[Federal Register Volume 73, Number 224 (Wednesday, November 19, 2008)]
[Rules and Regulations]
[Pages 69725-70237]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26213]



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Part II

Book 2 of 2 Books

Pages 69725-70238





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 405, 409, et al.



Medicare Program; Payment Policies Under the Physician Fee Schedule and 
Other Revisions to Part B for CY 2009; E-Prescribing Exemption for 
Computer-Generated Facsimile Transmissions; and Payment for Certain 
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
(DMEPOS); Final Rule

Federal Register / Vol. 73, No. 224 / Wednesday, November 19, 2008 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 409, 410, 411, 413, 414, 415, 423, 424, 485, 486, 
and 489

[CMS-1403-FC] [CMS-1270-F2]
RINs 0938-AP18, 0938-AN14


Medicare Program; Payment Policies Under the Physician Fee 
Schedule and Other Revisions to Part B for CY 2009; E-Prescribing 
Exemption for Computer-Generated Facsimile Transmissions; and Payment 
for Certain Durable Medical Equipment, Prosthetics, Orthotics, and 
Supplies (DMEPOS)

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period implements changes to the 
physician fee schedule and other Medicare Part B payment policies to 
ensure that our payment systems are updated to reflect changes in 
medical practice and the relative value of services. It also finalizes 
the calendar year (CY) 2008 interim relative value units (RVUs) and 
issues interim RVUs for new and revised codes for CY 2009. In addition, 
as required by the statute, it announces that the physician fee 
schedule update is 1.1 percent for CY 2009, the preliminary estimate 
for the sustainable growth rate for CY 2009 is 7.4 percent, and the 
conversion factor (CF) for CY 2009 is $36.0666. This final rule with 
comment period also implements or discusses certain provisions of the 
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). 
(See the Table of Contents for a listing of the specific issues 
addressed in this rule.)

DATES: Effective Date: This final rule with comment period is effective 
on January 1, 2009 except for amendments to Sec.  410.62 and Sec.  
411.351 which are effective July 1, 2009.
    Comment Date: Comments will be considered if we receive them at one 
of the addresses provided below, no later than 5 p.m. e.s.t. on 
December 29, 2008.

ADDRESSES: In commenting, please refer to file code CMS-1403-FC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions for 
``Comment or Submission'' and enter the filecode to find the document 
accepting comments.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1403-FC, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1403-FC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to either of the following addresses:

7500 Security Boulevard, Baltimore, MD 21244-1850; or

Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201.

    (Because access to the interior of the HHH 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.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by mailing your 
comments to the addresses provided at the end of the ``Collection of 
Information Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: 
    Pam West, (410) 786-2302, for issues related to practice expense.
    Rick Ensor, (410) 786-5617, for issues related to practice expense 
methodology.
    Stephanie Monroe, (410) 786-6864, for issues related to malpractice 
RVUs.
    Esther Markowitz, (410) 786-4595, for issues related to telehealth 
services.
    Craig Dobyski, (410) 786-4584, for issues related to geographic 
practice cost indices.
    Ken Marsalek, (410) 786-4502, for issues related to the multiple 
procedure payment reduction for diagnostic imaging.
    Catherine Jansto, (410) 786-7762, or Cheryl Gilbreath, (410) 786-
5919, for issues related to payment for covered outpatient drugs and 
biologicals.
    Edmund Kasaitis, (410) 786-0477, or Bonny Dahm, (410) 786-4006, for 
issues related to the Competitive Acquisition Program (CAP) for Part B 
drugs.
    Corinne Axelrod, (410) 786-5620, for issues related to Health 
Professional Shortage Area Bonus Payments.
    Henry Richter, (410) 786-4562, for issues related to payments for 
end-stage renal disease facilities.
    Lisa Grabert, (410) 786-6827, for issues related to hospital-
acquired conditions and the Physician Resource Use Feedback Program.
    August Nemec, (410) 786-0612, for issues related to independent 
diagnostic testing facilities; enrollment issues; and the revision to 
the ``Appeals of CMS or CMS contractor Determinations When a Provider 
or Supplier Fails To Meet the Requirements for Medicare Billing 
Privileges'' final rule.
    Lisa Ohrin, (410) 786-4565, Kristin Bohl, (410) 786-8680, or Don 
Romano, (410) 786-1401, for issues related to anti-markup provisions 
and physician self-referral (incentive payment and shared savings 
programs).
    Diane Stern, (410) 786-1133, for issues related to the quality 
reporting system for physician payment for CY 2009.
    Andrew Morgan, (410) 786-2543, for issues related to the e-
prescribing exemption for computer-generated fax transmissions.
    Terri Harris, (410) 786-6830, for issues related to payment for 
comprehensive outpatient rehabilitation facilities (CORFs).
    Lauren Oviatt, (410) 786-4683, for issues related to CORF 
conditions of coverage.
    Trisha Brooks, (410) 786-4561, for issues related to personnel 
standards for portable x-ray suppliers.
    David Walczak, (410) 786-4475, for issues related to beneficiary 
signature for nonemergency ambulance transport services.
    Jean Stiller, (410) 786-0708, for issues related to the prohibition 
concerning providers of sleep tests
    Mark Horney, (410) 786-4554, for issues related to the solicitation 
for comments and data pertaining to physician organ retrieval services.
    Regina Walker-Wren, (410) 786-9160, for information concerning 
educational

[[Page 69727]]

requirements for nurse practitioners and clinical nurse specialists.
    Randy Throndset, (410) 786-0131, for information concerning 
physician certification and recertification for Medicare home health 
services.
    William Larson, (410) 786-4639, for coverage issues related to the 
initial preventive physical examination.
    Cathleen Scally, (410) 786-5714, for payment issues related to the 
initial preventive physical examination.
    Dorothy Shannon, (410) 786-3396, for issues related to speech 
language pathology.
    Kendra Hedgebeth, (410) 786-4644, or Gina Longus, (410) 786-1287, 
for issues related to low vision aids.
    Christopher Molling, (410) 786-6399, or Anita Greenberg, (410) 786-
4601, for issues related to the repeal to transfer of title for oxygen 
equipment.
    Karen Jacobs, (410) 786-2173, or Hafsa Bora, (410) 786-7899, for 
issues related to the therapeutic shoes fee schedule.
    Diane Milstead, (410) 786-3355, or Gaysha Brooks, (410) 786-9649, 
for all other issues.

SUPPLEMENTARY INFORMATION:
    Submitting Comments: We welcome comments from the public on the 
following issues:
     The Exception for Incentive Payment and Shared Savings 
Programs (Sec.  411.357(x)) in section II.N.1. of this final rule with 
comment period;
     Sections 131(c), 144(b), and 149 of the MIPPA as described 
in sections III.C., III.J., and III.M. of this final rule with comment 
period.
     Interim Relative Value Units (RVUs) for selected codes 
identified in Addendum C;
     Information on pricing for items in Tables 2 through 5;
     Issues related to the Physician Resource Use Feedback 
Program described in section II.S.6. of this final rule with comment 
period; and
     The physician self-referral designated health services 
(DHS) codes listed in Tables 29, 30, and 31. You can assist us by 
referencing the file code [CMS-1403-FC] and the section heading on 
which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a table of contents. Some of the issues 
discussed in this preamble affect the payment policies, but do not 
require changes to the regulations in the Code of Federal Regulations 
(CFR). Information on the regulation's impact appears throughout the 
preamble, and therefore, is not exclusively in section XVI. of this 
final rule with comment period.

I. Background
    A. Development of the Relative Value System
    1. Work RVUs
    2. Practice Expense Relative Value Units (PE RVUs)
    3. Resource-Based Malpractice RVUs
    4. Refinements to the RVUs
    5. Adjustments to RVUs are Budget Neutral
    B. Components of the Fee Schedule Payment Amounts
    C. Most Recent Changes to Fee Schedule
II. Provisions of the Proposed Regulation
    A. Resource-Based Practice Expense (PE) Relative Value Units 
(RVUs)
    1. Current Methodology
    2. PE Proposals for CY 2009
    B. Geographic Practice Cost Indices (GPCIs): Locality Discussion
    C. Malpractice RVUs (TC/PC issue)
    D. Medicare Telehealth Services
    E. Specific Coding Issues Related to Physician Fee Schedule
    1. Payment for Preadministration-Related Services for 
Intravenous Infusion of Immune Globulin
    2. Multiple Procedure Payment Reduction for Diagnostic Imaging
    3. HCPCS Code for Prostate Saturation Biopsies
    F. Part B Drug Payment
    1. Average Sales Price (ASP) Issues
    2. Competitive Acquisition Program (CAP) Issues
    G. Application of the HPSA Bonus Payment
    H. Provisions Related to Payment for Renal Dialysis Services 
Furnished by End-Stage Renal Disease (ESRD) Facilities
    I. Independent Diagnostic Testing Facility (IDTF) Issues
    J. Physician and Nonphysician Practitioner (NPP) Enrollment 
Issues
    K. Amendment to the Exemption for Computer-Generated Facsimile 
(FAX) Transmissions From the National Council for Prescription Drug 
Programs (NCPDP) SCRIPT Standard for Transmitting Prescription and 
Certain Prescription-Related Information for Part D Covered Drugs 
Prescribed for Part D Eligible Individuals
    L. Comprehensive Outpatient Rehabilitation Facilities (CORF) and 
Rehabilitation Agency Issues
    M. Technical Corrections for Therapy-Related Issues
    N. Physician Self-Referral and Anti-Markup Issues
    1. Exception for Incentive Payment and Shared Savings Programs 
(Sec.  411.357(x))
    2. Changes to Reassignment Rules Related to Diagnostic Tests 
(Anti-Markup Provisions)
    O1. Physician Quality Reporting Initiative
    O2. Electronic Prescribing (E-Prescribing) Incentive Program
    P. Discussion of Chiropractic Services Demonstration
    Q. Educational Requirements for Nurse Practitioners and Clinical 
Nurse Specialists
    R. Portable X-Ray Issue
    S. Other Issues
    1. Physician Certification (G0180) and Recertification (G0179) 
for Medicare-Covered Home Health Services Under a Home Health Plan 
of Care (POC) in the Home Health Prospective Payment System (HH PPS)
    2. Prohibition Concerning Payment of Continuous Positive Airway 
Pressure (CPAP) Devices
    3. Beneficiary Signature for Nonemergency Ambulance Transport 
Services
    4. Solicitation of Comments and Data Pertaining to Physician 
Organ Retrieval Services
    5. Revision to the ``Appeals of CMS or CMS contractor 
Determinations When a Provider or Supplier Fails To Meet the 
Requirements for Medicare Billing Privileges'' Final Rule
    6. Physician Resource Use Feedback Program
    T. Electronic Prescribing (E-Prescribing) Incentive Program
III. Medicare Improvements for Patients and Providers Act of 2008 
(MIPPA) Provisions
    A. Section 101: Improvements to Coverage of Preventive Services
    B. Section 131: Physician Payment, Efficiency, and Quality 
Improvements
    C. Section 131(c): Physician Resource Use Feedback Program
    D. Section 132: Incentives for Electronic Prescribing
    E. Section 133(b): Expanding Access to Primary Care Services
    F. Section 134: Extension of Floor on Medicare Work Geographic 
Adjustment Under the Medicare Physician Fee Schedule
    G. Section 136: Extension of Treatment of Certain Physician 
Pathology Services Under Medicare
    H. Section 141: Extension of Exceptions Process for Medicare 
Therapy Caps

[[Page 69728]]

    I. Section 143: Speech-Language Pathology Services
    J. Section 144(b): Repeal of Transfer of Title for Oxygen 
Equipment
    K. Section 145: Clinical Laboratory Tests
    L. Section 146: Improved Access to Ambulance Services
    M. Section 149: Adding Certain Entities as Originating Sites for 
Payment of Telehealth Services
    N. Section 153: Renal Dialysis Provisions
IV. Potentially Misvalued Codes Under PFS
    A. Valuing Services Under the Physician Fee Schedule
    B. Requested Approaches for the AMA RUC To Utilize
    C. AMA RUC Review of Potentially Misvalued Codes
V. Refinement of Relative Value Units for Calendar Year 2009 and 
Response to Public Comments on Interim Relative Value Units for 2008
    A. Summary of Issues Discussed Related to the Adjustment of 
Relative Value Units
    B. Process for Establishing Work Relative Value Units for the 
Physician Fee Schedule
    C. Interim 2008 Codes
    D. Establishment of Interim Work Relative Value Units for New 
and Revised Physician's Current Procedural Terminology (CPT) Codes 
and New Healthcare Common Procedure Coding System Codes (HCPCS) for 
2009 (Includes Table Titled ``AMA RUC Recommendations and CMS' 
Decisions for New and Revised 2009 CPT Codes'')
    E. Discussion of Codes and AMA RUC Recommendations
    F. Additional Coding Issues
    G. Establishment of Interim PE RVUs for New and Revised 
Physician's Current Procedural Terminology (CPT) Codes and New 
Healthcare Common Procedure Coding System (HCPCS) Codes for 2009
VI. Physician Self-Referral Prohibition: Annual Update to the List 
of CPT/HCPCS Codes
    A. General
    B. Speech-Language Pathology Services
    C. Annual Update to the Code List
VII. Physician Fee Schedule Update for CY 2009
    A. Physician Fee Schedule Update
    B. The Percentage Change in the Medicare Economic Index (MEI)
    C. The Update Adjustment Factor (UAF)
VIII. Allowed Expenditures for Physicians' Services and the 
Sustainable Growth Rate (SGR)
    A. Medicare Sustainable Growth Rate
    B. Physicians' Services
    C. Preliminary Estimate of the SGR for 2009
    D. Revised Sustainable Growth Rate for 2008
    E. Calculation of 2009, 2008, and 2007 Sustainable Growth Rates
IX. Anesthesia and Physician Fee Schedule Conversion Factors for CY 
2009
    A. Physician Fee Schedule Conversion Factor
    B. Anesthesia Conversion Factor
X. Telehealth Originating Site Facility Fee Payment Amount Update
XI. Payment for Certain Durable Medical Equipment, Prosthetics, 
Orthotics, and Supplies (DMEPOS)--Services Excluded From Coverage
    A. Low Vision Aid Exclusion
    B. Replacement of Reasonable Charge Methodology by Fee Schedules 
for Therapeutic Shoes
XII. Provisions of the Final Rule
XIII. Waiver of Proposed Rulemaking and Delay in Effective Date
XIV. Collection of Information Requirements
XV. Response to Comments
XVI. Regulatory Impact Analysis
Regulation Text
Addendum A--Explanation and Use of Addendum B
Addendum B--Relative Value Units and Related Information Used in 
Determining Medicare Payments for CY 2009
Addendum C--Codes With Interim RVUs
Addendum D--2009 Geographic Adjustment Factors (GAFs)
Addendum E--2009 Geographic Practice Cost Indices (GPCIs) by State 
and Medicare Locality
Addendum F--Multiple Procedure Payment Reduction Code List
Addendum G--CY 2009 ESRD Wage Index for Urban Areas Based on CBSA 
Labor Market Areas
Addendum H--CY 2009 ESRD Wage Index Based on CBSA Labor Market Areas 
for Rural Areas
Addendum I--CPT/HCPCS Imaging Codes Defined by Section 5102(b) of 
the DRA
Addendum J--List of CPT/HCPCS Codes Used To Define Certain 
Designated Health Services Under Section 1877 of the Social Security 
Act

Acronyms

    In addition, because of the many organizations and terms to which 
we refer by acronym in this final rule with comment period, we are 
listing these acronyms and their corresponding terms in alphabetical 
order below:

ACC American College of Cardiology
ACR American College of Radiology
AFROC Association of Freestanding Radiation Oncology Centers
AHA American Heart Association
AHRQ [HHS] Agency for Healthcare Research and Quality
AIDS Acquired immune deficiency syndrome
AMA American Medical Association
AMP Average manufacturer price
AOA American Osteopathic Association
ASC Ambulatory surgical center
ASP Average sales price
ASRT American Society of Radiologic Technologists
ASTRO American Society for Therapeutic Radiology and Oncology
ATA American Telemedicine Association
AWP Average wholesale price
BBA Balanced Budget Act of 1997 (Pub. L. 105-33)
BBRA [Medicare, Medicaid and State Child Health Insurance Program] 
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection 
Act of 2000 (Pub. L. 106-554)
BLS Bureau of Labor Statistics
BN Budget neutrality
CABG Coronary artery bypass graft
CAD Coronary artery disease
CAH Critical access hospital
CAHEA Committee on Allied Health Education and Accreditation
CAP Competitive acquisition program
CBSA Core-Based Statistical Area
CCHIT Certification Commission for Healthcare Information Technology
CEAMA Council on Education of the American Medical Association
CF Conversion factor
CfC Conditions for Coverage
CFR Code of Federal Regulations
CKD Chronic kidney disease
CLFS Clinical laboratory fee schedule
CMA California Medical Association
CMHC Community mental health center
CMP Civil money penalty
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CoP Condition of participation
CORF Comprehensive Outpatient Rehabilitation Facility
CPAP Continuous positive air pressure
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPI-U Consumer price index for urban customers
CPT [Physicians'] Current Procedural Terminology (4th Edition, 2002, 
copyrighted by the American Medical Association)
CRT Certified respiratory therapist
CSW Clinical social worker
CY Calendar year
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and 
supplies
DNP Doctor of Nursing Practice
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)
DSMT Diabetes self-management training
E/M Evaluation and management
EDI Electronic data interchange
EEG Electroencephalogram
EHR Electronic health record
EKG Electrocardiogram
EMG Electromyogram
EMTALA Emergency Medical Treatment and Active Labor Act
EOG Electro-oculogram
EPO Erythopoeitin
ESRD End-stage renal disease
FAX Facsimile
FDA Food and Drug Administration (HHS)
FFS Fee-for-service
FMS [Department of the Treasury's] Financial Management Service
FPLP Federal Payment Levy Program
FR Federal Register
GAF Geographic adjustment factor
GAO General Accounting Office
GPO Group purchasing organization
GPCI Geographic practice cost index
HAC Hospital-acquired conditions
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System

[[Page 69729]]

HH PPS Home Health Prospective Payment System
HHA Home health agency
HHRG Home health resource group
HHS [Department of] Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996 
(Pub. L. 104-191)
HIT Health information technology
HITSP Healthcare Information Technology Standards Panel
HIV Human immunodeficiency virus
HOPD Hospital outpatient department
HPSA Health Professional Shortage Area
HRSA Health Resources Services Administration (HHS)
ICF Intermediate care facilities
ICR Information collection requirement
IDTF Independent diagnostic testing facility
IFC Interim final rule with comment period
IPPS Inpatient prospective payment system
IRS Internal Revenue Service
IVIG Intravenous immune globulin
IWPUT Intra-service work per unit of time
JRCERT Joint Review Committee on Education in Radiologic Technology
MA Medicare Advantage
MA-PD Medicare Advantage-Prescription Drug Plans
MedCAC Medicare Evidence Development and Coverage Advisory Committee 
(formerly the Medicare Coverage Advisory Committee (MCAC))
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MIEA-TRHCA Medicare Improvements and Extension Act of 2006 (that is, 
Division B of the Tax Relief and Health Care Act of 2006 (TRHCA) 
(Pub. L. 109-432)
MIPPA Medicare Improvements for Patients and Providers Act of 2008 
(Pub. L. 110-275)
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (Pub. L. 108-173)
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 
110-173)
MNT Medical nutrition therapy
MP Malpractice
MPPR Multiple procedure payment reduction
MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539)
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MS-DRG Medicare Severity-Diagnosis related group
MSA Metropolitan statistical area
NCD National Coverage Determination
NCPDP National Council for Prescription Drug Programs
NDC National drug code
NISTA National Institute of Standards and Technology Act
NP Nurse practitioner
NPDB National Practitioner Data Bank
NPI National Provider Identifier
NPP Nonphysician practitioner
NPPES National Plan and Provider Enumeration System
NQF National Quality Forum
NRC Nuclear Regulatory Commission
NTTAA National Technology Transfer and Advancement Act of 1995 (Pub. 
L. 104-113)
NUBC National Uniform Billing Committee
OACT [CMS'] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
ODF Open door forum
OIG Office of Inspector General
OMB Office of Management and Budget
ONC [HHS'] Office of the National Coordinator for Health Information 
Technology
OPPS Outpatient prospective payment system
OSA Obstructive Sleep Apnea
OSCAR Online Survey and Certification and Reporting
P4P Pay for performance
PA Physician assistant
PC Professional component
PCF Patient compensation fund
PDP Prescription drug plan
PE Practice expense
PE/HR Practice expense per hour
PEAC Practice Expense Advisory Committee
PECOS Provider Enrollment, Chain, and Ownership System
PERC Practice Expense Review Committee
PFS Physician Fee Schedule
PHP Partial hospitalization program
PIM [Medicare] Program Integrity Manual
PLI Professional liability insurance
POA Present on admission
POC Plan of care
PPI Producer price index
PPS Prospective payment system
PPTA Plasma Protein Therapeutics Association
PQRI Physician Quality Reporting Initiative
PRA Paperwork Reduction Act
PSA Physician scarcity areas
PSG Polysomnography
PT Physical therapy
ResDAC Research Data Assistance Center
RFA Regulatory Flexibility Act
RIA Regulatory impact analysis
RN Registered nurse
RNAC Reasonable net acquisition cost
RRT Registered respiratory therapist
RUC [AMA's Specialty Society] Relative (Value) Update Committee
RVU Relative value unit
SBA Small Business Administration
SGR Sustainable growth rate
SLP Speech-language pathology
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled nursing facility
SOR System of record
SRS Stereotactic radiosurgery
TC Technical Component
TIN Tax identification number
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)
UPMC University of Pittsburgh Medical Center
USDE United States Department of Education
VBP Value-based purchasing
WAMP Widely available market price

I. Background

    Since January 1, 1992, Medicare has paid for physicians' services 
under section 1848 of the Social Security Act (the Act), ``Payment for 
Physicians' Services.'' The Act requires that payments under the 
physician fee schedule (PFS) be based on national uniform relative 
value units (RVUs) based on the relative resources used in furnishing a 
service. Section 1848(c) of the Act requires that national RVUs be 
established for physician work, practice expense (PE), and malpractice 
expense. Before the establishment of the resource-based relative value 
system, Medicare payment for physicians' services was based on 
reasonable charges.

A. Development of the Relative Value System

1. Work RVUs
    The concepts and methodology underlying the PFS were enacted as 
part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (Pub. L. 
101-239), and OBRA 1990, (Pub. L. 101-508). The final rule, published 
on November 25, 1991 (56 FR 59502), set forth the fee schedule for 
payment for physicians' services beginning January 1, 1992. Initially, 
only the physician work RVUs were resource-based, and the PE and 
malpractice RVUs were based on average allowable charges.
    The physician work RVUs established for the implementation of the 
fee schedule in January 1992 were developed with extensive input from 
the physician community. A research team at the Harvard School of 
Public Health developed the original physician work RVUs for most codes 
in a cooperative agreement with the Department of Health and Human 
Services (DHHS). In constructing the code-specific vignettes for the 
original physician work RVUs, Harvard worked with panels of experts, 
both inside and outside the Federal government, and obtained input from 
numerous physician specialty groups.
    Section 1848(b)(2)(B) of the Act specifies that the RVUs for 
anesthesia services are based on RVUs from a uniform relative value 
guide. We established a separate conversion factor (CF) for anesthesia 
services, and we continue to utilize time units as a factor in 
determining payment for these services. As a result, there is a 
separate payment methodology for anesthesia services.
    We establish physician work RVUs for new and revised codes based on 
recommendations received from the American Medical Association's (AMA) 
Specialty Society Relative Value Update Committee (RUC).
2. Practice Expense Relative Value Units (PE RVUs)
    Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 
103-432),

[[Page 69730]]

enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the 
Act and required us to develop resource-based PE RVUs for each 
physician's service beginning in 1998. We were to consider general 
categories of expenses (such as office rent and wages of personnel, but 
excluding malpractice expenses) comprising PEs.
    Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 
105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay 
implementation of the resource-based PE RVU system until January 1, 
1999. In addition, section 4505(b) of the BBA provided for a 4-year 
transition period from charge-based PE RVUs to resource-based RVUs.
    We established the resource-based PE RVUs for each physician's 
service in a final rule, published November 2, 1998 (63 FR 58814), 
effective for services furnished in 1999. Based on the requirement to 
transition to a resource-based system for PE over a 4-year period, 
resource-based PE RVUs did not become fully effective until 2002.
    This resource-based system was based on two significant sources of 
actual PE data: the Clinical Practice Expert Panel (CPEP) data; and the 
AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were 
collected from panels of physicians, practice administrators, and 
nonphysicians (for example, registered nurses (RNs)) nominated by 
physician specialty societies and other groups. The CPEP panels 
identified the direct inputs required for each physician's service in 
both the office setting and out-of-office setting. We have since 
refined and revised these inputs based on recommendations from the RUC. 
The AMA's SMS data provided aggregate specialty-specific information on 
hours worked and PEs.
    Separate PE RVUs are established for procedures that can be 
performed in both a nonfacility setting, such as a physician's office, 
and a facility setting, such as a hospital outpatient department. The 
difference between the facility and nonfacility RVUs reflects the fact 
that a facility typically receives separate payment from Medicare for 
its costs of providing the service, apart from payment under the PFS. 
The nonfacility RVUs reflect all of the direct and indirect PEs of 
providing a particular service.
    Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) 
(Pub. L. 106-113) directed the Secretary of Health and Human Services 
(the Secretary) to establish a process under which we accept and use, 
to the maximum extent practicable and consistent with sound data 
practices, data collected or developed by entities and organizations to 
supplement the data we normally collect in determining the PE 
component. On May 3, 2000, we published the interim final rule (65 FR 
25664) that set forth the criteria for the submission of these 
supplemental PE survey data. The criteria were modified in response to 
comments received, and published in the Federal Register (65 FR 65376) 
as part of a November 1, 2000 final rule. The PFS final rules published 
in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended 
the period during which we would accept these supplemental data through 
March 1, 2005.
    In CY 2007 PFS final rule with comment period (71 FR 69624), we 
revised the methodology for calculating PE RVUs beginning in CY 2007 
and provided for a 4-year transition for the new PE RVUs under this new 
methodology. We will continue to evaluate this policy and proposed 
necessary revisions through future rulemaking.
3. Resource-Based Malpractice (MP) RVUs
    Section 4505(f) of the BBA amended section 1848(c) of the Act 
requiring us to implement resource-based malpractice (MP) RVUs for 
services furnished on or after 2000. The resource-based MP RVUs were 
implemented in the PFS final rule published November 2, 1999 (64 FR 
59380). The MP RVUs were based on malpractice insurance premium data 
collected from commercial and physician-owned insurers from all the 
States, the District of Columbia, and Puerto Rico.
4. Refinements to the RVUs
    Section 1848(c)(2)(B)(i) of the Act requires that we review all 
RVUs no less often than every 5 years. The first 5-Year Review of the 
physician work RVUs was published on November 22, 1996 (61 FR 59489) 
and was effective in 1997. The second 5-Year Review was published in 
the CY 2002 PFS final rule with comment period (66 FR 55246) and was 
effective in 2002. The third 5-Year Review of physician work RVUs was 
published in the CY 2007 PFS final rule with comment period (71 FR 
69624) and was effective on January 1, 2007. (Note: Additional codes 
relating to the third 5-Year Review of physician work RVUs were 
addressed in the CY 2008 PFS final rule with comment period (72 FR 
66360).)
    In 1999, the AMA's RUC established the Practice Expense Advisory 
Committee (PEAC) for the purpose of refining the direct PE inputs. 
Through March 2004, the PEAC provided recommendations to CMS for over 
7,600 codes (all but a few hundred of the codes currently listed in the 
AMA's Current Procedural Terminology (CPT) codes). As part of the CY 
2007 PFS final rule with comment period (71 FR 69624), we implemented a 
new methodology for determining resource-based PE RVUs and are 
transitioning this over a 4-year period.
    In the CY 2005 PFS final rule with comment period (69 FR 66236), we 
implemented the first 5-Year Review of the MP RVUs (69 FR 66263).
5. Adjustments to RVUs are Budget Neutral
    Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments 
in RVUs for a year may not cause total PFS payments to differ by more 
than $20 million from what they would have been if the adjustments were 
not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, 
if adjustments to RVUs cause expenditures to change by more than $20 
million, we make adjustments to ensure that expenditures do not 
increase or decrease by more than $20 million.
    As explained in the CY 2007 PFS final rule with comment period (71 
FR 69624), due to the increase in work RVUs resulting from the third 5-
Year Review of physician work RVUs, we applied a separate budget 
neutrality (BN) adjustor to the work RVUs for services furnished during 
2007 and 2008. This approach is consistent with the method we used to 
make BN adjustments to reflect the changes in the PE RVUs.
    Section 133(b) of the MIPPA amends section 1848(c)(2)(B) of the Act 
to specify that, instead of continuing to apply the BN adjustor for the 
5-Year Review to work RVUs, the BN adjustment must be applied to the CF 
for years beginning with CY 2009. Further discussion of this MIPPA 
provision as it relates to the CY 2009 PFS can be found in sections 
III. and IX. of this final rule with comment period.

B. Components of the Fee Schedule Payment Amounts

    To calculate the payment for every physician's service, the 
components of the fee schedule (physician work, PE, and MP RVUs) are 
adjusted by a geographic practice cost index (GPCI). The GPCIs reflect 
the relative costs of physician work, PE, and malpractice insurance 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

[[Page 69731]]

is calculated by CMS' Office of the Actuary (OACT).
    The formula for calculating the Medicare fee schedule payment 
amount for a given service and fee schedule area can be expressed as:

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

C. Most Recent Changes to the Fee Schedule

    The CY 2008 PFS final rule with comment period (72 FR 66222) 
addressed certain provisions of Division B of the Tax Relief and Health 
Care Act of 2006--Medicare Improvements and Extension Act of 2006 (Pub. 
L. 109-432) (MIEA-TRHCA), and made other changes to Medicare Part B 
payment policy to ensure that our payment systems are updated to 
reflect changes in medical practice and the relative value of services. 
The CY 2008 PFS final rule with comment period also discussed 
refinements to resource-based PE RVUs; GPCI changes; malpractice RVUs; 
requests for additions to the list of telehealth services; several 
coding issues including additional codes from the 5-Year Review; 
payment for covered outpatient drugs and biologicals; the competitive 
acquisition program (CAP); clinical lab fee schedule issues; payment 
for end-stage renal dialysis (ESRD) services; performance standards for 
facilities; expiration of the physician scarcity area (PSA) bonus 
payment; conforming and clarifying changes for comprehensive outpatient 
rehabilitation facilities (CORFs); a process for updating the drug 
compendia; physician self-referral issues; beneficiary signature for 
ambulance transport services; durable medical equipment (DME) update; 
the chiropractic services demonstration; a Medicare economic index 
(MEI) data change; technical corrections; standards and requirements 
related to therapy services under Medicare Parts A and B; revisions to 
the ambulance fee schedule; the ambulance inflation factor for CY 2008; 
and an amendment to the e-prescribing exemption for computer-generated 
facsimile transmissions.
    We also finalized the calendar year (CY) 2007 interim RVUs and 
issued interim RVUs for new and revised procedure codes for CY 2008.
    In accordance with section 1848(d)(1)(E)(i) of the Act, we also 
announced that the PFS update for CY 2008 is -10.1 percent, the 
preliminary estimate for the sustainable growth rate (SGR) for CY 2008 
is -0.1 percent and the CF for CY 2008 is $34.0682. However, subsequent 
to publication of the CY 2008 PFS final rule with comment period, 
section 101(a) of the Medicare, Medicaid, and SCHIP Extension Act of 
2007 (Pub. L. 110-173) (MMSEA) was enacted on December 29, 2007 and 
provided for a 0.5 percent update to the conversion factor for the 
period beginning January 1, 2008 and ending June 30, 2008. For the 
first half of 2008 (that is, January through June), the Medicare PFS 
conversion factor was $38.0870. In the absence of legislation, the PFS 
conversion factor for the second half of 2008 would have been $34.0682, 
as announced in the PFS final rule with comment period for CY 2008. 
However, as a result of the enactment of the Medicare Improvements for 
Patients and Providers Act of 2008 (Pub. L. 110-275) (MIPPA), the 
Medicare PFS conversion factor remained at $38.0870 for the remaining 
portion of 2008 (July through December).

II. Provisions of the Final Rule With Comment Period

    In response to the CY 2009 PFS proposed rule (73 FR 38502) we 
received approximately 4,100 timely public comments. These included 
comments from individual physicians, health care workers, professional 
associations and societies, manufacturers and Congressmen. The majority 
of the comments addressed proposals related to independent diagnostic 
testing facilities, anti-markup, prohibition concerning providers of 
sleep tests, and the general impact of the proposed rule on specific 
specialties. To the extent that comments were outside the scope of the 
proposed rule, they are not addressed in this final rule with comment 
period.

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

    Practice expense (PE) is the portion of the resources used in 
furnishing the service that reflects the general categories of 
physician and practitioner expenses, such as office rent and personnel 
wages but excluding malpractice expenses, as specified in section 
1848(c)(1)(B) of the Act.
    Section 121 of the Social Security Amendments of 1994 (Pub. L. 103-
432), enacted on October 31, 1994, required CMS to develop a 
methodology for a resource-based system for determining PE RVUs for 
each physician's service. Until that time, PE RVUs were based on 
historical allowed charges. This legislation stated that the revised PE 
methodology must consider the staff, equipment, and supplies used in 
the provision of various medical and surgical services in various 
settings beginning in 1998. The Secretary has interpreted this to mean 
that Medicare payments for each service would be based on the relative 
PE resources typically involved with furnishing the service.
    The initial implementation of resource-based PE RVUs was delayed 
from January 1, 1998, until January 1, 1999, by section 4505(a) of the 
BBA. In addition, section 4505(b) of the BBA required that the new 
payment methodology be phased in over 4 years, effective for services 
furnished in CY 1999, and fully effective in CY 2002. The first step 
toward implementation of the statute was to adjust the PE values for 
certain services for CY 1998. Section 4505(d) of the BBA required that, 
in developing the resource-based PE RVUs, the Secretary must--
     Use, to the maximum extent possible, generally-accepted 
cost accounting principles that recognize all staff, equipment, 
supplies, and expenses, not solely those that can be linked to specific 
procedures and actual data on equipment utilization.
     Develop a refinement method to be used during the 
transition.
     Consider, in the course of notice and comment rulemaking, 
impact projections that compare new proposed payment amounts to data on 
actual physician PE.
    In CY 1999, we began the 4-year transition to resource-based PE 
RVUs utilizing a ``top-down'' methodology whereby we allocated 
aggregate specialty-specific practice costs to individual procedures. 
The specialty-specific PEs were derived from the American Medical 
Association's (AMA's) Socioeconomic Monitoring Survey (SMS). In 
addition, under section 212 of the BBRA, we established a process 
extending through March 2005 to supplement the SMS data with data 
submitted by a specialty. The aggregate PEs for a given specialty were 
then allocated to the services furnished by that specialty on the basis 
of the direct input data (that is, the staff time, equipment, and 
supplies) and work RVUs assigned to each CPT code.
    For CY 2007, we implemented a new methodology for calculating PE 
RVUs. Under this new methodology, we use the same data sources for 
calculating PE, but instead of using the ``top-down'' approach to 
calculate the direct PE RVUs, under which the aggregate direct and 
indirect costs for each specialty are allocated to each individual 
service, we now utilize a ``bottom-up'' approach to calculate the 
direct costs. Under the ``bottom up'' approach, we determine the direct 
PE by adding the costs of the resources (that is, the clinical staff, 
equipment, and supplies) typically required to provide each service. 
The

[[Page 69732]]

costs of the resources are calculated using the refined direct PE 
inputs assigned to each CPT code in our PE database, which are based on 
our review of recommendations received from the AMA's Relative Value 
Update Committee (RUC). For a more detailed explanation of the PE 
methodology see the June 29, 2006 proposed notice (71 FR 37242) and the 
CY 2007 PFS final rule with comment period (71 FR 69629).
1. Current Methodology
a. Data Sources for Calculating Practice Expense
    The AMA's SMS survey data and supplemental survey data from the 
specialties of cardiothoracic surgery, vascular surgery, physical and 
occupational therapy, independent laboratories, allergy/immunology, 
cardiology, dermatology, gastroenterology, radiology, independent 
diagnostic testing facilities (IDTFs), radiation oncology, and urology 
are used to develop the PE per hour (PE/HR) for each specialty. For 
those specialties for which we do not have PE/HR, the appropriate PE/HR 
is obtained from a crosswalk to a similar specialty.
    The AMA developed the SMS survey in 1981 and discontinued it in 
1999. Beginning in 2002, we incorporated the 1999 SMS survey data into 
our calculation of the PE RVUs, using a 5-year average of SMS survey 
data. (See the CY 2002 PFS final rule with comment period (66 FR 
55246)). The SMS PE survey data are adjusted to a common year, 2005. 
The SMS data provide the following six categories of PE costs:
     Clinical payroll expenses, which are payroll expenses 
(including fringe benefits) for nonphysician clinical personnel.
     Administrative payroll expenses, which are payroll 
expenses (including fringe benefits) for nonphysician personnel 
involved in administrative, secretarial, or clerical activities.
     Office expenses, which include expenses for rent, mortgage 
interest, depreciation on medical buildings, utilities, and telephones.
     Medical material and supply expenses, which include 
expenses for drugs, x-ray films, and disposable medical products.
     Medical equipment expenses, which include depreciation, 
leases, and rent of medical equipment used in the diagnosis or 
treatment of patients.
     All other expenses, which include expenses for legal 
services, accounting, office management, professional association 
memberships, and any professional expenses not previously mentioned in 
this section.
    In accordance with section 212 of the BBRA, we established a 
process to supplement the SMS data for a specialty with data collected 
by entities and organizations other than the AMA (that is, those 
entities and organizations representing the specialty itself). (See the 
Criteria for Submitting Supplemental Practice Expense Survey Data 
interim final rule with comment period (65 FR 25664)). Originally, the 
deadline to submit supplementary survey data was through August 1, 
2001. In the CY 2002 PFS final rule (66 FR 55246), the deadline was 
extended through August 1, 2003. To ensure maximum opportunity for 
specialties to submit supplementary survey data, we extended the 
deadline to submit surveys until March 1, 2005 in the Revisions to 
Payment Policies Under the Physician Fee Schedule for CY 2004 final 
rule with comment period (68 FR 63196) (hereinafter referred to as CY 
2004 PFS final rule with comment period).
    The direct cost data for individual services were originally 
developed by the Clinical Practice Expert Panels (CPEP). The CPEP data 
include the supplies, equipment, and staff times specific to each 
procedure. The CPEPs consisted of panels of physicians, practice 
administrators, and nonphysicians (for example, RNs) who were nominated 
by physician specialty societies and other groups. There were 15 CPEPs 
consisting of 180 members from more than 61 specialties and 
subspecialties. Approximately 50 percent of the panelists were 
physicians.
    The CPEPs identified specific inputs involved in each physician's 
service provided in an office or facility setting. The inputs 
identified were the quantity and type of nonphysician labor, medical 
supplies, and medical equipment.
    In 1999, the AMA's RUC established the PEAC. From 1999 to March 
2004, the PEAC, a multi-specialty committee, reviewed the original CPEP 
inputs and provided us with recommendations for refining these direct 
PE inputs for existing CPT codes. Through its last meeting in March 
2004, the PEAC provided recommendations for over 7,600 codes which we 
have reviewed and in most instances have accepted. As a result, the 
current PE inputs differ markedly from those originally recommended by 
the CPEPs. The PEAC was replaced by the Practice Expense Review 
Committee (PERC) and now these PE-related activities are addressed by 
the AMA RUC PE subcommittee.
b. Allocation of PE to Services
    The aggregate level specialty-specific PEs are derived from the 
AMA's SMS survey and supplementary survey data. To establish PE RVUs 
for specific services, it is necessary to establish the direct and 
indirect PE associated with each service.
    (i) Direct costs. The direct costs are determined by adding the 
costs of the resources (that is, the clinical staff, equipment, and 
supplies) typically required to provide the service. The costs of these 
resources are calculated from the refined direct PE inputs in our PE 
database. These direct inputs are then scaled to the current aggregate 
pool of direct PE RVUs. The aggregate pool of direct PE RVUs can be 
derived using the following formula: (PE RVUs x physician CF) x 
(average direct percentage from SMS/(Supplemental PE/HR data)).
    (ii) Indirect costs. The SMS and supplementary survey data are the 
source for the specialty-specific aggregate indirect costs used in our 
PE calculations. We then allocate the indirect costs to the code level 
on the basis of the direct costs specifically associated with a code 
and the maximum of either the clinical labor costs or the physician 
work RVUs. For calculation of the 2009 PE RVUs, we use the 2007 
procedure-specific utilization data crosswalked to 2009 services. To 
arrive at the indirect PE costs--
     We apply a specialty-specific indirect percentage factor 
to the direct expenses to recognize the varying proportion that 
indirect costs represent of total costs by specialty. For a given 
service, the specific indirect percentage factor to apply to the direct 
costs for the purpose of the indirect allocation is calculated as the 
weighted average of the ratio of the indirect to direct costs (based on 
the survey data) for the specialties that furnish the service. For 
example, if a service is furnished by a single specialty with indirect 
PEs that were 75 percent of total PEs, the indirect percentage factor 
to apply to the direct costs for the purposes of the indirect 
allocation would be (0.75/0.25) = 3.0. The indirect percentage factor 
is then applied to the service level adjusted indirect PE allocators.
     We use the specialty-specific PE/HR from the SMS survey 
data, as well as the supplemental surveys for cardiothoracic surgery, 
vascular surgery, physical and occupational therapy, independent 
laboratories, allergy/immunology, cardiology, dermatology, radiology, 
gastroenterology, IDTFs, radiation oncology, and urology. (Note: For 
radiation oncology, the data represent

[[Page 69733]]

the combined survey data from the American Society for Therapeutic 
Radiology and Oncology (ASTRO) and the Association of Freestanding 
Radiation Oncology Centers (AFROC)). As discussed in the CY 2008 PFS 
final rule with comment period (72 FR 66233), the PE/HR survey data for 
radiology is weighted by practice size. We incorporate this PE/HR into 
the calculation of indirect costs using an index which reflects the 
relationship between each specialty's indirect scaling factor and the 
overall indirect scaling factor for the entire PFS. For example, if a 
specialty had an indirect practice cost index of 2.00, this specialty 
would have an indirect scaling factor that was twice the overall 
average indirect scaling factor. If a specialty had an indirect 
practice cost index of 0.50, this specialty would have an indirect 
scaling factor that was half the overall average indirect scaling 
factor.
     When the clinical labor portion of the direct PE RVU is 
greater than the physician work RVU for a particular service, the 
indirect costs are allocated based upon the direct costs and the 
clinical labor costs. For example, if a service has no physician work 
and 1.10 direct PE RVUs, and the clinical labor portion of the direct 
PE RVUs is 0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65 
clinical labor portions of the direct PE RVUs to allocate the indirect 
PE for that service.
c. Facility/Nonfacility Costs
    Procedures that can be furnished in a physician's office as well as 
in a hospital or facility setting have two PE RVUs: facility and 
nonfacility. The nonfacility setting includes physicians' offices, 
patients' homes, freestanding imaging centers, and independent 
pathology labs. Facility settings include hospitals, ambulatory 
surgical centers (ASCs), and skilled nursing facilities (SNFs). The 
methodology for calculating PE RVUs is the same for both facility and 
nonfacility RVUs, but is applied independently to yield two separate PE 
RVUs. Because the PEs for services provided in a facility setting are 
generally included in the payment to the facility (rather than the 
payment to the physician under the PFS), the PE RVUs are generally 
lower for services provided in the facility setting.
d. Services With Technical Components (TCs) and Professional Components 
(PCs)
    Diagnostic services are generally comprised of two components: a 
professional component (PC) and a technical component (TC), both of 
which may be performed independently or by different providers. When 
services have TCs, PCs, and global components that can be billed 
separately, the payment for the global component equals the sum of the 
payment for the TC and PC. This is a result of using a weighted average 
of the ratio of indirect to direct costs across all the specialties 
that furnish the global components, TCs, and PCs; that is, we apply the 
same weighted average indirect percentage factor to allocate indirect 
expenses to the global components, PCs, and TCs for a service. (The 
direct PE RVUs for the TC and PC sum to the global under the bottom-up 
methodology.)
e. Transition Period
    As discussed in the CY 2007 PFS final rule with comment period (71 
FR 69674), we are implementing the change in the methodology for 
calculating PE RVUs over a 4-year period. During this transition 
period, the PE RVUs will be calculated on the basis of a blend of RVUs 
calculated using our methodology described previously in this section 
(weighted by 25 percent during CY 2007, 50 percent during CY 2008, 75 
percent during CY 2009, and 100 percent thereafter), and the CY 2006 PE 
RVUs for each existing code. PE RVUs for codes that are new during this 
period will be calculated using only the current PE methodology and 
will be paid at the fully transitioned rate.
f. PE RVU Methodology
    The following is a description of the PE RVU methodology.
(i) Setup File
    First, we create a setup file for the PE methodology. The setup 
file contains the direct cost inputs, the utilization for each 
procedure code at the specialty and facility/nonfacility place of 
service level, and the specialty-specific survey PE per physician hour 
data.
(ii) Calculate the Direct Cost PE RVUs
    Sum the costs of each direct input.
    Step 1: Sum the direct costs of the inputs for each service. The 
direct costs consist of the costs of the direct inputs for clinical 
labor, medical supplies, and medical equipment. The clinical labor cost 
is the sum of the cost of all the staff types associated with the 
service; it is the product of the time for each staff type and the wage 
rate for that staff type. The medical supplies cost is the sum of the 
supplies associated with the service; it is the product of the quantity 
of each supply and the cost of the supply. The medical equipment cost 
is the sum of the cost of the equipment associated with the service; it 
is the product of the number of minutes each piece of equipment is used 
in the service and the equipment cost per minute. The equipment cost 
per minute is calculated as described at the end of this section.
    Apply a BN adjustment to the direct inputs.
    Step 2: Calculate the current aggregate pool of direct PE costs. To 
do this, multiply the current aggregate pool of total direct and 
indirect PE costs (that is, the current aggregate PE RVUs multiplied by 
the CF) by the average direct PE percentage from the SMS and 
supplementary specialty survey data.
    Step 3: Calculate the aggregate pool of direct costs. To do this, 
for all PFS services, sum the product of the direct costs for each 
service from Step 1 and the utilization data for that service.
    Step 4: Using the results of Step 2 and Step 3 calculate a direct 
PE BN adjustment so that the aggregate direct cost pool does not exceed 
the current aggregate direct cost pool and apply it to the direct costs 
from Step 1 for each service.
    Step 5: Convert the results of Step 4 to an RVU scale for each 
service. To do this, divide the results of Step 4 by the Medicare PFS 
CF.
(iii) Create the Indirect PE RVUs
    Create indirect allocators.
    Step 6: Based on the SMS and supplementary specialty survey data, 
calculate direct and indirect PE percentages for each physician 
specialty.
    Step 7: Calculate direct and indirect PE percentages at the service 
level by taking a weighted average of the results of Step 6 for the 
specialties that furnish the service. Note that for services with TCs 
and PCs we are calculating the direct and indirect percentages across 
the global components, PCs, and TCs. That is, the direct and indirect 
percentages for a given service (for example, echocardiogram) do not 
vary by the PC, TC and global component.
    Step 8: Calculate the service level allocators for the indirect PEs 
based on the percentages calculated in Step 7. The indirect PEs are 
allocated based on the three components: the direct PE RVU, the 
clinical PE RVU, and the work RVU.
    For most services the indirect allocator is: indirect percentage * 
(direct PE RVU/direct percentage) + work RVU.
    There are two situations where this formula is modified:
     If the service is a global service (that is, a service 
with global, professional, and technical components), then the indirect 
allocator is: indirect percentage * (direct PE RVU/direct percentage) + 
clinical PE RVU + work RVU.

[[Page 69734]]

     If the clinical labor PE RVU exceeds the work RVU (and the 
service is not a global service), then the indirect allocator is: 
indirect percentage * (direct PE RVU/direct percentage) + clinical PE 
RVU.
    (Note: For global services, the indirect allocator is based on both 
the work RVU and the clinical labor PE RVU. We do this to recognize 
that, for the professional service, indirect PEs will be allocated 
using the work RVUs, and for the TC service, indirect PEs will be 
allocated using the direct PE RVU and the clinical labor PE RVU. This 
also allows the global component RVUs to equal the sum of the PC and TC 
RVUs.)
    For presentation purposes in the examples in Table 1, the formulas 
were divided into two parts for each service. The first part does not 
vary by service and is the indirect percentage * (direct PE RVU/direct 
percentage). The second part is either the work RVU, clinical PE RVU, 
or both depending on whether the service is a global service and 
whether the clinical PE RVU exceeds the work RVU (as described earlier 
in this step.)
    Apply a BN adjustment to the indirect allocators.
    Step 9: Calculate the current aggregate pool of indirect PE RVUs by 
multiplying the current aggregate pool of PE RVUs by the average 
indirect PE percentage from the physician specialty survey data. This 
is similar to the Step 2 calculation for the direct PE RVUs.
    Step 10: Calculate an aggregate pool of indirect PE RVUs for all 
PFS services by adding the product of the indirect PE allocators for a 
service from Step 8 and the utilization data for that service. This is 
similar to the Step 3 calculation for the direct PE RVUs.
    Step 11: Using the results of Step 9 and Step 10, calculate an 
indirect PE adjustment so that the aggregate indirect allocation does 
not exceed the available aggregate indirect PE RVUs and apply it to 
indirect allocators calculated in Step 8. This is similar to the Step 4 
calculation for the direct PE RVUs.
    Calculate the Indirect Practice Cost Index.
    Step 12: Using the results of Step 11, calculate aggregate pools of 
specialty-specific adjusted indirect PE allocators for all PFS services 
for a specialty by adding the product of the adjusted indirect PE 
allocator for each service and the utilization data for that service.
    Step 13: Using the specialty-specific indirect PE/HR data, 
calculate specialty-specific aggregate pools of indirect PE for all PFS 
services for that specialty by adding the product of the indirect PE/HR 
for the specialty, the physician time for the service, and the 
specialty's utilization for the service.
    Step 14: Using the results of Step 12 and Step 13, calculate the 
specialty-specific indirect PE scaling factors as under the current 
methodology.
    Step 15: Using the results of Step 14, calculate an indirect 
practice cost index at the specialty level by dividing each specialty-
specific indirect scaling factor by the average indirect scaling factor 
for the entire PFS.
    Step 16: Calculate the indirect practice cost index at the service 
level to ensure the capture of all indirect costs. Calculate a weighted 
average of the practice cost index values for the specialties that 
furnish the service. (Note: For services with TCs and PCs, we calculate 
the indirect practice cost index across the global components, PCs, and 
TCs. Under this method, the indirect practice cost index for a given 
service (for example, echocardiogram) does not vary by the PC, TC and 
global component.)
    Step 17: Apply the service level indirect practice cost index 
calculated in Step 16 to the service level adjusted indirect allocators 
calculated in Step 11 to get the indirect PE RVU.
(iv) Calculate the Final PE RVUs
    Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs 
from Step 17.
    Step 19: Calculate and apply the final PE BN adjustment by 
comparing the results of Step 18 to the current pool of PE RVUs. This 
final BN adjustment is required primarily because certain specialties 
are excluded from the PE RVU calculation for rate-setting purposes, but 
all specialties are included for purposes of calculating the final BN 
adjustment. (See ``Specialties excluded from rate-setting calculation'' 
below in this section.)
(v) Setup File Information
     Specialties excluded from rate-setting calculation: For 
the purposes of calculating the PE RVUs, we exclude certain specialties 
such as midlevel practitioners paid at a percentage of the PFS, 
audiology, and low volume specialties from the calculation. These 
specialties are included for the purposes of calculating the BN 
adjustment.
     Crosswalk certain low volume physician specialties: 
Crosswalk the utilization of certain specialties with relatively low 
PFS utilization to the associated specialties.
     Physical therapy utilization: Crosswalk the utilization 
associated with all physical therapy services to the specialty of 
physical therapy.
     Identify professional and technical services not 
identified under the usual TC and 26 modifiers: Flag the services that 
are PC and TC services, but do not use TC and 26 modifiers (for 
example, electrocardiograms). This flag associates the PC and TC with 
the associated global code for use in creating the indirect PE RVU. For 
example, the professional service code 93010 is associated with the 
global code 93000.
     Payment modifiers: Payment modifiers are accounted for in 
the creation of the file. For example, services billed with the 
assistant at surgery modifier are paid 16 percent of the PFS amount for 
that service; therefore, the utilization file is modified to only 
account for 16 percent of any service that contains the assistant at 
surgery modifier.
     Work RVUs: The setup file contains the work RVUs from this 
final rule.
(vi) Equipment Cost per Minute
    The equipment cost per minute is calculated as:

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

Where:

minutes per year = maximum minutes per year if usage were continuous 
(that is, usage = 1); 150,000 minutes.
usage = equipment utilization assumption; 0.5.
price = price of the particular piece of equipment.
interest rate = 0.11.
life of equipment = useful life of the particular piece of 
equipment.
maintenance = factor for maintenance; 0.05.
    Note: To illustrate the PE calculation, in Table 1 we have used 
the conversion factor (CF) of $36.0666 which is the CF effective 
January 1, 2009 as published in this final rule.


[[Page 69735]]



                                                                                  Table 1--Calculation of PE RVUs Under Methodology for Selected Codes
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            99213  Office     33533  CABG,                                                             93000  ECG,       93005  ECG,       93010  ECG,
                                       Step              Source             Formula          visit, est     arterial  single   71020  Chest x-  71020TC  Chest x- 7102026  Chest x-     complete           tracing           report
                                                                                             nonfacility        facility       ray nonfacility   ray nonfacility   ray nonfacility     nonfacility       nonfacility       nonfacility
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Labor cost (Lab)...........  Step 1..........  AMA...............  .................            $13.32            $77.52             $5.74             $5.74               $--             $6.12             $6.12               $--
(2) Suppy cost (Sup)...........  Step 1..........  AMA...............  .................             $2.98             $7.34             $3.39             $3.39               $--             $1.19             $1.19               $--
(3) Equipment cost (Eqp).......  Step 1..........  AMA...............  .................             $0.19             $0.65             $8.17             $8.17               $--             $0.12             $0.12               $--
(4) Direct cost (Dir)..........  Step 1..........  ..................  =(1)+(2)+(3).....            $16.50            $85.51            $17.31            $17.31               $--             $7.43             $7.43               $--
(5) Direct adjustment (Dir Adj)  Steps 2-4.......  See footnote*.....  .................             0.625             0.625             0.625             0.625             0.625             0.625             0.625             0.625
(6) Adjusted labor.............  Steps 2-4.......  =Lab*Dir Adj......  =(1)*(5).........             $8.33            $48.48             $3.59             $3.59               $--             $3.83             $3.83               $--
(7) Adjusted supplies..........  Steps 2-4.......  =Sup*Dir Adj......  =(2)*(5).........             $1.87             $4.59             $2.12             $2.12               $--             $0.75             $0.75               $--
(8) Adjusted equipment.........  Steps 2-4.......  =Eqp*Dir Adj......  =(3)*(5).........             $0.12             $0.41             $5.11             $5.11               $--             $0.07             $0.07               $--
(9) Adjusted direct............  Steps 2-4.......  ..................  =(6)+(7)+(8).....            $10.32            $53.48            $10.82            $10.82               $--             $4.65             $4.65               $--
(10) Conversion Factor (CF)....  Step 5..........  MFS...............  .................           36.0666           36.0666           36.0666           36.0666           36.0666           36.0666           36.0666           36.0666
(11) Adj. labor cost converted.  Step 5..........  =(Lab*Dir Adj)/CF.  =(6)/(10)........              0.23              1.34              0.10              0.10                --              0.11              0.11                --
(12) Adj. supply cost converted  Step 5..........  =(Sup*Dir Adj)/CF.  =(7)/(10)........              0.05              0.13              0.06              0.06                --              0.02              0.02                --
(13) Adj. equip cost converted.  Step 5..........  =(Eqp*Dir Adj)/CF.  =(8)/(10)........              0.00              0.01              0.14              0.14                --              0.00              0.00                --
(14) Adj. direct cost converted  Step 5..........  ..................  =(11)+(12)+(13)..              0.29              1.48              0.30              0.30                --              0.13              0.13                --
(15) Wrk RVU...................  Setup File......  MFS...............  .................              0.92             33.64              0.22                --              0.22              0.17                --              0.17
(16) Dir--pct..................  Steps 6, 7......  Surveys...........  .................             33.8%             32.6%             40.7%             40.7%             40.7%             37.7%             37.7%             37.7%
(17) Ind--pct..................  Steps 6, 7......  Surveys...........  .................             66.2%             67.4%             59.3%             59.3%             59.3%             62.3%             62.3%             62.3%
(18) Ind. Alloc. formula (1st    Step 8..........  See Step 8........  .................  ((14)/(16))*(17)  ((14)/(16))*(17)  ((14)/(16))*(17)  ((14)/(16))*(17)  ((14)/(16))*(17)  ((14)/(16))*(17)  ((14)/(16))*(17)  ((14)/(16))*(17)
 part).
(19) Ind. Alloc. (1st part)....  Step 8..........  ..................  See (18).........              0.56              3.06              0.44              0.44                --              0.21              0.21                --
(20) Ind. Alloc. formulas (2nd   Step 8..........  ..................  See Step 8.......              (15)              (15)         (15)+(11)              (11)              (15)         (15)+(11)              (11)              (15)
 part).
(21) Ind. Alloc. (2nd part)....  Step 8..........  ..................  See (20).........              0.92             33.64              0.32              0.10              0.22              0.28              0.11              0.17
(22) Indirect Allocator          Step 8..........  ..................  =(19)+(21).......              1.48             36.70              0.76              0.54              0.22              0.49              0.32              0.17
 (1st+2nd).
(23) Indirect Adjustment (Ind    Steps 9-11......  See footnote**....  .................             0.337             0.337             0.337             0.337             0.337             0.337             0.337             0.337
 Adj).
(24) Adjusted Indirect           Steps 9-11......  =Ind Alloc * Ind    .................              0.50             12.37              0.26              0.18              0.07              0.16              0.11              0.06
 Allocator.                                         Adj.
(25) Ind.Practice Cost Index     Steps 12-16.....  See Steps 12-16 =   .................             0.973             0.976             1.087             1.087             1.087             1.237             1.237             1.237
 (PCI).                                             Adj. Ind.
(26) Adjusted Indirect.........  Step 17.........  Alloc*PCI.........  =(24)*(25).......              0.49             12.07              0.28              0.20              0.08              0.20              0.13              0.07
(27) PE RVU....................  Steps 18-19.....  =(Adj Dir+Adj Ind)  =((14)+(26))                   0.77             13.44              0.57              0.49              0.08              0.33              0.26              0.07
                                                    *budn.              *budn.
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 69736]]

2. PE Proposals for CY 2009
a. RUC Recommendations for Direct PE Inputs
    In the CY 2009 PFS proposed rule, we agreed with the AMA RUC PE 
recommendations for 23 codes except for the inclusion of the clinical 
staff for quality-related activities for 8 immunization injection 
services (73 FR 38512). The AMA RUC recommendations and other PE issues 
are addressed below.
Immunization Services
    We did not accept the AMA RUC-recommended inclusion of 4 minutes of 
clinical staff time related to quality activities (QA) for the 4 
immunization codes for the initial injection: CPT codes 90465, 90467, 
90471, and 90473; nor did we accept the recommended 1 minute of QA time 
for the 4 ``each additional'' subsequent injection for CPT codes 90466, 
90468, 90472 and 90474. As we explained, unlike the clinical staff time 
related to quality activities that is included for mammography services 
as required by the Mammography Quality Standards Act of 1992 (Pub. L. 
102-539) (MQSA), there is no statutory requirement for quality-related 
clinical staff time inputs for these services.
    Comment: We received comments from individuals and group practice 
physicians, specialty societies, the AMA RUC, the AMA, two State 
medical societies, a vaccine manufacturer, a pharmaceutical research 
association, and the National Vaccine Advisory Committee regarding our 
omission of the QA clinical labor time for the immunization injection 
codes. These commenters requested that we add back the QA clinical time 
as recommended by the AMA RUC.
    Response: Based on the commenters' requests, we reexamined the 
issue. We have identified clinical QA time included in other services 
that is not based on a statutory requirement. For many cardiac and 
vascular ultrasound services, for example, QA time is included because 
it is directly related to compliance with accreditation requirements. 
After our review, we believe there was evidence to support the 
inclusion of this QA time in this case in order to comply with State 
and Federal regulatory guidelines. We have revised the PE database to 
reflect QA time for these immunization services.
    Comment: Other commenters representing specialty societies 
supported our acceptance of the AMA RUC recommendations for the 15 
other services identified in Table 2 of the proposed rule.
    Response: We have finalized the AMA RUC PE recommendations for 
these services.
b. Equipment Time-in-Use
    The formula for estimating the cost per minute for equipment is 
based upon a variety of factors, including the cost of the equipment, 
useful life, interest rate, maintenance cost, and utilization. The 
purpose of this formula is to identify an estimated cost per minute for 
the equipment that can be multiplied by the time the equipment is in 
use to obtain an estimated per use equipment cost to develop the 
resource-based PE RVU.
    In calculating the estimated cost per minute for services that are 
in use 24 hours per day for 7 days per week, we have assumed that the 
maximum amount of time that the equipment can be in use is 
approximately 525,000 minutes (that is, 525,000 minutes = (24 hours per 
day) x (7 days per week) x (52 weeks per year) x (60 minutes per 
hour)).
    For CY 2008, we used 525,000 minutes to calculate the per minute 
equipment cost for the equipment used in CPT code 93012, Telephonic 
transmission of post-symptom electrocardiogram rhythm strip(s), 24-hour 
attended monitoring, per 30 day period of time; tracing only and CPT 
code 93271, Patient demand single or multiple event recording with 
presymptom memory loop, 24-hour attended monitoring, per 30 day period 
of time; monitoring, receipt of transmissions, and analysis. Based on 
information presented to us by a provider group suggesting that the 
equipment was in use continuously, we determined that this equipment is 
used 24 hours a day, 7 days a week. Thus, we assigned the equipment a 
100 percent usage rate. However, in subsequent discussions with a 
provider group, we determined that, although there may be a 100 percent 
usage rate for a particular month, this does not correspond to a 100 
percent usage rate for a year. Therefore, for CY 2009 we proposed to 
apply our standard utilization rate of 50 percent to the 525,000 
maximum minutes of use, consistent with our utilization rate assumption 
for other equipment. This results in 262,500 minutes (that is, 262,500 
= 525,000 x 0.50) of average use over the course of the year.
    In the CY 2008 PFS rule, we used 43,200 minutes (60 minutes per 
hour x 24 hours per day x 30 days per month) to estimate the per use 
cost of the equipment in these monthly services. We are continuing to 
use 43,200 minutes in determining the equipment cost per use for these 
codes.
    Comment: The majority of comments received supported our proposal 
to assign the standard 50 percent utilization rate to CPT codes 93012 
and 93271. Other comments disagreed with our proposal and described it 
as an arbitrary method for changing equipment utilization rates. Many 
commenters suggested that we should develop a survey process that would 
obtain service specific utilization rates for all PFS services.
    Response: We agree with the commenters that support assigning the 
standard 50 percent equipment utilization rate to CPT codes 93012 and 
93271 and we will finalize our proposal to use the standard 50 percent 
utilization rate for CPT codes 93012 and 93271. Although we did not 
make any proposals related to a comprehensive survey of services 
specific equipment costs, we plan to continue to work with interested 
parties to analyze the possibilities for potential inclusion in a 
future rulemaking cycle.
c. Change to PE Database Inputs for Certain Cardiac Stress Tests
    In the CY 2009 PFS proposed rule, we proposed to change the PE 
database for CPT code 93025, Microvolt T-wave alternans for assessment 
of ventricular arrhythmias, to make the clinical labor staff type 
consistent with the other cardiac stress tests, CPT codes 93015 and 
93017. In addition, we proposed to add the specific Microvolt T-wave 
testing equipment in place of the cardiac stress testing treadmill 
devices, as well as to revise the time-in-use for the equipment in CPT 
93025 to reflect the service period. We also proposed to apply similar 
revisions to the equipment time-in-use to the other 2 CPT codes, CPT 
codes 93015 and 93017.
    Comment: The manufacturer of the equipment technology and the 
specialty society were supportive of these proposed changes. In 
addition, the AMA RUC noted that it would address this issue at the 
2008 October AMA RUC meeting.
    Response: We have received and accepted the AMA RUC recommendations 
for CPT 93025, 93015 and 93017 which support all of the changes in our 
proposal. The PE database is revised to reflect these changes.
d. Revisions to Sec.  414.22(b)(5)(i) Concerning Practice Expense
    Current regulations at Sec.  414.22(b)(5)(i) provide an explanation 
of the two levels of PE RVUs for the facility and nonfacility settings 
that are used in determining payment under the PFS. Section 
414.22(b)(5)(i)(A) discusses

[[Page 69737]]

facility PE RVUs and Sec.  414.22(b)(5)(i)(B) discusses nonfacility PE 
RVUs. Language in each of these sections incorrectly implies that the 
facility PE RVU is lower than or equal to the nonfacility PE RVUs. 
However, there are some instances where the facility PE RVUs may 
actually be greater than the nonfacility PE RVUs. In order to address 
this inaccuracy, we proposed to revise Sec.  414.22(b)(5)(i)(A) and (B) 
to remove this language.
    We received no comments on our proposed technical change and have 
revised the regulations at Sec.  414.22(b)(5)(i)(A) and (B) as 
proposed.
e. Other PE Direct Input Issues
    (i) Removal of Conscious Sedation (CS) PE Inputs for Services in 
Which CS is not Inherent--Technical Correction
    In reviewing the PE database, we noted that the conscious sedation 
(CS) PE inputs for 12 CPT codes in which CS is not inherent had not 
been removed after CPT 2005 began identifying these codes in a separate 
Addendum. The CS inputs for CPT codes 19300, 22520, 22521, 31717, 
62263, 62264, 62268, 62269, 63610, 64585, 64590, and 64595 had been 
added by the AMA RUC's PEAC prior to CY 2005. At that time, the AMA RUC 
recommended deletion of the CS PE inputs for all procedures that were 
not identified in the CPT 2005 manual Addendum which lists the services 
in which CS is inherent; and thus include the associated direct PE 
inputs. Due to a technical error, these inputs were not removed for CY 
2005. We have removed the CS PE inputs for the 12 CPT codes noted 
above. We ask that the AMA RUC permit specialty societies to bring any 
CPT codes forward to either the February or April 2009 AMA RUC meetings 
should any other discrepancies between the CPT Addendum and the PE 
database be identified.
(ii) Jejunostomy Tube Price
    A comment received on the CY 2009 PFS proposed rule stated that we 
had mistakenly entered the price for a set of 2, rather than just 1, 
jejunostomy tube in each of the following CPT codes 49441, 49446, 
49451, and 49452. So that the price of this PE supply can be properly 
valued as part of the PE RVUs for each of the four services in which it 
is found, we have changed the price of this supply from $198 to $97.50 
in CPT codes 49441, 49446, 49451, and 49452. In addition, because it's 
correct price is less than $150, this item was erroneously placed on 
the list for re-pricing of higher-cost supplies on Table 29 in the 
proposed rule; and, as a result of this price correction, it has been 
removed from the list of supply items in need of repricing.
(iii) Supply Code SH079, Collagen, Dermal Implant (2.5ml uou) 
(Contigen)
    We received comments from a specialty society representing 
urologists noting that the dermal collagen implant, priced at $317, was 
an inappropriate supply input for CPT 52330. The specialty society 
asked that we remove this supply from this service. We agree that 
inclusion of the dermal collagen implant as a supply input for CPT code 
52330 is not appropriate. The PE RVUs for CPT 52330 reflect the removal 
of this supply item.
(iv) Contractor Pricing of CPT 77371 for Stereotactic Radiosurgery 
(SRS) Treatment Delivery
    CPT code 77371, Radiation treatment delivery, stereotactic 
radiosurgery (SRS) (complete course of treatment of cerebral lesion(s) 
consisting of one session); multi-source Cobalt 60 based, (more 
commonly known as Gamma Knife) was a new CPT code for CY 2007. At that 
time, we accepted nearly all of the AMA RUC PE recommendations for this 
procedure (we did not accept the Cobalt 60 radiation source as a direct 
PE input) during CY 2007 rulemaking, and these recommendations are 
reflected in the PE RVUs for CPT 77371. The PE inputs for CPT 77371 had 
been proposed by the sitting AMA RUC specialty society representing 
therapeutic radiation oncology physicians. The AMA RUC discussed and 
amended the specialty's proposal for direct PE inputs (particularly the 
amount of clinical labor time) prior to agreeing on the final AMA RUC 
recommendation that was forwarded to CMS for CY 2007. Due to the 
equipment expense (nearly $4 million) along with the many Nuclear 
Regulatory Commission (NRC) requirements for construction of the 
facility required to furnish these procedures, all but one of these 
facilities is connected with a hospital setting, leaving a single free-
standing nonfacility provider.
    Comment: We received 3 comments stating that the PE RVUs listed in 
Addendum B for CPT 77371 are exceptionally inadequate. All commenters, 
including the single freestanding nonfacility based provider, noted the 
difference in payments between those made under OPPS and the PFS for 
CPT 77371. For CY 2009, the commenters noted that the proposed OPPS 
payment is $7,608 and the PFS payment under the proposed rule would be 
$1,260. A freestanding nonfacility provider noted that it had worked 
with the Medicare contractor but was unsuccessful in securing a higher 
payment because the contractor could not deviate from the established 
PE RVUs. Two commenters also stated that they believe the direct PE 
inputs are incorrect since the cost data they had gathered from other 
facility providers of this stereotactic radiosurgery (SRS) service 
included extra clinical labor time due to Nuclear Regulatory Commission 
(NRC) requirements for both the physicist and the registered nurse. In 
addition, they disagreed with our decision to treat the Cobalt 60 
radiation source (recommended by the AMA RUC as a 1-month renewable 
equipment item) as an indirect PE cost in the CY 2007 PFS final rule 
with comment period. The commenters have asked us to contractor-price 
CPT 77371 for CY 2009 if a payment correction cannot be made in the 
final rule.
    Response: We will ask the AMA RUC to review the direct PE inputs 
for this code in light of these comments. In the interim, we believe 
the commenters have raised sufficient questions regarding the propriety 
of the direct PE inputs and PE RVUs established for this new code in 
2007 to warrant contractor-pricing for CPT 77371 for CY 2009.
f. Supply and Equipment Items Needing Specialty Input
    We have identified some supply and equipment items from the CY 2008 
final rule with comment period for which we were unable to verify the 
pricing information (see Table 2: Items Needing Specialty Input for 
Pricing and Table 3: Equipment Items Needing Specialty Input for 
Pricing). For the items listed in Tables 2 and 3, we are requesting 
that commenters provide pricing information. In addition, we are 
requesting acceptable documentation, as described in the footnote to 
each table, to support the recommended prices. For supplies or 
equipment that previously appeared on these lists, we may propose to 
delete these items unless we receive adequate information to support 
current pricing by the conclusion of the comment period for this final 
rule.
    In Tables 4 and 5, we have listed specific supplies and equipment 
items related to new CY 2009 CPT codes that are discussed in section V. 
of this final rule with comment period. We have added these items to 
the PE database along with the associated prices (on an interim basis). 
We plan to propose finalized pricing information in the CY 2010 PFS 
proposed rule. Item prices identified in these tables are also 
reflected in the PE RVUs in Addendum B. In addition, we have asked 
commenters to submit specific information in response to the

[[Page 69738]]

discussion of the supply and equipment items for some each of the new 
CPT codes in section V. of this final rule with comment period. We have 
also specifically asked for public comment about the direct cost inputs 
for the 3 new 2009 CPT codes which we contractor-priced for CY 2009 
(CPT codes 93229, 93299, and 95803).

                                                Table 2--Supply Items Needing Specialty Input for Pricing
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Primary                                               Commenter
    Code            2008/9              Unit          Unit       Associated      Associated *    Prior item status   response and CMS  2009 Item  status
                 Description                          price      Specialties      CPT code(s)         on table            action        refer to note(s)
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Gas, argon,        .................  ........  Urology,                   50395  YES................  New item 2008...  A, D.
               cryoablation.                                   Radiology,
                                                               Interventional
                                                               Radiology.
              Gas, helium,       .................  ........  Urology,                   50395  YES................  New item 2008...  A, D.
               cryoablation.                                   Radiology,
                                                               Interventional
                                                               Radiology.
SL119.......  Sealant spray....  oz...............  ........  Radiation                  77333  YES................  No comments       B.
                                                               Oncology.                                              received.
              Catheter, Kumpe..  Item.............  ........  Radiology,          50385, 50386  YES................  New item 2008...  A, D.
                                                               Interventional
                                                               Radiology.
              Disposable         .................  ........  Oral and                   21073  YES................  New item 2008...  A, D.
               aspirating                                      Maxillofacial
               syringe.                                        Surgery.
              Guidewire, angle   .................  ........  Radiology,          50385, 50386  YES................  New item 2008...  A, D.
               tip (Terumo),                                   Interventional
               180 cm.1                                        Radiology.
              Snare, Nitinol     Item.............  ........  Radiology,          50385, 50386  YES................  New item 2008...  A, D.
               (Amplatz).                                      Interventional
                                                               Radiology.
NA..........  Agent, neurolytic  ml...............  ........  Orthopedic                 64632  NO.................  New item 2009...  A.
                                                               Surgery,
                                                               Podiatry.
NA..........  Strut,             Item.............      1151  ................           20697  NO.................  New item 2009...  A.
               replacement,
               dynamic external.
NA..........  Tube, anaerobic    Item.............  ........  62267...........             Lab  NO.................  New item 2009...  A, B.
               culture.
NA..........  Tube,              Item.............     97.50  49441, 49446,          Accessory  NO.................  Price changed/    C.
               jejunsostomy.                                   49451 and 49452.                                       CMS error. $195
                                                                                                                      price for 2 J-
                                                                                                                      tubes. $97.50
                                                                                                                      accepted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
 
Note: Acceptable documentation includes detailed description (including system, kit or product components), source (multiple sources requested), and
  current pricing information. For most items, there will be multiple sources of documentation available--multiple products/models that can be used as
  acceptable substitutes in performing a procedure. We ask that documentation from multiple sources be submitted with verified prices of the various
  products which represent the price range. In these instances, only one specific item/model/product is available on the market for use in a given
  procedure, one source of documentation is required. However, CMS expects that all documentation reflect the market price for each product reflecting
  the manufacturer or vendor discounts, rebates, etc. Invoices from physician purchases are the preferred documentation. In cases where this is not
  possible, CMS may accept other documentation such as copies of catalog pages, hard copy from specific Web pages, physician invoices, and typical or
  average sales price ``quotes'' (letter format okay) from manufacturers, vendors, or distributors. Unacceptable documentation includes phone numbers
  and addresses of manufacturer, vendors or distributors, Web site links without pricing information, etc.
A. Additional documentation required. Need detailed description (including ``kit'', system, or product contents and component parts), source, and
  current pricing information (including pricing per specified unit of measure in database).
B. No/Insufficient information received. Where applicable, retained price in database on an interim basis. Forward acceptable documentation promptly.
C. Submitted price accepted.
D. 2008/9 price retained on an interim basis. Forward acceptable documentation promptly.


                                              Table 3--Equipment Items Needing Specialty Input for Pricing
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              * CPT
                                           2008/9    Primary specialties     code(s)       Prior status on     Commenter  response    2009 Item status
      Code          2008/9 Description     Price    associated with item   associated           table            and  CMS action      refer to note(s)
                                                                            with item
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Camera mount-floor...       2300  Dermatology.........         96904  Yes.................  Specialty to submit,  A and D.
                                                                                                               asap.
                  Cross slide                  500  Dermatology.........         96904  Yes.................  Specialty to submit,  A and D.
                   attachment.                                                                                 asap.
                  Plasma pheresis           37,900  Radiology,            36481, G0341  Yes.................  Revised description   B.
                   machine.                          Dermatology.                                              based on comments
                                                                                                               received that light
                                                                                                               source was not part
                                                                                                               of item.
                                                                                                               Documentation
                                                                                                               requested.
ED039...........  Psychology Testing     .........  Psychology..........  96101, 96102  Yes.................  Specialty to submit,  B.
                   Equipment.                                                                                  asap.
                  Strobe, 400 watts           1500  Dermatology.........         96904  Yes.................  Documentation         B.
                   (Studio)(2).                                                                                requested.
                  Cryosurgery system     .........  Urology, Radiology,          50593  Yes.................  New item 2008.......  A and D.
                   (for tumor                        Interventional
                   ablation).1                       Radiology.

[[Page 69739]]

 
                  Workstation, dual,         85000  Cardiology..........         93351  No..................  New item 2009,        E.
                   echocardiography.                                                                           Specialty submitted
                                                                                                               $173,509--CMS
                                                                                                               accept $85,000.
EQ136...........  Infrared Coagulator      3659.50  ....................        46606,  No..................  New price for 2009    E.
                   (with hand                                                   46608,                         with addition of
                   applicator, includes                                         46610,                         light guide, Supply
                   light guide).                                          46612, 46930                         code, Eq136,
                                                                                                               descriptor changed
                                                                                                               to include the
                                                                                                               light guide.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
 
Note: Acceptable documentation includes detailed description (including system, kit or product components), source (multiple sources requested), and
  current pricing information. For most items, there will be multiple sources of documentation available--multiple products/models that can be used as
  acceptable substitutes in performing a procedure. We ask that documentation from multiple sources be submitted with verified prices of the various
  products which represent the price range. In these instances, only one specific item/model/product is available on the market for use in a given
  procedure, one source of documentation is required. However, CMS expects that all documentation reflect the market price for each product reflecting
  the manufacturer or vendor discounts, rebates, etc. Invoices from physician purchases are the preferred documentation. In cases where this is not
  possible, CMS may accept other documentation such as copies of catalog pages, hard copy from specific Web pages, physician invoices, and typical or
  average sales price ``quotes'' (letter format okay) from manufacturers, vendors, or distributors. Unacceptable documentation includes phone numbers
  and addresses of manufacturer, vendors or distributors, Web site links without pricing information, etc.
A. Additional documentation required. Need detailed description (including kit contents), source, and current pricing information (including pricing per
  specified unit of measure in database). Accept copies of catalog pages or hard copy from specific Web pages. Phone numbers or addresses of
  manufacturer, vendors, or distributors are not acceptable documentation.
B. No/Insufficient received. Retained price in database on an interim basis. Forward acceptable documentation promptly.
C. Submitted price accepted.
D. 2008/9 price, where specified, retained on an interim basis. Forward acceptable documentation promptly.
E. See discussion in section V. of this final rule with comment period. Forward requested documentation promptly, for example, whether item is typical.


                                               Table 4--Practice Expense Supply Item Additions for CY 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         * CPT code(s)
           Equip code              Supply description          Unit           Unit      associated with      Supply category            Comments
                                                                              price           item
--------------------------------------------------------------------------------------------------------------------------------------------------------
NA..............................  Agent, neurolytic..  ml.................  ........  64632..............  Pharmacy, Rx.......  A, B and D.
NA..............................  IV infusion set,     Item...............     11.5   96369 and 96371....  Hypodermic, IV.....  B.
                                   Sof-set (Minimed).
NA..............................  Strut, replacement,  Item...............   1151     20697..............  Accessory..........  A.
                                   dynamic external.
NA..............................  Swab, patient prep,  Item...............      1.04  93352..............  Pharmacy, NonRx....  B.
                                   1.5 ml
                                   (chloraprep).
NA..............................  Tube, anaerobic      Item...............  ........  62267..............  Lab................  A.
                                   culture.
NA..............................  Tube, jejunsostomy.  Item...............     97.50  49441, 49446, 49451  Accessory..........  A and C.
                                                                                       and 49452.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
A. Price verification needed. Item(s) added to table of supplies requiring specialty input.
B. Request explanation/rationale as to why specific supply is necessary, how it differs from current PE database item, and why current PE item(s) cannot
  be used for procedure(s).
C. CMS price correction.
D. Also, see discussion in section V. of this final rule with comment period. Proxy in use on an interim basis: SH062 Sclerosing solution, inj.


                         Table 5--Practice Expense Equipment Item Additions for CY 2009
----------------------------------------------------------------------------------------------------------------
                                                             * CPT code(s)       Supply or
     Item code          Equipment      Equip   Unit price   associated with      equipment          Comments
                       description      life                     item            category
----------------------------------------------------------------------------------------------------------------
NA................  Workstation,            5    85000     93351...........  DOCUMENTATION...  A and D.
                     dual,
                     echocardiograph
                     y.
NA................  Pacemaker,              5   123250     93693 and 93696.  OTHER EQUIPMENT.  B and D.
                     Interrogation,
                     System (CMS
                     used Pacemaker,
                     Monitoring,
                     System as proxy
                     for price).

[[Page 69740]]

 
EQ198.............  Pacemaker follow-       7    23507     93279, 93280,     OTHER EQUIPMENT.  C and D.
                     up system (incl                        93281, 93282,
                     software and                           93284, 93285,
                     hardware)                              93286, 93287,
                     (Paceart).                             93288, 93289,
                                                            93290, 93291,
                                                            93292, 93724.
EQ136.............  Infrared               10     3659.50  46606, 46608,     OTHER EQUIPMENT.  A and D.
                     Coagulator                             46610, 46612,
                     (with hand                             46930.
                     applicator,
                     includes light
                     guide).
----------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2009 American Medical Association. All Rights Reserved.
  Applicable FARS/DFARS apply.
A. Price verification needed. Item(s) added to table of equipment requiring specialty input.
B. Interim value, CY 2009 only. CMS assigned the pacemaker monitoring system to these two CPT codes that the
  specialty association requested a pacemaker ``interrogation'' system. Since the CMS PE database does not
  contain such an item, we assigned, on an interim basis, the pacemaker monitoring system that was assigned to
  these 2 codes previously. Although we remain uncertain as to the appropriate equipment that should be
  assigned, we will work with the specialty as they provide us with more information and documentation for the
  typical equipment needed for these 2 services when provided in the physician's office.
C. Interim value, CY 2009 only. CMS assigned EQ198 to all new cardiac monitoring codes for CY 2009 because the
  crosswalked codes (for CY 2008) each contained the equipment item EQ198. While the specialty requested the
  ``pacemaker monitoring system'' for these services, CMS was not provided any information to support the change
  in technology for these services provided in the physician's office setting.
D. Also, see discussion in Section V. of this final rule with comment period.

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

1. Update
    Section 1848(e)(1)(A) of the Act requires us to develop separate 
Geographic Practice Cost Indices (GPCIs) to measure resource cost 
differences among localities compared to the national average for each 
of the three fee schedule components (work, PE and malpractice). While 
requiring that the PE and malpractice GPCIs reflect the full relative 
cost differences, section 1848(e)(1)(A)(iii) of the Act requires that 
the physician work GPCIs reflect only one-quarter of the relative cost 
differences compared to the national average.
    Section 1848(e)(1)(C) of the Act requires us to review and, if 
necessary, adjust the GPCIs at least every 3 years. This section also 
specifies that if more than 1 year has elapsed since the last GPCI 
revision, we must phase in the adjustment over 2 years, applying only 
one-half of any adjustment in each year. As discussed in the CY 2008 
PFS final rule with comment period (72 FR 66243), we established new 
GPCIs for each Medicare locality in CY 2008 and implemented them. The 
CY 2008 adjustment to the GPCIs reflected the first year of the 2-year 
phase-in.
    We noted in the CY 2009 PFS proposed rule (73 FR 38513), that the 
physician work GPCIs we calculated did not reflect the 1.000 floor that 
was in place during CY 2006 through June 30, 2008. However, as 
discussed in section III. of this preamble, section 134 of the MIPPA of 
2008 extended the 1.000 work GPCI floor from July 1, 2008, through 
December 31, 2009. Additionally, section 134(b) of the MIPPA sets a 
permanent 1.500 work GPCI floor in Alaska for services furnished 
beginning January 1, 2009. As such, the CY 2009 GPCIs and summarized 
GAFs reflect these statutorily mandated work GPCI floors.
    See Addenda D and E for the CY 2009 GPCIs and summarized geographic 
adjustment factors (GAFs).
    For a detailed explanation of how the GPCI update was developed, 
see the CY 2008 PFS final rule with comment period (72 FR 66244).
2. Payment Localities
a. Background
    As stated above in this section, section 1848(e)(1)(A) of the Act 
requires us to develop separate GPCIs to measure resource cost 
differences among localities compared to the national average for each 
of the three fee schedule components (work, PE, and malpractice). 
Payments under the PFS are based on the relative resources required to 
provide services, and are adjusted for differences in resource costs 
among payment localities using the GPCIs. As a result, PFS payments 
vary between localities. Although the PFS payment for a particular 
service is actually adjusted by applying a GPCI to each fee schedule 
component, for purposes of discussion and comparison, we calculate a 
geographic adjustment factor (GAF) for each locality. These GAFs 
reflect a weighted average of the GPCIs within the locality and can be 
used as a general proxy for area practice costs. A GAF is calculated to 
reflect a summarization of the GPCIs, (which is used only to make 
comparisons across localities). The GAFs are not an absolute measure of 
actual costs, nor are they used to calculate PFS payments. Rather, they 
are a tool that can be used as a proxy for differences in the cost of 
operating a medical practice among various geographic areas (for 
example counties) for the purpose of assessing the potential impact of 
alternative locality configurations.
    Prior to 1992, Medicare payments for physicians' services were made 
on the basis of reasonable charges. Payment localities were established 
under the reasonable charge system by local Medicare carriers based on 
their knowledge of local physician charging patterns and economic 
conditions. A total of 210 localities were developed; including 22 
``Statewide'' localities where all areas within a State (whether urban 
or rural) received the same payment amount for a given service. These 
localities changed little between the inception of Medicare in 1966 and 
the beginning of the PFS in 1992. Following the inception of the PFS, 
we acknowledged that there was no consistent geographic basis for these 
localities and that they did not reflect the significant economic and 
demographic changes that had taken place since 1966. As a result, a 
study was begun in 1994 which culminated in a comprehensive locality 
revision which was implemented in 1997.
    The 1997 payment locality revision was based and built upon the 
prior locality structure. The 22 previously existing Statewide 
localities remained Statewide localities. New localities were 
established in the remaining 28 States by comparing the area cost 
differences (using the GAFs as a proxy for costs) of the localities 
within these States. We ranked the existing localities within these 
States by GAFs in descending order. The GAF of the highest locality

[[Page 69741]]

within a State was compared to the weighted average GAF of other 
localities. If the differences between these GAFs exceeded 5 percent, 
the highest locality remained a distinct locality. If the GAFs 
associated with all the localities in a State did not vary by at least 
5 percent, the State became a Statewide locality. If the highest 
locality remained a distinct locality, the process was repeated for the 
second highest locality and so on until the variation among remaining 
localities fell below the 5 percent threshold. The rest of the 
localities within the State were combined into a single rest-of-State 
locality as their costs were relatively homogeneous. The revised 
locality structure (which is the one currently in use) reduced the 
number of localities from 210 to 89. The number of Statewide localities 
increased from 22 to 34. The development of the current locality 
structure is described in detail in the CY 1997 PFS proposed rule (61 
FR 34615) and the subsequent final rule (61 FR 59494).
    Although there have been no changes to the locality structure since 
1997, we have proposed changes in recent years, although we did not 
finalize them. As we have frequently noted, any changes to the locality 
configuration must be made in a budget neutral manner. Therefore, 
changes in localities can lead to significant redistributions in 
payments. For many years, we have not considered making changes to 
localities without the support of a State Medical Association, which we 
believed would demonstrate consensus for the change among the 
professionals who would be affected. However, we recognize that over 
time changes in demographics or local economic conditions may lead us 
to conduct a more comprehensive examination of existing payment 
localities, and consideration of potential alternatives.

