skeptical of RUC-recommended values for newly “bundled” codes that appear not to recognize the full resource
We are proposing a work RVU of 4.24 for CPT code 369X2 instead of the RUC-recommended work RVU of 4.83. The RUC-recommended work RVU is based upon a direct crosswalk to CPT code 43253 (Esophagogastroduodenoscopy, flexible, transoral) which shares the same 40 minutes of intraservice time with CPT code 369X2. However, CPT code 43253 has significantly longer total time than CPT code 369X2, 104 minutes against 86 minutes, which we believe reduces its utility for comparison. We are instead proposing to crosswalk the work RVU for CPT code 369X2 from CPT code 44408 (Colonoscopy through stoma), which has a work RVU of 4.24. In addition to our assessment that the two codes share similar intensities, CPT code 44408 also shares 40 minutes of intraservice time with CPT code 369X2 but has only 95 minutes of total time and matches the duration of the procedure under review more closely than the RUC-recommended crosswalk to CPT code 43253. We also note that the RUC-recommended work increment between CPT codes 369X1 and 369X2 was 1.47, and by proposing a work RVU of 4.24 for CPT code 369X2, we maintain a very similar increment of 1.42. As a result, we are proposing a work RVU of 4.24 for CPT code 369X2, based on this direct crosswalk to CPT code 44408.
For CPT code 369X3, we are proposing a work RVU of 5.85 instead of the RUC-recommended work RVU of 6.39. The RUC-recommended value is based on a direct crosswalk to CPT code 52282 (Cystourethroscopy, with insertion of permanent urethral stent). Like the previous pair of RUC-recommended crosswalk codes, CPT code 52282 shares the same intraservice time of 50 minutes with CPT code 369X3, but has substantially longer total time (120 minutes against 96 minutes) which we believe limits its utility as a crosswalk. We are proposing a work RVU of 5.85 based on maintaining the RUC-recommended work RVU increment of 3.03 as compared to CPT code 369X1 (proposed at a work RVU of 2.82), the base code for this family of related procedures. We also point to CPT code 44403 (Colonoscopy through stoma; with endoscopic mucosal resection) as a reference point for this value. CPT code 44403 has a work RVU of 5.60, but also lower intraservice time (45 minutes as compared to 50 minutes) and total time (92 minutes as compared to 96 minutes) in relation to CPT code 369X3, suggesting that a work RVU a bit higher than 5.60 would be an accurate valuation. Therefore, we are proposing a work RVU of 5.85 for CPT code 369X3, based on an increment of 3.03 from the work RVU of CPT code 369X1.
We are proposing a work RVU of 6.73 instead of the RUC-recommended work RVU of 7.50 for CPT code 369X4. Our proposed value comes from a direct crosswalk from CPT code 43264 (Endoscopic retrograde cholangiopancreatography), which shares the same intraservice time of 60 minutes with CPT code 369X4 and has a higher total time. We also looked to the intraservice time ratio between CPT codes 369X1 and 369X4; this works out to 60 minutes divided by 25 minutes, for a ratio of 2.4, and a suggested work RVU of 6.77 (derived from 2.4 times CPT code 369X1's work RVU of 2.82). This indicates that our proposed work RVU of 6.73 maintains relativity within the Dialysis Circuit family. As a result, we are proposing a work RVU of 6.73 for CPT code 369X4, based on a direct crosswalk to CPT code 43264.
We are proposing a work RVU of 8.46 instead of the RUC-recommended work RVU of 9.00 for CPT code 369X5. We looked at the intraservice time ratio between CPT codes 369X1 and 369X5 as one potential method for valuation, which is a 1:3 ratio (25 minutes against 75 minutes) for this case. This means that one potential value for CPT code 369X5 would be triple the work RVU of CPT code 369X1, or 2.82 times 3, which results in a work RVU of 8.46. We also investigated preserving the RUC-recommended work RVU increment between CPT code 369X1 and 369X5, which was an increase of 5.64. When this increment is added to the work RVU of 2.82 for CPT code 369X1, it also resulted in a work RVU of 8.46 for CPT code 369X5. Therefore, we are proposing a work RVU of 8.46 for CPT code 369X5, based on both the intraservice time ratio with CPT code 369X1 and the RUC-recommended work increment with the same code.
For CPT code 369X6, we are proposing a work RVU of 9.88 instead of the RUC-recommended work RVU of 10.42. We based the proposed value upon the RUC-recommended work RVU increment between CPT codes 369X1 and 369X6, which is 7.06. When added to the work RVU of 2.82 for CPT code 369X1, the work RVU for CPT code 369X6 would be 9.88. We are supporting this value through the use of two crosswalks that both share the same 90 minutes of intraservice time with 369X6. These are CPT code 31546 (Laryngoscopy, direct, with submucosal removal of non-neoplastic lesion(s) of vocal cord) at a work RVU of 9.73 and CPT code 61623 (Endovascular temporary balloon arterial occlusion, head or neck) at a work RVU of 9.95.
The final three codes in the Dialysis Circuit family are all add-on codes, which make comparisons difficult to the global 0-day codes that make up the rest of the family. We are proposing a work RVU of 2.48 instead of the RUC-recommended work RVU of 3.00 for CPT code 369X7. Due to the difficulty of comparing CPT code 369X7 with the non-add-on codes in the rest of the Dialysis Circuit family, we looked instead to compare the value to the add-on codes in the Open and Percutaneous Transluminal Angioplasty family of codes (CPT codes 372X1–372X4). As we stated previously, both of these groups of new codes are being constructed from the same set of frequently reported together codes. We reviewed these two families of codes together to maintain relativity across the two families, and so that we could compare codes that shared the same global period.
We are proposing the RUC-recommended work RVUs for all four codes in the Open and Percutaneous Transluminal Angioplasty family of codes. As a result, we compared CPT code 369X7 with the RUC-recommended work RVU of 2.97 for CPT code 372X4, which is also an add-on code. These procedures should be clinically very similar, since both of them are performing percutaneous transluminal angioplasty on a central vein, and both of them are add-on procedures. We looked at the intraservice time ratio between these two codes, which was a comparison between 25 minutes for CPT code 369X7 against 30 minutes for CPT code 372X4.
For CPT code 369X8, we disagree with the RUC-recommended work RVU of 4.25, and we are instead proposing a work RVU of 3.73. We do not consider the RUC work value of 4.25 to be accurate for CPT code 369X8, as this was higher than our proposed work value for CPT code 369X2 (4.24), and we do not believe that an add-on code should typically have a higher work value than a similar non-add-on code with the same intraservice time. We identified two appropriate crosswalks for valuing CPT code 369X8: CPT code 93462 (Left heart catheterization by transseptal puncture through intact septum or by transapical puncture) and CPT code 37222 (Revascularization, endovascular, open or percutaneous, iliac artery). Both of these codes share the same intraservice time as CPT code 369X8, and both of them also have the same work RVU of 3.73, which results in these codes also sharing the same intensity since they are all add-on codes. We are therefore proposing a work value of 3.73 for CPT code 369X8, based on a direct crosswalk to CPT codes 93462 and 37222.
Finally, we are proposing a work RVU of 3.48 for CPT code 369X9 instead of the RUC-recommended work RVU of 4.12. The RUC recommended value comes from a direct crosswalk from CPT code 38746 (Thoracic lymphadenectomy by thoracotomy). We compared the RUC-recommended work RVU for this procedure to other add-on codes with 30 minutes of intraservice time and found that the recommended work RVU of 4.12 would overestimate the overall intensity of this service relative to those with similar times. In reviewing the range of these codes, we believe that a more appropriate crosswalk is to CPT code 61797 (Stereotactic radiosurgery (particle beam, gamma ray, or linear accelerator)) at a work RVU of 3.48. We believe that this value is more accurate when compared to other add-on procedures with 30 minutes of intraservice time across the PFS. As a result, we are proposing a work RVU of 3.48 for CPT code 369X9 based on a direct crosswalk from CPT code 61797.
We are proposing to use the RUC-recommended direct PE inputs for these nine codes with several refinements. We are not proposing to include the recommended additional preservice clinical labor for CPT codes 369X4, 369X5, and 369X6. The preservice work description is identical for all six of the global 0-day codes in this family; there is no justification given in the RUC recommendations as to why the second three codes need additional clinical labor time beyond the minimal preservice clinical labor assigned to the first three codes. We do not believe that the additional staff time would be typical. Patient care already would have been coordinated ahead of time in the typical case, and the need for unscheduled dialysis or other unusual circumstances would be discussed prior to the day of the procedure. We are therefore proposing to refine the preservice clinical labor for CPT codes 369X4, 369X5, and 369X6 to match the preservice clinical labor of CPT codes 369X1, 369X2, and 369X3.
We are proposing to refine the L037D clinical labor for “Prepare and position patient/monitor patient/set up IV” from 5 minutes to 3 minutes for CPT codes 369X1–369X6. The RUC recommendation included a written justification for additional clinical labor time beyond the standard 2 minutes for this activity, stating that the extra time is needed to prepare the patient's arm for the procedure. We agree that extra time may be needed for this activity as compared to the default standard of 2 minutes; however, we are assigning 1 extra minute for preparing the patient's arm, resulting in a total of 3 minutes for this task. We do not believe that 3 extra minutes would be typically needed for arm positioning.
We are proposing to remove the “kit, for percutaneous thrombolytic device (Trerotola)” supply (SA015) from CPT codes 369X4, 369X5, and 369X6. We believe that this thrombolytic device kit and the “catheter, thrombectomy-Fogarty” (SD032) provide essentially the same supply, and the use of only one of them would be typical in these procedures. We believe that each of these supplies can be used individually for thrombectomy procedures. We are proposing to remove the SA015 supply and retain the SD032 supply, and we seek additional comment and information regarding the use of these two supplies.
We are also proposing to remove the recommended supply item “covered stent (VIABAHN, Gore)” (SD254) and replace it with the “stent, vascular, deployment system, Cordis SMART” (SA103) for CPT codes 369X3 and 369X6. The Cordis SMART vascular stent was previously used in the past for CPT code 37238, which is the deleted code for transcatheter placement of an intravascular stent that CPT codes 369X3 and 369X6 are replacing. We do not have a stated rationale as to the need for this supply substitution, and therefore, we do not believe it would be appropriate to replace the current items with a significantly higher-priced item without additional information.
We are also proposing to refine the quantity of the “Hemostatic patch” (SG095) from 2 to 1 for CPT codes 369X4, 369X5, and 369X6. This supply was not included in any of the deleted base codes out of which the new codes are being constructed, and while we agree that the use of a single hemostatic patch has become common clinical practice, we do not agree that CPT codes 369X4–369X6 would typically require a second patch. As a result, we are proposing to refine the SG095 supply quantity from 2 to 1 for CPT codes 369X4–369X6, which also matches the supply quantity for CPT codes 369X1–369X3.
Included in the RUC recommendation for the Dialysis Circuit family of codes were a series of invoices for a “ChloraPrep applicator (26 ml)” supply. We are soliciting comments regarding whether the Betadine solution has been replaced by a Chloraprep solution in the typical case for these procedures. We are also soliciting comments regarding whether the “ChloraPrep applicator (26 ml)” detailed on the submitted invoices is the same supply as the SH098 “chlorhexidine 4.0% (Hibiclens)” applicator currently in the direct PE database.
Finally, we are also interested in soliciting comments about the use of guidewires for these procedures. We are requesting feedback about which guidewires would be typically used for these procedures, and which guidewires are no longer clinically necessary.
In January 2015, a CPT/RUC workgroup identified the following CPT codes as being frequently reported together in various combinations: 35475 (Transluminal balloon angioplasty, percutaneous; brachiocephalic trunk or branches, each vessel), 35476 (Transluminal balloon angioplasty,
For the clinical labor direct PE inputs, we are proposing to use the RUC-recommend inputs with several refinements. Our proposed inputs refine the recommended clinical labor time for “Prepare and position patient/monitor patient/set up IV” from 5 minutes to 3 minutes for CPT codes 372X1 and 372X3. The RUC recommendation included a written justification for additional clinical labor time beyond the standard 2 minutes for this activity, stating that the extra time was needed to move leads out of X-ray field, check that X-ray is not obstructed and that there is no risk of collision of X-ray equipment with patient. As we wrote for the same clinical labor activity in the Dialysis Circuit family, we agree that extra time may be needed for this activity as compared to the default standard of 2 minutes; however, we are assigning 1 extra minute for the additional positioning tasks, resulting in a total of 3 minutes for this task. We do not believe that 3 extra minutes would be typically needed for preparation of the X-ray. The equipment times for the angiography room (EL011) and the PACS workstation (ED050) have been refined to reflect this change in clinical labor.
We are proposing to remove the “drape, sterile, femoral” supply (SB009) and replace it with a “drape, sterile, fenestrated 16in x 29in” supply (SB011) for CPT codes 372X1 and 372X3. The two base codes out of which these new codes are being constructed, CPT codes 35471 and 35476, both made use of the SB011 fenestrated sterile drape supply, and there was no rationale provided for the switch to the SB009 femoral sterile drape in the two new codes. We are seeking comment on the use of sterile drapes for these procedures, and what rationale there is to support the use of the SB009 femoral sterile drape as typical for these new procedures.
This group of fourteen codes was reviewed by the RUC at the April 2015 meeting. We established interim final values for this group of codes during the CY 2016 PFS rulemaking cycle, and subsequently received updated RUC recommendations from the October 2015 meeting for the CY 2017 PFS rulemaking cycle. Our proposals for these codes incorporate both the updated RUC recommendations, as well as public comments received as part of the interim final status of these procedures.
We received several comments regarding the CMS refinements to the work values for this family of codes in the CY 2016 final rule with comment period. The relevance of many of these comments has been diminished by the new series of RUC recommendations for work values that we received as a result of the October 2015 meeting. Given that we are proposing the updated RUC-recommended work RVUs for CPT codes 47531, 47532, 47533, 47534, 47535, 47536, 47537, 47538, 47539, 47540, 47542, 47543, and 47544, we seek additional comments relative to these proposed values. We agree that the second round of physician surveys conducted for the October 2015 RUC meeting more accurately captured the work and time required to perform these procedures. The one exception is CPT code 47541; the survey times for this procedure were identical as conducted for the April and October 2015 RUC meetings, yet the RUC recommendation increased from a work RVU of 5.61 in April to a work RVU of 7.00 in October. Given that the time values for the procedure remained unchanged between the two surveys, we do not understand why the work RVU would have increased by nearly 1.50 in the intervening months. Since this code also has an identical intraservice time (60 minutes) and total time (121 minutes) as CPT code 47533, we do not agree that it should be valued at a substantially higher rate compared to a medically similar procedure within the same code family. We are therefore proposing to crosswalk the work value of CPT code 47541 to the work value of CPT code 47533, and we are proposing a work RVU of 5.63 for both procedures.
We also note that many of the codes in the Percutaneous Biliary Procedures family were previously included in Appendix G, and were valued under the assumption that moderate sedation was typically performed on the patient. As part of the initiative to pay separately for moderate sedation when it is performed, we are removing a portion of the work RVU and preservice work time from CPT codes 47532, 47533, 47534, 47535, 47536, 47538, 47539, 47540, and 47541. For example, we are proposing that CPT code 47541 undergoes a 0.25 reduction in its work RVU from 5.63 to 5.38, and a 10 minute reduction in its preservice work time from 33 minutes to 23 minutes, to reflect the work that will now be reported separately using the new moderate sedation codes. CPT codes 47542, 47533, and 47544 are also included in the moderate sedation initiative; however, as add-on codes, they are not subject to alterations in
For the direct PE inputs, we are proposing to remove the L051A clinical labor for “Sedate/apply anesthesia” and the L037D for “Assist Physician in Performing Procedure” for CPT codes 47531 and 47537. As we wrote in last year's final rule with comment period (80 FR 71053), we believe that this clinical labor describes activities associated with moderate sedation, and moderate sedation is not typical for these procedures. We are also proposing to refine the L037D clinical labor for “Clean room/equipment by physician staff” from 6 minutes to 3 minutes for all of the codes in this family. Three minutes is the standard for this clinical labor activity, and we continue to maintain that the need for additional clinical labor time for this cleaning activity would not be typical for these procedures.
We are also proposing to remove the recommended supply item “stone basket” (SD315) from CPT code 47543 and add it to CPT code 47544. Based on the code descriptors, we believe that the stone basket was intended to be included in CPT code 47544 and was erroneously listed under CPT code 47543. We are soliciting comments from the public to help clarify this issue.
We note again that many of the codes in the Percutaneous Biliary Procedures family were previously included in Appendix G, and as part of the initiative to pay separately for moderate sedation when performed, we are removing some of the recommended direct PE inputs related to moderate sedation from CPT codes 47532, 47533, 47534, 47535, 47536, 47538, 47539, 47540, and 47541. We are removing the L051A clinical labor time for “Sedate/apply anesthesia”, “Assist Physician in Performing Procedure (CS)”, and “Monitor pt. following moderate sedation”. We are also removing the conscious sedation pack (SA044) supply, and some or all of the equipment time for the stretcher (EF018), the mobile instrument table (EF027), the 3-channel ECG (EQ011), and the IV infusion pump (EQ032). These changes are reflected in the public use files posted to the web; see section II.D for more details.
After we identified CPT codes 31575 and 31579 as potentially misvalued in (80 FR 70912–70914) the RUC referred the entire flexible laryngoscopy family of codes back to CPT for revision and the addition of several codes representing new technology within this family of services. At the May 2015 CPT meeting, the Editorial Panel added three new codes to describe laryngoscopy with ablation or destruction of lesion and therapeutic injection. Based on the survey results, the time resources involved in furnishing the procedures described by this code family experienced a significant reduction in the intraservice period, yet the recommended work RVUs were not similarly reduced. Therefore, in reviewing the recommended values for this family of codes we looked for a rationale for increased intensity and absent such rationale, propose to adjust the recommend work RVUs to account for significant changes in time.
For CPT code 31575, we disagree with the RUC-recommended work RVU of 1.00, and we are instead proposing a work RVU of 0.94. We looked at the total time ratio for CPT code 31575, which is decreasing from 28 minutes to 24 minutes, and applied this ratio of 0.86 times the current work RVU of 1.10 to derive our proposed work RVU of 0.94. We are supporting this value for CPT code 31575 through a crosswalk to CPT code 64405 (Injection, anesthetic agent; greater occipital nerve), which shares 5 minutes of intraservice time and also has a work RVU of 0.94.
We agree with the RUC that CPT code 31575 serves as the base code for the rest of the Flexible Laryngoscopy family. As a result, we are proposing to maintain the same RUC-recommended increments for the rest of the codes in this family, measuring the increments from CPT code 31575's refined work RVU of 0.94 instead of the RUC-recommended work RVU of 1.00. This means that each of the work RVUs for the codes in the rest of the family has decreased by 0.06 when compared to the RUC-recommended value. We are therefore proposing a work RVU of 1.89 for CPT code 31576, a work RVU of 2.19 for CPT code 31577, a work RVU of 2.43 for CPT code 31578, a work RVU of 3.01 for CPT code 317X1, a work RVU of 2.43 for CPT code 317X2, a work RVU of 2.43 for CPT code 317X3, and a work RVU of 1.88 for CPT code 31579.
Amongst the direct PE inputs, we are proposing to refine the clinical labor time for “Obtain vital signs” for CPT codes 31577 and 31579 from 3 minutes to 2 minutes. We believe that this extra clinical labor time is duplicative, as these codes are typically performed with a same day E/M service. Each procedure is only allotted a maximum of 5 minutes for obtaining vital signs, and since 3 minutes are already included in the E/M code, we are proposing to reduce the time to 2 minutes for these services. Similarly, we are proposing to remove the 3 minutes of clinical labor time for “Clean room/equipment by physician staff” from CPT codes 31575, 31577, and 31579. These procedures are typically reported with a same day E/M service, making the clinical labor minutes for cleaning the room in these procedure codes duplicative of the time already included in the E/M codes.
For CPT code 317X1, we are proposing to remove the “laser tip, diffuser fiber” supply (SF030) and replace it with the “laser tip, bare (single use)” supply (SF029) already present in our direct PE database. We
We are also proposing to make significant changes to the prices of several of the supplies and equipment related to Flexible Laryngoscopy, as well as to the prices of scopes more broadly. We are proposing to set the price of the disposable biopsy forceps supply (SD318) at $26.84, based on the submission of an invoice with a price of $536.81 for a unit size of 20. In our search for additional information regarding scope inputs, we obtained a quote from a vendor listing the current price for several equipment items related to the use of scopes. Since we believe that the prices in vendor quotes would typically be equal to or higher than prices actually paid by practitioners, we are updating the prices in our direct PE database to reflect this new information. As part of this process, we are proposing to increase the price of the “light source, xenon” (EQ167) from $6,723.33 to $7,000 to reflect current pricing information. We are also proposing to adjust the price of the “fiberscope, flexible, rhinolaryngoscopy” (ES020) from $6,301.93 to $4,250.00.
In accordance with the wider proposal that we are making involving the use of scope equipment, we are proposing to separate the scopes used in these procedures from the scope video systems. In the course of researching different kinds of scopes, we obtained vendor pricing for two different types of scopes used in these procedures. We are proposing to price the “rhinolaryngoscope, flexible, video, non-channeled” (ES063) at $8,000 and the “rhinolaryngoscope, flexible, video, channeled” (ES064) at $9,000 in accordance with our vendor quotes. We are proposing to use the non-channeled scope for CPT codes 31575, 31579, and 317X3 and the channeled scope for CPT codes 31576, 31577, 31578, 317X1, and 317X2 in accordance with the RUC-recommended video systems that stipulated channeled versus non-channeled scope procedures.
We believe that the “Video-flexible laryngoscope system” listed in the recommendations is not a new form of equipment, but rather constitutes a version of the existing “video system, endoscopy” equipment (ES031). We are not adding a new equipment item to our direct PE database; instead, we are proposing to use the submitted invoices to update the price of the ES031 endoscopy video system. As the equipment code for ES031 indicates, we are proposing to define the endoscopy video system as containing a processor, digital capture, monitor, printer, and cart. We are proposing to price ES031 at $15,045.00; this reflects a price of $2,000.00 for the monitor, $9,000.00 for the processor, $1,750.00 for the cart, and $2,295.00 for the printer. These prices were obtained from our vendor invoice, with the exception of the printer, which is a crosswalk to the “video printer, color (Sony medical grade)” equipment (ED036).
We do not agree that there is a need for multiple different video systems for this collection of Flexible Laryngoscopy codes based on our understanding of the clinical differences among the codes. In keeping with this understanding, we are proposing to use the same existing “video system, endoscopy” equipment (ES031) for the remaining codes in the family that included RUC recommendations for new equipment items named “Video-flexible channeled laryngoscope system” and “Video-flexible laryngoscope stroboscopy system.” For CPT codes 31576, 31577, 31578, 317X1, and 317X2, we are proposing to replace the Video-flexible channeled laryngoscope system with the existing endoscopy video system (ES031) along with a channeled flexible video rhinolaryngoscope (ES064). For CPT code 31579, we are proposing to rename the RUC-recommended “Video-flexible laryngoscope stroboscopy system” to the shortened “stroboscopy system” (ES065) and assign it a price of $19,100.00. This reflects the price of the StrobeLED Stroboscopy system included on the submitted invoice. We are proposing to treat the stroboscopy system as a scope accessory, which will be included along with the “video system, endoscopy” equipment (ES031) and the “rhinolaryngoscope, flexible, video, non-channeled” (ES063) for CPT code 31579. When the price of the scope, the scope video system, and the stroboscopy system are summed together, the total proposed equipment price is $42,145.00.
We are proposing to refine the recommended equipment times for several equipment items to conform to changes in clinical labor time. These are: The fiberoptic headlight (EQ170), the suction and pressure cabinet (EQ234), the reclining exam chair with headrest (EF008), and the basic instrument pack (EQ137). We are proposing to use the standard equipment time formula for scope accessories for the endoscopy video system (ES031) and the stroboscopy scope accessory system (ES065). We are also proposing to refine the equipment time for the channeled and non-channeled flexible video rhinolaryngoscopes to use the standard equipment time formula for scopes. For this latter pair of two new equipment items, this proposal results in small increases to their respective equipment times.
CPT code 31588 (Laryngoplasty, not otherwise specified (
For CPT code 31584, the RUC recommended a work RVU of 20.00. We believe that the 25th percentile of the survey, which is a work RVU of 17.58, better represents the time and intensity involved with furnishing this service based on a comparison with and assessment of the overall intensity of other codes with similar instraservice and total time. This value is also supported by a crosswalk code of CPT code 42844 (Radical resection of tonsil, tonsillar pillars, and/or retromolar trigone; closure with local flap (
For CPT code 315X5, the RUC recommended a work value of 15.60 RVUs. We believe that the 25th percentile of the survey, which is a work RVU of 13.56, better represents the time and intensity involved with furnishing this service based on a comparison of the overall intensity of other codes with similar instraservice and total time. The 25th percentile of the survey is additionally bracketed by two crosswalk codes that we estimate have slightly lower and slighter higher overall intensities, CPT code 36819
Additionally, the RUC forwarded invoices provided by a medical specialty society for the video-flexible laryngoscope system used in these services. As discussed in section II.A of this proposed rule, we have proposed changes to the items included in equipment item ES031 (video system, endoscopy). Consistent with those proposed changes, we are proposing to add a Nasolaryngoscope, non-channeled, to the list of equipment items used for CPT codes 31580, 31584, 31587, and 315X1–315X6, along with the modified equipment item ES031.
At the October 2015 CPT meeting, the CPT Editorial Panel established two Category I codes for reporting venous mechanochemical ablation, CPT codes 364X1 and 364X2. We are proposing the RUC-recommended work RVU of 3.50 for CPT code 364X1. For CPT code 364X2 we believe that the RUC-recommended work RVU of 2.25 does not accurately reflect the typical work involved in furnishing this procedure. The specialty society survey recommended that this add-on code has half the work of the base code, CPT code 364X1. This value is supported by the ratio between work and time in the key reference service, CPT code 36476 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; second and subsequent veins treated in a single extremity, each through separate access sites (List separately in addition to code for primary procedure)). Therefore, we are proposing a work RVU of 1.75 for CPT code 364X2.
The RUC-recommended direct practice expense inputs for CPT codes 364X1 and 364X2 included inputs for an ultrasound room (EL015). Based on the clinical nature of these procedures, we do not believe that an ultrasound room would typically be used to furnish these procedures. We are proposing to remove inputs for the ultrasound room and put in a portable ultrasound (EQ250), power table (EF031), and light (EF014). The RUC also recommended that the ultrasound machine be allocated clinical staff time based on the PACS workstation formula. We do not believe that an ultrasound machine would be used like a PACS workstation, as images are generated and reviewed in real time. Therefore, we are proposing to remove all inputs associated with the PACS workstation.
In October 2015, the CPT Editorial Panel created two new codes to describe laparoscopic implantation and removal of a magnetic bead sphincter augmentation device used for treatment of gastroesophageal reflux disease (GERD). The RUC noted that the specialty societies conducted a targeted survey of the 145 physicians who have been trained to furnish these services and who are the only physicians who have performed these procedures. They noted that only 18 non-conflicted survey responses were received despite efforts to follow up and that nine physicians had no experience in the past 12 months with the procedure. The RUC agreed with the specialty society that the expertise of those responding was sufficient to consider the survey, however, neither entity used the survey results as the as the primary basis for their recommended value.
For CPT code 432X1, the RUC recommended a work RVU of 10.13. We compared this code to CPT code 43180 (Esophagoscopy, rigid, transoral with diverticulectomy of hypopharynx or cervical esophagus (
For CPT code 432X2, the RUC recommended a work RVU of 10.47. To value this code, we used the increment between the RUC-recommended work RVU for this code and CPT code 432X1 (0.34 RVUs) to develop our proposed work RVU of 9.37 for CPT code 432X2.
We identified CPT code 51784 as potentially misvalued through a screen of high expenditure by specialty. This family also includes CPT code 51785 (Needle electromyography studies (EMG) of anal or urethral sphincter, any technique) but was not included in this survey. Both services have 0-day global periods. The RUC recommended a work RVU of 0.75 for CPT code 51784. We believe that this service is more accurately valued without a global period, since that is more consistent with other diagnostic services, and specifically, with all the other diagnostic electromyography services. We are proposing a change to the global period from 0-day to no global period, and we are proposing the RUC-recommended work RVU of 0.75 for CY 2017. We are also proposing to change the global period for CPT code 51785 from 0-day to no global period, to be consistent with 51784. Additionally, we are proposing to add CPT code 51785 to the list of potentially misvalued codes to update the value of the service considering the change in global period, and to maintain consistency with 51784.
In the CY 2016 PFS final rule with comment period, CMS identified CPT code 52000 through the screen for high expenditure services by specialty screen. The RUC-recommended work RVUs of 1.75 for CPT code 52000 is larger than the work RVUs for all 0-day global codes with 10 minutes of intraservice time and we do not believe that the overall intensity of this service is greater than all of the other codes. Instead, we believe the overall work compares for this code compares favorably to CPT code 58100 (Endometrial sampling (biopsy) with or without endocervical sampling (biopsy), without cervical dilation, any method (separate procedure)), which has a work RVU of 1.53, and has identical intraservice time and similar total time. Therefore, we are using a direct crosswalk to CPT code 58100 and are proposing a work RVU of 1.53 for CPT code 52000.
In the CY 2016 PFS final rule with comment period, CMS identified CPT code 55700 as potentially misvalued based on the high expenditure by specialty screen.
The RUC subsequently reviewed this code for physician work and practice expense and recommended a work RVU of 2.50 based on the 25th percentile of the survey. We believe the RUC-recommended work RVU overestimates the work involved in furnishing this service given the reduction in total service time; specifically, the reduction in preservice and postservice times. The RUC recommendation also appears overvalued when compared to similar 0-day global services with 15 minutes of intraservice time and comparable total
As part of the recommended direct PE inputs for CPT code 55700, the RUC recommended inclusion of a new equipment item, Biopsy Guide, but we have not received any invoices to price this item. Given our longstanding difficulties in acquiring accurate pricing information for equipment items, we are seeking invoices and public comment for pricing this equipment prior to adding this new equipment item code.
In the CY 2016 PFS proposed rule, we proposed CPT code 58558 as a potentially misvalued code based on the screen for high expenditure by specialty screen. This code was reviewed at the January 2016 RUC meeting and CPT codes 58559–58563 were included in the review as part of the family.
For CPT code 58555, the RUC recommended a work RVU of 3.07. We believe that the 25th percentile of the survey, a work RVU of 2.65, more accurately reflects the resources involved in furnishing this service. This value is bracketed by two crosswalk codes, CPT code 43191 (Esophagoscopy, rigid, transoral; diagnostic, including collection of specimen(s) by brushing or washing when performed (separate procedure)), which has a work RVU of 2.49, and CPT code 31295 (Nasal/sinus endoscopy, surgical; with dilation of maxillary sinus ostium (
For CPT code 58558, the RUC recommended a work RVU of 4.37. However, we believe that a direct crosswalk from CPT code 36221 (Non-selective catheter placement, thoracic aorta, with angiography of the extracranial carotid, vertebral, and/or intracranial vessels, unilateral or bilateral, and all associated radiological supervision and interpretation, includes angiography of the cervicocerebral arch, when performed), which has a work RVU of 4.17, and which has identical intraservice time and very similar total time, more accurately reflects the time and intensity of furnishing this service. This value is additionally supported by using an increment between this code and the base code for this family, CPT code 58555. The increment between the RUC-recommended values for these two codes is 1.3. That increment added to the proposed work RVU of 2.65 for the base code, CPT code 58555, results in a work RVU of 3.95. Therefore, we are proposing a work value of 4.17 RVUs for CPT code 58558.
For CPT code 58559, the RUC recommended a work RVU of 5.54. However, we believe that a direct crosswalk of the work RVUs for CPT code 52315 (Cystourethroscopy, with removal of foreign body, calculus, or ureteral stent from urethra or bladder (separate procedure); complicated), which has a work RVU of 5.20 and which has a similar (slightly higher) intraservice time and similar total time as compared with CPT code 58589 more accurately reflects the time and intensity of furnishing this service. This value is additionally supported by using an increment between CPT code 58559 and the base code for this family, CPT code 58555. The increment between the RUC recommended values for the two codes is 2.47. That increment added to the proposed value for the base code, CPT code 58555 (2.65), results in a work RVU of 5.12. Therefore, we are proposing a work RVU of 5.20 for CPT code 58559.
For CPT code 58560, the RUC recommended a work RVU of 6.15. However, we believe that a direct crosswalk of the work RVUs for CPT code 52351 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy; diagnostic), which has a work RVU of 5.75 and which has more intraservice time and very similar total time, more accurately reflects the time and intensity of furnishing this service. This value is additionally supported by using an increment between CPT code 58560 and the base code for this family, CPT code 58555. The increment between the RUC recommended values for the two codes is 3.08. That increment added to the proposed value for the base code, CPT code 58555 (2.65), results in a work RVU of 5.73. Therefore, we are proposing a work RVU of 5.75 for CPT code 58560.
For CPT code 58561, the RUC recommended a work RVU of 7.00. However, we believe that a direct crosswalk of the work RVUs for CPT code 35475 (Transluminal balloon angioplasty, percutaneous; brachiocephalic trunk or branches, each vessel), which has a work RVU of 6.60 and which has similar intraservice and total times, more accurately reflects the time and intensity of furnishing this service. This value is additionally supported by using an increment between CPT code 58561 and the base code for this family, CPT code 58555. The increment between the RUC recommended values for the two codes is 3.93. That increment added to the proposed value for the base code, CPT code 58555 (2.65), results in a work RVU of 6.58. Therefore, we are proposing a work RVU of 6.60 for CPT code 58561.
For CPT code 58562, the RUC recommended a work RVU of 4.17. However, we believe that a direct crosswalk of the work RVUs for CPT code 15277 (Application of skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, total wound surface area greater than or equal to 100 sq cm; first 100 sq cm wound surface area, or 1% of body area of infants and children), which has a work RVU of 4.00 and which has identical intraservice time and similar total time, more accurately reflects the time and intensity of furnishing this service. The RUC also used this code as one of its supporting codes for its recommendation. This value is additionally supported by using an increment between CPT code 58562 and the base code for this family, CPT code 58555. The increment between the RUC recommended values for the two codes is 1.10. That increment added to the proposed value for the base code, CPT code 58555 (2.65), results in a work RVU of 3.75. Therefore, we are proposing a work RVU of 4.00 for CPT code 58562.
For CPT code 58563, the RUC recommended a work RVU of 4.62. However, we believe that a direct crosswalk of the work RVUs for CPT code 33962 (Extracorporeal membrane oxygenation (ECMO)/extracorporeal life support (ECLS) provided by physician; reposition peripheral (arterial and/or venous) cannula(e), open, 6 years and older (includes fluoroscopic guidance, when performed)), which has a work RVU of 4.47 and which has identical intraservice time and similar total time, more accurately reflects the resources involved in furnishing this service. This value is additionally supported by using an increment between CPT code 58563 and the base code for this family, CPT code 58555. The increment between the RUC recommended values for the two codes is 1.55. That increment added to the proposed value for the base code, CPT code 58555 (2.65), results in a work RVU of 4.20. We note that CPT code 58563 has the same instraservice time and the same total time as CPT code 58558; however, we agree that the
The RUC submitted invoices for two new equipment items used in furnishing CPT code 58558, the Hysteroscopic Fluid Management System and the Hysteroscopic Resection System. We are proposing to use these invoice prices for the Hysteroscopic Fluid Management System, which totaled $14,698.38. The Hysteroscopic Resection System included the price of the hysteroscope as well as other items necessary for tissue removal. However, we generally price endoscopes separately and not as a part of a system. In order to maintain consistency, we are proposing not to include the hysteroscope from the Resection System. Instead, we are proposing to update the equipment item “endoscope, rigid, hysteroscopy” (ES009) with the invoice price, $6,207.50. We are not proposing to include the sterilization tray from the Hysteroscopic Resection System because we believe this tray has generally been characterized as an indirect expense. For the Hysteroscopic Resection System, we are proposing to include the Hysteroscopic tissue remover ($18,375), the sheath ($1,097.25), and the calibration device ($300), and creating a new equipment item code, priced at $19,857.50 in the proposed direct PE input database. We did not propose to include the calibration device since the submitted price was not documented with a paid invoice.
We are proposing the RUC-recommended work RVU for all eight of the codes in this family.
We are proposing to remove the 10–12ml syringes (SC051) and the RK epidural needle (SC038) from all eight of the codes in this family. These supplies are duplicative, as they are included in the epidural tray (SA064). As an alternative, we could remove the epidural tray and replace it with the individual supply components used in each procedure; we are seeking public comment on either the inclusion of the epidural tray or its individual components for this family of codes.
For CY 2016, the CPT Editorial Panel created CPT code 630X1 to describe the endoscopic decompression of neural elements. The RUC recommended a work RVU of 10.47 based on a crosswalk to CPT code 47562 (Laparoscopy, surgical; cholecystectomy) with a higher intraservice time than reflected in the survey data. Since we believe CPT codes 630X1 and 47562 are similar in intensity, we believe using the same work RVU as the crosswalk code overestimates the work involved in furnishing CPT code 630X1. Reference CPT code 49507 (Repair initial inguinal hernia, age 5 years or older; incarcerated or strangulated) has a work RVU of 9.09 and has similar intensity and an identical intraservice time compared to CPT code 630X1. Therefore, we are proposing a work RVU of 9.09 for CPT code 630X1.
For CY 2015, the CPT Editorial Panel made several changes to CPT codes 67101 and 67105. These changes include revising the code descriptors to exclude “diathermy” and “with or without drainage of subretinal fluid” and removing the reference to “1 or more sessions”. The recommended global period has also changed from 90 days to 10 days.
For CPT code 67101 we propose the RUC recommendation of 3.50 work RVUs, which was based on the 25th percentile of the survey. For CPT code 67105, the RUC recommended a work RVU of 3.84 based on the 25th percentile of the survey. The RUC also stated that CPT code 67105 was a more intense procedure, and therefore, should have a higher work RVU than CPT code 67101. Currently, CPT code 67101 has a higher work RVU than CPT code 67105 and according to the surveys the intraservice and total times remain higher for CPT code 67101. It was not clearly explained and we do not understand why the RUC believes that CPT code 67105 is more work than CPT code 67101. Therefore we are not proposing the RUC-recommended work value of 3.50 for CPT code 67105. We do not find evidence that CPT code 67105 is more intense than CPT code 67101 and accordingly propose a new value for CPT code 67105. To value CPT code 67105 we used the RVU ratio between 67101 and 67105. We divided the current work RVU of CPT code 67105 (8.53), by the current work RVU of CPT code 67101 (8.80) and multiplied the quotient by the RUC-recommended work RVU for CPT code 67101 (3.50) to arrive at a product of 3.39 work RVUs.
Therefore, for CY 2017 we are proposing a work RVU of 3.39 for CPT code 67105.
For CY 2017, the CPT Editorial Panel created a new code, CPT 767X1, to describe abdominal aortic ultrasound screening, currently described by HCPCS G-code G0389. The specialties that surveyed CPT code 767X1 for the RUC were vascular surgery and radiology, and the direct practice expense inputs recommended by the RUC included an ultrasound room. Based on an analysis of Medicare claims data, the dominant specialties furnishing the service are family practice and internal medicine. We believe that these specialties may more typically use a portable ultrasound device rather than an ultrasound room. Therefore, we are proposing to accept the RUC-recommended work value of 0.55, and the RUC-recommended PE inputs for this service, but we are seeking comment regarding whether or not it would be more accurate to substitute a portable ultrasound device or possibly a hand-held device for an ultrasound room for CPT code 767X1. We note that while the phase-in of significant reductions in RVUs ordinarily would not apply to new codes, we believe that it would be appropriate to consider this change from a G-code to a CPT code to be fundamentally similar to an editorial coding change since the service is not described differently, and therefore, we propose to apply the phase-in to this service by comparing the previous value of the G-code to the value for the new CPT code.
In the CY 2015 PFS final rule with comment period, CMS indicated that while CPT codes 77002 and 77003 had been previously classified as stand-alone codes without global periods, we believe their vignettes and CPT Manual parentheticals are consistent with an add-on code as has been established for CPT code 77001. Therefore, the global periods for CPT codes 77002 and 77003 now reflect an add-on code global period with modifications to the vignettes and parentheticals.
For CPT code 77001, we are proposing the RUC-recommended work RVU of 0.38. The RUC-recommended work RVUs for CPT codes 77002 and 77003 do not appear to account for the significant decrease in total times for these codes relative to the current total times. We note that these three codes describe remarkably similar services and have identical intraservice and total times. Based on the identical times and
We identified CPT codes 77332, 77333, and 77334 through the high expenditures by specialty screen. These services represent an incremental increase of complexity from the simple to the intermediate to the complex in design of radiation treatment devices. The RUC recommended no change from the current work RVUs for these codes, which are currently 0.54 for CPT code 77332, 0.84 for CPT code 77333 and 1.24 for CPT code 77334. We believe the recommended work RVUs overstate the work involved in furnishing these services, as they do not sufficiently reflect the degree to which the RUC concurrently recommended a decrease in intraservice or total time. For CPT code 77332, we believe the RUC recommendation to maintain its current value despite a 34 percent decrease in total time appears to ignore the change in time. Therefore, we are proposing a value for this code based on a crosswalk from the value from CPT code 93287 (Peri-procedural device evaluation (in person) and programming of device system parameters before or after a surgery, procedure, or test with analysis, review and report by a physician or other qualified health care professional; single, dual, or multiple lead implantable defibrillator system)), due to its identical intraservice time, similar total time, and similar level of intensity. We are therefore proposing a work RVU of 0.45 for CPT code 77332. We are further supporting this valuation with HCPAC code 97760 (Orthotic(s) management and training (including assessment and fitting when not otherwise reported) upper extremity(s), lower extremity(s) and/or trunk, each 15 minutes), which has similar physician time and intensity measurements and a work RVU of 0.45. As these codes are designed to reflect an incremental increase in work value from simple, to intermediate, and complex device designs, we used an incremental difference methodology to value CPT codes 77333 and 77334. We are proposing a work RVU of 0.75 for CPT code 77333, maintaining its recommended increment from CPT code 77332, For CPT code 77334, we are proposing a work RVU of 1.15 which maintains its increment from CPT code 77332.
We identified CPT code 77470 through the high expenditure charges by specialty. We are proposing the RUC-recommended work RVU of 2.03. However, we believe the description of service and vignette describe different and unrelated treatments being performed by the physician and clinical staff for a typical patient, and this presents a disparity between the work RVUs and PE RVUs. We seek public comment on information that would clarify this apparent disparity to help determine appropriate PE inputs. In addition, we seek comment to determine if creating two G-codes, one which describes the work portion of this service, and one which describes the PE portion, may be a potentially more accurate method of valuing and paying for the service or services described by this code.
The Flow Cytometry Interpretation family of codes is split into a pair of codes used to describe the technical component of flow cytometry (CPT codes 88184 and 88185), which do not have a work component, and a trio of codes (CPT codes 88187, 88188, and 88189) which do not have direct practice expense inputs, as they are professional component only services. CPT codes 88184 and 88185 were reviewed by the RUC in April 2014, and their CMS refined values were included in the CY 2016 PFS final rule with comment period. The full family of codes was reviewed again at the January 2016 RUC meeting, and new recommendations were submitted to CMS as part of the CY 2017 PFS rulemaking cycle.
We are proposing the RUC-recommended work RVU of 0.74 for CPT code 88187, and the RUC-recommended work RVU of 1.70 for CPT code 88189. For CPT code 88188, we are proposing a work RVU of 1.20 instead of the RUC-recommended work RVU of 1.40. We arrived at this value by noticing that there were no comparable codes with no global period in the RUC database with intraservice time and total time of 30 minutes that had a work RVU higher than 1.20. The RUC-recommended work RVU of 1.40 would go beyond the current maximum value and establish a new high, which is not consistent with our estimation of the overall intensity of this service relative to the others. As a result, we believe it is more accurate to crosswalk CPT code 88188 to the work value of the code with the current highest value, which is CPT code 88120 (Cytopathology, in situ hybridization (for example, FISH), urinary tract specimen with morphometric analysis, 3–5 molecular probes) at a work RVU of 1.20. We believe that CPT code 88120 is crosswalk comparable code since it shares the identical intraservice time and total time of 30 minutes with CPT code 88188.
We also noted that the survey increment between CPT codes 88187 and 88188 at the RUC-recommended 25th percentile was 0.40 (between work RVUs of 1.00 and 1.40), and this increment of 0.40 when added to CPT code 88187's work RVU of 0.74 would arrive at a value of 1.14. In addition, the total time for CPT code 88188 decreases from 43 minutes to 30 minutes, which is a ratio of 0.70, and when this time ratio is multiplied by CPT code 88188's previous work value of 1.69, the result would be a new work RVU of 1.18. With this information in mind, we are proposing a work RVU of 1.20 for CPT code 88188 as a result of a direct crosswalk to CPT code 88120.
For CPT codes 88184 and 88185, which describe the technical component of flow cytometry, we are proposing to use the RUC-recommended inputs with a series of refinements. However, we believe that the coding for these two procedures may inhibit accurate valuation. CPT code 88184 describes the first marker for flow cytometry, while CPT code 88185 is an add-on code that describes each additional marker. We believe that it may be more accurate to have a single CPT code that describes the technical component of flow cytometry on a per patient case basis, as these two procedures are always performed together and it is difficult to determine the clinical labor, supplies, and equipment used in the typical case under the current coding structure. We are soliciting comments regarding the public interest in consolidating these two procedures into a single code used to describe the technical component of flow cytometry.
Absent such a change in coding, we are proposing to refine the clinical labor time for “Instrument start-up, quality control functions, calibration, centrifugation, maintaining specimen tracking, logs and labeling” from 15 minutes to 13 minutes for CPT code 88184. We maintain that 13 minutes for this activity, which is the current time value, would be typical for the procedure, as CPT code 88182 also uses 13 minutes for the identical clinical labor task. We are also proposing to refine the L054A clinical labor for
We are proposing to maintain the clinical labor for “Print out histograms, assemble materials with paperwork to pathologists Review histograms and gating with pathologist” for CPT code 88184 at 2 minutes, as opposed to the RUC-recommended 5 minutes. A clinical labor time of 2 minutes is standard for this activity; we disagree with the RUC rationale that reviewing histograms and gating with the pathologist in this procedure is not similar to other codes. We also note that the review of histograms with a pathologist is not even described by CPT code 88184, which again refers to the technical component of flow cytometry, not the professional component. We are also proposing to refine the L033A clinical labor time for “Clean room/equipment following procedure” from 2 minutes to 1 minute for CPT code 88184. We have established 1 minute in previous rulemaking (80 FR 70902) as the standard time for this clinical labor activity in the laboratory setting.
We are proposing to maintain our removal of the clinical labor time for “Enter data into laboratory information system, multiparameter analyses and field data entry, complete quality assurance documentation” for both CPT code 88182 and CPT code 88184. As we stated in last year's final rule with comment period (80 FR 70979), we have not recognized the laboratory information system as an equipment item that can be allocated to an individual service. We continue to believe that this is a form of indirect PE, and therefore, we do not recognize the laboratory information system as a direct PE input, and we not consider this task as typically performed by clinical labor on a per-service basis.
We are proposing to maintain the quantity of the “lysing reagent” supply (SL089) at 2 ml for CPT code 88185, as opposed to the RUC-recommended quantity of 3 ml. In our discussions with pathology specialists who perform flow cytometry, we were informed that the use of 50–55 ml of the lysing reagent would be typical for an entire patient case. The RUC recommendation similarly suggested a quantity of 46 ml or 48 ml per patient case. We were also told that the most typical number of markers used for flow cytometry is 24, consisting of 1 service of CPT code 88184 and 23 services of CPT code 88185. An investigation of our claims data confirmed this information, indicating that 24 markers is the most frequent per patient case for flow cytometry, and the use of more than 20 markers is typical. We believe that this data supports our refinement of the lysing reagent from a quantity of 3 ml to a quantity of 2 ml for CPT code 88185, which is also the current value for the procedure and the RUC-recommended value from the previous set of recommendations. For the typical case of 24 markers, our value would produce a total lysing reagent quantity of 51 ml (5 ml from the single service of CPT code 88184 and 46 ml from the 23 services of CPT code 88185), which matches with the amount required for a total per patient case. If we were to adopt the RUC recommendation, the total lysing reagent quantity would be 74 ml, which is well in excess of what we believe to be typical for these procedures.
We are also proposing to refine the quantity of the “antibody, flow cytometry” supply (SL186) from quantity 1.6 to quantity 1, which is also the current value for the supply and the RUC-recommended value from the previous set of recommendations. We do not agree that more than one antibody would be typically used for each marker. We are reaffirming the previous RUC recommendation, and maintaining the current quantity of 1 antibody for each marker.
We are not proposing the recommended additional time for the “printer, dye sublimation (photo, color)” equipment (ED031). We are proposing to maintain the equipment time at 2 minutes for CPT code 88184, and at 1 minute for CPT code 88185. As we stated in the CY 2016 PFS final rule with comment period (80 FR 70979), we are proposing to assign equipment time for the dye sublimation printer to match the clinical labor time for “Print out histograms, assemble materials with paperwork to pathologists.” We do not believe that it would be typical for the printer to be in use longer than it takes to accomplish this clinical labor task.
Section 104 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106–554) required us to create separate codes with higher payment amounts for digital mammography compared to film mammography, which was the technology considered to be typical at the time. In addition, the statute required additional payment to be made when computer-aided detection (CAD) was used.
In CY 2002, we began valuing digital mammography services using three G-codes, G0202, G0204, and G0206 to describe screening mammography, unilateral diagnostic mammography, and bilateral diagnostic mammography, respectively. CMS implemented the requirements of BIPA section 104(d)(1), which applied to tests furnished in 2001, by using the work RVUs of the parallel CPT codes, but establishing a fixed PE RVU rather than using PE RVUs developed under the standard PE methodology. The fixed amount of PE RVUs for these codes has generally remained unchanged since implementation of the G-codes that specifically described digital imaging.
Most mammography services under Medicare have since been billed with these G-codes when digital mammography was used, and with CPT codes 77055, 77056, and 77057 when film mammography was used. The use of CAD has been reported with CPT codes 77051 and 77052. For CY 2017, the CPT Editorial Panel deleted CPT codes 77051, 77052, 77055, 77056, 77057 and created three new CPT codes, 770X1, 770X2, and 770X3, to describe mammography services bundled with CAD. For CY 2017, the RUC recommended a work RVU of 0.81 for CPT code 770X1, a work RVU of 1.00 for CPT code 770X2, and a work RVU of 0.76 for CPT code 770X3, as well as new PE inputs for use in developing resource-based PE RVUs based on our standard methodologies. The RUC has recommended these inputs and only one medical specialty society has provided us with a set of single invoices to price the equipment used in furnishing these services.
We have reviewed these coding changes and recommended changes to valuation for CY 2017. The revised CPT coding mitigates the need for both separate G-codes and the CAD add-on codes. Based upon these coding changes and the recommended input values, overall Medicare payment for mammography services would be drastically reduced. This is especially the case for the technical component of these services, which could possibly be reduced up to 50 percent relative to the PE RVUs currently used for payment for these services.
Based on our initial review of the recommended inputs for the new codes, we believe that these changes would likely result in values more closely related to the relative resources involved in furnishing these services. However, we recognize that these services, particularly the preventive
Therefore, for CPT codes 770X1, 770X2, and 770X3, we are proposing to accept the RUC-recommended work RVUs, but to crosswalk the PE RVUs for the technical component of the current corresponding G-codes, as we seek further pricing information for these equipment items.
In addition to seeking comment on this proposal, we are also seeking comment on rates for these services in the commercial market to help us understand the potential impacts of any future proposed revisions to PFS payment rates.
Finally, we note that by adopting the new coding for CY 2017, any subsequent significant reduction in RVUs (greater than 20 percent) for the codes would be subject to the statutory phase-in under section 1848(c)(7).
To help us examine the resource inputs for these services, we are seeking public comment on the list of items recommended as equipment inputs for mammography services. We also invite commenters to provide any invoices that would help with future pricing of these items.
We also received specialty society recommendations for a new Equipment Item, a physician PACS mammography workstation. We note that we discuss physician PACS workstation in section II.A of this rule. The items that comprise the physician PACS mammography workstation are listed in Table 18. We are requesting public comment as to the appropriateness of this list and if some items are indirect expenses or belong in other codes. We also invite commenters to provide any invoices that would help with future pricing of these items.
We also note that for CY 2015, the CPT Editorial Panel created CPT codes 77061, 77062, and 77063 to describe unilateral, bilateral, and screening digital breast tomosynthesis, respectively. CPT code 77063 is an add-on code to 77057, the CPT code for screening mammography. To be consistent with our use of G codes for digital mammography, we did not implement two of these three CPT codes for Medicare purposes. We only adopted CPT code 77063 an add-on code to G0202. Instead of adopting stand-alone codes 77061 and 77062, we created a new code, G0279 Diagnostic digital breast tomosynthesis, as an add-on code to the diagnostic digital mammography codes G0204 and G0206 and assigned it values based on CPT code 77063. Pending revaluation of the mammography codes using direct PE inputs, we propose to maintain the current coding structure for digital breast tomosynthesis with the technical change that G0279 be reported with 770X1 or 770X2 as the replacement codes for G0204 and G0206.
CPT codes 88321, 88323, and 88325 were reviewed by the RUC in April 2014 for their direct PE inputs only, and the CMS refined values were included in the CY 2016 PFS final rule with comment period. The family of codes was reviewed again at the January 2016 RUC meeting for both work values and direct PE inputs, and new recommendations were submitted to CMS as part of the CY 2017 PFS rulemaking cycle.
In the CY 2016 PFS final rule with comment period, we finalized our proposal to remove many of the inputs for clinical labor, supplies, and equipment for CPT code 88325. The descriptor for this code did not state that slide preparation was taking place, and therefore, we refined the labor, supplies, and equipment inputs to align with the inputs recommended for CPT code 88321, which also does not include the preparation of slides. After further discussion with pathologists and consideration of comments received, we have been persuaded that slide preparation does take place in conjunction with the service described by CPT code 88325. In the RUC-recommended direct PE inputs from the January 2016 meeting, the labor, supplies, and equipment inputs related to slide preparation were added once again to CPT code 88325. We are proposing to accept these restorations related to slide preparation without refinement.
Regarding the clinical labor direct PE inputs, we are proposing to assign 1 minute of L037B clinical labor for “Complete workload recording logs. Collate slides and paperwork. Deliver to pathologist” for CPT codes 88323 and 88325. We are maintaining this at the current value for CPT code 88323, and adding this 1 minute to CPT code 88325 based on our new understanding that slide preparation is undertaken as part of the service described by this code. We are proposing to remove the clinical labor for “Assemble and deliver slides with paperwork to pathologists” from all three codes, as we believe this clinical labor is redundant with the labor assigned for “Complete workload recording logs.” We are similarly proposing to remove the clinical labor for “Clean equipment while performing service” from CPT codes 88323 and 88325, as we believe it to be redundant with the clinical labor assigned for “Clean room/equipment following procedure.”
We are proposing to maintain the quantity of the “stain, hematoxylin” supply (SL135) at 16 ml for CPT codes 88323 and 88325, as opposed to the RUC-recommended quantity of 32 ml. The RUC recommendation stated that the hematoxylin supply does not include eosin and should not be redundant; the stains are not mixed together, but are instead sequential. The recommendation also made a comparison to the use of the hematoxylin supply quantity in CPT code 88305. However, we note that CPT code 88305 does not include 8 ml of eosin stain (SL201), but instead 8 gm of eosin solution (SL063), and these are not the same supply. Therefore we do not agree that a direct comparison of the supply quantities is the most accurate way to value these procedures. For CPT codes 88323 and 88325, we continue to note that the prior supply inputs for these procedures had quantity 2.4 of the eosin solution (SL063) and quantity 4.8 of the hematoxylin stain (SL135); in other words, a 1:2 ratio between the eosin and hematoxylin. We are proposing to maintain that 1:2 ratio with 8 ml of the eosin stain (SL201) and 16 ml of the hematoxylin stain (SL135).
We are also proposing to update the use of the eosin solution (sometimes listed as “eosin y”) in our supply database. We believe that the eosin solution supply (SL063), which is measured in grams, reflects an older process of creating eosin stains by hand. This is in contrast to the eosin stain supply (SL201), which is measured in milliliters, and can be ordered in a state that is ready for staining immediately. We do not believe that the use of eosin solution would reflect typical lab practice today, with the readily availability for purchase of inexpensive eosin staining materials. We also note that in the CY 2016 PFS final rule with comment period, we removed 8 gm of the eosin solution and replaced it with 8 ml of the eosin stain, and this substitution was accepted without further change in the most recent set of RUC recommendations. As a result, we are proposing to update the price of the eosin stain supply from $0.044 per ml to $0.068 per ml to reflect the current cost of the supply. We are also proposing to use CPT codes 88323 and 88325 as a model, and replace the use of eosin solution with an equal quantity of eosin stain for the rest of the codes that make use of this supply. This applies to 15 other CPT codes: 88302 (Level II—Surgical pathology, gross and microscopic examination), 88304 (Level III—Surgical pathology, gross and microscopic examination), 88305 (Level IV—Surgical pathology, gross and microscopic examination), 88307 (Level V—Surgical pathology, gross and microscopic examination), 88309 (Level VI—Surgical pathology, gross and microscopic examination), 88364 (In situ hybridization (
The CPT Editorial Committee developed three new codes (two base codes and one add-on code) to describe paravalvular leak closure procedures that were previously reported using an unlisted code. The RUC recommended a work RVU of 17.97 for CPT code 935X2. We are proposing a work RVU of 14.50 for CPT code 935X2, a direct crosswalk from CPT code 37227. We believe that a direct crosswalk to CPT code 37227 accurately reflects the time and intensity described in CPT code 935X2 since CPT code 37227 also describes a transcatheter procedure with similar service times.
To maintain relativity among the codes in this family, we are proposing refinements to the recommended work RVUs for CPT code 935X1. The RUC noted the additional work associated with CPT code 935X1 compared to CPT code 935X2 was due to the addition of a transseptal puncture to access the mitral valve. The RUC identified a work RVU of 3.73 for a transseptal puncture. Therefore, for CPT code 935X1, we are proposing a work RVU of 18.23 arrived at by using our proposed work RVU for CPT code 935X2 (14.50) and adding the value of a transseptal puncture (3.73).
CPT code 935X3 is an add-on code used to report placement of additional occlusion devices for percutaneous transcatheter paravalvular leak closure, performed in conjunction with either an initial mitral or aortic paravalvular leak closure. The RUC recommended a work RVU of 8.00 for this code. We considered applying the relative increment between CPT codes 935X1 and 935X2, however, we believe that a direct crosswalk to CPT code 35572, with a work RVU of 6.81, more accurately reflects the time and intensity of furnishing the service. Therefore, for CPT code 935X3, we are proposing a work RVU of 6.81.
In February 2016, the RUC submitted recommendations for work and direct PE inputs for CPT codes 95812, 95813, and 95957. We are proposing to use the RUC-recommended physician work and direct PE inputs for CPT code 95957 and to use the RUC-recommended work RVUs for CPT codes 95812 and 95813.
In the CY 2016 PFS final rule with comment period (80 FR 70886), we finalized direct PE input refinements for several clinical labor times for CPT codes 95812 and 95813. The RUC's February 2016 PE summary of recommendations indicated that the specialty society expert panel disagreed with CMS' refinements to clinical labor time for these two codes. The RUC recommended 62 minutes for clinical labor task “perform procedure” for CPT code 95812 and 96 minutes for the same clinical labor task for CPT code 95813, similar to the values recommended by the RUC in April 2014.
We are proposing to maintain the CMS-refined CY 2016 PE inputs for clinical labor task “perform procedure” for CPT codes 95812 (50 minutes) and 95813 (80 minutes). The PE summary of recommendations state that CPT code 95812 requires 50 minutes of clinical labor time for EEG recording, and CPT code 95813 requires 80 minutes of clinical labor time for the same clinical labor task.
In October 2015, the CPT Editorial Panel created two new PE-only codes, 961X0 (Administration of patient-focused health risk assessment instrument (
We note that we believe that this code describes a service that is frequently reasonable and necessary in the treatment of illness or injury, such as when there has been a change in health status. However, when the service described by CPT code 961X0 is explicitly included in another service being furnished, such as the Annual Wellness Visit (AWV), this code should not be billed separately, much like other codes that describe services included in codes with broader descriptions. We also note that this service should not be billed separately if furnished as a preventive service as it would describe a non-covered service. However, we are also seeking comment on whether this service may be better categorized as an add-on code and welcome stakeholder input regarding whether or not there are circumstances when this service might be furnished as a stand-alone service.
For CY 2015, the CPT Editorial panel established six new Category I codes to describe reflectance confocal microscopy (RCM) for imaging of skin. For CPT codes 96931 and 96933, the specialty society and the RUC agreed that the physician work required for both codes were identical, and therefore, should be valued the same. The RUC recommended a work RVU of 0.80 for CPT codes 96931 and 96933 based on the 25th percentile of the survey. Based on the similarity of the services being performed in CPT codes 96931 and 96933 and the identical intra-service times of 96931, 96933 and 88305, the key reference code from the survey, we believe a direct crosswalk from CPT code 88305 to 96931 and 96933 would more accurately reflect the work involved in furnishing the procedure. Therefore, for CY 2017 we are proposing a value of 0.75 RVUs for CPT codes 96931 and 96933. In addition, we are removing 3 minutes of preservice time in CPT codes 96931 and 96933 since it is not included in CPT code 88305 and as a result, we do not believe it is appropriate in CPT codes 96931 and 96933 either.
For CPT codes 96934 and 96936 the specialty society and the RUC agreed that the physician work required for both codes were identical, and therefore, should be valued the same. In its recommendation, the RUC stated that it believed the survey respondents somewhat overestimated the work for CPT code 96934 with the 25th percentile yielding a work RVU of 0.79. Consequently, the RUC reviewed the survey results from CPT code 96936 and agreed that the 25th percentile work RVU of 0.76 accurately accounted for the work involved for the service. Therefore, the RUC recommended a work RVU of 0.76 for CPT codes 96934 and 96936.
We believe that the incremental difference between the RUC-recommended values for the base and add-on codes accurately captures the difference in work between the code pairs. However, because we valued the base codes differently than the RUC, we are proposing values for the add-on
We are also proposing to reduce the preservice clinical labor for Patient clinical information and questionnaire reviewed by technologist, order from physician confirmed and exam protocoled by physician CPT codes 96934 and 93936 as this work is performed in the two CPT base codes 93931 and 93933. The service period clinical labor for “Prepare and position patient/monitor patient/set up IV” was reduced from 2 to 1 minute for CPT codes 93934 and 93936 since we believe that less positioning time is needed with subsequent lesions. The service period clinical labor for “Other Clinical Activity—Review imaging with interpreting physician” was refined to zero minutes for CPT codes 96933 and 96936 as these are interpretation and report only codes and not image acquisition.
For CY 2017, the CPT Editorial Panel deleted four CPT codes (97001, 97002, 97003, and 97004) and created eight new CPT codes (97X61–97X68) to describe the evaluative procedures furnished by physical therapists and occupational therapists. There are three new codes, stratified by complexity, to replace a single code, 97001, for physical therapy (PT) evaluation, three new codes, also stratified by complexity, to replace a single code, 97003, for occupational therapy (OT) evaluation, and one new code each to replace the reevaluation codes for physical and occupational therapy—97002 and 97004. Table 19 includes the long descriptors and the required components of each of the eight new CPT codes for the PT and OT services.
The CPT Editorial Panel's creation of the new codes for PT and OT evaluative procedures grew out of a CPT workgroup that was originally convened in January 2012 when contemplating major revision of the Physical Medicine and Rehabilitation CPT section of codes in response to our nomination of therapy codes as potentially misvalued codes, including CPT code 97001 (and, as a result, all four codes in the family) in the CY 2012 PFS proposed rule.
In reviewing the eight new CPT codes for evaluative procedures, the HCPAC forwarded recommendations for work RVUs and direct PE inputs for each code. Currently, CPT codes 97001 and 97003 both have a work RVU of 1.20, and CPT codes 97002 and 97004 both have a work RVU of 0.60. These CPT codes have reflected the same work RVUs since CY 1998 when we accepted the HCPAC values during CY 1998 rulemaking.
The HCPAC submitted work RVU recommendations for each of the six new PT and OT evaluation codes. These recommendations are intended to be work neutral relative to the valuation for the previous single evaluation code for PT and OT, respectively. However, that assessment for each family of codes is dependent on the accuracy of the utilization forecast for the different complexity levels within the PT or OT family. As used in this section, work neutrality is distinct from the budget neutrality that is applied broadly in the PFS. Specifically, work neutrality is intended to reflect that despite changes in coding, the overall amount of work RVUs for a set of services is held constant from one year to the next. For example, if a service is reported using a single code with a work RVU of 2.0 for one year but that same service would be reported using two codes, one for “simple” and another for “complex” in the subsequent year valued at 1.0 and 3.0 respectively, work neutrality could only be attained if exactly half the services were reported using each of the two new codes. If more than half of the services were reported using the “simple” code, then there would be fewer overall work RVUs. If more than half of the services were reported using the “complex” code, then there would be more overall work RVUs. Therefore, work neutrality can only be assessed with an understanding of the relative frequency of how often particular codes will be reported.
The HCPAC recommended a work RVU of 0.75 for CPT code 97X61, a work RVU of 1.18 for CPT code 97X62, and a work RVU of 1.5 for CPT code 97X63. The PT specialty society projected that the moderate complexity evaluation code would be reported 50 percent of the time because it is the typical evaluation, and the CPT codes for the low and high complexity evaluations are each expected to be billed 25 percent of the time. The HCPAC-recommended work RVU of 1.18 for CPT code 97X62 represents the survey median with 30 minutes of intraservice time, 10 minutes of preservice time, and 15 minutes postservice time. The HCPAC notes this work value is appropriately ranked between levels 2 and 3 of the E/M office visit codes for new patients.
The HCPAC recommended a work RVU of 0.88 for CPT code 97X65, a work RVU of 1.20 for CPT code 97X66, and a work RVU of 1.70 for CPT code 97X67. For the OT codes, work neutrality would be achieved only with a projected utilization in which the low-complexity evaluation is billed 50 percent of the time; the moderate-complexity evaluation is billed 40 percent of the time, and the high-complexity evaluation only billed 10 percent of the time. For purposes of calculating work neutrality, the HCPAC recommended assuming that the low-complexity code will be most frequently reported even though the HCPAC-recommended work RVU of 1.20 and 45 minutes of intraservice time for moderate complexity code is identical to that of the current OT evaluation code. The HCPAC believes that the work RVU of 1.20 is appropriately ranked between 99202 and 99203, levels 2 and 3 for E/M office visits for new outpatients.
In our review of the HCPAC recommendations, we noted the work neutrality and the inherent reliance on the utilization assumptions. We considered the three complexity levels for the PT evaluations and the three complexity levels for the OT evaluations; and we also considered the evaluation services described by the codes as a whole. The varying work RVUs and the dependence on utilization for each complexity level to ensure work neutrality in the PT and OT code families make it difficult for us evaluate the HCPAC's recommended values or to predict with a high degree of certainty whether physical and occupational therapists will actually bill for these services at the same rate forecast by their respective specialty societies.
We are concerned that the coding stratification in the PT and OT evaluation codes may result in upcoding incentives, especially while physical and occupational therapists gain familiarity and expertise in the differential coding of the new PT and OT evaluation codes that now include the typical face-to-face times and new required components that are not enumerated in the current codes. We are also concerned that stratified payment rates may provide, in some cases, a payment incentive to therapists to upcode to a higher complexity level than was actually furnished to receive a higher payment.
We understand that there may be multiple reasons for the CPT Editorial Panel to stratify coding for OT and PT
Given the advantages inherent and public interest in using CPT codes once they become part of the code set, we are proposing to adopt the new CPT codes for use in Medicare for CY 2017. However, given our concerns about appropriate pricing and payment for the stratified services, we are proposing to price the services described by these stratified codes as a group instead of individually. To do that, we are proposing to utilize the authority in section 220(f) of the Protecting Access to Medicare Act (PAMA), which revised section 1848(c)(2)(C) of the Act to authorize the Secretary to determine RVUs for groups of services, rather than determining RVUs at the individual service level. We believe that using this authority instead of proposing to make payment based on Medicare G-codes will preserve consistency in the code set across payers, thus lessening burden on providers, while retaining flexibilities that are beneficial to Medicare.
We propose a work RVU of 1.20 for both the PT and the OT evaluation groups of services. We are proposing this work RVU because we believe it best represents the typical PT and OT evaluation. This is the value recommended by the HCPAC for the OT moderate-complexity evaluation and nearly the same work RVU for corresponding PT evaluation (1.18). Additionally, 1.20 work RVUs is the long-standing value for the current evaluation codes, 97001 and 97003, and, thus, assures work neutrality without reliance on particular assumptions about utilization, which we believe was the intent of the HCPAC recommendation.
Because we are proposing to use the same work RVU for the six evaluation codes, we are not addressing any additional concerns about the utilization assumptions recommended to us. By proposing the same work values for each code in the family, there will be no ratesetting impact to work neutrality. As such, we are not revising the utilization crosswalks as projected by the respective therapy specialties to achieve work neutrality. However, were we to value each code in the PT or OT evaluation families individually, we would seek objective data from stakeholders to support the utilization crosswalks, particularly those for the OT family in which the low-level complexity evaluation is depicted as typical and the high-complexity is projected to be billed infrequently at 10 percent of the overall number of OT evaluations.
We are proposing to use the direct PE inputs forwarded by the HCPAC (with the refinements described below) for the typical PT evaluation and also for the typical OT evaluation in the development of PE RVUs for the PT and OT codes as a group of services. For the PT codes, we are proposing to use the recommended inputs for the moderate-complexity code for the direct PE inputs of all three codes based on its assumption as the typical service. Our proposed direct PE inputs reflect the recommended values minus 2 minutes of physical therapist assistant (PTA) time in the service period because we believe that PTA tasks to administer certain assessment tools are appropriately included as part of the physical therapist's work and the time of the PTA to explain and/or score self-reported outcome measures is not separately included in the clinical labor of other codes. We are proposing to include the recommended four sheets of laser paper without an association to a specific equipment item, but we are seeking comment regarding the paper's use.
For the OT evaluation codes, we considered proposing to use the direct PE inputs for the low-complexity evaluation because the OT specialty organization believes it represents the typical OT evaluation service with a projected 50 percent utilization rate. However, we propose to use the moderate-level direct inputs instead, because the direct PE for this level is based on a vignette that is valued with the same intraservice time, 45 minutes, as the current code, CPT code 97003. Consequently, we propose to use the recommended direct PE inputs for the moderate-complexity code for use in developing PE RVUs for this group of services.
Our proposed direct PE inputs reflect the recommended values minus 2 minutes of occupational therapist assistant (OTA) time in the service period because we believe that OTA tasks to administer certain assessment tools are appropriately included as part of the occupational therapist's work and the time of the OTA to explain and/or score self-reported outcome measures is not separately included in the clinical labor of other codes. We also rounded up the recommended 6.8 minutes to 7 minutes to represent the time the OTA assists the occupational therapist during the intraservice time period. For the Vision Kit equipment item, our proposed price reflects the submitted invoice that clearly defined a kit.
The recommendations the HCPAC sent to us for the PT and OT reevaluation codes are not work neutral. For the new PT reevaluation code, CPT code 97X64, the HCPAC recommended a work RVU of 0.75 compared to the work RVU of 0.60 for CPT code 97002. This recommended work RVU falls between the 25th percentile of the survey and the survey's median value and was based on a direct crosswalk to CPT code 95992 for canalith repositioning with 20 minutes intraservice time and 10 minutes immediate postservice time. The HCPAC supported this 0.15 work RVU increase based on an anomalous relationship between PT services and E/M office visit codes for established patients, noting that physician E/M codes have historically been used as a relative comparison. The HCPAC stated its 0.75 work RVU recommendation for code 97X64 appropriately ranks it between the key reference codes for this service 99212 and 99213, levels 2 and 3 E/M office-visit codes for established patients.
The HCPAC provided a work RVU of 0.80 for the OT reevaluation code, CPT code 97X68, based on the 25th percentile of the survey, which represents an increase over the current work RVU of 0.60 for CPT code 97004. This work value includes 30 minutes of intraservice time, 5 minutes preservice time, and 10 minutes immediate postservice time. The HCPAC noted that the increase in work compared to the PT reevaluation code (0.75) is because the occupational therapist spends more time observing and assessing the patient and, in general, the OT patient typically has more functional and cognitive disabilities. The HCPAC recommendation notes that the 0.80 work RVU recommendation appropriately ranks it between the level 1 and 2 E/M office-visit codes for new patients.
The HCPAC's recommended increases to work RVUs for the PT and OT reevaluation codes are not work neutral. We are unclear why the HCPAC did not maintain work neutrality for the OT and PT reevaluation codes since maintaining work neutrality was important to the establishment of the six new evaluation codes. We are proposing to maintain the
We are proposing the HCPAC-recommended direct PE inputs for CPT code 97X64 with a reduction in time for the PTA by 1 minute (from 5 to 4) in the service period– the line for “Other Clinical Activity”—because the time to explain and score the self-reported outcome measure (for example, Oswestry) is not separately included in the clinical labor of other codes.
We are proposing the HCPAC-recommended direct PE inputs for CPT code 97X68 with a reduction in time for the OTA by 1 minute (from 3 to 2) in the service period—the line for “Other Clinical Activity”—for the same reason we reduced the corresponding line for PTAs—because the time to explain and score any patient-self-administered functional and/or other standardized outcome measure is not separately included in the clinical labor of other codes.
Because the new CPT code descriptors contain new coding requirements for each complexity level, we seek comment from the PT and OT specialty organizations as well as other stakeholders to clarify how therapists will be educated to distinguish the required complexity level components and the selection of the number of elements that impact the plan of care. For example, for the OT codes, we invite comment on how to define performance deficits, what process the occupational therapist uses to identify the number of these performance deficits that result in activity limitations, and performance factors needed for each complexity level. For the PT codes, we would like more information about how the physical therapist differentiates the number of personal factors that actually affect the plan of care. We would also be interested in understanding more about how the physical therapist selects the number of elements from any of the body structures and functions, activity limitations, and/or participation restrictions to make sure there is no duplication during the physical therapist's examination of body systems.
It is also important to note that CMS defines the codes for these evaluative services as “always therapy.” This means that they always represent therapy services regardless of who performs them and always require a therapy modifier, GP or GO, to signify that the services are furnished under a PT or OT plan of care, respectively. These codes will also be subject to the therapy MPPR and to statutory therapy caps.
Since 2010, in addition to the codes for evaluative services, CMS has periodically added codes that represent therapy services to the list of potentially misvalued codes. The current list of 10 therapy codes was based on the statutory category “codes that account for the majority of spending under the physician fee schedule,” as specified in section 1848(c)(2)(K)(ii)(VII) of the Act. We understand that the therapy specialty organizations have pursued the development of coding changes through the CPT process for these modality and procedures services. While we understand that, in some cases, it may take several years to develop appropriate coding revisions, we are, in the meantime, seeking information regarding appropriate valuation for the existing codes. See Table 20.
In the CY 2015 PFS proposed rule (79 FR 40349), we noted that it appeared that practice patterns for endoscopic procedures were changing. Anesthesia services are increasingly being separately reported for endoscopic procedures, meaning that resource costs associated with sedation were no longer incurred by the practitioner reporting the procedure. Subsequently, in the CY 2016 PFS proposed rule (80 FR 41707), we sought public comment and recommendations on approaches to address the appropriate valuation of moderate sedation related to the approximately 400 diagnostic and therapeutic procedures for which the CPT Editorial Committee has determined that moderate sedation is an inherent part of furnishing the service. The CPT Editorial Committee created separate codes for reporting of moderate sedation services.
For the newly created moderate sedation CPT codes, we are proposing to use the RUC-recommended work RVUs for CPT codes 991X1, 991X2, 991X3, and 991X6. CPT codes 991X1 and 991X2 make a distinction between moderate sedation services furnished to patients younger than 5 years of age and patients 5 years or older, with CPT codes 991X3 and 991X4 making a similar distinction. The RUC recommendations include a work RVU increment of 0.25 between CPT code 991X1 and 991X2. For CPT code 991X4, we are proposing a work RVU of 1.65 to maintain the 0.25 increment relative to CPT code 991X3 (a RUC-recommended work RVU of 1.90) and maintain relativity among the CPT codes in this family. We are proposing to use the RUC-recommended direct PE inputs for all six codes.
When moderate sedation is reported for Medicare beneficiaries, we expect that it would most frequently reported using the code that describes moderate sedation furnished by the same person who also performs the primary procedure for patients 5 years of age or older. Under the new coding structure, these services would be reported using CPT code 991X2. Stakeholders have presented information that illustrates that the specialty group survey data regarding the work involved in furnishing the moderate sedation described by CPT code 991X2 showed a significant bimodal distribution between procedural services furnished by gastroenterologists (GI) and those services furnished by other specialties. The GI societies' survey data reported a median valuation of 0.10 work RVUs for moderate sedation furnished by the same person furnishing the base procedure; all other specialty groups (combined) reported a median valuation of 0.25 work RVUs. Given the significant volume of moderate sedation furnished by GI practitioners and the significant difference in RVUs reported in the survey data, we are proposing to make payment using a gastrointestinal (GI) endoscopy-specific moderate sedation code GMMM1 that would be used in lieu of the new CPT moderate sedation coding used more broadly: GMMM1: Moderate sedation services provided by the same physician or other qualified health care professional performing a gastrointestinal endoscopic service (excluding biliary procedures) that sedation supports, requiring the presence of an independent trained observer to assist in the monitoring of the patient's level of consciousness and physiological status; initial 15 minutes of intra-service time; patient age 5 years or older.
We are proposing to value GMMM1 at 0.10 work RVUs based on the median survey result for GI respondents in the survey data. We are proposing that when moderate sedation services are furnished by the same practitioner reporting the GI endoscopy procedure, practitioners would report the sedation services using GMMM1 instead of 991X2. In all other cases, we propose that practitioners would report moderate sedation using one of the new moderate sedation CPT codes consistent with CPT guidance. This would include the full range of codes for those furnishing moderate sedation with the remaining (non-GI endoscopy) base procedures as well as for the other circumstances during which moderate sedation is furnished along with a GI endoscopy (for example, to a patient under 5 years of age or for a biliary procedure, the endoscopist furnishing moderate sedation should not use GMMM1, but instead use the appropriate CPT code; see Table 22 for more information about when GMMM1 should be used in lieu of the newly created moderate sedation CPT codes).
In addition to providing recommended values for the new codes used to separately report moderate sedation, the RUC has provided recommendations that value the procedural services without moderate sedation. However, the RUC recommends removing fewer RVUs from the procedures than it recommends for valuing the sedation services. In other words, the RUC is recommending that overall payments for these procedures should be increased now that practitioners will be required to report the sedation services that were previously included as inherent parts of the procedures. We believe that if we were to use the RUC recommendations for re-valuation of the procedural services without refinement, the RVUs currently attributable to the redundant payment for sedation services when anesthesia is separately reported would be used exclusively to increase overall payment for these services. We refer readers to Section II.D.5. of this proposed rule, which includes a more extensive discussion of our general principle that overall resource costs for the procedures including moderate sedation do not inherently change based solely on changes in coding.
To account for the separate billing of moderate sedation services, we are proposing to maintain current values for the procedure codes less the work RVUs associated with the most frequently reported corresponding moderate sedation code so that practitioners furnishing the moderate sedation
Table 22 lists the existing work RVUs for each applicable service and our proposed refined work RVU using the proposed revaluation methodology described above. Additionally, the table identifies the GI endoscopic services for which we are proposing that GMMM1 would be used to report moderate sedation services. This information will be made available and maintained in the “downloads” section of the PFS Web site at
We previously received RUC recommendations for face-to-face and non-face-to-face prolonged E/M services. In response to the CY 2016 PFS proposed rule, in which we sought comment about improving payment accuracy for cognitive services, commenters suggested that we consider making separate payment for CPT codes 99358 and 99359. As reflected in section II.E, we are proposing to make separate payment for these services.
We are also proposing values for services in this family of codes based on the RUC-recommended values, including for CPT code 99354, which would increase the current work RVU to 2.33. Likewise, we are proposing to adopt the RUC-recommended work values of 2.10 for CPT code 99358 and of 1.00 for CPT code 99359.
We received RUC recommendations for CPT codes 99487 and 99489 following the October 2012 RUC meeting. For CY 2017, we are proposing to change the procedure status for CPT codes 99487 and 99489 from B (bundled) to A (active), see II.E, and are proposing to adopt the RUC-recommended values for work, 1.00 work RVUs for CPT code 99487 and 0.50 work RVUs for CPT code 99489, as well as direct PE inputs consistent with the RUC recommendations.
The College of American Pathologists and the American Society of Cytopathology formed an expert panel to make recommendations at the October 2015 RUC meeting to determine an appropriate work RVU for HCPCS code G0416, as they felt that the survey results were invalid. The panel made several arguments to the RUC in recommending for a higher work RVU under the RUC's “compelling evidence” standard. These arguments were: (1) That incorrect assumptions were made in previous valuations; (2) the value of HCPCS code G0416 remained constant while the code descriptors changed over the years; and (3) the “anomalous relationship” between HCPCS code G0416 and CPT code 88305 (Level IV—Surgical pathology, gross and microscopic examination). The expert panel recommended a work RVU of 4.00 based on a crosswalk from CPT code 38240 (Hematopoietic progenitor cell (HPC); allogeneic transplantation per donor). The RUC agreed.
We believe HCPCS code G0416 should not be valued as a direct crosswalk from CPT code 38240. Instead we believe CPT code 88305 is the basis for HCPCS code G0416, and therefore, HCPCS code G0416 should be valued as such. To value HCPCS code G0416, we used the intra-service time ratio between HCPCS code G0416 and CPT code 88305 to arrive at a work RVU of 3.60. To further support this method, we note that the IWPUT for HCPCS code G0416 with a work RVU of 3.60 is the same as CPT code 88305. Using the RUC recommended RVU of 4.00 results in a higher IWPUT, and we do not believe there is a difference in work intensity between these codes. Therefore for CY 2017, we are proposing a work RVU of 3.60 for HCPCS code G0416.
For CY 2017, we are proposing to establish and make separate Medicare payment using four new HCPCS G-codes, GPPP1 (Initial psychiatric collaborative care management, first 70 minutes in the first calendar month of behavioral health care manager activities, in consultation with a psychiatric consultant, and directed by the treating physician or other qualified health care professional), GPPP2 (Subsequent psychiatric collaborative care management, first 60 minutes in a subsequent month of behavioral health
To value HCPCS code GPPPX, we are proposing a work value based on a direct crosswalk from CPT code 99490 (Chronic care management services), a work value of 0.61 RVUs. We recognize that the services described by CPT code 99490 are distinct from those furnished under the CoCM and we believe that these alsovary based on different kinds of BHI care. We note that there are relatively few existing codes that describe these kinds of services over a calendar month. We also believe that the resources associated with 99490 may vary based on the ways different practitioners implement the service. Until we have more information about how these services are typically furnished, we believe valuation based on the minimum resources would be most appropriate. To account for the care manager minutes in the direct PE inputs for HCPCS code GPPPX, we are proposing to use clinical labor type L045C, which is the labor type for social workers/psychologists and has a rate of $0.45 per minute.
As discussed in section II.E, we are proposing to establish payment for services furnished to patients with mobility-related disabilities, through a new add-on G-code, to be billable with office/outpatient E/M and TCM codes. Based on our analysis of the resources typically involved in furnishing office visits to patients with these needs (especially including the typical additional practitioner and staff time), we believe that the physician work and time for HCPCS code GDDD1 is most accurately valued through a direct crosswalk from CPT code 99212 (Level 2 office or other outpatient visit for the evaluation and management of an established patient). Therefore, we are proposing a work RVU of 0.48 and a physician time of 16 minutes for HCPCS code GDDD1. We are seeking comment on whether these work and time values accurately capture the additional physician work typically involved in furnishing services to patients with mobility impairments.
We believe that a direct crosswalk to the clinical staff-time associated with CPT code 99212, which is 27 minutes of LN/LPN/MTA (L037D) accurately represents the additional clinical staff time required to furnish an outpatient office visit or TCM to a patient with a mobility-related disability. We are also proposing to include as direct practice expense inputs 27 minutes for a stretcher (EF018) and a high/low table (EF028), and 27 minutes for new equipment inputs associated with the following: A patient lift system, wheelchair accessible scale, and padded leg support positioning system. These items are included in the CY 2017 proposed direct PE input database. We are seeking comments on whether these inputs are appropriate, and whether any additional inputs are typically used in treating patients with mobility-impairments.
For CY 2017, we are proposing to create and pay separately for new HCPCS code GPPP6 (Cognition and functional assessment using standardized instruments with development of recorded care plan for the patient with cognitive impairment, history face-to-face obtained from patient and/or caregiver, in office or other outpatient setting or home or domiciliary or rest home), see II.E for further discussion. Based on similarities between work intensity and time, we believe that the physician work and time for this code would be accurately valued by combining the work RVUs from CPT code 99204 (Level 4 office or other outpatient visit for the evaluation and management of a new patient) and half the work RVUs for HCPCS code G0181 (Physician supervision of a patient receiving Medicare-covered services furnished by a participating home health agency (patient not present) requiring complex and multidisciplinary care modalities involving regular physician development and/or revision of care plans, review of subsequent reports of patient status, review of laboratory and other studies, communication (including telephone calls) with other health care professionals involved in the patient's care, integration of new information into the medical treatment plan and/or adjustment of medical therapy, within a calendar month, 30 minutes or more). Therefore, we are proposing a work RVU of 3.30. For direct practice expense inputs we are proposing 70 total minutes of time for RN/LPN/MTA (L037D). We believe this is typical based on information from several specialty societies representing practitioners who typically furnish this service and report, it, when appropriate, using E/M codes. We are seeking comment on these valuation assumptions and would welcome additional information on the work and direct practice expense associated with furnishing this service.
For CY 2017 we are proposing to make payment for the resource costs of comprehensive assessment and care planning for patients requiring CCM services through HCPCS code GPPP7 as an add-on code to be billed with the initiating visit for CCM for patients that require extensive assessment and care planning (see section II.E). In valuing this code, we believe that a crosswalk to half the work and time values of HCPCS code G0181 (Physician supervision of a patient receiving Medicare-covered services provided by a participating home health agency (patient not present) requiring complex and
As discussed in section II.C, we are proposing use of HCPCS G-codes, GTTT1 (Telehealth consultation, critical care, physicians typically spend 60 minutes communicating with the patient via telehealth (initial) and GTTT2 (Telehealth consultation, critical care, physicians typically spend 50 minutes communicating with the patient via telehealth (subsequent)), to report telehealth consultations for a patient requiring critical care services. We note that due to limited coding granularity for high-intensity cognitive services, in the PFS, we do not believe there is an intuitive crosswalk code for ideal estimation of the work and time values for GTTT1. In general, we believe that the overall work for GTTT1 is not as much as 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30–74 minutes) but that the service involves more work than G0427 (Telehealth consultation, emergency department or initial inpatient, typically 70 minutes or more communicating with the patient via telehealth). We believe that GTTT1 is most accurately valued by a crosswalk to the work RVU and physician intra-service time of 38240 (Hematopoietic progenitor cell (HPC); allogeneic transplantation per donor) can therefore serve as an appropriate crosswalk. Therefore we are proposing a work RVU of 4.0 and are seeking comment on the accuracy of these assumptions. We do not believe that direct PE inputs would typically be involved with furnishing this service from the distant site. For GTTT2 we are proposing a work RVU of 3.86 based on a crosswalk from G0427. We believe that G0427 has similar overall work intensity to GTTT2 and has a similar intraservice time. We also believe that no direct PE inputs would typically be associated with furnishing this service from the distant site.
In the CY 2016 PFS final rule with comment period (80 FR 71080 through 71088), we finalized policies for payment of CCM services in RHCs and FQHCs. Payment for CCM services in RHCs and FQHCs was effective beginning on January 1, 2016, for RHCs and FQHCs that furnish a minimum of 20 minutes of qualifying CCM services during a calendar month to patients with multiple (two or more) chronic conditions that are expected to last at least 12 months or until the death of the patient, and that would place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline. Payment is made when CPT code 99490 is billed alone or with other payable services on a RHC or FQHC claim, and the rate is based on the PFS national average non-facility payment rate. The requirement that RHC or FQHC services be furnished face-to-face was waived for CCM services furnished to a RHC or FQHC patient because CCM services are not required to be furnished face-to-face.
Medicare payment for TCM services furnished by a RHC or FQHC practitioner was effective January 1, 2013, consistent with the effective date of payment for TCM services under the PFS (77 FR 68978 through 68994; also, see CMS-Pub. 100–02, Medicare Benefit Policy Manual, chapter 13, section 110.4).
TCM services are billable only when furnished within 30 days of the date of the patient's discharge from a hospital (including outpatient observation or partial hospitalization), skilled nursing facility, or community mental health center. Communication (direct contact, telephone, or electronic) with the patient or caregiver must commence within 2 business days of discharge, and a face-to-face visit must occur within 14 days of discharge for moderate complexity decision making (CPT code 99495), or within 7 days of discharge for high complexity decision making (CPT code 99496). The TCM visit is billed on the day that the TCM visit takes place, and only one TCM visit may be paid per beneficiary for services furnished during that 30 day post-discharge period. If the TCM visit occurs on the same day as another billable visit, only one visit may be billed. TCM and CCM cannot be billed during the same time period for the same patient.
In the CY 2016 PFS final rule with comment period (80 FR 71087), we responded to comments requesting that we make an exception to the supervision requirements for auxiliary staff furnishing CCM and TCM services incident to physician services in RHCs and FQHCs (80 FR 71087). Auxiliary staff in RHCs and FQHCs furnish services incident to a RHC or FQHC visit and include nurses, medical assistants, and other clinical staff who work under the direct supervision of a RHC or FQHC practitioner. The commenters suggested that the regulatory language be amended to be consistent with the provision in § 410.26(b)(5) for CCM and TCM services under the PFS, which states that services and supplies furnished incident to CCM and TCM services can be furnished under general supervision of the physician (or other practitioner) when they are provided by clinical staff. It further specifies that 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, but only the supervising physician (or other practitioner) may bill Medicare for incident to services. We responded that due to the differences between physician offices and RHCs and FQHCs in their models of care and payment structures, we believe that the direct supervision requirement for services furnished by auxiliary staff is appropriate for RHCs and FQHCs, but that we would consider changing this in future rulemaking if RHCs and FQHCs find that requiring direct supervision presents a barrier to furnishing CCM services.
Since payment for CCM in RHCs and FQHCs began on January 1, 2016, some RHCs and FQHCs have informed us that, in their view, the direct supervision requirement for auxiliary
To bill for CCM services, RHCs and FQHCs must ensure that there is access to care management services on a 24 hour a day, 7 day a week basis. This includes providing the patient with a means to make timely contact with RHC or FQHC practitioners who have access to the patient's electronic care plan to address his or her urgent chronic care needs. The RHC or FQHC must ensure the care plan is available electronically at all times to anyone within the RHC or FQHC who is providing CCM services.
Once the RHC or FQHC practitioner has initiated CCM services and the patient has consented to receiving this service, CCM services can be furnished by a RHC or FQHC practitioner, or by auxiliary personnel, as defined in § 410.26(a)(1), which includes nurses, medical assistants, and other staff working under physician supervision who meet the requirements to provide incident to services. Auxiliary personnel in RHCs and FQHCs must furnish services under direct supervision, which requires that a RHC or FQHC practitioner be present in the RHC or FQHC and immediately available to furnish assistance and direction. The RHC or FQHC practitioner does not need to be present in the room when the service is furnished.
Although many RHCs and FQHCs prefer to furnish CCM and TCM services utilizing existing staff, some RHCs and FQHCs would like to contract with a third party to furnish aspects of their CCM and TCM services, but cannot do so because of the direct supervision requirement. Without the ability to contract with a third party, these RHCs and FQHCs have stated that they find it difficult to meet the CCM requirements for 24 hours a day, 7 days a week access to services.
To enable RHCs and FQHCs to effectively contract with third parties to furnish aspects of CCM and TCM services, we propose to revise § 405.2413(a)(5) and § 405.2415(a)(5) to state that services and supplies furnished incident to TCM and CCM services can be furnished under general supervision of a RHC or FQHC practitioner. The proposed exception to the direct supervision requirement would apply only to auxiliary personnel furnishing TCM or CCM incident to services, and would not apply to any other RHC or FQHC services. The proposed revisions for CCM and TCM services and supplies furnished by RHCs and FQHCs are consistent with § 410.26(b)(5), which allows CCM and TCM services and supplies to be furnished by clinical staff under general supervision when billed under the PFS.
Section 10501(i)(3)(A) of the Affordable Care Act (Pub. L. 111–148 and Pub. L. 111–152) added section 1834(o) of the Act to establish a payment system for the costs of FQHC services under Medicare Part B based on prospectively set rates. In the Prospective Payment System (PPS) for FQHC Final Rule published in the May 2, 2014
Section 1834(o)(2)(B)(ii) of the Act requires that the payment for the first year after the implementation year be increased by the percentage increase in the MEI. Therefore, in CY 2016, the FQHC PPS base payment rate was increased by the MEI. The MEI was based on 2006 data from the American Medical Association (AMA) for self-employed physicians and was used in the PFS Sustainable Growth Rate (SGR) formula to determine the conversion factor for physician service payments. (See the CY 2014 PFS final rule (78 FR 74264) for a complete discussion of the 2006-based MEI). Section 1834(o)(2)(B)(ii) of the Act also requires that beginning in CY 2017, the FQHC PPS base payment rate will be increased by the percentage increase in a market basket of FQHC goods and services, or if such an index is not available, by the percentage increase in the MEI.
For CY 2017, we are proposing to create a 2013-based FQHC market basket. The proposed market basket uses Medicare cost report (MCR) data submitted by freestanding FQHCs. In the following discussion, we provide an overview of the proposed market basket and describe the methodologies used to determine the cost categories, cost weights, and price proxies. In addition, we compare the growth rates of the proposed FQHC market basket to the growth rates of the MEI.
The 2013-based FQHC market basket is a fixed-weight, Laspeyres-type price index. A Laspeyres price index measures the change in price, over time, of the same mix of goods and services purchased in the base period. Any changes in the quantity or mix of goods and services (that is, intensity) purchased over time relative to a base period are not measured.
The index itself is constructed in three steps. First, a base period is selected (in this proposed rule, the base period is CY 2013), total base period costs are estimated for a set of mutually exclusive and exhaustive cost categories, and the proportion of total costs that each cost category represents is calculated. These proportions are called cost weights. Second, each cost category is matched to an appropriate price or wage variable, referred to as a price proxy. These price proxies are derived from publicly available statistical series that are published on a consistent schedule (preferably at least on a quarterly basis). Finally, the cost weight for each cost category is multiplied by the established price proxy index level. The sum of these products (that is, the cost weights multiplied by their price levels) for all cost categories yields the composite index level of the market basket for the given time period. Repeating this step for other periods produces a series of market basket levels over time. Dividing the composite index level of one period by the composite index level for an earlier period produces a rate of growth in the input price index over that timeframe.
As previously noted, the market basket is described as a fixed-weight index because it represents the change in price over time of a constant mix (quantity and intensity) of goods and services needed to furnish FQHC services. The effects on total costs resulting from changes in the mix of goods and services purchased subsequent to the base period are not
In 2015, we began researching the possibility of creating a FQHC market basket that would be used in place of the MEI to update the FQHC PPS base payment rate annually. An FQHC market basket should reflect the cost structures of FQHCs while the MEI reflects the cost structures of self-employed physician offices. At the time of implementation of the FQHC PPS, a FQHC market basket had not been developed, and therefore, the law stipulated that the FQHC PPS base payment rate be updated by the MEI for the first year after implementation (CY 2016). In subsequent years, the FQHC PPS base payment rate should be annually updated by a FQHC market basket, if available.
The MEI cost weights were derived from data collected by the AMA on the Physician Practice Expense Information Survey (PPIS), since physicians, unlike other Medicare providers, are not required to complete and submit a Medicare Cost Report. FQHCs submit expense data annually on the Medicare Cost Report form CMS–222–92 (OMB No: 0938–0107), “Independent Rural Health Clinic and Freestanding Federally Qualified Health Center Cost Report”; therefore, we were able to estimate relative cost weights specific to FQHCs. We define a “major cost weight” as one calculated using the Medicare cost reports (for example, FQHC practitioner compensation). However, the Medicare cost report data allows multiple methods for reporting detailed expenses, either in detailed cost center lines or more broadly reported in general categories of expenses. An alternative data source is used to disaggregate further residual costs that could not be classified into a major cost category directly using only the Medicare Cost Report data. We estimated the cost weights for each year 2009 through 2013 and found the cost weights from each year to be similar, which provided confidence in the derived cost weights.
In summary, our research over the past year allowed us to evaluate the appropriateness of using freestanding FQHC Medicare cost report data to calculate the major cost weights for a FQHC market basket. We believe that the proposed methodologies described below create a FQHC market basket that reflects the cost structure of FQHCs. Therefore, we believe that the use of this proposed 2013-based FQHC market basket to update FQHC PPS base payment rate would more accurately reflect the actual costs and scope of services that FQHCs furnish compared to the 2006-based MEI.
The proposed 2013-based FQHC market basket consists of eight major cost categories, which were derived from the CY 2013 Medicare cost reports for freestanding FQHCs. These categories are FQHC-Practitioner Compensation, Other Clinical Compensation, Non-Health Compensation, Fringe Benefits, Pharmaceuticals, Fixed Capital, Moveable Capital, and an All Other (Residual) cost category. The All Other (Residual) cost category reflects the costs not captured in the other seven cost categories. The CY 2013 Medicare cost reports include all FQHCs whose cost reporting period began on or after January 1, 2013, and prior to or on December 31, 2013. We selected CY 2013 as the base year because the Medicare cost reports for that year were the most recent, complete set of Medicare cost report data available for FQHCs at the time of development of the cost share weights and proposed 2013-based FQHC market basket. As stated above, we compared the cost share weights from the MCR for CY 2009 through CY 2013 and the CY 2013 weights were consistent with the weights from prior years.
We began with all FQHCs with reporting periods in CY 2013 (that is, between and including January 1, 2013, and December 31, 2013). We then excluded FQHCs missing “total costs” (that is, any FQHC that did not report expenses on Worksheet A, Column 7, Line 62). This edit removed 83 providers from our analysis. Next, we compared the total Medicare allowable costs (that is, total costs eligible for reimbursement under the FQHC PPS) to total costs reported on the Medicare cost report. We kept FQHCs whose Medicare-allowable costs accounted for 60 percent or more of total costs to remove FQHCs whose costs were primarily driven by services not covered under the FQHC benefit. For example, FQHCs that reported a majority of costs for dental services were excluded from the sample. This edit removed 33 FQHCs from our analysis. We used the remaining Medicare cost reports to calculate the costs for the eight major cost categories (FQHC Practitioner Compensation, Other Clinical Compensation, Non-Health Compensation, Fringe Benefits, Pharmaceuticals, Fixed Capital, Moveable Capital, and All Other (Residual) costs).
The resulting 2013-based FQHC market basket cost weights reflect Medicare allowable costs. We propose to define Medicare allowable costs for freestanding FQHC facilities as: Worksheet A, Columns 1 and 2, cost centers lines 1 through 51 but excluding line 20, which is professional liability insurance (PLI). We exclude PLI costs from the total Medicare allowable costs because FQHCs that receive section 330 grant funds also are eligible to apply for medical malpractice coverage under Federally Supported Health Centers Assistance Act (FSHCAA) of 1992 (Pub. L. 102–501) and FSHCAA of 1995 (Pub. L. 104–73 amending section 224 of the Public Health Service Act). Below we derive the eight major cost categories.
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We believe that distributing the fringe benefit expenses reported on line 45 using the provider-specific compensation ratios is reasonable.
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Although a cost weight for these categories could be obtained directly from the costs reported in that cost center's respective line on the cost report form, some FQHCs reported significant costs in other (specify), or “free form,” lines which made it difficult to determine the accuracy of these costs. For example, some FQHCs reported costs only in the free form lines and not in the cost center specific lines, while other FQHCs reported costs in both the cost center specific lines and the free form lines. Since a majority of FQHCs used the free form lines, relying solely on the costs reported in the cost center specific lines for costs could lead to an inaccurate cost weights in the market basket. For example, if a FQHC reported all other healthcare costs in line 21 rather than breaking the healthcare costs into the detailed cost centers (lines 17 through 20.50), then the cost weight for medical supplies could be lower than it should be if we did not allocate the costs reported in the free form lines to medical supplies.
Section III.B.1.b explains the method used to allocate the residual costs to more detailed cost categories.
After we derived costs for the eight major cost categories for each FQHC using the Medicare cost report data as previously described, we addressed data outliers using the following steps. First,
The All Other Residual cost weight was derived from summing all expenses reported on the Medicare cost report Worksheet A, columns 1 and 2 for medical supplies (line 17), transportation (line 18), allowable GME pass through costs (line 20.50), facility insurance (line 27), utilities (line 29), office supplies (line 40), legal (line 41), accounting (line 42), administrative insurance (line 43), telephone (line 44), non-compensation housekeeping & maintenance (line 32, column 2 only), nondescript healthcare costs (lines 21–23), nondescript facility costs (lines 34–36), and nondescript administrative costs (lines 54–56).
To further divide the “All Other” residual cost weight (20.1 percent) estimated from the CY 2013 Medicare cost report data into more detailed cost categories, we propose to use the relative cost shares from the 2006-based MEI for nine detailed cost categories: Utilities; Miscellaneous Office Expenses; Telephone; Postage; Medical Equipment; Medical Supplies; Professional, Scientific, & Technical Services; Administrative & Facility Services; and Other Services. For example, the Utilities cost represents 7 percent of the sum of the 2006-based MEI “All Other” cost category weights; therefore, the Utilities cost weight would represent 7 percent of the proposed 2013-based FQHC market basket's “All Other” cost category (20.066 percent), yielding a “final” Utilities proposed cost weight of 1.4 percent in the proposed 2013-based LTCH market basket (7 percent * 20.1 percent = 1.4 percent).
Table 30 shows the cost weight for each matching category from the 2006-based MEI, the percent each cost category represents of the 2006-based MEI “All Other” cost weight, and the resulting proposed 2013-based FQHC market basket cost weights for detailed cost categories.
FQHCs have liberty in how and where certain costs are reported on the Medicare cost report form. We believe that, given the ambiguity in how the data are reported for these overhead cost centers on the FQHC cost report form, relying on the relative shares determined from the MEI is reasonable. We hope that future cost data from the upcoming revised FQHC cost report form will allow us to better estimate the detailed cost weights for these categories directly. All FQHCs will report costs on the new forms for cost report periods for CY 2016 expenses. For details regarding how the 2006-based MEI cost categories were derived, see the CY 2011 PFS final rule with comment period (75 FR 73262 through 73267). The following is a description of the types of expenses included in detailed cost categories derived from the All Other (Residual) cost category:
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Table 31 shows the proposed cost categories and weights for the 2013-based FQHC market basket. The resulting cost weights include combining the cost weights derived from the Medicare Cost Report Data (shown in Table 29), distributing the fringe benefits weight across the three compensation cost categories (shown in Table 28), and disaggregating the residual cost weight into detailed cost categories (shown in Table 30). Additionally, we compare the cost weights of the proposed 2013-based FQHC market basket to the cost weights in the 2006-based MEI, where we have grouped the cost weights from the MEI to align with the FQHC proposed cost categories.
Although the overall cost structure of the MEI, the index currently used to update the FQHC PPS base payment, is similar to the proposed FQHC cost structure, there are a few key differences.
First, though total compensation costs in the proposed FQHC market basket and the MEI are each approximately 67–68 percent of total costs, non-health compensation accounts for a larger share of compensation costs in the FQHC setting than in the self-employed physician office. Likewise, physician compensation accounts for a larger percentage of costs in the MEI than FQHC practitioner compensation accounts for in the proposed FQHC market basket.
Second, the proposed FQHC market basket includes a cost category for pharmaceuticals, while drug costs are excluded from the MEI. Drug costs are an expense in the FQHC PPS base payment rate since drugs and biologicals that are not usually self-administered, and certain Medicare-covered preventive injectable drugs are paid incident to a visit while drug costs are reimbursed separately under the PFS.
Third, as mentioned previously, PLI expenditures are excluded from the proposed FQHC market basket since most FQHCs PLI costs are covered under the Federal Tort Claims Act, while in the MEI the PLI costs are a significant expense for self-employed physicians. Finally, fixed capital expenses, which include costs such as office rent and depreciation, are about half of the share in the FQHC market basket as they are in the MEI.
After establishing the 2013 cost weights for the proposed FQHC market basket, an appropriate price proxy was selected for each cost category. The proposed price proxies are chosen from a set of publicly available price indexes
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We evaluate the price proxies using the criteria of reliability, timeliness, availability, and relevance. Reliability indicates that the index is based on valid statistical methods and has low sampling variability. Timeliness implies that the proxy is published regularly, preferably at least once a quarter. Availability means that the proxy is publicly available. Finally, relevance means that the proxy is applicable and representative of the cost category weight to which it is applied. We believe the proposed PPIs, CPIs, and ECIs selected meet these criteria.
Table 32 lists all price proxies that we are proposing to use for the 2013-based FQHC market basket. Below is a detailed explanation of the price proxies that we are proposing for each cost category weight. We note that many of the proxies that we are proposing for the 2013-based FQHC market basket are the same as those used for the 2006-based MEI.
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Table 32 lists the proposed price proxies for each cost category in the proposed FQHC market basket.
Section 1834(o)(2)(B)(ii) of the Act describes the methods for determining updates to FQHC PPS payment. After the first year of implementation, the FQHC PPS base payment rate must be increased by the percentage increase in the MEI. In subsequent years, the FQHC PPS base payment rate shall be increased by the percentage increase in a market basket of FQHC goods and services as established through regulations or, if not available, the MEI published in the PFS final rule.
The MEI published in the PFS final rule has a productivity adjustment. The MEI has been adjusted for changes in productivity since its inception. In the CY 2003 PFS final rule with comment period (67 FR 80019), we implemented a change in the way the MEI was adjusted to account for changes in productivity. The MEI used for the 2003 physician payment update incorporated changes in the 10-year moving average of private nonfarm business (economy-wide) multifactor productivity. Previously, the index incorporated changes in productivity by adjusting the labor portions of the index by the 10-year moving average of private nonfarm business (economy-wide) labor productivity.
In 2012, we convened the MEI Technical Panel to review all aspects of the MEI including inputs, input weights, price-measurement proxies, and productivity adjustment. For more information regarding the MEI Technical Panel, see the CY 2014 PFS final rule with comment period (78 FR 74264). The MEI Technical Panel was asked to review the approach of adjusting the MEI by the 10-year moving average of private nonfarm business productivity. As described in the CY 2014 PFS final rule with comment period (78 FR 74271), the MEI Technical Panel concluded in Finding 5.1 that “such an adjustment continues to be appropriate. This adjustment prevents `double counting' of the effects of productivity improvements, which would otherwise be reflected in both (i) the increase in compensation and other input price proxies underlying the MEI, and (ii) the growth in the number of physician services performed per unit of input resources, which results from advances in productivity by individual physician practices.”
We are proposing to include a productivity adjustment similar to the MEI in the proposed FQHC market basket. We believe that applying a productivity adjustment is appropriate because this would be consistent with the MEI, which has an embedded productivity adjustment. We note that the MEI Technical Panel concluded that a productivity adjustment is appropriate for the MEI given the type of services performed in physician's offices. Specifically, the MEI Technical Panel report states that “The input price increases within the MEI are reflected in the price proxies, such as changes in wages and benefits. Wages increase, in part, due to the ability of workers to increase the amount of output per unit of input. Absent a productivity
We propose to use the most recent estimate of the 10-year moving average of changes in annual private nonfarm business (economy-wide) multifactor productivity (MFP), which is the same measure of MFP used in the MEI. The BLS publishes the official measure of private nonfarm business MFP. (See
We note that MFP is derived by subtracting the contribution of labor and capital input growth from output growth. Since at the time of the proposed rule the 2015 MFP has not been published by BLS, we rely on a projection of MFP. The projection of MFP is currently produced by IHS Global Insight (IGI), a national economic forecasting firm with which CMS contracts to forecast the components of the market basket and MFP. A complete description of the MFP projection methodology is available at
Using IGI's first quarter 2016 forecast, the productivity adjustment for CY 2017 (the 10-year moving average of MFP for the period ending CY 2015) is projected to be 0.4 percent. If more recent data are subsequently available (for example, a more recent estimate of the market basket and MFP adjustment), we would use such data to determine the CY 2017 increase in the proposed FQHC market basket in the final rule.
For CY 2017, we are proposing to use the proposed 2013-based FQHC market basket increase factor to update the FQHC PPS base payment rate. Consistent with CMS practice, we estimated the market basket update for the FQHC PPS based on the most recent forecast from IGI. Identical to the MEI, we are proposing to use the update based on the most recent historical data available at the time of publication of the final rule. For example, the final CY 2017 FQHC update would be based on the four-quarter moving-average percent change of the FQHC market basket through the second quarter of 2016 (based on the final rule's statutory publication schedule). For the proposed rule, we do not have the second quarter of 2016 historical data and, therefore, we will use the most recent projection available.
Based on IGI's first quarter 2016 forecast with historical data through the fourth quarter of 2015, the projected proposed FQHC market basket increase factor for CY 2017 would be 1.7 percent. This reflects a 2.1-percent increase of FQHC input prices and a 0.4-percent adjustment for productivity. We are also proposing that if more recent data are subsequently available (for example, a more recent estimate of the market basket or MFP) we would use such data, to determine the CY 2017 update in the final rule.
For comparison, the 2006-based MEI is projected to be 1.3 percent in CY 2017; this estimate is based on IGI's first quarter 2016 forecast (with historical data through the fourth quarter of 2015). Table 33 compares the proposed 2013-based FQHC market basket updates and the 2006-based MEI market basket updates for CY 2017.
For CY 2017, the proposed 2013-based FQHC market basket update (1.7 percent) is 0.4 percent higher than the 2006-based MEI (1.3 percent). The 0.4 percentage point difference stems mostly from the inclusion of pharmaceuticals in the proposed FQHC market basket. Prices for pharmaceuticals are projected to grow 7.8 percent, faster than the other components in the market basket. This cost category and associated price pressures are not included in the MEI.
We propose to update the FQHC PPS base payment rate by 1.7 percent for CY 2017 based on the proposed 2013-based FQHC market basket. The proposed FQHC market basket would more accurately reflect the actual costs and scope of services that FQHCs furnish compared to the 2006-based MEI. We invite public comment on all aspects of the FQHC market basket proposals.
Section 218(b) of the PAMA amended Title XVIII of the Act to add section 1834(q) of the Act directing us to establish a program to promote the use of appropriate use criteria (AUC) for advanced diagnostic imaging services. The CY 2016 PFS final rule with comment period addressed the initial component of the new Medicare AUC program, specifying applicable AUC. In that rule we established evidence-based process and transparency requirements for the development of AUC, defined provider-led entities (PLEs) and established the process by which PLEs may become qualified to develop, modify or endorse AUC. The first list of qualified PLEs are expected to be posted on the CMS Web site by the end of June 2016 at which time their AUC libraries will be considered to be specified AUC for purposes of section 1834(q)(2)(A) of the Act.
This rule proposes requirements and processes for specification of qualified clinical decision support mechanisms (CDSMs) under the Medicare AUC program; the initial list of priority clinical areas; and exceptions to the requirement that ordering professionals consult specified applicable AUC when ordering applicable imaging services.
AUC present information in a manner that links: A specific clinical condition or presentation; one or more services; and, an assessment of the appropriateness of the service(s). For purposes of this program, AUC are a set or library of individual appropriate use criteria. Each individual criterion is an evidence-based guideline for a particular clinical scenario. Each scenario in turn starts with a patient's presenting symptoms and/or condition. Evidence-based AUC for imaging can assist clinicians in selecting the imaging study that is most likely to improve health outcomes for patients based on their individual clinical presentation.
AUC need to be integrated as seamlessly as possible into the clinical workflow. CDSMs are the electronic portals through which clinicians would access the AUC during the patient workup. While CDSMs can be standalone applications that require direct entry of patient information, they may be more effective when they automatically incorporate information such as specific patient characteristics, laboratory results, and lists of co-morbid diseases from Electronic Health Records (EHRs) and other sources. Ideally, practitioners would interact directly with the CDSM through their primary user interface, thus minimizing interruption to the clinical workflow.
Consistent with definitions of CDSM by the Agency for Healthcare Research and Quality (AHRQ) (
In the CY 2016 PFS final rule with comment period, we included a discussion of the Medicare Imaging Demonstration (MID), which was required by section 135(b) of the MIPPA, in addition to independent experiences of implementing AUC by several healthcare systems and academic medical centers. Two key aspects of that discussion remain relevant to the CDSM component of this program. First, AUC, and the CDSMs through which clinicians access AUC, must be integrated into the clinical workflow and facilitate, not obstruct, evidence-based care delivery. For instance, a CDSM external to a provider's primary user interface could utilize an application program interface (API), a set of protocols and tools specifying how software components should interact, to pull relevant information into the decision support application. By adhering to common interoperability standards, such as the national standards advanced through certified health IT (see 2015 edition of criteria available in the
Second, the ideal AUC is an evidence-based guide that starts with a patient's specific clinical condition or presentation (symptoms) and assists the clinician in the overall patient workup, treatment, and follow-up. Imaging would appear as key nodes within the clinical management decision tree.
Other options outside of certified EHR technology exist to access AUC through CDSMs. Stand-alone, internet-based CDSMs are available and, although they will not interact with EHR data, can nonetheless search for and present AUC relevant to a patient's presenting symptoms or condition.
In communicating an appropriateness rating to the ordering practitioner, some CDSMs provide a scale with numeric ratings, some output a red, yellow, or green light while others provide a dichotomous yes or no. At this time, we do not believe there is one correct approach to communicating the level of appropriateness to the ordering professional. However, section 1834(q)(4)(B) of the Act requires that information be reported on the claim form as to whether the service would or would not adhere to the specified AUC consulted through a particular CDSM, or whether the AUC was not applicable to the service. We are requesting feedback from commenters regarding how appropriateness ratings provided by CDSMs could be interpreted and recorded for the purposes of this program.
There are different views about the comprehensiveness of AUC that should be accessible within CDSMs. Some stakeholders believe that the CDSM should contain as comprehensive a collection of AUC as possible, incorporating individual criteria from across all specified AUC libraries. The intent would be for ordering professionals to avoid the frustration, experienced and voiced by many clinicians participating in the MID, of spending time navigating the CDSM only to find that no criterion for their patient's specific clinical condition exists.
Other stakeholders believe, based on decades of experience rolling out AUC in the context of robust quality improvement programs that it is best to
As we stated in the CY 2016 PFS final rule with comment period, we believe there is merit to both approaches, and it has been suggested to us that the best approach may depend on the particular care setting. The second, “focused” approach may work better for a large health system that produces and uses its own AUC. The first, “comprehensive” approach may in turn work better for a smaller practice with broad image ordering patterns and fewer resources that wants to simply adopt and start using a complete AUC system developed elsewhere. We believe a successful program would allow flexibility, and under section 1834(q) of the Act, we foresee a number of sets of AUC developed by different PLEs, and an array of CDSMs from which clinicians may choose.
We established in the CY 2016 PFS final rule with comment period that we would identify priority clinical areas through rulemaking, and that these may be used in the determination of outlier ordering professionals (a future phase of the Medicare AUC program). The concept of priority clinical areas allows us to implement an AUC program that combines the focused and comprehensive approaches to implementation discussed above. Although potentially large volumes of AUC (as some PLEs have large libraries of AUC) would become specified across clinical conditions and advanced imaging technologies, we believe this rapid and comprehensive roll out of specified AUC should be balanced with a more focused approach when identifying outlier ordering professionals. We believe this will provide an opportunity for physicians and practitioners to become familiar with AUC in identified priority clinical areas prior to Medicare claims for those services being part of the input for calculating outlier ordering professionals.
As we describe earlier, CDSMs are the access point for ordering professionals to consult AUC. We believe the combination of the comprehensive and focused approaches should be applied to CDSM requirements as we consider a minimum floor of AUC that must be made available to ordering professionals through qualified CDSMs. AUC that reasonably address the entire clinical scope of priority clinical areas could establish a minimum floor of AUC to be included in qualified CDSMs, and the number of priority clinical areas could be expanded through annual rulemaking and in consultation with physicians and other stakeholders. This allows priority clinical areas to roll out judiciously, and build over time.
Section 218(b) of the PAMA added a new section 1834(q) of the Act entitled, “Recognizing Appropriate Use Criteria for Certain Imaging Services,” which directs the Secretary to establish a new program to promote the use of AUC. Section 1834(q)(3)(A) of the Act requires the Secretary to specify qualified CDSMs that could be used by ordering professionals to consult with specified applicable AUC for applicable imaging services.
There are four major components of the AUC program under section 1834(q) of the Act, each with its own implementation date: (1) Establishment of AUC by November 15, 2015 (section 1834(q)(2)); (2) identification of mechanisms for consultation with AUC by April 1, 2016 (section 1834(q)(3)); (3) AUC consultation by ordering professionals and reporting on AUC consultation by furnishing professionals by January 1, 2017 (section 1834(q)(4)); and (4) annual identification of outlier ordering professionals for services furnished after January 1, 2017 (section 1834(q)(5)). As we will discuss later in this preamble, we did not identify mechanisms for consultation by April 1, 2016 and will not have specified or published the list of qualified CDSMs by January 1, 2017; therefore, ordering professionals will not be required to consult CDSMs, and furnishing professionals will not be able to report information on the consultation, by this date.
In the CY 2016 PFS final rule with comment period, we addressed the first component under section 1834(q)(2) of the Act—the requirements and process for establishment and specification of applicable AUC, along with relevant aspects of the definitions under section 1834(q)(1) of the Act. This included defining the term PLE and finalizing requirements for the rigorous, evidence-based process by which a PLE would develop AUC, upon which qualification is based, as provided in section 1834(q)(2)(B) of the Act and in the CY 2016 PFS final rule with comment period. Using this process, once a PLE is qualified by CMS, the AUC that are developed, modified or endorsed by the qualified PLE are considered to be specified applicable AUC under section 1834(q)(2)(A) of the Act. We defined the term PLE to include national professional medical societies, health systems, hospitals, clinical practices and collaborations of such entities such as the High Value Healthcare Collaborative or the National Comprehensive Cancer Network. Qualified PLEs may collaborate with third parties that they believe add value to their development of AUC, provided such collaboration is transparent. We expect qualified PLEs to have sufficient infrastructure, resources, and the relevant experience to develop and maintain AUC according to the rigorous, transparent, and evidence-based processes detailed in the CY 2016 PFS final rule with comment period.
A timeline and process was established for PLEs to apply to become qualified with the first list of qualified PLEs expected to be published at
The second major component of the Medicare AUC program is the specification of qualified CDSMs that could be used by ordering professionals for consultation with specified applicable AUC under section 1834(q)(3) of the Act. We envision a CDSM as an interactive tool that communicates AUC information to the user. Information regarding the clinical presentation of the patient would be incorporated into the CDSM from another health IT system or through data entry by the ordering professional. At a minimum, the tool would provide immediate feedback to the ordering professional on the appropriateness of one or more imaging services. Ideally, CDSMs would be integrated within or seamlessly interoperable with existing health IT systems and would automatically receive patient data from the EHR or through an API or other connection. Such integration would minimize burden on practitioners and avoid duplicate documentation. Also useful to clinicians would be the ability to switch between CDSMs that can interoperate based on common standards.
Section 1834(q)(3)(A) of the Act states that the Secretary must specify qualified CDSMs in consultation with physicians, practitioners, health care technology experts, and other stakeholders. This
All CDSMs must meet the requirements under section 1834(q)(3)(B) of the Act, which specifies that a mechanism must: Make available to the ordering professional applicable AUC and the documentation supporting the appropriateness of the applicable imaging service that is ordered; where there is more than one applicable appropriate use criterion specified for an applicable imaging service, indicate the criteria it uses for the service; determine the extent to which an applicable imaging service that is ordered is consistent with the applicable AUC; generate and provide to the ordering professional documentation to demonstrate that the qualified CDSM was consulted by the ordering professional; be updated on a timely basis to reflect revisions to the specification of applicable AUC; meet applicable privacy and security standards; and perform such other functions as specified by the Secretary (which may include a requirement to provide aggregate feedback to the ordering professional). Section 1834(q)(3)(C) of the Act specifies that the Secretary must publish an initial list of specified mechanisms no later than April 1, 2016, and that the Secretary must identify on an annual basis the list of specified qualified CDSMs.
As we explained in the CY 2016 PFS proposed and final rules with comment period, implementation of many aspects of the amendments made by section 218(b) of the PAMA requires consultation with physicians, practitioners, and other stakeholders, and notice and comment rulemaking. We continue to believe the PFS calendar year rulemaking process is the most appropriate and administratively feasible implementation vehicle. Given the timing of the PFS rulemaking process, we were not able to include proposals in the PFS proposed rule to begin implementation in the same year the PAMA was enacted, as we would have had to interpret and analyze the new statutory language, and develop proposed plans for implementation in under one month. As we did prior to the CY 2016 PFS proposed rule when we met extensively with stakeholders to gain insight and hear their comments and concerns about the AUC program, we have used the time prior to the CY 2017 PFS proposed rule to meet with many of the same stakeholders but also a new group of stakeholders specifically related to CDSMs. In addition, we are continuing our stepwise approach to implementing this AUC program. The first phase of the AUC program (specifying AUC including defining what AUC are and specifying the process for developing them) was accomplished through last year's CY 2016 PFS final rule with comment period. For this second phase, we will use this CY 2017 PFS rulemaking process as the vehicle to establish requirements for CDSMs, and the process to specify qualified CDSMs, in a transparent manner that allows for stakeholder and public involvement. Therefore, the final CDSM requirements and process for CDSMs to become qualified would be published in the CY 2017 PFS final rule with comment period on or about November 1, 2016.
The third major component of the AUC program is in section 1834(q)(4) of the Act, Consultation with Applicable Appropriate Use Criteria. This section establishes, beginning January 1, 2017, the requirement for an ordering professional to consult with a qualified CDSM when ordering an applicable imaging service that would be furnished in an applicable setting and paid for under an applicable payment system; and for the furnishing professional to include on the Medicare claim information about the ordering professional's consultation with a qualified CDSM. The statute distinguishes between the ordering and furnishing professional, recognizing that the professional who orders an applicable imaging service is usually not the same professional who bills Medicare for that service when furnished. Section 1834(q)(4)(C) of the Act provides for certain exceptions to the AUC consultation and reporting requirements including in the case of certain emergency services, inpatient services paid under Medicare Part A, and ordering professionals who obtain an exception due to a significant hardship. Section 1834(q)(4)(D) of the Act specifies that the applicable payment systems for the AUC consultation and reporting requirements are the PFS, hospital outpatient prospective payment system, and the ambulatory surgical center payment systems.
Since a list of qualified CDSMs is not yet available and will not be available by January 1, 2017, we will not require ordering professionals to meet this requirement by that date.
The fourth component of the AUC program is in section 1834(q)(5) of the Act, Identification of Outlier Ordering Professionals. The identification of outlier ordering professionals under this paragraph facilitates a prior authorization requirement for outlier professionals beginning January 1, 2020, as specified under section 1834(q)(6) of the Act. Although we are not proposing to implement these sections in the CY 2017 PFS proposed rule, we propose below a list of priority clinical areas which may serve as part of the basis for identifying outlier ordering professionals.
We propose to amend our regulations at § 414.94, “Appropriate Use Criteria for Certain Imaging Services.”
In § 414.94(b), we propose to codify and add language to clarify some of the definitions provided in section 1834(q) of the Act, as well as define terms that were not defined in statute but for which a definition would be helpful for program implementation. In this section, we provide a description of the terms we propose to codify to facilitate understanding and encourage public comment on the AUC program.
We propose to define CDSM under § 414.94(b) as an interactive, electronic tool for use by clinicians that communicates AUC information to the user and assists them in making the most appropriate treatment decision for a patient's specific clinical condition. A CDSM would incorporate specified applicable AUC sets from which an ordering professional could select. A CDSM may be a module within or available through certified EHR technology (as defined in section 1848(o)(4) of the Act) or private sector mechanisms independent from certified EHR technology. If within or available through certified EHR technology, a qualified CDSM would incorporate relevant patient-specific information into the assessment of the appropriateness of an applicable imaging service.
As prescribed in section 1834(q) of the Act and § 414.94(b) of our regulations, the Medicare AUC program imposes requirements only for applicable imaging services furnished in applicable settings. Further, as specified in section 1834(q)(4)(D) of the Act, we propose to amend our regulation at § 414.94(b) to state that the applicable payment systems for the Medicare AUC program are the PFS under section
We remind readers that in PFS rulemaking for CY 2016 we defined applicable imaging service in § 414.94(b) as an advanced diagnostic imaging service as defined in 1834(e)(1)(B) of the Act for which the Secretary determines (i) One or more applicable appropriate use criteria apply; (ii) There are one or more qualified clinical decision support mechanisms listed; and (iii) One or more of such mechanisms is available free of charge.
We propose to establish a new § 414.94(e)(5) to set forth the initial list of priority clinical areas.
To compile this proposed list we performed an analysis of Medicare claims data using the CMS Chronic Conditions Data Warehouse (CCW) as the primary data source. The CCW contains 100 percent of Medicare claims for beneficiaries who are enrolled in the fee-for-service (FFS) program. Data were derived from the CCW's 2014 Part B non-institutional claim line file, which includes Part B services furnished during CY 2014. This is the main file containing final action claims data for non-institutional health care providers, including physicians, physician assistants, clinical social workers, nurse practitioners, independent clinical laboratories, and freestanding ambulatory surgical centers. The Part B non-institutional claim line file contains the individual line level information from the claim and includes Healthcare Common Procedure Coding System (HCPCS) code(s), diagnosis code(s) using the International Classification of Diseases, Ninth Revision (ICD–9), service dates, and Medicare payment amount. A publicly available version of this dataset can be downloaded from the CMS Web site at
In the CY 2016 PFS final rule with comment period, we stated that when identifying priority clinical areas we may consider factors such as incidence and prevalence of disease, the volume and variability of utilization of imaging services, the strength of evidence for their use, and applicability of the clinical area to the Medicare population and to a variety of care settings.
Using the 2014 Medicare claims data referenced above, we ranked ICD–9 codes by the frequency with which they were used as the primary indication for specific imaging procedures, which in turn were identified by the volume of individual Current Procedural Terminology (CPT) codes for which payments were made in 2014. We extracted the top 135 ICD–9 codes from this list and formed clinically-related categories. Next, we searched manually through an electronic list of all ICD–9 codes to find others that would plausibly fit into each clinical grouping. This process required subjective clinical judgment on whether a particular ICD–9 code should be included in a given clinical group. The top eight clinical groupings (by volume of procedures) are what we are proposing as the initial list of priority clinical areas. The eight clinical areas account for roughly 40 percent of part B advanced diagnostic imaging services paid for by Medicare in 2014. We are aware that some stakeholders have suggested beginning the AUC program with no more than five priority clinical areas while others have suggested a far greater number. We believe the proposed eight priority clinical areas strike a reasonable balance that allows us to focus on a significant range and volume of advanced diagnostic imaging services.
We also considered extracting pulmonary embolism as a separate priority clinical area from the chest pain grouping based on stakeholder consultation and feedback. However, we decided not to identify pulmonary embolism separately, but are asking for public comment on whether pulmonary embolism should be included as a stand-alone priority clinical area. Based on our consultations with physicians, practitioners and other stakeholders, as required by section 218(b) of the PAMA, we attempted to be inclusive when grouping ICD–9 codes into cohesive clinical areas. As an example of how we derived the priority clinical area for low back pain, we grouped together 10 ICD–9 codes, incorporating six from the top 135 and four from the manual search of all ICD–9 codes. Included in this grouping are the ICD–9 codes for displacement of lumbar intervertebral disc without myelopathy (722.10), degeneration of lumbar of lumbosacral intervertebral disc (722.52), intervertebral disc disorder with myelopathy lumbar region (722.73), post-laminectomy syndrome of lumbar region (722.83), lumbago (724.2), sciatica (724.3), thoracic or lumbosacral neuritis or radiculitis unspecified (724.4), spinal stenosis, lumbar region, without neurogenic claudication (724.02), lumbosacral spondylosis without myelopathy (721.3), and spondylosis with myelopathy lumbar region (721.42) which resulted in 1,883,617 services. To see all of the priority clinical area groupings of diagnosis codes, a table is available on the CMS Web site at
Using the above methodology, we developed and are proposing eight priority clinical areas. These reflect both the significance and the high prevalence of some of the most disruptive diseases in the Medicare population.
CMS also engaged the CMS Alliance to Modernize Healthcare (CAMH) Federally Funded Research and Development Center (FFRDC), the MITRE Corporation (MITRE), to begin developing efficient and effective processes for managing current and future health technology assessments. MITRE generated an independent report that presents a summary of findings from claims data from the Medicare population and their utilization of advanced imaging procedures. Coupled with our internal analysis, this report has assisted in identification of proposed priority clinical areas for the Medicare AUC program for advanced diagnostic imaging services. Analysis and methods for this report are available at
While this year we are proposing priority clinical areas based on an analysis of claims data alone, we may use a different approach in future rulemaking cycles. As we provided in § 414.94(e) of our regulations, we may consider factors other than volume when proposing priority clinical areas including incidence and prevalence of disease, variability of use of particular imaging services, strength of evidence supporting particular imaging services and the applicability of a clinical area to a variety of care settings and to the Medicare population.
We encourage public comments on this proposed initial list of priority clinical areas, including recommendations for other clinical areas that we should include among our list of priority clinical areas. In particular, we are interested in comments on the above methodology or alternate options; whether the proposed priority clinical areas are appropriate including information on the extent to which these proposed priority clinical areas may be represented by clinical guidelines or AUC in the future. Furthermore, we are interested in public comments, supported by published information, with respect to varying levels of evidence that exist across as well as within priority clinical areas.
We are proposing to add a new § 414.94(g)(1) to our regulations to establish requirements for qualified CDSMs. Section 1834(q)(3)(A)(iii) of the Act provides relative flexibility for qualified CDSMs, and states that they may include mechanisms that are within certified EHR technology, private sector mechanisms that are independent from certified EHR technology or mechanisms that are established by the Secretary.
We believe that, at least initially, it is in the best interest of the program to establish CDSM requirements that are not prescriptive about specific IT standards. Rather, we are proposing an approach that focuses on the functionality and capabilities of qualified CDSMs. The CDSM, EHR and health IT environments are constantly changing and improving and we want to allow room for growth and innovation. However, in the future, as more stakeholders and other entities including the ONC, AHRQ, and relevant standards development organizations come to consensus regarding standards for CDSMs, then we may consider pointing to such standards as a requirement for qualified CDSMs under this program. We believe standards would make it possible to achieve interoperability, allowing any CDSM to incorporate any standardized AUC and for sets of AUC to be easily interchangeable among various CDSMs. We will continue to work with the ONC and AHRQ to facilitate movement in this direction.
Recent work under the federally-sponsored Clinical Quality Framework (CQF) initiative has successfully developed an integrated approach that harmonizes standards for electronic clinical quality measurement with those that enable shareable clinical decision support artifacts (for example, AUC). The CQF initiative is working to support semantically interoperable data exchange for (1) sending patient data to a service for clinical decision support guidance and receiving clinical decision support guidance or quality measurement results in return, and (2) enabling a system to consume and internally execute decision support artifacts. As this standard is considered sufficiently mature for widespread adoption, the ONC may consider it for use in future editions of certification criteria for health IT. While the current regulation requires no specific standard, the CMS and ONC are supportive of this approach and additional information can be found at
Under § 414.94(g)(1), we propose to codify in regulations the seven requirements for qualified CDSMs set forth in section 1834(q)(3)(B)(ii) of the Act. The Act requires qualified CDSMs to make available to the ordering professional specified applicable AUC and the supporting documentation for the applicable imaging service ordered. We do not interpret this requirement to mean that every qualified CDSM must make available every specified applicable AUC. In the CY 2016 PFS final rule with comment period we allowed for the approval of massive libraries of AUC (resulting from approvals for qualified PLEs with comprehensive and extensive libraries), yet we expressed our intention to establish priority clinical areas. While there is a statutory requirement to consult AUC for each applicable imaging service, we recognize that ordering professionals may choose to thoroughly improve their understanding of, and focus their internal quality improvement (QI) programs on, those priority clinical areas; and these areas will in turn serve as the basis for future outlier calculations.
Consistent with that approach, we propose to add a requirement in § 414.94(g)(1)(iii) that qualified CDSMs must make available to ordering professionals, at a minimum, specified applicable AUC that reasonably encompass the entire clinical scope of all priority clinical areas. We encourage and expect some CDSMs, based on the needs of the professionals they serve, will choose to include a far more comprehensive set of AUC going above and beyond the minimum set as we understand many ordering professionals want such comprehensive access to AUC. When this Medicare AUC program is fully implemented, all ordering professionals must consult specified applicable AUC through a qualified
We further propose to add a requirement in § 414.94(g)(1)(iv) of our regulations that qualified CDSMs must be able to incorporate specified applicable AUC from more than one qualified PLE. We believe this approach ensures that CDSMs can expand the AUC libraries they can provide access to in order to represent AUC across all priority clinical areas (consistent with the requirements under proposed § 414.94(g)(1)(iii)). We do not necessarily expect that a single qualified PLE will develop AUC addressing every priority clinical area domain, especially since we believe that over time and through future rulemaking, the list of priority clinical areas will expand and cross additional clinical domains. Ensuring that qualified CDSMs are not limited in their technology to incorporating AUC from only one qualified PLE will help to ensure that ordering professionals will not be in a position of consulting a CDSM that cannot offer them access to AUC that address all priority clinical areas. As stakeholders continue to advance CDSM technology, we look forward to standards being developed and widely accepted so that AUC are incorporated in a standardized format across CDSM platforms. Increasing standardization in this area will move the industry closer to the goal of interoperability across CDSMs and EHRs.
We also propose to add a requirement in § 414.94(g)(1)(i) that specified applicable AUC and related documentation supporting the appropriateness of the applicable imaging service ordered must be made available within the qualified CDSM. For example, the ordering professional would have immediate access to the full appropriate use criterion, citations supporting the criterion and a summary of key evidence supporting the criterion.
We propose to add a requirement in § 414.94(g)(1)(ii), consistent with section 1834(q)(3)(B)(ii)(II) of the Act, that the qualified CDSM must clearly identify the appropriate use criterion consulted if the tool makes available more than one criterion relevant to a consultation for a patient's specific clinical scenario. We believe this is important since CDSMs that choose to incorporate a comprehensive AUC library may be offering the ordering professional access to AUC from multiple qualified PLEs. In such scenarios, it is important that the ordering professional knows which appropriate use criterion is being consulted and have the option to choose one over the other if more than one criterion applies to the scenario.
We propose to add a requirement in § 414.94(g)(1)(v), consistent with section 1834(q)(3)(B)(ii)(III) of the Act, that the qualified CDSM must provide to the ordering professional a determination, for each consultation, of the extent to which an applicable imaging service is consistent with specified applicable AUC or a determination of “not applicable” when the mechanism does not contain a criterion that would apply to the consultation. This determination would communicate the appropriateness of the applicable imaging service to the ordering professional. In addition to this determination, we also propose that the CDSM provide the ordering professional with a determination of “not applicable” when the mechanism does not contain an appropriate use criterion applicable to that patient's specific clinical scenario.
We propose to add a requirement in § 414.94(g)(1)(vi), consistent with section 1834(q)(3)(B)(ii)(IV) of the Act, that the qualified CDSM must generate and provide to the ordering professional certification or documentation that documents which qualified CDSM was consulted, the name and NPI of the ordering professional that consulted the CDSM and whether the service ordered would adhere to applicable AUC, whether the service ordered would not adhere to such criteria, or whether such criteria was not applicable for the service ordered. We propose to require under § 414.94(g)(1)(vi)(A) that this certification or documentation must be issued each time an ordering professional consults the qualified CDSM. Since Medicare claims will be filed only for services that are rendered to beneficiaries, we will not see CDSM consultation information on the claim form specific to imaging services that are not ordered. We believe that for the CDSM to be able to provide meaningful feedback to ordering professionals, information regarding consultations that do not result in imaging is just as important as information on consultations that do result in an order for advanced imaging.
Thus, we propose to require under § 414.94(g)(1)(vi)(B) that the documentation or certification provided by the qualified CDSM must include a unique consultation identifier. This would be a unique code issued by the CDSM that is specific to each consultation by an ordering professional. This type of unique code may serve as a platform for future collaboration and aggregation of consultation data across CDSMs. In addition, at some point in the future, this unique code may assist in more seamlessly bringing Medicare data together with CDSM clinical data to maximize quality improvement in clinical practices and to iteratively improve the AUC itself.
We propose in § 414.94(g)(1)(vii), consistent with section 1834(q)(3)(B)(ii)(V) of the Act, that the specified applicable AUC content within qualified CDSMs be updated at least every 12 months to reflect revisions or updates made by qualified PLEs to their AUC sets or to an individual appropriate use criterion. We propose 12 months as the maximum acceptable delay for updating content. We believe that in most cases it will be possible to update AUC content more frequently than every 12 months, particularly for cloud-based CDSMs. We further propose in § 414.94(g)(1)(vii)(A) that qualified CDSMs have a protocol in place to more expeditiously remove AUC that are determined by the qualified PLE to be potentially dangerous to patients and/or harmful if followed.
In addition, we propose in § 414.94(g)(1)(vii)(B) that qualified CDSMs must make available for consultation specified applicable AUC that address any new priority clinical areas within 12 months of the priority clinical area being finalized by CMS. We believe this would allow the CDSM sufficient time to incorporate the AUC into the CDSM. Thus, any new priority clinical areas finalized, for example, in the CY 2018 PFS final rule with comment period that would be effective January 1, 2018, would need to be incorporated into a qualified CDSM by January 1, 2019. To accommodate this time frame, we would accept a not applicable determination from a CDSM
We propose to add a requirement in § 414.94(g)(1)(viii), consistent with section 1834(q)(3)(B)(ii)(VI) of the Act, that the qualified mechanism must meet privacy and security standards under applicable provisions of law. Potentially applicable laws may include the HIPAA Privacy and Security rules.
We propose to add a requirement in § 414.94(g)(1)(ix), consistent with section 1834(q)(3)(B)(ii)(VII) of the Act, that qualified CDSMs must provide ordering professionals aggregate feedback in the form of an electronic report on an annual basis (at minimum) regarding their consultations with specified applicable AUC. Our intent is to require records to be retained in a manner consistent with the HIPAA Security Rule. To provide such feedback, and to make detailed consultation information available to ordering professionals, furnishing professionals (when they have authorized access to the CDSM), auditors and CMS, we propose in § 414.94(g)(1)(x) that a qualified CDSM must maintain electronic storage of clinical, administrative and demographic information of each unique consult for a minimum of 6 years. We believe CDSMs could fulfill this requirement in a number of ways, including involving a third party in the storage of information as well as for providing feedback to ordering professionals. We recognize that these requirements represent a minimum floor that clinicians may choose to expand upon in their local QI programs.
In the event requirements under § 414.94(g)(1) are modified through rulemaking during the course of a qualified CDSM's 5-year approval cycle, we propose in § 414.94(g)(1)(xi) that the CDSM would be required to comply with the modification(s) within 12 months of the effective date of the modification.
We propose that CDSMs must apply to CMS to be specified as a qualified CDSM. We propose that CDSM developers who believe their mechanisms meet the regulatory requirements must submit an application to us that documents adherence to each of the requirements to be a qualified CDSM.
We propose to require in § 414.94(g)(2) that CDSM developers must submit applications to CMS for review that document adherence to each of the CDSM requirements. Applications to be specified as a qualified CDSM must be submitted by January 1 of a year in order to be reviewed within that year's review cycle. For example, the first applications would be accepted from the date of publication of the PFS final rule until January 1, 2017. A determination on whether the applicants are qualified would be made by June 30, 2017. Applications must be submitted electronically to
An example of our proposed timeline for applications and the approval cycle is as follows:
• Year 1 = July 2017 to June 2018.
• Year 2 = July 2018 to June 2019.
• Year 3 = July 2019 to June 2020.
• Year 4 = July 2020 to June 2021.
• Year 5 = July 2021 to June 2022 (reapplication is due by January 1, 2022).
We believe it is important for us to have the ability to remove from the list of specified qualified CDSMs a CDSM that we determine fails to adhere to any of the qualification requirements, including removal outside of the proposed 5-year cycle. We propose to state under § 414.94(h) that, at any time, we may remove from the list of qualified CDSMs a CDSM that fails to meet the criteria to be a qualified CDSM or consider this information during the requalification process. Such determinations may be based on public comment or our own review and we may consult with the National Coordinator for Health Information Technology or her designee to assess whether a qualified CDSM continues to adhere to requirements.
We invite comments on how we could streamline and strengthen the approval process for CDSMs in future program years. For instance, CMS may consider a testing framework for CDSMs that would validate adherence to specific standards that enable seamless incorporation of AUC across CDSMs.
Although we continue to aggressively move forward to implement this AUC program, ordering professionals will not be expected to consult qualified CDSMs by January 1, 2017. At the earliest, under this proposal, the first qualified CDSM(s) will be specified on June 30, 2017. We anticipate that some ordering professionals could be able to begin consulting AUC through qualified CDSMs very quickly as some may already be aligned with a qualified CDSM.
We anticipate that furnishing professionals may begin reporting as early as January 1, 2018. This reporting delay is necessary to allow time for ordering practitioners who are not already aligned with a qualified CDSM to research and evaluate the qualified CDSMs so they may make an informed decision. While there will be further rulemaking next year, we are announcing this date because the agency expects physicians and other stakeholders/regulated parties to begin preparing themselves to begin reporting on that date. We will adopt procedures for capturing this information on claims forms and the timing of the reporting requirement through PFS rulemaking for CY 2018.
As we expect to implement the AUC consultation and reporting requirements under section 1834(q)(4)(A) and (B) of the Act on January 1, 2018, we are interested in receiving feedback from the public to include a discussion of specific operational considerations that we should take into account and include in such rulemaking. For example, commenters could consider alternatives for reporting data on claims and for seeking exceptions, as discussed below. We also seek information on the barriers to implementation along this timeline that allows ordering and furnishing professionals to be prepared to consult AUC and report consultation information on the claims and whether
Under section 1834(q)(4)(B) of the Act, Medicare claims for applicable imaging services furnished in applicable settings can only be paid under the applicable payment systems if certain information is included on the claim including: Which qualified CDSM was consulted by the ordering professional for the service; whether the service, based on the CDSM consultation, adheres to specified applicable AUC, does not adhere to specified applicable AUC or whether no criteria in the CDSM were applicable to the patient's clinical scenario; and, the national provider identifier (NPI) of the ordering professional. This section further allows payment for these services only if the claim contains such information beginning January 1, 2017. To develop and operationalize a meaningful solution to collecting new AUC consultation-related information on the claims, we must diligently evaluate our options taking into account the vast number of claims impacted and the limitations of the legacy claims processing system. While we could have moved more quickly to establish some sort of AUC consultation indicator for Medicare claims, any such indicator would have been a relatively meaningless token. Additionally, in the case of advanced imaging services, related claims are already required to append certain HCPCS modifiers and G codes for purposes of proper payments. In the recent implementation of section 218(a) of the PAMA, we established a HCPCS modifier for CT services rendered on machines that do not meet an equipment standard. It is important that we understand and evaluate how the additional requirements for AUC reporting would impact the information that is already required for advanced imaging services. Moving too quickly to satisfy the reporting requirement could inadvertently result in technical and operational problems that could cause delays in payments.
Section 1834(q)(4)(C) of the Act includes exceptions that allow claims to be paid even though they do not include the information about AUC consultation by the ordering professional. We believe that, unless a statutory exception applies, an AUC consultation must take place for every order for an applicable imaging service furnished in an applicable setting and under an applicable payment system. We further believe that section 1834(q)(4)(B) of the Act accounts for the possibility that AUC may not be available in a particular qualified CDSM to address every applicable imaging service that might be ordered; and thus, the furnishing professional can meet the requirement to report information on the ordering professional's AUC consultation by indicating that AUC is not applicable to the service ordered.
We are considering the mechanisms for appending the AUC consultation information to various types of Medicare claims and expect to develop requirements for appending such information in the CY 2018 PFS rulemaking process. Stakeholders interested in sharing feedback related to reporting and claims processing are welcome to do so as part of the comment period for this proposed rule. We are particularly interested in receiving feedback on, for example, whether the information should be collected using HCPCS level II G codes or HCPCS modifiers. We will use this feedback to inform CY 2018 rulemaking.
Section 1834(q)(4)(C) of the Act provides for certain exceptions to the AUC consultation and reporting requirements under section 1834(q)(4)(B) of the Act. First, the statute provides for an exception under section 1834(q)(4)(C)(i) of the Act where an applicable imaging service is ordered for an individual with an emergency medical condition as defined in section 1867(e)(1) of the Act. We believe this exception is warranted because there can be situations in which a delay in action would jeopardize the health or safety of individuals. Though we believe they occur primarily in the emergency department, these emergent situations could potentially arise in other settings. Furthermore, we recognize that most encounters in an emergency department are not for an emergency medical condition as defined in section 1867(e)(1) of the Act.
We propose to provide for an exception to the AUC consultation and reporting requirements under § 414.94(i)(1) for an applicable imaging service ordered for an individual with an emergency medical condition as defined in section 1867(e)(1) of the Act. For example, if a patient, originally determined by the clinician to have an emergency medical condition prior to ordering an applicable imaging service, is later determined not to have had an emergency medical condition at that time, the relevant claims for applicable imaging services would still qualify for an exception. To meet the exception for an emergency medical condition as defined in section 1867(e)(1) of the Act, the clinician only needs to determine that the medical condition manifests itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in: Placing the health of the individual (or a woman's unborn child) in serious jeopardy; serious impairment to bodily functions; or serious dysfunction of any bodily organ or part. Orders for advanced imaging services for beneficiaries with an emergency medical condition as defined under section 1867(e)(1) of the Act are excepted from the requirement to consult AUC. We intend through the CY 2018 PFS proposed rule to propose more details around how this exception will be identified on the Medicare claim.
The second exception is under section 1834(q)(4)(ii) of the Act for applicable imaging services ordered for an inpatient and for which payment is made under Medicare Part A. We propose to codify this exception in new § 414.94(i)(2). While we are including this exception consistent with statute, we note that if payment is made under Medicare Part A, the service would not be paid under an applicable payment system, such that the AUC consultation and reporting requirements under § 414.94 would never apply.
The third exception is under section 1834(q)(4)(iii) of the Act for applicable imaging services ordered by an ordering professional who the Secretary determines, on a case-by-case basis and subject to annual renewal, that consultation with applicable AUC would result in a significant hardship, such as in the case of a professional practicing in a rural area without sufficient Internet access. We propose to codify this exception in new § 414.94(i)(3) by specifying that ordering professionals who are granted a significant hardship exception for purposes of the Medicare EHR Incentive Program payment adjustment under § 495.102(d)(4)(i), (ii), or (iii)(A)(B) of our regulations would also be granted a significant hardship exception for purposes of the AUC consultation requirement. We are proposing, to the extent technically feasible, that the year for which the eligible professional is excepted from the EHR Incentive Program payment adjustment is the same year that the ordering professional is excepted from the requirement to consult AUC through a qualified CDSM. We propose not to adopt the Meaningful Use significant hardship exception under § 495.102(d)(4)(iv)(C) as an exception for purposes of the AUC consultation requirement. Therefore, ordering professionals with a primary specialty of anesthesiology, radiology or
We believe there is substantial overlap between the eligible professionals that would seek a hardship exception under the EHR Incentive Program and those ordering professionals that would seek a hardship exception under the AUC program and, as such, this proposal would be administratively efficient. Using an existing program is the most efficient and expeditious manner to implement the significant hardship exception under the Medicare AUC program. We also believe it is the only administratively feasible option for a national significant hardship identification process that can be implemented by January 1, 2018, though we intend to revisit this option for years after 2018 as the current EHR Incentive Program payment adjustment is set to expire after the 2018 payment year as the Merit-Based Incentive Payment System takes effect. In addition, below we discuss considerations for a supplemental process to account for hardships for ordering professionals that are not eligible to apply for a significant hardship under the EHR Incentive Program (for example, non-physician practitioners) and ordering professionals that incur a significant hardship outside of the EHR Incentive Program application deadline.
The criteria for significant hardships under the EHR Incentive Program relate to insufficient internet connectivity, practicing for less than 2 years, practicing at multiple locations with the inability to control the availability of Certified EHR Technology, lack of face-to-face interaction with patients or a primary specialty designation of anesthesiology, radiology or pathology. We believe that most of these criteria would be relevant to demonstrate a significant hardship for ordering professionals to consult AUC. Regarding hardship exceptions for certain specialty designations, based on Medicare claims data for advanced imaging services from the first 6 months of 2014, approximately 1.2 percent of those claims were for advanced imaging services that had been ordered by a professional with one of the three primary specialty designations. While their combined ordering volume is small, we do not believe that categorical exclusion of certain specialties of which the practitioner selected as their primary specialty designation for Medicare enrollment would necessarily be appropriate under the AUC program. Since eligible professionals in these three specialties are categorically excepted from the EHR Incentive Program payment adjustment, few of them would have applied for an exception on the other grounds. Therefore, we must consider another mechanism to evaluate whether ordering practitioners with these medical specialties experience a significant hardship for purposes of the AUC program.
We understand that there are differences between the purpose and timing of significant hardship exceptions for the EHR Incentive Program and the Medicare AUC program. Foremost, a significant hardship under the EHR Incentive Program is generally based on a hardship that occurred in a prior period, impacting meaningful EHR use that would affect payments in a subsequent calendar year. For example, a professional that submits an application in March 2017 and qualifies for the hardship exception under the EHR Incentive Program would be exempt from the EHR payment adjustment for calendar year 2018. Although significant hardship exceptions for the EHR payment adjustment year generally are based on the existence of a hardship in a prior period, we believe it would be appropriate for these professionals to also qualify for a significant hardship exception for purposes of the AUC consultation requirement during calendar year 2018. It is also our best, most efficient, administratively feasible means of determining significant hardships for ordering professionals for CY 2018.
We also recognize the possibility that an ordering professional could suffer a significant hardship during the AUC program year, and therefore, is immediately unable to consult AUC. In addition, while again we believe there is significant overlap, there may be circumstances where an ordering professional is not considered to be an eligible professional under the EHR Incentive Program (for example, an ordering professional that is not a physician). We are seeking feedback from commenters regarding processes that could be put in place to accommodate ordering professionals with primary specialties that categorically receive significant hardship exceptions under the EHR Incentive Program, real-time hardships that arise during a year, and ordering professionals that are not eligible to apply using the EHR Incentive Program significant hardship exception process and need to seek a significant hardship exception for the purposes of the AUC program. We believe this would involve only a small number of ordering professionals. To the extent technically feasible, some possibilities for implementing such hardship exceptions may include Medicare Administrative Contractors granting hardships on a case-by-case basis or establishing another mechanism to allow for self-attestation of a significant hardship for a defined period of time (for example, a calendar quarter or a calendar year). We intend to propose a process in the CY 2018 PFS proposed rule.
We invite the public to comment on our proposal for ordering professionals granted a hardship exception for the EHR Incentive Program for payment year 2018 to also be granted a hardship exception to the Medicare AUC program for those years. We propose that the year the practitioner is excepted from the EHR Incentive Program payment adjustment is the same year that the practitioner would be excepted from consulting AUC.
Section 1834(q) of the Act includes rapid timelines for establishing a Medicare AUC program for advanced diagnostic imaging services. The number of clinicians impacted by the scope of this program is massive as it will apply to every physician or other practitioner who orders or furnishes applicable imaging services. This crosses almost every medical specialty and could have a particular impact on primary care physicians since their scope of practice can be quite broad.
We continue to believe the best implementation approach is one that is diligent, maximizes the opportunity for public comment and stakeholder engagement, and allows for adequate advance notice to physicians and practitioners, beneficiaries, AUC developers, and CDSM developers. It is for these reasons we are proposing to continue a stepwise approach, adopted through notice and comment rulemaking. We propose this second component to the program to specify qualified CDSMs, identify the initial list of priority clinical areas, and establish requirements related to CDSMs, as well as consulting and reporting exceptions. However, we also recognize the importance of moving expeditiously to accomplish a fully implemented program. Under this proposal, the first list of qualified CDSMs will be posted no later than June 30, 2017, allowing ordering professionals to begin aligning themselves with a qualified CDSM. We anticipate that furnishing professionals could begin reporting AUC information starting as early as January 1, 2018, but will provide details in CY 2018 PFS
In summary, we propose definitions of terms and processes necessary to implement the second component of the AUC program. We invite the public to submit comments on these proposals. We are particularly seeking comment on the proposed priority clinical areas and the requirements that must be met by CDSMs to become qualified. We believe the proposed requirements for qualified CDSMs will allow for flexibility so mechanisms can continue to reflect innovative concepts in decision support and develop customer-driven products to ultimately provide information to the ordering professional in such a manner that will maximize appropriate ordering of advanced diagnostic imaging while seamlessly integrating into workflow. As the stakeholders continue to move to a place of consensus-based standards deemed ready for deployment, we may become more prescriptive in future requirements for CDSMs. We also seek comment on the exceptions to the requirements to consult applicable AUC using CDSMs.
In the February 8, 2013
In addition to the Open Payments final rule, we issued final regulations in the CY 2015 PFS final rule with comment period (79 FR 67758) that revised the Open Payments regulations. Specifically, we: (1) Deleted of the definition of “covered device”; (2) removed the continuous medical education (CME) exclusion; (3) expanded the marketed name reporting requirements to biologicals and medical supplies; and (4) required stock, stock options, and any other ownership interests to be reported as distinct forms of payment.
Since the publication and implementation of the Open Payments Final Rule and the CY 2015 PFS, various stakeholders have provided feedback to us regarding aspects of the Open Payment program. We have identified areas in the rule that might benefit from revision. In order to consider the views of all stakeholders, we are soliciting comments to inform future rulemaking. We do not intend to finalize any requirements related to Open Payments directly as a result of this proposed rule; rather, we expect to conduct future rulemaking. We are particularly interested in receiving comments on the following:
• We would like to know if the nature of payment categories as listed at § 403.904(e)(2) are inclusive enough to facilitate reporting of all payments or transfers of value to covered recipient physicians and teaching hospitals. We also seek feedback on further categorization of reported research payments.
• Although there is a 5-year record retention requirement at § 403.912(e), our regulations are currently silent on how long applicable manufacturers and applicable GPOs remain obligated to report on past years of payments or ownership or investment interests. We are soliciting feedback on how many years an applicable manufacturer or applicable GPO should continue to monitor and report on past program years for Open Payments reporting purposes.
• We are continuing to refresh all years of program data in addition to newly submitted payment records. We are interested in receiving feedback on how many years of Open Payments data is relevant to our stakeholders to help us determine how many years to continue to publish and refresh annually on our Web site. In addition, we are looking for feedback on how many years may be useful or relevant to Open Payments data users as archive files available for download on our Web site.
• We are seeking feedback on a requirement for all applicable manufacturers and applicable GPOs as defined in § 403.902 to register each year, regardless of whether the entity will be reporting payments or other transfers of value, or ownership or investment interests for the program year. We also seek comment on requiring applicable manufacturers and applicable GPOs to include the reason for not reporting any payments or other transfers of value, or ownership or investment interests.
• We are constantly striving to ensure that all published Open Payments data is valid and reliable. As part of this effort we are seeking comment on a requirement for applicable manufacturers and applicable GPOs to pre-vet payment information with covered recipients and physicians owners or investors before reporting to the Open Payments system, which we understand is an increasingly common practice. Specifically, we would like feedback on pre-vetting based on threshold payment values or random samplings of covered recipients. We are also interested in hearing how applicable manufacturers and applicable GPOs are successfully pre-vetting payment or transfer of value records.
• We continue to receive feedback that the current definition of a covered recipient teaching hospital, as defined at § 403.902, makes reporting payments or transfers of value difficult for applicable manufacturers. Section 1128G of the Act is silent on the definition of a covered recipient teaching hospital. We are soliciting feedback on the specific hurdles that the current definition presents. Additionally we would like to receive proposed alternative operationally feasible definitions or definitional elements of a covered recipient teaching hospital.
• We have heard from stakeholders that verifying receipt of payments or transfers of value to teaching hospitals is a difficult process on the recipient end for a various number of reasons (such as size of hospitals, number of departments, etc.). Without context around a payment record, teaching hospitals have reported difficulties verifying payments attributed to them. This leads to payment disputes. We are seeking feedback on adding a new non-public data element to assist in review and affirmation of payment records. Some examples might be hospital contact name or department etc. Would a free form text field be preferable?
• Some reporting entities have expressed interest to upload data into the Open Payments system before the end of the calendar year for which the data is collected. We believe this may increase data validity and minimize disputes. We solicit feedback on the benefit for applicable manufacturers and applicable GPOs to report data to CMS early or ongoing throughout the year.
• We recognize that some entities may experience mergers, acquisitions, corporate organizations and reorganizations, and other structural corporate changes. We seek feedback on how we might change our reporting requirements to ensure that industry can properly, and easily, represent these changes while still monitoring for compliance with reporting requirements.
• We have received feedback from industry that there is confusion surrounding requirements for reporting ownership and investment interests. Keeping in mind that these reporting requirements are statutorily mandated, we solicit feedback on operationally feasible definitions regarding ownership or investment interests. Specifically, we would like feedback on the terms “value or interest” and “dollar amount invested.” We also solicit comments on additional terms that may require further clarification to facilitate compliance with reporting requirements.
• We solicit ideas on how to define physician-owned distributors (PODs) for data reporting purposes, as well as what data elements PODs should be required to report. We also seek feedback on what portion of the reported data we should share on our Web site.
• From a data collection perspective, we welcome suggestions on ways to streamline or make the process more efficient, while facilitating our role in oversight, compliance, and enforcement.
• With respect to all solicitations, we are requesting an estimate of the time and cost burden associated with reporting for purposes of compliance with the Paperwork Reduction Act.
As part of the annual bidding process required under section 1854(a) of the Act, Medicare Advantage organizations (MAOs) submit bids for each plan they wish to offer in the upcoming contract year (calendar year). We refer to each of these bids as a Medicare Advantage (MA) plan bid. As required by sections 1857(e)(4) and 1860D–12(b)(3)(D) of the Act, data supporting medical loss ratios (MLR) are submitted annually to us by MAOs and Part D sponsors, respectively. Using this authority, we codified the MLR submission requirement in the MLR final rule for Part C and Part D published in the
We are proposing to release to the public MA bid pricing data and Part C and Part D MLR data on a specific schedule and subject to specified exclusions. We propose to add contract terms and expand the basis and scope of our regulations on MA bidding and Part C and Part D MLR submission to incorporate section 1106(a) of the Act (42 U.S.C. 1306(a)), which authorizes disclosure of information filed with this agency in accordance with regulations adopted by the agency. (
The purposes underlying these proposed data releases include allowing public evaluation of the MA and Part D programs encouraging research into these programs and better ways to provide health care, and reporting to the public regarding federal expenditures and other statistics involving these programs. In particular, we believe that facilitating public research using this bid pricing data could lead to better understanding of the costs and utilization trends in MA and support future policymaking for the MA program. For example, MA bid pricing data (which contains actual and projected cost figures) could be used to understand patterns of health care utilization such as how projected and actual costs may differ across geographic areas and different beneficiary populations. Release of MLR data from the MA and Part D programs could lead to research into how managed care in the Medicare population differs from and is similar to managed care in other populations (such as the individual and group markets) where MLR data is also released publicly; such research could inform future administration of these programs. Further, we believe that making certain MA bid pricing data and Part C and Part D MLR data available publicly aligns with Presidential initiatives to improve management and transparency of federal information. The President's January 21, 2009,
These interests, however, must also be balanced with the need to protect the privacy of individuals, the confidentiality of information about Medicare beneficiaries, and the proprietary interests of the MA and Part D plans that submit the information. While transparency in governmental activities and spending is important, we recognize that some of the information we collect in the form of MA bid pricing submissions and Part C and Part D MLR reports should not be publicly disclosed. We believe that our proposal balances these various interests and goals, both in carving out from the planned and authorized releases certain specific data, and (in the case of the MA bid pricing data) in delaying the release past the point of the commercial usefulness of the data.
We are seeking to balance protection of the proprietary interests of MAOs and Part D sponsors with the need to effectively and transparently administer federal health care programs and to encourage research into better ways to provide health care. Further, we believe that adopting a fixed schedule for release of this information and standardizing releases of this data through this rule, will reduce the burdens on the public, CMS, and the submitters of the data that are associated with individual requests for information. Proposing a rule for these releases provides the opportunity for a fulsome and public dialogue that is not always the case with individual requests for information. We encourage commenters to identify and explain additional uses of the information we propose here to release and to suggest additional protections from release if commenters disagree with how we have balanced the competing interests. We hope to receive comments from all viewpoints to ensure that the lines for releasing and protecting information are appropriately drawn.
We make monthly prospective payments to MAOs for providing Part C coverage to Medicare beneficiaries enrolled in their MA plans. As mandated in section 1854 of the Act, amended by Title II of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), our payments to MAOs for their MA plan enrollees are based on bids that MAOs must submit to us no later than the first Monday in June for the upcoming contract year. Each MA plan bid is an estimate of the plan's revenue requirement to cover plan benefits for a projected population. The monthly aggregate bid amount for an MA plan is composed of estimated benefit expenses (direct medical expenses), non-benefit expenses (administrative expenses), and a gain/loss margin (profit) for coverage of original Medicare benefits, Part C supplemental benefits (if any), and Part D benefits (if any). We are not proposing to release Part D bid pricing data in this rule. Also, cost plans operated under section 1876 and section 1833 of the Act, Program for All Inclusive Care for the Elderly (PACE) organizations, and Medicare-Medicaid demonstration plans operated under the Financial Alignment Initiative (
Section 1854(a) of the Act requires that MA bid submissions, including coverage, cost-sharing, and pricing, be in a form and manner specified by the Secretary. The statute, as specified in paragraphs (a)(1), (a)(3), and (a)(6), requires that bids include the plan type, the plan's geographic service area, projected enrollment under the plan, bid amounts for the provision of Part C benefits, bid amounts for Part D benefits (if offered by the MA plan), descriptions of beneficiary cost-sharing liability for each type of benefit, the plan's use of the beneficiary rebate (if any), and the actuarial basis for determining the bid pricing amounts. Part C benefits include basic benefits (that is, the benefits available under Original Medicare Parts A and B) and non-Medicare supplemental benefits (both mandatory and optional); supplemental benefits may include benefits not available under Original Medicare (for example, vision and dental benefits) or the reduction in cost-sharing obligations of enrollees compared to Original Medicare.
The regulation at § 422.254 addresses the content of the bid submission as well but does not specify the form or manner of the submission. We developed standardized templates for MAOs to populate and upload to our Health Plan Management System (HPMS) as the bid submission described in the statute and regulation. These standardized MA bid submission templates collect the information required under § 422.254, and organize the information as follows:
• Plan Benefit Package (PBP) information (describing the Part C benefits and cost-sharing for each MA plan);
• Service Area information (identifying geographic areas where an MA plan is to be offered by the MAO);
• Plan Crosswalk information (identifying plan consolidations, terminations, and/or service area changes from one year to the next); and
• The MA bid pricing data for each PBP (that is, each MA plan). MA bid pricing data is uploaded to HPMS in a template referred to as the MA Bid Pricing Tool (MA BPT).
Currently, we publicly release information on the Plan Benefit Package, service area, and plan crosswalks each year. These data sets can be found on our Web site at
In this rule, we propose to release MA bid pricing data, as defined at proposed § 422.272, which would be implemented as a release of data housed in the MA BPT for each MA plan subject to specified exclusions from release (noted in this section of the proposed rule). The MA BPT is a standardized Excel workbook with multiple worksheets and special functions built-in (for example, validation features). There are also separate BPTs used to price two types of MA plans: Medicare Medical Savings Account plans (the MSA BPT); and End-Stage Renal Disease-only special needs plans (the ESRD–SNP BPT). The MSA BPT was first released for calendar year (CY) 2009 bidding, and the ESRD–SNP BPT was first released for CY 2014 bidding. We maintain and update these three MA BPT formats under OMB #0938–0944, and release annual versions every April.
The MA BPT templates can be found on our Web site at
Below we describe the general categories of MA bid pricing data contained in the MA BPT templates, indicating the associated BPT worksheet. Worksheets 1 through 6 of the MA BPT template collect information for the development and identification of the revenue requirements for basic benefits and mandatory supplemental benefits. Optional supplemental benefits, which enrollees may opt to purchase separately, are addressed in a separate worksheet. The BPT as a whole collects the information described in § 422.254(b), (c) and (d) for coordinated care and private fee-for-service plans and in § 422.254(b) and (e) for MA–MSA plans. The regulation describes the required bid elements in general terms, which we implemented and operationalized at a detailed level in the BPT.
MAOs must report base period experience data, which is defined as claims incurred in the calendar year 2 years prior to the contract year for which the bid is being submitted, for basic benefits and mandatory supplemental benefits. For example, for CY 2017 bids (which must be submitted June 6, 2016), the base period data is for CY 2015. For the historical period, MAOs report the plan's actual allowed per member per month (PMPM) cost, unit cost and utilization by service type (for example, inpatient, outpatient, etc.); cost sharing and net costs are also reported. MAOs must also report actual enrollment and revenue, as well as expenses for claims, administration, and gain/loss margin, for this base period. Finally, MAOs must report the assumptions they use to project (that is, trend) the base period claims experience to the contract year for which they are bidding.
MAOs provide the projected allowed PMPM costs, unit costs, and utilization by service type for the contract year, using the claims experience and projection assumptions described previously; such information demonstrates the actuarial bases of the bid. Allowed costs are “gross” costs, that is, before the application of any beneficiary cost sharing. Total projected allowed costs are reported separately for dual eligible beneficiaries without full Medicare cost-sharing liability versus other beneficiaries. MAOs may also enter manual rates and the credibility assumptions used to blend together manual rates with projected experience.
MAOs present the effective value of a plan's level of cost-sharing by service type, which must include both in-network and out-of-network cost sharing (copays and coinsurance) and other amounts such as plan deductibles and the plan's out-of-pocket maximum cost-sharing amount.
MAOs then combine their allowed cost data and cost sharing information (described in sections III.E.2.b. and c. of this proposed rule) to calculate the plan's projected revenue requirement, which consists of benefit costs (direct medical costs) net of cost-sharing, non-benefit expenses (administrative costs), and gain/loss margin. The plan's projected revenue requirement is allocated to the following: Medicare-covered A/B services, prescription drug coverage (if the plan is an MA–PD plan), and non-Medicare covered services (mandatory supplemental benefits under the plan).
MAOs have the option of reporting enrollment, revenue and expense information related to their plan enrollees with End Stage Renal Disease (ESRD) on worksheet 4; these costs are otherwise excluded from bid development. (We have the authority to determine whether and when it is appropriate to apply the bidding methodology to ESRD MA enrollees, as set forth at § 422.254(a)(2).) MAOs also have the option of reporting information related to Medicaid revenue and expenses for dual eligible beneficiaries.
The plan's expected risk profile (average risk score) is reflected in the projected revenue requirements (costs) for both A/B and supplemental bid amounts. That is, the projected costs will reflect the expected risk profile of that plan's population because the utilization projections built into the costs projected in the bid reflect the underlying risk and need for services of the expected enrollees for that plan. When these projected costs are divided by the plan's projected risk score for a projected enrollment, the costs become “standardized.” Standardized costs have a risk score equal to one, which means that they reflect the risk profile of the average Medicare beneficiary.
The MA BPT illustrates development of the plan-specific A/B benchmark, based on the service area of the plan and the county rates (or MA regional rates) applicable to the plan; the benchmark is identified and calculated using information provided by the plan and county rate information announced by CMS. See § 422.254 and § 422.258. The service-area level benchmark represents the upper limit that the federal government will pay PMPM for coverage of A/B benefits in the defined service area, given the plan's quality rating, prior to risk adjusting payments. The service-area level benchmark for (non-regional) plans that cover multiple counties is a weighted average of the projected plan enrollment and the applicable county ratebook amounts.
For benchmark development, the MAO reports the following: Projected enrollment in member months per county; projected average risk score for the projected enrollment in each county in the plan's service area; and a plan-level factor for the proportion of beneficiaries with Medicare as Secondary Payer. Plan-level projected member months and risk scores are reported separately for dual eligible beneficiaries without full Medicare cost-sharing liability versus other beneficiaries.
The MA BPT is programmed to compare the A/B bid amount from the MAO to the benchmark to determine whether the plan has a beneficiary rebate (defined at § 422.266) and must submit information required by § 422.254(d). If the plan A/B bid amount is lower than the plan benchmark, a percentage of the difference determines the beneficiary rebate amount (where the percentage is based on the plan's quality rating). If the bid is greater than benchmark, the plan must charge a
The MA BPT presents a summary of key figures developed in the tool, including the bid, benchmark, projected risk score, and rebate amount, to support the final step of bid pricing—development of the beneficiary premium (if any) for the plan. To determine the premium, MAOs indicate how the rebate amount will be allocated. Under § 422.266(b), the rebate must be allocated to some combination of MA mandatory supplemental benefits (defined at § 422.2), which can include buy down of original Medicare A/B cost-sharing and offering additional benefits not covered by original Medicare; and buy down of the Part D basic premium, the Part D supplemental premium, and/or the Part B premium.
MAOs may offer optional supplemental benefits, which plan enrollees may opt to purchase for a separate, additional premium. MAOs present the actuarial pricing elements for any optional supplemental benefit packages to be offered during the contract year, up to a maximum of 5 packages. Not all MA plans offer optional supplemental benefits. MAOs report projected member months, allowed costs PMPM, cost sharing, administrative costs and gain/loss margin for each optional supplemental benefit package. MAOs also report base period experience for optional supplemental benefits, including revenue, enrollment, claim expenses, administrative expenses, and gain/loss margin. The information is reported separately as enrollees must make a separate election to purchase these benefits, and for coordinated care plans and private fee-for-service plans they cannot be funded by beneficiary rebates.
Regarding the MSA BPT and ESRD–SNP BPT, the same general requirements apply: Submission of base period experience data; projected allowed costs by service type; projected enrollee cost-sharing payments; projected revenue requirements (medical, administrative, and margin); and development of the plan benchmark against which the bid is compared. Unique to the MSA BPT is development of the beneficiary deposit amount for the high-deductible plan. Unique to the ESRD–SNP BPT are service categories such as dialysis and nephrologist.
In addition to the categories of data noted in this section of the proposed rule, MAOs must also submit supporting documentation to substantiate the actuarial basis of pricing and an actuarial certification of the bid for their MA BPTs, MSA BPTs, and ESRD–SNP BPTs, as required at §§ 422.254(b)(5) and 422.256(c)(5).
We are proposing to amend our MA regulations to provide for the release of certain MA bid pricing data. We propose to release to the public each year, after the first Monday in October, MA bid pricing data that we accepted or approved for a contract year at least 5 years prior to the upcoming calendar year, subject to specific exclusions described in proposed § 422.272(c). We believe this disclosure is consistent with Presidential directives to make information available to the public, and with our goals of allowing public evaluation of the MA program, encouraging research into better ways to provide health care, and reporting to the public regarding federal expenditures and other statistics involving this program. For example, MA bid pricing data (which contains actual and projected cost figures) could be used to understand patterns of health care utilization such as how projected and actual costs may differ across geographic areas and different beneficiary populations, which could inform future bidding and payment policies. Further, releasing pricing data, particularly in conjunction with information already released under § 422.504(n), will provide insight into the use of public funds for the MA program, providing appropriate transparency about the administration of the program.
We propose to codify the requirements for release of MA bid pricing data for MA plan bids accepted or approved by us by adding a new § 422.272 to subpart F of part 422. First, we discuss the definition of MA bid pricing data, then our proposal to release MA bid pricing data for MA plan bids accepted or approved by us, and the types of information we propose be excluded from these data releases. Next, we discuss the specific proposal for the timing of the public data release. Finally, we solicit public comment on approaches to releasing more recent MA bid pricing data. We also solicit comment on our goals and purposes stated above for the release of MA bid pricing data.
At § 422.272(a), we propose a definition of MA bid pricing data to mean the information that MAOs must submit for the annual bid submission for each MA plan, in a form and manner specified by us. Specifically, we propose that MA bid pricing data includes the information described at § 422.254(a)(1) and the information required for MSA plans at § 422.254(e). We use § 422.254(a)(1) in our proposed definition because it provides an overview of the submission requirements in our MA bidding regulations. Specifically, § 422.254(a)(1) references § 422.254(b), (c), and (d), which address, respectively, general bid requirements, information required for coordinated care plans and private fee-for-service plans, and information on beneficiary rebates. At § 422.272(a)(2), we propose to include in the definition the information required for bids for MSA plans, set forth at § 422.254(e), which includes the amount of plan deductible for the high-deductible plan.
By proposing to define MA bid pricing data at § 422.272(a) using cross-references to existing regulation at § 422.254(a)(1) and (e), we are proposing in operational terms that the term encompass all plan-specific data fields in the MA BPT, the MSA BPT, and the ESRD–SNP BPT, that is, the figures that MAOs input and those that are calculated within the BPT. The BPTs also include data that are not plan-specific, which consist of look-up tables built-in to facilitate calculations. We do not propose to include these look-up tables as part of the proposed definition of MA bid pricing data, as they are not submitted by the MAO. These look-up tables are hidden Excel worksheets (which can be “unhidden” within Excel), and are currently available to the public in the BPT templates on the CMS Web site at
Our proposed definition of MA bid pricing data references elements required at § 422.254(b) and includes information described in section III.E.2. (MA Bid Pricing Data) of this proposed rule: The estimated revenue required by an MA plan for providing original
Finally, we propose to define MA bid pricing data to include elements required at § 422.254(d), thus incorporating a reference to the forms of beneficiary rebate at § 422.266(b). That is, for plans that bid below the benchmark for their service areas, the term would include the beneficiary rebate amounts that are allocated in the BPTs to the uses allowed in law: Reduction of cost-sharing below original Medicare levels, offering additional benefits not covered by original Medicare, and reduction of the Part D basic premium, the Part D supplemental premium, and/or the Part B premium. Unlike the underlying components of the Part D pricing (that is, pricing information related to the Part D benefit analogous to the information included in the MA BPT), we consider beneficiary rebate amounts that are applied to reduce the Part D basic and supplemental premiums to be Part C amounts that are part of the MA bid pricing submission, not the Part D bid pricing submission.
In § 422.272(b), we propose to authorize the public release of MA bid pricing data for the MA plan bids that were accepted or approved by us for a contract year under § 422.256. We propose that the annual release will contain MA bid pricing data from the final list of MA plan bids accepted or approved by us for a contract year that is at least 5 years prior to the upcoming calendar year.
We use the phrase “accepted or approved” in the proposed regulation text because both terms are used in existing regulation when referring to MA bids. We consider these words to mean the same thing in the context of MA bid pricing submissions, and we use both words in proposed § 422.272(b) to mirror existing regulation. For example, existing § 422.256(b) states that CMS can only accept bids that meet the standards in that paragraph. However, § 422.256(b)(4)(i) and (ii) use the phrase “CMS approves a bid. . . .” The phrases “decline to accept” and “decline to approve” are used at § 422.254(a)(5) and § 422.256(a), respectively. In the remainder of this preamble, we will use the term “accepted” to represent the phrase “accepted or approved.”
During our annual bid review process, we determine which MAOs must submit one or more updated versions of the initial MA BPT for one or more of their MA plans, in response to questions from our bid reviewers. In addition, as part of the bid pricing submission process, an MAO may have to adjust its allocation of beneficiary rebate dollars for some or all of its MA plans that offer Part D and for their regional PPOs, after we publicly release the Part D national average bid amount and the final MA regional plan benchmarks. Any reallocation of rebate dollars results in a revised MA bid, which must be submitted to us as an updated version of the original submission. Finally, on occasion an MAO will withdraw an MA plan after we have accepted the plan bid. For these reasons, we propose that the MA bid pricing data to be released will only be the data found in the final list of accepted bids; for operational purposes, this means the final accepted MA BPTs, MSA BPTs, and ESRD–SNP BPTs, subject to exclusions noted in proposed paragraph (c).
Finally, in § 422.272(b), we propose to authorize the annual release of MA bid pricing data for a contract year that is at least 5 years prior to the upcoming calendar year. We believe that 5 years is an appropriate length of time for the MA bid pricing data to no longer be competitively sensitive. (The base period data on actual expenses in the MA BPT, MSA BPT, and ESRD–SNP BPT is 2 years older than the data for the bidding year—see the description of the MA BPT category MA Base Period Experience and Projection Assumptions in section III.E.2. of this proposed rule.) Since this will be an annual release, over time the public would have the ability to trend bid cost projections across years, to compare actual costs from the MA BPT with projections from prior years, and to observe bidding patterns over ever-longer periods of time.
We are seeking to balance the protection of commercially sensitive information with our goals to effectively administer federal health care programs, increase data transparency regarding federal expenditures, and encourage research into better ways to provide health care. We propose that a 5-year delay renders multi-year comparisons of pricing trends less relevant to the current year of MA plan pricing. The time lag represents a buffer between the development and implementation of pricing strategies that can be distilled from data multiple years for and the observed relationship and trend from one year to the next, thus mitigating possible competitive disadvantage from the proposed data disclosure. For example, an MAO looking to enter a new MA market is significantly less likely to gain an unfair commercial advantage from being able to examine and trend 5-year-old bid pricing data than if the MAO were able to examine and trend more recent bid pricing data.
We solicit comment on the proposed 5 year delay for reducing competitive disadvantages to MAOs. We solicit comments explaining whether a shorter period would suffice to protect MAOs from competitive harm associated from the disclosure of confidential commercial information or if a longer period is necessary to adequately protect the information and assure the continued submission of accurate data.
In § 422.272(c), we propose that several types of MA bid pricing information be excluded from the data releases under paragraph (b). First, we note that we are not proposing to release Part D bid pricing data in this rule. For this reason, the exclusion from release at proposed § 422.272(c)(1) is information pertaining to the Part D prescription drug bid amount for an MA plan offering Part D benefits, specifically the information required for Part D bid submission at § 422.254(b)(1)(ii), (c)(3)(ii), and (c)(7). We consider this exclusion at proposed § 422.272(c)(1) to include the following amounts in the MA BPT that pertain to the Part D premiums: The Part D basic premium before and after application of beneficiary rebate amounts; the Part D supplemental premium before and after application of beneficiary rebate amounts; the combined MA plus Part D total plan premium; and the target Part D basic premium.
Regarding Part D bid pricing data, section 1860D–15(f) of the Act contains protections for data submitted by Part D Sponsors in accordance with section 1860D–15; these protections would generally prohibit public release of such data. We propose that the Part D bid pricing elements listed in this section of the proposed rule, which appear in the MA bid pricing tools, would be excluded from release. However, we note that the Part C statute does not establish similar protections for MA bid pricing data, and we believe that MA
Second, at § 422.272(c)(2), we propose to exclude from release two categories of additional information that we require to verify the actuarial bases of the MA plan bids. At paragraph (c)(2)(i), we propose to exclude from release any narrative information in the MA BPT, MSA BPT, and ESRD SNP BPT regarding base period factors, manual rates, cost-sharing methodology, optional supplemental benefits, or other topics for which narratives are required by us under § 422.254. These narrative fields provide additional information to allow us to verify the actuarial bases of the bid, as described at § 422.256(c)(5). For the base period narratives, MAOs are asked to describe the source of the base period experience data, and any other utilization adjustment factors, unit cost adjustment factors, and additive adjustment factors that the MAO applied. For projected allowed costs, the narrative field captures descriptions of manual rates including trending assumptions in the manual rates. For projected cost sharing, the narrative fields contains a description of the methodology for reflecting the impact of maximum cost-sharing. Finally, for optional supplemental benefits, there is a general comments field. The proposed regulation text would also exclude from release any other narrative fields in the BPT that we may require as the bid submission process changes over time. We propose to exclude these text fields in the BPTs. MAOs may populate them with information pertinent to more than the individual MA plan bid in which the narrative is included, such as regional or national-level information on an MAO's approach to cost-sharing methodology or projection factors. For example, MAOs may provide information on provider contracting, such as the fee schedules. Further, these explanations and additional information provide insight into the exercise of actuarial judgment in developing the bids. We believe that it is reasonable to treat such summary statements of MAO methodology or strategy as information proprietary to the MAO that should remain protected from public disclosure. The release of such information (for example, fee schedules or national pricing strategy) may provide an unfair commercial advantage to certain entities, such as new market entrants, and likely would impair the government's ability to obtain such information in the future, since MAOs have greater discretion in deciding what written information to share with us and would likely attempt to avoid sharing fee schedule and pricing strategy information.
Another category of information that we propose to exclude from release, at § 422.272(c)(2)(ii), is the supporting documentation that MAOs submit to us to support the actuarial bases of each MA plan bid; these materials are collected outside of the BPT templates so this proposed exclusion would be operationalized by withholding from release any materials submitted as part of an MA bid that were not part of the BPT worksheet submission. Supporting documentation for each MA plan bid can consist of multiple text, spreadsheet, and email files. MAOs submit the first round of supporting documentation with the initial bid submission. Subsequently, during the bid review process, our reviewers may communicate requests for additional supporting documentation, and in response, MAOs may submit multiple updated versions of an MA plan's BPT and additional supporting documentation. There are no standard formats for supporting documentation. A range of files (Word, Adobe, Excel, and email formats) may be uploaded for each of the MA plan bids, and there is no way to identify clearly which data elements in any of the supporting documentation for an MA plan bid applies to the final accepted version of the bid. Supporting documentation often links a particular plan bid to an MAO's broader pricing approaches, such as financial arrangements with providers, and we believe that such analytical information at a regional or national level could be commercially sensitive information in a way that the cost and enrollment estimates in the BPT are not, since such strategic pricing and contracting information could provide an unfair commercial advantage to certain entities, such as new market entrants, who would not need to release such strategic information. We also are concerned whether release of supporting documentation could have a chilling effect on the scope of information provided by MAOs for future bidding and our ability to accurately evaluate bids. We rely on MAOs to provide detailed explanations of the bids in order for CMS to fully understand the judgment calls underlying the assumptions reflected in the bids. If MAOs believe that the explanations and additional information are not protected from disclosure, they may provide less information and less explanation. In order to preserve the access we have, we are proposing to protect this information.
Third, at § 422.272(c)(3), we propose to exclude from release any information identifying Medicare beneficiaries and other individuals. We believe that this identifying information should be excluded from a public data release to protect the privacy of individuals, including but not limited to protecting the confidentiality of information about Medicare beneficiaries. Regarding Medicare beneficiaries, we propose to exclude from release any MA bid pricing data element that is based on fewer than 11 Medicare beneficiaries as we believe that this threshold establishes the point at which individual-level data can be discerned. Following our longstanding data release policy for protecting individually identifiable information, in the event that data fields in an MA BPT, MSA BPT, or ESRD SNP BPT are populated with fewer than 11 MA plan members (or 132 member months, assuming each individual is counted for 12 months), we would suppress all of those data fields in the public release file for that MA plan bid under our proposed rule. We are not proposing to build this threshold into the regulation text, however, as we believe that technology and the ability to reverse-engineer data to identify beneficiaries may change over time. We may revisit this threshold as we administer the data releases proposed here (and in other Medicare contexts) and will make adjustments as necessary to ensure that we do not disclose data that could be used to identify beneficiaries. For example, data fields with member months, utilizers, and utilization per 1,000 could be populated based on fewer than 11 MA plan members and would be suppressed from the release under this proposed rule. Protection of information that could identify Medicare beneficiaries, particularly in the context of their receipt of health care services, is a long-standing principle of ours in the context of the Medicare program. Incorporating this principle and the necessary protection of this data into this proposal to disclose information is appropriate.
Regarding other individuals, we require the names and contact information of certifying actuaries and MA plan contacts in the MA bid submission, that is, in certain fields in the MA BPT, MSA BPT, and ESRD–SNP BPT, and we also require the names and contact information in the actuarial certifications submitted by actuaries who prepared the bids. We propose to exclude this information from the release that we propose to implement. The actuarial certification consists of standardized language that we
Finally, at § 422.272(c)(4), we propose to exclude from release bid review correspondence between us (including our contractors) and the MAO, and internal bid review reports (for example, bid desk review documentation housed in the HPMS Bid Desk Review module, which supports the automated aspects of bid review). First, bid review correspondence (emails) often involves follow-up questions requesting clarification of supporting documentation, so our concerns described above regarding the release of supporting documentation apply to bid review correspondence. Second, it would not be operationally feasible to determine which set of bid review emails between our reviewers and MAOs and which internal bid review reports pertain to the final accepted/approved bid for an MA plan, which is the data we propose to release.
At § 422.272(d), we propose the timing of the release of MA bid pricing data as provided in paragraph (b) and limited by the exclusions in paragraph (c). We propose that the annual release would occur after the first Monday in October. We selected the first Monday in October as the date after which the release could occur each year because the annual bidding cycle has come to a close at this point and we have completed the approval of MA plan bids for the upcoming contract year (calendar year). For example, after the first Monday in October 2016, the bids for contract year 2017 have been accepted; thus, a public release in December 2016 or January 2017 would be a release of the final accepted MA bid pricing data for a contract year not more recent than 2012.
Under this example, our December 2016 release of MA bid pricing data under this proposed rule may include the following: (1) The accepted MA BPT worksheets for 2012 in their entirety, subject to the exceptions § 422.272(c); (2) the accepted MSA BPT worksheets for 2012 in their entirety, subject to the same exceptions; (3) accepted MA BPTs for 2006 through 2011, subject to the same exceptions; and (4) MSA BPTs for 2009 through 2011 (as 2009 was the first year this BPT was used), subject to the same exceptions, because these years are more than 5 years prior to 2017. However, under the example of a December 2016 release, we would not release any Part C pricing data for ESRD–SNPs because the ESRD–SNP BPT was used for the first time for contract year 2014; the first time that data from accepted ESRD–SNP BPTs could be released under this proposal is after the first Monday in October 2018.
While we propose to authorize release of this data after the first Monday in October each year, we are not committing to a specific date for each annual release. We will provide details on each year's release schedule through sub-regulatory communications. We anticipate that as the release process becomes more standardized over the years, we will be able to release these files closer to the proposed regulatory timeline. In addition, we intend that the first time we implement a public release MA bid submission data, we may release data for multiple contract years that meet the criterion of at least 5 years prior to the upcoming calendar year.
As mentioned in the Background (section III.E.1), in crafting this proposal to release MA bid pricing data, we are seeking to balance proprietary interests with our mission to effectively administer federal health care programs and increase data transparency. We are soliciting comments on the approach we are proposing for the public release of MA bid pricing data based on a 5-year lag in the data, and whether that is the appropriate timeframe to apply to this data release. We also seek comment on the scope of the proposed release of BPT worksheets and data elements. We are particularly interested in whether of the MA bid pricing data we are proposing to release contains proprietary information, and if so, are requesting detailed explanations of good cause for its redaction from public availability and suggestions for what safeguards might be implemented to appropriately protect those portions of the data. Detailed explanations should contain specific examples which show how this information disclosure could cause substantial competitive harm to MAOs. Specific examples should (1) cite the particular information proposed to be released and explain how that information differs from publicly available data; (2) point to the particular entity or entity type that could gain an unfair competitive advantage from the information release; and (3) fully explain the mechanism by which the release of that particular information would create an unfair competitive advantage for that particular entity. Similarly, we are interested in comments that our proposed scope for release is too narrow and unnecessarily protects data that is not confidential and should not be protected. We are soliciting comments and explanations that show how the data is not confidential, could not be used to create unfair competitive disadvantage, and that its release would not have a chilling effect on the nature and scope of the data that we currently receive from MAOs in the bid submissions. As noted above, we view this rulemaking as the opportunity to solicit wide ranging comments on this issue in order to chart the wisest course for release of pricing data in support of our goals.
We propose to amend § 422.250 on the basis and scope of the MA program to add a reference to section 1106 of the Act. As discussed in the Background (section E.1.), section 1106(a) of the Act (42 U.S.C. 1306(a)) provides us the authority to enact regulations that would enable the agency to release information filed with this agency.
We are also considering whether to release MA bid pricing data for years more recent than the 5-year data lag proposal. In 2011, an academic researcher submitted a request to CMS for certain data elements regarding the 2009 MA Base Period Experience in the 2011 MA bid pricing submissions. We rejected the request under Exemption 4 to the FOIA, 5 U.S.C. 552(b)(4), which exempts from disclosure trade secrets and confidential or privileged commercial or financial information that is obtained from a person. In a 2013 opinion,
For example, we are considering whether to release MA bid pricing data on a shorter timeframe than the proposed 5-year lagged timeframe, which could be as recent as MA bid pricing data from the previously-concluded MA contract year. We are also seeking comment as to whether the relationship between the passage of time and commercial sensitivity of the bid data changes more rapidly for some MA bid pricing data elements than others. If commenters believe this to be the case, we are seeking the submission of detailed analysis that sets forth which data elements meet this standard and why.
If unfair competitive harm is included as a rationale for us to consider in withholding some or all elements of more recent MA bid pricing data from release, either to external researchers subject to some limitations in redisclosure of the data or the public at large, we seek evidence of this competitive harm linked to particular bid data elements, and a fulsome discussion as to how each of the elements identified could be used by a competitor to directly harm a competing MAO. See section III.E.3.d above for detail on what a fulsome discussion would include, in our explanation of “specific examples.” If there are commercially sensitive data elements in the MA bids, we also seek comment as to whether there are safeguards that might be appropriately implemented to protect those identified data elements, while still allowing releases of more recent data.
Finally, we are seeking comment regarding to whom we should release more recent MA bid pricing data. Specifically, should such a release be made fully available to the public at large, or only to researchers who have studies approved through an application process and who are subject to our long-standing data sharing procedures. If we were to release MA bid pricing data for years more recent than the 5 year lagged data we propose here, we also seek comment on whether to use the existing policies for the release of Part D prescription drug event (PDE) data at § 423.505(m) and Part C encounter data at § 422.310(f)(2). We also seek comment on whether research results from the analysis of MA bid pricing data should be subject to additional restrictions, such as a prohibition of publication of MA bid pricing data at the plan level or prohibitions on the identification of the applicable MAO that submitted the data. We seek comment on whether external researchers should be able to use MA bid pricing data for commercial purposes rather than to produce research that could be useful to us in our administration of the Medicare program generally. We are considering limiting conditions of this type as means to release as much data while protecting what should be protected.
As discussed in section III.E.3.d above, we are seeking comment on our proposal that 5 years is an appropriate length of time for the MA bid pricing data we are proposing to release to no longer be competitively sensitive. In addition, in setting forth this section III.E.5 discussion, we are also soliciting comments on how we can best serve the needs of the public through the sharing of MA bid pricing data that is less than 5 years old while at the same time addressing the concerns of MAOs that we appropriately guard against the potential misuse of data in ways that would undermine protections put in place to ensure nondisclosure of proprietary data. The purpose of this solicitation is to both inform our decision-making process about the 5-year threshold proposed above, as well as to inform future policy development.
Section 1103 of Title I, Subpart B of the Health Care and Education Reconciliation Act (Pub. L. 111–152) amends section 1857(e) of the Act to add medical loss ratio (MLR) requirements to Medicare Part C. An MLR is expressed as a percentage, generally representing the percentage of revenue used for patient care rather than for such other items as administrative expenses or profit. Because section 1860D–12(b)(3)(D) of the Act incorporates by reference the requirements of section 1857(e) of the Act, these MLR requirements also apply to the Part D program. In the May 23, 2013 final rule (78 FR 31284), we codified the MLR requirements for MAOs and Part D sponsors in the regulations at part 422, subpart X, and part 423, subpart X.
For contracts beginning in 2014 or later, MAOs, cost plans, and Part D sponsors are required to report their MLRs and are subject to financial and other penalties for a failure to meet the statutory requirement that they have an MLR of at least 85 percent (see § 422.2410 and § 423.2410). The statute imposes several levels of sanctions for failure to meet the 85 percent minimum MLR requirement, including remittance of funds to CMS, a prohibition on enrolling new members, and ultimately contract termination. The minimum MLR requirement in section 1857(e)(4) of the Act creates incentives for MAOs and Part D sponsors to reduce administrative costs, such as marketing costs, profits, and other uses of the funds earned by plan sponsors, and helps to ensure that taxpayers and enrolled beneficiaries receive value from Medicare health plans.
Under the regulations at § 422.2410 and § 422.2460, with respect to MAOs, and § 423.2410 and § 423.2460, with respect to Part D sponsors, for each contract year, each MAO and Part D sponsor is required to submit a report to us, in a timeframe and manner that we specify, which includes the data needed to calculate and verify the MLR and remittance amount, if any, for each contract. The information that MAOs and Part D sponsors report to us includes incurred claims for medical services and prescription drug costs, expenditures on activities that improve health care quality, taxes, licensing and regulatory fees, non-claims costs, and revenue.
We have developed a standardized MLR Report template, called the MLR Report, for MAOs and Part D sponsors to populate with the data used to calculate the MLR and remittance amount owed to us under § 422.2410 and § 423.2410, if any. The MLR Report is a standardized Excel workbook with three worksheets and special functions built in (for example, validation features). We maintain and update the MLR Report data collection format under OMB #0938–1232.
For each contract year beginning in 2014 or later, MAOs and Part D sponsors are required to enter their MLR data and upload their MLR Reports to our Health Plan Management System (HPMS). Based on the data entered by the MAO or Part D sponsor, the Report calculates the MLR for the contract. An MA or Part D contract's MLR is increased by a credibility factor if the contract's experience for the contract
Below we describe the categories of Part C and Part D MLR data submitted in the MLR Reports:
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We are proposing to add new contract requirements, codified in new regulations at §§ 422.504 and 422.2490 of part 422, with respect to Part C MLR data, and §§ 423.505 and 423.2490 of part 423, with respect to Part D MLR data, to authorize release to the public by CMS of certain MLR data submitted by MAOs and Part D sponsors. We propose to define Part C MLR data at § 422.2490(a), and Part D MLR data at
Generally, the MLR for each MA and Part D contract reflects the ratio of costs (numerator) to revenues (denominator) for all enrollees under the contract. For an MA contract, the MLR reflects the percentage of revenue received under the contract spent on incurred claims for all enrollees, prescription drug costs for those enrollees in MA plans under the contract offering the Part D benefit, quality initiatives that meet the requirements at § 422.2430, and amounts spent to reduce Part B premiums. The MLR for a Part D contract reflects the percentage of revenue received under the contract spent on incurred claims for all enrollees for Part D prescription drugs, and on quality initiatives that meet the requirements at § 423.2430. The percentage of revenue that is used for other items such as administration, marketing, and profit is excluded from the numerator of the MLR (see § 422.2401 and § 423.2401; § 422.2420(b)(4) and § 423.2420(b)(4); § 422.2430(b) and § 423.2430(b)).
As discussed in section III.F.1. of this proposed rule, our proposed release of Part C and Part D MLR data is in keeping with Presidential initiatives to improve federal management of information resources by increasing data transparency and access to federal datasets. In proposing this release, we are also seeking to align with current disclosures of MLR data that issuers of commercial health plans submit each year as required by section 2718 of the Public Health Service Act. We have published similar commercial MLR data on our Web site at
The MLR data that we propose to release will enable enrollees, consumers, regulators, and others to see how much of plan sponsors' revenue is used to pay for services, quality improving activities, and Part B premium rebates versus how much is used to pay for “non-claims,” or administrative expenses, incurred by the plan sponsor. We believe that the release of this data will facilitate public evaluation of the MA and Part D programs by providing insight into the efficiency of health insurers' operations. In addition, we believe that our proposed policy for the release of certain MLR data will provide beneficiaries with information that can be used to assess the relative value of Medicare health and drug plans.
For the purpose of this data release under proposed § 422.2490 and § 423.2490, we would exclude four categories of information from the release of Part C and Part D MLR data, as described at proposed § 422.2490(b) and § 423.2490(b), respectively. First, at § 422.2490(b)(1) and § 423.2490(b)(1), we propose to exclude from release any narrative information that MAOs and Part D sponsors submit to support the amounts that they include in their MLR Reports, such as descriptions of the methods used to allocate expenses. MAOs and Part D sponsors are required to describe the methods they used to allocate expenses, including incurred claims, quality improvement expenses, federal and state taxes and licensing or regulatory fees, and other non-claims costs. A detailed description of each expense element should be provided, including how each specific expense meets the criteria for the type of expense in which it is categorized. We believe that descriptions of expense allocation methods should be excluded because MAOs and Part D sponsors may be required to provide information that is pertinent to more than the individual MA or Part D contract for which the MLR Report is being submitted (see, for example, § 422.2420(d)(1)(ii) and § 423.2420(d)(1)(ii), which requires that expenditures that benefit multiple contracts, or contracts other than those being reported, be reported on a pro rata share), such as an MAO's or Part D sponsor's proprietary approach to setting payment rates in contracts with providers, or its strategies for investing in activities that improve health quality. We are concerned that MAOs and Part D sponsors would be reluctant to submit narrative descriptions that include information that they regard as proprietary if they know that it will be disclosed to the public, which could impair our ability to assess the accuracy of their allocation methods.
Second, at § 422.2490(b)(2) and § 423.2490(b)(2), we propose to exclude from release any plan-level information that MAOs and Part D sponsors submit in their MLR Reports. Some of the plan-level data in MAO's and Part D sponsors' MLR Reports is also included in their plan bids as base period experience data, such as plan IDs, plan member months, and Medicaid per member per month gain/loss. As discussed in our proposal to release certain MA bid pricing data, we believe bid data would no longer be competitively sensitive after 5 years; however, we do not believe that bid data becomes no longer competitively sensitive within the 18-month timeframe for our proposed release of MLR data. Therefore, we will exclude from our proposed release plan-level data that is included as base period experience data in plan bids. We also propose to exclude the plan-level information submitted in MLR Reports because we do not regard it as relevant to the purposes of our proposed release of Part C and Part D MLR data, which include giving the public access to data that can be used to evaluate the efficiency of MAOs and Part D sponsors and providing enrollees with information that can be used to compare the relative value of health plans. For example, our proposed release would exclude MAOs' and Part D sponsors' responses to questions in the MLR Report that ask whether each plan under a contract is a Special Needs Plan for beneficiaries who are dually eligible for both Medicare and Medicaid (D–SNP), or whether the plan's defined service area includes counties in one of the territories.
Third, at § 422.2490(b)(3) and § 423.2490(b)(3), we propose to exclude from release any information identifying Medicare beneficiaries or other individuals. This exclusion is proposed for the same reason we propose to exclude similar information from MA bid submission data that will be released; we believe that it is important to protect the privacy of individuals identified in these submissions, particularly Medicare beneficiaries. Protection of information that could identify Medicare beneficiaries, particularly in the context of their receipt of health care services, is a long-standing principle of ours in the context of the Medicare program. Incorporating this principle and the necessary protection of this data into this proposal to disclose information is appropriate. With respect to Medicare beneficiaries, we propose to exclude from release any information (that is, data elements) in an MLR Report for a contract if the total number of beneficiaries under the contract is fewer than 11, as we believe that this threshold establishes the point at which individual-level data can be discerned. Following our longstanding data release policy for protecting
Regarding other individuals, we require that MAOs and Part D sponsors provide in their MLR Reports the names and contact information of individuals who can answer questions about the data submitted in an MLR Report. We propose to exclude this information from release. We do not believe that the release of this information serves the purposes of our proposed release of certain MLR data, which are to provide the public with data that can be used to evaluate MA and Part D contracts' efficiency, and to provide beneficiaries with information that can be used to compare the relative value of Medicare plans. Further, release of this identifying and contact information appears to be an unnecessary intrusion into information about private individuals.