Payment Locality Approaches Discussed in the CY 2008 PFS Proposed Rule

    For the past several years, we have been involved in discussions 
with California physicians and their representatives about recent 
shifts in relative demographics and economic conditions among a number 
of counties within the current California payment locality structure. 
In the CY 2008 PFS proposed rule, we described three options for 
changing the payment localities in California. For a detailed 
discussion of the options for changing the payment localities in 
California, see the CY 2008 PFS proposed rule and final rule with 
comment period (72 FR 38139 and 72 FR 66245, respectively).
    After evaluating the comments on these options, which included 
MedPAC's two suggestions for developing changes in payment localities 
for the entire country (not just California), other States expressing 
interest in having their payment localities reconfigured, and the 
California Medical Association's decision not to endorse any option, we 
decided not to proceed with any of the alternatives we presented. We 
explained in the CY 2008 final rule with comment period (72 FR 66248) 
that we intended to conduct a thorough analysis of potential approaches 
to reconfiguring localities and would address this issue again in 
future rulemaking. We also noted that some commenters wanted us to 
consider a national reconfiguration of localities rather than just 
making changes one State at a time.
b. Alternative Payment Locality Approaches
    In the CY 2009 PFS proposed rule, we explained that as a follow-up 
to the CY 2008 PFS final rule with comment period, we contracted with 
Acumen, LLC to conduct a preliminary study of several options for 
revising the payment localities. To that end, we are currently 
reviewing several alternative approaches for reconfiguring payment 
localities on a nationwide basis. However, our study of possible 
alternative payment locality configurations is in the early stages of 
development. We also stated that we are not making any changes to our 
payment localities at this time. For a discussion of the alternative 
payment locality configurations currently under consideration, see the 
CY 2009 PFS proposed rule (73 FR 38514).
    Our preliminary study of several options for revising the payment 
localities was posted on the CMS Web site on August 21, 2008. The 
report entitled, ``Review of Alternative GPCI Payment Locality 
Structures'', which was produced by Acumen, LLC under contract to CMS, 
is accessible from the PFS Federal regulation notices Web page under 
the download section of the CY 2009 PFS proposed rule (CMS-1403-P). The 
report may also be accessed directly from the following link: http://www.cms.hhs.gov/PhysicianFeeSched/downloads/ReviewOfAltGPCIs.pdf. 
Comments on the interim report were accepted through November 3, 2008.
    In the CY 2009 PFS proposed rule and on the CMS Web site, we 
encouraged interested parties to submit comments on the options 
presented in the proposed rule and in our interim report. We also 
requested comments on the administrative and operational issues 
associated with each option, as well as suggestions for other options.
    Comment: We received comments on the options discussed in the 
proposed rule from various specialty groups and medical societies, as 
well as a few group practices and individual practitioners. Generally, 
commenters commended us for acknowledging the need for intermittent 
reconfiguration of PFS payment localities and expressed support for our 
study of alternative locality configurations. Some commenters urged us 
to expedite changes in our payment localities and suggested that we do 
so as part of the CY 2009 final rule. Other commenters requested that, 
in any locality reconfiguration, we minimize the payment discrepancy 
between urban and rural areas to ensure continued access to care.
    Response: We would like to thank the public for the comments 
submitted on the options presented in the proposed rule and in the 
interim report posted on the CMS Web site. We will summarize all 
comments received in future rulemaking. As we have stated previously, 
we will provide extensive opportunities for public comment (for 
example, town hall meetings or open door forums, as well as a proposed 
rule) on any specific proposals for changes to the locality 
configuration before implementing any changes.

C. Malpractice RVUs (PC/TC Issue)

    In the CY 1992 PFS final rule (56 FR 59527), we described in detail 
how malpractice (MP) RVUs are calculated for each physicians' service 
and, when professional liability insurance (PLI) premium data are not 
available, how we crosswalk or assign RVUs to services. Following the 
initial calculation of resource-based MP RVUs, the MP RVUs are then 
subject to review by CMS at 5-year intervals. Reviewing the MP RVUs 
every 5 years ensures that the MP relative values reflect any 
marketplace changes in the physician community's ability to acquire 
PLI. However, there are codes that define certain radiologic services 
that have never been part of the MP RVU review process. The MP RVUs 
initially assigned to these codes have not been revised because there 
is a lack of suitable data on the cost of PLI for technical staff or 
imaging centers (where most of these services are performed).
    In the CY 2008 PFS proposed rule (72 FR 38143), we noted that the 
PLI workgroup, a subset of the Relative Value Update Committee (RUC) of 
the AMA, brought to our attention the fact that there are approximately 
600 services that have TC MP RVUs that are

[[Page 69742]]

greater than the PC MP RVUs. The PLI workgroup requested that we make 
changes to these MP RVUs and suggested that it is illogical for the MP 
RVUs for the TC of a service to be higher than the MP RVUs for the PC.
    We responded that we would like to develop a resource-based 
methodology for the technical portion of these MP RVUs; but that we did 
not have data to support such a change. We asked for information about 
how, and if, technicians employed by facilities purchase PLI or how 
their professional liability is covered. We also asked for comments on 
what types of PLI are carried by facilities that perform these 
technical services.
    In the CY 2008 PFS final rule with comment period (72 FR 66248), 
one commenter suggested that we ``flip'' the MP RVUs between the PCs 
and TCs, or make them equal. Reversing the RVUs would reduce the MP 
RVUs for the TC and increase the MP RVUs for the PC. The AMA's PLI 
workgroup recommended that we reduce the MP RVUs for the TC for these 
codes to zero. The workgroup suggested that there are no identifiable 
separate costs for professional liability for the TC. The workgroup 
also recommended that the MP RVUs removed from the TC for these codes 
be redistributed across all physicians' services.
    We responded that we did not believe it would be appropriate to 
``flip'' the PC and TC MP RVU values because the professional part of 
the MP RVUs has undergone a resource-based review, is derived from 
actual data, and is consistent with the resource-based methodology for 
PFS payments. We stated that we would not simply equalize the PC and TC 
RVU values because we had no data to demonstrate that the MP costs for 
the technical portion of these services are the same as the 
professional portion.
    We also noted that we have received several comments supporting the 
decision to examine the possibility of developing a resource-based 
methodology for the technical portion of the MP RVUs. The commenters 
supported the collection and analysis of appropriate MP premium data 
before making any changes to the MP RVU distribution.
    We stated that we would continue to solicit, collect, and analyze 
appropriate data on this subject. We noted that when we had sufficient 
information we would be better able to make a determination as to what, 
if any, changes should be made and that we would propose any changes in 
future rulemaking.
    In the CY 2009 PFS proposed rule (73 FR 38515), we stated that the 
issue of assigning MP RVUs for the TC of certain services continues to 
be a source of concern for several physician associations and for CMS. 
We noted that we did not receive a response to our CY 2008 request for 
additional data on this issue and that this issue is one of importance 
to CMS. We also stated that the lack of available PLI data affects our 
ability to make a resource-based evaluation of the TC MP RVUs for these 
codes. We indicated that as part of our work to update the MP RVUs in 
CY 2010, we would instruct our contractor to research available data 
sources for the MP costs associated with the TC portion of these codes 
and that we would also ask the contractor to look at what is included 
in general liability insurance versus PLI for physicians and other 
professional staff. We also stated that if data sources are available, 
we would instruct the contractor to gather the data so we will be ready 
to implement revised MP RVUs for the TC of these codes in conjunction 
with the update of MP RVUs for the PCs in 2010.
    The following is a summary of the comments we received on the CY 
2009 PFS proposed rule and our responses.
    Comment: Most commenters opposed any change to the MP RVUs that 
would make the TC MP RVUs zero. The commenters stated that there are 
identifiable MP expenses associated with allied health professionals 
and that for many radiation oncology centers there are separate MP 
insurance policies for the radiation oncologists and the nonphysician 
clinical personnel. The commenters requested that we ensure that the 
liability insurance associated with the nonphysician personnel is 
reflected in the MP RVUs for technical services. The commenters also 
stated that these expenses do not represent general insurance liability 
premiums which are part of the PE RVUs. The commenters were supportive 
of our plan for researching data sources for MP premium data for the TC 
of these codes. One commenter provided the name of a company that 
provides liability insurance to imaging facilities.
    Other commenters, including the AMA, proposed that CMS reduce to 
zero the TC MP RVUs associated with the codes identified as having 
higher TC MP RVUs than PC MP RVUs. The commenters stated that any 
premium data received would represent general liability insurance, not 
liability insurance premium data related to nonphysician clinical 
personnel. The commenters suggested that premium data does not exist to 
support a resource-based computation of the MP RVUs for the TC and 
stated that general liability insurance premiums are included in the PE 
component and should not be part of the MP RVU calculation.
    Response: We appreciate the comments in support of our proposal to 
instruct our contractor to research available data sources for the MP 
costs associated with the TC portions of these codes. As we stated in 
the CY 2008 PFS final rule with comment period (72 FR 66248), we are 
not able to evaluate whether sufficient data exists or to make a 
judgment on the RUC's assertion that such data are not available. It is 
possible that the contractor responsible for collecting the data for 
the 5-year MP RVU update will identify providers of professional 
liability insurance for nonphysician clinical personnel. We plan to 
share the information received on a potential source of such data with 
our contractor. If such premium data can be identified, it will be 
incorporated into the MP RVU update. In the event that we adopt such 
data, we will ensure there is no duplication of costs between the PE 
and the MP RVUs. As noted in the CY 2009 PFS proposed rule, and 
discussed above in this section, we will be addressing this issue as 
part of the update to the malpractice RVUs for CY 2010.

D. Medicare Telehealth Services

1. Requests for Adding Services to the List of Medicare Telehealth 
Services
    Section 1834(m)(4)(F) of the Act defines telehealth services as 
professional consultations, office visits, and office psychiatry 
services, and any additional service specified by the Secretary. In 
addition, the statute required us to establish a process for adding 
services to or deleting services from the list of telehealth services 
on an annual basis.
    In the December 31, 2002 Federal Register (67 FR 79988), we 
established a process for adding services to or deleting services from 
the list of Medicare telehealth services. This process provides the 
public an ongoing opportunity to submit requests for adding services. 
We assign any request to make additions to the list of Medicare 
telehealth services to one of the following categories:
     Category 1: Services that are similar to 
professional consultations, office visits, and office psychiatry 
services. In reviewing these requests, we look for similarities between 
the proposed and existing telehealth services for the roles of, and 
interactions among, the beneficiary, the physician (or other 
practitioner) at the distant site

[[Page 69743]]

and, if necessary, the telepresenter. We also look for similarities in 
the telecommunications system used to deliver the proposed service, for 
example, the use of interactive audio and video equipment.
     Category 2: Services that are not similar to the 
current list of telehealth services. Our review of these requests 
includes an assessment of whether the use of a telecommunications 
system to deliver the service produces similar diagnostic findings or 
therapeutic interventions as compared with the face to face ``hands 
on'' delivery of the same service. Requestors should submit evidence 
showing that the use of a telecommunications system does not affect the 
diagnosis or treatment plan as compared to a face to face delivery of 
the requested service.
    Since establishing the process, we have added the following to the 
list of Medicare telehealth services: psychiatric diagnostic interview 
examination; ESRD services with two to three visits per month and four 
or more visits per month (although we require at least one visit a 
month to be furnished in-person ``hands on'', by a physician, clinical 
nurse specialist (CNS), nurse practitioner (NP), or physician assistant 
(PA) to examine the vascular access site); individual medical nutrition 
therapy; and the neurobehavioral status exam.
    Requests to add services to the list of Medicare telehealth 
services must be submitted and received no later than December 31 of 
each calendar year to be considered for the next rulemaking cycle. For 
example, requests submitted before the end of CY 2007 are considered 
for the CY 2009 proposed rule. Each request for adding a service to the 
list of Medicare telehealth services must include any supporting 
documentation you wish us to consider as we review the request. Because 
we use the annual PFS as a vehicle for making changes to the list of 
Medicare telehealth services, requestors should be advised that any 
information submitted is subject to disclosure for this purpose. For 
more information on submitting a request for an addition to the list of 
Medicare telehealth services, including where to directly mail these 
requests, visit our Web site at http://www.cms.hhs.gov/telehealth/.
2. Submitted Requests for Addition to the List of Telehealth Services
    We received the following requests in CY 2007 for additional 
approved services to become effective for CY 2009: (1) Diabetes self-
management training (DSMT); and (2) critical care services. In 
addition, in the CY 2008 PFS final rule with comment period (72 FR 
66250), we committed to continuing to evaluate last year's request to 
add subsequent hospital care to the list of approved telehealth 
services. In the CY 2009 PFS proposed rule (73 FR 38515), we responded 
to these requests. We did not propose to add DSMT or critical care 
services to the list of Medicare telehealth services. We proposed to 
create HCPCS codes specific to follow-up inpatient consultations 
delivered via telehealth, and we proposed to revise Sec.  410.78 and 
Sec.  414.65 to revise our regulations accordingly. The following is a 
summary of the discussion from the proposed rule and a summary of the 
comments we received and our responses.
a. Diabetes Self-Management Training (DSMT)
    The American Telemedicine Association (ATA) and the Marshfield 
Clinic submitted a request to add individual and group diabetes self 
management training (DSMT) (as represented by Healthcare Common 
Procedure Coding System (HCPCS) codes G0108 and G0109) to the list of 
approved telehealth services. The requesters believe that DSMT services 
can be considered and approved for telehealth as Category 1 services 
because they are comparable to medical nutrition therapy (MNT) services 
approved for telehealth.
    As discussed in the CY 2009 PFS proposed rule (73 FR 38516), Sec.  
414.65 provides for the payment of individual MNT furnished via 
telehealth. Group MNT is not an approved telehealth service, so it 
cannot be used as a point of comparison for group DSMT (as represented 
by HCPCS code G0109). In addition, group counseling services have a 
different interactive dynamic between the physician or practitioner at 
the distant site and beneficiary at the originating site as compared to 
services on the current list of Medicare telehealth services. (See 70 
FR 45787 and 70 FR 70157 for a previous discussion of group services.) 
Since the interactive dynamic of group DSMT is not similar to 
individual MNT or any other service currently approved for telehealth, 
we believe that group DSMT must be evaluated as a category 2 service.
    Section 1861(qq) of the Act provides that DSMT (which can be either 
a group or individual service) involves educational and training 
services to ensure therapy compliance or to provide necessary skills 
and knowledge to participate in managing the condition, including the 
skills necessary for the self administration of injectable drugs. We 
believe individual DSMT is not analogous to individual MNT because of 
the element of skill based training that is encompassed within 
individual DSMT, but is not an aspect of individual MNT (or any other 
services currently approved for telehealth). Due to the statutory 
requirement that DSMT services include teaching beneficiaries the 
skills necessary for the self administration of injectable drugs, we 
believe that DSMT, whether provided to an individual or a group, must 
be evaluated as a category 2 service.
    Because we consider individual and group DSMT to be category 2 
services, we needed to evaluate whether these are services for which 
telehealth can be an adequate substitute for a face to face encounter. 
After reviewing studies submitted with the request, we determined that 
we do not have sufficient comparative analysis that either individual 
or group DSMT delivered via telecommunications is equivalent to DSMT 
delivered face to face. We did not find evidence that providing DSMT 
via telehealth is an adequate substitute for providing DSMT in person. 
Therefore, we proposed not to add individual and group DSMT (as 
described by HCPCS codes G0108 and G0109) to the list of approved 
telehealth services.
    Comment: Some commenters disagreed with our proposal and noted that 
adding DSMT to the list of approved telehealth services would provide a 
physician or practitioner with an additional tool for supporting 
patient compliance with management of diabetes. One commenter 
acknowledged that training patients in the self-administration of 
injectable drugs, a required component of DSMT programs, would be 
difficult to perform via telehealth. However, the commenter disagreed 
that this concern should prevent diabetes patients from accessing the 
DSMT benefit through telehealth. The commenter believes that educating 
a patient on diet, exercise, medications, managing stress and illness, 
and managing blood sugar can be taught via telehealth.
    Another commenter agreed that telehealth should not serve as a 
substitute for initial DSMT training that may involve hands-on teaching 
of injectable medications or appropriate usage of glucose monitors. 
However, the commenter believes that follow-up telehealth encounters 
can help to quickly identify any potential problems or health concerns.
    Response: The request we received was to add individual and group 
DSMT as described by HCPCS codes G0108 and G0109 to the list of 
Medicare

[[Page 69744]]

telehealth services. As discussed above, teaching beneficiaries the 
skills necessary for the self administration of injectable drugs is a 
statutorily required element of DSMT (and is typically provided as part 
of an individual DSMT session). This skill based training is typically 
not a component of any of the current Medicare telehealth services.
    Group DSMT (which comprises the vast majority of DSMT; initial and 
follow up) is by definition furnished in a group setting and, 
therefore, the interactive dynamic is not similar to any existing 
telehealth service. No group services are approved for telehealth. For 
more information on our review of the use of telehealth to furnish 
group services, see the CY 2006 PFS proposed rule (70 FR 45787).
    In order to consider addition of services for Medicare telehealth 
that are not similar to the existing list of telehealth services, we 
require comparative studies showing that the use of an interactive 
audio and video telecommunications system is an adequate substitute for 
the in person (face-to-face) delivery of the requested service. To 
date, requestors have not submitted sufficient comparative analyses 
supporting the approval of skill based training (such as teaching a 
patient how to administer self-injectable drugs) for telehealth. 
Likewise, requestors have not submitted comparative analyses showing 
that the use of a telecommunications system is an adequate substitute 
for group counseling services (DSMT or otherwise) furnished in person.
    We agree with the commenters that skill-based training, such as 
teaching patients how to inject insulin, would be difficult to 
accomplish without the physical in person presence of the teaching 
practitioner. However, we disagree that this training element should be 
carved out of individual (or group) DSMT for purposes of providing 
Medicare telehealth services. The skill-based training involved in 
teaching beneficiaries the skills necessary for the self-administration 
of injectable drugs is a key component of this statutorily defined 
benefit (and therefore inherent in the codes that describe DSMT). We do 
not believe that it would be appropriate to carve out this statutorily 
required component of DSMT for purposes of telehealth.
b. Critical Care Services
    The (UPMC) submitted a request to add critical care services (as 
defined by HCPCS codes 99291 and 99292) as a ``Category 1'' service. 
The requester draws similarities to the evaluation and management (E/M) 
consultation services currently approved for telehealth. The requester 
noted that the primary difference between critical care and other E/M 
services already approved for telehealth is that critical care is 
specific to patients with vital organ failure. Anecdotally, UPMC has 
found that the use of telecommunications systems and software gives 
stroke patients timely access to highly specialized physicians. 
According to the request, UPMC physicians are able to give ``an equally 
effective examination, spend the same amount of time with the patient 
and develop the same course of treatment just as if they were 
bedside.''
    The acuity of a critical care patient is significantly greater than 
the acuity generally associated with patients receiving the E/M 
services approved for telehealth. Because of the acuity of critically 
ill patients, we do not consider critical care services similar to any 
services on the current list of Medicare telehealth services. 
Therefore, we believe critical care must be evaluated as a Category 2 
service.
    Because we consider critical care services to be Category 2, we 
needed to evaluate whether these are services for which telehealth can 
be an adequate substitute for a face-to-face encounter. 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. As such, 
we did not propose to add critical care services (as defined by HCPCS 
codes 99291 and 99292) to the list of approved telehealth services.
    Comment: UPMC submitted a detailed description of their experiences 
using telehealth to support the treatment of acute stroke patients and 
provided supporting studies describing the use of telemedicine in 
remote stroke assessment. Per their comment, remote stroke assessment 
has specific and unique clinical importance because an urgent decision, 
based in part on a neurological examination, must be made regarding the 
administration of thrombolytic therapy within 3 hours of the onset of 
stroke symptoms. The elements of remote stroke assessment involve 
discrete interactions between physicians and patients, and the 
consultative input of specialists experienced in acute stroke treatment 
is considered in directing the bedside care of the patient.
    Some commenters were concerned that our proposal will not permit 
the use of telehealth to treat critically ill patients. We received 
comments and supporting documentation regarding the feasibility and 
value of providing consultations via telehealth to patients who are 
critically ill.
    Response: Consultations are already included on the list of 
approved telehealth services. Our proposal not to add critical care 
services (as defined by 99291 and 99292) to the list of Medicare 
telehealth services does not preclude physicians or NPPs from providing 
medically necessary and clinically appropriate telehealth consultations 
to patients who are critically ill. We believe that permitting initial 
and follow up inpatient consultation via telehealth will help provide 
greater access to specialty care for critically ill patients (including 
stroke patients). If guidance or advice is needed regarding a 
critically ill patient, a consultation may be requested from an 
appropriate source and may be furnished as a telehealth service. (See 
the CMS Internet-Only Medicare Claims Processing Manual, Chapter 12, 
Section 30.6.10 for more information on Medicare policy regarding 
payment for consultation services.)
    In support of the request to approve critical care services (as 
described by HCPCS codes 99291 through 99292), UPMC provided 
comparative analyses involving the use of an interactive audio and 
video telecommunications system as a substitute for an in-person (face-
to-face) clinical assessment. However, the focus of these studies was 
limited to stroke patients (critical care services include a broad 
range of disease categories). Additionally, one study recruited 
clinically stable patients. This study noted that ``because of the 
subacute nature of our test bed, the current data must be considered 
preliminary in determining their potential impact on actual clinical 
decision making.'' The same study also noted that although the use of 
telehealth ``may expedite stroke-related decision making, it cannot and 
should not be thought of as a substitute for the comprehensive clinical 
evaluation of the acute stroke patient, including thorough medical and 
cardiac evaluations.'' In another study submitted, the patients 
selected were not randomized.
    Comment: A few commenters supported our proposal not to add 
critical care services to the list of Medicare approved telehealth 
services. The commenters believe that, within the current standards of 
practice, critical care services require the physical presence of the 
physician rendering the critical care services.
    We received approximately 20 comments expressing opposition to our 
proposal not to add critical care services to the list of Medicare 
approved telehealth services which distinguished between their use of 
telehealth for

[[Page 69745]]

critical care services and the use of telehealth for remote stroke 
assessments, as described in the original request. Many of the 
commenters characterized our proposal as a ``non-coverage 
determination'' of remote critical care services and described an 
intensive care unit (ICU) model that integrates continuous surveillance 
of the ICU with an electronic medical records interface. This model is 
also programmed to automatically prompt the physician to rapidly 
respond and intervene in the event of certain changes in a patient's 
physiological status. Many of these commenters included documentation 
and references to studies that the adoption of this model reduced 
medical errors; enhanced patient safety; reduced complications; 
decreased overall length of stay in the ICU; and resulted in a 
statistically significant decrease in ICU mortality in comparison to 
the traditional ICU model. The commenters also noted that patient 
outcomes have been equivalent if not superior to patient outcomes prior 
to adopting this model of care.
    The American Medical Association (AMA) recently developed Category 
III tracking codes for remote critical care services (0188T-0189T). Two 
specialty societies commented that they are working with other critical 
care organizations to collect and analyze data on remote critical care 
services, as requested by the CPT editorial panel.
    Response: In the CY 2009 PFS proposed rule, we explained that we 
have no evidence suggesting that the use of telehealth could be a 
reasonable surrogate for the face-to-face delivery of critical care 
services, as defined by HCPCS codes 99291 and 99292. We agree with the 
comments that, within the current standards of practice, critical care 
services require the physical presence of the physician rendering the 
critical care services.
    Our proposal not to add critical care services to the list of 
approved telehealth services for Medicare was in no way a ``non-
coverage determination'' for remote critical care services described by 
the AMA's Category III tracking codes, 0188T-0189T. Consistent with the 
AMA's creation of those tracking codes, we believe that remote critical 
care services are different from the telehealth delivery of critical 
care services (as defined by CPT codes 99291 through 99292). Category 
III CPT codes track utilization of a service, facilitating data 
collection on, and assessment of new services and procedures. We 
believe that the data collected for these tracking codes will help 
provide useful information on how to best categorize and value remote 
critical care services in the future. However, at the present time, we 
do not have sufficient evidence that the provision of critical care 
services (as represented by HCPCS codes 99291 and 99292) via telehealth 
is an adequate substitute for an in person (face-to-face) encounter.
c. Subsequent Hospital Care
    Prior to 2006, follow-up inpatient consultations (as described by 
CPT codes 99261 through 99263) were approved for telehealth. CPT 2006 
deleted the follow-up inpatient consultation codes and advised 
practitioners instead to bill for these services using the codes for 
subsequent hospital care (as described by CPT codes 99231 through 
99233). For CY 2006, we removed the deleted codes for follow-up 
inpatient consultations from the list of approved telehealth services.
    In the CY 2008 PFS proposed rule (72 FR 38144) and subsequent final 
rule with comment period (72 FR 66250), we discussed a request we 
received from the ATA to add subsequent hospital care to the list of 
approved telehealth services. Because there is currently no method for 
practitioners to bill for follow-up inpatient consultations delivered 
via telehealth, the ATA requested that we approve use of the subsequent 
hospital care codes to bill follow-up inpatient consultations furnished 
via telehealth, as well as to bill for subsequent hospital care 
services furnished via telehealth that are related to the ongoing E/M 
of the hospital inpatient (72 FR 66250). Since the subsequent hospital 
care codes describe a broader range of services than follow-up 
inpatient consultation, including some services that may not be 
appropriate for addition to the list of telehealth services, we did not 
add subsequent hospital care to the list of approved telehealth 
services. Instead, we committed to continue to evaluate whether, and if 
so, by what mechanism subsequent hospital care could be approved for 
telehealth when used for follow-up inpatient consultations (72 FR 
66249).
    In the CY 2009 PFS proposed rule, we proposed to create a new 
series of HCPCS codes for follow-up inpatient telehealth consultations. 
Practitioners would use these codes to submit claims to their Medicare 
contractors for payment of follow-up inpatient consultations provided 
via telehealth. We proposed that the new HCPCS codes would be limited 
to the range of services included in the scope of the previous CPT 
codes for follow-up inpatient consultations, and the descriptions would 
be modified to limit the use of such services for telehealth. The HCPCS 
codes would clearly designate these services as follow-up inpatient 
consultations provided via telehealth, and not subsequent hospital care 
used for inpatient visits. Utilization of these codes would allow for 
payment for these services, as well as enable us to monitor whether the 
codes are used appropriately. We also proposed to establish the RVUs 
for these services at the same level as the RVUs established for 
subsequent hospital care (as described by CPT codes 99231 through 
99233). We believe this is appropriate because a physician or 
practitioner furnishing a telehealth service is paid an amount equal to 
the amount that would have been paid if the service had been furnished 
without the use of a telecommunication system. Since physicians and 
practitioners furnishing follow-up inpatient consultations in a face-
to-face encounter must continue to utilize subsequent hospital care 
codes (as described by CPT codes 99231 through 99233), we believe it is 
appropriate to set the RVUs for the new telehealth G codes at the same 
level as for the subsequent hospital care codes.
    Comment: Several commenters enthusiastically supported our proposal 
to create a new series of HCPCS codes for follow-up inpatient 
telehealth consultations. Some commenters were concerned that our 
proposed definition of the new HCPCS codes did not clearly distinguish 
these consultations from subsequent hospital care, and they believed it 
would not preclude the use of telehealth for the ongoing E/M of an 
inpatient. Other commenters supported our effort to reinstitute follow-
up inpatient consultations delivered via telehealth, but discouraged us 
from creating new HCPCS codes for the long-term. A few commenters 
recommended that instead we approve subsequent hospital care for 
telehealth. The AMA and others urged us to implement the proposed G 
codes as an interim measure, while working expeditiously with the CPT 
Editorial Panel and the RUC to develop appropriate codes and RVUs for 
the long-term.
    Response: We are pleased that the majority of commenters supported 
our proposal to create a new series of HCPCS codes for follow-up 
inpatient telehealth consultations. As discussed in the CY 2009 PFS 
proposed rule, we considered other approaches to provide and bill for 
follow-up inpatient consultations delivered via telehealth. In response 
to the comments requesting that we approve subsequent hospital care for 
telehealth only when the codes are used for follow-up inpatient 
consultations, we were concerned that

[[Page 69746]]

the other approaches under consideration would lead to a misuse of the 
service, and practitioners would provide a broader range of services 
via telehealth than was formerly approved, including the ongoing, day-
to-day E/M of a hospital inpatient. We were also concerned that it 
could be difficult to implement sufficient controls and monitoring to 
ensure that whatever mechanism we created would be limited to the 
delivery of services that were formerly described as follow-up 
inpatient consultations. We continue to believe that creating HCPCS 
codes specific to the telehealth delivery of follow-up inpatient 
consultations allows us to provide payment for these services, as well 
as enables us to best monitor whether the codes are used appropriately.
    As noted previously, CPT deleted the follow-up inpatient 
consultation codes. We determined that there was a need to establish a 
method by which practitioners could provide and bill Medicare for 
follow-up inpatient consultations delivered via telehealth, without 
allowing the ongoing E/M of a hospital inpatient via telehealth. 
Physicians and NPPs furnishing follow-up inpatient consultations in a 
face-to-face encounter must continue to utilize subsequent hospital 
care codes (as described by CPT codes 99231 through 99233).
    In response to commenters concerns that the new HCPCS codes will 
not prevent the use of telehealth for the ongoing E/M of an inpatient, 
we have modified the definition of follow-up inpatient telehealth 
consultations. We clarified that the criteria for these services will 
be subject to and consistent with Medicare policy for consultation 
services, including criteria that would distinguish a follow-up 
consultation from a subsequent E/M visit.

Result of Evaluation of 2009 Requests

    We will finalize our proposal not to add DSMT (as defined by HCPCS 
codes G0108 and G0109) and not to add critical care services (as 
defined by HCPCS codes 99291 and 99292) to the list of Medicare 
telehealth services.
    We will finalize our proposal to add follow-up inpatient telehealth 
consultation, as represented by HCPCS codes G0406 through G0408, to the 
list of Medicare telehealth services. We will also finalize our 
proposal to add follow-up inpatient telehealth consultations to the 
list of Medicare services at Sec.  410.78 and Sec.  414.65.
    Practitioners would use the new HCPCS codes to submit claims to 
their Medicare contractors for payment of follow-up inpatient 
consultations provided via telehealth. These new HCPCS codes are 
limited to the range of services included in the scope of the previous 
CPT codes for follow-up inpatient consultations, and the descriptions 
limit the use of such services for telehealth. The HCPCS codes clearly 
designate these services as follow-up inpatient consultations provided 
via telehealth, and not subsequent hospital care used for inpatient 
visits. Utilization of these codes will allow for payment for these 
services, as well as enable us to monitor whether the codes are used 
appropriately.
    We also will finalize our proposal to establish the RVUs for these 
services at the same level as the RVUs established for subsequent 
hospital care (as described by CPT codes 99231 through 99233). 
Physicians and NPPs furnishing follow-up inpatient consultations in a 
face-to-face encounter must continue to utilize subsequent hospital 
care codes (as described by CPT codes 99231 through 99233).
    We are finalizing our proposal to create HCPCS codes specific to 
the telehealth delivery of follow-up inpatient consultations solely to 
re-establish the ability for practitioners to provide and bill for 
follow-up inpatient consultations delivered via telehealth. These codes 
are intended for use by practitioners serving beneficiaries located at 
qualifying originating sites (as defined in Sec.  410.78) requiring the 
consultative input of physicians who are not available for an in person 
(face-to-face) encounter. These codes are not intended to include the 
ongoing E/M of a hospital inpatient.
    Claims for follow-up inpatient telehealth consultations will be 
submitted to the Medicare contractors that process claims for the area 
where the physician or practitioner who furnishes the service is 
located. Physicians/practitioners must submit the appropriate HCPCS 
procedure code for follow-up inpatient telehealth consultations along 
with the ``GT'' modifier (``via interactive audio and video 
telecommunications system''). By coding and billing the ``GT'' modifier 
with the inpatient follow-up inpatient telehealth consultation codes, 
the distant site physician/practitioner certifies that the beneficiary 
was present at an eligible originating site when the telehealth service 
was furnished. (See the CMS Internet-Only Medicare Claims Processing 
Manual, Pub. 100-04, Chapter 12, Sec.  190.6.1 for instructions for 
submission of interactive telehealth claims.)
    In the case of Federal telemedicine demonstration programs 
conducted in Alaska or Hawaii, store-and-forward technologies may be 
used as a substitute for an interactive telecommunications system. 
Covered store-and-forward telehealth services are billed with the 
``GQ'' modifier, ``via asynchronous telecommunications system.'' By 
using the ``GQ'' modifier, the distant site physician/practitioner 
certifies that the asynchronous medical file was collected and 
transmitted to him or her at the distant site from a Federal 
telemedicine demonstration project conducted in Alaska or Hawaii. (See 
the CMS Internet-Only Medicare Claims Processing Manual, Pub. 100-04, 
Chapter 12, Sec.  190.6.2 for instructions for submission of telehealth 
store and forward claims.)

Follow-Up Inpatient Telehealth Consultations Defined

    Follow-up inpatient telehealth consultations are consultative 
visits furnished via telehealth to follow up on an initial 
consultation, or subsequent consultative visits requested by the 
attending physician. The initial inpatient consultation may have been 
provided in person or via telehealth. The conditions of payment for 
follow-up inpatient telehealth consultations, including qualifying 
originating sites and the types of telecommunications systems 
recognized by Medicare, are subject to the provisions of Sec.  410.78. 
Payment for these services is subject to the provisions of Sec.  
414.65.
    Follow-up inpatient telehealth consultations include monitoring 
progress, recommending management modifications, or advising on a new 
plan of care in response to changes in the patient's status or no 
changes on the consulted health issue. Counseling and coordination of 
care with other providers or agencies is included as well, consistent 
with the nature of the problem(s) and the patient's needs. The 
physician or practitioner who furnishes the inpatient follow-up 
consultation via telehealth cannot be the physician of record or the 
attending physician, and the follow-up inpatient consultation would be 
distinct from the follow-up care provided by a physician of record or 
the attending physician. If a physician consultant has initiated 
treatment at an initial consultation and participates thereafter in the 
patient's ongoing care management, such care would not be included in 
the definition of a follow-up inpatient consultation and is not 
appropriate for delivery via telehealth. Follow-up inpatient telehealth 
consultations are subject to the criteria for consultation services, as

[[Page 69747]]

described in the CMS Internet-Only Medicare Claims Processing Manual, 
Pub 100-04, Chapter 12, Sec.  30.6.10.
    Payment for follow-up inpatient telehealth consultations includes 
all consultation related services furnished before, during, and after 
communicating with the patient via telehealth. Pre-service activities 
would include, but would not be limited to, reviewing patient data (for 
example, diagnostic and imaging studies, interim lab work) and 
communicating with other professionals or family members. Intra-service 
activities must include at least two of the three key elements 
described below for each procedure code. Post-service activities would 
include, but would not be limited to, completing medical records or 
other documentation and communicating results of the consultation and 
further care plans to other health care professionals. No additional E/
M service could be billed for work related to a follow-up inpatient 
telehealth consultation.
    Follow-up inpatient telehealth consultations could be provided at 
various levels of complexity. To reflect this, we are establishing 
three codes.
    Practitioners taking a problem focused interval history, conducting 
a problem focused examination, and engaging in medical decision making 
that is straightforward or of low complexity, would bill a limited 
service, using HCPCS code G0406. At this level of service, 
practitioners would typically spend 15 minutes communicating with the 
patient via telehealth.
    Practitioners taking an expanded focused interval history, 
conducting an expanded problem focused examination, and engaging in 
medical decision making that is of moderate complexity, would bill an 
intermediate service using HCPCS code G0407. At this level of service, 
practitioners would typically spend 25 minutes communicating with the 
patient via telehealth.
    Practitioners taking a detailed interval history, conducting a 
detailed examination, and engaging in medical decision making that is 
of high complexity, would bill a complex service, using HCPCS code 
G0408. At this level of service, practitioners would typically spend 35 
minutes or more communicating with the patient via telehealth.
    We are establishing the following HCPCS codes to describe follow-up 
inpatient consultations approved for telehealth:
     G0406, Follow-up inpatient telehealth consultation, 
limited, typically 15 minutes communicating with the patient via 
telehealth.
     G0407, Follow-up inpatient telehealth consultation, 
intermediate, typically 25 minutes communicating with the patient via 
telehealth.
     G0408, Follow-up inpatient telehealth consultation, 
complex, typically 35 minutes or more communicating with the patient 
via telehealth.
3. Other Issues
    Comment: In 2005, CMS received a request to add the following 
procedure codes to the list of approved telehealth services: initial 
nursing facility care (as described by HCPCS codes 99304 through 
99306); subsequent nursing facility care (HCPCS codes 99307 through 
99310); nursing facility discharge services (HCPCS codes 99315 and 
99316); and other nursing facility services (as described by HCPCS code 
99318). In the CY 2007 PFS final rule with comment period, we did not 
add these nursing facility care services to the list of approved 
telehealth services because these procedure codes did not describe 
services that were appropriate to the originating sites eligible in CY 
2007. At that time, SNFs were not defined in the statute as originating 
sites. (See 71 FR 69657.)
    Section 149 of the MIPPA recognizes SNFs as telehealth originating 
sites, effective for services furnished on or after January 1, 2009. In 
light of this provision, the American Telemedicine Association (ATA) 
urged us to add nursing facility care codes to the list of telehealth 
services for CY 2009, as requested in 2005.
    Response: Section 149 of the MIPPA did not add any services to the 
approved telehealth list. Currently, telehealth may substitute for a 
face-to-face, ``hands on'' encounter for professional consultations, 
office visits, office psychiatry services, and a limited number of 
other PFS services that we have determined to be appropriate for 
telehealth. We will continue to review requests for additions to this 
list using our existing criteria.
    Telehealth is a delivery mechanism for otherwise payable Part B 
services. Although the requested nursing facility services are not on 
the approved telehealth list, we will pay eligible distant site 
physicians or practitioners for eligible Medicare telehealth services 
if the service is separately payable under the PFS when furnished in a 
face-to-face encounter at a SNF effective January 1, 2009.
    Since we believed it was not relevant to add these codes when SNFs 
were not eligible originating sites, we did not include a full review 
of these codes in the CY 2007 PFS proposed rule or final rule with 
comment period. We also note that in considering nursing facility care 
for telehealth, we would need to carefully evaluate the use of 
telehealth for the personal visits that are currently required under 
Sec.  483.40, (which are billed using procedure codes included in this 
request). Overall, we believe that it would be more appropriate to 
consider the addition of nursing facility care services for telehealth 
through full notice and comment procedures.
    In the CY 2010 PFS proposed rule, we will address the request to 
add nursing facility care services to the list of approved telehealth 
services, as received in 2005. In light of the previous request to add 
these services and the new legislation adding SNFs as permissible 
telehealth originating sites, we will accept additional information in 
support of this request for consideration in the CY 2010 proposed rule 
if received prior to December 31, 2008.
    Comment: We received a request to add health and behavior 
assessment and intervention codes (as described by HCPCS codes 96150 
through 96154) to the list of approved telehealth services.
    Response: Requests submitted before the end of CY 2008 will be 
considered for the CY 2010 proposed rule. Requestors should be advised 
that each request to add a service to the list of Medicare telehealth 
services must include any supporting documentation the requestor 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 directly mail these requests, visit our 
Web site at http://www.cms.hhs.gov/telehealth/.

E. Specific Coding Issues Related to the Physician Fee Schedule

1. Payment for Preadministration-Related Services for Intravenous 
Infusion of Immune Globulin
    In the CY 2009 PFS proposed rule (73 FR 38518), we proposed to 
discontinue payment for HCPCS code G0332, Services for intravenous 
infusion of immunoglobulin prior to administration (this service is to 
be billed in conjunction with administration of immunoglobulin), for 
services furnished after December 31, 2008.
    Immune globulin is a complicated biological product that is 
purified from human plasma obtained from human plasma donors. In past 
years, there have been issues reported with the supply of intravenous 
immune globulin (IVIG) due to numerous factors including decreased 
manufacturing capacity, increased usage, more sophisticated

[[Page 69748]]

processing steps, and low demand for byproducts from IVIG 
fractionation.
    When IVIG is furnished to a patient in a physician's office, three 
different payments are usually recognized: payment for the IVIG product 
itself (described by a HCPCS J code); payment for the administration of 
the IVIG product (described by one or more CPT codes); and similar 
payment for the preadministration-related services (HCPCS code G0332). 
The Medicare payment rates for IVIG products are established through 
the Part B average sales price (ASP) drug payment methodology.
    As explained in detail in the CY 2006, CY 2007 and CY 2008 PFS 
final rules with comment period (70 FR 70218 to 70221, 71 FR 69678 to 
69679, and 72 FR 66254 to 66255, respectively), we created, in 2006, a 
temporary code in order to pay separately for the IVIG 
preadministration-related services in order to assist in ensuring 
appropriate access to IVIG during a period of market instability. Part 
of this instability was due to the implementation of the new ASP 
payment methodology for IVIG drugs which began in 2005. The payment for 
preadministration-related services was continued in 2007 and 2008 
because of continued reported instability in the IVIG marketplace. The 
preadministration-related payment was designed to pay the physician 
practice for the added costs of obtaining adequate supplies of the 
appropriate IVIG product and scheduling the patient infusion during a 
period of market uncertainty.
    The PFS rates for the pre-administration service codes were $72, 
$75, and $75 respectively in 2006, 2007, and 2008.
    In the CY 2009 PFS proposed rule, we noted that the Office of the 
Inspector General's (OIG) study on the availability and pricing of IVIG 
published in a April 2007 report entitled, ``Intravenous Immune 
Globulin: Medicare Payment and Availability (OEI-03-05-00404),'' found 
that for the third quarter of CY 2006, just over half of IVIG sales to 
hospitals and physicians were at prices below Medicare payment amounts. 
Relative to the previous three quarters, this represented a substantial 
increase of the percentage of sales with prices below Medicare amounts. 
During the third quarter of 2006, 56 percent of IVIG sales to hospitals 
and over 59 percent of IVIG sales to physicians by the largest 3 
distributors occurred at prices below the Medicare payment amounts. We 
reviewed national claims data for IVIG drug utilization as well as 
utilization of the preadministration-related services HCPCS code. The 
data show modest increases in the utilization of IVIG drugs and the 
preadministration-related services code, which suggest that IVIG 
pricing and access may be improving.
    In the CY 2009 PFS proposed rule, we noted that these factors, 
taken as a whole, suggested a lessening of the instability of the IVIG 
market. As a result of these developments, we proposed to discontinue 
the preadministration-related service payment in 2009 for HCPCS code 
G0332. For CY 2009, under the Outpatient Prospective Payment System 
(OPPS), a proposal was made to package payment for HCPCS code G0332 (73 
FR 41457).
    The following is a summary of the comments received and our 
responses.
    Comment: We received several comments from beneficiaries, patient 
advocate groups, manufacturers, and physicians. Most commenters opposed 
the elimination of the preadministration-related services payment. A 
few commenters requested that the preadministration-related services 
payment become permanent for both the PFS and the OPPS. Some commenters 
stated that the market conditions for IVIG are not fundamentally 
different than they were when CMS initially instituted the 
preadministration-related services payment in CY 2006. The commenters 
requested that CMS continue the separate payment until there is more 
stability in the IVIG market. Several commenters stated that the 
information CMS presented in the CY 2009 PFS proposed rule did not 
conclusively prove that the IVIG market was stabilizing. The commenters 
stated that significant access problems remain.
    In response to the findings of the OIG report, some commenters 
stated that the lag inherent in the ASP pricing system may have played 
a role in substantially increasing the percentage of IVIG sales at 
prices below the Medicare payment amounts in the third quarter of 2006. 
The preadministration-related service fee was cited as providing some 
assistance to physicians and hospitals that are experiencing problems 
obtaining IVIG. Several commenters noted that the OIG report could be 
interpreted as leaving a large percent of hospitals and physicians 
unable to acquire IVIG at prices below Medicare's payment amounts. Many 
commenters stated that they do not believe the introduction of new 
brand-specific reporting codes for IVIG will result in a more stable 
marketplace.
    One commenter presented patient surveys conducted in CYs 2006, 2007 
and 2008 which described access limitations and shifts in the site of 
service. These surveys were limited in size and surveyed only patients 
receiving IVIG for primary immune deficiency. Another commenter 
referred to a report on IVIG issued in February 2007 titled, ``Analysis 
of Supply, Distribution, Demand and Access Issues Associated with 
Immune Globulin Intravenous'' prepared by the Eastern Research Group 
under contract (Contract No. HHSP23320045012XI) to the Assistant 
Secretary of Planning and Evaluation in the U.S. Department of Health 
and Human Services and cited this report as an important source of 
information on IVIG usage and patient access.
    Response: The separate payment for IVIG preadministration-related 
service was designed to compensate the physician practice for the 
additional, unusual, and temporary costs associated with obtaining IVIG 
products and scheduling patient infusions during a temporary period of 
market instability. This payment was never intended to subsidize 
payment for drugs made under the ASP system.
    In the CY 2009 PFS proposed rule, we referred to data from the OIG 
study that indicated that for the third quarter of 2006, just over half 
of IVIG sales to hospitals and physicians were at prices below Medicare 
payment amounts. Relative to the previous three quarters, this 
represented a substantial increase of the percentage of sales with 
prices below Medicare amounts. We agree with the commenters that it is 
likely that increased ASP payments were the result of previous price 
increases from past quarters influencing future ASP data. Furthermore, 
the new HCPCS codes for IVIG products allow the physician to report and 
receive payment for the specific product furnished to the patient. We 
stated clearly in the CY 2006 PFS final rule with comment period that 
the preadministration-related services payment policy was a temporary 
measure to pay physicians for the unusual and temporary costs 
associated with procuring IVIG. We expected that these costs would 
decline over time as practices became more familiar with the nuances of 
the IVIG market and the availability of the limited primary and 
secondary suppliers in their areas.
    We did not reference the report conducted by the Eastern Research 
Group (Contract No. HHSP23320045012XI) in the proposed rule. As the 
commenter noted, this report provides important comprehensive 
background on the IVIG marketplace. For example, it provides an 
analysis of IVIG supply and distribution, and an analysis of the

[[Page 69749]]

demand for and utilization of IVIG products. This report describes how 
IVIG is administered and paid and includes information from the 
industry and others on physician and patient problems with access to 
IVIG. The study is a collection of multi-source information that 
provides an understanding of the IVIG marketplace. One limitation of 
the study is it depicts the market only up through the first quarter of 
2006 and it does not have detailed information on IVIG pricing as the 
OIG report did. The OIG report also contains data from a later time 
period because it includes data through the third quarter of 2006.
    We note, based on the information that follows, that the IVIG 
market today appears more stable than it was in CY 2006. We have 
reviewed national claims data for IVIG drug utilization, as well as the 
utilization of the preadministration-related services HCPCS code. These 
data show a modest increase in the utilization of IVIG and the 
preadministration-related services code in both physicians' offices and 
hospital outpatient departments from CY 2006 to CY 2007, after a period 
of decreased IVIG utilization in physicians' offices with a shift of 
IVIG infusions to the hospital outpatient department in the previous 
year, which suggests that IVIG pricing and access may be improving.
    National Medicare claims history data show that there were about 
3.1 million units of IVIG administered in physicians' offices in CY 
2006, and 7.3 million units in hospital outpatient departments. In CY 
2007, those numbers rose to estimates of 3.3 million units and 8.1 
million units in the office and hospital outpatient department 
settings, respectively. Under the OPPS, the total number of days of 
IVIG administration increased modestly from CY 2006 to CY 2007, from 
113,000 to 119,000. Aggregate allowed IVIG charges in the physician's 
office setting for CY 2006 were $82 million, while total payments 
(including beneficiary copayments) under the OPPS were $184 million for 
the same time period. In CY 2007, aggregate allowed charges in the 
physician's office setting are estimated at $8 million, while total 
OPPS payments are estimated at $246 million.
    In summary, beginning in CY 2007, IVIG utilization increased 
modestly in both the physician's office setting and the hospital 
outpatient department, after a prior shift to the hospital and away 
from the physicians' offices, presumably reflecting increasing 
availability of IVIG and appropriate payment for the drug in both 
settings.
    According to information on the Plasma Protein Therapeutics 
Association (PPTA) Web site regarding the supply of IVIG, in the past 
year, while the supply has spiked at various times throughout the year, 
the supply has remained above or near the 12-month moving average. 
While we acknowledge that the supply is only one of several factors 
that influence the market, we believe that an adequate supply is one 
significant factor that contributes to better access to IVIG for 
patients.
    Therefore, because we believe that the reported transient market 
conditions that led us to adopt the separate payment for IVIG 
preadministration-related services have improved, we believe that 
continuation of the separate payment for preadministration services 
beyond CY 2008 is not warranted.
    After consideration of the public comments received, we are 
finalizing our CY 2009 proposal, without modification, to discontinue 
separate payment under the PFS for IVIG preadministration-related 
services described by HCPCS code G0332. The treatment of payment for 
preadministration-related services under the OPPS will be addressed 
separately in that final rule. We will continue to work with IVIG 
stakeholders to understand their concerns regarding the pricing of IVIG 
and Medicare beneficiary access to this important therapy.
2. Multiple Procedure Payment Reduction for Diagnostic Imaging
    In general, we price diagnostic imaging procedures in the following 
three ways:
     The PC represents the physician's interpretation (PC-only 
services are billed with the 26 modifier).
     The TC represents PE and includes clinical staff, 
supplies, and equipment (TC-only services are billed with the TC 
modifier).
     The global service represents both PC and TC.
    Effective January 1, 2006, we implemented a multiple procedure 
payment reduction (MPPR) on certain diagnostic imaging procedures (71 
FR 48982 through 49252 and 71 FR 69624 through 70251). When two or more 
procedures within one of 11 imaging code families are furnished on the 
same patient in a single session, the TC of the highest priced 
procedure is paid at 100 percent and the TC of each subsequent 
procedure is paid at 75 percent (a 25-percent reduction). The reduction 
does not apply to the PC.
    It is necessary to periodically update the list of codes subject to 
the MPPR to reflect new and deleted codes. In the CY 2009 PFS proposed 
rule, we proposed to subject several additional procedures to the MPPR 
(73 FR 38519). Six procedures represent codes newly created since the 
MPPR list was established. Four additional procedures have been 
identified as similar to procedures currently subject to the MPPR. We 
also proposed to remove CPT code 76778, a deleted code, from the list. 
Table 6 contains the proposed additions to the list. After we adopted 
the MPPR, section 5102 of the Deficit Reduction Act of 2005 (Pub. L. 
109-171) (DRA) exempted the expenditure reductions resulting from this 
policy from the statutory BN requirement. Therefore, we proposed that 
expenditure reductions resulting from these changes be exempt from BN. 
(See the Regulatory Impact Analysis in section XVI. of this final rule 
with comment period for a discussion of BN.) The complete list of 
procedures subject to the MPPR is in Addendum F of this final rule with 
comment period.

  Table 6--Procedures Proposed for Multiple Procedure Payment Reduction
------------------------------------------------------------------------
           CPT code              Short descriptor       Code family
------------------------------------------------------------------------
70336.........................  mri,               Family 5 MRI and MRA
                                 temporomandibula   (Head/Brain/Neck).
                                 r joint(s).
70554.........................  Fmri brain by      Family 5 MRI and MRA
                                 tech.              (Head/Brain/Neck).
75557.........................  Cardiac mri for    Family 4 MRI and MRA
                                 morph.             (Chest/Abd/Pelvis).
75559.........................  Cardiac mri w/     Family 4 MRI and MRA
                                 stress img.        (Chest/Abd/Pelvis).
75561.........................  Cardiac mri for    Family 4 MRI and MRA
                                 morph w/dye.       (Chest/Abd/Pelvis).
75563.........................  Cardiac mri w/     Family 4 MRI and MRA
                                 stress img & dye.  (Chest/Abd/Pelvis).
76776.........................  Us exam k transpl  Family 1 Ultrasound
                                 w/doppler.         (Chest/Abdomen/
                                                    Pelvis--Non-
                                                    Obstetrical).
76870.........................  Us exam, scrotum.  Family 1 Ultrasound
                                                    (Chest/Abdomen/
                                                    Pelvis--Non-
                                                    Obstetrical).
77058.........................  Mri, one breast..  Family 4 MRI and MRA
                                                    (Chest/Abd/Pelvis).

[[Page 69750]]

 
77059.........................  Mri, broth         Family 4 MRI and MRA
                                 breasts.           (Chest/Abd/Pelvis).
------------------------------------------------------------------------

    The following is a summary of the comments we received and our 
responses.
    Comment: Some commenters indicated that the MPPR should not be 
extended to additional procedures without providing data supporting the 
appropriateness of a 25-percent payment reduction for the additional 
procedures. A commenter expressed concern that the MPPR was being 
extended to include breast MRIs, but the commenter provided no other 
information.
    Response: As stated in the CY 2006 PFS final rule with comment 
period (70 FR 70261), when multiple images are taken in a single 
session, most of the clinical labor activities and supplies are not 
duplicated for subsequent procedures. Specifically, the following 
activities are not duplicated for subsequent procedures:
     Greeting the patient.
     Positioning and escorting the patient.
     Providing education and obtaining consent.
     Retrieving prior exams.
     Setting up the IV.
     Preparing and cleaning the room.
    In addition, we considered that supplies, with the exception of 
film, are not duplicated for subsequent procedures.
    To determine the appropriate level of the payment reduction for 
multiple procedures, we examined multiple pairs of procedure codes from 
the families representing all modalities (that is, ultrasound, CT/CTA, 
and MRI/MRA studies) that were frequently performed on a single day 
based on historical claims data. Using PE input data provided by the 
RUC, we factored out the clinical staff minutes for the activities we 
indicated are not duplicated for subsequent procedures, and the 
supplies, other than film, which we considered are not duplicated for 
subsequent procedures. We did not assume any reduction in procedure 
(scanning) time or equipment for subsequent procedures. However, 
equipment time and indirect costs are allocated based on clinical labor 
time; therefore, these inputs were reduced accordingly. Removing the PE 
inputs for activities that are not duplicated, and adjusting the 
equipment time and indirect costs for the individual pairs of 
procedures studied, supported payment reductions ranging from 40 to 59 
percent for the subsequent services. Because we found a relatively 
narrow range of percentage payment reductions across modalities and 
families, and taking into consideration that we did not eliminate any 
duplicative image acquisition time for subsequent procedures in our 
analysis, we originally proposed an across-the-board MPPR for all 11 
families of 50 percent (which is approximately the midpoint of the 
range established through our analysis). We believe this level of 
reduction was both justified and conservative (70 FR 45849). To allow 
for a transition of the changes in payments for these services 
attributable to this policy, we implemented a 25 percent payment 
reduction for all code families in CY 2006 which was scheduled to 
increase to a 50 percent reduction in CY 2007.
    Subsequent to the publication of the CY 2006 PFS final rule with 
comment period, section 5102 (b) of the DRA capped the PFS payment for 
most imaging services at the amount paid under the hospital outpatient 
prospective payment system (OPPS). In addition, in response to our 
request for data on the appropriateness of the 50 percent reduction in 
the CY 2006 PFS final rule with comment period, the American College of 
Radiology (ACR) provided information for 25 code combinations 
supporting a reduction of between 21 and 44 percent. Given the expected 
interaction between the MPPR policy and the further imaging payment 
reductions mandated by section 5102(b) of the DRA, along with the 
information we received from the ACR on the MPPR as it applies to 
common combinations of imaging services, we decided it was prudent to 
maintain the MPPR at its current 25 percent level while we continue to 
examine the appropriate payment levels. Therefore, we have maintained 
the MPPR at the 25 percent level.
    In establishing the MPPR, we elected to use a single reduction 
percentage for all code pairs. We adopted a percentage reduction that 
is considerably lower than the range supported by our prior analysis, 
and slightly higher than the lowest percentage supported by ACR's 
analysis. We do not believe it is necessary to conduct another analysis 
for the additional codes because we adopted a conservative reduction 
percentage and are continuing use of a single reduction percentage for 
all code pairs. We believe the payment reduction policy, described 
above, represents an appropriate reduction for the typical delivery of 
multiple imaging services furnished in the same session.
    Furthermore, in establishing the MPPR, we limited it to codes in 
the same family, that is, contiguous areas of the body that are 
commonly furnished on the same patient, in the same session, on the 
same day. We believe that the eight CPT codes that were newly created 
for 2007 or 2008, and proposed for inclusion in the MPPR beginning in 
CY 2009 (CPT codes 70554, 75557, 75559, 75561, 75563, 76776, 77058, and 
77059), would have been included on the MPPR list when it was finalized 
in CY 2006, had they existed at the time. These CPT codes are similar 
to CPT codes that were selected for the list in CY 2006 and can be 
classified into the 11 contiguous body area families already in 
existence. For example, the procedure described by CPT code 76776 
(Ultrasound, transplanted kidney, real time and duplex Doppler with 
image documentation) is similar to the procedure described by CPT code 
76705 (Ultrasound, abdominal, real time with image documentation; 
limited (for example, single organ, quadrant, follow-up), which has 
been subject to the MPPR since the creation of the policy in CY 2006. 
Similarly, we believe we should add CPT codes 70336 and 76870, which 
were in existence in CY 2006, to the list because they also share 
characteristics with other procedures subject to the MPPR.
    In response to the commenter expressing concern that we were adding 
the breast MRI CPT codes 77058 and 77059 in particular, we are not 
certain of the reason for his or her concern because none was stated. 
However, we continue to believe it is appropriate to add these CPT 
codes because their addition is consistent with our policy for other 
procedures included in Family 4, which describe procedures involving 
MRI of the chest area.
    To the extent that the newly added procedures do not meet the MPPR 
criteria (for example, if they are not performed in the same session), 
they will be unaffected by the MPPR.

[[Page 69751]]

    Comment: Commenters noted that we proposed to establish new 
composite rates for certain multiple diagnostic imaging procedures 
performed at the same time in hospital outpatient settings. One 
commenter asked whether individual procedure payment rates, or the 
composite payment rates under hospital OPPS will be used for purposes 
of applying the OPPS cap to PFS services. The commenter also asked 
whether we will continue our policy of applying the MPPR before 
application of the OPPS cap.
    Response: Under the PFS, services are paid based on the individual 
CPT or HCPCS code. Therefore, the OPPS cap will continue to be applied 
based on the hospital OPPS ambulatory payment classification (APC) rate 
for the individual procedure, and not the composite rate. The policy of 
applying the MPPR before applying the OPPS cap remains unchanged.
    Comment: Several commenters expressed concern that the proposed 
MPPR undervalues the procedures and jeopardizes beneficiary access to 
care. One commenter indicated that we should examine any shifts in the 
site-of-service that may have resulted due to the MPPR.
    Response: The Government Accountability Office (GAO) and the Office 
of the Inspector General (OIG) have been performing several reviews 
relating to the utilization of imaging procedures including the effects 
of the OPPS cap and the MPPR on utilization, payment, and access to 
care. We will continue to monitor the effects of the policies to ensure 
that beneficiaries have proper access to care.
    After reviewing the public comments, we are proceeding with the 
policy as proposed. The ten additional procedures listed in Table 6 
will be subject to the MPPR, effective January 1, 2009.
3. HCPCS Code for Prostate Saturation Biopsies
    In the CY 2009 PFS proposed rule, we proposed to create four new G 
codes for prostate saturation biopsy as shown in Table 7, currently 
reported with CPT code 88305, Surgical pathology, gross and microscopic 
examination, which is separately billed by the physician for each core 
sample taken. We also proposed to have Medicare contractors price these 
codes.

                  Table 7--G Codes for Prostate Biopsy
------------------------------------------------------------------------
                 G code                             Descriptor
------------------------------------------------------------------------
G0416..................................  Surgical pathology, gross and
                                          microscopic examination for
                                          prostate needle saturation
                                          biopsy sampling, 1-20
                                          specimens.
G0417..................................  Surgical pathology, gross and
                                          microscopic examination for
                                          prostate needle saturation
                                          biopsy sampling, 21-40
                                          specimens.
G0418..................................  Surgical pathology, gross and
                                          microscopic examination for
                                          prostate needle saturation
                                          biopsy sampling, 41-60
                                          specimens.
G0419..................................  Surgical pathology, gross and
                                          microscopic examination for
                                          prostate needle saturation
                                          biopsy sampling, greater than
                                          60 specimens.
------------------------------------------------------------------------

    The following is a summary of the comments we received and our 
responses.
    Comment: Some commenters expressed opposition to this proposal, 
while others supported it but recommended modifications to the proposed 
G codes. All commenters were opposed to Medicare contractor pricing the 
G codes and stated that CMS, rather than the Medicare contractor, 
should assign an appropriate work value for each specimen level to 
capture the expertise, skill, time, and resources used to determine if 
prostate cancer is present.
    Response: First, for CY 2009, the CPT Editorial Panel changed 
Category III code (0137T) to a Category I code, 55706, Biopsies, 
prostate; needle, transperineal, stereotactic template guided 
saturation sampling including image guidance, which the AMA RUC valued 
at 6.15 work RVUs. As discussed in the proposed rule, we currently pay 
$102.35 for CPT code 88305, which is the code used by pathologists when 
interpreting prostate biopsy samples. Patients requiring a prostate 
saturation biopsy generally have 30 to 60 specimens taken. The 
pathologist would bill CPT code 88305 for evaluation of each individual 
specimen. When CPT code 88305 is used to evaluate prostate saturation 
biopsies, the average total payment for the evaluation of samples from 
one prostate needle saturation biopsy ranges from $3000 to $6000, 
depending on the number of biopsies taken. We believe the use of CPT 
code 88305 to bill individually for the evaluation of each biopsy 
sample would result in overpayment for this service. Therefore, we are 
proceeding with the proposal to create four G codes for pathologic 
examination of prostate needle saturation tissue sampling for services 
furnished beginning in 2009.
    However, we agree with commenters that, rather than having Medicare 
contractors price the new G codes, it would be preferable for us to 
specify the payment for these services. We generally use contractor 
pricing when we do not have sufficient information to set the price. 
Upon further reflection, we believe we can set prices for the new G-
codes by analogy to the current RVUs for two existing codes: 88304 and 
88305. We selected the mid-point of the range of samples for G0417, 
G0418, and G0419 to calculate the average number of samples for each 
code. We assumed 15 percent of the samples taken require considerable 
clinical expertise to differentiate and distinguish carcinoma from 
hyperplasia. We assigned the work and PE values of 88305 to the 15 
percent of samples requiring this level of expertise. The remaining 85 
percent of samples require confirmation of prostate tissue and 
interpretation indicating the presence of cancer or not since the 
diagnosis had been identified in the 15 percent of samples. We assigned 
the work and PE of 88304 to this group of samples. We assigned the full 
work and PE payment to the 15 percent sample component to reflect the 
skill, time, and effort required to identify and diagnose carcinoma. We 
applied the multiple surgical procedure discount (RVUs were reduced by 
50 percent in accordance with current CMS policy) to the remaining 85 
percent of samples reviewed for identification and confirmation of 
prostate tissue. We selected the 75th percentile of samples from G0416 
to recognize the greater degree of skill, time, and effort required to 
review, identify, and interpret the initial biopsy specimens sampled. 
(See Addendum B for the values assigned to these G codes.)

    Note: Under the PFS, CPT code 88305 will continue to be 
recognized for those surgical pathology services unrelated to 
prostate needle saturation biopsy sampling.

F. Part B Drug Payment

1. Average Sales Price (ASP) Issues
    Medicare Part B covers a limited number of prescription drugs and 
biologicals. For the purposes of this final rule with comment period, 
the term ``drugs'' will hereafter refer to both drugs and biologicals, 
unless otherwise specified. Medicare Part B covered drugs not paid on a 
cost or prospective payment basis generally fall into the following 
three categories:
     Drugs furnished incident to a physician's service.
     DME drugs.

[[Page 69752]]

     Drugs specifically covered by statute (certain 
immunosuppressive drugs, for example).
    Beginning in CY 2005, the vast majority of Medicare Part B drugs 
not paid on a cost or prospective payment basis are paid under the ASP 
methodology. The ASP methodology is based on data submitted to us 
quarterly by manufacturers. In addition to the payment for the drug, 
Medicare currently pays a furnishing fee for blood clotting factors, a 
dispensing fee for inhalation drugs, and a supplying fee to pharmacies 
for certain Part B drugs.
    In this section, we discuss recent statutory changes to the ASP 
methodology and other drug payment issues.
a. Determining the Payment Amount Based on ASP Data
    The methodology for developing Medicare drug payment allowances 
based on the manufacturers' submitted ASP data is specified in 42 CFR 
part 414, subpart K. We initially established this regulatory text in 
the CY 2005 PFS final rule with comment period (69 FR 66424). We 
further described the formula we use to calculate the payment amount 
for each billing code in the CY 2006 PFS proposed rule (70 FR 45844) 
and final rule with comment period (70 FR 70217). With the enactment of 
the MMSEA, the formula we use changed beginning April 1, 2008. Section 
112(a) of the MMSEA requires us to calculate payment amounts using a 
specified volume-weighting methodology. In addition, section 112(b) of 
the MMSEA sets forth a special rule for determining the payment amount 
for certain inhalation drugs.
    For each billing code, we calculate a volume-weighted, ASP-based 
payment amount using the ASP data submitted by manufacturers. 
Manufacturers submit ASP data to us at the 11-digit National Drug Code 
(NDC) level, including the number of units of the 11-digit NDC sold and 
the ASP for those units. We determine the number of billing units in an 
NDC based on the amount of drug in the package. For example: a 
manufacturer sells a box of four vials of a drug. Each vial contains 20 
milligrams (mg). The billing code is per 10 MG. The number of billing 
units in this NDC for this billing code is (4 vials x 20mg)/10mg = 8 
billable units.
    Prior to April 1, 2008, we used the following three-step formula to 
calculate the payment amount for each billing code. First, we converted 
the manufacturer's ASP for each NDC into the ASP per billing unit by 
dividing the manufacturer's ASP for that NDC by the number of billing 
units in that NDC. Then, we summed the product of the ASP per billing 
unit and the number of units of the 11-digit NDC sold for each NDC 
assigned to the billing code. Then, we divided this total by the sum of 
the number of units of the 11-digit NDC sold for each NDC assigned to 
the billing code.
    Beginning April 1, 2008, we use a two-step formula to calculate the 
payment amount for each billing code. We sum the product of the 
manufacturer's ASP and the number of units of the 11-digit NDC sold for 
each NDC assigned to the billing and payment code, and then divide this 
total by the sum of the product of the number of units of the 11-digit 
NDC sold and the number of billing units in that NDC for each NDC 
assigned to the billing and payment code.
    In addition to the formula change, the MMSEA established a special 
payment rule for certain inhalation drugs furnished through an item of 
durable medical equipment (DME). The ``grandfathering'' provision in 
section 1847A(c)(6)(C)(ii) of the Act requires that certain drugs be 
treated as multiple source drugs for purposes of calculating the 
payment allowance limits. Section 112(b) of the MMSEA requires that, 
effective April 1, 2008, the payment amount for inhalation drugs 
furnished through an item of DME is the lesser of the amount determined 
by applying the grandfathering provision or by not applying that 
provision. We reviewed our payment determinations effective January 1, 
2008 to identify the drugs subject to this special rule, and 
implemented this new requirement in accordance with the statutory 
implementation date of April 1, 2008. We identified that albuterol and 
levalbuterol, in both the unit dose and concentrated forms, are subject 
to the special payment rule. At this time, we have not identified other 
inhalation drugs furnished through an item of DME to which section 
112(b) of the MMSEA applies.
    The provisions in section 112 of the MMSEA are self-implementing 
for services on and after April 1, 2008. Because of the limited time 
between enactment and the implementation date, it was not practical to 
undertake and complete rulemaking on this issue prior to implementing 
the required changes. As a result of the legislation, we proposed to 
revise Sec.  414.904 to codify the changes to the determination of 
payment amounts as required by section 112 of the MMSEA. We solicited 
comments on the proposed regulatory text.
    The following is a summary of the comments we received and our 
responses.
    Comment: We received a number of comments regarding our proposed 
regulatory text. All of comments we received strongly supported our 
proposed regulatory text. Several comments strongly urged CMS to ensure 
that the methodology is properly applied to all drugs paid under the 
ASP methodology.
    Response: We appreciate the support from the public with regard to 
the implementation of this statutory provision. We have been applying 
the revised methodology since April 2008 and are unaware of payment 
issues resulting from its usage. The new methodology is being applied 
consistently across all Part B drugs subject to the ASP methodology.
    Comment: One commenter requested that we limit the application of 
the special payment rule, established by section 112(b) of MMSEA to 
only albuterol and levalbuterol.
    Response: We disagree with this comment. While we currently believe 
that we have identified all of the drugs to which the special payment 
rule applies, it would be imprudent to expressly limit its application 
to albuterol and levalbuterol in the regulations text because the 
statute does not do so. The statute refers to certain drugs described 
in section 1842(o)(1)(G) of the Act. Thus, we believe the regulations 
text, as proposed, adequately specifies the drugs to which the special 
rule applies. We have committed, via postings on our web site, to 
proceeding transparently when making pricing determinations and have 
done so by posting our decisions on our web site. We will continue to 
do so in the future.
    After review of the public comments, we are finalizing our proposed 
regulatory text at Sec.  414.904.
b. Average Manufacturer Price (AMP)/ Widely Available Market Prices 
(WAMP)
    Section 1847A(d)(1) of the Act states that ``the Inspector General 
of HHS shall conduct studies, which may include surveys to determine 
the widely available market prices (WAMP) of drugs and biologicals to 
which this section applies, as the Inspector General, in consultation 
with the Secretary, determines to be appropriate.'' Section 1847A(d)(2) 
of the Act states that, ``Based upon such studies and other data for 
drugs and biologicals, the Inspector General shall compare the ASP 
under this section for drugs and biologicals with--

[[Page 69753]]

     The WAMP for such drugs and biologicals (if any); and
     The average manufacturer price (AMP) (as determined under 
section 1927(k)(1) of the Act for such drugs and biologicals.''
    Section 1847A(d)(3)(A) of the Act states that, ``The Secretary may 
disregard the average sales price (ASP) for a drug or biological that 
exceeds the WAMP or the AMP for such drug or biological by the 
applicable threshold percentage (as defined in subparagraph (B)).'' The 
applicable threshold percentage is specified in section 
1847A(d)(3)(B)(i) of the Act as 5 percent for CY 2005. For CY 2006 and 
subsequent years, section 1847A(d)(3)(B)(ii) of the Act establishes 
that the applicable threshold percentage is ``the percentage applied 
under this subparagraph subject to such adjustment as the Secretary may 
specify for the WAMP or the AMP, or both.'' In CY 2006 through CY 2008, 
we specified an applicable threshold percentage of 5 percent for both 
the WAMP and AMP comparisons. We based this decision on the limited 
data available to support a change in the current threshold percentage.
    For CY 2009, we proposed to specify an applicable threshold 
percentage of 5 percent for the WAMP and the AMP comparisons. As we 
stated in the proposed rule, the OIG is continuing its ongoing 
comparison of both the WAMP and the AMP. However, information on how 
recent changes to the ASP weighting methodology may affect the 
comparison of WAMP/AMP to ASP was not available in time for 
consideration prior to developing our proposal to maintain the 
applicable threshold percentage at 5 percent for CY 2009. Although we 
have recently received reports comparing ASP to AMP in which the OIG 
states it has applied the new volume-weighting methodology 
consistently, we have not had sufficient time to analyze these reports. 
Thus, we do not have data suggesting a more appropriate level for the 
threshold at this time. Therefore, we believe that continuing the 5 
percent applicable threshold percentage for both the WAMP and AMP 
comparisons is appropriate for CY 2009.
    As we noted in the CY 2008 PFS final rule with comment period (72 
FR 66259), we understand that there are complicated operational issues 
associated with potential payment substitutions. We will continue to 
proceed cautiously in this area and provide stakeholders, particularly 
manufacturers of drugs impacted by potential price substitutions, with 
adequate notice of our intentions regarding such, including the 
opportunity to provide input with regard to the processes for 
substituting the WAMP or the AMP for the ASP. As part of our approach, 
we intend to develop a better understanding of the issues that may be 
related to certain drugs for which the WAMP and AMP may be lower than 
the ASP over time.
    We solicited comments on our proposal to continue the applicable 
threshold at 5 percent for both the WAMP and AMP for CY 2009.
    The following is a summary of the comments we received and our 
responses.
    Comment: Most commenters supported maintaining the threshold at 5 
percent. Other commenters suggested that we exercise caution in the 
determination of price substitutions and that we develop a formal 
process and criteria to determine when substitutions are necessary. 
Commenters also recommended that we provide adequate notice prior to 
making a price substitution.
    Response: We appreciate the comments to maintain the threshold at 5 
percent. As we noted in the CY 2008 PFS final rule with comment period 
(72 FR 66259), we understand that there are complicated operational 
issues associated with potential payment substitutions. We will 
continue to proceed cautiously in this area and provide stakeholders, 
particularly manufacturers of drugs impacted by potential price 
substitutions, with adequate notice of our intentions regarding such, 
including the opportunity to provide input with regard to the processes 
for substituting the WAMP or the AMP for the ASP. As part of our 
approach, we intend to develop a better understanding of the issues 
that may be related to certain drugs for which the WAMP and AMP may be 
lower than the ASP over time.
    After reviewing of the public comments, we are finalizing our 
proposal to establish the WAMP/AMP threshold at 5 percent for CY 2009.
2. Competitive Acquisition Program (CAP) Issues
    Section 303(d) of the MMA requires the implementation of a 
competitive acquisition program (CAP) for certain Medicare Part B drugs 
not paid on a cost or PPS basis. The provisions for acquiring and 
billing drugs under the CAP were described in the Competitive 
Acquisition of Outpatient Drugs and Biologicals Under Part B proposed 
rule (March 4, 2005, 70 FR 10746) and the interim final rule (July 6, 
2005, 70 FR 39022), and certain provisions were finalized in the CY 
2006 PFS final rule with comment period (70 FR 70236). The CY 2007 PFS 
final rule with comment period (72 FR 66260) then finalized portions of 
the July 6, 2005 IFC that had not already been finalized.
    The CAP is an alternative to the ASP (buy and bill) methodology of 
obtaining certain Part B drugs used incident to physicians' services. 
Physicians who choose to participate in the CAP obtain drugs from 
vendors selected through a competitive bidding process and approved by 
CMS. Under the CAP, physicians agree to obtain all of the approximately 
190 drugs on the CAP drug list from an approved CAP vendor. A vendor 
retains title to the drug until it is administered, bills Medicare for 
the drug, and bills the beneficiary for cost sharing amounts once the 
drug has been administered. The physician bills Medicare only for 
administering the drug to the beneficiary. The CAP currently operates 
with a single CAP drug category. CAP claims processing began on July 1, 
2006.
    After the CAP was implemented, section 108 of the MIEA-TRHCA made 
changes to the CAP payment methodology. Section 108(a)(2) of the MIEA-
TRHCA requires the Secretary to establish (by program instruction or 
otherwise) a post-payment review process (which may include the use of 
statistical sampling) to assure that payment is made for a drug or 
biological only if the drug or biological has been administered to a 
beneficiary. The Secretary is required to recoup, offset, or collect 
any overpayments. This statutory change took effect on April 1, 2007. 
Conforming changes were proposed in the CY 2008 PFS proposed rule (72 
FR 38153) and finalized in the CY 2008 PFS final rule with comment 
period (72 FR 66260).
    In the CY 2009 PFS proposed rule, we proposed several refinements 
to the CAP regarding the annual CAP payment amount update mechanism, 
the definition of a CAP physician, the restriction on physician 
transportation of CAP drugs, and the dispute resolution process (73 FR 
38522). However, since the publication of our proposed rule, we have 
announced the postponement of the CAP for 2009 due to contractual 
issues with the successful bidders. As a result, CAP physician election 
for participation in the CAP in 2009 is not being held this Fall, and 
CAP drugs will not be available from an Approved CAP Vendor for dates 
of service after December 31, 2008.
    Moreover, we are currently soliciting public feedback on the CAP 
from participating physicians, potential vendors, and other interested 
parties. We are soliciting public comments

[[Page 69754]]

about a range of issues, including, but not limited to the following 
issues: the categories of drugs provided under the CAP; the 
distribution of areas that are served by the CAP; and procedural 
changes that may increase the program's flexibility and appeal to 
potential vendors and physicians. Interested parties can submit 
feedback about the CAP electronically or request to meet with us in 
person. Feedback about the CAP and meeting requests can be submitted 
electronically to: MMA303DDrugBid@cms.hhs.gov.
    We will also host a CAP Open Door Forum (ODF) this December for 
participating physicians, potential vendors, and other interested 
parties. Participants will have an opportunity to discuss the 
postponement and suggest changes to the program. Additional information 
about this event will be available on the CMS CAP Web site at http://www.cms.hhs.gov/CompetitiveAcquisforBios/.
    We will assess information from the public and consider 
implementing changes to the CAP before proceeding with another bid 
solicitation for Approved CAP Vendor contracts. Furthermore, in light 
of the postponement of the CAP, we believe it would be prudent to 
consider the additional information that is being collected before 
finalizing any further changes to the program. For this reason, we will 
not finalize the CAP items in the CY 2009 proposed rule at this time. 
We appreciate the comments that we have received and we will consider 
these comments as we assess potential changes to the program and future 
rulemaking.

G. Application of the HPSA Bonus Payment

    Section 1833(m) of the Act provides for an additional 10-percent 
bonus payment for physicians' services furnished in a year to a covered 
individual in an area that is designated as a geographic Health 
Professional Shortage Area (HPSA) as identified by the Secretary prior 
to the beginning of such year. The statute indicates that the HPSA 
bonus payment will be made for services furnished during a year in 
areas that have been designated as HPSAs prior to the beginning of that 
year. As a result, the HPSA bonus payment is made for physicians' 
services furnished in an area designated as of December 31 of the prior 
year, even if the area's HPSA designation is removed during the current 
year. However, for physicians' services furnished in areas that are 
designated as geographic HPSAs after the beginning of a year, the HPSA 
bonus payment is not made until the following year, if the area is 
still designated as of December 31 of that year.
    In the CY 2005 PFS final rule with comment period (69 FR 66297), we 
stated that determination of zip codes for automatic HPSA bonus payment 
will be made on an annual basis and that there would be no updates to 
the zip code file during the year. We also stated that physicians 
furnishing covered services in ``newly designated'' HPSAs may add a 
modifier to their Medicare claims to collect the HPSA bonus payment 
until our next annual posting of zip codes for which automatic payment 
of the bonus will be made.
    In the CY 2009 PFS proposed rule, we proposed to revise Sec.  
414.67 to clarify that physicians who furnish services in areas that 
are designated as geographic HPSAs as of December 31 of the prior year 
but not included on the list of zip codes for automated HPSA bonus 
payments should use the AQ modifier to receive the HPSA bonus payment.
    Comment: We received comments in support of using the AQ modifier 
to ensure that all physicians furnishing services in a geographic HPSA 
that is not included in the list of zip codes eligible for automatic 
bonus payments will still receive the 10-percent HPSA bonus payment. 
One commenter emphasized that this clarification would lessen the 
administrative burdens they experienced from the lack of a modifier in 
the past.
    A few commenters expressed concern that many physicians may not be 
aware of the AQ modifier requirement for services furnished in areas 
that are not on the list of zip codes for automatic payment. One 
commenter urged us to use educational materials and outreach in order 
to ensure physicians are aware they may need to use the AQ modifier 
when submitting their Medicare claims. Another commenter requested that 
we develop a method to ensure payments are received automatically for 
all physicians that would qualify for the HPSA bonus payment.
    One commenter suggested that we change the HPSA bonus payment 
program to include nonphysicians and work with the Congress to allow 
all persons who directly bill under Part B to be eligible for the 10-
percent bonus for working in a designated HPSA.
    Response: We appreciate the comments in support of our efforts to 
ensure all physicians furnishing services to Medicare beneficiaries in 
an area that is designated as a geographic HPSA on December 31 of the 
prior year receive the HPSA bonus payment.
    As a result of refinements in our systems, we expect that more 
areas that are eligible for the bonus payment will be on the list of 
zip codes eligible for automatic payment of the HPSA bonus, thereby 
reducing the number of physicians who need to use the modifier. 
However, we acknowledge that some physicians may not be aware of the 
need to use the modifier if they are furnishing services in a 
geographic HPSA that was designated after the list of eligible zip 
codes was created but prior to December 31. We will continue to utilize 
our provider education resources to increase awareness of the 
appropriate application of the AQ modifier. We will also continue to 
refine our systems to include as many areas as possible to the list of 
zip codes that receive automatic HPSA bonus payments.
    We recognize that there can be shortages of all types of healthcare 
practitioners and we indeed appreciate the value of these 
nonphysicians. However, section 1833(m) of the Act provides for the 
payment of an additional amount only to physicians and a change would 
require a statutory revision.
    After careful consideration of all of the comments, we are adopting 
our proposal to add Sec.  414.67(d) with minor revisions to clarify 
that physicians who furnish services in areas that are designated as 
geographic HPSAs as of December 31 of the prior year but not included 
on the list of zip codes for automated HPSA bonus payments should use 
the AQ modifier to receive the HPSA bonus payment.

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

    In the CY 2009 PFS proposed rule (73 FR 38527), we outlined for CY 
2009 the proposed updates to the case-mix adjusted composite rate 
payment system established under section 1881(b)(12) of the Act, added 
by section 623 of the MMA. These included updates to the drug add-on 
component of the composite rate system, as well as the wage index 
values used to adjust the labor component of the composite rate.
    Specifically, we proposed the following provisions which are 
described in more detail below in this section:
     A zero growth update to the proposed 15.5 percent drug 
add-on adjustment to the composite rates for 2009 required by section 
1881(b)(12)(F) of the Act (resulting in a $20.33 per treatment drug 
add-on amount).
     An update to the wage index adjustment to reflect the 
latest available

[[Page 69755]]

wage data, including a revised BN adjustment factor of 1.056672;
     The completion of the 4-year transition from the previous 
wage-adjusted composite rates to the CBSA wage-adjusted rates, where 
payment will be based on 100 percent of the revised geographic 
adjustments; and
     A reduction of the wage index floor from 0.7500 to 0.7000.
    A total of 56 comments were submitted under the caption ``ESRD 
PROVISIONS.'' Eight of these comments pertained to the proposed changes 
to ESRD payment related provisions listed above. The remaining 48 
comments responded to the solicitation for public comment pertaining to 
the application of preventable hospital-acquired condition (HAC) 
payment provisions for IPPS hospitals in settings other than IPPS 
hospitals, including ESRD facilities. Please refer to section II.H.6. 
of this final rule with comment period for a discussion of the 
applicability of the HAC payment provision for IPPS hospitals in 
settings other than IPPS hospitals.
    The ESRD payment related comments are discussed in detail below in 
this section. In addition, subsequent to the publication of the CY 2009 
PFS proposed rule, section 153 of the Medicare Improvements for 
Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted 
on July 15, 2008, mandates changes in ESRD payment effective January 1, 
2009.
    Section 153(a) of the MIPPA amends section 1881(b)(12)(G) of the 
Act to increase the composite rate component of the payment system and 
amends section 1881(b)(12)(A) to revise payments to ESRD facilities. 
The amendments that are effective January 1, 2009 include an update of 
1 percent to the composite rate component of the payment system (for 
services furnished on or after January 1, 2009, and before January 1, 
2010), and the establishment of a site neutral composite rate for both 
hospital-based and independent dialysis facilities which, when applying 
the geographic index, shall reflect the labor share based on the labor 
share otherwise applied for renal dialysis facilities. The labor share 
for both hospital-based and independent dialysis facilities is 53.711.
    In addition, since we compute the drug add-on adjustment as a 
percentage of the weighted average base composite rate, the drug add-on 
percentage is decreased to account for the higher composite payment 
rate and will result in a 15.2 percent drug add-on adjustment for CY 
2009. Since the statutory increase only applies to the composite rate, 
this adjustment to the drug add-on percentage is needed to ensure that 
the total drug add-on dollars remains constant.
    Prior to the MIPPA provisions, effective for CY 2008, hospital-
based dialysis facilities received a base composite rate of $136.68 and 
independent dialysis facilities received a base composite rate of 
$132.49, and so the CY 2009 base composite rate for independent 
dialysis facilities prior to the MIPPA was $132.49. The MIPPA mandates 
that payments for both the hospital-based dialysis facilities and 
independent dialysis facilities be based on the independent dialysis 
facilities rate. The 1 percent increase to the independent dialysis 
facility's 2008 composite rate of $132.49 results in a 2009 base 
composite rate for both hospital-based and independent dialysis 
facilities of $133.81. A drug add-on amount of $20.33 per treatment 
remains the same for 2009, which results in a 15.2 percent increase 
over the base independent composite rate of $133.81.
1. Growth Update to the Drug Add-On Adjustment to the Composite Rates
    Section 623(d) of the MMA added section 1881(b)(12)(B)(ii) of the 
Act which requires us to establish an add-on to the composite rate to 
account for changes in the drug payment methodology stemming from 
enactment of the MMA. Section 1881(b)(12)(C) of the Act provides that 
the drug add-on must reflect the difference in aggregate payments 
between the revised drug payment methodology for separately billable 
ESRD drugs and the AWP payment methodology. In 2005, we generally paid 
for ESRD drugs based on average acquisition costs. Thus, the difference 
from AWP pricing was calculated using acquisition costs. However, in 
2006 when we moved to ASP pricing for ESRD drugs, we recalculated the 
difference from AWP pricing using ASP prices.
    In addition, section 1881(b)(12)(F) of the Act requires that 
beginning in CY 2006, we establish an annual update to the drug add-on 
to reflect the estimated growth in expenditures for separately billable 
drugs and biologicals furnished by ESRD facilities. This growth update 
applies only to the drug add-on portion of the case-mix adjusted 
payment system.
    The CY 2008 drug add-on adjustment to the composite rate is 15.5 
percent. The drug add-on adjustment for 2008 incorporates an inflation 
adjustment of 0.5 percent. This computation is explained in detail in 
the CY 2008 PFS final rule with comment period (72 FR 66280 through 
66282).
a. Estimating Growth in Expenditures for Drugs and Biologicals for CY 
2009
    In the CY 2007 PFS final rule with comment period (71 FR 69682), we 
established an interim methodology for annually estimating the growth 
in ESRD drugs and biological expenditures that uses the Producer Price 
Index (PPI) for pharmaceuticals as a proxy for pricing growth, in 
conjunction with 2 years of ESRD drug data, to estimate per patient 
utilization growth. We indicated that this methodology would be used to 
update the drug add-on to the composite rate until such time that we 
had sufficient ESRD drug expenditure data to project the growth in ESRD 
drug expenditures beginning in CY 2010.
    For CY 2009, we proposed revising the interim methodology for 
estimating the growth in ESRD drug expenditures by using ASP pricing 
instead of the PPI to estimate the price component of the update 
calculation.
    As detailed below in this section, we proposed for CY 2009 to 
estimate price growth using historical ASP pricing data for ESRD drugs 
for CY 2006 through CY 2008, and to estimate growth in per patient 
utilization of drugs by using ESRD facility historical drug expenditure 
data for CY 2006 and CY 2007.
b. Estimating Growth in ESRD Drug Prices
    For CY 2009, we proposed to estimate price growth using ASP pricing 
data for the four quarters of CY 2006 and CY2007, and the two available 
quarters of CY 2008. For this final rule with comment period, we are 
using four quarters of ASP prices for CYs 2006, 2007, and 2008. We 
calculated the weighted price change, for the original top ten ESRD 
drugs for which we had acquisition pricing, plus Aranesp. In CY 2006 
and CY 2007, we calculated a weighted average price reduction of 1.8 
percent. We also calculated a weighted average price reduction of 2.1 
percent between CY 2007 and CY 2008. The overall average price 
reduction is 1.9 percent over the 3-year period. Thus, the weighted 
average ESRD drug pricing change projected for CY 2009 is a reduction 
of 1.9 percent.
    Comment: Commenters were generally opposed to the use of ASP prices 
to estimate the price component of the drug add-on adjustment. One 
commenter stated that although the price of EPO has declined in the 
past few years, it has now stabilized and will likely not decline again 
in CY 2009. Two commenters, including MedPAC, supported the use of ASP 
prices stating that it is more closely related to the

[[Page 69756]]

actual ESRD drug pricing than the use of the overall drug PPI. Another 
commenter stated that the PPI was a more accepted proxy for predicting 
drug price increases compared to ASP price trends which have never been 
used in forecasting drug price changes. Some suggested that we use a 
blend of ASP and PPI to soften the impact of the change in the 
methodology.
    Response: Given that the statutory language mandates that we 
estimate the growth in ESRD drug expenditures in order to update the 
drug add-on adjustment, we believe we have an obligation to utilize the 
best data available to make those estimates. Although the PPI is a well 
recognized measure of overall drug price growth, it is not specific to 
ESRD drug prices. Given that ESRD drug pricing trends are very 
different from overall drug pricing trends, we do not believe it would 
be appropriate to continue using the PPI when more specific data are 
available. ASP pricing data that are specific to ESRD drugs provide the 
most accurate measure for estimating the price component of the total 
ESRD drug expenditure estimate for CY 2009. Therefore, for this final 
rule with comment period, we used ASP pricing data to estimate price 
growth in ESRD drugs.
c. Estimating Growth in per Patient Drug Utilization
    To isolate and project the growth in per patient utilization of 
ESRD drugs for CY 2009, we removed the enrollment and price growth 
components from the historical drug expenditure data, and considered 
the residual to be utilization growth. As discussed previously in this 
section, we proposed to use ESRD facility drug expenditure data from CY 
2006 and CY 2007 to estimate per patient utilization growth for CY 
2009.
    We first estimated total drug expenditures for all ESRD facilities. 
For the CY 2009 PFS proposed rule (73 FR 38528), we used the final CY 
2006 ESRD claims data and the latest available CY 2007 ESRD facility 
claims, updated through December 31, 2007 (that is, claims with dates 
of service from January 1 through December 31, 2007, that were 
received, processed, paid, and passed to the National Claims History 
File as of December 31, 2007). For this final rule with comment period, 
we are using additional updated CY 2007 claims with dates of service 
for the same time period. This updated CY 2007 data file will include 
claims received, processed, paid, and passed to the National Claims 
History File as of June 30, 2008.
    For the CY 2009 PFS proposed rule, we adjusted the December 2007 
file to reflect our estimate of what total drug expenditures would be 
using the final June 30, 2008 bill file for CY 2007. The net adjustment 
we applied to the CY 2007 claims data was an increase of 12.6 percent 
to the December 2007 claims file. To calculate the proposed per patient 
utilization growth, we removed the enrollment component by using the 
growth in enrollment data between CY 2006 and CY 2007. This was 
approximately 3 percent. To remove the price effect, we calculated the 
weighted change between CY 2006 and CY 2007 ASP pricing for the top 
eleven ESRD drugs. We weighted the differences using 2007 ESRD facility 
drug expenditure data.
    This process led to an overall 1.8 percent reduction in price 
between CY 2006 and CY 2007.
    After removing the enrollment and price effects from the 
expenditure data, the residual growth would reflect the per patient 
utilization growth. To do this, we divided the product of the 
enrollment growth of 3 percent (1.03) and the price reduction of 1.8 
percent (1.00 - 0.018 = 0.982) into the total drug expenditure change 
between 2006 and 2007 of 0 percent (1.00 - 0.00 = 1.00). The result is 
a utilization factor equal to 0.99 or 1.00/(1.03 * 0.982) = 0.99.
    Since we observed a 1 percent drop in per patient utilization of 
drugs between CY 2006 and CY 2007, we projected a 1 percent drop in per 
patient utilization for ESRD facilities in CY 2009.
    Comment: A few commenters suggested that the use of CY 2007 billing 
data to predict utilization change in CY 2009 is not accurate since the 
utilization change in CY 2007 was driven by a revision to the EPO 
monitoring policy which caused a one-time decline in utilization that 
has since leveled off.
    Response: We agree that the revised monitoring policy for 
erythropoesis stimulating agents (ESAs) that took effect in CY 2007 
could have contributed to the observed decrease in ESRD drug 
utilization between CY 2006 and CY 2007, especially given that EPO and 
Aranesp make up over 75 percent of all ESRD drug expenditures. 
Moreover, this effect could distort our estimate of per patient 
utilization growth in CY 2009. Since CY 2007, we have analyzed 2 years 
of historical claims data for estimating growth in utilization (CY 2005 
and CY 2006). During that period, utilization based on an analysis of 
independent ESRD facility drug data has indicated no growth. We believe 
the use of CY 2005 and CY 2006 drug data is the best data available for 
use in projecting utilization in CY 2009. Therefore, for CY 2009, we 
will continue to use our estimate of growth in utilization based on CY 
2005 and CY 2006 data (72 FR 66282). That is, we are finalizing an 
estimation of no growth in utilization for CY 2009.
2. Applying the Proposed Growth Update to the Drug Add-on Adjustment
    In the CY 2007 PFS final rule with comment period (71 FR 69684), we 
revised our update methodology by applying the growth update to the per 
treatment drug add-on amount. That is, for CY 2007, we applied the 
growth update factor of 4.03 percent to the $18.88 per treatment drug 
add-on amount for an updated amount of $19.64 per treatment (71 FR 
69684). For CY 2008, the per treatment drug add-on amount was updated 
to $20.33.
    For CY 2009, we proposed no update to the per treatment drug add-on 
amount of $20.33 established in CY 2008.
3. Update to the Drug Add-On Adjustment
    In the CY 2009 PFS proposed rule (73 FR 38529), we estimated a 1 
percent reduction in per patient utilization of ESRD drugs for CY 2009. 
Using the projected decline of the CY 2009 ASP pricing for ESRD drugs 
of 1.9 percent, we projected that the combined growth in per patient 
utilization and pricing for CY 2009 would result in a negative update 
equal to -2.9 percent (0.99 * 0.981 = 0.971). However, we proposed to 
apply a zero percent update to the drug add-on adjustment and maintain 
the $20.33 per treatment drug add-on amount for CY 2009 that reflects a 
15.5 percent drug add-on adjustment to the composite rate for CY 2009.
    In addition, for CY 2009 we presented an alternative approach to 
the zero percent update. The alternative approach would be to apply an 
adjustment of less than 1.0 to the drug add-on adjustment. For CY 2009, 
we would ``increase'' the drug add-on by 0.971. Applying the 0.971 
increase to the $20.33 per treatment adjustment would yield a drug add-
on amount of $19.74 per treatment, which represents a 0.4 percent 
decrease in the CY 2008 drug add-on percentage of 15.5 percent. As 
such, the drug add-on adjustment to the composite rate for CY 2009 
would be equal to 1.155 * 0.996 = 1.15 or 15.0 percent.
    We solicited public comment on our proposal of a zero update, as 
well as the alternative approach presented above, so that we could make 
an informed decision with respect to the final update

[[Page 69757]]

to the CY 2009 drug add-on adjustment to the composite rate.
    Comment: Commenters were uniformly opposed to any decrease in the 
drug add-on adjustment, citing the plain reading of the statute which 
calls for an annual ``increase'' in the adjustment. As support for the 
reliance on the plain reading of the statute, several commenters cited 
case law examples in which courts have relied on dictionary 
definitions, biblical text, and common usage of terms for purposes of 
interpreting statutory text. One commenter disagreed with CMS' 
alternative reading of 1881(b)(12)(F) of the Act, under which an 
increase in the drug add-on could not be implemented when estimated 
drug growth is negative, pointing to MMA Conference Report language 
that referenced a payment update that would be based on a ``growth'' in 
drug spending and ``drug cost increases.'' Commenters further argued, 
citing case law the priority on plain language over policy arguments 
and cautioned against identifying gaps in statutes.
    One commenter suggested that we should use the methodology to 
estimate growth in ESRD drug expenditures that yields a positive 
adjustment as required by the statute. Another commenter stated that if 
we believe ESRD drug expenditures will decline, this would indicate 
that the spread between AWP and ASP pricing will widen in CY 2009, thus 
justifying an increase in the drug add-on adjustment.
    Response: We agree that the plain reading of the statute would 
preclude any decrease in the drug add-on adjustment and would not 
support a negative growth update. Specifically, section 1881(b)(12)(F) 
of the Act states in part that ``the Secretary shall annually 
increase'' the drug add-on amount based on the growth in expenditures 
for separately billed ESRD drugs. We interpret the statutory language 
``annually increase'' to mean a positive or zero update to the drug 
add-on given that the statute also requires that the annual 
``increase'' to the drug add-on adjustment reflect our estimate of the 
growth in ESRD drug expenditures. Since our analysis indicates a 
projected reduction in ESRD drug expenditures for CY 2009, we do not 
believe it would be appropriate to provide an increase that cannot be 
substantiated by the best data available.
    Therefore, we are finalizing our proposal to provide a zero update 
to the drug add-on adjustment for CY 2009. If the statute had included, 
instead of the word ``increase,'' a broader term, we believe we would 
have had authority to decrease the rate to take into account the 
projected reduction.
4. Final Growth Update to the Drug Add-On Adjustment for 2009
    As we indicated earlier, we have decided not to use CY 2007 
expenditure data to estimate utilization growth for CY 2009, because of 
the potential distortion of our estimates due to the implementation of 
the ESA monitoring policy in 2007. Therefore, for this final rule with 
comment period, we are using the same data we use to estimate growth in 
utilization for CY 2008 as outlined in the CY 2008 PFS final rule with 
comment period (72 FR 66282). That is, for CY 2009, we estimate no 
growth in per patient utilization of ESRD drugs for CY 2009.
    Similar to the CY 2009 PFS proposed rule, we estimated growth in 
ESRD drug prices using ASP pricing data for CYs 2006, 2007 and 2008. In 
the proposed rule, we had only 2 quarters of data for 2008, but for 
this final rule all four quarters of ASP pricing data are available. We 
calculated the weighted price change for the top eleven ESRD drugs. 
Tables 8 and 9 show the average ASP prices and the 2007 weights used. 
We note that the final CY 2007 weights are derived from the final CY 
2007 ESRD facility claims file as of June 30, 2008. For CY 2006 and CY 
2007, we calculated a weighted average price reduction of 1.8 percent. 
We also calculated a weighted average price reduction of 1.9 percent 
between CY 2007 and CY 2008. The overall average price reduction is 1.8 
percent over the 3-year period. Thus, the weighted average ESRD drug 
pricing change projected for CY 2009 is a reduction of 1.8 percent.
    We project that the combined growth in per patient utilization and 
pricing of ESRD drugs for CY 2009 would result in a negative update 
equal to -1.8 percent (1.00 * 0.982 = 0.982). If we implement this 
decrease in the update to the drug-on adjustment, the resulting savings 
would have been $14 million. However, as indicated above, for this 
final rule with comment period, we are applying no update to the drug 
add-on adjustment for CY 2009. Thus, we are applying a zero update to 
the $20.33 per treatment drug add-on amount for CY 2009. After 
adjusting for the MIPPA changes as discussed earlier in this section, 
the final drug add-on adjustment to the composite rate for CY 2009 is 
15.2 percent.