Fourth, at § 422.2490(b)(4) and § 423.2490(b)(4), we propose to exclude from release any MLR review correspondence. In the course of the MLR review process, our reviewers may engage in correspondence with MAOs and Part D sponsors in order to validate amounts included in their MLR Reports. Such correspondence may include requests for evidence of amounts reported to us. Responses to these requests could include competitively-sensitive information, such as MAOs' and Part D sponsors' negotiated rates of reimbursement. Release of this correspondence could cause MAOs to be less forthcoming in the information provided to CMS, which would impede the ability of the agency to verify the information submitted by MAOs and Part D sponsors.
We are proposing to release the MLR data specified in this rule for each MA and Part D contract on an annual basis no earlier than 18 months after the end of the contract year to which the MLR data applies. We are proposing to follow the commercial MLR approach in making the data we receive in MLR Reports available to the public. For Part C and Part D MLR reporting, the data is due about 12 months after the end of the contract year. After we receive MAOs' and Part D sponsors' MLR Reports, we anticipate that it will take up to six months for us to review and finalize the data submitted by MAOs and Part D sponsors.
We believe that our proposed release of contract-level MLR data strikes the appropriate balance between safeguarding information that could be commercially sensitive or proprietary and providing enrollees of health plans, consumers, regulators, and others with a measure that can be used to evaluate health insurers' efficiency. The Part C MLR data and Part D MLR data that we propose to release is aggregated at the contract level. Costs in the MLR numerator are aggregated across providers, beneficiaries, and sites of service. Costs and revenues are further aggregated across all plans under the contract. We do not believe that there is a realistic possibility that the MLR data that we propose to release could be disaggregated or reverse engineered to reveal commercially sensitive or proprietary information. We seek comment on this point and on our analysis of the commercial sensitivity of this information.
We believe the availability of the Part C MLR data and Part D MLR data we are proposing to release will provide beneficiaries a measure by which they can compare the relative value of Medicare products. Our proposed release of MLR data will permit enrollees of health plans, consumers, regulators, and others to take into consideration MLRs when evaluating health insurers' efficiency.
We also believe the availability of MLR data will enhance the competitive nature of the MA and Part D programs. The proposed access to data will support potential plan sponsors in evaluating their participation in the Part C and D programs and will facilitate the entry into new markets of existing plan sponsors. In knowing historical MLR data, new business partners might emerge, and better business decisions might be made by existing partners. As a result, we believe that releasing Part C and Part D MLR data as proposed is both necessary and appropriate for the effective operation of these programs.
We seek comment on the release of Part C MLR data and Part D MLR data as outlined above. We solicit comment on whether the Part C MLR data and Part D MLR data we propose to release contain proprietary information, and if so, what safeguards might be appropriate to protect those data, such as recommended fields to be redacted, the minimum length of time that such data remains commercially sensitive, and any suggestions for publishing aggregations of Part C MLR data and Part D MLR data in lieu of publishing the MLR data as submitted by MAOs and Part D sponsors. We invite commenters to provide analysis and explanations to support comments that information should be protected for a longer—or shorter—period of time so that we may properly evaluate our proposal in adopting a final rule. Analysis and explanations should (1) cite the particular information proposed to be released and explain how that information differs from publicly available data; (2) point to the particular entity or entity type that could gain an unfair competitive advantage from the information release; and (3) fully explain the mechanism by which the release of that particular information would create an unfair competitive advantage for that particular entity.
We also solicit comment on whether MLR data that is associated single-plan contracts is more commercially sensitive than MLR data that is associated with contracts that include multiple plans, and if so, whether we should take any protective measures when releasing the MLR data for single-plan contracts, such as redacting data fields that could be used to identify the contract, withholding the MLR data for all single-plan contracts and instead publishing a data set consisting of figures that have been averaged across all single-plan contracts, or by releasing a more limited data set for single-plan contracts.
We are proposing to amend § 422.2400, which identifies the basis and scope of the MLR regulations for MAOs, and § 423.2400, which identifies the basis and scope of the MLR regulations for Part D sponsors, to add a reference to section 1106 of the Act, which governs the release of information gathered in the course of administering our programs under the Act.
We remind all Medicare providers (including providers of services defined in section 1861 of the Act and
These findings underscore the need to re-educate providers about proper billing practices for QMB enrollees.
In 2013, approximately 7 million Medicare beneficiaries were enrolled in the QMB program. State Medicaid programs are liable to pay Medicare providers who serve QMB individuals for the Medicare cost-sharing. However, as permitted by federal law, states can limit provider payment for Medicare cost-sharing to the lesser of the Medicare cost-sharing amount, or the difference between the Medicare payment and the Medicaid rate for the service. Regardless, Medicare providers must accept the Medicare payment and Medicaid payment (if any, and including any permissible Medicaid cost sharing from the beneficiary) as payment in full for services rendered to a QMB individual. Medicare providers who violate these billing prohibitions are violating their Medicare Provider Agreement and may be subject to sanctions. (See sections 1902(n)(3); 1905(p); 1866(a)(1)(A); 1848(g)(3) of the Act.)
Providers should take steps to educate themselves and their staff about QMB billing prohibitions and to exempt QMB individuals from impermissible Medicare cost-sharing billing and related collection efforts. For more information about these requirements, steps to identify QMB patients and ways to promote compliance, see
Given that original Medicare providers may also serve Medicare Advantage enrollees, we note that the CY 2017 Medicare Advantage Call Letter reiterates the billing prohibitions applicable to dual eligible beneficiaries (including QMBs) enrolled in Medicare Advantage plans and the responsibility of plans to adopt certain measures to protect dual eligible beneficiaries from unauthorized charges under § 422.504(g). (See pages 181–183 at
Medicare payments to providers and suppliers may be offset or recouped, in whole or in part, by a Medicare contractor if the Medicare contractor or CMS has determined that a provider or supplier has been overpaid. Historically, we have used the Medicare provider billing number or National Provider Identifier (NPI) to recoup overpayments from Medicare providers and suppliers until these debts were paid in full or eligible for referral to the Department of Treasury (Treasury) for further collection action under the Debt Collection Improvement Act of 1996 and the Digital Accountability and Transparency Act of 2014. Once an overpayment is referred to Treasury, the Treasury's Debt Management Services uses various tools to collect the debt, including offset of federal payments against entities that share the same provider Taxpayer Identification Number (TIN). Hence, Treasury has the ability to collect our overpayments using the provider TIN and we pay a fee for every collection made.
On March 23, 2010, the Affordable Care Act (ACA) was enacted. Section 6401(a)(6) of the Affordable Care Act established a new section 1866(j)(6) of the Act. Section 1866j(6) of the Act allows the Secretary to make any necessary adjustments to the payments to an applicable provider of services or supplier to satisfy any amount due from an obligated provider of services or supplier. The statute defines an applicable provider of services or supplier (applicable provider) as a provider of services or supplier that has the same taxpayer identification number as the one assigned to the obligated provider of services or supplier. The statute defines the obligated provider of services or supplier (obligated provider) as a provider of services or supplier that owes a past-due overpayment to the Medicare program. For purposes of this provision, the applicable and obligated providers must share a TIN, but may possess a different billing number or National Provider Identifier (NPI) number than one another.
For example, a health care system may own a number of hospital providers and these providers may share the same TIN while having different NPI or Medicare billing numbers. If one of the hospitals in this system receives a demand letter for a Medicare overpayment, then that hospital (Hospital A) will be considered the obligated provider while its sister hospitals (Hospitals B and C) will be considered the applicable providers. This authority allows us to recoup the overpayment of the obligated provider, Hospital A, against any or all of the applicable providers, Hospitals B and C, with which it, Hospital A, shares a TIN.
If CMS or a Medicare contractor has decided to put into effect an offset or recoupment, then § 405.373(a) requires the Medicare contractor to notify the provider or supplier in writing of its intention to fully or partially offset or recoup payment and the reasons for the offset or recoupment. Currently, the written demand letter sent by the Medicare contractor to a provider or supplier serves as notification of the overpayment and intention to recoup or offset if the obligated provider, Hospital A, fails to repay the overpayment in a timely manner.
With the passage of section 1866(j)(6) of the Act, the requirements in § 405.373(a) could be interpreted to require the Medicare contractor to provide notification to both the obligated provider, Hospital A, and the applicable provider, Hospital B, of its intention to recoup or offset payment. Because we don't think it is necessary to provide separate notice to both the obligated provider and the applicable provider, we propose to amend the notice requirement in § 405.373. Specifically, we propose to create a new paragraph (f) in § 405.373 to state that § 405.373(a) does not apply in instances where the Medicare Administrative Contractor intends to offset or recoup payments to the applicable provider of services or supplier to satisfy an amount due from an obligated provider of services or supplier when the applicable and obligated provider of services or supplier share the same Taxpayer Identification Number.
Before the effective date of this rule, we intend to notify all potentially affected Medicare providers of the implementation of section 1866j(6) of the Act through Medicare Learning Network (MLN) or MLN Connects Provider eNews article(s), an update to
Additionally, in our review of § 405.373(a) and (b), we propose to replace the terms intermediary and carrier with the term Medicare Administrative Contractor as intermediaries and carriers no longer exist.
The Affordable Care Act gives the Secretary authority to incorporate reporting requirements and incentive payments from certain Medicare programs into the Shared Savings Program, and to use alternative criteria to determine if payments are warranted. Specifically, section 1899(b)(3)(D) of the Act affords the Secretary discretion to incorporate reporting requirements and incentive payments related to the physician quality reporting initiative (PQRI), under section 1848 of the Act, including such requirements and such payments related to electronic prescribing, electronic health records, and other similar initiatives under section 1848, and permits the Secretary to use alternative criteria than would otherwise apply (under section 1848 of the Act) for determining whether to make such payments.
Current Shared Savings Program regulations at § 425.504(c) do not allow eligible professionals (EPs) billing through the Taxpayer Identification Number (TIN) of an Accountable Care Organization (ACO) participant to participate in PQRS outside of the Shared Savings Program, and these EPs and the ACO participants through which they bill may not independently report for purposes of the PQRS apart from the ACO. This policy was designed to ease reporting burden for individual EPs and group practices and promote integration of providers and suppliers within the ACO in order to help achieve the Shared Savings Program goals of improving quality and coordination of care. While over 98 percent of ACOs satisfactorily report their quality data annually, if an ACO fails to satisfy the PQRS reporting requirements, the individual EPs and group practices participating in that ACO will receive the PQRS payment adjustment along with the automatic VM downward payment adjustment.
We are proposing to amend the regulation at § 425.504 to permit EPs that bill under the TIN of an ACO participant to report separately for purposes of the 2018 PQRS payment adjustment when the ACO fails to report on behalf of the EPs who bill under the TIN of an ACO participant. Specifically, we are proposing to remove the requirement at § 425.504(c)(2) so that, for purposes of the reporting period for the 2018 PQRS payment adjustment (that is, January 1, 2016, through December 31, 2016), EPs who bill under the TIN of an ACO participant have the option of reporting separately as individual EPs or group practices. If the ACO fails to satisfactorily report on behalf of such EPs or group practices, we are proposing to consider this separately reported data for purposes of determining whether the EPs or group practices are subject to the 2018 PQRS payment adjustment. We are also proposing to amend § 425.504(c)(2) to apply only for purposes of the 2016 payment adjustment. We propose at § 425.504(d) the revised requirements for the 2017 and 2018 PQRS payment adjustment under the Shared Savings Program. We discuss the proposed changes for the 2017 PQRS payment adjustment under the Shared Savings Program in more detail later in this section.
We note that the registration deadline for participating in the PQRS Group Practice Reporting Option (GPRO) is June 30 of the applicable reporting period. Since affected EPs are not able to register for the PQRS GPRO by the applicable deadline for the 2018 PQRS payment adjustment, we propose that such EPs would not need to register for the PQRS GPRO for the 2018 PQRS payment adjustment, but rather mark the data as group data in their submission. Thus, we are proposing to eliminate a registration process for groups submitting data using third party entities. When groups submit data utilizing third party entities, such as a qualified registry, QCDR, direct EHR product, or EHR data submission vendor, we are able to obtain group information from the third party entity and discern whether the data submitted represents group submission or individual submission once the data is submitted. In addition, we propose that an affected EP may utilize the secondary reporting period either as an individual EP using one of the registry, qualified clinical data registry (QCDR), direct Electronic Health Record (EHR) product, or EHR data submission vendor reporting options or as a group practice using one of the registry, QCDR, direct EHR product, or EHR data submission vendor reporting options. We note that this would exclude, for individual EPs, the claims reporting option and, for group practices, the Web Interface and certified survey vendor reporting options.
Furthermore, we recognize that certain EPs are similarly situated with regard to the 2017 PQRS payment adjustment, which will be applied beginning on January 1, 2017. We believe it is appropriate and consistent with our stated policy goals to afford these EPs the benefit of this proposed policy change. Accordingly, as noted above,we are proposing to permit EPs that bill through the TIN of an ACO participant to report separately for purposes of the 2017 PQRS payment adjustment if the ACO failed to report on behalf of the EPs who bill under the TIN of an ACO participant. Specifically, we are proposing to remove the requirements at § 425.504(c)(2) so that, for purposes of the reporting period for the 2017 PQRS payment adjustment, EPs who bill under the TIN of an ACO participant have the option of reporting separately as individual EPs or group practices. As noted above, we are proposing to amend § 425.504(c)(2) to apply only for purposes of the 2016 payment adjustment. We propose at § 425.504(d) the revised requirements for the 2017 and 2018 PQRS payment adjustment under the Shared Savings Program.
The previously established reporting period for the 2017 PQRS payment adjustment is January 1, 2015, through December 31, 2015. To allow affected EPs that participate in an ACO to report separately for purposes of the 2017 PQRS payment adjustment, we are proposing at § 414.90(j)(1)(ii) to establish a secondary PQRS reporting period for the 2017 PQRS payment adjustment for individual EPs or group practices who bill under the TIN of an ACO participant if the ACO failed to report on behalf of such individual EPs or group practices during the previously established reporting period for the
In addition, we propose that these affected EPs may utilize the secondary reporting period either as an individual EP using the registry, QCDR, direct EHR product, or EHR data submission vendor reporting options or as a group practice using one of the registry, QCDR, direct EHR product, or EHR data submission vendor reporting options. We note that this would exclude, for individual EPs, the claims reporting option and, for group practices, the Web Interface and certified survey vendor reporting options.
We note that the registration deadline for the participating in the PQRS GPRO is June 30 of the applicable reporting period. Since the applicable deadline for the 2017 PQRS payment adjustment has passed, we propose that such EPs would not need to register for the PQRS GPRO for the 2017 PQRS payment adjustment, but rather would be able to report as a group practice via the registry, QCDR, direct EHR product, or EHR data submission vendor reporting options. Therefore, we propose at § 414.90(j)(4)(v) that sections § 414.90(j)(8)(ii), (iii), and (iv) would apply to affected EPs reporting as individuals using this secondary reporting period for the 2017 PQRS payment adjustment. In addition, we propose at § 414.90(j)(7)(viii) that sections § 414.90(j)(9)(ii), (iii), and (iv) would apply to affected EPs reporting as group practices using this secondary reporting period for the 2017 PQRS payment adjustment. Further, we propose at § 414.90(k)(4)(ii) that § 414.90(k)(5) would apply to affected EPs reporting as individuals or group practices using this secondary reporting period for the 2017 PQRS payment adjustment.
We are also proposing that the secondary reporting period for the 2017 PQRS payment adjustment would coincide with the reporting period for the 2018 PQRS payment adjustment (that is, January 1, 2016 through December 31, 2016). In addition, for operational reasons and to minimize any additional burden on affected EPs (who are already required to report for CY 2016 for purposes of the 2018 PQRS payment adjustment), we propose to assess the individual EP or group practice's 2016 data using the applicable satisfactory reporting requirements for the 2018 PQRS payment adjustment (including, but not limited to, the applicable PQRS measure set). We invite comment on any 2018 requirements that may need to be modified when applied for purposes of the 2017 PQRS payment adjustment,
As a result, individual EP or group practice 2016 data could be used with respect to the secondary reporting period for the 2017 payment adjustment or for the 2018 payment adjustment or for both payment adjustments if the ACO in which the affected EPs participate failed to report for purposes of the applicable payment adjustment. We believe this change to our program rules is necessary for affected individual EPs and group practices to be able to take advantage of the additional flexibility proposed at section III.K.1.e. for the Shared Savings Program. If an affected individual EP or group practice decides to use the secondary reporting period for the 2017 payment adjustment, it is important to note that this EP or group practice should expect to receive a PQRS payment adjustment for services furnished in 2017 until CMS is able to determine that the EP or group practice satisfactorily reported for purposes of the 2017 PQRS payment adjustment. First, we would need to process the data submitted for 2016. Second, we would need to determine whether or not the individual EP or group practice met the applicable satisfactory reporting requirements for the 2018 PQRS payment adjustment. Third, we would need to update the individual EP or group practice's status so that the EP or group practice stops receiving a negative payment adjustment on claims for services furnished in 2017 and reprocess all claims that were previously paid. In addition, as discussed further in section III.L. of this proposed rule, the EP or group practice would also avoid the automatic downward VM adjustment, but would not qualify for an upward adjustment since the ACO failed to report.
Since EPs and group practices taking advantage of this secondary reporting period for the 2017 PQRS payment adjustment will have missed the deadline for submitting an informal review request for the 2017 PQRS payment adjustment, we propose the informal review submission periods for these EPs or group practices would occur during the 60 days following the release of the PQRS feedback reports for the 2018 PQRS payment adjustment.
We request comments on these proposals.
The Medicare program is the primary payer of health care for approximately 54 million beneficiaries and enrollees. Section 1802(a) of the Act permits beneficiaries to obtain health services from any individual or organization qualified to participate in the Medicare program. Providers and suppliers furnishing items or services must comply with all applicable Medicare requirements stipulated in the Act and codified in the regulations. These requirements are meant to promote quality care while protecting the integrity of the program. As a major component of our fraud prevention activities, we have increased our efforts to prevent unqualified individuals or organizations from enrolling in Medicare.
The term “provider of services” is defined in section 1861 of the Act as a hospital, a critical access hospital (CAH), a skilled nursing facility (SNF), a comprehensive outpatient rehabilitation facility (CORF), a home health agency (HHA), or a hospice. The term “supplier” is defined in section 1861(d) of the Act as, unless context otherwise requires, a physician or other practitioner, facility or other entity (other than a provider of services) that furnishes items or services under title XVIII of the Act. Other supplier categories may include, for example, physicians, nurse practitioners, and physical therapists.
Providers and suppliers that fit into these statutorily defined categories may enroll in Medicare if they meet the proper screening and enrollment requirements. This proposed rule would require MA organization providers and suppliers to be enrolled in Medicare in an approved status. We generally refer to an “approved status” as a status whereby a provider or supplier is enrolled in, and is not revoked from, the Medicare program. For example, a provider or supplier that has submitted an application, but has not completed the enrollment process with their respective Medicare Administrative Contractor (MAC), is not enrolled in an approved status. The submission of an enrollment application does not deem a provider or supplier enrolled in an approved status. A provider or supplier that is currently revoked from Medicare is not in an approved status. Out-of network or non-contract providers and suppliers are not required to enroll in
To receive payment for a furnished Medicare Part A or Part B service or item, or to order, certify, or prescribe certain Medicare services, items, and drugs, a provider or supplier must enroll in Medicare. The enrollment process requires the provider or supplier to complete, sign, and submit to its assigned Medicare contractor the appropriate Form CMS–855 enrollment application. The CMS–855 application form captures information about the provider or supplier that is needed for CMS or its contractors to screen the provider or supplier and determine whether the provider or supplier meets all Medicare requirements. This screening prior to enrollment helps to ensure that unqualified individuals and entities do not bill Medicare and that the Medicare Trust Funds are accordingly protected. Data collected and verified during the enrollment process generally includes, but is not limited to: (1) Basic identifying information (for example, legal business name, tax identification number); (2) state licensure information; (3) practice locations; and (4) information regarding ownership and management control.
We strive to further strengthen its provider and supplier enrollment process to prevent and deter problematic providers and suppliers from entering the Medicare program. This includes, but is not limited to, enhancing its program integrity monitoring systems and revising its provider and supplier enrollment regulations in 42 CFR 424, subpart P, and elsewhere as needed. With authority granted by the Act, including provisions in the Affordable Care Act and Medicare Access and CHIP Reauthorization Act, we have revised our provider and supplier enrollment regulations by issuing the following:
• In the February 2, 2011
++ A requirement that institutional providers and suppliers must submit application fees as part of the Medicare, Medicaid, and CHIP provider and supplier enrollment processes.
++ Establishment of Medicare, Medicaid, and CHIP provider and supplier risk-based enrollment screening categories and corresponding screening requirements.
++ Authority that enabled imposition of temporary moratoria on the enrollment of new Medicare, Medicaid, and CHIP providers and suppliers of a particular type (or the establishment of new practice locations of a particular type) in a geographic area.
• In the April 27, 2012
++ This requirement was expanded to include prescribers of Medicare Part D drugs in the final rule published in the May 23, 2014
Through improved processes and systems, since March 2011 we have:
• Saved over $927 million by revoking Medicare Part A and B providers and suppliers that did not comply with Medicare requirements;
• Avoided over $2.4 billion in costs by preventing further billing from revoked and deactivated Medicare Part A and B providers and suppliers;
• Deactivated more than 543,163 Medicare Part A and B providers and suppliers that did not meet Medicare enrollment standards;
• Revoked enrollment and billing privileges under § 424.535 for more than 34,888 Medicare Parts A and B providers and suppliers that did not meet Medicare enrollment standards, and
• Denied 4,949 applications for providers and suppliers in Medicare Parts A and B that did not meet Medicare enrollment standards within a recent 12-month period.
The public may review CMS' Reports to Congress each year for more information on program integrity efforts, including how we calculate savings to the Medicare and Medicaid programs. The Department of Health and Human Services Office of Inspector General (OIG), Government Accountability Office (GAO), and other federal agencies routinely review Medicare's provider and supplier enrollment processes and systems, including a recent study stating that “as part of an overall effort to enhance program integrity and reduce fraud risk, effective enrollment-screening procedures are essential to ensure that ineligible or potentially fraudulent providers or suppliers do not enroll in the Medicare program.” (GAO–15–448) The enrollment screening authorities granted in the Affordable Care Act and used to prevent and detect ineligible or potentially fraudulent providers and suppliers from enrolling in the Medicare program are working to protect beneficiaries and the Medicare Trust Funds.
Under applicable provisions of the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982, Medicare began to pay health plans on a prospective risk basis for the first time. The Balanced Budget Act of 1997 (BBA) modified these provisions and established a new Part C of the Medicare program, known as Medicare+Choice (M+C), effective January 1999. As part of the M+C program, the BBA authorized us to contract with public or private organizations to offer a variety of health plan options for enrollees, including both traditional managed care plans (such as those offered by HMOs, as defined in section 1876 of the Act) and new options not previously authorized.
The M+C program was renamed the Medicare Advantage (MA) program under Title II of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173), which was enacted on December 8, 2003. The MMA updated and improved the choice of plans for enrollees under MA and changed how benefits are established and payments are made. Under the MMA, enrollees may choose from additional plan options. In addition, Title I of the MMA established the Medicare prescription drug benefit (Part D) program and amended the MA program to allow most MA plans to offer prescription drug coverage.
All Medicare health plans, with the exception of PACE organizations, operating in geographic areas that we determine to have enough qualified providers and suppliers with which to contract in order for enrollees to have access to all Medicare Part A and Part B services, must develop a network of qualified providers and suppliers that
This proposed rule would require providers or suppliers that furnish health care items or services to a Medicare enrollee who receives his or her Medicare benefit through an MA organization to be enrolled in Medicare and be in an approved status. The term “MA organization” refers to Medicare Advantage plans and also MA plans that provide drug coverage, otherwise known as an MA–PD plan. This proposal would create consistency with the provider and supplier enrollment requirements for all other Medicare (Part A, Part B, and Part D) programs. We believe that this proposed rule is necessary to help ensure that Medicare enrollees receive items or services from providers and suppliers that are fully compliant with the requirements for Medicare enrollment and that are in an approved enrollment status in Medicare. This proposed rule would assist our efforts to prevent fraud, waste, and abuse and to protect Medicare enrollees by carefully screening all providers and suppliers, especially those that potentially pose an elevated risk to Medicare, to ensure that they are qualified to furnish Medicare items and services. Out-of network or non-contract providers and suppliers are not required to enroll in Medicare to meet the requirements of this proposed rule.
We consider provider and supplier enrollment to be the gateway to the Medicare program and to beneficiaries. Requiring enrollment of those that wish to furnish Medicare items or services gives us improved oversight of the providers and suppliers treating beneficiaries and the Medicare Trust Funds dollars spent on their care. However, Medicare does not have direct oversight over all providers and suppliers in MA organizations. We note that § 422.204 requires MA organizations to conduct screening of their providers. We believe that we, through our enrollment processes, can further ensure that only qualified providers and suppliers treat Medicare beneficiaries by conducting rigorous screening and rescreening of providers and suppliers that include, for example, risk-based site visits and, in some cases, fingerprint-based background checks. We also has access to information not available to MA organizations, making oversight to ensure compliance with all federal and state requirements more robust. We also continually review provider and supplier enrollment information from multiple sources, such as judicial, law enforcement, state licensure, professional credentialing, and other databases. In short, we collect and carefully review and verify information prior to the provider's or supplier's enrollment and, of great importance, continue this monitoring throughout the period of enrollment. Section 422.204, on the other hand, neither requires MA organizations to, for instance, review a provider or supplier's final adverse action history (as defined in § 424.502), nor to verify a provider or supplier's practice location, ownership, or general identifying information.
We believe that MA organization enrollees should have the same protections against potentially unqualified or fraudulent providers and suppliers as those afforded to beneficiaries under the fee-for-service and Part D programs. Indeed, Medicare beneficiaries and enrollees, the Medicare Trust Funds, and the program at large, are at risk when providers and suppliers that have not been adequately screened and reviewed furnish, order, certify, or prescribe Medicare services and items and receive Medicare payments. For instance, a network provider with a history of performing medically unnecessary tests, treatments, or procedures could threaten enrollees' welfare, as could a physician who routinely overprescribes dangerous drugs. This could also result in improper Medicare payments, harming the Medicare Trust Funds and taxpayers. Requiring enrollment allows us to have proper oversight of providers and suppliers. Under the provisions of this proposed rule, if a provider or supplier fails to meet our requirements or violates federal rules and regulations, we may revoke their enrollment, thereby removing them from consideration as an MA organization provider or supplier.
Information regarding a provider or supplier's enrollment status is housed in our enrollment repository called the Provider Enrollment, Chain and Ownership System (PECOS). A link to that information is located on the CMS Web site. Initial data show a large percent of Medicare Advantage providers and suppliers are already enrolled in Medicare. We do not believe that this proposed rule would have a significant impact on MA organizations' ability to establish networks of contracted providers that meet CMS' MA network requirements. However, we are soliciting industry comment on the potential impact of this proposed rule on MA organizations ability to establish or maintain an adequate networks of providers.
We believe that preventing questionable providers or suppliers from participating in the MA program and removing existing unqualified providers and suppliers would help ensure that fewer enrollees are exposed to risks and potential harm, and that taxpayer monies are spent appropriately. Such a policy would also help comply with the GAO's recommendation that we improve its provider and supplier enrollment processes and systems to increase the protection of all beneficiaries and the Medicare Trust Funds. (GAO–15–448). The additional resources and oversight that we provide in its processes for enrolling providers and suppliers will enhance and complement the screening processes that MA organizations already are required to perform.
The following are the principal legal authorities for our proposed provisions:
• Section 1856(b) of the Act provides that the Secretary shall establish by regulation other standards for Medicare+Choice organizations and plans “consistent with, and to carry out, this part.” In addition, § 1856(b) states that these standards supersede any state law or regulation (other than those related to licensing or plan solvency) for all MA organizations.
• Sections 1102 and 1871 of the Act, which provide general authority for the Secretary to prescribe regulations for the efficient administration of the Medicare program.
• Section 1866(j) of the Act, which provides specific authority with respect to the enrollment process for providers and suppliers in the Medicare program.
Given the foregoing and the need to safeguard the Medicare program and its enrollees, we propose several provisions in this proposed rule.
Although existing regulations at § 422.204 address basic requirements for MA provider credentialing, we propose
In §§ 422.222, 417.478, 460.68, and 460.32, we propose to add a requirement that providers and suppliers enroll in Medicare in an approved status in order to provide health care items or services to a Medicare enrollee who receives his or her Medicare benefit through an MA organization. This requirement would apply to network providers and suppliers; first-tier, downstream, and related entities (FDR); providers and suppliers participating in the Program of All-inclusive Care for the Elderly (PACE); suppliers in Cost HMOs or CMPs; providers and suppliers participating in demonstration programs; providers and suppliers in pilot programs; locum tenens suppliers; and incident-to suppliers. MA organizations that do not ensure that providers and suppliers comply with the provider and supplier enrollment requirements may be subject to sanctions and termination. Considering the serious risks to the Medicare program and enrollees from fraudulent or unqualified providers and suppliers, we believe that these are appropriate sanctions.
Current rules allow MA organizations to contract with different entities to provide services to beneficiaries. These contracted entities are referred to as first-tier, downstream, and related entities or FDRs, as defined in § 422.500.
PACE is a Medicare and Medicaid program that helps people meet their health care needs in the community instead of going to a nursing home or other care facility, wherein a team of health care professionals works with participants and their families to make sure participants get the coordinated care they need. A participant enrolled in PACE must receive Medicare and Medicaid benefits solely through the PACE organization. To ensure consistency within our programs, we believe that our proposed provider and supplier enrollment requirements should extend to this program.
Medicare Cost HMOs or CMPs are a type of Medicare health plan available in certain areas of the country. Some Cost HMOs or CMPs only provide coverage for Part B services. Cost HMOs or CMPs do not include Part D. These plans are either sponsored by employer or union group health plans or offered by companies that do not provide Part A services.
Demonstrations and pilot programs, also called research studies, are special projects that test improvements in Medicare coverage, payment, and quality of care. They usually operate only for a limited time for a specific group of people and/or are offered only in specific areas. Providers and suppliers in these programs would not be exempt from the requirements of this proposed rule.
In § 422.224, we also propose to prohibit MA organizations from paying individuals or entities that are excluded by the OIG or revoked from the Medicare program. In this proposal, there would be a first time allowance for payment; as part of this, the MA organization would be required to notify the provider or supplier and the enrollee that no future payment shall be made to, or on behalf of, the revoked or excluded provider or supplier. We believe such notification is necessary because enrollees and beneficiaries often do not know when their provider or supplier is excluded by the OIG or revoked from Medicare. We understand that MA organizations have little or no notice when enrollees seek out-of-network providers and suppliers and only obtain this information once an item or service has been provided. It is probable that some out-of-network providers or suppliers cannot meet Medicare enrollment requirements and therefore may be unable to enroll. We believe the proposals included in this proposed rule will allow for notification to be given to the enrollee and the provider or supplier that no further payments shall be made. We believe such excluded or revoked individuals and entities pose a significant risk to enrollees and should not receive federal dollars, even if payment is made through an intermediary such as an MA organization.
In § 422.501(c)(2), we propose to add to language to the MA organization application requirements requiring MA organizations to provide documentation that all applicable providers and suppliers are enrolled in Medicare in an approved status. We believe that this would assist CMS in the MA organization application process by requiring MA organizations to provide assurance that the designated providers and suppliers are properly screened and enrolled in Medicare.
In § 422.504(a)(6), we propose to add language to the conditions to which an MA organization must agree in its contract with us. MA organizations must agree to comply with all applicable provider requirements in subpart E of this part, including provider certification requirements, anti-discrimination requirements, provider participation and consultation requirements, the prohibition on interference with provider advice, limits on provider indemnification, rules governing payments to providers, and limits on physician incentive plans. In § 422.504(a)(6), we propose to extend this requirement to suppliers, not just limit it to providers. In this same section, we also propose to add a requirement at for MA organizations to comply with the provider and supplier enrollment requirements referenced in § 422.222. We believe these revisions would help facilitate the MA plan's compliance with § 422.222.
In §§ 422.504(i)(2)(v), 417.484, and 460.70, we propose to add provisions that requires MA organizations, Cost plans, and PACE organizations to require all FDRs and contracted entities to agree to comply with the provider and supplier enrollment provision.
In §§ 422.510(a)(4)(xiii) and 460.50, we propose provisions that would give us the authority to terminate a contract if an MA organization or PACE organization fails to meet provider and supplier enrollment requirements in accordance with § 422.222 and payment prohibitions in § 422.224. This section is necessary to ensure plan compliance with §§ 422.222 and 422.224 and to provide an appropriate remedy with respect to plans that fail to comply.
We also propose to add provisions to §§ 422.752(a) and 460.40 that would give us the authority to impose sanctions if an MA organization or PACE organizations fails to meet provider and supplier enrollment requirements in accordance with §§ 422.222 and 422.224. As with proposed § 422.510(a)(13), we believe this section is necessary to ensure plan compliance with §§ 422.222 and 422.224 and to furnish an appropriate remedy regarding plans that do not comply.
Finally, we propose to make these provisions effective the first day of the next plan year that begins 2 years from the date of publication of the CY 2017 PFS final rule with comment period.
We believe this would give all stakeholders sufficient time to prepare for these requirements. We are unable to impose new requirements on MA organizations mid-year and therefore must wait to make these rules effective. We seek public comment on our proposed effective date.
In January 2015, the Administration announced the vision of “Better Care, Smarter Spending, Healthier People” with emphases on improving the way providers are paid, improving and innovating in care delivery, and sharing information to support better decisions.
Diabetes is at epidemic levels in the Medicare population, affecting more than 25 percent of Americans aged 65 or older.
A diabetes prevention program is an evidence-based intervention targeted to individuals with prediabetes, meaning those who have blood sugar that is higher than normal but not yet in the diabetes range. The risk of progression to Type 2 diabetes in an individual with prediabetes is around 5–10 percent per year, or about 5–20 times higher than in individuals with normal blood glucose.
In 2012, the Center for Medicare & Medicaid Innovation (the Innovation Center) awarded a Health Care Innovation Award (HCIA) to The Young Men's Christian Association (YMCA) of the USA (Y–USA) to test whether DPP services could be successfully furnished by non-physician, community-based organizations to Medicare beneficiaries diagnosed with prediabetes and therefore at high risk for development of Type 2 diabetes. The HCIA model tests are being conducted under the authority of section 1115A of the Act (added by section 3021 of the Affordable Care Act) (42 U.S.C. 1315a). The statute authorizes the Innovation Center to test innovative health care payment and service delivery models that have the potential to reduce Medicare, Medicaid, and Children's Health Insurance Program (CHIP) expenditures while preserving or enhancing the quality of patient care.
Between February 2013 and June 2015, the Y–USA, in partnership with 17 local YMCAs, the Diabetes Prevention and Control Alliance, and seven other non-profit organizations, enrolled a total of 7,804 Medicare beneficiaries into the model. Enrolled beneficiaries represented a diverse geography across the eight states of Arizona, Delaware, Florida, Indiana, Minnesota, New York, Ohio, and Texas. According to the second year independent evaluation report of the Y–USA Diabetes Prevention Program model, Medicare beneficiaries demonstrated high rates of participation and sustained engagement in the Diabetes Prevention Program. Approximately 83 percent of recruited Medicare beneficiaries attended at least 4 core sessions and approximately 63 percent completed 9 or more core sessions. The first and second independent evaluation reports are available on the Innovation Center's Web site at
CMS' Office of the Actuary has determined that DPP is likely to reduce Medicare expenditures if made available to eligible Medicare beneficiaries based on historical evidence from evaluations of the Y–USA DPP and other DPPs in the CDC Diabetes Prevention Recognition Program. In addition, to evaluate the longer-term impact of the program, the CMS Actuary developed a model to estimate lifetime per participant savings of a Medicare beneficiary receiving DPP services.
The full CMS Actuary Report is available at
Section 1115A(c) of the Act provides the Secretary with the authority to expand (including implementation on a nationwide basis) through rulemaking the duration and scope of a model that is being tested under section 1115A(b) of the Act if the following findings are made, taking into account the evaluation of the model under section 1115A(b)(4) of the Act: (1) The Secretary determines that the expansion is expected to either reduce spending without reducing quality of care or improve the quality of patient care without increasing spending; (2) the CMS Chief Actuary certifies that the expansion would reduce (or would not result in any increase in) net program spending; and (3) the Secretary determines that the expansion would not deny or limit the coverage or provision of benefits.
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We propose to expand the duration and scope of the DPP model test by expanding DPP under section 1115A(c) of the Act, and we propose to refer to this expanded model as the Medicare Diabetes Prevention Program (MDPP). In this section of this proposed rule, we propose a basic framework for the MDPP. If finalized, we will engage in additional rulemaking, likely within the next year, to establish specific requirements of the MDPP. We seek comment on all of the proposals below and on any other policy or operational issues that need to be considered in implementing this expansion. The MDPP will become effective January 1, 2018.
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We believe that MDPP services are generally consistent with the types of additional preventive services that are appropriate for Medicare beneficiaries. In particular, we believe that MDPP services we are proposing under the expanded MDPP model meet the requirements of section 1861(ddd)(1)(A) of the Act because they are specifically designed to prevent prediabetes from advancing into diabetes. MDPP services do not meet the requirement in section 1861(ddd)(1)(B) of the Act that they have received a recommendation with a grade of A or B by the USPSTF. However, under section 1115A(d)(1) of the Act, the Secretary has authority to waive certain requirements. We propose to use this waiver authority to waive section 1861(ddd)(1)(B) of the Act with respect to MDPP services because they have been recommended by the Community Preventive Services Task Force, which is similar to the USPSTF, and therefore a USPSTF recommendation is not necessary. We believe that MDPP services are appropriate for individuals entitled to benefits under part A or enrolled in Part B, and thus meet the requirements of section 1861(ddd)(1)(C) of the Act, because findings from the second year independent evaluation of the Y–USA DPP HCIA project and results from other DPP evaluations demonstrate effectiveness of the program in preventing diabetes onset and thus improve quality of care for Medicare beneficiaries.
Section 1861(ddd)(2) of the Act requires the Secretary to make the determinations required under section 1861(ddd)(1) of the Act using the process for making national coverage determinations (NCDs). However, we propose to waive this requirement because using the NCD process to implement the MDPP would create implementation problems, especially as this rule proposes to create a supplier class and this is an issue that the NCD process does not address.
We seek comment on these proposals.
During the first 6 months (weeks 1–26) of the DPP intervention, each of the 16 core sessions must address one of these curriculum topics, and all topics must be addressed by the end of the 16 sessions.
The last 6 months (weeks 27–52) of the DPP 12-month intervention must include at least one core maintenance session delivered in each of the 6 months (for a minimum of six sessions), and all core maintenance sessions must address different topics.
CDC-approved curriculum can be found at
We propose that the MDPP expanded model will use the CDC-approved curriculum. We also propose that beneficiaries who meet the coverage criteria that we propose below would be able to enroll in the MDPP only once; however, we propose that those beneficiaries who complete the 12 month program and achieve and maintain a required minimum level of weight loss would be eligible for additional monthly maintenance sessions for as long as the weight loss is maintained. We propose that these ongoing maintenance sessions adhere to the same curriculum requirements as the core maintenance sessions. We propose to require that each MDPP session be at least an hour in duration.
We propose to describe the services that would be covered under the Medicare Diabetes Prevention Program expanded model at § 410.79. Consistent with our statutory authority, we will continue to test and evaluate the nationwide MDPP as finalized. In the
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We propose that any organization recognized by the CDC (that is, those with preliminary or full recognition) to provide DPP services would be eligible to apply for enrollment in Medicare as a supplier beginning on or after January 1, 2017. This proposal would promote timely enrollment of CDC-recognized organizations before billing begins, and would permit full implementation of the MDPP expansion by January 1, 2018. We propose that MDPP suppliers would be subject to the enrollment regulations set forth in 42 CFR part 424, subpart P. Organizations seeking to enroll in Medicare specifically to become MDPP Suppliers would be subject to screening under § 424.518. We are considering what level of application screening is most appropriate, and we are currently proposing that potential MDPP Suppliers be screened according to the high categorical risk category defined in § 424.518(c) because we acknowledge that MDPP may bring organization types that are entirely new to Medicare. We also believe that MDPP suppliers have some similarities to home health agencies because non-medical personnel may deliver MDPP services in a non-clinical setting, such as at Y–USA. We seek comments on this approach.
As suppliers, enrolled MDPP organizations would be obligated to comply with all statutes and regulations that establish generally applicable requirements for Medicare suppliers. For example, there are regulations that specify time limits for filing claims (§ 424.44), requirements to report and return overpayments (§ 401.305), and procedures for suspending, offsetting or recouping Medicare payments in certain situations (§ 405.371).
We propose that before enrolling in Medicare, DPP organizations must have either preliminary or full CDC recognition status. Organizations that apply for CDC recognition can attain preliminary CDC recognition within 1 year of applying, and full upon demonstrating program effectiveness within 24–36 months of applying. We propose that if an organization loses its CDC recognition status at any point, or withdraws from the CDC recognition program at any point, or fails to move from preliminary to full recognition within 36 months of applying for CDC recognition, the organization would be subject to revocation of its Medicare billing privileges for MDPP services as provided by 42 CFR part 424, subpart P. Under the CDC standards for recognition, an organization that loses its CDC recognition (and thus, under our proposal, would no longer be able to bill Medicare for MDPP services) must wait 12 months before reapplying for recognition. We propose that DPP organizations would be eligible to re-enroll in Medicare as an MDPP supplier if, after reapplying for CDC recognition, the organization again achieves preliminary recognition. CDC's standards for recognition as a DPP organization can be found at
We propose to permit CDC-recognized organizations who are not already enrolled in Medicare (on the basis of being an existing Medicare provider or supplier) to apply to enroll any time on or after January 1, 2017. Existing Medicare providers and suppliers that wish to bill for MDPP services would have to inform us of that intention and satisfy all other requirements, but would not need to enroll a second time. These existing Medicare providers and suppliers would be eligible to bill for MDPP services furnished on or after January 1, 2018. We also considered an alternative approach where existing Medicare providers and suppliers would have to submit a separate enrollment application (including any applicable enrollment application fee) and be separately screened to be eligible to bill for MDPP services. We seek comments on our approach.
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We propose to require MDPP suppliers to maintain a crosswalk between the beneficiary identifiers they submit to CMS for billing purposes and the beneficiary identifiers they provide CDC for the beneficiary level-clinical data. We propose that MDPP suppliers provide this crosswalk to the CMS evaluator on a regular basis. We seek comment on this approach.
We plan to propose to require MDPP suppliers to maintain records that document the MDPP services provided to beneficiaries. We propose that these records must contain detailed documentation of the services provided, including but not limited to the beneficiary's eligibility status, sessions attended, the coach furnishing the session attended, the date and place of service of sessions attended, and weight. MDPP suppliers would be required to maintain these records within a larger medical record, or within a medical record that an MDPP supplier
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The National DPP currently allows community-referral such as by Y–USA and self-referral of patients, in addition to referral by physicians and other health care practitioners, if the patient presents DPP-qualifying blood test results that the DPP organization keeps on record. We propose to similarly permit beneficiaries who meet the proposed criteria above to obtain MDPP services by self-referral, community-referral, or health care practitioner-referral.
We propose to establish the beneficiary eligibility criteria at § 410.79. We seek comment on this proposal.
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We plan to monitor administrative claims for virtual services to identify any unusual and/or adverse utilization of the DPP benefit. We seek comment on specific monitoring activities or program integrity safeguards with respect to virtual services, in addition to the time period in which such enhanced monitoring activities should occur.
We note that MDPP services provided via a telecommunications system or other remote technology will not be part of the current Medicare telehealth benefits and have no impact on how telehealth services are defined by Medicare. We recognize that the provision of MDPP services by such virtual methods may introduce additional risks for fraud and abuse, and if this proposal is finalized, we would propose specific policies in future rulemaking to mitigate these risks. We thus seek comment on whether there are quality or program integrity concerns regarding the use of virtual sessions, or whether they offer comparable or higher quality MDPP services when compared to in-person services. We seek comment on strategies to strengthen program integrity and minimize the potential for fraud and abuse in virtual sessions.
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Under section 1899 of the Act, we 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 establishing the Shared Savings Program appeared in the November 2, 2011
Additionally, on April 27, 2016, the Department of Health and Human Services (HHS) issued a proposed rule to implement key provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and establish a new Quality Payment Program (QPP) (Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models (81 FR 28162) (QPP proposed rule)). The QPP proposed rule would establish a new program under which Medicare would reward physicians for providing high-quality care, instead of paying them only for the number of tests or procedures provided. The QPP proposed rule addresses issues related to APMs, such as the Medicare Shared Savings Program, and issues related to reporting for purposes of MIPS by eligible clinicians (ECs) that are participating in APMs.
Our intent in this proposed rule is to propose further refinements to the Shared Savings Program rules, and we have identified several policies that we propose to update or revise. First, we discuss and propose policies related to ACO quality reporting including proposing changes to the quality measures used to assess ACO quality performance, changes in the methodology used in our quality validation audits and the way in which the results of these audits may affect an ACO's sharing rate, various issues related to alignment with policies proposed in the QPP proposed rule, and revisions related to the terminology used in quality assessment such as “quality performance standard” and “minimum attainment level.” We are also proposing conforming changes to our regulatory text. Next, we address several issues unrelated to quality reporting and assessment. Specifically, we propose to implement a process by which beneficiaries may voluntarily align with an ACO by designating an ACO professional as responsible for their overall care. We also propose to introduce beneficiary protections related to use of the SNF 3-Day Waiver. Finally, we are proposing to make technical changes to certain rules related to merged and acquired TINs and the minimum savings rate (MSR) and minimum loss rate (MLR) that would be used during financial reconciliation for ACOs that fall below 5,000 assigned beneficiaries.
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 and recent CY PFS final rules with comment period (77 FR 69301 through 69304; 78 FR 74757 through 74764; 79 FR 67907 through 67931; and 80 FR 71263 through 712710), we have established the quality performance standard that ACOs must meet to be eligible to share in savings that are generated. For example, in the CY 2015 PFS final rule with comment period, we made a number of updates to the quality requirements within the program, such as updates to the quality measure set, the addition of a quality improvement reward, and the establishment of benchmarks for 2 years. We made further updates to the quality measure set, established policies to address outdated measures, and made conforming changes to align with PQRS in the CY 2016 PFS final rule with comment period. Through these previous rulemakings, we have worked to improve the alignment of quality performance measures, submission methods, and incentives under the Shared Savings Program and PQRS. Currently, eligible professionals billing through the TIN of an ACO participant may avoid the downward PQRS
We are proposing several changes and other revisions to our policies related to the quality measures and quality performance standard in this rule, including the following:
• Changes to the measure set used in establishing the quality performance standard;
• Changes to the methodology used to validate quality data submitted by the ACO along with penalties that may apply if the audit match rate is less than 90 percent;
• Revisions to the use of the terms “quality performance standard” and “minimum attainment level” in the regulation text;
• Revisions related to use of flat percentages to establish quality benchmarks; and
• Alignment with policies proposed in the QPP proposed rule.
Section 1899(b)(3)(C) of the Act states that the Secretary shall 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 final rule, we established a quality performance standard consisting of 33 measures across four domains, including patient experience of care, care coordination/patient safety, preventive health, and at-risk population. In subsequent PFS final rules with comment period, we made a number of updates to the set of measures that make up the quality performance standard. For example, in the CY 2015 PFS final rule with comment period, we added new measures that ACOs must report, retired measures that no longer aligned with updated clinical guidelines, reduced the sample size for measures reported through the CMS web interface, established a schedule for the phase in of new quality measures, and established an additional reward for quality improvement. The revisions to the measures set made in the CY 2016 PFS final rule with comment period, resulted in a net increase in the quality measure set from 33 measure to 34 measures.
Quality measures are submitted by the ACO through the CMS 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. The CAHPS for ACOs patient experience of care survey used for the Shared Savings Program includes the core CG–CAHPS modules, as well as some additional modules. The measures collected through the CMS web interface are also used to determine whether eligible professionals participating in an ACO avoid the PQRS and automatic Physician Value Modifier (VM) payment adjustments for 2015 and subsequent years. Currently, eligible professionals billing through the TIN of an ACO participant may avoid the downward PQRS payment adjustment when the ACO satisfactorily reports all of the ACO GPRO measures on their behalf using the CMS web interface. Beginning with the 2017 VM, ACO performance on the CMS web interface measures and all cause readmission measure will be used in calculating the quality component of the VM for groups and solo practitioners participating within an ACO (79 FR 67941 through 67947).
As we previously stated (76 FR 67872), our principal goal in selecting quality measures for ACOs has been to identify measures of success in the delivery of high-quality health care at the individual and population levels with a focus on outcomes. We believe endorsed measures have been tested, validated, and clinically accepted, and therefore, when selecting the original 33 measures, we had 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 have also exercised our discretion to include certain measures that we believe to be high impact but that are not currently endorsed, including for example, ACO#11, which is currently titled Percent of PCPs Who Successfully Meet Meaningful Use Requirements.
In selecting the original measure set, we balanced a wide variety of important considerations. Our measure selection emphasized prevention and management of chronic diseases that have a high impact on Medicare FFS 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.
In the CY 2015 PFS final rule with comment period we finalized a number of changes to the quality measures used in establishing the quality performance standard to better align with PQRS, retire measures that no longer align with updated clinical practice, and add new outcome measures that support the CMS Quality Strategy and National Quality Strategy goals. In the CY 2016 PFS final rule with comment period, in modifying the measures set we sought to include both process and outcome measures, including patient experience of care (80 FR 71263 through 71268). We believe it is important to retain a combination of both process and outcomes measures 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. However, as other CMS quality reporting programs, such as PQRS, move to more outcomes-based measures and fewer process measures over time, we have indicated that we might also revise the quality performance standard for the Shared Savings Program to incorporate more outcomes-based measures and fewer process measures over time.
We are also continuing to work with the measures community to ensure that the specifications for the measures used under the Shared Savings Program are up-to-date and reduce reporting burden. We believe that it is important to 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.
The Core Quality Measures Collaborative was formed in 2014, as a collaboration between CMS, providers, and other stakeholders, with the goal of aligning quality measures for reporting across public and private stakeholders in order to reduce provider reporting burden. On February 16, 2016, the Core Quality Measures Collaborative recommended a core quality measure set that aligns and simplifies quality reporting across multiple payers (
In efforts to continue to align with other CMS initiatives and reduce provider confusion and the burden of reporting, we propose modifications to the quality measure set that an ACO is required to report. Specifically, to align the Shared Savings Program quality measure set with the measures recommended by the Core Quality Measures Collaborative and proposed for reporting through the CMS web interface under the QPP proposed rule, we propose to add, and in some cases to replace, existing quality measures with the following:
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By aligning the Shared Savings Program measures with the Core Quality Measures Collaborative recommendations and proposals under the QPP proposed rule, we hope to reduce the burden of provider data collection and reporting of measures that do not align across public and private quality reporting initiatives. Therefore, we propose to retire or replace the following measures in order to reduce provider reporting burden by reducing the number of measures that must be reported and because these measures do not align with the core measure set recommendations from the Core Quality Measures Collaborative and the measures that we proposed for reporting through the CMS web interface in the QPP proposed rule:
• ACO–39 Documentation of Current Medications in the Medical Record.
• ACO–21 Preventive Care and Screening: Screening for High Blood Pressure and Follow-up Documented.
• ACO–31 Heart Failure (HF): Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD).
• ACO–33 Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy—for patients with CAD and Diabetes or Left Ventricular Systolic Dysfunction (LVEF <40%).
In addition to our proposals above to modify the quality measure set to align with the Core Quality Measures Collaborative and the proposed modifications to the measures reported through the CMS web interface under the QPP proposed rule, we propose a few additional modifications as follows:
First, we propose to retire the two AHRQ Ambulatory Sensitive Conditions Admission measures (ACO–9 and ACO–10). Although ACO–9 and ACO–10 address admissions for patients with heart failure, chronic obstructive pulmonary disease (COPD), and asthma, we introduced two all-cause, unplanned admission measures for heart failure
Second, while we are proposing above to remove ACO–9 and ACO–10, we continue to believe AHRQ's Prevention Quality Indicator (PQI) measures are important because they report on inpatient hospital admissions of patients with clinical conditions that could potentially be prevented with high-quality outpatient care. Coordination of patient care and patient access to primary care services can often prevent complications or hospital admissions. AHRQ's PQI #91
Table 36 lists the Shared Savings Program quality measure set and summarizes our proposed measure changes, which will be used to assess quality performance starting with the 2017 performance year. We note that, consistent with our rules at § 425.502(a)(4), all newly introduced measures are set at the level of complete and accurate reporting for the first two reporting periods for which reporting of the measures is required. Therefore, the proposed new measures discussed above, including the Medication Reconciliation measure, would be pay for reporting for the 2017 and 2018 performance years. Beginning in the 2019 performance year, these quality measures will be assessed according to the phase-in schedule noted in Table 36.
As a result of these proposed measure changes, each of the four domains will include the following number of quality measures (See Table 37 for details.):
Table 37 provides a summary of the number of measures by domain and the total points and domain weights that would be used for scoring purposes with the proposed changes to the quality measures.
In the November 2011 final rule, we finalized a proposal to retain the right to validate the data ACOs enter into the Web Interface (76 FR 67893 through 67894). This validation process, referred to as the Quality Measures Validation audit, was based on the process used in Phase I of the Physician Group Practice (PGP) demonstration. The policy was finalized at § 425.500(e). In this audit process, CMS selects a subset of Web Interface measures, and selects a random sample of 30 confirmed and completely reported beneficiaries for each measure in the subset. The ACO provides medical records to support the data reported in the Web Interface for those beneficiaries. A measure-specific audit performance rate is then calculated using a multi-phased audit process:
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If at the conclusion of the third phase there is a discrepancy greater than 10 percent between the quality data reported and the medical records provided during the audit, the ACO will not be given credit for meeting the quality target for any measure(s) for which the mismatch rate exists.
Since publication of the initial program rules in 2011, we have gained experience in conducting audits and believe that certain modifications to our rules should be made in order to increase the statistical rigor of the audit methodology, streamline audit operations, and more closely align the Quality Measures Validation audit used in Shared Savings Program audits with other CMS quality program audits including those performed in the Physician Quality Reporting Program and the Hospital Inpatient and Outpatient Quality Reporting programs. Below, we propose four improvements to the previously described process. The proposed changes address the number of records to be reviewed per measure, the number of audit phases, the calculation of an audit match rate and the consequences if the audit match rate falls below 90 percent.
First, we propose to increase the number of records audited per measure to achieve a high level of confidence that the true audit match rate is within 5 percentage points of the calculated result. The November 2011 final rule indicated that CMS would review as few as 8 records (Phase 1 only) or as many as 30 records (Phase 1 and 2) per audited measure. With this phased methodology, the total number of records reviewed for each ACO varies (range of 40 to 150 records per audited ACO during the Performance Year 2014 audit). A sample size analysis found that the number of reviewed records needs to increase in order to provide the desired high level of confidence that the audited sample is representative of the ACO's quality reporting performance. We note that the precise number of records requested for review would vary, depending on the desired confidence level, the number of measures audited, and the expected match rate. Therefore, we are not proposing a specific number of records that would be requested for purposes of ACO quality validation audits in the future. However, based on an analysis using the poorest expected match rate, the highest degree of confidence and an estimated number of measures to be audited, we do not anticipate more than 50 records will be requested per audited measure.
Second, we propose to modify our regulations in order to conduct the quality validation audit in a single step rather than the current multi-phased process described at § 425.500(e)(2). We propose to use a more streamlined approach in which all records selected for audit are reviewed in a single step and some activities currently conducted in phase 3 would be removed from the audit process entirely while others would instead be addressed at the conclusion of the audit. During the proposed single step, we would review all submitted medical records and calculate the match rate. The education we currently provide to ACOs and the opportunity for ACOs to explain the mismatches that occur in Phase 3 of the current process would continue, but would occur at the conclusion of the audit. Under this proposal, there would not be an the opportunity for ACOs to correct and resubmit data for any measure with a >10 percent mismatch because we have learned through our experience with program operations that resubmission of CMS Web Interface measure data after the close of the CMS Web Interface is not feasible. Instead, we propose that an ACO's quality score would be affected by an audit failure as described below, without requiring re-opening of the CMS Web Interface. This single step process would allow us to maintain the desired level of confidence that the true audit match rate is within 5 percentage points of the calculated result and to complete the audit in a more timely manner. Therefore, we propose to remove the provision at § 425.500(e)(2) that requires 3 phases of medical record review. In so doing, we propose to redesignate § 425.500(e)(3) as § 425.500(e)(2).
Third, we propose to revise § 425.500(e)(3) in order to provide for an
Fourth, we propose to revise the redesignated provision at § 425.500(e)(2), to indicate that if an ACO fails the audit (that is, has an overall audit match rate of less than 90 percent), the ACO's overall quality score would be adjusted proportional to its audit performance. Currently, our regulation at § 425.500(e)(3) states that if, at the conclusion of the audit process there is a discrepancy greater than 10 percent between the quality data reported and the medical records provided, the ACO will not be given credit for meeting the quality target for any measures for which this mismatch rate exists. In light of our proposed modifications to the quality validation audit process above in which we propose to assess and validate the ACO's performance overall rather than the ACO's performance on each measure, we believe a modification to this requirement is necessary to reflect an overall adjustment. Therefore, we propose to modify the provision at newly redesignated § 425.500(e)(2) to state that if an ACO fails the audit (that is, has an audit match rate of less than 90 percent), the ACO's overall quality score will be adjusted proportional to the ACO's audit performance. The audit-adjusted quality score will be calculated by multiplying the ACO's overall quality score by the ACO's audit match rate. For example, if an ACO's quality score is 75 percent and the ACO's audit match rate is 80 percent, the ACO's audit-adjusted quality score is 60 percent. The audit-adjusted quality score would be the quality score that is used to determine the percentage of any earned savings that the ACO may share or the percentage of any losses for which the ACO is accountable.
Finally, we propose to add a new requirement at § 425.500(e)(3) that in addition to the adjustment in the ACO's overall quality score, any ACO that has an audit match rate of less than 90 percent, may be required to submit a corrective action plan (CAP) under § 425.216 for CMS approval. In the CAP, the ACO may be required to explain the cause of its audit performance and how it plans to improve the accuracy of its quality reporting in the future. In addition, CMS maintains the right, as described in § 425.500(f), to terminate or impose other sanctions on any ACO that does not report quality data accurately, completely or timely.
We invite comment on the proposed improvements to the process used to validate ACO quality data reporting.
The Shared Savings Program quality reporting rules were originally established through rulemaking in the November 2011 final rule. In this section, we make several proposals regarding the quality performance standard that an ACO must meet to be eligible to share in savings. Part of the determination of whether an ACO has met the quality reporting standard in each year is dependent on the ACO meeting the minimum attainment level for certain measures. We discuss how the “minimum attainment” requirement has been implemented to date and propose a modification that we believe is more consistent with our policies for assessing an ACO's performance over time. Finally, we propose to move references to compliance actions from § 425.502(d)(2)(ii) to a more appropriate provision at § 425.316(c).
First, we propose to make technical revisions to ensure stakeholder understanding of the definition of the quality performance standard. The quality performance standard is established under Subpart F for each performance year (§ 425.502(a)). For the first performance year of an ACO's first agreement period, the quality performance standard is defined as complete and accurate reporting of all quality measures. For each subsequent performance year, quality measures phase in to pay for performance, and although the ACO must continue to report all measures completely and accurately, the ACO will also be assessed on performance based on the quality performance benchmark and minimum attainment level of certain measures that are designated as pay for performance. The quality performance standard that applies to an ACO's final year in its first agreement period also applies to each year of an ACO's subsequent agreement period (§ 425.502(a)(3)) (79 FR 67925 through 67926). ACOs must meet or exceed the minimum quality performance standard in a given performance year to be eligible to receive payments for shared savings (§ 425.100(b)). Conversely, failure to meet the quality performance standard in a given performance year makes ACOs ineligible to share in savings, even if generated, and such ACOs may be subject to compliance actions.
Our intent in the November 2011 final rule was to establish a single quality performance standard that would apply for each performance year in which an ACO participates in the program. Because the quality performance standard changes, depending on the performance year, the ACO may be subject to multiple quality performance standards over the course of its 3-year agreement period. We recognize that some of the language used in subsequent revisions to our regulations may have generated some confusion related to this issue. For example, as explained above, the quality performance standard refers to the overall standard the ACO must meet, however, in § 425.502(a)(4), we state 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. We wish to clarify that while there are certain standards that must be met for each measure or in each domain, there is one overall quality performance standard that must be met in each performance year by an ACO. We propose to make conforming changes to the regulations text to remove references to the quality performance standard in contexts where it does not appear to apply to the overall quality performance standard (see § 425.316(c)(2), § 425.502(a)(4), and § 425.502(d)(1)). We do not believe that modifications necessarily must be made to the regulations text in all instances where there is a reference to multiple quality performance standards, however, because we recognize that the quality performance standard varies
Second, we wish to address the concept of the minimum attainment level and its use in determining whether an ACO has met the quality performance standard. As noted above, beginning in the second year of an ACO's first agreement period, the quality performance standard is met by complete and accurate reporting on all measures, but also includes meeting the minimum attainment level on “certain” measures. As provided at § 425.502(b)(1), we designate a performance benchmark and minimum attainment level for each measure. Pursuant to § 425.502(b)(3), the minimum attainment level is set at 30 percent or the 30th percentile of the performance benchmark. In § 425.502(c)(1) through (c)(2), we state that performance below the minimum attainment level for a measure will receive zero points for that measure and performance equal to or greater than the minimum attainment level for a measure will receive points on a sliding scale based on the level of performance. Finally, § 425.502(d) outlines quality performance requirements for the four domains, stating that the ACO must report all measures in a domain and must score above the minimum attainment level determined by CMS on 70 percent of the measures in each domain. If the ACO fails to achieve the minimum attainment level on at least 70 percent of the measures in a domain, CMS will take compliance action. Additionally, the ACO must achieve the minimum attainment level for at least one measure in each of the four domains to be eligible to share in savings. In guidance, we have interpreted the quality performance requirements for domains to apply only to pay for performance measures because minimum attainment applies only to “certain” measures according to the definition of the quality performance standard in § 425.502(a)(3), and we have interpreted the reference to “certain” measures in § 425.502(a)(2) to mean pay for performance measures. As a result of this interpretation, we believe an inconsistency in the application of the policy goals outlined in our November 2011 final rule has arisen. In particular, we believe certain current policies are inconsistent with our goal of holding ACOs to higher quality reporting standards over time. Specifically, because measures are phased-in from pay for reporting to pay for performance over the course of an ACO's first 3-year agreement period, there are no pay for performance measures during PY1 and fewer pay for performance measures in each domain in PY2 compared to PY3. Thus, under our current interpretation of the rules, it is not possible to take compliance actions against an ACO in its first performance year for failure to achieve the minimum attainment level on at least 70 percent of the measures in a domain because there are no pay for performance measures on which to assess performance on a domain. Additionally, because there are fewer pay for performance measures in PY2 than in PY3, it is more likely that a compliance action would be taken against an ACO due to failure to meet the minimum attainment level on 70 percent of the pay for performance measures in a domain in PY2 than in PY3. Since publication of the November 2011 final rule, we have used the annual PFS rule to update the measures that ACOs are required to report. Each time a new measure is added, the measure is designated as pay for reporting for the first 2 years it is in use so that we can establish a performance benchmark prior to using it as a pay for performance measure. This, in turn, diminishes even further the number of pay for performance measures available in a domain in PY2 and PY3 or in an ACO's second or subsequent agreement period, making it more likely that ACOs would be subject to compliance action. Based on this experience, we believe it would be more consistent with our policy goals to take all measures into account when determining whether a compliance action should be taken against an ACO based on its quality performance in one or more domains.
Therefore, we propose to take all measures into account when determining ACO performance at the domain level for purposes of compliance actions. Additionally, we believe that compliance actions should be addressed at § 425.316 rather than in the quality reporting section, and therefore, we propose to move the provisions governing the specific performance levels at which a compliance action would be triggered from § 425.502 to § 425.316. Specifically, we propose the following modifications to our regulations:
• Revise introductory text at § 425.502(a) to make it clear that the quality performance standard is the overall standard the ACO must meet to qualify to share in savings.
• Replace the word “certain” in § 425.502(a)(2) and (3) with “all,” so that the term “minimum attainment level” clearly applies to both pay for reporting and pay for performance measures.
• At § 425.502(a)(4), make modifications to remove the reference to the quality performance standard each time it appears to avoid causing confusion between the standards for individual measures and the overall quality performance standard.
• At § 425.502(b)(3), define “minimum attainment level” for both pay for reporting and pay for performance measures. We propose to set the minimum attainment level for pay for performance measures at the 30th percent or 30th percentile of the quality benchmark. We propose to set the minimum attainment level for pay for reporting measures at the level of complete and accurate reporting.
• At § 425.502(c)(2), we propose to revise the regulation text to specify that only pay for performance measures are assessed on a sliding scale.
• At § 425.502(c)(5), we propose to add a provision to specify that pay for reporting measures earn the maximum number of points for a measure when the minimum attainment level is met.
• Finally, we propose to modify § 425.502(d) to refer generally to compliance actions that may be taken for low quality performance. We propose to address specific levels of quality domain performance at which compliance action would be triggered by modifying § 425.316(c)(1).
In the CY 2014 PFS final rule with comment period (78 FR 74761–74763), we finalized a methodology to spread clustered measures when setting quality benchmarks to promote a clinically meaningful assessment of ACO quality. Specifically, we finalized a policy that CMS would set quality benchmarks using flat percentages for a clustered measure when the national FFS data results in the 60th percentile for the measure are equal to or greater than 80.00 percent. We noted that the methodology would not apply to measures whose performance rates are calculated as ratios, for example, measures such as the two ACO Ambulatory Sensitive Conditions Admissions and the All Condition Readmission measures. Similarly, in the CY 2015 PFS final rule with comment period (79 FR 67925), we finalized a
Since the CY 2015 PFS final rule with comment period, we have determined that converting measures calculated and reported as ratios into benchmarks expressed as percentiles and percentages creates confusion in the interpretation of quality results and may yield results that are contrary to the intended purpose of using flat percentages. As a result, we propose no longer applying the flat percentage policy to performance measures calculated as ratios, such as the Ambulatory Sensitive Conditions Admissions measures and the All-Cause Readmission measure. In addition, we propose two technical changes to address typographical errors in § 425.502(a)(1), which contains a duplicative reference to CMS, and in § 425.502(b)(2)(ii), which contains an extra “t” at the end of “percent.”
The Affordable Care Act gives the Secretary authority to incorporate reporting requirements and incentive payments from certain Medicare programs into the Shared Savings Program, and to use alternative criteria to determine if payments are warranted. Specifically, section 1899(b)(3)(D) of the Act affords the Secretary discretion to incorporate reporting requirements and incentive payments related to the physician quality reporting initiative (PQRI), under section 1848 of the Act, including such requirements and such payments related to electronic prescribing, electronic health records, and other similar initiatives under section 1848, and permits the Secretary to use alternative criteria than would otherwise apply (under section 1848 of the Act) for determining whether to make such payments. Under this authority, in the November 2011 final rule, we incorporated certain reporting requirements and payment rules related to the PQRS into the Shared Savings Program at § 425.504 for “eligible professionals” (EPs) who bill under the TIN of an ACO participant within an ACO. Thus, the Shared Savings Program rules provide that EPs who bill under the TIN of an ACO participant within an ACO may only participate under their ACO participant TIN as a group practice under PQRS under the Shared Savings Program for purposes of qualifying for a PQRS incentive (prior to 2015) or avoiding the payment adjustment (starting in 2015). In other words, the current regulations prohibit ACO participant TINs and the EPs billing through those TINs from participating in PQRS outside of the Shared Savings Program such that these entities may not independently report for purposes of PQRS apart from the ACO.
An ACO, reporting on behalf of its EPs for purposes of PQRS, is required to satisfactorily submit through the CMS web interface all of the ACO GPRO measures that are part of the Shared Savings Program quality performance standard. Under § 425.504(c), for 2016 and subsequent years, if an ACO fails to satisfactorily report all of the ACO GPRO measures through the CMS web interface each EP who bills under the TIN of an ACO participant within the ACO will receive a downward adjustment, as described in § 414.90(e) for that year. The current regulations do not provide any mechanism for these EPs to report separately or otherwise avoid the downward payment adjustment if the ACO fails to satisfactorily report on their behalf.
We stated in the November 2011 final rule that there were two main reasons for not allowing EPs who bill under the TIN of an ACO participant to report outside of their ACO for purposes of PQRS: (1) The Shared Savings Program is concerned with measuring the quality of care furnished by the ACO to its patient population as a whole, and not that of individual ACO providers/suppliers, and (2) allowing EPs that bill under the TIN of an ACO participant to earn more than one PQRS incentive goes against the rules of traditional PQRS (76 FR 67901 through 67902).
Since publication of the November 2011 final rule, we have gained experience with these policies and program operations and believe it is necessary to propose a change in policy in order to be able to accept and use data that is separately reported outside the ACO by EPs billing through the TIN of an ACO participant within an ACO for purposes of PQRS under limited circumstances for the final two years of PQRS before it sunsets and is replaced by the Quality Payment Program (QPP). We continue to believe that in most cases it is appropriate to assess EPs that bill through the TIN of an ACO participant under the PQRS as a group practice because as noted in the November 2011 final rule, the Shared Savings Program is concerned with measuring the quality of care furnished to an assigned population of FFS beneficiaries by the ACO, as a whole, and not that of individual ACO providers/suppliers. We believe this framework promotes clinical integration among the ACO providers/suppliers, which is an important aspect of the Shared Savings Program. In addition, it is consistent with the requirement under § 425.108(d) that each ACO provider/supplier must demonstrate a meaningful commitment to the mission of the ACO to ensure its likely success. Because an ACO cannot be successful in the Shared Savings Program without satisfying the quality reporting requirements, we believe a meaningful commitment by ACO providers/suppliers to the mission of the ACO includes assisting with and engaging in annual quality reporting through the ACO. Further, ACO reporting reduces burden for those in small or solo practices, and places a focus on population health by encouraging care coordination by ACO providers/suppliers to improve the health of the broader patient population for which they are responsible. Finally, we believe that such group reporting is consistent with group reporting under various other CMS initiatives and therefore, we do not intend to remove the requirement that ACOs report on behalf of the EPs who bill under the TIN of an ACO participant. As a corollary, we would continue to use ACO data preferentially for purposes of assessing or determining an EP's quality performance for purposes of programs such as PQRS or, by extension, the VM.
However, we believe that when an ACO does not satisfactorily report for purposes of PQRS, it may be appropriate to accept and use data that is reported outside the ACO. For PQRS to be able to accept and use data reported outside the ACO, however, we must modify the provision at § 425.504 prohibiting EPs that bill under the TIN of an ACO participant in an ACO to report separately for purposes of PQRS. We are therefore proposing to modify § 425.504 to lift the prohibition on separate reporting for purposes of the 2017 and 2018 PQRS payment adjustment. We believe this change to our program rules is necessary for several reasons.
First, we believe it is necessary to protect EPs that participate in ACOs that fail to satisfactorily report all of the ACO GPRO measures. Although 98 percent of ACOs successfully complete required quality reporting annually, there have been a few instances where
Second, PQRS has transitioned away from providing incentive payments to applying only downward payment adjustments to payments under the Medicare Physician Fee Schedule, making it even more important for EPs to ensure they comply with the reporting requirements for PQRS. Under the current rules, EPs who bill under the TIN of an ACO participant within an ACO must ultimately rely on the ACO to report on their behalf. These EPs are only able to encourage and facilitate ACO reporting, but lack the ability to ensure that the ACO satisfactorily reports in order to prevent application of the payment adjustment. The proposed change to allow EPs to report separately would provide them a mechanism over which they have direct control to ensure satisfactory reporting occurs. Additionally, we note that because there are no more payment incentives under the PQRS, there is no longer any concern that an EP may inadvertently receive duplicative PQRS incentive payments from CMS. Specific issues and policies related to data reported by EPs apart from an ACO for purposes of avoiding the PQRS payment adjustment for payment years 2017 and 2018 are addressed in section III.H. of this proposed rule.
Third, under the VM, if the ACO satisfactorily reports quality data on their behalf, groups and solo practitioners that bill under the TIN of an ACO participant will be evaluated under the quality tiering methodology and could qualify for an upward payment adjustment if the ACO satisfactorily reports on their behalf. However, if the ACO does not satisfactorily report quality data as required under § 425.504 then groups and solo practitioners that bill under the TIN of an ACO participant fall into Category 2 for the VM and are subject to a downward payment adjustment. In section III.G. of this proposed rule, we make proposals for how quality data reported by EPs billing under the TINs of ACO participants that is reported apart from the ACO for purposes of avoiding the VM downward payment adjustment for 2017 and 2018.
For the reasons noted above, we believe it is appropriate to retain the provisions under § 425.504 that require the ACO to report all of the ACO GPRO measures to satisfactorily report on behalf of the EPs who bill under the TIN of an ACO participant for purposes of the PQRS payment adjustment, however, we are proposing to modify the provisions that prohibit EPs that bill under the TIN of an ACO participant to report apart from the ACO. Specifically, we propose to add a redesignated and revised paragraph at § 425.504(d) to address the requirement that the ACO report on behalf of the eligible professionals who bill under the TIN of an ACO participant for purposes of the of the 2017 and 2018 PQRS payment adjustment. Under this revised provision the prohibition on separate quality reporting for purposes of the PQRS payment for 2017 and 2018 would be removed. We also propose to make a technical change to § 425.504 to move existing § 425.504(d) to § 425.504(c)(5) because the intent of this provision was to parallel the language of § 425.504(b)(6) for purposes of the payment adjustment for 2016 and subsequent years. We reiterate our intent that data reported by an ACO would continue to be preferentially used for purposes of other CMS initiatives that rely on such data, including the PQRS and the VM, as discussed in sections III.I. and III.M., respectively. If an EP who bills under the TIN of an ACO participant chooses to report apart from the ACO, the EP's data may be used for purposes of PQRS and VM only when complete ACO reported data is not available.
Additionally, we note that under the Shared Savings Program, only the quality data reported by the ACO as required under § 425.500 would be used to assess the ACO's performance under the Shared Savings Program. In other words, quality data submitted separately from the ACO will not be considered under the Shared Savings Program. We request comments on this proposal.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114–10, enacted April 16, 2015), amended title XVIII of the Act to repeal the Medicare sustainable growth rate (SGR) and strengthen Medicare access by improving physician payments and making other improvements, to reauthorize the Children's Health Insurance Program, and for other purposes. The statute established the Merit-Based Incentive Payment System (MIPS), a new program for certain Medicare-participating practitioners. MIPS consolidates components of three existing programs, the PQRS, the Physician Value Modifier (VM), and the Medicare Electronic Health Record (EHR) Incentive Program for EPs. The statute also established incentives for participation in certain alternative payment models (APMs). On April 27, 2016, the Department of Health and Human Services (HHS) issued a proposed rule to implement key provisions of the MACRA and establish a new Quality Payment Program (QPP) (Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models (81 FR 28162 through 28586) (the QPP proposed rule)). The QPP proposed rule proposes to implement a Quality Payment Program (QPP) that replaces a patchwork system of Medicare reporting programs with a flexible system that allows practitioners to choose from two paths that link quality to payments: the Merit-Based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). As proposed, MIPS and the APM incentive will impact practitioner payments beginning in payment year 2019 based on 2017 reporting. MIPS is a new program that combines parts of the Physician Quality Reporting System (PQRS), Value Modifier (VM) and Medicare Electronic Health Record (EHR) Incentive Program into a single program in which eligible clinicians (ECs) will be measured over 4 categories which include quality, resource use, clinical practice improvement, and advancing care information. The QPP proposed rule specifically addresses ECs that participate in APMs and Advanced APMs, such as the Shared Savings Program. Specifically, for ECs participating in APMs, the QPP proposed rule proposes to:
• Establish criteria for reporting under each of the 4 categories. For example, the QPP proposed rule proposes for the quality performance category to use quality information submitted by the ACO through the CMS web interface to assess each EC billing under the TIN of an ACO participant. For assessing performance in the
• Define an Advanced APM as one that meets several criteria including requiring participants to use certified EHR technology (CEHRT). As proposed under the QPP proposed rule, only Tracks 2 and 3 of the Shared Savings Program have the potential to meet all criteria necessary for designation as an Advanced APM. As proposed, in order to meet the CEHRT requirement, the Medicare Shared Savings Program must hold ACOs accountable for their participating eligible clinicians' use of CEHRT by applying a penalty or reward based on the degree of use of CEHRT (such as the percentage of EPs that are using CEHRT or the care coordination or other activities they perform using CEHRT).
We therefore reviewed the Shared Savings Program rules and identified several modifications to program rules that we believe must be proposed in order to support and align with this effort. These proposed modifications are discussed in more detail below and include:
• Revisions to §§ 425.504 and 425.506 to sunset Shared Savings Program alignment with PQRS and the EHR Incentive Program starting with quality reporting period 2017 (corresponding to payment year 2019).
• Addition of new paragraph § 425.506(e) and section § 425.508 to align with the proposed Quality Payment Program, including rules addressing annual assessment of an ACO ECs' use of CEHRT and for ACO reporting of certain quality measures to satisfy the quality performance category on behalf of the eligible clinicians who bill under the TIN of an ACO participant.
• Modifications to the EHR measure title and specifications necessary to align with the proposed QPP criteria for determining Advanced APM status, including scoring requirements for the limited circumstances when the measure is designated as pay for reporting.
The Shared Savings Program has established rules at §§ 425.504 and 425.506 incorporating reporting requirements related to PQRS and the EHR Incentive Program. The current provision at § 425.504(c), addresses the PQRS payment adjustment for 2016 and subsequent years. Under the existing Shared Savings Program rules, which we propose to modify as discussed in the immediately preceding section, EPs who bill under the TIN of an ACO participant within an ACO may only participate under their ACO participant TIN as a group practice under the PQRS Group Practice Reporting Option for purposes of the PQRS payment adjustment under the Shared Savings Program. ACOs must submit all of the ACO GPRO measures to satisfactorily report on behalf of their eligible professionals for purposes of the PQRS payment adjustment. Under the current rules, if an ACO does not satisfactorily report, each EP participating in the ACO receives a payment adjustment under PQRS. As discussed in this rule, we have proposed to revise the rules to allow EPs who bill under the TIN of an ACO participant within an ACO to report separately from their ACO for purposes of the PQRS payment adjustment for 2017 and 2018.
At § 425.506, we address alignment with the EHR Incentive Program. Specifically, at § 425.506(a), we assert that ACOs, ACO participants, and ACO providers/suppliers are encouraged to develop a robust EHR infrastructure, which aligns with our eligibility criteria under § 425.112 that require ACOs to define care coordination processes, which may include the use of enabling technologies such as CEHRT. At § 425.506(b) and (c) we state that the quality measure regarding EHR adoption is measured based on a sliding scale and that it is weighted twice that of any other measure for scoring purposes and determining compliance with quality performance requirements for domains. To align with the EHR incentive program we state in § 425.506(d), 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 the EP extracts data necessary for the ACO to satisfy the quality reporting requirements under the Shared Savings Program from CEHRT and when the ACO reports the ACO GPRO measures through a CMS web interface. EPs are responsible for meeting the rest of the EHR incentive program requirements apart from the ACO.
As noted in this section of the proposed rule, the VM, PQRS and the EHR incentive programs are sunsetting and the last quality reporting period under these programs is proposed to be 2016, which would impact payments in 2018. Quality reporting under the QPP, as proposed, would begin in 2017 for payment year 2019. In order to align with the policies proposed in the QPP proposed rule, we propose to amend §§ 425.504 and 425.506 to indicate that these reporting requirements apply to ACOs and their EPs through the 2016 performance year. Specifically, at § 425.504(c) we propose to remove the phrase “for 2016 and subsequent performance years” each time it appears and add in its place the phrase “for 2016.” As noted in section III.H. of this rule, we propose a technical change to redesignate paragraph (d) as paragraph (c)(5) and then to add new paragraph (d) to address PQRS alignment rules for the 2017 and 2018 PQRS payment adjustment. Similarly, at § 425.506, we propose to revise paragraph (d) to indicate that the last reporting year for the EHR Incentive program is 2016. As stated in this section of the proposed rule, the PQRS and EHR incentive programs are sunsetting and we have proposed that the Quality Payment Program will begin with the 2017 reporting year, and payment adjustments will take effect in 2019 for eligible clinicians.
In addition, we propose to require ACOs, on behalf of the ECs who bill under the TIN of an ACO participant, to report quality measures through the CMS web interface in order to satisfy the QPP quality performance category. Currently, ACOs are required under § 425.504 to report measures on behalf of the EPs who bill under the TIN of an ACO participant for purposes of PQRS. Under the QPP proposed rule, the quality data submitted to the CMS web interface by ACOs would satisfy the quality performance category for ECs participating in the ACO. Therefore, in order to align with the QPP proposals, we propose to add a new paragraph at § 425.508(a) that parallels the current requirement at § 425.504 for reporting on behalf of EPs who bill under the TIN of an ACO participant for purposes of PQRS. Specifically, we propose to require that ACOs, on behalf of ECs who bill under the TIN of an ACO participant, must submit all the ACO CMS web interface measures required by the Shared Savings Program using a CMS web interface, to meet reporting requirements for the quality performance category under MIPS. We also propose to maintain flexibility for EPs to report quality performance category data separately from the ACO, and therefore, do not propose to include a provision that would restrict an EP from reporting outside the ACO. The intent is to permit flexibility in reporting quality data. Under the Shared
In the QPP proposed rule (81 FR 28296) we outlined and defined the proposed criteria for Advanced APMs, APMs through which ECs would have the opportunity to become Qualified Participants as specified in section 1833(z)(3)(C) and (D) of the Act. First, under MACRA, for an APM to be considered an Advanced APM, it must meet three requirements: (1) Require participants to use certified EHR technology; (2) provide payment for covered professional services based on quality measures comparable to those used in the quality performance category of MIPS; and (3) be either a Medical home Model expanded under section 1115A(c) of the Act or bear more than an nominal amount of risk for monetary losses. In the QPP proposed rule, we proposed criteria for each of these requirements (81 FR 28296). As proposed under the QPP proposed rule, significant distinctions between the design of different tracks or options within an APM mean that certain tracks or options could meet the proposed Advanced APM criteria while other tracks or options may not. Because of this, only Tracks 2 and 3 of the Shared Savings Program would have the potential to meet all criteria necessary for designation as an Advanced APM. Under the approach discussed in the QPP proposed rule, while all ACOs would meet the criterion for provider payment based on quality measures comparable to those used in the quality performance category of MIPS, only Tracks 2 and 3 would appear to the meet the proposed financial risk standard to bear more than a nominal amount of risk for monetary losses.
For purposes of meeting the CEHRT requirement, we proposed in the QPP proposed rule to adopt for Advanced APMs the definition of CEHRT that is proposed for MIPS and the APM incentive under § 414.1305 (see 81 FR 28299 for more detailed information). We also noted in the QPP proposed rule that the statute does not specify the number of ECs who must use CEHRT or how CEHRT must be used in an Advanced APM. For this reason, we stated we believed it was reasonable to use discretion when proposing details on how APMs might meet criteria. In the QPP proposed rule, we proposed that an Advanced APM must require at least 50 percent of ECs who are enrolled in Medicare (or each hospital if hospitals are the APM participants) to use the certified health IT functions outlined in the proposed definition of CEHRT to document and communicate clinical care with patients and other health care professionals. However, we stated we believed it was appropriate to propose an alternative criterion for CEHRT use for the Shared Savings Program because, although the Shared Savings Program requires ACOs to encourage and promote the use of enabling technologies (such as EHRs) to coordinate care for assigned beneficiaries, the Shared Savings Program does not require a specific level of CEHRT use for participation in the program. Instead, the Shared Savings Program, as noted above, includes an assessment of EHR use as part of the quality performance standard which directly impacts the amount of shared savings/shared losses generated by the ACO. We therefore proposed an alternative criterion available only to the Shared Savings Program. Specifically, we proposed that the alternative criterion would allow the Shared Savings Program to satisfy the EHR criterion if it holds APM Entities accountable for their ECs' use of CEHRT by applying a financial penalty or reward based on the degree of CEHRT use (such as the percentage of ECs that use CEHRT or the engagement in care coordination or other activities using CEHRT). We noted that the current EHR quality measure at ACO #11, as noted above, assesses the degree to which certain ECs in the ACO successfully meet the requirements of the EHR Incentive Program, which requires the use of CEHRT by certain ECs in the ACO, and we stated that “[s]uccessful reporting of the measure for a performance year gives the ACO points toward its overall quality score, which in turn affects the amount of shared savings or shared losses an ACO could earn or be liable for, respectively.” (81 FR 28300). Finally, we stated that we believed the alternative criterion meets the statutory requirement because the “proposed alternative criterion builds on established Shared Savings Program rules and incentives that directly tie the level of CEHRT use to the ACO's financial reward which in turn has the effect of directly incentivizing ever-increasing levels of CEHRT use among EPs.”
In light of these QPP proposals, we are proposing several modifications to our program rules in order to align with the QPP proposals.
First, we propose to modify the title and specifications of the EHR quality measure (ACO #11). This measure is currently titled Percent of PCPs Who Successfully Meet Meaningful Use Requirements. Under the current Shared Savings Program rules, ACOs must report on and are held accountable for certain measures that make up the quality reporting standard. One of these measures, ACO #11, assesses the degree of CEHRT use by primary care physicians participating in the ACO and performance on this measure is weighted twice that of any other measure for scoring purposes. To calculate this measure, CMS collects information submitted by PCPs through the EHR Incentive Program and determines the rate of CEHRT use by PCPs participating in the ACO. Specifically, as explained in our guidance [
Additionally, under the proposed policies included in the QPP proposed rule, ECs participating in an ACO would satisfy the Advancing Care Information category by reporting meaningful use of EHRs apart from the ACO (81 FR 28247, Table 15). Similar to the process currently used under the Shared Savings Program to determine what practitioners have met criteria for meaningful use for the ACO #11 measure, we anticipate accessing EC-reported data under the Advancing Clinical Information category to assess the ACO's overall use of CEHRT. Because the current measure only assesses the degree of use of CEHRT by primary care physicians participating in the ACO, we propose to modify the EHR
Finally, consistent with our statements in the QPP proposed rule as noted above, we do not believe that any additional modifications or exceptions to current program rules (other than the ones proposed here, specifically, that the measure specifications and title of ACO #11 be modified to include all ECs and not just PCPs, and the proposal for how an ACO would demonstrate complete and accurate reporting) must be made in order to be consistent with the spirit and intent of the statute and the QPP proposed criteria. Rather, the existing Shared Savings Program rules are sufficient to meet the QPP proposed criteria for Tracks 2 and 3 to be designated as eligible APMs because the EHR quality measure will always be used to impact the amount of shared savings or losses of an ACO, regardless of whether it is designated as pay for performance or pay for reporting. We note that the EHR measure has an especially significant impact on the overall quality scoring for an ACO because it is double-weighted compared to any other measure. In spite of this, we are considering additional options regarding the treatment of the EHR measure under the Shared Savings Program in order to further enhance the importance of this measure and its impact on an ACO's quality performance score and to improve alignment with the intent of the policies proposed in the QPP proposed rule. Specifically, we are considering whether to finalize a policy that would require the EHR measure to be P4P in all performance years, including the first year of an ACO's first agreement period. Additionally, we are considering whether to finalize a policy that would require the EHR measure to remain P4P, even when a new EHR measure is introduced or there are significant modifications to the specifications for the measure. Such modifications may require additional changes or alternative approaches to certain current Shared Savings Program rules related to quality benchmarking and scoring. We anticipate that if such modifications are made, they would only apply to the EHR measure and would not impact current scoring and benchmarking rules for other quality measures that make up the quality performance standard. For example, if a final policy is adopted that requires the EHR measure to remain P4P in the face of changes to the measure, we anticipate that we would need to establish a benchmark appropriate for the measure that does not depend on FFS or ACO generated data and distributing points on a sliding scale according to the benchmark because no FFS or ACO generated data would be available to do so in the first 2 years of the use of the new measure. For example, we may use a flat rate to assess performance or create a scale that aligns with our final QPP policies (for example, assessing ACO performance on a scale from 0–50 percent or 0–75 percent) and incrementally making points available depending on level of attainment. Additionally, we would consider exempting the EHR measure from “minimum attainment level” rules that would normally apply to a pay for performance measure, at least for the first 2 years of implementation and/or the first year of the first agreement period since the measure would be new to the ACO. Finally, we would consider whether these modifications should apply to the EHR measure only for tracks that could meet the requirements for designation as Advanced APMs under the forthcoming QPP final rule; we note that under the QPP proposed rule, only Tracks 2 and 3 would be designated as Advanced APMs. We seek comment on how best to conform to the intent and spirit of the QPP requirements to ensure that clinicians have assurance they are participating in an Advanced APM. We specifically seek comment on our proposals and the alternatives considered.
Finally, we note that the CMS web interface measures, including those proposed in the QPP proposed rule, are consistent across CMS reporting programs. We do not believe it is beneficial to propose CMS web interface measures for ACO quality reporting separately. Therefore, to avoid confusion and duplicative rulemaking, we propose that any future changes to the CMS web interface measures would be proposed through rulemaking for the QPP and would be applicable to ACO quality reporting under the Shared Savings Program.
Under section 1899(c) of the Act, beneficiaries are required to be assigned to an ACO participating in the Shared Savings Program based on the beneficiary's utilization of primary care services rendered by physicians participating in the ACO. Medicare FFS beneficiaries do not enroll in the Shared Savings Program, and they retain the right to seek Medicare-covered services from any Medicare-enrolled provider or supplier of their choosing. No exclusions or restrictions based on health conditions or similar factors are applied in the assignment of Medicare FFS beneficiaries. Thus, a beneficiary's choice to receive primary care services furnished by physicians and certain non-physician practitioners that are ACO professionals in the ACO, determines the beneficiary's assignment to an ACO under the Shared Savings Program. As discussed in detail in the November 2011 Medicare Shared Savings Program final rule (76 FR 67851 through 67870), we finalized a claims-based hybrid approach (called preliminary prospective assignment with retrospective reconciliation) for assigning beneficiaries to an ACO. Under this approach, beneficiaries are preliminarily assigned to an ACO at the beginning of a performance year to help the ACO refine its care coordination activities, but final beneficiary assignment is determined at the end of each performance year based on where beneficiaries chose to receive a plurality of their primary care services during the performance year. We adopted this policy because we believe that the methodology balances beneficiary freedom to choose healthcare providers under FFS Medicare with the ACO's desire to have information about the FFS beneficiaries that are likely to be assigned at the end of the performance year. We believe this methodology accomplishes an appropriate balance because ACOs have the greatest opportunities to impact the quality and cost of the care of beneficiaries that choose to receive care from providers and suppliers participating in the ACO during the course of the year.
A beneficiary is eligible for assignment to an ACO under § 425.402 if the beneficiary had a primary care service with a physician who is an ACO professional, and thus, is eligible for assignment to the ACO under the statutory requirement to base assignment on “utilization of primary care services” furnished by physicians who are ACO professionals in the ACO. The beneficiary is then assigned to the ACO if the allowed charges for primary care services furnished to the beneficiary by all primary care physicians who are ACO professionals and non-physician ACO professionals in the ACO are greater than the allowed charges for such services provided by primary care physicians, nurse practitioners, physician assistants, and clinical nurse specialists who are ACO professionals in another ACO or not affiliated with any ACO and are identified by a Medicare-enrolled TIN. The second step of the assignment process considers the remainder of beneficiaries who have received at least one primary care service from an ACO physician with a specialty designation specified in § 425.402(c) , but have received no services from a primary care physician, nurse practitioner, physician assistant, or clinical nurse specialist either inside or outside the ACO. These beneficiaries are assigned to the ACO if the allowed charges for primary care services furnished by physicians who are ACO professionals in the ACO with one of the specialty designations specified in § 425.402(c) are greater than the allowed charges for primary care services furnished by physicians with such specialty designations in another ACO or who are not affiliated with any ACO and are identified by a Medicare-enrolled TIN. The “two step” assignment process simultaneously maintains the requirement to focus on primary care services in beneficiary assignment, while recognizing the necessary and appropriate role of specialists and non-physician practitioners in providing primary care services, such as in areas with primary care physician shortages. We revised this two-step claims based methodology in the June 2015 Final Rule as discussed in detail in that final rule (80 FR 32743 through 32758) and finalized a policy that would exclude services provided by certain physician specialties from step 2 of the assignment process.
Additionally, in the June 2015 final rule, and in response to stakeholders, we implemented an option for ACOs to participate in a new two-sided performance-based risk track, Track 3. Under Track 3, beneficiaries are prospectively assigned to the ACO at the beginning of the performance year using the same two-step methodology, based on the most recent 12 months for which data are available, which reflects where beneficiaries have chosen to receive primary care services during that period. The ACO is held accountable for beneficiaries that are prospectively assigned to it for the performance year. Under limited circumstances, a beneficiary may be excluded from the prospective assignment list, for example, if the beneficiary enrolls in Medicare Advantage or no longer lives in the United States or U.S. territories and possessions, based on the most recent available data in our beneficiary records at the end of the performance year. A beneficiary is not excluded from the ACO's prospective assignment list at the time of reconciliation because the beneficiary chose to receive most or all of his or her primary care during the performance year from providers and suppliers outside the ACO. Additionally, no beneficiaries are added to the ACO's prospective assignment list at the time of reconciliation because a beneficiary chose to receive a plurality of his or her primary care during the performance year from ACO professionals participating in the ACO. Offering this alternative approach to beneficiary assignment responds to stakeholders who expressed a desire for a prospective assignment approach. These stakeholders believe prospective assignment will provide more certainty about the beneficiaries for whom the ACO will be held accountable during the performance year, thus enabling ACOs to redesign their patient care processes to more efficiently and effectively improve care for specific FFS beneficiaries rather than for all FFS beneficiaries. We note, however, that such certainty is limited because prospectively aligned beneficiaries who meet the exclusion criteria specified in § 425.401(b) during the performance year will not be aligned to the ACO at the end of the year; and further, as noted, beneficiaries remain free under FFS Medicare to choose the healthcare providers from whom they receive services.
Because of uncertainty inherent in FFS Medicare where there is no beneficiary lock-in or enrollment, both patient advocacy groups and ACOs have expressed interest in and support for
To begin to address these concerns, the Center for Medicare & Medicaid Innovation (Innovation Center) began conducting a test of beneficiary attestation (which was referred to as voluntary alignment, a term that we will also use in the context of the Shared Savings Program) in the Pioneer ACO Model (see
In the Pioneer ACO Model, for a Pioneer ACO to participate in voluntary alignment for performance year four (Pioneer ACO contract year 2015), the Pioneer ACO was required to submit an application to CMS in the summer of performance year three (Pioneer ACO contract year 2014) in which the ACO explained its plan for contacting beneficiaries. ACOs that were approved to participate in voluntary alignment were limited to contacting only those beneficiaries who appeared on the ACO's then current (Pioneer ACO contract year 2014) and prior year's (Pioneer ACO contract year 2013) prospective assignment lists.
The ACOs sent letters to beneficiaries during a specified period asking the beneficiaries to confirm whether a listed Pioneer Provider/Supplier was their “main doctor.” The Innovation Center imposed certain safeguards on the participating ACOs to protect against actions that could improperly influence a beneficiary's decision to complete the voluntary alignment form. The ACOs collected responses and turned them in to CMS in fall 2014, before the start of the 2015 performance year. Beneficiaries who confirmed a care relationship with the Pioneer Provider/Supplier listed on the form, and met all other eligibility criteria for alignment, were prospectively aligned to the Pioneer ACO for the upcoming performance year, regardless of whether or not the practitioners participating in the Pioneer ACO rendered the plurality of the beneficiary's primary care services during the alignment period. We refer to the procedures used under the Pioneer ACO Model as “the manual process.”
Because the testing of beneficiary attestation in the Pioneer ACO Model was just beginning at the time of the publication of the December 2014 proposed rule, in that proposed rule we indicated our interest in beneficiary attestation, but did not make any specific proposals. However, we welcomed comments on whether it would be appropriate to offer a beneficiary attestation process to ACOs participating under two-sided risk financial arrangements under the Shared Savings Program in the future (79 FR 72826 through 72829). We noted that if we were to offer a beneficiary attestation process for ACOs in performance-based risk tracks, we would anticipate initially implementing beneficiary attestation in a manner consistent with the beneficiary attestation process tested under the Pioneer ACO Model (79 FR 72829).
Beneficiary and ACO participation in and experience with voluntary alignment under the Pioneer ACO Model to date has been mixed. Initially, beneficiaries often seemed confused about the implications of attesting to a care relationship with a Pioneer Provider/Supplier, based on the letters they received from Pioneer ACOs. Beneficiaries, for example, were often unfamiliar with the name of the Pioneer ACO. Although most Pioneer ACOs initially expressed high interest in beneficiary attestation, only half participated. Those that did not participate cited cost/benefit concerns. To address concerns expressed by ACOs and beneficiaries, the beneficiary attestation process was updated for the Pioneer ACO Model for PY 2016, with letters sent to beneficiaries during the summer of 2015. The new beneficiary attestation process includes updated language in the letters to beneficiaries and the attestation form to reduce beneficiary confusion. The letters now include plainer language, refer to a specific healthcare provider (in addition to the ACO), and Pioneer Providers/Suppliers are permitted to discuss beneficiary attestation with beneficiaries and respond to questions. Other significant changes to the process include a longer voluntary alignment period and the ability for ACOs to provide the letter/form to beneficiaries via email, patient portal, or other electronic method (in which case the forms must be returned with a “wet-ink” signature, such as by returning the original signed form by mail. (We continue to view this updated process to be a manual process.) In addition there was a change to the voluntary alignment eligibility criteria. For performance year four (Pioneer ACO contract year 2015), only those beneficiaries who were identified on a Pioneer ACO's prospective alignment list from performance year two (Pioneer ACO contract year 2013) or performance year three (Pioneer ACO contract year 2014) were eligible to voluntarily align with the Pioneer ACO for performance year four, assuming all other eligibility criteria were met. For performance year five (Pioneer ACO contract year 2016), CMS changed the criteria to allow beneficiaries to voluntarily align into the performance year five aligned population if, among other requirements, the beneficiary had at least one paid claim for a Qualified E/M service, as defined in section 2.4 of Appendix C of the Pioneer ACO Agreement, furnished by a Pioneer Provider/Supplier on or after January 1, 2013. Based on some initial feedback, beneficiaries appear to be wary of the implications of designating a “main doctor” but are much more amenable to this type of information request when it comes from their physician or other practitioner, rather than from an ACO. However, information is not yet available on the impact or results of the modifications made to the beneficiary attestation process in the Pioneer ACO Model. The Next Generation ACO Model, which started operation on
To date, the Innovation Center has done limited analyses of the updated voluntary alignment process for effects on beneficiary engagement. Early experience indicates that for the participating ACOs, the number of prospectively assigned beneficiaries per ACO increased by 0.2 to 2.7 percent relative to the number of beneficiaries who would have otherwise been assigned. However, there is not yet enough information to determine whether beneficiary attestation under the manual process has had an impact on increasing certainty that a beneficiary will continue to choose to receive primary care or other services from practitioners participating in an ACO. For example, we would like to know how many of the beneficiaries who “attested” into alignment to the ACO continued to seek primary care services from ACO professionals during the performance year, which might demonstrate increased engagement on the part of the beneficiary. The Innovation Center found that ACOs were implementing the beneficiary attestation process under the Pioneer ACO Model as they described in their applications, and no marketing abuses have been observed to date.