                              Table 8--CY 2006, 2007 and 2008 ESRD Drug ASP Prices
----------------------------------------------------------------------------------------------------------------
                        Independent drugs                             CY 2006         CY 2007         CY 2008
----------------------------------------------------------------------------------------------------------------
EPO.............................................................           $9.46           $9.17           $9.05
Paricalcitol....................................................            3.81            3.79            3.78
Sodium-ferric-glut..............................................            4.88            4.76            4.81
Iron-sucrose....................................................            0.36            0.37            0.36
Levocarnitine...................................................            9.44            8.07            6.31
Doxercalciferol.................................................            2.97            2.68            2.75
Calcitriol......................................................            0.55            0.54            0.40
Iron-dextran....................................................           11.94           11.69           11.69
Vancomycin......................................................            3.23            3.43            3.19
Alteplase.......................................................           31.63           33.21           33.06
Aranesp.........................................................            3.01            3.29            2.86
----------------------------------------------------------------------------------------------------------------


            Table 9--CY 2007 Drug Weights for ESRD Facilities
------------------------------------------------------------------------
                                                              CY 2007
                    Independent drugs                       weights (%)
------------------------------------------------------------------------
EPO.....................................................            69.1
Paricalcitol............................................            11.9
Sodium-ferric-glut......................................             2.5
Iron-sucrose............................................             6.1
Levocarnitine...........................................             0.2
Doxercalciferol.........................................             2.8

[[Page 69758]]

 
Calcitriol..............................................             0.1
Iron-dextran............................................             0.0
Vancomycin..............................................             0.1
Alteplase...............................................             1.0
Aranesp.................................................             6.2
------------------------------------------------------------------------

5. Update to the Geographic Adjustments to the Composite Rates
    Section 1881(b)(12)(D) of the Act, as added by section 623(d) of 
the MMA, gives the Secretary the authority to revise the wage indexes 
previously applied to the ESRD composite rates. The wage indexes are 
calculated for each urban and rural area. The purpose of the wage index 
is to adjust the composite rates for differing wage levels covering the 
areas in which ESRD facilities are located.
a. Updates to Core-Based Statistical Area (CBSA) Definitions
    In the CY 2006 PFS final rule with comment period (70 FR 70167), we 
announced our adoption of the OMB's CBSA-based geographic area 
designations to develop revised urban/rural definitions and 
corresponding wage index values for purposes of calculating ESRD 
composite rates. OMB's CBSA-based geographic area designations are 
described in OMB Bulletin 03-04, originally issued June 6, 2003, and is 
available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html. In addition, OMB has published subsequent bulletins regarding 
CBSA changes, including changes in CBSA numbers and titles. We wish to 
point out that this and all subsequent ESRD rules and notices are 
considered to incorporate the CBSA changes published in the most recent 
OMB bulletin that applies to the hospital wage index used to determine 
the current ESRD wage index. The OMB bulletins may be accessed online 
at http://www.whitehouse.gov/omb/bulletins/index.html.
b. Updated Wage Index Values
    In the CY 2007 PFS final rule with comment period (71 FR 69685), we 
stated that we intended to update the ESRD wage index values annually. 
The current ESRD wage index values for CY 2008 were developed from FY 
2004 wage and employment data obtained from the Medicare hospital cost 
reports. The ESRD wage index values are calculated without regard to 
geographic classifications authorized under sections 1886(d)(8) and 
(d)(10) of the Act and utilize pre-floor hospital data that is 
unadjusted for occupational mix. To calculate the ESRD wage index, 
hospital wage index data for FY 2004 for all providers in each urban/
rural geographic area are combined. The sum of the wages for all 
providers in each geographic area was divided by the total hours for 
all providers in each area. The result is the average hourly hospital 
wage for that geographic locale. The ESRD wage index was computed by 
dividing the average hourly hospital wage for each geographic area by 
the national average hourly hospital wage. The final step was to 
multiply each wage index value by the ESRD wage index budget neutrality 
factor (BNF).
    We proposed to use the same methodology for CY 2009, with the 
exception that FY 2005 hospital data will be used to develop the CY 
2009 wage index values. The CY 2009 ESRD wage index BNF is 1.056689. 
This figure differs slightly from the figure in the proposed rule 
(1.056672) because we used updated hospital wage data and treatment 
counts from the most current claims data. (See section II.H.5.c. of 
this final rule with comment period for details about this adjustment.) 
For a detailed description of the development of the CY 2009 wage index 
values based on FY 2005 hospital data, see the FY 2009 ``Hospital 
Inpatient Prospective Payment Systems (IPPS) and Final Fiscal Year 2009 
Rates'' rule (73 FR 23630). Section III.G. of the preamble to the FY 
2009 IPPS final rule, Computation of the Final FY 2009 Unadjusted Wage 
Index, describes the cost report schedules, line items, data elements, 
adjustments, and wage index computations. The wage index data affecting 
ESRD composite rates for each urban and rural locale may also be 
accessed on the CMS Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp. The wage data are located in the 
section entitled, ``FY 2009 Final Rule Occupational Mix Adjusted and 
Unadjusted Average Hourly Wage and Pre-reclassified Wage Index by 
CBSA.''
i. Fourth Year of the Transition
    In the CY 2006 PFS final rule with comment period (70 FR 70167 
through 70169), we indicated that we would apply a 4-year transition 
period to mitigate the impact on the composite rates resulting from our 
adoption of CBSA-based geographic designations. Beginning January 1, 
2006, during each year of the transition, an ESRD facility's wage-
adjusted composite rate (that is, without regard to any case-mix 
adjustments) is a blend of its old MSA-based wage-adjusted payment rate 
and its new CBSA-based wage adjusted payment rate for the transition 
year involved. In CY 2006, the first year of the transition, we 
implemented a 75/25 blend. In CY 2007, the second year of the 
transition, we implemented a 50/50 blend. In CY 2008, the third year of 
the transition, we implemented a 25/75 blend. Consistent with the 
transition blends announced in the CY 2006 PFS final rule with comment 
period (70 FR 70170), in CY 2009, each ESRD facility's composite 
payment rate will be based entirely on the CBSA-based wage index.
    For CY 2009, we proposed to reduce the wage index floor from 0.75 
to 0.70. For this final year of the transition (CY 2009), we believe 
that a reduction to 0.70 is appropriate as we continue to reassess the 
need for a wage index floor in future years. We believe that a gradual 
reduction in the floor is still needed to ensure patient access to 
dialysis in areas that have low wage index values, especially Puerto 
Rico, and to prevent sudden adverse effects to the payment system. 
However, we note that our goal is the eventual elimination of all wage 
index floors.
    The wage index floor and blended share applicable for CY 2009 are 
shown in Table 10.

                                      Table 10--Wage Index Transition Blend
----------------------------------------------------------------------------------------------------------------
          CY payment                Floor                Ceiling                 Old MSA            New CBSA
----------------------------------------------------------------------------------------------------------------
2009.........................           0.70*  None.......................                 0%               100%
----------------------------------------------------------------------------------------------------------------
* Each wage index floor is multiplied by a BN adjustment factor. For CY 2009 the BN adjustment is 1.056689
  resulting in an actual wage index floor of 0.7397.


[[Page 69759]]

Because CY 2009 is the final year of the 4-year transition period, each 
ESRD facility's composite payment rate will be based entirely on its 
applicable new CBSA-based wage index value.
    Comment: We received a few comments that commend CMS for its use of 
a transition policy in shifting the Medicare ESRD program into a new 
geographic wage index system. Commenters stressed that prior to the 
elimination to the floor, we should provide protection to facilities in 
areas that would otherwise not be able to support dialysis facilities, 
which will ensure that access to care for beneficiaries is not 
compromised.
    Response: We note that our goal is the eventual elimination of all 
wage index floors. However, we believe that a gradual reduction in the 
floor is still needed to ensure patient access to dialysis in areas 
that have low wage index values, especially Puerto Rico, and to prevent 
sudden adverse effects to the payment system. We will continue to 
reassess the need for a wage index floor in future years.
ii. Wage Index Values for Areas With No Hospital Data
    In CY 2006, while adopting the CBSA designations, we identified a 
small number of ESRD facilities in both urban and rural geographic 
areas where there are no hospital wage data from which to calculate 
ESRD wage index values. The affected areas were rural Massachusetts, 
rural Puerto Rico, and the urban area of Hinesville, GA (CBSA 25980). 
For CY 2006, CY 2007, and CY 2008, we calculated the ESRD wage index 
values for those areas as follows:
     For rural Massachusetts, because we had not determined a 
reasonable wage proxy, we used the FY 2005 wage index value in CY 2006 
and CY 2007. For CY 2008, we used an alternative methodology as 
explained below.
     For rural Puerto Rico, the situation was similar to rural 
Massachusetts. However, because all geographic areas in Puerto Rico 
were subject to the wage index floor in CY 2006, CY 2007, and CY 2008, 
we applied the ESRD wage index floor to rural Puerto Rico as well.
     For the urban area of Hinesville, GA, we calculated the CY 
2006, CY 2007, and CY 2008 wage index value based on the average wage 
index value for all urban areas within the State of Georgia.
    For CY 2008, we adopted an alternative methodology for establishing 
a wage index value for rural Massachusetts. Because we used the same 
wage index value for 2 years with no update, we believed it was 
appropriate to establish a methodology which employed reasonable proxy 
data for rural areas (including rural Massachusetts), and also 
permitted annual updates to the wage index based on that proxy data. 
For rural areas without hospital wage data, we used the average wage 
index values from all contiguous CBSAs as a reasonable proxy for that 
rural area.
    In determining the imputed rural wage index, we interpreted the 
term ``contiguous'' to mean sharing a border. In the case of 
Massachusetts, the entire rural area consists of Dukes and Nantucket 
Counties. We determined that the borders of Dukes and Nantucket 
counties are contiguous with Barnstable and Bristol counties. We will 
continue to use the same methodology for CY 2009. Under this 
methodology, the CY 2009 wage index values for the counties of 
Barnstable (CBSA 12700, Barnstable Town, MA-1.2643) and Bristol (CBSA 
39300, Providence-New Bedford-Fall River, RI-MA-1.0696) were averaged 
resulting in an imputed proposed wage index value of 1.1670 for rural 
Massachusetts in CY 2009.
    For rural Puerto Rico, we continued to apply the wage index floor 
in CY 2008. Because all areas in Puerto Rico that have a wage index 
were eligible for the ESRD wage index floor of 0.75, we applied that 
floor to ESRD facilities located in rural Puerto Rico. For CY 2009, all 
areas in Puerto Rico that have a wage index are eligible for the final 
ESRD wage index floor of 0.70. Therefore, we will apply the ESRD wage 
index floor of 0.70 to all ESRD facilities that are located in rural 
Puerto Rico.
    For Hinesville, GA (CBSA 25980), which is an urban area without 
specific hospital wage data, we proposed to apply the same methodology 
in 2009 that we used to impute a wage index value in CY 2006, CY 2007, 
and CY 2008. Specifically, we proposed to use the average wage index 
value for all urban areas within the State of Georgia. We are 
finalizing our proposal, which results in a CY 2009 wage index value of 
0.9110 for the Hinesville-Fort Stewart GA CBSA.
    In the CY 2008 PFS final rule with comment period (72 FR 66283 
through 66284), we stated that we would continue to evaluate existing 
hospital wage data and possibly wage data from other sources such as 
the Bureau of Labor Statistics, to determine if other methodologies 
might be appropriate for imputing wage index values for areas without 
hospital wage data for CY 2009 and subsequent years. To date, no data 
from other sources, superior to that currently used in connection with 
the IPPS wage index, have emerged. Therefore, for ESRD purposes, we 
continue to believe this is an appropriate policy. We received no 
comments on this section and are finalizing our policies for wage areas 
with no hospital data as proposed.
iii. Evaluation of Wage Index Policies Adopted in the FY 2008 IPPS 
Final Rule
    We stated in the CY 2008 PFS final rule with comment period (72 FR 
66284) that we planned to evaluate any policies adopted in the FY 2008 
IPPS final rule (72 FR 47130, 47337 through 47338) that affect the wage 
index, including how we treat certain New England hospitals under 
section 601(g) of the Social Security Amendments of 1983 (Pub. L. 98-
21). This is relevant for the ESRD composite payment system, because 
the ESRD wage index is calculated using the same urban/rural 
classification system and computation methodology applicable under the 
IPPS, except that it is not adjusted for occupational mix and does not 
reflect geographic classifications authorized under sections 1886(d)(8) 
and (d)(12) of the Act. We also proposed to use the FY 2009 wage index 
data (collected from cost reports submitted by hospitals for cost 
reporting periods beginning during FY 2005), to compute the ESRD 
composite payment rates effective beginning January 1, 2009.
(1) CY 2009 Classification of Certain New England Counties
    We are addressing the change in the treatment of ``New England 
deemed counties'' (that is, those counties in New England listed in 
Sec.  412.64(b)(1)(ii)(B) that were deemed to part of urban areas under 
section 601(g) of the Social Security Amendments of 1983), that were 
made in the FY 2008 IPPS final rule with comment period (72 FR 47337 
through 47338). These counties include the following: Litchfield 
County, Connecticut; York County, Maine; Sagadahoc County, Maine; 
Merrimack County, New Hampshire; and Newport County, Rhode Island. Of 
these five ``New England deemed counties'', three (York County, 
Sagadahoc County, and Newport County) are also included in the MSAs 
defined by OMB, and therefore, used in the calculations of the urban 
hospital wage index values reflected in the ESRD composite payment 
rates. The remaining two counties, Litchfield County and Merrimack 
County, are geographically located in areas that are considered 
``rural'' under the current IPPS and ESRD composite payment system 
labor market definitions, but have been previously deemed urban under 
the IPPS in certain circumstances as discussed below.

[[Page 69760]]

    In the FY 2008 IPPS final rule with comment period, for purposes of 
IPPS, Sec.  412.64(b)(1)(ii)(B) was amended such that the two ``New 
England deemed counties'' that are still considered rural under the OMB 
definitions (Litchfield County, CT and Merrimack County, NH) are no 
longer considered urban effective for discharges occurring on or after 
October 1, 2007, and therefore, are considered rural in accordance with 
Sec.  412.64(b)(1)(ii)(C). For purposes of the ESRD wage index, we have 
recognized OMB's CBSA designations, as well as generally followed the 
policies under the IPPS with regard to the definitions for ``urban'' 
and ``rural'' for the wage index, but we do not to take into account 
IPPS geographic reclassifications in determining payments under the 
composite payment system. Accordingly, to reflect our general policy 
for the ESRD wage index, these two counties will be considered 
``rural'' under the ESRD composite payment system effective with the 
next update of the payment rates on January 1, 2009, and will no longer 
be included in urban CBSA 25540 (Hartford-West Hartford-East Hartford, 
CT) and urban CBSA 31700 (Manchester-Nashua, NH), respectively.
(2) Multi-Campus Hospital Wage Index Data
    In the CY 2008 ESRD composite payment system final rule (72 FR 
66280), we established ESRD wage index values for CY 2008 calculated 
from the same data (collected from cost reports submitted by hospitals 
for cost reporting periods beginning during FY 2004) used to compute 
the FY 2008 acute care hospital inpatient wage index, without taking 
into account geographic reclassification under sections 1886(d)(8) and 
(d)(10) of the Act. However, the IPPS policy that apportions the wage 
data for multi-campus hospitals was not finalized before the ESRD 
composite payment system final rule. Therefore, the CY 2008 ESRD wage 
index values reflected the IPPS wage data that were based on a 
hospital's actual location without regard to the urban or rural 
designation of any related or affiliated provider. Accordingly, all 
wage data from different campuses of a multi-campus hospital were 
included in the calculation of the CBSA wage index of the main 
hospital. In the proposed rule, we noted that the IPPS wage data used 
to determine the proposed CY 2009 ESRD wage index values were computed 
from wage data submitted by hospitals for cost reporting periods 
beginning in FY 2005, and reflect our policy adopted under the IPPS 
beginning in FY 2008, which apportions the wage data for multi-campus 
hospitals located in different labor market areas, CBSAs, to each CBSA 
where the campuses are located (see the FY 2008 IPPS final rule with 
comment period (72 FR 47317 through 47320)). Specifically, under the CY 
2009 ESRD composite payment system, the wage index was computed using 
IPPS wage data (published by hospitals for cost reporting periods 
beginning in 2005, as with the FY 2009 IPPS wage index). This resulted 
in the allocation of salaries and hours to the campuses of two multi-
campus hospitals, with campuses that are located in different labor 
areas, one in Massachusetts and the other is Illinois. The ESRD wage 
index values proposed for CY 2009 in the following CBSAs are affected 
by this policy: Boston-Quincy, MA (CBSA 14484), Providence-New Bedford-
Falls River, RI-MA (CBSA 39300), Chicago-Naperville-Joliet, IL (CBSA 
16974), and Lake County-Kenosha County, IL-WI (CBSA 29404). (Please 
refer to Addenda G and H of this final rule with comment period.)
    For CY 2009, we will use the FY 2009 wage index data (collected 
from cost reports submitted by hospitals for cost reporting periods 
beginning during FY 2005) to compute the ESRD composite payment rates 
effective beginning January 1, 2009.
    Although we solicited comments, we did not receive any comments on 
this section and are implementing these provisions in this final 
notice. (For a detailed explanation of the multi-campus and New England 
deemed counties policies, refer to the CY 2009 PFS proposed rule (73 FR 
38531 through 38532)).
c. Budget Neutrality Adjustment
    Section 1881(b)(12)(E)(i) of the Act, as added by section 623(d) of 
the MMA, requires that any revisions to the ESRD composite rate payment 
system as a result of the MMA provision (including the geographic 
adjustment), be made in a budget neutral manner. This means that 
aggregate payments to ESRD facilities in CY 2008 should be the same as 
aggregate payments that would have been made if we had not made any 
changes to the geographic adjusters. We note that this BN adjustment 
only addresses the impact of changes in the geographic adjustments. A 
separate BN adjustment was developed for the case-mix adjustments 
currently in effect. As we did not propose any changes to the case-mix 
measures for CY 2009, the current case-mix BN adjustment will remain in 
effect for CY 2009. As in CY 2008, for CY 2009, we again proposed to 
apply a BN adjustment factor directly to the ESRD wage index values. As 
explained in the CY 2007 PFS final rule with comment period (71 FR 
69687 through 69688), we believe this is the simplest approach because 
it allows us to maintain our base composite rates during the transition 
from the current wage adjustments to the revised wage adjustments 
described previously in this section. Because the ESRD wage index is 
only applied to the labor-related portion of the composite rate, we 
computed the BN adjustment factor based on that proportion (53.711 
percent).
    To compute the final CY 2009 wage index BN adjustment factor 
(1.056689), we used the most current FY 2005 pre-floor, pre-
reclassified, non-occupational mix-adjusted hospital data to compute 
the wage index values, treatment counts from the most current 2007 
outpatient claims (paid and processed as of June 30, 2008), and 
geographic location information for each facility which may be found on 
the Dialysis Facility Compare Web page on the CMS Web site at http://www.cms.hhs.gov/DialysisFacilityCompare/. The FY 2005 hospital wage 
index data for each urban and rural locale by CBSA may also be accessed 
on the CMS Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp. The wage index data are located in the section entitled, ``FY 
2009 Final Proposed Rule Occupational Mix Adjusted and Unadjusted 
Average Hourly Wage and Pre-Reclassified Wage Index by CBSA.''
    Using treatment counts from the 2007 claims and facility-specific 
CY 2008 composite rates, we computed the estimated total dollar amount 
each ESRD provider would have received in CY 2008 (the 3rd year of the 
4-year transition). The total of these payments became the target 
amount of expenditures for all ESRD facilities for CY 2009. Next, we 
computed the estimated dollar amount that would have been paid to the 
same ESRD facilities using the proposed ESRD wage index for CY 2009 
(the 4th year of the 4-year transition). The total of these payments 
became the fourth year new amount of wage-adjusted composite rate 
expenditures for all ESRD facilities. Section 153(a) of the MIPPA 
updated section 1881(b)(12)(G) of the Act and revised payments to ESRD 
facilities. The revisions that are effective January 1, 2009 include an 
update of 1 percent to the composite rate component of the payment 
system, and the establishment of a site neutral composite rate to 
hospital-based and independent dialysis facilities. We note that when 
computing the 4th year new amount, we did not

[[Page 69761]]

include the MIPPA provisions because they are not budget neutral.
    After comparing these two dollar amounts (target amount divided by 
the 4th year new amount), we calculated an adjustment factor that, when 
multiplied by the applicable CY 2009 ESRD wage index value, would 
result in aggregate payments to ESRD facilities that will remain within 
the target amount of composite rate expenditures. When making this 
calculation, the ESRD wage index floor value of 0.7000 is used whenever 
appropriate. The BN adjustment factor for the CY 2009 wage index is 
1.056689. This figure differs slightly from the figure in the proposed 
rule (1.056672) because we have used updated hospital wage data and 
treatment counts from the most current claims data.
    To ensure BN, we also must apply the BN adjustment factor to the 
wage index floor of 0.7000 which results in a adjusted wage index floor 
of 0.7397 (0.7000 x 1.056689) for CY 2009.
d. ESRD Wage Index Tables
    The 2009 wage index tables are located in Addenda G and H of this 
final rule with comment period.
6. Application of the Hospital-Acquired Conditions Payment Policy for 
IPPS Hospitals to Other Settings
    Value-based purchasing (VBP) ties payment to performance through 
the use of incentives based on measures of quality and cost of care. 
The implementation of VBP is rapidly transforming CMS from being a 
passive payer of claims to an active purchaser of higher quality, more 
efficient health care for Medicare beneficiaries. Our VBP initiatives 
include hospital pay for reporting (the Reporting Hospital Quality Data 
for the Annual Payment Update), physician pay for reporting (the 
Physician Quality Reporting Initiative), home health pay for reporting, 
the Hospital VBP Plan Report to Congress, and various VBP demonstration 
programs across payment settings, including the Premier Hospital 
Quality Incentive Demonstration and the Physician Group Practice 
Demonstration.
    The preventable hospital-acquired conditions (HAC) payment 
provision for IPPS hospitals is another of our value-based purchasing 
initiatives. The principle behind the HAC payment provision (Medicare 
will not provide additional payments to IPPS hospitals to treat certain 
preventable conditions acquired during a beneficiary's IPPS hospital 
stay) could be applied to the Medicare payment systems for other 
settings of care. Section 1886(d)(4)(D) of the Act requires the 
Secretary to select for the HAC IPPS payment provision conditions that 
are: (1) High cost, high volume, or both; (2) assigned to a higher 
paying Medicare Severity-Diagnosis Related Group (MS-DRG) when present 
as a secondary diagnosis; and (3) could reasonably have been prevented 
through the application of evidence-based guidelines. Beginning October 
1, 2008, Medicare can no longer assign an inpatient hospital discharge 
to a higher paying MS-DRG if a selected HAC was not present, or could 
not be identified based on clinical judgment, on admission. That is, 
the case will be paid as though the secondary diagnosis related to the 
HAC was not present. Medicare will continue to assign a discharge to a 
higher paying Medicare Severity-Diagnosis Related Group (MS-DRG) if a 
selected condition was present on admission.
    The broad principle articulated in the HAC payment provision for 
IPPS hospitals (that is, Medicare not paying more for certain 
reasonably preventable hospital-acquired conditions) could potentially 
be applied to other Medicare payment systems for conditions that occur 
in settings other than IPPS hospitals. Other possible settings of care 
include, but are not limited to: hospital outpatient departments, 
ambulatory surgical centers, SNFs, HHAs, ESRD facilities, and physician 
practices. Implementation would be different for each setting, as each 
payment system is different and the level of reasonable prevention 
through the application of evidence-based guidelines would vary for 
candidate conditions across different settings of care. However, 
alignment of incentives across settings of care is an important goal 
for all of our VBP initiatives, including the HAC payment provision.
    A related application of the broad principle behind the HAC payment 
provision for IPPS hospitals could be considered through Medicare 
secondary payer policy by requiring the provider that failed to prevent 
the occurrence of a preventable condition in one setting to pay for all 
or part of the necessary follow up care in a second setting. This would 
help shield the Medicare program from inappropriately paying for the 
downstream effects of a reasonably preventable condition acquired in 
the first setting but treated in the second setting.
    We note that we did not propose new Medicare policy in this 
discussion of the possible application of the HAC payment policy for 
IPPS hospitals to other settings, as some of these approaches may 
require new statutory authority. Instead of proposing policy, we 
solicited public comment on the application of the preventable HAC 
payment provision for IPPS hospitals to other Medicare payment systems. 
We also stated that we look forward to working with stakeholders in the 
fight against all healthcare-associated conditions.
    The following is a summary of the comments we received and our 
responses.
    Comment: Commenters recommended that CMS work with technical 
experts, such as physicians and hospitals, to determine the impact, 
burden, and accuracy of POA indicator reporting in the inpatient 
setting before it is expanded to other settings of care. Commenters 
specifically recommended that CMS consider issues of adverse selection 
and access to care for vulnerable populations. Many commenters had 
concerns with CMS' authority and ability to implement such a policy for 
the physician office setting.
    Response: We agree that the HAC payment provision should be studied 
to determine its impact. We also recognize the importance of aligning 
VBP policy across all Medicare payment systems. We believe it is 
appropriate to consider policies of not paying more for medical care 
that harms patients or leads to complications that could have been 
prevented. For example, we note that CMS is currently considering 
National Coverage Determinations (NCDs) for three of the National 
Quality Forum's Serious Reportable Events: (1) Surgery on the wrong 
body part, (2) surgery on the wrong patient, and (3) wrong surgery 
performed on a patient. NCDs can address physician services as well as 
institutional services. We will work with stakeholders as we move 
forward in combating healthcare-associated conditions in all Medicare 
payment settings. Any additional policies, within statutory authority, 
addressing these issues would be proposed through notice and comment 
rulemaking.
    Comment: Some commenters stated that CMS may need to implement a 
Present on Admission (POA)-type indicator to recognize healthcare-
acquired conditions in the physician office and ESRD settings of care, 
similar to the IPPS POA indicator.
    Response: We agree that a POA-type indicator would aid in 
determining the onset of a healthcare-acquired condition. We welcome 
the opportunity to work with stakeholders to consider expansion of a 
POA-type indicator to all Medicare settings of care. We look forward to 
working with entities such as the National Uniform Billing Committee 
(NUBC) on the implementation of a

[[Page 69762]]

POA-type indicator for all settings of care.
    Comment: Many commenters identified attribution of a healthcare-
acquired condition to an individual physician who is broadly managing 
the patient's care as a challenge in expanding the principle behind the 
HAC payment provision to the physician office setting. Some commenters 
noted that several physicians may be responsible for the care of a 
patient, therefore attribution of the adverse event to a single 
physician may be difficult.
    Response: We recognize that because health care is delivered by a 
team of professionals, several providers could potentially share 
responsibility for the occurrence of a healthcare-associated condition. 
We have extensive experience in testing various attribution 
methodologies in our cost of care measurement initiative. We refer 
readers to section III.C. of this final rule with comment period 
(section 131(c) of the MIPPA) for further discussion of attribution.
    Comment: Some commenters expressed concern regarding implementation 
of the Medicare secondary payer policy to hold the provider in which a 
health-care associated condition occurred liable for the cost of 
subsequent care required to treat the condition.
    Response: We appreciate the comments regarding MSP policy and 
payment for health-care associated conditions in downstream care 
settings. We look forward to further exploring these issues with 
stakeholders.
    Comment: A few commenters recognized that the HAC payment provision 
targets a portion of an MS-DRG payment and were unsure how this concept 
could be transferred to the physician office setting. Further, several 
commenters mentioned bundled or global payment as a more rational way 
to pay for Medicare services, which could obviate the need for a 
healthcare-acquired condition payment provision.
    Response: As commenters noted, the HAC payment provision prohibits 
payment for a portion of the MS-DRG when a HAC occurs in the inpatient 
setting. In that the HAC payment provision results in payment being 
adjusted to a lower level of payment, the basic payment concept could 
be made applicable to other Medicare payment settings. Implementation 
of such policies would likely depend on the specific coding and payment 
systems used for each payment system.
    Comment: Several commenters expressed the need to adjust for 
patient-specific factors like severity of illness and patient 
compliance. A few commenters stated that unlike the inpatient setting, 
the physician office setting does not lend itself to close monitoring 
of patient compliance.
    Response: We recognize that certain beneficiaries may pose a 
greater risk of contracting a healthcare-acquired condition. We also 
note that providers must carefully consider those risk factors to avoid 
preventable conditions. We refer readers to the FY 2009 Inpatient 
Prospective Payment System final rule (73 FR 48487 through 48488 
(http://edocket.access.gpo.gov/2008/pdf/E8-17914.pdf)) where we 
discussed risk-adjustment as a potential enhancement to the IPPS HAC 
provision.
    Comment: Many commenters believe that it could be more effective to 
combat healthcare-acquired conditions by adjusting payments based on a 
provider's rates of healthcare-associated conditions rather than to 
directly adjust the payment for an individual service.
    Response: We agree that capturing rates of healthcare-associated 
conditions and using those rates for performance-based payment may be a 
more sophisticated and effective way to adjust payment. Rates of 
healthcare-associated conditions may be good candidates as possible 
quality measures for VBP programs like the PQRI as discussed in more 
detail in section II.O. of this final rule with comment period. 
Further, the ESRD pay-for-performance program and the forthcoming 
Physician VBP Plan Report to Congress may also address healthcare-
associated conditions.
    Comment: Commenters raised concern regarding the use of financial 
incentives to combat healthcare-associated conditions. Many commenters 
suggested that CMS should encourage compliance with evidence-based 
guidelines rather than use direct payment adjustments to address 
healthcare-associated conditions in the physician office setting.
    Response: We agree that it is important for Medicare providers to 
provide care that is consistent with evidence-based guidelines. We 
intend to consider all of our statutory and regulatory authorities, 
including the implementation of quality measures and payment 
adjustments, to encourage provision of care that is consistent with 
evidence-based guidelines. We look forward to working with stakeholders 
to further identify and apply available methods to combat healthcare-
acquired conditions.
    Comment: Many commenters supported the alignment of incentives 
across all Medicare settings of care.
    Response: We appreciate the public's support of our efforts to 
align incentives across all Medicare payment settings. We look forward 
to working with stakeholders to expand VBP initiatives in all Medicare 
payment settings. Further, we intend to host a public listening session 
toward the end of CY 2008 to discuss the expansion of the HAC payment 
provision, specifically targeting both the inpatient and hospital 
outpatient department (HOPD) settings of care.

I. Independent Diagnostic Testing Facility (IDTF) Issues

    In the CY 2007 and 2008 PFS final rules with comment period, we 
established performance standards for suppliers enrolled in the 
Medicare program as an IDTF (71 FR 69695 and 72 FR 66285). These 
standards were established to improve the quality of care for 
diagnostic testing furnished to Medicare beneficiaries by a Medicare-
enrolled IDTF and to improve our ability to verify that these suppliers 
meet minimum enrollment criteria to enroll or maintain enrollment in 
the Medicare program. These performance standards were established at 
Sec.  410.33. In the proposed rule, we proposed to expand on the 
quality and program safeguard activities that we implemented 
previously.
1. Improving Quality of Diagnostic Testing Services Furnished by 
Physician and Nonphysician Practitioner Organizations
    During the CY 2008 PFS proposed rule comment period, we received 
comments requesting that we require that the IDTF performance standards 
adopted in Sec.  410.33, including prohibitions regarding the sharing 
of space and leasing/sharing arrangements, apply to physicians and 
nonphysician practitioners (NPPs) who are furnishing diagnostic testing 
services for Medicare beneficiaries, and who have enrolled in the 
Medicare program as a clinic, group practice, or physician's office. 
The commenters stated that standards for imaging services were not 
applied consistently for all imaging centers and that two distinct 
compliance and regulatory standards would emerge depending on how the 
similarly situated imaging centers were enrolled. In addition, one 
commenter stated that we should not prohibit space sharing when done 
with an adjoining physician practice or radiology group that is an 
owner of an IDTF. Because these comments were outside of the scope of 
the provisions in the CY 2008 PFS proposed rule, we were not able to 
take action regarding these comments in the

[[Page 69763]]

CY 2008 PFS final rule with comment period.
    In the CY 2009 PFS proposed rule, we stated that we are concerned 
that--
     Certain physician entities, including physician group 
practices, and clinics, can enroll as a group practice or clinic and 
furnish diagnostic testing services without the benefit of qualified 
nonphysician personnel, as defined in Sec.  410.33(c), to conduct 
diagnostic testing.
     Some physician entities expect to furnish diagnostic 
testing services for their own patients and the general public and are 
making the decision to enroll as a group or clinic thereby 
circumventing the performance standards found in the IDTF requirements 
in Sec.  410.33.
     Some physician organizations are furnishing diagnostic 
tests using mobile equipment provided by an entity that furnishes 
mobile diagnostic services.
    Therefore, we proposed certain exceptions to the established 
performance standards found in Sec.  410.33(g) because we believe that 
physician organizations already meet or exceed some of these standards. 
For example, their liability insurance coverage usually far exceeds the 
$300,000 per incident threshold, and there are a host of ways in which 
patients may make clinical complaints concerning their physicians. In 
addition, we believe that compliance with some of the performance 
standards would be costly and burdensome and possibly limit beneficiary 
access, particularly in rural or medically underserved areas. For these 
reasons, we proposed that physician entities do not need to comply with 
the following standards:
     Maintaining additional comprehensive liability insurance 
for each practice location as required under Sec.  410.33(g)(6).
     Maintaining a formal clinical complaint process as 
required under Sec.  410.33(g)(8).
     Posting IDTF standards as required under Sec.  
410.33(g)(9).
     Maintaining a visible sign posting business hours as 
required under Sec.  410.33(g)(14)(ii).
     Separately enrolling each practice location as required 
under Sec.  410.33(g)(15)(i).
    Accordingly, we proposed to add Sec.  410.33(j) which states that, 
``A physician or NPP organization (as defined in Sec.  424.502) 
furnishing diagnostic testing services, except diagnostic mammography 
services: (1) Must enroll as an independent diagnostic testing facility 
for each practice location furnishing these services; and (2) is 
subject to the provisions found in Sec.  410.33, except for Sec.  
410.33(g)(6), Sec.  410.33(g)(8), Sec.  410.33(g)(9), Sec.  
410.33(g)(14)(ii), and Sec.  410.33(g)(15)(i).'' As discussed in 
section II.J. of this preamble, we proposed to define a ``physician or 
nonphysician practitioner organization'' as any physician or NPP entity 
that enrolls in the Medicare program as a sole proprietorship or 
organizational entity such as a clinic or group practice.
    We maintained that this enrollment requirement is necessary to 
ensure that beneficiaries are receiving the quality of care that can 
only be administered by appropriately licensed or credentialed 
nonphysician personnel as described in Sec.  410.33(c). Moreover, we 
proposed that physician or NPP organizations that do not enroll as an 
IDTF and meet the provisions at Sec.  410.33 may be subject to claims 
denial for diagnostic testing services or a revocation of their billing 
privileges.
    We solicited comments on whether we should consider establishing 
additional exceptions to the established performance standards in Sec.  
410.33(g) for physician and NPP organizations furnishing diagnostic 
testing services. We stated in the proposed rule that while we believe 
that most physician and NPP organizations utilize nonphysician 
personnel described in Sec.  410.33(c) to furnish diagnostic testing 
services, we also solicited comments on whether physician or NPPs 
conduct diagnostic tests without benefit of qualified nonphysician 
personnel and under what circumstances the testing occurs.
    While we proposed to apply the IDTF requirement to all diagnostic 
testing services furnished in physicians' offices, we stated that we 
were considering whether to limit this enrollment requirement to less 
than the full range of diagnostic testing services, such as to 
procedures that generally involve more costly testing and equipment. We 
solicited comments about whether the policy should apply only to 
imaging services or whether it should also include other diagnostic 
testing services such as electrocardiograms or other diagnostic testing 
services frequently furnished by primary care physicians. Within the 
scope of imaging services, we solicited comments about whether the 
policy should be limited to advanced diagnostic testing procedures 
which could include diagnostic magnetic resonance imaging, computed 
tomography, and nuclear medicine (including positron emission 
tomography), and other such diagnostic testing procedures described in 
section 1848(b)(4)(B) of the Act (excluding X-ray, ultrasound, and 
fluoroscopy). We also solicited comments on what would be appropriate 
criteria to limit this provision.
    Finally, since these changes, if adopted, would take time to 
implement for suppliers that have enrolled in the Medicare program, we 
proposed an effective date of September 30, 2009, rather than the 
effective date of the final rule with comment period. For newly 
enrolling suppliers, we proposed the effective date of this rule which 
is January 1, 2009.
    With the enactment of section 135 of the MIPPA legislation and 
after reviewing public comments, we are deferring the implementation of 
these proposals while we continue to review the public comments 
received on this provision and we will consider finalizing this 
provision in a future rulemaking effort if we deem it necessary. 
Section 135 of the MIPPA requires that the Secretary establish an 
accreditation process for those entities furnishing advanced diagnostic 
testing procedures which include diagnostic magnetic resonance imaging, 
computed tomography, and nuclear medicine (including positron emission 
tomography), and other such diagnostic testing procedures described in 
section 1848(b)(4)(B) of the Act (excluding X-ray, ultrasound, and 
fluoroscopy) by January 1, 2012.
    Accordingly, we are not adopting our proposal to require physicians 
and NPPs to meet certain quality and performance standards when 
providing diagnostic testing services, except mammography services, 
within their medical practice setting and have removed the paperwork 
burden and regulatory impact analysis associated with this provision in 
this final rule with comment period.
2. Mobile Entity Billing Requirements
    To ensure that entities furnishing mobile services are providing 
quality services and are billing for the diagnostic testing services 
they furnish to Medicare beneficiaries, we proposed a new performance 
standard for mobile entities at Sec.  410.33(g)(16), which would 
require that entities furnishing mobile diagnostic services enroll in 
Medicare and bill directly for the mobile diagnostic services that they 
furnish, regardless of where the services are furnished. We believe 
that entities furnishing mobile diagnostic services to Medicare 
beneficiaries must be enrolled in the Medicare program, comply with the 
IDTF performance standards, and directly bill Medicare for the services 
they furnish.

[[Page 69764]]

    While we understand that a mobile entity can furnish diagnostic 
testing services in various types of locations, we stated that we 
believe that it is essential that mobile entities use qualified 
physicians or nonphysician personnel to furnish diagnostic testing 
procedures and that the enrolled mobile supplier bill for the services 
furnished. We maintain that it is essential to our program integrity 
and quality improvement efforts that an entity furnishing mobile 
diagnostic testing services complies with the performance standards for 
IDTFs and bill the Medicare program directly for the services furnished 
to Medicare beneficiaries.
    Since we believe that most mobile entities are already billing for 
the services they furnish, whether the service was provided in a fixed-
based location or in a mobile facility, we proposed that this provision 
would be effective with the effective date of this final rule with 
comment period.
    Comment: Several commenters supported our proposal to require 
mobile diagnostic service providers to enroll in Medicare as IDTFs and 
to be required to bill Medicare directly for the TC services they 
furnish.
    Another commenter stated that this provision creates a single, 
universal quality standard for outpatient imaging that eliminates any 
possible inequity in standards that could exist between office-based 
imaging and IDTF imaging.
    Several other commenters support the concept that all providers and 
suppliers serving Medicare beneficiaries must be enrolled to be 
eligible to receive payments from Medicare, directly or indirectly.
    Response: We agree with these comments and thank the commenters for 
their support.
    Comment: One commenter stated that this provision would eliminate 
two distinct and unfair competitive advantages that mobile cardiac 
nuclear imaging providers enjoy under existing regulations. One 
advantage is the ability to operate under a ``mobile'' Nuclear 
Regulatory Commission Radioactive Materials license, which does not 
require the same regulatory filings as fixed-site cardiac nuclear 
medicine laboratories, and in the case of some state Radioactive 
Materials licenses, it does not subject the mobile provider to the same 
pre-opening inspections that the fixed sites are subject to. Second, 
some mobile providers are able to secure accreditation from certain 
accrediting agencies that furnish a global, or ``hub'', accreditation 
certification.
    Response: We thank the commenter for its support.
    Comment: One commenter stated that our proposal to require mobile 
providers to enroll in Medicare as IDTFs, be subject to all IDTF 
performance standards, and to bill Medicare directly, not only would it 
create a single, universal standard for quality among all imaging 
providers, but would also level the playing field in the competitive 
market for management services for companies which provide high quality 
fixed site programs for Medicare-enrolled physician practices and their 
Medicare enrollees.
    Response: We appreciate the comments and thank the commenter for 
their support.
    Comment: One commenter supports the proposal requiring these 
entities to enroll in Medicare and as such, for them to be required to 
abide by applicable Medicare policies. The commenter continued to state 
that they do not oppose the direct billing requirement but that if the 
proposal is finalized, CMS needs to provide a great amount of detail in 
how the provision will work and its impact on hospital billing 
practices.
    Response: We have revised the provision at Sec.  410.33(g)(17) for 
those IDTFs that are billing under arrangement with hospitals as 
described in section 1862(a)(14)of the Act and Sec.  482.12(e).
    Comment: Several commenters urged CMS to clarify that its proposal 
to require mobile testing entities to bill directly for services they 
furnish would not apply when such services are furnished ``under 
arrangement to hospital inpatients and outpatients.'' In addition, 
these commenters recommended that mobile diagnostic testing facilities 
that furnish these services to hospitals be excluded from the proposed 
IDTF performance standards.
    Response: Although we are requiring all mobile entities that 
furnish diagnostic testing services to enroll in the Medicare program, 
we are not requiring mobile testing entities to bill directly for the 
services they furnish when such services are furnished under 
arrangement with hospitals as described in sections 1861(w)(1) and 
1862(a)(14)of the Act and Sec.  482.12(e).
    Comment: One commenter urges CMS to exclude from the definition of 
entities furnishing mobile diagnostic testing services those entities 
that do the following: lease equipment and provide technicians who 
conduct diagnostic tests in the office of the billing physician or 
physician organization; and furnish testing under the supervision of a 
physician who shares an office with the billing physician or physician 
organization.
    Response: We disagree with the commenter. We maintain that a mobile 
entity providing diagnostic testing services must enroll for any 
diagnostic imaging services that it furnishes to a Medicare 
beneficiary, regardless of whether the service is furnished in a mobile 
or fixed base location so that CMS knows which entity is providing 
these diagnostic testing services.
    Comment: One commenter stated that the proposed IDTF performance 
standard is contrary to the Medicare ``under arrangement'' provisions 
and if the IDTF performance standard were extended into the hospital 
setting, it would prohibit hospitals from providing diagnostic imaging 
services under arrangement and present significant administrative and 
operational challenges for hospitals and their patients.
    Response: We agree and have revised the provision to account for 
mobile IDTFs billing under arrangement with hospitals as described in 
sections 1861(w)(1) and 1862(a)(14)of the Act and Sec.  482.12(e).
    Comment: Several commenters requested that we not require mobile 
units that furnish diagnostic testing services to enroll in Medicare or 
be required to bill for all of the services they furnish.
    Response: We disagree with the commenters. In order to maintain 
program integrity and enable CMS to monitor services furnished by 
mobile units providing diagnostic testing services, we maintain that a 
mobile entity providing diagnostic testing services must enroll for 
diagnostic imaging services that it furnishes to a Medicare 
beneficiary, regardless of whether the service is furnished in a mobile 
or fixed base location. We are requiring these mobile IDTFs to bill for 
the services that they furnish unless they are billing under 
arrangement with hospitals.
    Comment: One commenter stated the contractual arrangement between 
mobile diagnostic imaging services companies and hospitals are 
commonplace throughout the United States health care industry and these 
long-standing arrangements, which can be short-term or long-term 
depending upon hospital demand, service a variety of important needs 
within the hospital and provider community, including a valuable means 
to address capacity, volume and equipment cost issue and limitations 
imposed by State Certificate of Need (CON) requirements.

[[Page 69765]]

    Response: We understand the commenters' concerns and we are 
requiring these mobile IDTFs to bill for the services that they furnish 
unless they are billing under arrangement with hospitals.
    Comment: One commenter suggested that we should provide clear and 
concise guidance on billing protocols that permit hospitals to continue 
billing for mobile diagnostic testing services furnished as inpatient 
and outpatient hospital services and allow informational billing (that 
is, no payment impact) by the mobile entities through the use of a 
billing modifier.
    Response: We believe these comments are outside the scope of the 
rule.
    Comment: One commenter does not support a restriction of an 
enrolled provider/supplier that would preclude them from arrangements 
that are allowed under the purchased diagnostic test or purchased 
interpretation rules due to their method of connecting a patient with 
testing equipment.
    Response: We understand the commenters' concerns and we are 
requiring these mobile IDTFs to bill for the services they furnish 
unless they are billing under arrangement with hospitals.
    Comment: One commenter states that they believe that the provision 
of diagnostic and other therapeutic services by a contracted provider 
to registered inpatients and outpatients is fully consistent with 
longstanding Medicare provisions expressly permitting hospitals to 
furnish services directly or ``under arrangements,'' and that the 
mobile entities that may furnish these services under arrangement would 
not bill directly for their services but would be under the control of 
another entity.
    Response: We agree with the commenter and although we are requiring 
all mobile entities that provide diagnostic testing services to enroll 
in the Medicare program, we are not requiring mobile testing entities 
to bill directly for the services they furnish when such services are 
furnished under arrangement to hospitals.
    After reviewing public comments, we are finalizing the provision at 
Sec.  410.33(g)(16), which would require that entities furnishing 
mobile diagnostic services enroll in Medicare program as an IDTF 
regardless of where the services are furnished. By enrolling in the 
Medicare program, CMS or our contractor can determine if the mobile 
IDTF meets all of the performance standards found in Sec.  410.33(g) 
and that its owners are not otherwise excluded or barred from 
participation in the Medicare program. We believe that requiring mobile 
IDTFs to enroll in order to furnish services to Medicare beneficiaries 
is consistent with the existing enrollment regulation found at Sec.  
424.505 which states that to receive payment for covered Medicare items 
or services from either Medicare or a Medicare beneficiary, a provider 
or supplier must be enrolled in the Medicare program. Moreover, by 
requiring mobile IDTFs to enroll in order to furnish services to 
Medicare beneficiaries, the Medicare contractor will be able to certify 
that mobile IDTFs are in compliance with the requirements for enrolling 
and maintaining enrollment set forth at Sec.  424.520. Finally, the 
owner of a mobile IDTF is responsible for ensuring that the mobile IDTF 
meets all applicable regulatory requirements to maintain their 
enrollment in the Medicare program.
    In addition, we are finalizing the provision at Sec.  410.33(g)(17) 
requiring that mobile diagnostic services bill for the mobile 
diagnostic services that they furnish, unless the mobile diagnostic 
service is part of a hospital service and furnished under arrangement 
with that hospital as described in section 1862(a)(14)of the Act and 
Sec.  482.12(e). To ensure that IDTFs are actually furnishing services 
under arrangement with a hospital, we will require that mobile IDTFs 
provide documentation of the arrangement with their initial or 
revalidation enrollment application, or change in enrollment 
application.
3. Revocation of Enrollment and Billing Privileges of IDTFs in the 
Medicare Program
    Historically, we have allowed IDTFs whose Medicare billing numbers 
have been revoked to continue billing for services furnished prior to 
revocation for up to 27 months after the effective date of the 
revocation. Since we believe that permitting this extensive billing 
period poses a significant risk to the Medicare program, we proposed to 
limit the claims submission timeframe after revocation. In Sec.  
424.535(g) (redesignated as Sec.  424.535(g)), we proposed that a 
revoked IDTF must submit all outstanding claims for not previously 
submitted items and services furnished within 30 calendar days of the 
revocation effective date. We stated that this change is necessary to 
limit the Medicare program's exposure to future vulnerabilities from 
physician and NPP organizations and individual practitioners that have 
had their billing privileges revoked. Accordingly, the proposed change 
would allow a Medicare contractor to conduct focused medical review on 
the claims submitted during the claims filing period to ensure that 
each claim is supported by medical documentation that the contractor 
can verify. We maintain that focused medical review of these claims 
will ensure that Medicare only pays for services furnished by a 
physician or NPP organization or individual practitioner and that these 
entities and individuals receive payment in a timely manner. In 
addition, we also proposed to add a new provision at Sec.  424.44(a)(3) 
to account for this provision related to the requirements for the 
timely filing of claims. The timely filing requirements in Sec.  
424.44(a)(1) and (a)(2) will no longer apply to physician and NPP 
organizations, physicians, NPPs and IDTFs whose billing privileges have 
been revoked by CMS.
    Comment: Several commenters recommended that we withdraw all of our 
proposed changes to the requirements for physician enrollment in 
Medicare, including changes to the effective date of billing 
privileges, eligibility to participate in the program, enrollment 
processing, reporting requirements, and revocation of billing 
privileges. Many of the commenters were concerned that it would be 
burdensome to add new requirements where they must submit all claims 
within 60 days of the effective date of revocation because of the time 
it takes to process claims and that it would be easier to leave the 
retrospective billing rules as they are.
    Response: We are not adopting this recommendation. Instead, we will 
respond to the specific comments received in response to our specific 
proposals.
    Comment: Several commenters requested that we make no revisions to 
current physician and NPP enrollment rules at this time.
    Response: We are not adopting this recommendation. Instead, we will 
respond to the specific comments received in response to our specific 
proposals.
    After reviewing public comments, we are finalizing the provisions 
found at Sec.  424.535(h) (formerly Sec.  424.535(g)) that require a 
revoked physician organization, a physician, a NPP, or an IDTF to 
submit all outstanding claims not previously submitted within 60 
calendar days of the revocation effective date. Since IDTFs are already 
afforded approximately 30 days notification before the effective date 
of revocation (except for revocations identified in Sec.  405.874(b)(2) 
and Sec.  424.535(f) of this final rule), we believe that almost 90 
days is more than sufficient time to file any outstanding claims.
    In addition, we are finalizing the provisions found at Sec.  
424.44(a) related

[[Page 69766]]

to the requirements for the timely filing of claims. The timely filing 
requirements in Sec.  424.44(a)(1) and (a)(2) will no longer apply to 
physician and NPP organizations, physicians, NPPs or IDTFs. We revised 
this provision so that it is consistent with Sec.  424.521 which limits 
the ability of these suppliers to bill Medicare retrospectively.

J. Physician and Nonphysician Practitioner (NPP) Enrollment Issues

1. Effective Date of Medicare Billing Privileges
    In accordance with Sec.  424.510, physician and NPP organizations 
(that is, groups, clinics, and sole owners) and individual 
practitioners including physicians and NPPs, operating as sole 
proprietorships or reassigning their benefits to a physician and 
nonphysician organization may submit claims as specified in Sec.  
424.44 after they are enrolled in the Medicare program. This provision 
permits newly enrolled physician and NPP organizations and individual 
practitioners, as well as existing physicians and nonphysician 
organizations and individual practitioners to submit claims for 
services that were furnished prior to the date of filing or the date 
the applicant received billing privileges to participate in the 
Medicare program.
    For the purposes of this final rule with comment period, we believe 
that an NPP includes, but is not limited to, the following individuals: 
anesthesiology assistants, audiologists, certified nurse midwives, 
certified registered nurse anesthetists (CRNA), clinical social 
workers, nurse practitioners (NPs), physician assistants (PAs), 
clinical psychologists, psychologists billing independently, speech 
language pathologists, and registered dieticians or nutrition 
professionals.
    Once enrolled, physician and NPP organizations and individual 
physicians and NPPs, depending on their effective date of enrollment, 
may retroactively bill the Medicare program for services that were 
furnished up to 27 months prior to being enrolled to participate in the 
Medicare program. For example, if a supplier is enrolled in the 
Medicare program in December 2008 with an approval date back to October 
2006, that supplier could retrospectively bill for services furnished 
to Medicare beneficiaries as early as October 1, 2006.
    Currently, physician and NPP organizations and individual 
practitioners, including physicians and NPPs, are allowed to bill 
Medicare prior to their enrollment date. Therefore, it is possible that 
the physician and NPP organizations and individual practitioners who 
meet our program requirements on the date of enrollment may not have 
met those same requirements prior to the date of enrollment, even 
though that supplier could bill Medicare and receive payments for 
services furnished up to 27 months prior to their enrolling in the 
Medicare program. In the proposed rule, we stated our concern that some 
physician and NPP organizations and individual practitioners may bill 
Medicare for services when they are not meeting our other program 
requirements, including those related to providing beneficiary 
protections, such as Advance Beneficiary Notices.
    We solicited public comment on two approaches for establishing an 
effective date for Medicare billing privileges for physician and NPP 
organizations and for individual practitioners.
    The first approach would establish the initial enrollment date for 
physician and NPP organizations and for individual practitioners, 
including physician and NPPs, as the date of approval by a Medicare 
contractor. This approach would prohibit physician and NPP 
organizations and individual practitioners from billing for services 
furnished to a Medicare beneficiary before they are approved and 
enrolled by a designated Medicare contractor to participate in the 
Medicare program and Medicare billing privileges are conveyed to their 
National Provider Identifier (NPI). Physicians and NPPs are eligible 
for NPIs and may apply for their NPIs at any time. To enroll in 
Medicare, a physician or NPP must have an NPI. If an enrollment 
application is received that is absent the NPI, it will be rejected. 
The NPI regulation, at 45 CFR 162.410(a)(1), requires a health care 
provider who is a covered entity under HIPAA to obtain an NPI. At 45 
CFR 162.410(b), the NPI regulation states that a health care provider 
who is not a covered entity under HIPAA may obtain an NPI. The 
definition of ``health care provider'' is found at 45 CFR 160.103. The 
preamble of the NPI final rule (69 FR 3450) states that HIPAA does not 
prohibit a health plan from requiring its enrolled health care 
providers to obtain NPIs if those health care providers are eligible 
for NPIs (that is, that they meet the definition of ``health care 
provider''). With exceptions for the two entities that are eligible to 
enroll in Medicare but are not eligible for NPIs, Medicare requires all 
providers, including physicians and NPPs, who apply for enrollment to 
have NPIs, and to report them on their Medicare enrollment 
applications. When applying for NPIs, providers indicate they are one 
of the following: An Entity type 1 (an individual person, such as a 
physician or an NPP, to include a sole proprietor/sole proprietorship); 
or an Entity type 2 (an organization, which is any legal entity other 
than an individual).
    The date of approval is the date that a designated Medicare 
contractor determines that the physician or NPP organization or 
individual practitioner meets all Federal and State requirements for 
their supplier type
    Given this first approach, in proposed Sec.  424.520, we stated 
that we may implement regulations text that reads similar to: ``The 
effective date of billing privileges for physician and NPP 
organizations and individual practitioners, including physicians and 
NPPs, is the date a Medicare contractor conveys billing privileges to a 
NPI.''
    We also stated in the CY 2009 PFS proposed rule that we believe 
that this approach--
     Prohibits physicians, NPP organizations, and individual 
practitioners from receiving payments before a Medicare contractor 
conveys Medicare billing privileges to an NPI (69 FR 3434);
     Is consistent with our requirements in Sec.  489.13 for 
those providers and suppliers that require a State survey prior to 
being enrolled and the requirements for durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) suppliers in Sec.  
424.57(b)(2);
     Is consistent with our requirements for providers 
identified in Sec.  400.202 and surveyed suppliers that are allowed to 
bill for services only after they are approved to participate in the 
Medicare program. Surveyed suppliers are those suppliers who have been 
certified by either CMS or a State certification agency and are in 
compliance with Medicare requirements. Surveyed suppliers may include 
ASCs or portable x-ray suppliers; and
     Ensures that we are able to verify a supplier's 
qualifications, including meeting any performance standards before 
payment for services can occur.
    The second approach would establish the initial enrollment date for 
physician and NPP organizations and individual practitioners, including 
physician and NPPs, as the later of: (1) The date of filing of a 
Medicare enrollment application that was subsequently approved by a 
fee-for-service (FFS) contractor; or (2) the date an enrolled supplier 
first started furnishing services at a new practice location. The date 
of filing the enrollment application is the date that the Medicare FFS 
contractor receives a signed Medicare enrollment application that the 
Medicare FFS

[[Page 69767]]

contractor is able to process to approval. This option would allow a 
supplier that is already seeing non-Medicare patients to start billing 
for Medicare patients beginning on the day they submit an enrollment 
application that can be fully processed. In contrast to the first 
option, newly enrolling physicians and NPP organizations, and 
individual practitioners or physician and NPP organizations and 
individual practitioners that are establishing or changing a practice 
location would be allowed to bill the Medicare program for services 
furnished to Medicare beneficiaries on or after the date of filing if a 
Medicare contractor approves Medicare billing privileges and conveys 
billing privileges to an NPI. It is also important to note that if a 
Medicare contractor rejects or denies an enrollment application, then 
the physician or NPP organization or individual practitioner is at risk 
of not receiving payment for any services furnished after the date of 
filing.
    Given this second approach, in proposed Sec.  424.520, we stated 
that we may implement regulations text that reads similar to: ``The 
effective date of billing privileges for physician and NPP 
organizations and for individual practitioners, physicians and NPPs, is 
the later of--(1) The filing date of the Medicare enrollment 
application that was subsequently approved by a FFS contractor; or (2) 
The date that the physician or NPP organization or individual 
practitioner first furnished services at a new practice location.''
    We also stated in the CY 2009 PFS proposed rule that we believe 
that this approach--
     Prohibits physician and NPP organizations and individual 
practitioners, including physician and NPPs, from receiving payments 
before a Medicare contractor conveys Medicare billing privileges to an 
NPI (69 FR 3434);
     Is consistent with our requirements found at Sec.  
410.33(i) that limit the retrospective billing for IDTFs and ensures 
that Medicare billing privileges are conveyed to physician and NPP 
organizations and to individual physicians and NPPs in a similar manner 
similar to IDTFs; and
     Addresses the public's concern regarding contractor 
processing timeliness while appropriately ensuring that Medicare 
payments are made to physician and NPP organizations and to individual 
physicians and NPPs who have enrolled in a timely manner.
    We maintain that it is not possible to verify that a supplier has 
met all of Medicare's enrollment requirements prior to submitting an 
enrollment application. Therefore, the Medicare program should not be 
billed for services before the later of the two dates that a physician 
or NPP organization, physician, or NPP has submitted an enrollment 
application that can be fully processed or when the enrolled supplier 
is open for business.
    To assist physician and NPP organizations and individual 
practitioners in enrolling and updating their existing enrollment 
record, we established an Internet-based enrollment process known as 
the Internet-based Provider Enrollment, Chain and Ownership System 
(PECOS) that is more streamlined and efficient than the traditional 
paper-application enrollment method.
    By using Internet-based PECOS, we expect that physician and NPP 
organizations and individual practitioners will be able to reduce the 
time necessary to enroll in the Medicare program or to make a change in 
their Medicare enrollment record by reducing common errors in the 
application submission process. We expect that Medicare contractors 
will fully process most complete Internet-based PECOS enrollment 
applications within 30 to 45 calendar days compared to 60 to 90 
calendar days in the current paper-based enrollment process. Thus, if 
physician and NPP organizations and individual practitioners enroll in 
the Medicare program or make a change in their existing Medicare 
enrollment using Internet-based PECOS and submit required supporting 
documentation, including a signed certification statement, licensing 
and education documentation, and, if necessary, the electronic funds 
transfer authorization agreement (CMS-588) 45 days before their 
effective date, a Medicare contractor should be able to process the 
enrollment application without a delay in payment.
    The date of filing for Internet-based PECOS will be the date the 
Medicare FFS contractor receives all of the following: (1) A signed 
certification statement; (2) an electronic version of the enrollment 
application; and (3) a signature page that the Medicare FFS contractor 
processes to approval.
    In Sec.  424.502, we also proposed to define a physician and NPP 
organization to mean any physician or NPP entity that enrolls in the 
Medicare program as a sole proprietorship or organizational entity such 
as a clinic or a group practice. In addition to establishing an 
organizational structure as a sole proprietorship, physicians and NPPs 
are able to establish various organizational relationships including 
corporations, professional associations, partnerships, limited 
liability corporations, and subchapter S corporations. We believe that 
the proposed definition would include sole proprietorships that receive 
a type 1 NPI and any organizational entity that is required to obtain a 
type 2 NPI.
    Comment: Several commenters urged CMS to adopt the proposal to 
limit retrospective billing to the later of the date of filing or date 
the practice location was established.
    Response: We agree with these commenters and have finalized this 
approach in this final rule with comment period.
    Comment: One commenter recommended that we should not implement the 
revised effective date for billing privileges until January 1, 2010.
    Response: We disagree with the commenter because we believe that it 
is essential that Medicare only pay for services to eligible 
practitioners that are qualified to bill for services.
    Comment: Several commenters recommended that we refrain from 
implementing any proposed changes to the effective date of Medicare 
billing privileges until the Provider Enrollment, Chain and Ownership 
System (PECOS) system is fully functional and a thorough discussion is 
held between all affected parties and/or all current National Provider 
Identifier (NPI) applications are processed.
    Response: While we understand this comment, we disagree with these 
commenters. By establishing an effective date of billing for 
physicians, NPPs, and physician and NPP organizations, we believe that 
Medicare will only pay for services furnished by licensed practitioners 
that meet all of the Medicare program requirements. In addition, we 
implemented the NPI on May 23, 2008. Accordingly, we do not believe 
that there is a nexus between the implementation of the effective date 
for physicians, NPPs, and physician and NPP organizations and the 
implementation of the Internet-based PECOS or the implementation of the 
NPI.
    Comment: One commenter suggested that payment not commence until 
the provider's application has been processed and approved and that if 
the approval date is after the date the provider first started to 
render services, then payments will be paid retroactive to the 
rendering date. The commenter also requested that CMS implement an 
electronic enrollment processing system.
    Response: We are finalizing a provision that allows physicians, 
NPPs (including CRNAs), and physician or NPP organizations to 
retrospectively bill

[[Page 69768]]

for services up to 30 days prior to their effective date of billing 
when the physician or NPP organization met all program requirements, 
including State licensure requirements, where services were provided at 
the enrolled practice location prior to the date of filing and 
circumstances precluded enrollment in advance of providing services to 
Medicare beneficiaries in Sec.  424.521(a)(1). Further, we are 
implementing Internet-based PECOS for physicians and NPPs by the end of 
CY 2008 to facilitate the electronic enrollment process.
    Comment: One commenter suggested that the enrollment payment policy 
for CRNAs remain as it is.
    Response: We are finalizing a provision that allows physicians, 
NPPs (including CRNAs), and physician or NPP organizations to 
retrospectively bill for services up to 30 days prior to their 
effective date of billing when the physician or nonphysician 
organization has met all program requirements, including State 
licensure requirements, where services were provided at the enrolled 
practice location prior to the date of filing and circumstances, such 
as, when a physician is called to work in a hospital emergency 
department which precluded enrollment in advance of providing services 
to Medicare beneficiaries in Sec.  424.521(a)(1).
    Comment: One commenter would like to recommend that CMS not make 
the new Web-based enrollment system too cumbersome. Their concerns are 
based on current member experiences with the IACS for review of PQRI 
claims. The requirements for the practice to designate a security 
officer, submit old IRS documents, etc., are extremely time-consuming, 
burdensome and serve as disincentives to physician participation.
    Response: This comment is outside the scope of the proposed rule 
and cannot be addressed within this final rule.
    Comment: One commenter asked that if we adopt either of these 
enrollment strategies, we should consider an exemption for hospital-
based emergency physicians and NPP organizations to allow a period of 
retroactive billing and payment once an enrollment application is 
approved by the contractor.
    Response: We are finalizing a provision that allows physicians, 
NPPs, and physician or NPP organizations to retrospectively bill for 
services up to a 30 days prior to their effective date of billing when 
the physician or NPP organization met all program requirements, 
including State licensure requirements, where services were furnished 
at the enrolled practice location prior to the date of filing and 
circumstances precluded enrollment in advance of providing services to 
Medicare beneficiaries in Sec.  424.521(a)(1).
    Comment: One commenter stated that they support our efforts to 
ensure participating providers and suppliers of services are complying 
with Medicare program requirements in a matter consistent with policy 
and are not attempting to ``game'' the system. However, should we move 
forward with this proposal, the commenter advises the drafting of 
policies to identify unusual activities beyond the control of the 
provider or supplier, such as hurricanes and other natural disasters, 
that necessitate a provider or supplier of services obtaining 
additional Medicare billing privileges in order to provide services.
    Response: We are finalizing a provision that allows physicians, 
NPPs, physician or NPP organizations to retrospectively bill for 
services up to a 90 days prior to their effective date of billing when 
the physician or NPP organization met all program requirements, 
including State licensure requirements, services were furnished at the 
enrolled practice location prior to the date of filing and a 
Presidentially-declared disaster under the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act, 42 U.S.C. Sec. Sec.  5121-5206 
(Stafford Act) precluded enrollment in advance of providing services to 
Medicare beneficiaries in Sec.  424.521(a)(2).
    Comment: A large number of commenters do not support either 
approach and go further to state that both proposals will negatively 
impact the ability of hospital emergency departments and their 
physicians to meet their statutory obligations under the Emergency 
Medical Treatment and Active Labor Act (EMTALA). Many of these 
commenters stated that in these emergency department situations, 
physicians are hired in very short timeframes, sometimes just days 
before they begin working in a new location that they cannot submit an 
enrollment application in such a short timeframe. They also continued 
to state that if we adopted the enrollment provisions as proposed, 
these emergency department enrollment situations would cause the 
physicians to forgo payment because they would not be able to submit an 
enrollment application before they begin furnishing services. Other 
commenters were opposed to both proposed approaches to limit 
retrospective billing after enrolling in the Medicare program and asked 
that we withdraw any proposed changes to the enrollment process.
    Response: We disagree with the commenters. We believe that we have 
adopted an approach that balances the need to strengthen the Medicare 
enrollment process, protect the Medicare Trust Funds, and ensure that 
individual practitioners and physician and NPP organizations receive 
payment for services furnished to Medicare beneficiaries. The revised 
provision allows up to 30 days after furnishing services to submit an 
enrollment application (and up to 90 days when a Presidentially-
declared disaster under the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act, 42 U.S.C. 5121-5206 (Stafford Act)) so the 
physician, NPP or physician or NPP organization has sufficient time to 
submit their enrollment application.
    Comment: One commenter stated that they believe that it is 
unreasonable to expect physicians to furnish care to their patients 
without the ability to be paid for their services until they are 
officially enrolled in the Medicare program.
    Response: While we agree that physicians should be reimbursed for 
the services furnished to Medicare beneficiaries, we also believe that 
physicians, NPPs and physician and NPP organizations are responsible 
for enrolling or making a change in their enrollment in a timely 
manner. In most cases, we believe that physicians and NPP practitioners 
can submit an enrollment application prior to providing Medicare 
services at a new practice location.
    Comment: One commenter stated that in emergency room situations 
these enrollment scenarios will not work and gives the example using 
the second approach of when an emergency department is in desperate 
need of a provider. The department is able to obtain a physician almost 
immediately who is already employed within the organization and is also 
an approved provider in the Medicare program at their current practice 
location. Simply because the events in this example happened so 
quickly, the physician's CMS-855R was submitted to the Medicare 
contractor 1 week after he began providing services in the emergency 
department. If the second approach were in effect, 1 week of services 
the physician furnished to Medicare beneficiaries in the emergency 
department would be denied as his enrollment at this location was not 
in effect.
    Response: We understand this commenter's concerns and are 
finalizing a provision that allows physicians, NPPs, physician or NPP 
organizations to retrospectively bill for services up to 30

[[Page 69769]]

days prior to their effective date of billing when the physician or NPP 
organization met all program requirements, including State licensure 
requirements, where services were furnished at the enrolled practice 
location prior to the date of filing and circumstances precluded 
enrollment in advance of providing services to Medicare beneficiaries 
in Sec.  424.521(a)(1).
    Comment: One commenter stated that should we adopt the second 
approach, they requested that a standard be established that defines 
what constitutes the receipt of a substantially complete application 
form for which the effective date under approach two may be 
established. This approach would address the situations where denial 
errors and clarifications can be corrected without delaying the 
effective date.
    Response: As a general rule, applicants are given at least 30 days 
to cure any deficiencies/technicalities before a contractor rejects an 
enrollment application (see Sec.  424.525). During the application 
review process, contractors notify applicants about missing information 
and documentation and afford the applicant at least 30 days to correct 
deficiencies. With the implementation of Internet-based PECOS, we 
expect that physicians and NPPs using the Web process will 
significantly decrease the number of incomplete applications and the 
need for contractors to request additional information. With the 
implementation of this final rule, we would require contactor to deny, 
rather than reject paper or Web applications when a physician, NPP, or 
physician or NPP organization fails to cure any deficiencies/
technicalities.
    Comment: One commenter urged CMS to adopt a standard establishing 
that the filing date for an enrollment application is when a signed 
application is first received by a contractor and not when the 
application is deemed complete and ready for approval by that 
contractor. Otherwise, delays associated with contractor processing 
could become a larger concern.
    Response: We agree with this commenter and have adopted the ``date 
of filing'' as the date that the Medicare contractor receives a signed 
provider enrollment application that the Medicare contractor is able to 
process to approval.
    Comment: Several commenters strongly opposed the approach where 
billing privileges would be conveyed based on the date of approval by 
the Medicare contractor and maintain that tying billing privileges to a 
contractor's approval of a practitioner's Medicare enrollment 
application could create unintended access problems for some patients. 
Other commenters added that in certain situations, the physicians would 
furnish services and would not be able to be compensated which they do 
believe is an unintended consequence by CMS.
    Response: We agree with the commenters and have not adopted the 
proposed approach as it was proposed but revised it so that it would 
establish the effective date of billing for physicians, NPPs, and 
physician and NNP organizations as the later of date of filing of a 
Medicare enrollment application that was subsequently approved by a 
Medicare contractor or the date they first began furnishing services at 
a new practice location.
    Comment: The suggestion to use the Medicare contractor's date of 
approval as the initial enrollment date would mean that an employer can 
expect to generate no revenue from a new hire for a minimum of 3 to 6 
months, which is unacceptable.
    Response: As stated above, we have not adopted the proposed 
approach but revised it so that it would establish the effective date 
of billing for physicians, NPPs, and physician and NNP organizations as 
the later of date of filing of a Medicare enrollment application that 
was subsequently approved by a Medicare contractor or the date they 
first began furnishing services at a new practice location.
    Comment: One commenter supports the establishment of an effective 
billing date for physicians, NPPs, and physician and NPP organizations 
as the later of: (1) The date of filing of a Medicare enrollment 
application that was subsequently approved by a Medicare contractor; or 
(2) the date an enrolled physician or NPP first started furnishing 
services at a new practice location. The commenter further urges the 
agency to tie enrollment and when billing privileges begins to offering 
services at a new practice location.
    Response: We appreciate this comment and have adopted a modified 
approach where that date of filing is the effective date of billing for 
physicians, NPPs, and physician and NPP organizations.
    Comment: One commenter requests that current procedures change and 
allow enrollment applications to be submitted 60 days prior to a 
change.
    Response: We disagree with the commenter and maintain that 
permitting billing 30 days before the filing of an enrollment 
application will provide a sufficient amount of time in most cases.
    Comment: One commenter stated that the establishment of an 
effective billing date for physicians, NPPs, and physician and NPP 
organizations as: (1) The date of filing of a Medicare enrollment 
application that was subsequently approved by a Medicare contractor; or 
(2) the date an enrolled physician or NPP first started furnishing 
services at a new practice location will improve patient access to 
Medicare providers, since patients could be scheduled for appointments 
based on the date that a Medicare provider submits an enrollment 
application to the Medicare Administrative Contractor (MAC). This also 
allows new Medicare providers more flexibility when initiating services 
under Medicare.
    Response: We thank the commenter for their support of this 
provision.
    Comment: Several commenters recommend that providers should be able 
to submit enrollment applications with a requested effective date.
    Response: We believe limiting retrospective payments will ensure 
that physicians, NPPs, and physician and NPP organizations will ensure 
that only qualified practitioners are able to bill for services 
furnished to Medicare beneficiaries. Moreover, we believe that 
establishing an effective date of Medicare billing privileges and 
establishing limited retrospective payments will encourage physicians, 
NPPs, and physician and NPP organizations to enroll and maintain their 
enrollment in with the Medicare program. However, the effective date of 
billing privileges is 30 days prior to the later of the date an 
enrollment application is filed or the date services were furnished at 
a new practice location.
    Comment: Several commenters urged CMS to retain its current 
retrospective billing policy for physicians and NPPs. However, these 
commenters stated that if CMS revised its retrospective billing policy 
for physicians, NPPs, and NPP organizations that they preferred option 
2 (establishment of an effective billing date for physicians, NPPs, and 
physician and NPPs as the later of: (1) The date of filing of a 
Medicare enrollment application that was subsequently approved by a 
Medicare contractor; or (2) the date an enrolled physician or NPP first 
started furnishing services at a new practice location), which limited 
retrospective billing to the later of the date of filing or the date 
the practice location was established.
    Response: We agree with these commenters and have adopted this 
approach in this final rule.
    Comment: One commenter recommends allowing those physicians

[[Page 69770]]

who are about to complete their fellowship to submit an application to 
Medicare for a generic provider number which at a later date can be 
linked to an eventual employer.
    Response: Since we do not establish a provisional enrollment status 
for physicians or other suppliers, but rather convey billing privileges 
to a NPI, we disagree with this commenter.
    Comment: One commenter suggests that to improve the Medicare 
enrollment process, the processing of enrollment applications should 
take 30 to 45 days versus a 90 to 120 days activity. Medicare could 
follow the process employed by private payers and utilize one central 
repository for provider enrollment given that all processes basically 
require the same essential information.
    Response: CMS already utilizes a single national repository of 
enrollment information. The national enrollment repository is known as 
the Provider Enrollment, Chain and Ownership System (PECOS).
    Comment: Several commenters supported our proposed approach that 
would establish the initial enrollment date for individual 
practitioners and physician and NPP organizations as the date an 
enrolled supplier started furnishing services at the new practice 
location as it would be the fairest option for all enrollees.
    Response: We appreciate this comment, and as stated above, we are 
finalizing this proposal with revisions so that it would establish the 
effective date of billing for physicians, NPPs, and physician and NNP 
organizations as the later of date of filing of a Medicare enrollment 
application that was subsequently approved by a Medicare contractor or 
the date they first began furnishing services at a new practice 
location.
    Comment: One commenter stated that physician practices that allow 
new practitioners to treat Medicare patients before their applications 
are approved run the risk of submitting an application that is 
ultimately returned on a technicality, forcing them to begin the 
application process all over again.
    Response: As stated above, to address the concern that enrollment 
applications are returned based on a technicality, we expect that 
physicians and NPPs using the Web process will significantly decrease 
the number of incomplete applications and the need for contractors to 
request additional information. With the implementation of this final 
rule, we would require contactor to deny, rather than reject paper or 
Web applications when a physician, NPP, or physician or NPP 
organization fails to cure any deficiencies/technicalities.
    Comment: One commenter stated that new physicians' practices must 
begin paying rent, salaries and other expenses the minute they become 
operational, if not before. This commenter also stated that many of 
these physicians are already forced to take out loans to pay expenses 
in the early days of operation until they enroll and can bill for 
services furnished in the interim. Finally, this commenter stated that 
our proposal to limit retrospective billing to the later of the date of 
filing or the date the practice location is operational will inhibit 
the ability of physicians and NPPs to create their own organizations, 
and instead, it will force them to join already existing entities.
    Response: We do not believe that the Medicare program pays for 
services rendered prior to the date a new practice location is 
established. As described above, the physician or NPP would be allowed 
to file his or her enrollment application 30 days prior to the opening 
of new practice location and receive payments for services provided 
from the day the practice location was established or opened assuming 
that the physician met State licensing requirements and other Medicare 
program requirements at the time of filing and subsequently thereafter.
    Comment: One commenter urged CMS to withdraw any proposed changes 
to the enrollment process, but stated that they would consider 
supporting limiting retrospective billing to the later of the date of 
filing or the date the practice location is operational but only after 
Internet-based PECOS has been proven to facilitate timely enrollment 
processing (fewer than 30 days). Another commenter supported CMS 
implementing this requirement once the enrollment processing time is at 
a period of 30 to 45 days.
    Response: We do not believe that a change to the effective date of 
Medicare billing privileges has a nexus to the implementation of the 
Internet-based PECOS.
    Comment: One commenter suggested that we allow 30 to 60 days before 
submission of an application to serve as the date of approval because 
this timeline will allow for practices to obtain provider signatures, 
licenses, and certifications so that we can approve back to the date of 
licensure and/or the date the provider started furnishing services with 
a minimum of 30 to 60 days.
    Response: We disagree with this commenter, because physicians, NPPs 
and physician and NPP organizations should have all the necessary 
licenses/certifications at the time of filing, not 30 or 60 days after 
filing an enrollment application.
    Comment: Several commenters asked for clarification of the ``date 
of filing'' when submitting an application for enrollment.
    Response: We have clarified the ``date of filing'' in the provision 
of the final rule as the date that the Medicare contractor receives a 
signed provider enrollment application that the Medicare contractor is 
able to process to approval.
    Comment: One commenter recommends that we wait until the Internet-
based PECOS system has been released and used by the physician 
population before making these changes.
    Response: As stated above, we do not believe that a change to the 
effective date of Medicare billing privileges has a nexus to the 
implementation of the Internet-based PECOS.
    Comment: Several commenters recommended that we shorten the period 
of time during which retrospective billing is permitted from 27 months 
to 12 months. Another commenter stated that reducing retrospective 
billing from 27 months to 12 months would provide sufficient time for 
enrollment to occur, reduce the possibility of improper billing and 
eliminate the unreasonable administrative burden that the our 
alternatives would place on all new physicians.
    Response: We appreciate these comments, but continue to believe 
that allowing retrospective billing for 12 months prior to enrollment 
poses a significant risk to the Medicare program. Accordingly, with the 
implementation of this final rule, physician and NPPs and physician and 
NPP organizations will have a limited time period to submit claims 
before the effective date of their respective Medicare billing 
privileges.
    Comment: Several commenters urged CMS to establish the new Web-
based program and determine the accuracy and ease of the system before 
making new enrollment rules. This commenter also stated the new Web-
based system should be far easier to use than the current process.
    Response: We agree with these commenters and, as previously stated, 
we expect to implement Internet-based PECOS for individuals by the end 
of CY 2008.
    Comment: One commenter stated that they have been advised by 
Medicare that this change means upon receiving notice that a graduate 
nurse anesthetist

[[Page 69771]]

had passed his or her certifying exam that the ``graduate'' now a CRNA 
can retain any Medicare claims from his or her certification date 
forward and then submit these held claims upon receiving his or her 
National Provider Identifier (NPI). Further, the commenter stated that 
Medicare carriers have allowed this payment practice with the 
understanding that graduate nurse anesthetists are qualified to bill 
Medicare for their services upon their certification date.
    Response: While we understand this comment, we believe that 
physicians and NPPs must meet all State licensing requirements before 
Medicare can convey billing privileges. Moreover, with the 
implementation of this final rule, physician and NPPs and physician and 
NPP organizations will have a limited time period to submit claims 
before the effective date of their Medicare billing privileges.
    Comment: One commenter stated that they understand that there have 
been Medicare Carriers that allow CRNAs to hold their claims and back 
bill for up to 1 year prior to the date they are certified, consistent 
with Medicare payment policy.
    Response: We believe that physician and NPPs must meet all State 
licensing requirements before Medicare can convey billing privileges. 
Moreover, with the implementation of this final rule, physician and 
NPPs and physician and NPP organizations will have a limited time 
period to submit claims before their effective date of Medicare billing 
privileges.
    Comment: One commenter urged CMS to adopt the Council for 
Affordable Quality Healthcare's (CAQH) Universal Credentialing Database 
(UCD) as its provider credentialing information gathering tool. This 
commenter stated that CAQH has over 600,000 providers and suppliers in 
its database and is working with hospitals and State Medicaid programs 
as well.
    Response: While we appreciate this comment, this comment is outside 
the scope of this final rule. However, it is important to understand 
that CMS' national enrollment repository, PECOS, maintains Medicare 
enrollment records on more than 610,000 physicians, 280,000 NPPs, 
75,000 single specialty clinics, and 130,000 multi-specialty clinics. 
In addition, PECOS maintains enrollment records for all other provider 
and supplier types, except durable medical equipment, prosthetics, 
orthotics, and supplies (DMEPOS) suppliers. This means that we have 
collected and retained current enrollment information on approximately 
80 percent of physicians and 98 percent of the NPPs enrolled in and 
billing the Medicare program. In addition, since the information 
obtained during the enrollment process for physician and NPP 
organizations updates our claims payment systems for Part B services, 
we are able to help ensure claims processing accuracy by utilizing its 
existing processes.
    Comment: One commenter urged CMS to produce educational materials 
beyond the vague tip sheets located at the beginning of each 
application. In addition, this commenter recommends that we develop a 
series of frequently asked questions on Medicare provider enrollment.
    Response: We already maintain a link to provider enrollment 
frequently asked questions at http://www.cms.hhs.gov/MedicareProviderSupEnroll. In addition, this Web site maintains more 
than 10 different provider enrollment outreach documents that the 
public can view online or download for future reference.
    In an attempt to ensure that all physicians, NPPs, and NPP 
organizations are aware of and comply with their reporting 
responsibilities, we developed and posted reporting responsibilities 
for physicians, NPPs, and physician organizations on our provider 
enrollment Web page at http://www.cms.hhs.gov/MedicareProviderSupEnroll 
on September 16, 2008. In addition, on September 17, 2008, we issued a 
listserv announcement to those individual physicians and NPPs who 
subscribe to the CMS Physician Open Door Forum and to more than 150 
national and State-level organizations that subscribe to the CMS 
provider partnership network. We also expect that contractors will 
continue to notify physicians and NPP organizations about their 
reporting responsibilities by listserv, bulletin, and/or direct mail in 
FY 2009 and beyond. With the implementation of this final rule with 
comment period on January 1, 2009, we will revise the educational 
materials found on our Web site and distribute this information through 
our established communication channels. Finally, we will post 
educational material, including fact sheets and frequent asked 
questions, regarding Internet-based PECOS as soon as this system is 
available to the public.
    Comment: One commenter asked that we create extensive educational 
programming on provider enrollment for both our contractors and 
providers to ensure that both sides thoroughly understand the process 
and expectations.
    Response: We provide Medicare contractors with manual instructions 
and other directives to ensure consistent enrollment processing. In 
addition, as stated above, we are disseminating additional educational 
materials to ensure that the public understands their reporting 
responsibilities.
    Comment: One commenter suggested a process for the Medicare 
Contractor to notify the provider that the application has been 
received and it is being processed to ensure the approved billing date 
is the same between the provider and the Medicare contractor.
    Response: Due to cost constraints, most Medicare contractors can 
not notify an applicant when their paper enrollment application is 
received; however, Medicare contractors are required to notify an 
applicant when the application is missing information or if additional 
supporting documentation is needed to process the enrollment request.
    Comment: One commenter stated that the NPP nomenclature is 
ambiguous because CMS lists all suppliers as NPPs (including 
audiologists and physical and occupational therapists) on page 38535 of 
the proposed rule, rather than limiting this term to physician 
assistants, nurse practitioners, and clinical nurse specialists as 
defined in Medicare policy manuals.
    Response: We have revised this rule to refer to individual 
physicians and NPPs and physician and NPP organizations.
    Comment: One commenter urges CMS to require contractors to provide 
accurate and complete information to applicants, allowing their 
practices to complete their enrollment applications in an easy and 
efficient manner.
    Response: While we appreciate this comment, this comment is outside 
the scope of this proposed rule and can not be addressed in this final 
rule.
    Comment: One commenter urged CMS to require Medicare contractors to 
communicate requests for additional information in such a manner that 
the communications can be easily tracked.
    Response: We believe that this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter urged a ``timeout'' on the release of new 
rules and regulations surrounding the Medicare provider enrollment 
process.
    Response: We recognize that we have published several regulations 
within the last 3 years and a number of program integrity manual 
instructions designed to strengthen the enrollment process. However, we 
continue to believe that CMS must maintain the flexibility to issue 
regulations in accordance with the Administrative Procedures Act.