Based on valuable experience gained through development and testing of beneficiary attestation processes through the Pioneer ACO Model, the manual process developed thus far appears to be resource intensive and may not significantly impact beneficiary assignment to ACOs. We also note that a similar manual process for sending letters to beneficiaries to provide them notice of their opportunity to opt out of claims data sharing was removed from the Shared Savings Program in the June 2015 final rule (see 80 FR 32743). This data sharing opt out process was removed because it was resource intensive and cumbersome for ACOs and CMS, and was confusing for beneficiaries. Instead, based on stakeholder comments, we finalized a process to provide beneficiaries the opportunity to decline claims data sharing directly by contacting the Medicare program (through 1–800–MEDICARE) rather than through the ACO. This more direct process started at the end of 2015 and so far appears to be working well, as it has not generated the number of complaints and concerns raised by the initial manual process.
We continue to believe that it may be desirable to incorporate beneficiary attestation into the assignment of beneficiaries to ACOs participating in the Shared Savings Program, to supplement and enhance the current claims-based algorithm driven methodology as described in more detail in this section of the proposed rule. We agree with stakeholders that supplementing the current assignment process with a voluntary alignment process that incorporates beneficiary attestation about their “main doctor” could help ACOs to increase patient engagement, improve care management and health outcomes, and lower expenditures for beneficiaries. Incorporating beneficiary attestation into the beneficiary assignment process could further strengthen the current claims-based, two-step assignment process. For example, although we defined certain HCPCS codes at § 425.20 as being “primary care services,” the use of these codes may not fully capture the extent of the primary care relationship a beneficiary has with his or her provider. Supplementing the claims-based assignment algorithm with beneficiary attestations could further assure that beneficiaries are assigned to ACOs based on their relationship with providers that they believe to be truly responsible for their overall care.
We believe that it would be appropriate to implement, at a minimum, a voluntary alignment process under the Shared Savings Program that would be similar to the updated manual process we have implemented under the Pioneer ACO Model and that will be used under the Next Generation ACO Model. However, based on the valuable knowledge and experience we have gained through these Innovation Center models, we are concerned that the manual voluntary alignment process used for the Pioneer ACO Model and that will be used under the Next Generation ACO Model is resource intensive for both ACOs and CMS. The voluntary alignment process under the Pioneer ACO Model requires individual ACOs to directly obtain information from beneficiaries by sending them a form letter approved by CMS that includes a copy of a CMS-approved form that the beneficiary may complete to confirm their care relationship with a provider or supplier that is participating in the ACO (that is, their “main doctor”), whose services are considered in the alignment process. The ACOs then communicate these beneficiary attestations to CMS. However, not all beneficiaries that submit an attestation form may be eligible to be aligned to the ACO. Accordingly, we must review the submissions, and provided the beneficiary is otherwise eligible for alignment to the ACO, this confirmation (or attestation) is then used to align the beneficiary to the ACO. If we were to implement a similar manual process under the Shared Savings Program, we believe it would be appropriate to limit voluntary alignment to Track 3 ACOs for the reasons explained later in this section. Additionally, the timing and requirements of the process would prohibit beneficiaries from voluntarily aligning to ACOs that initially join the Shared Savings Program under Track 3 for the ACO's first performance year because, consistent with the coluntary alignment process under the Pioneer ACO and Next Generation ACO models explained above, an ACO would only be permitted to contact beneficiaries that were aligned prospectively to the ACO in the current or prior years. Thus, a beneficiary's designation of an ACO professional as responsible for coordinating their overall care would impact an ACO's prospective assignment list starting in PY2, assuming the ACO met all requirements necessary for the incorporation of this information during PY1, including applying for participation in voluntary alignment, sending letters, collecting beneficiary preferences, and timely submitting all required information to CMS.
Because of the limitations of the manual process, we have considered ways that voluntary alignment might be implemented in a more automated and direct way under the Shared Savings Program, potentially having a more significant impact on beneficiary engagement while reducing burdens on ACOs, ACO participants, ACO providers/suppliers, ACO professionals, beneficiaries, and CMS. Automating a process for Medicare FFS beneficiaries to designate their “main doctor” or the other healthcare provider they believe is responsible for their overall care could align with agency goals to provide increased focus on patient centered care, and improve beneficiary engagement. We believe strengthening primary care is critical to an effective health care system. Automating a
We are therefore proposing to implement an automated approach under which we could determine which healthcare provider a FFS beneficiary believes is responsible for coordinating their overall care (their “main doctor”) using information that is collected in an automated and standardized way directly from beneficiaries (through a system established by us, such as
We propose to make such an automated mechanism available for beneficiaries to voluntarily align with the provider or supplier that they believe is responsible for coordinating their overall care starting early in 2017, making it possible for us to use beneficiary attestations for assigning beneficiaries to ACOs in all three tracks for the 2018 performance year. For example, if the automated mechanism is available for beneficiaries in early 2017, we would be able to use the information in the fall of 2017 to develop ACO assignment lists for 2018 for ACOs that are currently participating in the Shared Saving Program, as well as those applying for participation. Voluntary alignment data would be accessed and incorporated in the beneficiary assignment process each time we run the assignment algorithm. Under the automated approach, beneficiaries would be able to change their attestation about their “main doctor” at any time, however, we note there may be a lag in using the information to update an ACO's assignment list depending on the timing of the beneficiary's updated designation and the track under which the ACO is participating. For example, we propose that beneficiaries who designate an ACO professional in a Track 3 ACO as their “main doctor” would be prospectively assigned to that Track 3 ACO based on their designation prior to the start of the performance year as currently provided under § 425.400(a)(3). These beneficiaries would remain assigned to the Track 3 ACO until the end of the benchmark or performance year, even if they subsequently designate a practitioner outside the ACO as their “main doctor”, unless they meet any of the exclusion criteria under § 425.401(b). We considered incorporating voluntary alignment as part of the exclusion criteria under 425.401(b), however, we believe it would be appropriate, when incorporating voluntary alignment for Track 3 ACOs, to continue the current prospective assignment policy provided under § 425.400(a)(3) because the intent of prospective assignment is to provide stability in ACOs' beneficiary assignment lists to allow ACOs to coordinate care appropriately for the patients assigned to them. This policy would also align with our policy regarding the SNF 3-day rule waiver under § 425.612, which is limited to eligible beneficiaries who have been prospectively aligned to a Track 3 ACO, because it is important for the ACO to have clear information about which beneficiaries are eligible to receive SNF services pursuant to the waiver. The updated designation would, however, be considered when conducting beneficiary assignment for the subsequent benchmark or performance year.
Further, we propose to incorporate voluntary alignment for ACOs in Tracks 1 and 2 on a quarterly basis; that is, beneficiaries who are not currently assigned to a Track 3 ACO and who voluntarily align with a healthcare provider that is an ACO professional participating in an ACO under Track 1 or 2 would be reflected in the ACO's next preliminary prospective or final assignment list as provided under § 425.400(a)(2). We believe this policy would be appropriate because it aligns with the current timing for updates to Track 1 and 2 ACO assignment lists.
Finally, we propose that if a beneficiary voluntarily aligns with a provider or supplier whose services would be considered in assignment but who is not participating in an ACO as an ACO professional, the beneficiary would not be eligible for alignment to an ACO, even if the beneficiary would have otherwise been assigned to an ACO under our claims-based approach.
We further propose that, if this automated voluntary alignment process is not operationally ready for implementation under the proposed timeframe, we would implement a manual voluntary alignment process for Track 3 ACOs only that builds upon experience previously gained under the Pioneer ACO Model. Because a manual voluntary alignment process is resource intensive for both ACOs and CMS, we believe that if it were necessary to adopt a manual voluntary alignment process under the Shared Savings Program, it would be appropriate to initially limit it to ACOs participating in the Shared Savings Program under Track 3 because beneficiaries are prospectively aligned to Track 3 ACOs (as they are to ACOs under the Pioneer ACO Model and the
More specifically, we propose that if we determine, by no later than spring 2017, that an automated voluntary alignment process is not ready for implementation to allow beneficiaries to voluntarily align with ACO across all three Tracks for the 2018 performance year, then we would implement an alternative manual voluntary alignment process to allow beneficiaries to align with Track 3 ACOs for the 2018 performance year and until such time as an automated process is available. This proposed alternative manual voluntary alignment process for Track 3 ACOs would be similar to the updated process that was used under the Pioneer ACO Model to allow beneficiaries to voluntarily align with participating ACOs for the 2016 performance year and that we will follow under the Next Generation ACO Model for the 2017 performance year. Early each year, starting in 2017, Track 3 ACOs would notify us as to whether they want to participate in voluntary alignment for the upcoming performance year. Specifically, similar to the process used under the Pioneer ACO Model and the Next Generation ACO Model, each spring starting in 2017, those Track 3 ACOs that have notified CMS that they would like to participate in voluntary alignment would be required to provide us with a list of the beneficiaries they plan to contact to request that the beneficiary designate an ACO professional whose services are considered in assignment as their “main doctor.” The ACOs must also submit to CMS for approval the criteria used to identify the listed beneficiaries. We would review these beneficiary lists to determine if the beneficiary is eligible to be contacted regarding voluntary alignment depending on whether the beneficiary was prospectively assigned yo the ACO in prior performance years, similar to the approach used under the Pioneer ACO Model and the Next Generation ACO Model approach as described above. ACOs could then contact the eligible beneficiaries by sending them a form letter approved by CMS, similar to the letter ACOs sent under the Pioneer ACO Model for 2016, that would include a copy of a CMS-approved form that the beneficiary could complete to confirm their care relationship with an ACO professional, whose services are considered in the assignment process, who the ACO believes may be their “main doctor.” Alternatively, the ACO could provide an opportunity for beneficiaries to obtain a copy of the CMS-approved form in the offices of ACO professionals that furnish primary care services on which assignment is based.
Under the manual voluntary alignment process, by September of each year, Track 3 ACOs participating in voluntary alignment for the upcoming performance year would notify CMS as to which beneficiaries had agreed to voluntarily align with their ACO for the upcoming performance year by submitting a form designating an ACO professional whose services are considered in alignment as responsible for coordinating their overall care. We would verify that the beneficiaries are still eligible for assignment to the ACO, and prospectively assign all eligible beneficiaries to the Track 3 ACO for the upcoming performance year. We would repeat this process annually; that is, under this process, beneficiaries would be required to voluntarily align each year by submitting a new form confirming a care relationship with an ACO professional whose services are used in assignment. This approach would enable us to begin the process of incorporating beneficiary attestations into the assignment of beneficiaries to Track 3 ACOs until a more automated, direct method of voluntary alignment is operationally feasible. We believe even this more limited approach to voluntary alignment may increase patient centeredness over the current approach of assigning beneficiaries to ACOs based only on the claims-based algorithm driven methodology for the reasons discussed above and because some level of additional beneficiary engagement in the alignment process may be preferable to no beneficiary engagement.
Therefore, regardless of process (manual or automatic), we are proposing to begin to incorporate beneficiary attestation into the assignment methodology for the Shared Savings Program, effective for assignment for the 2018 performance year. In brief, under the proposal, an eligible beneficiary would be assigned to an ACO based on the existing claims-based assignment process unless the beneficiary has designated a healthcare provider as being responsible for their overall care. If an eligible beneficiary has made such a designation then the voluntary alignment would override the claims based assignment process. Under an automated process, beneficiaries would be able to modify their designation at any time (not just annually, as under a manual process), however, as noted above, there may necessarily be a lag before that information can be incorporated into the assignment methodology for purposes of determining an ACO's assignment list, depending on the timing of the designation and the track in which the ACO is participating. The latest that the information would be updated would be prior to the start of the next performance year at a timepoint designated by CMS in cases where beneficiaries are prospectively aligned to a Track 3 ACO. There may also be a lag when a beneficiary voluntarily aligns with a practitioner identified by an NPI who is an ACO professional in an ACO, but chooses to leave the ACO during a performance year. For example, there may be situations in which an eligible beneficiary voluntarily aligns to a practitioner billing under ACO participant TIN A in ACO A participating in Track 3 and becomes
We emphasize that we do not intend for the voluntary alignment process (whether automated or manual) to be used as a mechanism for ACOs (or their ACO participants, ACO providers/suppliers, ACO professionals or other individuals or entities performing functions or services on behalf of the ACO) to target beneficiaries for whose treatment the ACO might expect to earn shared savings, or to avoid those for whose treatment the ACO might be less likely to generate shared savings. Further, as discussed in more detail later in this section, we do not believe ACOs or others should be permitted to offer gifts or other inducements to beneficiaries, nor should they be allowed to withhold or threaten to withhold services, for the purposes of coercing or influencing beneficiaries' voluntary alignment decisions. However, we believe it is important to promote engagement and discussion between beneficiaries and their healthcare providers and therefore do not propose to prohibit an ACO or its ACO participants, ACO providers/suppliers, or ACO professionals from providing a beneficiary with accurate descriptive information about the potential patient care benefits of designating an ACO professional as responsible for the beneficiary's overall care.
Accordingly, we propose to revise the regulations governing the assignment methodology to add a new paragraph (e) to § 425.402. Under this paragraph, if an automated system is available by spring of 2017 to allow a beneficiary to designate an ACO professional whose services are used in alignment as responsible for coordinating their overall care and for CMS to process the designation electronically, then the voluntary alignment process would be available for ACOs participating in Track 1, Track 2, or Track 3, as specified in § 425.600(a) of this part. However, if such an electronic system is not available by spring of 2017, then CMS will specify the form and manner in which a beneficiary may designate an ACO professional whose services are used in assignment as responsible for coordinating their overall care using a manual process, but the voluntary alignment process will be limited to ACOs participating in Track 3 until an automated system is available. In either case, under the proposal, beginning in performance year 2018 beneficiaries that have voluntarily aligned with an ACO by designating an ACO professional whose services are used in assignment as responsible for coordinating their overall care will be added to the ACO's list of assigned beneficiaries, for a performance year under the following conditions:
• The beneficiary must have had at least one primary care service with a physician who is an ACO professional in the ACO and who is a primary care physician as defined under § 425.20 of this subpart or who has one of the primary specialty designations included in § 425.402(c).
• The beneficiary must meet the assignment eligibility criteria established in § 425.401, and must not be excluded by the criteria at § 425.401(b).
• The beneficiary must have designated an ACO professional who is a primary care physician as defined at § 425.20 of this part, a physician with a specialty designation included at § 425.402(c) of this subpart, or a nurse practitioner, physician assistant, or clinical nurse specialist as responsible for their overall care.
• The designation must be made in the form and manner and by a deadline determined by CMS. In contrast, if a beneficiary designates a provider or supplier outside the ACO, who is a primary care physician as defined at § 425.20 of this part, a physician with a specialty designation included at § 425.402(c), or a nurse practitioner, physician assistant, or clinical nurse specialist, as responsible for coordinating their overall care, the beneficiary will not be added to the ACO's list of assigned beneficiaries for a performance year, even if the beneficiary would otherwise be included in the ACO's assigned beneficiary population under the assignment methodology in § 425.402(b).
Further, we propose that the ACO, ACO participants, ACO providers/suppliers, ACO professionals, and other individuals or entities performing functions or services related to ACO activities are prohibited from directly or indirectly, committing any act or omission, or adopting any policy that coerces or otherwise influences a Medicare beneficiary's decision to designate or not designate an ACO professional as responsible for coordinating their overall care, including but not limited to the following:
• Offering anything of value to the Medicare beneficiary as an inducement for influencing the Medicare beneficiary's decision to designate or not to designate an ACO professional as responsible for coordinating their overall care. Any items or services provided in violation of this prohibition will not be considered to have a reasonable connection to the medical care of the beneficiary, as required under § 425.304(a)(2);
• Withholding or threatening to withhold medical services or limiting or threatening to limit access to care; and
• Including any voluntary alignment or change of preference forms requiring a beneficiary signature with any other materials or forms, including but not limited to any other materials requiring the signature of the Medicare beneficiary. (We note this requirement would only be applicable if we implement a manual process);
To maintain flexibility for ACOs, ACO participants, ACO providers/suppliers, ACO professionals, beneficiaries, and CMS, we would intend to provide further operational details regarding the voluntary alignment process and the applicable implementation timelines through subregulatory guidance and other outreach activities.
We seek comments on this proposal, on the effective date, and on any other related issues that we should consider for the final rule to address issues related to voluntary alignment under the Shared Savings Program. In particular, we seek comment on whether voluntary alignment is an appropriate mechanism for assigning beneficiaries retrospectively to an ACO. Specifically, is it appropriate to retrospectively align a beneficiary to an ACO, if the beneficiary designated an ACO professional whose services are used in assignment as responsible for the beneficiary's overall care, but did not receive a plurality of primary care services from ACO professionals in the ACO during the performance year? We seek comment on whether including voluntary alignment information in our assignment algorithm should be discretionary, that is, whether ACOs should be permitted to opt into or out of voluntary alignment. We seek comment on whether we should exclude a beneficiary from an ACO's prospective assignment list for a performance year if later during the performance year the beneficiary voluntarily aligns with a healthcare provider that is not an ACO professional in the ACO. We also seek input on how concerns about ACO avoidance of at risk beneficiaries might be addressed.
We also note that under the proposed automated voluntary alignment process, a beneficiary's designation of a healthcare provider as responsible for coordinating their overall care would stay in effect until the beneficiary chose to make a subsequent change. We have concerns that in some cases a beneficiary may develop a closer healthcare relationship with a primary care provider who is different than the one they initially designated but the beneficiary might not necessarily change their designation to reflect this new choice. However, requiring a beneficiary to update his or her designation annually seems burdensome. Therefore, under the proposal we would continue to use their designation and rely on appropriate information shared with beneficiaries at the point of care to ensure the beneficiary's designation is kept up to date. We seek comment on this issue and our proposal under the automated system to continue to use a beneficiary's designation of the healthcare provider responsible for coordinating their overall care until it is changed.
In addition, although we are not proposing to specify operational processes in regulations, nevertheless we also welcome suggestions regarding the operational process, implementation timelines, and related issues regarding the process for beneficiaries to voluntarily align with an ACO, including how to strengthen ACOs' beneficiary engagement activities. We note that although we are proposing to establish a process under which beneficiaries may designate their “main doctor” who they consider responsible for coordinating their overall care, in establishing the operational processes for allowing beneficiaries to designate their “main doctor” we may not explicitly use the phrase “responsible for coordinating overall care” which we have included in the proposed provision at § 425.402(e). Instead, we may consider using other terminology based on focus group testing and/or other feedback from beneficiary representatives. We welcome comments on what terminology would be preferable to ensure beneficiaries understand the significance of designating a provider or supplier as responsible for coordinating their overall care. We will consider such suggestions further as we develop program guidance and outreach activities for beneficiaries and ACOs.
The Medicare SNF benefit is for beneficiaries who require a short-term intensive stay in a SNF, requiring skilled nursing, or skilled rehabilitation care, or both. Under section 1861(i) of the Act, beneficiaries must have a prior inpatient hospital stay of no fewer than three consecutive days in order to be eligible for Medicare coverage of inpatient SNF care. In the June 2015 final rule (80 FR 32804 through 32806), we provided ACOs participating in Track 3 with additional flexibility to attempt to increase quality and decrease costs by allowing these ACOs to apply for a waiver of the SNF 3-day rule for their prospectively assigned beneficiaries when they are admitted to certain “SNF affiliates,” that is, SNFs with whom the ACO has executed SNF affiliate agreements. (See § 425.612(a)(1)). Waivers are effective upon CMS notification of approval for the waiver or the start date of the ACO's participation agreement, whichever is later. (See § 425.612(c)). We stated in the June 2015 final rule that the SNF 3-day rule waiver would be effective for services furnished on or after January 1, 2017. Program requirements for this waiver are codified at § 425.612. These requirements are primarily based on criteria previously developed under the Pioneer ACO Model. Specifically, under § 425.612(a)(1), we waive the requirement in section 1861(i) of the Act for a 3-day inpatient hospital stay prior to a Medicare covered post-hospital extended care service for eligible beneficiaries prospectively assigned to ACOs participating in Track 3 that have been approved to implement the waiver that receive otherwise covered post-hospital extended care services furnished by an eligible SNF that has entered into a written agreement to partner with the ACO for purposes of this waiver. All other provisions of the statute and regulations regarding Medicare Part A post-hospital extended care services continue to apply.
We believe that clarity regarding whether a waiver applies to SNF services furnished to a particular beneficiary is important to help ensure compliance with the conditions of the waiver and also improve our ability to monitor waivers for misuse. Therefore, in the June 2015 final rule, we limited the waiver to ACOs in Track 3 because under the prospective assignment methodology used in Track 3, beneficiaries are assigned in advance to the ACO for the entire performance year (unless they meet any of the exclusion criteria under § 425.401(b) during the performance year), so it will be clearer to a Track 3 ACO whether the waiver applies to SNF services furnished to a particular beneficiary than it would be to an ACO in Track 1 or 2, where beneficiaries are assigned using a preliminary prospective assignment methodology with retrospective reconciliation (80 FR 32804). An ACO's use of the SNF 3-day rule waiver will be associated with a distinct and easily identifiable event, specifically, admission of a prospectively assigned beneficiary to a previously identified SNF affiliate without prior inpatient
Based on our experiences under the Pioneer ACO Model, and in response to comments, we established certain requirements under § 425.612 for ACOs, ACO providers/suppliers, SNF affiliates, and beneficiaries with respect to the SNF 3-day rule waiver under the Shared Savings Program. All ACOs electing to participate in Track 3 will be offered the opportunity to apply for a waiver of the SNF 3-day rule for their prospectively assigned beneficiaries at the time of their initial application to participate in Track 3 of the program and annually thereafter while participating in Track 3. We anticipate accepting the first SNF 3-day rule waiver applications from Track 3 ACOs later this summer. As set forth at § 425.612(a)(1)(i), in their waiver applications, ACOs must demonstrate that they have the capacity to identify and manage beneficiaries who would be either directly admitted to a SNF or admitted to a SNF after an inpatient hospitalization of fewer than 3 days. As part of the application process, the ACO will be required to submit a list of the SNFs with which the ACO will partner (called “SNF affiliates”) along with executed SNF affiliate agreements for each listed SNF. These SNF affiliates will be subject to program integrity screening under § 425.612(b). Additionally, the ACO must submit narratives describing how the ACO plans to implement the waiver, including the communication plan between the ACO and its SNF affiliates; a care management plan for beneficiaries admitted to a SNF affiliate; a beneficiary evaluation and admission plan approved by the ACO medical director and the healthcare professional responsible for the ACO's quality improvement and assurance processes; and a description of any financial relationships between the ACO, SNF, and acute care hospitals.
To be eligible to receive covered SNF services under the waiver, a beneficiary must be prospectively assigned to the ACO for the performance year in which he or she is admitted to the SNF affiliate, may not reside in a SNF or other long-term care setting, must be medically stable and have an identified skilled nursing or rehabilitation need that cannot be provided as an outpatient, and must meet the other requirements set forth at § 425.612(a)(1)(ii).
For a SNF to be eligible to partner with ACOs for purposes of the waiver, a SNF must have an overall quality rating of 3 or more stars under the CMS 5 Star Quality Rating System, must sign a written agreement with the ACO, which we refer to as the “SNF affiliate agreement,” that includes elements determined by CMS, including: A clear indication of the effective dates of the SNF affiliate agreement; agreement to comply with Shared Savings Program rules, including but not limited to those specified in the participation agreement between the ACO and CMS; agreement to validate beneficiary eligibility to receive covered SNF services under the waiver prior to admission; remedial processes and penalties for noncompliance with the terms of the waiver, and other requirements set forth at § 425.612(a)(1)(iii). The SNF affiliate agreement must include these elements to ensure that the SNF affiliate understands its responsibilities related to implementation of the SNF 3-day rule waiver.
We indicated in the June 2015 final rule that the SNF 3-day rule waiver would be effective no earlier than January 1, 2017; thereafter, the waiver will be effective upon CMS notification to the ACO of approval for the waiver or the start date of the ACO's participation agreement, whichever is later, and will not extend beyond the term of the ACO's participation agreement. If CMS terminates the participation agreement under § 425.218, then the waiver will end on the date specified by CMS in the notice of termination. If the ACO terminates its participation agreement, then the waiver will end on the effective date of termination as specified in the written notification required under § 425.220.
We also indicated in the June 2015 final rule that we established the timeline for implementation of the SNF 3-day rule waiver to allow for development of additional subregulatory guidance, including necessary education and outreach for ACOs, ACO participants, ACO providers/suppliers, and SNF affiliates. We noted that we would continue to evaluate the waiver of the SNF 3-day rule, including further lessons learned from Innovation Center models in which a waiver of the SNF 3-day rule is being tested. We indicated that in the event we determined that additional safeguards or protections for beneficiaries or other changes were necessary, such as to incorporate additional protections for beneficiaries into the ACO's participation agreement or SNF affiliate agreements, we would propose the necessary changes through future rulemaking.
In considering additional beneficiary protections that may be necessary to ensure proper use of the SNF 3-day rule waiver under the Shared Savings Program, we note that there are existing, well established payment and coverage policies for SNF services based on sections 1861(i), 1862(a)(1), and 1879 of the Act that include protections for beneficiaries from liability for certain non-covered SNF charges. These existing payment and coverage policies for SNF services continue to apply to SNF services furnished to beneficiaries assigned to ACOs participating in the Shared Savings Program, including services furnished pursuant to the SNF 3-day rule waiver. (For example, see the Medicare Claims Processing Manual, Chapter 30—Financial Liability Protections, section 70, available at
Since publication of the June 2015 final rule, we have continued to learn from implementation and refinement of the SNF 3-day rule waiver in the Pioneer ACO Model (see
First, one example of a scenario under which a beneficiary may be at financial risk relates to the quarterly exclusions from a Track 3 ACO's prospective assignment list. For example, assume a beneficiary was prospectively assigned to a Track 3 ACO that has been approved for the SNF 3-day rule waiver (a waiver-approved ACO), but during the first quarter of the year, the beneficiary's Part B coverage terminated and the beneficiary is therefore no longer eligible to be assigned to the ACO. As a result, the beneficiary would be excluded from the ACO's prospective assignment list because the beneficiary meets one or more of the exclusion criteria specified at § 425.401(b). That is, although SNF services are covered under Part A, not Part B, the beneficiary would be dropped from the ACO's prospective assignment list if during the performance year the beneficiary is no longer enrolled in Part B and thus no longer eligible to be assigned to the ACO. We are concerned about some very limited situations, such as when a beneficiary's Part B coverage terminates during a quarter when the beneficiary is also receiving SNF services. The beneficiary may be admitted to a SNF without a prior 3-day inpatient hospital stay after his or her Part B coverage ended, but before the beneficiary appears on a quarterly exclusion list. It is not operationally feasible for CMS to notify the ACO and for the ACO, in turn, to notify its SNF affiliates, ACO participants, and ACO providers/suppliers immediately of the beneficiary's exclusion. The lag in communication may then cause the SNF affiliate to unknowingly admit a beneficiary who no longer qualifies for the waiver without a prior 3-day inpatient hospital stay. Absent specific beneficiary protections, we are concerned that the beneficiary could be charged for such non-covered SNF services. We do not believe it would be appropriate for CMS to hold the beneficiary or the SNF affiliate financially liable for such services. We believe we should allow for a reasonable amount of time for CMS to communicate beneficiary exclusions to an ACO and for the ACO to communicate the exclusions to its SNF affiliates, ACO participants, and ACO providers/suppliers. Typically there would be no way for the SNF affiliate to verify in real-time that a beneficiary continues to be prospectively assigned to the ACO; the SNF affiliate must rely upon the assignment list and quarterly exclusion lists provided by CMS to the ACO and communicated by the ACO to its SNF affiliates, ACO participants, and ACO providers/suppliers. Further, the beneficiary does not receive a notification regarding his or her eligibility for the SNF 3-day rule waiver prior to receiving SNF services under the waiver, so beneficiaries are not able to check their own eligibility.
To address delays in communicating beneficiary exclusions from the prospective assignment list, the Pioneer ACO Model and Next Generation ACO Model provide for a 90-day grace period that functionally acts as an extension of beneficiary eligibility for the SNF 3-day rule waiver and permits some additional time for the ACO to receive quarterly exclusions lists from CMS and communicate beneficiary exclusions to its SNF affiliates. We believe that it would be appropriate, in order to protect beneficiaries from potential financial liability related to the SNF 3-day rule waiver under the Shared Savings Program, to establish a similar 90-day grace period in the case of a beneficiary who was prospectively assigned to a waiver-approved ACO at the beginning of the performance year but is later excluded from assignment to the ACO.
Therefore, we believe it is necessary for purposes of carrying out the Shared Savings Program to allow these formerly assigned beneficiaries to receive covered SNF services under the SNF 3-day rule waiver when the beneficiary is admitted to a SNF affiliate within a 90-day grace period following the date that CMS delivers the quarterly beneficiary exclusion list to an ACO. The equitable and efficient implementation of the SNF 3-day rule waiver is necessary to further support ACOs' efforts to increase quality and decrease costs under two-sided performance-based risk arrangements. (See 80 FR 32804 for a detailed discussion of the rationale for establishing the SNF 3-day rule waiver). Based upon the experience in the Pioneer ACO Model, we believe it is not possible to adopt such a waiver without providing some protection for certain beneficiaries who were prospectively assigned to the ACO at the start of the year, but are subsequently excluded from assignment. Accordingly, we are proposing to modify the waiver to include a 90-day grace period to allow sufficient time for CMS to notify the ACO of any beneficiary exclusions, and for the ACO then to inform its SNF affiliates, ACO participants, and ACO providers/suppliers of those exclusions.
More specifically, we propose to modify the waiver under § 425.612(a)(1) to include a 90-day grace period that would permit payment for SNF services provided to beneficiaries who were initially on the ACO's prospective assignment list for a performance year but were subsequently excluded during the performance year. CMS would make payments for SNF services furnished to such a beneficiary under the terms of the SNF 3-day rule waiver if the following conditions are met:
• The beneficiary was prospectively assigned to a waiver-approved ACO at the beginning of the performance year but was excluded in the most recent quarterly exclusion list.
• The SNF affiliate services are furnished to a beneficiary admitted to the SNF affiliate within 90 days following the date that we deliver the quarterly exclusion list to the ACO.
• We would have otherwise made payment to the SNF affiliate for the services under the SNF 3-day rule waiver, but for the beneficiary's exclusion from the waiver-approved ACO's prospective assignment list.
We further note that we anticipate that there would be very few instances where it would be appropriate for SNF services to qualify for payment under this 90-day grace period. This is because this waiver only allows for payment for claims that meet all applicable requirements except the requirement for a prior 3-day inpatient hospital stay. For example, assume that a beneficiary who had been assigned to a waiver-approved ACO was admitted to a SNF without a prior 3-day inpatient hospital stay after his or her enrollment in an MA Plan, but before the beneficiary appears on a quarterly exclusion list. In this case, these SNF services would not be covered under FFS because the waiver does not expand coverage to include services furnished to Medicare beneficiaries enrolled in MA Plans. Both beneficiaries and healthcare providers are expected to know that the beneficiary is covered under an MA plan and not FFS Medicare.
Second, we are concerned that there could be other more likely scenarios where a beneficiary could be charged for non-covered SNF services that were a result of an ACO's or SNF's inappropriate use of the SNF 3-day rule waiver. Specifically, we are concerned that a beneficiary could be charged for non-covered SNF services if a SNF affiliate were to admit a FFS beneficiary who is not prospectively assigned to the waiver-approved ACO, and payment for SNF services is denied for lack of a qualifying inpatient hospital stay.
We believe this situation could occur as a result of a breakdown in one or more of processes the ACO and SNF affiliate are required to have in place to implement the waiver. For example, the SNF affiliate and the admitting ACO provider/supplier may not verify that the beneficiary appears on the ACO's prospective assignment list prior to admission, as required under the SNF 3-day rule waiver (§ 425.612(a)(1)(iii)(B)(4)) and the terms of the SNF's affiliate agreement with the ACO. In this scenario, Medicare would deny payment of the SNF claim under existing FFS rules because the beneficiary did not have a qualifying inpatient hospital stay. We are concerned that, once the claim is rejected, the beneficiary may not be protected from financial liability, and thus could be charged by the SNF affiliate for these non-covered SNF services that were a result of an inappropriate attempt to use the waiver, potentially subjecting the beneficiary to significant financial liability. However, in this scenario, a SNF with a relationship to the ACO submitted the claim that was rejected for lack of a qualifying inpatient hospital stay, but that otherwise would have been paid by Medicare. In this circumstance, we propose to assume the SNF's intent was to rely upon the SNF 3-day waiver, but the waiver requirements were not met. We believe it is reasonable to assume the SNF's intent was to use the SNF 3-day rule waiver because, as a SNF affiliate, the SNF should be well aware of the ability to use the SNF 3-day rule waiver and, by submitting the claim, demonstrated an expectation that CMS would pay for SNF services that would otherwise have been rejected for lack of a 3-day inpatient hospital stay. We believe that in this scenario, the rejection of the claim under the SNF 3-day rule waiver could easily have been avoided if the ACO, the admitting ACO provider/supplier, and the SNF affiliate had confirmed that the requirements for use of the SNF 3-day rule waiver were satisfied. Because each of these entities is in a better position to know the requirements of the waiver and ensure that they are met than the beneficiary is, we believe that the ACO and/or the SNF affiliate should be accountable for such rejections and the SNF affiliate should be prevented from attempting to charge the beneficiary for the non-covered SNF stay.
To address situations similar to this scenario where the beneficiary may be subject to financial liability due to an eligible SNF submitting a claim that is not paid only as a result of the lack of a qualifying inpatient hospital stay, the Next Generation ACO Model generally places the financial responsibility on the SNF, where the SNF knew or reasonably could be expected to have known that payment would not be made for the non-covered SNF services. In such cases, CMS makes no payment for the services and the SNF may not charge the beneficiary for the services and must return any monies collected from the beneficiary. Additionally, under the Next Generation ACO Model, the ACO must indemnify and hold the beneficiary harmless for payment for the services. We believe it is appropriate to propose to adopt a similar policy under the Shared Savings Program because, under § 425.612(a)(1)(iii)(B), to be a SNF affiliate, a SNF must agree to validate the eligibility of a beneficiary to receive covered SNF services in accordance with the waiver prior to admission to the SNF, and otherwise comply with the requirements and conditions of the Shared Savings Program. SNF affiliates are required to be familiar with the SNF 3-day rule and the terms and conditions of the SNF 3-day rule waiver for the Shared Savings Program, and should know to verify that a FFS Medicare beneficiary who is a candidate for admission has completed a qualifying hospital stay or that the admission meets the criteria under a waiver of the SNF 3-day rule that is properly in place. Additionally, ACOs and their SNF affiliates are required to develop plans that will govern communication and beneficiary evaluation and admission prior to use of the SNF 3-day rule waiver. In these circumstances, we believe it is reasonable that the ultimate responsibility and liability for a non-covered SNF admission should rest with the admitting SNF affiliate.
Therefore, to protect FFS beneficiaries from being charged in certain circumstances for non-covered SNF charges related to the waiver of the SNF 3-day rule under the Shared Savings Program, potentially subjecting such beneficiaries to significant financial liability, we are proposing to add certain beneficiary protection requirements in § 425.612(a)(1). These requirements would apply to SNF services furnished by a SNF affiliate that would otherwise have been covered except for the lack of a qualifying hospital stay preceding the admission to the SNF affiliate. Specifically, we propose that we would make no payment to the SNF, and the SNF may not charge the beneficiary for the non-covered SNF services, in the event that a SNF that is a SNF affiliate of a Track 3 ACO that has been approved for the SNF 3-day rule waiver admits a FFS beneficiary who was never prospectively assigned to the waiver-approved ACO (or was assigned but later excluded and the 90 day grace period has lapsed), and the claim is rejected only for lack of a qualifying inpatient hospital stay.
In this situation, we propose that we would apply the following rules:
• We would make no payment to the SNF affiliate for such services.
• The SNF affiliate must not charge the beneficiary for the expenses incurred for such services; and the SNF affiliate must return to the beneficiary any monies collected for such services.
• The ACO may be required to submit a corrective action plan to CMS for approval as specified at § 425.216(b) addressing what actions the ACO will take to ensure that the SNF 3-day rule waiver is not misused in the future. If after being given an opportunity to act upon the corrective action plan the ACO fails to come into compliance, approval to use the waiver will be terminated in accordance with § 425.612(d). We note that in accordance with our existing program rules at §§ 425.216 and 425.218, CMS retains the authority to take corrective action, including terminating an ACO for non-compliance with program rules. A misuse of a waiver under § 425.612 would constitute non-compliance with program rules. Accordingly, we propose to codify at new provision § 425.612(d)(4) that misuse of a waiver under § 425.612 may result in CMS taking remedial action against the ACO under §§ 425.216 and 425.218, up to and including termination of the ACO from the Shared Savings Program.
We propose that if the SNF submitting the claim is a SNF affiliate for a waiver-approved ACO, and the only reason for the rejection of the claim is lack of a qualifying inpatient hospital stay, then CMS would assume the SNF intended to rely upon the SNF 3-day rule waiver. We would not assume the SNF intended to rely upon the SNF 3-day rule waiver if the SNF is not a SNF affiliate of a waiver-approved ACO because the waiver is not available to SNFs more broadly. We believe intended reliance on the waiver is an important factor in determining whether the additional beneficiary protections proposed here should apply as explained above. Outside the context of an intent to rely on the SNF 3-day rule waiver, we do not believe it would be necessary to include additional beneficiary protections under the Shared Savings Program because there is no reason for either the beneficiary or the SNF to expect that different coverage rules would apply to SNF services. In these other situations,
As previously noted in this section, we anticipate accepting the first SNF 3-day rule waiver applications from Track 3 ACOs later this summer. We strongly believe it is important to ensure that beneficiaries have appropriate financial protections against misuse of the waiver prior to approving any SNF 3-day rule waiver applications. We also recognize that ACOs and their SNF affiliates could be reluctant to enter into a SNF affiliate agreement without there being clarity as to their potential responsibility for non-covered SNF services related to the waiver. For these reasons, although we will still accept applications from Track 3 ACOs for the SNF 3-day rule waiver later this summer, in the event we finalize any of the proposed beneficiary protections in the CY 2017 PFS final rule with comment period, we plan to develop a process for ACOs to confirm that they and their SNF affiliates agree to comply with all requirements related to the SNF 3-day rule waiver, including any new requirements adopted in this rulemaking. ACOs and SNF affiliates that do not agree to comply with all requirements would be ineligible for the SNF 3-day rule waiver. We note that this confirmation process may delay approval of ACOs' applications for the SNF 3-day rule waiver; however, we do not anticipate approval would be delayed beyond the first quarter of 2017.
We seek comments on these proposals. We note that under our proposed beneficiary protection provision, a SNF affiliate would be prohibited from charging a beneficiary for non-covered SNF services even in cases where the beneficiary explicitly requested or agreed to being admitted to the SNF in the absence of a qualifying 3-day hospital stay if all other requirements for coverage are met. We therefore specifically seek comment on whether it is reasonable to hold SNFs that are SNF affiliates responsible for all claims that are rejected solely as a result of lack of a qualifying inpatient hospital stay. We also seek comment on whether the ACO rather than or in addition to the SNF affiliate, should be held liable for such claims and under what circumstances. We also seek comment on our proposal to modify the waiver under § 425.612(a)(1) to include a 90-day grace period for beneficiaries prospectively assigned to a waiver-approved ACO at the start of the performance year but later excluded. We seek comment on the proposed length of the grace period, and in particular whether the grace period should be less than 90 days, given our expectation that ACOs will share the quarterly beneficiary exclusion lists with their SNF affiliates, ACO participants, and ACO providers/suppliers in a timely manner. Finally, we seek comment on any other related issues that we should consider in connection with these proposals to protect beneficiaries from significant financial liability for non-covered SNF services related to the waiver of the SNF 3-day rule under the Shared Savings Program.
Section 1899(b)(2)(D) of the Act includes a requirement that a participating ACO must have a minimum of 5,000 Medicare FFS beneficiaries assigned to it. Currently, the regulations at § 425.110(b) indicate that if at any time during the performance year, an ACO's assigned population falls below 5,000, the ACO may be subject to the actions described in §§ 425.216 and 425.218; the regulations further indicate at § 425.110(b)(1) that while under a CAP, the ACO remains eligible for shared savings and losses and the MSR and MLR (if applicable) is set “at a level consistent with the number of assigned beneficiaries.” We have applied this rule in the past to perform financial reconciliation for ACOs that fell below 5,000 assigned beneficiaries. In these cases, the ACO was subject to a CAP and financial reconciliation was based on a variable MSR/MLR that was determined by the number of assigned beneficiaries. For example, we have calculated the ACO's MSR based on an expanded sliding scale that include a range of 3,000 to 4,999 assigned beneficiaries with a corresponding MSR range of 5.0 to 3.9 percent.
However, ACOs under risk-based tracks are not limited to financial reconciliation under a variable MSR/MLR that is based on the number of assigned beneficiaries. In the June 2015 final rule (see 80 FR 32769– 32771, and 32779–32780), we finalized a policy that provides ACOs under two-sided performance-based risk tracks with an opportunity to choose among several options for establishing their MSR/MLR. In addition to being able to choose a symmetrical MSR/MLR that varies based on the ACO's number of assigned beneficiaries, ACOs under two-sided performance-based risk tracks can also choose from a menu of non-variable MSR/MLR options (either a 0 percent MSR/MLR or a symmetrical MSR/MLR in a 0.5 percent increment between 0.5 through 2.0 percent).
We believe it is important to clarify the policy regarding situations where an ACO under a two-sided performance-based risk track has chosen a non-variable MSR/MLR at the start of the agreement period but has fallen below 5,000 assigned beneficiaries at the time of financial reconciliation. As discussed in detail in the June 2015 final rule, we continue to believe that ACOs under two-sided performance-based risk tracks are best positioned to determine the level of risk that they are prepared to accept. Therefore, we are proposing to update the regulations at § 425.110(b)(1) to be consistent with the regulatory changes in the June 2015 final rule that permit ACOs under a two-sided performance-based risk track (Track 2 and Track 3) to choose their own MSR/MLR from a menu of options. Specifically, we are proposing to update the regulations at § 425.110(b)(1) to indicate that in the event an ACO falls below 5,000 assigned beneficiaries at the time of financial reconciliation, the ACO participating under a two-sided risk track will be eligible to share in savings (or losses) and the MSR/MLR will be set at a level consistent with the choice of MSR/MLR that the ACO made at the start of the agreement period. If the Track 2 or Track 3 ACO selected a symmetrical MSR/MLR option based on a fixed percentage (for example, zero percent or a percentage between 0.5 and 2 percent) regardless of ACO size, then the current methodology for use of a variable MSR/MLR based on the ACO's number of assigned beneficiaries would not apply. For example, if at the beginning of the agreement period the ACO chose a 1.0 percent MSR/MLR and the ACO's assigned population falls below 5,000, the MSR/MLR will remain 1.0 percent for purposes of financial reconciliation while the ACO is under a CAP. Further, as we noted in earlier rulemaking, if the ACO has elected a variable MSR/MLR, the methodology for calculating the variable MSR/MLR under a two-sided model is consistent with the methodology for calculating the variable MSR that is required under the under the one-sided model (Track 1) (see 80 FR 32769 through 32771; 32779 through 32780). Under the one-sided shared savings model (Track 1), we have accounted for circumstances where an ACO's number of assigned beneficiaries falls below 5,000, by expanding the variable MSR range based on input from the CMS Office of the Actuary (OACT). Thus, in the case where a Track 2 or Track 3 ACO selects a variable MSR/MLR based on its number of assigned
ACOs frequently request that we take into account the claims billed by the TINs of practices that have been acquired by sale or merger for the purpose of meeting the minimum assigned beneficiary threshold, establishing a more accurate financial benchmark, and determining the prospective or preliminary prospective assignment list for the upcoming performance year. In response to these inquiries, we initially developed subregulatory guidance that allowed claims billed under the TIN of a merged or acquired entity to be considered in certain circumstances. In that guidance we indicated that the merged or acquired entity's TIN may no longer be used to bill Medicare. In the June 2015 final rule, we codified the policies outlined in this guidance allowing for consideration of claims billed under merged or acquired entities' TINs for purposes of beneficiary assignment and establishing the ACO's benchmark, provided certain requirements were met (§§ 425.204(g), 425.118(a)(2)). However, the regulation at § 425.204(g) indicates that an ACO may request that CMS consider, for purposes of beneficiary assignment and establishing the ACO's benchmark under § 425.602, claims billed by “Medicare-enrolled” entities' TINs that have been acquired through sale or merger by an ACO participant. Because the regulation at § 425.204(g) refers to such merged or acquired TINs as “Medicare-enrolled,” we have received inquiries from ACOs regarding whether such merged or acquired TINs must continue to be Medicare-enrolled after the merger or acquisition has been completed and the TINs are no longer used to bill Medicare.
It was not our intent to establish such a requirement. We do not believe there would be a program purpose to require the TIN of a merged or acquired entity to maintain Medicare enrollment if it is no longer used to bill Medicare. Therefore, to address this issue, we are proposing a technical change to § 425.204(g) to clarify that the merged/acquired TIN is not required to remain Medicare enrolled after it has been merged or acquired and no longer used to bill Medicare.
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 (EPs) 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 and Physician Feedback program continue CMS' initiative to recognize and reward clinicians based on the quality and cost of care provided to their patients, increase the transparency of health care quality information and to assist clinicians and beneficiaries in improving medical decision-making and health care delivery. As stated in the CY 2016 PFS final rule with comment period (80 FR 71277), the MACRA was enacted on April 16, 2015. Under section 1848(p)(4)(B)(iii) of the Act, as amended by section 101(b)(3) of MACRA, the VM shall not be applied to payments for items and services furnished on or after January 1, 2019. Section 1848(q) of the Act, as added by section 101(c) of MACRA, establishes the Merit-based Incentive Payment System (MIPS) that shall apply to payments for items and services furnished on or after January 1, 2019.
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. 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 EPs. A summary of the existing policies that we finalized for the CY 2015 VM can be found in the CY 2014 PFS proposed rule (78 FR 43486 through 43488). Subsequently, in the CY 2014 PFS final rule with comment period (78 FR 74765 through 74787), we finalized policies to continue the phase-in of the VM by applying it starting January 1, 2016, to payments under the Medicare PFS for physicians in groups of 10 or more EPs. Then, in the CY 2015 PFS final rule with comment period (79 FR 67931 through 67966), we finalized policies to complete the phase-in of the VM by applying it starting January 1, 2017, to payments under the Medicare PFS for physicians in groups of 2 or more EPs and to physician solo practitioners. In the CY 2016 PFS final rule with comment period (80 FR 71277 through 71279), we finalized that in the CY 2018 payment adjustment period, the VM will apply to nonphysician EPs who are physician assistants (PAs), nurse practitioners (NPs), clinical nurse specialists (CNSs), and certified registered nurse anesthetists (CRNAs) in groups with 2 or more EPs and to PAs, NPs, CNSs, and CRNAs who are solo practitioners.
As a general summary, we are proposing to update the VM informal review policies and establish how the quality and cost composites under the VM would be affected for the CY 2017 and CY 2018 payment adjustment periods in the event that unanticipated program issues arise.
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.
• The determination of costs.
These statutory requirements regarding limitations of review are reflected in § 414.1280. 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.
In the CY 2015 PFS final rule with comment period (79 FR 67960), for the CY 2015 payment adjustment period, we finalized: (1) A February 28, 2015 deadline for a group to request
Moreover, for both the CY 2015 payment adjustment period and future adjustment periods, we finalized a policy to adjust a TIN's quality-tier if we make a correction to a TIN's quality and/or cost composites because of this correction process. We further noted 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 2015 PFS final rule for the CY 2016 payment adjustment period, we noted that if the operational infrastructure is not available to allow the recomputation of quality measure data we would continue the approach of the initial corrections process to classify a TIN as “average quality” in the event we determine a third-party vendor error or CMS made an error in the calculation of the quality composite.
In the CY 2016 PFS final rule with comment period (80 FR 71294 through 71295), for the CY 2017 and CY 2018 payment adjustment periods, we finalized 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. We also finalized the continuation of the process for accepting requests from groups and solo practitioners to correct certain errors made by CMS or a third-party vendor (for example, PQRS-qualified registry). We stated we would continue the approach of the initial corrections process to classify a TIN as “average quality” in the event we determine a third-party vendor error or CMS made an error in the calculation of the quality composite and the infrastructure was not available to allow for recomputation of the quality measure data. Additionally, we finalized that we would reclassify a TIN as Category 1 when PQRS determines on informal review that at least 50 percent of the TIN's EPs meet the criteria to avoid the PQRS downward payment adjustment for the relevant payment adjustment year. If the group was initially classified as Category 2, then we would not expect to have data for calculating their quality composite, in which case they would be classified as “average quality”; however, if the data is available in a timely manner, then we would recalculate the quality composite.
As a result of issues that we became aware of prior to and during the CY 2016 VM informal review process that are discussed below, we have learned that re-running QRURs and recalculating the quality composite is not always practical or possible, given the diversity and magnitude of the errors, timing of when we become aware of an error, and practical considerations in needing to compute a final VM upward payment adjustment factor after the performance period has ended based on the aggregate amount of downward payment adjustments. Furthermore, this approach can create uncertainty for groups and solo practitioners about their final VM payment adjustment making it difficult for them to plan and make forecasts.
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Due to the volume and complexities of the informal review issues, the inconsistency of available PQRS data to calculate a TIN's quality composite, the case-by-case nature of the informal review process, and the condensed timeline to calculate an accurate VM upward payment adjustment factor, we believe that we need to update the VM informal review policies and establish in rulemaking how the quality and cost composites under the VM would be affected if unanticipated issues arise (for example, the program issues described above, errors made by a third-party such as a vendor, or errors in our calculation of the quality and/or cost composites). The intent of these proposals are not to provide relief for EPs and groups who fail to report under PQRS, but rather to provide a mechanism for addressing unexpected issues such as the data integrity issues discussed above.
Recalculating the quality composite is operationally complex, and does not align with the current timeline given the volume of informal reviews and the need to calculate the VM upward payment adjustment factor as close to the beginning of the payment adjustment period as possible. We want to close out as many informal reviews as possible before the VM upward payment adjustment factor is calculated, to lend confidence to the adjustment factor and to provide finality for the clinicians, and to minimize claims reprocessing. Limiting the potential movement of TINs between VM quality tiers based on informal review may result in a more accurate adjustment factor calculation and provide greater predictability for the CMS' Office of the Actuary (OACT) in making assumptions around the adjustment factor including assumptions around the impact of outstanding informal reviews at the time of the calculations. We believe that our proposals would help groups and solo practitioners to better predict the outcome of their final VM adjustment and reduce uncertainty as we continue to improve our systems.
Table 38 summarizes our proposals.
For the CY 2017 VM, Category 1 will include those groups that meet the criteria to avoid the CY 2017 PQRS payment adjustment as a group practice participating in the PQRS Group Practice Reporting Option (GPRO) in CY 2015 and groups that have at least 50 percent of the group's EPs meet the criteria to avoid the CY 2017 PQRS payment adjustment as individuals (80 FR 71280). Category 1 also includes those solo practitioners that meet the criteria to avoid the CY 2017 PQRS payment adjustment as individuals. Category 2 will include groups and solo practitioners that are subject to the CY 2017 VM and do not fall within Category 1 (79 FR 67939). We finalized a similar two-category approach for the CY 2018 VM based on participation in the PQRS by groups and solo practitioners in 2016 (80 FR 71280 through 71281).
If a TIN is initially classified as Category 2, and subsequently, through the PQRS or VM informal review process, the TIN is classified as Category 1 then we propose to classify the TIN's quality composite as “average quality” instead of attempting to calculate the quality composite. We also propose to calculate the TIN's cost composite using the quality-tiering methodology. If the TIN is classified as “high cost” based on its performance on the cost measures, then we propose to reclassify the TIN's cost composite as “average cost.” If the TIN is classified as “average cost” or “low cost”, then we propose that the TIN would retain the calculated cost tier designation. We note that in the CY 2016 PFS final rule with comment period (80 FR 71280), we finalized a policy for the CY 2017 and 2018 payment adjustment periods that when determining whether a group will be included in Category 1, we will consider whether the 50 percent threshold has been met regardless of whether the group registered to participate in the PQRS GPRO for the relevant performance period. We believe this policy will allow groups that register for a PQRS GPRO, but fail as a group to meet the criteria to avoid the PQRS payment adjustment an additional opportunity for the quality data reported by individual EPs in the group to be taken into account for the purposes of applying the VM. Consequently, because of this policy we anticipate that the number of TINs who could fall into Scenario 1 would be minimal; however, we believe it is necessary to have a policy in the event that CMS determines on informal review that Category 2 TINs were negatively impacted by a third-party vendor error or CMS made an error in the calculation of the quality composite. We propose to apply these policies for the CY 2017 VM and CY 2018 VM.
Calculating the quality composite for a TIN that was initially classified as Category 2 would be operationally complex given the timeline for determining and applying the VM adjustments for all TINs subject to the VM, the volume of informal reviews, the need to calculate the VM upward payment adjustment factor as close to the beginning of the payment adjustment period as possible, and uncertainty about the availability of the
Our proposal to calculate the cost composite and assign “average cost” if the cost composite is initially classified as “high cost” would alleviate concerns from stakeholders that a TIN may receive a downward VM payment adjustment under the quality-tiering methodology as a result of being classified as average quality and high cost. Under our proposal discussed above, for TINs in Scenario 1, we would not consider a TIN's actual performance on the quality measures or calculate a quality composite score; rather, we would classify the TIN's quality composite as average quality for the reasons stated above. In this scenario, we do not believe that we should retain a TIN's “high cost” designation when the TIN's actual cost performance is not being compared to the TIN's actual quality performance, as it is possible the TIN might have scored high quality if actual performance had been considered. We believe that these proposals would help groups and solo practitioners to better predict the outcome of their final VM adjustment and reduce uncertainty about the impact of the informal review. Additionally, it is important to note that groups or solo practitioners who submit an informal review request would not automatically be covered by the policy proposed for Scenario 1. We would verify on informal review that the group or solo practitioner did submit complete and accurate data and did meet the criteria to avoid the PQRS payment adjustment to be included in Category 1.
We request comments on these proposals.
For the CY 2017 VM, Category 1 will include groups that have at least 50 percent of the group's EPs meet the criteria to avoid the CY 2017 PQRS payment adjustment as individuals (80 FR 71280). A similar policy was finalized for the CY 2018 VM (80 FR 71280). If a TIN is classified as Category 1 for the CY 2017 VM by having at least 50 percent of the group's EPs meet the criteria to avoid the CY 2017 PQRS payment adjustment as individuals, and subsequently, through the PQRS informal review process, it is determined that additional EPs that are in the TIN also meet the criteria to avoid the CY 2017 PQRS payment adjustment as individuals, then we propose the following policies to determine the TIN's quality and cost composites:
• If the TIN's quality composite is initially classified as “low quality”, then we propose to reclassify the TIN's quality composite as “average quality.” If the TIN's quality composite is initially classified as “average quality” or “high quality”, then we propose that the TIN would retain that quality tier designation.
• We would maintain the cost composite that was initially calculated.
We propose to apply these policies for the CY 2017 VM and CY 2018 VM. Under these policies, we would not recalculate the TIN's quality composite to include the additional EPs that were determined to have met the criteria to avoid the PQRS payment adjustment as individuals through the PQRS informal review process. As discussed under Scenario 1, recalculating the quality composite is operationally complex, and we may not have PQRS data for the additional EPs because they did not meet the criteria to avoid the PQRS payment adjustment during the initial determination. In addition, we seek to avoid a situation where by recalculating the quality composite, a TIN may be subject to a lower quality tier designation because a few EPs in the TIN independently pursued PQRS informal reviews. As stated above, we are proposing to reclassify a TIN's quality composite as average quality if it is initially classified as “low quality” in order to avoid a situation where we do not have the PQRS quality data for those few EPs whose quality performance could have bumped the TIN up from a low quality designation as the EPs did not meet the criteria to avoid the PQRS payment adjustment during the initial determination. Additionally, it is important to note that TINs whose EPs submit an informal review request would not automatically be covered by the policy proposed for Scenario 2. We would verify on informal review that an EP did submit complete and accurate data and did meet the criteria to avoid the PQRS payment adjustment as an individual in order for the TIN to be included in Category 1.
We request comments on these proposals.
In cases where there is a systematic issue with any of a Category 1 TIN's quality data that renders it unusable for calculating a TIN's quality composite, we propose to classify the TIN's quality composite as average quality. For this proposal, we consider widespread quality data issues, as issues that impact multiple TINs and we are unable to determine the accuracy of the data submitted via these TINs (for example, the EHR and QCDR issues for the CY 2014 performance period as described above). This proposal would offer a predictable designation for all TINs under this scenario.
We also propose to calculate the TIN's cost composite using the quality-tiering methodology. If the TIN is classified as “high cost” based on its performance on the cost measures, then we propose to reclassify the TIN's cost composite as “average cost.” If the TIN is classified as “average cost” or “low cost”, then we propose that the TIN would retain the calculated cost tier designation. We propose to apply these policies for the CY 2017 VM and CY 2018 VM.
As discussed under Scenario 1, our proposal to calculate the cost composite and assign “average cost” if the cost composite is initially classified as “high cost” would alleviate concerns from stakeholders that a TIN may receive a downward VM payment adjustment under the quality-tiering methodology as a result of being classified as average quality and high cost. Similarly, for TINs in Scenario 3, we would not consider a TIN's actual performance on the quality measures or calculate a quality composite score; rather, we would classify the TIN's quality composite as average quality for the reasons stated above. In this scenario, we do not believe that we should retain a TIN's high cost designation when the TIN's actual cost performance is not being compared to the TIN's actual quality performance, as it is possible the TIN might have scored high quality if actual performance had been considered. We would continue to show and designate these groups as high cost in their annual QRURs so they have the opportunity to understand and improve their performance, but under our proposal, we would classify their cost composite as average cost for purposes of determining their VM adjustment. Additionally, it is important to note that groups or solo practitioners would only be covered by the policy proposed for Scenario 3 once we verify that the group or solo practitioner did submit complete and accurate data and did meet the criteria to avoid the PQRS payment adjustment in order to be included in Category 1.
We request comments on these proposals.
Further, we note that we expect quality data issues such as these to be
If we determine after the release of the Quality and Resource Use Reports (QRURs) that there is a widespread claims data issue that impacts the calculation of the quality and/or cost composites for Category 1 TINs, we propose to recalculate the quality and cost composites for affected TINs. For this proposal, we consider widespread claims data issues, as issues that impact multiple TINs and require the recalculation of the quality and/or cost composites (for example, the incomplete claims identification and specialty adjustment issues described above).
After recalculating the composites, if the TIN's quality composite is classified as low quality, then we propose to reclassify the quality composite as average quality, and conversely, if the TIN's cost composite is classified as high cost, we propose to reclassify the cost composite as average cost. If the TIN is classified as average quality, high quality, average cost or low cost, then we propose that the TIN would retain the calculated quality or cost tier designation. We are proposing to assign average quality if the quality composite is classified as low quality and assign average cost if the cost composite is classified as high cost after recalculating the quality and cost composites because, after a claims data issue is identified, it would take approximately 6 weeks to recalculate the composites and notify groups and solo practitioners about their recalculated VM. Given that the VM informal review period lasts for 60 days after the release of the QRURs and the timing of when we become aware of an error, we would likely not be able to notify groups and solo practitioners about their recalculated VM before the end of the informal review period. We believe these proposed policies are necessary to provide certainty for groups and solo practitioners about their final VM payment adjustment and due to the condensed timeline to calculate an accurate VM upward payment adjustment factor.
We propose to apply these policies for the CY 2017 VM and CY 2018 VM.
We request comments on these proposals.
The proposals described in this section would allow us to make predictable decisions as a result of informal reviews and unanticipated issues that may arise, providing greater certainty for groups and solo practitioners about impact of their results, as we foresee that several of the issues that impacted the CY 2016 VM, as described above, may continue to impact the CY 2017 and CY 2018 VM and/or new unanticipated issues may be identified. The proposals would also minimize the need to use PQRS data to recalculate the quality composite and prevent situations where we are making decisions on a case-by-case basis based on the TIN's PQRS reporting mechanism.
In the CY 2015 PFS final rule with comment period (79 FR 67946), for groups and solo practitioners, as identified by their TIN, that participate in a Shared Savings Program ACO, we finalized the same policy that is generally applicable to groups and solo practitioners that fail to satisfactorily report or participate under PQRS and thus fall in Category 2 and are subject to an automatic downward adjustment under the VM in CY 2017. We stated that, consistent with the application of the VM to other groups and solo practitioners that report under PQRS, if the ACO does not successfully report quality data as required by the Shared Savings Program under § 425.504, all groups and solo practitioners participating in the ACO will fall in Category 2 for the VM, and therefore, will be subject to a downward payment adjustment. We finalized this policy for the 2017 payment adjustment period for the VM. In the CY 2016 PFS proposed rule with comment period (80 FR 41899), we proposed to continue this policy in the CY 2018 payment adjustment period for all groups and solo practitioners subject to the VM that participate in a Shared Savings Program ACO and finalized our proposal in the CY 2016 PFS final rule (80 FR 71285).
As discussed in sections III.I. and III.L.1.e. of this proposed rule, we are proposing to remove the prohibition on EPs who are part of a group or solo practitioner that participates in a Shared Savings Program ACO, for purposes of PQRS reporting for the CY 2017 and CY 2018 payment adjustments, to report outside the ACO. As a result of this proposed policy, the EPs in groups and those who are solo practitioners would be allowed to report to the PQRS as a group (using one of the group registry, QCDR, or EHR reporting options) or individually (using the registry, QCDR, or EHR reporting option) outside of the ACO. This section addresses how we propose to use the PQRS data reported by EPs outside of the ACO for the CY 2018 VM when the ACO does not successfully report quality data on behalf of their EPs for purposes of PQRS as required by the Shared Savings Program under § 425.504.
For the CY 2018 payment adjustment period, if a Shared Savings Program ACO does not successfully report quality data on behalf of their EPs for purposes of PQRS as required by the Shared Savings Program under § 425.504, then we propose to use the data reported to the PQRS by the EPs (as a group (using one of the group registry, QCDR, or EHR reporting options) or as individuals (using the registry, QCDR, or EHR reporting option) under the participant TIN) outside of the ACO to determine whether the TIN would fall in Category 1 or Category 2 under the VM. We propose to apply the two-category approach finalized for the CY 2018 VM (80 FR 71280) based on participation in the PQRS by groups and solo practitioners to determine whether groups and solo practitioners that participate in a Shared Savings Program ACO, but report to the PQRS outside of the ACO, would fall in Category 1 or Category 2 under the VM. This proposed policy is consistent with our policy for groups and solo practitioners who are subject to the VM and do not participate in the Shared Savings Program, and we believe it would further encourage quality reporting by EPs in the event the ACO does not successfully report quality data as required by the Shared Savings Program under § 425.504. For example, if groups that participate in a Shared Savings Program ACO in 2016 report quality data to the PQRS outside of the ACO and meet the criteria to avoid PQRS payment adjustment for CY 2018 as a group using one of the group registry, QCDR, or EHR reporting options or have at least 50 percent of the group's EPs meet the criteria to avoid the PQRS payment adjustment for CY 2018 as individuals using the registry, QCDR, or EHR reporting option by
As finalized for the CY 2018 payment adjustment period (80 FR 71285), all groups and solo practitioners that participate in a Shared Savings Program ACO and fall in Category 2 will be subject to an automatic downward payment adjustment under the VM. For groups and solo practitioners that participate in a Shared Savings Program ACO that did not successfully report quality data as required by the Shared Savings Program under § 425.504 and are in Category 1 as a result of reporting quality data to the PQRS outside of the ACO, we propose to classify their quality composite for the VM for the CY 2018 payment adjustment period as “average quality.” As finalized in the CY 2015 PFS final rule with comment period (79 FR 67943), the cost composite for groups and solo practitioners that participate in a Shared Savings Program ACO will be classified as “average cost.” Because we would not have the ACO's quality data for these groups and solo practitioners, we believe it would be appropriate to use the quality data they reported to the PQRS outside the ACO to determine whether they avoided the PQRS payment adjustment and whether they would be in Category 1 or 2 for purposes of the VM, but not to calculate a quality composite using the quality-tiering methodology. As we stated previously, we continue to believe that it is appropriate to calculate a quality composite for groups and solo practitioners participating in the Shared Savings Program based on the ACO's quality data (79 FR 67944). This proposal is not intended to encourage groups and solo practitioners that participate in a Shared Savings Program ACO to report to the PQRS outside the ACO, but in the event the ACO does not successfully report quality data on behalf of their EPs for purposes of PQRS, to provide them with a safeguard that would allow them to avoid the PQRS payment adjustment and the automatic downward adjustment under the VM. We encourage groups and solo practitioners to continue to report through the ACO in order to promote clinical and financial integration within the ACO and for the Medicare beneficiaries they treat. For groups and solo practitioners that participate in a Shared Savings Program ACO that successfully reports quality data on behalf of their EPs for purposes of PQRS as required by the Shared Savings Program under § 425.504, we will calculate their VM for the CY 2018 payment adjustment period according to the policies established in the CY 2015 PFS final rule with comment period (79 FR 67941 to 67947 and 79 FR 67956 to 67957) and CY 2016 PFS final rule with comment period (80 FR 71283 to 71286 and 80 FR 71294). We solicit comment on these proposals. We are also proposing corresponding revisions to § 414.1210(b)(2).
As discussed in section III.H. of this proposed rule, to allow affected EPs that participate in an ACO to report separately for the CY 2017 PQRS payment adjustment, we are proposing a secondary PQRS reporting period for EPs that were in an ACO that did not successfully report quality data on behalf of the EPs in the group and those who are solo practitioners. Specifically, we are proposing that affected individual EPs or groups, who report under an ACO, may separately report outside the ACO either as individual EPs (using the registry, QCDR, or EHR reporting option) or using one of the group registry, QCDR, or EHR reporting options (note these EPs and groups would not need to register for one of these group reporting options, but rather mark the data as group data in their submission) during a secondary PQRS reporting period for the CY 2017 PQRS payment adjustment if they were a participant in an ACO that did not successfully report quality data on their behalf during the established reporting period for the CY 2017 PQRS payment adjustment. We are proposing the secondary PQRS reporting period for the CY 2017 PQRS payment adjustment would coincide with the reporting period for the CY 2018 PQRS payment adjustment (that is, January 1, 2016 through December 31, 2016).
This section addresses how we propose to use, for purposes of the CY 2017 VM, the PQRS data reported by the EPs in the group and those who are solo practitioners outside of the ACO using the secondary PQRS reporting period when the ACO did not successfully report quality data on behalf of their EPs for purposes of PQRS as required by the Shared Savings Program under § 425.504 for the CY 2017 PQRS payment adjustment. For the CY 2017 payment adjustment period, if a Shared Savings Program ACO did not successfully report quality data on behalf of their EPs for purposes of PQRS as required by the Shared Savings Program under § 425.504 for the CY 2017 PQRS payment adjustment, then we propose to use the data reported to the PQRS by the EPs (as a group using one of the group registry, QCDR, or EHR reporting options or as individuals using the registry, QCDR, or EHR reporting option) under the participant TIN) outside of the ACO during the secondary PQRS reporting period to determine whether the TIN would fall in Category 1 or Category 2 under the VM. We propose to apply the two-category approach finalized for the CY 2017 VM (79 FR 67938 to 67939 and as revised in 80 FR 71280 to 71281) based on participation in the PQRS by groups and solo practitioners to determine whether groups and solo practitioners that participate in a Shared Savings Program ACO, but report to the PQRS outside of the ACO, would fall in Category 1 or Category 2 under the VM. In section III.H. of this proposed rule, we are proposing to assess the individual EP or group's 2016 data submitted outside the ACO and during the secondary PQRS reporting period against the reporting requirements for the CY 2018 PQRS payment adjustment. Therefore, we propose that groups that meet the criteria to avoid PQRS payment adjustment for CY 2018 as a group practice participating in the PQRS GPRO (using one of the group registry, QCDR, or EHR reporting options) or have at least 50 percent of the group's EPs meet the criteria to avoid the PQRS payment adjustment for CY 2018 as individuals (using the registry, QCDR, or EHR reporting option), based on data submitted outside the ACO and during the secondary PQRS reporting period, would be included in Category 1 for the CY 2017 VM. We also propose that solo practitioners that meet the criteria to avoid the PQRS payment adjustment for CY 2018 as individuals using the registry, QCDR, or EHR reporting option, based on data submitted outside the ACO and during the secondary PQRS reporting period, would be included in Category 1 for the CY 2017 VM. Category 2 would include those groups and solo practitioners subject to the CY 2017 VM that participate in a Shared Savings Program ACO and do not fall within Category 1.
As finalized for the CY 2017 payment adjustment period (79 FR 67946), all groups and solo practitioners that
If EPs who are part of a group or a solo practitioner that participated in a Shared Savings Program ACO in 2015 that did not successfully report quality data on their behalf decide to use the secondary PQRS reporting period, it is important to note that such groups and solo practitioners should expect to be initially classified as Category 2 and receive an automatic downward adjustment under the VM for items and services furnished in CY 2017 until CMS is able to determine whether the group or solo practitioner met the criteria to avoid the PQRS payment adjustment as described above. First, we would need to process the data submitted for 2016. Second, we would need to determine whether or not the group or solo practitioner would be classified as Category 1 or Category 2 for the CY 2017 VM and notify the group or solo practitioner if there is a change in the VM status. Third, we would need to update the group or solo practitioner's status so that they will stop receiving an automatic downward adjustment under the VM for items and services furnished in CY 2017 and reprocess all claims that were previously paid. Since groups and solo practitioners taking advantage of this secondary reporting period for the 2017 VM will have missed the deadline for submitting an informal review request for the 2017 VM, we propose the informal review submission periods for these groups and solo practitioners would occur during the 60 days following the release of the QRURs for the 2018 VM.
We request comment on these proposals. We are also proposing corresponding revisions to § 414.1210(b)(2).
Section 6204 of the Omnibus Budget Reconciliation Act of 1989 (Pub. L. 101– 239) (OBRA 1989), enacted on December 19, 1989, added section 1877 to the Act. Section 1877 of the Act, also known as the physician self-referral law: (1) Prohibits a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership or compensation), unless an exception applies; and (2) prohibits the entity from filing claims with Medicare (or billing another individual, entity, or third party payer) for those referred services. The statute establishes a number of specific exceptions, and grants the Secretary the authority to create regulatory exceptions for financial relationships that pose no risk of program or patient abuse. Additionally, the statute mandates refunding any amount collected under a bill for an item or service furnished under a prohibited referral. Finally, the statute imposes reporting requirements and provides for sanctions, including civil monetary penalty provisions. Section 1877 of the Act became effective on January 1, 1992.
Section 4207(e) of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101–508) (OBRA 1990), enacted on November 5, 1990, amended certain provisions of section 1877 of the Act to clarify definitions and reporting requirements relating to physician ownership and referrals and to provide an additional exception to the prohibition. Several subsequent laws further changed section 1877 of the Act. Section 13562 of the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103– 66) (OBRA 1993), enacted on August 10, 1993, expanded the referral prohibition to cover certain other “designated health services” in addition to clinical laboratory services, modified some of the existing statutory exceptions, and added new exceptions. Section 152 of the Social Security Act Amendments of 1994 (SSA 1994) (Pub. L. 103–432), enacted on October 31, 1994, amended the list of designated health services, changed the reporting requirements at section 1877(f) of the Act, and modified some of the effective dates established by OBRA 1993. Some provisions relating to referrals for clinical laboratory services were effective retroactively to January 1, 1992, while other provisions became effective on January 1, 1995.
The following discussion provides a chronology of our more significant and comprehensive rulemakings; it is not an exhaustive list of all rulemakings related to the physician self-referral law.
Following the passage of section 1877 of the Act, we proposed rulemakings in 1992 (related only to referrals for clinical laboratory services) (57 FR 8588) (the 1992 proposed rule) and 1998 (addressing referrals for all DHS) (63 FR 1659) (the 1998 proposed rule). We finalized the proposals from the 1992 proposed rule in 1995 (60 FR 41914) (the 1995 final rule), and issued final rules following the 1998 proposed rule in three stages. The first final rulemaking (Phase I) was published in the January 4, 2001
We issued additional final regulations after passage of the Affordable Care Act. In the CY 2011 PFS final rule with comment period (75 FR 73170), we codified a disclosure requirement established by the Affordable Care Act for the in-office ancillary services exception. We also issued regulations in the CY 2011 OPPS final rule with comment period (75 FR 71800), the CY
We have addressed the issue of unit-based compensation in several rulemakings. Sections 1877(e)(1)(A)(iv) and (B)(iv) of the Act provide that, for an arrangement for the rental of office space or equipment to satisfy the relevant exceptions to the physician self-referral law, the rental charges over the term of the lease must be set in advance, be consistent with fair market value, and not be determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties. Interpreting this “volume or value” standard in the 1998 proposed rule, we proposed that compensation could be based on units of service (for example, “per-use” equipment rentals) provided that the units of service did not include services provided to patients who were referred by the physician receiving the payment. For example, a physician who owned a lithotripter could rent it to a hospital on a per-procedure basis, except for lithotripsies for patients referred by the physician owner. Instead, payments for the use of the lithotripter for those patients would have to use a methodology that did not vary with referrals. (63 FR 1714;
After reviewing the public comments in response to the 1998 proposed rule, we finalized in Phase I significant revisions with respect to the scope of the volume or value standard. We revised our interpretation of the “volume or value” standard for purposes of section 1877 of the Act to permit, among other things, payments based on a unit of service, provided that the unit-based payment is fair market value and does not vary over time. (66 FR 876 through 879) Importantly, we permitted unit-based compensation formulas, even when the physician receiving the payment has generated the payment through a DHS referral. To reach this position, we reviewed the legislative history with respect to the statutory exceptions for the rental of office space and equipment and concluded that Congress intended that unit-of-service-based payments be protected under certain circumstances. (66 FR 878) Specifically, with respect to the exceptions for the rental of office space and equipment, the Conference Committee report, H. Rep. No. 213, 103rd Cong., 1st Sess. (1993) (the House Conference Report) states at page 814 that the conferees “intend[ed] that rental charges for [office] space and equipment leases may be based on daily, monthly, or other time-based rates, or rates based on units of service furnished, so long as the amount of the time-based or units of service rates does not fluctuate during the contract period based on the volume or value of referrals between the parties to the lease or arrangement.” However, we stated our unequivocal belief that arrangements in which the lessor is compensated each time that the lessor refers a patient to the lessee for a service performed in the leased office space or using the leased equipment have an obvious potential for abuse and could incent overutilization (66 FR 878). We indicated that we would continue to monitor financial arrangements in the health care industry and would revisit particular regulatory decisions if we determine that there has been abuse or overutilization (66 FR 860).
In the CY 2008 PFS proposed rule (72 FR 38122), we stated that arrangements between a physician lessor and an entity lessee under which the physician lessor receives unit-of-service payments are inherently susceptible to abuse because the physician lessor has an incentive to profit from referring a higher volume of patients to the lessee. We proposed that space and equipment leases may not include per-click payments to a physician lessor for services rendered by an entity lessee to patients who are referred by a physician lessor to the entity (72 FR 38183). We also solicited comments on the question of whether we should prevent per-click payments in situations in which the physician is the lessee and a DHS entity is the lessor. The CY 2008 PFS proposed rule also included eight other significant proposed revisions to the physician self-referral regulations. Due to the large number of physician self-referral proposals, the significance of the provisions both individually and in concert with each other, and the volume of public comments received in response to the CY 2008 PFS proposed rule, we declined to finalize our proposals, including our proposal to prohibit certain per unit-of-service compensation formulas in arrangements for the rental of office space and equipment, in the CY 2008 PFS final rule (72 FR 66222).
After consideration of the public comments and our independent research, we finalized regulations prohibiting certain per-unit of service compensation formulas for determining office space and equipment rental charges in the FY 2009 IPPS final rule (73 FR 48434). Specifically, we revised § 411.357(a)(4) and (b)(4) to prohibit rental charges for the rental of office space or equipment that are determined using a formula based on per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee. In doing so, we relied on our authority in section 1877(e)(1)(A)(vi) and (B)(vi) of the Act, which permits the secretary to impose by regulation other requirements needed to protect against program or patient abuse. We also revised the exceptions at §§ 411.357(l) and (p) for fair market value compensation and indirect compensation arrangements, respectively, to include similar limitations on the formula for determining office space and equipment rental charges, as applicable. We did so using our authority at section 1877(b)(4) of the Act, as those exceptions were established using that authority. (
On June 12, 2015, the D.C. Circuit (the Court) issued an opinion in
The text of the statute does not unambiguously preclude the Secretary from using her authority to add a requirement that bans per-click leases. To the contrary, the statutory text of the exception clearly provides the Secretary with the discretion to impose any additional requirements that she deems necessary “to protect against program or patient abuse.” (
The Court further concluded that the relevant language in the House Conference Report merely interpreted section 1877(e)(1)(B)(iv) of the Act, and thus did not preclude CMS from imposing additional requirements under section 1877(e)(1)(B)(vi) of the Act. It stated that the legislative history “simply indicates that, as written, the rental-charge clause [in section 1877(e)(1)(B)(iv) of the Act] does not preclude per-click leases” and stated further that “[n]othing in the legislative history suggests a limit on [the Secretary's] authority to prohibit per-click leases under section 1877(e)(1)(B)(vi) of the Act).”
The Court also concluded, however, that CMS's discussion of the House Conference Report in the FY 2009 IPPS final rule contained an unreasonable interpretation of the conferees' statements concerning sections 1877(e)(1)(A)(iv) and (B)(iv) of the Act, and it remanded the case to the agency to permit a fuller consideration of the legislative history. This rulemaking addresses that decision.
As discussed above, in the FY 2009 IPPS final rule, we revised the exceptions for the rental of office space and equipment to include in each a requirement that the rental charges for the office space or equipment are not determined using a formula based on per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee. We explained that our decision to add this requirement was ultimately based on our authority under section 1877(e)(1)(B)(vi) of the Act to promulgate “other requirements” needed to protect against program or patient abuse. However, we also discussed certain legislative history contained in the House Conference Report addressing sections 1877(e)(1)(A)(iv) and 1877(e)(1)(B)(iv) of the Act, which establish requirements that rental charges over the term of a lease for office space or rental equipment be set in advance, be consistent with fair market value, and not be determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties. With respect to those statutory conditions, the language in the House Conference Report states that—
The conferees intend that charges for space and equipment leases may be based on daily, monthly, or other time-based rates, or rates based on units of service furnished, so long as the amount of time-based or units of service rates does not fluctuate during the contract period based on the volume or value of referrals between the parties to the lease or arrangement. (H.R. Rep. No. 103–213, at 814 (1993).)
In the FY 2009 IPPS final rule, we noted that CMS had previously concluded that this language indicated that Congress intended to permit leases that included per-click payments, even for patients referred by the physician lessor (66 FR 940), but asserted that the language could also be interpreted as excluding from the office space and equipment lease exceptions those lease arrangements that include per-click payments for services provided to patients referred from one party to the other (73 FR 48716). Specifically, we stated that, where the total amount of rent (that is, the rental charges) over the term of the lease is directly affected by the number of patients referred by one party to the other, those rental charges can arguably be said to “take into account” or “fluctuate during the contract period based on” the volume or value of referrals between the parties. The Court found this revised interpretation to be an unreasonable reading of the language of the House Conference Report. The Court remanded § 411.357(b)(4)(ii)(B) to the Secretary for further proceedings consistent with its opinion, and directed that the Secretary should consider whether a ban on per-click equipment leases is consistent with the House Conference Report.
In this proposed rule, we are re-proposing certain requirements for arrangements involving the rental of office space or equipment. Specifically, using the same language in existing §§ 411.357(a)(5)(ii)(B), (b)(4)(ii)(B), (l)(3)(ii), and (p)(1)(ii)(B), we are proposing to include at §§ 411.357(a)(5)(ii)(B), (b)(4)(ii)(B), (l)(3)(ii), and (p)(1)(ii)(B) a requirement that rental charges for the office space or equipment are not determined using a formula based on per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee. We are using the authority granted to the Secretary in sections 1877(e)(1)(A)(vi) and (B)(vi) of the Act to re-propose this requirement in the exceptions at § 411.357(a) and (b) for the rental of office space and equipment, respectively. We are using the authority granted to the Secretary in section 1877(b)(4) of the Act to re-propose this requirement in the exceptions at § 411.357(l) and (p) for fair market value compensation and indirect compensation arrangements, respectively.
We emphasize that we are not proposing an absolute prohibition on rental charges based on units of service furnished. In general, per-unit of service rental charges for the rental of office space or equipment are permissible. We are proposing to limit the general rule by prohibiting per-unit of service rental charges where the lessor generates the payment from the lessee through a referral to the lessee for a service to be provided in the rented office space or using the rented equipment. Thus, per-unit of service rental charges for the rental of office space or equipment would be permissible, but only in those instances where the referral for the service to be provided in the rented office space or using the rented equipment did not come from the lessor.
In accordance with the Court's opinion in
As the Court stated, the physician self-referral law gives the Secretary power to add requirements as needed to protect against program or patient abuse, even if Congress did not anticipate such abuses at the time of enactment of the statute. Specifically, although Congress may not have originally included a ban on per-click rental charges in office space and equipment lease arrangements, it “empowered the Secretary to make her own assessment of the needs of the Medicare program and regulate accordingly.” (
The Secretary's authority to impose requirements regarding the type of compensation formulas upon which office space and equipment rental charges may be based is not constrained by the House Conference Report. As discussed elsewhere in this proposed rule, we acknowledge that the language in the House Conference Report states Congress' intent at the time of enactment of the physician self-referral law that sections 1877(e)(1)(A)(iv) and (B)(iv) of the Act not be interpreted as prohibiting charges for the rental of office space or equipment that are based on units of service furnished. We do not purport here to interpret this language as implying anything other than the conferees' understanding—at the time of enactment of the statute—that the statute as written did not prohibit rental charges based on units of service rates. But Congress also gave the Secretary the authority in sections 1877(e)(1)(A)(vi) and (B)(vi) of the Act to impose by regulation other requirements as needed to protect against program or patient abuse, which could only happen
The conference report . . . states only that rental charges “may” be based on units of service. The language is not obligatory. Instead, it simply indicates that, as written, the rental-charge clause [(section 1877(e)(1)(B)(iv) of the Act)] does not preclude per-click leases. But, as we have already explained, there is more to the statute than this clause, and to qualify for the exception, a rental agreement must comply with all six clauses, not merely the rental-charge clause alone. The final clause [(section 1877(e)(1)(B)(vi) of the Act)] gives the Secretary the authority to add further requirements. Nothing in the legislative history suggests a limit on this authority. We conclude that the statute does not unambiguously forbid the Secretary from banning per-click leases as she evaluates the needs of the Medicare system and its patients. (790 F.3d at 221–22 (
Moreover, as the Court further noted, a statement that unit of service-based rental charges are not precluded by sections 1877(e)(1)(A)(iv) and (B)(iv) of the Act as they are written is not equivalent to a statement that the Secretary must continue to permit such charges as she reevaluates, in light of experience, the operation of the statute and the need to protect the Medicare program and its beneficiaries against abuse. (
The Secretary has broad authority under sections 1877(e)(1)(A)(vi) and (B)(vi) of the Act to impose conditions on arrangements for the rental of office space or equipment in order to protect against program or patient abuse. That authority is not limited by the express words of the statute as it is in other provisions of section 1877 of the Act. In agreement, the Court in
. . . Congress knew how to limit the Secretary's authority to impose additional requirements to the various exceptions [to the physician self-referral law]. In [section 1877(e)(2) of the Act], Congress excludes bona fide employment relationships from the definition of compensation arrangements. This provision states that the employment relationship must comply with various requirements, including that the pay not be determined “in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician.” This employment exception also allows the Secretary to impose “other requirements,” just as the equipment rental exception. But the statute then goes on to say that the listed requirements “shall not prohibit the payment of remuneration in the form of a productivity bonus based on services performed personally by the physician.” This language shows that Congress knew how to cabin the Secretary's authority to impose “other” requirements and that it knew how to further clarify what it meant by compensation that does not take into account the volume of business generated between parties. That Congress employed neither of these tools with reference to the [exception for the rental of office space or equipment] again supports reading the statute as giving the Secretary broad discretion as she regulates in this area. (790 F.3d at 221 (citations omitted))
The Secretary's authority to limit the use of per-unit of service rental charges in arrangements for the rental of office space or equipment is particularly clear when the exceptions for the rental of office space and equipment are compared to other provisions in section 1877 of the Act. According to the Court in
[T]he statute elsewhere expressly permits charging per-click fees in other contexts, showing that Congress knew how to authorize such payment terms when it wanted to. In [section 1877(e)(7)(A) of the Act], Congress created an exception to the [physician self-referral law] that allows the continuation of certain group practice arrangements with a hospital. . . . The provision states that “[a]n arrangement between a hospital and a group under which designated health services are provided by the group but are billed by the hospital” is excepted from the ban on referrals if, among other things, “the compensation paid over the term of the agreement is consistent with fair market value and the compensation
In summary, as we stated in the FY 2009 IPPS final rule (73 FR 48716), the physician self-referral statute responds to the context of the times in which it was enacted (by addressing known risks of overutilization and, in particular, by creating exceptions for common business arrangements), and also incorporates sufficient flexibility to adapt to changing circumstances and developments in the health care industry. For example, in section 1877(b)(4) of the Act, Congress authorized the Secretary to protect additional beneficial arrangements by promulgating new regulatory exceptions. In addition, Congress included the means to address evolving fraud risks by inserting into many of the exceptions—and notably, for our purposes, in the lease exceptions—specific authority for the Secretary to add conditions as needed to protect against abuse. This design reflects a recognition that a fraud and abuse law with sweeping coverage over most of the health care industry could not achieve its purpose over the long term if it were frozen in time. In short, the statute evidences Congress' foresight in anticipating that the nature of fraud and abuse—and of beneficial industry arrangements—might change over time. (73 FR 48716 (citations omitted))
As we did in 2007 when we first proposed to impose additional requirements for rental charges in arrangements for the rental of office space and equipment, and in 2008 when we finalized regulations incorporating such additional requirements, we are relying in this proposal on the Secretary's clear authority in sections 1877(e)(1)(A)(vi) and (B)(vi) of the Act to impose such other requirements needed to protect against program or patient abuse. With respect to our proposal to include the same requirements at § 411.357(l) and (p), we have determined that the proposed revisions to § 411.357(l) and (p) are necessary to meet the standard set forth in section 1877(b)(4) of the Act, which authorizes the Secretary to establish exceptions to the statute's referral and billing prohibitions only where the excepted financial relationships do not pose a risk of program or patient abuse.
As we discussed in prior rulemakings, including the 1998 proposed rule, a number of studies prior to the enactment of the physician self-referral law found that physicians who had financial relationships with entities to which they referred patients ordered more services than physicians without such financial relationships (63 FR 1661). Studies conducted since that time, including recent studies by GAO, indicate that financial self-interest continues to affect physicians' medical decision making.
In the FY 2009 IPPS final rule, we discussed in detail our rationale for finalizing the limitation on per-unit of service rental charges in arrangements for the rental of office space or equipment. We noted primary concerns regarding the potential for overutilization, patient steering and other anti-competitive effects, and reduction in quality of care and patient outcomes, as well as concerns regarding the potential for increased costs to the Medicare program. For the reasons set forth in the FY 2009 IPPS final rule, some of which are restated below, we believe that, in order to protect against program or patient abuse, it is necessary to impose additional requirements on arrangements for the rental of office space or equipment. Specifically, we believe that it is necessary to prohibit rental charges that are determined using a formula based on per-unit of service rental charges to the extent that such charges reflect services provided to patients referred by the lessor to the lessee of the office space or equipment.
Commenters responding to our proposal in the CY 2008 PFS proposed rule to impose additional requirements for office space and equipment lease arrangements provided compelling information regarding potential program or patient abuse. We were persuaded in 2008 to finalize requirements limiting per-unit of service rental charges in the exceptions applicable to the rental of office space or equipment, and believe today that these requirements continue to be necessary, due to our concerns that “per-click” lease arrangements in which the lessor makes referrals to the lessee that generate payments to the lessor—
• Creates an incentive for overutilization of imaging services (as described by MedPAC in its comments to our proposal in the CY 2008 PFS proposed rule), as well as other services, including therapeutic services;
• Creates an incentive for physicians to narrow their choice of treatment options to those for which they will realize a profit, even where the best course of action may be no treatment;
• Influence physicians to refer to the lessee instead of referring to another entity that utilizes the same or different (and perhaps more efficacious) technology to treat the patient's condition;
• Result in physicians steering patients to equipment they own, even if it means having the patient travel to a non-convenient site for services using the leased equipment; and
• Increase costs to the Medicare program when referring physicians pressure hospitals to use their leasing company despite not being the low cost provider.
Most recently, in the CY 2016 PFS final rule, we expressed our continued concern that, when physicians have a financial incentive to refer a patient to a particular entity, this incentive can affect utilization, patient choice, and competition. Physicians can overutilize by ordering items and services for patients that, absent a profit motive, they would not have ordered. A patient's choice is diminished when physicians steer patients to less convenient, lower quality, or more expensive providers of health care, just because the physicians are sharing profits with, or receiving remuneration from, the providers. And lastly, where referrals are controlled by those sharing profits or receiving remuneration, the medical marketplace suffers if new competitors cannot win business with superior quality, service, or price (80 FR 41926). In that rule, in establishing the exception at § 411.357(y) for timeshare arrangements, we determined it necessary to exclude from the exception any timeshare arrangements that incorporate compensation formulas based on: (1) A percentage of the revenue raised, earned, billed, collected, or otherwise attributable to the services provided while using the timeshare; or (2) per-unit of service fees, to the extent that such fees reflect services provided to patients referred by the party granting permission to use the timeshare to the party to which the permission is granted. We explained our belief that timeshare arrangements based on percentage compensation or per-unit of service compensation formulas present a risk of program or patient abuse because they may incentivize overutilization and patient steering. We noted, by way of example, that a per-patient compensation formula could incent the timeshare grantor to refer patients (potentially for unnecessary consultations or services) to the party using the timeshare because the grantor will receive a payment each time the premises, equipment, personnel, items, supplies, or services are used. (80 FR 71331 through 71332) Similarly, we believe that arrangements utilizing rental charges for the rental of office space or equipment that are determined
Finally, we note that we are not alone in our concern regarding overutilization and steering of beneficiaries resulting from arrangements in which a physician's referral may provide future remuneration back to the physician. In two notable advisory opinions, OIG expressed its concern with per-unit of service compensation arrangements. Specifically, in Advisory Opinion 03–08, OIG stated that “ `[p]er patient,' `per click,' `per order,' and similar payment arrangements with parties in a position, directly or indirectly, to refer or recommend an item or service payable by a federal health care program are disfavored under the anti-kickback statute. The principal concern is that such arrangements promote overutilization . . . .” In Advisory Opinion 10–23, OIG noted that the arrangement that was the subject of the opinion “involves a `per-click' fee structure, which is inherently reflective of the volume or value of services ordered and provided . . . .”
We are proposing to revise § 411.372(a) by making a minor technical correction to change the instructions for submitting a request for an advisory opinion relating to physician referrals. The current language in this subsection directs a requesting party to submit its request to a physical address that is out of date. In an effort to expedite the receipt and processing of these requests, and to account for any future changes, we are proposing to revise paragraph (a) to state a party or parties must submit a request for an advisory opinion to CMS according to the instructions specified on the CMS Web site.
We note that, at the time of this rulemaking, the correct address for such advisory opinion requests is: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Office of Financial Management, Division of Premium Billing and Collections, Mail Stop C3–09–27, Attention: Advisory Opinions, 7500 Security Boulevard, Baltimore, MD 21244–1850. However, we note that this address is subject to change, per this technical correction, and that parties seeking to submit a request for an advisory opinion relating to physician referrals will need to refer to the instructions on the CMS Web site.
Under the Paperwork Reduction Act of 1995 (PRA), we are required to publish a 60-day notice in the
To fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues:
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our burden estimates.
• The quality, utility, and clarity of the information to be collected.
• Our effort to minimize the information collection burden on the affected public, including the use of automated collection techniques.
We are soliciting public comment on each of the required issues under section 3506(c)(2)(A) of the PRA for the following information collection requirements (ICRs).
To derive average costs, we used data from the U.S. Bureau of Labor Statistics' May 2015 National Occupational Employment and Wage Estimates for all salary estimates (
As indicated, we are adjusting our employee hourly wage estimates by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and overhead costs vary significantly from employer to employer, and because methods of estimating these costs vary widely from study to study. Nonetheless, there is no practical alternative and we believe that doubling the hourly wage to estimate total cost is a reasonably accurate estimation method.
For individual EPs or group practices, who choose to separately report quality measures during the proposed secondary PQRS reporting period for the 2017 PQRS payment adjustment, who bill under the TIN of an ACO participant if the ACO failed to report on behalf of such EPs or group practices during the previously established reporting period for the 2017 PQRS payment adjustment, we do not believe the individual EP or group practice incurs any additional burden. The associated reporting burden which is currently approved by OMB under control number 0938–1059 (CMS–10276) explains that the PQRS annual burden estimate was calculated separately for (1) individual eligible professionals and group practices using the claims (for eligible professionals only), (2) qualified registry and QCDR,
Consistent with section 1834(q) of the Act (as amended by section 218(b) of the PAMA), we have proposed specific requirements for clinical decision support mechanisms (CDSMs) that can be qualified CDSMs under § 414.94 of our regulations as part of the Medicare appropriate use criteria (AUC) program. CDSMs that believe they meet the requirements to be qualified CDSMs (for the purpose of this section) may apply to CMS to be specified as a qualified CDSM.
Applications must be submitted electronically and demonstrate how the CDSM meets the requirements under § 414.94(g)(1). Specifically, applications must demonstrate how the CDSM: (1) Makes available specified applicable AUC and related documentation supporting the appropriateness of the applicable imaging service ordered; (2) identifies the appropriate use criterion consulted in the event the CDSM makes available more than one criterion relevant to a consultation for a patient's specific clinical scenario; (3) makes available, at a minimum, specified applicable AUC that reasonably encompass the entire clinical scope of all priority clinical areas identified in § 414.94(e)(5); (4) has the technical capability to incorporate specified applicable AUC from more than one qualified PLE; (5) determines the extent to which an applicable imaging service is consistent with a specified applicable appropriate use criterion consulted for a patient's specific clinical scenario, or a determination of “not applicable” when the mechanism does not contain a criterion applicable to that patient's specific clinical scenario; (6) generates and provides a certification or documentation each time an ordering professional consults a qualified CDSM that includes a unique consultation identifier to the ordering professional that documents which qualified CDSM was consulted, the name and national provider identifier (NPI) of the ordering professional that consulted the CDSM, and whether the service ordered would adhere to specified applicable AUC or whether specified applicable AUC was not applicable to the service ordered; (7) updates AUC content at least every 12 months to reflect revisions or updates made by qualified PLEs to their AUC sets or an individual appropriate use criterion; (8) has a protocol to expeditiously remove AUC determined by the qualified PLE to be potentially dangerous to patients and/or harmful if followed; (9) makes available for consultation specified applicable AUC that reasonably encompass the entire clinical scope of any new priority clinical area within 12 months of the priority clinical area being finalized by CMS; (10) meets privacy and security standards under applicable provisions of law; (11) provides the ordering professional aggregate feedback regarding their consultation with specified applicable AUC in the form of an electronic report on an annual basis; (12) maintains electronic storage of clinical, administrative, and demographic information of each unique consultation for a minimum of 6 years; and (13) complies with modification(s) to any requirements under § 414.94(g)(1) made through rulemaking within 12 months of the effective date of the modification.
To be specified as a qualified CDSM by CMS, mechanism developers must document adherence to the requirements in their application for CMS review and use the application process identified in § 414.94(g)(2) which includes: (1) Applications submitted by CDSMs documenting adherence to each requirement outlined in § 414.94(g)(1) must be received annually by January 1; (2) all approved qualified CDSMs in each year will be included on the list of qualified CDSMs posted to the CMS Web site by June 30 of that year; (3) approved CDSMs are qualified for a period of 5 years; and (4) all qualified CDSMs must re-apply every 5 years and applications must be received by CMS by January 1 of the 5th year after the developer's most recent approval date. If a qualified CDSM is found to be non-adherent to the requirements identified above, CMS may terminate its qualified status or may consider this information during re-qualification.
The one-time burden associated with the requirements under § 414.94(g)(2) is the time and effort it would take each of the approximately 30 CDSM developers (as estimated by CMS, the Office of the National Coordinator (ONC), and the Agency for Healthcare Research and Quality (AHRQ)) that have interests in incorporating AUC consultation into their mechanisms' functionality to compile, review and submit documentation demonstrating adherence to the proposed CDSM requirements. We anticipate 30 respondents based on the number of existing CDSMs that have expressed an interest in incorporating AUC for advanced diagnostic imaging, as well as our estimation of the number of CDSM developers that may be interested in incorporating AUC for advanced diagnostic imaging in the future as their mechanisms develop and evolve. Each respondent will voluntarily compile, review and submit documentation that demonstrates their adherence to the proposed CDSM requirements listed above.
We estimate it would take 10 hours at $68.18/hr for a business operations specialist to compile, prepare and submit the required information, 2.5 hours at $86.72/hr for a computer system analyst to review and approve the submission, 2.5 hours at $135.58/hr for a computer and information systems manager to review and approve the submission, and 5 hours at $131.02/hr for a lawyer to review and approve the submission. In this regard, we estimate 20 hours per submission at a cost of $1,892.65. In aggregate, we estimate 600 hours (20 hr × 30 submissions) at $56,779.50 ($1,892.65 × 30 submissions).
After the anticipated initial 30 respondents, we expect less than 10 applicants to apply to become qualified CDSMs annually. Since we estimate fewer than 10 respondents, the information collection requirements and burden are exempt (5 CFR 1320.2(c)) from the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq).
Given that qualified CDSMs must re-apply every 5 years, in years 6–10, we expect the initial 30 entities will re-apply. The ongoing burden for re-applying is expected to be half the
As regulatory requirements become more complex, we will look to innovative technologies that minimize the burden on an organizations' budget and manpower. To this end, the proposed CDSM functionality requirements identified in § 414.94(g)(1) will help practitioners meet the requirements of the AUC program. While the CDSM application process proposed in § 414.94(g)(2) is a new burden under this program, the CDSM functionality requirements proposed in § 414.94(g)(1) do not add burden as they are functions of the CDSM. These mechanisms function consistently with their voluntary and individualized design so the proposed requirements in § 414.94(g)(1) are either part of a mechanism's functionality or not. If CDSM developers wish to become qualified under this program, they may choose to develop the functionality of their mechanisms consistent with these requirements to be qualified, but all CDSMs are not required to participate in this program. For example, a CDSM that does not incorporate AUC for any advanced diagnostic imaging services would likely choose not to seek to become qualified under this Medicare AUC program. As such, only CDSMs that wish to participate in the Medicare AUC for advanced diagnostic imaging services program are required to apply for qualification and, in choosing to seek qualification, CDSM developers would also choose to incorporate the proposed requirements into their mechanism's functionality.
The proposed requirements and burden will be submitted to OMB under control number 0938—New (CMS–10624).
There are approximately 1.9 million providers and suppliers nationwide that are enrolled in Medicare. Through our analysis of currently available encounter data provided by MA organizations, we have found that some providers and suppliers that furnish items or services to MA organization enrollees are not enrolled in Medicare in an approved status. Based on preliminary data, we estimate that 64,000 MA providers and suppliers would have to enroll in Medicare pursuant to proposed § 422.222 in order to treat enrollees.
About half of the approximately 64,000 unenrolled providers and suppliers, or 32,000, are individuals and the other half are organizations. We do not have data at this point to confirm the number of unenrolled individuals who are physicians as opposed to non-physician practitioners. For purposes of fulfilling the requirements of the PRA, we will project that one-half (16,000) are physicians and the other half (16,000) are practitioners.