[[Page 69772]]

    Comment: One commenter urged CMS to clarify the apparent 
inconsistent policies on revalidation as set forth in the April 21, 
2006 provider enrollment rule titled, ``Medicare Program: Requirements 
for Providers and Suppliers to Establish and Maintain Medicare 
Enrollment (CMS-6002-F)'' and the June 27, 2008 provider enrollment 
rule titled, ``Medicare Program: Appeals of CMS or CMS Contractor 
Determinations When a Provider or Supplier Fails to Meet the 
Requirements for Medicare Billing Privileges (CMS-6003-F).''
    Response: In response to comment in the April 21, 2006 final rule 
(71 FR 20754), we stated, ``We expect that a fee-for-service contractor 
would notify the provider or supplier in writing regarding the need to 
revalidate its enrollment information. Once notified, providers and 
suppliers would be expected to review, update, and submit any changes 
and supporting documentation regarding the enrollment record within 60 
days. If no changes have occurred, a provider or supplier would simply 
sign, date, and return the revalidation application.'' In addition, we 
stated in the provisions of the final rule that, ``We will contact all 
providers and suppliers directly as to when their 5-year revalidation 
cycle starts beginning with those providers and suppliers currently 
enrolled in the Medicare program but that have not submitted a 
completed enrollment application. The revalidation process would ensure 
that we collect and maintain complete and current information on all 
Medicare providers and suppliers and ensure continued compliance with 
Medicare requirements. In addition, this process further ensures that 
Medicare beneficiaries are receiving items or services furnished only 
by legitimate providers and suppliers, and strengthens our ability to 
protect the Medicare Trust Funds.''
    In response to a comment in the June 27, 2008 final rule (73 FR 
36448), we stated, ``Therefore, providers and suppliers that enrolled 
in the Medicare program prior to 2003, but who have not completed a 
Medicare enrollment application since then, have had more than 2 years 
to come into voluntary compliance with our enrollment criteria by 
submitting a complete enrollment application. With this final rule, we 
are again notifying physicians, providers, and suppliers that they may 
voluntarily complete and submit a Medicare enrollment application and 
the necessary supporting documentation prior to our formal request for 
revalidation. Accordingly, providers and suppliers who choose not to 
come into voluntary compliance or fail to respond to a revalidation 
request in a complete and timely manner fail to satisfy our enrollment 
criteria and may be subject to revocation of their billing 
privileges.'' Accordingly, we do not believe that these policies are 
inconsistent. We continue to encourage all physicians, providers, and 
suppliers to update their enrollment records when a reportable change 
occurs, and absent a reportable change we encourage all physicians, 
providers, and suppliers who have not updated their enrollment record 
within the last 5 years to do so in advance of contractor's 
revalidation request. Once we initiate revalidation efforts, physicians 
and other providers and suppliers will only be provided 60 days to 
respond to a contractor's request.
    Comment: One commenter stated that we should monitor, track, and 
make publicly available the average length of time from submission of 
an enrollment application for new procedures to the time the Medicare 
contractors actually process and notify the providers of acceptance of 
that enrollment application.
    Response: While we monitor contractor provider enrollment 
processing timeliness using PECOS, we do not currently calculate an 
average length of time for initial enrollments, changes, and 
reassignments. We will consider calculating the average length of time 
for initial enrollment applications, changes of information, and 
reassignments and making this information available to the public.
    Comment: One commenter requests that if we finalize these 
provisions, a notice of onsite review should be provided 14 days in 
advance to allow the pharmacy to appropriately schedule for the onsite 
review.
    Response: We disagree with this commenter. We believe that onsite 
reviews provide CMS and our contractors a valuable tool to ensure that 
providers and suppliers are in compliance.
    Comment: Several commenters remain concerned about the failure of 
CMS to permit the use of electronic signatures and electronic documents 
which would provide practitioners and practices the opportunity to 
complete and submit the entire application package online.
    Response: This comment is outside the scope of this proposed rule 
and can not be addressed in this final rule.
    Comment: One commenter recommended that we hold an open and 
thorough dialogue with its contractors and the provider community 
regarding the enrollment process as it currently stands and the 
problems encountered by all.
    Response: We believe that this issue is outside the scope of the 
proposed rule and can not be addressed in this final rule.
    Comment: One commenter stated that they support CMS and the 
establishment of an electronic enrollment process but they do not 
believe it will address the provisions in the rule.
    Response: While we do not expect that Internet-based PECOS will 
remedy all provider enrollment processing issues, we do believe that an 
Internet-based enrollment process will allow physicians and other 
providers and suppliers to reduce the time necessary to enroll or make 
a change in enrollment in the Medicare program.
    Comment: One commenter recommended that we establish streamlined 
and user-friendly procedures that will encourage high rates of 
physician participation in the Medicare program.
    Response: We appreciate this comment and believe that Internet-
based PECOS will allow physicians and NPPs the ability to enroll or 
make changes in their enrollment records faster and more accurately 
than the paper-based enrollment process.
    Comment: One commenter commended CMS for PECOS as it will provide 
timely ease of use for enrollment as well as updating the enrollment 
record.
    Response: We appreciate this comment.
    Comment: One commenter requested that we consider modifying 
existing provider enrollment applications to include an attestation 
statement for which an applicant would attest to those certain 
requisite program requirements having been met prior to the filing of 
the application.
    Response: This recommendation is outside the scope of the proposed 
rule and can not be addressed in this final rule.
    Comment: One commenter stated that we should provide notice 14 days 
in advance of conducting an onsite review and that reviews on Mondays 
should be avoided.
    Response: This comment is outside the scope of this proposed rule 
and can not be addressed in this final rule.
    Comment: One commenter urged that CMS and the NSC coordinate so 
that only a single onsite review would be required and the least 
disruptive to an operation.

[[Page 69773]]

    Response: This comment is outside the scope of the proposed rule 
and can not be addressed in this final rule.
    After reviewing public comments, we are finalizing the definition 
of ``physician or nonphysician practitioner (NPP) organization'' at 
Sec.  424.502 as ``any physician or NPP organization that enrolls in 
the Medicare program as a sole proprietorship or any organizational 
entity.'' Organizational entities include, but are not limited to, 
limited liability corporations, Subchapter S corporations, 
partnerships, professional limited liability corporations, professional 
corporations, and professional associations.
    After reviewing public comments, we are finalizing the provision at 
Sec.  424.520(d) to state that we will establish an effective date of 
billing for physicians, NPPs and physician and NPP organizations that 
would be the later of: (1) The date of filing of a Medicare enrollment 
application that was subsequently approved by Medicare contractor (that 
is, carrier, fiscal intermediary or A/B Medicare Administrative 
Contractor); or (2) the date a physician, NPP or physician and NPP 
organization first started furnishing services at its new practice 
location.
    In Sec.  424.521, Request for Payment by Physicians, Nonphysician 
Practitioners, Physician or Nonphysician Organizations, we are 
finalizing the proposals.
    In Sec.  424.521(a)(1), we are finalizing a provision that allows 
physicians, NPPs, physician or NPP organizations to retrospectively 
bill for services up to 30 days prior to their effective date of 
billing when the physician or NPP organization met all program 
requirements, including State licensure requirements, services were 
furnished at the enrolled practice location prior to the date of filing 
and circumstances precluded enrollment in advance of providing services 
to Medicare beneficiaries. Thus, physicians, NPPs, and physician or NPP 
organizations would be limited to receiving reimbursement for services 
for a maximum of 30 days prior to filing an enrollment application that 
was subsequently approved by a Medicare contractor.
    In Sec.  424.521(a)(2), we are finalizing a provision that allows a 
physician, NPP, and physician or NPP organization to retrospectively 
bill for services up to 90 days prior to their effective date of 
billing privileges when the physician or NPP organization met all 
program requirements, including State licensure requirements, services 
were furnished at the enrolled practice location prior to the date of 
filing, and a Presidentially-declared disaster under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 
Sec. Sec.  5121-5206 (Stafford Act) precluded enrollment in advance of 
providing services to Medicare beneficiaries.
    While these changes limit the retrospective payments that a 
physician, NPP, or physician and NPP organization may obtain from the 
Medicare program, we believe that this approach will ensure that a 
Medicare contractor is able to verify that a physician, NPP or 
physician and NPP organization meets all program requirements at the 
time of filing, including State licensure. In addition, this approach 
will afford Medicare beneficiaries the appropriate protections under 
the statute, regulations, and CMS policy.
    To ensure that eligible physicians, NPPs or physician and NPP 
organizations receive reimbursement for services furnished, we will 
require that Medicare contractors deny Medicare billing privileges when 
a Medicare contractor is not able to process an incomplete enrollment 
application that is submitted by a physician, NPP or physician and NPP 
organization. This is a change from our earlier final rule, ``Medicare 
Program; Requirements for Providers and Suppliers to Establish and 
Maintain Medicare Enrollment,'' (CMS-6002-F) which was published on 
April 21, 2006. In this earlier rulemaking effort, we stated that we 
would reject an incomplete enrollment application. In order to provide 
physician and NPP organizations and individual practitioners with the 
opportunity to preserve an initial application filing date, we will 
deny incomplete applications for these supplier types. We believe that 
Sec.  424.530(a)(1) permit a Medicare contractor to deny an incomplete 
enrollment application.
    By denying billing privileges for enrollment in the Medicare 
program or to establish a new practice location, rather than rejecting 
an enrollment application, physicians, NPPs or physician and NPP 
organizations will be afforded appeal rights which will preserve the 
original date of filing the application. Reimbursement for services 
furnished back to the effective date of billing will be permitted as 
long as the applicant submits a corrective action plan or appeal in 
accordance with Sec.  405.874 and submits the necessary information to 
cure any application deficiencies. However, if the applicant does not 
submit a corrective action plan or appeal within the timeframe 
established in Sec.  405.874, then the applicant would not preserve the 
right to bill the Medicare program for services furnished from the date 
of the initial filing of the application or the date the practitioner 
or organization first started furnishing services at its new practice 
location.
    We are also adopting the ``date of filing'' as the date that the 
Medicare contractor receives a signed provider enrollment application 
that the Medicare contractor is able to process to approval. If the 
Medicare contractor denies an enrollment application that is not later 
overturned during the appeals process, the new date of filing would be 
established when a physician or NPP organization submits a new 
enrollment application that the contractor is able to process to 
approval.
    PECOS is the system that supports the Medicare provider and 
supplier enrollment process by collecting and storing provider and 
supplier information obtained from the Medicare enrollment application 
(that is, the CMS-855). The PECOS database retains enrollment 
information on Part A providers that bill fiscal intermediaries (FIs) 
or A/B Medicare Administrative Contractors (A/B MAC) and Part B 
providers, including physicians and NPPs that bill carriers or A/B 
MACs.
    Medicare contractors use PECOS to establish new enrollment records 
for providers and suppliers, update provider and supplier information, 
and process requests from individual health care practitioners for 
assignment of benefits. PECOS standardized the Medicare enrollment 
process and supplies enrollment data to the Part A and Part B claims 
processing systems.
    In June 2002 and November 2003, we implemented PECOS for fiscal 
intermediaries (FIs) and carriers respectively. Today, PECOS is used by 
carriers, FIs, and A/B MACs to enter data submitted on the Medicare 
enrollment application. However, by establishing an Internet-based 
enrollment process, we will allow providers and suppliers (except 
suppliers of durable medical equipment, prosthetics, orthotics, and 
supplies (DMEPOS)) suppliers, the option of enrolling or making a 
change in their Medicare enrollment information via the Internet.
    Internet-based PECOS will allow Medicare providers and suppliers to 
enroll or make a change in their Medicare enrollment record. The 
primary objectives for the Web enablement of PECOS are to: (1) Reduce 
the time necessary for providers and suppliers to enroll or make a 
change in their Medicare information; (2) streamline the enrollment 
process for providers and suppliers; (3) allow

[[Page 69774]]

physicians and NPPs to manage their enrollment information and verify 
their reassignments of benefits; and (4) reduce the administrative 
burden associated with completing and submitting enrollment information 
to Medicare.
    Additional information regarding Internet-based PECOS will be made 
available later this year. This information will be posted on the 
Medicare provider/supplier enrollment Web site at http://www.cms.hhs.gov/MedicareProviderSupEnroll.
    With the implementation of an Internet enrollment process referred 
to as the Internet-based PECOS, the date of filing for individual 
practitioners submitted through Internet-based PECOS is the date the 
Medicare contractor receives both: (1) An electronic version of the 
enrollment application; and (2) a signature page containing an original 
signature that the Medicare contractor processes to approval. The date 
of filing for organizational entities submitted through Internet-based 
PECOS is the date the Medicare contractor receives all of the 
following: (1) An electronic version of the enrollment application; (2) 
a signature page containing an original signature that the Medicare 
contractor processes to approval.
    To address public concerns regarding the burden and complexity 
associated with the Medicare enrollment process, we will implement 
Internet-based PECOS in three distinct phases. We will implement 
Internet-based PECOS for all individual physicians and NPPs enrolling 
or making a change to an existing enrollment record in Phase I. In 
Phase II, we will implement Internet-based PECOS for all organizational 
providers and suppliers, except DMEPOS suppliers, enrolling or making a 
change to an existing enrollment record. In Phase III, we will 
implement Internet-based PECOS for DMEPOS suppliers.
    Based on current operating assumptions, we expect to begin 
implementation of Phase I by the end of CY 2008, with full 
implementation scheduled for completion in January 2009. We also expect 
to make Internet-based PECOS available to physicians and NPPs in all 
States, including California, Missouri, and New York.
    Phase II is tentatively scheduled for implementation beginning in 
Spring 2009, with full implementation scheduled for completion by June 
30, 2009. Phase III is tentatively scheduled for implementation in CY 
2010.
    Since Internet-based PECOS is a scenario-driven application process 
with front-end editing capabilities and built-in help screens, we 
believe that this new enrollment application process will significantly 
simplify and streamline the enrollment process for physicians, 
providers and suppliers, reduce the time necessary to enroll or make a 
change to a Medicare enrollment record, reduce the administrative 
burden associated with completing and submitting enrollment information 
to Medicare, decrease the errors during the application submission 
process, and allow physicians and NPPs to take personal responsibility 
for their Medicare enrollment in a timely manner. Moreover, unlike the 
paper-based enrollment process, Internet-based PECOS' scenario-driven 
application process will ensure that prospective providers and 
suppliers or enrolled providers and suppliers only complete and submit 
the information necessary to apply or make a change in their Medicare 
enrollment record. Physicians and NPPs will no longer see questions 
that are not applicable for their supplier-type.
    While we will encourage all physicians, NPPs, physicians and NPP 
organizations and other providers and suppliers to utilize Internet-
based PECOS when it is made available for their provider/supplier type 
and their State, all providers and suppliers will continue to have the 
option of submitting an enrollment application by paper.
    In order to use Internet-based PECOS to enroll or make a change in 
an enrollment record, physicians and NPPs will be required to use the 
User ID and user password obtained when applying for or updating their 
National Provider Identifier (NPI) with the National Plan and Provider 
Enumeration System (NPPES). Accordingly, physicians and NPPs will need 
to know their NPPES User ID/password information before trying to 
enroll or change their enrollment record with Medicare via Internet-
based PECOS. To ensure privacy and security for these individual 
practitioners, we encourage that physicians and NPPs to reset their 
user password prior to initiating their first enrollment action via 
Internet-based PECOS, reset their user password at least once a year 
thereafter, and that physicians and NPPs not share their NPPES User ID/
password with billing agents, clearinghouses, academic medical 
institutions, or staff within their practice.
    Physicians and NPPs choosing to use billing agents, clearinghouses, 
academic medical institutions, etc. will be required to submit a paper 
enrollment application to enroll or make a change in their Medicare 
enrollment record.
    In order to use Internet-based PECOS to enroll or make a change in 
an organizational enrollment record, we will verify that the authorized 
official associated with the Medicare enrollment record is employed by 
the organization and is authorized by the organization to submit or 
make changes to the organization enrollment record.
    Over the last 2 years, we have stressed the importance of filing a 
complete application at the time of filing or in response to a 
contractor's request for additional information. However, Medicare 
contractors continue to report that a significant number of 
applications are incomplete at the time of filing or that applicants do 
not respond timely and completely to a contractor's request for 
additional information.
    Finally, in the April 21, 2006 final rule, physicians, NPPs, and 
physician and NPP organizations learned about our intent to begin a 
revalidation process.
    Specifically, Sec.  424.515 states that a provider or supplier 
(other than a DMEPOS supplier), must resubmit and recertify the 
accuracy of its enrollment information every 5 years. Therefore, 
physicians, NPPs and physician and NPP organizations that enrolled in 
the Medicare program prior to 2003, but who have not completed a 
Medicare enrollment application since then, have had more than 2 years 
to come into voluntary compliance with our enrollment criteria by 
submitting a complete enrollment application. To date, approximately 80 
percent of the enrolled physicians and 98 percent of NPPs have updated 
their Medicare enrollment record within the last 5 years.
    To ensure that Medicare only pays eligible physicians and NPPs, we 
are again notifying physicians and NPPs that they may voluntarily 
complete and submit a Medicare enrollment application and the necessary 
supporting documentation prior to our formal request for revalidation. 
In accordance with the existing provision at Sec.  424.535(a)(1)(ii), 
providers and suppliers who choose not to come into voluntary 
compliance or fail to respond to a revalidation request within 60 days 
of the Medicare contractor's request may be subject to the revocation 
of their billing privileges.
2. Medicare Billing Privileges and Existing Tax Delinquency
    The Government Accountability Office (GAO) found that over 21,000 
of the physicians, health professionals, and suppliers paid under 
Medicare Part B during the first 9 months of CY 2005 had tax debts 
totaling over $1 billion.

[[Page 69775]]

The GAO report titled, ``Medicare, Thousands of Medicare Part B 
Providers Abuse the Federal Tax System (GAO-07-587T)'' found abusive 
and potentially criminal activity, including failure to remit to IRS 
individual income taxes or payroll taxes or both withheld from their 
employees.
    While we do not currently consider whether an individual physician, 
NPP currently enrolled in the Medicare program has delinquent tax debts 
with the Internal Revenue Service (IRS), we do consider whether a 
physician or NPP was convicted of a Federal or State felony offense, 
including income tax evasion, that we have determined to be detrimental 
to the best interest of the Medicare program. Moreover, if a physician 
or NPP was convicted of Federal or State felony offense within the 10 
years preceding enrollment or revalidation of enrollment that we 
determined to be detrimental to the best interest of the Medicare 
program, we could deny or revoke the Medicare billing privileges of the 
physician or NPP.
    The Financial Management Service (FMS), a bureau of the Department 
of Treasury, initiated the Federal Payment Levy Program (FPLP) portion 
of the Continuous Levy Program in July 2000 to recover delinquent 
Federal tax debts. The FPLP is a program whereby delinquent Federal 
income tax debts are collected by levying non-tax payments, as 
authorized by the Taxpayer Relief Act of 1997 (Pub. L. 105-34). The 
FPLP includes vendor and Social Security benefit payments, and Medicare 
payments. It is accomplished through a process of matching delinquent 
debtor data with payment record data. This automated collection of debt 
at the time of payment occurs after the delinquent taxpayer has been 
afforded due process, in accordance with the Internal Revenue Code.
    In July 2000, the IRS in conjunction with the Department of 
Treasury's FMS started the FPLP which is authorized by section 6331(h) 
of the Internal Revenue Code as prescribed by section 1024 of the 
Taxpayer Relief Act of 1997. Through this program, the IRS can collect 
overdue taxes through a continuous levy on certain Federal payments 
disbursed by FMS; it generally allows Medicare to match a claim to a 
delinquent taxpayer, offset the payment, and recover a percentage of 
the amount due.
    The FPLP is a collection and enforcement tool used by the IRS for 
individuals that have received all requisite notification of tax 
delinquency and who have either exhausted or neglected to use their 
respective appeal rights; therefore, the FPLP is only applied after all 
previous IRS collections efforts have failed. Accordingly, the FPLP is 
an automated levy program where certain delinquent taxpayers are 
systematically matched and levied on their Federal payments disbursed 
by Treasury's FMS.
    In 2001, we implemented the FPLP process for Medicare Part C and 
vendor payments, and in FY 2009, we will implement the FPLP process for 
payments made to providers and suppliers reimbursed under Part A and 
Part B of the Medicare program. However, the FPLP does not allow CMS to 
offset a payment when an individual reassigns his or her benefits to a 
third-party, such as a group practice where an existing Federal tax 
delinquency exists.
    Consistent with statutory authority found under sections 
1866(j)(1)(A) and 1871 of the Act, we believe that we have the 
authority to establish and make changes to the enrollment process for 
providers and suppliers of service. Accordingly, to ensure that the 
Federal government is able to recoup delinquent Federal tax debts from 
physicians and NPPs who are enrolled in the Medicare program and are 
receiving payments, we are considering revoking the billing privileges 
for those individuals for whom a tax delinquency exists and we are 
unable to directly levy future payments through the FPLP. While we did 
not propose this change in this year's PFS proposed rule, we will 
consider proposing this type of change in a future rulemaking effort 
after we have implemented the FPLP process, monitored and evaluated the 
implementation of FPLP process, and analyzed the potential impact of 
this change on physician and NPPs who are subject to the FPLP but for 
whom we are unable to directly levy future payments through the FPLP. 
In addition, we expect to conduct outreach regarding our implementation 
of the FPLP in FY 2009.
    We believe that this change, if proposed and adopted, would 
prohibit an individual with a tax delinquency from shielding their 
future payments through reassignment of benefits to a third party. 
Finally, since the tax delinquency would be incurred by an individual 
who has reassigned his or her benefits to a third party, we do not 
believe that it is appropriate to take action against the third-party. 
We believe that this is consistent with the protections already 
afforded to an individual by the IRS but ensures that Medicare does not 
enroll or allow continued enrollment to an individual with a serious 
tax delinquency.
    We maintain that it is essential that a physician or NPP resolve 
any existing Federal tax delinquency before entering the Medicare 
program. This will ensure that the Medicare program is not making 
payments to an individual who has not met his or her obligation to pay 
their tax debts.
    Finally, we solicited comments on whether we should consider 
revoking a physician's billing privileges or taking some other type of 
administrative action when a physician or NPP has a Federal tax 
delinquency that can not be levied through the FPLP process. We also 
solicited comments on whether we should consider revoking the billing 
privileges of an organizational entity or taking some other type of 
administrative action against organizational entities when the owners 
of an organizational entity have a Federal tax delinquency that can not 
be levied through the FPLP process.
    Comment: One commenter recommends an alternative to payment denial 
where an individual with a tax delinquency has reassigned their 
benefits to a group. The commenter suggested that the government 
garnish a portion of the individual practitioner's salary directly, as 
appropriate. Another commenter does not believe it is appropriate to 
penalize all of the partners in a practice, when only one individual is 
guilty of tax evasion. One commenter requests that we define, in 
greater detail, the term ``reliable information,'' and also that we 
assure some formal type of appeals process apart from a simple 
rebuttal. Another commenter questions if there is a mechanism in place 
whereby a potential new hire can be held harmless should his or her 
potential employer find itself in a delinquent status within a 12-month 
period. One commenter questions whether the burden of reporting an 
adverse legal action would be placed upon the individual saddled with 
the action rather than his or her group managing partners, for 
sometimes the principals are not aware of the actions of their 
employees. Another commenter stated that at a minimum, the third party 
involved should be sent notification of the provider's revoked billing 
privileges 18 months before the date of revocation. One commenter 
believes that this provision is not logistically possible because it 
raises too many issues, including taxpayer privacy, equal opportunity 
employment concerns, and perhaps even whistleblower triggers regarding 
noncompliance.
    Response: Section 189 of the MIPPA requires that CMS take all 
necessary steps to participate in the Federal

[[Page 69776]]

Payment Levy Program (FPLP) under section 6331(h) of the Internal 
Revenue Code of 1986. The FPLP process allows CMS to levy current and 
future payments until the tax delinquency is eliminated.
    After reviewing comments received in response to our solicitation 
for comments regarding whether we should consider revoking billing 
privileges or taking some other administrative action when a physician 
or NPP has a Federal tax delinquency that cannot be levied through the 
FPLP process, we are considering whether future rulemaking or 
administrative action is needed in this area. We appreciate the public 
insight regarding our solicitation for comments and will consider these 
comments in developing any future rulemaking proposals; however, we 
continue to maintain that physicians and NPPs should resolve any 
existing Federal tax delinquency before enrolling in the Medicare 
program or as soon as practical if the physician is enrolled in 
Medicare.
3. Denial of Enrollment in the Medicare Program (proposed Sec.  
424.530(a)(6) and (a)(7))
    Currently, owners, authorized officials, and delegated officials of 
physician and NPP organizations and individual practitioners, including 
physicians and NPPs, can obtain additional billing privileges by 
establishing a new tax identification number (TIN), reassigning 
benefits to another entity, or by submitting an enrollment application 
as another provider or supplier type even though the entity for which 
the provider or supplier furnished services and has had its billing 
privileges revoked, suspended, or has an outstanding Medicare 
overpayment. Absent a reason to reject or deny a Medicare enrollment 
application, the Medicare FFS contractor is required to approve the 
enrollment application for a provider or supplier who meets all other 
Federal and State enrollment requirements for their provider or 
supplier type.
    By submitting and having an enrollment application (for example, an 
initial application or a change of ownership) with a new TIN, some 
physician and NPP organizations and individual practitioners are able 
to circumvent existing Medicare revocation, payment suspension, 
overpayment recovery, and medical review processes by obtaining 
additional Medicare billing privileges. By obtaining additional billing 
privileges for multiple locations, these providers and suppliers are 
able to discontinue the use of the NPI that has an administrative 
action against it and bill and receive payment under another NPI.
    Consistent with existing Sec.  405.371, we will impose a payment 
suspension when we possess reliable information that an overpayment or 
fraud, or willful misrepresentation exists, or that payments to be made 
may not be correct. Suspension procedures give providers and suppliers 
an opportunity to submit a rebuttal to CMS' payment suspension 
determination. We believe that it is essential that we resolve the 
payment suspension determination before we grant additional billing 
privileges to these providers or suppliers. In concert with Sec.  
405.372(c), once a payment suspension has been terminated, providers 
and suppliers may then apply for billing privileges.
    Moreover, we are obligated to recover Medicare overpayments as 
expeditiously as possible. Providers and suppliers can pay the debt or 
Medicare can reduce present or future Medicare payments and apply the 
amount withheld to the indebtedness. When we identify an overpayment 
and provide notice of the overpayment, physician and NPP organizations 
and individual practitioners are given an opportunity to appeal the 
determination. Under certain conditions, the overpayment collection 
process is suspended during the appeals process. However, if the 
physician and NPP organization or individual practitioner does not 
appeal the overpayment determination, or if the overpayment 
determination is upheld on appeal, we will initiate a recovery action.
    Accordingly, we proposed to add a new Sec.  424.530(a)(6) and 
(a)(7) to deny enrollment applications for additional Medicare billing 
privileges if the physician or NPP organization or individual 
practitioner has an active payment suspension or has an existing 
overpayment that has not been repaid. We proposed to allow a Medicare 
FFS contractor to deny enrollment applications from those authorized 
officials, delegated officials, owners, and individual practitioners 
that own a supplier or provider at the time of filing until such time 
as the suspension has been terminated or the Medicare overpayment has 
been repaid in full. Specifically, we proposed to deny enrollment to 
any current owner (as defined in Sec.  424.502), physician, or NPP, who 
is participating in the Medicare program and is under a current 
Medicare payment suspension.
    We stated that we believe that the change to our denial policy 
would help protect the Medicare program from unscrupulous or 
problematic physician and NPP organizations and individual 
practitioners. Moreover, we believe this change would: (1) Allow 
Medicare FFS contractors to improve customer service to all providers 
and suppliers that are already enrolled in the Medicare program; (2) 
facilitate the enrollment of all providers and suppliers seeking to 
enroll in the Medicare program for the first time; and (3) expand on 
existing efforts to process changes in a timely manner and provide 
better customer service.
    Comment: Several commenters stated that our proposal to deny 
additional billing privileges to a physician or an NPP when the 
physician or NPP is suspended or has an outstanding overpayment is a 
denial of due process and is in conflict with the principle of innocent 
until proven guilty.
    Response: We believe that we have an obligation to protect the 
Medicare program from inappropriate payments. Conversely, physicians 
and NPPs have an obligation to the Medicare program to resolve payment 
suspensions and overpayment actions in a timely manner. Finally, as a 
payer of health care, we believe that additional billing privileges 
should not be conveyed to a physician, NPP or owners, authorized and 
delegated officials who have an existing payment suspension or 
overpayment. To grant additional billing privileges to individuals with 
an existing payment suspension or overpayment exposes the Medicare 
Trust Funds to additional risks.
    With Medicare's implementation of the NPI on May 23, 2008, Medicare 
contractors no longer issue billing numbers to providers and suppliers 
participating in the Medicare program. However, Medicare contractors do 
convey billing privileges to providers and suppliers that have an NPI 
and meet all of the program requirements for their provider or supplier 
type. Once enrolled, providers and suppliers are required to use their 
NPI to submit claims to Medicare, and based on the NPI final rule, 
organizations may obtain one or more NPIs.
    After reviewing public comments, we are finalizing the provisions 
at Sec.  424.530(a)(6) and (a)(7) to deny enrollment applications for 
additional Medicare billing privileges if a physician, NPP, physician 
or NPP organization has an existing payment suspension or has an 
existing overpayment that has not been repaid. We believe that 
permitting a Medicare contractor to deny enrollment applications 
submitted by individual practitioners, authorized officials, delegated 
officials, and owners until such time as the Medicare overpayment

[[Page 69777]]

has been repaid in full will require providers and suppliers to resolve 
overpayments in a timely manner. Once CMS has imposed a payment 
suspension, a provider or supplier may submit a rebuttal to CMS for the 
purpose of reducing or terminating the payment suspension. As long as 
the payment suspension is effective, the contractor has the task of 
making an overpayment determination. Specifically, we are adopting the 
provision to deny enrollment to any physician, or NPP current owner (as 
defined in Sec.  424.502), authorized or delegated official who is 
participating in the Medicare program and is under an existing Medicare 
payment suspension or has an outstanding overpayment that has not been 
repaid in full. As adopted, physicians and NPPs will not be allowed to 
enroll and reassigning payments to a third-party if the individual 
practitioner has an existing payment suspension or overpayment that 
have not been repaid.
4. Reporting Requirements for Providers and Suppliers (Sec.  424.516 
and Sec.  424.535(a)(10))
    Currently, Sec.  424.520(b) requires that providers and suppliers, 
except DMEPOS and IDTF suppliers, report to CMS most changes to the 
information furnished on the enrollment application and furnish 
supporting documentation within 90 calendar days of the change (changes 
in ownership must be reported within 30 days). As specified in Sec.  
424.57(c)(2), DMEPOS suppliers have only 30 calendar days to submit 
changes of information to CMS. As specified in Sec.  410.33(g)(2), 
IDTFs, must report changes in ownership, changes in location, changes 
in general supervision, and final adverse actions within 30 calendar 
days. All other changes to the enrollment application must be reported 
within 90 days.
    While physician and NPP organizations and individual practitioners 
are required to report changes within 90 days of the reportable event, 
in many cases, there is little or no incentive for them to report a 
change that may adversely affect their ability to continue to receive 
Medicare payments. For example, physician and NPP organizations and 
individual practitioners purposely may fail to report a felony 
conviction as described in Sec.  424.535(a)(3), or other final adverse 
action, such as a revocation or suspension of a license to a provider 
of health care by any State licensing authority, or a revocation or 
suspension of accreditation, because reporting this action may result 
in the revocation of their Medicare billing privileges. Thus, unless 
CMS or our designated contractor becomes aware of the conviction or 
final adverse action through other means, the change may never be 
reported by a physician and NPP organization or individual 
practitioner. Alternatively, if CMS or our designated contractor 
becomes aware of the conviction or final adverse action after the fact, 
we have lacked the regulatory authority to collect overpayments for the 
period in which the physician and NPP organizations and individual 
practitioners should have had their billing privileges revoked.
    Since we believe that physician and NPP organizations and 
individual practitioners must furnish updates to their Medicare 
enrollment information in a timely manner, we are adopting a new Sec.  
424.516(d) which would establish more stringent reporting requirements 
for physician NPP organizations and individual practitioners. (We 
proposed to redesignate Sec.  424.520 as Sec.  424.516 and amend the 
provisions in new Sec.  424.516.) In addition to a change of ownership 
(as currently specified in redesignated Sec.  424.516(d)(1)(i)), we 
proposed to add Sec.  424.516(d)(1)(ii) requiring all physician and NPP 
organizations and individual practitioners to notify our designated 
contractor of any final adverse action within 30 days. We stated that 
final adverse actions include, but are not limited to, felonies, 
license suspensions, and the HHS Office of the Inspector General (OIG) 
exclusion or debarment. We believe that a physician and NPP 
organizations and individual practitioner's failure to comply with the 
reporting requirements within the time frames described above may 
result in the revocation of Medicare billing privileges and a Medicare 
overpayment from the date of the reportable change. Specifically, we 
believe that a final adverse action may preclude payment, and thus, 
establish an overpayment from the date of the adverse action. As such, 
we believe that physician and NPP organizations and individual 
practitioners should not be allowed to retain any reimbursement they 
receive after the final adverse action.
    In addition, we added the word ``final'' to the beginning of the 
term ``adverse legal action'' in the regulation text in Sec.  424.535 
on overpayment. We define the term as a ``final adverse action'' in the 
definition section at Sec.  424.502 and want to be consistent with that 
definition. Also, we want to be consistent with our definition of this 
term in the Durable medical Equipment prosthetics Orthotics and 
Supplies surety bond rule (CMS-6006-F). Moreover, we want this term to 
be consistent with the definition of ``final adverse action'' found in 
section 221(g)(1)(A) of the Health Insurance Portability and 
Accountability Act (HIPAA) of 1996. Finally, we believe that a final 
adverse action has occurred when the sanction is imposed and not when a 
supplier has exhausted all of the appeal rights associated with the 
action itself.
    We believe that it is essential that this type of change be 
reported in a timely manner (that is within 30 days). For example, if 
CMS or our designated contractor determines in February 2008 that a 
physician failed to notify Medicare about a final adverse action that 
occurred on June 30, 2007, that physician may be subject to an 
overpayment for all Medicare payments beginning June 30, 2007 and have 
their Medicare billing privileges revoked effective retroactively back 
to June 30, 2007 as well.
    Additionally, we proposed to add a requirement for change in 
location at Sec.  424.516(d)(1)(iii). Since a change in location may 
impact the amount of payment for services furnished by placing the 
physician and NPP organizations and individual practitioners into a new 
Core Based Statistical Area (CBSA). We believe that it is essential 
that physician and NPP organizations and individual practitioners 
report changes in practice location including those that impact the 
amount of payments they receive within a timely period (that is, 30 
days). However, unlike a final adverse action, which may preclude all 
payments if reported, failure to report a change in practice location 
may impact the amount of payment, not whether a physician and NPP 
organizations and individual practitioners may be eligible to receive 
payments. Accordingly, we believe that failing to report changes in 
practice location would result in an overpayment for the difference in 
payment rates retroactive to the date the change in practice location 
occurred and may result in the revocation of Medicare billing 
privileges. For example, if a physician and NPP organization moves its 
practice location in New York, from urban Herkimer County to Hamilton 
County or Lewis County, which are both rural, but fails to update its 
provider enrollment information; then it would no longer be able to 
receive the higher payment rate associated with Herkimer County. We 
believe that reporting these types of changes is essential for making 
correct and appropriate payments.
    We proposed to add Sec.  424.535(a)(9) which would specify that 
failure to comply with the reporting requirements

[[Page 69778]]

specified in Sec.  424.516(d) would be a basis for revocation. 
Additionally, we proposed in Sec.  424.565, ``Failure to comply with 
the reporting requirements specified in Sec.  424.516(d) would result 
in a Medicare overpayment from the date of a final adverse action or a 
change in practice location.'' In this situation, an overpayment for 
failure to timely report these changes would be calculated back to the 
date of the final adverse action or the date of the change in practice 
location. Once an overpayment has been assessed, we will follow the 
overpayment regulations established at 42 CFR part 405 subpart C. We 
previously addressed these procedures in Chapter 4 of the Medicare 
Financial Management Manual (IOM Manual 100-06). Lastly, collection of 
overpayments related to Sec.  424.516(d)(1)(iii) would not begin until 
after the effective date of the final rule.
    Since it is essential that physician and NPP organizations and 
individual practitioners notify their designated contractor of these 
types of reportable events in a timely manner and to ensure that the 
provider or supplier continues to be eligible for payment, we believe 
that it is essential that we establish an overpayment from the time of 
the reportable event. We believe that establishing an overpayment and 
revocation of billing privileges for noncompliance from the time of the 
reportable event would provide the supplier with a compelling incentive 
to report reportable changes in the 30-day reporting period.
    In addition, if CMS or our designated contractor determines that a 
physician and NPP organization or an individual practitioner has moved 
and has not reported the reportable event within the 30-day reporting 
period, CMS or our designated contractor would impose an overpayment, 
if applicable, and revoke billing privileges for a period of not less 
than 1 year.
    Comment: One commenter would like to laud CMS for expounding on 
reporting requirements for the updates regarding address changes, as 
well as reporting an adverse legal action in a manner to be complete 
within 30 days. The commenter continued to state that failure to report 
changes in location, leading to potential overpayment, and revocation 
of Medicare billing privileges needs to be highlighted for all 
providers.
    Response: We appreciate this comment and will consider expanding 
this provision to all providers and suppliers in a future rulemaking 
effort.
    Comment: One commenter stated that it disagrees with our assumption 
that all payments subsequent to an adverse legal action are collectable 
overpayments.
    Response: Since final adverse actions such as Federal exclusion or 
debarment, felony convictions as described in Sec.  424.535(a)(3) or 
license suspension or revocation that precluded continued enrollment in 
the Medicare program.
    Comment: One commenter stated that while a CMS representative 
publicly stated that the proposed rule should have referenced adverse 
legal actions that have been finally adjudicated, the commenter 
recommends that CMS clarify this language in the final rule. Several 
commenters recommended that only adverse legal actions that are 
relevant to the practice of medicine should be required to be reported 
to CMS.
    Response: Based on these comments, we are adding a definition of a 
final adverse action to Sec.  424.502(a). Specifically, we have defined 
a final adverse action to mean one or more of the following actions: 
(1) A Medicare-imposed revocation of any Medicare billing privileges; 
(2) Suspension or revocation of a license to provide health care by any 
State licensing authority; (3) Revocation or suspension by an 
accreditation organization; (4) A conviction of a Federal or State 
felony offense (as defined in Sec.  424.535(a)(3)(i)) within the last 
10 years preceding enrollment, revalidation, or re-enrollment; or (5) 
An exclusion or debarment from participation in a Federal or State 
health care program.
    Comment: One commenter suggested that we should clarify in the 
final rule that with regard to adverse legal actions, the requirements 
should apply only to notification within 30 days of ``final'' legal 
actions that are relevant to or otherwise impact the practice of 
medicine.
    Response: While we understand that physicians and NPPs are afforded 
different appeal rights depending on the type of final adverse action, 
we do not believe that it is appropriate to allow physicians and NPPs 
to continue to furnish services to Medicare beneficiaries if their 
State medical license has been suspended or revoked, a Federal 
exclusion or debarment or Medicare revocation has been imposed, or the 
physician or NPP was found guilty or pled to felony conviction as 
described in Sec.  424.535(a)(3).
    Comment: One commenter believes that if CMS wants to collect 
alleged overpayments for services paid during the 90 days as if they 
were performed in a higher-paying locale, then they should also pay the 
difference for underpayments when a physician provides services for up 
to 90 days in a higher paying locality prior to notifying CMS of the 
change in location.
    Response: We maintain that it is the responsibility of the 
physician, NPP or physician or NPP organization to update their 
enrollment information within the appropriate timeframes. Further, note 
that CMS will not reprocess claims for the services provided when there 
has been a failure to report a change in practice location.
    Comment: Several commenters stated that a State licensing board is 
the proper authority to weigh the significance of legal actions against 
a physician. Another commenter stated that State licensing and other 
requirements already protect beneficiaries from the most important 
kinds of issues that could arise in medical care.
    Response: While we agree that State licensing boards are 
responsible for determining whether an individual meets or continues to 
meet the qualifications for a specific State medical license, we do not 
agree that a State license is the only criteria that an individual must 
maintain in order to receive billing privileges from the Medicare 
program.
    Comment: One commenter stated that they do not oppose changing the 
time period for reporting adverse legal actions from 90 days to 30 
days, as generally payments should not be made under these 
circumstances.
    Response: We appreciate this comment.
    Comment: One commenter stated that they did not agree that a change 
in practice location should be treated as an urgent matter that would 
support a retroactive revocation of billing authority.
    Response: We disagree with this commenter. Since physicians and 
NPPs receive payments in part on locality adjustments based on the 
place of service, we believe that physicians, NPPs, and physician and 
NPP organizations are responsible for updating their enrollment record 
within 30 days of a change in practice location. It is also important 
to note that we already have existing authority to revoke the billing 
privileges of a Part B supplier, including physicians and NPPs, if CMS 
or our contractor determines that upon an on-site review or other 
reliable evidence that the supplier is not operational (see Sec.  
424.535(b)(5)).
    Comment: One commenter stated that they oppose changing the time 
period for reporting a change in location from 90 days to 30 days 
because the physician is still eligible for payment and Medicare's 
vulnerability to overpayments is limited.
    Response: While we agree that a physician may still be eligible to 
receive

[[Page 69779]]

payment, the issue in question is the amount of payment. Moreover, as a 
payer of health care, we believe that physicians and all other 
providers and suppliers have a responsibility to update their 
enrollment record when a change in practice location occurs. This will 
allow CMS or our contractor to verify that services are actually 
furnished at the practice locations identified by the medical 
practices.
    Comment: One commenter stated that if we finalize our reporting 
requirements, a better option would be to limit the types of actions 
that are reportable to similar actions that are required to be reported 
to the National Practitioner Data Bank (NPDB) which was established by 
the Congress to address the need to improve the quality of medical care 
by encouraging State licensing boards, health care entities such as 
hospitals, and professional societies to identify and discipline those 
who engage in unprofessional behavior, as well as restrict a 
practitioner's ability to move from State to State without disclosure 
of previous adverse action history.
    Response: We disagree with this commenter. In considering the types 
of events that should be reported within 30 days of the reportable 
event, with this final rule with comment period, we have limited the 
types of reportable events to three specific types of events: (1) 
Change in ownership, (2) final adverse actions, and (3) change in 
practice location. We believe that the failure to report any of these 
types of reportable events may result in payments to the wrong 
organization, erroneous payments if the physician or NPP payment no 
longer meets State licensure requirements, or payments in the wrong 
amount when a change in practice location impacts the payment to a 
physician, NPP or physician or NPP organization.
    Comment: One commenter stated that our proposal to revoke billing 
privileges for a period of not less than 1 year for failure to comply 
with the proposed 30-day reporting period is a harsh and unjust penalty 
for a minor paperwork offense.
    Response: While we understand this commenter's concern, we believe 
that physicians, NPPs, physician and NPP organizations have an 
obligation to report certain changes, including State license 
suspensions and revocations, felony convictions as described in Sec.  
424.535(a)(3), Federal debarments and exclusions, within 30 days since 
these adverse actions may affect a physician, NPP or physician or NPP 
organization's ability to continue to participate in the Medicare 
program.
    Comment: One commenter urged CMS to consider that the failure to 
notify Medicare contractors of a change in location is an oversight 
rather than a true attempt to defraud the Medicare program.
    Response: Since physicians, NPPs, and physician and NPP 
organizations routinely notify State medical societies, vendors, 
employees, utility companies, leasing companies, and others prior to a 
change in practice location, we disagree with this commenter that 
change in location is an oversight.
    Comment: One commenter stated that that while there is a need to 
maintain timely provider records and track Medicare payments, proposed 
penalties for failure to report an address change promptly are so out 
of proportion to the offense as to be draconian.
    Response: We disagree with this commenter. As stated above, we 
understand that physicians, NPPs, and physician and NPP organizations 
routinely notify other payers and affiliated business partners about a 
change of practice location in advance of the change. In addition, to 
ensure payment accuracy, it is essential that physicians, NPPs, and 
physician and NPP organizations report changes in practice locations 
prior to change, but not later than 30 days after the reportable event.
    Comment: One commenter stated that it seemed sufficient to collect 
any overpayment from providers that file their change of address notice 
within the traditional 90-day window for updating enrollment records.
    Response: As a payer of health care, it is essential that we make 
every attempt to make correct payments for services furnished by 
qualified providers and suppliers. To help ensure that we are making 
the correct payments the first time, we believe that it is necessary 
that physicians, NPPs, and physician and NPP organizations update their 
enrollment records when a change in practice location occurs.
    Comment: One commenter urges CMS to withdraw the proposal to 
establish authority to require that physicians report a change in 
ownership, ``any'' adverse legal action, or change in practice location 
within 30 days since these events may be unrelated to the Medicare 
program and the reporting time frame is unduly burdensome to 
physicians.
    Response: We disagree with this commenter. Since June 20, 2006, 
physicians and NPP organizations have been required to report a change 
in ownership within 30 days and changes in practice locations and final 
adverse actions within 90 days (see Sec.  424.516(d)). Since we are 
aware of situations where physicians and NPPs have not reported State 
license suspensions/revocations or final adverse actions which may 
affect a physician or NPPs eligibility to participate in the Medicare 
program, we believe that it is essential to establish more stringent 
reporting requirements than in the past. We believe that these 
requirements along with corresponding enforcement procedures will 
encourage physicians, NPPs and physician and NPP organizations to 
report changes in ownership, final adverse actions, and changes in 
practice location in a timely manner (that is, 30 days.)
    Comment: One commenter stated that ``any adverse legal action'' is 
not defined; therefore a 30-day reporting requirement is unreasonable 
as are the other proposed requirements. The commenter also stated that 
we should save our severe penalties for proven fraudulent behavior, not 
minor clerical oversights.
    Response: We disagree with this commenter that failure to report a 
final adverse action is a minor clerical oversight. Since reporting a 
final adverse action may affect a physician or NPP's ability to 
continue to participate in the Medicare program, we understand why 
these actions may not be reported to a Medicare contractor; however, we 
believe that final adverse actions, including State licensing 
suspensions and revocations, should be reported within 30 days of the 
reportable event, even if the physician or NPP plans on appealing the 
final adverse action. By reporting the final adverse action within 30 
days, the Medicare program will carefully review any revocation action 
and exercise its discretion as to whether to impose a revocation and 
the length of time of the reenrollment bar.
    Comment: One commenter stated that a revocation of billing 
privileges seems to be a disproportionately severe penalty for 
infractions such as: (1) Failure to report changes in ownership, 
adverse legal actions, and changes in practice location, or (2) not 
maintaining ordering and referring documentation for a 10-year period.
    Response: We disagree with this commenter. As stated above, we 
believe reporting changes in ownership, final adverse actions, and 
changes in practice locations are essential to ensuring that the 
Medicare program makes correct payments to eligible practitioners and 
organizations. We also believe that it is essential that physicians and 
NPPs maintain ordering and referring documentation to support the 
claims submissions.

[[Page 69780]]

    Comment: One commenter stated that levying an overpayment for 
failure to report a ``reportable event,'' within 30 days is excessive 
for what is likely an honest oversight.
    Response: We disagree with this commenter that establishing an 
overpayment is excessive when a physician, NPP or physician and NPP 
organization fails to report a final adverse action, such as a State 
license suspension or revocation or adverse legal action, that may 
preclude participation in the continued participation in the Medicare 
program in a timely manner (that is, 30 days).
    Comment: One commenter stated that Federal regulations regarding 
overpayments are already established at 42 CFR part 405, therefore, 
changing the provider enrollment requirements to prevent overpayments 
is not necessary.
    Response: We disagree with this commenter because the existing 
overpayment regulations do not allow us to assess an overpayment based 
on the failure of a physician, NPP, or physician or NPP organizations 
to report certain reportable enrollment events.
    Comment: One commenter stated that they were concerned over 
inconsistency in the verbiage of this section where we state in the CY 
2009 PFS proposed rule (73 FR 38538 through 38539) that billing 
privileges may be revoked in one place and in the other place state 
that they would be revoked.
    Response: We appreciate this comment and have clarified in this 
final rule to use the word, ``may'' when referring to the revocation of 
Medicare billing privileges.
    Comment: One commenter recommends that a 60-day limit be imposed 
rather than the proposed 30 days for notifying CMS about a ``reportable 
event.''
    Response: We believe that changes of ownership, adverse legal 
actions, and changes in practice locations can and should be reported 
within 30 days of the reportable event. By reporting these types of 
reportable events within 30 days, the Medicare program can take the 
necessary steps to ensure that we are paying physicians and NPPs 
correctly and ensure that only eligible physicians and NPPs are 
enrolled in the Medicare program.
    After reviewing public comments, we are finalizing the provision at 
proposed Sec.  424.516(d) which would require physicians, NPPs or 
physician and NPP organizations to notify its Medicare contractor of a 
change of ownership, change in practice location or any final adverse 
action within 30 days of the reportable event. In addition, we believe 
that physician and NPP organizations' and individual practitioners' 
failure to comply with the reporting requirements within the time frame 
described above may result in the revocation of Medicare billing 
privileges and the imposition of a Medicare overpayment from the date 
of the reportable change. Specifically, we believe that a final adverse 
action may preclude payment, and thus, establish an overpayment from 
the date of the adverse legal action. As such, we believe that 
physician and NPP organizations and individual practitioners should not 
be allowed to retain any reimbursement they receive after the date of 
the adverse legal action. In addition, physicians, NPPs, or physician 
and NPP organizations who voluntarily report a final adverse action 
that prohibits further payment will have their Medicare billing 
privileges revoked and have an overpayment assessed back to the date of 
the reportable event. CMS has the discretion to revoke the supplier's 
billing privileges. Moreover, revocation affords the supplier appeal 
rights and by reporting an adverse legal action within 30 days of the 
reportable event, a physician or NPP or physician or NPP organization 
may regain billing privileges if the final adverse action no longer 
impedes the applicant's reenrollment into the Medicare program.
    We are also finalizing the provision at Sec.  424.516(d)(1)(iii) 
which requires physicians, NPPs and physician and NPP organizations to 
report a change of practice location within 30 days. While we may not 
revoke the billing privileges of physicians, NPPs and physician and NPP 
organizations if a change of practice location is reported by the 
practitioner or organization after the prescribed 30-day timeframe, we 
will assess an overpayment, if applicable, for the difference in 
payment rates retroactive to the date the change in practice location 
occurred. In addition, with limited exceptions such as a 
Presidentially-declared disaster under the Robert T. Stafford Disaster 
Relief and Emergency Assistance Act, 42 U.S.C. 5121-5206 (Stafford 
Act), physicians, NPPs, and physician and NPP organizations can report 
a change of practice location in advance of the reportable event. We 
note that individual practitioners and physician and NPP organizations 
routinely notify staff, the U.S. Post Office, telephone and electric 
companies, suppliers, vendors, State medical associations and other 
practitioner partners prior to a change in practice location. 
Accordingly, we believe that it is appropriate that physicians and NPP 
organizations notify the Medicare contractor in advance of any pending 
change of practice location, but no later than 30 days after the 
reportable event.
    As such, we will not reprocess claims for those individual 
practitioners and physician and NPP organizations that do not report a 
change of practice location prior to a change in practice location 
where the reported change would result in an underpayment, unless the 
change of location was the direct result of a Presidentially-declared 
disaster under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, 42 U.S.C. 5121-5206 (Stafford Act). We believe that 
this change will create an incentive for physicians, NPPs, and 
physician and NPP organizations to report changes in practice locations 
prior to the change of practice location or, at a minimum, within the 
30 days of the reportable event.
    Moreover, if we determine that a change of practice location 
occurred and it has not been reported within the 30 days of the 
reportable event, we may revoke billing privileges and assess any 
applicable overpayment for the difference in payment rates retroactive 
to the date the change in practice location occurred. We believe that 
the authority to revoke billing privileges has already been established 
in Sec.  424.535(a)(5)(ii).
    We are finalizing the provision at proposed Sec.  424.535(a)(9) 
which would specify that failure to comply with the reporting 
requirements specified in Sec.  424.516(d) would be a basis for 
revocation. Additionally, we are also finalizing the provision we 
proposed in Sec.  424.565(a), ``Failure to comply with the reporting 
requirements specified in Sec.  424.516(d) would result in a Medicare 
overpayment from the date of a final adverse action or a change in 
practice location.'' In this situation, an overpayment for failure to 
timely report these changes would be calculated back to the date of the 
final adverse action or the date of the change in practice location. 
Once an overpayment has been assessed, we will follow the overpayment 
regulations established at 42 CFR Part 405 subpart C.
    Based on public comments, we are adding a definition of final 
adverse action to Sec.  424.502(a). A final adverse action means one or 
more of the following actions: (1) A Medicare-imposed revocation of any 
Medicare billing privileges; (2) Suspension or revocation of a license 
to furnish health care by any State licensing authority; (3) Revocation 
or suspension by an accreditation organization; (4) A conviction of a 
Federal or State felony

[[Page 69781]]

offense (as defined in Sec.  424.535(a)(3)(i)) within the last 10 years 
preceding enrollment, revalidation, or re-enrollment; or (5) An 
exclusion or debarment from participation in a Federal or State health 
care program.
5. Maintaining Ordering and Referring Documentation
    We proposed to add a new Sec.  424.516(f) that would specify, ``A 
provider or supplier is required to maintain ordering and referring 
documentation, including the NPI, received from a physician or eligible 
NPP. Physicians and NPPs are required to maintain written ordering and 
referring documentation for 10 years from the date of service.'' We 
believe that it is essential that providers and suppliers maintain 
documentation regarding the specific service ordered or referred to a 
Medicare beneficiary by a physician or NPP as defined in section 
1842(b)(18)(c) of the Act, (which includes but is not limited to nurse 
practitioners and physician assistants). We believe that ordering and 
referring documentation maintained by a provider or supplier must match 
the information on the Medicare claims form. Additionally, we proposed 
to add Sec.  424.535(a)(10) that would state that failure to comply 
with the documentation requirements specified in Sec.  424.516(f) would 
serve as a reason for revocation. For example, a lab submits a claim 
with Dr. Smith's NPI (1234512345) in the ordering and referring section 
of the claim form. The number submitted on the claim form should match 
the documentation in the provider or supplier's records. In addition, 
we proposed to codify the requirement to maintain ordering and 
referring documentation as required in the Medicare Program Integrity 
Manual (PIM) Publication 100-08, Chapter 5. While the PIM currently 
requires that providers and suppliers maintain ordering and referring 
documentation for 7 years from the date of payment, we believe that the 
industry generally maintains documentation from the date of service. 
Accordingly, since there may be a delay in claims submission and 
subsequent payment for up to 27 months from the date of service, we 
believe that it would be administratively less burdensome for providers 
and suppliers to maintain ordering and referring documentation for 7 
years from the date of service, rather than requiring providers and 
suppliers to maintain ordering and referring documentation associated 
with the date of payment.
    We maintain that a provider or supplier should retain the necessary 
ordering and referring documentation received from physicians and NPPs 
as defined in section 1842(b)(18)(C) of the Act to assure themselves 
that coverage criterion for an item has been met. If the information in 
the patient's medical record does not adequately support the medical 
necessity for the item, the supplier would be liable for the dollar 
amount involved unless a properly executed Advance Beneficiary Notice 
of possible denial has been obtained.
    Comment: One commenter urged CMS to adopt its proposal that would 
specify that a provider or supplier is required to maintain ordering 
and referring documentation, including the NPI received from the 
physician or eligible NPP, for 10 years from the date of service, but 
that this provision only apply to services furnished on or after the 
effective date of this final rule with comment period.
    Response: We agree with this commenter in that we are basing the 
ordering and referring record retention requirement based upon the date 
of service, however we are adopting the provision for 7 years from the 
date of service. We believe that this approach is administratively 
consistent with current manual record retention policy that requires 
that suppliers retain ordering and referring documentation for 7 years 
from the date of billing. We maintain that it is less burdensome for 
providers and suppliers to maintain ordering and referring 
documentation for 7 years from the date of service rather than 
requiring providers and suppliers to maintain ordering and referring 
documentation associated with the proposed provision for 10 years after 
the date of payment.
    Comment: One commenter disagrees with increasing the retention of 
ordering and referring documentation beyond the current 7 years from 
the date of payment. The commenter continued to state that the 
provision as proposed may represent an additional cost for 3 years of 
additional record retention.
    Response: As stated above, we are establishing an ordering and 
referring record retention period as 7 years from the date of service.
    Comment: One commenter believes that CMS must understand that in 
virtually all cases, the only information the laboratory receives is 
the laboratory requisition submitted by the physician.
    Response: We continue to believe that it is necessary that 
providers and suppliers retain ordering and referring documentation for 
services furnished 7 years from the date of service. However, we 
understand that the supplier may not maintain the NPI documentation for 
each service, but the provider or supplier must maintain sufficient 
documentation to identify the individual who ordered or referred the 
beneficiary for their services. In addition, upon review, CMS or our 
contractor may validate the ordering/referring documentation maintained 
by the billing provider or supplier with the individual practitioner 
who ordered/ referred the beneficiary for these services.
    Comment: One commenter recommends that CMS defer to the judgment of 
the State boards of pharmacy regarding the length of record retention, 
and also allow offsite electronic storage of ordering and referring 
records.
    Response: We appreciate the importance of the requirements of State 
boards of pharmacy; however, we uphold that Medicare is a national 
program and it is necessary to establish national standards for 
maintaining the ordering and referring record retention period. We 
believe that this approach will lead to consistency. Further, the 
provisions of the final rule do not preclude offsite or electronic 
storage as long as these records are readily accessible and 
retrievable.
    Comment: One commenter proposes CMS to abandon its proposal for the 
10-year record retention period and allow pharmacies to follow record 
retention requirements under State law.
    Response: We appreciate the importance of the requirements of State 
boards of pharmacy, however we uphold that Medicare is a national 
program and it is necessary to establish national standards for 
maintaining the ordering and referring record retention period. We 
believe that this approach will lead to CMS consistency. While we are 
not changing our record retention policy to account for different State 
pharmacy laws, we are revising the proposed 10-year record retention 
policy and establishing an ordering and referring record retention 
period as 7 years from the date of service
    Comment: One commenter believes that pharmacies should be allowed 
to maintain their hard-copy records offsite electronically after a 
certain time.
    Response: The provisions of the final rule do not preclude offsite 
or electronic storage as long as these records are readily accessible 
and retrievable.
    Comment: Several commenters recommended that pharmacies should 
maintain the prescription record in written form for the greater of 3 
years or the requirements in State law, and then allow the prescription 
to be stored electronically for the remaining years. The commenter 
continued to state that this would bring consistency to the Medicare 
Parts B and D programs, and

[[Page 69782]]

reduce the need to create new storage capacity for paper prescription 
records.
    Response: Since Medicare is a Federal program that already requires 
a 7-year retention period from the date of billing, we disagree that 
this change will create a significant burden.
    Comment: One commenter stated that the extension from 7 to 10 years 
would add a substantial recordkeeping burden.
    Response: We agree with this commenter and have revised this final 
rule with comment period to establish an ordering and referring record 
retention period as 7 years from the date of service.
    Comment: One commenter urged CMS to reconsider our position 
regarding maintaining ordering and referring documentation. In 
addition, this commenter stated that this change would constitute an 
unfunded mandate.
    Response: We disagree with this commenter that this change is an 
unfunded mandate because providers and suppliers are already required 
by CMS' manual instructions to maintain ordering and referring 
documentation for 7 years from the date of billing.
    Comment: One commenter stated that we should allow offsite and 
electronic storage of ordering and referring records.
    Response: The provisions of the final rule do not preclude offsite 
or electronic storage as long as these records are readily accessible.
    Comment: One commenter urged CMS to adopt the proposed requirement 
for record retention, but only with a provision that such record 
retention requirements became effective as of the effective date of the 
final rule. Further, the commenter states that those providers and 
suppliers that, until now, have not kept ordering and referring 
documentation for 10 years from the date of service (and were under no 
other statutory or regulatory requirement to do so) would not be liable 
and face possible revocation of billing privileges as long as the 
provider or supplier was in compliance with currently existing 
requirements.
    Response: We agree with this commenter; however, we have revised 
this final rule to establish the ordering and referring record 
retention period as 7 years from the date of service.
    After reviewing public comments, we are finalizing the provision at 
proposed Sec.  424.516(f) that would require providers and suppliers to 
maintain ordering and referring documentation, including the NPI, 
received from a physician or eligible NPP. Physicians and NPPs are 
required to maintain written ordering and referring documentation for 7 
years from the date of service. In addition, we are finalizing the 
provision found at Sec.  424.535(a)(10) that states that failure to 
comply with the documentation requirements specified in Sec.  
424.516(f) is a reason for revocation.
    Finally, the aforementioned provisions regarding ordering and 
referring documentation are effective with services furnished on or 
after the implementation date of this final rule.
6. Revocation of Enrollment and Billing Privileges in the Medicare 
Program (Sec.  424.535(h))
    Historically, we have allowed providers and suppliers whose 
Medicare billing numbers have been revoked to continue billing for 
services furnished prior to revocation for up to 27 months after the 
effective date of the revocation. Since we believe this extensive 
billing period poses significant risk to the Medicare program, we 
proposed to limit the claims submission timeframe after revocation. In 
Sec.  424.535(g) (Redesignated as Sec.  424.535(h), we proposed that 
revoked physician and NPP organizations and individual practitioners, 
including physicians and NPPs, must submit all outstanding claims not 
previously submitted within 30 calendar days of the revocation 
effective date. We stated that this change is necessary to limit the 
Medicare program's exposure to future vulnerabilities from physician 
and NPP organizations and individual practitioners that have had their 
billing privileges revoked. We know that some physician and NPP 
organizations and individual practitioners are able to create false 
documentation to support claims payment. Accordingly, we stated that 
the proposed change would allow a Medicare contractor to conduct 
focused medical review on the claims submitted during the claims filing 
period to ensure that each claim is supported by medical documentation 
that the contractor can verify. We also stated that focused medical 
review of these claims will ensure that Medicare only pays for 
furnished services by a physician organization or individual 
practitioner and that these entities and individuals receive payment in 
a timely manner. Since a physician organization or individual 
practitioner generally submits claims on a nexus to the date of 
service, we stated that the proposed change will not impose a 
significant burden on physician organizations or individual 
practitioners. In addition, we also proposed to add Sec.  424.44(a)(3) 
to account for this provision related to the requirements for the 
timely filing of claims.
    Comment: One commenter supports our proposal to limit, to 30 days, 
the time frame in which a provider whose billing services have been 
revoked may continue to submit claims for services furnished prior to 
such revocation.
    Response: We appreciate this comment.
    Comment: One commenter appreciated our concern regarding the 
current period of up to 27 months but offered alternative time periods 
of 60 or 90 days rather than the proposed time period of 30 days.
    Response: We are finalizing the provisions at Sec.  424.535(h) 
(proposed as Sec.  424.535(g)) that require a revoked physician, NPP or 
a physician or NPP organization to submit all outstanding claims not 
previously submitted within 60 calendar days of the effective date of 
the revocation, (except for revocations identified in Sec.  
405.874(b)(2) and Sec.  424.535(f) of this final rule).
    Comment: Several commenters encouraged CMS to reset the period of 
time a provider can submit claims after billing privileges have been 
revoked from up to 27 months to 6 months, instead of the proposed 30 
days.
    Response: As stated above, we are finalizing the provisions found 
at Sec.  424.535(g) (Redesignated as Sec.  424.535(h)) that require a 
revoked physician, NPP or a physician or NPP organization to submit all 
outstanding claims not previously submitted within 60 calendar days of 
the effective date of the revocation, (except for revocations 
identified in Sec.  405.874(b)(2) and Sec.  424.535(f) (redesignated as 
Sec.  424.535(g)) of this final rule).
    Comment: One commenter stated that 30 days is simply not enough 
time to wrap up all of the details of a practice, in addition to the 
other circumstances associated with a revocation of billing privileges.
    Response: We are finalizing the provisions found at Sec.  
424.535(h) (proposed as Sec.  424.535(g)) that require a revoked 
physician, NPP or a physician or NPP organization to submit all 
outstanding claims not previously submitted within 60 calendar days of 
the effective date of the revocation, (except for revocations 
identified in Sec.  405.874(b)(2) and Sec.  424.535(f) (redesignated as 
Sec.  424.535(g)) of this final rule).
    After reviewing public comments, we are finalizing the provisions 
found at Sec.  424.535(h) (proposed as Sec.  424.535(g)) that require a 
revoked physician, NPP or a physician or NPP organization to submit all 
outstanding claims not previously submitted within 60 calendar days of 
the effective date of the revocation. Since the physician, NPP or

[[Page 69783]]

a physician or NPP organization is already afforded approximately 30 
days notification before the effective date of revocation (except for 
revocations identified in Sec.  405.874(b)(2) and Sec.  424.535(f) 
(redesignated as Sec.  424.535(g)) of this final rule), we believe that 
almost 90 days is more than sufficient time to file any outstanding 
claims with the Medicare program.
    In addition, we are amending Sec.  424.44(a) to account for this 
provision related to the requirements for the timely filing of claims. 
We are revising the Sec.  424.44(a) to clarify that this provision is 
consistent with Sec.  424.521 which limits the ability of physicians, 
NPPs and physician and NPP organizations to bill retrospectively. The 
timely filing requirements in Sec.  424.44(a)(1) and (a)(2) will no 
longer apply to physician, NPPs, or physician or NPP organizations or 
IDTFs.
7. Technical Changes to Regulations Text
    We proposed to make the following technical changes:
     Existing Sec.  424.510(d)(8) would be redesignated as 
Sec.  424.517. This revision would separate our ability to conduct 
onsite reviews from the provider and supplier enrollment requirements.
     Existing Sec.  424.520 would be revised and redesignated 
as Sec.  424.516. This redesignation would move the additional provider 
and supplier enrollment requirements so that these requirements 
immediately follow the provider and supplier enrollment requirements.
     In new Sec.  424.520, we proposed to specify the effective 
dates for Medicare billing privileges for the following entities: 
Surveyed, certified, or accredited providers and suppliers; IDTFs; and 
DMEPOS suppliers.
     In Sec.  424.530, we proposed to add the phrase ``in the 
Medicare program'' to the section heading to remain consistent with 
other headings in the subpart.
    After reviewing public comments, we are finalizing the following 
technical changes:
     Existing Sec.  424.510(d)(8) has been redesignated as 
Sec.  424.517. This revision would separate our ability to conduct 
onsite reviews from the provider and supplier enrollment requirements.
     Existing Sec.  424.520 has been revised and redesignated 
as Sec.  424.516. This redesignation would move the additional provider 
and supplier enrollment requirements so that these requirements 
immediately follow the provider and supplier enrollment requirements.
     In new Sec.  424.520, we are adopting the effective dates 
for Medicare billing privileges for the following entities: Surveyed, 
certified, or accredited providers and suppliers; IDTFs; and DMEPOS 
suppliers.
     In Sec.  424.530, we are adding the phrase ``in the 
Medicare program'' to the section heading to remain consistent with 
other headings in the subpart.

K. Amendment to the Exemption for Computer-Generated Facsimile (Fax) 
Transmissions From the National Council for Prescription Drug Programs 
(NCPDP) SCRIPT Standard for Transmitting Prescription and Certain 
Prescription-Related Information for Part D Covered Drugs Prescribed 
for Part D Eligible Individuals

1. Legislative History
    Section 101 of the MMA amended title XVIII of the Act to establish 
a voluntary prescription drug benefit program. Prescription Drug Plan 
(PDP) sponsors and Medicare Advantage (MA) organizations offering 
Medicare Advantage-Prescription Drug Plans (MA-PDs) and other Medicare 
Part D sponsors are required to establish electronic prescription drug 
programs to provide for electronic transmittal of certain information 
to the prescribing provider and dispensing pharmacy and dispenser. This 
includes information about eligibility, benefits (including drugs 
included in the applicable formulary, any tiered formulary structure 
and any requirements for prior authorization), the drug being 
prescribed or dispensed and other drugs listed in the medication 
history, as well as the availability of lower cost, therapeutically 
appropriate alternatives (if any) for the drug prescribed. Section 101 
of the MMA established section 1860D-4(e)(4)(D) of the Act, which 
directed the Secretary to issue uniform standards for the electronic 
transmission of such data.
    There is no requirement that prescribers or dispensers implement e-
prescribing. However, prescribers and dispensers who electronically 
transmit prescription and certain other prescription-related 
information for covered drugs prescribed for Medicare Part D eligible 
individuals, directly or through an intermediary, are required to 
comply with any applicable final standards that are in effect. For a 
complete discussion of the statutory basis for the e-prescribing 
portions of this final rule with comment period and the statutory 
requirements at section 1860D-4(e) of the Act, please refer to the 
``Background'' section of the E-Prescribing and the Prescription Drug 
Program proposed rule published in the February 4, 2005 Federal 
Register (70 FR 6256)
2. Regulatory History
a. Foundation Standards and Exemption for Computer-Generated Facsimiles 
(Facsimiles)
    In the E-Prescribing and the Prescription Drug Program final rule 
(70 FR 67568, November 7, 2005), we adopted the National Council for 
Prescription Drug Programs (NCPDP) SCRIPT standard, Implementation 
Guide, Version 5, Release 0 (Version 5.0), May 12, 2004, excluding the 
Prescription Fill Status Notification Transaction (and its three 
business cases which include the following: Prescription Fill Status 
Notification Transaction-Filled; Prescription Fill Status Notification 
Transaction-Not Filled; and Prescription Fill Status Notification 
Transaction-Partial Fill) hereafter referred to as ``NCPDP SCRIPT 
5.0,'' as the standard for communicating prescriptions and 
prescription-related information between prescribers and dispensers. 
Subsequently, in the June 23, 2006 Federal Register (71 FR 36020), we 
published an interim final rule with comment period (IFC) that 
maintained NCPDP SCRIPT 5.0 as the adopted standard, but allowed for 
the voluntary use of a subsequent backward compatible version of the 
standard, NCPDP SCRIPT 8.1. In the April 7, 2008 Federal Register, we 
published a final rule (73 FR 18918) that finalized the June 23, 2006 
IFC; effective April 1, 2009, we will retire the NCPDP SCRIPT 5.0 and 
adopt NCPDP SCRIPT 8.1 as the standard. Hereafter we refer to these 
standards as ``NCPDP SCRIPT.''
    The November 7, 2005 final rule also established an exemption to 
the requirement to utilize the NCPDP SCRIPT standard for entities that 
transmit prescriptions or prescription-related information for Part D 
covered drugs prescribed for Part D eligible individuals by means of 
computer-generated facsimiles (facsimiles generated by one computer and 
electronically transmitted to another computer or facsimile machine 
which prints out or displays an image of the prescription or 
prescription-related information). Providers and dispensers who use 
this technology are not compliant with the NCPDP SCRIPT standard. The 
exemption was intended to allow such providers and dispensers time to 
upgrade to software that utilizes the NCPDP SCRIPT standard, rather 
than forcing them to revert to paper prescribing.

[[Page 69784]]

b. Amendment of Exemption
    In the CY 2008 PFS proposed rule (72 FR 38194), we proposed to 
revise Sec.  423.160(a)(3)(i) to eliminate the computer-generated 
facsimile exemption to the NCPDP SCRIPT standard for the communication 
of prescription or certain prescription-related information between 
prescribers and dispensers for the transactions specified in Sec.  
423.160(b)(1)(i) through (xii).
    Since computer-generated facsimiles retain some of the 
disadvantages of paper prescribing (for example, the administrative 
cost of keying the prescription into the pharmacy system and the 
related potential for data entry errors that may impact patient 
safety), we believed it was important to take steps to encourage 
prescribers and dispensers to move toward use of NCPDP SCRIPT. We 
believed the elimination of the computer-generated facsimile exemption 
would encourage prescribers and dispensers using this computer-
generated facsimile technology to, where available, utilize true e-
prescribing (electronic data interchange using the NCPDP SCRIPT 
standard) capabilities.
    We proposed to eliminate the computer-generated facsimile exemption 
effective 1 year after the effective date of the CY 2008 PFS final rule 
(that is, January 1, 2009). We believed that this would provide 
sufficient notice to prescribers and dispensers who would need to 
implement or upgrade e-prescribing software to look for products and 
upgrades that are capable of generating and receiving transactions that 
utilize NCPDP SCRIPT. It would also afford current e-prescribers time 
to work with their trading partners to eventually eliminate computer-
to-facsimile transactions.
    We solicited comments on the impact of the proposed elimination of 
this exemption. Several commenters concurred with our proposal to 
eliminate the exemption for computer-generated facsimiles, indicating 
that eliminating the exemption for computer-generated facsimiles would 
act as an incentive to move prescribers and dispensers toward true e-
prescribing (electronic data interchange using the NCPDP SCRIPT 
standard), although many commenters suggested that we continue to allow 
for the use of computer-generated facsimiles in the case of 
transmission failure and network outages. Less than half of the 
commenters disagreed with our proposal to eliminate the exemptions for 
computer-generated facsimiles, citing concerns about increased 
hardware/software costs, transaction fees, certification, and other 
activation costs.
    Several commenters indicated that the elimination of the exemption 
could be problematic in certain e-prescribing transactions, namely 
prescription refill requests, but only one of those commenters offered 
substantiation to support this assertion. Absent receipt of substantial 
industry data on the impact of the elimination of the computer-
generated facsimile exemption on prescription refill requests, and not 
considering the industry's comments about prescription refill requests 
to constitute widespread concern regarding the prescription refill 
request function, in the CY 2008 PFS final rule with comment period (72 
FR 66396), we amended the exemption to permit the use of computer-
generated facsimiles only in cases of temporary/transient network 
transmission failures, effective January 1, 2009.
3. Proposal for CY 2009
    Following the publication of the CY 2008 PFS final rule with 
comment period, we received additional information regarding how the 
modification of the exemption for computer-generated faxing to 
eliminate use of computer-generated faxing in all instances other than 
temporary/transient network transmission failures would adversely 
impact the electronic transmission of prescription refill requests. The 
submitted information offered additional support to the claim that in 
all instances other than temporary/transient network transmission 
problems, elimination of the use of computer-generated facsimiles would 
adversely impact the electronic transmission of prescription refill 
requests. These later materials substantiated the earlier claims that 
the elimination of the exemption in all instances other than temporary/
transient network transmission failures would force dispensers who e-
prescribe and use these transactions to revert to paper prescribing. 
These materials offered more specific information regarding the 
economic and workflow impacts associated with the elimination of the 
exemption for computer-generated facsimiles in all instances other than 
temporary/transient network transmission failures that was not 
forthcoming in the prior public comment period for the CY 2008 PFS 
proposed rule. We also received unsolicited comments on this issue 
during the comment period for the November 16, 2007 Part D e-
prescribing proposed rule (proposing the adoption of certain final Part 
D e-prescribing standards and the use of NPI in Part D e-prescribing 
transactions) (72 FR 64900). As a result of the new information, we 
reexamined this issue and proposed additional modifications to the 
computer-generated facsimile exemption in the CY 2009 PFS proposed rule 
(73 FR 38502).
    Dispensers have indicated that they use computer-generated 
facsimiles for the majority of prescription refill requests, in 
particular when communicating with prescribers that have not adopted e-
prescribing. Currently, regardless of how the initial prescription was 
received by the pharmacy (that is, orally, via e-prescribing, 
telephone, paper, or facsimile) nearly all prescription refill requests 
from chain pharmacies to prescribers are sent electronically, either 
via an e-prescribing application or via computer-generated facsimile. 
When a prescription is received by a dispenser electronically, the 
prescription refill request is sent to the prescriber via the same 
technology. However, where the dispenser knows that the prescriber 
lacks e-prescribing capability or has not activated it, or where the 
prescriber does not respond to the request sent to his or her 
prescribing device, the prescription refill request is sent or resent 
via computer-generated facsimile. Commenters stated that the vast 
majority of computer-generated facsimiles sent today from prescribers 
to pharmacies are not electronic data interchange (EDI) transmissions, 
but usually prescription refill requests sent from pharmacies to 
prescribers who do not conduct true e-prescribing and, in many cases, 
do not engage in any electronic transactions at all. One national drug 
store chain estimates that it produces approximately 150,000 computer-
generated facsimile prescription refill requests every day.
    The workflow and process for filling prescriptions would be 
significantly disrupted if these computer-generated facsimile 
transmissions were prohibited. Dispensers and other staff would be 
forced to revert back to making phone calls or using a stand-alone 
facsimile machine to contact prescribers each time a refill is 
requested. Commenters indicated that not only would this be 
counterproductive to the advances and efficiencies made in pharmacy 
practice, it would impose an undue administrative burden on dispensing 
pharmacies and pharmacists.
    As a result of this additional information regarding the larger 
than anticipated impact of the elimination of computer-generated 
facsimiles for the prescription refill request transaction, we proposed 
to further amend the

[[Page 69785]]

computer-generated facsimile exemption to also allow for an exemption 
from the NCPDP SCRIPT standards for electronic prescription refill 
request transactions that are conducted by computer-generated 
facsimiles when the prescriber is incapable of receiving electronic 
transmissions using the NCPDP SCRIPT standard. We proposed to retain 
the computer-generated facsimile exemption in instances of transient/
temporary network transmission failures, effective January 1, 2009. We 
also proposed to revisit the computer-generated facsimile exemption for 
the purpose of ultimately eliminating it for the prescription refill 
request transaction found at Sec.  423.160(b)(1)(vii), and specifically 
solicited industry and interested stakeholder comments regarding what 
would constitute an adequate time to allow the industry to transition 
to the use of the NCPDP SCRIPT standard.
    We also solicited industry input on any other e-prescribing 
transaction that might be similarly adversely impacted by the 
elimination of computer-generated facsimiles in all instances other 
than transient/temporary network transmission failures.
    We received 52 relevant and timely public comments on our proposal 
to further amend the exemption of computer-generated facsimiles from 
the NCPDP SCRIPT standard for Part D e-prescribing to include an 
exemption for refill request transactions with prescribers who are not 
capable of e-prescribing using the adopted NCPDP SCRIPT standard as 
detailed in the CY 2009 PFS proposed rule (73 FR 38600). While the 
comments were few in number, they tended to provide multiple detailed 
comments on what had been proposed.
    Comment: Several commenters recommended that we reinstate the 
exemption for computer-generated facsimiles in its entirety. The 
commenters referenced the Medicare Improvements for Patients and 
Providers Act of 2008 (MIPPA) and its potential to help drive e-
prescribing adoption, stating that the e-prescribing incentives 
contained in the MIPPA provide a better, more transitional path towards 
that goal.
    One commenter recommended that the elimination of the computer-
generated facsimile exemption coincide with the incentive provisions 
contained in the MIPPA legislation. The commenter noted the eventual 
penalty for Medicare providers who do not adopt e-prescribing by the 
year 2012. The commenter also stated that structuring the elimination 
of the computer-generated facsimile exemption to coincide with this 
date would allow organizations the time needed to appropriately 
implement e-prescribing.
    Other commenters recommended that we adopt a computer-generated 
facsimile exemption for pharmacies in areas where prescribers who do 
not e-prescribe fall under the ``significant hardship'' exception 
contained in the MIPPA. Commenters also recommended that the computer-
generated facsimile exemption be further modified so as to allow for 
use of the computer-generated facsimile exemption that was adopted in 
the November 7, 2005 final rule (the ``original'' computer-generated 
facsimile exemption) until 2014, when provider disincentives/penalties 
are maximized under the MIPPA, at which time a study could be conducted 
to determine the number of prescriptions being e-prescribed. We assume 
that the commenters' intent would be to use the information gleaned 
from such a study as an indicator of whether or not e-prescribing had 
reached an acceptable level of adoption among providers and pharmacies, 
and that if an acceptable level of adoption among providers and 
pharmacies had been demonstrated, that the computer-generated facsimile 
exemption could be eliminated.
    Similarly, other commenters suggested that the exemption should be 
eliminated in 2012 when disincentives under the MIPAA e-prescribing 
incentive program go into effect, or in 2014, when e-prescribing 
provider disincentives/penalties are maximized under the MIPPA. Another 
commenter urged that we reinstate the original (from the November 7, 
2005 final rule (70 FR 67568)) exemption for computer-generated 
facsimiles in its entirety, not just for prescription refill requests 
and transmission failures.
    Response: We agree with the commenters regarding the impact of the 
MIPPA. In general, the MIPPA provides payment incentives for eligible 
professionals who are ``successful electronic prescribers'' as that 
term is defined in the law. The incentive payments are 2 percent of the 
eligible professional's allowed charges under the PFS for CY 2009 
through CY 2010; 1.5 percent in CY 2011 through CY 2012, and a 0.5 
percent in CY 2013. Conversely, the MIPPA calls for payment reductions, 
or disincentives, for those who are not successful electronic 
prescribers beginning in CY 2012. For CY 2012, the payment amount under 
the PFS will be reduced by 1 percent for eligible professionals who are 
not successful electronic prescribers. In subsequent years, the payment 
reduction is increased by 0.5 percent each year through CY 2014, and 
then is fixed at 2 percent for later years. For more information on the 
e-prescribing provisions of the MIPPA, please see section 132 of the 
MIPPA legislation enacted on July 15, 2008 (Pub. L. 110-275, http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_public_laws&docid=f:publ275.110.pdf).
    We envision that the MIPPA-created incentive payments for those 
prescribers who successfully implement electronic prescribing in 
accordance with MIPPA guidelines will provide the ``tipping point''--an 
adequate level of industry adoption of e-prescribing using electronic 
data interchange (EDI) that would in turn move the entire industry 
toward widespread e-prescribing adoption. We believe that data from the 
e-prescribing incentive program under the MIPPA and eventually from 
Part D e-prescribing will offer evidence of the rate of e-prescribing 
adoption, therefore making a study of e-prescribing for purposes of 
determining e-prescribing adoption rates unnecessary.
    We analyzed the industry feedback that we received in response to 
the computer-generated facsimile exemption proposals in the CY 2009 PFS 
proposed rule in light of the recent MIPPA legislation. While the MIPPA 
legislation was not yet been enacted at the time of the CY 2009 PFS 
proposed rule's publication, it was enacted in time for commenters to 
discuss its provisions in their comments to our proposals. Based on 
MIPPA-based and other comments received in response to our proposal to 
further modify the computer-generated facsimile exemption, and taking 
into consideration the potential positive impact on the industry of the 
Part D e-prescribing incentives included in the recently-enacted MIPPA 
legislation, we are reinstating the original exemption for computer-
generated facsimiles effective January 1, 2009. We also agree with 
those commenters who suggested that the computer-generated facsimile 
exemption should be eliminated (in all instances other than transient/
temporary network transmission failures) once provider e-prescribing 
disincentives under the MIPAA program are initiated.
    Although several commenters suggested that we should wait until the 
disincentives are maximized in 2014, we feel that it is more 
appropriate to eliminate the reinstated exemption (in all instances 
other than temporary/transient network transmission problems) sooner, 
when the MIPPA e-prescribing program disincentives for those who are 
not successful electronic

[[Page 69786]]

prescribers begin in 2012. We believe that the January 1, 2012 
compliance date for the elimination of the computer-generated facsimile 
exemption (in all instances other than temporary/transient transmission 
problems) will take advantage of the momentum that will be built by the 
e-prescribing incentive program under the MIPPA, and affords the 
industry an additional 3 years from the effective date of this final 
rule with comment period to move toward true e-prescribing. We also 
believe that the January 1, 2012 date will enable the industry to begin 
taking advantage of the benefits of e-prescribing sooner, and in so 
doing pass those advantages on to their patients in the way of 
increased patient safety and convenience. Therefore effective January 
1, 2012, we will eliminate the reinstated exemption to the requirement 
to utilize the NCPDP SCRIPT standard for entities that transmit 
prescriptions or prescription-related information for Part D covered 
drugs prescribed for Part D eligible individuals by means of computer-
generated facsimiles in all instances other than transient/temporary 
network transmission failures.
    We do not believe that a computer-generated facsimile exemption is 
needed for pharmacies in areas where prescribers who do not have access 
to the technology that would allow them to e-prescribe under the 
``significant hardship'' exception contained in the MIPPA. We would 
expect that by the year 2012, the effective date of the elimination of 
the computer-generated facsimile exemption (in all instances other than 
temporary and transient network transmission failures), that most areas 
would have the telecommunication and/or Internet connectivity capacity 
to allow providers to conduct e-prescribing, and an exemption is not 
warranted in the rare instance where this may not be the case.
    Comment: We received feedback from 19 commenters who agreed with 
the proposal to extend the exemption to computer-generated facsimiles 
for the prescription refill request transaction in cases where the 
physician is not NCPDP SCRIPT enabled.
    Response: We agree with commenters. This issue will be resolved 
with this final rule's reversal of the CY 2008 PFS final rule's e-
prescribing provisions that would have eliminated the computer-
generated faxing exemption (in all instances other than temporary and 
transient network transmission failures) effective on January 1, 2009, 
and concurrent reinstatement of the original exemption for computer-
generated facsimiles from the November 7, 2005 final rule effective 
January 1, 2009. However, we will eliminate the reinstated exemption 
for computer-generated facsimiles (in all instances other than 
transient/temporary network transmission failures) effective when the 
MIPPA e-prescribing program disincentives take effect on January 1, 
2012.
    Comment: Some commenters expressed opposition to the proposed 
elimination of the exemption for computer-generated facsimiles in all 
instances other than temporary/transient network transmission failures. 
One commenter erroneously identified January 1, 2010 as the proposed 
compliance date, but still asked for additional time for NCPDP SCRIPT-
noncompliant providers to become compliant with the NCPDP SCRIPT 
standard.
    Another commenter stated that the overall e-prescribing adoption 
rate has not met a critical mass to justify a January 2009 deadline for 
the elimination of the computer-generated facsimile exemption in all 
instances other than transient/temporary network transmission failures. 
The commenter noted that with the effective date fast approaching, 
unless the computer-generated facsimile exemption is modified once 
again, many organizations will have to hastily implement e-prescribing 
solutions or revert back to paper prescribing.
    Response: We agree with commenters that it is in the best interests 
of the industry and consumers that the CY 2008 PFS final rule's 
modifications to the computer-generated facsimile exemption be reversed 
and the broad exemption originally created in the November 7, 2005 
final rule for computer-generated facsimiles in Part D e-prescribing be 
reinstated to prevent a reversion by providers to paper prescriptions, 
and a reversion by pharmacies to traditional paper faxing. Therefore, 
by this rule we have reinstated the original exemption for computer-
generated facsimiles effective January 1, 2009. However, we will 
eliminate the reinstated computer-generated facsimiles exemption in all 
instances other than transient/temporary network transmission failures 
effective when the MIPPA e-prescribing program disincentives take 
effect on January 1, 2012.
    Comment: Some commenters requested clarification of our proposed 
amendment to the exemption for computer-generated facsimiles. One 
commenter stated that their customers believe that all Part D 
prescriptions, without exception, must be sent via electronic 
transmission as of January 1, 2009, and otherwise they may be liable 
for conducting an ``illegal'' transaction. To avoid undue hardship, 
costs, and confusion, the commenter asked that CMS clearly specify that 
e-prescribing is preferred but still voluntary for providers and 
dispensers; and those prescribers not currently e-prescribing under the 
Medicare Part D pharmacy benefit program may still write paper 
prescriptions, or call in or fax their prescriptions using a 
traditional paper fax machine to a pharmacy.
    Another commenter asked CMS to clarify that providers who use 
prescription writing systems that enable computer based facsimiles but 
do not enable NCPDP SCRIPT transactions are not subject to the 
provisions of the computer-generated facsimile exemption. One commenter 
asked CMS to clarify the definition of a ``true'' e-prescribing system.
    Response: We recognize that there might be some confusion for 
prescribers and dispensers with the elimination of certain portions of 
the computer-generated facsimile exemption. In the November 7, 2005 e-
prescribing final rule (70 FR 67568), we defined ``e-prescribing'' to 
mean the transmission, using electronic media, of prescription or 
prescription-related information, between a prescriber, dispenser, PBM, 
or health plan, either directly or through an intermediary, including 
an e-prescribing network.
    As we noted above, section 101 of the MMA amended title XVIII of 
the Act to establish the Part D prescription drug benefit program. As 
part of that program, the Congress required the establishment of a 
``voluntary'' e-prescribing program. It is voluntary in that providers 
and dispensers are not required to conduct e-prescribing for Medicare 
covered drugs prescribed for Medicare Part D eligible beneficiaries, 
but if they do conduct such e-prescribing, they must do so using the 
applicable standards that are in effect at the time of the 
transmission. Part D sponsors, in turn, must support e-prescribing so 
that providers and dispensers who wish to conduct e-prescribing 
transactions with plans will be able to do so using the adopted 
standards that are in effect at the time of the transaction. We refer 
those commenters with questions regarding the creation and scope of the 
Medicare Part D e-prescribing program to the ``Background'' section of 
the E-Prescribing and the Prescription Drug Program proposed rule 
published in the February 4, 2005 Federal Register (70 FR 6256)
    In the CY 2008 PFS proposed rule (72 FR 38194), we proposed to 
revise

[[Page 69787]]

Sec.  423.160(a)(3)(i) to eliminate the computer-generated facsimile 
exemption to the NCPDP SCRIPT standard for the communication of 
prescription or certain prescription-related information between 
prescribers and dispensers for the transactions specified in Sec.  
423.160(b)(1)(i) through (xii). In keeping with the comments that we 
received, we finalized modifications that required prescribers and 
dispensers to use NCPDP SCRIPT compliant e-prescribing software when 
they conduct e-prescribing transactions for Part D covered drugs that 
are prescribed for Part D eligible individuals in all instances other 
than transient/temporary network transmission failures, effective 
January 1, 2009. Those prescribers who choose not to e-prescribe Part D 
covered drugs for Part D eligible individuals can continue to use non-
computer-generated facsimiles as a means to deliver such prescriptions 
to a dispenser.
    Providers who use electronic prescription writing systems that are 
only capable of producing computer-generated facsimiles are not in 
conformance with the adopted standards because they do not transmit 
information using the adopted NCPDP SCRIPT standard. Those who utilize 
their NCPDP SCRIPT enabled systems to produce computer-generated 
facsimiles are likewise not in compliance with the adopted standards 
because computer-generated facsimiles on these systems also do not use 
the adopted standard. We believed that eliminating the exemption (in 
all instances other than transient/temporary network transmission 
failures) might encourage those with NCPDP SCRIPT capabilities that 
have not been activated to use the NCPDP SCRIPT standard in electronic 
data interchanges, and those without such capabilities to upgrade their 
current software products, or, where upgrades are not available, to 
switch to new products that would enable such true e-prescribing.
    We believe that eliminating the computer-generated facsimile 
exemption in 2012 would provide sufficient notice to prescribers and 
dispensers who would need to implement or upgrade e-prescribing 
software to look for products and upgrades that are capable of 
generating and receiving transactions that utilize NCPDP SCRIPT. 
Eliminating the reinstated computer-generated facsimile exemption in 
2012 would also afford current e-prescribers time to work with their 
trading partners to eventually eliminate the use (in all instances 
other than transient/temporary network transmission failures) of 
computer-generated facsimiles in e-prescribing transactions.
    From our analysis of the public comments that asked that the 
elimination of the computer-generated facsimile exemption (in all 
instances other than temporary/transient network transmission failures) 
be reversed, and in view of the recent MIPPA legislation that provides 
a more powerful incentive to providers to e-prescribe in accordance 
with the standards adopted under Medicare Part D, we are reversing the 
modifications to the computer-generated facsimile exemption that were 
made in the CY 2008 PFS final rule with comment period and reinstating 
the original computer-generated facsimile exemption that was adopted in 
the November 7, 2005 e-prescribing final rule in its entirety, 
effective January 1, 2009. However, we will eliminate the reinstated 
exemption for computer-generated facsimiles in all instances other than 
transient/temporary network transmission failures when the MIPPA e-
prescribing program disincentives take effect on January 1, 2012.
    Comment: Several commenters who agreed with our proposal to 
eliminate the computer-generated facsimile exemption (in all instances 
other than transient/temporary network transmission failures) suggested 
that we delay the January 1, 2009 effective date stated in the CY 2008 
PFS final rule with comment period. One commenter urged CMS to conduct 
studies on the barriers to use of NCPDP SCRIPT compliant systems, and 
then work with stakeholders to identify pathways toward more widespread 
use of e-prescribing systems. Another commenter noted that the recent 
merger of the two major e-prescribing information exchange networks 
still may hold unforeseen consequences for those vendors who have been 
previously certified or are in the process of being certified by either 
of those two networks. The commenter stated that any software changes 
that the network may demand as a result of their merger may take time 
to develop, and as a result, the effective date should be delayed.
    A few commenters said that we should tie the computer-generated 
facsimile exemption compliance to the April 1, 2009 compliance date of 
the most recent round of final e-prescribing standards. One commenter 
suggested that we delay the effective date of the CY 2008 PFS final 
rule with comment period modifications to the computer-generated 
facsimile exemption to 2012, when wireless broadband upload 
connectivity is expected to achieve a speed of faster than 1MB/second.
    Response: We do not see a correlation between the e-prescribing 
network certification process, and the commenter's request to delay the 
elimination of the computer-generated facsimile exemption based on what 
may or may not take place in that process. Additionally, the process 
for vendors to certify their products to an e-prescribing information 
exchange network is a marketplace issue to which we are not a party.
    We understand that some prescribers and dispensers may not have 
been prepared to e-prescribe using the adopted standards by the January 
1, 2009 effective date of the CY 2008 PFS final rule's e-prescribing 
provisions. However, with this final rule's reversal of those 
modifications and reinstatement of the original computer-generated 
facsimile exemption that was adopted in the November 7, 2005 e-
prescribing final rule in its entirety, effective January 1, 2009, we 
believe we have addressed commenters' concerns regarding effective 
dates. However, we will eliminate the reinstated exemption for 
computer-generated facsimiles in all instances other than transient/
temporary network transmission failures when the MIPPA e-prescribing 
program disincentives take effect on January 1, 2012.
    Comment: A comment concerning the computer-generated facsimile 
exemption issue relative to non-NCPCP SCRIPT enabled pharmacies 
(including many independent pharmacies) stated that there are still 
significant segments of the retail pharmacy market not yet in a 
position to receive electronic prescriptions because they are only 
facsimile-enabled. The commenter cited national prescription 
information exchange network data showing that only about 42,000 of the 
nation's pharmacies are NCPDP SCRIPT e-prescribing enabled, and about 
20,000 of the nation's pharmacies are only manual (traditional paper-
based) facsimile or computer-generated facsimile-enabled.
    One commenter stated that e-prescribing technology has not yet been 
perfected by its developers, and that the receiving parties (that is, 
pharmacies) have not fully integrated this technology into their 
workflows. The commenter also indicated that use of e-prescribing 
technology is dependent on the availability of telecommunications 
services and Internet connectivity, and this is problematic especially 
in rural areas where there may be a lack of such telecommunications 
and/or Internet connectivity services needed to support e-prescribing 
systems.