Consistent with our prior time (per respondent) estimates, we project that it would take 3 hours at $194.66/hr for a physician and $93.30/hr for a non-physician practitioner to complete their individual enrollments. For organizations (office and administrative support personnel), we estimate it would take 6 hours at $34.94/hr, since organizations typically submit more data than individuals. For physicians, we estimate 48,000 hours (16,000 applicants × 3 hours) at a cost of $9,343,680 (48,000 hr × $194.66/hr). For non-physician practitioners, we estimate 48,000 hours (16,000 applicants × 3 hours) at a cost of $4,478,400 (48,000 hr × $93.30/hr). For organizations, we estimate 192,000 hours (32,000 applicants × 6 hours) at a cost of $6,708,480 (192,000 hr × $34.94). In aggregate, we estimate 288,000 hours at $20,530,560.
When projected annually over OMB's maximum 3-year approval period, we estimate 96,000 hours at a cost of $6,843,520.
For physicians and non-physician practitioners, the proposed requirements and annualized burden (32,000 hours) will be submitted to OMB under control number 0938–0685 (Form CMS–855I) because physicians and non-physician practitioners enroll via the Form CMS–855I. For organizations, the proposed requirements and annualized burden (64,000 hours) will be submitted to OMB under control number 0938–0685 (21,333.3 hours for Form CMS–855A and 21,333.3 hours for Form CMS–855B) and control number 0938–1056 (21,333.3 hours for Form CMS–855S). The specific form to be completed would depend upon the provider or supplier type at issue. For instance, and consistent with current enrollment policy, certified providers and certain certified suppliers would complete the Form CMS–855A; group practices, ambulance suppliers, and certain other supplier types would complete the Form CMS–855B; suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) would complete the Form CMS–855S.
Please note that breakout of the organization burden (dividing 64,000 hours by 3 forms) is an estimate. Logistically this is necessary for the purposes of submitting burden for approval. We have no way of estimating the number of providers/suppliers that will complete the individual forms. We welcome comment to help us derive a more reliable breakout.
Changes proposed for §§ 422.501 and 422.510 involve only CMS contract changes and will not result in any external charges or operational costs to MA organizations. Many MA organizations already require Medicare enrollment for all their network providers and suppliers. So there will be no additional costs to most MA and MA- PD plans. The only tangible costs would be to those providers or suppliers that are not enrolled and those costs are estimated above.
Section 422.272 proposes an annual public release of MA bid pricing data (with specified exceptions from release), which would occur after the first Monday in October and would contain MA bid pricing data that was approved by CMS for a contract year at least five years prior to the upcoming calendar year. Under Part C, MA organizations (MAOs) are required to submit bid data to CMS each year for MA plans they wish to offer in the upcoming contract year (calendar year), under current authority at § 422.254.
Proposed §§ 422.2490 (for Part C) and 423.2490 (for Part D) would also provide for the public release of Part C and Part
The proposed provisions on release of MA bid pricing data and release of Part C and Part D MLR data do not change any of the existing requirements regarding submission of bid data and MLR data by MAOs or Part D sponsors. Nor does this rule propose any new or revised reporting, recordkeeping, or third-party disclosure requirements. Although the proposed provisions have no impact on respondent requirements or burden, the changes will be submitted to OMB for approval under control number 0938–0944 (CMS–10142) for MA bid pricing data and 0938–1232 (CMS–10476) for Part C and Part D MLR data.
Section 1899(e) of the Act provides that chapter 35 of title 44 of the U.S. Code, which includes such provisions as the PRA, shall not apply to the Shared Savings Program.
In this proposed rule, we make reference to proposed associated information collection requirements that were not discussed in the regulation text contained in this proposed rule. The following is a discussion of those requirements.
Section II.D.2. of this proposed rule details our plans for a proposed claims based reporting program for global surgical services. Specifically, that section describes our proposal for claims-based data collection that would be applicable to 10- and 90-day global services furnished on or after January 1, 2017, including who would be required to report, what they would be required to report, and how reports would be submitted. As currently proposed, this data collection would be subject to the PRA. As stated in section 220 of the Protecting Access to Medicare Act (PAMA) of 2014 (Pub. L. 113–93), Chapter 35 of title 44, United States Code, shall not apply to information collected or obtained under this paragraph. Specifically, information collected to ensure the accurate valuation of services under the Physician Fee Schedule which includes but is not limited to surveys of physicians, other suppliers, providers of services, manufacturers, and vendors; surgical logs, billing systems, or other practice or facility records; electronic health records; and, any other mechanism deemed appropriate by the Secretary.
As discussed earlier in section II.D.6. e.(1)–(2) of this document, we are proposing to conduct a survey of providers to help us explore options and collect data with respect to assessing and revaluing the global surgery services. If we finalize this proposal, the associated information collection request will be exempt from the PRA. As stated in stated in section 220 of PAMA of 2014, Chapter 35 of title 44, United States Code, shall not apply to information collected to ensure the accurate valuation of services under the Physician Fee Schedule. Consequently, the information collection requirements associated with this proposed survey need not be reviewed by the Office of Management and Budget.
In section II.D6.e.(3) of this document, we propose to conduct a survey of ACOs on a number of issues surrounding pre- and post-operative surgical services. Once developed and implemented, the survey would be exempt from the PRA. As stated in section 3022 of the Affordable Care Act, Chapter 35 of title 44, United States Code, shall not apply to the Medicare Shared Savings Program. Similarly, as stated in stated in section 220 of PAMA of 2014, Chapter 35 of title 44, United States Code, shall not apply to information collected to ensure the accurate valuation of services under the Physician Fee Schedule. Consequently, the information collection requirements associated with this proposed survey need not be reviewed by the Office of Management and Budget.
We have submitted a copy of this proposed 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 the OMB.
To obtain copies of the supporting statement and any related forms for the proposed collections discussed above, please visit CMS' Web site at
We invite public comments on these potential information collection requirements. If you wish to comment, please submit your comments electronically as specified in the
ICR-related comments are due September 13, 2016.
Because of the large number of public comments we normally receive on
This proposed rule is necessary to make payment and policy changes under the Medicare PFS and to make required statutory changes under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Achieving a Better Life Experience Act of 2014 (ABLE). This proposed rule is also necessary to make changes to payment policy and other related policies for Medicare Part B, Part D, and Medicare Advantage.
We 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 ($100 million or more in any 1 year). We estimate, as discussed in this section, that the PFS provisions included in this proposed rule would redistribute more than $100 million in 1 year. Therefore, we estimate that this rulemaking is “economically significant” as measured by the $100 million threshold, and hence also a major rule under the Congressional Review Act. Accordingly, we prepared an RIA that, to the best of our ability, presents the costs and benefits of the rulemaking. The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals, practitioners and most other providers and suppliers are small entities, either by nonprofit status or by having annual revenues that qualify for small business status under the Small Business Administration standards. (For details see the SBA's Web site at
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 proposed rule 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 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We did not prepare an analysis for section 1102(b) of the Act because we determined, and the Secretary certified, that this proposed rule would not have a significant impact on the operations of a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits on state, local, or tribal governments or on the private sector before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2016, that threshold is approximately $146 million. This proposed rule 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 issues 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 prepared the following analysis, which together with the information provided in the rest of this preamble, meets all assessment requirements. The analysis explains the rationale for and purposes of this proposed rule; details the costs and benefits of the rule; analyzes alternatives; and presents the measures we would use to minimize the burden on small entities. As indicated elsewhere in this proposed rule, we are proposing to implement a variety of changes to our regulations, payments, or payment policies to ensure that our payment systems reflect changes in medical practice and the relative value of services, and to implement statutory provisions. We provide information for each of the policy changes in the relevant sections of this proposed rule. We are unaware of any relevant federal rules that duplicate, overlap, or conflict with this proposed rule. The relevant sections of this proposed rule contain a description of significant alternatives if applicable.
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 expenditures for PFS services compare payment rates for CY 2016 with proposed payment rates for CY 2017 using CY 2015 Medicare utilization. The payment impacts in this proposed rule reflect averages by 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 practitioner furnishes. The average percentage change in total revenues would be less than the impact displayed here because practitioners and other entities generally furnish services to both Medicare and non-Medicare patients. In addition, practitioners and other entities may receive substantial Medicare revenues for services under other Medicare payment systems. For instance, independent laboratories receive approximately 83 percent of their Medicare revenues from clinical laboratory services that are paid under the Clinical Lab Fee Schedule.
The annual update to the PFS conversion factor (CF) was previously calculated based on a statutory formula; for details about this formula, we refer readers to the CY 2015 PFS final rule with comment period (79 FR 67741 through 67742). Section 101(a) of the MACRA repealed the previous statutory update formula amended section 1848(d) of the Act to specify the update adjustment factors for calendar years 2015 and beyond. For 2017, the specified update is 0.5 percent.
We note that section 220(d) of the PAMA added a new paragraph at section 1848(c)(2)(O) of the Act to establish an annual target for reductions in PFS expenditures resulting from adjustments to relative values of misvalued codes. Under section 1848(c)(2)(O)(ii) of the Act, if the net reduction in expenditures for the year is equal to or greater than the target for the year, reduced expenditures attributable to such adjustments shall be redistributed in a budget-neutral manner within the PFS in accordance with the existing budget neutrality requirement under section 1848(c)(2)(B)(ii)(II) of the Act. Section 1848(c)(2)(O)(iii) of the Act specifies that, if the estimated net reduction in PFS expenditures for the year is less than the target for the year, an amount equal to the target recapture amount shall not be taken into account when applying the budget neutrality requirements specified in section 1848(c)(2)(B)(ii)(II) of the Act. We estimate the CY 2017 net reduction in expenditures resulting from proposed adjustments to relative values of misvalued codes to be 0.51 percent. Since, if finalized, this amount would exceed the 0.5 percent target established by the Achieving a Better Life Experience Act of 2014 (ABLE) (Division B of Pub. L. 113–295, enacted December 19, 2014), there is no residual difference between the target for the year and the estimated net reduction in expenditures (the “Target Recapture Amount”) by which to reduce payments made under the PFS. As a result, we estimate that the proposed PFS rates would not produce a CY 2017 Target Recapture Amount applicable to the CY 2017 CF. However, we note that the final Target Recapture Amount will be calculated based on the adjustments to misvalued codes as finalized in the CY 2017 PFS Final Rule.
Effective January 1, 2012, we implemented an MPPR of 25 percent on the professional component (PC) of advanced imaging services. Section 502(a)(2)(A) of the Consolidated Appropriations Act of 2016 (Pub. L 114–113, enacted on December 18, 2015) added a new section 1848(b)(10) of the Act which revises the multiple procedure payment reduction on the professional component of imaging services from 25 percent to 5 percent, effective January 1, 2017. Section 502(a)(2)(B) added a new subclause at section 1848(c)(2)(B)(v)(XI) which exempts the MPPR reductions attributable to the new 5 percent MPPR on the PC of imaging from the PFS budget neutrality provision. However, the provision does not exempt the change from the 25 percent MPPR from PFS budget neutrality. Therefore, for CY 2017 we must calculate PFS rates in a manner that exempts the 5 percent MPPR from budget neutrality but ensures that the elimination of the 25 percent MPPR is included in PFS budget neutrality. We note that the application of the 25 percent MPPR has been applied in a budget neutral fashion to date.
The CY 2017 proposed PFS rates exclude the 5 percent MPPR for the professional component of imaging services by calculating the rates as if the discount does not occur, consistent with our approach to other discounts that occur outside of PFS budget neutrality. In order to implement the change from the 25 percent discount in 2016 to the 5 percent discount in 2017 within PFS budget neutrality, we measured the difference in total RVUs for the relevant services assuming an MPPR of 25 percent and the total RVUs for the same services without an MPPR and then applied that difference as an adjustment to the conversion factor to account for the increased expenditures attributable to the change, within PFS budget neutrality. This approach is consistent with the statutory provision that requires the 5 percent MPPR to be implemented outside of PFS budget neutrality.
To calculate the proposed conversion factor for this year, we multiply the product of the current year conversion factor and the update adjustment factor by the budget neutrality adjustment and the imaging MPPR adjustment described in the preceding paragraphs. We estimate the CY 2017 PFS conversion factor to be 35.7751, which reflects the budget neutrality adjustment, the 0.5 percent update adjustment factor specified under section 1848(d)(18) of the Act, and a the adjustment due to the non-budget neutral 5 percent MPPR for the professional component of imaging services. We did not need to apply an adjustment for atarget recapture for the reasons described above. We estimate the CY 2017 anesthesia conversion factor to be 21.9756, which reflect the same overall PFS adjustments.
Table 43 shows the payment impact on PFS services of the proposals contained in this proposed rule. To the extent that there are year-to-year changes in the volume and mix of services provided by practitioners, the actual impact on total Medicare revenues would be different from those shown in Table 43 (CY 2017 PFS Estimated Impact on Total Allowed Charges by Specialty). The following is an explanation of the information represented in Table 43.
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The most widespread specialty impacts of the proposed RVU changes are generally related to the proposed changes to RVUs for specific services resulting from the Misvalued Code Initiative, including proposed RVUs for new and revised codes. Several specialties, including interventional radiology and independent labs, would experience significant decreases to overall payments for services that they frequently furnish as a result of revisions to the coding structure or the proposed inputs used to develop RVUs for the codes that describe particular services. Other specialties, including endocrinology and family practice, would experience significant increases to payments for similar reasons.
Column F of Table 43 displays the estimated CY 2017 impact on total allowed charges by specialty of all the RVU changes. A table shows the estimated impact on total payments for selected high volume procedures of all of the changes is available under “downloads” on CY 2017 PFS proposed rule Web site at
As discussed in section II.I. of this proposed rule, we proposed to add several new codes to the list of Medicare telehealth services. Although we expect these changes to increase access to care in rural areas, based on recent utilization of similar services already on the telehealth list, we estimate no significant impact on PFS expenditures from the additions relative to overall PFS expenditures.
Based upon statutory requirements, we are proposing new GPCIs for each Medicare payment locality. The proposed GPCIs incorporate updated data and cost share weights as discussed in II.E. The Act requires that updated GPCIs be phased in over two years. Addendum D shows the estimated effects of the revised GPCIs on area GAFs for the transition year (CY 2017) and the fully implemented year (CY 2018). The GAFs reflect the use of the updated underlying GPCI data, and the cost share weights remain unchanged from the previous (seventh) GPCI update. The GAFs are a weighted composite of each area's work, PE and malpractice expense GPCIs using the national GPCI cost share weights. While we do not actually use the GAFs in computing the fee schedule payment for a specific service, they are useful in comparing overall areas costs and payments. The actual effect on payment for any actual service will deviate from the GAF to the extent that the proportions of work, PE and malpractice
The most significant changes occur in 19 non-California payment localities, where the fully implemented (CY 2018) GAF moves up by more than 1 percent (14 payment localities) or down by more than 2 percent (5 payment localities).
In section III.A., we proposed to revise § 405.2413(a)(5) and § 405.2415(a)(5) to state that services and supplies furnished incident to TCM and CCM services can be furnished under general supervision of a RHC or FQHC practitioner. In section III.A., we proposed revising the CCM requirements for RHCs and FQHCs to be consistent with the proposed revisions to the CCM requirements for practitioners billing under the PFS. These proposed revisions will allow RHCs and FQHCs to provide TCM and CCM services at the level that was projected when the programs were authorized and therefore no impact on spending is expected.
As outlined in section III.A., we proposed to change the direct supervision requirement to a general supervision for CCM services furnished incident to RHCs and FQHCs. This regulatory change was already made for CCM services furnished by practitioners billing the PFS, and changes to RHC and FQHC regulations have no impact on regulations for practitioners billing under the PFS. The impact on RHCs and FQHCs in 2017 is negligible, as estimates are rounded to the nearest 5 million and 2017 was too small of an impact to have a notable effect on the estimate.
As discussed in section III.B of this proposed rule, we are proposing to create a 2013-based FQHC market basket to update the FQHC PPS base payment rate. Table 44 shows the 5-year and 10-year fiscal cost estimates from switching from a MEI-adjusted base payment rate to a FQHC PPS market basket-adjusted base payment rate. This was determined by compiling data on historical FQHC spending, projecting it forward, and creating two separate baselines. The first baseline assumed an MEI price update and the second baseline assumed an FQHC specific market basket price update which was created by the Office of the Actuary within CMS. The utilization of services was held constant between the two baselines, and therefore, the impact table specifically captures the change in price from now growing at an FQHC MB update relative to how it was growing at the MEI updates. We estimate that this would cost approximately 170 million dollars over 10 years from FY 2017–2026, 35 million of which would be paid for through beneficiary premiums and the remaining 135 million would be paid for through Part B.
We are proposing and requesting public comment on clinical decision support mechanism (CDSM) requirements as well as an application process that CDSM developers must comply with for their mechanisms to be specified as qualified under this program. These proposals would not impact CY 2017 physician payments under the PFS.
We are soliciting comments to inform future rulemaking. We do not intend to finalize any requirements directly as a result of this proposed rule; so there is no impact to CY 2017 physician payments under the PFS.
Under section III.E. of the preamble of this proposed rule, we are proposing to revise the existing regulations by adding § 422.272 to provide for an annual public release of MA bid pricing data (with specified exceptions from release). The annual release would occur after the first Monday in October and would contain MA bid pricing data that was accepted or approved by CMS for a contract year at least 5 years prior to the upcoming calendar year. Under current authority at § 422.254, MA organizations (MAOs) are required to submit bid pricing data to CMS each year for MA plans they wish to offer in the upcoming contract year (calendar year).
In addition, the proposed rule adds § 422.2490 for Part C and § 423.2490 for Part D to provide for an annual public release of Part C and Part D medical loss ratio (MLR) data (with specified exceptions from release). This annual release would occur no sooner than 18 months after the end of the contract year for which MLR data was reported to CMS. Starting with contract year 2014, each MAO or Part D sponsor that fails to spend at least 85 percent of revenue received under an MA or Part D contract on incurred claims and quality improving activities must remit the difference to the government. Under current authority at § 422.2460 and § 423.2460, each year MAOs and Part D sponsors must submit an MLR Report to CMS, which includes the data needed by the MAO or Part D sponsor to calculate and verify the MLR and remittance amount, if any, for each contract.
We are proposing to add regulatory language to authorize CMS' release of such data to the public. We have determined that the proposed regulatory amendments do not impose any mandatory costs on the public or entities that seek to download and use the released data. We expect that this
We are restating information to inform providers to take steps to educate themselves and their staff about QMB billing prohibitions and to exempt QMB individuals from Medicare cost-sharing billing and related collection efforts. Therefore, there is no impact to CY 2017 physician payments under the PFS.
This proposed rule implements section 1866(j) of the Act which grants the Secretary the authority to authority to make any necessary adjustments to the payments of an applicable provider of services or supplier who shares a TIN with an obligated provider of services or supplier that has an outstanding Medicare overpayment. The Secretary is authorized to adjust the payments of such applicable provider, regardless of whether that applicable provider is assigned a different Medicare billing number or National Provider Identifier (NPI) number from the obligated provider with the outstanding Medicare overpayment. The concept of offsetting or recouping payments of providers sharing a TIN to satisfy a Medicare overpayment is analogous to Treasury's current practice of offsetting against entities that share a TIN to collect Medicare overpayments. This proposed rule would help support our efforts to safeguard the Medicare Trust Funds by collecting its own overpayments more quickly and reducing the accounts receivable delinquency rates reported in the Treasury Report on Receivables. This proposed rule also helps the obligated provider because we would collect the overpayments more quickly; thus reducing the additional interest assessments that would continue on the provider's outstanding delinquent balance until paid in full. Therefore, there is no impact to CY 2017 physician payments under the PFS.
This proposed rule would require that providers and suppliers must be enrolled in Medicare in approved status in order to render services to beneficiaries in the Medicare Advantage program. This proposed rule will not have a significant economic impact on a substantial number of small businesses because the number not enrolled in Medicare appears to be small in comparison to the general population of providers. The completion of the Form CMS–855 (as explained in section III) would be required very infrequently, in many cases either only one time or once every several years. Also, the hour and cost burden per provider or supplier will not pose a significant burden on a provider and supplier, especially when considering the overall revenue that providers and suppliers receive per year. We thus do not believe our proposal would impact a substantial number of small businesses.
Virtually all of the quantifiable costs associated with this proposed rule involve the paperwork burden to providers and suppliers (see section IV. of this proposed rule). The estimates presented in this section do not address the potential financial benefits of this proposed rule from the standpoint of the rule's effectiveness in preventing or deterring certain providers from enrolling in or maintaining their enrollment in Medicare. We simply have no means of quantifying these benefits in monetary terms.
There are three main uncertainties associated with this proposed rule. First, we are uncertain as to the number of providers and suppliers that would be required to enroll in Medicare under § 422.222. Second, we cannot estimate the savings in fraud and abuse prevention that would accrue from this rule. Third, since we have no systematic method to know how many FDRs may be used by MA or MA–PD organizations to deliver services to Medicare beneficiaries, therefore, we cannot estimate the possible impact to FDRs.
In this rule, we propose to expand the Diabetes Prevention Program (DPP) Model in accordance with section 1115A(c) of the Act, and we propose to refer to this expanded model as the Medicare Diabetes Prevention Program (MDPP). We propose that MDPP will become effective January 1, 2018, and CMS will continue to test and evaluate MDPP as finalized. In the future, CMS will assess whether the nationwide implementation of the MDPP is continuing to either reduce Medicare spending without reducing quality of care or improve the quality of patient care without increasing spending, and could modify the nationwide MDPP as appropriate. In this proposed rule, we propose a basic framework for the MDPP. If finalized, we will engage in additional rulemaking, likely within the next year, to establish specific requirements of the MDPP. The comments received from this proposed rule will inform key design parameters of the MDPP. Modifications to the proposed MDPP could result in changes to our current financial projections and therefore affect economic impact estimates of MDPP. For these reasons, it is premature to provide an impact statement at this time. We intend to provide an impact statement in future rulemaking.
We are proposing certain rules having to do with ACO quality reporting: (1) We are proposing conforming changes to align with the policies included in the QPP proposed rule, including changes to the quality measure set; (2) we are proposing to streamline the quality validation audit process and use the results to modify an ACO's overall quality score; (3) we are proposing revisions to references to the Quality Performance Standard and Minimum Attainment; (4) we are clarifying that measures calculated as ratios are excluded from use of flat percentages when such benchmarks appear “clustered” or “topped out”; and (5) we are proposing to modify our PQRS alignment rules to permit flexibility for EPs to report quality data to PQRS to avoid the PQRS and VM downward adjustments for 2017 and 2018 in cases where an ACO fails to report on their behalf. In addition, we are proposing updates to the assignment methodology to include beneficiaries who identify ACO professionals as being responsible for coordinating their overall care.
We are also proposing additional beneficiary protections when ACOs in Track 3 make use of the SNF 3-day rule waiver. Finally, we are proposing certain technical changes and clarifications related to reconciliation for ACOs that fall below 5,000 assigned beneficiaries and related to our policies for consideration of claims billed by merged and acquired TINs.
Because the proposed policies are not expected to substantially change the quality reporting burden for ACOs participating in the Shared Savings Program and their ACO participants or change the financial calculations, we do
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. 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.
In the CY 2015 PFS final rule with comment period (79 FR 67936 and 67941 through 67942), we established that, beginning with the CY 2017 payment adjustment period, the VM will apply to physicians in groups with two or more EPs and to physicians who are solo practitioners based on the applicable performance period, including physicians that participate in an ACO under the Shared Savings Program. In the CY 2014 PFS final rule with comment period (78 FR 74771 through 74772), we established CY 2015 as the performance period for the VM that will be applied to payments during CY 2017. In CY 2017, the VM will be waived for groups and solo practitioners, as identified by their TIN, if at least one EP who billed for Medicare PFS items and services under the TIN during 2015 participated in the Pioneer ACO Model or the Comprehensive Primary Care initiative in 2015 (80 FR 71288).
In the CY 2015 PFS final rule with comment period (79 FR 67938 through 67939), we adopted a two-category approach for the CY 2017 VM based on participation in the PQRS by groups and solo practitioners. Category 1 will include those groups that meet the criteria to avoid the PQRS payment adjustment for CY 2017 as a group practice participating in the PQRS GPRO in CY 2015. We finalized in the CY 2016 PFS final rule with comment period (80 FR 71280 through 71281) that, for the CY 2017 VM, Category 1 will also include groups that have at least 50 percent of the group's EPs meet the criteria to avoid the PQRS payment adjustment for CY 2017 as individuals. In determining whether a group will be included in Category 1, we will consider whether the 50 percent threshold has been met regardless of whether the group registered to participate in the PQRS GPRO in CY 2015. Lastly, Category 1 will include those solo practitioners that meet the criteria to avoid the PQRS payment adjustment for CY 2017 as individuals.
For groups and solo practitioners that participated in an ACO under the Shared Savings Program in CY 2015, they are considered to be Category 1 for the CY 2017 VM if the ACO in which they participated successfully reported on quality measure via the GPRO Web Interface in CY 2015 (79 FR 67946). As discussed in sections III.I. and III.L.1.e. of this proposed rule, we are proposing to remove the prohibition on EPs who are part of a group or solo practitioner that participates in a Shared Savings Program ACO, for purposes of PQRS reporting for the CY 2017 and CY 2018 payment adjustments, to report outside the ACO. In section III.L.3.b. of this proposed rule, we are proposing for the CY 2017 payment adjustment period, if a Shared Savings Program ACO did not successfully report quality data as required by the Shared Savings Program under § 425.504 for the CY 2017 PQRS payment adjustment, then we propose to use the data reported to the PQRS by the EPs (as a group using one of the group registry, QCDR, or EHR reporting options or as individuals using the registry, QCDR, or EHR reporting option) under the participant TIN) outside of the ACO during the secondary PQRS reporting period to determine whether the TIN would fall in Category 1 or Category 2 under the VM. We are proposing that groups that meet the criteria to avoid PQRS payment adjustment for CY 2018 as a group practice participating in the PQRS GPRO (using one of the group registry, QCDR, or EHR reporting options) or have at least 50 percent of the group's EPs meet the criteria to avoid the PQRS payment adjustment for CY 2018 as individuals (using the registry, QCDR, or EHR reporting option), based on data submitted outside the ACO and during the secondary PQRS reporting period, would be included in Category 1 for the CY 2017 VM. We are also proposing that solo practitioners that meet the criteria to avoid the PQRS payment adjustment for CY 2018 as individuals using the registry, QCDR, or EHR reporting option, based on data submitted outside the ACO and during the secondary PQRS reporting period, would be included in Category 1 for the CY 2017 VM. Category 2 would include those groups and solo practitioners subject to the CY 2017 VM that participate in a Shared Savings Program ACO and do not fall within Category 1.
The CY 2017 VM payment adjustment amount for groups and solo practitioners in Category 2 is −4.0 percent for groups of physicians with 10 or more EPs and −2.0 percent for groups of physicians with between 2 to 9 EPs and physician solo practitioners.
In the CY 2015 PFS final rule with comment period (79 FR 67939 through 67941), we finalized that quality-tiering, which is the methodology for evaluating performance on quality and cost measures for the VM, will apply to all groups of physicians and physician solo practitioners in Category 1 for the VM for CY 2017. However, groups of physicians with between 2 to 9 EPs and physician solo practitioners will be subject only to upward or neutral adjustments derived under quality-tiering, while groups of physicians with 10 or more EPs will be subject to upward, neutral, or downward adjustments derived under quality-tiering. That is, groups of physicians with between 2 to 9 EPs and physician solo practitioners in Category 1 would be held harmless from any downward adjustments derived under quality-tiering for the CY 2017 VM.
Under the quality-tiering methodology, each group and solo practitioner's quality and cost composites will be classified into high, average, and low categories depending upon whether the composites are at least one standard deviation above or below the mean and statistically different from the mean. We will compare their quality of care composite classification with the cost composite classification to determine their VM adjustment for the CY 2017 payment adjustment period according to the amounts in Tables 45 and 46.
Under the quality-tiering methodology, for groups and solo practitioners that participated in a Shared Savings ACO that successfully reports quality data for CY 2015, the cost composite will be classified as “Average” and the quality of care composite will be based on ACO-level quality measures. We will compare their quality of care composite classification with the “Average” cost composite classification to determine their VM adjustment for the CY 2017 payment adjustment period according to the amounts in Tables 45 and 46.
We are proposing in section III.M.3.b. of this proposed rule, for groups and solo practitioners that participate in a Shared Savings Program ACO that did not successfully report quality data for CY 2015 and are in Category 1 as a result of reporting quality data to the PQRS outside of the ACO using the secondary PQRS reporting period, we are proposing to classify their quality composite for the VM for the CY 2017 payment adjustment period as “average quality.” Their cost composite will be classified as “average cost” (79 FR 67943).
To ensure budget neutrality, we first aggregate the downward payment adjustments in Tables 45 and 46 for those groups and solo practitioners in Category 1 with the automatic downward payment adjustments of −2.0 percent or −4.0 percent for groups and solo practitioners 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). We plan to incorporate assumptions about the number of physicians in groups and physician solo practitioners in the ACOs that did not successfully report their CY 2015 quality data whose status could potentially change from Category 2 to Category 1 if the group or solo practitioner satisfactorily report their 2016 data during the secondary PQRS reporting period. Additionally, as we had done when calculating the upward payment adjustment factor for the 2016 VM, we will also incorporate adjustments made for estimated changes in physician behavior (
At the time of this proposed rule, we have not completed the analysis of the impact of the VM in CY 2017 on physicians in groups with 2 or more EPs and physician solo practitioners based on their performance in CY 2015. In the CY 2017 PFS final rule with comment period, we will present the number of groups of physicians and physician solo practitioners that will be subject to the VM in CY 2017.
The physician self-referral update provisions are discussed in section III.M of this proposed rule. We are re-proposing regulatory provisions prohibiting certain per-unit of service compensation formulas for determining rental charges in the exceptions for the rental of office space, rental of equipment, fair market value compensation, and indirect compensation arrangements. These provisions are necessary to protect against potential abuses such as overutilization and anti-competitive behavior. We believe that most parties comply with these regulatory provisions since they originally became effective on October 1, 2009, and the re-proposed regulations text is identical to the existing regulations text. Therefore, we do not believe that the proposals will have a significant burden.
This proposed rule 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. For purposes of the payment impact on PFS services of the proposals contained in this proposed rule, we presented the estimated impact on total allowed charges by specialty. The alternatives we considered, as discussed in the preceding preamble sections, would result in different proposed payment rates, and therefore result in different estimates than those shown in Table 43 (CY 2017 PFS Estimated Impact on Total Allowed Charges by Specialty). For example, the estimated increases to primary care specialties would be lessened without the proposals to revise payment policies for certain care management and patient-specific services as described in section II.E. However, because PFS rates are based on relative value units, the proposed rates reflect all of the proposed changes and eliminating some of the proposed changes might have multi-faceted impacts on the payment rates for other services.
There are a number of changes in this proposed rule that would have an effect on beneficiaries. In general, we believe that many of these changes, including those intended to improve accuracy in payment through revisions to the inputs
Most of the aforementioned proposed 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 our Public User File Impact on Payment for Selected Procedures table available on the CMS Web site at
As discussed in section III.B of this proposed rule, we are proposing that beginning on January 1, 2017, the FQHC base rate would be updated using a FQHC-specific market basket instead of using the MEI to more accurately reflect changes in the cost of furnishing FQHC services. This would result in a higher payment to FQHCs, and since coinsurance is 20 percent of the lesser of the FQHC's charge for the specific payment code or the PPS rate, beneficiary coinsurance would also increase. The FQHC market basket cost estimates in Table 44 includes a premium offset line which is the amount of cost that would be offset by the beneficiaries. The beneficiaries would pay approximately $5 million and $35 million over the 5 and 10 year projection windows.
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.
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, Biologics, Drugs, Health facilities, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Grant programs—health, Health care, Health insurance, Health maintenance organizations (HMO), Loan programs—health, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health maintenance organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.
Administrative practice and procedure, Emergency medical services, Health facilities, Health maintenance organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.
Emergency medical services, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health professions, Medicare, Reporting and recordkeeping requirements.
Aged, Health care, Health records, Medicaid, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as set forth below:
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).
The revisions and addition read as follows:
(a)
(b) Paragraph (a) of this section does not apply if the Medicare Administrative Contractor, after furnishing a provider a written notice of the amount of program reimbursement in accordance with § 405.1803, recoups payment under paragraph (c) of § 405.1803. (For provider rights in this circumstance, see §§ 405.1809, 405.1811, 405.1815, 405.1835, and 405.1843.)
(f) Paragraph (a) of this section does not apply in instances where the Medicare Administrative Contractor intends to offset or recoup payments to the applicable provider of services or supplier to satisfy an amount due from an obligated provider of services or supplier when the applicable and obligated provider of services or supplier share the same Taxpayer Identification Number.
(a) * * *
(5) Furnished under the direct supervision of a physician, except that services and supplies furnished incident to transitional care management and chronic care management services can be furnished under general supervision of a physician when these services or supplies are furnished by auxiliary personnel, as defined in § 410.26(a)(1) of this chapter.
(a) * * *
(5) Furnished under the direct supervision of a nurse practitioner, physician assistant, or certified nurse-midwife, except that services and supplies furnished incident to transitional care management and chronic care management services can be furnished under general supervision of a nurse practitioner, physician assistant, or certified nurse-midwife, when these services or supplies are furnished by auxiliary personnel, as defined in § 410.26(a)(1) of this chapter.
Secs. 1102, 1834, 1871, 1881, and 1893 of the Social Security Act (42 U.S.C. 1302, 1395m, 1395hh, and 1395ddd).
The addition and revision reads as follows:
(a) * * *
(3)
(b) * * *
(5) In general, services and supplies must be furnished under the direct supervision of the physician (or other practitioner). Designated non-face-to-face care management services can be furnished under general supervision of the physician (or other practitioner) when these services or supplies are provided incident to the services of a physician (or other practitioner). The physician (or other practitioner) supervising the auxiliary personnel need not be the same physician (or other practitioner) who is treating the patient more broadly. However, only the supervising physician (or other practitioner) may bill Medicare for incident to services.
(a) Medicare Diabetes Prevention Program (MDPP) services will be available beginning on January 1, 2018.
(b)
(i) Welcome to the National Diabetes Prevention Program.
(ii) Self-Monitoring weight and food intake.
(iii) Eating less.
(iv) Healthy eating.
(v) Introduction to physical activity (Move those muscles).
(vi) Overcoming barriers to physical activity (Being active—A way of life).
(vii) Balancing calorie intake and output.
(viii) Environmental cues to eating and physical activity.
(ix) Problem solving.
(x) Strategies for healthy eating out.
(xi) Reversing negative thoughts.
(xii) Dealing with slips in lifestyle change.
(xiii) Mixing up your physical activity: Aerobic fitness.
(xiv) Social cues.
(xv) Managing stress.
(xvi) Staying motivated, Program wrap up.
(i) Welcome to the second phase of the program.
(ii) Healthy eating: Taking it one meal at a time.
(iii) Making active choices.
(iv) Balance your thoughts for long-term maintenance.
(v) Healthy eating with variety and balance.
(vi) Handling holidays, vacations, and special events.
(vii) More volume, fewer calories (adding water, vegetables, and fiber).
(viii) Dietary fats.
(ix) Stress and time management.
(x) Healthy cooking: Tips for food preparation and recipe modification.
(xi) Physical activity barriers.
(xii) Preventing relapse.
(xiii) Heart health.
(xiv) Life with Type 2 Diabetes.
(xv) Looking back and looking forward.
(c)
(i) Are enrolled in Medicare Part B.
(ii) Have as of the date of attendance at the first core session a body mass index (BMI) of at least 25 if not self-identified as Asian and a BMI of at least 23 if self-identified as Asian.
(iii) Have within the 12 months prior to attending the first core session a hemoglobin A1c test with a value between 5.7 and 6.4 percent, a fasting plasma glucose of 110–125 mg/dL, or a 2-hour plasma glucose of 140–199 mg/dL (oral glucose tolerance test).
(iv) Have no previous diagnosis of Type 1 or Type 2 diabetes.
(v) Does not have end-stage renal disease (ESRD).
(2)
(ii)
(d)
(2) The MDPP maintenance benefit is available only if the MDPP eligible beneficiary has achieved and maintains the required minimum weight loss percentage.
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).
(a) * * *
(5) * * *
(ii) * * *
(B) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.
(b) * * *
(4) * * *
(ii) * * *
(B) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.
(l) * * *
(3) * * *
(ii) Per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee.
(p) * * *
(1) * * *
(ii) * * *
(B) Per-unit of service rental charges, to the extent that such charges reflect
(a)
Secs. 1102, 1871, and 1881(b)(l) of the Social Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).
(b) * * *
(5) For services furnished in 2002 and subsequent years, the practice expense RVUs are based entirely on relative practice expense resources.
(i) * * *
(A)
(B)
(ii) Only one practice expense RVU per code can be applied for each of the following services: Services that have only technical component practice expense RVUs or only professional component practice expense RVUs; evaluation and management services, such as hospital or nursing facility visits that are furnished exclusively in one setting; and major surgical services.
(j) * * *
(1) * * *
(ii) Secondary Reporting Period for the 2017 PQRS payment adjustment for certain eligible professionals or group practices—Individual eligible professionals or group practices, who bill under the TIN of an ACO participant if the ACO failed to report data on behalf of such EPs or group practices during the previously established reporting period for the 2017 PQRS payment adjustment, may separately report during a secondary reporting period for the 2017 PQRS payment adjustment. The secondary reporting period for the 2017 PQRS payment adjustment for the affected individual eligible professionals or group practices is January 1, 2016 through December 31, 2016.
(4) * * *
(v) Paragraphs (j)(8)(ii), (iii), and (iv) of this section apply to individuals reporting using the secondary reporting period established under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment adjustment.
(7) * * *
(viii) Paragraphs 414.90(j)(9)(ii), (iii), and (iv) of this section apply to group practices reporting using the secondary reporting period established under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment adjustment.
(k) * * *
(4) * * *
(ii) Section 414.90(k)(5) applies to individuals and group practices reporting using the secondary reporting period established under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment adjustment.
The additions read as follows:
(b) * * *
(i) The physician fee schedule established under section 1848(b) of the Act;
(ii) The prospective payment system for hospital outpatient department services under section 1833(t) of the Act; and
(iii) The ambulatory surgical center payment systems under section 1833(i) of the Act.
(e) * * *
(5) Priority clinical areas include the following:
(i) Chest pain (including angina, suspected myocardial infarction and suspected pulmonary embolism).
(ii) Abdominal pain (any location including flank pain).
(iii) Headache (non-traumatic and traumatic).
(iv) Altered mental status.
(v) Low back pain.
(vi) Suspected stroke.
(vii) Cancer of the lung (primary or metastatic, suspected or diagnosed).
(viii) Cervical or neck pain.
(g)
(1)
(i) Make available specified applicable AUC and the related documentation supporting the appropriateness of the applicable imaging service ordered.
(ii) Identify the appropriate use criterion consulted if the CDSM makes available more than one criterion relevant to a consultation for a patient's specific clinical scenario.
(iii) Make available, at a minimum, specified applicable AUC that reasonably encompass the entire clinical scope of all priority clinical areas identified in paragraph (e)(5) of this section.
(iv) Be able to incorporate specified applicable AUC from more than one qualified PLE.
(v) Determines, for each consultation, the extent to which the applicable imaging service is consistent with specified applicable AUC or a determination of “not applicable” when the mechanism does not contain a criterion that would apply to the consultation.
(vi) Generate and provide a certification or documentation to the ordering professional that documents which qualified CDSM was consulted; the name and national provider identifier (NPI) of the ordering professional that consulted the CDSM; and whether the service ordered would adhere to specified applicable AUC, whether the service ordered would not adhere to specified applicable AUC or whether specified applicable AUC was not applicable to the service ordered.
(A) Certification or documentation must be issued each time an ordering professional consults a qualified CDSM.
(B) Certification or documentation must include a unique consultation identifier generated by the CDSM.
(vii) Update AUC content at least every 12 months to reflect revisions or updates made by qualified PLEs to their AUC sets or an individual appropriate use criterion.
(A) A protocol must be in place to expeditiously remove AUC determined by the qualified PLE to be potentially dangerous to patients and/or harmful if followed.
(B) Specified applicable AUC that reasonably encompass the entire clinical scope of any new priority clinical area must be made available for consultation through the qualified CDSM within 12 months of the priority clinical area being finalized by CMS.
(viii) Meet privacy and security standards under applicable provisions of law.
(ix) Provide to the ordering professional aggregate feedback regarding their consultations with specified applicable AUC in the form of an electronic report on at least an annual basis.
(x) Maintain electronic storage of clinical, administrative, and demographic information of each unique consultation for a minimum of 6 years.
(xi) Comply with modification(s) to any requirements under paragraph (g)(1) of this section made through rulemaking within 12 months of the effective date of the modification.
(2)
(ii) Applications must be received by CMS annually by January 1;
(iii) All qualified CDSMs specified by CMS in each year will be included on the list of specified qualified CDSMs posted to the CMS Web site by June 30 of that year; and
(iv) Qualified CDSMs are specified by CMS as such for a period of 5 years.
(v) Qualified CDSMs are required to re-apply during the fifth year after they are specified by CMS in order to maintain their status as qualified CDSMs. This application must be received by CMS by January 1 of the 5th year after the developers' most recent approval date.
(h)
(i)
(1) Emergency services when provided to individuals with emergency medical conditions as defined in section 1867(e)(1) of the Act.
(2) For an inpatient and for which payment is made under Medicare Part A.
(3) Ordering professionals who are granted a significant hardship exception to the Medicare EHR Incentive Program payment adjustment for that year under § 495.102(d)(4) of this chapter, except for those granted such an exception under § 495.102(d)(4)(iv)(C) of this chapter.
(b) * * *
(2) * * *
(i) * * *
(B) For groups and solo practitioners that participate in a Shared Savings Program ACO that successfully reports quality data as required by the Shared Savings Program under § 425.504, 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) of this chapter or another mechanism specified by CMS and the ACO all-cause readmission measure. Groups and solo practitioners that participate in two or more ACOs during the applicable performance period receive the quality composite score of the ACO that has the highest numerical quality composite score. For the CY 2018 payment adjustment period, the CAHPS for ACOs survey also will be included in the quality composite score. For the CY 2017 and 2018 payment adjustment periods, for groups and solo practitioners who participate in a Shared Savings Program ACO that does not successfully report quality data as required by the Shared Savings Program under § 425.504 and who meet the requirements to avoid the PQRS payment adjustment for CY 2018 by reporting to the PQRS outside the ACO, the quality composite is classified as “average” under § 414.1275(b).
(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 (or groups and solo practitioners that participate in 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 of physicians with 10 or more eligible professionals and equal to −2% for groups of physicians with two to nine eligible professionals and for physician solo practitioners. If the ACO has an assigned beneficiary population during the performance period with an average risk score in the top 25 percent of the risk scores of beneficiaries nationwide, and a group of physician or physician solo practitioner that participates in the ACO during the performance period is classified as high quality/average cost under quality-tiering for the CY 2017 payment adjustment period, the group or solo practitioner receives an upward adjustment of +3 × (rather than +2 ×) if the group has 10 or more eligible professionals or +2 × (rather than +1 ×) for a solo practitioner or the group has two to nine eligible professionals.
(D) For the CY 2018 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 (or groups and solo practitioners that
(F) For groups and solo practitioners that participate in a Shared Savings Program ACO that successfully reports quality data as required by the Shared Savings Program under § 425.504 of this chapter, 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.
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh), secs. 1301, 1306, and 1310 of the Public Health Service Act (42 U.S.C. 300e, 300e–5, and 300e–9), and 31 U.S.C. 9701.
(e) Sections 422.222 and 422.224 of this chapter which requires all providers or suppliers, as defined in section 1861 of the Act, to be enrolled in Medicare in an approved status and prohibits payment to providers and suppliers that are excluded or revoked.
(b) * * *
(3) All providers and suppliers, as defined in section 1861 of the Act, are enrolled in Medicare in an approved status.
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
(a) * * *
(1) * * *
(i) 1106—Disclosure of information in possession of agency.
(b) * * *
(5) Ensures compliance with the provider and supplier enrollment requirements at § 422.222.
(a) Providers or suppliers that are types of individuals or entities that can enroll in Medicare in accordance with section 1861 of the Act, must be enrolled in Medicare and be in an approved status in Medicare in order to provide health care items or services to a Medicare enrollee who receives his or her Medicare benefit through an MA organization. This requirement applies to all of the following providers and suppliers:
(1) Network providers and suppliers.
(2) First-tier, downstream, and related entities (FDR).
(3) Providers and suppliers in Program of All-inclusive Care for the Elderly (PACE) plans.
(4) Providers and suppliers in Cost HMOs or CMPs, as defined in 42 CFR part 417.
(5) Providers and suppliers participating in demonstration programs.
(6) Providers and suppliers in pilot programs.
(7) Locum tenens suppliers.
(8) Incident-to suppliers.
(b) MA organizations that do not ensure that providers and suppliers comply with paragraph (a) of this section, may be subject to sanctions under § 422.750 and termination under § 422.510.
(a) An MA organization may not pay, directly or indirectly, on any basis, for items or services (other than emergency or urgently needed services as defined in § 422.2) furnished to a Medicare enrollee by any individual or entity that is excluded by the Office of the Inspector General (OIG) or is revoked from the Medicare program except as provided in paragraph (b) of this section.
(b) If an MA organization receives a request for payment by, or on behalf of, an individual or entity that is excluded by the OIG or is revoked in the Medicare program, the MA organization must notify the enrollee and the excluded or revoked individual or entity in writing, as directed by contract or other direction provided by CMS, that future payments must not be made. Payment may not be made to, or on behalf of, an individual or entity after the first payment is made or as permitted in-writing by CMS.
This subpart is based largely on section 1854 of the Act, but also includes provisions from sections 1853 and 1858 of the Act, and is also based on section 1106 of the Act. It sets forth the requirements for the Medicare Advantage bidding payment methodology, including CMS' calculation of benchmarks, submission of plan bids by Medicare Advantage (MA) organizations, establishment of beneficiary premiums and rebates through comparison of plan bids and benchmarks, negotiation and approval of bids by CMS, and the release of MA bid submission data.
(a)
(1) The pricing-related information described at § 422.254(a)(1); and
(2) The information required for MSA plans, described at § 422.254(e).
(b)
(c)
(1) For an MA plan bid that includes Part D benefits, the information described at § 422.254(b)(1)(ii), (c)(3)(ii), and (c)(7);
(2) Additional information that CMS requires to verify the actuarial bases of the bids for MA plans for the annual bid submission as follows:
(i) Narrative information on base period factors, manual rates, cost-sharing methodology, optional supplement benefits, and other required narratives; and
(ii) Supporting documentation.
(3) Any information that could be used to identify Medicare beneficiaries and other individuals.
(4) Bid review correspondence and reports.
(d)
(c) * * *
(1) * * *
(iv) Documentation that all providers and suppliers in the MA or MA–PD plan who can enroll in Medicare, are enrolled in an approved status.
(2) The authorized individual must thoroughly describe how the entity and MA plan meet, or will meet, all the requirements described in this part, including providing documentation that all providers and suppliers referenced in § 422.222 are enrolled in Medicare in an approved status.
The revisions and addition read as follows:
(a) * * *
(6) To comply with all applicable provider and supplier requirements in subpart E of this part, including provider certification requirements, anti-discrimination requirements, provider participation and consultation requirements, the prohibition on interference with provider advice, limits on provider indemnification, rules governing payments to providers, limits on physician incentive plans, and Medicare provider and supplier enrollment requirements.
(i) * * *
(2) * * *
(v) They will require all of their providers and suppliers to be enrolled in Medicare in an approved status consistent with § 422.222.
(n)
(i) For Part C, the following data—
(A) Average per member per month CMS payment amount for A/B (original Medicare) benefits for each MA plan offered, standardized to the 1.0 (average risk score) beneficiary.
(B) Average per member per month CMS rebate payment amount for each MA plan offered (or, in the case of MSA plans, the monthly MSA deposit amount).
(C) Average Part C risk score for each MA plan offered.
(D) County level average per member per month CMS payment amount for each plan type in that county, weighted by enrollment and standardized to the 1.0 (average risk score) beneficiary in that county.
(ii) For Part D plan sponsors, plan payment data in accordance with § 423.505(o) of this subchapter.
(2)
(a) * * *
(4) * * *
(xiii) Fails to meet provider and supplier enrollment requirements in accordance with §§ 422.222 and 422.224.
(a) * * *
(13) Fails to comply with §§ 422.222 and 422.224, that requires the MA organization to ensure providers and suppliers are enrolled in Medicare and not make payment to excluded or revoked individuals or entities.
This subpart is based on sections 1857(e)(4), 1860D–12(b)(3)(D), and 1106 of the Act, and sets forth medical loss ratio requirements for Medicare Advantage organizations, financial penalties and sanctions against MA organizations when minimum medical loss ratios are not achieved by MA organizations, and release of medical loss ratio data to entities outside of CMS.
(a)
(b)
(1) Narrative descriptions that MA organizations submit to support the information reported to CMS pursuant to the reporting requirements at § 422.2460, such as descriptions of expense allocation methods;
(2) Information that is reported at the plan level, such as the number of member months associated with each plan under a contract;
(3) Any information that could be used to identify Medicare beneficiaries and other individuals; and
(4) MLR review correspondence.
(c)
Sections 1102, 1106, 1860D–1 through 1860D–42, and 1871 of the Social Security Act (42 U.S.C. 1302, 1306, 1395w–101 through 1395w–152, and 1395hh).
(o)
(i) The average per member per month Part D direct subsidy standardized to the 1.0 (average risk score) beneficiary for each Part D plan offered.
(ii) The average Part D risk score for each Part D plan offered.
(iii) The average per member per month Part D plan low-income cost sharing subsidy for each Part D plan offered.
(iv) The average per member per month Part D Federal reinsurance subsidy for each Part D plan offered.
(v) The actual Part D reconciliation payment data summarized at the Parent Organization level including breakouts of risk sharing, reinsurance, and low income cost sharing reconciliation amounts.
(2)
This subpart is based on sections 1857(e)(4), 1860D–12(b)(3)(D), and 1106 of the Act, and sets forth medical loss ratio requirements for Part D sponsors, financial penalties and sanctions against Part D sponsors when minimum medical loss ratios are not achieved by Part D sponsors and release of medical loss ratio data to entities outside of CMS.
(a)
(b)
(1) Narrative descriptions that Part D sponsors submit to support the information reported to CMS pursuant to the reporting requirements at § 423.2460, such as descriptions of expense allocation methods;
(2) Information that is reported at the plan level, such as the number of member months associated with each plan under a contract;
(3) Any information that could be used to identify Medicare beneficiaries and other individuals; and
(4) MLR review correspondence.
(c)
Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh).
(a)
(1) Has Full DPRP recognition, or has preliminary DPRP recognition and progresses to full DPRP recognition within 36 months of the date upon which it applied for DPRP recognition.
(2) Has obtained and maintains an active and valid TIN and NPI at the organizational level.
(3) Has passed application screening at a high categorical risk level per § 424.518(c).
(4) All coaches who will be furnishing MDPP services on the entity's behalf have obtained and maintain active and valid NPIs.
(b)
(1) Has Full DPRP recognition, or has preliminary DPRP recognition and progresses to full DPRP recognition within 36 months of the date upon which it applied for DPRP recognition.
(2) All coaches who will be furnishing MDPP services on the entity's behalf have obtained and maintain active and valid NPIs.
(c)
(1) Establishes and maintains a recordkeeping system that is adequate to document and monitor beneficiaries' session attendance and weight at every MDPP session. MDPP suppliers are required to maintain and handle any beneficiary PII and PHI in compliance with HIPAA, other applicable privacy laws and CMS standards.
(2) Maintains a crosswalk between the beneficiary identifiers submitted to CMS for billing and the beneficiary identifiers submitted to CDC for beneficiary level-clinical data.
(3) Attests that the MDPP eligible beneficiary for which it is submitting a claim has attended 1, 4 or 9 core sessions, and, if applicable, achieved the required minimum weight loss percentage specified in § 410.79 of this chapter.
(4) If applicable, attests that the MDPP eligible beneficiary for which it is submitting a claim has maintained the required minimum weight loss percentage and attended core maintenance sessions.
(5) If applicable, attests that the MDPP eligible beneficiary for which it is submitting a claim has maintained the required minimum weight loss percentage and attended ongoing maintenance sessions.
(6) Submits any documentation requested by CMS or a Medicare contractor to substantiate the attestations described in this section or claims submitted for payment under the Medicare program.
(7) Submits any documentation requested by CMS or a Medicare contractor to support supplier or coach enrollment in Medicare.
(8) Complies with the requirements of subpart P of this part.
(9) Retains beneficiary records for 7 years from the date of service, and upon request of CMS or a Medicare contractor provides access to such records.
(i) The records must contain detailed documentation of the services provided including the beneficiary's eligibility status, sessions attended, the coach furnishing the session attended, the date and place of service of sessions attended, and weight.
(ii) The records shall be maintained within a larger medical record, or within a medical record that an MDPP supplier establishes for the purposes administering MDPP.
(d)
(1) Fails to move from Preliminary to Full Recognition within 36 months of applying for DPRP recognition.
(2) Loses its DPRP recognition or withdraws from seeking DPRP recognition.
(3) Medicare suppliers that lose DPRP recognition will lose Medicare billing privileges for MDPP services, but may continue to bill for non-MDPP services for which they remain eligible to bill.
(e)
(1) Become eligible to bill for MDPP services again if it reapplies for DPRP recognition, successfully achieves preliminary DPRP recognition, and, as applicable, reenrolls in Medicare as an MDPP supplier subject to § 424.59(a).
(2) Appeal in accordance with the procedures specified in 42 CFR part 405, subpart H, 42 CFR part 424, and 42 CFR part 498.
(b) * * *
(1) While under the CAP, the ACO remains eligible for shared savings and losses.
(i) For ACOs with a variable MSR and MLR (if applicable), the MSR and MLR (if applicable) will be set at a level consistent with the number of assigned beneficiaries.
(ii) For ACOs with a fixed MSR/MLR, the MSR/MLR will remain fixed at the level consistent with the ACO's choice of MSR and MLR that the ACO made at the start of the agreement period.
(e) Beginning in performance year 2018, CMS will supplement the claims-based assignment methodology described in this section with information provided by beneficiaries regarding the provider or supplier they consider responsible for coordinating their overall care. If a system is available by spring 2017 to allow a beneficiary to designate a provider or supplier as responsible for coordinating their overall care and CMS to process the designation electronically, then the voluntary alignment process under paragraph (e) will be available for ACOs participating in Track 1, Track 2, or Track 3, as specified in § 425.600(a). If such an electronic system is not available by spring 2017, CMS will specify the form and manner in which a beneficiary may designate a provider or supplier as responsible for coordinating their overall care using a manual process, but the voluntary alignment process will be limited to ACOs participating in Track 3 until an electronic system is available.
(1) Notwithstanding the assignment methodology under paragraph (b) of this section, beneficiaries who designate an ACO professional participating in an ACO as responsible for coordinating their overall care will be added to the ACO's list of assigned beneficiaries for a performance year under all of the following conditions:
(i) The beneficiary must have had at least one primary care service with a physician who is an ACO professional in the ACO and who is a primary care physician as defined under § 425.20 or who has one of the primary specialty designations included in paragraph (c) of this section.
(ii) The beneficiary meets the eligibility criteria established at § 425.401(a) and must not be excluded by the criteria at § 425.401(b).
(iii) The beneficiary must have designated an ACO professional who is a primary care physician as defined at § 425.20, a physician with a specialty designation included at paragraph (c) of this section, or a nurse practitioner, physician assistant, or clinical nurse specialist as responsible for their overall care.
(iv) If a beneficiary has designated a provider or supplier outside the ACO who is a primary care physician as defined at § 425.20, a physician with a specialty designation included at paragraph (c) of this section, or a nurse practitioner, physician assistant, or clinical nurse specialist, as responsible for coordinating their overall care, the beneficiary will not be added to the ACO's list of assigned beneficiaries for a performance year under the assignment methodology in paragraph (b).
(2) The ACO, ACO participants, ACO providers/suppliers, ACO professionals, and other individuals or entities performing functions and services related to ACO activities are prohibited from providing or offering gifts or other remuneration to Medicare beneficiaries as inducements for influencing a Medicare beneficiary's decision to designate or not to designate an ACO professional under paragraph (e) of this section. The ACO, ACO participants, ACO providers/suppliers, ACO professionals, and other individuals or entities performing functions and services related to ACO activities must not, directly or indirectly, commit any
(i) Offering anything of value to the Medicare beneficiary as an inducement for influencing the Medicare beneficiary's decision to designate or not to designate an ACO professional as responsible for coordinating their overall care under paragraph (e) of this section. Any items or services provided in violation of paragraph (e)(3) will not be considered to have a reasonable connection to the medical care of the beneficiary, as required under § 425.304(a)(2);
(ii) Withholding or threatening to withhold medical services or limiting or threatening to limit access to care.
(iii) If a manual process is implemented by CMS, including any voluntary alignment form that requires a beneficiary signature with any other materials or forms, including but not limited to, any other materials requiring the signature of the Medicare beneficiary.
(e) * * *
(2) If, at the conclusion of the audit process the overall audit match rate between the quality data reported and the medical records provided under paragraph (e)(1) of this section is less than 90 percent, CMS will adjust the ACO's overall quality score proportional to the ACO's audit performance.
(3) If, at the conclusion of the audit process CMS determines there is an audit match rate of less than 90 percent, the ACO may be required to submit a CAP under § 425.216 for CMS approval.
The revisions and addition read as follows:
(a)
(b) * * *
(3) The minimum attainment level for pay for performance measures is set at 30 percent or the 30th percentile of the performance benchmark. The minimum attainment level for pay for reporting measures is set at the level of complete and accurate reporting.
(c) * * *
(5) Performance equal to or greater than the minimum attainment level for pay-for-reporting measures will receive the maximum available points.
(d) * * *
(2) * * *
(ii) CMS may take the compliance actions described in § 425.216 for ACOs exhibiting poor performance on a domain, as determined by CMS under § 425.316.
The addition reads as follows:
(d)
(2) Eligible professionals who bill under the TIN of an ACO participant within an ACO participate under their ACO participant TIN as a group practice under the Physician Quality Reporting System Group Practice Reporting Option of the Shared Savings Program for purposes of the Physician Quality Reporting System payment adjustment under the Shared Savings Program for 2017 and 2018.
(3) If an ACO, on behalf of eligible professionals who bill under the TIN of an ACO participant, does not satisfactorily report for purposes of the Physician Quality Reporting System payment adjustment for 2017 or 2018, each eligible professional who bills under the TIN of an ACO participant will receive a payment adjustment, as described in § 414.90(e) of this chapter, unless such eligible professionals have reported quality measures apart from the ACO in the form and manner required by the Physician Quality Reporting System.
(4) For eligible professionals subject to the Physician Quality Reporting System payment adjustment under the Medicare Shared Savings Program for 2017 or 2018, the Medicare Part B Physician Fee Schedule amount for covered professional services furnished during the program year is equal to the applicable percent of the Medicare Part B Physician Fee Schedule amount that would otherwise apply to such services under section 1848 of the Act, as described in § 414.90(e) of this chapter.
(5) The reporting period for a year is the calendar year from January 1 through December 31 that occurs 2 years prior to the program year in which the payment adjustment is applied, unless otherwise specified by CMS under the Physician Quality Reporting System.
The revision and addition read as follows:
(e) For 2017 and subsequent years, CMS will annually assess the degree of use of certified EHR technology by eligible clinicians billing through the TINs of ACO participants for purposes of meeting the CEHRT criterion necessary for Advanced Alternative Payment Models under the Quality Payment Program.
(1) During years in which the measure is designated as pay for reporting, in order to demonstrate complete and accurate reporting, at least one eligible clinician billing through the TIN of an ACO participant must meet the reporting requirements under the Advancing Clinical Information category under the Quality Payment Program.
(2) During years in which the measure is designated as pay for performance, the quality measure regarding EHR adoption will be measured based on a sliding scale.
(a)
(b) [Reserved]
The additions read as follows:
(a) * * *
(1) * * *
(iv) For a beneficiary who was included on the prospective assignment list under § 425.400(a)(3) for a performance year for a Track 3 ACO for which a waiver of the SNF 3-day rule has been approved under paragraph (a)(1) of this section, but who was subsequently excluded from the ACO's prospective assignment list, CMS makes payment for SNF services furnished to the beneficiary by a SNF affiliate if the following conditions are met:
(A) The beneficiary was prospectively assigned to the ACO at the beginning of the applicable performance year but was excluded in the most recent quarterly update to the prospective assignment list under § 425.401(b).
(B) The SNF services are furnished to a beneficiary who was admitted to a SNF affiliate within 90 days following the date that CMS delivers the quarterly exclusion list to the ACO.
(C) But for the beneficiary's exclusion from the ACO's prospective assignment list, CMS would have made payment to the SNF affiliate for such services under the waiver under paragraph (a)(1) of this section.
(v) The following beneficiary protections apply when a beneficiary receives SNF services without a prior 3-day inpatient hospital stay from a SNF affiliate that intended to provide services pursuant to a SNF 3-day rule waiver under paragraph (a)(1) of this section, but the beneficiary was not prospectively assigned to the ACO and was not in the 90 day grace period under paragraph (a)(1)(iv) of this section. The SNF affiliate services must be non-covered only because the SNF affiliate stay was not preceded by a qualifying hospital stay under section 1861(i) of the Act.
(A) A SNF is presumed to intend to provide services pursuant to the SNF 3-day rule waiver under paragraph (a)(1) of this section if the SNF submitting the claim is a SNF affiliate of an ACO for which such a waiver has been approved.
(B) CMS makes no payments for SNF services to a SNF affiliate of an ACO for which a waiver of the SNF 3-day rule has been approved when the SNF affiliate admits a FFS beneficiary who was never prospectively assigned to the ACO or was prospectively assigned but was later excluded and the 90 day grace period under paragraph (a)(1)(iv) of this section has lapsed.
(C) In the event that CMS makes no payment for SNF services furnished by a SNF affiliate as a result of paragraph (a)(1)(v)(B) of this section and the only reason the claim was non-covered is due to the lack of a qualifying inpatient stay, the following beneficiary protections will apply:
(d) * * *
(4) CMS reserves the right to take compliance action, including termination, against an ACO for noncompliance with program rules, including misuse of a waiver under this section, as specified at §§ 425.216 and 425.218.
Secs. 1102, 1871, 1894(f), and 1934(f) of the Social Security Act (42 U.S.C. 1302, 1395, 1395eee(f), and 1396u–4(f)).
(a) * * *
(14) Name and National Provider Identifier (NPI) of all providers and suppliers, as defined in 1861 of the Act, reflecting enrollment in Medicare in an approved status.
(j) Employs or contracts with any provider or supplier, as defined in section 1861 of the Act, that is not enrolled in Medicare in an approved status.
(b) * * *
(1) * * *
(ii) The PACE organization failed to comply substantially with conditions for a PACE program or PACE organization under this part, or with terms of its PACE program agreement, including employing or contracting with any provider or supplier, as defined in section 1861 of the Act, that is not enrolled in Medicare in an approved status.
(a) * * *
(4) That are not enrolled in Medicare in an approved status, if they are a provider or supplier that is eligible to enroll in Medicare, as defined in section 1861 of the Act.
(b) * * *
(1) * * *
(ii) A practitioner or supplier must meet Medicare or Medicaid requirements applicable to the services it furnishes, including enrollment in Medicare in an approved status, if they are a provider or supplier that is eligible to enroll in Medicare, as defined in section 1861 of the Act.
Bureau of Safety and Environmental Enforcement (BSEE); Bureau of Ocean Energy Management (BOEM), Interior.
Final rule.
The Department of the Interior (DOI or the Department), acting through BOEM and BSEE, is revising and adding new requirements to regulations for exploratory drilling and related operations on the Outer Continental Shelf (OCS) seaward of the State of Alaska. This final rule focuses solely on the OCS within the Beaufort Sea and Chukchi Sea Planning Areas (Arctic OCS). The Arctic region is characterized by extreme environmental conditions, geographic remoteness, and a relative lack of fixed infrastructure and existing operations. This final rule is designed to help ensure the safe, effective, and responsible exploration of Arctic OCS oil and gas resources, while protecting the marine, coastal, and human environments, and Alaska Natives' cultural traditions and access to subsistence resources.
This rule becomes effective on September 13, 2016.
The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of September 13, 2016.
Comments and material received from the public, as well as documents mentioned in this preamble as being available in the docket, are part of docket BSEE–2013–0011 and are available for inspection or copying at the Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet by going to
Materials incorporated by reference in this final rule may be inspected by appointment at BOEM and BSEE Headquarters, 45600 Woodland Road, Sterling, Virginia 20166, or at the BOEM and BSEE Alaska Regional Offices, 3801 Centerpoint Drive, Suite 400 or Suite 500, Anchorage, Alaska 99503, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. To make an appointment, call (202) 258–1518.
Mark E. Fesmire, BSEE, Alaska Regional Office,
Although there is currently a comprehensive OCS oil and gas regulatory program, there is a need for new and revised Arctic-specific regulatory measures for exploratory drilling conducted by floating drilling vessels and “jack-up rigs” (collectively known as mobile offshore drilling units or (MODU)) in the Beaufort Sea and Chukchi Sea Planning Areas (defined in this final rule as the Arctic OCS). The United States (U.S.) Arctic region, as recognized and defined in the U.S. Arctic Research and Policy Act of 1984, as amended, encompasses an extensive marine and terrestrial area; however, this final rule focuses solely on the OCS within the Beaufort Sea and Chukchi Sea Planning Areas.
On February 24, 2015, BOEM and BSEE published a Notice of Proposed Rulemaking (NPRM) in the
The U.S Arctic region is known for its oil and gas resource potential, its vibrant ecosystems, and the Alaska Native communities, which rely on the Arctic's resources for subsistence use and cultural traditions. The region is characterized by extreme environmental conditions, geographic remoteness, and a relative lack of fixed infrastructure and existing operations. These are key factors in considering the feasibility, practicality, and safety of conducting offshore oil and gas activities on the Arctic OCS. This final rule will help to ensure that Arctic OCS exploratory drilling operations are conducted in a safe and responsible manner while taking into account the unique conditions of Arctic OCS drilling activities and Alaska Natives' cultural traditions and access to subsistence resources.
This final rule adds to and revises existing regulations in 30 CFR parts 250, 254, and 550 for Arctic OCS oil and gas activities and focuses on exploratory drilling activities that use MODUs and related operations during the Arctic OCS open-water drilling season. The final rule does not preclude exploratory drilling on the Arctic OCS conducted in the future using other drilling technologies (
1. Designs and conducts exploration programs in a manner that accounts for Arctic OCS conditions;
2. Develops an integrated operations plan (IOP) that addresses all phases of its proposed Arctic OCS exploration program, and submits the IOP to BOEM at least 90 days in advance of filing its Exploration Plan (EP);
3. Has access to, and the ability to promptly deploy, Source Control and Containment Equipment (SCCE) while drilling below, or working below, the surface casing;
4. Has access to a separate relief rig located in a geographic position to be able to timely drill a relief well under the conditions expected at the site in the event of a loss of well control;
5. Has the capability to predict, track, report, and respond to ice conditions and adverse weather events;
6. Effectively manages and oversees contractors; and,
7. Develops and implements an Oil Spill Response Plan (OSRP) that is designed and executed in a manner that accounts for the unique Arctic OCS operating environment, and has the necessary equipment, training, and personnel for oil spill response on the Arctic OCS.
The final rule furthers the Nation's stewardship of the Arctic's environment and resources, and establishes specific operating models and requirements for the extreme, changing conditions that exist on the Arctic OCS. The regulations will require comprehensive planning of operations, especially for emergency response and safety systems. A goal of the final rule is to encourage the identification of operational risks early in the planning process and to encourage operators to plan for how to avoid and/or mitigate those risks. The requirements in the final rule also aim to ensure that plans meet the challenges presented by Arctic conditions and are executed in a safe and environmentally protective manner.
In May 2013, President Obama issued a document entitled, “National Strategy for the Arctic Region” (NSAR). The President affirmed that emerging economic opportunities exist in the region, but that “. . . we must exercise responsible stewardship, using an integrated management approach and making decisions based on the best available information, with the aim of promoting healthy, sustainable, and resilient ecosystems over the long term.” The NSAR is intended, among other things, to “reduce our reliance on imported oil and strengthen our Nation's energy security” by working with stakeholders to enable “environmentally responsible production of oil and natural gas.” To provide responsible stewardship of the
Furthermore, the NSAR acknowledges the potential international implications of Arctic oil and gas activities for “other Arctic states and the international community as a whole.” The U.S. has committed to do its part to “keep the Arctic region prosperous, environmentally sustainable, operationally safe, secure, and free of conflict[.]” One primary objective outlined in the implementation plan for the NSAR is to “reduce the risk of marine oil pollution while increasing global capabilities for preparedness and response to oil pollution incidents in the Arctic.” (available at:
The Arctic OCS region is estimated to contain a vast amount of undiscovered, technically recoverable oil and gas. Most of the Alaska OCS resource potential is located off the Arctic coast within the Chukchi Sea and Beaufort Sea Planning Areas. According to BOEM's 2016 Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation's Outer Continental Shelf (mean estimates available at
As ocean and seasonal conditions continue to change in the U.S. Arctic, both commercial and recreational activities will increase as more areas of water open up for longer periods of time due to the increased melting of sea ice. The decrease in summer sea ice raises legitimate concerns regarding changes to the environment and the Arctic resources that Alaska Natives depend on for survival and cultural traditions. Consistent with the Outer Continental Shelf Lands Act (OCSLA), BOEM and BSEE, the Bureaus responsible for managing oil and gas resources on the Arctic OCS, are finalizing these regulations that take into account the needs of the multiple users who have an interest in the future of the U.S. Arctic region (
The U.S. has a longstanding interest in the orderly development of oil and gas resources on the Arctic OCS, while also seeking to ensure the protection of its environment and communities. The U.S. has proceeded with Arctic OCS oil and gas development to ensure that laws, regulations, and policies are created and implemented based on a thorough examination of the multiple factors at play in this unique environment. BOEM and BSEE have conducted extensive research on potential oil and gas activities on the OCS in anticipation of operations (
Coordinating the future uses of the U.S. Arctic region will require integrated action between and among Federal, State, municipal and tribal governmental entities. On July 12, 2011, President Obama signed Executive Order (E.O.) 13580, establishing an Interagency Working Group on Coordination of Domestic Energy Development and Permitting in Alaska (E.O. 13580 Alaska Energy Permitting IWG), chaired by the Deputy Secretary of the Interior. The E.O. 13580 Alaska Energy Permitting IWG is composed of representatives from the DOI, Department of Defense, Department of Commerce, Department of Agriculture, Department of Energy, Department of Homeland Security, and the Environmental Protection Agency (EPA).
The E.O. 13580 Alaska Energy Permitting IWG's report entitled, “Managing for the Future in a Rapidly Changing Arctic, A Report to the President” (March 2013) (
Although there is currently a comprehensive OCS oil and gas regulatory program, DOI engagement with partners and stakeholders
This final rule defines the “Arctic OCS” as the Beaufort Sea and Chukchi Sea Planning Areas, as described in the
This final rule applies to Arctic OCS exploratory drilling activities that use MODUs (
This final rule builds on and codifies input received from partners and stakeholders, comments to the proposed rule, as well as key components of the 2012 and 2015 Arctic exploratory drilling programs. DOI released in 2013 a “Report to the Secretary of the Interior, Review of Shell's 2012 Alaska Offshore Oil and Gas Exploration Program” (60-Day Report) (available at
Shell's exploratory operations proceeded in 2015 without any unexpected drilling-related problems, and it safely drilled its well to a total depth of 6800 feet. On
September 28, 2015, Shell announced that it had found indications of oil and gas in the well, but stated that the results were not sufficient to warrant further exploration of the prospect, and the well was to be plugged and abandoned in accordance with BSEE regulations. Shell subsequently announced it was ceasing further exploration activity in offshore Alaska for the foreseeable future.
BOEM and BSEE have undertaken extensive environmental and safety reviews of potential oil and gas operations on the Arctic OCS. These reviews, along with concerns expressed by environmental organizations and Alaska Natives, as well as other stakeholders, highlight the need to develop additional measures specifically tailored to the operational and environmental conditions of the Arctic OCS. Arctic OCS operations can be complex, and there are challenges and operational risks throughout every phase of an exploratory drilling program.
This final rule is a combination of prescriptive and performance-based requirements that address a number of important issues and objectives, including, but not limited to, ensuring that operators:
1. Design and conduct exploration programs in a manner that accounts for Arctic OCS conditions (
2. Develop an IOP that addresses all phases of an Arctic OCS exploration program and submit the IOP to BOEM at least 90 days in advance of filing an EP;
3. Have access to, and the ability to promptly deploy, SCCE while drilling below, or working below, the surface casing;
4. Have access to a separate relief rig located in a geographic position to be able to timely drill a relief well under the conditions expected at the site;
5. Have the capability to predict, track, report, and respond to ice conditions and adverse weather events;
6. Effectively manage and oversee contractors; and
7. Develop and implement OSRPs that are designed in a manner that accounts for the unique Arctic OCS operating environment and that describe the availability of the necessary equipment, training, and personnel for oil spill response on the Arctic OCS.
The Final Regulatory Impact Analysis (RIA) for this final rule estimates that the new requirements could result in compliance costs for the industry of $2.05 billion under 3-percent discounting and $1.74 billion under 7-percent discounting over 10 years. The provisions of the rule subsumed within the regulatory baseline are estimated to cost $1.83 billion under 3-percent discounting and $1.51 billion under 7-percent discounting over the 10-year analysis period. As discussed in Section V.B of the preamble, the baseline includes the estimated costs associated with current regulatory requirements and industry standards. While the economic and other benefits of the final rule—based primarily on preventing or reducing the severity or duration of catastrophic oil spills—are difficult to quantify, BOEM and BSEE have determined that it is appropriate to proceed with this final rule. Although the probability of a catastrophic oil spill is low, the
Reducing the risks of Arctic OCS operations is particularly important because of the unique significance to Alaska Natives of the marine mammals, fish, and migratory birds, in the lands and waters around the Arctic OCS. Ensuring a continuing opportunity to harvest these subsistence resources is critical for protecting Alaska Natives' health, livelihood, and culture. Additionally, adequately protecting the health of the Arctic ecosystem, including the sensitive environment and wildlife, is particularly important and highly valued. Thus, the impact of a catastrophic oil spill, while a remote possibility, would have extremely high cultural and societal costs, and prevention of such a catastrophe would have correspondingly high cultural and societal benefits.
The requirements of the rule—specifically tailored to the Arctic OCS—provide additional specificity regarding BOEM's and BSEE's expectations for safe and responsible development of U.S. Arctic resources and outline the particular actions that lessees, owners, and operators must take to meet those expectations. BOEM and BSEE do not anticipate that these requirements, or their associated costs, will prevent lessees and operators from conducting exploratory drilling on their leases. In pursuing such operations, Arctic OCS lessees and operators are well aware of the significant challenges presented by Arctic OCS conditions, and the final rule largely reflects clarification and codification of the Bureaus' expectations under existing regulations and industry standards for the relevant operations. In fact, the additional clarity and specificity provided by the final
BSEE frequently uses standards (
Federal regulations, at 1 CFR part 51, govern how BSEE and other Federal agencies incorporate various documents by reference. Agencies may only incorporate a document by reference by publishing in the
BSEE incorporates by reference in its regulations many oil and gas industry standards in order to require compliance with those standards in offshore operations. When a copyrighted publication is incorporated by reference into BSEE regulations, BSEE is obligated to observe and protect that copyright. BSEE provides members of the public with Web site addresses where these standards may be accessed for viewing—sometimes for free and sometimes for a fee. Standards development organizations decide whether to charge a fee. One such organization, the American Petroleum Institute (API), provides free online public access to review its key industry standards, including a broad range of technical standards. These standards represent almost one-third of all API standards and include all that are safety-related or are incorporated into Federal regulations. One of those standards is incorporated by reference in this final rule. In addition to the free online availability of the standard for viewing on API's Web site, hardcopies and printable versions are available for purchase from API. The API Web site address is:
For the convenience of members of the viewing public who may not wish to purchase or view these incorporated documents online, they may be inspected at BSEE's office, 45600 Woodland Road, Sterling, Virginia 20166; phone: 703–787–1665.
This rulemaking is substantive in terms of the content that is explicitly stated in the rule text itself, and it also incorporates by reference a technical standard concerning structures and pipelines for offshore Arctic conditions. A brief summary of the standard follows.
This standard was developed in response to the offshore industry's demand for a coherent and consistent definition of methodologies to design, analyze, and assess arctic and cold region offshore structures. This standard also addresses issues such as topsides, winterization, and escape, evacuation, and rescue that go beyond what is strictly necessary for the design, construction, transportation, installation, and decommissioning of the structure. These issues are essential for offshore operations in arctic and cold region conditions and they are not covered in other standards. When future editions of this and other standards are prepared, effort will be made to avoid duplication of scope.
On February 24, 2015, BOEM and BSEE published an NPRM in the
The OCSLA, 43 U.S.C. 1331
The Secretary delegated most of the responsibilities under the OCSLA to BOEM and BSEE, both of which are charged with administering and regulating aspects of the Nation's OCS oil and gas program (see § 250.101 and § 550.101). BOEM and BSEE work to promote safety, protect the environment, and conserve offshore resources through vigorous regulatory oversight.
BOEM manages the development of the Nation's offshore energy resources in an environmentally and economically responsible way. BOEM's functions include leasing; exploration, development and production plan administration and review; environmental analyses to ensure compliance with the National Environmental Policy Act of 1969 (NEPA); environmental studies; resource evaluation; economic analysis; complying with other Federal laws (
BSEE performs offshore regulatory oversight and enforcement to ensure safety and environmentally sound performance during operations, and the conservation of OCS resources, by, among other things, evaluating drilling permits, and conducting inspections to ensure compliance with laws, regulations, lease terms, and approved plans and permits.
Prior to commencing exploration for oil and gas on the OCS, OCSLA and its implementing regulations (43 U.S.C. 1340(c)(1); § 550.201(a)) require lessees to submit an EP to BOEM for approval. An EP must include information such as a schedule of anticipated exploration activities, equipment to be used, the general location of each well to be drilled, and any other information deemed pertinent by BOEM (§§ 550.211 through 550.228).
However, approval of an EP does not by itself permit the lessee to proceed with exploratory drilling. After the EP is approved, the lessee must submit to BSEE an Application for Permit to Drill (APD), which BSEE must approve before a lessee may drill a well (43 U.S.C. 1340(d); § 250.410)). The APD must be consistent with the approved EP and include information on the well location, the drilling design and procedures, casing and cementing programs, the diverter and Blowout Preventer (BOP) systems, MODU (if one is used), and additional information requested by the District Manager.
BOEM evaluates EPs, and BSEE evaluates APDs, to determine whether the operator's proposed activities meet the OCSLA's standards and each Bureau's regulations governing OCS exploration. The regulatory requirements include, but are not limited to, ensuring that the proposed drilling operation:
i. Conforms to OCSLA, as amended, its applicable implementing regulations, lease provisions and stipulations, and other applicable laws;
ii. Is conducted in a safe manner;
iii. Conforms to sound conservation practices and protects the rights of the U.S. in the mineral resources of the OCS;
iv. Does not unreasonably interfere with other uses of the OCS; and
v. Does not cause undue or serious harm or damage to the human, marine, or coastal environments (§§ 250.101 and 250.106; 550.101 and 550.202).
Based on these evaluations, BOEM and BSEE will approve the lessee's (or operator's) EP and APD, require the lessee (or operator) to modify its submissions, or disapprove the EP or APD (§§ 250.410; 550.233).
Congress passed the OPA, 33 U.S.C. 2701
i. They have prepared and submitted “a plan for responding, to the maximum extent practicable, to a worst case discharge (WCD), and to a substantial threat of such a discharge, of oil . . .;”
ii. The plan “has been approved by the President;” and
iii. The “facility is operating in compliance with the plan” (OPA section 4202(a), codified at 33 U.S.C. 1321(j)(5)(A)(i) and (F)(i)–(ii)).
E.O. 12777 (October 18, 1991) delegated to the Secretary the functions of 33 U.S.C. 1321(j)(5) and (j)(6)(A) related to offshore facilities (other than deep water ports). This includes the promulgation of regulations governing the obligation to prepare and submit OSRPs, the review and approval of OSRPs, and the periodic verification of spill response capabilities related to these plans. Those applicable regulations are administered by BSEE and are at parts 250 and 254. E.O. 12777 also delegated to the Secretary the authority to implement, for offshore facilities, 33 U.S.C. 1321(j)(1)(C), which provides for the issuance of regulations “establishing procedures, methods, and equipment and other requirements for equipment to prevent discharges of oil and hazardous substances from . . . offshore facilities, and to contain such discharges.”
There has been a renewed interest in the oil and gas potential of the Alaska OCS since the first exploratory wells were drilled in the late 1970s. The majority of exploratory drilling north of the Arctic Circle has occurred where the greatest oil and gas resource potential exists, namely the Beaufort Sea and Chukchi Sea Planning Areas (
Until Shell's 2012 and 2015 exploratory operations, there had been only one exploratory well drilled on the Arctic OCS since 1994—the 2003
With the exception of three OCS leases making up a portion of the Northstar oil field, currently operated by Hilcorp Alaska, LLC, from State submerged lands in the Beaufort Sea, no production has yet resulted from Alaska OCS leases.
The challenges to conducting operations and responding to emergencies in the extreme and variable environmental and weather conditions in the Arctic are demanding. Both the Beaufort Sea and Chukchi Sea Planning Areas experience sub-freezing temperatures during most of the year, extended periods of low-light visibility, significant fog cover in the summer, strong winds and currents, storms that produce freezing spray and dangerous sea states, snow, and significant ice cover. During the fall (September–November), conditions become increasingly inhospitable as air temperatures decrease, wind speeds increase, storms become more frequent, and sea ice begins to form, all of which make Arctic OCS exploratory drilling operations more challenging.
The existing OCS oil and gas regulatory regime is extensive and covers all offshore facilities or operations in any OCS region, as appropriate and applicable, including the Arctic OCS. BOEM and BSEE apply these regulations while overseeing OCS leasing, exploration, development, production, and decommissioning. Operators are subject to the same regulatory requirements, such as: Application procedures and information requirements for exploration, development, and production activities; pollution prevention and control; safety requirements for casing and cementing and the use of a BOP and diverter systems; design, installation, use and maintenance of OCS platforms to ensure structural integrity and safe and environmentally protective operations; decommissioning; development and implementation of Safety and Environmental Management Systems (SEMS); and preparation and submission of OSRPs (
The existing regulations also contain provisions that apply to specific regions or atypical activities or operating conditions, especially, for example, where drilling occurs in deep water or in a “frontier” area (typically characterized by its remote location and limited infrastructure and operational history, such as the Arctic OCS region).
Though there is currently a generally applicable OCS oil and gas regulatory program, there is a need for new and amended regulatory measures specifically for Arctic OCS exploratory drilling by MODUs. This final rule, in combination with the existing regulations (which continue to apply to Arctic OCS operations unless otherwise expressly stated) will ensure that exploratory drilling operations are well planned from the outset and conducted safely and responsibly in relation to the unique Arctic environment and the local communities that are closely connected to the region and its resources. The key elements of the final rule are as follows:
The final rule addresses recommendations contained in several recent reports on OCS oil and gas activities, including the Arctic Council, Arctic Offshore Oil and Gas Guidelines (2009); the National Commission on the BP
Numerous comments were submitted on the NPRM requesting a more performance-based approach to regulating exploratory drilling operations on the Arctic OCS. As discussed in depth in Section IV. B,
Furthermore, existing regulations will continue to allow operators to use new and emergent technology on the OCS in certain circumstances and upon demonstrating adequate safety and environmental protection. Under § 250.141,
1. Laboratory tests results, test protocols, test procedures, testing methodologies, Quality Assurance/Quality Control provisions, manufacturer testing, and/or qualification or accreditation procedures implemented by an independent third party relevant to the performance characteristics of such equipment when used in a real world environment;
2. Actual operational performance of such equipment if previously used or currently being used in other areas under similar conditions; and
3. Additional studies, evaluations, or risk and/or hazards analyses relevant to the equipment or procedures under consideration.
During exploratory drilling operations on the Arctic OCS, operators may face substantial environmental challenges and operational risks throughout every phase of the endeavor, including preparations, mobilization, in-theater drilling operations, emergency response and preparedness, and demobilization. Thorough advanced planning is critical to mitigating these challenges and risks. One of the key components of this final rule is a requirement that operators explain how their proposed Arctic OCS exploratory drilling operations are fully integrated from start to finish in a manner that accounts for Arctic OCS conditions and that they provide this information to DOI at an early stage of the planning process.
This final rule requires that operators develop and submit IOPs to BOEM at least 90 days in advance of filing their EPs. The purpose of the IOP is to describe, at a strategic or conceptual level, how exploratory drilling operations will be designed, executed, and managed as an integrated endeavor from start to finish. The IOP is intended to be a concept of operations that includes a description of pertinent aspects of an operator's proposed exploratory drilling activities and supporting operations and how the operator will design and conduct its program in a manner that accounts for the challenges presented by Arctic OCS conditions. The primary issues that operators must address in their IOPs include:
1. Vessel and equipment designs and configurations;
2. The overall schedule of operations, including contractor work on critical components;
3. Mobilization and demobilization operations and maintenance schedule(s);
4. In-theater drilling program objectives and timelines for each objective;
5. Weather and ice forecasting and management capabilities;
6. Contractor management and oversight;
7. Operational safety principles;
8. Preparation and staging of spill response assets;
9. Impact on local community infrastructure, including but not limited to housing, energy supplies and services; and
10. Extent the project will rely on local community workforce and spill clean-up response capacity.
DOI recognizes that other Federal agencies have primary oversight responsibility for some of the previously listed activities. Upon receipt of the IOP, DOI would engage with members of the E.O. 13580 Alaska Energy Permitting IWG and promptly distribute the IOP to the State of Alaska and Federal government agencies making up the Alaska Energy Permitting IWG and others that are involved in the review, approval, or oversight of various aspects of OCS operations.
However, the IOP process does not entail any mechanism through which agencies can or must approve the operator's proposed activities described in the IOP. The IOP is intended to be a conceptual, informational document designed to ensure that an operator has planned to address risks associated with the full suite of regulated activities, and to provide the relevant regulatory agencies a preview of an operator's approach to regulatory compliance and integrated planning. It is also anticipated that an operator would already develop much of this requested information as a part of its internal planning for potential activity. Thus, the IOP enables relevant agencies to familiarize themselves, early in the planning process, with the operator's overall proposed program from start to finish. This, in turn, allows DOI and those agencies to coordinate and provide early input to the operator regarding potential issues presented by the proposed activities with respect to any future EP reviews and permitting requirements, including aspects of the program that might require additional details or refinement. The IOP requirement—and the final rule in general—will not, however, interfere with or supplant operators' obligations to comply with all other applicable Federal agency requirements. Each agency that receives an IOP would continue to review the relevant details of an operator's planned activities for compliance with that agency's regulatory requirements in the appropriate manner and at the appropriate time under its own regulatory program.
In Arctic OCS exploratory drilling, there is a need for operators to demonstrate that they have access to, and could promptly deploy, well control and containment resources that would be adequate to respond to a loss of well control. This equipment is readily available and accessible in the Gulf of Mexico due to the level of activity in that area, but is not similarly available in the Arctic as a matter of normal course. Ensuring that operators have redundant protective measures in place is critical, as there is no guarantee that a single measure could control or contain a WCD. Therefore, BSEE is requiring that operators who use a MODU for Arctic OCS exploratory drilling must be able to stop or capture the flow of an out-of-control well by having access to, and the ability to deploy, SCCE (
BSEE is also requiring operators to have access to a separate relief rig, staged at a location such that it could arrive on site, drill a relief well, kill and abandon the original well, and abandon the relief well prior to expected seasonal ice encroachment at the drill site and in no event later than 45 days after the loss of well control. This equipment is fundamental to safe and responsible operations on the Arctic OCS, where existing infrastructure is sparse, the geography and logistics make bringing equipment and resources into the region challenging, and the time available to mount response operations is limited by changing weather and ice conditions, particularly at the end of the drilling season.
The 45-day period is the maximum time allowed for conducting relief rig operations. However, it is a performance-based requirement and leaves the means of compliance up to the operator. The operator may seek to demonstrate its ability to complete relief well operations in less than 45 days, subject to review by BOEM in the EP process under § 550.22(c)(4) and BSEE's review during the APD process under § 250.470(c). The length of the “shoulder season”, or the period of time operators may not drill or work below the surface casing, depends upon how long operations related to the use of a relief rig can be expected to take. An operator must demonstrate how long it will take for a relief rig to arrive on site, drill a relief well, kill and abandon the original well and abandon the relief well prior to expected seasonal ice encroachment at the drill site (or trigger date). In evaluating this demonstration, consideration may be given to a number of factors, including but not limited to: The distance of drilling operations to the shore; available infrastructure; and the capacity and location of oil spill response equipment. The trigger date, established by BOEM (in consultation with the National Weather Service (NWS) and the operator)), restricts when the operator can drill or work below the surface casing in order to address risks associated with late season drilling and ensure an opportunity for spill response and cleanup in favorable conditions. BSEE notes the operator's actual timeframe to drill a relief well would be based on consideration of the distance between anticipated exploratory drilling sites, the availability of adequate staging locations for relief rigs, the length and complexity of rig transit, and the time necessary to complete the requisite operations once on-site. The 45-day maximum timeframe is intended to ensure a timely response and prevent an extended uncontrolled flow of hydrocarbons in the event of a loss of well control early in the open water season.
As discussed previously in Section III.B, we have revised the proposed language for the SCCE provisions at paragraph (a) of § 250.471 and added a new paragraph (i) in § 250.471, and revised the relief rig provisions at paragraphs (a) and (c) of § 250.472, to clearly state the standards operators must meet to satisfy the requirements, while also alternatively providing that operators may request approval of an alternate technology under existing § 250.141, if the operator can show the alternate technology will meet or exceed the level of safety and environmental protection provided by the SCCE and relief rigs requirements. This provision enables operators to request approval for innovative technological advancements that may provide additional flexibility.
Reliable weather and ice forecasting play a significant role in ensuring safe
1. Notify BOEM and BSEE immediately of any sea ice movement or condition that has the potential to affect operations or trigger ice management activities; and
2. Notify BSEE of the start and termination of ice management activities and submit written reports after completing such activities.
Operators need to be prepared for a quick and effective response in the event of an oil spill on the Arctic OCS and be ready to coordinate activities with the Federal government and other stakeholders. The OSRPs and related activities should be tailored to the unique Arctic OCS operating environment to ensure that operators have the necessary equipment, training, and personnel. Among other things, this final rule establishes specific planning requirements to maximize the application of oil spill response technology and ensure a coordinated response system designed to address the challenges inherent to the U.S. Arctic region.
Partners, primarily Alaska Native Tribes, as well as other stakeholders expressed concern that mud and cuttings from exploratory drilling could adversely affect marine species (
BSEE is requiring the capture of all petroleum-based mud and associated cuttings from Arctic OCS exploratory drilling operations to prevent the discharge of such pollutants into the marine environment. The new provision also clarifies the Regional Supervisor's discretionary authority to require that operators capture all water-based mud and associated cuttings from Arctic OCS exploratory drilling operations (after completion of the hole for the conductor casing) to prevent their discharge into the marine environment. The Regional Supervisor would exercise this discretion based on various factors, such as the proximity of exploratory drilling operations to subsistence hunting and fishing locations or the extent to which such discharges might cause marine mammals and birds to alter their migratory patterns in a manner that interferes with subsistence activities or might adversely affect marine mammals, fish, birds, or their habitat(s).
An effective risk management framework at the beginning of a project incorporates many components, including planning, vessel design, contractor selection, and an assessment of regulatory requirements for all facets of the project. DOI is requiring that operators provide an explanation, starting in the IOP, at a conceptual level, of how they would apply their oversight and risk management protocols to both their personnel and their contractors to support safe and responsible exploratory drilling. These new regulations, in conjunction with DOI's existing regulations, require varying levels of information about operator safety and oversight management at progressive stages of the planning and approval process. This would start with the most general information and increase the level of detail with successive regulatory submittals, as the project proceeds from planning to implementation (
In addition, the final rule requires Arctic OCS operators to:
1. Report threatening sea ice conditions and ice management activities, and unexpected operational issues that could result in a loss of well control;
2. Conduct real-time monitoring of various aspects of well operations,
3. Increase their SEMS auditing frequency; and,
4. Enhance their oil spill preparedness and response capabilities for Arctic OCS operations.
A summary of the changes that this final rule makes to the provisions proposed by the NPRM follows:
This section summarizes the requirements proposed in the NPRM and how they are addressed in this final rule. Some of these provisions received no comments during the public comment period, while other provisions were supported or criticized by certain commenters. Section IV.A discusses the changes from the proposed to the final rule. Section IV.B discusses the public comments received and our responses to the comments. Many of these provisions and concepts are described in more detail above in Section III.
This section includes a description of how the final rule differs from the provisions proposed by the NPRM (80 FR 9916 (February 24, 2015)) along with an explanation of why the changes in the final rule are necessary. For a full discussion of comments and BOEM and BSEE responses, see section IV.B
BSEE is revising the proposed definition of “capping stack” to clarify that the required capping stack may be pre-positioned. Although the proposed definition did not preclude the use of a pre-positioned capping stack, in response to comments we determined a clarification to the definition of capping stack is appropriate. Accordingly, the addition of the clarification that the capping stack may be pre-positioned to the definition does not create a new category of capping stack, but instead clarifies that the use of a capping stack is not limited to subsea wellheads when surface BOPs are used. The revised definition makes clear that pre-positioned capping stacks may be used below subsea BOPs. BSEE will evaluate the use of a pre-positioned capping stack as a part of an operator's proposal on a case-by-case basis and approve their use when deemed technically and operationally appropriate, such as when the operator proposes to use a jack-up rig with surface trees.
BSEE is revising the language of proposed § 250.402(c)(2) to clarify the
The proposed amendments to § 250.447(b) are not being included in the final rule. BSEE has decided to maintain the same 14-day BOP pressure test cycle on the Arctic OCS as is required elsewhere on the OCS. The existing regulation in paragraph (a)(4) of § 250.737 provides that the District Manager or Regional Supervisor may require more frequent testing if conditions or BOP performance warrant.
As discussed in Section IV.B,
BSEE recognizes the importance of ensuring the proper functioning of the BOP. Shell proposed a 7-day BOP testing cycle in 2012, and BSEE ultimately approved that approach for Shell. We proposed in the NPRM to require a similar testing frequency for all Arctic OCS exploratory drilling operations, due to the possibility that the integrity of BOPs could be compromised by Arctic conditions. BSEE specifically requested comments on the appropriateness of the proposed 7-day testing frequency to demonstrate the reliability of the equipment under Arctic conditions; any additional safety issues that might arise from this increased testing or that would be unique to Arctic operations; and all potential drilling impacts related to the proposed 7-day testing frequency.
Comments on BOP testing frequency fell largely into two groups: Supporters of the 14-day (or longer) test cycle and supporters of the 7-day test cycle. BSEE considered all of the comments, the information and justifications provided by the commenters, and various studies in deciding the appropriate test frequency. After careful consideration, BSEE determined that increasing the testing frequency to 7-days could cause increased wear-and-tear and fatigue on the equipment, without measurably increasing the reliability of the BOPs. No significant evidence was presented by supporters of a 7-day test cycle that demonstrated that more frequent testing in all situations would increase safety, and no evidence was presented for why BSEE should have a different requirement for BOP pressure tests in the Arctic than elsewhere on the OCS.
Therefore, in the final rule BSEE removed the proposed amendments that would have required operators to test their BOP systems every 7 days during Arctic OCS exploratory drilling operations. Existing regulatory provisions address similar protection concerns. Paragraph (a)(4) of § 250.737 allows for the District Manager, to require more frequent testing if conditions (Arctic or otherwise) or the BOP performance warrant. Additionally, § 250.737(d)(9) requires a function test of the annular and ram BOPs every 7 days, between pressure tests, ensuring the BOP rams will function in all operating conditions.
BSEE is revising the proposed § 250.452 to clarify the operator's responsibilities for complying with the real-time monitoring (RTM) requirements.
Paragraph (a) of § 250.452 is revised by deleting the phrase “all aspects of” from the provision identifying what functions must be monitored. This revision allows the operator flexibility in determining which elements of the identified functions will be monitored. The operator is responsible for recording, storing, and transmitting data regarding the BOP system; the well fluid's handling systems on the rig; and the well's downhole conditions as monitored by a downhole sensing system, when such a system is installed. The operator will determine what functional aspects of these systems should be monitored to meet the performance requirements of this provision.
BSEE has revised paragraphs (a) and (b) of § 250.452 to make clear that it is not necessary to cease operations because of a temporary loss of the RTM data feed due to a failure or interruption in the RTM data feed to shore. In this type of situation, the operator should have the ability to gather and record the data in the control room of the offshore unit and transmit the data to shore once the data feed is restored. To clarify this, we deleted the word “immediately” from paragraph (b) of § 250.452 and added the phrase “as they are gathered, barring unforeseeable or unpreventable interruptions in transmissions,” to describe the proper timing of the data transmission. Additionally, to clarify that in the event of a failure or interruption of the datalink the operator should continue collecting RTM data, we added qualifying language to paragraph (a) in § 250.452, providing that the monitoring system must be “independent, automatic, and
We have also revised paragraph (b) in § 250.452 by deleting the proposed text: “and who have the authority, in consultation with rig personnel, to initiate any necessary action in response to abnormal data or events.” BSEE recognizes that operators typically seek to ensure that command and control decision making is primarily the responsibility of the onboard rig personnel, and that the RTM support personnel typically function in an advisory capacity. The RTM monitoring requirements seek to help improve, not disrupt, the ability of onboard rig personnel to monitor operations and assess and mitigate risks.
The final clarifying revision to paragraph (a) in § 250.452 tightens the language, changing from the proposed “you must have real-time data gathering and monitoring, capability to record, store, and transmit data” to now read: “you must gather and monitor real-time data using an independent, automatic, and continuous monitoring system capable of recording, storing, and transmitting data.” Other than as discussed above, these revisions are designed to make the regulatory language clearer and easier to understand and apply.
As discussed in Sections III.B
Also as discussed in Sections III.B and III.D, BSEE is revising the language proposed in § 250.472 to clarify the performance standard that must be met when proposing to use alternate equipment or procedures to the relief rig requirements of § 250.472. Specifically, we are adding the phrase “able to kill and permanently plug an out-of-control well” to the language of proposed § 250.472(a) to clearly state the performance standards the relief rig must achieve. We are also revising the language of proposed § 250.472(c) to clarify that when an operator is requesting approval of alternate procedures or equipment to the relief rig requirements under the provisions of § 250.141, the operator must demonstrate that the proposed alternate procedures or equipment provide a level of safety and environmental protection that meets or exceeds that required by BSEE regulations, including demonstrating that the alternate procedures or equipment will be able to kill and permanently plug an out-of-control well. These revisions are in response to commenters' requests for a clear statement of a performance standard and are designed to offer guidance and clarification to operators with respect to the performance-based standard established by this rule that any proposed alternate compliance must meet or exceed in connection with the requirements finalized in this rulemaking.
BOEM is revising § 550.220(c)(6)(ii) to clarify the intent of the provision. This provision is designed to obtain information regarding the operator's relief rig plans through the EP. BOEM has revised the provision in response to comments, removing language that could potentially create confusion over the interaction between the BOEM EP informational provision and the BSEE operational relief rig requirements at § 250.472. The intent of § 550.220(c)(6)(ii) is to obtain the information that is known at the time of EP submission regarding the operator's plans for compliance with the requirements of § 250.472(b). Therefore, as a technical correction, we finalized the text of § 550.220(c)(6)(ii) without reference to “into zones capable of flowing liquid hydrocarbons.” This revision is explained in further detail in Section IV.B.
The Bureaus have made several additional changes between the proposed and final regulatory text that are technical made in order to clarify edits. These changes result in more easily understandable regulations but do not make substantive changes. For this reason, the Bureaus have determined that further notice and comment is unnecessary pursuant to 5 U.S.C. 553(b).
The Bureaus divided our discussion and responses to the comments received into subject matter topics, beginning with general comments, and then organized them by section number in the order in which operators would seek to comply with the regulations during permitting and operations.
Although BSEE permitting and operational requirements appear earlier in 30 CFR part 250, with the BOEM requirements following in 30 CFR part 550, in practice the IOP and EP phases governed by the 30 CFR part 550 regulations would precede the drilling approval and oversight phases governed by 30 CFR part 250. Requirements to prepare for an oil spill, which are contained in part 254, may be met at any time before handling, storing, or transporting oil in operations BSEE permits under part 250. Consequently, the subject matter topics are presented in this preamble in the following order: Definitions of
Several comments addressed general concepts related to the rulemaking, instead of specific regulatory requirements proposed in the NPRM. These commenters opposed finalizing the proposed rule for a variety of reasons including: An opposition to all drilling in the Arctic Region; the proposed regulations are unnecessary, or overly restrictive or too costly; and
Many commenters opposed the proposed rule in its entirety because of their opposition to all drilling in the Arctic Region, based on concerns over climate change and other environmental reasons. Some of these commenters supported the development of renewable energy in lieu of continued exploration for oil and gas resources.
BOEM and BSEE strongly agree with the need to protect the Arctic environment, and the requirements of this final rule are an important means to achieve that goal. However, the decision whether or not to prevent the exploration and development in the Arctic OCS is beyond the scope of this rulemaking. OCSLA establishes a process for deciding when and where to issue leases based on a defined set of criteria (
Advancing renewable energy and transitioning away from reliance on fossil fuels is critical in the long term, but fossil fuels will continue to be an important part of the U.S.' energy portfolio for the foreseeable future. The Department is required by OCSLA to make the OCS “available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of competition and other national needs.” 43 U.S.C. 1332(3). As discussed throughout this preamble, and in several studies and reports available in the docket, the development of the U.S. Arctic's significant resources has the potential to promote a greater national reliance on domestic energy resources, benefits for the U.S. economy, and enhanced global energy security. The protection of the Arctic marine and coastal environments where drilling activities take place is of the utmost importance to BOEM and BSEE. The requirements finalized in this rule ensure that current and future exploratory drilling activities on the Arctic OCS are conducted safely and responsibly, subject to strong operational requirements.
A large number of commenters argue the regulations should not be finalized because they are unnecessary due to other Federal agencies' existing regulations. Many of these commenters also assert that the regulations are overly restrictive and will be too costly. The comments do not provide specific costs or identify specific offending provisions, but only that the regulations should not be finalized.
BOEM and BSEE disagree. The operating environment for exploratory drilling operations on the Arctic OCS is characterized by unique environmental conditions, geographic remoteness, and a relative lack of fixed infrastructure and existing operations. The provisions of this rule are necessary and appropriate to address those challenges.
BOEM and BSEE engaged in Government-to-Government Tribal consultations and Government-to-ANCSA Corporations consultations to discuss the subject matter of the proposed rule and solicit input in the development of the final rule. Additionally, many comments on the NPRM support the finalization of this rule. This rulemaking takes into account the feedback we have received from these consultations and public comments and the lessons learned from recent exploratory drilling activity on the Arctic OCS. The provisions of this final rule do not add significant burdens beyond those that BOEM and BSEE required of Shell in 2012 and 2015, as part of the conditions of approval for its EP and permits to drill. From inception to completion, every phase of Arctic OCS operations comes with inherent challenges and operational risks. BOEM and BSEE determined that the final rule is reasonable and necessary to ensure that Arctic OCS exploration is conducted responsibly and in accordance with the highest safety and environmental standards. The final regulations are also necessary to provide regulatory certainty to industry regarding the requirements BOEM and BSEE will continue to expect operators to meet in their exploration and drilling programs. This final rule provides greater certainty to partners and stakeholders that Arctic OCS operations will be undertaken with the utmost regard for safety and environmental protection. The estimated costs and benefits of the rule are analyzed in greater detail in the final RIA and discussed in the E.O. 12866 section.
Many commenters request the proposed rule be withdrawn in its entirety. These commenters request withdrawal based on two different rationales.
One group of commenters requested that BOEM and BSEE withdraw the proposed rule and re-propose a rule with provisions aligning with the recommendations from a study by the NPC, a Department of Energy Federal Advisory Committee, entitled, “Arctic Potential: Realizing the Promise of U.S. Arctic Oil and Gas Resources”, (NPC Arctic Potential Study, March 27, 2015) (available at:
We disagree with this suggestion. BOEM and BSEE participated in the development of the NPC Arctic Potential Study and used, where appropriate, knowledge gained from its development. It is our view that this final rule comprehensively addresses the challenges to prudent hydrocarbon exploration posed by the Arctic OCS's unique operating environment. BOEM and BSEE recognize the value of the NPC Arctic Potential Study as a study that considers the research and technology opportunities to enable prudent development of U.S. Arctic oil and gas resources. However, it is only one of the resources we considered in developing regulations that will ensure the safe and responsible development of petroleum resources on the Arctic OCS.
The second group of commenters recommended that BOEM and BSEE delay the finalization of this final rule until the proposed Well Control Rule was finalized.
BOEM and BSEE decided to finalize the Well Control Rule in advance of this rulemaking (
BOEM and BSEE proposed to add new definitions in the proper alphabetical order for
BSEE further proposed to add new definitions in the proper alphabetical order for
Three commenters requested BOEM and BSEE refine the proposed definition of “Arctic OCS” in §§ 250.105 and 550.105 to include more than the Beaufort and Chukchi Sea Planning areas. Two of these commenters suggested utilizing all OCS areas north of the Arctic Circle under U.S. jurisdiction as the “Arctic OCS”.
BOEM and BSEE disagree that the “Arctic OCS” should be redefined to include offshore areas beyond the Beaufort Sea and Chukchi Sea Planning Areas. We determined that the final definition in this rulemaking should align with the areas of the Arctic OCS utilized in the DOI OCS Oil and Gas Leasing Program for 2012–2017 (June 2012, available at
One commenter stated the proposed definition of SCCE in § 250.105 excludes some of the primary intervention options, such as injection as a means to secure the well. The commenter recommended the definition for surface devices should include pumps and injection lines for dynamic kill and injection into well, and reference to subsea equipment should include jumpers, manifolds, and associated equipment to facilitate pumping into the well.
BSEE disagrees and has chosen to include as SCCE equipment only the equipment necessary to regain control of a well when the primary systems fails and that is not used in everyday drilling operations. Standard equipment (such as the BOP) is specifically excluded from the definition as it is a requirement of safe drilling operations regulated in other provisions of BSEE's rules. The definition of SCCE is not intended to be exclusive or restrictive, nor is the requirement that operators possess and have the ability to promptly deploy such equipment intended to preclude the use of other intervention mechanisms not specifically mentioned.
One commenter noted the proposed definition for capping stacks in § 250.105 limits the use of pre-positioned capping stacks to subsea wellheads when surface BOPs are used. The commenter suggests that the definition should be expanded to allow pre-positioned capping stacks to be used below subsea BOPs when deemed technically and operationally appropriate, such as with a jack-up rig.
BSEE agrees that pre-positioned capping stacks should be included in the definition. We therefore added the language “including one that is pre-positioned” to the definition for Capping Stack in § 250.105. BSEE will evaluate the use of a pre-positioned capping stack as a part of an operator's proposal on a case-by-case basis and approve their use below subsea BOPs when deemed technically and operationally appropriate, such as when an operator proposes to use a jack-up rig with surface trees.
One commenter requested a definition of MODU be included in the final rule.
BSEE disagrees. There is no one comprehensive definition of a MODU that can be utilized across parts 250, 254 and 550. MODUs include different types of vessels, including floating facilities or jack-up rigs, capable of engaging in well operations (
BOEM proposed to insert the acronym
BOEM proposed new § 550.204. This section requires operators to develop and submit IOPs to BOEM at least 90 days in advance of filing their EPs. The purpose of the IOP is to describe, at a strategic or conceptual level, how exploratory drilling operations will be designed, executed, and managed as an integrated endeavor from start to finish. The IOP is intended to be a concept of operations that includes a description of pertinent aspects of an operator's proposed exploratory drilling activities and supporting operations and how the operator will design and conduct its program in a manner that accounts for the challenges presented by Arctic OCS conditions. Several comments were received on this section. To clearly address the commenters' concerns, we have organized our discussion of § 550.204 in two separate topics: (i) Information requested for IOP completion, and (ii) appropriateness of IOP submission. BOEM has reviewed the comments and determined to finalize § 550.204 as proposed for the reasons stated herein.
Many commenters generally criticized the IOP provision as being duplicative or redundant of existing requirements.
BOEM disagrees. The IOP rules are neither redundant nor duplicative of existing requirements. The IOP is meant to be an overview of all phases of the operator's proposed operations in order to allow the Federal agencies an earlier review in the planning process than currently exists. Section 550.204 requires a description of the design and operation of the proposed exploratory drilling program that demonstrates the operator is accounting for Arctic OCS conditions. Using this description, Federal agencies will coordinate and reduce potential delays by identifying possible vulnerabilities early in the planning process related to safety and environmental protection. This proactive approach enables the operator
Given the important role played by contractors and the fact that many contractors hired to operate on the Alaska OCS do not have a long operating history in the region, effective contractor oversight by operators is critical, and sufficient oversight of each contractor can be a challenge. Section 550.204(f) requires operators to plan for how they will manage contractors to reduce operational risks and address the challenges associated with operations on the Arctic OCS. Further, § 550.204(b) requires operators to plan to coordinate the work of a number of contractors to ensure that time pressure or other contractor complications do not undermine safe and environmentally responsible operations. This section requires a degree of advanced planning that should identify critical paths necessary for successful operations, ensure requisite resources are allocated, and mitigates risks through adequate forethought.
Additionally, if an operator determines that information it will submit in an EP is redundant with that submitted in an IOP, § 550.201(c) provides the Regional Director discretion, on a case-by-case basis, to waive submission of required information or analyses when sufficient applicable information or analyses are readily available to BOEM. Paragraph (d) of § 550.201 also allows for referencing other pre-existing information and data when submitting an EP if that information was previously submitted or is otherwise readily available to BOEM, thus allowing the IOP to simplify the EP preparation process.
Another group of commenters asserted that information required to be included in the IOP will not always be available 90 days before the EP submission. One of the commenters explained that much of the operator's data is immature during this planning phase.
BOEM acknowledges that the IOP will be submitted at a phase of the planning process when not all details of proposed operations will be in place, and that such details will necessarily be further developed through later stages of the process. While the operator will explain how exploratory activities will be integrated in its IOP, BOEM does not expect the IOP to exhibit the same level of detail that other documents (
The operator should already have the information required to complete an IOP 90 days prior to submitting an EP due to the advanced planning necessary for the operator to safely operate in Arctic conditions and minimize its effects on local communities. In addition, the operator must perform detailed engineering themselves or have a contractor do such work, well in advance of the open-water season. Further, if the operator does not have the general summary information for the IOP, then it is unlikely that the operator will be in a position to submit a completed EP 90 days later.
Another of the commenters requested that BOEM provide notice to the State and local governments when it receives an IOP.
Regarding this request, we note that in addition to posting the IOP online, § 550.206(a)(2) requires the operator to submit eight copies to BOEM for public distribution. BOEM will share copies with State and local governments.
Several commenters requested clarification on whether an operator is obligated to respond to requests for additional information (RFAI) from BOEM, BSEE, or the other agencies with access to the IOP. The commenters note that if operators are obligated to respond to such requests, associated review timings should be established to ensure operators receive feedback within 45 days of submission.
The IOP will be circulated among the members in the E.O. 13580 Alaska Energy Permitting IWG, whose membership and function are discussed in Section I.B, and other relevant agencies. Members of the working group and other agencies will dialogue with the operator about any aspects of the proposed operations that may create risks. This dialogue ensures the operator is aware of elements of its proposed operations requiring clarification or revision to obtain later regulatory approvals in a manner consistent with each agency's regulatory requirements. The IOP is an informational document that must be filed and should cover the identified elements, but does not require approval by DOI. If all elements of § 550.204 are not addressed by the operator in its IOP, BOEM may request supplementation from the operator.
BOEM does not agree that the regulations should be amended to add a 45-day limit for when BOEM's feedback on the IOP should be sent to an operator after the operator has submitted its IOP. If the operator is unable to provide supplementation related to feedback given by BOEM before the end of the IOP review period, the operator would be able to furnish the material in its EP submittal. If, however, during an early point in the review period, BOEM finds that the operator's IOP is incomplete in such a way that it does not address all of the elements of § 550.204, then it may request that the operator supplement the incomplete IOP submission.
One commenter requested clarification of the need for “sufficient information” when submitting the IOP description of vessels utilized in the operator's proposed exploratory drilling program. The commenter understands this as the IOP requirement effectively establishing a 120 day review period for proposed operations (90 days for the IOP and 30 days for the EP). The commenter stated this mandatory IOP process will effectively delay EP submissions and ultimately frustrate future drilling efforts.
BOEM disagrees with the assertion that the IOP will delay the EP process, or that the IOP is designed to effectively expand that process. The final rule is a combination of prescriptive and performance-based requirements developed after extensive outreach to stakeholders, operators, and government agencies. BOEM will review the IOP for completeness, and if the agency finds that aspects of the operator's plan do not meet the necessary information obligations of § 550.204, then it will request the information be presented. The IOP is not subject to approval, and should not delay submission of the EP. Because the IOP is an overview that requires less detail than the EP, operators will be in a position to submit the IOP earlier in their planning process than the EP itself. As a result, the 90-day period will not delay the submittal of the EP.
Three commenters commented on the frequency of IOP submissions. One commenter requested clarification on whether a single IOP could address
BOEM disagrees that an IOP will need to be updated whenever an EP is updated. An IOP is required for each exploratory drilling program planned by an operator. However, a single IOP may cover multiple EPs when sufficient geographic and operational overlap exists. The IOP serves its primary purpose before an EP is submitted, as it informs the early planning process prior to initial EP submission. Requiring the IOP to be updated after the EP's submission would not serve any practical purpose, because the EP serves as the main point of reference for both agencies and the operator after the EP is filed.
One commenter recommended the IOP should mirror the International Association of Oil and Gas Producers (IOGP)/International Petroleum Industry Environmental Conservation Association (IPIECA) guidelines for oil spill risk assessments and management plans.
One commenter requested that IOP provisions should require proposed mitigation measures to avoid conflicts with subsistence activities. BOEM does not think this is necessary, as BOEM has determined that existing requirements address this concern. Before an EP is approved, BOEM must comply with applicable statutory requirements to analyze the potential impacts of the proposed exploration activities. As part of the analyses, BOEM analyzes how mobilization, demobilization, and exploratory drilling could affect subsistence use, resource use, and harvest activities. Both BOEM and BSEE may require additional mitigation measures at the EP and APD stages, as necessary, to address appropriately potential interference with subsistence activities. For example, because subsistence hunters are concerned that the effects of offshore oil and gas exploration might displace migrating bowhead whales and other marine mammals (like beluga whales), the Bureaus will meet with the Alaska Eskimo Whaling Commission and its whaling captains to help document traditional knowledge pertaining to bowhead whales, including movement and behavior. Given the importance of subsistence activities and related socio-cultural activities to the Alaska Native communities, operators are encouraged to work directly with interested parties to help mitigate potential impacts to subsistence activities. In addition, BOEM will continue to fund and support studies to better understand the potential impacts from OCS operations on marine mammals and subsistence activities.
One commenter asserted that the proposed rule failed to address public and private investment in on-shore infrastructure supporting oil spill response and protection of specific lands and resources. The commenter noted that the proposed rule neglected local community involvement in oil spill response capabilities, especially at Point Lay, the local community most likely to be impacted by the oil spill response activities. The commenter suggested that regulation be written to specifically require onshore infrastructure development at Point Lay and Cape Sabine, both former Distant Early Warning Line radar sites with existing, but unutilized infrastructure. The commenter shared his Kali traditional knowledge of local meteorological conditions with BOEM and BSEE personnel and has noted that weather conditions often times permit safe flight operations from Point Lay when they are suspended in Barrow and Wainwright.
BOEM has determined that both existing regulations and regulations finalized in this rulemaking address the commenter's concern regarding community involvement. Section 550.202 mandates that operators plan and prepare to conduct their proposed activity safely in conformance with all applicable legal requirements and sound conservation practices in a manner which neither unreasonably interferes with other OCS uses nor causes undue or serious harm to the human, marine or coastal environment. Additionally, § 550.204(j) requires the operator to include in its IOP a description of whether and to what extent a project will rely on local community workforce and spill cleanup response capacity. Regarding the request for specific onshore infrastructure investments, BOEM cannot in this rulemaking specify the location of such investments.
Two commenters assert that introducing an IOP prior to the EP is impractical and unnecessary in terms of timing and objectives. One commenter recommended the submittal of the EP should continue to precede the IOP to allow timely exploration to occur while the IOP is being developed. The commenter argued there is a lack of efficiency in asking operators to prepare a complete IOP as a pre-requisite to engaging in meaningful project-related dialogue and that early engagement between operators and the Federal agencies would be more meaningful as an iterative pre-application process that feeds into the IOP. The second commenter proposes the removal of the IOP as a separate document and that the EP and APD processes are adapted and clarified to meet the intentions of the IOP requirement.
BOEM disagrees and has determined to finalize the IOP provisions as proposed. The IOP requirement calls for information that is different from what is required to be provided in an EP or an APD. Information in an IOP contains a different level of detail and is required at a different point in the planning process. By requiring an IOP, the entire planning process should become more efficient by decreasing the likelihood of requests for additional information or plan modifications during the later stages that require approval. The early engagement facilitated by the IOP requirements of § 550.204 should increase efficiency by improving communication between agencies and operators, improving early agency understanding of and operator preparedness for planning activities.
Several commenters assert that the requirement to submit an IOP 90 days before submitting an EP for Arctic exploratory drilling operations is inconsistent with the OCSLA requirements at 43 U.S.C. 1340(c), and the Department is improperly exceeding its jurisdiction by requiring submission of the IOP information. Two of the commenters also assert that the IOP would require reporting of information and data beyond DOI's scope of jurisdiction and is not based in any statutory authority granted by Congress.
BOEM disagrees. The OCSLA requires the submission and approval of an EP, but does not specify or restrict what other information BOEM may require before the EP is submitted. The OCSLA provides the Secretary authority to require information described in the IOP. Section 1334(a) of Title 43 of the U.S.C. grants the Secretary authority to “prescribe and amend such rules and regulations as [s]he determines to be necessary and proper in order to provide for the prevention of waste and conservation of the natural resources of the [OCS].” Section 1332(6) declares that: “operations in the [OCS] should be conducted in a safe manner by well-trained personnel using technology, precautions, and techniques sufficient to prevent or minimize the likelihood of blowouts, loss of well control, fires, spillage, physical obstruction to other users of the waters or subsoil and seabed, or other occurrences which may cause damage to the environment or to property, or endanger life or health.”
Section 1348 of Title 43 of the U.S.C. imposes a duty on lessees and operators to “maintain all operations . . . in compliance with regulations intended to protect persons, property, and the environment on the [OCS].”
The EP and the IOP serve different purposes and are not governed by the same provisions of OCSLA. The EP is a statutorily mandated submission under 43 U.S.C. 1340(c), approval of which is required prior to exploration of any OCS lease. BOEM regulations set forth comprehensive and detailed requirements for the contents of an EP.
The IOP is fundamentally distinct from the EP, and does not implicate the section of OCSLA that governs EPs, 43 U.S.C. 1340. The IOP will be required to be submitted to BOEM well in advance of the EP, at a time when the Department recognizes the operator might not possess the type of detailed and specific information that is required to obtain approval of an EP. It requires Arctic-focused conceptual planning information to encourage and facilitate the development of integrated operational strategies early in the planning process. While the IOP will be reviewed to ensure that the submission is complete, addressing each of the elements listed, the IOP is not subject to approval by any Federal agency and does not bind the operator's future activities. Rather, the IOP, unlike the EP, is designed to be a preliminary informational resource to facilitate relevant Federal agencies' early familiarity with, and opportunities for constructive feedback on, important concepts related to the design of an operator's planned exploration program in an integrated manner that accounts for the unique Arctic OCS conditions. This process has the potential to facilitate the later EP review, but it is fundamentally distinct from the EP itself.
Agency regulations have long recognized the need to obtain through the planning process information about activities outside of the Department's direct regulatory jurisdiction but which are clearly relevant to approval of operations within our jurisdiction.
Section 1340(c) of OCSLA requires lessees to submit an EP for approval before they commence exploration pursuant to their lease, and it requires BOEM to take action on an EP within 30 days after submission.
One commenter argued that industry should not have to incur the additional cost of an IOP considering the roughly 124 day drilling window in the Chukchi Sea, and that the 90 days could instead be spent by agencies to integrate their services for regulatory efficiency. The commenter asserted that agencies must start working together to streamline the regulatory process, to fund and support Arctic-centric science, and to support infrastructure development in this remote region of the country.
We agree with the commenter's concern for agency integration and note the key purpose of the IOP is to facilitate interagency coordination on matters of mutual interest. The regulatory oversight of the Arctic OCS is shared by many agencies and the need for integration among them is recognized by the establishment of the E.O. 13580 Alaska Energy Permitting IWG. The E.O. 13580 Alaska Energy Permitting IWG consists of representatives from Federal agencies which include DOI, the Departments of Defense, Commerce, Agriculture, Energy, Homeland Security, and the EPA. BOEM will circulate the IOP amongst the aforementioned agencies;
BOEM proposed to revise § 550.206 to include information that explains how operators should submit their IOPs and allowing operators to request the nondisclosure of information in the IOP using established DOI processes. As is currently the case with EPs, Development and Production Plans (DPPs), and Development Operations Coordination Documents (DOCDs), operators requesting the nondisclosure of portions of an IOP should provide BOEM with two separate versions of the IOP; a public version from which potentially exempt information is redacted, and an agency version with such information present, but clearly marked as proprietary.
Several comments were received on this section. BOEM has evaluated these comments and decided to finalize § 550.206 as proposed. Two commenters requested that BOEM require planning information be submitted electronically to allow immediate availability for public access. This requirement would allow BOEM to immediately upload public-information copies of EPs and IOPs without the intermediate step of reformatting the operator's submissions.
We determined electronic submittal should remain optional. Currently, DOI allows electronic submittals of all or part of the EP and the final rule will allow electronic submission of all or a portion of the IOP. Whether the information is received electronically or in the form of a hardcopy, BOEM will post the appropriate information on
One commenter recommended that EP requirements be updated to require liaison with DOI as soon as the planning process starts, in order to coordinate forward planning and keep authorities abreast of the approach and milestones related to the EP. The commenter recommended the regulations be revised to require the EP scope be reviewed to ensure that it includes appropriate information requirements related to planning of integrated operations and how this will be achieved. The commenter goes on to recommend that these issues will be discussed as part of the overall EP development process, and that the APD scope be reviewed to ensure that it includes specific requirements for documentation of planned integrated operations, including finalized vessels, contractors and associated management systems. The commenter stated that by establishing such an approach, along the lines of approaches taken by the United Kingdom, Norway, Australia and others, the process for documenting selection and suitability of a rig would be simplified, enabling focus on other risk elements relating to how the unit will be utilized in integrated operations.
BOEM has determined the commenter's recommendations are addressed in the finalized provisions at § 550.204. Compliance with the provisions of § 550.204, related to the submission of the IOP, allows for operators and DOI to coordinate early in the planning process, and allows early visibility and opportunities to address how an operator's activities will be conducted in an integrated manner.
One commenter requested to receive a copy of all Arctic OCS applications and be provided with at least 30 days to review and comment on the applications.
BOEM's existing regulations allow for the public to review and, as appropriate, allow for comment from State, municipal and tribal governments. As stated in the NPRM, BOEM intends to post public versions of IOPs to its Web site upon receipt. Once an EP or DPP is deemed submitted, it is posted on BOEM's Web site,
One commenter recommended that DOI conduct timely and meaningful consultation with Alaska Native tribes before approving an EP. BOEM agrees. Consistent with E.O. 13175 (Consultation and Coordination with Indian Tribal Governments) and Secretarial Order 3317, BOEM requests Government-to-Government consultation with Alaska Native tribes for which the exploration activities could have tribal implications. The Department is committed to fulfilling its tribal consultation obligations, whether directed by statute or administrative action such as E.O. 13175, or other applicable Secretarial orders or policies.
One commenter requested clarification in the final regulations that evidence of equipment ownership or contracts with equipment providers is required only for an APD, but not required for approval of an EP or an OSRP. The commenter expressed concern with having to make commercial commitments to very expensive equipment contracts before getting confirmation from the Bureaus that the plans based on that equipment would be approved. The commenter stated there is sufficient time after EP and OSRP approval for the operator to procure equipment that conforms to the approved plan, and to provide evidence of such procurement at the APD stage.
BOEM does not believe that the final regulations require amendment in response to this comment. Both existing regulations and this final rule require varying levels of information about operator safety and oversight management at progressive stages of the planning and approval process. This information would begin with general information and narrow down to increasing levels of detail with successive regulatory submittals, as the project proceeds from planning to implementation. For example, at the IOP stage, we recognize that operators may not have contracts for vessels finalized or precise dates of drilling so, accordingly, specific names of contractors are not necessary, but could be provided if available. At the EP stage, § 550.220(c) requires, among other planning information, a preliminary general description of SCCE and relief rig capabilities needed for compliance with §§ 250.471 and 250.472. BOEM anticipates that the relief rig description may be general at the EP stage, but
BOEM proposed to revise several of the existing provisions at § 550.220 to ensure, through thorough advanced planning, that operators are capable of operating safely in the extreme and challenging conditions of the Arctic OCS. Revisions to the section include amending the existing “Emergency Plans” provision at § 550.220(a) to add fire, explosion, personnel evacuation, and loss of well control to the events for which emergency plans are required, and to replace the terms “blowout” with “loss of well control” and “craft” with “vessel, offshore vehicle, or aircraft” for clarification purposes. Finally, BOEM proposed creating a new § 550.220(c), which would set forth additional information requirements for EPs that are proposing exploration activities on the Arctic OCS.
Several comments were received on the provisions in this section. BOEM has reviewed the comments and determined to finalize § 550.220 as proposed for the reasons stated herein. One technical revision is finalized at § 550.220(c)(6)(ii). As discussed above in Section IV.A, this revision is required to correctly align the provision with the relief rig planning requirements of § 250.472. For a full discussion of the comment and our response, see the discussion of § 250.472 in Section IV.B.
Two commenters recommend that the end of season date should be decided by the regulators and not by the operators, and also that the operator should only be allowed to drill into hydrocarbon zones with enough time to complete a relief well and remove oil before the freeze-up date. One commenter expressed concern that the operator may overstate their relief well capabilities in order to maximize the length of their drilling season.
BOEM agrees with the commenters. To clarify, the end of season dates that the operator proposes in its EP are anticipated dates. BOEM, in consultation with the NWS, will analyze past and present meteorological conditions, oceanic conditions, and sea ice concentration and movement to determine if the operator has provided an appropriate end of season date estimate to account for its own unique operational capabilities and limits. BOEM does this through the establishment of the trigger date, or estimated seasonal ice encroachment date, that sets a deadline on when the operator can drill or work on the surface casing, so that risks associated with late season drilling are addressed and response and cleanup activities can occur in a timely manner.
Two commenters strongly supported the imposition of an end of season date for operators and request removal of the word “anticipated” in § 550.220(c)(6) to ensure that Arctic OCS operators provide a firm date for their end of seasonal operations to avoid increased risks associated with freeze-up. The commenters further recommended that the final rule provide the Bureaus authority to require operations to terminate before these dates if actual conditions during the drilling season indicate earlier likelihood of ice encroachment over the drill site. The commenters suggest these dates should undergo scientific review by the relevant agencies and should be based on at least ten years of historical ice and weather data.
BOEM disagrees with removing the word “anticipated” from the provisions of § 550.220(c)(6). There are two dates an operator must address in this provision when onsite operations will be complete and when drilling operations will terminate. These dates retain some flexibility at the EP stage, as they are based on a number of predictive factors related to the operator's capabilities to mitigate risk in operating on the Arctic OCS and to the prevailing meteorological and oceanic conditions that vary from year to year. Many of the provisions finalized in this rulemaking require the operator to provide BOEM and BSEE pertinent information that may require exploratory drilling operations to terminate at an earlier date than anticipated at the EP stage. For example, § 250.188 requires the operator to report to BSEE information on various incidents, including sea ice movement that may affect operations or trigger ice management activities and any unexpected “kicks” or operational issues that could result in the loss of well control. We further note the anticipated end of season dates are reviewed through interagency and scientific review prior to an approval of an EP.
Two commenters recommended adding to the final rule a provision requiring operators to develop, as part of the EP, a detailed written Oil Spill Prevention Program that includes a training program. One of the commenters suggest the prevention plan should address critical oil spill prevention programs such as blowout preventer testing, well control, corrosion monitoring and control programs, maintenance and testing of leak detection systems and alarms, and other prevention work.
BOEM and BSEE disagree. Oil spill prevention is a common theme among BOEM and BSEE regulations with the end goal being to prevent serious harm or damage to life, property, any mineral, national security or defense, or the marine, coastal or human environment. As planning is an essential part of spill prevention, the finalized provisions at § 550.220(a) mandate that the operator describe its emergency plans for responding to a variety of incidents, including a loss of well control, at the EP stage. Similar requirements at existing § 550.213(g) require the operator to discuss its worst-case blowout scenario in the EP, including options for response, such as surface intervention and a relief well. Further, existing regulations at § 550.219 mandate that the operator submit an OSRP in accordance with BSEE requirements in part 254, including the training requirements set forth in § 254.29. Accordingly, the Bureaus do not believe that the proposed revisions to § 550.220 are necessary or appropriate.
One commenter recommended deleting § 550.220(a) as existing regulations require a description of plans in the event of a loss of well control, the loss or disablement of a drilling unit, and the loss or damage to support craft, and the proposed language requires information concerning emergency plans in the event of `fire, explosion, or personnel evacuation'. The commenter explains that this information is currently captured by Emergency Evacuation Plans drafted for each of its drilling units and submitted to the U.S. Coast Guard (USCG) pursuant to 33 CFR 146.210. The commenter requested
BOEM disagrees. Drilling operations, especially in the Arctic OCS, are subject to operational risks and environmental challenges during every phase of the endeavor. For the most part, the text of § 550.220(a) remains unchanged from longstanding requirements. To the extent that operators have compiled the relevant information for other purposes, the burdens of providing them for the EP are minimal and may potentially be addressed through reference on a case by case basis.
One commenter stated the information requested in § 550.220(c)(1) is unnecessary and repetitive, as existing § 550.211 already requires a detailed description of drilling activities and this same information is also requested as part of the IOP under § 550.204.
BOEM disagrees that § 550.220(c)(1) is unnecessary and repetitive, as existing § 550.211 sets forth general requirements for what must be included with an operator's EP anywhere on the OCS. Because of the unique operating environment of the Arctic OCS, proposed activities in this region are subject to additional levels of scrutiny and specialized requirements. Section 550.220(c)(1) is addressed directly to that need, calling for descriptions of the suitability of proposed operations for Arctic OCS conditions, in contrast to the more generic requirements of § 550.211. Additionally, as explained in previous responses to comments, the operator's plans furnished with the IOP are less detailed than the information later available and required for submission with the EP, providing an opportunity for elaboration based on new information as it comes available.
One commenter is supportive of resource sharing with other operators, provided that appropriate terms and agreements can be made. However, the commenter asserted the requirement to share these proprietary private-party agreements under § 550.220(c)(5) is not appropriate and opposes the attempt to regulate what resources will be shared and with whom. The commenter asserted that involvement in any resource sharing agreements will not affect the operator's ability to meet the regulatory requirements regarding oil spills and emergency planning.
BOEM disagrees with the commenter's characterization of the regulation and clarifies that § 550.220(c)(5) is not an attempt to mandate resource sharing by regulation. Instead, this is a requirement to inform BOEM about any agreement the operator may have with a third party for sharing of assets or provisions for mutual aid in the event of an oil spill, as applicable, so regulators are aware of what response resources are available to an operator in the event of a loss of well control. This information is critical to ensure that the operator has made the necessary arrangements to respond appropriately in the event of a loss of well control incident. This information is also critical to confirm the operator's compliance with the relevant regulatory requirements related to well control equipment. To the extent that operators rely on such arrangements to satisfy their regulatory obligations, it is essential for the Bureaus to have access to the terms and conditions of those arrangements to confirm compliance. Additionally, the operator is required under this final rule at § 250.470(f)(1) and (3) to demonstrate at the APD stage that its membership agreements with cooperatives, service providers or other contractors include 24-hour per day availability of SCCE or related supplies while it is drilling or working below the surface casing. The operator is also required to describe its or its contractor's ability to access or deploy all necessary SCCE in accordance with § 250.471 and the SCCE listed in its EP. It is the operator's responsibility to ensure that reliance on resource sharing arrangements does not compromise its ability to fully and promptly respond to an event, and the required information is important to the bureaus' ability to ensure that this is addressed. We note that proprietary information is protected in accordance with existing §§ 250.197 and 550.197,
One commenter asserted that the anticipated end of season dates as described in § 550.220(c)(6) should not be driven by a specific calendar date, but by the application of performance-based principles including the ability of the operator's equipment, procedures, and expertise to effectively manage and mitigate risks that are reasonably likely to occur.
BOEM notes that the end of season dates discussed in the final rule at § 550.220(c)(6) are developed largely based on the capability of the operator's equipment and procedures to manage and mitigate risks associated with Arctic OCS conditions. Any date established depends on a number of factors, including a trigger date set by the Bureaus based on an evaluation of earliest sea ice encroachment, the latest ice and weather forecasts, the prevailing meteorological and oceanic conditions, and the timeframe in which an operator could drill a relief well. The specific calendar date is calculated using a performance-based metric, allowing for the operator to apply its capabilities and expertise in reaching a specific date, as approved by the Bureaus.
One commenter recommended deleting the entirety of § 550.220(a), (c)(3), and (c)(4) and replacing them with more performance-based requirements. Specifically, the commenter suggests that the EP be required to contain general planning information on source control and containment capabilities, including anticipated location and mobilization/demobilization times of equipment to mitigate risk from a loss of well control incident.
BOEM disagrees and is finalizing these sections as proposed. One of the main goals of this rulemaking is to help ensure, through advanced planning, that operators are capable of operating safely in the extreme and challenging Arctic OCS conditions. This rulemaking amends existing § 550.220(a) to add fire, explosion, and personnel evacuation to the events for which emergency plans are required and to replace the terms “blowout” with “loss of well control” and “craft” with “vessel, offshore vehicle, or aircraft” for clarification purposes. Paragraph (a) of § 550.220 otherwise remains unchanged from its longstanding form, and keeps the development of emergency plans largely within the performance-based control of the operator. Paragraphs (c)(3) and (4) of § 550.220 simply require the operator to provide a general description in its EP of how it plans to satisfy the separate operational requirements imposed by BSEE at §§ 250.471 and 250.472. While the operator has flexibility in determining how it will comply with those requirements, making the required EP description of the operator's compliance plans more general or performance-based would be unnecessary and inappropriate, and would not satisfy the Bureaus' need to ensure appropriate planning for compliance with the regulations.
One commenter requested that the requirement to provide some data for the APD be accelerated to the EP, including more information to account for operations in Arctic OCS conditions; more detail on emergency and critical operation curtailment plans; a detailed description of how the drilling rig, relief well rig, SCCE, support vessels and other associated support equipment and activities will be designed and conducted in a manner that accounts for Arctic OCS conditions; and information regarding operators' capabilities for
Both existing regulations and the regulations finalized in this rulemaking require varying levels of information at progressive stages of the planning and approval process. Furthermore, this final rule contains a combination of prescriptive and performance-based requirements that address a number of important issues. The required submissions begin with general information and are followed by more specificity with successive regulatory submittals, as the project proceeds from planning to implementation. The IOP is an overarching, high-level description of the integration of the exploration activities that provides an advanced summary of all phases of the proposed operations for the relevant Federal agencies to review and is designed to enable Federal agencies to identify possible vulnerabilities early in planning, and to facilitate interagency communication and discussion about possible permitting issues before submission of the EP. At the IOP stage, operators may not have contracts for vessels finalized or precise dates of drilling, accordingly, specific names of contractors are not necessary, but could be provided. At the EP stage the operator must provide a general description of its SCCE capabilities and relief rig plans, in accordance with § 550.220(c), conforming to §§ 250.471 and 250.472. BOEM anticipates that the relief rig description may still be general at the EP stage, but will be detailed enough for BOEM to confirm that the operator has plans in place for how it will conduct operations safely in compliance with the regulations. Existing § 550.213(g) also requires that an EP include a blowout scenario addressing matters including surface intervention and relief well capabilities. Section 550.220(c)(1) requires the EP to provide a description of how an operator will design and conduct the proposed activities in a manner that accounts for Arctic OCS conditions; including a description of how the operator will manage and oversee those activities as an integrated endeavor. Additionally, § 550.220(a) requires that the operator submit a description of emergency plans describing the operator's ability to respond to a fire, explosion, personnel evacuation, or loss of well control, as well as a loss or disablement of a drilling unit, and loss of or damage to a support vessel, offshore vehicle, or aircraft with the EP. These new and existing provisions provide for the appropriate level of detail regarding an operator's plans at successive stages of the approval process. In response to the comment recommending that the IOP be included as an appendix to the EP application, BOEM will have received the operator's IOP at a minimum of 90 days before the EP submittal; therefore it is optional for the operator to include the IOP as an appendix in the EP. In response to the commenter's recommendation of having the public review and comment on the IOP, BOEM will post public versions of the operator's IOP to its Web site when received.
One commenter suggested requiring that drilling rigs not previously used in frontier areas, such as the Arctic OCS, undergo a mandatory third-party review of the unit's design and that such review be submitted as part of the EP application.
BOEM does not believe that the final regulations require amendment in response to this comment. The information provided with the operator's EP is general by necessity; more detailed information becomes available as the operator progresses through the planning process. In accordance with existing § 550.211(c), the EP must include a description of the drilling unit. Later in the planning process at the APD stage, under finalized § 250.470, BSEE requires the operator to submit specific information on the drilling unit. This includes information required in finalized paragraphs (a)(2) and (g) of § 250.470, such as detailed descriptions of how the drilling unit will be prepared for service on the Arctic OCS and how the operator will comply with the requirements of API RP 2N,
Additionally, the operator's SEMS and the accompanying audit performed by a third-party must address the mechanical integrity of critical equipment. The revised requirements at § 250.1920(b)(5) will require Arctic OCS operators to increase their SEMS auditing frequency from every three years after the initial audit to every year in which drilling in the Arctic is conducted. Existing § 250.1920 requires that a third party Audit Service Provider accredited by a BSEE-approved accreditation body perform the audit. Accordingly, the proposed revisions are not necessary.
Two commenters recommend expanding the EP to address additional information including: Evidence that the operator consulted with marine mammal co-management organizations; a description of steps the operator will take to mitigate subsistence impacts, the establishment of appropriate start and stop timing for operations to minimize any potential conflict with subsistence activities, and an approved Conflict Avoidance Agreement (CAA) between the operator and the Alaska Eskimo Whaling Commission (AEWC). One of the commenters further recommended if a CAA is not included, then the EP should include an explanation as to the consultation process.
BOEM appreciates the commenter's concern for mitigating subsistence impacts and does not believe that the final regulations require amendment in response to this comment. For example, § 550.227 requires the operator to, among other things, assess the potential impacts of its proposed exploration activities, describe resources, conditions, and activities that could be affected by exploration operations (including impacts to marine mammals and subsistence and harvest practices), and list the agencies and persons that it consulted with regarding potential impacts associated with proposed exploration activities. Section 550.204(i) requires a description of the operator's efforts to minimize impacts on local community infrastructure. BOEM will also analyze subsistence impacts through its NEPA analyses.
With regard to the CAA processes, BOEM's Alaska OCS Region has regularly noted their positive value in public forums. The CAA is an agreement between AEWC and the operator and is considered a private agreement. As such, it is outside the scope of these regulations to require an operator to obtain a CAA from another entity. Although there is not a requirement for a CAA, discussion of resolutions during the consultation process and plans for continued consultation are required to be included in the EP. BOEM and BSEE continue to be committed to engaging on a routine basis with the AEWC. The AEWC leaders and members bring unmatched perspectives and insights into the relationships that BOEM and BSEE seek to maintain. With respect to the commenters suggestion that the operator be required to include evidence that the operator consulted with marine mammal co-management organizations, § 550.222 addresses the commenters
The existing regulations at § 250.188 require operators to provide oral and written notification to the BSEE District Manager (who in the Alaska OCS region is the Regional Supervisor) of, among other things, any injuries, fatalities, losses of well control, fires and explosions, and incidents affecting operations. BSEE proposed to add a new paragraph (c) to this section requiring operators on the Arctic OCS to provide an immediate oral report to the BSEE onsite inspector, if one is present, or to the Regional Supervisor, of any sea ice movement or condition that has the potential to affect operations or trigger ice management activities, as well as to report the start and termination of these activities, and any “kicks” or operational issues that are unexpected and could result in the loss of well control. The new provision would likewise require a written report of ice management activities within 24 hours of their completion.
Several comments were received on this section. BSEE has evaluated these comments and decided to finalize § 250.188(c) as proposed. We have separated comments received on this section into two topics: (i) Comments on ice management reporting, and (ii) comments on reporting of kicks or operational issues that are unexpected and could result in the loss of well control.
Two commenters assert that the ice management reporting requirements are too subjective and vague, and that the reporting should be limited to ice incursion incidents that affect operations or trigger ice management activities as stated in the ice management plan. One of these commenters further asserted that the requirement would necessitate nearly constant communication with BSEE regarding sea ice movement and conditions, and requested that BSEE allow 24 hours to report the incident so the operator is able to focus on a safe response to the incident before contacting the regulator.
BSEE disagrees with these comments. The ice management reporting requirements of this provision require operators to remain in close communication with BSEE about sea ice conditions that have the potential to affect operations before they reach the point of triggering ice management activities as stated in the ice management plan. This requirement does not necessitate constant communication, as the reporting requirements are limited to sea ice movements or conditions that have the potential to affect operations or trigger ice management activities. Just as the operator needs to have sufficient time to plan and act in the event that ice poses an operational hazard, BSEE would need sufficient time to oversee the safety of an operator's reactions and prepare to respond, if a response is necessary, due to a safety or environmental incident resulting from an ice event. BSEE does not agree that the identified standard is vague or ambiguous, and is confident, including based upon recent experience in 2012 and 2015, that Arctic OCS operators will be able to implement the provision in practice, and in coordination with the BSEE inspector or Regional Supervisor.
The requirement to notify the BSEE inspector on location or the Regional Supervisor of sea ice movement or conditions that have the potential to affect an operation or trigger ice management activities is important and appropriate. BSEE agrees with the commenter's statement that the operator should focus on a safe response to an active incident, but we disagree with the commenter's request to allow 24 hours to report an incident. The requirement for an immediate oral report is satisfied by notifying the onsite inspector or BSEE Regional Supervisor when an event or potential event is recognized. Requiring an immediate oral report is reasonable and likely will not burden the operator. This requirement will ensure that BSEE is informed of ice management concerns but will allow the operator to focus on executing safe ice management operations. Consistent with the prioritization of safe ice management operations, the regulation allows 24 hours for the written report to be completed.
One commenter questioned the suitability of § 250.190,
Two commenters suggested the ice monitoring requirement should be implemented to focus on the operators specifying reporting requirements in advance, based on the risks of a particular location, and these risks should be included in the ice management plan.
BSEE agrees in part. The operator is responsible for addressing the particular ice event, based on the ice management plan submitted to BOEM under § 550.220(c)(2). The operator's ice management plan should address how the operator will respond to and manage ice hazards, its ice alert procedures, and the procedures and thresholds for activating the ice management system. This ice management plan is required as part of the EP, which BOEM reviews to ensure the plan addresses all of BOEM's requirements. However, BSEE also believes that it is necessary and appropriate to establish baseline reporting requirements, not subject to individual operator plan specifications, to enable the agency to perform its necessary oversight functions, and therefore that no revision to the rule is needed in response to the comment.
One commenter proposes revising § 250.188(c)(1)(i) by deleting the requirement to report any sea ice movement or condition that has the potential to trigger ice management activities. The commenter suggests that compliance with these requirements would be achieved by including BSEE on the notification list used when an ice alert code is changed. BSEE does not agree that § 250.188(c)(1)(i) needs to be revised. The language of that provision makes it clear when the operator needs to notify BSEE. The commenter's suggested revision would change the mandatory reporting requirement to a provision allowing the operator to define its notification obligations through its ice management plan. Furthermore, it is the responsibility of the operator to determine how to comply with its notification obligations, including through use of its ice alert system.
Two commenters objected to the requirement to notify BSEE immediately
BSEE agrees with the commenter's statement that the operator should focus on a safe response to an active well control incident. The immediate reporting requirement is not intended to undermine safety, and safe operations always take precedence over satisfying reporting requirements. As discussed above in a similar comment to reporting any sea ice movement or condition that has the potential to affect operations or trigger ice management activities, the requirements finalized in this rulemaking allow 24 hours for the written report to be completed. It is appropriate to immediately provide an oral notification to the onsite inspector or Regional Supervisor as soon as an event or potential event is recognized. Accordingly, BSEE disagrees that this provision should be removed or revised. With the BSEE inspector on the rig during Alaska OCS exploratory drilling operations, an immediate oral report to that inspector is not only reasonable, but would not burden the operator. The provision also allows for notification to the Regional Supervisor if no inspector is onsite. Such notification is important to BSEE's fulfillment of its mandate to oversee operations to ensure safety and environmental protection.
One commenter asserted that the kick reporting requirement is more appropriate for inclusion in the Well Control final rule because there is no Arctic-specific reason to report kicks immediately.
BSEE evaluated this comment and determined it is appropriate to implement Arctic OCS specific requirements for kick reporting. As discussed in this preamble, the challenges to conducting operations and responding to emergencies in the extreme and variable environmental and weather conditions in the Arctic are demanding and distinct from those present in other OCS regions. Exploratory operations from MODUs on the Arctic OCS are conducted in sub-freezing temperatures, significant fog cover in the summer, strong winds and currents, storms that produce freezing spray and dangerous sea states, snow, and significant ice cover. Because of these conditions, the challenges of responding to kicks, and any resulting loss of well control, on the Arctic OCS are sufficiently distinct to justify distinct treatment. The Well Control Rule has national application and is therefore not the appropriate regulatory vehicle to address Arctic-specific concerns.
Three commenters request clarification that it is not BSEE's intent to direct well control activities beginning with any unexpected kick. The commenters assert that premature regulator intervention would increase confusion and any existing risks pertaining to the status of the well under such circumstances. Commenters also assert that including kick occurrence information with the daily and weekly well activity reports provides BSEE with the information it needs related to kick occurrence.
BSEE does not intend to direct well control activities and acknowledges that the operator is responsible for any immediate response to ensure the safety of the crew and facility. The notification requirements are within BSEE's authority to monitor and review any actions that may lead to a loss of well control. As described previously, safe operations are the primary concern. This requirement does not state, nor is there an implication, that the regulator will intervene in operations. However, proper response involves providing the regulator with timely and accurate information, so that it is actively aware of threats to well control. Merely including this information in well activity reports does not provide BSEE the information in a suitable timeframe.
One commenter requested that BSEE clarify what kicks are considered “unexpected” and could result in loss of well control. The commenter suggests that BSEE should provide reporting thresholds (
BSEE disagrees. The kick reporting requirement deliberately does not provide for the commenter's suggested reporting threshold. To the first part of the commenter's request, “unexpected” is intended to have its ordinary, typical definition, and an “unexpected” kick is one that is not anticipated in the course of normal operations and that could result in loss of well control. As with the ice management reporting requirements discussed above, BSEE determined not to prescriptively limit the reporting requirement to certain threshold triggers because it is essential for operators to remain in close communication with BSEE about any operational issues that are unexpected and could result in a loss of well control. Just as the operator needs to have sufficient time to act in the event of an incident that poses an operational hazard, BSEE would need sufficient time to oversee the safety of an operator's reactions and prepare to respond if a response is necessary due to a safety or environmental incident.
One commenter asked whether contractors or individuals are required to ascertain if the operator made the required reports, and to report independently if they have not.
As a general matter, BSEE looks to the designated operator to make filings and reports on behalf of all lessees and owners of operating rights. Because existing § 250.146(c) states that when a regulation requires that a lessee take an action, the person actually performing the activity is also responsible for complying with that requirement, it follows that the lessees' reporting duties could extend to a contractor to the extent that contractor actually performs the activity.
The existing regulations at § 250.198 identify what documents BSEE has incorporated by reference. BSEE proposed to add paragraph (h)(95) to existing § 250.198 to incorporate by reference the API RP 2N,
Several comments were received on this section. BSEE evaluated these comments and decided to finalize § 250.198 as proposed. Additional
Several commenters oppose incorporating API RP 2N Third edition because, at the time of publication of the NPRM, API RP 2N Third edition was in draft form. Therefore, they assert that the final version should not be incorporated in the final rule. One of the commenters requested an additional 30-day public review and comment period for the final API RP 2N Third edition. Additionally, several commenters suggested that ISO 19906 should be incorporated by reference.
BSEE disagrees. Since the effect of incorporating a document by reference is no different than printing the requirement directly in the
The relevant question is whether the NPRM's discussion of draft API RP 2N Third Edition gave adequate notice of the requirements that the Department is now finalizing. The test for adequate notice is whether the final rule is a logical outgrowth of the proposed rule.
One commenter asserted that BSEE should not incorporate ISO 19906 through the rulemaking because it does not apply specifically to MODUs.
BSEE disagrees. Although we are incorporating by reference the applicable provisions of API RP 2N Third Edition, rather than ISO 19906, the rationale is identical. While the commenter is correct that ISO 19906 (or API RP 2N Third Edition) does not apply specifically to MODUs, the procedures relating to ice actions and ice management contained in the standards can be applied to such units. The rule does not purport to incorporate and apply to MODUs every aspect of these standards, but rather requires the operator to describe how it will utilize the relevant best practices and specifically identifies portions that are not applicable.
Two commenters oppose the incorporation by reference of API RP 2N Third Edition because its incorporation by reference into BSEE regulations conflicts with API's intent that RPs should not be applied inflexibly and should not replace sound engineering judgment. BSEE disagrees that there is a conflict between the finalized incorporation by reference provisions of this rule and the intent of RPs. As stated in finalized § 250.470(g), an operator must comply with the incorporated provisions of API RP 2N Third Edition where it does not conflict with other Arctic OCS requirements under 30 CFR part 250, and must provide a detailed description of how the operator will utilize the best practices included in API RP 2N Third Edition. Accordingly, the flexibility of the application of RP 2N Third Edition is retained while providing for regulatory oversight of how the provisions will be tailored to each APD.
Two commenters suggest lease operators and drilling contractors utilize applicable class rules from classification societies recognized by the International Association of Classification Societies (IACS) to determine what, if any, measures need to be taken from a vessel structure and equipment perspective based upon the area of operations and the seasonal conditions that are expected to be encountered. Another commenter also opposed the incorporation of API RP 2N Third Edition, or ISO equivalents, as an absolute requirement due to the variability of operations that may be conducted in the Arctic and the potential restrictions that could result from such a prescriptive requirement. The commenter recommended the rules focus on operators proving critical equipment fit for Arctic use based on the specific operating environment and assumptions for the given project.
BSEE disagrees. We recognize that MODUs are designed for a specific set of criteria or are classed for a specific environment, water depth, and drilling capacity which, in combination, establishes the design limits of the MODU. Because MODUs are not traditionally designed and/or classed specifically for the environmental conditions found in the Arctic region, it is necessary, if MODUs are to be considered for exploratory drilling on the Arctic OCS, to have in place criteria for the assessment of the site and the MODU for these uniquely challenging operating conditions. API RP 2N Third Edition is the current industry standard that, although not specifically applicable to MODUs, provides the criteria for site and MODU assessment because the procedures relating to ice actions and ice management contained in the standards can be applied to such units. Even if the MODU is reclassified or redesigned for Arctic conditions, operators will still need to perform an assessment for the specific environmental conditions during the planned window of operations of the MODU on the Arctic OCS in compliance with the final APD requirements of § 250.470. Equipment on the MODU used to support the drilling operations should also be evaluated for suitability for Arctic conditions, but should be evaluated using the appropriate standards for equipment operating in the Arctic environment, not a structural design standard for the Arctic region. BSEE's existing regulation at § 250.418(f) requires that operators include in their APD evidence that, in areas subject to subfreezing conditions
Two commenters recommended other international standards, such as the International Maritime Organization (IMO) Standard for Ships Operating in Polar Waters, 2010 Edition and the Arctic Council Arctic Offshore Oil and Gas Guidelines, should be considered for incorporation by reference.
For this final rule, BSEE has determined that the incorporation by reference of the applicable provisions of API RP 2N Third Edition codifies appropriate standards to regulate MODUs and jack-up rigs conducting exploratory drilling operations on the Arctic OCS. BSEE will continue to review other standards to determine their applicability and the propriety of incorporating them, in addition to API RP 2N Third Edition, to support Arctic OCS exploration using MODUs.
One commenter does not support the incorporation of ISO 19905–1 in the final rule. Another commenter noted BSEE should be aware of the limited applicability of ISO 19905–1 to the assessment of self-elevating units, while ISO 19906 is intended to be used irrespective of structure type. The commenter points out that ISO 19905–1 relies on ISO 19906 for the determination of ice actions which, in practice, means that ISO 19906 has to be used as well.
BSEE agrees with the commenter and determined to incorporate by reference API RP 2N Third Edition. BSEE also agrees with the comment regarding the relationship between ISO 19905–1 and ISO 19906. BSEE recognizes that MODUs are designed for a specific set of criteria or are classed for a specific environment, water depth, and drilling capacity which, in combination, establishes the design limits of the MODU. API RP 2N Third Edition is the current industry standard that provides the criteria for site and MODU assessment. If industry develops additional standards or guidelines for the assessment of MODUs in the Arctic region, then BSEE may consider those during future rulemakings.
Two commenters recommended that any standards incorporated by reference should be available online to the public free of charge. One of the commenters asserted that because the documents were not freely available during the public comment period, neither API RP 2N Third Edition nor ISO 19906 qualify as being “reasonably available” as discussed in the
BSEE disagrees with the assertions of these commenters. The
First, it included a discussion of how interested parties could view a copy of the draft version of API RP 2N Third Edition, and it stated that once the standard was finalized by API it would continue to be available on API's Web site for free viewing or for purchase in electronic or hard copy. Specifically, the NPRM preamble stated: “BSEE proposes to incorporate, with certain exclusions discussed later in this proposed rule, draft proposed API RP 2N, Third Edition, which is available for free public viewing during the API balloting process on API's Web site at:
Further, BSEE is permitted to incorporate by reference (IBR) copyrighted materials into its regulations, and the OFR has expressly concluded that an agency's IBR of copyrighted material does not result in the loss of that copyright.
The
Second, the preamble to the proposed rule also included a summary of the RP 2N Third Edition. Early on the preamble stated that the document “would be appropriate for certain aspects of drilling operations, such as accounting for the severe weather and thermal effects on structures, maintenance procedures, and safety.” (80 FR 9932). Later, describing which parts of RP 2N would not apply, the preamble indicates different kinds of structures that are covered under RP 2N and are subject to BSEE's jurisdiction.
Two commenters recommend the regulations include a complete and clearly organized summary of the API RP 2N Third Edition provisions being incorporated. One of the commenters asserted that the rule should include a technical evaluation explaining the criteria used to determine whether a
BSEE disagrees. The preamble to the NPRM included a summary of API RP 2N Third Edition. The NPRM preamble stated that the document “would be appropriate for certain aspects of drilling operations, such as accounting for the severe weather and thermal effects on structures, maintenance procedures, and safety” (80 FR at 9932). It also described which parts of RP 2N Third Edition would not apply, and the preamble indicated which kinds of structures are covered under RP 2N Third Edition and subject to BSEE's jurisdiction.
BSEE proposed to revise § 250.300 pollution prevention regulations to address Arctic OCS exploratory drilling operations by adding provisions in paragraphs (b)(1) and (2). These provisions would require that, during exploratory drilling operations on the Arctic OCS, the operator must capture all petroleum-based mud, and associated cuttings from operations that use petroleum-based mud, to prevent their discharge into the marine environment. The provisions also state that the Regional Supervisor may require capture of all water-based mud, and associated cuttings, from operations after completion of the hole for the conductor casing to prevent its discharge into the marine environment based on certain conditions such as: Proximity of drilling operations to subsistence hunting and fishing locations; the extent to which discharged mud or cuttings may cause marine mammals to alter their migratory patterns in a manner that impedes subsistence users' access to, or use of, those resources, or increases the risk of injury to subsistence users; or the extent to which discharged mud or cuttings may adversely affect marine mammals, fish, or their habitat.
Several comments were received on this section. BSEE has reviewed the comments and determined, with the exception of various technical edits, the substantive provisions of § 250.188 are finalized as proposed.
Many commenters assert that the pollution prevention requirements set forth in the revisions to § 250.300 are unnecessary and redundant with existing authorities or exceed BOEM and BSEE's jurisdiction. Several commenters further assert that the provisions specifically duplicate or conflict with EPA regulations under the CWA, as implemented through National Pollution Discharge Elimination System (NPDES) general permits and strict monitoring requirements. One commenter suggests that BOEM and BSEE should defer to the National Oceanic and Atmospheric Administration (NOAA), National Marine Fisheries Service (NMFS) and its Incidental Harassment Authorization program with respect to potential impacts on marine mammals and subsistence hunting activities.
BSEE disagrees with the commenters. BSEE has the authority to implement the proposed changes to § 250.300, and furthermore the pollution prevention provisions of this final rule do not conflict with the authority of other agencies, such as the EPA and NOAA, to regulate discharges into the marine environment from oil and gas operations on the OCS.
Under OCSLA, BOEM and BSEE are jointly responsible for implementing environmental safeguards to ensure that oil and gas exploration and production activities on the OCS are conducted in a manner which minimizes damage to the environment and dangers to life or health, which provides for the conservation of the natural resources of the OCS, and which will not be unduly harmful to aquatic life in the area, result in pollution, create hazardous or unsafe conditions, or unreasonably interfere with other users of the area.
E.O. 12777 delegated the functions vested in the President by section 311(j)(1)(C) of the CWA to the Secretary, among others. These delegations establish a cooperative and complementary system for implementing the requirements of the CWA among the Secretary, EPA, NOAA, and others. The functions delegated to the Secretary authorize the Secretary to establish procedures, methods and equipment and other requirements for equipment to prevent and contain discharges of oil and hazardous substances from offshore facilities. The revised language of § 250.300 is consistent with this authorization and does not conflict with any other delegation of authority. By requiring the capture of mud and cuttings associated with exploratory drilling operations on the Arctic OCS under the identified conditions, BSEE is establishing procedures, methods, equipment and requirements for equipment to prevent or contain the discharge of oil and hazardous substances from offshore facilities, as is contemplated by section 311(j)(1)(C) of the CWA. Thus, the changes to § 250.300 are fully within BSEE's authority under the CWA.
The revisions do not conflict with the NPDES general permits issued by the EPA in November 2012. The NPDES permits authorize certain discharges from oil and gas exploratory facilities on the OCS in the Beaufort Sea and the Chukchi Sea, including certain discharges of water-based drilling fluids and drill cuttings, subject to effluent limitations and other requirements. The permits do not allow the discharge of oil-based drilling fluids in any location or at any time or the discharge of water-based drilling fluids and drill cuttings during the fall bowhead whale hunt in the Beaufort Sea. The revisions to § 250.300 are designed to complement, and do not conflict with, these permits. Further, as an agency statutorily responsible for minimizing environmental damage from oil and gas exploration activities on the OCS, BSEE has the authority to issue regulations that are more stringent than the NPDES permits issued by EPA. Nothing about the EPA's authority to regulate pursuant to the CWA detracts from the Secretary's delegated OPA authority under E.O. 12777 or direct authority under OCSLA.
Finally, when writing the rule, BSEE consulted with the EPA, NOAA, and other Federal agencies about regulating discharges from operations on the OCS. In addition, once this rule is final, BSEE will continue its practice of
Several commenters were generally supportive of the pollution prevention requirements, but request that the requirements mandate the capture of all water-based mud and cuttings. One of these commenters also asserted the operator should have the burden of demonstrating lack of harm associated with waste discharges, noting subsistence hunting concerns, because marine mammals traverse through areas where the regulated pollution may be discharged.
BOEM and BSEE do not agree that all water-based mud and cuttings must be captured. This final rule implements the statutory mandate under OCSLA to promote oil and gas development while protecting the environment. The Bureaus have not seen sufficient evidence to suggest that water-based mud and associated cuttings are sufficiently problematic in all circumstances to justify a uniform capture requirement. Regarding the comment recommending the operator bear the burden of demonstrating a lack of harm to subsistence hunting, we determined that the final rule addresses the commenter's concern. For example, the requirements in § 250.300(b)(1) and (2) clarify BSEE's authority to prevent discharges based on potential effects to subsistence hunting activities and environmental concerns related to the marine environment. In addition to OCSLA, BOEM must comply with mandates of other Federal laws (
Additionally, during the EP review process BOEM conducts environmental review of the EP, which includes addressing subsistence-harvest patterns, socio-cultural systems, and environmental justice. BOEM's environmental review describes the direct, indirect, and cumulative effects on the offshore and onshore environments expected to occur as a result of exploration activities. BOEM's Environmental Assessments (EA) describe the direct, indirect, and cumulative effects on the offshore and onshore environments expected to occur as a result of implementation of EPs. The analytical conclusions must clearly identify whether potential effects are significant, including through relevant information regarding environmental consequences obtained through consultation and review by interested parties. The EA must also identify the agencies and persons consulted with regard to potential effects associated with activities within an EP. Controversial issues and substantive opposing or conflicting views raised by Federal, State, or local agencies, Tribes, or the public regarding the level of environmental impact of the proposal will be addressed. Relevant approvals are also conditioned on compliance with protective restrictions and mitigations put in place by the U.S. Fish and Wildlife Service (USFWS) and NMFS. Through these and other measures, the Bureaus are able to sufficiently analyze and mitigate impacts to marine mammals and subsistence activities, and no revision to this provision is necessary.
One commenter suggests that any determination to allow the discharge of water-based drilling cuttings be made at the permitting stage to allow the operator adequate time for planning and installation of equipment and resources.
BOEM and BSEE agree that pollution prevention requirements should be considered as early as possible. Any determination by the BSEE Regional Supervisor that the operator must capture all water-based mud from operations after completion of the hole for the conductor casing will be made as soon as feasible, on a case-by-case basis, to allow for consideration of newly discovered impacts and impacts that may result from permit modifications. NEPA analysis of proposed exploration activities will help inform BSEE's determination.
Two commenters support the requirements to capture all petroleum-based muds and associated cuttings. One commenter recommended the provisions contain a narrowly defined exception for technical infeasibility, with the burden of proof placed on the operator to demonstrate technical infeasibility in its EP.
We disagree with the commenter's suggestion to allow an exception for technical infeasibility. We believe it is technically feasible, and a common industry practice today, to collect the petroleum based mud and cuttings and back haul them for disposal at an approved onshore disposal site. Existing regulations already provide for departures and use of alternate procedures under appropriate circumstances.
Several commenters recommend the capture requirement be extended to all discharges. One of the commenters further recommended the prohibition of all discharges when technically feasible, with the burden of proof on the operator, and asserted that there would only be an incremental increase in costs offset by cost savings from avoided discharge monitoring, record keeping, reporting, and sampling for heavy metal contamination in marine sediment.
Under existing § 250.300(b)(1), BSEE already has the authority to restrict the rate of drilling fluid discharges or prescribe alternative methods if environmental or operational concerns are raised. Amendments to the section clarify the Regional Supervisor's authority to impose operational measures that complement EPA's discharge limitations by considering potential impacts to specific components of the Arctic environment, such as subsistence activities, marine resources, and coastal areas.
The EPA has the authority to issue NPDES general permits for discharges under CWA section 301(a), 33 U.S.C. 1311(a), which generally prohibits the discharge of pollutants to the waters of the U.S. unless authorized by a NPDES permit. EPA typically issues NPDES general permits, rather than individual permits, for discharges from offshore oil and gas exploration facilities. The EPA uses the results of Ocean Discharge Criteria Evaluations (ODCE) and traditional knowledge when issuing general permits for oil and gas activities. For example, one of the criteria analyzed by EPA for ODCE is the potential impacts of discharges on human health through direct and indirect pathways. As subsistence hunting is directly related to human health, the EPA can require mitigation practices, such as environmental monitoring programs or restrictions on discharges during subsistence hunting seasons. The EPA addressed subsistence hunting concerns in its October 2012 Environmental Justice Analysis for Support of NPDES General Permits for Oil and Gas Exploration facilities in the Beaufort and Chukchi Seas.
We note the requirements finalized at § 250.300(b)(2) require the capture of all cuttings from Arctic OCS operations that utilize petroleum-based mud and, after consideration of various factors, the Regional Supervisor also has discretion to require the capture of cuttings from operations that utilize water-based mud. Additionally, under existing § 550.202, BOEM ensures, among other things, that the operator conforms to sound conservation practices, does not interfere with other uses of the OCS, and does not cause harm to the human, marine, or coastal environment. Both existing regulations and the requirements finalized at
One commenter disagrees with providing the Regional Supervisor discretion to prohibit both water- and petroleum-based mud and cuttings based on environmental factors, including migratory patterns and adverse effects to marine mammals, fish or their habitat. The commenter asserted that there is no scientific evidence suggesting whales detect odors from drilling, let alone respond to odors in a way that would substantially alter their migration patterns. Accordingly, the commenter asserted, concomitant changes to subsistence hunting, such as hypothetically needing to travel farther beyond historic whale migration routes and hunting areas, are not expected.
BSEE has existing authority under § 250.300(b)(1) to restrict drilling fluid discharges or prescribe alternative methods if environmental or operational concerns are raised. Amendments to the section clarify and provide guidance regarding the Regional Supervisor's authority to impose operational measures that complement EPA's discharge limitations by considering potential impacts to specific components of the Arctic environment, such as important subsistence activities, marine resources, and coastal areas. In crafting these amendments, the Bureaus considered all available science-based factors and traditional knowledge and determined the environmental effects of discharges into waters surrounding operations should be one of the factors the Regional Supervisor may consider when prohibiting discharges of water-based muds and associated cuttings. BOEM incorporates both science and traditional knowledge in its environmental documents prepared under the NEPA. This NEPA analysis helps ensure that BOEM and BSEE make decisions based on an understanding of environmental consequences with the intent to protect, restore, and enhance the environment of the Arctic OCS while balancing the Nation's need for oil and gas resources.
One commenter recommended rewording the provisions to allow for a science-based assessment to be reviewed by BSEE and stakeholders as part of a transparent process.
As a standard practice, BOEM and BSEE consult with Federal, State, and local governments, as well as federally recognized Alaska Native Tribes and ANCSA Corporations, and provide opportunities to be informed by the scientific community, non-governmental organizations, and concerned citizens to maintain transparency. However, for activity authorized under OCSLA, final decisions will rest either with BOEM under part 550 authorities or with BSEE under part 250 authorities. These decisions are made to protect the best interests of the Nation and in compliance with other Federal law, including, for example, NEPA, ESA, or the Marine Mammal Protection Act (MMPA).
BSEE proposed to add a new paragraph (c) to the former § 250.402. As discussed in Section IV.A, the contents of § 250.402 were subsequently moved to a new § 250.720 by the Well Control Rule. Therefore the new paragraph (c) has been finalized at § 250.720(c) in this rulemaking. This new paragraph requires exploratory drilling operators on the Arctic OCS to ensure that any equipment left on, near, or in a temporarily abandoned well that has penetrated below the surface casing be secured in a way that would protect the well head and prevent or minimize the likelihood of the integrity of the well or plugs being compromised. The primary concern this provision is designed to address is the possibility that ice floes could sever, dislodge, or drag any exploration-related equipment, obstructions or protrusions left on the well or the adjacent seafloor. The language, however, is drafted to encompass damage from any foreseeable source. The provision in paragraph (c)(1), which is designed to be performance-based, would allow operators to devise optimal strategies for identifying and accounting for threats to the integrity of equipment left on the OCS, and would be limited only to exploration wells that have penetrated below the surface casing.
However, for exploration wells located in an area subject to ice scour, based on a shallow hazards survey, final paragraph (c)(2) would require a mudline cellar or equivalent means of minimizing the risk of damage to the well head and well bore. BSEE added “well bore” to the provision to clarify that ice scour presents risks to equipment located both at the well head and in the well bore. BSEE may approve an equivalent means that will meet or exceed the level of safety and environmental protection required if the operator can show that utilizing a mudline cellar would compromise the stability of the rig, impede access to the well head during a well control event, or otherwise create operational risks. The BSEE Regional Supervisor will evaluate, during the APD process, whether a proposed equivalent approach is sufficiently protective.
Several commenters supported a performance-based approach and recommended that the final rule revise proposed § 250.402(c) to permit an operator to select technology that can best address the source control event according to the operator's plan. One of the commenters argued that a prescriptive approach to regulation stifles innovation, introduces uncertainty and promotes a particular type of spill response technology still in development, at the expense of other approaches combining different components that may provide equal or better protection against risk. This commenter asserted that the rulemaking does not provide a basis for determining how equivalency should or could be demonstrated by an operator or how it would be evaluated by the regulators.
BSEE agrees with the importance of allowing for the use of technology that is best suited to an operator's plan and understands that technology may exist or be developed that provides equal or better protection against risk than that prescribed in the regulation. To clarify this, we are revising the language in proposed § 250.402(c)(2). The finalized regulation at § 250.720(c)(2) establishes a performance standard, while also specifying a prescriptive method for achieving the performance standard. Section 250.720(c)(1) provides that an operator must ensure applicable equipment is “positioned in a manner” that will protect the well head and prevent or minimize the likelihood of compromising the downhole integrity of the well or the effectiveness of the well plugs, but does not dictate how those ends are to be achieved. Additionally, in areas of ice scour, § 250.720(c)(2) specifically allows for “an equivalent” to a well mudline cellar as an alternative means to protect the well head and wellbore. BSEE may approve an equivalent means that will meet or exceed the level of safety and environmental protection required if the operator can show that utilizing a mudline cellar would compromise the stability of the rig, impede access to the well head during a well control event, or otherwise create operational risks. The flexibility provided by these performance-based standards is adequate to address the commenter's concerns.
Existing regulations also facilitate the approval of alternate equipment and procedures. Section 250.141—
Regarding the commenters' concern that this rulemaking does not provide a basis for determining how equivalency should or could be demonstrated by an operator or how it would be evaluated by the regulators, we note the concern and have added a discussion in Section III.B to clarify how BSEE implements the provisions of § 250.141. Under § 250.141(c), the operator must submit information or give an oral presentation to the Regional Supervisor describing the site-specific application(s), performance characteristics, and safety features of the proposed procedure or equipment.
One commenter suggested that the final regulations should allow for the use of an open system, such as the use of a rotating head, managed pressure drilling, and/or riser gas handler, as this would allow for closer monitoring of flows and wellbore pressures. The commenter asserted that use of these options would protect against the formation of undetected or unconfirmed hydrocarbons arriving at an open surface arrangement with no backpressure and subsequent violent expansion/release of hydrocarbon gas clouds. The commenter recommended that the system used be determined based on water depth and other well/drilling rig parameters.
BSEE generally agrees, with the qualification that use of a system that incorporates a rotating head device, managed pressure drilling (MPD) technology, and/or riser gas handlers, is only appropriate in certain situations. For example, in settings such as the Gulf of Mexico, particularly in deep water where the safe drilling margin is typically very narrow, this technology has been used effectively. Currently, we are aware of four different MPD type systems available for use in the Gulf of Mexico, including use of a rotating control device. These include the following: (1) Constant bottom hole pressure for drilling in narrow or relatively unknown safe mud weight windows; (2) return flow control for early kick-loss detection; (3) mud cap drilling for drilling in severe to total loss zones with sacrificial fluids; and (4) dual gradient drilling for drilling in water depths greater than 5,000 feet. Use of open systems may have applicability in frontier areas such as the Arctic OCS where additional hydrostatic control may be advantageous to ensure a well is drilled safely. The provisions finalized at § 250.720(c) do not preclude an operator from proposing use of such a system in areas of ice scour. BSEE may approve an equivalent means that will meet or exceed the level of safety and environmental protection provided by a mudline cellar if the operator can show that utilizing a mudline cellar would compromise the stability of the rig, impede access to the well head during a well control event, or otherwise create operational risks. Additionally, an open system may be approved as an alternate procedure or equipment under § 250.141 if it is demonstrated to provide an equivalent means of minimizing risk of damage to the well head and wellbore.
One commenter recommended that BSEE provide guidance regarding the use of a slim-hole “closed” system approach during an initial exploration phase. The commenter asserted that a slim-hole approach may be quite possible in the Arctic and would result in far less impact on the environment for exploration drilling where no incident occurred. Additionally, the commenter asserted that the “closed” system allows for far better monitoring of flows in and out of the well.
BSEE agrees with the comment, as the use of a slim hole “closed” system approach to exploratory drilling operations on the Arctic OCS may have benefits in certain situations. As stated above, the provisions of this section do not preclude an operator from proposing use of such a system, if it can be demonstrated to provide an equivalent means of minimizing risk of damage to the well head. The existing regulations at § 250.141 also allow an operator to propose alternative methods of compliance if they can validate that such proposals provide for an equivalent or greater level of safety to personnel and the environment as what is required in the regulations.
One commenter suggested the use of a comprehensive up-to-date barrier diagram for each well, showing the condition and verification of each component of the barrier system. The commenter suggests that this diagram should be available for all involved to see and for inspection by authorities without notice.
BSEE agrees with having a barrier diagram for each well and has determined the concern is addressed in existing regulations. Section 250.413,
One commenter recommended there should be improvements, as appropriate, to the barrier system, specifying that these may include improvements to BOP equipment and to the monitoring and verification of casing/tubular connections.
We agree with the importance of improvements to barrier systems used during the drilling of a well. In addition to improvements enacted through this rulemaking, BSEE finalized several additional improvements to barrier systems in the Well Control Rule. BSEE also participates in various standards development work groups and workshops and has assisted with the preparation of Systems Reliability Technical Evaluations.
One commenter cautioned that operations should recognize limits of the casing shoe and potential consequences, should the leak off test pressure be exceeded. The commenter recommended the regulations require an estimate of the shoe strength, updated as information becomes available, and an assessment of what pressures will be imposed upon the shoe (as the weakest point in the openhole section of the wellbore) given the well/formation characteristics, uncertainties and potential interacting operations. The commenter highlights the Frade incident (Chevron, Brazil, 2010) as an example of what can happen when these issues are not adequately addressed.
BSEE is aware of the significance of the Frade incident, during which an estimated 4,600 barrels of oil leaked into the ocean during the drilling of an appraisal well in the Frade Offshore Field off the coast of Brazil, and has held various discussions with Brazil's National Agency of Petroleum, Natural Gas and Biofuels since the incident to better understand its causes. The agency believes that existing regulations at § 250.427, which require a pressure integrity test after drilling at least 10 feet but no more than 50 feet of new hole below the casing shoe, are adequate to prevent such an incident happening on the Arctic OCS, even though these provisions do not require an additional pressure integrity test to update a shoe's strength.
One commenter recommended revising the proposed rule to allow for better flow measurement in and out of the well. The commenter also suggested the need for better understanding of what differences could occur between flow in and flow out, specifying that this is needed where there is hydrocarbon within the flow system. The commenter asserted that it is essential to undertake detailed modeling of potential events in order to recognize potential issues and mitigations to be taken, and ensure that crews are properly and effectively trained.
BSEE agrees with the comment on addressing better measurement of flow in and flow out of a well as a way to improve safety. In December 2015, the agency completed a TAP study, #743-Evaluation of Automated Well Safety, studying early kick detection and managed pressure drilling, including use of a Coriolis meter to monitor flow in/flow out of a wellbore. This study identifies automated well safety technologies with the potential to increase safety during OCS drilling, well completion, well work over and production operations, as well as to assess early well kick detection approaches, equipment, techniques, and systems associated with drilling operations on the OCS. These studies will help us to identify and address improvements in flow measurements.
One commenter recommended that, if a marine riser is used, additional instrumentation should be included to identify and provide alarms to address the presence of previously undetected hydrocarbons in the riser prior to these hydrocarbons reaching the surface.
BSEE agrees with the commenter on the importance of detecting hydrocarbons in a drilling riser and notes that our existing regulations—formerly at § 250.446(b) and moved by the Well Control Rule to new § 250.739(c)—require a visual inspection of the riser at least every three days, weather and sea states permitting. BSEE believes that this requirement is adequate to assure the integrity of this system without installing additional riser instrumentation. Using additional riser instrumentation would not be an effective means of detecting hydrocarbons in drilling risers in the Arctic because of the short riser length needed to conduct shallow water drilling operations like those typically conducted on the Arctic OCS. In the event of a kick, short riser lengths will provide a limited amount of time between when a kick is detected in the wellbore and when the kick reaches the surface. Therefore, using additional riser instrumentation would provide negligible benefit.
One commenter suggests that the final rule should be revised to implement systems addressing approaches for ensuring crew safety and access to the seabed wellhead. The commenter cautions that, for deep water operations (>5000 feet (1524 meters)), it is likely that a dynamically positioned MODU will sink away from the seabed location (wellhead) of a well that has blown out. Additionally, the commenter asserted that forcibly pulling a MODU off of a well that is blowing out may result in a far higher rush of hydrocarbons to the rig floor, with very serious implications for the safety of the crew and the subsequent blow-out events.
BSEE disagrees that revisions to the rule are necessary. We consider access to the wellbore, wellhead and associated top hole equipment to be a part of the evaluation required under the revised § 250.720(c). Under this provision, the operator is required to evaluate equipment needs when moving a drilling rig off a well prior to completion or permanent abandonment to ensure that an appropriate response to potential issues will be available. Regarding the commenter's concern related to dynamically positioned MODUs engaged in deep water operations, it is anticipated that none of the relevant Arctic OCS exploratory drilling operations will be in water depths greater than 5000 feet. However, if operational realities change, the regulations finalized here do address the commenter's concern, as the operator must evaluate equipment needs and ensure appropriate responses to issues (
One commenter expressed concern with running a capping stack in shallow water, particularly installing a capping stack within the “boil” of a blowing out well. The commenter suggests that using a pre-positioned capping stack may be preferable.
The commenter's concern is addressed in this final rule. The ability to install the capping stack under expected conditions, including within the “boil” of a blowing out well, is required to be evaluated by the operator and presented as a part of their APD. BSEE agrees that there may be situations when the capping stack will not be an appropriate response to a well control event, which is why this is only one part of a series of well control measures proposed in the rule, including containment systems and same season relief well capabilities. Additionally, this final rule does not preclude the use of a pre-positioned capping stack as a part of an operator's proposal, and BSEE will evaluate such proposals on a case-by-case basis. To clarify, we revised the definition of Capping Stack to include one that is pre-positioned and may be utilized below a surface BOP when deemed technically and operationally appropriate, such as when using a jack-up rig with surface trees.
One requested BSEE consider relief well mooring patterns in advance, as the layout and installation of mooring systems may be complicated by the existing mooring system or by the inability to run mooring lines across the “boil” of a blowing out well.
BSEE does not agree that advance positioning of pre-set moorings or partially pre-set moorings for a relief well rig would be appropriate. The actual geometry of a well, including its
One commenter stressed the importance of well and rig specific training. The commenter noted it is essential to undertake a detailed modeling of potential events so that potential issues can be recognized, mitigations developed, and crews properly and effectively trained.
BSEE agrees with the importance of the role a well-trained crew plays in achieving safe and professional drilling operations. We believe that the training requirements in our existing regulations already provide the basis for developing this type of crew. Section 250.1501,
Two commenters assert the final rule should require the submittal of a well control plan.
Based on the limited information submitted with these comments, BSEE is assuming the commenter would like to see such a plan developed by an operator and submitted to BSEE as part of the approval of a well. Although BSEE agrees with the commenters that submittal of a well control plan would be of value to personnel safety and environmental protection, for such a plan to have meaningful input into actually controlling a well, the specifics of such a plan would need to be developed after a well control event. Therefore, BSEE does not agree that requiring a new plan as part of the approval of a well is appropriate. The actual response on the rig to a well control event is well specific and needs to be developed at the time of the event in order to capture the actual well depth, wellbore geometry, geology, mud weights, casing and/or liner setting depths, and wellbore properties (
It is important to note that BSEE already requires general well control plan type information in an operator's APD. In addition to discussing how a diverter system or a BOP will be used during an actual kick or loss of well control situation, the APD discusses general well control procedures (
One commenter contends that the revised regulations would be more effective from the standpoint of management of human and environmental risk in the Arctic offshore if they focused on prevention and alternate methods instead of focusing on a relief well plan. The commenter asserted that prevention through prudent well design and operations should be the primary method for control and containment.
BSEE agrees with the commenter that prevention is an important component of control and containment, but disagrees with the comment that it would make response capability unnecessary. We believe the rule properly focuses on both prevention and response techniques, including relief well plans. Proper control of a well in an emergency is achieved through reliance on a wide variety of techniques that may be employed depending upon the circumstances, including use of a relief well according to the provisions of § 250.472, if needed. These include, but are not limited to: Use of proper operational procedures; safe work practices; well maintained and effective equipment, systems, and technologies; a comprehensive inspection/audit program; use of properly trained employees and contractors capable of performing their job duties within the constraints of the actual rig equipment; and implementation of a robust safety management system. All of these techniques, including a well thought out relief well plan, need to work together to ensure proper well control under all circumstances during drilling operations.
One commenter questioned whether a contractor bears a residual responsibility and/or liability for securing the downhole integrity of the well or the effectiveness of the well plugs.
BSEE notes the operator is the ultimately responsible party for all safety, operational, and environmental concerns during a drilling operation. However, any person performing an activity under a lease issued or maintained under OCSLA must comply with regulations applicable to that activity, is obligated to take corrective action, and is subject to civil penalties for a failure to comply. Under the requirements of § 250.107(a)(1) and (2), all operations on a lease must be performed in a safe and workmanlike manner, and work areas must be maintained in a safe condition. Accordingly, contractors can be held responsible for activities related to securing a well where they actually perform those activities.
One commenter suggests that barrier requirements be qualified for the environmental conditions and time period used, for example, deep set versus shallow set plugs.
BSEE agrees that barriers, dual barriers and otherwise, need to be qualified for the environmental conditions and time period used. The barrier requirements included in this rule and in our existing regulations allow for such barriers to function properly at all times in the environmental conditions (
One commenter recommended revising proposed § 250.402(c)(2) because they claimed it introduces problems for some drilling platform choices, and because there is no basis for the assumption that the absence of a mudline cellar increases potential risk to the wellbore. The commenter argued that the uniform requirement for a mudline cellar poses special problems for a bottom-founded rig. The commenter also asserted the scope of the proposed requirement for mudline cellars will depend greatly on how areas of ice scour are identified, and suggested that ice scour analysis should be defined in the regulation to ensure objective and reasonable application.
Although BSEE disagrees with the commenter's claim that there is no basis for the assumption that the absence of a mudline cellar increases potential risk to the wellbore, we do agree there may be operational difficulties presented by a uniform requirement for a mudline cellar and did not intend this requirement to be overbroad in its application. The proposed language at § 250.402(c)(2) required the operator to use a mudline cellar in areas of ice scour, while allowing for the use of “equivalent means of minimizing the risk of damage to the well head.” To clarify this requirement, we are revising the language in proposed § 250.402(c)(2), as set out in the regulatory text of final § 250.720(c)(2). This revision clarifies that an operator may seek approval of an equivalent means to protect the well head and wellbore if it can also show how a mudline cellar would create operational risks. The operator must demonstrate that the equivalent means of minimizing the risk of damage to the well head and wellbore will meet or exceed the level of safety and environmental protection provided by a mudline cellar. Similar flexibility is provided through existing § 250.141.
Regarding the commenter's suggestion that ice scour analysis should be defined in the regulation, we disagree. BSEE has determined not to prescribe a means of analysis of scour data specific to any one technology to allow for the use of new technologies which may be used to determine ice scour (
One commenter asserted there is no reasonable basis for concluding that ice collision damage to a well head would impair integrity of the well down at the level of a hydrocarbon zone. The commenter suggests the focus of the regulations should be protection against the loss of oil containment, best done with attention to barriers and plugging. The commenter acknowledged that although the proposed rule does allow “equivalent means” to a mudline cellar, no guidance is provided on what might be considered equivalent, and no equivalent alternative is readily apparent.
BSEE disagrees with the premise that protecting the well head should not be a focus of the regulations, nor do we agree that a well head compromised by ice collision would not impair the downhole integrity of the well. Having a mudline cellar in place to protect the wellhead provides an additional protection against a loss of well control and possible release of hydrocarbons to the environment. BSEE further notes that, as discussed in the previous comment, we have revised the language in final § 250.720(c)(2) to clarify what an operator should show when requesting to utilize an equivalent that minimizes risk to both the well head and the well bore under this provision. Additionally, alternative compliance measures may be approved under the requirements of § 250.141, as appropriate. As discussed throughout this preamble, we have included discussion on the criteria BSEE will consider to approve such measures in Section III.B.
BSEE proposed to add a new paragraph to existing § 250.418. Proposed § 250.418(k) requires operators conducting exploratory drilling operations on the Arctic OCS to provide, with their APD, information concerning how they will comply with the SCCE requirements of § 250.470. No comments were received on the proposed language, and the language is adopted without change, however the paragraph is now designated as paragraph (i) to conform to other, unrelated revisions to § 250.418 finalized in the Well Control Rule). See later in this Section for the discussion of comments on § 250.470 for BSEE's response to comments related to the SCCE requirements.
Existing § 250.737, finalized in the Well Control Rule, requires a 14-day testing frequency for the BOP hydrostatic pressure test. BSEE had proposed to revise existing § 250.447(b) to implement a 7-day testing frequency for the BOP hydrostatic pressure test for Arctic OCS exploratory drilling operations, increasing the frequency from the 14-day interval currently required for all OCS drilling operations (
We do agree with the commenters' support for additional safety and protection on the Arctic OCS and have determined the current regulations improve safety and protection of the environment. As discussed in Section IV.A,
Many commenters highlighted a lack of evidence that reducing the testing interval of the BOP systems from a 14-day test cycle to a 7-day test cycle would result in an increase of safety. These commenters asserted that more frequent pressure testing has not been shown to increase reliability of the equipment and expressed concerns that the more frequent test cycle would cause increased wear-and-tear and fatigue wear of the BOP components, increase the risk that the BOP system will be damaged during testing, increase the likelihood that a well control event could occur during testing, and unnecessarily shorten the drilling season. Several of the commenters also noted that existing BSEE regulations authorize BSEE to require additional testing frequency, if needed.
BSEE agrees. We are not aware of any reliable data that show that more frequent testing enhances the safety of operations. We also have concluded that there is evidence that frequent testing may increase some risks, as well as increase the time needed for operations. BSEE has determined that existing regulations for BOP hydrostatic pressure testing requirements will remain at the 14-day interval and provide for an
Several commenters also asserted that a 7-day testing interval would directly conflict with BOP testing requirements finalized in the Well Control Rule for all operations on the OCS, and there is no basis for requiring different BOP testing requirements on the Arctic OCS. The commenters emphasized that BOP testing is not an Arctic-specific issue, as BOP performance is equally important regardless of where the operations are conducted. The commenters asserted that subsea temperatures in the Arctic are very similar to those encountered in deep water in the Gulf of Mexico at the seafloor and, similarly, BOPs operating onshore in the winter at negative temperatures are not subject to more frequent testing. Commenters asserted that, if BSEE requires the 7-day testing schedule for the Arctic OCS, then the question could be raised as to whether the 7-day testing schedule should be instituted for all OCS operations on the basis of greater safety. One commenter recommended that the regulations allow for the operator to demonstrate that the BOP equipment, elastomers, and hydraulic control fluid are suitable for the expected Arctic operating environment, including both surface and subsea conditions, with the specifications reviewed and approved by the appropriate regulatory agency.
BSEE generally agrees with the commenters. After considering all the information available, we have determined that the BOP hydrostatic pressure testing requirements will remain at the 14-day interval. We note that while our decision was based on public comments and available studies rather than the desire for uniformity for all OCS operations, the result is that BOP testing requirements will remain consistent for all oil and gas drilling operations on the OCS. BSEE is confident that the unique operating conditions on the Arctic OCS will be addressed, if needed, by the existing § 250.737 allowance for the District Manager to require more frequent testing if conditions or BOP performance warrant.
Several commenters expressed concern that BSEE did not provide adequate technical analysis or justification for proposing the 7-day BOP test cycle for Arctic OCS operations. These commenters emphasized that BSEE proposed changing the testing interval based only on Shell's voluntary reduction of the testing interval in 2012 and on a request from another organization for more frequent BOP testing. Many of the commenters also referred to research supporting less frequent BOP testing. These commenters asked whether BSEE has obtained other studies or additional information that would suggest more frequent BOP pressure testing will result in safer operations. Commenters noted that worldwide, except for the OCS, the standard for BOP pressure testing is 21 days, and that API RP 53 recommends 21 day BOP pressure testing.
BSEE agrees with the commenters on the importance of technical information and study on this issue. After considering all the available information, we have determined to retain the 14-day BOP testing interval. The proposed requirement for more frequent testing was based in part on how Shell conducted operations in 2012. The decision not to require a 7-day BOP testing interval, however, is based on public comments and available studies. We agree with the commenters highlighting conclusions reached by several studies supporting the decision to retain the 14-day BOP testing interval, including the 1999 Foundation for Scientific and Industrial Research at the Norwegian Institute of Technology (SINTEF) study,
Regarding commenters' support for a 21-day testing interval, we have determined that available data does not support changes from the general 14-day testing interval at this time. BSEE is aware of concerns that the more frequently BOPs are tested, the more likely the equipment might wear out prematurely, and thus fail to operate properly when needed. Additionally, an operator that believes a different interval is warranted by special circumstances may seek approval from the District Manager of an alternative procedure in accordance with § 250.141 or a departure under § 250.142.
BSEE proposed to add a new performance-based section in Part 250 that would require real-time data gathering on the BOP control system, the fluid handling systems on the rig, and, if a downhole sensing system is installed, the well's downhole conditions during Arctic OCS exploratory drilling operations. In addition, the proposed provision would have required operators to transmit immediately the data during operations to an onshore location, identified to BSEE prior to well operations, where it must be stored and monitored by personnel who would be capable of interpreting the data and have the authority, in consultation with rig personnel, to initiate any necessary action in response to abnormal events or data. Such personnel must also have the capability for continuous and reliable contact with rig personnel, to ensure the ability to communicate information or instructions between the rig and onshore facility in real-time, while operations are underway.
Several comments were received on this section. As discussed in Section IV.A,
Several commenters recommended removing the RTM requirements from the final rule. One of the commenters suggested that RTM for a BOP Control System should not be considered as useful as RTM for drilling parameters or Measurement While Drilling (MWD) data feeds. Another of the commenters recommended removing the proposed requirement because it is being addressed in the Well Control Rule.
BSEE disagrees. Due to the harsh environment and remote nature of the Arctic, exploratory drilling on the Arctic OCS, absent additional precautions appropriate to the region, constitutes a significantly higher risk activity than conventional drilling operations in other regions, such as the Gulf of Mexico and southern California. Therefore, we have determined it is appropriate to require RTM as an
Two commenters recommended that BSEE wait to finalize the RTM requirements until the completion of the National Academy of Sciences Marine Board Study.
The Marine Board study report was released in May 2016 and is posted on the BSEE Web site.
One commenter suggested that the role of RTM in managing emergency situations should be assessed to understand the impact of human factors on performance.
BSEE agrees that human factors play an important role in an effective emergency response, and the way that data streams from programs, including RTM, affect the emergency response decision process should be anticipated and described in the operator's SEMS program. This is in line with API RP 75, which is incorporated by reference into the SEMS regulations and which specifically promotes the consideration of human factors in the design of a SEMS, including as an underlying SEMS principle (Section 1.1.2.n.), in the design of new and modified facilities (Section 2.3.5), in the conduct of hazards analysis (Section 3), in the crafting of operating procedures “to minimize the likelihood of procedural error” (Section 5), in the design of Safe Work Practices (Section 6), and in ensuring that critical equipment is easily accessible for critical tasks (Section 7). Ultimately, the operator is responsible for determining how to effectively integrate RTM and human factors into their emergency response and well control planning.
Three commenters expressed concern about the ability to continue operations in the event of a failure or interruption in the data link to shore. One of the commenters further stated that even when no failure or interruption occurs, RTM data will have a small lag time associated with it and will not be “immediately transmitted.”
BSEE agrees it should not be necessary to cease operations just because of a temporary loss of the RTM data feed. In this type of situation, the operator should have the ability to gather and record the data in the control room of the offshore unit and transmit the data to shore once the data feed is restored. To clarify this point, we deleted the word “immediately” from the proposed text and revised the first sentence of final § 250.452(b) to state that during well operations, you must transmit the data identified in paragraph (a) as they are gathered, barring unforeseeable or unpreventable interruptions in transmission, and have the capability to monitor the data onshore, using qualified personnel. Onshore personnel who monitor real-time data must have the capability to contact rig personnel during operations. Additionally, to clarify that in the event of a failure or interruption of the datalink the operator should continue collecting RTM data, we added qualifying language to § 250.452(a), providing that the monitoring system must be “independent, automatic, and continuous” to ensure the operator is able to transmit data, even if not immediately, in a timely and appropriate manner.
Three commenters recommended that operators should have the flexibility to develop a performance-based approach to state in their EP or APD which functions will be monitored.
We agree with the comment and have deleted “all aspects of” from § 250.452(a) to allow flexibility for a more performance-based approach. An operator can explain which functions of the identified systems will be monitored in their EP or APD.
One commenter recommended the parameters of RTM should be more defined.
BSEE disagrees. We determined that defining exact parameters in this regulation would be overly prescriptive. BSEE believes guidance documents and industry standards are the best way to define important parameters for RTM as this technology continues to advance.
Several commenters cautioned that the proposed RTM requirements shift operational decision making away from operators and rig personnel and recommended that the language be clarified to affirm that it is the primary responsibility of onboard rig personnel to monitor operations.
BSEE agrees that command and control decision making is typically the primary responsibility of the onboard rig personnel, and the onshore RTM personnel should in most, if not all, scenarios only function in an advisory capacity. It was not BSEE's intent, nor
One commenter asked whether there is an implicit requirement for contractors to maintain duplicate records, or ascertain if the required RTM is being undertaken, and to suspend operations if not.
The operator is responsible for overall compliance with the regulations during operations, and the primary monitoring and record-keeping responsibility belongs to the operator. However, under existing § 250.146, a contractor actually performing operations also has the responsibility to comply with regulations applicable to those operations, as does anyone actually performing operations carried out under an OCS lease. Responsibilities for contractors are further clarified in BSEE's Interim Policy Document (IPD) No. 12–07 (August 15, 2012), “Issuance of Incident of Non Compliance (INC) to Contractors.” The IPD clarifies that any person performing an activity on a lease issued under OCSLA is responsible for compliance with regulations applicable to that activity, and can be held accountable for noncompliance. Additionally, under existing § 250.1914, an operator's SEMS program must contain appropriate detail in the bridging documents between the operator and any contractors, including the contractor's roles and responsibilities with regard to RTM. Accordingly, a contractor's responsibility for compliance with the RTM provisions depends upon the contractor's role with respect to carrying out the RTM requirements.
One commenter noted that BSEE will be exposed to proprietary and confidential information when they visit an operator's Real Time Operations Center, and will need to be bound by confidentiality agreements.
BSEE agrees that it must protect proprietary information in accordance with Federal law. As Federal regulators, BSEE personnel routinely work with proprietary and confidential information in the course of carrying out their official duties, so this is not a unique issue to RTM. We will employ the same safeguards, training and accountability measures, and oversight to comply with all Federal laws for protecting proprietary and confidential information obtained pursuant to these provisions. To further clarify, we note that BOEM and BSEE routinely protect proprietary information in accordance with existing §§ 250.197 and 550.197,
One commenter expressed concern that the USCG has not been involved in the development of the RTM requirements, as they have some jurisdiction over these rigs and this monitoring requirement could impact other rig functions and present possible cyber and security threats.
BSEE acknowledges the commenter's concern but disagrees with the basis of the comment. We have shared the proposed and finalized regulatory requirements for RTM, and all other requirements, in this rulemaking with the USCG as part of the interagency review process required by E.O. 12866. Additionally, we have an existing Memorandum of Agreement (MOA) with the USCG discussing shared regulatory responsibilities on MODUs. MOA OCS–08
One commenter questioned whether BSEE will expect RTM to reduce the number of BSEE inspectors physically present offshore 24/7 during drilling activity.
The finalized requirements of § 250.452 do not address how much of an inspection presence BSEE will maintain. The variability of inspection presence on any facility is dictated by internal BSEE policy, which accounts for many factors, including inspection resource availability and the relative risk of the operations. BSEE may take into account the availability of RTM among those considerations.
One commenter cautions that RTM technology will increase the current level of complexity in the BOP and suggests that the interaction with software should be addressed through a formal qualification process. The commenter further asserted that the maintenance and repair of BOPs will need to be done to Original Equipment Manufacturer (OEM) recommendations unless otherwise directed by BSEE, but the proposed regulations do not define how this will be enforced.
BSEE agrees with the commenter that RTM technology will increase the complexity of BOPs, but has determined the commenter's concern has been addressed by the requirements finalized in the Well Control Rule at § 250.732,
One commenter suggested that qualifying of BOP components for the actual operating conditions through appropriate testing and qualification plans should be extended beyond the rams and shear tests, and all scenarios should be considered.
BSEE disagrees. While it would be ideal to be able to test all the possible forces a BOP could experience when qualifying BOP components, this is usually not practical in a testing laboratory setting. Accordingly, calculations are typically permitted to supplement the testing results and account for the full range of forces that
BSEE proposed to add a new § 250.470, requiring operators to provide Arctic OCS-specific information with their APDs for exploratory drilling. The proposed informational requirements in the new section would be necessary to inform BSEE's evaluation of APDs for Arctic OCS exploratory drilling operations.
Several comments were received on this section. BSEE has evaluated the comments and determined that, with the exception of various technical edits, the substantive provisions of § 250.470 are finalized as proposed.
One commenter recommended that § 250.470 should include a requirement for operators to submit corrective action plans associated only with rectifying any deficiencies in the drilling unit or equipment that have been previously identified by a BSEE inspector on an Incident of Noncompliance (INC).
BSEE disagrees. The regulatory requirements of § 250.470 provides that drilling units and equipment may operate elsewhere outside of the Arctic drilling season, and the rigs may need repairs or maintenance before beginning operations on the Arctic OCS. Accordingly, the operator will need to demonstrate it is fully prepared to drill on the Arctic OCS prior to each drilling season. BSEE inspections are only one aspect of ensuring safe operations. The operator is responsible for ensuring the safety of their equipment by conducting on-going maintenance and repairs, and the operator must identify needed repair and maintenance for the drilling unit and equipment independent of the issuance of any INCs.
One commenter asserted that the APD provisions require an operator to resubmit a significant amount of information that is already included with the EP and the IOP.
BSEE disagrees. The additional information to be submitted with an APD under § 250.470 is not a requirement to re-submit duplicative information. BSEE expects that when the operator submits the APD, it will by then have a detailed plan that will include information on the same topics touched on in the IOP and EP, but that was not available at the time the IOP or EP was submitted. This may include information such as the identity of equipment and vessels to be used, dates of planned operations, and additional information on how the equipment and vessels would be designed for and be capable of performing in Arctic OCS conditions. To the extent that the operator has already provided necessary information in its approved EP, it may reference that information or recreate it with little burden.
One commenter supported the proposal to require detailed Arctic-specific information in the APD, but cautions that this information will be provided too late in the Department's review and approval process to provide adequate opportunity for the public to review and comment on this information. The commenter recommended BSEE require the inclusion of this important technical data as part of the IOP and EP review, in which outside parties may participate. The commenter recommended, as an alternative if BSEE prefers to require this important information only in the APD application, that the regulations be revised to include an opportunity for “outsiders” to participate in APD review.