[[Page 69788]]

    A vendor expressed concern that their client pharmacies that rely 
solely on computer-generated facsimiles may not be able to send or 
receive computer-generated facsimile transmissions through national 
prescription information exchange networks after January 1, 2009.
    Response: We recognize that pharmacies that are not now conducting 
e-prescribing transactions using the NCPDP SCRIPT standard will incur 
costs to implement this capability, and that pharmacies will likely 
experience an increase in e-prescribing transaction volumes and costs 
as utilization of such transactions increases.
    We agree that independent pharmacies and pharmacies that employ 
only computer-generated facsimile capabilities need to be given the 
opportunity to upgrade their systems and that elimination of the 
computer-generated facsimile exemption (in all instances other than 
transient/temporary network transmission failures) would place them at 
a disadvantage at a time when the MIPPA incentive program is expected 
to generate increased e-prescribing volumes. Therefore, for this reason 
and the other reasons stated herein, we are reversing the modifications 
to the computer-generated facsimile exemption that were made in the CY 
2008 PFS final rule with comment period and reinstating the original 
computer-generated facsimile exemption that was adopted in the November 
7, 2005 e-prescribing final rule in its entirety, effective January 1, 
2009. However, we will eliminate the exemption for computer-generated 
facsimiles in all instances other than transient/temporary network 
transmission failures when the MIPPA e-prescribing program 
disincentives take effect on January 1, 2012.
    Comment: We received comments requesting confirmation that the 
proposed revisions to the computer-generated facsimile exemption would 
not now apply to long term care providers. Another asked that CMS allow 
long term care facilities to continue to transmit prescriptions via 
computer-generated facsimile to pharmacies that are not yet using 
systems capable of receiving NCPDP SCRIPT transactions appropriate to 
this setting (NCPDP SCRIPT Version 10.2 or higher). A professional 
association noted that eliminating the exemption for computer-generated 
facsimiles (in all instances other than transient/temporary network 
transmission failures) is unlikely to spur adoption among long term 
care providers and could, if left standing, force some facilities to 
resort to manual facsimiles. The commenter also urged CMS to eliminate 
the e-prescribing exemption for long term care facilities.
    Response: In Sec.  423.160(a)(3)(iii), long term care facilities 
were specifically exempted from the requirement to use the adopted 
standards in e-prescribing under Medicare Part D due to their unique 
workflows and complexities associated with prescribing for patients in 
long term care settings. This exemption remains in effect for long term 
care facilities. Therefore, long term care facilities may continue to 
use computer-generated facsimiles, and such facilities will continue to 
be exempt from the requirement to use the NCPDP SCRIPT Standard in 
prescription transactions between prescribers and dispensers where a 
non-prescribing provider is required by law to be a part of the overall 
transaction process.
    Comment: Comments regarding other issues relevant to e-prescribing 
in general, and the elimination of the computer-generated facsimile 
exemption (in all instances other than transient/temporary network 
transmission failures) specifically included comments requesting 
amendments to the computer-generated facsimile exemption that would 
address when a prescriber or dispenser is prohibited from using the 
NCPDP SCRIPT standard for e-prescribing. The commenter noted that the 
Drug Enforcement Administration's (DEA) prohibition of e-prescribing of 
controlled substances would prevent a provider from prescribing such 
controlled substances under the Part D program in accordance with the 
adopted standards. One commenter stated that vendors would have to 
disable electronic communication of prescriptions from their client 
prescribers through the prescription information exchange network to 
those pharmacies that are only computer-generated facsimile-enabled. 
The vendor assumed that if their client prescriber attempts to send 
those prescriptions electronically that the prescription will be 
rejected by the prescription information exchange network because the 
pharmacy is not activated with the network for electronic transactions 
using the NCPDP SCRIPT standard. This same commenter noted that the 
network has heretofore insulated the prescriber from having to be 
concerned with whether or not the patient's choice of pharmacy was 
enabled to receive prescriptions in a particular way. After the 
proposed January 2009 compliance date, the commenter felt that 
additional burdens would be placed on the prescriber to obtain this 
information from the patient up front, or could compel patients to make 
different pharmacy choices which could result in lost business for 
pharmacies that are only facsimile-enabled.
    Response: The DEA has authority through the Controlled Substances 
Act over the electronic prescribing of controlled substances, and does 
not currently allow for the electronic prescribing of Schedule II 
drugs. As such substances currently may not be prescribed 
electronically, there is no conflict of law at this time. As noted 
previously, e-prescribing under Medicare Part D is voluntary for 
prescribers and dispensers--they are not required to issue 
prescriptions in electronic form. Although the DEA has published a 
notice of proposed rulemaking to allow for the electronic prescribing 
of controlled substances, we have no indication as to when the DEA will 
make a final determination on this issue. We continue to work with the 
DEA to help facilitate a solution that addresses both their enforcement 
requirements with respect to the electronic prescribing of controlled 
substances, and the needs of the healthcare community for a solution 
that is interoperable with existing e-prescribing systems, scalable and 
commercially viable.
    After reviewing these comments, in the interest of patient care and 
safety, and to foster the adoption of true e-prescribing among 
prescribers and dispensers, we are reversing the modifications to the 
computer-generated facsimile exemption that were made in the CY 2008 
PFS final rule with comment period and reinstating the original 
computer-generated facsimile exemption that was adopted in the November 
7, 2005 e-prescribing final rule, effective January 1, 2009. However, 
we will also eliminate the reinstated exemption for computer-generated 
facsimiles in all instances other than transient/temporary network 
transmission failures when the MIPPA e-prescribing program 
disincentives take effect on January 1, 2012.

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

    Comprehensive outpatient rehabilitation facilities (CORFs) and 
rehabilitation agencies are Medicare providers that are certified to 
provide certain rehabilitation services. Currently covered CORF 
clinical services and rehabilitation agency services are paid through 
the PFS.
    In the CY 2008 PFS final rule with comment period (72 FR 66399), we

[[Page 69789]]

revised the CORF regulations at 42 CFR parts 410 and 413 to ensure that 
the regulations reflected the statutory requirements applicable to 
CORFs under sections 1834(k) and 1861(cc) of the Act. Many of these 
changes were technical in nature. Specifically, the regulatory changes: 
(1) Revised the definitions of ``physicians' services,'' ``respiratory 
therapy services,'' ``social and psychological services,'' ``nursing 
services,'' ``drugs and biologicals,'' and ``supplies and durable 
medical equipment,'' and ``home environment evaluation''; (2) amended 
the payment provisions for CORF services; and (3) made other 
clarifications and changes to the conditions for coverage for CORF 
services.
    In the CY 2009 PFS proposed rule, we addressed the comments 
received in response to the CY 2008 PFS final rule with comment period 
(72 FR 66222), proposed new provisions, and proposed revising other 
provisions. We solicited comments on all of the proposed changes.
1. Personnel Qualifications
    We stated in the CY 2008 PFS final rule with comment period that we 
would propose updated qualifications for respiratory therapists in 
future rulemaking (72 FR 66297). It has been our policy that only the 
respiratory therapist (and not the respiratory therapy technician), who 
possesses the educational qualifications necessary to provide the level 
of respiratory therapy services required, is permitted to provide 
respiratory therapy in a CORF setting.
    In the CY 2008 PFS final rule with comment period, we received a 
comment indicating that our regulations were outdated and did not 
conform to current respiratory therapy professional standards. 
Specifically, the American Association for Respiratory Care (AARC) 
stated that the terms ``certified respiratory therapist (CRT)'' and the 
``registered respiratory therapist (RRT)'' have replaced the terms 
``respiratory therapy technician'' and ``respiratory therapist,'' 
respectively. In addition, the qualifications for CRTs and RRTs differ 
from those applicable to respiratory therapy technicians and 
respiratory therapists. The CRT designation is awarded after an 
individual successfully passes the entry-level respiratory therapy 
examination. In order to be eligible for the RRT examination, an 
individual must be a graduate of an advanced level respiratory therapy 
educational program and have obtained the RRT credential.
    We proposed to revise Sec.  485.70(j) of the Conditions of 
Participation of CORF services--setting forth the personnel 
qualifications for respiratory therapists in CORFs--to be consistent 
with current qualification requirements for RRTs, as recommended by 
AARC. We also proposed to delete Sec.  485.70(k), which sets forth 
personnel qualifications for CRTs (previously referred to as 
respiratory therapy technicians) in CORFs. In the past, we have not 
reimbursed CORFs for respiratory therapy services provided by 
respiratory therapy technicians or CRTs, and we believe that removing 
the technician definition would clarify our position. We stated that we 
believed that current medical standards continue to require that the 
provision of skilled respiratory therapy services to patients in the 
CORF setting be furnished by RRTs. While CRTs furnish general 
respiratory care procedures and may assume some clinical responsibility 
for specified respiratory care modalities involving the application of 
therapeutic techniques under the supervision of an RRT or a physician, 
the educational qualifications that a RRT possesses allow him or her to 
evaluate, treat, and manage patients of all ages with respiratory 
illnesses. RRTs participate in patient education, implement respiratory 
care plans, apply patient-driven protocols, follow evidence-based 
clinical practice guidelines, and participate in health promotion, 
disease prevention, and disease management. RRTs also may be required 
to exercise considerable independent judgment.
    This was implemented in the CY 2002 PFS final rule with comment 
period (66 FR 55246 and 55311) and the CY 2003 PFS final rule with 
comment period (67 FR 79966 and 79999) when we developed and discussed 
G codes, CORF respiratory therapy services, and specifically recognized 
the RRT as the appropriate level of personnel to provide these CORF 
services. Finally, the CORF regulations at Sec.  485.58(d)(4) state 
that as a condition of participation for CORFs, CORF personnel must 
meet the qualifications described at Sec.  485.70.
    For CY 2009, to maintain consistency in the conditions of 
participation for both CORFs, home health agencies (HHAs), and other 
outpatient service providers, we proposed to amend the material 
addressing personnel qualifications in Sec.  485.70. Specifically, we 
proposed to amend paragraphs Sec.  485.70(c) and Sec.  485.70(e) by 
referencing the personnel qualifications for HHAs at Sec.  484.4. This 
change would align CORF personnel requirements not only with HHA 
requirements, but also with other regulations in Part 485 addressing 
provision of physical therapy, speech-language pathology, and 
occupational therapy services.
    Also, at 485.58(a)(1)(i), we proposed to amend the duties of a CORF 
physician to include medical supervision of nonphysician staff. This 
change conforms to changes made to the CORF conditions for coverage in 
the CY 2008 PFS final rule with comment period. We believe that adding 
medical supervision of nonphysician staff to the duties of CORF 
physicians more accurately reflects the duties and responsibilities of 
the CORF physician. We also believe that this change could increase the 
quality of care provided to patients of CORFs.
    The following is a summary of the comments received concerning 
Personnel Qualifications and our responses.
    Comment: Commenters generally supported our proposed changes. We 
received a comment that supported the spirit of our proposed changes to 
the definitions of respiratory therapists and provided further 
clarification regarding current professional standards. Specifically, 
in previous comments, the commenter noted that the term ``respiratory 
therapy technician'' is an obsolete term. This is because today's 
curriculum and educational standards are no longer structured to teach 
at a technician level.
    The commenter noted that, in our discussion of the issue in the 
proposed rule, we stated that it was AARC's belief that the term 
``certified respiratory therapist'' (CRT) had replaced the obsolete 
term ``respiratory therapy technician'' and the term ``registered 
respiratory therapist'' (RRT) has replaced the term ``respiratory 
therapist.'' The commenter informed us that our statement was 
incorrect. According to the commenter, today's educational programs 
prepare students for the registry (RRT) examinations administered by 
the National Board for Respiratory Care (NBRC). Before graduates are 
eligible to sit for the RRT examinations they must first pass the 
NBRC's entry-level examination, which results in the CRT credential. 
Thus the CRT-credentialed individual is considered an ``entry-level 
respiratory therapist,'' but unlike other allied health professions, 
the terms ``technician'' or ``assistant'' are not used in the 
respiratory therapy profession.
    According to AARC, in the profession today, it is accepted clinical 
and medical terminology that individuals holding the credentials of 
both CRT and RRT are known simply as ``respiratory therapists.'' Also, 
most State laws that require licensing of respiratory therapists make 
no distinction in the

[[Page 69790]]

license as to whether the individual holds a credential of CRT or RRT. 
They are both licensed as ``respiratory therapists.'' To the best of 
AARC's knowledge, there are only six States that require a separate 
license for a CRT or a RRT. AARC recommended that the proposed 
definition be revised.
    Since CMS uses the term ``respiratory therapist'' in other 
regulatory provisions and manual instructions where applicable, AARC 
recommended that CMS delete the word ``registered'' from the proposed 
definition. This would also be consistent with the terms ``physical 
therapist'' and ``occupational therapist'' used to define qualified 
personnel in those professions.
    AARC also believes that CMS can ensure that only registered 
respiratory therapists, and not individuals holding only the CRT, meet 
the personnel qualifications by revising the curriculum requirements to 
require that respiratory therapists have passed the registry 
examination administered by the NBRC. AARC also noted that the name of 
the Board administering the certification and registry exams is the 
NBRC, not the National Board for Respiratory Therapy, Inc.
    Response: We thank the commenters for their support of our proposed 
revisions. We believe that the comments provided by AARC reflect and 
further clarify our intent to provide appropriate respiratory care to 
patients served by CORFs. We want to ensure that only respiratory 
therapists with the highest level of education and training can furnish 
respiratory therapy services in a CORF. Therefore, only those 
individuals holding the credential of registered respiratory therapist 
(RRT) conferred by the NBRC would qualify. Qualifying by being 
``eligible to take the registry examination,'' as we proposed, results 
in the unintended consequence of permitting CRTs who have not yet taken 
the registry exam to meet the personnel qualifications.
    As a result of the public comments, we are finalizing the proposed 
revisions that reference personnel qualifications for HHAs at Sec.  
485.70(c) and (e). We are also finalizing our proposed revision to 
Sec.  485.58(a)(i)(1) that amends the duties of CORF physicians to 
include medical supervision of nonphysician staff (we received no 
comments on this provision). We are adopting the revisions to the 
personnel qualifications for respiratory therapists at Sec.  485.70(j) 
as suggested by AARC, to read as follows:
    (j) A respiratory therapist must--
    (1) Be licensed by the State in which practicing, if applicable; 
and
    (2) Have successfully completed a nationally-accredited educational 
program that confers eligibility for the National Board for Respiratory 
Care (NBRC) registry exams, and have passed the registry examination 
administered by the NBRC, or
    (3) Have equivalent training and experience as determined by the 
National Board for Respiratory Care (NBRC) and passed the registry 
examination administered by the NBRC.
2. Social and Psychological Services
    In the CY 2008 PFS final rule with comment period (72 FR 66297), we 
clarified that all CORF services, including social and psychological 
services, must directly relate to or further the rehabilitation goals 
established in the physical therapy, occupational therapy, speech-
language pathology, or respiratory therapy plan of treatment. We 
believe that using a full range of clinical social and psychological 
CPT codes to describe CORF social and psychological services is 
inappropriate because social and psychological CORF services do not 
include independent clinical treatment of mental, psychoneurotic, and 
personality disorders. CPT codes 96150 through 96154 and CPT codes 
90801 through 90899 are inappropriate for CORF use because all of these 
CPT codes represent full-scale clinical treatment for these disorders. 
As we stated in the CY 2008 PFS final rule with comment period, we 
believe that for purposes of providing care in a CORF, social and 
psychological services should represent only case management and 
patient assessment components as they relate to the rehabilitation 
treatment plan (72 FR 66297 through 66298). Consequently, after notice 
and comment, we changed our policy and payment for CORF social and 
psychological services; these services may no longer address a CORF 
patient's mental health diagnoses except insofar as they relate 
directly to other services provided by the CORF.
    We specified in the CY 2008 final rule with comment period (72 FR 
66298) that only the CPT code 96152 for health and behavior 
intervention (with the patient) could be used to bill for CORF social 
and psychological services. This code was part of a series of codes 
that was created by CPT in 2002 to address health and behavior 
assessment issues. These services are offered to patients who present 
with established illnesses or symptoms, who are not diagnosed with 
mental illness, and may benefit from evaluations that focus on the 
biopsychosocial factors related to the patient's physical health 
status, such as patient adherence to medical treatment, symptom 
management and expression, health-promoting behaviors, health-related 
risk-taking behaviors, and overall adjustment to medical illness. We 
also adopted the more limited definition of CORF social and 
psychological services in Sec.  410.100(h) (72 FR 66399). The 
regulations state that social and psychological services include the 
assessment and treatment of an individual's mental and emotional 
functioning and the response to and rate of progress as it relates to 
the individual's rehabilitation plan of treatment, including physical 
therapy services, occupational therapy services, speech-language 
pathology services, and respiratory therapy services.
    We also noted that a HCPCS G-code could more accurately describe 
these unique CORF services, but believed that it was inappropriate to 
create such a G-code in the final rule with comment period without 
first proposing to do so in proposed rulemaking.
    Therefore, we proposed to create a CORF specific G-code, GXXX5, 
Social work and psychological services, directly relating to and/or 
furthering the patient's rehabilitation goals, each 15 minutes, face-
to-face; individual (services provided by a CORF-qualified social 
worker or psychologist in a CORF), to accurately describe the unique 
social and psychological services provided by CORF staff and to 
establish appropriate payment for these services. We proposed to use 
salary and wage data from the Bureau of Labor Statistics to institute a 
blended social worker/psychologist clinical labor category using a 
price per minute rate of $0.45 for the PE component of GXXX5. We 
proposed to assign a malpractice RVU of 0.01. Because the services 
described by GXXX5 are solely furnished by a CORF social worker or 
clinical psychologist, and not by a physician, we did not propose to 
allocate a work RVU for these services.
    We also proposed to revise Sec.  410.100(h) to delete the reference 
to ``and treatment.'' As discussed above and in the CY 2008 PFS final 
rule with comment period (72 FR 66297), we believe all CORF services, 
including social and psychological services, must directly relate to or 
further the rehabilitation goals established in the physical therapy, 
occupational therapy, speech-language pathology, or respiratory therapy 
plan of treatment. Accordingly, social and psychological CORF services 
do not include clinical treatment of mental, psychoneurotic, and 
personality disorders. We stated that we are concerned that the phrase 
``and treatment'' currently included in the definition of CORF social 
and psychological services may be

[[Page 69791]]

misconstrued to include social and psychological services for the 
independent clinical treatment of mental illness. Therefore, we 
proposed to delete this language in order to clarify that only those 
social and psychological services that relate directly to a 
rehabilitation plan of treatment and the associated rehabilitation 
goals are considered CORF social and psychological services.
    In addition, we proposed to remove Sec.  410.155(b)(1)(ii) 
regarding the application of mental health limitations to CORF social 
and psychological services. As we previously stated, CORF services, 
including social and psychological services, must directly relate to or 
further the rehabilitation goals established in the physical therapy, 
occupational therapy, speech-language pathology, or respiratory therapy 
plan of treatment. In the CY 2008 PFS final rule with comment period 
(72 FR 66400), we stated that CORF services must be furnished under a 
written plan of treatment that indicates the diagnosis and 
rehabilitation goals, and prescribes the type, amount, frequency, and 
duration of the skilled rehabilitation services, including physical 
therapy, occupational therapy, speech-language pathology and 
respiratory therapy services. Section 410.155(b) specifies that the 
mental health payment limitation applies when there is a diagnosis of 
mental, psychoneurotic, and personality disorders (mental disorders 
identified by a diagnosis code within the range of 290 through 319) 
prior to beginning services. Under our revised definition, CORF social 
and psychological services must directly relate to the physical therapy 
or other rehabilitation plan of treatment and its associated goals. 
Since these patients are receiving CORF services because they have a 
need for skilled rehabilitation services, any social and psychological 
services provided in a CORF under Sec.  410.100(h) must include an 
assessment of the individual's mental and emotional functioning 
exclusively as such functioning relates to their rehabilitation plan of 
treatment. In our view, such services provided in a CORF would not be 
``treatment of mental, psychoneurotic, and personality disorders of an 
individual'' as set out in section 1833(c) of the Act, so that the 
statutory mental health payment limitations would not apply. We 
proposed changes to Sec.  410.155(b) to reflect our view regarding the 
limited nature of these services.
    The following is a summary of the comments received concerning our 
proposal to create a HCPCS G-code to describe the unique CORF social 
and psychological services and our responses.
    Comment: One commenter stated that the G-code is more specific to 
rehabilitation services and its implementation will support future 
adoption as a CPT code. Another commenter stated that occupational 
therapy services are a core CORF service. The commenter requested that 
CMS clarify that the new G-code would not have a negative impact on the 
provision of occupational therapy services to meet patient needs that 
are similar to those addressed by the G-code. The commenter stated that 
occupational therapy, as with all therapy services, includes assessment 
of the patient level of functioning as an integral part of the therapy 
services. Other commenters suggested that therapists and psychologists 
assess and treat mental, cognitive, and emotional functioning as they 
relate to a patient's rehabilitation plan of care. The commenters 
further suggested that CMS revisit its decision not to allow CORF 
therapists and psychologist to bill the Health and Behavioral 
Assessment/Intervention codes (CPT codes 96150 through 96155), which 
are used to identify and treat ``biopsycholosocial factors important to 
physical health problems.'' One commenter also requested that the new 
G-code include physician work in the RVUs since all other codes billed 
by psychologist include physician work. Another commenter stated that 
the statute clearly defines social and psychological services so there 
is no need for the development of a G-code.
    Response: Section 1861(cc)(2)(B) of the Act defines the term CORF 
to mean a facility which provides at least physician services (as 
defined at Sec.  410.100(a)), physical therapy services and social or 
psychological services. As such, occupational therapy services are not 
considered one of the core CORF services but are optional. The CORF 
must provide the core CORF services. In addition it may furnish any of 
the optional covered and medically necessary services and items such as 
occupational therapy, speech-language pathology, or respiratory therapy 
services. These optional services must directly relate to, and be 
consistent with, the rehabilitation plan of treatment, and must be 
necessary to achieve the rehabilitation goals. Occupational therapy 
services include assessment of an individual's level of independent 
functioning, selection and teaching of task-oriented therapeutic 
activities to restore sensory-integrative functions, teaching of 
compensatory techniques to permit an individual with a physical or 
cognitive impairment or limitation to engage in daily activities. The 
patient's plan of treatment will document all the covered and medically 
necessary items and services that the patient requires which will 
include the core CORF services as well as any of the optional services 
such as occupational therapy.
    In the CY 2007 PFS final rule with comment period, we revised Sec.  
410.100(h) states that CORF social and psychological services include 
the assessment and treatment of a CORF patient's mental health and 
emotional functioning and the patient's response to/and rate of 
improvement and progress towards the rehabilitation plan of treatment. 
In our view, social and psychological services must contribute to the 
improvement of the individual's rehabilitation condition and may not 
relate to a mental health diagnoses. In the CY 2008 PFS final rule (72 
FR 66298), we discussed the use of CPT codes 96150 through 96155 for 
health and behavior assessment and treatment, which represent full-
scale clinical treatment of mental, psychoneurotic, personality 
disorders and biopsychosocial functioning. We revised the previous 
definition of CORF social and psychological services and instructed 
that these services should be limited to those described by CPT code 
96152. We stated that provision of other therapeutic services was 
outside of the scope of coverage for CORFs. Since these CPT codes were 
not a part of the proposed regulation, we will not revisit the use of 
these CPT codes in this final regulation.
    We are finalizing our proposal to create the CORF specific G-code 
which will be G0409. The description of this G-code will be G0409, 
Social work and psychological services. This code will directly relate 
to and/or further the patient's rehabilitation goals, each 15 minutes, 
face-to face; individual (services provided by a CORF-qualified social 
worker or psychologist in a CORF), to accurately describe the unique 
social and psychological services provided by CORF staff and to 
establish appropriate payment for these services. The code does not 
include any physician work RVUs because the social and psychological 
services are performed by a CORF social worker with a Bachelor of 
Science degree or a Masters-level psychologist and not by a physician 
as defined in the statute at section 1861(r) of the Act.
    We did not receive any comments on our proposal to eliminate the 
mental health limitation requirement. The mental health limitation is 
no longer

[[Page 69792]]

applicable because under our revised definition, CORF social and 
psychological services must directly relate to the physical therapy or 
other rehabilitation plan of treatment and its associated goals and do 
not relate to a general diagnosis of mental, psychoneurotic, and 
personality disorders which the mental health limitation addresses. 
Therefore, we are finalizing our proposed change to remove Sec.  
410.155(b)(1)(ii) regarding the application of mental health 
limitations to CORD social and psychological services.
3. CORF Conditions of Participation
    In the CY 2008 final rule with comment period (72 FR 66400), we 
finalized changes to the CORF coverage and payment rules. However, all 
conforming regulations in the CORF Conditions of Participation (CoPs) 
were not updated at that time.
    In the CY 2009 PFS proposed rule, we proposed to revise Sec.  
485.58(e)(2). Section 485.58(e) currently provides that as a CoP, a 
CORF facility must provide all CORF services on its premises with the 
exception of--(1) physical therapy, occupational therapy, and speech-
language pathology services furnished away from the premises of the 
CORF, if Medicare payment is not otherwise made for these services; and 
(2) a single home visit for the purpose of evaluating the potential 
impact of the patient's home environment on the rehabilitation goals. 
We proposed to clarify that the alternate premises for provision of 
physical therapy, occupational therapy, and speech-language pathology 
services may be the patient's home.
    The following is a summary of the comments received concerning CORF 
CoPs and our responses.
    Comment: Commenters concurred with the proposed clarification 
regarding the patient's home as an alternate premise for provision of 
physical therapy, occupational therapy, and speech-language pathology 
services.
    Response: We thank the commenters for their support of this 
provision. As a result of the public comments, we are finalizing the 
revisions to Sec.  485.58(e)(2) as proposed.
4. Extension Location
    We proposed to add a definition for an ``extension location'' of a 
rehabilitation agency to the definitions at Sec.  485.703. While there 
are currently no provisions that allow rehabilitation agencies to offer 
services in an extension location, there are currently 2,875 
rehabilitation agency primary locations and 2,486 rehabilitation agency 
offsite practice locations. While our State Operations Manual 
recognizes that these rehabilitation agency extension locations exist, 
it also includes language stating that the extension locations must 
meet applicable rehabilitation agency CoPs. However, it is difficult to 
apply CoP requirements to a location that currently is not identified 
in the CoPs. Creating a definition in the CoPs that applies to the 
extension locations will allow us to survey and monitor the care 
provided in these extension locations on a consistent basis.
    Therefore, we proposed to define an ``extension location'' as: (1) 
A location or site from which a rehabilitation agency provides services 
within a portion of the total geographic area served by the primary 
site; (2) is part of the rehabilitation agency; and (3) is located 
sufficiently close to share administration, supervision, and services 
in a manner that renders it unnecessary for the extension location to 
independently meet the conditions of participation as a rehabilitation 
agency.
    The following is a summary of the comments received concerning an 
extension location and our responses.
    Comment: Some commenters supported our proposed revisions and 
suggested that we add additional clarifying information. One commenter 
suggested that we clarify the status of space that a rehabilitation 
agency may use within another facility (for example, a room used by the 
agency within a nursing facility). Another commenter suggested that we 
specify a mile radius from the rehabilitation agency's primary site 
within which an extension location may exist.
    Response: We thank the commenters for their input. Regarding a mile 
radius, mileage, and travel times from the primary location to the 
extension location are significant factors to consider because they are 
implicitly referenced in the proposed regulation. However, each alone 
would not be the single issue in determining appropriateness as a sole 
means for approving an extension location. We have decided to leave it 
to the rehabilitation agency to prove to the State survey agency that 
the rehabilitation agency is close enough to the extension location to 
provide supervision of staff during its hours of operation. Supervision 
of the extension location staff must be adequate to support the care 
needs of the patients. We believe that our proposed definition for an 
extension location is adequate, as it has been used successfully in our 
State Operations Manual for other provider types. We are not making any 
changes to our proposed revisions based on public comments, and are 
finalizing them as proposed.
5. Emergency Care
    We proposed to revise Sec.  485.711(c), Standard: Emergency care, 
to reflect current medical practice. We proposed to remove the 
requirement that the rehabilitation agency provide for one or more 
doctors of medicine or osteopathy to be available on call to furnish 
necessary medical care in case of an emergency. We do not believe that 
the patients serviced by rehabilitation agencies regularly experience 
medical emergencies that necessitate the retention of an on-call 
physician.
    Therefore, we proposed that each rehabilitation agency establish 
procedures to be followed by personnel in an emergency that cover 
immediate care of the patient, persons to be notified, and reports to 
be prepared.
    The following is a summary of the comments received concerning 
Emergency care and our responses.
    Comment: Most commenters concurred with our proposed changes to the 
emergency care standard. Specifically, the commenters supported our 
proposed elimination of the requirement that rehabilitation agencies 
retain a physician on call for emergencies. The commenters cited 
difficulty in recruiting physicians for this role, and stated that it 
is often impractical to contact a physician in the rare case of an 
emergency. One commenter also supported the revisions to the emergency 
provisions because they allow facilities to develop emergency care 
plans most appropriate for an individual facility's location and 
patient population.
    Response: We thank the commenters for their support, and agree that 
these revisions will allow facilities to plan for, and respond to, 
emergency care situations in appropriate ways. As a result of the 
public comments, we are finalizing the provision as proposed with 
slight non-policy revisions for grammatical purposes. We are also 
revising the stem statement to remove the reference to the physician's 
presence in emergency situations.
6. Technical Changes for Rehabilitation Agencies
    Under section 1861(p) of the Act, rehabilitation agencies are 
tasked with furnishing outpatient physical therapy and speech-language 
pathology services. Unlike CORFs, which provide comprehensive 
outpatient rehabilitation services, rehabilitation agencies primarily 
provide physical therapy services. Some of the other services

[[Page 69793]]

offered by CORFs, such as respiratory therapy and social services are 
outside the scope of rehabilitation agency practice.
    The current definition of ``rehabilitation agency'' at Sec.  
485.703 (paragraph (2)(ii) of the definition) requires that 
rehabilitation agencies provide social or vocational adjustment 
services. This requirement is outside of the rehabilitation agency's 
scope of practice and has caused confusion for these providers because 
we do not reimburse rehabilitation agencies for furnishing social or 
vocational services. Accordingly, in Sec.  485.703, we proposed to 
delete the requirement in paragraph (2)(ii) of the rehabilitation 
agency definition requiring a rehabilitation agency provide social or 
vocational services.
    The following is a summary of the comments received concerning the 
technical change and our responses.
    Comment: Most commenters responded in support of this proposed 
revision. Some commenters stated that this requirement, which is an 
unfunded mandate, is burdensome, and that patients often resent being 
required to release their personal information to a social worker they 
will likely never meet or work with. The commenters also agreed that 
social and vocational services are outside the scope of practice for 
rehabilitation agencies.
    Response: We thank the commenters for their support of this change. 
As a result of the public comments, we are finalizing the provision as 
proposed.
    We also proposed to make a conforming change at Sec.  485.717, the 
Condition of participation: Rehabilitation program. At 485.711(b)(3), 
we proposed to remove the reference to Sec.  410.61(e), since Sec.  
410.61(e) no longer exists in regulation.
    The following is a summary of the comments received concerning this 
technical change and our responses.
    Comment: Some commenters concurred with this conforming change 
while others objected to this conforming change because the commenters 
believe that we did not also address the statement in Sec.  
485.711(b)(3) that states that the patient plan of care must be 
reviewed by a physician, nurse practitioner, clinical nurse specialist, 
or physician assistant at least every 30 days. The commenters believe 
that this conflicts with CMS payment policy, which requires 
recertification of the plan of care at least every 90 days. We also 
received several unsolicited comments requesting that we correct this 
perceived discrepancy.
    Response: We did not propose to revise the language to conform to 
changes in the timing for recertification of outpatient therapy plans 
of care as discussed in the CY 2008 PFS final rule with comment period 
(72 FR 66396). Currently, Sec.  485.711(b)(3) requires that the plan of 
care and results of treatment be reviewed by the physician or by the 
individual who established the plan at least as often as the patient's 
condition requires, and the indicated action is taken, which for 
Medicare patients being treated in rehabilitation agencies must be at 
least every 30 days. We believe that this requirement is in the best 
interests of rehabilitation agency patients, and note that by meeting 
this condition of participation, facilities would automatically meet 
the CMS payment policy requiring review at least every 90 days.
    We are not making any changes to our proposed revisions as a result 
of public comments, and are finalizing the conforming change as 
proposed.

M. Technical Corrections for Therapy-Related Issues

    We proposed the following technical changes to the regulations 
concerning therapy services:
     In Sec.  409.17(a), we proposed to delete the reference to 
paragraph (a)(1)(ii) which no longer exists.
     In Sec.  409.23, we proposed to revise the title of this 
section from ``Physical, occupational and speech therapy'' to 
``Physical therapy, occupational therapy and speech-language pathology 
services.''
    Commenters voiced no objections to these technical corrections, and 
we are finalizing these technical corrections as proposed.
    Several commenters brought to our attention changes made to the 
text of a regulation in the CY 2008 PFS final rule with comment period 
that did not reflect our policy as expressed in the preamble 
discussion. We intended to modify our regulations to make the policies 
for therapy services consistent across all settings. We added Sec.  
485.635(e) for the purpose of conforming the policies for physical 
therapy, occupational therapy and speech-language pathology in the 
critical access hospitals (CAHs) to the policies for therapy services 
in Sec.  409.17. Section 485.635(e) describes therapy services when 
furnished at the CAH as those that ``are provided as direct services by 
staff qualified under State law, and consistent with the requirements 
for therapy services described in Sec.  409.17.'' The reference in the 
regulation to ``direct services'' was not intended to address the 
employment status of staff providing those services, but we now 
recognize that it could be interpreted as such. Therefore, we are 
making a technical correction to the regulatory language at Sec.  
485.635(e) to remove the words ``as direct services.''

N. Physician Self-Referral and Anti-Markup Issues

1. Exception for Incentive Payment and Shared Savings Programs (Sec.  
411.357(x))
a. Introduction
    In the CY 2009 PFS proposed rule (73 FR 38502), we proposed a new 
exception to the physician self-referral law for incentive payment and 
shared savings programs. The proposed exception covered various types 
of hospital-sponsored pay-for-performance (P4P), shared savings (for 
example, gainsharing), and similarly-styled programs that offer 
financial incentives to physicians intended to foster high quality, 
cost-effective care. The exception, as proposed, would provide more 
flexibility than existing physician self-referral exceptions available 
for such programs (73 FR 38548).
    When establishing a new exception to the physician self-referral 
law, we rely on the authority granted to us in section 1877(b)(4) of 
the Act, which mandates that financial relationships permitted under an 
exception, such as the types of compensation arrangements contemplated 
by the proposed exception, not pose a risk of program or patient abuse. 
As described more fully in the CY 2009 PFS proposed rule, in order to 
ensure that we did not exceed this authority, the proposed exception 
was targeted and relatively narrow. We acknowledged that it was 
unlikely to cover as many arrangements as interested stakeholders would 
like, and sought comments on ways that we might expand the proposed 
exception without a risk of program or patient abuse.
    We received approximately 55 timely public comment letters 
regarding the proposed exception for incentive payment and shared 
savings programs. The majority of commenters supported the 
establishment of the following: (1) An exception for incentive payment 
and shared savings programs; or (2) two exceptions--one for incentive 
payment programs and one for shared savings programs. However, most of 
these commenters urged us to finalize such an exception or exceptions 
only if substantial modifications were made to the conditions proposed. 
We also received a number of comment letters urging us not to finalize 
an exception for incentive payment and shared savings programs, some of 
which asserted that

[[Page 69794]]

we lack statutory authority to do so and contended that any such 
exception necessarily would pose a risk of program or patient abuse.
    As we stated in the CY 2009 PFS proposed rule (73 FR 38548):

    In reviewing various programs and industry suggestions, we have 
been struck by the considerable variety and complexity of existing 
arrangements, and the likelihood of continued future innovation in 
the structure and method of these programs. This variety and 
complexity make it difficult to craft a ``one-size-fits-all'' set of 
conditions that are sufficiently ``bright line'' to facilitate 
compliance and enforceability, yet sufficiently flexible to permit 
innovation without undue risk of program or patient abuse.

    Our goal in establishing an exception or exceptions for incentive 
payment and shared savings programs is ``to promulgate an exception 
that is as broad as possible'' yet consistent with the statutory 
requirement that any arrangement excepted under an exception issued 
using our authority in section 1877(b)(4) of the Act pose no risk of 
program or patient abuse (73 FR 38548). Although we received thoughtful 
and instructive comments, we did not receive through the initial public 
comment process sufficient information or agreement among commenters 
regarding possible modifications to the proposal to allow us to 
finalize an exception that expands the proposed exception in any 
meaningful way. Therefore, we are reopening the public comment period 
to obtain the specific information described below. We believe that, if 
ultimately provided through the extended public comment process, the 
additional information we are requesting will assist us in finalizing 
an exception or exceptions for incentive payment and shared savings 
programs. The comment period will be reopened for an additional 90 days 
following publication of this final rule with comment period in the 
Federal Register. Information regarding the submission of public 
comments can be found in the ADDRESSES section of this final rule with 
comment period. We will summarize and respond to all comments received 
in response to our proposal (or any future proposal for an exception 
(or exceptions) to the physician self-referral law for incentive 
payment and shared savings programs), including the 55 comment letters 
noted above, in a final rulemaking.
    For ease of reference, we are numbering our solicitations of 
comments in a continuous sequential order, and we encourage commenters 
to refer to these numbers in their submissions to us. Although we have 
offered many specific solicitations of comments in an effort to 
stimulate and focus discussion, we do not mean to imply that we are 
interested in receiving comments only on the specific questions noted 
below; rather, we encourage comments on any and all relevant issues to 
an exception or exceptions for incentive payment and shared savings 
programs. In addition, we request that commenters consider all of the 
issues in context and in conjunction with each other, as well as 
consider the exception holistically rather than piecemeal. Many of the 
specific solicitations below are related to each other and may be 
better addressed if grouped together.
    We urge commenters to respond with specificity and to include 
detailed, practical examples whenever possible. Commenters are 
encouraged to consider the requirement under section 1877(b)(4) of the 
Act that any new regulatory exception pose no risk of program or 
patient abuse. Although the following discussion segregates individual 
issues, commenters are encouraged to comment on and recommend 
combinations of conditions for an exception or exceptions that would 
meet the ``no risk'' standard, would be sufficiently bright line to be 
enforceable and to facilitate compliance, and would be sufficiently 
flexible to foster beneficiary arrangements. Commenters should consider 
suggesting alternative safeguards when recommending the elimination or 
modification of a proposed condition or when recommending adoption of 
an alternative to a proposed condition. As an initial matter, we are 
interested in comments that address the best ways in an exception or 
exceptions for incentive payment or shared savings programs to achieve 
transparency and accountability, ensure quality of care, and prevent 
disguised payments for referrals. We request that commenters address 
these goals in their comments.
    To better understand and address the variety of incentive payment 
and shared savings programs that exist in the industry or that parties 
would like to implement, we are interested in detailed descriptions of 
incentive payment programs and shared savings programs that include 
specific descriptions of the structure and operations of the programs 
and payments. We are also interested in views addressing the likely 
evolution of these programs.
b. Background: Incentive Payment and Shared Savings Programs
    As we discussed in both the CY 2009 PFS proposed rule, and the FY 
2009 IPPS proposed rule, the term ``gainsharing'' is commonly used to 
describe certain programs that seek to align physician behavior with 
the goals of a hospital by rewarding physicians for reaching 
predetermined performance outcomes. Several types of programs exist 
(including, but not limited to, gainsharing) for the purpose of 
achieving quality standards, generating cost savings, and reducing 
waste. We refer to these programs as ``incentive payment'' and ``shared 
savings'' programs. Within the category of ``incentive payment'' 
programs, we include P4P, also known as quality-based purchasing, and 
other quality-focused programs that do not involve the sharing of cost 
savings from the reduction of waste or changes in administrative or 
clinical practice. Within the category of ``shared savings'' programs, 
we include programs that involve the sharing of cost savings 
attributable to physicians' efforts in controlling the costs of 
providing patient care, as well as hybrid programs that involve both 
the sharing of cost savings and payment for improvement or maintenance 
of patient care quality. For a discussion of incentive payment and 
shared savings programs, DHHS initiatives with respect to such 
programs, and our proposed exception for incentive payment and shared 
savings programs, we refer the reader to our solicitation of comments 
in the FY 2009 IPPS proposed rule regarding the necessity of an 
exception to the physician self-referral law for gainsharing programs 
(73 FR 23692 through 23695) and the CY 2009 PFS proposed rule (73 FR 
38548 through 38552).
    In the CY 2009 PFS proposed rule, we described our concerns 
regarding potential program and patient abuse from the implementation 
of improperly structured incentive payment and shared savings programs. 
Specifically, we stated:

    Although properly structured incentive payment programs can 
enhance health care quality and efficiency, improperly structured 
programs pose significant risks of program or patient abuse, 
including adversely affecting patient care. Moreover, such programs 
could be vehicles to disguise payments for referrals, including 
incentives to steer healthier patients to the hospital offering the 
incentive payment program. Programs that cannot be adequately and 
accurately measured for quality would also pose a high risk of 
program or patient abuse (73 FR 38549).

    We stated further:

    Although properly structured shared savings programs may 
increase efficiency and reduce waste, thereby potentially increasing 
a hospital's profitability and contributing to

[[Page 69795]]

quality of care, improperly designed or implemented programs pose 
the same risks of program or patient abuse described above in 
connection with incentive payment programs. Additional risk is posed 
by shared savings programs that reward physicians based on overall 
cost savings (for example, the amount by which the total costs 
attributable to a particular hospital department decreased from 1 
year to the next) without accountability for specific cost reduction 
measures (73 FR 38550).

    In addition, we expressed our continued concern about stinting 
(limiting the use of quality-improving but more costly devices, tests 
or treatments), cherry-picking (treating only healthier patients as 
part of an incentive payment or shared savings program), steering 
(avoiding sicker patients at the hospital sponsoring the incentive 
payment or shared savings program), and quicker-sicker discharges 
(discharging patients earlier than clinically indicated either to home 
or to post-acute care settings).
c. Solicitation of Additional Public Comments
i. Distinguishing between ``incentive payment'' and ``shared savings 
programs''
    In the CY 2009 PFS proposed rule, we sought comments regarding 
``whether separate exceptions for incentive payment and shared savings 
programs would be preferable and, if so, how they should be structured, 
and which requirements should appear in each'' (73 FR 38552). Most 
commenters in support of establishing an exception for incentive 
payment and shared savings programs recommended that we establish two 
separate exceptions. Here, we are requesting specific comments 
regarding how [1] to define the terms ``incentive payment program'' and 
``shared savings program.'' We also request comments regarding [2] 
whether the terminology ``incentive payment'' and ``shared savings'' 
programs is appropriate or whether different terminology would better 
describe the range of nonabusive programs we intend to cover under the 
proposed exception(s). Whatever terminology we employ, we must define 
the terms with sufficient clarity to enable parties to determine which 
exception, if more than one is finalized, would be applicable to the 
specific arrangement being analyzed.
    Commenters in support of the adoption of two separate exceptions 
frequently asserted that many of the conditions in the proposed 
exception are not applicable, or need not be applicable, to incentive 
payment programs, asserting that incentive payment programs do not pose 
the same risk of program or patient abuse as traditional gainsharing 
programs or shared savings programs. We are seeking comments that [3] 
identify with specificity which conditions should be made applicable to 
incentive payment programs (and why), [4] identify which conditions 
need not or should not be made applicable to incentive payment programs 
(and why), and [5] indicate why it would not be necessary to impose the 
same safeguards against program or patient abuse on both types of 
programs. For example, we seek comments on [6] whether a program 
involving cost savings measures that also improve quality should be 
treated as an incentive payment or shared savings program.
ii. Risk of Program or Patient Abuse
    As noted above, several commenters questioned our ability to 
promulgate an exception for shared savings programs that satisfies the 
mandate under section 1877(b)(4) of the Act that any exception issued 
using that authority pose no risk of program or patient abuse. The 
commenters asserted that, because gainsharing implicates sections 
1128A(b)(1) and (b)(2) of the Act, commonly referred to as the Civil 
Monetary Penalty (CMP) statute, any exception to the physician self-
referral law for incentive payment and shared savings programs would 
necessarily pose a risk of program or patient abuse and would be 
outside the scope of our authority under section 1877(b)(4) of the Act. 
We disagree with these commenters. We believe that it is possible 
within the meaning of section 1877(b)(4) of the Act to establish a set 
of safeguards to guard against program and patient abuse. Moreover, it 
is our understanding that many incentive payment programs would not 
involve payments to physicians to reduce or limit services to hospital 
patients. However, we are interested in comments that [7] specifically 
address this issue in greater detail, including [8] how we can satisfy 
the requirements of section 1877(b)(4) of the Act if we do not include 
a condition prohibiting payment to a physician (under the incentive 
payment or shared savings program) for reducing or limiting items or 
services furnished to Medicare or Medicaid beneficiaries under the 
physician's direct care. In addition, we are interested in comments 
regarding [9] the utility of an exception that incorporates conditions 
that are the same as or similar to conditions that have appeared in 
favorable advisory opinions issued by the OIG on gainsharing 
arrangements.
iii. Design of the Program
    In the CY 2009 PFS proposed rule, we proposed protecting documented 
programs that seek to achieve the improvement of quality of hospital 
patient care services through changes in physician clinical or 
administrative practices or actual cost savings for the hospital 
resulting from the reduction of waste or changes in physician clinical 
or administrative practices (73 FR 38553). To be protected, the program 
must achieve one or both of these goals without an adverse effect on, 
or diminution in, the quality of hospital patient care services.
(1) Objective Medical Evidence and Independent Review
    Under the proposed exception, incentive payment and shared savings 
programs must be supported by objective, independent medical evidence 
indicating that the applicable cost-savings or quality performance 
measures would not adversely affect patient care. We also proposed that 
patient care quality measures must derive from CMS' Specifications 
Manual for National Hospital Quality Measures. Many commenters objected 
to this limitation; however, the comments, for the most part, did not 
contain suggestions regarding other appropriate lists of quality 
measures or whether (and in what manner or under what circumstances) we 
should permit parties to establish their own quality measures for 
inclusion in a protected incentive payment or shared savings program. 
We are seeking comments on this issue, including [10] how we might 
avoid protecting payments based on sham measures or measures that do 
not reflect objective quality outcomes or standards but instead may be 
vehicles to reward referrals.
    We proposed in the CY 2009 PFS proposed rule that an incentive 
payment or shared savings program must be reviewed prior to 
implementation of the program and at least annually thereafter to 
ascertain the program's impact on the quality of patient care services 
provided by the hospital. We proposed that this review must be 
performed by an independent medical reviewer; that is, the review must 
be conducted by a person or organization with relevant clinical 
expertise that is not affiliated with the hospital operating the 
program under review and not affiliated with any physician 
participating in the program or with any physician organization with 
which a participating physician is affiliated. We also proposed that 
the reviewer could not be participating (at the time of the review) in 
any incentive

[[Page 69796]]

payment or shared savings program operated by the hospital (73 FR 38553 
through 38554). A substantial number of commenters objected to the 
requirement of independent medical review, claiming that the expense of 
independent medical review would likely be significant, and that many 
hospitals may not be able to find an ``independent'' medical reviewer. 
Commenters also contended that the impact on patient care can best be 
ascertained through individuals associated with the hospital, because 
hospital personnel and medical staff physicians are intimately aware of 
hospital operations and patient populations.
    We seek comments on [11] whether, assuming that there is a need for 
independent medical review, the need would be greater if the exception 
were to include outcome measures that are not on the CMS-approved list. 
We also seek comments on an alternative to independent medical review 
that would provide an objective, accurate and complete review. 
Specifically, we request comments addressing [12] how, if no 
independent medical review is required, we could ensure that a hospital 
is objective in the review of its incentive payment and shared savings 
program, that programs operate appropriately to improve (or maintain) 
patient care quality, and that the incentive payment or shared savings 
program results in no diminution of patient care quality or 
inappropriate reduction in care. Finally, and irrespective of whether 
we would require independent medical review or permit ``in-house'' 
review, we seek comments on: [13] How, when and what type of (for 
example, further review, corrective action, or termination of the 
incentive payment or shared savings program) recommendations should be 
made by the reviewer when the program review identifies concerns with 
patient care quality or the diminution in patient care quality 
resulting from the implementation of the incentive payment or shared 
savings program; and [14] requirements (including timeframes) for the 
hospital to take corrective action based on the reviewer's 
recommendations.
(2) Participating Physicians and Payment Amounts
    The proposed exception included a requirement that the incentive 
payment or shared savings program be structured to require physician 
participation in the program in pools of five or more physicians, with 
payments being distributed to members of each pool on a per capita 
basis. Under the proposed exception, all physicians participating in 
the program must be on the medical staff of the sponsoring hospital at 
the commencement of the program. Most commenters objected to these 
requirements, but did not provide clear suggestions regarding how to 
address our concern regarding disguised payments that reward referrals 
or other business generated by the physician in the absence of such 
structural requirements. Therefore, we are seeking specific comments on 
alternatives to these participation and payment restrictions, as well 
as other safeguards that we could include in an exception(s) if we were 
to omit the ``five-physician pool,'' per capita payment distribution, 
and/or medical staff membership requirements. We request comments as to 
[15] whether, if pools of less than five physicians are permitted, what 
the minimum number of physicians should be; [16] whether all 
participating physicians must be in the same specialty, and, if not, 
what issues are raised by protecting arrangements between hospitals and 
multi-specialty physician groups; [17] whether participating physicians 
should be required to be on the medical staff at the hospital at the 
commencement of the program and, if not, how we should address the risk 
that programs will be used inappropriately as recruiting tools; and 
[18] whether medical staff members may be added during an ongoing 
program and, if so, how we should address the risk that payments would 
be made to recruit physicians from other area hospitals, especially 
hospitals that might not be able to afford to offer a similar program.
    We also seek comments with respect to limitations on payments under 
an incentive payment or shared savings program. Specifically, we are 
interested in comments regarding whether: [19] We should impose a cap 
on the payment made per participating physician, regardless of the 
amount of cost savings or achievement of patient care quality goals 
attributable to a particular physician; [20] whether payments should be 
limited in duration and, if so, whether 3 years or some other period 
should be the maximum time period for payments; and [21] whether 
protected payments should be reasonably related to the measure that is 
achieved and, if so, how a reasonable relationship should be 
determined, and, if not, how we could protect against excessive 
payments that might induce referrals. In this regard, we are interested 
in comments addressing [22] methods for protecting against excessive 
payments to referring physicians who participate in the program but may 
contribute little or no work or expertise to the program. We are 
further interested in comments on [23] the types of physicians who 
should be protected participants and what it should mean to be a 
``participating'' physician. Finally, we are interested in comments 
addressing [24] the concept of restricting physicians from receiving 
payments for previously achieved cost savings or for meeting quality 
improvement goals that are, or have become over time, standard practice 
(for example, we are concerned about payments that amount to little 
more than supplemental payments to physicians to do nothing more than 
what they are already doing) (73 FR 38555 through 38556).
    In the CY 2009 PFS proposed rule, as described above, we proposed 
that payments to physicians be made (whether directly to the physician 
or to his or her qualifying physician organization) on a per capita 
basis. We also solicited comments that would ``outline alternate 
approaches to the per capita payment model for the distribution of 
incentive payments or shared savings payments, such as paying a 
physician more or less according to whether he or she contributed more 
or less to the achievement of the performance measures'' included in 
the program (73 FR 38555). Although many commenters stated support for 
permitting payments to physicians that directly correlate to their 
personal efforts and achievement of performance measures in an 
incentive payment or shared savings program, few comments provided 
sufficient detail regarding how we could incorporate this expansion 
into the exception without risk of program or patient abuse. We are 
interested in comments that [25] outline with specificity how a 
hospital would track or otherwise determine the ``personal efforts'' of 
a physician and correlate the achievement of performance measures to a 
particular physician's personal efforts and, in turn, to the amount of 
the payment.
    We also proposed a condition that would prevent physicians from 
being paid in a manner that reflected increased volumes of Federal 
health care program patients or services. Commenters generally opposed 
this proposed restriction. We recognize as we stated in the CY 2009 PFS 
proposed rule that volume changes can occur due to market forces and 
physician practice growth, rather than from changes in referral 
patterns due to financial incentives available to physicians 
participating in an incentive payment or shared savings program (73 FR 
38555). Where changes in the volume of Federal

[[Page 69797]]

health care patients or services occur because of financial incentives, 
a risk of abuse exists. We are soliciting comments that [26] 
specifically address how to account for legitimate fluctuations in the 
volume of Federal health care patient procedures or services and 
consider the potential that volume increases can indicate altered 
referral patterns when a physician is participating in an incentive 
payment or shared savings program. In addition, we are seeking comments 
regarding [27] possible ways to ensure against increases in total 
Medicare expenditures for patients for whom services are provided under 
an incentive payment or shared savings program.
    We proposed to require hospitals to make payments directly to 
participating physicians or to a ``qualified physician organization,'' 
which we proposed to define as a physician organization composed 
entirely of physicians participating in the incentive payment or shared 
savings program (73 FR 38553). We sought comments regarding possible 
expansion of this condition to allow payments to a physician 
organization even if all of its affiliated physicians were not 
participating in the incentive payment or shared savings program under 
which the payment is made. We reiterate our concern that payments made 
to physician organizations with nonparticipating physicians could be 
used to reward such nonparticipating physicians for their referrals. 
Many commenters objected to the strict limitations on the parties to 
whom a hospital may make a payment under an incentive payment or shared 
savings program. Commenters generally urged greater flexibility in the 
distribution of payments. We are seeking here specific information 
regarding [28] conditions that could be imposed to ensure no risk of 
program or patient abuse including, for example, conditions on the use 
and distribution of payments made to physician organizations on behalf 
of participating physicians.
(3) Costs Savings for Shared Savings Programs
    With respect to shared savings programs, we proposed various 
methods and sought comments on other methods for limiting or capping 
the total amount of cost savings available under the program. We 
proposed a flat, 50 percent limit on the amount of cost savings 
eligible for sharing with participating physicians, and also proposed 
requiring rebasing of the baseline statistics against which reduction 
in waste and cost savings would be measured. In the alternative, we 
proposed a surrogate method of capping total available payments that 
would be actuarially equivalent to a 50 percent cap with annual 
rebasing of baseline statistics. Many commenters responded that we 
should impose no limits on how a hospital determines the amount 
available for shared savings payments, while other commenters objected 
to the 50 percent cap and/or the rebasing requirement. As we noted in 
the CY 2009 PFS proposed rule and above, our goal is to finalize an 
exception (or exceptions) that provide sufficient flexibility for 
hospitals to structure and implement a variety of nonabusive incentive 
payment and shared savings programs. We are seeking comments that 
specifically address: [29] What safeguards we could include in an 
exception if we do not include a cap on the total amount of cost 
savings available for distribution to participating physicians; [30] 
What safeguards we could include in an exception to ensure that 
physicians are not paid for achieving performance measures they 
achieved in prior periods of the program if we do not require rebasing 
of the baseline against which reductions in waste or costs are 
measures; [31] whether it is appropriate to permit payments for 
continued achievement (or maintenance) of performance measures, waste 
reduction or cost savings and, if so, what safeguards we could include 
in an exception if we were to do so (for example, reduced payments for 
maintenance of patient care quality compared with payments for the 
achievement of targets); and [32] whether the answer to [33] differs 
for incentive payment programs as opposed to shared savings programs.
    We have had limited opportunity to review incentive payment and 
shared programs for compliance with the physician self-referral law, 
and we lack familiarity with the specifics of measuring achievements 
and calculating payments under such programs. We received insufficient 
information in the public comments to set forth with enough specificity 
conditions regarding the calculation of cost savings so as to enable 
parties to evaluate compliance with the exception. We proposed to 
require that payments that result from cost savings be calculated based 
on acquisition costs for the items at issue, as well as the costs 
involved in providing the specified services, and that they be 
calculated on the basis of all patients, regardless of insurance 
coverage (73 FR 38556). Many commenters stated that the term 
``acquisition costs'' was unclear or that it is difficult to determine 
the actual costs involved in providing specified services, and 
suggested that we provide additional guidance regarding these concepts 
if we were to finalize this condition on payments. We are seeking 
additional and specific comments regarding [34] the calculation of the 
amount of total cost savings available for distribution under a shared 
savings program, including a discussion of formulae used by parties to 
existing arrangements.
(4) Protecting Quality of Care
    We proposed that, under an exception for incentive payment and 
shared savings programs, no payments could be made if the program 
resulted in a diminution of patient care quality. Additional issues 
were raised in the public comments, and we seek further comments on the 
following: [35] Whether and, if so, how we should address the situation 
in which the implementation of an incentive payment or shared savings 
program results in a diminution in patient care quality measures not 
included in the incentive payment or shared savings program; [36] 
whether we should permit payments based on the global improvement in 
patient care quality instead of individually identified and tracked 
patient care quality measures; [37] if a program is structured to 
result in payments when global quality improves, whether and, if so, 
how should we permit payments to be made if only some of the quality 
measures are met; [38] whether payments should be permitted for the 
maintenance of patient care quality (as opposed to the improvement of 
patient care quality) [39] whether payments should be permitted for the 
achievement of intermediate targets for patient care quality and how 
intermediate targets should be defined and measured; [40] what types of 
medical evidence should support quality measures, and how we can ensure 
that quality measures are supported by credible medical evidence; and 
[41] whether measures must have some relation to the patient 
populations and practices at the hospital and, if so, what the relation 
should be, and, if not, how we could protect against programs that are 
structured to reward physicians for reaching subjective or limited 
goals that do not substantially benefit the hospital's patients.
    We seek additional information on how parties measure patient care 
quality and determine appropriate payment amounts for the achievement 
of targets for patient care quality measures. For example, we request 
comments on: [42] How quality improvement should be

[[Page 69798]]

measured, including how a baseline (that is, starting point) should be 
set from which to measure the improvement, how recent the baseline 
should be, and whether the targets should reflect regional data, 
national data, or some other data; [43] whether we should recognize a 
difference between ``quality improvement'' and ``quality maintenance'' 
and, if so, how we should define those terms in relation to each other, 
whether an exception should protect payments for both, and whether they 
should be valued differently (based on the supposition that improving 
quality may require more effort than maintaining it); and [44] how we 
can prevent protecting payments for programs that are not meeting their 
quality goals or for measures that, when achieved, result in a 
diminution of patient care quality.
iv. Structure of the Arrangement Between the Hospital Sponsoring the 
Program and the Physicians Participating in the Program
(1) Documentation
    In the CY 2009 PFS proposed rule, we included in the proposed 
exception for incentive payment and shared savings programs a 
requirement that the sponsoring hospital maintain certain documentation 
regarding the program that must be made available to the Secretary upon 
request. Many commenters supported this requirement, while others 
stated that it presented an undue administrative burden. We are seeking 
comments regarding [45] possible ways to reduce the administrative 
burden and cost for hospitals that would not hinder the government's 
ability to enforce the physician self-referral law and ensure 
compliance with a final exception (or exceptions). We are also seeking 
additional comments regarding [46] the inclusion of an audit 
requirement with respect to the calculations of cost savings and 
payment amounts under the incentive payment or shared savings program. 
Many commenters supported such a requirement, and stated that we should 
permit the audit to be performed ``in-house.'' We are seeking comments 
here regarding [47] whether such an audit could satisfy our concerns 
regarding the objectivity and accuracy of the audit. Specifically, we 
seek comments on [48] whether parties should be required to monitor and 
track each cost savings or quality measure and, if so, how we should 
address the need for transparency and accountability.
(2) Sharing of Global Savings
    Of particular concern from a fraud and abuse perspective is the 
sharing of total (or global) savings for a particular department or 
service line. Many commenters urged us to permit hospitals to share 
with physicians a percentage or share of the total savings in a 
particular department or service line, calculated from one period to 
another. The calculation and sharing of such global savings would not 
involve individually-tracked and measured performance measures, a 
cornerstone of the programs that have received favorable advisory 
opinions from the OIG to date. We seek comments regarding [49] 
necessary safeguards to ensure that a final exception for shared 
savings programs, when considered in its totality, would not present a 
risk of program or patient abuse if we permitted the sharing of 
departmental or service line global cost savings. In addition, we are 
interested in [50] the impact that sharing such savings with physicians 
would have on other potential requirements of a final exception, such 
as the requirement that the calculation of cost savings and physician 
payments be audited.
(3) Miscellaneous
    We request comments on [51] whether the exception should protect 
contracts/arrangements between hospitals and physician groups or only 
contracts/arrangements between hospitals and individual referring 
physicians (and, if the exception should allow contracts/arrangements 
between hospitals and physician groups, how we could protect against 
payments to physicians who do not actively participate in the program 
and who might be rewarded merely for making referrals). Also, we seek 
comments on [52] whether, if a physician group participates, the 
physician group may be paid if some of its physicians fail to make 
quality improvements; and [53] whether all physicians in the physician 
group should be required to participate in the same measures.
v. Availability of Other Physician Self-Referral Exceptions
    We note that there are many exceptions for compensation 
arrangements in Sec.  411.355 and Sec.  411.357 of our regulations, 
including exceptions for bona fide employment relationships (Sec.  
411.357(c)), personal service arrangements (Sec.  411.357(d)), 
arrangements involving fair market value compensation (Sec.  
411.357(l)), arrangements involving indirect compensation (Sec.  
411.357(p)), and services provided by an academic medical center (Sec.  
411.355(e)). We believe that properly structured arrangements involving 
physician participation in an incentive payment or shared savings 
program may meet the requirements of one or more of the existing 
physician self-referral exceptions for compensation arrangements. (An 
arrangement that implicates the physician self-referral statute need 
not satisfy more than one exception.) We request comments on [54] the 
extent to which a ``stand-alone'' exception(s) for incentive payment 
and shared savings programs is necessary given the existence of other 
compensation exceptions, including the ones mentioned above. We request 
comments on [55] whether it would preferable for us to modify aspects 
of the existing exceptions to protect a broader range of beneficial, 
nonabusive incentive payment and shared savings programs.
d. Conclusion
    It is evident from the variety of comments that we received and the 
detailed descriptions from some commenters of existing or ``ideal'' 
incentive payment or shared savings programs that such programs can be 
structured in a multitude of ways. Experience with one program model 
does not ensure an understanding of the impact of another program 
model. The structures of programs with similar positive outcomes do not 
necessarily resemble each other.
    We intend to continue working toward finalizing an exception (or 
exceptions) for incentive payment and shared savings programs. We do 
not believe, as several commenters suggested, that we must or should 
delay the issuance of a final exception until the completion of the 
gainsharing demonstrations authorized by section 1866C of the Act and 
section 5007 of the DRA. (See 73 FR 38550 for a description of these 
initiatives.) However, without the additional information discussed in 
this preamble, our efforts to finalize an exception(s) will be 
hindered. By soliciting additional public comments on the proposed 
exception for incentive payment and shared savings programs, we hope to 
acquire information that will better inform the development of an 
exception that is sufficiently flexible to encourage the development 
and implementation of beneficial, nonabusive incentive payment and 
shared savings programs that foster high quality, cost-effective care 
for our beneficiaries.

[[Page 69799]]

2. Changes to Reassignment Rules Related to Diagnostic Tests (Anti-
Markup Provisions)
    Section 1842(n)(1) of the Act requires us to impose a payment 
limitation on certain diagnostic tests where the physician performing 
or supervising the test does not share a practice with the physician or 
other supplier that bills for the test. We implemented section 
1842(n)(1) of the Act by applying an ``anti-markup'' payment limitation 
to technical components (TCs) of diagnostic tests purchased from an 
outside supplier, which has long appeared in our regulations in Sec.  
414.50 and which is applicable to diagnostic tests covered under 
section 1861(s)(3) of the Act and paid for under 42 CFR part 414 (other 
than clinical diagnostic laboratory tests paid under section 
1833(a)(2)(D) of the Act, which are subject to the special billing 
rules set forth in section 1833(h)(5)(A) of the Act). In the CY 2008 
PFS final rule with comment period (72 FR 66222), relying on section 
1842(n)(1) of the Act, our general rulemaking authority under sections 
1102(a) and 1871(a) of the Act, and authority under section 1842(b)(6) 
of the Act, we amended the anti-markup provision in Sec.  414.50. 
Specifically, we revised the anti-markup provision to apply to the TC 
of diagnostic tests that are ordered by the billing physician or other 
supplier (or ordered by a party related by common ownership or control 
to such physician or other supplier) when the TC is outright purchased 
or when the TC is not performed in the ``office of the billing 
physician or other supplier.'' We revised Sec.  414.50(a)(2)(iii) to 
define the ``office of the billing physician or other supplier'' as 
medical office space where the physician or other supplier regularly 
furnishes patient care. For a billing physician or other supplier that 
is a physician organization, as defined at Sec.  411.351, the ``office 
of the billing physician or other supplier'' is space in which the 
physician organization provides substantially the full range of patient 
care services that the physician organization provides generally. We 
also imposed an anti-markup payment limitation on the professional 
component (PC) of diagnostic tests that are ordered by the billing 
physician or other supplier (or ordered by a party related by common 
ownership or control to such physician or other supplier group) if the 
PC is outright purchased or if the PC is not performed in the office of 
the billing physician or other supplier. Under the CY 2008 PFS final 
rule with comment period, if a physician or other supplier bills for 
the TC or PC of a diagnostic test that was ordered by the physician or 
other supplier (or ordered by a party related to such physician or 
other supplier through common ownership or control) and the diagnostic 
test is either purchased from an outside supplier or performed at a 
site other than the office of the billing physician or other supplier, 
the payment to the billing physician or other supplier (less the 
applicable deductibles and coinsurance paid by the beneficiary or on 
behalf of the beneficiary) for the TC or PC of the diagnostic test may 
not exceed the lowest of the following amounts:
     The performing supplier's net charge to the billing 
physician or other supplier;
     The billing physician or other supplier's actual charge; 
or
     The fee schedule amount for the test that would be allowed 
if the performing supplier billed directly.
    In the CY 2009 PFS proposed rule (73 FR 38502), we proposed 
revisions to the anti-markup provisions in Sec.  414.50, and solicited 
comments on how best to implement these approaches. We proposed that 
the anti-markup provisions would apply in all cases where the TC or the 
PC of a diagnostic testing service is either: (i) Purchased from an 
outside supplier; or (ii) performed or supervised by a physician who 
does not share a practice with the billing physician or other supplier. 
We proposed two alternative approaches to determining whether the 
performing or supervising physician ``shares a practice'' with the 
billing physician or other supplier. We also solicited comments 
regarding other possible approaches to address our concerns regarding 
overutilization that can occur when a physician or physician 
organization is able to profit from diagnostic testing services not 
actually performed by or supervised by a physician who ``shares a 
practice'' with the billing physician or other supplier.
    In what we designate here as ``Alternative 1,'' we proposed that a 
physician who is employed by or contracts with a single physician or 
physician organization ``shares a practice'' with that physician or 
physician organization. We stated that, when a physician provides his 
or her efforts for a single physician organization (whether those 
efforts are full-time or part-time), he or she has a sufficient nexus 
with that practice to justify not applying the anti-markup provision as 
contemplated under section 1842(n)(1) of the Act. In light of this 
proposal, we also requested comments on how to consider locum tenens 
and other arrangements under which a physician provides occasional 
services outside of his or her physician organization, as we recognized 
that circumstances may exist under which it is beneficial or necessary 
for a physician to provide diagnostic testing services to more than one 
physician practice.
    We proposed a second alternative proposal, which we designate here 
as ``Alternative 2,'' which would maintain much of the current 
regulation text, and its ``site-of-service'' approach to determining 
whether a physician ``shares a practice'' with the billing physician or 
other supplier, that was finalized in the CY 2008 PFS final rule with 
comment period. In other words, we reproposed to apply the anti-markup 
payment limitation to non-purchased TCs and PCs that are performed 
outside the office of the billing physician or other supplier. We also 
solicited comments on whether this is the best anti-markup approach or 
whether we should employ a different approach.
    Specifically, in Alternative 2, we proposed to amend Sec.  414.50 
to: (1) Clarify that the ``office of the billing physician or other 
supplier'' includes space in which diagnostic testing is performed that 
is located in the same building in which the billing physician or other 
supplier regularly furnishes patient care (and to make two other 
revisions to the definition); (2) clarify that, with respect to TCs, 
the anti-markup provision applies if the TC is either conducted or 
supervised outside the office of the billing physician or other 
supplier; (3) clarify when we consider the TC of a diagnostic test to 
be purchased from an outside supplier; (4) clarify that, for purposes 
of applying the payment limitation in Sec.  414.50(a)(1)(i) only, with 
respect to the TC, the ``performing supplier'' is the physician who 
supervised the TC and, with respect to the PC, the ``performing 
supplier'' is the physician who performed the PC; and (5) include an 
exception for diagnostic tests ordered by a physician in a physician 
organization (as defined at Sec.  411.351) that does not have any 
owners who have the right to receive profit distributions. Finally, we 
solicited comments on how to define ``net charge'' and on whether we 
should delay beyond January 1, 2009, the application of the revisions 
made by the CY 2008 PFS final rule with comment period, or the proposed 
revisions (to the extent they are finalized), or both.
    We received numerous comments in response to the proposals related 
to the anti-markup provisions. Some commenters requested that we 
withdraw both the CY 2008 PFS rulemaking and the current proposals. 
Other commenters offered varied

[[Page 69800]]

support or criticism for one or both of the proposed alternatives. Some 
commenters expressed concerns about eliminating legitimate, nonabusive 
arrangements that serve Medicare beneficiaries. Quality concerns were 
raised by commenters both in favor of and opposed to the proposals.
    Commenters in support of Alternative 1 believe that it would be 
more straightforward and easier to implement than Alternative 2. Some 
commenters responded to Alternative 1 by requesting that a physician be 
able to ``share a practice'' with up to 3 physicians or physician 
organizations in order to accommodate arrangements that currently exist 
among many part-time physicians and the groups for whom they work. 
These commenters also stated that they would no longer be able to 
support an in-office laboratory employing part-time physicians if the 
Alternative 1 approach was implemented as proposed.
    Some commenters offered support for Alternative 2 and its ``site-
of-service'' approach, which they argued would curb abusive 
overutilization while granting physicians more flexibility in how to 
structure arrangements to provide care as they see fit. Commenters 
opposed to Alternative 2 were concerned that this approach focuses only 
on where the test is performed and not by whom. Some commenters did not 
support our proposal to clarify ``office of the billing physician or 
other supplier'' as including diagnostic testing performed in the 
``same building,'' but not in a ``centralized building,'' preferring 
that ``office of the billing physician or other supplier'' also 
encompass diagnostic testing performed in a ``centralized building.''
    Most commenters agreed with our proposed clarification that the TC 
of a diagnostic test is not ``purchased from an outside supplier'' if 
the TC is both conducted by the technician and supervised by the 
physician within the office of the billing physician or other supplier. 
We received a few comments, some in favor of and some opposed to, the 
proposed exception for diagnostic tests ordered by physicians in a 
physician organization with no owners who have the right to receive 
profit distributions. Most of the comments that we received in response 
to the ``net charge'' solicitation expressed dissatisfaction regarding 
the disallowance of overhead costs in the calculation of the ``net 
charge.'' Other commenters, however, agreed that these costs should not 
be included and that only those charges that are incurred from paying 
the physician providing the PC or supervising the TC should be 
included.
    We received a number of comments addressing issues outside the 
scope of this rulemaking, in particular, the in-office ancillary 
services exception to the physician self-referral law, which is 
codified in Sec.  411.355(b) of our regulations. Commenters believed 
that we must curtail the types of arrangements currently permitted 
under the in-office ancillary services exception in order to curb 
overutilization through the ordering of unnecessary diagnostic tests.
    After careful consideration of the comments that we received, we 
are adopting a flexible approach that incorporates both proposed 
alternatives. We are finalizing Alternative 1 with some modifications, 
and retaining with some modifications the present ``site-of-service'' 
approach (Alternative 2) to allow physicians to consider both 
approaches in determining if the anti-markup provisions apply to 
particular diagnostic testing services. Arrangements should be analyzed 
first under Alternative 1. Thus, where the performing physician (that 
is, the physician who supervises the TC or performs the PC, or both) 
performs substantially all (at least 75 percent) of his or her 
professional services for the billing physician or other supplier, none 
of the services furnished by the physician on behalf of the billing 
physician or other supplier will be subject to the anti-markup payment 
limitation in Sec.  414.50. If the performing physician does not meet 
the ``substantially all'' services requirement of Alternative 1, an 
analysis under the Alternative 2 requirements may be applied on a test-
by-test basis to determine whether the anti-markup payment limitation 
applies. Under the Alternative 2 ``site-of-service'' approach, only TCs 
conducted and supervised in and PCs performed in the office of the 
billing physician or other supplier by an employee or independent 
contractor physician will avoid application of the anti-markup payment 
limitation. Both the ``substantially all professional services'' and 
``site-of-service'' tests are measures of whether a performing/
supervising physician ``shares a practice'' with the billing physician 
or other supplier. With respect to Alternative 2, we believe that 
restrictions regarding the location of the conducting and supervising 
of the TC are essential to ensure that, if the test is to be billed as 
performed by the billing physician or other supplier, the billing 
physician or other supplier exercise sufficient control and a proper 
nexus to the individuals conducting and supervising the test. Requiring 
that the TC be conducted and supervised in the office of the billing 
physician or other supplier, under Alternative 2, creates this control 
and nexus. We believe that allowing billing physicians and other 
suppliers that cannot satisfy Alternative 1 to comply with the 
requirements of Alternative 2 on a case-by-case basis affords 
physicians flexibility while addressing our concerns regarding the 
ordering of unnecessary diagnostic tests.
    As we noted above, we have made one modification to Alternative 1 
in response to comments we received. Rather than requiring that a 
physician work exclusively for one physician practice, in order to 
``share a practice'' with a particular physician or physician 
organization, a physician must provide ``substantially all'' of his or 
her professional services for that practice. For purposes of 
Alternative 1, we are defining ``substantially all'' as ``at least 75 
percent.'' In this regard we note that ``substantially all,'' as used 
in certain of our physician self-referral rules, is defined as ``at 
least 75 percent'' (see Sec.  411.352(d) and Sec.  411.356(c)(1)). 
Although the anti-markup provisions in Sec.  414.50 and the physician 
self-referral rules in Sec.  411.350 through Sec.  411.389 are separate 
and distinct, we believe that ``at least 75 percent'' is an appropriate 
test within the context of Alternative 1, and we also wish to avoid any 
unnecessary confusion that could result from having one numerical test 
for the anti-markup provisions and another numerical test for the 
physician self-referral rules. Thus, for purposes of determining 
whether the anti-markup provisions apply, the performing physician 
(that is, the physician supervising the TC or performing the PC, or 
both) is considered to share a practice with a physician group for 
which he or she provides at least 75 percent of his or her professional 
services--even if the physician works for one or more billing physician 
groups or other health care entities. The final rule provides at 
revised Sec.  414.50(a)(2)(ii) that the ``substantially all'' 
requirement is satisfied if the billing physician or other supplier has 
a reasonable belief at the time it submits a claim that: (1) The 
performing physician has furnished substantially all of his or 
professional services through the billing physician or other supplier 
for the period of 12 months prior to and including the month in which 
the service was performed; or (2) the performing physician is expected 
to furnish substantially all of his or her professional services 
through the billing physician or other supplier during the

[[Page 69801]]

following 12 months (including the month the service is performed).
    We believe that our modification to the proposal for Alternative 1 
will satisfy the concerns regarding locum tenens arrangements (and 
part-time and other on-call or similar arrangements), provided that the 
performing physician is not furnishing more than 25 percent of his or 
her professional services as a locum tenens physician (or in some other 
capacity, such as a part-time physician for another billing group or 
moonlighting at a hospital).
    We are also retaining the present site-of-service approach to 
determining whether a physician ``shares a practice'' with the billing 
physician or other supplier. This approach was reproposed as 
Alternative 2, with a proposed clarification that diagnostic testing 
performed in the ``same building'' (as defined at Sec.  411.351) in 
which the ``office of the billing physician or other supplier'' is 
located would not be subject to the anti-markup provisions (provided 
that the testing was not purchased from an outside supplier). We are 
adopting this clarification, but deleting the references to purchased 
TCs and PCs from Sec.  414.50, for the reasons explained below. We are 
also adopting certain proposed clarifications and definitions. 
Specifically, a physician or other supplier may have more than one 
``office of the billing physician or other supplier,'' and the ``office 
of the billing physician or other supplier'' is defined as space in 
which the ordering physician or other ordering supplier regularly 
furnishes care (and with respect to physician organizations, is the 
space in which the ordering physician performs substantially the full 
range of patient care services that the ordering physician provides 
generally). We are adding to Alternative 2 the requirement, with 
respect to the TC, that the physician supervising the TC be an owner, 
employee, or independent contractor of the billing physician or other 
supplier, and, with respect to the PC, that the physician performing 
the PC be an employee or independent contractor of the billing 
physician or other supplier. We are doing this in order to simplify our 
rules and to avoid having a separate basis for imposing an anti-markup 
payment limitation for TCs supervised and PCs performed by outside 
suppliers. We explain our rationale for this change in the next 
paragraph.
    We are not finalizing a definition of outside supplier, and instead 
we are deleting references to a ``purchased'' test or interpretation in 
Sec.  414.50 because they are unnecessary, as explained below. We note 
that section 1842(n)(1) of the Act requires us to impose an anti-markup 
payment limitation on diagnostic tests that are performed or supervised 
by a physician who does not share a practice with the billing physician 
or other supplier. Traditionally, we have interpreted section 
1842(n)(1) of the Act as applying to purchased TCs from an outside 
supplier. Our longstanding policy of having an anti-markup payment 
limitation on purchased TCs was codified in Sec.  414.50, and retained 
in the CY 2008 PFS final rule with comment period. (Similarly, we 
imposed an anti-markup payment limitation on purchased PCs in the CY 
2008 PFS final rule with comment period and we proposed in the CY 2009 
PFS proposed rule to retain status as a purchased PC as a separate 
basis imposing an anti-markup payment limitation.) Based on our 
decision to adopt Alternative 1 and to allow arrangements that do not 
meet the requirements of Alternative 1 to nevertheless avoid the anti-
markup payment limitation if diagnostic testing services meet the 
requirements of Alternative 2, we believe that it is not necessary, and 
unduly complex, to use purchased tests and purchased interpretations as 
separate bases for imposing an anti-markup payment limitation. We 
provide a fuller explanation below, at section N.2.h., for deleting 
from Sec.  414.50 references to TCs and PCs purchased from an ``outside 
supplier.''
    We are not creating an exception for tests ordered by a physician 
in a physician organization with no physician owners who have the right 
to receive profit distributions. By finalizing both proposed 
alternatives, we believe that our concern that the Alternative 2 
approach could disadvantage nonproblematic arrangements involving 
nonprofit multi-specialty groups that have campus-based treatment 
facilities (and thus do not perform diagnostic testing in the same 
building as where patients are seen) largely becomes moot, as most such 
arrangements should be able to be structured to fit into Alternative 1, 
or failing that, Alternative 2.
    With respect to our specific solicitations of comments, we are not 
revising the meaning of ``net charge'' at this time. Moreover, we are 
not requiring at this time direct billing instead of permitting 
reassignment under certain circumstances; however, we may propose to do 
so in a future notice of proposed rulemaking. We considered the various 
recommendations commenters offered for the effective date for our 
revisions. We have decided to not deviate from the effective date that 
is generally applicable to this final rule with comment period and, 
thus, the revisions to Sec.  414.50 will become effective on January 1, 
2009.
    Finally, we did not propose to make changes to the in-office 
ancillary services exception and are not making any changes to that 
exception in this final rule; however, we are aware of the commenters' 
concerns and may propose rulemaking on this issue in the future.
a. General comments
    Comment: Some commenters were concerned with their perceived 
complexity of the anti-markup provisions and requested that we delay 
making any revisions to the rule. A commenter argued that extending the 
application of the anti-markup payment limitation only adds another 
layer of unnecessary complexity and confusion to an area where 
physicians want to provide high quality services in a cost efficient 
manner. Some commenters, including a large medical association, 
requested that we withdraw the proposals of this rule, as well as the 
proposals contained in the CY 2008 PFS final rule with comment period. 
In contrast, one commenter stated that the anti-markup provisions are 
consistent with the aforementioned medical association's code of 
ethics, which states that a physician should not charge a markup, 
commission, or profit on services rendered by others. A second 
commenter noted that the same medical association and many hospital 
bylaws strongly discourage fee-splitting. Other commenters urged us to 
not weaken or dilute last year's important anti-markup provision.
    Response: We believe that the anti-markup provisions in Sec.  
414.50, as revised by this final rule with comment period, are not 
inordinately complex. We agree that it would be simpler to not have any 
anti-markup provisions beyond what existed prior to the CY 2008 PFS 
final rule with comment period, but we remain convinced that additional 
rulemaking is necessary to address the potential for overutilization 
through unnecessary testing. Likewise, we agree that it would be 
simpler to adopt the approach, as suggested by one commenter, that we 
not allow any reassignment of diagnostic testing services and, instead, 
require direct billing, but, without studying that approach further, we 
have concerns that doing so may unnecessarily prevent nonabusive 
arrangements. Thus, the resulting rule presents some complexity in 
order to both allow flexibility for the industry while implementing 
statutory intent and addressing our concerns of

[[Page 69802]]

the potential for overutilization and patient abuse. To some extent, we 
have simplified the anti-markup provisions in Sec.  414.50 by deleting 
superfluous references to purchased TCs and PCs as bases for imposing 
an anti-markup payment limitation, for the reasons discussed above and 
more fully below at II.N.2.h.
    Comment: A commenter recommended that we finalize a combination of 
both Alternative 1 and Alternative 2, so that in order for the anti-
markup provision to not apply, an employee or contractor physician 
should work solely for the billing group and meet the ``site-of-
service'' requirements. Two other commenters recommended that we 
finalize both approaches and allow arrangements to avoid application of 
the anti-markup provisions if they comply with either approach.
    Response: We have adopted an ``either or'' approach to the two 
proposed alternative approaches. Diagnostic testing services furnished 
by physicians who meet the requirements of Alternative 1 (the 
``substantially all'' services approach) will not be subject to an 
anti-markup payment limitation. However, arrangements that do not meet 
the requirements of the Alternative 1 approach nevertheless will avoid 
application of the anti-markup provisions if they comply with 
Alternative 2 (the ``site-of-service'' approach), as clarified in this 
final rule. We believe that compliance with either one of the two 
approaches finalized in this rule will implement statutory intent and 
address our concerns regarding overutilization and abusive billing by 
establishing a sufficient nexus with the billing entity to justify not 
applying an anti-markup payment limitation.
    Comment: One commenter noted that the application of some of the 
proposed changes, both with respect to the anti-markup provisions in 
Sec.  414.50 and with respect to the IDTF standards in Sec.  410.33, 
may restrict the diagnostic testing services that physicians perform 
for Medicare beneficiaries and may result in more physicians electing 
to not accept new Medicare patients. A commenter stated that the 
proposed revisions to the anti-markup provisions threaten cooperative 
ventures and arrangements and, consequently, beneficiary access to 
quality Medicare services, including ultrasound and other diagnostic 
testing services. Other commenters asserted that both proposed 
approaches are misguided and do not acknowledge the way that physicians 
provide care under practical circumstances. A commenter contended that 
both proposals would hamper the ability of large groups to provide 
diagnostic services. Essentially, physician groups may have to bill 
differently for some physicians, resulting in an administrative burden 
for physician groups, and possibly curtailing the locations that a 
Medicare beneficiary can receive diagnostic tests and thus affecting 
patient care. Several commenters argued that the adoption of this rule 
will have the effect of eliminating many legitimate, nonabusive 
arrangements that serve to expand access to care to Medicare 
beneficiaries, while resulting in little or no countervailing benefit 
to the Medicare program
    Response: We do not believe that the revisions included in this 
final rule with comment period will discourage significantly or 
negatively impact significantly legitimate, nonabusive arrangements. We 
believe that the revisions strike an appropriate balance between 
allowing billing physicians and other suppliers flexibility in 
structuring their arrangements while protecting against program abuse 
caused by unnecessary diagnostic testing. As explained in section II.I. 
of this final rule, we are not finalizing our proposals at this time to 
require physician offices to comply with the IDTF standards in Sec.  
410.33.
    Comment: Some commenters stated that there is no evidence that 
bringing diagnostic services into a physician practice automatically 
leads to overutilization; rather, many practices do so in order to 
improve quality of patient care and efficiency and not for financial 
gain.
    Response: We disagree with the commenters' statement that there is 
no evidence that self-referral of diagnostic services leads to 
overutilization. We cited several studies in the CY 2008 PFS final rule 
with comment period that supported the proposition that physician self-
referral (that is, the referral of diagnostic tests provided within the 
physician practice) leads to overutilization (72 FR 66311 through 
66312). Additionally, since publication of that rule, the Government 
Accountability Office (GAO) has published a study indicating the 
overuse of some diagnostic testing when performed in a physician's 
office. The GAO report, Rapid Spending Growth and Shift to Physician 
Offices Indicate Need for CMS to Consider Additional Management 
Practices, (GAO-08-452), showed that spending for imaging services paid 
under the PFS more than doubled over a 6-year period from 2000 through 
2006. The report's findings reflect a link between spending growth and 
the provision of imaging services in physician offices. The proportion 
of Medicare spending on imaging services performed in-office rose from 
58 percent to 64 percent and physicians received an increased share of 
their total Medicare revenue from imaging services. We recognize that 
not all arrangements necessarily lead to overutilization. However, we 
are not able to regulate per individual practice and instead must issue 
rules of general applicability to implement statutory intent and 
address our concerns regarding the potential for overutilization 
through unnecessary diagnostic testing.
b. Statutory Authority
    Comment: A commenter noted that the anti-markup provisions in 
section 1842(n)(1) of the Act are limited to ``diagnostic tests 
described in section 1861(s)(3) [of the Act].'' According to the 
commenter, the physician interpretation of a diagnostic test is not a 
service described in section 1861(s)(3) of the Act, as physician 
services are described in section 1861(s)(1) of the Act. Other 
commenters stated that, in enacting section 1842(n) of the Act, the 
Congress specifically limited the applicability of the anti-markup 
provisions to diagnostic tests. Commenters expressed concern that 
applying an anti-markup payment limitation to the PC of diagnostic 
tests is inconsistent with the plain meaning of the law and 
Congressional intent.
    Response: As explained in the preamble to the CY 2008 PFS final 
rule with comment period (72 FR 66308 through 66309), despite the fact 
that we implemented section 1842(n)(1) of the Act to impose an anti-
markup payment limitation only on the TC of diagnostic tests, we are 
not prevented from applying an anti-markup payment limitation to the PC 
of a diagnostic test.
    We believe that our general rulemaking authority under sections 
1102(a) and 1871(a) of the Act provides us with authority to effectuate 
fully the Congress's intent in enacting section 1842(n)(1) the Act to 
remove the profit incentive for ordering unnecessary diagnostic tests. 
As we indicated in the preamble to the CY 2008 PFS final rule with 
comment period, the profit incentive to order unnecessary diagnostic 
tests remains if the billing physician or other supplier may markup the 
PC of the test (72 FR 66315). Moreover, and as also discussed in the 
preamble of the CY 2008 PFS final rule with comment period, section 
1842(b)(6) of the Act authorizes us, but does not command us, to allow 
reassignment of physician services, including the PC of a diagnostic 
test (72

[[Page 69803]]

FR 66309). At this time, we are not prohibiting reassignment of PCs and 
instead requiring direct billing, but we are imposing restrictions on 
the reassignment of PCs. That is, a PC that is reassigned by the 
performing physician to the billing physician or other supplier that 
ordered the PC may not be marked up by the billing physician or other 
supplier, unless the performing physician shares a practice with the 
billing physician or other supplier. If a physician or other supplier 
that orders a PC does not find that billing for the PC under an 
arrangement that is subject to the anti-markup provisions is profitable 
or financially worthwhile, that physician or other supplier is free to 
not accept reassignment and instead have the performing physician or 
other supplier bill directly for the PC.
    Comment: Several commenters questioned the appropriateness or the 
legality of imposing an anti-markup payment limitation on the TC 
supervised by, or the PC personally performed by, a physician in the 
same group practice as the ordering physician. Some commenters asserted 
that, because the anti-markup provision in section 1842(n) of the Act, 
with its relatively general language, came first, and the much more 
specific requirements of the physician self-referral law in section 
1877 of the Act came later, the Congress has defined specifically what 
it means for physicians to ``share a practice'' for Medicare purposes 
and we should not interpret these provisions differently, particularly 
without providing a clear rationale for doing so. One commenter 
contended that the ``share a practice'' concept in section 1842(n) of 
the Act simply was the Congress' short-hand version of what later 
became the lengthy definition of ``group practice'' in section 
1877(h)(4) of the Act. Other commenters asserted that, through the 
anti-markup provisions, we are overlaying a new and inconsistent set of 
requirements for providing diagnostic testing, with respect to bona 
fide group practices meeting the physician self-referral law 
requirements. According to these commenters, we are doing so by relying 
on the ``anti-mark-up'' language of section 1842(n)(1) of the Act, even 
though that language pre-dates the physician self-referral law and 
explicitly exempts testing performed by physicians who ``share a 
practice.'' One commenter stated that our proposals, if adopted, would 
impose a new and untenable burden on physician practices that have 
already taken pains to comply with the complex and onerous strictures 
imposed by the physician self-referral law. Two commenters stated that 
developing policies under one law only to make them largely irrelevant 
under another law represents arbitrary government action.
    Response: Section 1877(h) of the Act expressly states that the 
definitions it sets forth apply only for purposes of section 1877 of 
the Act. There is no indication in either the text or the legislative 
history of section 1877(h) of the Act that the Congress intended the 
definition of ``group practice'' to correlate with the term ``shares a 
practice'' in section 1842(n)(1) of the Act. Also, we note that the 
definition of group practice in section 1877(h) of the Act is 
relatively narrow. That is, the definition of ``group practice'' in 
section 1877(h) of the Act refers only to ``members'' of a group 
practice, which could be construed to mean only physicians with an 
ownership or investment interest in the group. (Note also that the 
definition of ``group practice'' in section 1877(h) of the Act allows 
the Secretary to impose other standards by regulation.) Likewise, the 
text of the in-office ancillary services exception in section 1877(b) 
of the Act, which allows referrals within a group practice, can be read 
as being restricted to services referred and performed by members of 
the group (and services performed by employees who are supervised by a 
member of the group). Therefore, even if the Congress did intend the 
definition of ``group practice'' in section 1877(h) of the Act for 
purposes of the physician self-referral law to correlate with ``shares 
a practice'' in section 1842(n)(1) of the Act for purposes of the 
statutory anti-markup provision, and also intended that individuals 
whose referrals are protected under the statutory in-office ancillary 
services exception to the physician self-referral law necessarily 
``share[] a practice'' for purposes of the statutory anti-markup 
provision (and we agree with neither proposition), we would not be 
required to take an expansive view of what it means to ``share[] a 
practice'' for purposes of the statutory anti-markup provision. We also 
note that section 1842(n)(1) of the Act does not prohibit us from using 
other authority to impose an anti-markup payment limitation on TCs and 
PCs.
    As a policy matter, we do not agree with the commenters that 
suggested that we should except from the anti-markup provisions any 
arrangement that complies with the physician self-referral rules. The 
anti-markup provisions, when applied, limit only how much a physician 
or other supplier may bill Medicare, whereas the physician self-
referral rules, when implicated and not satisfied, prevent a physician 
or other supplier (or provider) from billing Medicare (for any amount). 
Accordingly, we approach physician self-referral rulemaking with added 
caution, lest we prohibit a broad class of arrangements that in some 
cases and under certain circumstances do not pose a risk of abuse. 
Thus, using our general rulemaking authority and authority in section 
1877(b)(2) of the Act, we have provided some flexibility, with respect 
to which referrals are protected under the in-office ancillary services 
exception and the definition of a ``centralized building,'' for 
purposes of our physician self-referral rules. However, the fact that 
the physician self-referral law, as interpreted or implemented by us, 
does not prohibit a certain type of arrangement does not mean that we 
should not take measures, through an anti-markup approach, to address 
the potential for overutilization or other abuse that exists with 
certain arrangements that seek to take advantage of our definitions of 
``group practice'' and ``centralized building'' that are used for 
purposes of the physician self-referral exception for in-office 
ancillary services.
c. Alternative 1 (``Substantially All'' Professional Services)
    Comment: Under Alternative 1 as proposed, which we referred to in 
the proposed rule as the ``shares a practice'' approach (although the 
second alternative was also designed to ensure, through a site-of-
service methodology, that performing physicians ``share a practice'' 
with the billing physician or other group), the anti-markup payment 
limitation would not apply if a service is provided or supervised by a 
physician who ``shares a practice'' with the billing physician or other 
supplier by virtue of working exclusively with that physician or other 
supplier. Several commenters noted that this alternative mirrors the 
statutory language, but contended that the definition of ``shares a 
practice'' suggested by the preamble of the proposed rule (that is, if 
a physician contracts with more than one group, he or she does not 
``share a practice'' with any group) is inconsistent with a common 
sense interpretation of that term. A commenter stressed that even a 
physician who spends 1 percent of his or her time interpreting 
echocardiograms for an area hospital but spends the remainder of his or 
her time working for his or her group practice would not be considered 
to ``share a practice'' with the group under the

[[Page 69804]]

proposed approach. Some commenters suggested that physicians should be 
able to have two or three relationships with physician organizations 
and still be deemed to share a practice with each one and not be 
subject to the anti-markup provisions. Some commenters requested that 
the anti-markup provisions not apply when a physician works for a 
physician group and also works for another type of health care provider 
or supplier, such as a hospital, independent lab, or medical school. 
Another commenter proposed that a physician who spends more than 40 
percent of his ``total time spent on patient care services'' (as 
defined at Sec.  411.352(d)) as a physician in any group practice 
should be considered to ``share a practice'' with that group practice 
for purposes of the anti-markup provisions. According to the commenter, 
this requirement would ensure that a physician has a meaningful level 
of actual economic and professional integration with a group practice 
for which the physician provides DHS from which the group can profit, 
but it would not penalize a physician for providing professional and 
supervisory services to others. The commenter suggested that we should 
permit a physician to share a practice with no more than two groups and 
require extensive integration with each group.
    A commenter stated that, if a physician is a full-time or part-time 
employee of a physician group, that employment relationship in and of 
itself should establish a sufficient nexus with that group to justify 
not applying the anti-markup payment limitation to his or her 
professional services for the physician group. This commenter also 
noted that, under the proposed IDTF revisions in the CY 2009 PFS 
proposed rule (73 FR 38533 through 38535), a physician may serve as an 
IDTF medical director for no more than three IDTFs, and suggested that 
a similar standard could be used for the application of the anti-markup 
provisions by not allowing physicians to contract to provide services 
for more than three physician organizations.
    One commenter stated its belief that compliance with the proposed 
requirements of the Alternative 1 approach may be possible by some 
medical practices, such as those with the capital and testing volumes 
sufficient to warrant engaging or contracting for exclusive physician 
services needed to perform or supervise diagnostic testing. However, 
the commenter also asserted that the proposal may be burdensome to many 
physician offices. Another commenter asserted that some practices do 
not have sufficient patient volume to support a full-time pathologist 
or radiologist. A commenter representing an oncology practice noted 
that the practice currently can bill a global fee for the TC and PC, 
but the Alternative 1 proposal would apply the anti-markup payment 
limitation to the PC. The commenter stated that use of a part-time 
radiologist does not encourage overutilization, and, therefore, the 
anti-markup payment limitation should not apply.
    Response: We are modifying the proposed Alternative 1 approach so 
that a performing physician (that is, a physician who supervises the TC 
or performs the PC, or both) will be considered to share a practice 
with a physician, physician organization, or other supplier if the 
physician furnishes ``substantially all'' (at least 75 percent) of his 
or her professional services through that physician, physician 
organization, or other supplier. This means that a physician may 
furnish up to 25 percent of his or her professional services through 
any number of physicians (including himself or herself), physician 
organizations or other suppliers, through acting as a locum tenens 
physician, or in other circumstances without disqualifying himself or 
herself from sharing a practice with the physician or physician 
organization for which he or she provides the bulk (that is, at least 
75 percent) of his or her professional services. For example, suppose 
Physician A furnishes at least 75 percent of her services through 
Physician Organization B, and furnishes 25 percent of her professional 
services through Physician C and Laboratory Supplier D. Under this 
example, Physician A would be considered to be sharing a practice with 
Physician Organization B.
    Revised Sec.  414.50(a)(2)(ii) provides that the ``substantially 
all'' requirement is satisfied if the billing physician or other 
supplier has a reasonable belief, when submitting a claim, that: (1) 
The performing physician has furnished substantially all of his or her 
professional services through the billing physician or other supplier 
for the period of 12 months prior to and including the month in which 
the service was performed; or (2) the performing physician will furnish 
substantially all of his or professional services through the billing 
physician or other supplier during the following 12 months (including 
the month the service is performed).
    Comment: In response to our request for comments on how to address 
locum tenens relationships under Alternative 1, several commenters 
recommended that the locum tenens relationships should not count in 
calculating whether a physician shares a practice with another 
physician or other supplier. Another commenter suggested that abuse of 
locum tenens arrangements could be avoided through requirements for 
these arrangements in the Medicare Claims Processing Manual, 100-04, 
Chapter 1, Sec.  30.2.11. One commenter stated that, provided that 
locum tenens physicians satisfy Medicare's requirements governing the 
use of and billing for such physicians, the anti-markup payment 
limitation should not apply to tests performed or supervised by such 
physicians.
    One commenter enumerated additional circumstances in which group 
practice physicians provide services to or through entities other than 
their primary group affiliation. These circumstances included: (1) 
Covering for another practice while it recruits to replace a retired or 
deceased physician; (2) providing specialty services at hospitals or 
primary care clinics in areas (often rural, but not always) that would 
otherwise not have those specialties available and convenient to 
patients; and (3) providing specialty services to a different practice 
that has only a part-time need for the service.
    Another commenter noted the potential for situations where a non-
radiology practice contracts with a radiologist as a locum tenens 
physician to circumvent the anti-markup provision. The commenter 
recommended that we exclude only same-specialty locum tenens 
arrangements from the anti-markup provision.
    Response: In the CY 2009 PFS proposed rule, we requested comments 
on how, under Alternative 1, we could permit a physician to provide 
occasional services outside of his or her physician organization 
without the secondary arrangement precluding the physician from sharing 
a practice with the physician organization for purposes of applying the 
anti-markup provisions. To accommodate such temporary physician 
arrangements, we have modified Alternative 1 so that a physician will 
be considered to share a practice with a physician, physician 
organization, or other supplier if the physician furnishes at least 75 
percent of his or her professional services through that physician, 
physician organization, or other supplier. Thus, the final rule allows 
a physician to furnish up to 25 percent of his or her professional 
services through other arrangements (including for the purpose of 
acting as a locum tenens physician)

[[Page 69805]]

without disqualifying himself or herself from sharing a practice with 
his or her primary physician practice. We believe that our modification 
provides assurance that the performing physician has a sufficient nexus 
with the billing physician or other supplier so as to share a practice 
with such physician or other supplier. We are not persuaded that we 
should disqualify the performing physician from sharing a practice with 
the billing physician or other supplier if his or her locum tenens or 
part-time arrangements do not involve performing work for a billing 
physician or other supplier engaged in the same specialty as the 
performing physician.
    Immediately above, we address the issue of whether a physician may 
share a practice with a billing physician or other supplier despite 
furnishing some services through other arrangements, including acting 
as a locum tenens physician. In this paragraph, we address the ``flip 
side'' of this issue, that is, whether a billing physician or other 
supplier can avoid application of the anti-markup payment limitation 
where a locum tenens physician is substituting for a physician who does 
in fact perform ``substantially all'' of his or her professional 
services through the billing physician or other supplier. We wish to 
clarify that, with respect to locum tenens situations only, whether an 
arrangement satisfies Alternative 1 depends on whether the permanent 
physician (that is, the physician for whom the locum tenens physician 
is substituting) performs ``substantially all'' of his or her 
professional services through the billing physician or other supplier. 
For example, assume Physician A contracts with Group Practice C to 
render services in place of Physician B, who is on vacation. Physician 
B performs 100 percent of her professional services through Group 
Practice C. This arrangement meets the requirements of Alternative 1, 
because Physician B performs at least 75 percent of her professional 
services through Group Practice C. It is irrelevant whether, or the 
extent to which, Physician A furnishes professional services for Group 
Practice C outside the locum tenens arrangements, for purposes of 
determining whether the anti-markup payment limitation applies to the 
services provided by Physician A under the locum tenens arrangement.
    Comment: Many commenters were opposed to the proposed Alternative 1 
approach to determining whether a physician shares a practice with the 
billing physician or other supplier. Some commenters stated that they 
employ a pathologist in-house in order to improve quality of care by: 
(1) Using specialized pathologists for digestive diseases; (2) forming 
normative standards based on the practices of the physicians in the 
practice; and (3) decreasing the turnaround time for diagnostic tests. 
Other commenters, who are physicians, stated that they were unhappy 
with the professional services provided by commercial laboratory 
companies due to slow turnaround time on pathology reports or 
difficulty in asking follow-up questions of pathologists at remote 
laboratories. According to these commenters, by employing a 
pathologist, a group practice is able to ensure that the pathologist is 
a specialist in a particular practice area (for example, 
gastroenterology), something the commenters asserted they were unable 
to do with commercial laboratories.
    A commenter expressed concern regarding Alternative 1 because, in 
the commenter's view, it would unfairly limit a specialty practice 
(such as gastroenterology or urology) from billing and collecting the 
full global reimbursement from the Medicare program for services 
rendered by an in-office pathologist unless that pathologist works only 
for that physician group. The commenter stated that it should not 
matter if the pathologist works for more than one group practice. This 
commenter expressed concern that eliminating the in-office laboratory 
model would be a detriment to Medicare beneficiaries. Another commenter 
objected to our assertion that anatomic pathology services provided in 
a physician's office can result in overutilization. The commenter 
expressed its view that gastroenterologists do not overutilize anatomic 
pathology, even when profiting from it, because a colon biopsy is much 
more invasive than clinical laboratory tests such as fingerstick for 
hematocrit or a dipstick urine.
    Response: Billing physicians and other suppliers will continue to 
be able to employ a physician specialist on a part-time basis. Under 
Alternative 1, if the specialist furnishes ``substantially all'' (at 
least 75 percent) of his or her professional services through the 
billing physician or other supplier, the specialist ``shares a 
practice'' with the billing physician or other supplier. Because this 
rule finalizes both proposed approaches, if an arrangement does not 
satisfy the ``substantially all'' test of Alternative 1, the billing of 
a TC or PC may still avoid application of the anti-markup payment 
limitation if it meets, as determined on a case-by-case basis, the 
``site-of-service'' requirements of Alternative 2. Alternatively, part-
time physicians can bill Medicare directly.
    Comment: Some commenters contended that adoption of Alternative 1 
would interfere unfairly with the practice of medicine by severely 
limiting physician practices' right to organize themselves as they see 
fit to deliver quality care to their patients. These commenters stated 
that adoption of Alternative 1 would prevent a group from hiring a 
part-time pathologist, as is common for gastroenterology practices that 
provide pathology services to their patients. According to the 
commenters, the elimination of full reimbursement (that is, the PFS 
amount) for pathology services provided by part-time pathologists would 
interfere with the multidisciplinary approach that the commenters have 
chosen to best serve patients. One commenter asserted that, despite the 
fact that the pathologist simply may bill the Medicare program 
directly, Alternative 1 interferes with the practice of medicine. The 
commenter asserted that our proposal is equivalent to saying that a 
physician group cannot hire a part-time pathologist as part of its 
practice. The commenter contended that finding a pathologist who would 
travel to its offices was not easy, and that informing a pathologist 
that he or she can bill Medicare directly from the group's office 
provides no incentive to the pathologist. This commenter predicted that 
the approach outlined in Alternative 1 would force pathology to revert 
to the traditional model of referring physicians sending specimens to a 
laboratory and receiving pathology reports, rather than communicating 
with the pathologist directly. One commenter stated its belief that, if 
we permit a pathologist to bill for professional services directly, 
there is no reason for the pathologist to travel to different 
physician's offices if he or she can collect the same amount for 
professional fees while working in his or her own office. This 
commenter also suggested that our proposal would discriminate against 
small groups that cannot afford to employ a full-time pathologist. The 
commenter asserted that full-time pathologists based in small 
communities do not have the resources to bill and collect on their own 
and working for one group on a part-time basis is not sufficient.
    One commenter stated that it would support Alternative 1 if it was 
extended to allow a physician to be employed by or under contract with 
up to three physicians or physician organizations. Commenters 
recommended that the ``one practice'' requirement be eliminated so as 
not to harm small and

[[Page 69806]]

mid-sized practices that cannot afford to employ a full-time 
pathologist. Two commenters stated that a physician should be allowed 
to maintain ``two or three'' independent contractor or employee 
relationships with physician organizations and be viewed as sharing a 
practice with each. In the commenters' view, this less restrictive 
approach would account for different practice situations while still 
providing considerable protection against Medicare program abuse. 
Another commenter requested that, in drafting any final rule, we permit 
physicians to provide services in rural health or medically underserved 
areas without the secondary arrangement precluding the physician from 
sharing a practice with his or her physician organization.
    Response: We have modified Alternative 1 so that a physician group 
will be allowed to hire a part-time physician who will ``share a 
practice'' with that group, provided that the part-time physician 
furnishes ``substantially all'' (at least 75 percent) of his or her 
professional services through the group. Again, in order to avoid 
application of the anti-markup payment limitation under this final 
rule, billing physicians and other suppliers have the option of 
satisfying either the requirements of Alternative 1 (the 
``substantially all'' professional services approach), or the 
requirements of Alternative 2 (the ``site-of-service'' approach).
    Comment: One commenter suggested that Alternative 1 may be simpler 
and more effective if we clarify that the anti-markup provisions apply 
only when the billing physician or physician organization generated the 
referral for the pathology services. The commenter noted that, in 
States that prohibit the corporate practice of medicine, independent 
clinical laboratories contract with pathology groups to perform 
pathology services. Because such pathologists have employment or 
contractual relationships with both a pathology group and an 
independent lab, the anti-markup provisions could be triggered under 
Alternative 1 as proposed. The commenter cited the CY 2008 PFS final 
rule with comment period, where we stated that independent laboratories 
and pathologists do not trigger the initial order for pathology 
services. Thus, the commenter suggested that we clarify that, under the 
CY 2009 PFS proposals, anti-markup provisions still would only apply if 
the physician billing for the services was also the physician or 
supplier who provided the initial order for the service. Several 
commenters were concerned that we did not mention this in our 
commentary on the proposal.
    Response: As finalized in the CY 2008 PFS final rule, and as 
retained in this final rule with comment period, the anti-markup 
provisions for the TC or PC of a diagnostic test apply only when the 
billing physician or other supplier has ordered the TC. For example, if 
a laboratory contracts with a pathologist instead of employing the 
pathologist to perform the PC of a diagnostic test (because the 
laboratory is located in a State that has a prohibition on the 
corporate practice of medicine), the anti-markup payment limitation 
would not apply to the lab if the lab chooses to bill for the 
pathologist's interpretation, if the lab (or a party related to the lab 
by common ownership or control) did not order the test. For example, 
Physician Group A orders the TC and PC of a diagnostic test. Laboratory 
B performs TC and contracts with Physician C to perform the PC, and 
Laboratory B bills for the TC and the PC. In this example, the anti-
markup provisions would not apply to the TC or the PC billed by 
Laboratory B. However, if the interpreting pathologist decides to order 
additional tests that are then performed and/or interpreted by another 
pathologist, the anti-markup payment limitation potentially would apply 
if the ordering pathologist wishes to bill for the additional 
interpretations performed by the different pathologist. Whether the 
anti-markup payment limitation in fact would apply would depend on 
whether the arrangement between the ordering/billing pathologist and 
the pathologist performing or supervising the TC/performing the PC 
satisfies the requirements of Alternative 1 (and, if not, whether it 
satisfies, on a case-by-case basis, the requirements of Alternative 2).
    Comment: Some commenters offered support for Alternative 1. The 
commenters believed that this alternative has greater potential to 
limit self-referral arrangements by requiring that a physician practice 
should not be able to mark up anatomic pathology tests unless the 
physician who performs and supervises the pathology services is 
dedicated solely to that physician practice. Another commenter strongly 
urged us to focus on this alternative to apply the anti-markup 
provision to all TCs and PCs of diagnostic tests that are ordered by 
the billing physician or other supplier unless the physician who 
performs and supervises the pathology services is dedicated solely to 
that physician practice or physician organization. According to the 
commenter, this would protect legitimate multi-specialty group 
practices that employ their pathologists on a full-time basis.
    One commenter expressed support for not allowing a pathologist to 
work for more than one group (pathology or subspecialty) in order to 
maintain the quality and integrity of anatomic pathology. Other 
remedies proposed by this commenter included disallowing any profit 
made from anatomic pathology by the physician taking the biopsy, or 
allowing ``upcharging'' only on tests that can be reported that same 
day.
    Response: We believe that it is not necessary to go so far as 
requiring a physician not to work for more than one physician 
organization, because requiring a physician to furnish ``substantially 
all'' (at least 75 percent) of his or her professional services through 
a billing physician or other supplier addresses our concerns regarding 
overutilization and abusive billing and also allows physicians the 
flexibility to work for other physician groups or health care entities 
or to work as a locum tenens physician.
    Comment: A commenter requested that, if Alternative 1 is finalized, 
we clarify that a physician employee would be considered to be sharing 
a practice with a physician or a physician group whether the physician 
is hired directly or is a leased employee, whereas other commenters 
stated that employment and contractual arrangements might not be enough 
for determining whether a physician ``shares a practice'' as this could 
be circumvented via shareholder, ownership, or joint partnership 
arrangements.
    A commenter asked that we consider including physicians who are 
employed by affiliated (common ownership) organizations. This would 
allow affiliated organizations to share physician resources and 
expertise when interpreting tests via teleradiology. The commenter also 
noted a concern that employers may not have knowledge of all 
independent physician and supplier contracts and may not have 
sufficient mechanisms to ensure sole employment. This commenter 
requested clarification on how to manage independent physician and 
supplier contracts to ensure that physicians are employed by only one 
organization.
    Response: As finalized, any physician (that is, regardless of 
employment status or whether he or she is an owner of the billing 
entity) who performs ``substantially all'' (at least 75 percent) of his 
or her professional services for a billing physician or other supplier 
will be deemed to share a practice with that billing physician or other 
supplier.

[[Page 69807]]

d. Alternative 2 (``Site-of-Service'')
    Comment: One commenter opposed our reproposal of the existing 
``site-of-service'' approach for determining whether the physician 
performing or supervising the TC or PC of a diagnostic test shares a 
practice with the billing physician or other supplier, asserting that 
it will do little to stifle the growth of self-referral in lab 
arrangements. According to the commenter, this alternative focuses only 
on where the test is performed and not by whom, and, thus, specialty 
practices could profit from their referrals simply by bringing ``pod 
labs'' in-house to the location where the group provides physician 
services. The commenter advocated for the rule to require clearly a 
greater connection and integration between the performing physician and 
the practice before the practice can profit from lab tests ordered by 
physicians in the group.
    Response: We recognize the potential for arrangements that may be 
troublesome to be restructured so that the diagnostic testing is 
performed in the same building as where the testing is ordered; 
however, we are also concerned that adopting Alternative 1 without 
leaving in place the site-of-service approach of Sec.  414.50 (which we 
reproposed as Alternative 2) may unnecessarily disrupt some 
arrangements that do not appear problematic to us. We will continue to 
monitor arrangements and may propose further changes if necessary. 
Also, we continue to examine industry use of the in-office ancillary 
services exception of the physician self-referral rules, and may 
propose changes to that exception in a future rulemaking.
    Comment: Some commenters did not believe that site-of-service 
distinctions are relevant to determining the appropriate scope of 
section 1842(n) of the Act. According to the commenters, it should not 
matter if physicians are in a bona fide group practice that has one 
building or ten, and, if ten, the particular geographic configuration 
of the ten buildings should not matter. The commenters questioned the 
legal or policy justification for applying different site-of-service 
rules for purposes of the anti-markup provision than those that are 
employed in the physician self-referral regulations. Of particular 
concern for these commenters are distinctions that treat groups 
differently from solo practitioners and that discriminate between 
different types of groups. The commenter gave the example of a solo 
practitioner with five offices with an x-ray machine in each: provided 
that he or she regularly practiced in each office, he could order 
diagnostic tests at all five locations, or from any one of them, and 
the tests would be treated as ``furnished'' inside the practice rather 
than ``purchased.'' According to the commenter, a group practice, on 
the other hand, that has primary care physicians in one building and 
specialists in another either has to have x-ray machines in both 
buildings, to be used only by the physicians in each building, or do 
diagnostic testing in only one building and treat the group practice 
members in the other building as ``purchasing'' the tests. The 
commenter also described its understanding of the proposed rule, 
stating that, when diagnostic tests are provided in a centralized 
building by a non-profit multi-specialty group, they would be 
considered ``furnished,'' but the same tests provided by a physician-
owned group that is otherwise comparable in size and scope would be 
considered ``purchased.'' The commenter questioned the relevance of 
these distinctions related to quality, convenience, efficiency, 
utilization, or potential abuse.
    Response: Because the definition of ``centralized building'' at 
Sec.  411.351 contains no requirements for minimum size, proximity to 
the billing group's office, or staffing, and because our current policy 
under the physician self-referral rules is to allow billing groups to 
have more than one centralized building, we are concerned that the 
potential exists for overutilization of diagnostic testing through 
arrangements involving a billing group and physicians who have little 
or no real connection to the billing group other than to serve as a 
point of referral to generate profits for the billing group. We believe 
that a site-of-service approach, employing the ``same building'' test, 
is a reasonable means of determining whether a physician shares a 
practice and has a sufficient nexus with the billing physician or other 
supplier.
    We reiterate that, in addition to section 1842(n) of the Act (and 
our general rulemaking authority in sections 1102(a) and section 
1871(a) of the Act to ``gapfill'' in order to effectuate fully the 
Congress's intent in section 1842(n) of the Act to impose an anti-
markup provision on certain diagnostic tests), we have authority under 
section 1842(b)(6) of the Act to prescribe limitations on the 
reassignment of tests and test interpretations. However, in this final 
rule with comment period, we have adopted an ``either/or'' approach to 
the two proposed alternatives. That is, a billing physician or other 
supplier can avoid application of the anti-markup provisions by meeting 
either the ``substantially all'' professional services approach of 
Alternative 1 or, on a case-by-case basis, the ``site-of-service'' 
approach of Alternative 2, which are set forth in revised Sec.  
414.50(a)(2)(ii) and (iii). We believe that compliance with either one 
of the two approaches finalized in this rule will further our goal of 
reducing the potential for overutilization and other program or patient 
abuse while providing sufficient flexibility for the industry.
    Comment: One commenter contended that a ``one building'' ``site-of-
service'' standard is not a realistic means of ensuring proper billing 
arrangements, as large single specialty practices often span beyond one 
building. Another commenter remarked that the site-of-service 
alternative should not be finalized because it would be problematic for 
groups where specimens are collected at multiple sites but pathology 
diagnostic testing services are done at a separate location owned or 
leased by the group (the ``hub-and-spoke'' arrangement). Some 
cardiologists also expressed concern that interpretations of EKGs and 
other diagnostic testing services may be limited by the proposed site-
of-service approach. One commenter provided the example of a group that 
has three offices but only one with a CT scanner. The commenter noted 
that under the site-of-service approach, the anti-markup provision 
would apply to tests ordered and supervised by physicians employed by 
the group unless the physicians worked in the same office where the CT 
scanner was located.
    Response: We believe that allowing billing physicians and other 
suppliers to comply with either the ``substantially all'' professional 
services approach of Alternative 1 or the ``site-of-service'' approach 
of Alternative 2 will address our concerns while providing sufficient 
flexibility for the industry. In the situations described by the 
commenters, if the performing physician furnished substantially all of 
his or her professional services through the billing group, the anti-
markup payment limitation would not apply.
    Comment: A commenter stated that the Alternative 2 site-of-service 
approach is useful in deterring program abuse at locations other than 
the office of the billing physician, and may benefit from being merged 
with Alternative 1. However, the commenter asserted that we must 
address the issue of the level of supervision that is required for the 
TC of a pathology service. According to the commenter, it is unclear 
what level of supervision of the TC must be furnished and where it must 
be furnished, as CLIA does not govern the TC of a pathology service. 
The

[[Page 69808]]

commenter suggested that we require that the TC be supervised by a 
physician who meets, at a minimum, the general supervisor requirements 
under CLIA, including the requirements for the subspecialties of 
histopathology or dermatopathology, as necessary.
    Another commenter expressed concerns about supervision 
requirements, noting that ``the physician who supervised the TC'' is 
not defined in the proposed rule or CLIA. The commenter suggested that 
the supervising physician should meet the requirements for a laboratory 
director under CLIA or use IDTF requirements. The commenter noted that, 
in a separate proposal in the CY 2009 PFS proposed rule (73 FR 38533 
through 38535), we proposed to require physicians performing testing in 
their offices to enroll as IDTFs and meet the IDTF requirements. Among 
the applicable requirements of that proposal are that the supervising 
physicians have proficiency in the testing service being supervised and 
meet the specific requirements established by medical specialty groups 
or carriers.
    Response: With respect to our proposal to revise the anti-markup 
provisions in Sec.  414.50, we did not propose to impose special 
standards or qualifications on the physician supervising the TC, and 
decline to do so here. Section 410.32 establishes the level of 
supervision (general, direct, or personal) for diagnostic tests 
potentially subject to the anti-markup provisions (that is, services 
covered under section 1861(s)(3) of the Act and paid under part 414 of 
this chapter (other than clinical diagnostic laboratory tests paid 
under section 1833(a)(2)(D) of the Act, which are subject to the 
special billing rules set forth in section 1833(h)(5)(A) of the Act)).
    Comment: A commenter requested that if we adopt the Alternative 2 
approach, we clarify that block leases meeting the in-office ancillary 
services exception ``same building'' test would not trigger the anti-
markup provision. Another commenter stated that it favored the 
Alternative 2 ``site-of-service'' approach and that the anti-markup 
provisions should apply to any shared facility in the ``same 
building.''
    Response: We are adopting, in part, the position favored by the 
first commenter. Specifically, we are finalizing the Alternative 2 
approach, which employs the definition of ``same building'' as defined 
at Sec.  411.351 (as we proposed). However, we are not incorporating 
each element of the same building ``location'' test from the in-office 
ancillary services exception as set forth in Sec.  411.355(b)(2). A TC 
that is performed (that is, both conducted by the technician and 
supervised by the physician) in the ``office of the billing physician 
or other supplier'' will not be subject to the anti-markup payment 
limitation. Likewise, a PC that is performed in the ``office of the 
billing physician or other supplier'' will not be subject to the anti-
markup payment limitation. Diagnostic testing services are performed or 
interpreted in the ``office of the billing physician or other 
supplier'' if they are performed or interpreted in the ``same 
building'' (as defined in Sec.  411.351) as the space in which the 
ordering physician or other ordering supplier regularly furnishes 
patient care. In the CY 2008 PFS, we stated that various stakeholders 
informed us that a physician organization, such as a multi-specialty 
group, may not provide substantially its full range of services for a 
certain specialty at any one location, but rather may provide 
substantially the full range of services for a certain specialty in one 
location, substantially the full range of services for a second 
specialty in a second location, and so forth. In order to address this 
situation, we proposed to focus on the medical office space where the 
ordering physician provides substantially the full range of patient 
care services that the ordering physician provides generally.
    We are not adopting the approach suggested by the second commenter. 
The fact that diagnostic testing services are performed or interpreted 
in a space that is leased by two or more groups (but which is located 
in the same building as the space in which the billing physician or 
other supplier regularly furnishes patient care) does not cause the 
testing to be subject to the anti-markup provisions. Example: Physician 
A has an office located on the first floor of Medical Office Building. 
In his office, Physician A performs the full range of services that he 
provides generally (and thus the space meets the criteria for the 
``office of the billing physician or other supplier'' under Sec.  
414.50(a)(2)(iii). Physician A orders a diagnostic test, which is 
conducted by a technician and supervised by Physician B in a diagnostic 
testing facility located in the basement of Medical Office Building. 
Physician B also performs the PC of the test in the diagnostic testing 
facility. Physician B reassigns her right to bill for the TC and the PC 
of the test to Physician A. The diagnostic testing facility is shared, 
under block-time exclusive use leases, by Physicians A, C and D. 
Neither the TC, nor the PC, is subject to the anti-markup payment 
limitation, because the TC and the PC were performed in the ``office of 
the billing physician or other supplier.'' We are permitting shared 
space arrangements for diagnostic testing services that occur in the 
``same building'' because we believe that such arrangements can promote 
efficiency without raising the same concerns for overutilization or 
other abuse as arrangements that involve centralized buildings for 
diagnostic testing. We reiterate however, that we continue to have 
concerns with the present use of the in-office ancillary services 
exception and that we may issue a proposed rulemaking at a future date 
to address those concerns.
    Comment: One commenter supported the Alternative 2 ``site-of-
service'' approach as a reasonable approach to curbing potential 
overutilization. One commenter characterized the ``site-of-service'' 
approach as more fair than the Alternative 1 approach, even though, 
according to the commenter, Alternative 1 may control perceived 
overutilization while respecting the rights of pathologists and 
clinicians to practice medicine in the best manner possible. Another 
commenter generally was supportive of both alternatives but favored the 
Alternative 2 ``site-of-service'' approach because, in the commenter's 
view, it would better protect against physicians who wish to profit 
from their own referrals by preventing a multi-specialty physician 
organization with several practice locations from benefiting from its 
referrals to one central anatomic pathology laboratory. The commenter 
acknowledged that these ``hub-and-spoke'' arrangements may offer the 
advantage of patient convenience where diagnostic testing occurs 
following an office visit with the patient present (for example, an x-
ray), but, in the context of anatomic pathology services, these 
arrangements do not benefit the patient and may result in 
overutilization and the provision of lower quality, less specialized 
services.
    Response: We received support for both alternatives regarding when 
to apply the anti-markup provision to the TC and PC of diagnostic 
tests. After reviewing all the comments, we have decided to finalize, 
with some modification, both approaches. (As explained elsewhere in 
this preamble, we have modified the Alternative 1 approach so that the 
performing physician shares a practice with the billing physician or 
other supplier if the performing physician furnished ``substantially 
all'' (that is, at least 75 percent) of his or her professional 
services through the billing physician or other supplier, and we have 
modified

[[Page 69809]]

the Alternative 2 approach by clarifying that the performing physician 
must be an employee or independent contractor of the billing physician 
or other supplier (which has enabled us to delete the references to 
purchased tests from an outside supplier.) Thus, billing physicians and 
other suppliers may satisfy the Alternative 1 ``substantially all'' 
professional services approach or, on a case-by-case basis, the 
Alternative 2 ``site-of-service'' approach in order to avoid 
application of the anti-markup payment limitation. We believe that 
complying with either approach will address our concerns regarding 
potential overutilization and other abuse by establishing a sufficient 
nexus with the billing entity.
e. Exception for Physician Organizations That Do Not Have Any Owners 
Who Have the Right To Receive Profit Distributions
    Comment: We proposed an exception to the requirement that 
diagnostic testing be performed in the ``office of the billing 
physician or other supplier'' in order to avoid application of the 
anti-markup payment limitation. We proposed that (except for the 
purchase of a TC from an outside supplier) the anti-markup provisions 
would not apply to diagnostic tests ordered by a physician in a 
physician organization that does not have any owners who have the right 
to receive profit distributions. Some commenters supported adopting the 
proposed exception. One commenter requested clarification regarding 
whether the exception would apply only where the physician organization 
does not have any owners who have the right to receive profit 
distributions, or whether it would apply provided that the physician 
organization does not have any physician owners who have the right to 
receive profit distributions. In the commenter's view, if a physician 
organization without physician owners is a non-profit entity with a 
member that is another non-physician non-profit entity with typical 
membership rights, the proposed exception still would apply to avoid 
application of the anti-markup provisions. Another commenter stated 
that an exception for diagnostic tests ordered by a physician in a 
physician organization that does not have any physician owners with a 
right to receive profit distributions is a bright-line approach and 
consistent with program safeguards. Another commenter also asked that 
physician practices with ``titular'' owners not be subject to the final 
rule and that the definition be consistent with the definition of 
``titular'' ownership in the FY 2009 IPPS Final Rule (73 FR 48434, 
48693).
    One commenter questioned whether there is evidence suggesting tax-
paying medical groups behave, or are likely to behave, in a manner 
substantially different than tax exempt medical groups. The commenter 
also stated that it was unaware of any instances where the Medicare 
program differentiates policies based solely on institutional mode of 
ownership, incorporation, or tax status, and questioned if we have 
statutory authority to create such an exception based on type of 
ownership.
    Response: We have determined that it is not necessary to finalize 
an exception for diagnostic tests ordered by a physician in a physician 
organization that does not have any owners who have the right to 
receive profit distributions. By finalizing both proposed alternative 
approaches to avoiding application of the anti-markup payment 
limitation we believe that our concern that the Alternative 2 approach 
could hinder arrangements involving nonprofit multi-specialty groups 
that have campus-based treatment facilities (and, thus, do not perform 
diagnostic testing in the same building where patients are seen) 
largely becomes moot, as most such arrangements should be able to be 
structured (or are already structured) to meet the requirements of 
either the Alternative 1 or Alternative 2 approach finalized here. 
Similarly, there is no need to create an exception for titular owners.
f. Definition of the ``Office of the Billing Physician or Other 
Supplier''
    Comment: One commenter, generally supportive of our proposed 
clarification of the definition of ``office of the billing physician or 
other supplier'', questioned its application in Example 2 from the 
proposed rule (73 FR 38547) which would allow two separate physician 
organizations to share space used for diagnostic testing that is 
located in the same building in which the physician organizations have 
their respective offices. The commenter asserted that allowing two or 
more providers to share a laboratory undermines the anti-markup payment 
limitation, essentially enabling ``pod labs'' to regain their ability 
to facilitate markups by the referring physician or physician 
organization. The same commenter also requested clarification regarding 
Example 3 in the proposed rule (73 FR 38547), in which a ``group 
practice treats patients in Buildings A, B, and C. In each of its 
offices in Buildings A and B, the group practice provides substantially 
the full range of patient care services that it provides generally, but 
that is not true for space located in Building C. The group practice 
provides diagnostic testing services in Buildings B and C.'' We noted 
in this example that, under the proposed definition of the ``office of 
the billing physician or other supplier,'' the anti-markup payment 
limitation would not apply to diagnostic testing services provided in 
Building B, but would apply to those services provided in Building C. 
The commenter stated that it agreed with our conclusion, if the 
ordering physician or supplier's services were provided in Building B. 
According to the commenter, if the ordering physician provided his or 
her services in Building A, the anti-markup provisions should apply.
    Response: We do not agree with the commenter's assertion that our 
revisions to Sec.  414.50(a)(2)(iv) undermine the anti-markup 
provisions and enable ``pod labs'' to regain their ability to 
facilitate markups. In particular, we refer the reader to the 
definition of the ``office of the building physician or supplier'' at 
Sec.  414.50(a)(2)(iv), which includes space in which diagnostic 
testing services are performed, that is in the ``same building,'' (as 
defined at Sec.  411.351), in which the ordering physician or ordering 
supplier regularly furnishes patient care (and more specifically, for 
physician organizations, in the same building in which the ordering 
physician provides substantially the full range of patient care 
services that the ordering physician provides generally). Many of the 
potentially abusive pod lab arrangements that led to our extension of 
the anti-markup provisions to the PC of diagnostic testing services 
involved independent contractor pathologists who performed services in 
off-site pathology labs. Those arrangements did not have the type of 
nexus with the group practice required under Sec.  414.50(a)(2) (that 
is, the pod labs were not within the same building in which the 
ordering physician provided substantially the full range of patient 
care services).
    We do agree with the commenter's analysis of Example 3 given in the 
proposed rule.
    Comment: One commenter requested that, if adopted, the proposal for 
Alternative 2 should include detailed examples that provide clear 
definitions for several key terms, including ``office of the billing 
physician or other supplier,'' ``conducting and supervising the TC,'' 
and ``full range of services.'' The commenter believes that, without 
these definitions, our intent will be misconstrued and subject to 
potential abuse.

[[Page 69810]]

    Response: We do not provide a definition for ``conducting and 
supervising the TC'' in the regulation text, as we believe that the 
meaning of ``conducting'' is clear on its face; that is, the term 
``conducting the TC'' refers to the technician's (or physician's) 
performance of the test. Nor do we believe that it is necessary to 
define the term ``supervising.'' For a service to be covered by 
Medicare, the regulations at Sec.  410.32 define and specify various 
levels of supervision (that is general, direct, or personal 
supervision). The anti-markup provisions, when applied, limit the 
amount a physician or other supplier may bill Medicare. In the context 
of the applicability of the anti-markup provisions, we are requiring 
that the physician supervising the TC be present in the same building 
(as defined at Sec.  411.351); however, this has no impact on other 
Medicare billing requirements, which may require a specific level of 
supervision as described above. We decline to define the term ``full 
range of services,'' because this would vary greatly based on factors 
such as the specialty of the ordering physician, the types of services 
within the physician's specialty, and the focus of services at the 
specified practice.
    Comment: According to one commenter, the ``office of the billing 
physician or other supplier'' for multi-specialty groups should include 
medical office space in which the physician group provides 
substantially the full range of services of one or more of the 
specialties of the group. The commenter contended that this requirement 
would ensure an adequate nexus between the physician practice and the 
testing being conducted in the building. The commenter asserted that 
limiting the location to a building in which the ordering physician 
provides substantially the full range of services that the ordering 
physician typically provides imposes unnecessary restrictions that are 
overly burdensome when compared to the purpose of the proposed rule. 
Another commenter, in similar comments, urged us to consider replacing 
``ordering physician'' with the words ``ordering physician or a member 
of the ordering physician's group practice.'' According to the 
commenter, this revision would permit any physician member of a group 
practice to utilize the group's centralized designated health service 
(``DHS'') facility (and bill under the normal physician fee schedule), 
provided that the facility is located in the same building where the 
group practice provides patient care services on a full-time basis. To 
avoid the potential problem presented by a group practice with multiple 
offices, none of which provide the full range of patient care services 
provided by the group as a whole, the group proposed that we eliminate 
the requirement that the group practice provide in the same building 
``substantially the full range of patient care services that [it] 
provides generally.'' The commenter suggested replacing this 
requirement with a requirement that the group practice provide in the 
same building ``physician services unrelated to the provision of DHS on 
a full time basis.'' According to the commenter, this revision would be 
consistent with the physician self-referral law and regulations, would 
permit all physician members of a group practice to utilize the group's 
centralized DHS facility (provided that the facility is located in the 
same building where the group provides other physician services), and 
would permit the group to bill for all DHS provided in such a facility 
under the Medicare physician fee schedule.
    Response: We believe that the changes recommended by the commenters 
would not guard adequately against potential overutilization. In 
addition, we believe that sufficient flexibility is afforded multi-
specialty groups and others by allowing arrangements to satisfy the 
requirements of either the Alternative 1 or the Alternative 2 approach, 
as revised.
    Comment: One commenter expressed concern that the provision is more 
complicated than necessary and, rather than a definition of ``office of 
the billing physician or other supplier,'' a definition of an ``outside 
entity'' is needed to determine which services would be affected by the 
anti-markup provisions. The commenter suggested ``outside entity'' 
should be defined as an entity with a different identification number 
(for example, tax identification number) than the billing entity. The 
commenter asserted that our attempt to define ``office of the billing 
physician or other supplier'' results in ``nonsensical situations'' in 
which the anti-markup provisions do not apply if the diagnostic test is 
done on a different floor of the same building but do apply if it is 
done in a different building, even if the two buildings are closer 
together than the two floors.
    Several commenters argued that the ``same building'' test is 
unworkable and contrary to longstanding CMS policy concerning testing 
performed in a ``centralized building.'' According to the commenters, 
the ``same building'' proposal assumes an old-fashioned health care 
delivery system--that is, that all physician services are still 
delivered in a single practice location. According to these commenters, 
given market demands for services in multiple urban, suburban and rural 
locations, the idea that diagnostic testing services should be provided 
only in a building where ``substantially the full range'' of other 
physician services also are provided is anachronistic. The commenters 
opposed the implementation of the ``same building'' test as it relates 
to the proposed anti-mark-up provisions due to the alleged economic 
losses and decreased operating efficiencies that will result. The 
commenters contended that the fact that the diagnostic equipment is 
located in a separate building does not support an inference that the 
diagnostic services are not an integral part of the practice, as our 
proposal assumes.
    Response: Under this final rule, the anti-markup provisions will 
not apply to the TC or PC of a diagnostic test where the performing 
physician shares a practice with the billing physician or other 
supplier. With respect to a TC or PC of a diagnostic testing service, 
the performing physician is considered to share a practice with the 
billing physician or other supplier if: (1) He or she furnishes 
substantially all (at least 75 percent) of his or her professional 
services through the billing physician or other supplier; or (2) the TC 
is conducted and supervised, or the PC is performed, in the office of 
the billing physician or other supplier. We believe that, in the 
situation where an arrangement would otherwise be subject to the anti-
markup payment limitation because the performing physician does not 
furnish at least 75 percent of his or her professional services through 
the billing physician or other supplier, services that satisfy the 
site-of-service approach indicate a sufficient nexus between the 
performing physician and the billing physician or other supplier. We 
proposed clarifying that the ``office of the billing physician or other 
supplier'' protects diagnostic testing that takes place in the ``same 
building'' (as defined at Sec.  411.351) in which the ordering 
physician sees patients because, following publication of the CY 2008 
PFS final rule with comment period, stakeholders expressed concern that 
arrangements in which the diagnostic testing takes place on one floor 
of a building, but the billing physician or other supplier sees 
patients on another floor, could be subject to the anti-markup 
provisions. We agree with those stakeholders that it would be 
unnecessarily disruptive to impose the anti-markup payment limitation 
on

[[Page 69811]]

those types of arrangements, but we do not believe that it is 
appropriate to go further and define ``office of the billing physician 
or other supplier'' as including diagnostic testing space that is in a 
separate building from where the ordering physician sees patients. 
Specifically, we are unwilling to define ``office of the billing 
physician or other supplier'' as including diagnostic testing space in 
a ``centralized building'' due to the potential overbreadth of that 
definition with respect to some arrangements. We also reject a square 
footage test in lieu of using the ``same building'' definition because 
the former may be more difficult to enforce and the latter is an 
already-existing, well-defined concept.
    Comment: Several commenters responded to our solicitation for 
comments that would describe current business arrangements, such as 
those that take place on a ``campus,'' and that would suggest any 
additional or alternative criteria to permit such arrangements to avoid 
application of the anti-markup provisions. We received a few comments 
suggesting that we exempt arrangements taking place on a campus, and 
suggesting criteria for how we would define ``campus.'' For example, 
one commenter suggested that, to be considered ``on campus,'' the 
diagnostic center/building/entity must be located within the main 
building(s), or located in the physical area immediately proximate to 
the provider's main building(s). Alternatively, the commenter 
suggested, the diagnostic testing could be performed in other areas or 
buildings that are not proximate to the main building(s) but which are 
fully integrated (that is, financially integrated and administered in 
concert with overall operations standards, guidelines, rules and 
directives), with governance and operations functions determined by 
central administrative processes and structures. Another commenter 
encouraged us to consider the ``office of the billing physician or 
other supplier'' to encompass all buildings on a campus or within a 
multi-campus organization and the area of the entire legally-owned 
organization, regardless of where the service is performed. Another 
commenter noted that physician practices currently are required to list 
each practice location with the Part B carrier, and asserted that, 
because of this, there is adequate information for CMS (through the 
carrier) to monitor the campus arrangement to assure that the 
geographic layout of the physician practice is a bona fide campus.
    Response: We believe that, at this time, providing a definition of 
``campus'' that would be both workable for the industry yet address our 
concerns of potential overutilization would be difficult and may add 
unnecessary complexity to the final rule. We believe that the 
commenters' concerns will be alleviated by allowing arrangements to 
satisfy the requirements of either the Alternative 1 or the Alternative 
2 approach, as revised.
    Comment: A commenter questioned whether we intended ``ordering 
physician'' to mean an individual physician or any physician in the 
group. According to the commenter, in many specialty groups, a 
particular ordering physician will work at only one location, but the 
diagnostic services are provided at another location, where other 
physicians in the same group and in the same specialty provide 
substantial physician services. The commenter asserted that, if we mean 
that, in order to avoid application of the anti-markup payment 
limitation, a specific individual physician must provide the 
substantial physician services in that particular location where the 
diagnostic services are provided, the proposal would render 
unprofitable many existing lawful arrangements for single-specialty 
practices with multiple locations. The commenter further asserted that 
our proposal would require physicians in multi-practice locations to 
rearrange schedules so as to rotate through practice locations where 
the diagnostic testing services are provided.
    One commenter contended that the focus on where the ordering 
physician regularly furnishes care will affect all physician groups 
where all the physicians are not located in the same building and 
diagnostic testing services are only offered in a few of the group's 
locations. According to the commenter, the physician self-referral law 
requires a group practice with multiple locations to function as one 
group, and group practices have structured their arrangements to meet 
existing governmental requirements and to serve patients. The commenter 
asserted that changing these requirements may make it impossible for 
some groups to continue to provide these services to Medicare 
beneficiaries.
    Response: We believe that the commenters' concerns that physician 
practices with multiple locations will not be able to meet the ``site-
of-service'' approach are adequately addressed by allowing billing 
physicians and other suppliers to comply with either the requirements 
of Alternative 1 or Alternative 2.
    Comment: A commenter requested that the definition of ``office of 
billing physician or other supplier'' be modified to include a mobile 
van that is used in the parking lot of a building in which the 
physician group sees patients. Otherwise, the commenter argued, the use 
of mobile MRI essentially will be barred. According to the commenter, 
physician groups that use mobile MRI on an exclusive basis because of 
the nature of their practices are not committing any abuse that we 
should address in the anti-markup provisions. Another commenter noted 
that alternative 2, as proposed, would not allow groups to operate 
mobile diagnostic testing services performed in mobile vehicles, vans 
or trailers because they are specifically excluded from the definition 
of ``same building'' at Sec.  411.351.
    Response: We are not modifying the definition of the ``office of 
the billing physician or other supplier'' to include a mobile van that 
is used in the parking lot of a building in which the physician group 
sees patients. ``Same building,'' as defined at Sec.  411.351 of the 
physician self-referral regulations, specifically excludes a mobile 
vehicle, van, or trailer. Therefore, unless provided in a mobile unit 
that qualifies as a ``centralized building'' (as defined at Sec.  
411.351), diagnostic services provided in the parking lot of a building 
in which a physician group sees patients already would be subject to 
the physician self-referral restrictions and would not be protected 
under the in-office ancillary services exception. In the January 4, 
2001 Phase I final rule with comment period, we discussed our specific 
reasons for declining to include within the definition of ``same 
building'' a mobile van or other unit (66 FR 889 through 892). We are 
concerned with the potential for confusion if we were to have one 
definition of ``same building'' for physician self-referral purposes 
and another, more expansive definition for purposes of applying the 
anti-markup payment limitation. Moreover, we decline to expand the 
definition of ``same building'' for purposes of applying the anti-
markup provisions given the potential we see for overutilization 
through arrangements that take place outside the ``same building.'' 
Again, arrangements that do not satisfy the requirements of the 
Alternative 2 ``site-of-service'' approach may fit under the 
requirements of the Alternative 1 ``substantially all'' professional 
services approach.
g. Services Performed at a Site Other Than the Office of the Billing 
Physician or Other Supplier
    Comment: A commenter offered strong support for the proposed

[[Page 69812]]

clarification that ``if the TC is conducted outside the office of the 
billing physician or other supplier, the anti-markup provision applies 
irrespective of whether the supervision takes place in the office of 
the billing physician or other supplier.'' The same commenter also 
supported our proposal that the anti-markup payment limitation would 
apply if ``either the conducting of the TC or the supervising of the TC 
takes place outside the office of the billing physician or other 
supplier.'' Another commenter supported the proposed change that the 
anti-markup payment limitation would apply if the TC is either 
conducted or supervised outside the office of the billing physician or 
other supplier in order to eliminate confusion among providers when 
determining whether the TC is deemed to be provided by an outside 
supplier for purposes of the anti-markup provisions. Another commenter 
expressed concern that the TC will be considered to be performed 
outside the office of the billing supplier if the physician is not in 
the office when the test is being performed. According to the 
commenter, this runs counter to long standing Medicare regulation and 
policy regarding the supervision of diagnostic tests, as many of these 
tests do not require physician presence during the performance of the 
test. The commenter argued that changing this, requiring physicians to 
be present, would only inflate healthcare costs.
    A commenter recommended that TCs and PCs of non-purchased items 
performed outside the office of the billing physician or other supplier 
not be subject to the anti-markup provisions, noting that many 
audiologists are self-employed and perform testing services for off-
site physicians. The commenter further asserted that audiology services 
do not require physician supervision, and per CMS transmittal 84 
(issued February 29, 2008 and effective April 1, 2008), these services 
are to be billed by the provider of the service and benefits reassigned 
to the employer. The commenter contended that there has been no 
evidence of abuse with respect to billed audiology services, so no 
change is warranted.
    Response: We are adopting our proposal that, for purposes of 
satisfying the requirements of Alternative 2 with respect to the TC, 
the TC must be both conducted and supervised in the office of the 
billing physician or other supplier. Although the requirement that the 
supervising physician be present in the office of the billing physician 
or other supplier may be more restrictive than some Medicare coverage 
and payments regulations governing supervision of tests, we believe 
that our amendment to Sec.  414.50(a)(2)(iii) is necessary in order to 
minimize the potential for overutilization and program abuse. We do not 
believe that healthcare costs would be inflated if physicians were 
required to be present in the office of the billing physician or other 
supplier. If the test was not conducted within the office of the 
billing physician or other supplier, and/or the physician supervision 
did not occur within the office of the billing physician or other 
supplier, the service would still be payable by Medicare.
    We recognize that where audiologist services are performed by an 
audiologist, no physician supervision is necessary, and therefore the 
anti-markup provisions do not apply (because Sec.  414.50 applies to 
tests performed by a physician). We note further, however, that the TC 
of some audiological tests can be conducted by a technician and 
supervised by a physician, in which case, the anti-markup provisions 
potentially are applicable to the TCs and PCs of such tests. Although 
the commenter stated that there is no evidence of abuse with respect to 
billed audiology services, we are not required to demonstrate that 
fraud or abuse has occurred in order to finalize our proposals, but 
rather we attempt to guard against the potential for overutilization or 
patient abuse, and we strive to make distinctions between specific 
types of diagnostic services only when there is a persuasive reason to 
do so. We are unpersuaded to make such a distinction here. As noted 
above at section II.N.2., and as discussed more fully below at section 
II.N.2.h. in response to a comment, we are deleting references to 
purchased TCs and PCs from Sec.  414.50.
    Comment: Commenters expressed concern that the anti-markup 
provisions would apply when cardiologists perform the PC of a 
diagnostic testing service procedure in a hospital or other facility, 
as is often the case for complex or high risk procedures, because the 
test is conducted outside the office of the billing physician. 
Commenters asserted that cardiology groups that provide outreach 
services in rural areas and are the only providers of certain cardiac 
subspecialty services in such areas are concerned that their provision 
of hospital-based cardiac diagnostic tests to rural patients could 
become financially impossible under the anti-markup provisions, thereby 
reducing access to care for this already underserved population.
    Response: We do not expect the anti-markup payment limitation would 
apply in the situation described by the commenter, because, under 
Alternative 1 as finalized in this final rule with comment period, the 
performing cardiologist likely would share a practice with the 
cardiology group billing for the PC (or would be billing for the PC 
himself or herself). If the cardiologist reassigns payment to the 
hospital which then bills for the PC, the anti-markup payment 
limitation would not apply because the hospital did not order the PC.
h. Definition of Outside Supplier
    Comment: We proposed that the TC of a diagnostic test is not 
purchased from an outside supplier if the TC is both conducted and 
supervised in the office of the billing physician or other supplier and 
the supervising physician is an employee or independent contractor of 
the billing physician or other supplier. (For ease of reference, we 
refer to this below as the ``primary proposed definition''.) In the 
alternative, we proposed that: (1) If the TC is conducted by a 
technician who is not an employee of the billing supplier, the TC is 
considered to be purchased from an outside supplier, regardless of 
where the technician conducts the TC, and notwithstanding the 
employment status of the supervising physician and the fact that the 
test is supervised in the office of the billing physician or other 
supplier; and (2) where the TC is conducted by a non-employee of the 
billing physician or other supplier and outside the office of the 
billing physician or other supplier, the TC nevertheless will not be 
considered a purchased test if the supervising physician is an employee 
or independent contractor of the billing physician or other supplier 
and performs the supervision in the office of the billing physician or 
other supplier. Several commenters offered support of the primary 
proposed definition of outside supplier. One such commenter also 
requested that the final rule make clear that, for anti-markup purposes 
only, the performing supplier with respect to the TC would be the 
physician who supervised the TC, even when the technician is not an 
employee of the billing physician or other supplier.
    One commenter supported the first alternative proposed definition 
of outside supplier. This commenter suggested that the physician 
organization should be permitted to mark up the TC only if the 
technician is an employee and the supervising physician is on-site and 
is also an employee of the billing physician or physician organization. 
One commenter

[[Page 69813]]

supported adoption of the second alternative proposed definition. The 
commenter expressed its view that this definition provides sufficient 
flexibility to ensure that the anti-markup provisions will not be 
applied unless there is an inadequate relationship between the 
individual who performs or supervises the test and the billing entity.
    Response: As explained above at II.N.2., we are deleting from Sec.  
414.50 purchased tests and interpretations from an ``outside supplier'' 
as separate bases for imposing an anti-markup payment limitation. After 
reviewing the comments, we have concluded that employing the concept of 
a purchased TC or PC as a separate basis for imposing an anti-markup 
payment limitation is unnecessary, redundant, and potentially confusing 
in light of our decision to finalize Alternative 1 and to allow 
arrangements that do not meet the requirements of Alternative 1 to 
avoid application of the anti-markup provisions if they meet, on a 
case-by-case basis, the requirements of Alternative 2. If we were to 
adopt any of our proposals for the definition of ``outside supplier,'' 
it would mean we would effectively impose an anti-markup payment 
limitation on some arrangements that meet the ``substantially all'' 
services requirement of Alternative 1. We believe that a physician who 
performs ``substantially all'' of his services through a particular 
billing physician or other supplier ``shares a practice'' not only 
within the meaning of Alternative 1, but also within the meaning of 
section 1842(n)(1) of the Act. Moreover, although we considered 
adopting the second proposed alternative definition of ``outside 
supplier'' so that a TC would not be a purchased test if the 
supervising physician is an employee or independent contractor of the 
billing physician or other supplier and performs the supervision in the 
office of the billing physician or other supplier (regardless of the 
employment status of the technician or where the technician conducts 
the test), this too would be problematic in light of our decision to 
adopt Alternative 1 but also allow arrangements that do not meet the 
requirements of Alternative 1 to avoid application of the anti-markup 
provisions by meeting, on a case-by-case basis, the site-of-service 
criteria of Alternative 2. That is, with respect to arrangements that 
do not meet the requirements of Alternative 1 and thus must meet the 
site-of-service requirements of Alternative 2, adopting our second 
alternative definition of ``outside supplier'' would have been 
superfluous because, under Alternative 2, the TC must be both conducted 
and supervised within the office of the billing physician or other 
supplier. We retain the requirement, present in all of the proposed 
definitions of ``outside supplier,'' that the physician must be an 
employee or independent contractor of the billing physician or other 
supplier by incorporating the requirement into the Alternative 2 
criteria. Similarly, we believe that an anti-markup payment limitation 
on purchased PCs is unnecessary with respect to diagnostic testing 
services that meet the requirements of Alternative 2, because we are 
adding the requirement to Alternative 2 that the physician performing 
the PC is an employee or independent contractor of the billing 
physician or other supplier. Thus, as finalized, we are deleting the 
references in Sec.  414.50 to purchased tests and interpretations from 
an outside supplier. As finalized, the anti-markup payment limitation 
will apply to TCs and PCs that meet neither the requirements of 
Alternative 1 nor Alternative 2, without regard to whether the TC or PC 
was purchased from an outside supplier.
    Comment: A commenter requested that we clarify our use of the term 
``conducted or supervised'' because a physician may ``supervise'' an 
imaging procedure, for instance, even though he or she is not 
necessarily the physician who will be interpreting a test. According to 
the commenter, Medicare's determination as to the level of supervision 
required for a specific test supports this conclusion. The commenter 
stated that a CT scan, for instance, when performed without contrast 
requires only general supervision, whereas the same test performed with 
contrast requires direct supervision. The commenter asserted that this 
difference is due to the relative levels of medical risk to a patient 
during a test, not the interpretation of results. The commenter 
requested that we clarify that a ``supervising'' physician need not be 
the physician responsible for interpreting test results or images.
    Response: The commenter is correct that the supervising physician 
need not be the physician responsible for interpreting test results or 
images.
    Comment: For purposes of the anti-markup payment limitation only, 
we proposed to define the ``performing physician'' with respect to the 
TC as the physician who supervised the TC and, with respect to the PC, 
as the physician who performed the PC. One commenter supported this 
proposal, but requested several clarifications. The commenter 
understood the proposal to mean that the performing supplier of the TC 
is the physician who supervised the TC rather than the technician who 
actually conducted the test. The commenter inquired whether, if the 
anti-markup provision were applied in this instance, the group could 
recover only the fees it paid to the physician for the TC and not any 
amounts paid directly to the histotechnologist who furnished the TC. 
The commenter also requested clarification regarding application of the 
rule where a group purchases the TC directly from an outside supplier 
or histotechnologist, without any physician involvement.
    Response: The commenter is correct in that the performing supplier 
of the TC is the physician who supervised the TC. Where the anti-markup 
payment limitation applies, the billing physician or other supplier may 
bill for the lowest of the following amounts: (1) The performing 
supplier's net charge to the billing physician or other supplier; (2) 
the billing physician or other supplier's actual charge; or (3) the fee 
schedule amount for the test that would be allowed if the performing 
supplier billed directly. With respect to the commenter's question 
regarding whether a TC purchased from a supplier ``without any 
physician involvement,'' as noted in this section II.N.2.h., we have 
deleted the references to purchased tests or interpretations from an 
``outside supplier.'' The anti-markup payment limitation will apply if 
a TC is supervised by a physician who does not, within the meaning of 
Alternative 1, share a practice with the billing physician or other 
supplier and the TC does not meet the site-of-service requirements of 
Alternative 2 (that is, the TC was not conducted in the ``office of the 
billing physician or other supplier'' or was not supervised in the 
``office of the billing physician or other supplier'' by a physician 
who is an owner, employee, or contractor of the billing physician or 
other supplier). If the TC does not require physician supervision under 
our rules, the anti-markup provisions are inapplicable.
i. Specific Solicitation of Comments
(1) Net Charge
    Comment: We stated that we were interested in receiving comments 
concerning the calculation of the ``net charge'' when the anti-markup 
provisions apply (73 FR 38548). In response, many commenters expressed 
concern that we did not propose to allow practices to which the anti-
markup provisions apply to recoup at least their direct practice costs 
where the practice is limited to billing Medicare its ``net charge'' 
for the testing

[[Page 69814]]

service. One commenter asserted that if a group provides diagnostic 
tests at a site other than the ``office of the billing physician or 
other supplier,'' the calculation of a net charge is difficult and 
punitive because a group practice cannot consider all of the actual 
components of costs incurred, thereby compelling the group practice to 
lose money. Another commenter argued that it is ``grossly unfair'' to 
not allow physicians to recover any overhead costs. The commenter 
further contended that, although we may be concerned about physicians 
who may ``pad'' their charges with illegitimate amounts, this does not 
justify penalizing providers who incur appropriate and often costly 
overhead costs. According to the commenter, it would go against well-
established Medicare policy to not allow physicians to include 
legitimate costs in calculating a net charge. Another commenter stated 
that many suppliers would incur a loss, not just fail to profit, if 
these ``confusing and hyper-technical rules'' are adopted. For example, 
the commenter asserted, a billing physician would be prohibited from 
billing for the costs incurred when a technician performs the TC of a 
test because the physician group may bill only for the cost of the 
physician who supervised the test. The commenter also stated that the 
proposal effectively prohibits the payment for qualified technicians in 
the performance of the TC of diagnostic tests, or, in the alternative, 
requires that physicians who choose to provide their patients with such 
tests do so at a loss.
    One commenter explained that it is common practice for physician 
groups to provide pathologists with office space, equipment, 
administrative services, billing and collection services, and other 
services and then bill for the PC itself. The commenter urged that net 
charges should be defined to include these overhead costs rather than 
just the amount the physician group pays the pathologist to perform the 
PC. According to this commenter, it is critical that physicians be able 
to recoup actual and readily allocable costs attributable to these 
services. If they cannot, the commenter predicted, gastroenterology 
groups will be forced to stop utilizing their labs for Medicare-
reimbursed services, and patient care will suffer.
    Another commenter suggested that we allow a group practice to 
include in the calculation of ``net charge'' actual additional 
incremental costs incurred by the group which are directly allocable to 
the provision of the service, for example, rental charges for a 
facility used exclusively to provide diagnostic tests. If billing or 
administrative staff are hired by the group solely to provide billing 
services related to the provision of diagnostic tests, such costs 
should appropriately be considered in calculating net charge. The 
commenter contended that requiring that such costs be associated 
exclusively with providing the diagnostic tests for which payment is 
sought will ensure that only costs actually needed to provide the tests 
are included in the calculation of net charge. The commenter further 
asserted that this will permit groups to provide better diagnostic 
health care services for their clients without losing substantial money 
on every test performed.
    A commenter stated that, without a proposed definition for ``net 
charge,'' it did not understand how the anti-markup provisions could be 
applied fairly and consistently to testing provided by physician 
groups. The commenter stated that physician groups have standard fees 
for diagnostic test components that they charge to patients and payers 
and that, in order to determine an ``inside'' charge the group's usual 
and customary external charges would have to be recognized. According 
to the commenter, a fair net charge calculation would need to include 
the cost of equipment, supplies, technical personnel, related benefits, 
and allocated space, utilities, taxes and general overhead, which vary 
between practitioners.
    Another commenter stated that there should not be an allowance made 
to recover overhead expenses, such as billing expenses, rental charges, 
or equipment expenses, as these expenses will only help underwrite the 
cost of the laboratory and will be contrary to the goal of reducing 
overutilization. According to this commenter, the only costs that 
should be included in the calculation of ``net charge'' are those 
directly paid to the pathologist performing the PC or supervising the 
TC and should be limited to the W-2 salary income of the pathologist, 
not including any bonus.
    Response: After considering the issue further, we decline at this 
time to make any changes to what we allow to be included in the 
calculation of ``net charge.'' As we stated in the preamble to the CY 
2008 PFS final rule (72 FR 66319 through 66320), we are concerned that, 
allowing billing physicians and other suppliers to recoup costs such as 
overhead in situations in which the anti-markup provisions apply, would 
undermine a purpose of the anti-markup payment limitation because the 
incentive to overutilize (to recover capital outlays and other costs) 
would still be present. Therefore, where the billing physician or other 
supplier pays the performing supplier a fixed fee for the TC or the PC, 
the ``net charge'' is the fixed fee (exclusive of any charge that is 
intended to reflect the cost of equipment or space leased to the 
performing supplier by or through the billing physician or other 
supplier, per Sec.  414.50(a)(2)(i)). Where a fixed fee is not paid, 
the billing physician or other supplier is limited to the salary and 
benefits it paid to the performing supplier for the TC or PC. As we 
indicated in the CY 2008 PFS final rule, it is the responsibility of 
the billing entity to ascertain the amount it paid for the TC or PC. 
The billing entity should maintain contemporaneous documentation of the 
methodology and information used to calculate the net charge, and may 
do so in any reasonable manner (72 FR 66318).
(2) Direct Billing
    Comment: In the CY 2009 PFS proposed rule, we solicited comments on 
whether, in addition to or in lieu of the anti-markup provisions, we 
should prohibit reassignment in certain situations and require the 
physician supervising the TC or performing the PC to bill Medicare 
directly (73 FR 38548). One commenter opposed any requirement that a 
physician performing either the TC or the PC of diagnostic tests 
directly bill for such services. The commenter stated that the Congress 
enacted the anti-markup provisions in section 1842(n) of the Act rather 
than adopt the already established direct billing requirement for 
clinical laboratory services. The commenter argued that we should not 
second-guess the Congress' decision and choose to eliminate the system 
of assignment and reassignment that is currently in place. Another 
commenter agreed with the first commenter and stated that reassignment 
is beneficial to both physicians and patients because physicians gain 
flexibility to establish the most appropriate employment or contractual 
relationships for their lives and lifestyles and patients benefit by 
having medical services combined on one bill, which avoids confusion 
and additional paperwork. A commenter opposed to direct billing stated 
that, with respect to the situation in which multiple suppliers are 
engaged in the treatment of a patient, a prohibition on reassignment 
would force suppliers to bill Medicare directly only for the services 
provided directly by each supplier, resulting in a doubling of the 
claims that are submitted, with an increase in billing expenses. The 
commenter asserted that this prohibition would also be a concern for

[[Page 69815]]

locum tenens physicians who are, by agency definition, independent 
contractors. According to the commenter, it does not have the 
infrastructure to submit and collect payments from Medicare, and thus 
its contracts are based on the ability to reassign its Medicare claims 
to the physician or practice it is supporting.
    Some commenters were in favor of direct billing, stating that 
itemized billing encourages transparency relative to the amounts paid 
for the TC and PC of tests ordered by the billing physician or group. 
The commenters stated that an itemized bill would identify the PC and 
TC providers, the services provided, and associated charges as separate 
line items on a single Medicare claim form. The commenters further 
asserted that we would be able to reconcile TC and PC components 
without an increase in billing expenses to either the providers or 
Medicare. One commenter expressed its view that the most 
straightforward way to address potential overutilization caused by 
physicians being able to profit by billing for diagnostic services 
performed by others would be to implement a direct billing requirement. 
The commenter suggested that this would be a simple, understandable, 
bright-line rule that could be effectively implemented and monitored. 
Another commenter supported the establishment of direct billing for 
anatomic and clinical pathology services for all payers, public and 
private, so that payment should be made only to the person or entity 
that performed or supervised the service, except for referrals between 
laboratories independent of a physician's office. According to this 
commenter, this policy would be consistent with ethics principles that 
discourage fee-splitting.
    Response: We appreciate the comments on whether, in addition to or 
in lieu of the anti-markup provision, we should prohibit reassignment 
in certain situations and require the physician supervising the TC or 
performing the PC to bill Medicare directly. The issues raised and the 
suggestions made by the commenters will be taken into consideration for 
purposes of future rulemaking. As we noted above in section II.N.2.a., 
we agree that it would be simpler to adopt the approach, as suggested 
by one commenter, that we not allow any reassignment of diagnostic 
testing services and, instead, require direct billing. However, without 
studying that approach further, we have concerns that doing so may 
unnecessarily prevent nonabusive arrangements.
(3) Effective Date
    Comment: In the CY 2009 PFS proposed rule, we solicited comments on 
whether revisions made by the CY 2008 PFS final rule with comment 
period (but which were delayed until January 1, 2009 through a final 
rule published on January 3, 2008 (73 FR 404)) should go into effect on 
January 1, 2009, and whether any proposals from the CY 2009 PFS 
proposed rule that we may finalize should go into effect on that date, 
or whether some or all of the revisions should be delayed past January 
1, 2009. One commenter urged us to implement the anti-markup provisions 
without delay, as we have been studying this issue since 2004. The 
commenter asserted that sufficient time has passed for consideration of 
comments on the issue. The commenter also expressed its view that the 
anti-markup payment limitation will not affect access to critical 
patient services, only the ability of ordering providers to profit from 
their referrals.
    One commenter suggested an effective date of July 1, 2009, to 
provide sufficient time to restructure affected relationships. Another 
commenter, opposed to the anti-markup proposals, suggested that, if we 
revise the provisions currently in effect, the new provisions should 
not be effective until December 31, 2010 at the earliest. The commenter 
asserted that such a delay would ensure providers a reasonable amount 
of time to restructure their service and billing arrangements for 
consistency with the new provisions.
    Another commenter asserted that the delayed portions of last year's 
rule should not go into effect on January 1, 2009, and that neither of 
the alternative approaches discussed in this year's proposal should be 
finalized. The commenter stated that we achieved our goal of regulating 
so-called ``pod labs,'' and asserted that extending similar rules based 
on site-of-service beyond the pathology laboratory context risks 
disruption to a wide variety of diagnostic testing services that are 
genuinely ``inside'' group practices. Commenters claimed that these 
proposals have made it virtually impossible for physician practices or 
suppliers potentially subject to these rules to plan for compliance or 
alternative arrangements by January 1, 2009. One commenter requested 
that, if we do proceed with the extension of the anti-markup provision, 
the effective date of the rule be delayed until regulatory language can 
be proposed for each of the alternatives under consideration and there 
has been additional time to understand the impact of each proposal.
    A commenter recommended that we delay beyond January 1, 2009, the 
application of any further revisions until we can fully evaluate the 
effect of such revisions on physician groups and work with the medical 
community to simplify and streamline the anti-markup provisions, so 
that their application is clear to all involved. One commenter 
requested that we consider delaying the proposals until further 
evaluation is completed on the impact of recent changes affecting 
physicians such as MIPPA, DRA, ``Bottom-Up Methodology'' and the 
proposed IDFT requirements. Another commenter recommended that 
implementation should be delayed and that we should use the process set 
forth by the Congress in MIPPA to establish accreditation requirements 
for medical imaging to assess the appropriate use of imaging services 
and to examine the perceived overutilization of in-office imaging. A 
commenter recommended that we defer to the Congress regarding concerns 
of overutilization of diagnostic testing services. According to the 
commenter, the directives in MIPPA, released after the current proposed 
rule, are much clearer on this issue. The commenter noted that the 
Congress did not amend the anti-markup provision, choosing instead to 
direct the agency to develop a demonstration project to determine the 
appropriateness of advanced diagnostic imaging services furnished to 
Medicare beneficiaries and require accreditation of advanced diagnostic 
imaging suppliers by 2012.
    Response: We do not agree with the commenters that suggested a 
delayed effective date beyond January 1, 2009 for either the revisions 
made by the CY 2008 PFS final rule with comment period or the revisions 
that we are making in this CY 2009 PFS final rule with comment period. 
We have decided to make the finalized revisions effective as of January 
1, 2009. When we delayed, until January 1, 2009, the application of the 
revisions to Sec.  414.50 we made in the CY 2008 PFS final rule with 
comment period (except with respect to certain diagnostic testing 
arrangements involving anatomic pathology performed in a ``centralized 
building'' for which the revisions were applicable January 1, 2008), we 
stated that we planned to issue clarifying guidance as to what 
constitutes the ``office of the billing physician or other supplier'' 
within the following 12 months (73 FR 405). We proposed the 
clarification and other revisions in the CY 2009 PFS proposed rule in 
order to introduce the possible changes under consideration.

[[Page 69816]]

The revisions being finalized in this regulation stem from that 
proposal and we believe that sufficient time has been given for 
consideration of and response to the anti-markup revisions.
    Irrespective of whether ``pod lab'' arrangements otherwise would 
continue to exist or proliferate, we believe that the anti-markup 
provisions are needed in order to address potential program and patient 
abuse through the ordering of unnecessary diagnostic tests. Although 
several commenters made mention of MIPPA and the impact that it may 
have, we are not swayed by these arguments. MIPPA is a separate 
authority with a different focus than that of the anti-markup 
provisions. If, in the future, the anti-markup provisions are impacted 
through our implementation of MIPPA, we will address this in subsequent 
rulemaking.
j. Miscellaneous
    Comment: One commenter, a professional association of pathologists, 
suggested an exception from the anti-markup provisions for single-
specialty pathology physician groups and independent laboratories. The 
commenter suggested that such entities be defined as those in which all 
physicians within the group are pathologists and for which 75 percent 
of all CPT codes billed by the entity are pathology and laboratory CPT 
codes. According to the commenter, such an exception would ``clarify'' 
that dedicated pathology groups and independent laboratories are not 
subject to the anti-markup provisions for certain purchased diagnostic 
tests and interpretations or the ordering of special stains to perform 
better the tests ordered by outside, independent physicians. The 
commenter asserted that its proposed exception would be consistent with 
the physician self-referral's exclusion from the definition of 
``referral'' for services ordered by pathologists (and radiologists and 
radiation oncologists) pursuant to a consultation with another 
physician. According to the commenter, the exclusion from the 
definition of ``referral'' reflects the Congress's recognition that 
services ordered by such physicians pursuant to a consultation with 
another physician do not pose the same risk of abuse that physician 
self-referral generally poses. The commenter also suggested an 
alternative to its proposed exception, for independent laboratories for 
which at least 75 percent of the diagnostic tests have been ordered by 
physicians outside the laboratory. A second commenter representing 
pathologists also suggested an exception for pathology practices (which 
it would define as any entity for which at least 75 percent of all CPT 
codes billed by the entity are pathology and laboratory codes). The 
commenter also cited the exclusion from the definition of ``referral'' 
in the physician self-referral rules for services ordered by 
pathologists pursuant to a consultation, and asserted that there should 
not be a self-referral or mark-up concern when pathology groups order 
special stains or other tests. A third commenter stated that the 
``rapid rise'' in special stains in the last eight years is not a 
result of in-office pathology services or TC/PC arrangements, but 
rather is a result of the failure of national, regional, and hospital-
based pathology laboratories to follow standard protocol for tissue 
biopsies. The commenter contended that over-utilization of anatomic 
pathology testing can be managed by imposing tighter controls on such 
laboratory-based pathologists with respect to what stains they order 
and the reasons for ordering them.
    Response: We are not establishing an exception that would be 
applicable to pathology practices or independent laboratories, to the 
anti-markup provisions. We note that we did not propose such an 
exception and, thus, question whether we would have the authority to 
provide for such an exception in this final rule. Moreover, we are not 
convinced of the need for or wisdom of such an exception. We believe 
that the same potential that exists for the overutilization of 
diagnostic tests ordered by single-specialty physician groups and other 
suppliers, due to the profit motive, also exists for the ordering of 
special stains or other tests by pathology groups or independent 
laboratories.
    Comment: An association that represents physician group practices 
suggested that we establish a multi-specialty medical group ``carve 
out'' for ``merit,'' that is, an exemption from the anti-markup 
provisions based on delivery of high-quality health care services in 
the multi-specialty/organized system of care model. According to the 
commenter, the potential and risk for inappropriate actions is 
outweighed by the attributes and meritorious actions of multi-specialty 
groups. The commenter noted that, in section 131 of MIPPA, the Congress 
recognized the coordinated approach to patient care that multi-
specialty medical groups provide.
    A different commenter requested that multi-specialty group 
practices not be permitted to use the employment or independent 
contractor arrangements to bring pathology services in-house and then 
claim that a referral is exempt from the physician self-referral 
prohibition because it meets the requirements of the in-office 
ancillary services exception or some other exception. The commenter 
stated that pathology is a separate physician specialty and the 
provision of these services is not ancillary to the provision of 
urology or gastroenterology. According to the commenter, pathology 
services provided in-office do not serve the patient's convenience or 
increase access to these services as they are too time consuming and 
complex to perform, as the patient has always left the doctor's office 
by the time the pathology examination is complete and the report 
issued. The commenter argued that not allowing pathology services to be 
protected by the in-office ancillary services exception would be 
consistent with the physician self-referral law and would eliminate the 
incentive for overutilization that currently exists.
    Response: For the same reasons expressed in the response to the 
previous comment, we are not establishing an exception to the anti-
markup payment limitation, for multi-specialty groups. We also note 
that because we have adopted the first proposed alternative with 
modification, whereby the anti-markup provisions will not apply to TCs 
and PCs supervised or performed by a physician who performs 
``substantially all'' of his or her professional services for the 
billing physician or other supplier, ``hub and spoke'' arrangements of 
multi-specialty groups should not have significant difficulty avoiding 
application of the anti-markup provisions. We understand the 
commenter's concerns about the use of the in-office ancillary services 
exception and may propose rulemaking on this issue in the future.
    Comment: A commenter stated that dermatologic surgeons who order 
and read their own diagnostic tests should not be penalized for doing 
so by the addition of new and overly cumbersome regulations that the 
commenter argued are inconsistent with the existing physician self-
referral law. According to the commenter, a dermatopathologist has the 
expertise to diagnose and monitor diseases of the skin, which entails 
the examination and interpretation of specially prepared tissue 
sections, cellular scrapings, and smears of skin lesions by means of 
routine and special (electron and fluorescent) microscopes. The 
commenter was also concerned that patient access to care in rural and 
underserved areas will be affected. The commenter urged that practices 
that

[[Page 69817]]

order and interpret their own diagnostic tests in these areas should 
have the same ability to recoup the costs of equipment, space, and 
medical records management for services performed within their 
practices as those practices that utilize an outside supplier for the 
TCs or PCs of their tests.
    Response: We are unclear as to what the commenter is suggesting. We 
did not propose to, and this final rule does not, impose tighter 
billing restrictions on TCs and PCs ordered by dermatologic surgeons 
than for other specialties, and does not impose tighter billing 
restrictions for dermatologic surgeons who perform TCs and PCs than it 
does for those physician practices that purchase TCs and PCs from an 
outside supplier. We note that the commenter did not provide an 
explanation of why patient access to care in rural or underserved areas 
would be affected by our proposed revisions.
    Comment: A letter writing campaign expressed concern regarding the 
proposals to the anti-markup provisions, contending that it would limit 
the ability of allergists to provide services on a part-time basis with 
more than one group and, in particular, would limit access to allergy 
care (including allergy diagnostic tests), to Medicare beneficiaries in 
rural or underserved areas. The commenters urged that our proposals not 
be implemented.
    Response: We have adopted the first proposed alternative with 
modification, whereby the anti-markup provisions will not apply to TCs 
and PCs supervised or performed by a physician who performs 
``substantially all'' (at least 75 percent) of his or her professional 
services for the billing physician or other supplier, which provides 
some flexibility for the performing physician to work for more than one 
billing physician or other supplier. Moreover, this final rule provides 
additional flexibility by allowing arrangements that do not come within 
the protection of the ``substantially all'' test to avoid the 
application of the anti-markup payment limitation by complying on a 
case-by-case basis with the existing site-of-service approach (as 
clarified by this final rule with comment period). We believe that this 
addresses the commenters' concerns.