BSEE agrees with the commenter's statements on the importance of the APD, but disagrees with requiring the same information as part of the IOP and EP submissions. The IOP, EP, and APD are intended to allow the operator an opportunity to provide increasingly detailed information that is pertinent to each stage of the exploratory drilling operation approval process. Much of the information submitted with the APD is not expected to be available or relevant when submitting the IOP or EP.
While the commenter's suggestion regarding who should be able to participate in the review of the APD is unclear, we assume it is referring to the public. Since much of the information submitted with an APD will likely contain proprietary information, BSEE does not believe it would be appropriate to involve the public directly in the APD review process. However, we note that the regulatory requirements for the IOP, EP, and APD require the operator to make informational copies available to the public with the proprietary information removed. Operators are required to submit an informational copy of their APD, which will be publicly available on the BSEE.gov Web site: (
One commenter requested, in addition to the information required under § 250.470(c)(8) and (d), that BSEE require operators to submit documentation describing the criteria they would use for triggering site abandonment due to ice, and an organization chart of the operator's own personnel and subcontractors involved in such an operation. The commenter suggested that the criteria should be defined in quantities easy to observe and measure and should be linked to the operational mode of the MODU and its capacity as defined in the Fitness Requirements of former § 250.417(a). (The Well Control Rule removed and reserved former § 250.417 and moved the contents of that section to new § 250.713.) The commenter recognized that the criteria are indicated in EP requirements under § 550.220(c)(2)(iii). However, the commenter asserted the criteria are not clear because terminology related to ice management is inconsistently applied throughout the proposed regulations. The commenter referenced additional details regarding such criteria found in clause 17 of ISO 19906 (incorporated by § 250.470(g) in API RP 2N Third edition), but which the commenter asserted should be clarified in the rules rather than through IBR.
BSEE disagrees, as the provisions finalized at § 250.470 require the operator to present the required criteria for site abandonment due to ice in a measurable quantity and are in accordance with the Fitness Requirements in paragraph (a) of § 250.713,
The commenter does not explain why requiring the submission of an organization chart would help BSEE's oversight efforts. If conditions require site abandonment, BSEE would deal directly with the operator or the operator's representative to address the situation. The operator would be responsible for directing its personnel and contractors, as appropriate.
One commenter recommended that the APD include a requirement for a written well control plan and evidence of a contract with a well control expert. The commenter asserted that, although written well control plans and contracts with well control experts are industry standard, like other important practices, this minimum standard should be codified in regulation so short-cuts are not taken. The commenter recommended that the Arctic emergency well control plan include information regarding the primary rig, SCCE, secondary relief well rig, and additional well barriers. The commenter further recommended that the well control plan should be site-specific and appropriate for Arctic OCS conditions.
BSEE disagrees with the recommendation to require a written well control plan. BSEE does not require a well control plan because it is the responsibility of the operator to determine how best to address these requirements and ensure they have the appropriate equipment available, the contracts in place, and their personnel properly trained. Additionally, the regulations finalized in this rulemaking build on our existing regulations to ensure that operators address the unique Arctic OCS operating environment in a manner that is site-specific and appropriate for Arctic OCS conditions. Specifically, BSEE has existing well control requirements under various provisions of the Well Control Rule, requirements for diverters and BOPs under § 250.416 and other sections of the Well Control Rule, and information requirements for MODUs under § 250.713 of the Well Control Rule. Existing § 250.713 requires operators who plan to use a MODU to drill to “provide information and data to demonstrate the drilling unit's capability to perform at the proposed drilling location.” BSEE has training requirements under part 250, subpart O,
Paragraph (a) requires operators to submit a detailed description of the environmental, meteorological and oceanic conditions expected at the well site(s); how their equipment, materials, and drilling unit will be prepared for service in those conditions, and how the drilling unit will be in compliance with the requirements of § 250.713. The information requested by this proposed section for drilling units is not in addition to the requirements of § 250.713, but rather is designed to make clear that, to satisfy the fitness requirements of § 250.713, operators would need to provide details regarding Alaska OCS conditions.
One commenter recommended the Fitness for Service description should illustrate how the drilling unit and its major components can perform in the anticipated conditions of the location and season under which it is expected to operate.
BSEE agrees with the comment and notes that the finalized provisions at § 250.470(a)(2) address the commenter's concern. Paragraph (a)(2) of § 250.470 requires the operator to submit a detailed description of how the equipment, materials, and drilling unit will be prepared for service in the environmental, meteorological, and metocean conditions expected at the well site and how the drilling unit will be in compliance with the provisions of existing § 250.713. Existing § 250.713 requires the operator to provide information and data to demonstrate the drilling unit's capability to perform at the proposed drilling location. This information must include the maximum environmental and operational conditions that the unit is designed to withstand.
One commenter requested clarification on the contractor's or equipment supplier's responsibility for compliance with the specifications to be provided under § 250.470(a)(2). The commenter questioned whether it is reasonable to hold a party other than the applicant for the APD responsible when the selection of the equipment and contractor is presumably based on the APD applicant's foreknowledge of the conditions that can be reasonably expected during operations.
BSEE disagrees. Only the party responsible for submitting the APD is responsible for satisfying the requirements of § 250.470(a)(2) related to the contents of its APD. Whether a contractor is responsible for satisfying those requirements depends on the scope of activities performed by the contractor (
Paragraph (b) requires operators to submit with the APD a detailed description of all operations necessary in Arctic OCS conditions for well-specific transition operations. BSEE is requiring details about all of the activities necessary to begin and end drilling operations, and to transition between drilling operations and being under way. Finally, BSEE is requiring information regarding any specific repair and maintenance plans for the drilling unit and equipment associated with commencement or completion of drilling operations. All of the required information would facilitate BSEE's understanding of an operator's program and ensure that the operator complies with lease stipulations, EP conditions, and other permitting requirements.
One commenter recommended that BSEE remove paragraph (b) of § 250.470 because the information requested covers aspects of operations which are regulated by the USCG and do not fall under the jurisdiction of BSEE or BOEM. The commenter alternatively requested that, if BSEE does not delete the paragraph, BSEE provide clarification as to what value will be gained from the information provided, as the agency has no authority over the activities on which it seeks information (for example, daily maintenance activities on vessels and rigs, including diesel engine maintenance routines, greasing routines on cranes, and other basic maintenance).
BSEE disagrees with the commenter regarding removing the noted paragraph, but will explain the value to be gained from the required information. First, the examples the commenter cites, such as diesel engine maintenance routines and “towing,” are not required under § 250.470(b). Second, the information requested by BSEE under § 250.470(b) relate directly to operations within the Bureau's authority under OCSLA. For example, 43 U.S.C. 1332(6) declares that “operations in the [OCS] should be conducted in a safe manner by well-trained personnel using technology, precautions, and techniques sufficient to prevent or minimize the likelihood of blowouts, loss of well control, fires, spillage, physical obstruction to other users of the waters or subsoil and seabed, or other occurrences which may cause damage to the environment or to property, or endanger life or health.” Under 43 U.S.C. 1334(a), the Secretary has the authority to “prescribe and amend such rules and regulations as [s]he determines to be necessary and proper in order to provide for the prevention of waste and conservation of the natural resources of the [OCS].” Section 1348(b)(2) imposes a duty on lessees and operators to “maintain all operations . . . in compliance with regulations intended to protect persons, property, and the environment on the [OCS].” The information requested under § 250.470(b) will help BSEE to fulfill its mandate under OCSLA by ensuring that all operators are prepared to conduct drilling operations in as safe a manner as possible, especially given the challenges and fragility of the Arctic environment.
Paragraph (b) of § 250.470 requires that the information accompanying an operator's APD must include a detailed description of all transition operations necessary in Arctic OCS conditions to begin and end drilling operations and also requires a detailed description of repair and maintenance plans. Although USCG and BSEE share certain aspects of regulatory oversight of operations on MODUs, BSEE is not requesting information under another agency's jurisdictional authority. First, the information described above relates to matters within the scope of operations overseen by BSEE rather than USCG (
Paragraph (c) requires operators to submit “[w]ell-specific drilling objectives, timelines, and updated contingency plans for temporary abandonment of the well.” Whereas the corresponding provisions of the finalized IOP regulations and current EP regulations at § 550.211 relate more broadly to the objectives and timelines of the overall proposed exploratory drilling activities, this provision would require an operator to provide “well-specific” information at the APD stage.
One commenter requested that BSEE delete § 250.470(c), reasoning that the contingency plans for temporary abandonment are out of place in this section or at the time in the planning process the section addresses. The commenter asserted that the information requested is highly sensitive and has little nexus to any of BSEE's regulatory authority.
BSEE disagrees. Temporary abandonment is a well operation and is under BSEE authority.
The performance-based provision at paragraph (d) requires an operator to submit: A detailed description of its weather and ice forecasting capability for all phases of the drilling operation, including: “How [it] will ensure the continuous awareness of potential weather and ice hazards at, and during transition between, wells;” its “plans for managing ice hazards and responding to weather events;” and verification that it has the capabilities described in its EP. Operators can verify that they have the capabilities described in their EP by providing appropriate supporting documents (
One commenter requested that BSEE strike § 250.470(d), as the information sought in this paragraph is already contained in an operator's Critical Operations and Curtailment Plan (COCP) and Ice Management Plan and should not be duplicated as part of the APD process. The commenter asserted that weather and ice forecasting and monitoring are not well site specific and are not well suited as APD requirements.
BSEE disagrees. It is not BSEE's intent to have the operator submit information that it has already submitted to BOEM or BSEE under other requirements. Rather, the purpose of requiring an operator to submit information on ice and weather forecasting with the APD is to allow an opportunity, if needed, to update and supplement any information already submitted with additional details and information that was not available when the information was submitted previously. BSEE notes the information requested with an APD is not duplicative, and in addition to updating information, the operator is also required to address several new considerations, including how they will ensure continuous awareness of weather and ice hazards at, and during transition between, wells. To the extent that the requested information has been submitted previously, such submissions can be relied upon by reference.
Paragraph (e) requires operators to provide, with their APD, information concerning how they will comply with the relief rig requirements of § 250.472. No comments were received on this provision, and it is finalized as proposed. See below in this Section for the discussion of comments on § 250.472 for BSEE's response to comments related to relief rig requirements.
Paragraph (f) requires operators provide with their APD a statement that the operator has a contract with a provider for SCCE, which is capable of controlling and/or containing a WCD as described in the operator's BOEM approved EP, when proposing to use a MODU to conduct exploratory drilling operations on the Arctic OCS. The information requirements of paragraph (f) include:
1. A detailed description of the operator's or its contractor's SCCE capabilities. The description must include operating assumptions and limitations and information demonstrating that the operator would have access to and the ability to deploy such equipment necessary to stop or capture the flow of an out of control well. This description would allow BSEE to verify the location and availability of this equipment for compliance with § 250.471. This section also requires a detailed description of the operator's ability to evaluate the performance of the well design to determine how it can achieve full shut-in without having reservoir fluids discharged in the environment.
2. An inventory of the equipment, supplies, and services the operator owns or has a contract for locally and regionally, including the identification of each supplier. This information is important because BSEE would need to verify the existence, condition, and location of the equipment that the operator describes in its plans.
3. Where SCCE capabilities are obtained through contracting, proof of contracts or membership agreements with cooperatives, service providers, or other contractors, including information demonstrating the availability of the personnel and/or equipment on a 24-hour per day basis during operations below the surface casing.
4. A description of the procedures for inspecting, testing, and maintaining SCCE. SCCE is intended to be standby equipment. This provision allows BSEE to verify that the operator, or contractor, has procedures in place for inspecting, testing, and maintaining the equipment so that it would be ready for use, if necessary. Operators are already required under existing regulations at § 250.1916 to retain the information requested by this new paragraph. The new provision requires that operators who propose to conduct exploratory drilling on the Arctic OCS submit this information in conjunction with their APD.
5. A description of the operator's plan to demonstrate that personnel are trained to deploy and operate the equipment and that these personnel would maintain ongoing proficiency in source control operations. Standby crews who are not used regularly to perform their dedicated functions would not develop the necessary skills unless they are properly trained, and would not maintain those skills unless that training is reinforced by practice. It is therefore imperative that the operator demonstrate that these personnel have a plan for acquiring, and the ability to maintain, the proficiency necessary to respond when called upon. This requirement would allow BSEE to review those plans and verify that the proficiencies have been acquired and would be maintained.
One commenter suggests that the final rule require operators to submit a detailed plan demonstrating their ability to fully respond to a blowout within three days.
BSEE notes the final rule does require all operators conducting exploratory drilling operations on the Arctic OCS to have in place response plans demonstrating their ability to fully respond to a blowout, beginning within 24 hours after loss of well control. Specifically, revised § 250.471(a) requires that a capping stack be available and positioned to arrive at the
One commenter suggests changing the phrasing in § 250.470(f)(2) from “local and regional” in regards to the availability of SCCE, supplies, and services, to “in-region” and “out-of-region” to match common usage in Alaska (see 18 AAC 75.495) and to match oil spill response industry standard terminology.
BSEE disagrees. The provision at § 250.470(f)(2) ensures that the operator has the access to required SCCE within the timeframes established in § 250.471. The terms “local and regional” are used to reinforce that the equipment needs to be in proximate location to meet those standards. BSEE declines to adopt terms of art that may be perceived to have different meanings or connotations.
One commenter requested that BSEE remove § 250.470(f). The commenter asserted that operators should not have to provide this information in the context of each individual APD, as the information requested in paragraph (f) is largely duplicative of information provided elsewhere during the regulatory process. The commenter specifically points to information requested for the EP and IOP.
BSEE disagrees. As discussed above, the requirements of this section, or any provision of § 250.470, are not intended to require operators to resubmit information already submitted to BOEM or BSEE. Rather, the operator is expected to update and supplement the information already submitted and provide more specific or detailed information that was not available when it submitted information for the IOP and EP. To the extent that the operator intends to rely on information already submitted in previously approved submissions, it can do so by reference.
Paragraph (g) requires that operators explain how they utilized API RP 2N, Third Edition, in planning their Arctic OCS exploratory drilling operations. Since the requirements of this final rule are limited only to exploratory drilling operations, operators would not be expected to provide an explanation of how they utilized the entire API RP 2N, Third Edition. This performance-based requirement is limited to those portions of that document that are specifically relevant for exploratory drilling operations. BSEE excludes the following sections of API RP 2N, Third Edition, from incorporation:
1. Sections 6.6.3 through 6.6.4;
2. The foundation recommendations in Section 8.4;
3. Section 9.6;
4. The recommendations for permanently moored systems in Section 9.7;
5. The recommendations for pile foundations in Section 9.10;
6. Section 12;
7. Section 13.2.1;
8. Sections 13.8.1.1, 13.8.2.1, 13.8.2.2, 13.8.2.4 through 13.8.2.7;
9. Sections 13.9.1, 13.9.2, 13.9.4 through 13.9.8;
10. Sections 14 through 16; and
11. Section 18.
One commenter supported the incorporation of API RP 2N Third Edition, but disagreed with the exclusion of three sections. The commenter first opposed the exclusion of API RP 2N clauses 6.6.3 (Ice Gouge) and 6.6.4 (Strudel Scours). The commenter suggests BSEE should consider the possibility of not being able to permanently plug the well before the next open water season, and that by having ice gouge statistics it would also be possible to calculate the actual impact risk to a well head. The commenter also questioned excluding section 13.2.1 (Design Philosophy) and recommended BSEE include a statement that when there is overlap between the requirements in API RP 2N Third Edition and BSEE and/or USCG regulations, the regulatory requirements have precedence.
BSEE carefully considered which sections of API RP 2N Third Edition to incorporate in this rulemaking and determined that certain portions of API RP 2N are not relevant to the exploration stage. Regarding the commenter's first concern with exempting API RP 2N sections 6.6.3 and 6.6.4, the regulations finalized at § 250.470(c) directly address protecting equipment left on, near, or in a wellbore, including protecting the well head and preventing or mitigating threats to the down-hole integrity of the well and well plugs. These regulations are tailored specifically to exploratory drilling operations on the Arctic OCS from MODUs and jack-up rigs, and BSEE determined that sections 6.6.3 and 6.6.4 were therefore not appropriate for incorporation. The commenter's second concern is addressed in § 250.470(g), which requires an operator to comply with the incorporated requirements of API RP 2N “Where it does not conflict with other requirements of this subpart”.
One commenter also recommended including API RP 2N Third Edition sections 6.6.3 and 6.6.4, as there is evidence of ice gouging in several locations within the Arctic OCS, which would impact a multi-year drilling program. The commenter asserted that ice gouging should be considered for subsea structures likely to be left over winter, and that strudel scours are widespread along coastal river mouths and should be surveyed as part of planning for an exploratory drilling program in state waters. The commenter also recommended that sections 13.9.6 (Inspection and Maintenance), 13.9.7 (Planning and Operations), and 13.9.8 (Ice Management Plan) be included in the final rule, as they appear to provide a better basis for safe operation than the proposed regulations. The commenter also asked BSEE to consider retaining section 15 (Topsides), as there are a number of issues surrounding winterization of topside structures not under the authority of the USCG, such as wind breaks and insulation of manned work spaces and walkways, and winterization of drilling hydraulics and meters.
BSEE disagrees. Sections 6.6.3 and 6.6.4 were excluded because they address different types of conditions for ice gouging and/or scouring than are anticipated to occur during the Arctic OCS open water drilling season. To the extent the commenter is concerned about facilities remaining on the seabed in connection with multi-year drilling
Regarding the commenter's recommendation to include sections 13.9.6 through 13.9.8, and section 15, existing § 250.417(c) addresses drilling operations in frontier areas and includes provisions for a contingency plan to include design and operating limitations of the drilling unit where the operator must identify the actions necessary to maintain safety and prevent damage to the environment. Additionally, under existing § 250.418(f), for drilling operations in areas subject to subfreezing conditions, operators are required to include in their APD evidence that the drilling equipment, BOP systems and components, diverter systems, and other associated equipment and materials are suitable for operating under such conditions. Accordingly, BSEE believes that the combination of this rule and existing regulations adequately addresses the commenter's concerns.
One commenter generally agreed with the use of API RP 2N Third Edition, but proposed BSEE also require the operator to document its overall winterization philosophy, as well as specific winterization requirements for MODU drilling systems and equipment.
BSEE disagrees with the commenter's proposal, as the concerns are already addressed in existing rules and with this rulemaking. Although it is not entirely clear what the commenter means by “overall winterization philosophy”, existing SEMS requirements at §§ 250.1901 through 250.1933 require the operator to have a SEMS program in place that identifies, addresses and manages safety, environmental hazards and impacts during all phases of drilling operations. Additionally, the finalized revisions to § 250.1920 require an annual SEMS audit for exploratory drilling operations on the Arctic OCS. Regarding specific winterization requirements for MODU drilling system and equipment, BSEE has determined the finalized provisions at § 250.473, which requires operators to ensure that equipment and materials are rated or de-rated for service under conditions that can reasonably be expected during operations, and also utilize measures to address human factors associated with weather conditions that can be reasonably expected while operating on the Arctic OCS, ensure that these issues are adequately addressed.
One commenter suggests that the requirements to comply with API RP 2N Third Edition be replaced with a requirement to meet relevant and applicable class rules from a classification society accepted by the IACS. The commenter also suggests that BSEE replace the requirement for the MODU to meet Ice Class 3 standards with a requirement that the MODU be suitably classed to perform expected activities in the area of operations and the seasonal conditions that are expected to be encountered.
BSEE disagrees. API RP 2N Third Edition specifically addresses oil and gas activities in the Arctic and, although IACS has relevant and applicable class rules, we have determined the incorporation by reference of applicable provisions of RP 2N Third Edition is appropriate. BSEE recognizes that, when applied to MODUs, many of the structural criteria of API RP 2N Third Edition are regulated by the USCG and may be covered by Class requirements for marine structures. Classification is a determination made by private organizations that a vessel has been constructed and maintained in compliance with industry standards to be fit for a particular service.
Regarding the commenter's concern that the MODU be required to meet Ice Class 3 standards, we note that although the preamble to the NPRM did mention Ice Class 3 (
One commenter stated that BSEE should honor Clause 1 of API RP 2N Third Edition, which provides that this RP does not apply to MODUs. The commenter cautions that the current approach of § 250.470(g), even with exemptions, requires use of API RP 2N Third Edition in situations for which it was not intended.
BSEE disagrees with the commenter's interpretation of the applicability of API RP 2N Third Edition. While the commenter is correct that API RP 2N Third Edition does not apply specifically to MODUs, the procedures relating to ice actions and ice management contained in the standards are applicable to the assessment of such units. Additionally, API RP 2N Third Edition does not specifically preclude the application of appropriate provisions of the document to MODUs. Accordingly, § 250.470(g) calls upon the operator to provide a description of how it will utilize the best practices set forth in API RP 2N. Within that structure, operators have the inherent ability to address the inapplicability of any particular provisions to their operations.
The finalized requirements at § 250.471 are designed to ensure that each operator using a MODU and conducting exploratory drilling on the Arctic OCS will have access to, and can promptly and effectively deploy and operate, surface and subsea control and containment equipment in the event of a loss of well control. In particular, BSEE is requiring that each operator have the ability, in the event of a loss of well control, to cap the well and to capture, contain, and process or
Several comments were received on this section. As discussed in Section IV.A,
Several commenters generally support the provisions. One commenter strongly supported the finalized requirements of § 250.471, but noted for the deployment of technologies such as a capping stack, cap and flow system and a containment dome, there are significant “response gaps”: Periods in which a particular response tactic could be expected to be ineffective or impossible to deploy based on historic environmental conditions. In a study funded by BSEE, it was found that dispersants, in-situ burning, and mechanical recovery were viable options on the Arctic OCS only 82 percent, 66 percent, and 57 percent of the time, respectively, even during the summer months. During the winter months, the only viable option would be in-situ burning. The commenter argued that, since oil spill response methods are either only sporadically available or not proven to be reliable in Arctic conditions, emphasizing and requiring source control and containment is absolutely critical.
BSEE agrees that effective source control and subsea containment equipment is a critical response capability on the Arctic OCS. Oil spill response countermeasures used to mitigate spills on the surface of the water are always subject to limitations that may arise due to adverse weather and poor on-scene operating conditions. These concerns are heightened under Arctic OCS conditions. The best way to minimize the effects of spilled oil is to prevent it from entering the water in the first place, which is why BSEE agrees that prompt access to SCCE is a critical part in reducing the impacts of a spill and is requiring such equipment and capabilities in § 250.471.
Several commenters recommend that the detailed requirements for source control and containment be removed from the regulations and replaced with performance-based requirements. One of the commenters cautions that requiring specific types of equipment to respond to a loss of well control incident is ineffective and inefficient since it is based upon the false assumption that a loss of well control incident in the shallow waters of the Beaufort and Chukchi Seas would be the same as a deep water well blowout in the Gulf of Mexico. Another of the commenters specifically suggests that the regulations should allow for a specific type of response to a loss of well control — the diversion of wellbore fluids to a flare buoy surrounded by containment boom located a safe distance from other vessels.
BSEE recognizes that operators need to have some flexibility to select the technology that is best suited to planned operations and that alternative technologies may be developed that offer equal or more protection to personnel and the environment than existing technology. We believe the technologies identified in this provision represent the optimal approach to well control capabilities available for the Arctic OCS. However, BSEE acknowledges that it cannot always predict technological developments made by industry. Therefore, we have revised the proposed language at § 250.471(a) to clarify the performance standard required by this provision: That the operator must have access to SCCE that is capable of stopping or capturing the flow of an out-of-control well. Additionally, as discussed in Sections III.D and IV.A, we have added a paragraph (i) of § 250.471 to clearly state that, when an operator is requesting approval of alternate procedures or equipment to the SCCE requirements under the provisions of § 250.141, the operator must demonstrate that the proposed alternate procedures or equipment provides a level of safety and environmental protection that meets or exceeds that required by BSEE regulations, including demonstrating that the alternate procedures or equipment will be capable of stopping or capturing the flow of an out-of-control well.
In addition, with respect to the ability of operators to utilize alternative technology or procedures, BSEE notes these regulations are intended to ensure that operators have a coordinated and redundant system to provide for adequate safety in exploratory drilling operations on the Arctic OCS. Section 250.471 as finalized contemplates a sequential process based on operator proposals for dealing with Arctic challenges in a risked based manner. In the event of a well control event and failure of the BOP, the first option is to deploy a capping stack. The capping stack is the most immediately deployable equipment of the SCCE options. If the capping stack is not successful, the cap and flow system is the next option. If these options are not deployable, or fail to stop the flow, the containment dome system must be deployed to control the flow during the time it takes the well to bridge off or the relief well to be drilled. Each of these options has a high probability of success, but none is guaranteed to be deployable or successful in all situations. BSEE determined that the finalized provisions provide for the necessary redundancy and sequencing of the responses, based on the time necessary to deploy, and therefore provide sufficient safety and environmental protection to allow for exploratory drilling on the Arctic OCS.
One commenter asserted that the OPA already confers oil spill preparedness and response authority to the operator, USCG and EPA, as well as BSEE through the subject Act and E.O. The commenter cautions that introducing an additional and redundant layer of regulation by BSEE has the potential to lead to confusion and administrative conflicts.
We disagree. BSEE has authority to implement the SCCE requirements under OCSLA. BSEE further disagrees that the finalized requirements of § 250.471 add a redundant layer of regulation that will lead to administrative conflicts. The regulation's focus on equipment related to well control and containment (
Under OCSLA, BSEE is responsible for implementing environmental safeguards to ensure that oil and gas
These SCCE regulations are needed because exploratory drilling operations on the Arctic OCS are distinct from operations on any other part of the OCS. The logistics and transit times necessary to bring critical equipment to bear in the event of a loss of well control, require the operator to plan for and be prepared for contingencies that would be more straightforward to address in other areas of the OCS. Moreover, there is a limited ability in the Arctic region to summon additional source control and containment resources. Accordingly, operators working there must plan for complexities not confronted elsewhere. At some level, redundancy of equipment response options is both appropriate and necessary in this context, where the redundancies that exist as a matter of course in an environment like the Gulf of Mexico are not present. Rather than adding a redundant layer of regulation, these requirements are specifically geared towards the necessities of operating in this uniquely challenging and fragile environment.
Finally, when writing the rule, BSEE consulted with a number of agencies, including the USCG and the EPA. Moreover, Federal agencies communicate on a regular basis about issues over which they have intersecting authority. Thus, once this rule is in place, BSEE will continue to communicate with other agencies to maximize efficiencies and minimize or eliminate potential conflicts.
Two commenters noted the importance of setting limits on the continued drilling of any well relying on a particular SCCE if a blowout occurs in connection with another operation relying on the same SCCE as a result of mutual aid agreements or cooperatives formed to share SCCE. The commenters note that similar mutual aid agreements and cooperatives have already been formed by Arctic operators to share spill response resources, well capping equipment, and facilities. The commenter provides the example that, if four wells are being drilled and all four rely on the same SCCE package, if one well has a blowout then the other three wells should be suspended and safely secured while the SCCE is committed to the blowout response.
BSEE agrees with the commenter and concludes that this issue is addressed in the performance standard finalized at § 250.471(a), as incorporated into the operator's approved EP (§ 550.220(c)(3)) and APD (§ 250.470(f)). An operator is required to have access to the appropriate SCCE positioned to ensure it will arrive at the well location within a prescribed time limit. This may necessitate halting continued drilling at other well locations if the equipment is being used at the site of the spill in a manner that would preclude the equipment from being accessible for use in a potential well control event at the other well location within the prescribed time limits.
One commenter suggests the final rule should adequately describe technical findings or actual application success rates of containment dome systems used in OCS waters of less than 300 feet, which is commonly found in Alaska's near shore and OCS waters. The commenter questioned whether containment domes have ever safely been deployed in shallow water under a jack-up rig, where leg placement may present hazards when setting the containment dome.
BSEE notes that there has been no need to deploy a containment dome since the Macondo Well blowout in April of 2010.
One commenter suggests that BSEE remove the statement indicating that BSEE will direct any emergency response operations, reasoning that it fails to consider interfaces with the current role of the USCG.
BSEE disagrees with removing this statement. As previously described, OCSLA requires that BSEE ensure that OCS oil and gas operations minimize damage to the environment and conserve the natural resources of the OCS. Under OCSLA, BSEE also ensures that OCS oil and gas operations do not result in pollution, create hazardous or unsafe conditions, or unreasonably interfere with other uses of the area.
The deployment of SCCE is a well control measure designed to maintain, or regain, control over a subsea well. The deployment of SCCE will permit an operator to ensure the integrity of an OCS wellbore and maintain control over well pressure and well fluids. For example, a timely deployed capping stack will prevent the release of fluids into the environment in the cap and flow mode. Maintaining or regaining this type of well control ultimately promotes OCS safety, protects the environment, and conserves the natural resources of the OCS. Thus, these regulations implement OCSLA's authorization for BSEE to prescribe regulations concerning oil and gas operations on the OCS.
In addition to this OCSLA authority, the President delegated to the Secretary the OPA authority under CWA Section 311(j)(1)(C) concerning “establishing procedures, methods, and equipment and other requirements for equipment to prevent and to contain discharges of oil and hazardous substances from . . . offshore facilities, including associated pipelines . . . .”
BSEE's process for interfacing with the USCG with respect to directing well control measures from offshore facilities during a well control event is clearly described and has been carefully coordinated in BSEE/USCG MOA: OCS–03,
One commenter recommended the final rule include a provision requiring the operator to submit an SCCE Emergency Plan as part of the part 550 EP, subject to the public review requirements. The commenter suggests that the SCCE Emergency Plan should include various information, including: The technical and operating specifications of the equipment; standard operating procedures and schedules for testing, operation, inspection, maintenance and repair; and plans for storage, transportation to the well, and deployment. The commenter asserted that written plans provide consistent standard operating procedures for company staff that change over time, provide an excellent reference during an emergency response, and serve as an excellent training tool.
BOEM and BSEE agree with the commenter on the importance of awareness of SCCE assets and response capabilities and planning for their maintenance, deployment, and use. However we do not agree with the need for a specialized SCCE Emergency Plan as part of an operator's EP. Paragraphs (a) and (c) of § 550.220 already require that an operator's EP describe their emergency plans to respond to a fire, explosion, personnel evacuation, or loss of well control, among other things, as well as provide a general description of the operator's SCCE capabilities. The finalized provisions of §§ 250.471 and 250.470(f) also provide for sufficient BSEE oversight of the operator's SCCE capabilities to account for any staff changes over time, including requirements for the operator to: Detail the SCCE and the contractor's SCCE capabilities, include descriptions of all SCCE, and describe procedures for inspection/testing of SCCE.
Paragraph (a) requires that the operator, when using a MODU to drill below or work below the surface casing, have access to a capping stack positioned to arrive at the well within 24 hours after a loss of well control, and a cap and flow system and a containment dome positioned to arrive at the well within 7 days after a loss of well control.
Several commenters recommend that the cap-and-flow system and containment dome should be required to arrive within three days, as the quicker the cap-and-flow system and containment dome are available and on-site, the faster any blowout may be controlled.
BSEE appreciates the commenters' concern for rapid deployment of the cap-and-flow system and containment dome as a means to control any blowout as quickly as possible, and encourages operators to deploy source control and containment assets without undue delay. However, BSEE has decided to finalize this provision with the 7-day timeframe for arrival after the loss of well control. The 7-day timeframe allows for the appropriate arrival of all the SCCE response equipment and responders and facilitates a staged response during the early hours of an event. The cap-and-flow system and containment dome are elements of a systematic approach to the SCCE deployment, and the 7-day requirement provides for the arrival of the system after the operator has had time to deploy and test the capping stack and to complete other more immediate intervention options.
Several commenters recommend BSEE not impose timeframes for the deployment of SCCE and instead allow for performance-based requirements using a risk-based approach. One commenter suggests that the positioning of SCCE assets be determined on a case-by-case basis that takes into account any unique aspects of an operator's program and the well site, and that these tailored mobilization and operational timelines would be best captured in an operator's EP. Another of the commenters specifically urges consideration of the merits of a bottom-founded rig with a pre-installed capping device, which can cap a well in a matter of minutes or hours.
We note the final rule does not prohibit the use of pre-positioned capping stacks when operating a jack-up rig. To clarify this, we have added text to explicitly add a pre-positioned capping stack to the definition of
In response to commenters' request for a revised timeframe determined either by the use of a pre-positioned capping stack or on a case-by-case basis, BSEE has determined the requirements of this section appropriately implement a coordinated redundant system to provide adequate safety, and declines to modify the rule as suggested. The timeframes implemented in § 250.471 establish a sequential process based on operator proposals for dealing with Arctic challenges in a risk-based manner. In the event of a well control incident, the first option is to deploy a capping stack. The capping stack is the most immediately deployable of the SCCE options. If the capping stack is not successful, the cap and flow system is the next option. If these options are not deployable, or fail to stop the flow, the containment system must be deployed to contain the flow from the well during the time it takes the well to bridge off or the relief well to be drilled. Each of these options has a high probability of success, but none is guaranteed to be deployable or successful in all situations. The redundancy and sequencing of the responses, based on the time necessary to deploy and the increasing complexity, provides sufficient safety in a reasonable and appropriate framework. The 7-day timeframe for deployment of SCCE is the maximum timeframe allowed and, if an operator can deploy appropriate equipment in under 7 days, that is permissible and encouraged to the extent it may enhance the response. If an operator determines alternate procedures or equipment will provide for equal or better levels of protection, as discussed earlier, an operator may submit a request under existing § 250.141, and such procedures may be approved on a case-by-case basis.
Several commenters oppose the specific requirement for timely access to a containment dome, asserting that a performance-based requirement would be more appropriate. Commenters assert that a containment dome poses serious problems and risks in shallow water, and may only be compatible with a narrow range of drilling approaches. One commenter argued that future and existing technologies, including subsea shut-in devices, are being pursued to provide better outcomes in the highly unlikely event of a well control incident in Arctic conditions, and that there is no sound technical basis for including a containment dome as a specific requirement.
BSEE disagrees. The containment dome is intended to immediately contain oil that would otherwise be discharged into the environment in the event that the capping stack or any other method of subsea intervention does not stop an uncontrolled flow. The use of a containment dome is the only tool proposed by an operator to date that has been shown to contain the flow of a well following failure of such control interventions until the well bridges off or the relief well is finished and the well is plugged. As described above, § 250.141 and this final rule at § 250.471(i) allows for the District Manager or Regional Supervisor to approve the use of alternate procedures or equipment provided the operator can show the technology will meet or exceed the level of safety and environmental protection provided by the containment dome. The rule, therefore, specifically provides that BSEE may approve innovative methods to contain the flow of oil, in the event that a capping stack or other method of subsea intervention has failed to stop an uncontrolled flow (because of damage to the wellhead, equipment failure, or some other reason), until the relief well can be completed. This performance-based equivalency allows BSEE the flexibility to evaluate well control and containment equipment and devices that may be developed and deployed in the future.
One commenter requested that, if BSEE does not eliminate the containment dome requirement entirely, the regulations should specify that, when a jack-up rig is used with a subsurface BOP and a prepositioned capping device, a containment dome is not required. The commenter also asserted that the use of a well design using full pressure containment in the wellbore addresses and minimizes the risk of “broaching” (the escape of hydrocarbons through the cement occupying the space between the wellbore and the strata outside the casing) precluding the need for any kind of additional well containment, such as a cap and flow system. The commenter asserted that the combination of a jack-up rig, a prepositioned capping device, and a Level 1 well design materially strengthens spill prevention by adapting proven technologies to the Arctic context, and results in unique advantages with respect to spill prevention such as full pressure containment to the rig floor, access to a surface BOP, and a preinstalled cap with a response time of mere minutes.
BSEE disagrees with removing the requirement for a containment dome. Although the commenter refers to a “prepositioned capping device”, we assume the reference is to a prepositioned capping stack. As discussed previously in this Section, the SCCE requirements are intended to ensure that operators have a coordinated and redundant system to provide for adequate safety in exploratory drilling operations on the Arctic OCS. The capping stack must be positioned to arrive at the well location within 24 hours after loss of well control. If the out-of-control well is not successfully stopped by the capping stack, the other SCCE must arrive at the well location within 7 days after a loss of well control or as directed by the Regional Supervisor. The containment dome is intended to immediately contain oil that would otherwise be discharged into the environment in the event that the capping stack or any other method of subsea intervention does not stop an uncontrolled flow. The containment dome and cap and flow system are part of a sequential process based on operator proposals for dealing with Arctic challenges in a risked based manner. Therefore, removing the containment dome from the sequential approach would negate the intent of the requirements.
Regarding the commenter's suggestion of utilizing a pre-positioned capping stack, we do agree this may be appropriate in specific situations. BSEE notes that this final rule does not preclude the use of a prepositioned capping stack as a part of an operator's proposal. To clarify this, we have revised the definition of Capping Stack to specifically include pre-positioned capping stacks, which may be utilized below subsea BOPs when deemed technically and operationally appropriate, such as when using a jack-up rig with surface trees.
One commenter asserted that the safety and technical issues presented by installing a containment dome between the legs of a bottom-founded rig are sufficient to dismiss the use of a containment dome out of hand in most situations.
BSEE disagrees. This comment assumes that the rig will not have been moved off the location in the event of a loss of well control that has continued for the amount of time it would take to deploy a containment dome (up to seven days under this rule). If the well control event requires that the rig move off location, the containment dome would not only be viable, but necessary to contain the flow during relief well operations. When one considers that the
Paragraph (b) requires monthly stump tests of dry-stored capping stacks, and stump tests prior to installation for pre-positioned capping stacks. The finalized provision imposes a requirement that any capping stack that is dry stored must be stump tested (function and pressure tested to prescribed minimum and maximum pressures on the deck in a stand or stump where it could be visually observed) monthly. The final rule also requires that pre-positioned capping stacks be tested prior to each installation on a well to assure BSEE that no damage was done during the prior deployment or transit.
One commenter recommended that any testing requirements of capping stacks and similar equipment not add to testing requirements in other OCS regions. The commenter asserted that there is no rationale to change these standards for Arctic conditions, and instead suggests revisions to allow for the operator to demonstrate that the SCCE (including elastomers and hydraulic control fluid) are suitable for the expected specific operating environment, including both surface and subsea conditions.
Although it is unclear from the comment what “similar equipment” testing requirements the commenter is referencing, BSEE disagrees with the recommendation to align stump testing requirements for Arctic OCS capping stacks with those applicable to other OCS regions. The harsh conditions on the Arctic OCS do justify enhanced regulatory requirements for testing and maintaining equipment, and therefore BSEE has determined that more rigorous stump testing of capping stacks is appropriate. BSEE agrees with the commenter that requirements should be in place to ensure an operator can demonstrate that the SCCE is suitable for the expected operating environment. Accordingly, multiple provisions finalized in this rulemaking require such a demonstration. See,
Paragraph (c) requires a reevaluation of the SCCE capabilities if the well design changes because some well design changes may impact the WCD rate. If the operator proposes a change to a well design that impacts the WCD rate, the operator must provide the new WCD rate through an Application for Permit to Modify (APM), as required by existing § 250.465(a). The operator must then verify that the SCCE would either be modified to address the new rate or that the previously proposed system would be adequate to handle the new WCD to demonstrate ongoing compliance with the SCCE capability requirements previously addressed.
No comments were received on the proposed addition of this section and the section is therefore finalized as proposed.
Paragraph (d) requires the operator to conduct tests or exercises of the SCCE, including deployment of the SCCE, when directed by the Regional Supervisor. Similar to the requirement that equipment be tested periodically, BSEE has concluded that there is a need to ensure that personnel are prepared and that they, and the SCCE, would be capable of performing as intended. Therefore, BSEE is requiring that operators conduct tests and exercises (including deployment), at the direction of the Regional Supervisor, to verify the functionality of the systems and the training of the personnel.
Three commenters requested § 250.471(d) establish minimum testing requirements and that BSEE provide more specific details as to the timing and number of tests and exercises. The commenters recommend that SCCE be tested prior to each drilling season to ensure it is functioning properly and capable of working effectively during an emergency, and that the equipment be exercised at least once during the drilling season to ensure personnel have the opportunity to practice deployment and use of this critical well control equipment in Arctic conditions. One of the commenters recommended testing or exercises be conducted prior to active operations at a scheduled time so that required trained personnel can participate, and to enable adequate planning. The commenter suggests that, to ensure all required resources will be available at the agreed time, the date for any tests or exercises should be agreed to a minimum of 180 days in advance.
BSEE disagrees with requiring a prescribed frequency of testing of SCCE equipment or with pre-arranging all tests well in advance. The testing requirements in this final rule are the result of balancing logistics and safety concerns against the need to maintain the relevant systems in a constant state of readiness. Placing strictly pre-defined parameters on testing would allow for a level of staging and preparation that is not realistically reflective of the real-world scenarios in which the relevant capabilities would be needed. The Regional Supervisor should be allowed to determine the appropriate balance on a case-by-case basis. The SCCE equipment is not directly involved in drilling and, as such, the required state of readiness and availability can only be attained by testing as proposed, which allows for a case-by-case flexibility.
One commenter recommended testing the SCCE in Arctic OCS conditions at the exploration drill site during the drilling season.
BSEE has determined the logistics of testing at the Arctic OCS site introduce more risk than such testing would alleviate. One example of the types of difficulties of onsite testing in Arctic OCS conditions is that it is currently not feasible to transport to the Arctic the large volume of nitrogen that is required for recharging equipment. Nitrogen recharging of the surface SCCE equipment is used to help control corrosion during deployment and also helps minimize the risk of explosion, should use of the equipment become necessary. Recharging the system also helps monitor the system for leaks. Because recharging cannot currently be accomplished onsite, in the Arctic, it is more prudent to conduct testing and accomplish recharging outside the Arctic, where the nitrogen charges can be transported. This approach helps to ensure that the SCEE equipment will be properly charged and will be capable in the unlikely event that it is needed to response to a well control event during operations.
Paragraph (e) requires the operator to maintain records pertaining to testing, inspection, and maintenance of the SCCE for at least 10 years, and make them available to BSEE upon request. This information will facilitate a review
Paragraph (f) requires the operator to maintain records pertaining to use of the SCCE during testing, training, and deployment activities for at least 3 years and make them available to BSEE upon request. The use of the equipment during testing and training activities and actual operations must be recorded, along with any deficiencies or failures. These records will allow BSEE to address any issues arising during the usage and to document any trends or time-dependent problems that would develop over the record retention period. In the event that the equipment is used in a well control incident, the records are necessary to document the effectiveness of the response and functioning of the equipment.
Two commenters recommend that all records be retained for a consistent period and electronically submitted to BSEE, unless BSEE can explain the reason for recommending a different record retention schedule.
BSEE disagrees. The record maintenance requirements are intended to mirror current regulations to the extent possible given the long lead times and down periods in Arctic exploratory drilling.
Paragraph (g) requires operators to initiate transit of SCCE to a well immediately upon a loss of well control. Paragraph (h) requires that operators deploy and use SCCE when directed to do so by the Regional Supervisor. This provision ensures that all SCCE is available and ready for use and reinforces the Regional Supervisor's authority and discretion to require the deployment and use of SCCE in the event of a loss of well control.
One commenter suggests revising these sections to indicate that the Regional Supervisor must consult with the FOSC (and State on Scene Coordinator (SOSC) in state waters, and appropriate stakeholders and technical experts regarding the deployment of SCCE. The commenter expressed concern that the proposed requirements of § 250.471(h) indicate that the Regional Supervisor has the full authority to require the deployment of the capping stack and cap and flow system, without any requirement to consult with the Regional Response Team, the FOSC, or any technical experts. The commenter asserted that, under Federal law, the FOSC is in charge of oil spill response and is the sole Federal entity authorized to require actions to control a potential discharge. Another commenter further recommended that §§ 250.471(g) and (h), and § 250.472(a) should be eliminated or expressly subordinated to direction from the FOSC through the Incident Command System (ICS). The commenter alternately suggests that, if this recommendation is not accepted, BSEE should revise the provision to clarify that any direction to deploy or use SCCE or a relief rig by the Regional Supervisor must be requested within the Unified Command.
BSEE is aware that through OPA and the NCP, “[t]he OSC in every case retains the authority to direct the spill response, and must direct responses to spills that pose a substantial threat to the public health or welfare of the United States.” (59 FR 47384, 47387 (Sept. 15, 2016)). In this context, BSEE will continue to consult with the USCG as the on scene coordinator with the authority to direct and monitor spill response actions under the NCP. Notwithstanding, BSEE recognizes that OPA and the NCP do not expressly preempt all other relevant legal authorities that may be implicated during a spill response. (59 FR 47389–90 (Sept. 15, 1994)). The final rule's requirement that an operator deploy and use SCCE when directed by the Regional Supervisor in § 250.471(h) is consistent with BSEE's OCSLA authorities concerning the regulation of oil and gas exploration activities on the OCS. Neither OPA nor the NCP preempts BSEE's regulatory authority with respect to the regulation of these activities. Additionally, as discussed above, in addition to this OCSLA authority, the President delegated to the Secretary the OPA authority under CWA Section 311(j)(1)(C) concerning “establishing procedures, methods, and equipment and other requirements for equipment to prevent and to contain discharges of oil and hazardous substances from . . . offshore facilities, including associated pipelines . . .” These regulations, including those regarding SCCE, implement the Secretary's OPA authority with respect to equipment, procedures, and methods that prevent and contain oil discharges from offshore facilities.
The BSEE Regional Supervisor has both the technical expertise for source control operations and the authority to require the operator to implement SCCE measures under OCSLA. MOA:OCS–03 describes the roles of BSEE and the USCG during responses to spills from offshore facilities: “In the event of an oil discharge or substantial threat of an oil discharge from an offshore facility seaward of the coastline, BSEE has primary responsibility for monitoring and directing all efforts related to securing the source of the discharge and reestablishing source control . . . the Regional Supervisor or designated individual will direct measures to abate sources of pollution from regulated offshore facilities to ensure minimal release of oil and to prevent unwarranted shutdown of unaffected production and pipeline systems.” Both BSEE and the USCG acknowledge the need to seamlessly coordinate source control and other oil spill response activities. BSEE and the USCG established the position of the Source Control Support Coordinator (SCSC) within ICS framework and the 2014 edition of the USCG Incident Management Handbook (IMH). As provided for in the USCG IMH, “the SCSC . . . is the principal advisor to the FOSC for source control issues. The SCSC serves on the FOSC's staff and is responsible for providing source control support for operational decisions and for coordinating on-scene source control activity. During a source control issue involving a loss of well control or pipeline incident on the OCS, the SCSC and other source control technical specialists are provided by BSEE.” As such, there are clear policies in place and already agreed to between the USCG and BSEE regarding how source control activities resulting from a loss of well control should be implemented and how they should be addressed within ICS and the Unified Command. The provisions within this rulemaking are consistent with all existing statutory authorities, MOA:OCS–03, and the USCG's ICS framework within the IMH.
One commenter recommended that BSEE link the SCCE requirements to the operator's approved Emergency Response Plan such that, in the event of a loss of well control, the primary SCCE will be mobilized in accordance with the operator's approved Emergency Response Plan. The commenter also recommended that, during the transit of the primary SCCE, the operator will administer secondary intervention measures per their response plans to terminate or minimize the flow of hydrocarbon to the seafloor. The
This provision is intended to emphasize that the purpose of the SCCE requirement is to ensure that the operator is able to quickly commence source control operations, and BSEE does not agree that the suggested revisions are needed. The timeframes finalized in § 250.471 are minimum planning standards and may become relevant well before the ICS is activated and an Emergency Response Plan comes into play. This is also especially important with respect to the beginning of relief well operations under § 250.472.
Regarding the comment on BSEE's associated responsibility, accountability, and liability if § 250.471 requirements are invoked, BSEE clarifies that we do not propose to assume control over any operations. The finalized provisions of this rulemaking simply require the operator to comply with the terms of the regulations and its approved plans and permits and discuss BSEE's authority to order such compliance. The operator is responsible for safely executing all operations in compliance with the regulations and its approved plans and permits. BSEE has no authority to offer advisory opinions concerning the scope of potential executive agency legal liability. BSEE is authorized to prescribe rules and regulations that are necessary to carry out the provisions of OCSLA. (43 U.S.C. 1334(a)). Questions concerning legal liability are beyond the scope of this rulemaking and BSEE makes no representations concerning legal liability in this rule.
As discussed in Section IV.A,
BSEE proposed to add a new § 250.472 which requires an operator to have available a relief rig when drilling below or working below the surface casing. The provisions also proposed to establish a 45-day maximum limit on the time necessary to complete relief well operations. BSEE notes the relief rig could be stored in harbor, staged idle offshore, or actively working, as long as it would be capable of physically and contractually meeting the proposed 45-day maximum timeframe. However, any relief rig must be a separate and distinct rig from the primary drilling rig to account for the possibility that the primary rig could be destroyed or incapacitated during the loss of well control incident.
Many commenters expressed general support for the relief rig requirements. Many other commenters suggested various revisions to this section. As discussed in Section IV.A,
Several commenters recommended that BSEE remove the relief rig requirements and revise the final regulations to implement a performance-based equipment requirement. Commenters suggest that the availability of several alternative technologies, such as capping stacks, prepositioned capping devices, and subsea isolation devices (SID), negate the need to require a relief rig.
BSEE disagrees with the suggestion to remove the relief rig requirement. We have determined that a relief rig is currently the most reliable option for permanently killing and plugging an out-of-control well. We do agree with the commenters' concerns that the regulations provide flexibility and allow for the use of new technology that can meet or exceed the level of safety and environmental protection provided by a relief rig in the event of an out-of-control well. None of the types of technology proposed by the commenters, however, have been proven to be conclusively, and consistently, effective at killing and permanently plugging an out-of-control well. Therefore, BSEE has determined to finalize the § 250.472 requirement for an operator to have appropriate access to a relief rig, different from the primary drilling rig, when drilling or working below the surface casing during Arctic OCS exploratory drilling operations.
Although a relief well is the most reliable, and in some circumstances the only available, solution to kill and permanently plug an out-of-control well, there may be circumstances where innovative alternative compliance measures to drilling a relief well are available. The proposed § 250.472(c) addressed this concern by directing operators to existing § 250.141,
Many comments also requested additional clarity and explicit procedures for an operator to apply for the use of equivalent technology.
BSEE understands the commenters' stated reasons for desiring additional details about how to obtain approval for alternative procedures or equipment under § 250.141 and this final rule. As discussed in Section III.B and D of this preamble, operators may request
One commenter asserted that the requirement for a relief rig under § 250.472 is in conflict with the preference for performance-based regulations established in E.O. 12866, E.O. 13563 and associated guidance.
BSEE disagrees. Section 250.472 is consistent with the relevant portions of E.O. 12866, E.O. 13563 and the associated Office of Information and Regulatory Affairs (OIRA) guidance because it would allow for operators to utilize less expensive technologies that achieve the performance outcome of permanently killing and plugging an out-of-control well in a timely fashion. Importantly, within certain general parameters, the proposed regulation leaves a fair amount of discretion with the operator as to how to accomplish that outcome. Although this provision presumptively requires that operators have access to relief rigs to achieve the regulatory outcome, it sets forth the minimum level of prescription necessary to achieve the end, leaving many performance-based options available for operators to pursue. Additionally, § 250.472(c) expressly permits operators to propose alternate equipment to achieve the regulatory objective of permanently killing and plugging an out-of-control well. We note that we considered at the NPRM stage imposing more prescriptive requirements for relief rig capabilities, but instead chose to provide operators flexibility by selecting the best approach that would accomplish the ultimate goals.
Many commenters expressed their support for the NPC Arctic Potential Study and suggest we revise the relief well requirements to align with the Study's findings. The commenters cite to the NPC Arctic Potential Study's suggestion of alternative preventative measures such as well design, capping stacks or subsea shutoff devices as methods of spill mitigation and containment.
BSEE disagrees with the recommendation to revise § 250.472 and does not view the requirements finalized in this rulemaking as being in conflict with the NPC Arctic Potential Study. As discussed in Section IV.B.1,
Two commenters opposed the use of any equipment performance standard in this provision, asserting that the requirement for a relief rig should be mandatory. The commenters assert that permitting the use of any alternative compliance measures would necessitate a formal rulemaking with public notice and comment.
BSEE recognizes the commenters' concern, but disagrees with precluding the use of any alternative procedures or equipment to the relief rig requirements of § 250.472. We note that the ability of industry to innovate within regulatory constraints requires a careful balance, especially when undertaken in environmentally sensitive areas such as the Arctic OCS. In attempting to strike this balance, we have determined the hybrid prescriptive and performance-based requirements of § 250.472 are appropriate. Further, no additional formal rulemaking is necessary because an operator's option to apply for the use of alternate compliance measures is always available for any of the part 250 regulations under the existing regulatory provisions previously promulgated through notice and comment procedures at § 250.141.
Two commenters asserted that the relief well requirement is not best available and safest technology (BAST) as required by OCSLA at 43 U.S.C. 1347(b).
BSEE disagrees with the commenters. We determined that there is adequate support for requiring a relief rig for Arctic OCS exploratory drilling operations. BSEE has concluded that the requirement to have access to and utilize a relief rig to kill and permanently plug an out-of-control well is necessary and appropriate under Arctic OCS conditions. Although the commenters point to the MMS Studies as countering this conclusion, the MMS studies examined blowouts only
Commenters also appear to misconstrue the nature of the relief rig requirements, particularly their connection with the SCCE requirements of § 250.471. Commenters emphasize the preference for using capping stacks to regain prompt and immediate control of an out-of-control well. BSEE agrees with this assertion, as reflected in the provisions of § 250.471 requiring Arctic OCS operators to have a capping stack stationed nearby for prompt deployment to an out-of-control well as an initial response. BSEE acknowledges the timelines and challenges that accompany relief well operations, particularly on the Arctic OCS. BSEE does not propose the relief rig as an alternative to the capping stack, but rather as a supplement to the capping stack serving the distinct purpose of permanently killing and plugging the well. While capping stacks are sometimes—though not always—capable of regaining immediate control over a well, BSEE believes that the best available option to kill a well reliably and permanently, and to allow for safe longer-term abandonment, is a relief well. Accordingly, a relief rig is not an alternative to a capping stack, but rather a separate line of defense in the event of its failure, and/or the most reliable method for shifting from the temporary control potentially provided by a capping stack to the permanent killing of an out-of-control well on the Arctic OCS. Additionally, as discussed previously, operators may utilize alternate equipment or procedures if they can show the alternate compliance measures meet or exceed the level of safety and environmental protection provided by a relief rig. Specifically, the alternate compliance measure must demonstrate the ability to kill and plug an out-of-control well permanently; separate and distinct from the potential immediate well control capabilities of a capping stack.
BSEE notes that, under § 250.107(c), it presumes that an operator's compliance with BSEE regulations constitutes BAST. BSEE's Office of Offshore Regulatory Programs is responsible for developing and maintaining regulations, policies, standards and guidelines related to BAST. We continuously strive, through programs, such as the Technology Assessment Program, and collaborations, such as the Ocean Energy Safety Institute, to identify and incorporate new and evolving technologies into our regulation of OCS oil and gas activities. The regulations applicable to MODUs conducting exploratory drilling on the Arctic OCS reflect these efforts. The relief rig, SCCE, and other regulations require a coordinated and redundant system to provide for adequate safety in exploratory drilling operations under the uniquely challenging environmental and operational conditions on the Arctic OCS. BSEE has determined the finalized provisions in this rulemaking provide for the appropriate redundancy and sequencing of the responses, based on deployment time and varying equipment capabilities, and therefore provides the necessary level of safety and environmental protection to allow for exploratory drilling on the Arctic OCS.
One commenter further questioned BSEE's support for requiring a relief rig for exploratory drilling operations from a MODU or jack-up on the Arctic OCS, and requested identification of the administrative record. The commenter asserted that BSEE should allow for public comment on the administrative record when it is publicly identified.
Generally defined, an administrative record is a compilation of the body of information considered directly or indirectly by an agency decision-maker in arriving at a final decision. The administrative record is created from the decision record, which is an evolving resource through development of the proposed rule on to promulgation of the final rule. Public comments, including those submitted by the commenter, are part of the administrative record. As it does with all of its proposed rules, BSEE invited public comments on the NPRM and supporting documents and data to ensure that it considers a wide range of environmental, economic, and other issues related to the proposed rule. The commenter submitted this comment during the public comment period of the rulemaking process, and therefore prior to the final agency decision. The administrative record is complete when the Department issues the final rule, not before. In addition, administrative records are not subject to public review and comment requirements under applicable law. We note, however, the public may view the public rulemaking docket at any time. The docket, available at
Several commenters oppose the 45-day maximum limit on the time necessary to complete relief well operations and request that BSEE allow for a performance-based requirement to determine the end of drilling season date on a case-by-case basis. Many of the commenters also state the 45-day limit unnecessarily shortens the drilling season on the Arctic OCS, and consequently lessens the value of existing leases.
BOEM and BSEE note the proposed 45-day maximum limit does not seek to impose a specific requirement. The 45-day threshold marks the maximum time allowed, but the requirement is performance-based and leaves the means of compliance up to the operator.
BOEM and BSEE will take a precautionary approach to evaluating proposals to complete relief well operations,
One commenter expressed concern that current technology has not advanced to a point where oil can be effectively cleaned up when mixed with ice, or worse, trapped under the ice.
BSEE understands the commenter's concern, but notes the finalization of this rulemaking specifically limits operations to the open water season and requires early termination of operations when drilling below or working below the surface casing. The early termination is designed not only to allow the drilling of a relief well, but also to enable the use of oil spill response equipment prior to freeze-up. BSEE acknowledges, in certain situations, some cleanup of oil in ice could become necessary, and has required operators to develop oil intervention practices that will enhance the effectiveness of spill countermeasures when dealing with oil in broken ice conditions. Oil spill response techniques do exist for responding to oil spills in Arctic conditions. Research and development designed to improve oil spill response countermeasure technologies and procedures are continuous and ongoing, including efforts that are funded by both government and industry entities.
One commenter generally supported this rulemaking's emphasis on equipment redundancy to contain or control a WCD. The commenter recommended revising this section to encourage operators to demonstrate the success rate of capping operations and equipment, as well as to provide confidence levels of dealing with a number of discharge scenarios.
BSEE disagrees with the recommended revision. As discussed previously, the relief rig requirement is not the primary method of control or containment. The commenter's concern for encouraging redundancy is addressed in § 250.471, which requires Arctic OCS operators to have a capping stack stationed nearby for prompt deployment to an out-of-control well as an initial line of response. BSEE does not propose the relief rig as an alternative to the capping stack, but rather as a supplement to the capping stack, serving the distinct purpose of permanently killing and plugging the well. Regarding opportunities to demonstrate the success rates of capping operations and equipment, § 250.471(b) requires stump testing of capping stacks at specific intervals, and § 250.471(d) directs operators to conduct testing when directed by the BSEE Regional Supervisor. Accordingly, we agree there should be redundant capabilities covering a wide range of scenarios to be employed during an emergency situation, and the finalized provisions of this rulemaking adequately address this issue ensure.
Two commenters requested that, if the 45-day maximum timeframe is finalized, the WCD regulations at § 254.26(d)(l) should be revised to align with the maximum time allowed to drill a relief well, such that the operator must plan for a blowout lasting up to 45 days. Another commenter expressed general concern for how the WCD is calculated.
BSEE has determined the differing timeframes do not necessitate a revision at this time. The 45-day provision is the maximum timeframe allowed for an operator to move the relief rig to the site of the blowout and complete all necessary operations to kill and abandon the original well and abandon the relief well prior to seasonal ice encroachment. Existing regulations in § 254.26 provide a broad performance-based standard requiring plan holders to establish what a WCD would be, and then ensure that enough response and supporting resources are available to clean up such a discharge. Although § 254.26(d)(1) provides the WCD scenario must show how an operator will support operations for a blowout lasting 30 days, it does not preclude developing a scenario lasting longer than 30 days, nor does the hypothetical prospect of a spill lasting longer than 30 days necessitate revision of that regulatory timeline. Accordingly, NTL 2012–N06
One commenter suggests BSEE adopt a geographic prescriptive standard, requiring operators to maintain a relief rig within a certain distance of their drilling operation. The commenter asserted that the proposed performance-based requirements could still be maintained as a backstop in order to impose liability on any operator that fails to drill a relief well in a timely manner, even while compliant with the prescriptive standards.
BSEE disagrees. As discussed in the preamble to the NPRM, we did consider a prescriptive geographic standard, but based on both 2012 and 2015 operational experience and public comments to the proposed requirements of § 250.472, we determined to retain the 45 day maximum time allowance within a performance-based requirement to provide the operator flexibility to innovate and avoid unanticipated logistical consequences.
One commenter requested that BSEE mandate an additional 10-day buffer period before an operator's established end of season date to allow for unforeseen circumstances. The commenter asserted the additional time added to the end of season date will help mitigate the risk of relief well operations not being completed before the encroachment of winter sea ice and avoid the consequences of a spill continuing until the following open water season.
BSEE has determined it is not necessary to impose a mandatory additional 10 day buffer, because this rulemaking specifically limits operations to the open-water season. The requirement to be able to complete relief well operations prior to the expected encroachment of seasonal ice results in the end of drilling operations well in advance of winter sea ice encroachment and therefore provides an adequate buffer to accommodate the risks of a late season loss of well control. Further, a significant portion of the last 10 days of operations will be spent permanently or temporarily abandoning a well and most of the
Two commenters request clarification of how an operator will calculate the expected onset of seasonal ice encroachment when determining the end of seasonal operations to meet the proposed requirements of § 250.472. The commenters express concern that the calculation does not take into account periodic ice incursions during the open water season, and how potential ice management activities, which could include rig movement, interact with this requirement.
BSEE clarifies that the operator will calculate the freeze-up date based on historical data and will update it daily, in conjunction with the daily ice reports, as the season nears its end. Periodic ice incursions occur mostly during the early part of the open water season as the ice breaks off and floats away. Section 250.472 relates to the projected return of seasonal sea ice to the drilling site at the end of the open water season. However, an operator's ice management plan is always in effect with the included ice monitoring provisions.
One commenter asserted that the language of § 250.472(b) prohibiting “drilling below or working below the surface casing” during the relief well buffer period conflicts with the proposed provisions at § 550.220(c)(6), requiring “[t]he termination of drilling operations into zones capable of flowing liquid hydrocarbons to the surface.” The commenter asserted that, taken literally, an operator could not even conduct operations that are required by regulations during this relief well buffer period. The commenter suggests that, as drafted, the BOEM provision of part 550 references § 250.472 and that the more restrictive BSEE language would prevail if the two sections were reconciled. The commenter requested the conflict between the two provisions be addressed in a re-proposed rule by retaining the language under proposed § 550.220(c)(6), and removing the applicable language of § 250.472(b).
We agree with the commenter in part. The intent of § 550.220(c)(6)(ii) is to obtain the information that is known at the time of EP submission regarding the operator's plans for compliance with the requirements of § 250.472(b). Therefore, as a technical correction, we removed the text of “into zones capable of flowing liquid hydrocarbons” from § 550.220(c)(6)(ii) in this final rule. There is no need to re-propose this provision because the intent of § 550.220(c)(6)(ii) was stated as requiring the operator to include in the EP information “consistent with the relief rig planning requirements under § 250.472” and this revision does not change the intent of § 550.220(c)(6)(ii) as proposed. We disagree with the commenter's second suggestion that the proposed language of § 550.220(c)(6) should be retained, instead of the finalized language of § 250.472(b), “drilling below or working below the surface casing.” Operators may drill or work down to the surface casing at any time. However, the risk of a blowout is increased while working or drilling below that casing, including before drilling into areas expected to be capable of flowing liquid hydrocarbons (such as by way of example, shallow gas pockets). Therefore, the finalized language “below the surface casing” ensures that an operator stops at that last casing point, or pulls back and temporarily plugs at that casing point, to meet the requirements of § 250.472(b) and have appropriate capabilities to complete the relief well sufficiently in advance of seasonal ice encroachment.
One commenter suggested the end of seasonal operation dates should not be determined by the operator.
BSEE disagrees. The anticipated end of season date is determined by the operator because they have the primary responsibility to conduct operations in a safe and environmentally responsible manner. They also have the best access to the relevant information related to their equipment and capabilities to operate within certain conditions and timelines (
One commenter suggests BSEE require relief rigs be in the Arctic OCS area where drilling is underway, to allow the rig to be in place and operating within one week of a blowout occurring.
BSEE agrees with the commenter's concern for a timely response in the event of a blowout occurring. However, BSEE determined the best method of protection is not to prescriptively require an operator to stage a relief rig within a specific geographic area. While BSEE considered imposing such a requirement, we ultimately determined that the performance-based approach of establishing a 45-day maximum, but otherwise permitting the operator to determine its approach to relief rig staging, was preferable. This approach allows the operator flexibility in the management of its rigs while still ensuring that basic safety and environmental protection standards are met. Additionally, the response capabilities finalized in § 250.471 for SCCE will be activated and deployed at the same time that the relief rig is moving into location, mooring up and getting ready to drill, with the initial response required within 24 hours. The relief rig and SCCE requirements are not mutually exclusive operations and can proceed concurrently.
One commenter expressed concern that mutual-aid agreements or cooperatives formed to share relief rigs may inhibit the effectiveness of response. The commenter recommended the final rule set limits on continued drilling of any well relying on a particular relief rig if a blowout occurs and that rig is dedicated to blowout response.
BSEE agrees with the commenter and believes this issue is addressed in the performance standard finalized at § 250.472(b), and incorporated into the operator's approved EP (§ 550.220(c)(4)) and APD (§ 250.470(e)). An operator is required to have access to a relief rig, different from the primary rig, that is able to move onsite to drill a relief well, kill and abandon the original well, and abandon the relief well prior to seasonal ice encroachment at the drill site, but no later than 45 days from a loss of well control. The commenter is concerned with a circumstance in which a single relief rig is relied upon to provide the necessary capabilities for multiple operations (pursuant to a mutual aid or cooperative agreement), and is called into service by a well control event at one of the well sites. Under such circumstances, any other continued drilling operations that rely on the availability of that relief rig must stop, as the relief rig would no longer be available to respond within the parameters required by the regulation
Two commenters recommend the final rule include a provision requiring operators to submit a Relief Well Drilling Plan as part of the EP application in § 550.220. The commenters further assert that such plans are critical in any case where a mutual aid agreement is used to share a relief well drilling rig, to ensure that drilling operators agree to provide relief well personnel that are trained, qualified, and prepared to provide the services they offer to share.
BSEE agrees with the commenters' concerns that useful and important information about the relief rig should be required in the EP, and believes that the final regulations are sufficiently protective as finalized, without the need for an additional plan as suggested by the commenters. Although not specifically entitled a “Relief Well Drilling Plan”, § 550.220(c)(4) requires an operator to include with the EP a general description of how they will comply with the relief rig requirements of this section, including a description of the relief well rig, the anticipated staging area of the relief well rig, an estimate of the time it would take for the relief well rig to arrive at the site of a loss of well control, how the operator would drill a relief well if necessary, and the approximate timeframe to complete relief well operations. The EP process provides an opportunity for the public to review and comment on any submissions related to relief well operations, including the anticipated length of time to drill a relief well and complete relief well operations. Additionally, § 250.470(e) requires that the APD include a detailed description of how an operator will comply with the relief rig requirements of § 250.472. This information is required at both the EP and the APD stages because we expect an operator to have more detailed information as they move closer in time toward the exploratory drilling operations. The planning and descriptions required by these provisions ensure adequate attention to these issues.
One commenter suggests that, if a rig is strictly dedicated as a relief well rig, it still needs to be subject to the same audit, inspection, and testing requirements as an operating rig before it is approved as a stand-by rig to allow for the rig to be verified and ready for immediate use in an emergency. The commenter also recommended all records be retained for a consistent period and electronically submitted to BSEE, unless BSEE can explain the reason for recommending a different record retention schedule.
BSEE acknowledges the commenter's concern and notes that any dedicated standby rig contracted to an operator is subject to the same qualification, inspection and testing requirements as a rig with drilling activities underway. Section 250.472(a) expressly states that “[y]our relief rig must comply with all other requirements of this part pertaining to drill rig characteristics and capabilities, and it must be able to drill a relief well under anticipated Arctic OCS conditions.” Similarly, a dedicated standby rig is subject to the enhanced SEMS auditing requirements (
BSEE disagrees with the comment regarding record retention. The record maintenance requirements in the proposed rule are intended to mirror, to the extent possible given the long lead times and down periods in Arctic exploratory drilling, current regulations.
One commenter asserted that the use of an SID should be considered only in the case of a jack-up MODU, specifically to be employed to allow the jack-up to be moved off location in the event of unmanageable hazardous ice encroachment. The commenter explains that, for floating MODUs, the SID would not add benefit, as the subsea BOP is already deployed at the seabed and the SID would require a much deeper mud line cellar, which raises additional risks for the mud line cellar construction and soil stability.
BSEE agrees with the commenter. The final rule does not require an SID, although it may be requested as alternate technology or procedure for use with a jack-up under appropriate circumstances, pursuant to § 250.141. The BOP is already subsea with a floating drilling unit, so an SID would be only marginally effective or redundant.
One commenter requested that BSEE clarify why the decision to commence relief well drilling may be made by the Regional Supervisor. The commenter asserted that such decisions should be made by the operator because it will have the best understanding of the real-time situation and the most prudent sequence of steps. The commenter suggests that, if BSEE seeks to direct active drilling operations, further clarification is required on BSEE's responsibility, accountability, and liability in the event of any incidents that occur as a direct result of those actions.
BSEE anticipates that decision-making regarding appropriate sequencing and execution of well control activities in the event of the operator's loss of well control will involve cooperation between BSEE and the operator, in light of the operator's familiarity with its circumstances, conditions, and capabilities. BSEE is not seeking to direct active drilling operations and clarifies that its role is to enforce existing regulations to protect rig personnel, the environment, and the natural resources of the OCS, which may include ordering an operator to drill a relief well. In the event of a loss of well control, the Regional Supervisor may direct the operator to commence drilling a relief well; however, it remains the operator's responsibility to manage active drilling operations, in accordance with the requirements of the regulations to respond to a loss of well control. Questions concerning liability are beyond the scope of this rulemaking, BSEE is authorized to prescribe rules and regulations that are necessary to carry out the provisions of OCSLA. (43 U.S.C. 1334(a)). Section 250.472 requires the operator to have access to a relief rig that is different from the primary rig, and that will arrive on site, drill a relief well, kill and abandon the original well, and abandon the relief well prior to expected seasonal ice encroachment at the drill site, but no later than 45 days after the loss of well control. This requirement does not specify how any relief well will be drilled. Drilling a relief well (in accordance with an approved APD and any conditions included therein) will continue to be the operator's responsibility.
One commenter questioned the authority of the Regional Supervisor to direct an operator to commence relief well operations, which is an oil spill source control activity and therefore within the jurisdictional authority of the FOSC, not the Regional Supervisor.
BSEE disagrees. The drilling of a relief well is an emergency well control measure that is conducted under regulations implementing OCSLA. As such, the BSEE Regional Supervisor has the authority to require the operator to begin relief rig operations as part of their responsibilities under the OCSLA.
One commenter requested clarification on why BOEM and BSEE are proposing additional regulations for relief rigs if they already have the existing authority to require relief rigs for exploratory drilling on the Arctic OCS. The commenter cites the NPRM preamble: “BOEM and BSEE anticipate that we would exercise our existing authorities to require a relief rig for any future exploratory drilling on the Arctic OCS” (see 80 FR 9948).
BOEM and BSEE have broad authority under existing regulations to impose reasonable conditions on exploration plans and drilling permits. We included the express requirements for a relief rig in § 250.472 because this provision clearly articulates that BOEM and BSEE will require access to a relief rig during all future exploration activities on the Arctic OCS, unless an operator is able to obtain approval for alternative compliance measures under § 250.141 and this final rule at § 250.472(c). This explicit requirement should allow operators to plan for all of the types of vessels, equipment, and personnel that will be required to conduct exploratory drilling operations on the Arctic OCS, and on what terms.
One commenter recommended § 250.472(a) be revised to insert the word “safely,” whereby an operator would be required “to safely drill a relief well under anticipated Arctic OCS conditions.”
BSEE agrees with the commenter's premise, but notes the requirement for safe operations is the primary goal of all our regulations, and as such this obligation is captured throughout the regulations. For example, § 250.107,
One commenter suggests that, if an operator drills a well to total depth during the drilling season prior to the time set aside for a relief well, then that time could be effectively utilized for logging and well evaluation.
BSEE disagrees. The final regulations at § 250.472 prohibit working (
BSEE proposed to add a new § 250.473 that would require performance-based measures in addition to those listed in § 250.107 to protect health, safety, property, and the environment during exploratory drilling operations on the Arctic OCS. Several comments were received on this section. BSEE has reviewed the comments and determined to finalize § 250.473 as proposed.
The majority of commenters were generally supportive of the requirements of § 250.473, and consider the finalized requirements good business practice and appropriate environmental stewardship.
One commenter suggests that the performance-based requirements could be supported by established and well known standards, such as International Electrotechnical Commission (IEC) 61508 and 61511.
BSEE has determined that no revision is needed here because these issues are addressed by our existing SEMS requirements at Part 250 subpart S, which are performance-based. The SEMS requirements are primarily based on API RP 75, which was specifically developed for the offshore oil and gas industry. The operator's SEMS must meet or exceed the standard of safety and environmental protection of API RP 75. The goal of the operator's SEMS is to promote safety and environmental protection by ensuring all personnel aboard a facility are complying with the policies and procedures identified in the operator's SEMS.
One commenter recommended adding a requirement that the operator train personnel for the environmental conditions present in the Arctic. The commenter asserted that an understanding of wind chill, frostbite, and proper safety procedures around ice-covered equipment is as necessary as having arctic-grade hydraulic fluid in the lines.
BSEE agrees that a well-trained crew plays an important role in achieving safe and professional drilling operations. We believe that the training requirements in our current regulations provide the basis for appropriate training for crews working in Arctic conditions. Section 250.1501,
BSEE proposed to revise existing § 250.1920 to increase the audit frequency and facility coverage for intermittent Arctic OCS exploratory drilling operations. While operators are generally required to conduct their SEMS audit every 3 years after their initial audit, BSEE proposed to require a SEMS audit of Arctic OCS exploratory drilling operations and all related infrastructure each year in which drilling is conducted, because of the particularly challenging conditions and high-risk nature of those activities. This Arctic OCS audit would require operators to ensure that all safety systems are in place and functional prior to commencing or resuming activities for a new drilling season, as well as to conduct the offshore portion of the audit while drilling is under way. An operator conducting Arctic OCS exploratory drilling operations may not combine its Arctic OCS facility audit(s) with audits of its non-Arctic OCS facilities to satisfy the facility sampling requirements incorporated into Subpart S.
Many comments were received on this section. BSEE has reviewed the comments, and made various technical edits in response to the comments. The remaining substantive provisions of § 250.1920 are finalized as proposed, as discussed herein.
Several commenters generally support this provision. Three of these commenters supported the requirement for annual SEMS audits with suggested revisions. One commenter recommended that the new provision clearly state that BSEE will ensure that any identified non-compliance in the onshore audit is remedied prior to the
BSEE agrees that an annual SEMS audit is a prudent requirement for Arctic OCS exploratory drilling. BSEE also recognizes that the audit requirement implicates more than simply having a management system in place. An audit of a good management system will identify ways that the management system is meeting its objective of hazard identification and risk management. The same audit is just as likely to identify ways that the management system is functioning but can do a better job.
BSEE is not changing the schedule for submittal of audit findings in this final rule. Developing a comprehensive audit report and effective CAP within 30 days of an audit will require considerable discipline and focus. BSEE believes that a shorter time frame would compromise the quality of both submittals. In addition, the time frame to complete any proposed corrective actions should not be specified in the rule, as the appropriate time frame for correction is largely dependent upon the nature of the nonconformity. This will continue to be a subject for discussion between the operator and BSEE as currently allowed by the regulation. With respect to BSEE's ability to ensure timely compliance, finalized § 250.1920(g) provides that, “if BSEE determines that the CAP or progress toward implementing the CAP is not satisfactory, BSEE may order you to shut down all or part of your operations.”
BSEE also does not believe that it is necessary to specify that off-season evaluation of the SEMS needs to be performed. Operators have discretion within their own management systems on how to identify and prioritize continual improvement opportunities, and our specifying how to do this could be counterproductive. Finally, BSEE believes that the schedule for submittal of the audit findings will allow BSEE to intervene quickly if a management system is not in place, as when an operator's continual improvement efforts appear inadequate.
Several commenters request that BSEE remove the annual auditing requirements of § 250.1920(b)(5). The commenters assert that such a frequency of auditing is not needed, has not been justified, and will not have an impact on safety or compliance because an operator's SEMS program does not typically change on an annual basis. In addition, commenters state that existing BSEE regulations require an audit of the SEMS program on a three-year cycle, which has worked effectively for operations in the Gulf of Mexico and they assert should be more than adequate for operations in the Arctic OCS. One commenter suggests that an annual audit frequency may actually reduce health, safety, security, and environmental performance, and requiring an annual SEMS audit on existing operations will result in added time delay to conduct audits without any demonstrated improvement to safety.
BSEE disagrees with these comments. Operators engaging in exploratory drilling on the Arctic OCS will be managing risks that are novel and untested compared to those encountered in the Gulf of Mexico. Arctic operations are seasonal and will include mobilization and demobilization activities each year within short time windows. Changes to an operator's management system (both in design and in the personnel who will be relied upon to implement it) are likely to be required as new hazards are recognized and managed, and as contractors rotate in and out of the field. Accordingly, an operator's Arctic SEMS program will likely change over the course of a year. Annual auditing is a way to determine if the organization is continually improving its management system as it gains experience with the new risks and the changing environmental and organizational conditions. If an operator finds that audit results do not contribute to improved approaches to safety and environmental protection, then it is possible that the audit approach needs to be changed rather than resorting to a less frequent audit.
Several commenters suggest additions to the content of SEMS audits for exploratory drilling operations on the Arctic OCS. One of the commenters suggests the SEMS audit should be extended to address the status of key barriers and assess ice management, as well as evaluate the Arctic operator's safety culture. Another of the commenters asked that the SEMS audit include a focus on contractor management and oversight. One of the commenters suggests the proposed regulatory text be revised to include a reference to the onshore portion of the audit incorporating a physical audit of all major equipment proposed in the EP and APD (including at a minimum the drilling rig, SCCE, relief rig, and support vessels) to verify this equipment is ready and capable. The commenter also recommended the revision address the offshore portion of the audit, including requiring a physical audit of all equipment used to execute the EP and APD in the Arctic OCS while drilling is underway. The same commenter asked that the SEMS audit require an audit of 100 percent of the equipment instead of 100 percent of the facilities.
BSEE agrees that those who audit Arctic operations need to examine contractor management elements of their SEMS, as well as review the barrier analysis and barrier readiness aspects, including ice management, weather and ice forecasting, ice and marine mammal monitoring, and response to ice encroachment. BSEE notes, under existing §§ 250.1914 and 250.1924, BSEE has broad authority to require operators on the Arctic OCS to provide BSEE with appropriate contractor information, such as the names of contractors and the specific scope of their duties and timelines for performance in support of an operator's drilling activities. For example, if an operator planned to use a contractor for waste disposal, cementing, or logging, BSEE would expect the operator to inform BSEE of this intent, along with any other operations contracted out, and the names of those contractors. BSEE intends to work with the Accreditation Bodies it names pursuant to § 250.1922 to define and hold auditors accountable for evaluating the management system's effectiveness in addressing these risk areas.
BSEE disagrees that the scope of the audit should include inspection of equipment. The purpose of a management system audit is to determine if the processes and systems adopted by an operator to manage risk are in place and effective, not to test and inspect the functionality of every piece of equipment within the management system. BSEE conducts thorough facility and equipment inspections through its own inspection program.
One commenter expressed concern that there would be a shortage of
BSEE disagrees that a possible shortage of qualified auditors should be a basis for challenging the annual SEMS audit requirement on the Arctic OCS. The commenter did not provide evidence that there is or will be a shortage of qualified auditors, or that the marketplace would not be able to respond appropriately.
One commenter requested further clarification on the associated responsibility, accountability and liability BSEE will assume in the event of any incidents occurring as a direct result of what the commenter describes as BSEE seeking to direct active drilling operations. The commenter urges BSEE to leave key operational decision-making in the hands of the operators and focus the regulations on ensuring that drilling plans and operations are risk based and fit for purpose for every proposed location.
BSEE does not direct active drilling operations, nor intend to do so in the future through this rule. Operators responsible for directing the drilling operations are required to do so safely and in accordance with the regulations. BSEE has the authority to require compliance with the regulations, but in doing so does not assume any accountability or liability for incidents arising from the regulated operations. It is the operator's responsibility to conduct its activities both safely and in accordance with its regulatory obligations. Operators must also have access to all of the information needed to make their own decisions on how to mitigate safety and environmental impacts from the hazards they will face. One purpose of the SEMS audit is for the operator to gain a third-party assessment of their own ability to effectively manage risks. BSEE does not use the results of the SEMS audit to tell operators how to manage the risks, but instead evaluates those results as one part of its oversight responsibilities to ensure that the operators have systems in place that are effectively risk-focused and fit for purpose.
One commenter asked that BSEE consider a Safety Case approach to ensure functionality of Health Safety and Environment and Quality management systems, and compliance of rigs and contractors, similar to the approach established on the Norwegian Continental Shelf and in the United Kingdom.
BSEE declines to adopt this suggestion. BSEE has adopted a hybrid approach to safety and environmental regulation on the OCS. BSEE and BOEM have determined that Arctic exploratory drilling operations should be guided by a number of specific requirements to ensure protection of workers and the environment. We note that the final rule clearly allows for specific requirements to be met by employing new and emergent technology, when appropriate. Given the significant risks associated with Arctic drilling operations, complete reliance on a safety case approach, in the view of BSEE and BOEM, does not offer enough regulatory oversight.
BSEE proposed to insert in the proper alphabetical order new definitions for
One commenter claimed that the revised definition for Adverse Weather Conditions disregards the safety of responders and would set in place operating limits that would delay the cessation of response activities until equipment is destroyed or responders are fatally injured. The commenter suggests that BSEE replace the definition with language adopted from the State of Alaska's regulations, which require a plan holder to define realistic maximum response operating limitations, as per 18 AAC 75.425(e)(3)(D).
BSEE disagrees with this comment. The final rule adds the terms “extreme cold, freezing spray, snow, and extended periods of low light” to the list of conditions in the existing definition that may degrade the operating environment on the Arctic OCS. Adopting these terms in the final rule provides a more thorough description of the types of challenges a plan holder's response resources must be prepared to address in responding to a discharge on the Arctic OCS, but in no way establishes operational limits, and certainly does not create any expectation that responders will continue to operate in life threatening conditions. Operating conditions must be continuously evaluated and monitored during a response to ensure effective operations, but only when it is safe for responders to do so. The revised definition continues to state that Adverse Weather does not include situations where it would be dangerous to continue responding. The State of Alaska's cited regulations require the plan holder to define the maximum operating limitations for a mechanical recovery-based response, and to identify mitigating measures that may be instituted when those parameters are exceeded. This State requirement in 18 AAC 75.425(e)(3)(D) has a very different focus and intent and is not appropriate language for use in revising the definition of Adverse Weather Conditions for purposes of implementing the OPA.
BSEE proposed to add a new § 254.55 requiring the OSRP for any facility conducting exploratory drilling from a MODU in Alaska State waters seaward of the coast line within the Beaufort or Chukchi Seas to address the additional requirements set forth in the new subpart E, as finalized in this rulemaking. BSEE has authority under the CWA over oil spill response plans related to operations seaward of the coastline, including on state submerged lands. 33 U.S.C. 1321(j)(5); E.O. 12777; 30 CFR part 254, subpart D. Some requirements in subpart E address planning and exercises related to the use of source control and subsea containment equipment such as capping stacks or containment domes. Operators are required to have access to and use this equipment when conducting exploratory drilling from a MODU on the Arctic OCS, pursuant to finalized regulations in part 250, but those conducting similar activities in State waters are not currently subject to the same requirements. The State of Alaska, however, has State requirements for source control. As such, a response plan covering operations in State waters of the Beaufort or Chukchi Seas must address how the source control procedures selected to comply with State law would be integrated into the planning, training, and exercise requirements of proposed §§ 254.70(a) and 254.90(c).
Several comments were received on this section. BSEE has reviewed the comments and determined to finalize § 254.55 as proposed for the reasons stated herein.
One commenter requested that BSEE closely coordinate its OSRP requirements with the State of Alaska's requirements.
BSEE agrees, and for offshore facilities in State waters seaward of the coast line, BSEE will consult with the State to
One commenter stated that the term “source control” is different than the term used in State requirements, which is “contain and control”, and that using different terms will be problematic.
BSEE's position is this rulemaking addresses Federal requirements for offshore facilities in State waters seaward of the coast line, and does not impact state requirements. The State and Federal terms, while slightly different, are effectively similar in nature, and should not create any confusion for plan holders with respect to complying with either State or Federal regulations. While it is beneficial to use harmonized terms whenever possible between State and Federal regulations, it is just as important that Federal regulations use terminology that is consistent across various Federal rules and agencies. The term “source control” is defined in the National Contingency Plan as the construction, installation and startup of actions necessary to prevent the continued release of hazardous substances or pollutants or contaminants into the environment.
A new § 254.65 was proposed to state the purpose for subpart E, described as establishing additional requirements for preparing OSRPs and maintaining preparedness for facilities conducting exploratory drilling operations from a MODU on the Arctic OCS. No comments were received on the proposed addition of this section and, with exception of one minor technical edit, the section is finalized as proposed.
BSEE proposed adding § 254.70 addressing general oil spill response planning requirements for operators using MODUs to conduct exploratory drilling on the Arctic OCS. These requirements include incorporating the support mechanisms for capping stacks, cap and flow systems, containment domes, and other similar subsea and surface devices and equipment and vessels, required by finalized § 250.471, into oil spill response incident action planning. They would also require operators to address the influence of adverse weather conditions on responders' health and safety during spill response activities. Finally, they would require operators, prior to resuming seasonal exploratory drilling activities, to review their OSRPs, and modify as necessary, to address changes to the location or status of response resources or the arrangements for supporting logistical infrastructure arising from extended periods of time without drilling.
Several comments were received on this section. BSEE has reviewed the comments and with the exception of one technical edit, the provisions of § 254.70 are finalized as proposed for the reasons discussed herein.
Many commenters recommend that BSEE should include an opportunity for public review and comment for OSRPs that address operations on the Arctic OCS.
BSEE disagrees. The National Response System that was set up under the CWA and the OPA establishes a system of plans, including a National Contingency Plan, regional contingency plans, area contingency plans, and facility and vessel response plans. National, regional, and area level plans all set policy on the use of oil spill countermeasures and all relevant strategies, and identify how sensitive resources must be protected. Regulatory agencies promulgate regulatory requirements for industry OSRPs, consistent with these higher-level plans requiring industry plan holders to have access to the requisite amounts and types of response capabilities. Agency review and approval of these plans is limited to ensuring the plans are consistent with national, regional, and area level guidance and ensuring the plans meet the pre-established regulatory requirements for capabilities and preparedness arrangements. Public comment and review is not necessary for the Agency to complete its review of the OSRP for compliance with the regulations, nor is there a meaningful role for the public where the pre-established standards of review leave little to no room for discretion. Under this existing paradigm, none of the industry response plans regulated by the Pipeline and Hazardous Materials Safety Administration (PHMSA), EPA, USCG or BSEE are subject to a public review and comment process. BSEE believes the most appropriate opportunities for public participation and comment on the relevant response issues are during the public comment periods associated with the oil and gas lease sales and EPs, public comment periods during the rulemaking process for establishing industry response plan regulatory requirements, and through interaction with the Area Committees, who develop the local Oil Spill Area Contingency Plans that provide guidance on the use of spill response countermeasures as well as protection strategies for specific sensitive habitats and species. In the case of the Arctic OCS, BSEE encourages interested parties to engage with the Alaska Regional Response Team, whose members include: The USCG; NOAA; Federal Emergency Management Agency; Federal Aviation Administration; General Services Administration; State of Alaska Department of Environmental Conservation; EPA; and Departments of Agriculture, Defense, Energy, State, Health and Human Services, Interior, Justice, and Labor, as well as the Northwest Alaska and North Slope SubArea Committees.
One commenter suggests that BSEE should develop the OSRP requirements using a risk-based environmental assessment process and design the response capabilities to address the specific risks of a spill from the offshore facility.
BSEE agrees with the commenter's concern, but notes the baseline requirements for an OSRP within § 254.26 already contain many provisions that are founded upon risk assessment processes. For example, plan holders must use oil spill trajectories from their offshore facility to assess any spill risks to resources and habitats, and design response capabilities appropriately. While this rulemaking adds additional detail that is necessary
One commenter asserted that the type and number of resources that should be maintained in an area should reflect the most probable spill events that might occur.
BSEE disagrees. The OPA and BSEE's OSRP regulations require industry to plan for their WCD to the maximum extent practicable as a planning standard, and not for the size of their most probable spill, which would be considerably smaller. While response resources are strategically staged throughout the coastal zone near OCS regions where drilling occurs, BSEE acknowledges that in some cases equipment will be cascaded in from more distant areas in order to respond to a WCD, especially in the Arctic OCS.
One commenter suggests the regulations should allow for all types of response mechanisms to be in place, including the use of dispersants and in situ burning.
BSEE agrees industry OSRPs should include provisions for all of the oil spill response capabilities that are allowed for and consistent with the guidance contained within the relevant Regional and Area Contingency Plans (RCPs/ACPs). In the Arctic OCS, the guidance regarding, and strategies for, the use of dispersants and in situ burning is contained within the Unified Alaska Plan and the North Slope SubArea Contingency Plans. BSEE's OSRP regulations currently allow for the listing of both dispersants and in situ burning capabilities within industry OSRPs. A regulatory study entitled, “Oil Spill Response Equipment Capabilities Analysis,” is currently underway that is considering additional requirements for ensuring the availability of these spill countermeasures in all areas of the OCS where drilling is occurring or may occur, including the Arctic.
One commenter suggested that the duration of a WCD required by § 254.26(a) for drilling operations should be extended beyond 30 days to whichever is greater, a period of 45 days or the time it would take to drill a relief well. The commenter further recommended that the method to calculate the WCD daily flow rate should be amended and based on offset well data; if no offset well is available, the commenter recommended that minimum default values of 61,000 barrels of oil per day for wells in the Chukchi Sea, and 25,000 barrels of oil per day for wells in the Beaufort Sea, should be adopted.
BSEE agrees in part. Based on the lessons learned from the
Two commenters indicated the regulations should provide more detailed guidance on what oil spill planning and response capabilities should be required to adequately respond to an oil spill in the Arctic. One of the commenters provided detailed recommendations for what those requirements and capabilities should entail.
The existing regulations in § 254.26 provide a broad performance-based planning standard for establishing a plan holder's WCD identifying the anticipated impacts, and ensuring the availability of enough response and supporting resources to protect or clean up the environment from such a discharge. BSEE is reviewing the possibility of providing more detailed requirements for response capabilities in a future rulemaking, and will consider the recommendations provided in these comments as an input for that process. Until that time, it is the plan holder's responsibility to develop response capabilities that will satisfactorily meet the existing planning standard.
One commenter argued that most drilling in the Arctic is in extremely shallow water from gravel islands, and that use of SCCE equipment in those cases is not practicable.
BSEE agrees. The SCCE requirements of this rulemaking only apply to MODUs conducting exploration drilling, and therefore would not apply to shallow water drilling from gravel islands.
Two commenters assert that adding SCCE information to the OSRP would confuse responders and unnecessarily increase the size of the OSRP. The commenters suggest that SCCE information should be kept in a separate planning document, and one of the commenters specifically recommended that OSRPs reference well containment plans instead.
BSEE agrees in part. SCCE are critical capabilities required for certain plan holders in order for them to meet their requirements in existing § 254.26(d) for responding to their WCD. Further, SCCE will be deployed and utilized alongside spill response equipment, necessitating coordinated planning for an integrated approach to a loss of well control. As such, OSRPs must include certain essential information about SCCE capabilities. BSEE agrees that most SCCE information can be maintained in separate well control-oriented planning documents (as required by § 550.220(c)(3) (EPs) and § 250.470(f) (APDs)) as long as they are properly referenced in the OSRP. However, incidents, such as the Macondo Well blowout, demonstrate that source control activities need to be better coordinated with the overall management of the larger incident and other response operations, and they validate the need for additional source control information in the OSRPs. Accordingly, the OSRP should outline how the management structure established for the overall incident response will coordinate SCCE activities. BSEE believes the inclusion of this critical information in the OSRP will improve clarity for all responders rather than create confusion, and will
One commenter recommended the Arctic-specific regulations contain milestones that ensure timely deployment of well control equipment in concert with oil spill response equipment.
BSEE agrees and has determined the final rule addresses the commenter's recommendation. Regulatory requirements finalized in other parts of this final rule, such as §§ 250.470, 250.471 and 250.472, contain new standards for the deployment of well control equipment in the Arctic and include timelines for deployment. We note, however, that although the commenter's concern is addressed in part 250 of this final rule, part 254 currently does not contain any specific timelines for the deployment of spill response equipment.
Two commenters request that BSEE require plan holders to describe how they will respond in adverse weather conditions.
BSEE agrees. Existing § 254.26(d) requires plan holders to discuss how they will respond to their WCD scenario in adverse weather conditions. The purpose of subpart E is to provide additional regulatory detail to address Arctic-specific issues and challenges. The finalized requirements in § 254.70(b) require an operator to describe how they will address certain human factors, such as cold stress and cold-related conditions that are likely to become challenges due to the adverse nature of Arctic OCS conditions. Additionally, the finalized requirements in § 254.80(a) and (b) require an operator to describe how they will adapt and sustain their response techniques during adverse conditions that occur in the Arctic OCS operating environment.
One commenter recommended that operators be required to provide detailed statistical assessments for identifying curtailment thresholds that will limit operations or pose safety hazards to responders in Arctic conditions, and that this assessment should be used to establish the end of season operational dates at § 550.220(c)(6).
BSEE agrees in part. Section 254.70(b) requires operators to describe how they will address Arctic challenges in adverse weather conditions. While it is prudent for operators to identify and address recommended operating limits in their safety procedures, decisions to suspend response operations due to safety concerns must be made on a case by case basis and must consider all the conditions in place at that point in time. Operational safety decisions cannot be projected forward based on a statistical analysis of past seasonal conditions; however, the general limitations on an operator's' ability to conduct an oil spill response due to expected site conditions are considered by BOEM when establishing end-of-season dates.
One commenter suggests the requirements of § 254.70 should be more performance-based and focus on management practices.
BSEE agrees in part. The OSRP regulations are designed to strike a balance between performance-based standards that afford an operator the flexibility to develop an OSRP that meets the specific needs of its offshore facility and more detailed prescriptive requirements ensuring an OSRP meets the underlying statutory requirements. Many of the provisions contained throughout part 254 are performance-based in nature, while many others address the management practices of the operator to organize and respond to their WCD. BSEE believes that § 254.70 appropriately strikes that balance as written.
One commenter asserted that the provision in § 254.2(b), which allows a facility to operate while BSEE reviews the plan, should be removed for operations in the Arctic OCS.
BSEE agrees in part, however the proposed rule did not contain any amendments to the requirements of § 254.2. These administrative practices have been successfully followed for many years for OSRPs in other OCS regions, and are particularly well suited for certain situations, such as the transfer of ownership of an existing facility to a new operator who will now operate the facility under the new owner's existing regional OSRP. BSEE acknowledges that the provision in § 254.2(b) is not as well suited for the review and approval of new OSRPs covering exploratory drilling in the Arctic, where the challenges associated with operating in this frontier environment have made the review and approval of OSRPs more complex and controversial in the public eye. As such, BSEE will look to clarify the overall applicability of these procedures in a separate rulemaking that will update Part 254, including § 254.2. Finally, it should be noted that all operators on the Arctic OCS in recent years have had their OSRP approved well in advance of conducting any drilling operations at their lease sites.
One commenter asserted that all existing OSRPs should be updated to meet the new requirements of this rulemaking within 90 days.
BSEE disagrees. The final rule states that the requirements contained in this rulemaking will become effective 60 days after the date of publication in the
BSEE also proposed to create a new § 254.80 focusing on additional information requirements for the emergency response action plan section of an OSRP when the operator proposes to conduct exploratory drilling operations from a MODU on the Arctic OCS. The additional requirements would include specifics regarding ice intervention practices, staging considerations, and tracking abilities.
Several comments were received on this section. BSEE has evaluated the comments and made various technical edits as discussed herein. Otherwise, the substantive provisions of § 254.80 are finalized as proposed.
Many commenters assert that the regulations must include requirements ensuring Arctic-grade response capabilities for equipment, materials and personnel capable of operating in Arctic conditions, including fog, adverse sea states, and ice.
BSEE agrees and has determined this recommendation is met in our existing regulations. Section 254.26(e) states that operators must ensure that the response equipment, materials, support vessels, and strategies listed are suitable, within the limits of current technology, for the range of environmental conditions anticipated at your facility. Furthermore, § 254.80(a) requires that operators, who are developing ice intervention practices, must consider the use of specialized tactics, modified response equipment, ice management assist vessels, and technologies for the identification, tracking, containment and removal of oil in ice.
One commenter requested that BSEE delete the requirements of proposed § 254.80 as redundant to existing regulations in part 254. The commenter asserted that the requirement for ice intervention practices is redundant with the requirements of existing § 550.220(b), which requires an Ice Management Plan (IMP), a component of the Critical Operations and Curtailment procedures, and that the OSRP should simply reference the procedures contained within the IMP.
BSEE disagrees. The proposed requirements in § 254.80 address
One commenter recommended that ice intervention practices should address how response equipment will address challenges associated with response in the Arctic.
BSEE agrees. The intent of the requirement for a description of the operator's ice intervention practices was to ensure plan holders evaluated their capabilities and ensured they are adequately prepared and trained to effectively operate in expected Arctic conditions.
One commenter asserted that the requirement for ice intervention practices is limited to mechanical recovery.
BSEE disagrees with this statement, and reiterates that the operator should develop ice intervention practices for each response countermeasure listed in the OSRP. The preamble discussion in the NPRM states that an operator's ice intervention practices should improve oil encounter rates for all removal or mitigation techniques, including dispersants and in situ burning.
One commenter asserted that BSEE should conduct further studies regarding the challenges involved with responding to a spill in the Arctic, such as responding in the presence of ice.
BSEE agrees and is continually reviewing ongoing research study reports as well as funding numerous studies of its own to better understand all aspects of responding to oil spills in Arctic conditions. BSEE uses that information to better inform its efforts to develop regulations and assess a plan holder's preparedness to respond to oil spills.
One commenter recommended that, in addition to requiring the development of ice intervention practices, BSEE provide specific recovery equipment performance standards for recovering oil in the Arctic. Specifically, the commenter recommended that BSEE adopt a standard similar to the State of Alaska requirement at 18 AAC 75.445(g)(5).
BSEE agrees with the intent of the comment, but has determined the commenter's concern is addressed in existing regulations. BSEE reviewed the standard contained within 18 AAC 75.445(g)(5) and found that the existing requirements in § 254.44 already establish an equipment performance planning standard that is equivalent in nature. In addition, BSEE has an ongoing regulatory study underway to evaluate potential revisions to the requirements contained in § 254.44, including a revised equipment planning standard that would be based on oil encounter rate and recovery system-based performance. This revised planning standard may be incorporated into the regulations for all OSRPs, including those in the Arctic OCS, at a later date in a future rulemaking.
Several commenters recommend the provisions in the Arctic-specific regulations should be informed by research into oil behavior and spill response techniques in ice, and that flexibility must exist to select the most effective strategies in context of the spill situation.
BSEE agrees with both of these points. Both government and industry are conducting extensive research on oil behavior and the use of appropriate spill response techniques in ice. BSEE's development of its regulatory requirements, as well as its plan review and approval processes, is informed by this information. BSEE also supports the use of a process to compare the environmental outcomes associated with using various response techniques and countermeasures in order to assess and select the most appropriate response technologies for use during an event. However, the selection and use of response technologies during a spill event is governed by EPA regulations contained within the NCP, and by the FOSC, which is a pre-designated senior USCG official. BSEE is not dictating the selection or use of any particular strategies for responding to any specific spill situation through its regulations or the OSRP process.