O1. Physician Quality Reporting Initiative (PQRI)

a. Program Background and Statutory Authority
i. Division B of the Tax Relief and Health Care Act of 2006--Medicare 
Improvements and Extension Act of 2006 (MIEA-TRHCA) and the Medicare, 
Medicaid, and SCHIP Extension Act of 2007 (MMSEA): Requirements for the 
PQRI Program Prior to Enactment of the Medicare Improvements for 
Patients and Providers Act of 2008 (MIPPA)
    Section 101(b) of the MIEA-TRHCA (Pub. L. 109-432) amended section 
1848 of the Act by adding subsection (k). Section 1848(k)(1) of the Act 
requires the Secretary to implement a system for the reporting by 
eligible professionals of data on quality measures as described in 
section 1848(k)(2) of the Act. Section 1848(k)(1) of the Act authorizes 
the Secretary to specify the form and manner for data submission by 
program instruction or otherwise which may include submission of such 
data on Part B claims. Section 1848(k)(3)(B) of the Act specifies that 
for the purpose of the quality reporting system, eligible professionals 
include physicians, other practitioners as described in section 
1842(b)(18)(C) of the Act, physical and occupational therapists, and 
qualified speech-language pathologists. Section 101(c) of the MIEA-
TRHCA, as amended by the Medicare, Medicaid, and SCHIP Extension Act of 
2007 (Pub. L. 110-173) (MMSEA), authorizes ``Transitional Bonus 
Incentive Payments for Quality Reporting'' in 2007 and 2008, for 
satisfactory reporting of quality data, as defined by section 101(c)(2) 
of the MIEA-TRHCA. We have named this quality reporting system the 
``Physician Quality Reporting Initiative (PQRI)'' for ease of 
reference.
    The MMSEA required the Secretary to establish alternative reporting 
periods and alternative criteria for satisfactorily submitting data on 
quality measures through medical registries and for reporting groups of 
measures for 2008 and 2009.
    For 2009, section 1848(k)(2)(B)(ii) of the Act, as amended by the 
MMSEA, requires the Secretary to publish a proposed set of quality 
measures that would be appropriate for eligible professionals to use to 
submit data in 2009 in the Federal Register by August 15, 2008. Such 
measures shall be measures that have been endorsed or adopted by a 
consensus organization, such as the National Quality Forum (NQF) or the 
AQA (formerly the Ambulatory Care Quality Alliance), that include 
measures that have been submitted by a physician specialty, and that 
the Secretary identifies as having used a consensus-based process for 
developing such measures. In addition, the measures shall include 
structural measures, such as the use of electronic health records 
(EHRs) and electronic prescribing (e-prescribing) technology. The 
Secretary must publish the final set of measures in the Federal 
Register no later than November 15, 2008, as required by section 
1848(k)(2)(B)(iii) of the Act, as amended by the MMSEA.
    Although section 101(c) of the MIEA-TRHCA, as amended by the MMSEA, 
authorized the Secretary to make incentive payments for satisfactorily 
reporting quality measures data on covered professional services 
furnished by eligible professionals during the reporting period for 
2007 and 2008, neither MIEA-TRHCA nor MMSEA authorized an incentive 
payment for PQRI for 2009. Also unlike the 2007 or 2008 PQRI, neither 
the MIEA-TRHCA nor the MMSEA defined a specific reporting period for 
the 2009 PQRI.
ii. Extension of and Enhancements to the PQRI Program Authorized by the 
MIPPA
    The MIPPA, which was enacted after the publication of the CY 2009 
PFS proposed rule, included a number of provisions that impact the 2009 
PQRI. Prior to enactment of the MIPPA, the MIEA-TRHCA, as amended by 
the MMSEA, was the authorizing legislation for PQRI. The MIPPA codifies 
the PQRI under sections 1848(k)(2) and 1848(m) of the Act. First, the 
MIPPA makes the PQRI a permanent program and authorizes us to make 
incentive payments for satisfactorily reporting data on quality 
measures for covered professional services furnished by eligible 
professionals during the 2009 PQRI reporting period equal to 2.0 
percent of the estimated total allowed charges for all covered 
professional services furnished during the reporting period that are 
submitted no later than 2 months after the end of the reporting period. 
In addition, the reporting period for the 2009 PQRI is defined as the 
entire year, or January 1, 2009 through December 31, 2009. Therefore, 
for the 2009 PQRI, eligible professionals who satisfactorily report 
data on quality measures for covered professional services furnished 
between January 1, 2009 through December 31, 2009 will receive an 
incentive payment equal to 2.0 percent of the total estimated allowed 
charges submitted by no later than February 28, 2010 for all covered 
professional services furnished between January 1, 2009 and December 
31, 2009.

[[Page 69818]]

    Beginning with the 2009 PQRI, the MIPPA also amended the definition 
of ``eligible professional'' to include qualified audiologists (as 
defined in section 1861(11)(3)(B) of the Act). Thus, for purposes of 
the 2009 PQRI, eligible professionals include physicians, other 
practitioners as described in section 1842(b)(18)(C) of the Act, 
physical and occupational therapists, qualified speech-language 
pathologists, and qualified audiologists.
    In addition, section 1848(k)(2)(D) of the Act, as added by the 
MIPPA, requires that for each 2009 PQRI quality measure, ``the 
Secretary shall ensure that eligible professionals have the opportunity 
to provide input during the development, endorsement, or selection of 
measures applicable to services they furnish.''
    Section 1848(m)(3)(A) of the Act, as amended and redesignated by 
the MIPPA, also requires that for years after 2008, the PQRI quality 
measures shall not include e-prescribing quality measures. Even with 
the removal of the e-prescribing measure, we continue to meet the 
requirements under section 1848(k)(2)(B)(ii) of the Act to include the 
use of structural measures.
    Section 131(b)(6) of the MIPPA also specifies that none of the 
amendments to the Social Security Act resulting from the MIPPA will 
impact the operation of the PQRI for 2007 or 2008. Additional 
information regarding the MIPPA provisions can be found in section III 
of this final rule with comment period.
iii. General Program Comments and Responses
    In the CY 2009 PFS proposed rule (73 FR 38558 through 38559), we 
provided a longer summary of the history of the PQRI and a more 
detailed discussion of the pertinent MIEA-TRHCA and MMSEA requirements 
than is provided above in this section. We proposed to define the 2009 
PQRI reporting period to be the entire CY 2009, but also proposed 
alternative reporting periods and alternative criteria for 
satisfactorily reporting quality measures data for measures groups and 
registry-based reporting as required by the MMSEA (73 FR 38559 through 
38564). The CY 2009 PFS proposed rule (73 FR 38564 through 38565) also 
included proposed reporting options and reporting periods for 
satisfactorily reporting quality measures data extracted from EHRs.
    To satisfy section 1848(k)(2)(B) of the Act, as amended by the 
MMSEA, we published 175 proposed 2009 PQRI quality measures in the CY 
2009 PFS proposed rule (73 FR 38565 through 38572). We also proposed 9 
measures groups for the 2009 PQRI on which eligible professionals may 
report (73 FR 38572 through 38574) and described potential uses of the 
PQRI information (73 FR 38574 through 38575).
    In the CY 2009 PFS proposed rule (73 FR 38558 through 38575), we 
solicited comments on the following areas:
     Implications of including or excluding any given measure 
from the set of proposed 2009 quality measures.
     The new measures groups proposed for 2009 including 
suggestions for other measures groups based on individual measures 
included in the proposed 2009 PQRI measure set.
     The proposed use of the consecutive patient reporting 
criteria for measures groups.
     The proposed use of 30 consecutive patients as the 
required sample under the consecutive patient reporting criteria during 
the full-year 2009 reporting period.
     The proposed options and planned use of registries for 
registry-based quality measures results and numerator and denominator 
data on quality measures data reporting to PQRI in 2009.
     The advisability of expanding the number of PQRI quality 
measures beyond the 119 measures in the 2008 PQRI quality measure set 
given that there is no specific authorization for an incentive payment 
for the 2009 PQRI and beyond.
     Various issues that we identified in the proposed rule to 
help us determine the most appropriate uses of PQRI data.
    We received 161 comments from the public on the CY 2009 PFS 
proposed rule related to the PQRI. In this section of the final rule 
with comment period, we first summarize the comments about the PQRI 
program in general and our responses to those comments immediately 
below. The remaining comments received and our responses to those 
comments are discussed under the relevant topic areas of this section 
of the final rule with comment period.
    Comment: Several comments commended CMS and the PQRI program for 
providing more flexibility and were generally supportive of the program 
including the proposed addition of measures in the 2009 PQRI and the 
continued development and implementation of a variety of reporting 
periods and reporting methodologies.
    Response: We appreciate the commenters' positive feedback.
    Comment: Several commenters suggested that we conduct an 
independent, formal evaluation of the PQRI program's processes and to 
analyze and validate the data that has been gathered to date. One of 
the major reasons cited for needing an evaluation component was the 
fact that a relatively small percentage of those eligible professionals 
who participated in the 2007 PQRI actually received an incentive 
payment. Other common reasons cited include to assess the range of 
specialties reporting information to ensure that most eligible 
professionals have the opportunity to participate, to better understand 
why some eligible professionals did not participate, and to fully 
understand how improvements affect participation rates prior to 
expansion of the PQRI.
    Response: We are continuing to evaluate the results of the 2007 
PQRI and will evaluate the results of the 2008 PQRI as they become 
available as we develop and implement strategies for enhancing the PQRI 
in the future.
    Comment: A number of commenters also offered to assist us in 
improving physician quality measure design and to help us better 
understand the barriers to and the stimuli for participating by 
requesting to review the data files used for calculating the 2007 and/
or 2008 incentive payments.
    Response: Information about individuals that is retrieved by the 
individuals' names or other personal identifiers is subject to the 
Privacy Act of 1974 (that is, the Privacy Act), Freedom of Information 
Act and other Federal government rules and regulations. As such, the 
information cannot be released without the individual's written 
consent, unless the Privacy Act permits release. See 5 U.S.C. 552a(b).
    We employ strict security measures to appropriately safeguard 
individual privacy and seek to ensure that files containing physician 
and/or beneficiary identifiers are used only when necessary and in 
accordance with disclosure provisions of the Privacy Act. The Privacy 
Act, as well as the notice that is published in the Federal Register 
for each CMS System of Records (SOR), provide the permitted disclosures 
of individually identifiable information and explain the procedures 
that need to be followed to safeguard the information. The notices that 
describe each CMS SOR can be found on the CMS Web site at http://www.cms.hhs.gov/PrivacyActSystemofRecords/SR/list.asp#TopOfPage.
    All research requests for individually identifiable data must be 
submitted to the Research Data Assistance Center (ResDAC) for initial 
review. More information on the policies and procedures for data 
requests for data that are protected by the Privacy Act can be found on 
the CMS Web site at http://www.cms.hhs.gov/

[[Page 69819]]

PrivProtectedData/01--Overview.aspTopOfPage.
    Comment: Many commenters recommended we redesign the PQRI section 
of the CMS Web site, including suggestions to provide an updated 
listing of measures under formal consideration by the various measure 
developers, as well as to provide more detailed information about the 
PQRI measures.
    Response: We concur with commenters' suggestions to redesign the 
PQRI section of the CMS Web site. We are currently working to make the 
Web site more user-friendly and will consider the commenters' 
suggestions.
    Comment: A few commenters suggested we establish a multi-
stakeholder advisory council or that we actively engage more 
stakeholders, such as consumers and hospitals. Active engagement of 
stakeholders could be used for a variety of purposes, such as to help 
understand why some eligible professionals may not have participated; 
to engage and obtain feedback and observations from those who will be 
measured as well as those who successfully participated; to ensure that 
the PQRI measures provide clinically-significant information while 
being structured in the least administratively-burdensome manner 
possible; or to advise us as we proceed with making information derived 
from the PQRI publicly available.
    Response: We plan to continue our dialogue with the stakeholder 
community and will consider their and PQRI participants' input as we 
continue to evaluate the results from the PQRI and to develop and 
implement strategies for enhancing the PQRI in the future.
    Comment: One commenter recommended different incentives that we 
could employ to increase participation, such as reducing eligible 
professionals' costs for collecting Medicare payments.
    Response: We are bound by statute with respect to the types of 
incentives that we can provide to eligible professionals, how those 
incentives are calculated, and the amount of the incentive. The only 
incentives we are authorized to provide eligible professionals are an 
incentive for eligible professionals who satisfactorily report quality 
measures data through the PQRI as discussed below and the new incentive 
that we are implementing in 2009 for eligible professionals who are 
successful electronic prescribers as discussed in section II.O2. below.
    Comment: Other specific suggestions for improving the PQRI provided 
by commenters include renaming the PQRI the ``Provider'' or 
``Practitioner'' Quality Reporting Initiative to acknowledge potential 
participation of all types of Medicare providers; separating the 
quality reporting from the billing process by removing the requirement 
that ``G'' codes are reported on the same claim as the denominator 
service; developing guidelines on which measures are appropriate for 
reporting by different medical specialties; designing reporting options 
in a manner that would allow smaller providers to more easily 
participate; considering assigning all measures to clinical area 
groups; providing an appeal process for eligible professionals who 
participate but are not deemed to be successful; and ensuring greater 
transparency in all aspects of the program including, but not limited 
to, in the measure selection process, in the provision of feedback, and 
in the implementation of the pertinent MIPPA provisions.
    Response: We appreciate and value the constructive feedback that we 
have received from the wide variety of commenters who have provided 
insights and information and partnered with us to disseminate 
information about PQRI. As reflected in the variety of reporting 
options that we are making available for the 2009 PQRI and the 
expansion of measures groups, it is our desire to allow as many 
eligible professionals to participate with as little additional burden 
as possible. To the extent that we find it practical, feasible, and 
appropriate to implement the commenters' suggestions, we would do so 
via notice and comment rulemaking for future years' PQRI.
    With respect to the commenters' suggestion to provide an appeals 
process for eligible professionals who participate but are not deemed 
to be successful, we note that section 1848(m)(5)(e) of the Act, as 
amended by MIPPA, provides that with respect to the PQRI there shall be 
no administrative or judicial review under sections 1869 or 1879 of the 
Act, or otherwise of (1) the determination of measures applicable to 
services furnished by eligible professionals; (2) the determination of 
satisfactory reporting; and (3) the determination of any incentive 
payment. Therefore, we have no authority to establish an appeals 
process for the subject of eligible professionals ``not deemed to be 
successful'' which we read to fall within the determination of 
satisfactory reporting.
    Comment: We received numerous comments providing general 
recommendations for enhancing the Medicare program, such as suggestions 
to transition the PQRI from a pay-for-reporting program to a pay-for-
performance program as quickly as possible; addressing problems of 
underuse, overuse, and misuse of services; assuring that all Americans 
receive the right care by reducing health care disparities and 
encouraging that quality care be provided to at-risk populations; 
encouraging care coordination and support for the integration and 
delivery of services across providers and across care settings; and 
providing payment that supports the re-engineering of care, such as 
providing payment for e-visits and efficiency-enhancing forms of 
telemedicine. One commenter expressed a desire to see the development 
of a quality reporting mechanism similar to the PQRI that is applicable 
to a pediatric population and Medicaid.
    Response: While we appreciate these suggestions for enhancing the 
Medicare and Medicaid programs mentioned, we note that those programs 
are beyond the scope of this section of the final rule with comment 
period. This section of the final rule with comment period is limited 
to the 2009 PQRI.
    Comment: Many commenters also commented on the MIPPA provisions 
that were not directly related to the PQRI. For example, we received 
many comments related to the plan for transitioning to a value-based 
purchasing program for physicians' services that we are required to 
submit to the Congress by May 1, 2010 under the MIPPA.
    Response: While we appreciate the commenters' input for 
implementing the MIPPA provisions, we note that MIPPA provisions that 
are not directly related to the PQRI program are beyond the scope of 
this section of the final rule with comment period. This section of the 
final rule with comment period is limited to the 2009 PQRI.
    Comment: Several commenters expressed confusion about participation 
requirements and recommended that we implement an aggressive education 
and outreach campaign on how to successfully participate, to help 
eligible professionals who did not receive a bonus understand why, and 
that provides participating eligible professionals with confidential 
interim and final feedback and compliance reports.
    Response: We agree that with increased flexibility comes more 
potential for confusion about participation requirements. Section 
1848(k)(6) of the Act requires the Secretary to provide for education 
and outreach to eligible professionals on the operation of the PQRI.
    To minimize any potential confusion, we have hosted monthly 
national

[[Page 69820]]

provider calls on the PQRI in which our PQRI subject matter experts are 
available to answer questions on the PQRI. We have also provided 
guidance on specific topics on these calls, such as accessing the 2007 
PQRI feedback reports, how the 2007 incentive payments were calculated, 
and the various 2008 reporting options.
    In addition to the national provider calls, we have worked with 
various medical specialty societies, such as the American Academy of 
Family Physicians, the American College of Physicians, American Academy 
of Ophthalmology, American Optometric Association, and the American 
Gastroenterological Association Institute to host Special Open Door 
Forums to educate their membership on the PQRI. We anticipate 
continuing these education and outreach activities as we implement the 
2009 PQRI.
    Information about these CMS-sponsored calls, including information 
about upcoming calls, can be found on the PQRI section of the CMS Web 
site at http://www.cms.hhs.gov/PQRI. The Web site itself also serves as 
a useful resource for obtaining the most up to date information on the 
PQRI. For example, the PQRI Tool Kit found on the PQRI section of the 
CMS Web site at http://www.cms.hhs.gov/PQRI/31_PQRIToolKit.asp#TopOfPage contains valuable resources to help eligible 
professionals in the successful integration of PQRI into their 
practices. We encourage eligible professionals to visit this Web site 
and to review the frequently asked questions found on this Web site.
    Comment: Many commenters stated they were pleased the Congress 
extended PQRI and authorized a 2.0 percent incentive payment for 2009, 
but others noted that the incentive payment was not enough to outweigh 
the burden of participating or noted concern about the number of 
``quality and efficiency'' measures imposed on physicians without 
evidence of improved health outcomes, health status, and reduced system 
costs. One commenter recommended that we base the incentive payment on 
RVUs rather than the amount billed to Medicare.
    Response: We do not have the authority to change the basis for 
calculation of the incentive payment. Section 1848(m)(1) of the Act, as 
redesignated and amended by the MIPPA, authorizes us to make incentive 
payments for satisfactorily reporting data on quality measures for 
covered professional services furnished by eligible professionals 
during the 2009 PQRI reporting period equal to 2.0 percent of the 
estimated total allowed charges for all covered professional services 
furnished during the reporting period that are submitted no later than 
2 months after the end of the reporting period. However, we are 
committed to exploring and supporting practical, effective mechanisms 
for quality-of-care data submission that promote efficiency by 
streamlining participants' and our data collection and handling. As 
such, and as described below in this section of the final rule with 
comment period, we have developed and are implementing options for 
registry-based submission of quality measures data and plan to 
implement options for EHR-based submission of quality measures data 
after some additional testing.
    In addition, we have increased the number of measures groups and 
individual PQRI quality measures available for the 2009 PQRI in an 
effort to expand opportunities for eligible professionals to 
participate in PQRI.
    Comment: We received many comments urging us to ensure that all 
eligible professionals have meaningful opportunities to participate in 
the PQRI. Some commenters were specifically concerned that funding for 
the Quality Insights of Pennsylvania (QIP) project to develop 
nonphysician quality measures has ended and hoped that CMS will 
continue to extend funding in the future for the development and 
implementation of quality measures for nonphysicians as well as to move 
measures already developed by the QIP through the NQF endorsement and/
or AQA approval process.
    Several commenters were also concerned that therapists who work in 
certain outpatient settings (for example, acute care hospitals, skilled 
nursing facilities, comprehensive outpatient rehabilitation facilities, 
or rehabilitation agencies) are unable to participate in PQRI since 
they do not use the 1500 or 837-P claim form and instead submit claims 
on the UB-04 or 837-I form where there is no place to report the 
individual National Provider Identifier (NPI) of the eligible 
professional furnishing the service. The commenters recommended 
registry-based alternatives for PQRI participation.
    A few commenters noted that pathologists who bill via independent 
laboratories are also not able to participate in the PQRI because we 
are not yet able to capture this billing situation.
    Response: We agree with the goal of providing as many eligible 
professionals the opportunity to participate in the PQRI as is 
practical and feasible. As we stated in the CY 2009 PFS proposed rule 
(73 FR 36566), one of the considerations we employed in the selection 
of measures for the 2009 PQRI is to select measures that increase the 
scope of applicability of measures to services furnished to Medicare 
beneficiaries and expand opportunities for eligible professionals to 
participate in PQRI. We seek to increase the circumstances where 
eligible professionals have at least three measures applicable to their 
practice.
    For the 2008 PQRI, we supported, via contract with QIP, the 
development of structural measures and measures applicable to a broad 
cross-section of PQRI eligible professionals, including some NPPs who 
had few or no measures available in the 2007 PQRI. We prioritized 
development of these measures available or otherwise in development and 
on a need to address as broad a cross-section of eligible professions 
or specialties as possible within the limited volume of measures for 
which we could support development in time for inclusion in the 2008 
PQRI. As the contracted measure developer, QIP was responsible for 
supporting the measures through the AQA adoption process. CMS funded a 
project with the NQF which reviewed the measures for endorsement.
    We plan to continue working to fill gaps in available consensus 
endorsed or adopted measures consistent with available time and 
resources. However, we largely depend on and encourage the development 
of measures by professional organizations and other measure developers. 
Ideally, in the future, there will be a sufficient number of clinician-
level quality measures that meet the statutory requirements that CMS 
would be able to just select PQRI measures from these existing measures 
rather than needing to fund the development of additional clinician-
level quality measures.
    Regarding the concerns cited by therapists unable to participate in 
PQRI since they do not use the 1500 or 837-P claim form, we note as we 
did in the CY 2008 PFS final rule with comment period (73 FR 66337) 
that our analysis of claims-based alternatives to enable participation 
determined that extensive modifications to the claims processing 
systems of CMS and providers would be required. Such modifications 
would represent a material administrative burden to us and providers 
and/or modifications to the industry standard claims formats, which 
would require substantial time to effect via established processes and 
structures that we do not maintain or control.
    Our analysis of the two registry-based alternatives suggested by 
the commenters indicate that it would be possible for therapists in 
this situation

[[Page 69821]]

to participate in a registry because there are registries ``qualified'' 
to participate in our 2008 PQRI program that intended to report all of 
the PQRI measures and that are open to all eligible professionals who 
would like to participate with them. However, it would not be possible 
to calculate an incentive payment for the therapists' participation 
since our claims processing systems do not allow us to attribute 
services furnished by therapists who bill through fiscal intermediaries 
to an individual eligible professional to calculate the incentive 
amount. As required by section 1848(1)(A)(ii) of the Act, as 
redesignated and added by the MIPPA, the 2009 PQRI incentive must be 
calculated based on each eligible professional's allowed charges for 
covered professional services that are based on or paid under the 
Medicare PFS. Although we are in the process of evaluating the impact 
of making the changes to the fiscal intermediary claims processing 
systems needed to be able to accept the PQRI quality data codes and 
attribute them to an eligible professional, it is unknown at this time 
whether these changes can be made without undue burden to our systems 
or what the timeline for potential implementation would be.
    Regarding the concern that pathologists who bill through 
independent laboratories are unable to participate in the PQRI, we note 
that only eligible professionals as defined in section 1848(k)(3)(B) of 
the Act are eligible to participate in PQRI. As discussed in section 
II.O1.a.ii. above, ``eligible professional'' is defined to include 
physicians, other practitioners as described in section 1842(b)(18)(C) 
of the Act, physical and occupational therapists, qualified speech-
language pathologists, and qualified audiologists for the purposes of 
the 2009 PQRI. As noted in the comment, independent laboratories are 
suppliers and are therefore not eligible to participate in PQRI. 
Pathologists who bill directly to Medicare, however, are eligible to 
participate in PQRI.
    Comment: Several commenters noted the mechanism for viewing the 
feedback reports was too cumbersome and were concerned about the lack 
of timely feedback (both in terms of when the feedback reports are 
received and when incentive payments are received). Several commenters 
requested that more detailed information be provided in the feedback 
reports so that eligible professionals can reconcile CMS' data with 
their own claims information to ensure that codes were submitted 
accurately, captured by the Medicare Administrative Contractor (MAC), 
transferred to the PQRI data system, and result in meaningful data that 
corresponds to the eligible professional's own experience.
    Response: Although, as discussed in sections II.SG.6. and III. of 
this final rule with comment period, section 1848(n) of the Act, as 
added by the MIPPA, requires the Secretary to establish a Physician 
Feedback Program to provide confidential reports to physicians (and, if 
determined appropriate by the Secretary, groups of physicians) that 
measure the resources involved in furnishing care to Medicare Part B 
patients, we are not statutorily required to provide participants with 
feedback reports on the quality measures data submitted for the PQRI 
and are not committing to provide feedback reports for claims-based 
submission of quality measures data for the 2009 PQRI. For registry-
based reporting in 2009, we would rely on the participating registries 
to provide feedback to participating eligible professionals.
    We do, however, understand the value of receiving meaningful 
feedback reports and, to the extent that we continue to provide PQRI 
participants with feedback reports for claims-based submission of 
quality measures data for the 2009 PQRI, we will consider such concerns 
as part of our ongoing dialogue with stakeholders in order to 
collaboratively identify ways to enhance the program's value to its 
participants and to the Medicare program. We note though that 
information on all aspects of care billed to Medicare, including 
quality data codes, is found on the remittance advice that eligible 
professionals receive. We urge PQRI participants to review the 
information received on the remittance advice along with their own 
records (such as their own claims information) to ensure that PQRI 
quality information is being accurately submitted and captured on 
claims. We also note that 2007 was the first broad scale implementation 
of quality data submission through the claims process. We are aware 
that practice management systems have the capability to analyze 
information received on the remittance advice. We anticipate that 
practice management systems may be adapted in the future for analysis 
of quality data code submission, as well. Such systems could provide 
contemporaneous feedback and analysis for physicians.
    With respect to the timeframe when incentive payments are received, 
it is unlikely that we will be able to issue incentive payments for 
participation in PQRI for a particular year much sooner than the middle 
of the following year because of the way in which the incentive 
payments are calculated. The incentive payments are calculated based on 
the total estimated allowed charges for the reporting period. As 
required by section 1848(m)(1)(A)(ii) of the Act, as redesignated and 
added by the MIPPA, we must wait until 2 months after the end of the 
reporting period to allow eligible professionals to submit claims for 
covered professional services furnished during the reporting period.
    Comment: The MIPPA requires that by January 1, 2010, the Secretary 
shall establish and have in place a process under which eligible 
professionals in a group practice shall be treated as satisfactorily 
submitting data on quality measures for the PQRI. A few commenters 
welcomed this option and offered to assist CMS in defining ``group 
practice.'' Another commenter noted that it would be more cost-
effective for multi-specialty group practices to participate under this 
new option.
    Response: We welcome the commenters' interest in our plans for 
implementing future enhancements to the PQRI based on the MIPPA. 
However, we note that the scope of this section of the final rule is 
limited to the 2009 PQRI. Our plans for future years' PQRI, including 
our plans for implementing the MIPPA provisions that affect future 
program years, will be discussed in future notice and comment 
rulemaking. Thus, commenters can expect to see a discussion of our 
plans for implementing the physician group practice option for the 2010 
PQRI in the CY 2010 PFS proposed rule next year.
b. Satisfactory Reporting Criteria and Reporting Periods--Reporting 
Options in the 2009 PQRI
    In the CY 2009 PFS proposed rule (73 FR 38559), we proposed to 
define the reporting period for the 2009 PQRI as the entire year 
(January 1, 2009-December 31, 2009) and proposed two alternative 
reporting periods for reporting measures groups and for registry-based 
reporting: (1) January 1, 2009 through December 31, 2009; and (2) July 
1, 2009 through December 31, 2009.
    As discussed in section III. of this final rule with comment 
period, the MIPPA defines the reporting period for the 2009 PQRI to be 
the entire year. Therefore, for the 2009 PQRI the reporting period will 
be January 1, 2009 through December 31, 2009. We are retaining the two 
alternative reporting periods, which were unaffected by MIPPA, for 
reporting measures groups and registry-based reporting (that is, 
January 1, 2009 through December 31, 2009 and July 1, 2009 through 
December 31, 2009) as proposed. These reporting periods result in 
several reporting

[[Page 69822]]

options available to eligible professionals that vary by the reporting 
mechanism selected. The reporting mechanisms and criteria for 
satisfactorily reporting quality measures data for the 2009 PQRI are 
described in the following section.
i. Claims-Based Submission of Data for Reporting Individual Measures
    Under section 1848(m)(3) of the Act, as redesignated and added by 
the MIPPA, the criteria for satisfactorily submitting data on 
individual quality measures through claims-based submission require the 
reporting of at least three applicable measures in at least 80 percent 
of the cases in which the measure is reportable. If fewer than three 
measures are applicable to the services of the professional, the 
professional may meet the criteria by reporting on all applicable 
measures (that is, one to two measures) for at least 80 percent of the 
cases where the measures are reportable. It is assumed that if an 
eligible professional submits quality data codes for a particular 
measure, the measure applies to the eligible professional. These 
criteria were proposed for the January 1, 2009 through December 31, 
2009 reporting period.
    We received a few comments on the proposed reporting period and 
criteria for satisfactorily submitting quality data through claims for 
reporting individual measures, as discussed below.
    Comment: A few commenters encouraged CMS to establish alternative 
reporting periods for claims-based submission of individual quality 
measures. One commenter specifically requested us to extend the 
alternative reporting period of July 1, 2009 through December 31, 2009 
to eligible professionals participating in PQRI through claims-based 
reporting of individual quality measures. The commenter stated that 
measures groups and/or registries are not always an option for eligible 
professionals.
    Response: We appreciate the commenter's suggestions, which are 
intended to enhance the claims-based reporting of individual measures 
by providing greater flexibility. However, as discussed above and in 
section III. of this final rule with comment period, the MIPPA defines 
the reporting period for the 2009 PQRI to be the entire year and, as 
discussed in section II.O1.a.i. above, the MMSEA authorizes the 
Secretary to establish alternative reporting periods for registry-based 
reporting and for reporting on measures groups only. We note, however, 
that for years after 2009, the MIPPA authorizes the Secretary to revise 
the reporting period for claims-based submission of quality measures 
data if it is determined that such revision is appropriate, produces 
valid results on measures reported, and is consistent with the goals of 
maximizing scientific validity and reducing administrative burden.
    Additionally, there are registries currently participating in the 
2008 PQRI that report or are able to report all of the PQRI quality 
measures. Alternative reporting periods are available for registry-
based submission of quality measures data, which enables all eligible 
professionals who wish to participate in PQRI to do so through a 
registry. For the 2008 PQRI, there are 32 registries ``qualified'' to 
submit quality measure results and numerator and denominator data on 
quality measures on behalf of eligible professionals.
    Based on our review of this comment, we are retaining the reporting 
option for claims-based submission of data on individual quality 
measures as summarized in Table 11. That is an eligible professional 
can meet the criteria for satisfactorily reporting quality data by 
reporting at least three applicable measures (or one to two measures if 
fewer than three measures apply) for at least 80 percent of the cases 
in which each measure is reportable, during January 1, 2009 through 
December 31, 2009.

 Table 11--Final 2009 PQRI Claims-Based Reporting Options for Individual
                                Measures
------------------------------------------------------------------------
      Reporting mechanism         Reporting criteria    Reporting period
------------------------------------------------------------------------
Claims-based reporting........  At least 3 PQRI         January 1, 2009-
                                 measures, or 1-2        December 31,
                                 measures if less than   2009.
                                 3 apply to the
                                 eligible
                                 professional, for 80
                                 percent of applicable
                                 Medicare Part B FFS
                                 patients of each
                                 eligible professional.
------------------------------------------------------------------------

ii. Satisfactory Reporting of Data on Quality Measures and Reporting 
Periods for Measures Groups, Through Claims-Based Reporting and 
Registry-Based Reporting
    As described in the CY 2009 PFS proposed rule, section 101(c)(5)(F) 
of the MIEA-TRHCA, as added by the MMSEA and redesignated by the MIPPA 
as section 1848(m)(5)(F) of the Act, requires that the Secretary 
establish alternative reporting periods and alternative criteria for 
satisfactorily reporting groups of measures. In establishing these 
alternatives, we have labeled these groups of measures ``measures 
groups.'' We define ``measures groups'' as a subset of PQRI measures 
that have a particular clinical condition or focus in common. The 
denominator definition and coding of the measures group identifies the 
condition or focus that is shared across the measures within a 
particular measures group.
    For the 2009 PQRI, we proposed to expand the available measures 
groups to a total of nine measures groups. We proposed to carry forward 
three of the four 2008 measures groups for the 2009 PQRI: (1) Diabetes 
Mellitus; (2) Chronic Kidney Disease (CKD); and (3) Preventive Care. In 
addition, we proposed to add six new measures groups for the 2009 PQRI:
    (1) Coronary Artery Bypass Graft (CABG) Surgery;
    (2) Coronary Artery Disease (CAD);
    (3) Rheumatoid Arthritis;
    (4) Human Immunodeficiency Virus (HIV)/Acquired Immune Deficiency 
Syndrome (AIDS);
    (5) Perioperative Care; and
    (6) Back Pain.
    We proposed to allow measures groups to be reported through claims-
based or registry-based submission for the 2009 PQRI.
    We proposed that the form and manner of quality data submission for 
2009 measures groups would be posted on the PQRI section of the CMS Web 
site at http://www.cms.hhs.gov/pqri no later than December 31, 2008, 
and will detail specifications and specific instructions for reporting 
measures groups via claims and registry-based reporting.
    The final 2009 PQRI measures groups and the measures selected for 
inclusion in each of the 2009 measures groups are listed in section 
II.O1.d.v. of this final rule with comment period.
    We proposed (73 FR 38561) establishing three options for 
satisfactorily reporting measures groups using claims-based reporting 
and three options for satisfactorily reporting measures groups using 
registry-based

[[Page 69823]]

submission for the 2009 PQRI. We proposed two basic criteria for 
satisfactory reporting of measures groups for both claims-based 
submission and registry-based submission. For claims-based reporting, 
the two criteria were: (1) The reporting of quality data for 30 
consecutive Medicare Part B FFS patients for one measures group for 
which the measures group is applicable during a full-year reporting 
period; or (2) the reporting of quality data for at least 80 percent of 
Medicare Part B FFS patients for whom the measures group is applicable 
(with a minimum number of patients commensurate with the reporting 
period duration). For registry-based submission, the two criteria were: 
(1) The reporting of quality measures results and numerator and 
denominator data for 30 consecutive patients for one measures group for 
which the measures group is applicable during a full-year reporting 
period; or (2) the reporting of quality measures results and numerator 
and denominator data for at least 80 percent of patients for whom the 
measures group is applicable (with a minimum number of patients 
commensurate with the reporting period duration).
    We proposed that the 30 consecutive patients reporting criteria 
apply only to the entire year (January 1, 2009 through December 31, 
2009) reporting period, but would apply to both claims-based submission 
and registry-based submission mechanisms.
    We proposed that the alternative criteria for measures groups based 
on reporting on 80 percent of patients for which one measures group 
would be applicable for the January 1, 2009 through December 31, 2009 
reporting period (with a minimum of 30 patients) and to the July 1, 
2009 through December 31, 2009 reporting period (with a minimum of 15 
patients). These alternative criteria would also be applicable for 
either claims-based or registry-based reporting of measures groups.
    In the CY 2009 PFS proposed rule (73 FR 38561), we requested 
comments on the proposed use of the consecutive patient reporting 
criteria and on the use of 30 consecutive patients (for claims-based 
reporting, the consecutive patients must all be Medicare FFS patients) 
as the required minimum sample under these criteria during the full-
year 2009 reporting period.
    We received numerous comments on the proposed alternative reporting 
periods and alternative criteria for satisfactory reporting of data on 
measures groups, including the proposed use of the consecutive patient 
reporting criteria and proposed use of 30 consecutive patients. These 
comments are summarized and addressed below.
    Comment: Some commenters suggested that we establish general rules 
governing measures groups reporting involving multiple providers from 
separate entities.
    Response: To qualify for the PQRI incentive, each individual 
professional must separately qualify, based on the criteria for 
reporting measures groups and the services rendered by the individual 
professional. The reporting by other professionals and the 
establishment of rules relating to the reporting of multiple providers 
from separate entities is not germane to satisfactory reporting at the 
individual level. Each individual professional must qualify based on 
that individual's satisfactory reporting. No later than December 31, 
2008, we will post the detailed specifications and specific 
instructions for reporting measures groups at http://www.cms.hhs.gov/
pqri. This document is intended to promote an understanding of how to 
implement and facilitate satisfactory reporting of quality measures 
results and numerator and denominator data by individual eligible 
professionals who wish to participate in PQRI via measures group 
reporting.
    Comment: Many commenters strongly supported the continued use of 
measures groups, the expansion of measures groups, registry-based 
submissions of measures groups, and alternative reporting periods for 
measures groups.
    Response: We are pleased that many commenters are supportive of the 
measures groups concept, the expansion of measures groups, registry-
based submissions for measures groups, and alternative reporting 
periods. These options provide for program efficiency, flexibility and 
opportunities for physicians and other eligible professionals to more 
broadly demonstrate their clinical performance for particular services 
and provide a better basis for comparison among professionals. We plan 
to continue a dialogue with stakeholders to discuss opportunities for 
program efficiency and flexibility.
    Comment: Many commenters were in support of the 30 consecutive 
patient reporting option for the full year 2009 reporting period. One 
commenter noted that a sample consisting of consecutive patients would 
result in a nonrandom sample of patients. Another commenter requested 
clarification on which 30 patients should be included in the 
consecutive patient sample.
    Response: We are pleased that many commenters found the 30 
consecutive patient reporting option to be useful and were supportive 
of this option. We agree that a sample of 30 consecutive patients would 
be a nonrandom sample, but it is our intention to allow physicians and 
other eligible professionals greater flexibility and opportunities to 
participate in PQRI. In addition, requiring consecutive patients would 
prevent eligible professionals from being able to selectively report 
cases to enhance their performance rates.
    While we do not have the results of the 2008 PQRI reporting, we 
believe that a minimum sample size of 30 consecutive patients is 
sufficient to calculate comparable performance rates across eligible 
professionals furnishing comparable services. Patient sample sizes of 
30 are commonly considered to be a reasonable minimum threshold for 
being able to reliably report health care performance measurement 
results. Results from our Better Quality Information for Medicare 
Beneficiaries (BQI) pilot project indicate that minimum patient sample 
sizes of between 30 through 50 patients per physician are needed to 
make reliable distinctions between physicians' performance. (Delmarva 
Foundation for Medical Care. Enhancing Physician Quality Performance 
Measurement and Reporting Through Data Aggregation: The BQI Project. 
October 2008.) We expect additional experience with PQRI reporting to 
clarify optimal sample sizes and reporting criteria for use in future 
reporting periods. We will continually evaluate our policies on 
sampling and notify the public through future notice and comment 
rulemaking if we make substantive changes. As we evaluate our policies, 
we plan to continue a dialogue with stakeholders to discuss 
opportunities for program efficiency and flexibility.
    As described in Table 12, for claims-based reporting of measures 
groups, eligible professionals wishing to report data on measures 
groups using the consecutive patient criteria should include only 
Medicare Part B FFS patients in the consecutive patient sample. For 
registry-based reporting of measures groups, eligible professionals 
wishing to report data on measures groups using the consecutive patient 
criteria may include some non-Medicare FFS patients. However, there 
must be more than one Medicare Part B FFS patient included in this 
patient sample as well.
    Comment: We received a large volume of comments in support of 
discontinuing the 15 consecutive patients for a 6-month reporting 
period

[[Page 69824]]

(that is, July 1 through December 31). We also received a few comments 
suggesting we continue the option of allowing eligible professionals to 
report data on 15 consecutive patients for a 6-month reporting period.
    Response: Unlike in the 2008 PQRI, we will not include a reporting 
option for 15 consecutive patients for a 6-month reporting period. 
While we do not have the results of the 2008 reporting, we are 
concerned that samples of fewer than 30 consecutive patients may be 
insufficient to calculate comparable performance rates across eligible 
professionals furnishing comparable services. We expect additional 
experience with PQRI reporting to clarify optimal sample sizes and 
reporting criteria for use in future reporting periods.
    Comment: We received comments recommending that, regardless of the 
reporting mechanism selected, the criteria for satisfactorily reporting 
data on measures groups and individual quality measures be expanded to 
include the reporting data on measures groups and/or individual quality 
measures for 100 percent of patients for whom the measures group and/or 
individual quality measures are applicable. One commenter thought that 
we should specifically require eligible professionals who report via 
registries to report on 100 percent of their eligible patients. Another 
commenter suggested that for the option to report on 80 percent of 
patients for registry-based reporting of measures groups we accept 
quality measures results and numerator and denominator data on quality 
measures on all patients, regardless of payer, rather than quality 
measures results and numerator and denominator data on quality measures 
on Medicare Part B FFS beneficiaries only. The commenter, however, 
opposed requiring a minimum number of Medicare FFS patients be included 
in the data submitted from the registry. Another commenter thought that 
registry reporting and claims-based reporting requirements should be 
the same.
    Response: While we would encourage eligible professionals to report 
data on measures groups and/or individual quality measures for all 
patients who qualify for a measure they are reporting and eligible 
professionals are not precluded from reporting data on measures groups 
and/or individual quality measures for 100 percent of their eligible 
patients, satisfactory reporting was established by the MIEA-TRHCA to 
include reporting in at least 80 percent of the cases for which the 
respective measure is reportable. Analysis of the 80 percent reporting 
threshold has indicated it to be a sufficiently large sample size to be 
representative of an eligible professional's patient population. That 
is, 80 percent is a sufficiently large reporting rate that the 
performance rates calculated from the 80 percent sample are 
substantially the same as the performance rates calculated from 100 
percent of applicable cases. Although a 100 percent sample of cases for 
which individual quality measure or measures groups are applicable 
would eliminate any sampling error, requiring 100 percent reporting of 
applicable cases would cause eligible professionals to be ineligible 
for an incentive payment based on a failure to report data on a single 
missed case that falls into the quality measure's denominator.
    Additionally, the 80 percent reporting criteria for individual 
quality measures is statutorily required through 2009 for individual 
quality measures reported through claims. While the Secretary is 
authorized to establish a different reporting threshold for measures 
groups and registry-based reporting, we believe that it is necessary 
and desirable to maintain consistency and to achieve a balance amongst 
the reporting options in order to promote a successful program.
    With respect to requiring a minimum number of Medicare Part B FFS 
patients in the sample for registry-based reporting options for 
reporting on measures groups for at least 80 percent of applicable 
cases, our primary interest is in improving the quality of care 
Medicare beneficiaries receive. If we do not specify a minimum number 
of Medicare Part B FFS on which eligible professionals should report, 
it is feasible that an eligible professional could meet the 80 percent 
threshold by treating just one or two beneficiaries. Thus, for those 
eligible professionals who treat few Medicare beneficiaries, the sample 
size would be too small to do any meaningful analysis of the eligible 
professional's performance on that particular measure even though the 
sample consists of 80 percent of the eligible professional's Medicare 
beneficiaries to whom the measure applies.
    Comment: One commenter suggested that registries ``facilitate 
quality measures reporting for measures groups reporting regardless of 
the relationship of the reporting provider to the registry.'' The 
commenter suggested that we further clarify that in order to become 
qualified to submit quality measures results and numerator and 
denominator data on quality measures to the PQRI on behalf of eligible 
professionals, a registry must assure a mechanism by which multiple 
providers who collectively report the individual measures comprising a 
measures group can do so and that there are no barriers to the 
reporting of such information by any provider regardless of the 
provider's relationship to the registry.
    Response: Registries provide an alternative to claims-based 
reporting. Regardless of the reporting mechanism (that is, claims or 
registries), there is no provision for reporting by multiple 
professionals under the PQRI since each individual eligible 
professional must separately meet the criteria for satisfactory 
reporting of PQRI quality measures. Registries have no responsibility 
to establish a relationship with any particular professional. An 
eligible professional who does not have a relationship with a qualified 
registry has the option of submitting data on measures groups through 
claims or establishing a relationship with a qualified registry unless 
he or she wishes to report the CABG surgery measures group. The 
measures in the CABG surgery measures group are reportable only through 
a registry.
    Comment: One commenter thought we should allow satisfactory 
reporting of measures groups via registries to count for 2 years of 
PQRI reporting.
    Response: Our statutory authority authorizes an annual PQRI 
program. For each year, there are established specific reporting 
periods and reporting criteria. The incentive payment for PQRI must be 
for covered professional services furnished during a given reporting 
period. We do not have the authority to allow satisfactory reporting of 
measures groups via registries for a 1-year reporting period to count 
as satisfactory reporting for another year or reporting period.
    Based on the comments received, we are finalizing the six options 
proposed for satisfactorily reporting on measures groups as described 
in Table 12. The details of the requirements for registries are 
contained in section II.O1.b.iii.

[[Page 69825]]



     Table 12--Final 2009 PQRI Reporting Options for Measures Groups
------------------------------------------------------------------------
      Reporting mechanism         Reporting criteria    Reporting period
------------------------------------------------------------------------
Claims-based reporting........  One Measures Group for  January 1, 2009-
                                 30 Consecutive          December 31,
                                 Medicare Part B FFS     2009.
                                 Patients.
Claims-based reporting........  One Measures Group for  January 1, 2009-
                                 80 percent of           December 31,
                                 applicable Medicare     2009.
                                 Part B FFS patients
                                 of each eligible
                                 professional (with a
                                 minimum of 30
                                 patients during the
                                 reporting period).
Claims-based reporting........  One Measures Group for  July 1, 2009-
                                 80 percent of           December 31,
                                 applicable Medicare     2009.
                                 Part B FFS patients
                                 of each eligible
                                 professional (with a
                                 minimum of 15
                                 patients during the
                                 reporting period).
Registry-based reporting......  One Measures Group for  January 1, 2009-
                                 30 Consecutive          December 31,
                                 Patients. Patients      2009.
                                 may include, but may
                                 not be exclusively,
                                 non-Medicare patients.
Registry-based reporting......  One Measures Group for  January 1, 2009-
                                 80% of applicable       December 31,
                                 Medicare Part B FFS     2009.
                                 patients of each
                                 eligible professional
                                 (with a minimum of 30
                                 patients during the
                                 reporting period).
Registry-based reporting......  One Measures Group for  July 1, 2009-
                                 80% of applicable       December 31,
                                 Medicare Part B FFS     2009.
                                 patients of each
                                 eligible professional
                                 (with a minimum of 15
                                 patients during the
                                 reporting period).
------------------------------------------------------------------------

    While claims are submitted to CMS on Medicare patients only (for 
claims-based reporting), the 30 consecutive patients option for 
registry-based submission for the January 1, 2009 through December 31, 
2009 reporting period may include some, but may not be exclusively, 
non-Medicare patients. We include this limited option to report quality 
measures results and numerator and denominator data on quality measures 
that includes non-Medicare patients for registry-based submission 
because of the desirability of assessing the overall care provided by a 
professional rather than just that provided to a certain subset of 
patients, and the benefit of having a larger number of patients on 
which to assess quality.
iii. Registry-Based Submission for Reporting Individual Measures
    As discussed in the CY 2009 PFS proposed rule (73 FR 38562), 
section 101(c)(5)(F) of the MIEA-TRHCA, as added by MMSEA and 
redesignated by the MIPPA as section 1848(m)(5)(F) of the Act, requires 
us to establish alternative criteria for satisfactorily reporting PQRI 
quality measures data through medical registries. For 2009, we proposed 
that eligible professionals would be able to report 2009 PQRI quality 
measures results and numerator and denominator data on quality measures 
through a qualified clinical registry by authorizing or instructing the 
registry to submit quality measures results and numerator and 
denominator data on quality measures to CMS on their behalf (73 FR 
38562). Similar to the 2008 PQRI, we proposed (73 FR 38562) that the 
data to be submitted for the 2009 PQRI would include the reporting and 
performance rates on PQRI measures or PQRI measures groups, as well as 
the numerators and denominators for the reporting rates and performance 
rates.
    For the 2009 PQRI, we proposed (73 FR 38562) to continue the PQRI 
reporting criteria for satisfactorily reporting through registry-based 
submission of 3 or more individual PQRI quality measures data that are 
described in the ``2008 PQRI: Establishment of Alternative Reporting 
Periods and Reporting Criteria'' document (http://www.cms.hhs.gov/PQRI/Downloads/2008PQRIalterrptperiods.pdf). That is, we proposed to accept 
quality measures results and numerator and denominator data on quality 
measures from registries that qualify as data submission vendors. We 
proposed that these criteria would be available for each of the two 
alternative reporting periods.
    We also proposed (73 FR 38563) to require registries to complete a 
self-nomination process based on meeting specific technical and other 
requirements to submit on behalf of eligible professionals pursuing 
incentive payment for reporting clinical quality information on 
services furnished during 2009 for reporting both on individual 
measures and measures groups. We proposed that this self-nomination 
would be required regardless of whether or not the registry 
participated in any way in PQRI in 2008 (73 FR 38563).
    In the CY 2008 PFS proposed rule (73 FR 38564), we requested 
comments on the proposed options for registry-based PQRI reporting of 
data on measures and measures groups for services furnished in 2009. We 
received several comments on the proposed options for registry-based 
PQRI reporting of data on measures and measures groups for services 
furnished in 2009. Comments related to the proposed options for 
registry-based PQRI reporting of data on measures groups were 
summarized and addressed above in section II.O1.b.ii of this final rule 
with comment period. A summary of the comments received related to our 
proposed use of registries and the proposed options for registry-based 
PQRI reporting of data on individual quality measures and our responses 
to those comments are discussed below.
    Comment: We received numerous comments in support of continuing to 
allow registries to report quality measures results and numerator and 
denominator data on quality measures to CMS on behalf of eligible 
professionals who submit quality data to them. Some commenters thought 
permitting registry reporting would allow us to better track patient 
outcomes by looking at results over a period of time rather than only 
track processes of care and that registry reporting is less burdensome. 
Additionally, one commenter suggested we allow those registries that 
were ``qualified'' to report to PQRI in 2008 be ``qualified'' to report 
to PQRI in 2009.
    Response: For the 2009 PQRI, we are finalizing our proposal to 
accept quality measures results and numerator and denominator data on 
quality measures from registries as described in the

[[Page 69826]]

proposed rule (73 FR 38562 through 38564). The specifications and 
qualifications for registries to participate in the 2009 PQRI will be 
listed on the PQRI section of the CMS Web site at http://
www.cms.hhs.gov/pqri under the reporting tab, by November 15, 2008.
    Based on the commenter's suggestion that registries that were 
``qualified'' to report to PQRI in 2008 be ``qualified'' to report to 
PQRI in 2009, registries that were ``qualified'' for 2008 will not need 
to be ``re-qualified'' for 2009 unless they are unsuccessful at 
submitting PQRI data for 2008 (that is, fail to submit 2008 PQRI data 
per the 2008 PQRI registry requirements). By March 31, 2009, registries 
that were ``qualified'' for 2008 and wish to continue to participate in 
2009 should indicate their desire to continue participation for 2009 
and their compliance with the 2009 PQRI registry requirements using the 
process described below.
    If a qualified 2008 registry is unsuccessful at submitting 2008 
PQRI data (that is, fails to submit 2008 PQRI data per the 2008 PQRI 
registry requirements), the registry will need to go through the full 
qualification process similar to the qualification process that took 
place for the 2008 PQRI. By March 31, 2009, registries that are 
unsuccessful submitting quality measure results and numerator and 
denominator data for the 2008 PQRI will need to be able to meet the 
specifications listed below and in the document on the Web site and 
send a letter of self-nomination to us.
    Registries that were not qualified for the 2008 PQRI will need to 
be able to meet the specifications listed below and in the document on 
the Web site and send a letter of self-nomination to us by January 31, 
2009.
    Comment: One comment supported registry use if they were open to 
all providers.
    Response: We assume that by ``providers'' the commenter was 
referring to eligible professionals. As we stated previously, registry 
reporting is voluntary. There are ``qualified'' registries in our 2008 
PQRI program that intend to report all of the PQRI measures. These 
registries are accepting eligible professionals who wish to sign up as 
new clients of the registry and are open to all eligible professionals 
who would like to participate with them. There may be costs associated 
with participating through registries but this is outside of the 
purview of PQRI.
    We note that although registries are not required to report all 
PQRI measures, eligible professionals who wish to report PQRI quality 
measures data through registries are required to report on at least 3 
quality measures when reporting on individual quality measures or to 
report all measures in at least one measures group when reporting on 
measures groups. Thus, the eligible professional is responsible for 
ensuring that the registry that he or she selects has the ability to 
report the measures that the eligible professional intends to report 
for PQRI.
    Comment: We received one comment requesting eligible professionals 
with only 1 or 2 measures to be able to report via registries.
    Response: We did not propose to allow registry reporting of 1 or 2 
measures if less than 3 measures apply. Analytically it would be 
difficult to implement in that if an eligible professional submits 
fewer than 3 measures via registries, we would not know whether the 
eligible professional did so because only 2 measures applied or because 
the registry only accepts data for 2 of the provider's measures and he 
or she is reporting their third measure via claims. The amount of 
cross-checking via different submission options that would be necessary 
makes it impractical to implement the commenter's suggestion.
    Comment: A few comments were received regarding the process for 
correcting data that was sent in via registries that is incorrect.
    Response: We highly discourage eligible professionals from changing 
data once it is submitted to CMS from the registry. Allowing data to be 
resubmitted for one or more professionals would not only be time-
consuming and delay reports and payment, but it could also result in 
duplicating or erroneously leaving out some professionals' quality 
measures results and/or numerator and denominator data on quality 
measures.
    Comment: Two commenters requested that we specify what constituted 
an acceptable validation strategy for registries.
    Response: As a result of the MMSEA, which was enacted in December 
2007, and modified the PQRI, we implemented registry-based submission 
for the 2008 PQRI. Thus, for 2008, we required registry vendors to 
supply CMS with their validation strategy that would detail how the 
registry would ensure that the data the registry reported to CMS was 
accurate. We found that there are several variations for this process 
that registries use. We do not believe we have enough experience with 
registries to specify a single validation strategy that all should 
employ and we believe we are benefited from allowing a variety of such 
techniques to be employed based on our approval at this point. 
Therefore, for the 2009 PQRI, registry vendors will again be required 
to supply us with their validation strategy that details how the 
registry would ensure that the data the registry reports to us is 
accurate. In addition, we note that registries are required to sign an 
attestation statement to CMS vouching for the accuracy of the data that 
they submit to CMS on behalf of their eligible professionals.
    As we gain more experience with registry submission, we would 
expect to further specify through rulemaking qualification requirements 
for registries that may include more comprehensive validation 
requirements. As we evaluate our policies, we plan to continue a 
dialogue with stakeholders to discuss opportunities for program 
efficiency and flexibility.
    Comment: One commenter requested that the registry record layout 
and requirements be published by December 31, 2008. Similarly, many 
commenters requested that the registry record layout and requirements 
be published in this final rule with comment period.
    Response: We intend to have the requirements posted on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/pqri by November 
15, 2008. However, the technical specifications (that is, 
specifications for the XML file format that registries would need to 
use to submit PQRI quality measures results and numerator and 
denominator data on quality measures to CMS) are not finalized and will 
be made available to a registry after the registry passes an initial 
qualification process. This will prevent registries that cannot satisfy 
the requirements listed on the Web site from expending resources trying 
to meet the technical specifications. Meeting only the technical 
specifications would not in and of itself qualify the registry to 
participate.
    Comment: A commenter requested that CMS work with standards 
development organizations to align our measures and specifications for 
registries and EHRs with the standards development organizations' 
standards.
    Response: We agree with the commenter's suggestion and do actively 
interact with standards development organizations. We desire to use 
such standards when available and to promote the adoption and use of 
such standards.
    Based on the comments received, the 2009 reporting options for 
registry-based submission of at least three individual PQRI measures 
are finalized as proposed and are listed in Table 13.

[[Page 69827]]



  Table 13--Final 2009 PQRI Registry-Based Submission Reporting Options
                         for Individual Measures
------------------------------------------------------------------------
      Reporting mechanism         Reporting criteria    Reporting period
------------------------------------------------------------------------
Registry-based reporting......  At least 3 PQRI         January 1, 2009-
                                 measures for 80% of     December 31,
                                 applicable Medicare     2009.
                                 Part B FFS patients
                                 of each eligible
                                 professional.
Registry-based reporting......  At least 3 PQRI         July 1, 2009-
                                 measures for 80% of     December 31,
                                 applicable Medicare     2009.
                                 Part B FFS patients
                                 of each eligible
                                 professional.
------------------------------------------------------------------------

    As discussed in section II.O1.b.ii. of this final rule with comment 
period, we are also establishing the three reporting options for 
registry-based submission of quality measures results and numerator and 
denominator data on PQRI measures groups summarized in Table 12.
    To report quality measures results and numerator and denominator 
data on quality measures or measures groups through registries, 
eligible professionals will need to enter into and maintain an 
appropriate legal arrangement with an eligible clinical registry. As we 
described in the CY 2009 PFS proposed rule (73 FR 38562), such 
arrangements will provide for the registry's receipt of patient-
specific data from the eligible professional and the registry's 
disclosure of quality measures results and numerator and denominator 
data on behalf of the eligible professional to CMS for the PQRI. Thus, 
the registry would act as a Health Insurance Portability and 
Accountability Act of 1996 (Pub. L. 104-191) (HIPAA) Business Associate 
and agent of the eligible professional. Such agents are referred to as 
``data submission vendors.'' Such ``data submission vendors'' would 
have the requisite legal authority to provide clinical registry data on 
behalf of the eligible professional to the Quality Reporting System 
developed in accordance with the statute. The registry, acting as such 
a data submission vendor, will submit registry-derived measures 
information to the CMS designated database within the Quality Reporting 
System, using a CMS-specified record layout.
    To maintain compliance with applicable statutes and regulations, 
including but not limited to the HIPAA, our program and its data system 
must maintain compliance with HIPAA requirements for requesting, 
processing, storing, and transmitting data. Eligible professionals that 
conduct HIPAA covered transactions also must maintain compliance with 
the HIPAA requirements.
    To submit on behalf of eligible professionals pursuing incentive 
payment for reporting clinical quality information on services 
furnished during 2009 for reporting both on individual measures and 
measures groups, registries that were ``qualified'' for 2008 will not 
need to be ``re-qualified'' for 2009 unless they are unsuccessful at 
submitting 2008 PQRI data (that is, fail to submit 2008 PQRI data per 
the 2008 PQRI registry requirements). Registries that were 
``qualified'' for 2008 and wish to continue to participate in 2009 
should indicate their desire to continue participation for 2009 by 
submitting a letter indicating their continued interest in being a PQRI 
registry for 2009 and their compliance with the 2009 PQRI registry 
requirements by March 31, 2009. Such letters should be sent to: 2009 
PQRI Registry Nomination, Centers for Medicare & Medicaid Services, 
Office of Clinical Standards and Quality, Quality Measurement and 
Health Assessment Group, 7500 Security Blvd., Mail Stop S3-02-01, 
Baltimore, MD 21244-1850.
    If a qualified 2008 registry is unsuccessful at submitting 2008 
PQRI data (that is, fails to submit 2008 PQRI data per the 2008 PQRI 
registry requirements), the registry will need to go through the full 
self-nomination process again. By March 31, 2009, registries that are 
unsuccessful submitting quality measure results and numerator and 
denominator data for 2008 will need to be able to meet the 
specifications listed in this final rule with comment period and in the 
document on the Web site and send a letter of self-nomination to the 
above address. Registries that were not ``qualified'' for 2008 will 
need to be able to meet the specifications listed in this final rule 
with comment period and in the document on the Web site and send a 
letter of self-nomination to the above address by January 31, 2009.
    As we stated in the CY 2009 PFS proposed rule (73 FR 38563), we 
will make every effort to ensure that registries that are ``qualified'' 
will be able to successfully submit quality measures results and 
numerator and denominator data on PQRI quality measures or measures 
groups, but we cannot assume responsibility for the successful 
submission of data on PQRI quality measures or measures groups, by the 
registry.
    The 2009 registry technical requirements will be posted on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/pqri by November 
15, 2008. In general, to be considered qualified to submit individual 
quality measures on behalf of professionals wishing to report under the 
2009 PQRI, a registry must:
     Have been in existence as of January 1, 2009.
     Be able to collect all needed data elements and calculate 
results for at least three measures in the 2009 PQRI program (according 
to the posted 2009 PQRI Measure Specifications).
     Be able to calculate and submit measure-level reporting 
rates by NPI/Taxpayer Identification Number (TIN).
     Be able to calculate and submit measure-level performance 
rates by NPI/TIN.
     Be able to separate out and report on Medicare Fee for 
Service (Part B) patients only.
     Provide the Registry name.
     Provide the Reporting period start date (covers dates of 
services from).
     Provide the Reporting period end date (covers dates of 
services through).
     Provide the measure numbers for the PQRI quality measures 
on which the registry is reporting.
     Provide the measure title for the PQRI quality measures on 
which the registry is reporting.
     Report the number of eligible instances (reporting 
denominator).
     Report the number of instances of quality service 
performed (numerator).
     Report the number of performance exclusions.
     Report the number of reported instances, performance not 
met (eligible professional receives credit for reporting, not for 
performance).
     Be able to transmit this data in a CMS-approved XML 
format.
     Comply with a secure method for data submission.
     Submit an acceptable ``validation strategy'' to CMS by 
March 31, 2009. A validation strategy ascertains whether eligible 
professionals have submitted accurately and on at least the minimum 
number (80 percent) of their eligible patients, visits, procedures, or 
episodes for a given measure. Acceptable validation strategies often 
include such provisions as the registry being able to conduct random 
sampling of their

[[Page 69828]]

participants' data, but may also be based on other credible means of 
verifying the accuracy of data content and completeness of reporting or 
adherence to a required sampling method.
     Enter into and maintain with its participating 
professionals an appropriate legal arrangement that provides for the 
registry's receipt of patient-specific data from the eligible 
professionals, as well as the registry's disclosure of quality measure 
results and numerator and denominator data on behalf of eligible 
professionals who wish to participate in the PQRI program.
     Obtain and keep on file signed documentation that each NPI 
whose data is submitted to the registry has authorized the registry to 
submit quality measures results and numerator and denominator data to 
CMS for the purpose of PQRI participation. This documentation must meet 
the standards of applicable law, regulations, and contractual business 
associate agreements.
     Provide CMS access (if requested) to review the Medicare 
beneficiary data on which 2009 PQRI registry-based submissions are 
founded.
     Provide the reporting option (reporting period and 
reporting criteria) that the eligible professional has satisfied or 
chosen.
     Registries must provide CMS an ``attestation statement'' 
which states that the quality measure results and numerator and 
denominator data provided to CMS are accurate and complete.
    In addition to the above, registries that wish to submit 2009 
quality measures information on behalf of their participating eligible 
professionals seeking to participate in the 2009 PQRI based on 
satisfying the criteria applicable to reporting of measures groups must 
be able to:
     Indicate whether each eligible professional within the 
registry who wishes to submit PQRI using the measures groups will be 
doing so for the 6- or 12-month period.
     Base reported information only on patients to whom 
services were furnished during the 12-month reporting period of January 
through December 2009 or the 6-month reporting period of July 2009 
through December 2009.
     Agree that the registry's data may be inspected by CMS 
under our health oversight authority if non-Medicare patients are 
included in the consecutive patient group.
     Be able to report data on all of the measures in a given 
measures group and on either 30 consecutive patients from January 1 
through December 31, 2009 (note this consecutive patient count must 
include some Medicare Part B FFS beneficiaries) or on 80 percent of 
applicable Medicare Part B FFS patients for each eligible professional 
(with a minimum of 30 patients during the January 1, 2009 through 
December 31, 2009 reporting period or a minimum of 15 patients during 
the July 1, 2009 through December 31, 2009 reporting period).
     If reporting consecutive patients, provide the beginning 
date of service that initiates the count of 30 consecutive patients.
     Be able to report the number of Medicare Fee for Service 
patients and the number of Medicare Advantage patients that are 
included in the consecutive patients reported for a given measures 
group.
    Registries that were ``qualified'' for 2008 and wish to continue to 
participate in 2009 must indicate their compliance with the above 
requirements for 2009 at the time that they indicate their desire to 
continue participation for 2009.
    We will provide the technical specifications (that is, 
specifications for the XML file format that registries would need to 
use to submit PQRI quality measures results and numerator and 
denominator data on quality measures to CMS) to registries after a 
registry passes an initial qualification process for the 2009 PQRI. 
This will prevent registries that cannot satisfy the requirements 
listed on the Web site from expending resources trying to meet the 
technical specifications. Meeting only the technical specifications 
would not in and of itself qualify the registry to participate.
iv. EHR-Based Submission for Reporting Individual Measures
    In addition to the testing of registry-based submission, we also 
described in the CY 2009 PFS proposed rule (73 FR 38564 through 38565) 
our plans to test the submission of clinical quality data extracted 
from EHRs for five 2008 PQRI measures and proposed to accept PQRI data 
from EHRs and to pay the incentive payment based on that submission for 
a limited subset of the proposed 2009 PQRI quality measures.
    We proposed to begin accepting submission of clinical quality data 
extracted from EHRs on January 1, 2009 or as soon thereafter as is 
technically feasible, based upon our completion of the 2008 EHR data 
submission testing process and our determination that accepting data 
from EHRs on quality measures for the 2009 PQRI is practical and 
feasible. We proposed in the CY 2009 PFS proposed rule (73 FR 38564) 
that the date on which we will begin to accept quality data submission 
on services furnished in 2009 would depend on having the necessary 
information technology infrastructure components and capacity in place 
and ready to accept data on a scale sufficient for national 
implementation of PQRI submission through this mechanism.
    We proposed that EHR vendors that would like to enable their 
customers to submit data on PQRI that is extracted from their 
customers' EHRs to the CMS-designated clinical warehouse should update 
or otherwise assure that their EHR products capture and can submit the 
necessary data elements identified for measure specifications and 
technical specifications for EHR-based submission. We proposed that we 
would use Certification Commission for Healthcare Information 
Technology (CCHIT) criteria and the Healthcare Information Technology 
Standards Panel (HITSP) interoperability standards where possible and 
we encouraged vendors to do so also. We encouraged the use of EHRs that 
have been certified by the CCHIT for data submission, but recognized 
that there would be some eligible professionals who are using systems 
in specialties for which there are no appropriate CCHIT certified EHR 
systems, or who purchased and implemented their EHR prior to the 
availability of CCHIT certification.
    We proposed as criteria for satisfactory submission of data for 
quality measures for covered professional services by EHR-based 
submission for the 2009 PQRI the same criteria for satisfactory 
reporting and the same reporting period that we proposed for claims-
based submission of data for individual 2009 PQRI measures. The 
proposed reporting criteria for EHR-based submission of individual PQRI 
measures are summarized in Table 14.

[[Page 69829]]



 Table 14--Proposed 2009 PQRI EHR-Based Submission Reporting Options for
                           Individual Measures
------------------------------------------------------------------------
      Reporting mechanism         Reporting criteria    Reporting period
------------------------------------------------------------------------
EHR-based reporting...........  At least 3 PQRI         January 1, 2009-
                                 measures, or 1-2        December 31,
                                 measures if less than   2009.
                                 3 apply to the
                                 eligible
                                 professional, for 80%
                                 of applicable
                                 Medicare Part B FFS
                                 patients of each
                                 eligible professional.
------------------------------------------------------------------------

    In the CY 2008 PFS proposed rule (73 FR 38565), we invited comments 
on the proposed use of EHR-based data submission for PQRI. We received 
numerous comments on the proposed use of EHR-based data submission for 
PQRI, which are summarized and addressed below.
    Comment: We received many comments in favor of accepting quality 
measures data through EHRs in 2009. These commenters cited EHRs as a 
means for increasing PQRI participation and being able to report more 
accurate data. There were a few commenters who, while favoring EHR data 
submission in general, thought that it was premature to begin this 
process in 2009.
    Response: We proposed to begin EHR data submission for PQRI in 2009 
based on anticipation that we would have sufficient testing completed 
to be confident that systems would be in place and operational by 
January 1, 2009. At this point, the testing process is incomplete. As a 
result, we agree with the commenter's suggestion that it is premature 
to begin EHR submission as part of the 2009 PQRI. Rather, we believe 
that it is more prudent to allow the 2008 testing process to be 
completed.
    Furthermore, we are aware of the importance of promoting and 
aligning with the work of health information technology (HIT) standards 
development organizations. By postponing implementation of EHR 
submissions for PQRI, we believe this alignment with and promotion of 
the adoption and uses of HIT standards will be enhanced.
    Finally, we believe it would benefit eligible professionals to know 
in advance of the start of a PQRI reporting period which EHR vendors 
are qualified to submit clinical quality data extracted from their EHR 
to CMS. At this point, we would be unable to identify such vendors in 
view of the incomplete testing process.
    Rather than implement EHR reporting for the 2009 PQRI, and in order 
to prepare for possible implementation of EHR reporting for the 2010 
PQRI, we will complete the 2008 testing and continue additional testing 
in 2009. In addition, upon completion of satisfactory testing, we 
intend to qualify EHR vendors and their specific products to submit 
clinical quality data extracted from their EHR products to the CMS 
quality data warehouse. As vendors qualify, we would post the names on 
the PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri for 
informational purposes.
    It should be noted, however, that qualification of vendors for EHR 
data submission does not assure that we will include EHR data 
submission as an option for satisfactorily reporting data on quality 
measures for the 2010 PQRI. Rather, this will be the subject of future 
notice and comment rulemaking.
    The process we will use to qualify EHR vendors and their specific 
products is described below.
    Comment: One commenter suggested we allow non-CCHIT certified EHRs 
to submit data to PQRI.
    Response: We are not planning to accept data via EHRs for purposes 
of satisfactorily reporting data on quality measures in the 2009 PQRI 
and instead will only continue testing in the 2009 PQRI. We do not 
intend to limit testing to CCHIT certified EHRs given the fact that 
relevant certification standards may not yet have been adopted. Any EHR 
quality data submission will be required to comply with all current 
regulations regarding security, privacy, and HIPAA.
    Comment: A few commenters suggested allowing EHRs to report quality 
measures data on measures groups.
    Response: We did not propose this option because of our concerns 
with the feasibility of such reporting. In addition, as discussed 
previously, we are not including EHR reporting for the 2009 PQRI as an 
option but instead will continue testing during 2009.
    Comment: A commenter was concerned that CMS does not inadvertently 
facilitate anti-competitive behavior by allowing reporting of 
information on quality measures via EHRs.
    Response: We are unclear as to how allowing quality data reporting 
through EHRs could result in anti-competitive behavior.
    Comment: A few commenters suggested either paying more money so 
that providers can adopt HIT or paying more incentives for measures 
submitted electronically.
    Response: We are authorized by statute to provide incentive 
payments in 2009 to eligible professionals who satisfactorily report 
PQRI quality measures data and/or who are successful electronic 
prescribers only. We lack specific authority to pay eligible 
professionals more incentives for the adoption of HIT or for measures 
submitted electronically.
    The basis for the calculation of the incentive payment for PQRI is 
also statutorily defined and previously discussed. We do not have the 
authority to modify the amount of payments to promote particular 
objectives, nor to base the incentive payments for PQRI on using an 
electronic means of submission. As identified in section II.O1.d.i. 
below, we note that one of the structural measures selected for 
inclusion in the 2009 PQRI is an HIT measure (Measure 124). 
Thus, an eligible professional who reports this measure along with 
meeting the other criteria for satisfactorily reporting for the 2009 
PQRI can earn an additional 2.0 percent of their estimated total 
allowed charges for covered professional services furnished during the 
2009 PQRI reporting period for their adoption and use of HIT.
    Additionally, as described in section II.O2. of this final rule 
with comment period, we are authorized to pay a 2.0 percent incentive 
payment for eligible professionals who are successful electronic 
prescribers in 2009. The 2.0 percent incentive payment for successful 
electronic prescribers is a separate incentive payment from the 2.0 
percent incentive payment authorized for satisfactory reporting of 
quality information for the 2009 PQRI.
    Comment: A few commenters requested that we publish the submission 
standards for EHRs as soon as possible to allow practitioners and 
vendors adequate time to modify their systems by January 1, 2009. In 
addition, several commenters requested that the final rule specify the 
procedures and requirements that EHR vendors must meet to minimize 
errors in the EHR reporting process during the reporting period as well 
as procedures to be followed to correct for errors that may

[[Page 69830]]

occur when the vendor submits data to CMS.
    Response: As stated above, we are not planning to accept data via 
EHRs for purposes of satisfactorily reporting data on quality measures 
in the 2009 PQRI. We intend, however, to continue testing in 2009 and 
to qualify EHR vendors and their specific products to submit clinical 
quality data extracted from their EHR products to the CMS quality data 
warehouse so that we may potentially begin to accept data via EHRs for 
purposes of satisfactorily reporting data on quality measures in future 
PQRI reporting. Therefore, by December 31, 2008, we anticipate posting 
on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri 
a list of requirements that EHR vendors must be able to meet in order 
to self-nominate to have their product ``qualified'' to be able to 
participate in the continued testing phase in 2009 and with 
anticipation that such vendors' systems may be able to submit quality 
measures data in the future to CMS for PQRI on behalf of the eligible 
professional(s) using the system(s).
    Based on the comments received related to our proposal to begin 
accepting data from EHRs for the 2009 PQRI and our experience thus far 
with testing the EHR reporting mechanism, we are not finalizing our 
proposal to allow eligible professionals to submit clinical quality 
data extracted from EHRs for purposes of receiving an incentive payment 
for the 2009 PQRI. Instead, we will continue to test the submission of 
clinical quality data extracted from EHRs in 2009. The measures on 
which specifications are available for testing EHR data submission are 
identified in Table 15. The specifications for these measures can be 
found on the QualityNet Web site at http://www.qualitynet.org/dcs/ContentServer?cid=1214232460333&pagename=QnetPublic%2FPage%2FQnetTier3&c=Page.
    By December 31, 2008, we also anticipate posting on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/pqri a list of 
requirements that EHR vendors must be able to meet in order to self-
nominate to have their product ``qualified'' to potentially be able to 
submit quality measures data for the 2010 PQRI to CMS. Qualifying EHR 
vendors ahead of actual data submission will facilitate the live data 
submission process.
    EHR vendors interested in engaging in the 2009 testing and 
qualification process should review the EHR requirements document that 
will be posted on the PQRI section of the CMS Web site at http://www.cms.hhs.gov. If an EHR vendor wishes to be included in the testing 
and qualification process, the vendor should submit a letter of self-
nomination to CMS by February 13, 2009 to: PQRI EHR Nomination, Centers 
for Medicare & Medicaid Services, Office of Clinical Standards and 
Quality, Quality Measurement and Health Assessment Group, 7500 Security 
Blvd, Mail Stop S3-02-01, Baltimore, MD 21244-1850.
    The EHR vendors who self-nominate will be included in a 
``qualifying'' process (similar to the process previously established 
for registries) to assess their capabilities. If they are found to meet 
the requirements, the EHR vendors will be included in the data 
submission testing. These processes will have firm timelines that 
vendors must meet. Failure to meet any of these deadlines will be a 
basis for not continuing to consider the EHR vendor for qualification 
to submit data to the CMS quality data warehouse. The number of self-
nominated vendors will determine the timeframe needed to complete the 
testing and qualification process. However, it is expected that this 
process will conclude by mid-summer 2009. The measures and reporting 
mechanism for the 2010 PQRI will be the subject of future notice and 
comment rulemaking. As previously noted, the completion of the EHR 
vendor quality data submission qualification process does not ensure 
that EHR reporting will be an option for the 2010 PQRI.
c. Statutory Requirements for Measures Included in the 2009 PQRI
i. Overview and Summary
    Section 1848(k)(2)(B)(ii) of the Act requires CMS to publish in the 
Federal Register by no later than August 15, 2008, a proposed set of 
quality measures that the Secretary determines would be appropriate for 
eligible professionals to use to submit data in 2009. In addition, 
section 1848(k)(2)(B)(iii) of the Act requires CMS to publish in the 
Federal Register by no later than November 15, 2008, the final set of 
quality measures that would be appropriate for eligible professionals 
to use to submit data in 2009.
    As discussed in the CY 2009 PFS proposed rule (73 FR 38565), in 
examining the statutory requirements of section 1848(k)(2)(B)(i) of the 
Act, as amended by the MMSEA, we believe that the requirement that 
measures be endorsed or adopted by a consensus organization applies to 
each measure that would be included in the measure set for submitting 
quality data and/or quality measures results and numerator and 
denominator data on the quality measures on covered professional 
services furnished during 2009. Likewise, the requirement for measures 
to have been developed using a consensus-based process (as identified 
by the Secretary) applies to each measure. By contrast, we do not 
interpret the provision requiring inclusion of measures submitted by a 
specialty to apply to each measure. Rather, we believe this requirement 
means that in endorsing or adopting measures, a consensus organization 
must include in its consideration process at least some measures 
submitted by one physician or organization representing a particular 
specialty.
    We also believe that under sections 1848(k)(2)(B)(ii) through (iii) 
of the Act, the Secretary is given broad discretion to determine which 
quality measures meet the statutory requirements and are appropriate 
for inclusion in the final set of measures for 2009. We do not 
interpret section 1848(k)(2)(B) of the Act to require that all measures 
that meet the basic requirements of section 1848(k)(2)(B)(i) of the Act 
be included in the 2009 set of quality measures. The statutory 
requirements for consensus organizations and the use of a consensus-
based process for developing quality measures as they relate to the 
requirements for the 2009 PQRI measures were discussed in the CY 2009 
PFS proposed rule (73 FR 38565 through 38566). As discussed in the 
proposed rule, consistent with the principle that measures used for 
2009 be endorsed or adopted by a consensus organization and developed 
through the use of a consensus-based process, but without limiting the 
2009 PQRI measures to those meeting the definition of a voluntary 
consensus standard under the National Technology Transfer and 
Advancement Act of 1995 (Pub. L. 104-113) (NTTAA), we interpret 
``consensus-based process for developing measures'' as used in section 
1848(k) of the Act to encompass not only the basic development work of 
the formal measure developer, but also to include the achievement of 
consensus among stakeholders in the health care system.
    In addition, section 1848(k)(2)(D) of the Act, as added by the 
MIPPA, requires that for each 2009 PQRI quality measure, ``the 
Secretary shall ensure that eligible professionals have the opportunity 
to provide input during the development, endorsement, or selection of 
measures applicable to services they furnish.'' Eligible professionals 
have the opportunity to provide input during the development of a 
measure during the public comment phase of a measure's

[[Page 69831]]

development. As part of the measure development process, measure 
developers typically solicit public comments on measures that they are 
testing in order to determine whether additional refinement of the 
measure(s) is needed prior to submission for consensus endorsement. 
Additional information on the measure development process used by CMS 
contractors is available in the ``Quality Measures Development 
Overview'' document found on the CMS Web site at http://www.cms.hhs.gov/QualityInitiativesGenInfo/downloads/QualityMeasuresDevelopmentOverview.pdf. Eligible professionals also 
have the opportunity to provide input on a measure as the measure is 
being vetted through the consensus endorsement and/or adoption process. 
Both the NQF and AQA employ a public comment period for measures vetted 
through their respective consensus endorsement or adoption processes. 
Finally, eligible professionals have an opportunity to provide input on 
measures selected for inclusion in PQRI through the notice and comment 
rulemaking process we use to announce the measures selected for 
inclusion in PQRI each year. As required by section 1848(k)(2)(B)(ii) 
of the Act, we proposed measures for the 2009 PQRI in the Federal 
Register in July, which was followed by a 60-day comment period in 
which eligible professionals had the opportunity to comment. 
Accordingly, we believe the additional requirement under MIPPA with 
regard to the 2009 PQRI has been met in multiple ways.
ii. Summary of Comments and Responses
    We received several comments related to the statutory requirements 
for measures included in the 2009 PQRI and/or our approach to the 
selection of measures, which are summarized and addressed below.
    Comment: Several comments expressed concerns about the AQA's 
structure and original intended purpose not being ideally suited to its 
current role in PQRI, and its role in the measure endorsement process 
not clearly adding value to the process. Many comments noted that the 
AQA does not meet the NTTAA definition of a ``voluntary consensus 
standards body.''
    Response: Both the NQF and the AQA were identified as examples of 
consensus organizations under section 1848(k)(2)(B)(i) of the Act. We 
interpreted this to mean that for purposes of the PQRI, these 
organizations, as constituted on the date of enactment of the MIEA-
THRCA authorizing legislation, are considered to be consensus 
organizations. On the other hand we stated that we found the NQF to be 
an organization organized and operating in a manner that meets the 
NTTAA definition of a ``voluntary consensus standards body,'' but we 
did not find that the AQA constituted such an organization. We also 
stated our policy preference for measures endorsed by an organization 
that meets the NTTAA definition of ``voluntary consensus standards 
body'' to one that does not so qualify. Further, we stated our policy 
that a measure that was specifically declined for endorsement by the 
NQF would not be included in PQRI even though it was adopted by AQA.
    Comment: Several commenters commended NQF for the scientific rigor 
of its structure and review processes. Some commenters in favor of 
establishing a single consensus organization entity whose approval 
would qualify a measure for PQRI inclusion went on to name NQF as the 
leading or only named candidate for such an organization.
    Response: As stated previously, we have stated a policy preference 
for NQF-endorsed measures. However, we are not limited by statute to 
using only NQF-endorsed measures.
    Comment: We received some comments supportive of having measures 
that originate from a variety of sources and opposed to requiring PQRI 
measurement development to come solely from physician controlled 
organizations. At the same time, several commenters suggested we 
consider establishing as policy that quality measures to be used by, 
and analyzed at the level of, individual PQRI-eligible professionals, 
must be developed by clinician controlled organizations to assure 
relevance and promote uptake by the eligible professional community. 
Multiple commenters suggested that explicit preference be given for 
measures developed or endorsed by physician specialty societies, in the 
context of consensus-organization review and CMS measure selection 
processes. Some commenters stated that the AMA-PCPI should be the sole 
source for physician level measures. Several commenters specifically 
presented an interpretation of the requirement under section 
1848(k)(2)(B)(i) of the Act for the 2009 PQRI measures to include 
measures submitted by a physician specialty as meaning that the 2009 
PQRI should include only measures developed by physician organizations, 
to assure physician control of available measures applicable to 
assessing the clinical performance of individual physicians.
    Response: Physician involvement and leadership is standard in the 
work of both measure developers and consensus organizations. As a 
result, physicians are actively involved at all levels of measure 
development and consensus adoption and endorsement. We are in agreement 
that physician expertise is an important ingredient in measure 
development and in the consensus process. We further recognize the 
leadership of physician organizations, as is reflected in the large 
number of physician quality measures included in PQRI which were 
developed by the AMA-PCPI and its participating specialty societies.
    However, we do not agree that physicians should be in complete 
control of the process of measure development, as would be the case if 
measures were required to be developed solely by physician-controlled 
organizations. Any such restriction would unduly limit the basic 
development of physician quality measures and the scope and utility of 
measures that may be considered for endorsement as voluntary consensus 
standards. We do not interpret the provisions in section 
1848(k)(2)(B)(i) of the Act to place special restrictions on the type 
or make up of the organizations carrying out this basic development of 
physician measures, such as restricting the initial development to 
physician-controlled organizations. Similarly, we do not interpret 
section 1848(k)(2)(B)(i) of the Act to require that each measure 
included in the 2009 PQRI have been developed by a physician specialty.
    Section 1848(k)(2)(B)(i) of the Act, thereby, maintains flexibility 
in potential sources of measure consensus review, which is, like having 
multiple sources of measure development, key to maintaining a robust 
marketplace for development and review of quality measures.
    Comment: Several comments addressed gaps in the PQRI measure set, 
such as the lack of measures related to patient-centeredness, equity/
disparities, and episodes of care based efficiency. One comment 
expressed concern that the PQRI measures appear to be targeted to 
single conditions and to patients where classical treatment goals are 
appropriate and do not contain any quality measures specifically 
addressing multiple, co-morbid conditions. A few comments urged CMS to 
adopt quality measures that would enable the full range of physicians 
to participate and to identify and add more quality measures to fill 
the gaps. The commenters also requested that we consider developing 
interim opportunities for eligible professionals for whom there is a

[[Page 69832]]

shortage of available measures to participate in the PQRI and to 
receive an incentive for doing so. One comment urged funding for 
consumer-relevant measure development to fill the existing gaps and to 
include language in the measure development contracts that reflects the 
perspectives of consumers and purchasers. Another commenter urged us to 
include more measures on which specifications for electronic data 
submission via EHRs are available.
    Response: Health care quality measures are currently developed by a 
variety of organizations and used by a variety of governmental and 
nongovernmental, and public-private initiatives which have various and 
at times differing priorities and programmatic needs for quality 
measures. As reflected by the considerations for identifying proposed 
PQRI quality measures described in the CY 2009 PFS proposed rule (73 FR 
38566), we are committed to having a broad and robust set of quality 
measures for the PQRI. However, we largely depend on the development of 
measures by professional organizations and other measure developers. 
Although we had significant involvement in the development of measures 
applicable to eligible professionals at the start of the PQRI, ideally 
we would not need to be closely involved in the development of 
clinician-level quality measures but would select from measures that 
meet the statutory requirements. Thus, we encourage professional 
organizations and other measure developers to fund and develop measures 
that address some of the gaps identified by the commenters.
    Comment: One comment suggested that we add additional measures in 
July of each year for implementation in that year's PQRI. For example, 
in July 2009, we should announce additional measures for inclusion in 
the 2009 PQRI.
    Response: Section 1848(k)(2)(B)(ii) requires us to publish a 
proposed set of quality measures for inclusion in a particular year's 
PQRI program in the Federal Register by no later than August 15th of 
the prior year. Additionally, section 1848(k)(2)(B)(iii) requires us to 
publish a final set of quality measures for inclusion in a particular 
year's PQRI program in the Federal Register by no later than November 
15th of the prior year. We are not authorized to make any changes to 
the final set of PQRI quality measures for a particular year once the 
set has been published in the Federal Register.
    However, as explained in the CY 2009 PFS proposed rule (73 FR 
38570) we introduced a test measures process during 2008, which gives 
eligible professionals the opportunity to submit the quality data codes 
for measures included in the 2008 Measure Testing Process. No financial 
incentive is associated with the reporting of these 2008 test measures 
though. Instead, the test measures process helps provide experience 
with using the measures which can contribute to future consideration 
for the PQRI. We proposed and are finalizing as 2009 PQRI measures 
certain measures included in the 2008 Test Measures Process.
d. The Final 2009 PQRI Quality Measures
    In the CY 2009 PFS proposed rule (73 FR 38566 through 38567), we 
solicited comments on the implication of including or excluding 175 
specific quality measures in 4 categories. We also explained that while 
we recognized that some commenters may wish to recommend additional 
measures for inclusion in the 2009 PQRI measures that we had not 
proposed, we would not be able to consider such additional measures for 
inclusion in the 2009 measure set. We also described several 
considerations used for selecting the measures proposed for the 2009 
PQRI.
    We received multiple comments on the proposed 2009 PQRI quality 
measures, which are addressed below.
    Comment: A number of comments requested or recommended that we make 
readily available on an ongoing basis more detailed information on the 
measure development process and measures in development. Numerous 
commenters also requested final measure specifications be published as 
far in advance of the beginning of the reporting period as possible, 
and that more detailed information about measures proposed or finalized 
for use in PQRI be published at the same time as or in advance of 
future rulemaking.
    Response: We agree that it is desirable for the public to have 
information on the measures development process and measures in 
development. To this end CMS has developed a standardized process to be 
used for CMS contracted measures development. This standardized process 
is detailed in the ``Quality Measures Development Overview'' document 
found on the CMS Web site at http://www.cms.hhs.gov/QualityInitiativesGenInfo/downloads/QualityMeasuresDevelopmentOverview.pdf. Under the standardized measures 
development process, we plan that all CMS contracted measures 
developers, in the future, will post the measures for public comment on 
the CMS Web site rather than solely on the individual contractor's Web 
site. This will allow a uniform access point for information during the 
CMS contracted basic development process for measures intended for 
PQRI. Additionally, other major measures developers publish measures 
and specifications during development and seek public comment as do 
both NQF and AQA during their consensus processes.
    We agree with the commenters that it is desirable to provide final 
measure specifications sufficiently in advance of the reporting period 
to allow reasonable time for professionals to analyze new or revised 
measures and implement any needed changes in their office workflows to 
accurately capture and successfully submit data on a selection of 
measures applicable to their practice on which they can act to improve 
the quality of the services they furnish. Having detailed information 
on measures available in advance of the reporting period also enhances 
the ability of vendors (such as practice-management software, billing 
services, and electronic health records vendors) to support 
professionals' successful implementation of revised data-capture 
processes for the measures.
    Given that section 1848(k)(2)(B)(iii) requires that we publish the 
final list of 2009 PQRI measures in the Federal Register no later than 
November 15, 2008, we expect to publish detailed specifications shortly 
after that date. Detailed measure specifications for measures new or 
revised for 2009 PQRI will be posted on the Measures/Codes tab of the 
PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri. These 
detailed specifications will include instructions for reporting and 
identifying the circumstances in which each measure is applicable. The 
detailed technical specifications for measures in the final listing for 
the 2009 PQRI remain potentially subject to corrections until the start 
of the 2009 reporting period, as we stated in the proposed rule. In 
addition, the 2009 PQRI quality measure specifications for any given 
quality measure may be different from specifications for the same 
quality measure used for 2008. Specifications for all 2009 PQRI quality 
measures, whether or not included in the 2008 PQRI program, must be 
obtained from the specifications document for 2009 PQRI quality 
measures.
    Since its inception, the PQRI program has expanded rapidly in terms 
of the number of measures included in the PQRI. This rapid growth was 
necessary in order to meet a primary objective of having a sufficient 
number of measures to allow broad participation by eligible 
professionals who cover a broad scope