One commenter suggested that OSRPs should include information that outlines when dispersants will be used and when their use will not be allowed.
BSEE disagrees. A plan holder does not have the authority to prescribe the conditions or required outcomes that must be present for dispersants to be used during a response. The use of dispersants is governed by the provisions of the NCP, as supplemented by RCPs and ACPs, and implemented on a case by case basis under the direction of the FOSC.
One commenter asserted that the OSRP regulations currently limit the response to mechanical spill recovery techniques only, and that BSEE should allow plan holders to use other response countermeasures when their use is appropriate. The commenter also indicated that the OSRPs should describe how those countermeasures will be used in the presence of sea ice and other Arctic conditions.
BSEE agrees that plan holders should plan for and prepare to use all available technologies and countermeasures to effectively mitigate the impacts of a discharge from their facilities, and that such planning and preparation should account for the presence of sea ice and other Arctic OCS conditions. While the regulations require the inclusion of mechanical recovery resources in the response plans, the regulations also allow for the listing of dispersants, in situ burning, and other response countermeasures in the plans, when using those countermeasures would be consistent with the strategies contained within the RCPs and ACPs for the area in which the facilities are operating. The procedures in the RCPs and ACPs provide the processes that a plan holder and the FOSC must follow in selecting the proper response countermeasures for a given situation. BSEE also agrees that OSRPs for facilities operating in the Arctic should describe how the plan holder would implement each countermeasure in ice. The new requirement to describe ice intervention practices in § 254.80(a) requires the plan holder to describe how they will effectively use each countermeasure in the presence of sea ice.
One commenter recommended that strategies and tactics listed in the OSRP, including use of dispersants and burning, should be based on the latest regional-specific research, historical oil spill data, field tests conducted by the operator or its Oil Spill Response Organization (OSRO), and exercises, and environmental analysis.
While BSEE agrees that response strategies and tactics should be informed by all the methods recommended by the commenter, BSEE disagrees with their assertion that plan holders are responsible for gathering this information, or that plan holders are responsible for field testing or validating these strategies and tactics as part of the process of developing and
Two commenters recommend that the requirements in § 254.80 should contain specific protection and response strategies and maps for environmentally sensitive areas and subsistence resources. One of the commenters further suggests that plan holders should have response personnel and equipment pre-staged near those sensitive sites, and that the strategies and equipment should be tested through a plan holder's exercise program, prior to being included in an OSRP.
While BSEE agrees protection and response strategies for sensitive resources are a critical part of oil spill response, BSEE disagrees that these strategies should be developed by industry plan holders, nor does BSEE believe it is feasible for a plan holder to pre-stage personnel and equipment throughout the Arctic wherever sensitive resources might be located. The correct place for the development of protection and response strategies for sensitive areas and resources, in accordance with guidance in the NCP, is in the ACP. In this case, the appropriate place would be within the North Slope SubArea Contingency Plan. Existing regulations do, however, require that operators address strategies for protecting environmentally sensitive areas in their OSRPs.
One commenter requested clarification regarding what areas under section § 254.80(b) would qualify as “areas of the Arctic OCS where a planned shore-based response would not satisfy § 254.1(a).” This commenter also requested clarification of the term “remote and limited infrastructure” under § 254.80(b)(2), indicating that this term is ambiguous and could change based on location and the future progress of the Arctic infrastructure on the coastline.
BSEE acknowledges there is a subjective element to these provisions that must be evaluated by the plan holder and agency plan reviewers on a case-by-case basis. The intent of the provisions is to ensure that plan holders take the steps necessary to ensure they can mobilize and sustain a significant oil spill response effort in the Arctic and overcome the obstacles presented by the extremely limited infrastructure that exists throughout the entire Arctic region. Given the development along the Arctic coast, the entire Arctic OCS region would qualify for both provisions. BSEE acknowledges this situation could change in the future, and thus adopted language that would allow the application of these provisions to evolve once an appropriate level of infrastructure is developed and put in place. BSEE can document and communicate such situations in the future through an NTL or other communications with plan holders as such need arises.
One commenter asserted that situations where an entirely offshore-based response is necessary, with no support from onshore resources, are not unique to the Arctic.
BSEE agrees this situation does exist, to a degree, for certain facilities located far offshore in the Gulf of Mexico. However, in the Arctic, unlike the Gulf of Mexico, nearly all OCS exploratory drilling falls into this offshore-based category due to the lack of shore-based supporting infrastructure in the region. As such, BSEE believes it is appropriate to have specific planning requirements to address this aspect of responding on the Arctic OCS.
One commenter suggests replacing the phrase “adverse weather conditions” in § 254.80(b)(1) with the concept of “realistic maximum response operating limits” (RMROL) from 18 AAC 75.425(e)(3)(D).
BSEE agrees plan holders must research the environmental conditions for the Arctic OCS area they will be operating in and ensure that the resources they acquire will be capable of sustained activity in those conditions; however, BSEE does not intend to establish specific operating criteria or limits for such equipment. The requirement for response equipment to be capable of operating in conditions up to and including adverse weather is a longstanding element of OPA requirements and is sufficiently covered by other parts of BSEE part 254 regulations. While the ability to operate in adverse conditions is an important element of § 254.80(b)(1), the real purpose of this requirement is to establish an offshore-based capability that can function without constant resupply from shore side infrastructure.
One commenter asserted that requiring the pre-staging of response equipment reduces the flexibility of the incident commander to respond effectively.
BSEE disagrees. Pre-spill planning, including the identification of pre-staging sites, is critical to an effective incident response. Incident commanders always have the flexibility to adapt the pre-spill planning in the OSRPs to meet the emergent needs of responders during a real incident. Therefore, BSEE does not believe that pre-staging response equipment reduces the flexibility of the incident commander to respond effectively.
One commenter asserted that additional response resources and training of local responders are needed along the coast of the State of Alaska. One commenter recommended that agencies with oil spill response responsibilities study various locations along the U.S. Arctic coast where equipment could be stored and staged, suggesting that such emplacements would lead to improved response times for equipment and potentially reduced the environmental impacts of an oil spill.
BSEE agrees that staging of equipment at strategically located depots along the State of Alaska coast could have a positive impact on oil spill responses that occur in the Arctic. However, the staging of response resources is primarily dependent upon the needs of each individual plan holder to enable them to respond to their WCD. As such, staging of response resources falls to the discretion of the plan holder and their OSRPs, with agencies reviewing their arrangements to ensure they will meet the planning standards in the regulations. To provide flexibility in allowing plan holders to meet their individual needs, the regulations do not mandate the use of any particular staging location(s) for equipment and personnel that must be used to meet response planning standards.
One commenter asserted that all response resources should be located in
BSEE agrees. Paragraphs (a) and (b) of § 254.80 require operators to list and describe their resources that will be offshore-based in the immediate area of the drilling operations, as well as their logistics resupply chains that will effectively address the remote and limited infrastructure that exists in the Arctic.
One commenter recommended the OSRP contain requirements for pre-staging equipment in the Russian Arctic, as well as procedures for moving response resources into waters under the jurisdiction of Russia.
BSEE disagrees. The preparedness and response requirements related to an oil spill located in Russian waters are governed by the laws and regulatory requirements of Russia. The movement of resources and the coordination of response activities between the two countries in the event of a transboundary oil pollution incident will be addressed by the U.S. Department of State and will follow existing bi-lateral and multi-lateral agreements that are in place for responding to transboundary spills in the Arctic.
BSEE proposed to create a new § 254.90 that would require operators to incorporate the additional requirements contained within §§ 254.70 and 254.80 into their oil spill response training and exercise activities; would require operators to provide notice of the commencement of covered operations; and would clarify the authority of the Regional Supervisor to conduct exercises, prior to and during exploratory drilling operations, to test response preparedness. These requirements are all essential to ensuring and verifying an operator's readiness to conduct response activities on the Arctic OCS.
Several comments were received on this section. BSEE has reviewed the comments and determined to finalize § 254.90 as proposed for the reasons stated herein.
One commenter recommended that operators conduct mandatory equipment demonstrations of response technologies under adverse conditions for operations that will occur in the Arctic Ocean.
BSEE disagrees. Under the requirements of the existing OSRP regulations and the implementing guidance contained within the PREP Guidelines, the operator must conduct equipment deployment exercises, without reference to the operating conditions, for the purposes of training, testing, or demonstrating the preparedness, material condition, and proficiency of personnel and equipment. These exercises are normally conducted under operating conditions that are conducive to achieving the deployment exercise objectives while maintaining a suitable margin of safety for all participants. BSEE does not believe that the increased risks associated with conducting exercises under adverse conditions are justified by an attendant increase in preparedness.
One commenter argued that a facility engaged in seasonal use in the Arctic will have difficulty complying with the regulatory exercise requirements, and that conducting equipment deployment drills that focus on ice intervention practices will not be of value during the open water season.
BSEE disagrees. Plan holders drilling only during the open water season have the same triennial period to comply with exercise and training requirements as all other operators. A plan holder may conduct their exercises and training when they deem most appropriate as long as they meet the regulatory requirements for the frequency of exercises. Incident management team and deployment exercises, designed to test ice intervention practices, may be done during the drilling off-season when ice is present if that is deemed a more valuable exercise. BSEE disagrees that equipment deployment drills focusing on ice intervention practices are not of value to operations during the open water season, as sea ice can be present throughout the year and would be very relevant to an early- or late-season spill response.
One commenter urges BSEE to remove the provision in § 254.90(c), under which the BSEE Regional Supervisor may require deployment of the capping stack, cap and flow system, and containment dome, and other similar subsea and surface devices and equipment and vessels, as part of announced or unannounced exercises or compliance inspections, due to the disruption it will cause to an already brief open water drilling season.
BSEE acknowledges the concern raised by this comment, and agrees that exercises of SCCE, if deemed necessary, should be conducted in a manner that minimizes disruptions to operations during the open water drilling season. BSEE will retain the provision in the rule to provide the Agency with the maximum flexibility possible to exercise its preparedness assessment and evaluation responsibilities, as necessary to demonstrate the operator's preparedness to respond during active operations. However, BSEE will ensure that SCCE deployment exercises are designed to minimize disruptions to the drilling season to the extent practicable.
One commenter recommended that any exercises directed by the Regional Supervisor should only occur after the plan holder has been notified and the particulars of the exercise have been discussed and agreed upon by all parties.
BSEE disagrees. While BSEE acknowledges the value of collaborative pre-planning in designing and holding exercises, BSEE reserves the discretion and flexibility to hold exercises in both announced and unannounced manners, as deemed necessary and appropriate, to assess and verify a plan holder's readiness and spill response preparedness. The operator's ability to execute its spill response operations with the limited notice that would be afforded in a real-word spill scenario is a critical aspect of that preparedness. BSEE will notify in advance and collaborate with plan holders in designing exercises whenever practicable when such procedures are in alignment with BSEE's exercise and overall compliance objectives.
One commenter opposed the provision for exercising equipment deployment requirements for SCCE and recommended it be removed due to the costs and operational risks involved, and the lack of specificity regarding these requirements in the regulations.
BSEE acknowledges equipment deployment exercises of SCCE are likely to be costly and may involve increased operational risks. Currently there is no recurring equipment deployment exercise requirement for SCCE outside of being directed to do so by the Regional Director or the Chief of the Oil Spill Preparedness Division of BSEE. Due to the increased costs and risks associated with this activity, BSEE intends to use this authority only when it deems it absolutely necessary to verify a plan holder's preparedness.
One commenter asserted that the provision in § 254.90(c) allowing the Regional Supervisor to direct the plan holder to deploy and operate spill response equipment or SCCE as part of an exercise or compliance inspection is contradictory to the information contained within the PREP Guidelines
BSEE disagrees. The PREP Guidelines and USCG/BSEE MOA OCS–08,
Two commenters oppose finalizing the requirement for BSEE to direct a plan holder to mobilize and deploy equipment during an exercise because it will cause confusion over who has oversight authority to direct a response during an actual spill.
BSEE disagrees with this comment. The requirement in § 254.90(c) only applies to BSEE directing the deployment of response equipment in an exercise for the purposes of evaluating a plan holder's preparedness, and does not apply to a response during an actual spill. For any spill in the coastal zone, the USCG is the FOSC who has overall authority to direct oil removal operations. Further information regarding the respective coordination between the USCG and BSEE for both preparedness and spill response activities is found in USCG/BSEE MOA OCS–03,
One commenter requested that the proposed revisions to part 254 apply to all operations on the Arctic OCS.
BSEE disagrees and this comment is beyond the scope of this rulemaking. While BSEE acknowledges that certain regulatory provisions would be beneficial for non-exploratory Arctic OCS activities, such provisions are beyond the scope of this rulemaking. BSEE will consider extending Arctic-specific provisions to other operations, such as drilling from gravel islands, or oil production activities, in a future rulemaking.
One commenter suggested the requirements for conducting exercises should be more specific regarding the timing of such exercises.
BSEE disagrees. Beyond the established frequency requirements in the regulations and in the PREP guidance, the timing of conducting planned exercises is left to the discretion of the plan holder in order to allow them to develop an integrated and effective exercise, equipment maintenance, and training cycle that meets their needs.
Comments on the initial RIA generally related to the exploratory drilling scenario, cost factors used, baseline assumptions and benefits. BOEM/BSEE revised cost factors or assumptions and expanded the discussion of qualitative benefits for the final RIA. The comments received, information provided by commenters and whether changes were made in the final rule RIA is discussed herein.
Several commenters question the assumptions about future levels of industry activity in the Arctic OCS contained in the initial RIA.
We acknowledge the commenters' concern. In accordance with recently announced changes in future Arctic exploration plans, such as Shell, ConocoPhillips and Statoil's decisions to suspend exploration activity offshore Alaska, BOEM and BSEE have revised the exploration scenario in the final RIA.
The proposed rule's scenario spanned from 2015 to 2024. The final RIA scenario spans from year 1 to year 10. Activity assumptions are based upon a number of variables that are difficult to predict, including the willingness of operators to invest in conducting such operations, the availability of assets required to conduct operations, and a number of other issues. BOEM and BSEE have made these assumptions to ensure that they do not understate costs associated with the final rule. The scenario, therefore, includes 10 years with 9 years of active exploration and 50 wells drilled.
Additionally, the exploration activity scenario no longer includes an idle relief rig. During the 2015 drilling season, Shell sought to use two drilling rigs at different sites and to designate each rig as the relief for the other. Because of legal restrictions, Shell ultimately only used one rig to conduct drilling operations; the second rig remained idle during the drilling season. That rig, however, was contracted to perform drilling operations and was located at a potential second drilling site. We have concluded that, with clear regulatory requirements in place, an operator in the future is most likely to productively employ all rigs for active exploratory drilling rather than have an idle relief rig. Consistent with this fact we acknowledge the capital and operational expenditure for a second Arctic rig even though productively employed may not be a company's best use of its capital. It may prefer to explore elsewhere or deploy its capital on development projects rather than exploration. Companies are forced to employ a drilling rig for this potentially less efficient use of capital resources. Therefore, we acknowledge that it is not a cost free decision for operators and lessees.
BOEM and BSEE have adopted what we view to be conservative (
Two commenters question the difference between the initial RIA and the NPRM cost-effectiveness analysis as to the number of operating rigs. The commenter cites the initial RIA as assuming one rig operating in 2015–2016, two for 2017, and four rigs operating from 2018–2024, and the NPRM cost-effectiveness analysis assumes two rigs operating for 2015–2017 and then four rigs operating from 2018–2024. The commenter questioned the difference and concludes that the assumptions would result in a ten-year cost of $174 million based on the initial RIA, while using the number of operating rigs per year set forth in the NPRM scenario would result in a ten-year cost of $204 million. However, the commenter points to the average annual cost used in the initial RIA as being $19.2 million, which does not match the assumptions outlined in either document.
BOEM and BSEE are aware of the difference in the relief rig assumptions between the initial RIA and the NPRM cost effectiveness analysis. We decided to use assumptions in the initial RIA that would present the likely maximum level of compliance costs, which included assuming the presence of a dedicated standby rig for years 2015–2016. However, the final RIA assumptions render this difference moot. As described above, the scenario for future Arctic exploratory drilling operations has been revised. The rig counts throughout the RIA were revised for consistency. BOEM and BSEE no longer assume that operators will have an idle relief rig and instead assume that operators will have all rigs actively engaging in exploratory drilling. The revised Arctic exploratory drilling scenario has zero rigs drilling in year 1 (no operators actively drilling), two rigs drilling in years 2 and 3 (assuming one operator), and four rigs drilling during years 4 to 10 (assuming three operators).
One commenter questioned the assumption related to industry sharing oil spill response assets and believes costs should have been calculated on the basis of a single industry participant operating in the region. The commenter noted the costs were based on an assumption of modest growth in the number of operators in the region during the next decade, but if fewer operators seek to operate on the Arctic OCS, there will also be fewer opportunities for operators to enter into contractual agreements to share relief rigs and other oil spill response equipment. The commenter stated that, if this occurs, operators will need to furnish their own relief rigs and associated infrastructure, thereby driving up operating costs.
The revised assumptions used for the final RIA include years in which one operator is operating in the Arctic and other years in which multiple operators are engaging in Arctic exploration and can share resources. Annual costs show the range of compliance costs from years 2 and 3 when one operator must bear all of the costs to the later years when operators can engage in resource sharing. Even in the beginning of the scenario when a single entity operates, we assume that operator has two rigs with no standby relief rig, as all operators are assumed to actively engage all rigs in exploratory drilling. Regardless of the number of operators, whether it be one or more than one, additional operating rigs are assumed to be used even with sharing of resources. With three operators in year 4, the analysis assumes that there are four operating rigs. BOEM and BSEE's compliance cost calculations consider the vessels which can be shared between operators (
One commenter questioned the Bureaus' assumption that only one operator will be operating through 2017, but that relief rigs would be cross-assigned between different operators to satisfy the requirement, meaning each operator's primary rig would be utilized by the other operator as a relief rig in the case of a well control incident. The commenter recommended the cost analysis for this time period should not be based on cross assignment between operators, as the Bureaus have provided no basis on which to assume an operator would bring more than one rig to the theater if not for the proposed relief rig requirement.
We no longer assume that an operator would bring more than one rig solely to serve as a standby relief rig. Instead, it is assumed that, during years 2 and 3 with one operator, the operator will have two operating rigs and will designate each rig as relief rig for the other. While it is possible that an operator may have only wanted to drill one well in the Arctic (thus not bringing a second rig if not for the relief rig requirement), we believe that, from an economic perspective, regardless of the relief rig requirement, it would be prudent for an operator to bring two rigs to the region. Given the large fixed costs of drilling in the Arctic (regardless of this regulation's new requirements), the marginal cost of a second rig would likely justify the operator to bring two rigs, in that they could share common support vessels, etc. The rig count scenario was revised for consistency in the final RIA.
One commenter questioned the initial RIA assumptions that two IOPs will be submitted in 2015, however only one EP will be submitted. The commenter requested that the Bureaus clarify under what circumstances more IOPs than EPs would be submitted in any given year, as the IOP requirement is tied to submittal of an EP. The commenter further questioned the initial RIA assumptions in Exhibit 3 showing three operators working on the Arctic OCS from 2018 to 2024, while the numbers of IOPs, EPs, and OSRPs are not in line with that number of operators.
BOEM and BSEE agree that the number of IOPs and EPs should be the same. The final RIA revises the IOP and EP assumptions from the proposed rule and initial RIA so that a single EP and single IOP per operator are submitted in the year prior to exploratory drilling.
Several commenters assert that the cost assumptions in the initial RIA are significantly overestimated and many of the costs of the finalized regulatory provisions should be included as baseline costs. One commenter expressed concern that the initial RIA overstated the costs of the proposed rule by assigning existing baseline costs that operators already include in their budgets as incremental costs. The commenter noted that many of the regulatory provisions in this final rule codify existing industry practices or incorporate existing requirements imposed by the Department as a condition of plan approval, through an
After reviewing comments, BOEM and BSEE have determined some of the costs identified as new regulatory compliance costs in the initial RIA are, instead, baseline costs. Costs are considered baseline if they are attributable to existing regulatory requirements, industry standards, and operator best practices. OMB's Circular A–4 (“Regulatory Analysis”) directs that the baseline should be “the best assessment of the way the world would look absent the proposed action.” BOEM and BSEE have broad authority under existing regulations to impose reasonable conditions on exploration plan approvals and drilling permits. Thus, the final RIA excludes from new compliance costs the activities or capital investments that existing regulations may require, as well as impacts resulting from the incorporation of industry standards with which the industry voluntarily complies.
The two provisions that are codified in this rulemaking and considered in the regulatory baseline are Additional Requirements for Securing Wells (§ 250.720) and Real-time Monitoring Requirements (§ 250.452). To supplement the analysis, we include a discussion of the baseline assumptions within the text of the final RIA and acknowledge the compliance cost for these two baseline provisions in the RIA appendix.
BOEM and BSEE considered all comments and revised the cost estimates for some provisions based on information provided in comments. Costs provided in comments were considered and greatly influenced the cost estimates used in the final RIA.
As mentioned above, the biggest change in the compliance cost of the rule relates to the characterization of costs, as BOEM and BSEE concluded that industry's existing practices and BOEM's and BSEE's current regulations would be used as the baseline for our analysis. To supplement the analysis, we included a discussion of the baseline costs within the text of the final RIA, and in developing the new compliance costs and estimates of the baseline cost, BOEM and BSEE seriously considered, and in many cases used, cost estimates provided by commenters that could be validated or were deemed reasonable.
Several commenters argue that the costs of the initial RIA were significantly underestimated and that the rule will result in a negative impact to America's economy and energy security by inhibiting oil and gas development on the Arctic OCS. One commenter asserted that the approximately $1 billion cost to industry estimated in the initial RIA over the 10 year assessment period fails to address the impacts of shortening the effective drilling season, driven primarily by the same-season relief well requirement. The commenter also argued the RIA uses assumed spread rates for drilling and emergency response facilities that are far lower than demonstrated by industry experience. The commenter asserted that the Bureaus' estimated costs in the initial RIA are drastically low, sometimes by several orders of magnitude, and that the cost to industry is $10–20 billion higher over the 10-year period. BOEM and BSEE generally disagree.
BOEM and BSEE considered these comments. The cost estimates provided comments influenced the compliance cost estimates for several provisions in the final RIA. In developing the new compliance costs and estimates of the baseline cost, BOEM and BSEE closely considered and in many cases used revised cost estimates provided in comments. The final RIA includes revised cost assumptions for each provision.
Regarding the assertion that our regulation of offshore oil and gas production in the Arctic will inhibit a large amount of economic activity, including preventing the creation of many new jobs, we disagree. Industry interest in potential development in the Arctic OCS region of Alaska is largely driven by the price of oil and gas and the challenging and harsh conditions in the area, as evidenced by recent departures from the area by Shell and Statoil. As a result, the Arctic OSC region of Alaska has not previously relied on the type of offshore drilling regulated by this final rule for economic development or well-being. The OCSLA states that the policy of the U.S. is to both make the OCS available for production and development as well as to ensure that operations are conducted safely. Lessees, particularly in the Arctic, obtain OCS leases and pursue exploration with a full understanding of this dynamic. This rulemaking reflects the Bureaus' reasonable and appropriate fulfillment of their multifaceted OCSLA mandates.
In addition, the final regulations could bring potential benefits to the local economy and cultural traditions from reduced risk of oil spills. A catastrophic oil spill would have negative economic impacts far beyond the offshore oil and gas industry. A catastrophic oil spill could disrupt subsistence practices, such as whaling, on which Native Alaskans rely for food and for their cultural preservation.
One commenter asserted that the initial RIA incorrectly estimates the daily per-rig operating cost at $2 million because it fails to take into account that rigs and vessels contracted for Arctic exploration are contracted on an annual basis. The commenter further states that, by considering the operating costs for a single day via day rates based on 365 days per year of utilization, the Bureaus have understated significantly the cost of a drilling day lost due to regulatory requirements or constraints. The commenter recommended that the cost should be captured in a weighted daily estimate of operating cost tied to the shortened Arctic operating season. The commenter noted that, based on an estimated 100 drilling days available in the Chukchi Sea, this results in an effective daily operating cost of $7.5 million per day per rig when the full cost of `ownership' is taken into account. Due to the significant fixed cost burden, the commenter asserted that the cost of a day spent not operating can be estimated at 80 percent of the operating rate, or $6 million per rig per day.
BOEM and BSEE have addressed this comment in the final RIA by adjusting the daily rig operating costs to $3.97 million, which assumes the operating rig must be contracted for the entire year and supporting vessels for part of the year. To address lost drilling days, the compliance cost of the “shoulder season”
One commenter disagrees with the initial RIA's assumption that the operating season on the Arctic OCS is 138 days long and asserted the Bureaus have exaggerated the season length and incorrectly spread costs across a greater number of days, resulting in the overall cost impact being incorrectly reduced. The commenter asserted that current regulatory constraints make July 1 to October 31 the highest potential estimate for season length (totaling 123 days), while ice data collected over the last 10 years would indicate an average season length of approximately 100 days. The commenter questioned whether the Bureaus have either assumed operators will have access prior to July 1, which is prohibited by current USFWS regulations, or extended the season past October 31, which is not supported by historical ice data.
BOEM and BSEE agree and have used assumptions that reflect a drilling season reduced to 82 days long. BOEM and BSEE estimate the ice-free season to be 116 days long (from July 7 through October 31) and subtract 34 days for the baseline shoulder season.
Two commenters questioned the cost of familiarization with the requirements of this rulemaking. One commenter asserted that the time estimated in the initial RIA for industry staff to generate the information was understated and allocated incorrectly to managerial time, when the work would be done by mid and senior level engineers. Another commenter stated that their experience with implementing rule packages for operations necessitates an initial time commitment involving a number of people across a number of teams, resulting in a time commitment 50 times as large as that assumed in the initial RIA. The commenter added that there would be an ongoing need to onboard staff and contractors, resulting in 250 hours of labor per year for review in subsequent years.
BOEM and BSEE agree in part. In the final RIA we revised the estimated staff times required by industry for familiarization with the regulation. It is assumed for each operator that a senior engineer will spend 250 hours to review the new regulation. It is also assumed that each operator will spend 120 hours per year assuring new personnel's familiarity with the rule to prepare for the next drilling season.
Several commenters question the benefits analysis of the initial RIA, and many specifically cite to benefits being calculated based on the conditional assumption that a catastrophic oil spill will occur on the Arctic OCS in the next ten years. Commenters assert this assumption is at odds with the broadly acknowledged understanding, as stated in the NPRM, that the probability of such an event is extremely low. One of the commenters noted the initial RIA calculated the benefits of the regulatory action by assuming costs based on the clean-up of the 2010 Macondo spill in the Gulf of Mexico, but that the estimated oil released at Macondo was twice the “worst-case discharge” projections for any Chukchi Sea oil spill. Three of the commenters question the initial RIA benefits analysis as being inconsistent with the February 2015 Chukchi Sea Lease Sale 193 Supplemental Environmental Impact Statement. They suggest that the final RIA should align to the less than one percent chance of a large oil spill during exploration of the Arctic OCS.
BOEM and BSEE have determined the benefits of the final rule justify the costs when qualitative factors are considered. The potential impact and cost of an Arctic OCS oil spill is substantial. This rule's spill control mechanisms provide significant potential benefits through avoided spill costs. This justification relies on both qualitative and quantitative analysis. BOEM and BSEE acknowledge previous studies which have found the estimated probability of a catastrophic oil spill to be very low; the final RIA provides frequency estimates for large oil spills, but it is usually true of catastrophic risks that society deems it worthwhile to defend against them or be prepared to remedy them despite the low probability of the event. The American public greatly values the Arctic. It is viewed as a pristine, unspoiled environment. With this in mind, a catastrophic oil spill would have severe impacts and it is meaningful to examine the highly unlikely scenario of a catastrophic oil spill.
Given both the low probability and high consequence nature of a catastrophic oil spill, and after review of public comments, BOEM and BSEE did not conduct a break-even analysis on the provisions in this final rule. Such an analysis could misrepresent both the underlying risk of a spill and the magnitude of costs which could result. The Initial RIA included a break-even analysis which was conditional on a catastrophic oil spill occurring. This analysis was removed, in part, as a response to comments which suggested that such an analysis was flawed and implied that a catastrophic oil spill would occur in the Arctic without the new regulations. Instead, the RIA provides estimates of the probability of a catastrophic oil spill and the range of potential costs of various size catastrophic oil spills. If the regulatory provisions were able to prevent a catastrophic oil spill, the benefits of the avoided spill costs have the potential to far exceed the rulemaking costs. In addition, the RIA discusses the spill control mechanisms in the rule which have the ability to limit spill costs and monetizes the potential avoided costs from each provision. Together, this information identifies the substantial benefits of the rule in avoiding the costs of a catastrophic oil spill while acknowledging the underlying low probability of a spill.
BOEM and BSEE analyzed the specific provisions of this regulation designed to reduce the length of a catastrophic oil spill. The analysis focuses on the conditional state where a spill is assumed to occur within the 10-year scenario. BOEM and BSEE used historical data on oil spills to estimate the potential costs that would result from spills of various durations in the Arctic OCS region. BOEM and BSEE then used the final rule costs and the avoided damages of potential spills to estimate the possible rulemaking benefits. The initial RIA expressed the break-even analysis results in terms of the number of days of spilled oil that would need to be avoided for specific provisions of the regulation to be cost-beneficial. The final RIA includes an expanded discussion of potential avoided spill costs by spill control mechanism and the qualitative benefits of the regulation.
One commenter requested the final RIA strengthen its “Benefits” analysis by estimating the safety benefits, and not just the environmental benefits, of the proposed rule. The commenter noted that, if major oil spills are prevented by the rulemaking, there clearly would be safety benefits as well.
In response to comments received about the safety benefits, BOEM and BSEE expanded their discussion of this topic in the benefits section of the RIA, including a discussion on the importance of codifying existing industry standards and practices. These benefits result from the rule's requirements that reduce the probability of a catastrophic spill from a well control event and reduce the duration of a spill should one occur. Both of these reductions will increase safety in addition to their environmental benefits. The RIA considers the benefits of increased safety by considering the avoided costs from human fatalities and injuries that could occur during a catastrophic well control event and spill.
One commenter questioned the initial RIA calculation of staff time required to develop the IOP for submission, and asserted the time is underestimated by almost a factor of 40. The commenter estimates the costs of this provision to be $793,212 annually, instead of the $125,167 annual cost cited in the initial RIA.
In response to this comment, BOEM revised the estimate of hours needed to prepare an IOP. The number of hours mid-level engineers spend to compile and include the required information in the IOP is revised to be 2,880 hours, resulting in a cost to industry of $281,721 per IOP, which is an increase from the initial RIA.
One commenter stated the initial RIA underestimates the amount of time required to develop the additional information required for submission of the EP by more than a factor of 20. The commenter assumed that 1,050 hours of industry staff time and 144 hours of agency staff time will be required, resulting in total average annual costs of $215,815. The initial RIA assumed 45 hours of industry staff time and 144 hours of agency staff time, resulting in average annual costs of $28,702. The commenter contends that development of the EP is a time intensive effort requiring input from a wide range of teams across the company to fully incorporate all of the information required by regulation.
BOEM finds the commenter's estimate reasonable for compiling and submitting the required information from different expertise areas. The required EP information includes descriptions of different operator emergency and contingency plans, information on suitability for Arctic OCS conditions, ice and weather management, SCCE capabilities, deployment of a relief rig, resource sharing, and anticipated end-of-season dates. The industry staff time assumptions in the final RIA match the estimate provided in this comment. Mid-level engineers are estimated to spend 1,050 hours compiling the required information for the EP. Multiplied by the median hourly compensation rate for mid-level engineers, the estimated industry cost is $102,711 per EP. The cost to BOEM remains the same at $10,898 per EP.
One commenter identifies two issues with the costs and burden associated with the incident reporting provisions of proposed § 250.188. First, the commenter noted the difference between the initial RIA accounting for one rig in 2015 and 2016 and the NPRM analysis that accounted for two rigs each of these years. From this, the commenter concludes that there would be a doubled cost for 2015 and 2016 if the analysis in the final RIA were updated to align with the assumptions of the NPRM analysis. Second, the commenter questioned the number of hours of staff work required to compile and document the required information. Based on the commenter's own previous experience during the 2012 season, the commenter estimated that instead of 5.5 hours of mid-level engineer time as a cost to industry, each incident would require 50 hours. The commenter supports the estimate by stating that a multidisciplinary team would work together to gather the necessary information, and the time estimates should account for the time required to review and prepare the submission by a senior level engineer, which is estimated to be 50 percent of the time required to gather the data, resulting in an additional 25 hours of cost. The commenter noted that for the cost to the agency, the relationship of 50 percent of the time required to gather the data being required to review the submission was maintained, resulting in 25 hours of review time for the agency.
In the final RIA, the assumptions regarding staff time are revised for this provision. It is assumed that incidents having new reporting requirements the final rule will occur two times a year for each rig. Industry mid-level engineers will spend 50 hours and industry senior engineers will spend 25 hours on reporting requirements for each incident. It is assumed that a BSEE senior engineer will spend 25 hours reviewing each submittal.
One commenter argued the initial RIA did not consider the operational and logistical burdens and costs associated with zero discharge operations for petroleum-based muds and cuttings. The commenter also argued the initial RIA did not account for costs associated with the authority of BSEE's Regional Supervisor to direct operators to capture water-based muds and cuttings, which will require operators to take into account that BSEE may drastically modify operations without warning, and the operator must plan accordingly. The commenter stated the initial RIA also did not account for any costs associated with the modification of rigs to handle a collection system, containers to collect and transport the muds and cuttings, vessels to transport the resulting volumes, or costs for the disposal of the mud and cuttings. The commenter asserted that an analysis of costs associated with Shell's 2012 Beaufort campaign, as well as updated plans based on what was learned from that campaign, demonstrate one-time costs required to prepare rigs and support vessels for a collection system. The commenter also identified additional operating costs for the rig system and for the collection, storage, and transport systems, which it states should all be included in compliance cost estimate for this provision.
The commenter disagrees with the initial RIA assumption that a skilled laborer on the rig crew and an industry senior engineer would spend, respectively, 60 and 8 hours annually to transport and dispose of mud and cuttings, resulting in an annual labor cost of $4,245 ((60 hours × $56.86) + (8 hours × $104.22)) per rig. The commenter proposes an alternative cost estimate for this provision as follows: $10 million to modify an existing rig and equipment for zero discharge operations; $2 million (annual cost per rig) to operate additional equipment on the rig; $3 million in upfront logistics costs per rig supported; and $14.5 million in annual logistics costs for the transport and disposal of waste. Taking into consideration the assumptions in the initial RIA Exhibit 3, the total cost of this provision would be $52 million in one-time costs to modify each rig and each rig's supporting logistic assets, and $561 million in total operating costs over 10 years, resulting in a total 10 year cost of $613 million.
BOEM and BSEE considered the comments received on the pollution prevention requirements and updated portions of the RIA accordingly. Based on other comments received and additional analysis conducted by the Bureaus, the final RIA assumes that the requirement to capture all petroleum-based mud and cuttings under this provision is in the baseline. The capture of petroleum-based mud and cuttings is an established industry practice and is required separately by EPA as part of the applicable NPDES permits. As this requirement is imposed separately by EPA, BOEM and BSEE do not include a cost for the capture of petroleum-based mud and cuttings as a cost of the rule.
BOEM and BSEE do consider the Regional Supervisor's discretion to require the capture of water-based muds and cuttings to result in costs attributable to this rule and have added an estimate of these costs to the final RIA. These costs are not considered as part of the baseline because the capture
One commenter stated the cost of complying with the requirements proposed at § 250.402(c) will result in a total cost of $4 billion over the ten years, compared to the Bureaus' estimated cost of $240 million. The commenter based its estimated costs on the assumptions in Exhibit 3 of the initial RIA, which assume 48 wells will be drilled during the ten-year period. The commenter estimated the cost per season for a two-rig program to be approximately $1.5 billion, leading to daily operating rig costs (based on a 100 day drilling season) of $7.5 million and lost rig day costs of $6 million. The commenter calculated that, based on the assumption of 1.5 days of additional lost time per well due to this provision, the cost is $9 million per well (1.5 days at a lost rig day rate of $6 million), which is three times larger than the initial RIA estimate of $2 million per well. The commenter argued that assuming a cost of $6 million per operating day results in an additional estimated cost of $9 million per well, and $432 million across the 48 wells assumed to be drilled in the ten-year period. The commenter further adds that inclusion of the costs for each rig to buy and maintain a dedicated mudline cellar bit adds $298 million to the cost across the 10-year program. Another commenter stated that the requirement for securing a well has long-required the use of well cellars and proper temporary abandonment of Arctic wells. The commenter asserted this is not a new requirement and should be included in the baseline costs.
BOEM and BSEE agree that the requirements under the former § 250.402 (finalized in the Well Control Rule as § 250.720), including mudline cellars, are a long-standing industry practice and are required by existing regulations (§ 250.738) for Arctic OCS MODU drilling operations in ice scour areas. Accordingly, we have included the costs of the mudline cellars in the final RIA's baseline cost estimate. BOEM and BSEE have adjusted the estimated compliance cost based on information received in comments and the number of drilling days required to drill or construct a mudline cellar. We assume that the mudline cellar will take 10 days to drill or construct, based on actual time required during the 2015 exploration drilling program. We further updated the average daily drilling cost. These calculations resulted in a mudline cellar drilling cost of approximately $37,000,000 per well.
The mudline cellar requirement imposes a capital cost per drilling rig (for the mudline well cellar drill bit) and a maintenance cost (for upkeep of the drill bit). These costs were not fully considered in the initial RIA but are included in the final RIA.
One comment questioned the assumption of the initial RIA that there is an incremental cost of $6 million per year, per rig for RTM requirements. The comment suggests that, because these measures were employed by Shell in 2012, there is no incremental cost to that operator. BOEM and BSEE agree and consider RTM costs to be part of the regulatory baseline. RTM was required as part of the approvals for the 2012 and 2015 Shell EPs, and the use of RTM has become a standard practice by industry on the Arctic OCS. Additionally, RTM provisions are codified in the final BSEE BOP/Well Control rule at § 250.724. While RTM is considered a baseline cost, BOEM and BSEE acknowledge there may be instances when RTM could be required under § 250.452 but not under § 250.724. Section 250.724 requires RTM when conducting well operations with a subsea BOP, with a surface BOP on a floating facility, or when operating in an HPHT environment. Arctic exploratory drilling may be conducted from grounded platforms such as a jack-up rig that do not utilize a subsea BOP. In these cases RTM would be required and could be considered a compliance cost assigned to § 250.452. However, as a general matter, the use of real-time monitoring has become an industry standard in the context of challenging conditions such as deepwater or HPHT wells (as reflected in the Well Control Rule) and Arctic OCS exploratory drilling (as reflected here and in the 2012 and 2015 plans). Accordingly, based on the requirements of the Well Control Rule and standard industry practices in challenging Arctic conditions, BOEM and BSEE have concluded that costs associated with maintaining real-time monitoring capabilities are properly considered baseline costs.
One commenter suggests that the RTM compliance costs were underestimated. They suggest that the cost to operate a monitoring system is approximately $10,000 per day, compared to the $5,000 per day used in the initial RIA. They suggest that, in a 100-day season, the system would be operated for approximately 144 days, with 30 days prior to the season utilized to get systems up and running and then two weeks following the season to close down. They further suggest that the initial system would cost $400,000 per operator with an additional $200,000 every three years to replace or update monitoring system components.
In the baseline cost analysis, BOEM and BSEE assume the RTM systems would be operated for 126 days per year, which consists of the 82 day drilling season (116 days in the season less the 34 day shoulder season), 30 days for set-up, and 14 days for take-down. We have kept the $5,000 average daily cost consistent with information received as part of the BSEE Well Control Rule. The initial system cost and refurbishing cost were revised based on this comment. A $400,000 initial system cost and a $200,000 refurbishing cost, incurred every three years, are included in the baseline final RIA cost estimate.
One commenter expressed concern about the incorporation of API RP 2N Third Edition as part of an operators' APD submittal. The commenter mentions that the RP explicitly states its inapplicability to MODUs, and concludes that the Bureaus' attempt to estimate the cost of incorporating an
BOEM and BSEE have revised the cost assumptions in response to this comment. The final RIA assumes an industry mid-level engineer will spend 20 hours on the documentation associated with the provision, which results in an annual cost of $1,956 per rig. It is assumed a senior BSEE engineer will spend 10 hours reviewing submittals associated with the requirement, for a cost of $979 per rig. With these assumptions, the average annual cost of this provision is estimated to be $10,273.
Two commenters recommend that the initial RIA's cost estimates of $31 million per year for SCCE, including a capping stack, cap-and-flow system, and containment dome, should be included in the baseline because this equipment has been required for OCS operations since 2010, pursuant to NTL 2010–N10 and Shell's 2012 EP. One of the commenters requested that, if SCCE costs are considered new regulatory compliance costs, then the capital and operating costs for each piece of SCCE should be explained.
BOEM and BSEE disagree that the costs are part of the baseline and have explained the cost assumptions in greater detail in the final RIA. The SCCE capital cost, in addition to the costs of deployment and testing of this equipment, is a compliance cost of the rule because the requirement to maintain SCCE is being formally codified in the regulations. The SCCE costs are summarized in the final RIA and total $681.9 million over 10 years (3 percent discounting).
One commenter stated that the costs for the SCCE requirements are significantly underestimated and that they should be $315 million to $685 million higher, over the ten-year period, than the costs associated with the SCCE requirements as presented in the initial RIA. The commenter asserted that the initial RIA incorrectly assumed no cost associated with the existing SCCE system by only including the cost for the purchase of a second system in 2018. The existing system is the result of what the comment states are extra-regulatory conditional permit requirements, and as such the $270 million used in 2018 was also utilized in 2015 to recognize the cost already incurred by the industry. Furthermore, the commenter states that its experience indicates that BSEE has substantially underestimated the annual operating costs of the system, accounting for only $1.2 million in operating costs per year. The commenter argued that all costs evaluated in the initial RIA assumed a continued WCD of 25,000 barrels per day as used in the approved Shell Chukchi OSRP. The commenter stated that if prospects with larger estimated WCDs are evaluated, the costs for the development and operation of the SCCE systems will scale, at minimum, linearly from the costs that are currently included, and the commenter recommended this increased cost should be incorporated into the analysis. The commenter also asserted that the cost for an annual test or exercise of the system, which would involve a full deployment of the SCCE, is underrepresented in the initial RIA. The commenter suggests that, based on current costs and experience from a 2015 deployment test, an annual test would cost an estimated $5.9 million per year per system.
BOEM and BSEE have revised the cost estimates for the SCCE testing requirements based on information received in comments and adopted the central SCCE capital scenario from the initial RIA. The central SCCE scenario assumes that one company purchases SCCE for its own use and the other two operators share SCCE. The calculation of the volume of oil under a WCD scenario varies from site to site. This information is required as part of the OSRP for each facility under § 254.47. BOEM and BSEE do not include additional costs for revised SCCE in the event that larger WCD scenarios are developed for other prospects, as these costs would be too speculative to estimate at this time. The final RIA estimates the average annual deployment and testing cost to be $22,117,333.
Two commenters recommend that the $0.55 billion relief rig costs should be removed from the incremental analysis and be included in the baseline because the Bureaus have previously imposed the requirement that Arctic OCS exploration operators have a relief rig. One of the commenters noted that the costs of the standby relief rigs should not be included because operators can plan simultaneous exploration operations using two or more drilling rigs where no drilling rig would be idle on stand-by. The commenter further noted that two or more operators drilling in the Arctic at the same time could agree to share relief rig services through a mutual aid agreement, whereby no drilling rig would be idle on stand-by. The commenter concludes there is no incremental cost for a stand-by relief rig in either case, because the rigs are actively drilling wells and included in the baseline economics, and would only be called up in an emergency to provide relief rig services.
BOEM and BSEE have continued to assign the compliance cost of the relief rig and shoulder season to the rule. However, the revised activity assumptions in the final RIA exclude the presence of an idle standby relief rig. Instead of an idle standby relief rig, it is assumed that the single operator in years 2 and 3 would operate two rigs and designate each rig as a relief rig for the other. Because the exploration activity scenario no longer includes an idle relief rig, no costs are associated with this provision. BOEM and BSEE maintain that the requirement that a relief well be drilled before seasonal ice encroachment is a compliance cost of the rule. The compliance cost for the shortening of the drilling season necessitated by these requirements is estimated to be $84.4 million per year in years 2 and 3 and $177.9 million per year in years 4 to 10.
One commenter suggests that BSEE's baseline economic modeling should be based on OCS lease operators being able to drill a single well per season per rig through 2017. The commenter further suggests the realization of a multiple-well drilling season for any single drilling unit is not likely, given the seasonal restrictions, requirement for a mud line cellar, and time required to drill a relief well.
BOEM and BSEE disagree that a multiple-well drilling season is not likely. However, we do agree, considering Shell's 2015 announcement, that the number of wells per season should be revised. Accordingly, beginning in year 2 we have revised the assumptions for the number of wells drilled per season to have a maximum of two wells per rig. The initial RIA assumed four wells for one rig in 2016, and the final RIA maintains the assumptions of four wells for two rigs in years 2 and 3 and six wells for 4 rigs from years 4 to 10. By assuming that two wells per season can be drilled, we are potentially assuming a higher level of activity and thus ensuring that we are not underestimating the costs of the regulation. We considered comments on the number of exploratory wells assumed in the analysis, and upon careful consideration have determined the scenario used in the final RIA
One commenter recommended any cost-benefit analysis of this rule package should account for the erosion to an operator's portfolio of lease holdings caused by lost drilling days resulting from the requirement for a same season relief well. The commenter asserted the regulations would make it difficult, and in many cases impossible, to complete one well in a single season and that the fewer days an operator has during the open-water season to explore its lease, the greater the number of its leases that will expire before they can be evaluated. The commenter points to the NPC Arctic Potential Study, where it is noted that the U.S. lease system is development based, and to retain a lease, the operator must have gained enough information to be able to move into the commercial development phase by the end of the 10-year primary term for an OCS lease. The short drilling season, it was argued, could make this determination practically impossible to achieve within the 10-year term when the drilling of several wells may be required to enable appraisal of a field.
BOEM and BSEE have reexamined, carefully considered and developed new estimates of the number of lost drilling days resulting from the requirements of the final rule, and have derived the effect of these lost drilling days in terms of their cost to operators. It is assumed that the relief rig requirement would shorten the drilling season by 34 days, out of the estimated 116 day drilling season. This 29 percent reduction in drilling days is used to estimate that 29 percent of the annual costs of the drilling rig is lost due to this provision. There are also savings realized during the 34 days from support vessels demobilizing earlier and other beneficial activities that can be pursued during that time, however these benefits were not incorporated into the cost estimates. The final RIA estimates the annual shoulder season costs as $84.42 million per year in years 2 and 3 and $177.95 million per year in years 4 to 10.
With regard to the NPC Arctic Potential Study, as discussed in Section IV.B.1.
One commenter argued that the cost per year of a relief rig, and number of years for inclusion of the cost of the relief rig, is overestimated. The initial RIA utilized a methodology to calculate the cost of a relief rig that took the assumed day rate cost of a rig at $2 million per day and multiplied that by the number of days in a season at 138 days to arrive at a total of $276 million for a season. The commenter suggests that this methodology overstates the cost that would be associated with a rig that was being held on stand-by as a true relief rig at a location such as Dutch Harbor. The commenter cites an analysis performed by ENVIRON which estimated a cost of approximately $212 million per season based on publicly available data sources and the requirement of a rig, tugs to transport the rig, and a support vessel on stand-by (ENVIRON International Corporation. Arctic Regulations Benefit Cost Analysis. 2014. p. 9).
BOEM and BSEE considered comments on the relief rig requirements of the proposed rule. We have revised both the day rate cost for Arctic drilling rigs and revised the cost of the shoulder season as discussed above. The revised Arctic exploration scenario has assumed that all rigs are conducting exploratory drilling operations.
Two commenters question the auditing costs. One commenter is concerned that the cost estimated by BSEE for auditing services was underestimated by 50 percent. Another commenter thinks that the estimate of the incremental cost of the SEMS requirements was reasonable considering the scope of the requirement.
BSEE has recently updated its cost estimates for SEMS Audits and now estimates the average cost to audit a complex operation on the OCS at $250,000/audit cycle. BSEE believes that this incremental cost is more reasonable given the requirement that the audit provide an objective evaluation to test and contribute to continual improvements in the management system's ability to manage risk.
The final rule establishes, through both performance-based and prescriptive requirements, what will be required of operators seeking to conduct exploratory drilling operations on the Arctic OCS. The requirements contained in the final rule reflect the unpredictable and challenging nature of exploratory drilling operations in the Arctic. The regulations require early and comprehensive planning of operations,
Changes to Federal regulations must undergo several types of economic analyses. First, E.O. 12866 and E.O. 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select a regulatory approach that maximizes net benefits (accounting for the potential economic, environmental, public health, and safety effects). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Under E.O. 12866, an agency must determine whether a regulatory action is significant and, thus, subject to the requirements of the E.O. and OMB review. Section 3(f) of E.O. 12866 defines a “significant regulatory action” as any rule that:
1. Has an annual effect on the economy of $100 million or more, or adversely affects in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as “economically significant”);
2. Creates serious inconsistency or otherwise interferes with an action taken or planned by another agency;
3. Materially alters the budgetary impacts of entitlement grants, user fees, loan programs, or the rights and obligations of recipients thereof; or
4. Raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in E.O. 12866.
E.O. 12866 provides that OMB's OIRA will review all significant rules. Pursuant to the procedures established to implement section 6 of E.O. 12866, OMB has determined that this final rule is significant because it may have an effect on the economy of $100 million. The legal and policy issues identified by OMB are the requirements for SCCE, relief rig availability, and the shoulder season to reflect current conditions for Arctic OCS exploration plan and permit approval. The following discussion summarizes the economic analysis. The complete final RIA can be found in the regulatory docket for this final rule at
Before authorizing the exploration for Arctic OCS hydrocarbon resources, BOEM and BSEE must ensure that exploration can occur safely and with minimal environmental risk. This final rule provides a regulatory framework specifically designed for Arctic exploration and outlines the specific requirements for exploratory activities. Its purpose is to provide the requirements and standards to which all individual operations will be held.
The available Arctic OCS oil spill control and response capabilities have been strengthened at considerable cost over the last few years. The incremental compliance costs for new provisions required in this rulemaking are on top of measures already taken by industry. Two of the requirements of this regulation are considered baseline, that is, not new costs, as they reflect current industry practice under current regulations. At the same time, for informational purposes, we have accounted for this cost to industry of existing baseline requirements for exploratory operations in the Arctic that are being included in this rulemaking. The final RIA includes estimates of both new regulatory compliance costs and costs associated with the baseline.
While a catastrophic oil spill resulting from exploratory drilling on the Arctic OCS is highly unlikely due to the nature of the geology, the shallow water depth, and the relative simplicity of well construction for wells likely to be drilled in the Arctic OCS, because the potential adverse effects of a catastrophic oil spill would be severe, steps must be taken to reduce the risk of a spill risk and its duration should one occur. The American public greatly values the Arctic. It is viewed as a pristine, unspoiled environment. With this in mind, a catastrophic oil spill would have severe impacts (at least on a meaningful human time scale). BOEM and BSEE have determined that the benefits of this rule exceed the costs when qualitative factors are considered and reflect society's strong risk averse preference in the Arctic.
The provisions of the final rule are estimated to result in compliance costs of $2.0 billion under 3-percent discounting and $1.7 billion under 7-percent discounting over 10 years. The baseline provisions are estimated to cost $1.8 billion under 3-percent discounting and $1.5 billion under 7-percent discounting over 10 years.
Table 1 shows the final rule's provisions and primary benefit. We have included the estimated costs for reference. As the table emphasizes, the key provisions of this rule are specifically intended to minimize the risks of catastrophic oil spills and minimize the damage of a spill, should one occur.
BOEM and BSEE have concluded that these exploratory drilling regulations will provide regulatory clarity and certainty, resulting in a more comprehensive Arctic OCS oil and gas regulatory framework. The provisions in this rule codify existing requirements in the Arctic designed to reduce the probability of a catastrophic spill, reduce the impacts of a spill should one occur, improve the coordination of operations among Federal agencies, and minimize natural resource and ecosystem impacts of offshore operations in the Arctic.
Due to both the uncertainty and difficulty of measuring benefits, we do not offer an aggregate quantitative assessment of all of the final rule's provisions. Instead, we present a combination of quantitative and qualitative discussions based on the benefits of the different provisions of this rule. In general, the individual provisions of this rule serve four main beneficial purposes: (1) Improving information to and coordination among Federal agencies regarding Arctic operations, (2) minimizing natural resource impacts, (3) reducing the risk of oil spills, including a catastrophic oil spill, and (4) improving containment and reducing severity of a catastrophic oil spill. Each of these benefits is discussed in more detail in the final RIA. In addition to these four main benefits, in aggregate the rule provides regulatory certainty to industry and the assurance to stakeholders and partners that DOI is committed to safe Arctic operations.
The final rule includes new provisions that require additional information sharing and availability. Because the nature of this benefit is difficult to quantify, it is considered qualitatively. The costs of the applicable provisions total $17.6 million and comprise 0.9 percent of the compliance costs assigned to the rule. They are designed to achieve better coordination among BSEE, BOEM, and other Federal agencies. For example, § 550.204 requires operators to provide information which will facilitate interagency coordination between DOI and other relevant Federal agencies, as recommended in the DOI
The additional pollution prevention requirements in paragraphs (b)(1) and (2) of § 250.300 constitute 6.9 percent of the rule's estimated compliance cost. The revised pollution prevention requirements that are responsible for these incremental compliance costs clarify the Regional Supervisor's discretionary authority to ensure that operators capture all water-based muds and associated cuttings from Arctic OCS exploratory drilling operations following completion of the conductor casing to prevent discharge of these water based muds and associated cuttings into the marine environment. The Regional Supervisor would be more likely to exercise authority requiring the capture of water-based muds and cuttings in the Beaufort Sea, as that is the area where whales migrate through subsistence harvest areas. Given the difficulty of calculating how the discharge of muds and cuttings could affect marine mammals, their habitat, and subsistence activities, we have not quantified the benefits of these provisions. However, we recognize the importance of subsistence harvests in the region and conclude these provisions are necessary to preserve a food source and cultural tradition.
Both the provision for RTM and the additional requirements for securing wells help reduce the risk of a catastrophic oil spill from Arctic OCS exploration activities. These baseline provisions are designed to reduce the risk of such an oil spill occurring.
A catastrophic oil spill is characterized as a “low-probability, high-consequence” event because it is infrequent but has large consequences when it does occur. Previous frequency/probability studies of oil spills resulting from loss of well control have estimated catastrophic oil spill risk, but also have emphasized the extreme difficulty in estimating the probability that an event will actually occur, in part because the number of such large accidents offshore is small. Even more difficult is determining the reduction in the
Provisions of this final rule are designed to ensure that equipment and personnel are readily available to respond to a loss of well control event. As shown in Table 1 in the RIA, the most costly provisions are designed to reduce the duration of a loss of well control event should one occur. To compare the benefit of reducing the duration or severity of a catastrophic oil spill with the costs incurred, the final RIA conducts analyses on the specific provisions of the rule designed to reduce spill duration or severity. Section 250.471 of the final rule requires additional SCCE testing and documentation, which can reduce the impact of a catastrophic oil spill should one occur. Section 250.472 requires Arctic OCS operators to have access to a separate relief rig that would be available if a loss of well control was to occur and drilling a relief well became necessary. The rule requires a drilling rig be located such that it could arrive on location, drill a relief well, kill and abandon the original well, and abandon the relief well prior to expected ice encroachment at the drill site, but no later than 45 days after a loss of well control. The SCCE and relief rig requirements make up 92 percent of the rule's compliance cost.
The SCCE testing requirements can help reduce the duration of catastrophic oil spills in two ways. First, through regular tests of the SCCE, crew members gain practice and experience in deploying the equipment which could ultimately lead to faster and more efficient deployment should an oil spill occur. Second, through these regular tests crew members can identify faulty equipment. This allows problems to be corrected before the equipment is actually needed.
Given the difficulties associated with quantifying the exact influence this provision could have on reducing the severity of an oil spill, we conducted an analysis of the SCCE testing requirements. The final RIA includes calculations for the smallest reduction in oil spill duration, due to the SCCE testing requirements, necessary for this provision of the rule to be cost-beneficial. Also included in the final RIA is a risk analysis that considers the historical frequency of catastrophic OCS oil spills.
The regulatory baseline includes recent Arctic OCS exploration best practices and regulatory requirements that are being clarified and codified in this rule. Therefore, a benefit of this final rule is to provide the regulatory certainty of what is required for operators to safely explore for hydrocarbons on the Arctic OCS.
The oil and gas industry requires regulatory stability to undertake timely and efficient exploration. With this rule, the oil and gas industry can more effectively plan and conduct exploratory drilling on the Arctic OCS with lower risk and fewer delays than under the existing rules and clarifying NTLs. According to BOEM's 2016 Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation's Outer Continental Shelf, there are approximately 23.6 billion barrels of technically recoverable oil and about 104.4 trillion cubic feet of technically recoverable natural gas in the Beaufort Sea and Chukchi Sea Planning Areas combined. The NPC Arctic Potential Study listed as one of its key findings that the “economic viability of U.S. Arctic development is challenged by operating conditions and the need for updated regulations that reflect arctic conditions” (p. 10). This rule provides those Arctic-specific regulatory requirements.
In addition to providing regulatory certainty to industry, another benefit of this rule is to provide assurance to stakeholders, partners, Tribes, citizens, and other countries that the U.S. will explore the Arctic safely and with appropriate environmental stewardship. This rule builds on one of the themes from the NPC Arctic Potential Study that steps must be taken to “secure public confidence” that activities can be conducted safely. This rule helps achieve the National Arctic Strategy goals of protecting the unique and sensitive Arctic ecosystems and the subsistence needs, culture, and traditions of the Alaska Native communities.
The U.S. Arctic Policy recognizes the interconnectedness of Arctic nations and commits to coordinating with other Arctic nations to ensure operationally safe and environmentally sustainable development. The U.S. is a Party to the Agreement on Cooperation on Marine Oil Pollution Preparedness and Response in the Arctic and must comply with the Agreement, including the provisions in Article 4: Systems for Oil Pollution Preparedness and Response. These regulations help provide assurances to the international community that our operators in the Arctic will follow the appropriate preparedness procedures and do everything possible to prevent an oil spill, or minimize the effects should one occur. Further, the NPC Arctic Potential Study cites the importance of the U.S. national Arctic strategy in promoting Arctic activities because of their interaction with national security, foreign policy, and energy policy. The goal of the Arctic strategy is to “seek an Arctic region that is stable and free of conflict, where nations act responsibly in a spirit of trust and cooperation, and where economic and energy resources are developed in a sustainable manner that respects the fragile environment and the interests and cultures of indigenous peoples.”
E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the Nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. In addition, E.O. 13563 directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. It also emphasizes that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We developed this final rule in a manner consistent with these requirements. BOEM and BSEE worked closely with engineers and technical staff to ensure this rulemaking follows sound engineering principles through research, standards development, and interaction with industry.
E.O. 13563 requires an analysis of employment impacts. BOEM and BSEE considered whether the regulation might adversely affect Alaska employment by reducing the potential for jobs associated with the offshore oil
Conversely, the final rule brings potential benefits to the local economy and cultural traditions from reduced risk of spills. A catastrophic spill would have negative economic impacts far beyond the offshore oil and gas industry. A catastrophic spill could disrupt subsistence whaling on which Native Alaskans rely for food and for their cultural preservation. Thus, assessing the net cost or benefit of the rule to the local economy is not practical, given the number of factors involved and the level of uncertainty that surrounds each of them.
E.O. 13563 encourages agencies to consider the cumulative cost of regulations. Consistent with E.O. 13563 and OMB guidance in the March 20, 2012, memorandum from the Administrator for the OIRA, the final RIA has made an effort to “take account of the cumulative effects of new and existing rules.” Thus, the RIA appendix accounts for the significant regulatory baseline costs codified in this rulemaking.
For the reasons explained in this section, BOEM and BSEE have concluded this rule will not have a significant economic impact on a substantial number of small entities and, therefore, a final regulatory flexibility analysis is not required.
BOEM and BSEE prepared an Initial Regulatory Flexibility Analysis (IRFA) for the proposed rule to assess the impact of the proposed rule on small entities, as defined by the applicable Small Business Administration size standards. The IRFA was prepared using conservative assumptions and sought public comments on potential small entity impacts. No comments on the potential impact to small entities were received during the proposed rule comment period. Based on the profile of current Arctic lessees, no small companies hold leases on the Arctic OCS. Previously only one small company holding only one lease held acreage in the Arctic. This company relinquished its lease in March 2016. Considering the past and current Arctic lease holding profiles and the challenges of operating in the Arctic, we certify that this final rule will not have a significant economic impact on a substantial number of small entities.
The final rule affects operators and Federal oil and gas lessees that could conduct exploratory drilling on the Arctic OCS. The Regulatory Flexibility Act, 5 U.S.C. 601–612, defines small entities as small businesses, small nonprofits, and small governmental jurisdictions. We have identified no small nonprofits or small governmental jurisdictions that the rule would impact. Businesses subject to this rule fall under North American Industry Classification System (NAICS) codes 211111 (Crude Petroleum and Natural Gas Extraction) and 213111 (Drilling Oil and Gas Wells). For these classifications, a small business is defined as one with fewer than 1,250 employees (NAICS code 211111) and fewer than 1,000 employees (NAICS code 213111), respectively. A small entity is one that is “independently owned and operated and which is not dominant in its field of operation.”
Consistent with the exploratory scenario for the final RIA analysis, BOEM and BSEE anticipate three businesses to conduct exploratory drilling on the Arctic OCS over the 10 years of analysis. Although any business holding a lease could conduct exploratory drilling on the Arctic OCS if it can meet the relevant BOEM and BSEE regulatory requirements, a viable Arctic exploratory drilling program requires large geologic prospects and sufficient acreage to identify multiple drilling locations to support the prospect of economically viable development. Even absent this rulemaking, a single season of Arctic OCS exploratory drilling is estimated to cost approximately $1.5 billion and may only result in one or two exploratory wells being drilled.
According to BOEM's May 2016 list of Arctic OCS leaseholders, six businesses currently hold lease interests on the Arctic OCS. This rule directly affects all six Arctic lessees. Based on the small entity criterion, none of the six businesses is considered a small entity. From inception, to execution, to completion, every phase of Arctic OCS operations comes with inherent challenges and operational risks. The inherent challenges, including prospect and operational risks, and the attendant costs, make it exceedingly unlikely that any small entity will choose to conduct exploratory drilling operations on the Arctic OCS over the next decade.
Consistent with the existing and inherent costs and challenges associated with Arctic OCS exploratory drilling, the absence of interested and capitalized small entity lessees, and the 10-year scenario in which only three operators engage in Arctic OCS exploratory drilling, BOEM and BSEE certify that this rule will not have a significant economic impact on a substantial number of small entities.
This final rule will not impose an unfunded Federal mandate on State, local, or Tribal governments. This rule will require expenditures exceeding $100 million in a single year by offshore oil and gas exploration companies operating on the Arctic OCS. DOI has prepared written statements satisfying the applicable requirements of the UMRA, 2 U.S.C. 1501
Among other things, the final rule and the final RIA:
1. Identify the provisions of Federal law (OCSLA, CWA, and OPA) under which this rule is being finalized;
2. Include a quantitative assessment of the anticipated costs to the private sector (
3. Include qualitative and quantitative assessments of the anticipated benefits of the final rule.
Since all of the anticipated expenditures by the private sector analyzed in the RIA would be borne by the OCS oil and gas exploration industry in the Arctic region, the RIA analyses satisfy the UMRA requirement to estimate any disproportionate budgetary effects of the final rule on a particular segment of the private sector (
As discussed in the Regulatory Planning and Review section of this final rule, and explained in the RIA, BOEM and BSEE considered two major regulatory alternatives for dealing with the safety and environmental concerns raised by exploration activities on the Arctic OCS. BOEM and BSEE have decided to move forward with this final rule, in lieu of the other alternative of taking no regulatory action, because the other alternative would not as efficiently or effectively address the safety, environmental or sociocultural concerns raised by various stakeholders and partners on the Arctic OCS or achieve the objectives of this final rule.
BOEM and BSEE have determined that the final rule would not impose any unfunded mandates or any other requirements on State, local or Tribal
Similarly, BOEM and BSEE have determined that it is not reasonably feasible to accurately estimate the potential effects, if any, of the final rule on the National economy (
Under the criteria in E.O. 12630, this final rule will not have significant takings implications. The final rule is not a governmental action capable of interference with constitutionally protected property rights. A Takings Implication Assessment is not required.
Under the criteria in E.O. 13132, this final rule will not have federalism implications. This final rule will not substantially and directly affect the relationship between the Federal and State governments. To the extent that State and local governments have a role in OCS activities, this final rule will not affect that role. A Federalism Assessment is not required.
This final rule complies with the requirements of E.O. 12988. Specifically, this rule:
1. Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and
2. Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.
Under the criteria in E.O. 13175, Consultation and Coordination with Indian Tribal Governments (dated November 6, 2000), DOI's Policy on Consultation with Indian Tribes (Secretarial Order 3317, Amendment 2, dated December 31, 2013), the Alaska Native Corporation Consultation Policy (dated August 12, 2012), and Departmental Manual Part 512 Chapters 4 and 5 (dated December 2, 2014), we evaluated and determined that the subject matter of this rulemaking will have implications for federally recognized Tribes and ANCSA Corporations. As described earlier, future Arctic OCS exploratory drilling activities conducted pursuant to this final rule could affect Alaska Natives, particularly their ability to engage in subsistence and cultural activities.
BOEM and BSEE are committed to regular and meaningful consultation and collaboration with Tribes on policy decisions that have Tribal implications including, as an initial step, through complete and consistent implementation of E.O. 13175, together with related orders, directives, and guidance. Therefore, BOEM and BSEE, in coordination with the Office of the Secretary of the Interior's Senior Alaska Representative, engaged in listening sessions, Government-to-Government Tribal consultations, and Government-to-ANCSA Corporations consultations to discuss the subject matter of the final rule and solicit input in the development of the final rule at several stages of the rule development process, from the earliest phases through the final rule development.
In the early stages of developing the NPRM, Government-to-Government consultation was held in Barrow between BOEM, BSEE, and the Inupiat Community of the Arctic Slope (ICAS), to both provide background to, and obtain information from, ICAS tribal leaders and council members. The following day, June 7, 2013, BOEM and BSEE met with leaders and council members of the Native Village of Barrow Inupiat Traditional Government in a separate Government-to-Government consultation. All Tribal input provided during the meetings was subsequently provided to DOI in writing and has been included in the decision record for this final rule.
BOEM and BSEE also held public listening sessions in South-central Alaska (Anchorage) and on the North Slope (Barrow) on June 6 and 7, 2013. The BOEM Alaska Region notified federally recognized Alaska Native Tribes and ANCSA Corporations of the June 6 and 7, 2013, public listening sessions and Government-to-Government consultations through phone calls, emails, newspaper announcements, and BOEM's Web site.
A series of follow-on meetings and listening sessions were held June 17–20, 2013, in Anchorage resulting, in part, in Government-to-Government consultation between BOEM, BSEE, and the Native Village of Nuiqsut and Government-to-ANCSA Corporation consultations between BOEM, BSEE, and the NANA Regional Corporation and the Cully Corporation (Point Lay ANCSA Corporation).
DOI continued consultation with affected federally recognized tribes and ANCSA Corporations following publication of the NPRM. On March 12, 2015, BOEM and BSEE held a public meeting in Barrow and met individually with leaders and council members of the Native Village of Barrow Inupiat Traditional Government, the AEWC and ICAS. The Bureaus also met with federally recognized Tribal leaders for six Government-to-Government consultations on the proposed regulations between April 20 and 24, 2015. The consultations were held in the following Alaskan locations: Kotzebue, Point Hope, Barrow, and Wainwright. During that week, consultations were held with the Native Village of Kotzebue, Native Village of Point Hope, ICAS, Native Village of Barrow, and Village of Wainwright. We also met with the president of the AEWC. On July 9, 2015, an additional Government-to-Government consultation was conducted with the Native Village of Nuiqsut by telephone conference.
Alaska Native Tribes' and ANCSA Corporations' comments on the proposed regulations, both written and oral, and the Bureaus' responses are summarized in this preamble (see Section IV
Only one commenter, the Cully Corporation, submitted a written comment asserting the Bureaus did not comply with the requirement to consult on this rulemaking.
Both BOEM and BSEE have sought and maintained an active relationship with the Cully Corporation. With respect to Cully Corporation's statement that neither Bureau consulted with them, it is important to note that both Bureaus did make an effort to reach out to Cully Corporation regarding this particular matter. We met with the Cully Corporation several times prior to the publication of the NPRM, including a Government-to-ANCSA Corporation consultation in June 2013. Another Government-to-ANCSA Corporation consultation was scheduled with Cully Corporation on April 21, 2015. We welcome the opportunity to discuss the Cully Corporation's concerns regarding implementation of this final rule, and thank them for the thoughtful and comprehensive written comments submitted on the proposed regulations.
E.O. 12898 requires Federal agencies to make achieving environmental justice part of their mission by identifying and addressing disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority and low-income populations. DOI has determined that this final rule does not have a disproportionately high or adverse human health or environmental effect on native, minority, or low-income communities because its provisions are designed to increase environmental protection and minimize any impact of exploration drilling on subsistence activities and Alaska Native community resources and infrastructure.
This rule contains information collection (IC) requirements for both BOEM and BSEE regulations. Therefore, an IC request for each Bureau was submitted to OMB for review and approval under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
As part of our continuing effort to reduce paperwork and respondent burdens, BOEM and BSEE invited the public to comment on any aspect of the reporting and recordkeeping burdens. We received 1,311 comments on this rulemaking. Three comments pertained to the information collection for BOEM and BSEE.
Commenters generally criticized the IOP provision as being duplicative or redundant of existing requirements. BOEM disagrees. The IOP rules are neither redundant nor duplicative of existing requirements. The IOP is meant to be an overview of all phases of the operator's proposed operations in order to allow the Federal agencies an earlier review in the planning process than currently exists. Moreover, the operator's IOP will contain planning information with less specificity than that furnished with the EP; as well as, the IOP will not require approval where the EP does require approval.
One of the commenters estimates that it will require 3,500 hours of industry staff time. We agree with the commenter that 90 hours for an IOP is low. However, we disagree with the commenter's recommendation to revise to 3,500 hours. BOEM anticipates that much of the conceptual planning information would already have been created by an operator planning to conduct exploration in the Arctic, and an IOP can be furnished through the operator's existing internal planning processes necessary for the preparation of Arctic operations. BOEM uses a conservative estimate derived from comments submitted by industry and direct experience reviewing a company's previously submitted IOP. During the IOP review period, BOEM can provide input to the operator, as well as request information from the operator regarding potential issues presented by the proposed activities concerning future plan approvals and permitting requirements. The estimated time it would take for the operator to provide any requested information to BOEM during the IOP review period is included in its burden hours estimate.
Therefore, based on comments received, changes to BOEM's hour burdens are as follows:
§ 550.204 submit all Arctic specific information required with IOP (+2,700).
§ 550.220 submit all Arctic specific information required with EP (+960).
Another comment received discussed duplicative information being submitted with the EP and the APD. BSEE and BOEM disagree with the duplication of information because the EP is intended to provide the operator the opportunity to present its overall plan for operations, and the APD is the technical document that provides the operator the opportunity to present details regarding how the plan will be implemented.
The commenter also discussed the burden hours being low, for example, the submission of detailed descriptions of environmental, meteorologic, and oceanic conditions expected at well site(s); etc. BSEE agrees and has increased two of the hour burdens associated with certain requirements. The changes are as follows:
§ 250.470(a); 417; 418—NEW—Submit detailed descriptions of environmental, meteorological, and oceanic conditions (+10 burden hours).
§ 250.470(d); 418—NEW—Submit detailed description concerning weather
One commenter suggested the regulations should implement performance based requirements for well containment, which recognizes acceptable alternatives to mud line cellars. BSEE agrees with the importance of allowing for the use of technology that is best suited to an operator's plan and has changed the burden as follows:
§ 250.720(c)(2)—NEW—Request approval to use an equivalent means rather than a well mudline cellar in areas of ice scour (+28 hours).
Another change that occurred to the BSEE information collection between the proposed and final rulemaking is the IC renewal for 30 CFR part 250, subpart S was initiated. When requests went out to industry for updated burdens, it was determined that the cost to conduct an audit has increased from $129,000 to $217,000. Based on a comment pertaining to the Regulatory Impact Analyses, it was decided that a SEMS audit in the Arctic will cost $250,000 (+$121,000).
The title of the collection of information for this rule is 30 CFR parts 250 and 254, Requirements for Exploratory Drilling on the Arctic Outer Continental Shelf. The OMB approved the collection under Control Number 1014–0027, expiration 06/30/2019, 779 hours, $250,000 non-hour cost burdens. The regulations establish requirements for safe, responsible, and environmentally protective Arctic OCS oil and gas exploration, and the information is used in our efforts to protect life and the environment, conserve natural resources, and prevent waste.
Potential respondents comprise Federal OCS oil, gas, and sulfur operators and lessees on the Arctic OCS. The frequency of response varies depending upon the requirement. Responses to this collection of information are mandatory; they are submitted on occasion, annually, or as a result of situations encountered, depending upon the requirement. The IC does not include questions of a sensitive nature. BSEE will protect proprietary information according to the Freedom of Information Act (5 U.S.C. 552) and DOI's implementing regulations (43 CFR part 2), 30 CFR part 252, and 30 CFR 250.197, which address disclosure of data and information to be made available to the public.
As stated previously, this rulemaking also pertains to several regulations. Once this rule becomes effective, the paperwork and non-hour cost burdens will be removed from this collection of information and consolidated with the IC burdens under OMB Control Numbers 30 CFR part 250, subpart A, 1014–0022, expiration 8/3/2017 (84,391 hours, $1,371,458 non-hour cost burdens); subpart D, 1014–0018, expiration 10/31/2017 (102,512 hours); subpart S, 1014–0017, expiration 11/30/2018 (2,238,164 hours, $5,220,000 non-hour cost burdens); and 30 CFR part 254, 1014–0007, expiration 11/30/2018 (74,461 hours) respectively; current collections can be viewed at
This final rulemaking adds new requirements for submitting EPs and other information before conducting oil and gas exploration drilling activities on the Arctic OCS. The title of the collection for the rulemaking is 30 CFR part 550, subpart B, Arctic OCS Activities. The OMB approved the collection under Control Number 1010–0189, expiration 06/30/2019, 3,930 hours, and no non-hour cost burdens.
Respondents for this rulemaking are Federal oil, gas, or sulfur lessees and/or operators on the Arctic OCS. Submissions are mandatory. BOEM collects the information to ensure that planned operations will be safe; will not adversely affect the marine, coastal, or human environments; will respond to the special conditions on the Arctic OCS; and will conserve the resources of the Arctic OCS. BOEM uses the information to ensure, through advanced planning, that operators are capable of safely operating in the unique environmental conditions of the Arctic and to make informed decisions on whether to approve EPs as submitted or whether modifications are necessary. BOEM also plans to share the preliminary information submitted in the IOP with other relevant agencies to provide them the opportunity to engage in constructive dialogue/feedback with operators, and each other, early in the process.
The burdens for the current planning requirements under 30 CFR part 550, subpart B, regulations are approved by OMB under Control Number 1010–0151 (432,512 hours, $3,939,435 non-hour costs; expiration 3/31/2018; the current collection can be viewed at
BOEM and BSEE developed a final Environmental Assessment (EA) and have determined this final rule does not have a significant impact on the quality of the human environment under the NEPA. The final EA and Finding of No Significant Impact is available in conjunction with this final rule at
In developing this rule, we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106–554, app. C section 515, 114 Stat. 2763, 2763A–153–154).
The Bureaus received two comments on the Data Quality Act. One comment asserted the NPRM, the Draft EA and the initial RIA violated the Information Quality Act (IQA) peer review requirements as well as associated IQA Guidelines.
We disagree. The IQA applies to information disseminated by Federal agencies and establishes basic quality performance goals for such information.
The second comment recommended the IC Requests in this final rule should be withdrawn by DOI or denied by OMB because the DOI burden estimates and the rest of the PRA analysis violate the IQA requirement for peer review as well as OMB and DOI IQA guidelines.
BOEM and BSEE disagree. The IC Requests are publicly available, but they are not disseminated to the public as that term is used in the IQA. In other words, the ICRs reflect information on which the Bureaus relied in reaching their decision, not an agency-sponsored distribution of information to the public. Therefore, the IQA, including the peer-review provisions, is not implicated by the content of the Bureaus' IC Request submissions to OMB. Also, the Bureaus' IC Requests have reasonably demonstrated that they have practical utility under the OMB definition, and the commenter provides no legitimate legal reason for recommending their withdrawal.
This rule is not a significant energy action under the definition of that term in E.O. 13211 because:
1. It is not likely to have a significant adverse effect on the supply, distribution or use of energy; and
2. It has not been designated as a significant energy action by the Administrator of OIRA.
Thus, a Statement of Energy Effects is not required.
Due to the inherent practical difficulties of exploration and production in the Arctic, to date there has been minimal exploration activity, and very little production of oil and gas, on the Arctic OCS. The only existing oil production from the Arctic OCS is through the Northstar Island facility in State of Alaska waters.
The regulations' cumulative effects (including baseline provisions) are not expected to affect long-term activity. This regulation establishes specific guidelines that protect the Arctic environment and makes explicit the requirements that operators will face. Protecting the Arctic region from a catastrophic oil spill is imperative for the long-term hydrocarbon development of the region.
We note that, although the rule might have a short-term impact on Arctic OCS exploration and development, other factors over which BOEM and BSEE have no control are likely to have a much greater effect on the rate of oil production from the Arctic OCS region. The primary external factor is the market price of oil and gas. The pace of exploration and development responds to changes in oil prices, with the pace slowing down when prices are decreasing and the pace accelerating when prices are rising.
The Arctic region of Alaska has not previously relied on the type of offshore drilling regulated by this final rule for economic development or well-being. The OCSLA states that the policy of the U.S. is both to make the OCS available for production and development as well as to ensure that operations are conducted safely. Lessees, particularly in the Arctic, obtain OCS leases and pursue exploration with a full understanding of this dynamic. This rulemaking reflects the Bureaus' reasonable and appropriate fulfillment of their multifaceted OCSLA mandates.
We are required by E.O. 12866, E.O. 12988, and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:
1. Be logically organized;
2. Use the active voice to address readers directly;
3. Use clear language rather than jargon;
4. Be divided into short sections and sentences; and
5. Use lists and tables wherever possible.
Administrative practice and procedure, Continental shelf, Environmental impact statements, Environmental protection, Incorporation
Continental shelf, Environmental protection, Intergovernmental relations, Oil and gas exploration, Oil pollution, Pipelines, Reporting and recordkeeping requirements.
Administrative practice and procedure, Continental shelf, Environmental impact statements, Environmental protection, Government contracts, Incorporation by reference, Investigations, Oil and gas exploration, Penalties, Pipelines, Reporting and recordkeeping requirements, Sulfur.
For the reasons stated in the preamble, BOEM and BSEE amend 30 CFR parts 250, 254, and 550 as follows:
30 U.S.C. 1751, 31 U.S.C. 9701, 33 U.S.C. 1321(j)(1)(C), 43 U.S.C. 1334.
The revision and additions read as follows:
(c) On the Arctic OCS, in addition to the requirements of paragraphs (a) and (b) of this section, you must provide to the BSEE inspector on location, if one is present, or to the Regional Supervisor, both of the following:
(1) An immediate oral report if any of the following occur:
(i) Any sea ice movement or condition that has the potential to affect your operation or trigger ice management activities;
(ii) The start and termination of ice management activities; or
(iii) Any “kicks” or operational issues that are unexpected and could result in the loss of well control.
(2) Within 24 hours after completing ice management activities, a written report of such activities that conforms to the content requirements in § 250.190.
(h) * * *
(95) ANSI/API RP 2N, Third Edition, “Recommended Practice for Planning, Designing, and Constructing Structures and Pipelines for Arctic Conditions”, Third Edition, April 2015; incorporated by reference at § 250.470(g);
(b)(1) The District Manager may restrict the rate of drilling fluid discharges or prescribe alternative discharge methods. The District Manager may also restrict the use of components that could cause unreasonable degradation to the marine environment. No petroleum-based substances, including diesel fuel, may
(i) The proximity of your exploratory drilling operation to subsistence hunting and fishing locations;
(ii) The extent to which discharged mud may cause marine mammals to alter their migratory patterns in a manner that impedes subsistence users' access to, or use of, those resources, or increases the risk of injury to subsistence users; or
(iii) The extent to which discharged mud may adversely affect marine mammals, fish, or their habitat.
(2) You must obtain approval from the District Manager of the method you plan to use to dispose of drill cuttings, sand, and other well solids. For Arctic OCS exploratory drilling, you must capture all cuttings from operations that utilize petroleum-based mud to prevent their discharge into the marine environment. The Regional Supervisor may also require you to capture, during your Arctic OCS exploratory drilling operations, all cuttings from operations that utilize water-based mud after completion of the hole for the conductor casing to prevent their discharge into the marine environment, based on various factors including, but not limited to:
(i) The proximity of your exploratory drilling operation to subsistence hunting and fishing locations;
(ii) The extent to which discharged cuttings may cause marine mammals to alter their migratory patterns in a manner that impedes subsistence users' access to, or use of, those resources, or increases the risk of injury to subsistence users; or
(iii) The extent to which discharged cuttings may adversely affect marine mammals, fish, or their habitat.
(j) For Arctic OCS exploratory drilling operations, you must provide the information required by § 250.470.
(a) When conducting exploratory drilling operations on the Arctic OCS, you must gather and monitor real-time data using an independent, automatic, and continuous monitoring system capable of recording, storing, and transmitting data regarding the following:
(1) The BOP control system;
(2) The well's fluid handling systems on the rig; and
(3) The well's downhole conditions as monitored by a downhole sensing system, when such a system is installed.
(b) During well operations, you must transmit the data identified in paragraph (a) of this section as they are gathered, barring unforeseeable or unpreventable interruptions in transmission, and have the capability to monitor the data onshore, using qualified personnel. Onshore personnel who monitor real-time data must have the capability to contact rig personnel during operations. After well operations, you must store the data at a designated location for recordkeeping purposes as required in §§ 250.740 and 250.741. You must provide BSEE with access to your real-time monitoring data onshore upon request.
In addition to complying with all other applicable requirements included in this part, you must provide with your APD all of the following information pertaining to your proposed Arctic OCS exploratory drilling:
(a) A detailed description of:
(1) The environmental, meteorological, and oceanic conditions you expect to encounter at the well site(s);
(2) How you will prepare your equipment, materials, and drilling unit for service in the conditions identified in paragraph (a)(1) of this section, and how your drilling unit will be in compliance with the requirements of § 250.713.
(b) A detailed description of all operations necessary in Arctic OCS conditions to transition the rig from being under way to conducting drilling operations and from ending drilling operations to being under way, as well as any anticipated repair and maintenance plans for the drilling unit and equipment. You should include, among other things, a description of how you plan to:
(1) Recover the subsea equipment, including the marine riser and the lower marine riser package;
(2) Recover the BOP;
(3) Recover the auxiliary sub-sea controls and template;
(4) Lay down the drill pipe and secure the drill pipe and marine riser;
(5) Secure the drilling equipment;
(6) Transfer the fluids for transport or disposal;
(7) Secure ancillary equipment like the draw works and lines;
(8) Refuel or transfer fuel;
(9) Offload waste;
(10) Recover the Remotely Operated Vehicles;
(11) Pick up the oil spill prevention booms and equipment; and
(12) Offload the drilling crew.
(c) A description of well-specific drilling objectives, timelines, and updated contingency plans for temporary abandonment of the well, including but not limited to the following:
(1) When you will spud the particular well (
(2) How long you will take to drill the well;
(3) Anticipated depths and geologic targets, with timelines;
(4) When you expect to set and cement each string of casing;
(5) When and how you would log the well;
(6) Your plans to test the well;
(7) When and how you intend to abandon the well, including specifically addressing your plans for how to move the rig off location and how you will meet the requirements of § 250.720(c);
(8) A description of what equipment and vessels will be involved in the process of temporarily abandoning the well due to ice; and
(9) An explanation of how you will integrate these elements into your overall program.
(d) A detailed description of your weather and ice forecasting capability for all phases of the drilling operation, including:
(1) How you will ensure your continuous awareness of potential weather and ice hazards at, and during transition between, wells;
(2) Your plans for managing ice hazards and responding to weather events; and
(3) Verification that you have the capabilities described in your BOEM-approved EP.
(e) A detailed description of how you will comply with the requirements of § 250.472.
(f) A statement that you own, or have a contract with a provider for, source control and containment equipment (SCCE), which is capable of controlling and/or containing a worst case discharge, as described in your BOEM-approved EP, when proposing to use a MODU to conduct exploratory drilling operations on the Arctic OCS. The following information must be included in your SCCE submittal:
(1) A detailed description of your or your contractor's SCCE capability to stop or contain flow from an out-of-control well, including your operating assumptions and limitations; your access to and ability to deploy, in accordance with § 250.471, all necessary SCCE; and your ability to evaluate the performance of the well design to determine how you can achieve a full shut-in without having reservoir fluids discharged into the environment;
(2) An inventory of the local and regional SCCE, supplies, and services that you own or for which you have a contract with a provider. You must identify each supplier of such equipment and services and provide their locations and telephone numbers;
(3) Where applicable, proof of contracts or membership agreements with cooperatives, service providers, or other contractors who will provide you with the necessary SCCE or related supplies and services if you do not possess them. The contract or membership agreement must include provisions for ensuring the availability of the personnel and/or equipment on a 24-hour per day basis while you are drilling below or working below the surface casing;
(4) A detailed description of the procedures you plan to use to inspect, test, and maintain your SCCE; and
(5) A detailed description of your plan to ensure that all members of your operating team, who are responsible for operating the SCCE, have received the necessary training to deploy and operate such equipment in Arctic OCS conditions and demonstrate ongoing proficiency in source control operations. You must also identify and include the dates of prior and planned training.
(g) Where it does not conflict with other requirements of this subpart, and except as provided in paragraphs (g)(1) through (11) of this section, you must comply with the requirements of API RP 2N, Third Edition “Planning, Designing, and Constructing Structures and Pipelines for Arctic Conditions” (incorporated by reference as specified in § 250.198), and provide a detailed description of how you will utilize the best practices included in API RP 2N during your exploratory drilling operations. You are not required to incorporate the following sections of API RP 2N into your drilling operations:
(1) Sections 6.6.3 through 6.6.4;
(2) The foundation recommendations in Section 8.4;
(3) Section 9.6;
(4) The recommendations for permanently moored systems in Section 9.7;
(5) The recommendations for pile foundations in Section 9.10;
(6) Section 12;
(7) Section 13.2.1;
(8) Sections 13.8.1.1, 13.8.2.1, 13.8.2.2, 13.8.2.4 through 13.8.2.7;
(9) Sections 13.9.1, 13.9.2, 13.9.4 through 13.9.8;
(10) Sections 14 through 16; and
(11) Section 18.
You must meet the following requirements for all exploration wells drilled on the Arctic OCS:
(a) If you use a MODU when drilling below or working below the surface casing, you must have access to the following SCCE capable of stopping or capturing the flow of an out-of-control well:
(1) A capping stack, positioned to ensure that it will arrive at the well location within 24 hours after a loss of well control and can be deployed as directed by the Regional Supervisor pursuant to paragraph (h) of this section;
(2) A cap and flow system, positioned to ensure that it will arrive at the well location within 7 days after a loss of well control and can be deployed as directed by the Regional Supervisor pursuant to paragraph (h) of this section. The cap and flow system must be designed to capture at least the amount of hydrocarbons equivalent to the calculated worst case discharge rate referenced in your BOEM-approved EP; and
(3) A containment dome, positioned to ensure that it will arrive at the well location within 7 days after a loss of well control and can be deployed as directed by the Regional Supervisor pursuant to paragraph (h) of this section. The containment dome must have the capacity to pump fluids without relying on buoyancy.
(b) You must conduct a monthly stump test of dry-stored capping stacks. If you use a pre-positioned capping stack, you must conduct a stump test prior to each installation on each well.
(c) As required by § 250.465(a), if you propose to change your well design, you must submit an APM. For Arctic OCS operations, your APM must include a reevaluation of your SCCE capabilities for any new Worst Case Discharge (WCD) rate, and a demonstration that your SCCE capabilities will meet the criteria in § 250.470(f) under the changed well design.
(d) You must conduct tests or exercises of your SCCE, including deployment of your SCCE, when directed by the Regional Supervisor.
(e) You must maintain records pertaining to testing, inspection, and maintenance of your SCCE for at least 10 years and make the records available to any authorized BSEE representative upon request.
(f) You must maintain records pertaining to the use of your SCCE during testing, training, and deployment activities for at least 3 years and make the records available to any authorized BSEE representative upon request.
(g) Upon a loss of well control, you must initiate transit of all SCCE identified in paragraph (a) of this section to the well.
(h) You must deploy and use SCCE when directed by the Regional Supervisor.
(i) Operators may request approval of alternate procedures or equipment to the SCCE requirements of subparagraph (a) of this section in accordance with § 250.141. The operator must show and document that the alternate procedures or equipment will provide a level of safety and environmental protection that will meet or exceed the level of safety and environmental protection required by BSEE regulations, including demonstrating that the alternate procedures or equipment will be capable of stopping or capturing the flow of an out-of-control well.
(a) In the event of a loss of well control, the Regional Supervisor may direct you to drill a relief well using the relief rig able to kill and permanently plug an out-of-control well as described in your APD. Your relief rig must comply with all other requirements of this part pertaining to drill rig characteristics and capabilities, and it must be able to drill a relief well under anticipated Arctic OCS conditions.
(b) When you are drilling below or working below the surface casing during Arctic OCS exploratory drilling operations, you must have access to a relief rig, different from your primary drilling rig, staged in a location such that it can arrive on site, drill a relief
(c) Operators may request approval of alternative compliance measures to the relief rig requirement in accordance with § 250.141. The operator must show and document that the alternate compliance measure will meet or exceed the level of safety and environmental protection required by BSEE regulations, including demonstrating that the alternate compliance measure will be able to kill and permanently plug an out-of-control well.
In addition to the requirements set forth in § 250.107, when conducting exploratory drilling operations on the Arctic OCS, you must protect health, safety, property, and the environment by using the following:
(a) Equipment and materials that are rated or de-rated for service under conditions that can be reasonably expected during your operations; and
(b) Measures to address human factors associated with weather conditions that can be reasonably expected during your operations including, but not limited to, provision of proper attire and equipment, construction of protected work spaces, and management of shifts.
(c) For Arctic OCS exploratory drilling operations, in addition to the requirements of paragraphs (a) and (b) of this section:
(1) If you move your drilling rig off a well prior to completion or permanent abandonment, you must ensure that any equipment left on, near, or in a wellbore that has penetrated below the surface casing is positioned in a manner to:
(i) Protect the well head; and
(ii) Prevent or minimize the likelihood of compromising the down-hole integrity of the well or the effectiveness of the well plugs.
(2) In areas of ice scour you must use a well mudline cellar or an equivalent means of minimizing the risk of damage to the well head and wellbore. BSEE may approve an equivalent means that will meet or exceed the level of safety and environmental protection provided by a mudline cellar if the operator can show that utilizing a mudline cellar would compromise the stability of the rig, impede access to the well head during a well control event, or otherwise create operational risks.
The additions read as follows:
(b) * * *
(5) * * * For exploratory drilling operations taking place on the Arctic OCS, you must conduct an audit, consisting of an onshore portion and an offshore portion, including all related infrastructure, once per year for every year in which drilling is conducted.
(c) * * * For exploratory drilling operations taking place on the Arctic OCS, you must submit an audit report of the audit findings, observations, deficiencies and conclusions for the onshore portion of your audit no later than March 1 in any year in which you plan to drill, and for the offshore portion of your audit, within 30 days of the close of the audit.
(d) * * * For exploratory drilling operations taking place on the Arctic OCS, you must provide BSEE with a copy of your CAP for addressing deficiencies or nonconformities identified in the onshore portion of the audit no later than March 1 in any year in which you plan to drill, and for the offshore portion of your audit, within 30 days of the close of the audit.
(f) For exploratory drilling operations taking place on the Arctic OCS, during the offshore portion of each audit, 100 percent of the facilities operated must be audited while drilling activities are underway. You must start and close the offshore portion of the audit for each facility within 30 days after the first spudding of the well or entry into an existing wellbore for any purpose from that facility.
(g) For exploratory drilling operations taking place on the Arctic OCS, if BSEE determines that the CAP or progress toward implementing the CAP is not satisfactory, BSEE may order you to shut down all or part of your operations.
33 U.S.C. 1321.
The revision and additions read as follows:
Response plans for facilities conducting exploratory drilling operations from a MODU seaward of the coast line in Alaska State waters in the Chukchi and Beaufort Seas must follow the requirements contained within subpart E of this part, in addition to the other requirements of this subpart. Such response plans must address how the source control procedures selected to comply with State law will be integrated into the planning, training, and exercise requirements of §§ 254.70(a), 254.90(a), and 254.90(c), in the event that the proposed operations do not incorporate the capping stack, cap and flow system, containment dome, and/or other similar subsea and surface devices and
This subpart describes the additional requirements for preparing OSRPs and maintaining oil spill preparedness for facilities conducting exploratory drilling operations from a mobile offshore drilling unit (MODU) on the Arctic OCS.
In addition to meeting the applicable requirements of this part, your OSRP must:
(a) Describe how the relevant personnel, equipment, materials, and support vessels associated with the capping stack, cap and flow system, containment dome, and other similar subsea and surface devices and equipment and vessels will be integrated into oil spill response incident action planning;
(b) Describe how you will address human factors, such as cold stress and cold related conditions, associated with oil spill response activities in adverse weather conditions and their impacts on decision-making and health and safety; and
(c) Undergo plan-holder review prior to handling, storing, or transporting oil in connection with seasonal exploratory drilling activities, and all resulting modifications must be submitted to the Regional Supervisor. If this review does not result in modifications, you must inform the Regional Supervisor in writing that there are no changes. The requirements of this paragraph (c) are in lieu of the requirements in § 254.30(a).
In addition to the requirements in § 254.23, you must include the following information in the emergency response action plan section of your OSRP:
(a) A description of your ice intervention practices and how they will improve the effectiveness of the oil spill response options and strategies that are listed in your OSRP in the presence of sea ice. When developing the ice intervention practices for your OSRP, you must consider, at a minimum, the use of specialized tactics, modified response equipment, ice management assist vessels, and technologies for the identification, tracking, containment and removal of oil in ice.
(b) On areas of the Arctic OCS where a planned shore-based response would not satisfy § 254.1(a):
(1) A list of all resources required to ensure an effective offshore-based response capable of operating in adverse weather conditions. This list must include a description of how you will ensure the shortest possible transit times, including but not limited to establishing an offshore resource management capability (
(2) A list and description of logistics resupply chains, including waste management, that effectively factor in the remote and limited infrastructure that exists in the Arctic and ensure you can adequately sustain all oil spill response activities for the duration of the response. The components of the logistics supply chain include, but are not limited to:
(i) Personnel and equipment transport services;
(ii) Airfields and types of aircraft that can be supported;
(iii) Capabilities to mobilize supplies (
(iv) Onshore staging areas, storage areas that may be used en-route to staging areas, and camp facilities to support response personnel conducting offshore, nearshore and shoreline response; and
(v) Management of recovered fluid and contaminated debris and response materials (
(c) A description of the system you will use to maintain real-time location tracking for all response resources while operating, transiting, or staging/maintaining such resources during a spill response.
In addition to the requirements in § 254.42, the following requirements apply to exercises for your response personnel and equipment for facilities conducting exploratory drilling from a MODU on the Arctic OCS:
(a) You must incorporate the personnel, materials, and equipment identified in § 254.70(a), the safe working practices identified in § 254.70(b), the ice intervention practices described in § 254.80(a), the offshore-based response requirements in § 254.80(b), and the resource tracking requirements in § 254.80(c) into your spill-response training and exercise activities.
(b) For each season in which you plan to conduct exploratory drilling operations from a MODU on the Arctic OCS, you must notify the Regional Supervisor 60 days prior to handling, storing, or transporting oil.
(c) After the Regional Supervisor receives notice pursuant to § 254.90(b), the Regional Supervisor may direct you to deploy and operate your spill response equipment and/or your capping stack, cap and flow system, and containment dome, and other similar subsea and surface devices and equipment and vessels, as part of announced or unannounced exercises or compliance inspections. For the purposes of this section, spill response equipment does not include the use of blowout preventers, diverters, heavy weight mud to kill the well, relief wells, or other similar conventional well control options.
30 U.S.C. 1751; 31 U.S.C. 9701; 43 U.S.C. 1334.
(a) * * *
If you propose exploratory drilling activities on the Arctic OCS, you must submit an Integrated Operations Plan (IOP) to the Regional Supervisor at least 90 days prior to filing your EP. Your IOP must describe how your exploratory drilling program will be designed and conducted in an integrated manner that accounts for Arctic OCS conditions and include the following information:
(a) A description of how all vessels and equipment will be designed, built, and/or modified to account for Arctic OCS conditions;
(b) A schedule of your exploratory drilling program, including contractor work on critical components of your program;
(c) A description of your mobilization and demobilization operations, including tow plans that account for Arctic OCS conditions, as well as your general maintenance schedule for vessels and equipment;
(d) A description of your exploratory drilling program objectives and timelines for each objective, including general plans for abandonment of the well(s), such as:
(1) Contingency plans for temporary abandonment in the event of ice encroachment at the drill site;
(2) Plans for permanent abandonment; and
(3) Plans for temporary seasonal abandonment.
(e) A description of your weather and ice forecasting capabilities for all phases of the exploration program, including a description of how you would respond to and manage ice hazards and weather events;
(f) A description of work to be performed by contractors supporting your exploration drilling program (including mobilization and demobilization), including:
(1) How such work will be designed or modified to account for Arctic OCS conditions; and
(2) Your concepts for contractor management, oversight, and risk management.
(g) A description of how you will ensure operational safety while working in Arctic OCS conditions, including but not limited to:
(1) The safety principles that you intend to apply to yourself and your contractors;
(2) The accountability structure within your organization for implementing such principles;
(3) How you will communicate such principles to your employees and contractors; and
(4) How you will determine successful implementation of such principles.
(h) Information regarding your preparations and plans for staging of oil spill response assets;
(i) A description of your efforts to minimize impacts of your exploratory drilling operations on local community infrastructure, including but not limited to housing, energy supplies, and services; and
(j) A description of whether and to what extent your project will rely on local community workforce and spill cleanup response capacity.
(a)
(1) Four copies that contain all required information (proprietary copies);
(2) Eight copies for public distribution (public information copies) that omit information that you assert is exempt from disclosure under the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the implementing regulations (43 CFR part 2); and
(3) Any additional copies that may be necessary to facilitate review of the IOP, EP, DPP, or DOCD by certain affected States and other reviewing entities.
(b)
(c)
(a)
(c) If you propose exploration activities on the Arctic OCS, the following planning information must also accompany your EP:
(1)
(2)
(i) A description of how you will respond to and manage ice hazards and weather events;
(ii) Your ice and weather alert procedures;
(iii) Your procedures and thresholds for activating your ice and weather management system(s); and
(iv) Confirmation that you will operate ice and weather management
(3)
(4)
(5)
(6)
(i) The completion of on-site operations, which is contingent upon your capability in terms of equipment and procedures to manage and mitigate risks associated with Arctic OCS conditions; and
(ii) The termination of drilling operations consistent with the relief rig planning requirements under § 250.472 of this title and with your estimated timeframe under paragraph (c)(4) of this section for completion of relief well operations.