[[Page 69833]]

of services provided to Medicare beneficiaries. We now have a broad 
range of measures and expect to rely more on the test measures program 
to introduce new measures. In this way, by the time they may be 
proposed for inclusion in a set of measures for a particular year, the 
measures specifications will be published, established, and utilized by 
eligible professionals for test submission.
    Comment: Numerous commenters suggested quality measures in addition 
to the quality measures we had proposed in Tables 11 through 14 of the 
CY 2009 PFS proposed rule (73 FR 38567 through 38572) for the 2009 
PQRI.
    Response: We have not included in final 2009 PQRI quality measures 
any quality measures that were not identified in the CY 2009 PFS 
proposed rule as proposed 2009 PQRI measures. As discussed above in 
this rule, we are obligated by section 1848(k)(2)(B)(ii) of the Act to 
publish and provide opportunity for public comment on proposed 2009 
PQRI quality measures. Measures recommended for selection via comments 
on the proposed rule that were not included in the proposed rule have 
not been placed before the public as part of notice and comment 
rulemaking process. Thus, such additional measures recommended via 
comments on the proposed rule cannot be included in the 2009 PQRI 
quality measure set that is required to be finalized via publication in 
the Federal Register by November 15, 2008 in accordance with section 
1848(k)(2)(B)(iii) of the Act.
    However, we have captured these recommendations and will have them 
available for consideration in identifying measure sets for future 
years' PQRI and other initiatives to which those measures may be 
pertinent or possibly to be introduced as part of a PQRI Test Measures 
Process.
    Comment: We received a few comments that suggested that some 
measures are not conducive to claims-based reporting but are good 
measures if submitted via a registry or an EHR.
    Response: We are not finalizing the proposal to allow submission of 
clinical quality data extracted from EHRS for the 2009 PQRI. We, 
however, agree that some measures are not conducive to claims-based 
reporting. For the 2009 PQRI, there are 18 measures that will only be 
accepted for reporting via registries due to their complex measure 
specifications, which require multiple diagnosis codes; a low number of 
satisfactory submissions during the 2007 PQRI; and a high occurrence of 
inaccurate quality date codes reporting for the 2007 PQRI. These 
measures are identified in Tables 15, 16, 18, and 22 with a ``+'' after 
the Measure Title.
    For the 2009 PQRI, the following 5 quality measures in Table 15 
will be reportable only through registries as individual quality 
measures:
     Measure 7 CAD: Beta-Blocker Therapy for CAD 
Patients with Prior Myocardial Infarction (MI)
     Measure 33 Stroke and Stroke Rehabilitation: 
Anticoagulant Therapy Prescribed for Atrial Fibrillation at Discharge
     Measure 46 Medication Reconciliation: 
Reconciliation After Discharge from an Inpatient Facility
     Measure 81 End-Stage Renal Disease (ESRD): Plan 
of Care for Inadequate Hemodialysis in ESRD Patients
     Measure 82 ESRD: Plan of Care for Inadequate 
Peritoneal Dialysis
    The following 8 quality measures in Tables 16 and 22 will be 
reportable only through registries as individual quality measures or 
part of the CABG measures group for the 2009 PQRI:
     CABG: Prolonged Intubation (Ventilation)
     CABG: Deep Sternal Wound Infection Rate
     CABG: Stroke/Cerebrovascular Accident (CVA)
     CABG: Post-operative Renal Insufficiency
     CABG: Surgical Re-exploration
     CABG: Anti-platelet Medications at Discharge
     CABG: Beta Blockade at Discharge
     CABG: Lipid Management and Counseling
    Finally, the following 5 quality measures in Table 18 will be 
reportable only through registries as individual quality measures for 
the 2009 PQRI:
     Pediatric ESRD: Adequacy of Hemodialysis
     HIV/AIDS: CD4+ Cell Count or CD4+ Percentage
     HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP) 
Prophylaxis
     HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS Who 
Are Prescribed Potent Antiretroviral Therapy
     HIV/AIDS: HIV RNA Control After 6 Months of Potent 
Antiretroviral Therapy
    Comment: One commenter suggested that CMS accept as many measures 
as possible that are based solely on information derived from 
administrative claims so that professionals would not have to do 
additional coding.
    Response: Under the PQRI program eligible professionals are 
provided an incentive payment for submission of quality data. What is 
suggested would not involve submission of quality data but merely 
normal claims submission from which quality inferences would be made. 
An important difference in that approach to PQRI is that under PQRI, by 
submitting quality data, the eligible professional indicates that the 
patient is appropriately attributed to that professional. When purely 
administrative data are used, attribution rules would need to be 
applied, with which the physician or other eligible professional may 
not agree. Thus, focusing on administrative-data based measures only 
could have the unintended consequence of holding the eligible 
professional responsible for certain services which the eligible 
professional might feel are beyond their scope of care for a particular 
patient.
    Comment: Several commenters recommended changes to specific quality 
measures' titles, definitions, and detailed specifications or coding. 
Many of these recommendations were based on alternative interpretations 
of clinical evidence or concerns about the utility of the measures. 
Some requests were specifically concerned that measures be expanded to 
include specific professionals to whom the measure may be applicable 
such as occupational therapists, registered dieticians, and 
audiologists. Specifically, one commenter suggested that in order to 
maximize the impact of Measure 1 Diabetes Mellitus: Hemoglobin 
A1c Poor Control in Diabetes Mellitus, the PQRI specifications should 
continue to require a performance period of 12 months and reporting 
that identifies whether A1c control is good (that is, A1c <= 7.0 
percent), moderate (that is, A1c <= 9.0 percent, but > 7.0 percent), or 
poor (that is, A1c > 9.0 percent). Another commenter requested that CMS 
re-evaluate the use of inpatient site of service codes (99241 through 
99245) for Measure 5 Heart Failure: Angiotensin-Converting 
Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy 
for Left Ventricular Systolic Dysfunction (LVSD), Measure 6 
CAD: Oral Antiplatelet Therapy Prescribed for Patients with CAD, 
Measure 7 CAD: Beta-Blocker Therapy for CAD Patients with 
Prior MI, and Measure 8 Heart Failure: Beta-Blocker Therapy 
for LVSD. Also another commenter requested the addition of 
specifications for inpatient reporting for Measure 56 
Community-Acquired Pneumonia (CAP): Vital Signs, Measure 57 
CAP: Assessment of Oxygen Saturation, Measure 58 CAP: 
Assessment of Mental Status, and Measure 59 CAP: Empiric 
Antibiotic. One commenter expressed gratitude that audiologists are now 
eligible to

[[Page 69834]]

participate in PQRI and willingness to work with the measure developer 
to expand Measure 94 Otitis Media with Effusion (OME): 
Diagnostic Evaluation--Assessment of Tympanic Membrane Mobility and 
Measure 95 Otitis Media with Effusion (OME): Hearing Testing. 
Lastly, one commenter requested that we not use Measures 73 
Cancer: Plan for Chemotherapy Documented and Measure T143 Cancer Care: 
Medical and Radiation--Plan of Care for Pain until the measure 
developers revise the measure specifications to include all 
chemotherapy and biologic disease modalities recognized in clinical 
guidelines. Also, this same commenter requested that we not use the 
Rheumatoid Arthritis measures group until the measures' developer 
revises the measures to include all biologic disease-modifying 
antirheumatic drugs (DMARDS) used as a monotherapy or in combination 
with nonbiologic DMARDS, such as methotrexate.
    Response: Quality measures that have completed the consensus 
processes of NQF or AQA have a designated party (generally the measure 
developer/owner) who has accepted responsibility for maintaining the 
measure. In general, it is the role of the measure owner, developer, or 
maintainer to make changes to a measure. The measure maintainer and/or 
the developer/owner of a measure included in the final set of quality 
measures selected for the 2009 PQRI is identified as the ``Measure 
Source'' in Tables 15 through 18. In addition, NQF has, for its 
endorsed measures, an established maintenance process which may be 
accessed.
    The Secretary is required to select measures through notice and 
comment rulemaking. We do not, however, use notice and comment 
rulemaking as a means to update or modify measure specifications. We 
retain the ability to update or modify specifications to the measures 
until December 31, 2008. After that date, there will be no changes to 
the measure for the 2009 reporting period(s).
    Comment: A number of comments requested or recommended that CMS 
include ``paired'' measures in the 2009 PQRI. Commenters noted that 
while under review by the NQF Steering Committee several measures 
proposed for 2009 were recommended to be implemented as ``paired 
measures'' by the NQF. Commenters referenced the following proposed 
measures as paired measures based on the NQF Steering Committee's 
recommendations:
    (1) Hepatitis C: Hepatitis A Vaccination and Hepatitis C: Hepatitis 
B Vaccination.
    (2) Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating 
Treatment and Hepatitis C: HCV Genotype Testing Prior to Therapy.
    (3) Oncology: Medical and Radiation--Pain Intensity Quantified and 
Oncology: Medical and Radiation--Plan of Care for Pain.
    Response: The 2009 PQRI will include four measures sets that can be 
considered paired measures. Each paired measures set consists of two 
closely related individual measures, but which are composed of two 
similar and complementary aspects of care. The measures assess uniquely 
different constructs in the assessment and/or management of a 
particular condition. Thus, while we note the recommendation that the 
measures in a particular paired measures set be reported together, we 
do not require for the 2009 PQRI that the measures in a particular 
paired measures set be reported together.
    These paired measures do not constitute a measures group. These 
measures may be subject to the measures validation strategy posted on 
PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/25_AnalysisAndPayment.asp#TopOfPage. Under the measures validation 
strategy for eligible professionals that satisfactorily report less 
than three measures, failure to report the additional measure(s) in a 
valid set would cause the eligible professional to fail to meet the 
validation requirements.
    The four paired measures sets for the 2009 PQRI are as follows:
    (1) Hepatitis C: Hepatitis A Vaccination and Hepatitis C: Hepatitis 
B Vaccination.
    (2) Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating 
Treatment and Hepatitis C: HCV Genotype Testing Prior to Therapy.
    (3) Oncology: Medical and Radiation--Pain Intensity Quantified and 
Oncology: Medical and Radiation--Plan of Care for Pain.
    (4) Falls: Risk Assessment and Falls: Plan of Care.
    Reporting instructions and detailed measure specifications for the 
2009 PQRI quality measures will be available by no later than December 
31, 2008 on the PQRI section of the CMS Web site at http://
www.cms.hhs.gov/pqri.
    Based on our review of these comments, the final set of 153 quality 
measures selected for the 2009 PQRI are listed in Tables 15 through 18. 
These measures can be categorized as follows: (1) Measures selected 
from the 2008 PQRI quality measures set; (2) additional NQF-endorsed 
measures; (3) additional AQA-adopted measures; and (4) additional 
measures that had not received NQF endorsement or AQA adoption at the 
time the proposed rule was published but whose selection was contingent 
upon whether they received NQF endorsement or AQA adoption by August 
31, 2008.
    No changes (that is, additions or deletions of measures) will be 
made after publication of this final rule with comment period. However, 
as was the case for 2008, we may make modifications or refinements, 
such as revisions to measures titles and code additions, corrections, 
or revisions to the detailed specifications for the 2009 measures until 
the beginning of the reporting period. Such specification modifications 
may be made through the last day preceding the beginning of the 
reporting period. The 2009 measures specifications will be available on 
the PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri 
when they are sufficiently developed or finalized. We are targeting 
finalization and publication of the detailed specifications for all 
2009 PQRI measures on the PQRI section of the CMS Web site by November 
15, 2008 and will in no event publish these specifications later than 
December 31, 2008. The detailed specifications will include 
instructions for reporting and identify the circumstances in which each 
measure is applicable.
    As described in section II.O1.b.ii. above, we are establishing a 
total of seven measures groups for use in the 2009 PQRI. The measures 
selected for inclusion in each of the 2009 measures groups are listed 
in Tables 19 through 25.
i. Measures Selected From the 2008 PQRI Quality Measures Set
    In the CY 2009 PFS proposed rule (73 FR 38567 through 38570) we 
proposed to include in the 2009 PQRI quality measures set 111 2008 PQRI 
quality measures. We received several comments on the 111 proposed 
measures selected from the 2008 PQRI quality measure set. The comments 
and our responses to those comments are discussed below.
    Comment: We received numerous comments in support of the 2008 PQRI 
measures selected for the 2009 PQRI. One commenter supports the 
retention of all the 2008 PQRI measures proposed for 2009. Other 
commenters specifically support inclusion of the following proposed 
2008 PQRI measures in the 2009 PQRI:
     Measure 1 Diabetes Mellitus: Hemoglobin A1c Poor 
Control in Diabetes Mellitus

[[Page 69835]]

     Measure 6 Coronary Artery Disease (CAD): Oral 
Antiplatelet Therapy Prescribed for Patients With CAD
     Measure 11 Stroke and Stroke Rehabilitation: 
Carotid Imaging Reports
     Measure 24 Osteoporosis: Communication With the 
Physician Managing Ongoing Care Post-Fracture
     Measure 39 Screening or Therapy for Osteoporosis 
for Women Aged 65 Years and Older
     Measure 40 Osteoporosis: Management Following 
Fracture
     Measure 41 Osteoporosis: Pharmacologic Therapy
     Measure 48 Urinary Incontinence: Assessment of 
Presence or Absence of Urinary Incontinence in Women Aged 65 Years and 
Older
     Measure 58 Community-Acquired Pneumonia (CAP): 
Assessment of Mental Status
     Measure 84 Hepatitis C: Ribonucleic Acid (RNA) 
Testing Before Initiating Treatment
     Measure 85 Hepatitis C: HCV Genotype Testing 
Prior to Therapy
     Measure 86 Hepatitis C: Consideration for 
Antiviral Therapy in HCV Patients
     Measure 94 Otitis Media With Effusion (OME): 
Diagnostic Evaluation--Assessment of Tympanic Membrane Mobility
     Measure 95 Otitis Media With Effusion (OME): 
Hearing Testing
     Measure 110 Preventive Care and Screening: 
Influenza Immunization for Patients >= 50 Years Old
     Measure 111 Preventive Care and Screening: 
Pneumonia Vaccination for Patients 65 years and Older
     Measure 112 Preventive Care and Screening: 
Screening Mammography
     Measure 113 Preventive Care and Screening: 
Colorectal Cancer Screening
     Measure 114 Preventive Care and Screening: 
Inquiry Regarding Tobacco Use
     Measure 115 Preventive Care and Screening: 
Advising Smokers to Quit
     Measure 128 Preventive Care and Screening: Body 
Mass Index (BMI) Screening and Follow-Up
    We also received several comments specifically suggesting that 
Measure 73 Cancer: Plan for Chemotherapy Documented be removed from the 
2009 PQRI quality measures for failure to achieve NQF endorsement.
    Response: Table 15 shows that 101 of 111 proposed 2008 PQRI quality 
measures have been finalized for the 2009 PQRI. All of the measures 
specifically supported by commenters are included in Table 15. As 
suggested by commenters Measure 73 Cancer: Plan for 
Chemotherapy Documented has been removed from the 2009 PQRI quality 
measures set because the measure was considered and specifically 
declined for endorsement by NQF on or before August 31, 2008.
    Comment: With respect to the two proposed structural measures 
(Measure 124 and Measure 125), we received 2 comments 
suggesting that we allow a practice or an eligible professional to 
simply attest to the use of an EHR or electronic prescribing in their 
office rather than report it on a claim as this was considered 
burdensome. Another comment recommended we treat an eligible 
professional's recognition under the National Committee for Quality 
Assurance (NCQA) Physician Practice Connection (PPC) as equivalent to 
reporting the two structural measures (Measures 124 and 
125).
    Response: For those professionals using an EHR, their system should 
be able to auto populate a superbill with the appropriate G code for 
this measure. Many EHRs already code the visit with diagnosis and level 
of service. The G code could be added to the superbill in this way. The 
EHR measure (Measure 124) requires more than just having an 
EHR system and software available in the office; rather the measure 
also measures ongoing use of the systems.
    As required by section 1848(m)(3)(A) of the Act, as redesignated 
and amended by the MIPPA, we are removing the electronic prescribing 
measure (measure 125) from the 2009 PQRI quality measure set 
and adopting the measure for use in the e-prescribing incentive program 
described in section II.O2. of this final rule with comment period.
    With respect to the recommendation to consider recognition under 
the NCQA PPC as equivalent to satisfactory PQRI reporting, a 
fundamental PQRI requirement is that the data be reported on PQRI 
measures. The PPC is a proprietary recognition program that does not 
utilize PQRI Measures 124 or 125.
    Comment: One commenter requested clarification of a statement made 
in the proposed rule regarding the 2008 PQRI Measure 4 
Screening for Future Fall Risk not proposed for 2009. This commenter 
noted that the measure developer did not make a request to retire this 
measure from PQRI nor was the measure replaced by a new AQA-adopted or 
NQF-endorsed measure proposed for 2009 as stated in the CY 2009 PFS 
proposed rule (73 FR 38567). The commenter advocated for Measure 
4 Screening for Future Fall Risk to remain available for the 
2009 PQRI. Another commenter supported the removal of Measure 
4 Screening for Future Fall Risk as a result of two new 
substantially similar fall measures proposed for 2009.
    Response: The commenter was correct in noting that the proposed 
rule incorrectly stated that the 2008 PQRI Measure 4 Screening 
for Future Fall Risk not proposed for 2009 was retired and intended to 
be replaced by new AQA-adopted or NQF-endorsed measures proposed for 
2009.
    However, we are not including Measure 4 Screening for 
Future Fall Risk in the final set of 2009 PQRI quality measures. We 
consider the following proposed AQA-adopted measures included in the 
final 2009 PQRI quality measures set listed in Table 17 to 
substantially cover the same care process as Measure 4 
Screening for Future Fall Risk and more comprehensive: Falls: Risk 
Assessment and Falls: Plan of Care.
    In addition, as previously stated in this final rule with comment 
period, we are obligated by section 1848(k)(2)(B)(ii) of the Act to 
publish and provide opportunity for public comment on proposed 2009 
PQRI quality measures prior to including them in the final 2009 PQRI 
quality measures set.
    Based on whether a measure retained its NQF endorsement status as 
of August 31, 2008 and the comments received, we are finalizing in the 
2009 PQRI quality measure set the following 101 of 111 proposed 2008 
PQRI measures identified in Table 15.

          Table 15--Final 2008 PQRI Measures Selected for 2009
------------------------------------------------------------------------
          Measure number and title                  Measure source
------------------------------------------------------------------------
1. Diabetes Mellitus: Hemoglobin A1c Poor    NCQA.
 Control in Diabetes Mellitus*.
2. Diabetes Mellitus: Low Density            NCQA.
 Lipoprotein (LDL-C) Control in Diabetes
 Mellitus*.
3. Diabetes Mellitus: High Blood Pressure    NCQA.
 Control in Diabetes Mellitus*.
5. Heart Failure: Angiotensin-Converting     American Medical
 Enzyme (ACE) Inhibitor or Angiotensin        Association--Physician
 Receptor Blocker (ARB) Therapy for Left      Consortium for Performance
 Ventricular Systolic Dysfunction (LVSD)*.    Improvement (AMA-PCPI).

[[Page 69836]]

 
6. Coronary Artery Disease (CAD): Oral       AMA-PCPI.
 Antiplatelet Therapy Prescribed for
 Patients with CAD.
7. Coronary Artery Disease (CAD): Beta-      AMA-PCPI.
 Blocker Therapy for CAD Patients with
 Prior Myocardial Infarction (MI)\+\,*.
8. Heart Failure: Beta-Blocker Therapy for   AMA-PCPI.
 Left Ventricular Systolic Dysfunction
 (LVSD).
9. Major Depressive Disorder (MDD):          NCQA.
 Antidepressant Medication During Acute
 Phase for Patients with MDD.
10. Stroke and Stroke Rehabilitation:        AMA-PCPI/NCQA.
 Computed Tomography (CT) or Magnetic
 Resonance Imaging (MRI) Reports.
11. Stroke and Stroke Rehabilitation:        AMA-PCPI/NCQA.
 Carotid Imaging Reports.
12. Primary Open Angle Glaucoma (POAG):      AMA-PCPI/NCQA.
 Optic Nerve Evaluation.
14. Age-Related Macular Degeneration (AMD):  AMA-PCPI/NCQA.
 Dilated Macular Examination.
18. Diabetic Retinopathy: Documentation of   AMA-PCPI/NCQA.
 Presence or Absence of Macular Edema and
 Level of Severity of Retinopathy.
19. Diabetic Retinopathy: Communication      AMA-PCPI/NCQA.
 with the Physician Managing Ongoing
 Diabetes Care.
20. Perioperative Care: Timing of            AMA-PCPI/NCQA.
 Antibiotic Prophylaxis--Ordering Physician.
21. Perioperative Care: Selection of         AMA-PCPI/NCQA.
 Prophylactic Antibiotic--First OR Second
 Generation Cephalosporin.
22. Perioperative Care: Discontinuation of   AMA-PCPI/NCQA.
 Prophylactic Antibiotics (Non-Cardiac
 Procedures).
23. Perioperative Care: Venous               AMA-PCPI/NCQA.
 Thromboembolism (VTE) Prophylaxis (When
 Indicated in ALL Patients).
24. Osteoporosis: Communication With the     AMA-PCPI/NCQA.
 Physician Managing Ongoing Care Post-
 Fracture.
28. Aspirin at Arrival for Acute Myocardial  AMA-PCPI/NCQA.
 Infarction (AMI).
30. Perioperative Care: Timing of            AMA-PCPI/NCQA.
 Prophylactic Antibiotics--Administering
 Physician.
31. Stroke and Stroke Rehabilitation: Deep   AMA-PCPI/NCQA.
 Vein Thrombosis Prophylaxis (DVT) for
 Ischemic Stroke or Intracranial Hemorrhage.
32. Stroke and Stroke Rehabilitation:        AMA-PCPI/NCQA.
 Discharged on Antiplatelet Therapy.
33. Stroke and Stroke Rehabilitation:        AMA-PCPI/NCQA.
 Anticoagulant Therapy Prescribed for
 Atrial Fibrillation at Discharge\+\.
34. Stroke and Stroke Rehabilitation:        AMA-PCPI/NCQA.
 Tissue Plasminogen Activator (t-PA)
 Considered.
35. Stroke and Stroke Rehabilitation:        AMA-PCPI/NCQA.
 Screening for Dysphagia.
36. Stroke and Stroke Rehabilitation:        AMA-PCPI/NCQA.
 Consideration of Rehabilitation Services.
39. Screening or Therapy for Osteoporosis    AMA-PCPI/NCQA.
 for Women Aged 65 Years and Older.
40. Osteoporosis: Management Following       AMA-PCPI/NCQA.
 Fracture.
41. Osteoporosis: Pharmacologic Therapy....  AMA-PCPI/NCQA.
43. Coronary Artery Bypass Graft (CABG):     The Society of Thoracic
 Use of Internal Mammary Artery (IMA) in      Surgeons (STS).
 Isolated CABG Surgery.
44. Coronary Artery Bypass Graft (CABG):     STS.
 Preoperative Beta-Blocker in Patients with
 Isolated CABG Surgery.
45. Perioperative Care: Discontinuation of   AMA-PCPI/NCQA.
 Prophylactic Antibiotics (Cardiac
 Procedures).
46. Medication Reconciliation:               AMA-PCPI/NCQA.
 Reconciliation After Discharge from an
 Inpatient Facility\+\.
47. Advance Care Plan......................  AMA-PCPI/NCQA.
48. Urinary Incontinence: Assessment of      AMA-PCPI/NCQA.
 Presence or Absence of Urinary
 Incontinence in Women Aged 65 Years and
 Older.
49. Urinary Incontinence: Characterization   AMA-PCPI/NCQA.
 of Urinary Incontinence in Women Aged 65
 Years and Older.
50. Urinary Incontinence: Plan of Care for   AMA-PCPI/NCQA.
 Urinary Incontinence in Women Aged 65
 Years and Older.
51. Chronic Obstructive Pulmonary Disease    AMA-PCPI.
 (COPD): Spirometry Evaluation.
52. Chronic Obstructive Pulmonary Disease    AMA-PCPI.
 (COPD): Bronchodilator Therapy.
53. Asthma: Pharmacologic Therapy..........  AMA-PCPI.
54. 12-Lead Electrocardiogram (ECG)          AMA-PCPI/NCQA.
 Performed for Non-Traumatic Chest Pain.
55. 12-Lead Electrocardiogram (ECG)          AMA-PCPI/NCQA.
 Performed for Syncope.
56. Community-Acquired Pneumonia (CAP):      AMA-PCPI/NCQA.
 Vital Signs.
57. Community-Acquired Pneumonia (CAP):      AMA-PCPI/NCQA.
 Assessment of Oxygen Saturation.
58. Community-Acquired Pneumonia (CAP):      AMA-PCPI/NCQA.
 Assessment of Mental Status.
59. Community-Acquired Pneumonia (CAP):      AMA-PCPI/NCQA.
 Empiric Antibiotic.
64. Asthma: Asthma Assessment..............  AMA-PCPI.
65. Treatment for Children with Upper        NCQA.
 Respiratory Infection (URI)--Avoidance of
 Inappropriate Use.
66. Appropriate Testing for Children with    NCQA.
 Pharyngitis.
67. Myelodysplastic Syndrome (MDS) and       AMA-PCPI/American Society
 Acute Leukemias: Baseline Cytogenetic        of Hematology (ASH).
 Testing Performed on Bone Marrow.
68. Myelodysplastic Syndrome (MDS):          AMA-PCPI/ASH.
 Documentation of Iron Stores in Patients
 Receiving Erythropoietin Therapy.
69. Multiple Myeloma: Treatment With         AMA-PCPI/ASH.
 Bisphosphonates.
70. Chronic Lymphocytic Leukemia (CLL):      AMA-PCPI/ASH.
 Baseline Flow Cytometry.
71. Breast Cancer: Hormonal Therapy for      AMA-PCPI/American Society
 Stage IC-III Estrogen Receptor/              of Clinical Oncology
 Progesterone Receptor (ER/PR) Positive       (ASCO)/National
 Breast Cancer.                               Comprehensive Cancer
                                              Network (NCCN).
72. Colon Cancer: Chemotherapy for Stage     AMA-PCPI/ASCO/NCCN.
 III Colon Cancer Patients.
76. Prevention of Catheter-Related           AMA-PCPI.
 Bloodstream Infections (CRBSI)--Central
 Venous Catheter Insertion Protocol.

[[Page 69837]]

 
79. End-Stage Renal Disease (ESRD):          AMA-PCPI.
 Influenza Vaccination in Patients with
 ESRD.
81. End-Stage Renal Disease (ESRD): Plan of  AMA-PCPI.
 Care for Inadequate Hemodialysis in ESRD
 Patients\+\.
82. End-Stage Renal Disease (ESRD): Plan of  AMA-PCPI.
 Care for Inadequate Peritoneal Dialysis+.
83. Hepatitis C: Testing for Chronic         AMA-PCPI.
 Hepatitis C--Confirmation of Hepatitis C
 Viremia.
84. Hepatitis C: Ribonucleic Acid (RNA)      AMA-PCPI.
 Testing Before Initiating Treatment.
85. Hepatitis C: HCV Genotype Testing Prior  AMA-PCPI.
 to Therapy.
86. Hepatitis C: Consideration for           AMA-PCPI.
 Antiviral Therapy in HCV Patients.
87. Hepatitis C: HCV Ribonucleic Acid (RNA)  AMA-PCPI.
 Testing at Week 12 of Treatment.
89. Hepatitis C: Counseling Regarding Risk   AMA-PCPI.
 of Alcohol Consumption.
90. Hepatitis C: Counseling of Patients      AMA-PCPI.
 Regarding Use of Contraception Prior to
 Starting Antiviral Therapy.
91. Acute Otitis Externa (AOE): Topical      AMA-PCPI.
 Therapy.
92. Acute Otitis Externa (AOE): Pain         AMA-PCPI.
 Assessment.
93. Acute Otitis Externa (AOE): Systemic     AMA-PCPI.
 Antimicrobial Therapy--Avoidance of
 Inappropriate Use.
94. Otitis Media with Effusion (OME):        AMA-PCPI.
 Diagnostic Evaluation--Assessment of
 Tympanic Membrane Mobility.
95. Otitis Media with Effusion (OME):        AMA-PCPI.
 Hearing Testing.
99. Breast Cancer Resection Pathology        AMA-PCPI/College of
 Reporting: pT Category (Primary Tumor) and   American Pathologists
 pN Category (Regional Lymph Nodes) with      (CAP).
 Histologic Grade.
100. Colorectal Cancer Resection Pathology   AMA-PCPI/CAP.
 Reporting: pT Category (Primary Tumor) and
 pN Category (Regional Lymph Nodes) with
 Histologic Grade.
102. Prostate Cancer: Avoidance of Overuse   AMA-PCPI.
 of Bone Scan for Staging Low-Risk Prostate
 Cancer Patients.
104. Prostate Cancer: Adjuvant Hormonal      AMA-PCPI.
 Therapy for High-Risk Prostate Cancer
 Patients.
105. Prostate Cancer: Three-Dimensional      AMA-PCPI.
 (3D) Radiotherapy.
106. Major Depressive Disorder (MDD):        AMA-PCPI.
 Diagnostic Evaluation.
107. Major Depressive Disorder (MDD):        AMA-PCPI.
 Suicide Risk Assessment.
108. Rheumatoid Arthritis: Disease           NCQA.
 Modifying Anti-Rheumatic Drug Therapy.
109. Osteoarthritis (OA): Function and Pain  AMA-PCPI.
 Assessment.
110. Preventive Care and Screening:          AMA-PCPI.
 Influenza Immunization for Patients >= 50
 Years Old*.
111. Preventive Care and Screening:          NCQA.
 Pneumonia Vaccination for Patients 65
 years and Older*.
112. Preventive Care and Screening:          NCQA.
 Screening Mammography*.
113. Preventive Care and Screening:          NCQA.
 Colorectal Cancer Screening*.
114. Preventive Care and Screening: Inquiry  AMA-PCPI.
 Regarding Tobacco Use.
115. Preventive Care and Screening:          NCQA.
 Advising Smokers to Quit.
116. Inappropriate Antibiotic Treatment for  NCQA.
 Adults with Acute Bronchitis--Avoidance of
 Inappropriate Use.
117. Diabetes Mellitus: Dilated Eye Exam in  NCQA.
 Diabetic Patient.
118. Coronary Artery Disease (CAD):          AMA-PCPI.
 Angiotensin-Converting Enzyme (ACE)
 Inhibitor or Angiotensin Receptor Blocker
 (ARB) Therapy for Patients with CAD and
 Diabetes and/or Left Ventricular Systolic
 Dysfunction (LSVD).
119. Diabetes Mellitus: Urine Screening for  NCQA.
 Microalbumin or Medical Attention for
 Nephropathy in Diabetic Patients.
121. Chronic Kidney Disease (CKD):           AMA-PCPI
 Laboratory Testing (Calcium, Phosphorus,
 Intact Parathyroid Hormone (iPTH) and
 Lipid Profile).
122. Chronic Kidney Disease (CKD): Blood     AMA-PCPI.
 Pressure Management.
123. Chronic Kidney Disease (CKD): Plan of   AMA-PCPI.
 Care: Elevated Hemoglobin for Patients
 Receiving Erythropoiesis--Stimulating
 Agents (ESA).
124. HIT: Adoption/Use of Electronic Health  Quality Insights of
 Records (EHR)*.                              Pennsylvania (QIP)/CMS.
126. Diabetes Mellitus: Diabetic Foot and    American Podiatric Medical
 Ankle Care, Peripheral Neuropathy:           Association (APMA).
 Neurological Evaluation.
127. Diabetes Mellitus: Diabetic Foot and    APMA.
 Ankle Care, Ulcer Prevention: Evaluation
 of Footwear.
128. Preventive Care and Screening: Body     QIP/CMS.
 Mass Index (BMI) Screening and Follow-Up.
130. Documentation and Verification of       QIP/CMS.
 Current Medications in the Medical Record.
131. Pain Assessment Prior to Initiation of  QIP/CMS.
 Patient Treatment.
134. Screening for Clinical Depression.....  QIP/CMS.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
  not reportable via claims-based reporting.
\*\ This measure is 1 of 10 measures on which specifications are
  available for testing electronic submission via EHRs.

    The following proposed measures included in the 2008 PQRI on the 
basis of AQA adoption were considered and specifically declined for 
endorsement by NQF on or before August 31, 2008 and therefore are not 
included in the final measure set for the 2009 PQRI:
     Measure 73 Cancer: Plan for Chemotherapy 
Documented
     Measure 77 Gastroesophageal Reflux Disease 
(GERD): Assessment of GERD Symptoms in Patients Receiving Chronic 
Medication for GERD
     Measure 78 ESRD: Vascular Access for Patients 
Undergoing Hemodialysis
     Measure 101 Prostate Cancer: Appropriate Initial 
Evaluation
     Measure 132 Patient Co-Development of Treatment 
Plan/Plan of Care.

[[Page 69838]]

    As described in sections II.O2. and III. of this final rule with 
comment period, the MIPPA authorized a new incentive program for 
successful electronic prescribers. As a result, section 1848(m)(3)(A) 
of the Act, as redesignated by section 131(b)(3)(C) of the MIPPA and 
amended by section 131(b)(3)(D)(iii) of the MIPPA for 2009 and 
subsequent years, specifies that the PQRI quality measures shall not 
include electronic prescribing measures. Therefore, Measure  
125 HIT: Adoption/Use of Medication e-Prescribing is not included in 
the final set of 2009 PQRI quality measures. This measure will instead 
be used for the new e-prescribing incentive program authorized by MIPPA 
as discussed in section II.O2.
    Lastly, we are not finalizing the following proposed measures 
included in the 2008 PQRI primarily because our analysis of the 2007 
PQRI results indicate that there were no satisfactory submissions and 
no quality data codes accepted for these measures during the 2007 PQRI:
     Measure 96 OME: Antihistamines or Decongestants--
Avoidance of Inappropriate Use
     Measure 97 OME: Systemic Antimicrobials--
Avoidance of Inappropriate Use
     Measure 98 OME: Systemic Corticosteroids--
Avoidance of Inappropriate Use
     Measure 120 CKD: ACE/ARB Therapy.
    With respect to Measures 96 through 98, we also 
believe that eligible professionals would be unlikely to voluntarily 
report inappropriate actions. With respect to Measure 120, our 
analysis of the 2007 PQRI results revealed that the measure requires 
multiple diagnosis codes.
    Please note that detailed measure specifications for 2008 PQRI 
quality measures may have been updated or modified during the NQF 
endorsement process or for other reasons prior to 2009. The 2009 PQRI 
quality measure specifications for any given quality measure may, 
therefore, be different from specifications for the same quality 
measure used for 2008. Specifications for all 2009 PQRI quality 
measures, whether or not included in the 2008 PQRI program, must be 
obtained from the specifications document for 2009 PQRI quality 
measures, which will be available on the PQRI section of the CMS Web 
site on or before December 31, 2008.
    As stated above, there are 5 measures listed in Table 15 that can 
be reported only via a registry for the 2009 PQRI and, therefore, are 
not reportable via claims-based reporting.
ii. Additional NQF-Endorsed Measures
    We proposed to include in the 2009 PQRI quality measure set 17 new 
measures endorsed by the NQF but that were not included in the 2008 
PQRI quality measures. We received several comments on the 17 proposed 
additional NQF-endorsed measures, which are summarized and addressed 
below.
    Comment: We received several comments in support of the proposed 
additional NQF-endorsed measures. Comments were received specifically 
in support of the following measures:
     Anti-platelet Medications at Discharge.
     Hemodialysis Vascular Access Decision-making by Surgeons 
to Maximize Placement of Autogeneous Arterial Venous Fistula.
    One commenter, also the measure's developer, recommended the 
removal of the proposed measure ``Use of Imaging Studies in Low Back 
Pain'' and noted that this measure does not share a common denominator 
with the other measures within the Back Pain measures group.
    Response: We concur with the comments in support of the proposed 
additional NQF-endorsed measures. However, for the reasons recommended 
by the measure developer the proposed measure ``Use of Imaging Studies 
in Low Back Pain'' has been removed from the 2009 PQRI quality measures 
set.
    For the 2009 PQRI quality measure set, we are finalizing 15 of the 
17 proposed measures that were endorsed by the NQF but were not 
included in the 2008 PQRI quality measures. These 17 measures are 
identified in Table 16. Besides having NQF endorsement, these measures 
were considered ready for implementation for the purposes of the 2009 
PQRI as of October 15, 2008 based on the following--(1) the final, 
detailed specifications for use in data collection for PQRI have been 
completed and are ready for implementation, and (2) all of the Category 
II Current Procedural Terminology (CPT II) codes required for the 
measure to be reported by claims have been established and will be 
effective for CMS claims data submission on or before January 1, 2009.

            Table 16--Final Additional NQF-Endorsed Measures
------------------------------------------------------------------------
               Measure title                        Measure source
------------------------------------------------------------------------
Osteoarthritis (OA): Assessment for Use of   AMA-PCPI.
 Anti-Inflammatory or Analgesic Over-the-
 Counter (OTC) Medications.
Back Pain: Initial Visit...................  NCQA.
Back Pain: Physical Exam...................  NCQA.
Back Pain: Advice for Normal Activities....  NCQA.
Back Pain: Advice Against Bed Rest.........  NCQA.
Diabetes Mellitus: Foot Exam...............  NCQA.
Coronary Artery Bypass Graft (CABG):         STS.
 Prolonged Intubation (Ventilation)\+\.
Coronary Artery Bypass Graft (CABG): Deep    STS.
 Sternal Wound Infection Rate\+\.
Coronary Artery Bypass Graft (CABG): Stroke/ STS.
 Cerebrovascular Accident (CVA)\+\.
Coronary Artery Bypass Graft (CABG): Post-   STS.
 operative Renal Insufficiency\+\.
Coronary Artery Bypass Graft (CABG):         STS.
 Surgical Re-exploration\+\.
Coronary Artery Bypass Graft (CABG): Anti-   STS.
 platelet Medications at Discharge\+\.
Coronary Artery Bypass Graft (CABG): Beta    STS.
 Blockade at Discharge\+\.
Coronary Artery Bypass Graft (CABG): Lipid   STS.
 Management and Counseling\+\.
Hemodialysis Vascular Access Decision-       Society for Vascular
 Making by Surgeons To Maximize Placement     Surgeons (SVS).
 of Autogenous Arterial Venous Fistula.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
  not reportable via claims-based reporting.

    As previously mentioned in this final rule, we are not finalizing 
the proposed measure, Use of Imaging Studies in Low Back Pain, in the 
final 2009 PQRI quality measures set listed in Table 16 based on 
comments received.

[[Page 69839]]

    In addition, we are not finalizing the following proposed NQF-
endorsed measure in the final 2009 PQRI measures because its adaptation 
to the PQRI format was subsequently found to be not feasible: Selection 
of Antibiotic Administration for Cardiac Surgery Patients. Substantive 
components of this measure are duplicative of Measure  21 
Perioperative Care: Selection of Prophylactic Antibiotic--First OR 
Second Generation Cephalosporin, which is listed in Table 15.
    As stated above, there are 8 measures listed in Table 16 that can 
be reported only via a registry for the 2009 PQRI and, therefore, are 
not reportable via claims-based reporting.
    As described in the CY 2009 PFS proposed rule (73 FR 38570), 
measures designated as T in the proposed 
rule indicated that the measure was included in the 2008 Measure 
Testing Process. The T identifier 
was removed from Table 16 in this final rule with comment because each 
measure in the final 2009 PQRI quality measures set will be assigned a 
unique number which may be obtained from the detailed specifications 
which will be made available on the PQRI section of the CMS Web site no 
later than December 31, 2008.
iii. Additional AQA Adopted Measures
    As discussed in the CY 2009 PFS proposed rule (73 FR 38565 through 
38566), in circumstances where no NQF-endorsed measure is available, a 
quality measure that has been adopted by the AQA would also meet the 
requirements of section 1848(k)(2)(B)(i) of the Act. As such, we 
proposed 21 new measures adopted by the AQA that had not yet been 
reviewed or endorsed by the NQF at the time the CY 2009 PFS proposed 
rule was published and that were not included in the final set of 2008 
PQRI quality measures (73 FR 38571).
    We received numerous comments on the 21 proposed additional AQA-
adopted measures, which are summarized and addressed below.
    Comment: Numerous commenters were in support of the inclusion of 
the following proposed additional AQA-adopted measures in the final 
2009 PQRI measures:
     T138 Melanoma: Coordination of Care.
     T139 Cataracts: Cataracts: Comprehensive Preoperative 
Assessment for Cataract Surgery with Intraocular Lens (IOL) Placement.
     T140 Age-Related Macular Degeneration (AMD): Counseling on 
Antioxidant Supplement.
     T141 Primary Open-Angle Glaucoma (POAG): Reduction of 
Intraocular Pressure (IOP) by 15 percent OR Documentation of a Plan of 
Care.
     T143 Oncology: Medical and Radiation--Plan of Care for 
Pain.
     Oncology: Medical and Radiation-Pain Intensity Quantified.
     Oncology: Recording of Clinical Stage for Lung Cancer and 
Esophageal Cancer.
    However, we received 2 comments specifically suggesting that the 
proposed measure, T144 Radiology: Computed Tomography (CT) Radiation 
Dose Reduction, not be finalized as part of the 2009 PQRI quality 
measures for failure to achieve a recommendation for endorsement by the 
NQF Steering Committee on Outpatient Imaging Efficiency.
    Response: As suggested by commenters Measure T144 Radiology: 
Computed Tomography (CT) Radiation Dose Reduction will not be finalized 
as part of the 2009 PQRI quality measures set because the measure was 
specifically reviewed by NQF on or before August 31, 2008 but declined 
for endorsement. All other additional AQA-adopted measures specifically 
supported by commenters are being finalized for the 2009 PQRI.
    We are including in the final 2009 PQRI quality measure set 19 of 
the 21 proposed measures adopted by AQA that had not yet been reviewed 
or endorsed by the NQF at the time the CY 2009 PFS proposed rule was 
published and that were not included in the final set of 2008 PQRI 
quality measures. These measures are identified in Table 17.

             Table 17--Final Additional AQA-Adopted Measures
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
Chronic Kidney Disease (CKD):          AMA-PCPI.
 Influenza Immunization.
Melanoma: Follow-Up Aspects of Care..  AMA-PCPI/NCQA.
Melanoma: Continuity of Care--Recall   AMA-PCPI/NCQA.
 System.
Melanoma: Coordination of Care.......  AMA-PCPI/NCQA.
Cataracts: Comprehensive Preoperative  AMA-PCPI/NCQA.
 Assessment for Cataract Surgery with
 Intraocular Lens (IOL) Placement.
Age-Related Macular Degeneration       AMA-PCPI/NCQA.
 (AMD): Counseling on Antioxidant
 Supplement.
Primary Open-Angle Glaucoma (POAG) :   AMA-PCPI/NCQA.
 Reduction of Intraocular Pressure
 (IOP) by 15% OR Documentation of a
 Plan of Care.
Oncology: Medical and Radiation--Plan  AMA-PCPI.
 of Care for Pain.
Radiology: Exposure Time Reported for  AMA-PCPI/NCQA.
 Procedures Using Fluoroscopy.
Oncology: Medical and Radiation--Pain  AMA-PCPI.
 Quantified.
Radiology: Inappropriate Use of        AMA-PCPI.
 ``Probably Benign'' Assessment
 Category in Mammography Screening.
Coronary Artery Disease (CAD): Lipid   AMA-PCPI.
 Profile in Patients with CAD.
Chronic Kidney Disease (CKD):          AMA-PCPI.
 Referral for Arteriovenous (AV)
 Fistula.
Falls: Plan of Care..................  AMA-PCPI.
Falls: Risk Assessment...............  AMA-PCPI.
Oncology: Radiation Dose Limits to     AMA-PCPI.
 Normal Tissues.
Hepatitis C: Hepatitis A Vaccination.  AMA-PCPI.
Hepatitis C: Hepatitis B Vaccination.  AMA-PCPI.
Oncology: Recording of Clinical Stage  STS.
 for Lung Cancer and Esophageal
 Cancer.
------------------------------------------------------------------------

    The following proposed measures are not included in the final 2009 
PQRI quality measure set because they were reviewed by NQF on or before 
August 31, 2008 and were not recommended for endorsement:
     Measure T144 Radiology: Computed Tomography (CT) Radiation 
Dose Reduction; and
     Osteoporosis: Counseling for Vitamin D, Calcium Intake, 
and Exercise.
    Besides being adopted by the AQA, the measures we finalized were 
considered ready for implementation for the purposes of the 2009 PQRI 
as of October 15, 2008 based on the following--(1) the final, detailed

[[Page 69840]]

specifications for use in data collection for PQRI have been completed 
and are ready for implementation, and (2) all of the CPT II codes 
required for the measure to be reported by claims have been established 
and will be effective for CMS claims data submission on or before 
January 1, 2009.
    As described in section III.O.4.b, measures designated as 
T in the proposed rule indicated that the 
measure was included in the 2008 Measure Testing Process. The 
T identifier was removed from Table 
17 in the final rule with comment period because each measure in the 
final 2009 PQRI measure set will be assigned an unique number which may 
be obtained from the detailed specifications which will be made 
available on the PQRI section of the CMS Web site no later than 
December 31, 2008.
iv. Additional Measures Selected Contingent upon NQF Endorsement or AQA 
Adoption by August 31, 2008
    We proposed to include in the 2009 PQRI quality measure set 26 new 
measures that had not yet received NQF endorsement or AQA adoption at 
the time of the publication of the proposed rule but whose selection 
was contingent on NQF endorsement and/or AQA adoption by August 31, 
2008 (73 FR 38571 through 38572).
    We received several comments on these 26 proposed measures, which 
are summarized and addressed below.
    Comment: Several commenters were in support of the following 
proposed measures that have since been NQF endorsed and/or AQA adopted 
as of August 31, 2008:
     Nuclear Medicine: Correlation with Existing Imaging 
Studies for all Patients Undergoing Bone Scintigraphy; and
     Preventive Care and Screening: Unhealthy Alcohol Use--
Screening & Brief Counseling.
    One commenter, also the measure's developer, noted that the 
proposed measure Lipid Screening is not available for use in the 2009 
PQRI. Several commenters stated the following proposed measures do not 
represent standards of care and have technical issues and therefore, 
opposed inclusion of these measures in the final 2009 PQRI measure set:
     Rheumatoid Arthritis: Appropriate Use of Biologic Disease 
Modifying Anti-Rheumatic Drugs (DMARDs);
     Chronic Wound Care: Offloading of Diabetic Foot Ulcers;
     Diabetes Mellitus: Diabetic Foot and Ankle Care, 
Peripheral Arterial Disease--Ankle Brachial Index; and
     Palliative Care: Dyspnea Screening and Management.
    Response: The final 2009 PQRI measures have been selected based 
upon the following criteria as stated in the proposed rule:
     Achievement of NQF endorsement or AQA adoption by August 
31, 2008;
     Readiness for implementation for the purposes of the 2009 
PQRI if by October 15, 2008--(1) the final, detailed specifications for 
use of the measure in data collection for PQRI have been completed and 
are ready for implementation, and (2) all of the CPT II codes required 
for the measure to be reported by claims have been established and will 
be effective for CMS claims based submission on or before January 1, 
2009; and
     Proposed for use in the 2009 PQRI in the CY 2009 PFS 
proposed rule with an opportunity for public comment via the rulemaking 
process.
    As identified in Table 18, we are including in the final 2009 PQRI 
quality measure set 18 of 26 proposed measures that were contingent 
upon NQF endorsement or AQA adoption by August 31, 2008.

     Table 18--Final Measures Selected for 2009 Contingent Upon NQF
             Endorsement or AQA Adoption by August 31, 2008
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
Nuclear Medicine: Correlation with     AMA-PCPI.
 Existing Imaging Studies for all
 Patients Undergoing Bone
 Scintigraphy.
Preventive Care and Screening:         AMA-PCPI.
 Unhealthy Alcohol Use--Screening &
 Brief Counseling.
Pediatric ESRD: Adequacy of            AMA-PCPI.
 Hemodialysis\+\.
Pediatric ESRD: Influenza              AMA-PCPI.
 Immunization.
Rheumatoid Arthritis: Tuberculosis     AMA-PCPI/NCQA.
 Screening.
Rheumatoid Arthritis: Periodic         AMA-PCPI/NCQA.
 Assessment of Disease Activity.
Rheumatoid Arthritis: Functional       AMA-PCPI/NCQA.
 Limitation Assessment.
Rheumatoid Arthritis: Assessment and   AMA-PCPI/NCQA.
 Classification of Disease Prognosis.
Rheumatoid Arthritis: Glucocorticoid   AMA-PCPI/NCQA.
 Management.
Endoscopy & Polyp Surveillance:        AMA-PCPI/NCQA.
 Surveillance Colonoscopy Interval in
 Patients with History of Adenomatous
 Polyps.
Wound Care: Use of Compression System  AMA-PCPI/NCQA.
 in Patients with Venous Ulcers.
HIV/AIDS: CD4\+\ Cell Count or CD4+    AMA-PCPI/NCQA.
 Percentage\+\.
HIV/AIDS: Pneumocystis Jiroveci        AMA-PCPI/NCQA.
 Pneumonia (PCP) Prophylaxis+.
HIV/AIDS: Adolescent and Adult         AMA-PCPI/NCQA.
 Patients with HIV/AIDS who are
 Prescribed Potent Antiretroviral
 Therapy\+\.
HIV/AIDS: HIV RNA Control After 6      AMA-PCPI/NCQA.
 Months of Potent Antiretroviral
 Therapy\+\.
Elder Maltreatment Screen and Follow-  QIP/CMS.
 up Plan.
Functional Outcome Assessment in       QIP/CMS.
 Chiropractic Care.
Endarterectomy: Use of Patch During    SVS.
 Conventional Endarterectomy.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
  not reportable via claims-based reporting.

    These measures were selected based on the comments received, 
whether the measure received NQF endorsement and/or AQA adoption by 
August 31, 2008, and whether the measure was ready for implementation 
by October 15, 2008. A measure was considered ready for implementation 
for the purposes of the 2009 PQRI if by October 15, 2008--(1) the 
final, detailed specifications for use of the measure in data 
collection for PQRI have been completed and are ready for 
implementation, and (2) all of the CPT II codes required for the 
measure have been established and will be effective for CMS claims 
based submission on or before January 1, 2009.
    These additional measures augment the opportunity for eligible 
professionals to submit quality data under the PQRI where there were 
limited measures. These additional measures include the addition of 
measures for nuclear medicine services, pediatric ESRD services, 
rheumatoid arthritis services, gastroenterology services, wound care, 
and chiropractic services.
    The following proposed measures are not included in the final set 
of 2009

[[Page 69841]]

PQRI quality measures listed in Table 18 because they did not achieve 
NQF endorsement or AQA adoption as of August 31, 2008:
     Chronic Wound Care: Offloading of Diabetic Foot Ulcers;
     Diabetes Mellitus: Diabetic Foot and Ankle Care, 
Peripheral Arterial Disease--Ankle Brachial Index; and
     Endarterectomy: Perioperative Stroke or Death in 
Asymptomatic Patient Undergoing Carotid Endarterectomy (CEA).
    The following proposed measures are not included in the final set 
of 2009 PQRI quality measures listed in Table 18 because they were not 
ready for implementation by October 15, 2008:
     Lipid Screening;
     Rheumatoid Arthritis: Appropriate Use of Biologic Disease 
Modifying Anti-Rheumatic Drugs (DMARDs); and
     Participation by Physician or Other Clinician in a 
Systematic Clinical Database Registry that includes Consensus Endorsed 
Quality Measures.
    That is, by October 15, 2008, (1) the final, detailed 
specifications for use of the measure in data collection for PQRI have 
not been completed and/or are not ready for implementation, or (2) all 
of the CPT II codes required for the measure to be reported by claims 
have not been established and/or will not be effective for CMS claims 
based submission on or before January 1, 2009.
    In addition, we did not include in the final set of PQRI measures 
listed in Table 18 the following proposed measures that subsequently 
were adopted by the AQA, because their adaptation to the PQRI format 
was subsequently found to be not feasible:
     Palliative Care: Dyspnea Screening and Management.
    Finally, we did not include in the final PQRI measures listed in 
Table 18 the following proposed measure:
     Endarterectomy: Peri-operative Anti-platelet Therapy for 
Patients Undergoing Carotid Endarterectomy (CEA)
    We did not include this measure in the final 2009 PQRI quality 
measures set for many reasons. First, this measure is not reportable 
through claims submission. The SVS did not self-nominate to become a 
qualified registry for the 2008 PQRI and the SVS registry is not 
currently collecting this measure. In addition, we are not aware of any 
other registries collecting this measure.
    As stated above, however, there are 5 measures listed in Table 18 
that can be reported only via a registry for the 2009 PQRI, and 
therefore, are not reportable via claims-based reporting.
v. Measures Selected for Inclusion in 2009 Measures Groups
    As discussed in the CY 2009 PFS proposed rule, we proposed to 
retain three of the four 2008 PQRI measures groups for the 2009 PQRI--
(1) Diabetes Mellitus, (2) CKD, and (3) Preventive Care. The measures 
proposed for inclusion in the 2009 Diabetes Mellitus, CKD, and 
Preventive Care measures groups were identified in the CY 2009 PFS 
proposed rule (73 FR 38572 through 38573).
    In addition to these three proposed measures groups retained from 
2008 with applicable modifications, there were six new measures groups 
proposed for the 2009 PQRI: (1) CABG Surgery; (2) CAD; (3) Rheumatoid 
Arthritis; (4) HIV/AIDS; (5) Perioperative Care; and (6) Back Pain. 
Each of the measures groups was proposed to contain at least four PQRI 
quality measures. Except for the Back Pain measures group, it was 
proposed that all measures included in a measures group could be 
reported individually or as part of a group. Measures in the Back Pain 
measures group were proposed to be reportable only as a part of this 
measures group.
    In the CY 2009 PFS proposed rule (73 FR 38560), we invited comments 
on the proposed new measures groups, including suggestions for other 
measures groups based on individual measures included in the proposed 
2009 PQRI measure set. We explained that for the 2009 PQRI, measures 
groups must contain at least 4 measures and asked that all measures in 
each measures group suggested by commenters be included in the list of 
measures proposed in the CY 2009 PFS proposed rule (73 FR 38567 through 
38572). We explained that the individual measures included in the final 
measures groups for the 2009 PQRI will be limited to those which are 
included in the final set of measures for the 2009 PQRI, as identified 
below.
    We received numerous comments on the proposed measures groups, 
which are summarized and addressed as follows.
    Comment: Many commenters suggested that we create a composite code 
for reporting all of the aspects of care within a measures group. One 
commenter specifically recommended that the CABG Surgery measures group 
be limited to a smaller number of measures unless a composite code is 
created for all aspects of care in the measures proposed for inclusion 
in the CABG Surgery measures group.
    Response: We continue to seek methods to simplify reporting and 
increase participation in PQRI. We agree with this suggestion and have 
taken the necessary steps to develop composite codes for reporting all 
of the aspects of care within a measures group. This composite code 
will aid to simplify and allow for ease of reporting for those eligible 
professionals who elect to report a measures group. The measures 
groups' specifications document will be updated to include composite 
codes. No later than December 31, 2008, we will post the detailed 
specifications and specific instructions for reporting measures groups 
on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/pqri.
    Comment: We received numerous comments suggesting additional 
measures groups. Examples of measures groups' topics suggested by 
commenters include, but are not limited to, geriatrics, hepatitis C, 
respiratory, ischemic vascular disease (IVD), cardiovascular disease 
and stroke care, stroke treatment, osteoporosis, and oral drug therapy. 
One commenter noted that the proposed measures groups are applicable to 
physicians only and encouraged us to consider other eligible 
professionals as new measures groups are identified. Some commenters 
suggested specific measures for inclusion in their suggested measures 
groups, but many commenters did not suggest specific groups of at least 
4 measures.
    Response: While we welcome the additional measures groups suggested 
by commenters, we are not able to consider such additional measures 
groups for inclusion in the 2009 PQRI since there is no opportunity for 
public comment on the measures groups' potential inclusion in the 2009 
PQRI. However, to the extent that commenters suggested specific 
measures for inclusion in a particular measures group, we will take the 
commenters' suggestions into consideration for purposes of identifying 
measures groups for possible inclusion in future years' PQRI.
    As stated in the CY 2009 PFS proposed rule (73 FR 38560), each 
measures group suggested by commenters must contain at least 4 measures 
and must consist of the proposed measures cited in section II.O.4. of 
the proposed rule, ``Proposed 2009 PQRI Quality Measures.'' The 
measures groups must have a particular clinical condition or focus in 
common, as identified by the denominator definition and coding of the 
measures groups.
    We encourage professional organizations and measure developers to 
engage in the development of measures groups, including measures

[[Page 69842]]

groups that are applicable to other nonphysician professionals. We will 
continue working with stakeholders to fill gaps for measures groups.
    Comment: We received multiple suggestions for altering the proposed 
measure groups.
    Response: As stated previously, we requested in the CY 2009 PFS 
proposed rule that suggestions for new measures groups or measures 
included in a particular measures group, must be based on individual 
measures included in the proposed 2009 PQRI quality measure set. In 
response to the suggestions provided by commenters, the Use of Imaging 
Studies in Low Back Pain measure has been removed from the Back Pain 
measures group due to the frequency for the process of care being 
inconsistent with the other measures in this measures group. No new 
measures groups have been established outside of what was included in 
the CY 2009 PFS proposed rule. However, we encourage professional 
organizations and measure developers to engage in the development of 
measure groups. We plan to continue working with stakeholders to fill 
gaps for measures groups.
    Comment: Several commenters recommended retaining the ESRD Measures 
Group for the 2009 PQRI by replacing the 2008 PQRI Measure 80: 
Plan of Care for ESRD Patients with Anemia which was declined for NQF 
endorsement with the proposed 2009 PQRI Measure 82 ESRD: Plan 
of Care for Inadequate Peritoneal Dialysis listed in section II.O1.d. 
of this final rule, ``The Final 2009 PQRI Quality Measures.''
    Response: As stated in the proposed rule (73 FR 38560), the ESRD 
measures groups is not being included in the 2009 PQRI because one of 
the measures in the group is no longer NQF-endorsed. The denominator 
definition and coding of the ESRD measures proposed and selected for 
the 2009 PQRI do not meet the requirements for a measures group as 
stated in section II.O1.b.ii. of this final rule with comment period. 
However, the proposed 2009 PQRI Measure 82 ESRD: Plan of Care 
for Inadequate Peritoneal Dialysis is available to be reported as an 
individual quality measure in the 2009 PQRI.
    Based on the comments we received, we are retaining three 2008 PQRI 
measures groups for the 2009 PQRI--(1) Diabetes Mellitus, (2) CKD, and 
(3) Preventive Care. In some cases, different or additional measures 
may be selected for inclusion in a particular measures group for use in 
2009, compared to 2008. Therefore, the composition of the Diabetes 
Mellitus, CKD, and Preventive Care measures groups may be different for 
the 2009 PQRI than for the 2008 PQRI. The measures selected for 
inclusion in the 2009 Diabetes Mellitus, CKD, and Preventive Care 
measures groups are listed in Tables 19 through 21.
    Some measures selected for inclusion in a 2009 measures group are 
current 2008 PQRI measures. The title of each such measure is preceded 
with its PQRI Measure Number in Tables 19 through 25. The PQRI Measure 
Number is a unique identifier assigned by CMS to all measures in the 
PQRI measure set. Once a PQRI Measure Number is assigned to a measure, 
it will not be used again, even if the measure is subsequently retired 
from the PQRI measure set. Measures that are not preceded by a number 
have never been part of a PQRI measure set until now. A number will be 
assigned to such measures for the 2009 PQRI. As with measures group 
reporting in the 2008 PQRI, each eligible professional electing to 
report a group of measures for 2009 must report all measures in the 
group that are applicable to each patient or encounter to which the 
measures group applies at least up to the minimum number of patients 
required by applicable reporting criteria (described above in section 
II.O1.b.ii.).

  Table 19--Final Measures Selected for 2009 Diabetes Mellitus Measures
                                  Group
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
1. Diabetes Mellitus: Hemoglobin A1c   NCQA.
 Poor Control in Diabetes Mellitus.
2. Diabetes Mellitus: Low Density      NCQA.
 Lipoprotein (LDL-C) Control in
 Diabetes Mellitus.
3. Diabetes Mellitus: High Blood       NCQA.
 Pressure Control in Diabetes
 Mellitus.
117. Diabetes Mellitus: Dilated Eye    NCQA.
 Exam in Diabetic Patient.
119. Diabetes Mellitus: Urine          NCQA.
 Screening for Microalbumin or
 Medical Attention for Nephropathy in
 Diabetic Patients.
Diabetes Mellitus: Foot Exam.........  NCQA.
------------------------------------------------------------------------


      Table 20--Final Measures Selected for 2009 CKD Measures Group
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
121. Chronic Kidney Disease (CKD):     AMA-PCPI.
 Laboratory Testing (Calcium,
 Phosphorus, Intact Parathyroid
 Hormone (iPTH) and Lipid Profile).
122. Chronic Kidney Disease (CKD):     AMA-PCPI.
 Blood Pressure Management.
123. Chronic Kidney Disease (CKD):     AMA-PCPI.
 Plan of Care: Elevated Hemoglobin
 for Patients Receiving
 Erythropoiesis--Stimulating Agents
 (ESA).
Chronic Kidney Disease (CKD):          AMA-PCPI.
 Referral for Arteriovenous AV)
 Fistula.
Chronic Kidney Disease (CKD):          AMA-PCPI.
 Influenza Immunization.
------------------------------------------------------------------------


   Table 21--Final Measures Selected for 2009 Preventive Care Measures
                                  Group
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
39. Screening or Therapy for           AMA-PCPI/NCQA.
 Osteoporosis for Women Aged 65 Years
 and Older.
48. Urinary Incontinence: Assessment   AMA-PCPI/NCQA.
 of Presence or Absence of Urinary
 Incontinence in Women Aged 65 Years
 and Older.
110. Preventive Care and Screening:    AMA-PCPI.
 Influenza Immunization for Patients
 [gteqt] 50 Years Old.
111. Preventive Care and Screening:    NCQA.
 Pneumonia Vaccination for Patients
 65 Years and Older.
112. Preventive Care and Screening:    NCQA.
 Screening Mammography.
113. Preventive Care and Screening:    NCQA.
 Colorectal Cancer Screening.
114. Preventive Care and Screening:    AMA-PCPI.
 Inquiry Regarding Tobacco Use.

[[Page 69843]]

 
115. Preventive Care and Screening:    NCQA.
 Advising Smokers to Quit.
128. Preventive Care and Screening:    QIP/CMS.
 Body Mass Index (BMI) Screening and
 Follow-Up.
------------------------------------------------------------------------

    In addition to the three measures groups retained from 2008 with 
applicable modifications, there are four new measures groups that we 
are finalizing for the 2009 PQRI: (1) CABG Surgery; (2) Rheumatoid 
Arthritis; (3) Perioperative Care; and (4) Back Pain. Each of the 
measures groups contains at least four PQRI measures.
    Tables 22 through 25 lists the measures selected for inclusion in 
each of these new measures groups.

     Table 22--Final Measures Selected for 2009 CABG Measures Group
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
43. Coronary Artery Bypass Graft       STS.
 (CABG): Use of Internal Mammary
 Artery (IMA) in Isolated CABG
 Surgery.
44. Coronary Artery Bypass Graft       STS.
 (CABG): Preoperative Beta-Blocker in
 Patients with Isolated CABG Surgery.
Coronary Artery Bypass Graft (CABG):   STS.
 Prolonged Intubation (Ventilation)
 \+\.
Coronary Artery Bypass Graft (CABG):   STS.
 Deep Sternal Wound Infection Rate
 \+\.
Coronary Artery Bypass Graft (CABG):   STS.
 Stroke/Cerebrovascular Accident
 (CVA) \+\.
Coronary Artery Bypass Graft (CABG):   STS.
 Post-operative Renal Insufficiency
 \+\.
Coronary Artery Bypass Graft (CABG):   STS.
 Surgical Re-exploration \+\.
Coronary Artery Bypass Graft (CABG):   STS.
 Anti-platelet Medications at
 Discharge \+\.
Coronary Artery Bypass Graft (CABG):   STS.
 Beta Blockers Administered at
 Discharge \+\.
Coronary Artery Bypass Graft (CABG):   STS.
 Lipid Management and Counseling \+\.
------------------------------------------------------------------------
\+\ This measure is reportable only via registry-based reporting and is
  not reportable via claims-based reporting.


Table 23--Final Measures Selected for 2009 Rheumatoid Arthritis Measures
                                  Group
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
108. Rheumatoid Arthritis: Disease     NCQA.
 Modifying Anti-Rheumatic Drug
 (DMARD) Therapy.
Rheumatoid Arthritis: Tuberculosis     AMA-PCPI/NCQA.
 Screening.
Rheumatoid Arthritis: Periodic         AMA-PCPI/NCQA.
 Assessment of Disease Activity.
Rheumatoid Arthritis: Functional       AMA-PCPI/NCQA.
 Limitation Assessment.
Rheumatoid Arthritis: Assessment and   AMA-PCPI/NCQA.
 Classification of Disease Prognosis.
Rheumatoid Arthritis: Glucocorticoid   AMA-PCPI/NCQA.
 Management.
------------------------------------------------------------------------


 Table 24--Final Measures Selected for 2009 Perioperative Care Measures
                                  Group
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
20. Perioperative Care: Timing of      AMA-PCPI/NCQA.
 Antibiotic Prophylaxis--Ordering
 Physician.
21. Perioperative Care: Selection of   AMA-PCPI/NCQA.
 Prophylactic Antibiotic--First OR
 Second Generation Cephalosporin.
22. Perioperative Care:                AMA-PCPI/NCQA.
 Discontinuation of Prophylactic
 Antibiotics (Non-Cardiac Procedures).
23. Perioperative Care: Venous         AMA-PCPI/NCQA.
 Thromboembolism (VTE) Prophylaxis
 (When Indicated in ALL Patients).
------------------------------------------------------------------------


   Table 25--Final Measures Selected for 2009 Back Pain Measures Group
------------------------------------------------------------------------
            Measure title                        Measure source
------------------------------------------------------------------------
Back Pain: Initial Visit.............  NCQA.
Back Pain: Physical Exam.............  NCQA.
Back Pain: Advice for Normal           NCQA.
 Activities.
Back Pain: Advice Against Bed Rest...  NCQA.
------------------------------------------------------------------------

    We are not finalizing the proposed CAD and HIV/AIDS measures 
groups. Analysis of the proposed CAD measures group has revealed 
difficulty with determining a common denominator and that two of the 
four measures within this measures group would require additional 
diagnosis codes in order to be applicable for the group. Analysis of 
the proposed HIV/AIDS measures group has revealed several barriers for 
establishing the common denominator and the consecutive patient 
determination. While these are meaningful individual quality measures, 
we believe that the issues as stated make it impractical to use these 
measures as measures groups.
    The measures in the Diabetes Mellitus; CKD; Preventive Care; 
Rheumatoid Arthritis, and Perioperative Care measures groups are 
reportable either individually or as part of the measures group. The 
measures in these measures groups can be reported through claims-based 
or registry-based submission.
    The measures in the Back Pain measures group are reportable only as 
a measures group, not as individual

[[Page 69844]]

measures. As individual measures, the measures in the Back Pain 
measures group are too basic; however, taken together they are 
meaningful indicators of quality of care for back pain. These measures 
are also reportable through claims-based or registry-based submission.
    Eight measures in the CABG surgery measures group are reportable 
only via registry-based reporting as a measures group or as individual 
measures. These measures cannot be reported through claims-based 
reporting because they cannot be feasibly specified for claims-based 
reporting.
    In addition, as discussed above, we did not finalize Measure 
120 CKD: ACE/ARB Therapy in the 2009 PQRI. Therefore, we are 
removing Measure 120 from the CKD Measures Group and are 
instead replacing Measure 120 with the following 2 measures 
from Table 17:
     CKD: Referral for AV Fistula.
     CKD: Influenza Immunization.
    Analysis of Measure 120 revealed that the measure requires 
multiple diagnosis codes, which is inconsistent with the other measures 
in the CKD Measures Group.
    As noted in the CY 2009 PFS proposed rule (73 FR 38560), the 
detailed measure specifications and instructions for submitting data on 
those 2009 measures groups that were also included as 2008 PQRI 
measures groups may be updated or modified prior to 2009. Therefore, 
the 2009 PQRI measure specifications for any given measures group could 
be different from specifications and submission instructions for the 
same measures group used for 2008. These measure specification changes 
do not materially impact the intended meaning of the measures or the 
strength of the measures. Additionally, the specifications for measures 
groups would not necessarily contain all the specification elements of 
each individual measure making up the measures group. This is based on 
the need for a common set of denominator specifications for all the 
measures making up a measures group in order to define the 
applicability of the measures group. Therefore, the specifications and 
instructions for measures groups will be provided separately from the 
specifications and instructions for the individual 2009 PQRI measures. 
We will post the detailed specifications and specific instructions for 
reporting measures groups on the PQRI section of the CMS Web site at 
http://www.cms.hhs.gov/pqri by no later than December 31, 2008.
e. Uses of PQRI Information
i. Overview and Summary
    In the CY 2009 PFS proposed rule (73 FR 38574 through 38575) we 
indicated that we are contemplating a ``Physician Compare'' Web site 
similar to other Web pages we currently have at http://www.medicare.gov 
for the public reporting of quality data for hospitals (Hospital 
Compare), dialysis facilities (Dialysis Facility Compare), nursing 
homes (Nursing Home Compare) and home health facilities (Home Health 
Compare) by enhancing the information found on the Physician and Other 
Healthcare Professional Directory (see http://www.medicare.gov/Physician/Home.asp?bhcp=1) to include information about the quality of 
care and value for services provided by professionals to Medicare 
beneficiaries. There are a variety of data sources that could provide 
quality of care, value, and other information for services provided by 
professionals to Medicare beneficiaries that could be used to develop a 
Physician Compare Web site. As we indicated in the proposed rule, the 
data on PQRI quality measures that is submitted at the individual (that 
is, NPI) level by physicians and other eligible professionals could be 
the basis for public reporting of quality measurement performance 
results at either the individual or group (that is, TIN) level. We also 
indicated that as part of our broader goal to measure and make the 
quality of care for services furnished to Medicare beneficiaries 
publicly available and in support of the four cornerstones for value-
driven health care (that is, connecting the health system through the 
use of interoperable health information technology; measuring and 
publishing information about quality; measuring and publishing 
information about price; and using incentives to promote high-quality 
and cost-effective care), we anticipate making information on the 
quality of care for services furnished by professionals to Medicare 
beneficiaries publicly available in the future. We also indicated that 
we anticipate exploring the use of information collected from the PQRI, 
including performance results, for this purpose. To assist us in 
determining the most appropriate uses of PQRI data, we invited comments 
on the following issues:
     Ways to effectively engage eligible professionals, 
consumers, and other stakeholders in the development and evaluation of 
a valid and reliable public reporting system related to professional 
services provided to Medicare beneficiaries.
     The venue and format for how PQRI information should be 
made publicly available.
     Types of data that would be most useful and meaningful to 
consumers (for example, reporting results and/or performance results).
     Types of data that would be most useful and meaningful for 
professionals.
     Level at which PQRI information should be publicly 
reported (that is, at the individual professional, or NPI, level or the 
group, or TIN, level).
     Types of PQRI measures and/or measures groups that would 
be most useful and meaningful to consumers.
     Types of PQRI measures and/or measures groups that would 
be most useful and meaningful to professionals.
     Review of the data to be publicly reported by eligible 
professionals.
    In addition, subsequent to the publication of the CY 2009 PFS 
proposed rule, section 1848(m)(5)(G) of the Act, as added by the MIPPA 
and described in section III. of this final rule with comment period, 
requires the Secretary to post on the CMS Web site, in an easily 
understandable format, a list of the names of eligible professionals 
(or group practices) who satisfactorily submitted data on quality 
measures for the PQRI and the names of the eligible professionals (or 
group practices) who are successful electronic prescribers as defined 
and discussed further below in section II.O2. This requirement, 
however, cannot be applied retrospectively to data that was collected 
prior to the enactment of the MIPPA.
ii. Summary of Comments and Responses
    The following is a summary of the comments we received and our 
responses.
    Comment: A few commenters expressed general support for publicly 
reporting physician performance and/or participation information and 
applauded CMS' efforts to assist beneficiaries in making informed 
decisions when choosing a health care provider. One commenter noted 
that although reporting performance information back to providers is an 
important first step, rapidly reporting performance information to the 
public is critical for informed decision-making by consumers and 
purchasers. Some commenters also expressed support for making specific 
types of information public about eligible professionals. Examples of 
information that commenters would like to see made public include, but 
are not limited to, board certification status and certification 
maintenance status, adding

[[Page 69845]]

hospital medicine to the list of specialties contained in the Physician 
and Other Healthcare Professional Directory, CAHPS patient survey data, 
an indicator of whether an eligible professional participates in a 
clinical data registry, and the numerators and denominators for any 
measure rates that are publicly reported.
    Response: We are pleased to have the commenters' support for our 
broader goal to make information on physician performance publicly 
available. We agree that such information may be relevant and useful to 
a broad audience. Physicians and other eligible professionals can use 
information about their own performance and the performance of their 
peers to improve the quality of the care they deliver. Medicare 
beneficiaries and other consumers can use such information to inform 
their decision-making when it comes to selecting their health care 
providers. We note, however, that much of the information that 
commenters specifically requested be made public is beyond the scope of 
this final rule with comment period, which is limited to the public 
disclosure of PQRI information.
    Comment: A few commenters suggested that we limit public reporting 
of PQRI information to the names of the clinicians and/or group 
practices that satisfactorily participated and earned an incentive 
payment.
    Response: As stated previously, the MIPPA requires us to list the 
names of eligible professionals (or group practices) who satisfactorily 
submitted data on quality measures for the PQRI on our Web site. While 
we agree that information on who satisfactorily submits data on quality 
measures for the PQRI is useful information to have and plan to list 
only the names of physicians who satisfactorily participated in the 
2009 PQRI and earned an incentive payment, it is our goal to eventually 
make performance information public as well. We have made information 
on quality of care in other care settings publicly available and hope 
to eventually do the same for physicians and other health care 
practitioners as part of our broader goal to measure and make the 
quality of care for services furnished to Medicare beneficiaries 
publicly available.
    Comment: Several commenters felt that it would be premature to 
publicly report any information derived from PQRI at this time. Other 
commenters merely urged CMS to proceed cautiously when creating a 
Physician Compare Web site using PQRI data. Although some commenters 
supported limiting the information to be publicly reported to the names 
of eligible professionals and/or group practices that satisfactorily 
participate in PQRI and earned the bonus incentive payment, many 
commenters cited concerns with even listing just the names of 
participants. Some of the specific concerns cited include:
     Lack of program stability;
     Lack of evidence demonstrating that compliance with pay-
for-reporting programs increases quality;
     Lack of evidence to demonstrate the validity of some of 
the PQRI quality measures;
     Successful participation demonstrates only an eligible 
professional's ability to implement a process and is not a measure of 
quality;
     Publicly reporting PQRI participation information may give 
beneficiaries or others who visit the Web site the false impression 
that eligible professionals who participated are practicing higher 
quality medicine than those who do not participate;
     Not clear how information on an individual's participation 
in the PQRI would be helpful or meaningful;
     The analysis of physician performance on some measures 
will be based on small numbers;
     CMS' data on PQRI participation may be an inaccurate 
representation of the number of eligible professionals participating or 
making a good faith effort to participate in PQRI since clearinghouses 
inappropriately removed NPI information from claims submissions;
     Major improvements are needed to the Physician and Other 
Healthcare Professional Directory before it can form the basis for a 
Physician Compare Web site because there are accuracy issues associated 
with the data on the Physician and Other Healthcare Professional 
Directory;
     It would be unfair to eligible professionals to publish 
PQRI information since no interim feedback reports are provided to help 
participants determine if they are reporting correctly;
     It would be especially unfair to publicly report 2007 and 
2008 data because eligible professionals were not informed in advance 
that such information would be publicly reported;
     Publicly reporting 2007 PQRI participation information may 
be perceived by physicians as reneging on prior commitments that CMS 
made to physicians in which we indicated that we would not publicly 
report PQRI information at this time;
     While other providers, such as hospitals, home health 
agencies, and nursing homes had many months of advance notice that CMS 
would be launching public reporting programs for those provider 
settings, eligible professionals were given no advance notice that PQRI 
information would be made public until very recently;
     CMS does not have the authority to publicly report PQRI 
performance information since the Congress only gave CMS the authority 
to publicly report the names of successful participants;
     The PQRI program is too new and is a voluntary program;
     Many eligible professionals cannot participate in PQRI due 
to the lack of applicable measures;
     Experience with PQRI is limited and individual eligible 
professionals are still trying to determine how to integrate PQRI into 
their office billing processes; and
     There are numerous barriers, some of which are described 
above, that make it difficult for physicians and other eligible 
professionals to participate in the PQRI.
    Response: We are appreciative of the commenters' thoughtful and 
constructive feedback and will take these concerns into consideration 
as we further develop our plans for publicly reporting PQRI 
information. While we understand the commenters' concerns, we note that 
section 1848(m)(5)(G) of the Act, as added by the MIPPA, requires us to 
list the names of eligible professionals who satisfactorily submitted 
PQRI quality measures data in an easily understandable format on our 
Web site. As such, it is our intent to identify the eligible 
professionals who satisfactorily submit data on quality measures for 
the 2009 PQRI on the CMS Web site in 2010. We are not required, nor are 
we specifically authorized by MIPPA or preceding PQRI authorizing 
legislation, to publicly report 2007 and 2008 PQRI information 
submitted prior to July 15, 2008.
    Comment: A number of the commenters urged CMS to delay the public 
reporting of information derived from PQRI that was authorized by the 
MIPPA because eligible professionals should have the opportunity to 
view their individual data for several years before it is made public. 
Several commenters provided recommendations for CMS to consider with 
respect to publicly reporting PQRI information and specifically as we 
proceed with implementing the MIPPA provision to list the names of the 
individuals or physician groups who successfully participate in the 
PQRI on CMS's Web site. Examples of some of the recommendations 
received include:
     CMS should educate the public on PQRI and its limitations 
and include disclaimer language on the Web site

[[Page 69846]]

explaining the PQRI program and its limitations, such as the program is 
voluntary, there are many barriers to participation and many valid 
reasons for nonparticipation, there are many factors that could impact 
participation, the year to year changes to the program, and PQRI 
participation status is not a proxy for quality.
     CMS should conduct a formal evaluation to closely review 
the 2007 and 2008 PQRI program, including the program's processes and 
the analysis and validation of the data gathered, before proceeding 
with public reporting of PQRI participation or performance data. No 
PQRI data should be publicly released until its accuracy and 
reliability is verified, otherwise, serious unintended consequences can 
occur. CMS must make every effort to ensure the accuracy of any 
information that will be made public, including demographic information 
and other information listed in the Physician and Other Healthcare 
Professional Directory, and provide the American Medical Association 
and medical specialty societies access to aggregate PQRI participation 
data so that these groups can analyze the data to ensure accuracy, 
improve upon identified quality gaps in specialty care, and work with 
physicians to boost participation.
     The Web site should positively recognize physicians who 
attempted to participate in the program and if a physician or other 
eligible professional attempted to participate but was not deemed to be 
a successful participant, CMS should provide the eligible professionals 
with the reasons why and give the eligible professional the opportunity 
to correct any errors, appeal, and/or request that the participant's 
explanation for why he or she was not successful be made public.
     Eligible professionals should also be given the 
opportunity to publicly explain why they did not participate, including 
the ability to describe any quality improvement initiatives the 
eligible professional participates in.
     CMS should provide more timely and detailed confidential 
feedback reports (including interim feedback reports) to providers so 
that they can quickly address any participation or performance issues 
before data is posted to the Web site.
     Eligible professionals should be notified prior to the 
start of data collection that data collected in a particular year will 
be publicly reported and should be given sufficient opportunity to 
review and comment on any information that will be made public prior to 
its public release following an initial dry run in which reports are 
shared only with the eligible professionals. In addition, there should 
be a formal process to allow eligible professionals to correct any 
errors. CMS should also make the comments received from the review 
period public.
     CMS should not report the names of those who 
satisfactorily submitted quality data until the data submission process 
and the reporting results have been verified.
     CMS should work closely with the physician community and 
other stakeholders in establishing a Physician Compare Web site and 
should establish a multi-stakeholder workgroup to provide input and 
feedback to CMS on the development of the Web site, including 
identifying potential problem areas. This includes conducting focus 
groups with consumers and providers to determine the goals for public 
reporting prior to deciding which data to report.
     CMS may want to consider reporting data at the physician 
group or team level as opposed to the individual level as well as 
consider reporting composite measures rather than individual measures.
     Eligible professionals should have the ability to opt-out 
of having their information made public.
     Public reporting of PQRI measurement results should be 
limited to those measures that have achieved an agreed upon baseline of 
scientific acceptability post-implementation or to those measures on 
which eligible professionals chose to submit data.
     CMS should publish the names of participating eligible 
professionals only in cases where the PQRI measures that the eligible 
professionals reported on has been in use in the PQRI for at least 3 
years. This indicates at least some measure of stability in the program 
and allows CMS to recognize those eligible professionals that reported 
on measures that have been in use in PQRI for less than 3 years as 
early adopters.
     Any Physician Compare tool developed by CMS needs to be 
user-friendly and thoroughly vetted and evaluated prior to going live 
to the public. CMS should consider formats that balance the needs of 
end users with the amount of data to be displayed and permit specific 
action by patients, families, and others. The Web site should be 
designed to report current measure sets but be flexible enough to grow 
with the addition of measures and physicians over time.
     CMS should take a two-phase approach to publicly reporting 
PQRI information at the NPI level. In Phase 1 CMS should publicize only 
the names of those who participated. After 2 years, then CMS should 
publicize the names of those who participated, those who did not 
participate and those who participated successfully in Phase 2.
    Response: We appreciate the numerous recommendations that were 
provided in the spirit of ensuring a successful launch of our efforts 
to make information about physician performance publicly available. As 
we proceed with making the names of the eligible professionals who 
satisfactorily report data on quality measures for the 2009 PQRI, we 
will consider these suggestions along with other input received (both 
formally and informally) as part of our ongoing dialogue with 
stakeholders. We believe that many of these suggestions are reasonable 
and will try to incorporate them into our plans to the extent that they 
are feasible and practical.
c. Plans for Publicly Reporting Information Derived From PQRI
    To support the delivery of high-quality, efficient health care and 
enable consumers and providers to make more informed health care 
decisions, CMS plans to launch a Physician and Other Health Care 
Professional Compare Web site that will enhance the information found 
on the current Physician and Other Health Care Professionals Directory 
at http://www.medicare.gov/Physician/Home.asp?bhcp=1. CMS anticipates 
that the addition of a Physician and Other Health Care Professional 
Compare Web site to the compare family of Web sites will complement the 
quality information CMS already makes available for hospitals, dialysis 
facilities, nursing homes, and home health facilities. Similar to the 
other compare Web sites, Physician and Other Health Care Professional 
Compare will include information about the quality of care and value 
for services provided by physicians to Medicare beneficiaries.
    As a first step, we plan to use information from the PQRI program 
to populate a Physician and Other Health Care Professional Compare Web 
site.
    Based on the public comments received and the requirements under 
section 1848(m)(5)(G) of the Act, we will report publicly the names of 
eligible professionals that have satisfactorily submitted quality data 
for the 2009 PQRI. This information will be available in 2010, in an 
easily understandable format, on a Physician and Other Health Care 
Professional Compare Web site at http://www.medicare.gov/Physician/Home.asp?bhcp=1.
    For purposes of publicly reporting the names of eligible 
professionals, on a Physician and Other Health Care

[[Page 69847]]

Professional Compare Web site, we will post the names of eligible 
professionals who have (1) submitted data on the 2009 PQRI quality 
measures through the claims-based reporting mechanism or through 
registry-based reporting, (2) met one of the satisfactory reporting 
criteria for the 2009 PQRI described in section II.O1.b above, and (3) 
received a PQRI incentive payment for covered professional services 
furnished between January 1, 2009 through December 31, 2009.
    As with the other compare Web sites, CMS plans to continue to 
expand the information that is available on the Physician and Other 
Health Care Professional Compare Web site in the future. CMS may 
publicly report physician information that is maintained in the 
``Performance Measurement and Reporting System (PMRS),'' SOR number 09-
70-0584, as amended, in order to improve the quality and efficiency of 
health care delivery and enable consumers to make more informed health 
care decisions. This includes posting on an Internet Web site the names 
of those physicians who report data on quality measures through the 
PQRI as described above as well as other types of performance 
measurement information. More information about the PMRS SOR is 
available at http://www.cms.hhs.gov/PrivacyActSystemofRecords/downloads/0584.pdf.

O2. Electronic Prescribing (E-Prescribing) Incentive Program

a. Program Background and Statutory Authority
    As discussed in section III. of this final rule with comment 
period, the MIPPA authorizes a new incentive program beginning for 2009 
for eligible professionals who are successful electronic prescribers. 
Since MIPPA was enacted after publication of the CY 2009 PFS proposed 
rule, there was no discussion of this new incentive program in the CY 
2009 PFS proposed rule. We note, however, that many of the requirements 
under MIPPA with respect to the new e-prescribing incentive program are 
self-implementing. In addition, section 1848(m)(5)(C) of the Act, as 
redesignated and amended by the MIPPA, authorizes us to implement 
certain aspects of the 2009 e-prescribing incentive program by program 
instruction or otherwise. Given that the e-prescribing quality measure 
developed under the PQRI program will be used in 2009, however, we are 
finalizing the 2009 e-prescribing incentive program in this final rule 
with comment period.
    As defined in Sec.  423.159(a), e-prescribing is the transmission, 
using electronic media, of prescription or prescription-related 
information between a prescriber, dispenser, pharmacy benefit manager 
(PBM), or health plan, either directly or through an intermediary, 
including an e-prescribing network. E-prescribing includes, but is not 
limited to, two-way transmissions between the point of care and the 
dispenser.
    The MMA and the creation of the Medicare Prescription Drug Benefit 
Program (Part D) promoted the use of electronic prescribing by 
requiring the adoption of interoperable Part D standards for 
electronically prescribing Part D covered drugs prescribed to Part D 
eligible individuals. As required by section 1860(D)(4)(e) of the Act, 
as added by the MMA, ``foundation standards'' were adopted on November 
7, 2005 (70 FR 67568) and additional Part D e-prescribing standards 
were adopted on April 1, 2008, that are to become effective April 1, 
2009 (73 FR 18918).
    Section 1860(D)(4)(e)(6) of the Act, as added by the MMA, also 
permitted third parties to offset the implementation costs for 
electronic prescribing by authorizing the creation of an exception to 
the physician self-referral (``Stark'') prohibition for certain 
donations of electronic prescribing technology. This enabled health 
plans, hospitals, and medical groups to provide in-kind support to 
physicians for electronic prescribing. Furthermore the MMA authorized 
the creation of a ``safe harbor'' to protect these entities from 
prosecution under the anti-kickback statute.
    There are many potential advantages to e-prescribing. These 
advantages include, but are not limited, to:
     Improving patient safety and quality of care by (reducing 
medication errors by up to 86 percent):
    [cir] Reducing illegibility.
    [cir] Reducing oral miscommunications.
    [cir] Providing warnings and alert systems.
    [cir] Providing access to patient's medication history;
     Reducing time spent on pharmacy phone calls and faxing;
     Automation of renewals and authorization;
     Improving formulary adherence (from 14 percent to 88 
percent after e-prescribing implementation) (Bell, Douglas S. and 
Friedman, Maria A. ``E-Prescribing and the Medicare Modernization Act 
of 2008.'' Health Affairs. 2005; Volume 24, no.5: 1159-1169); and
     Improving drug surveillance/recall;
    A more detailed description of the benefits of e-prescribing can be 
found by clicking on the Clinician's Guide to Electronic Prescribing 
link at http://www.ehealthinitiative.org/. Many of these advantages 
were also discussed at a recent e-prescribing conference co-sponsored 
by CMS. Downloadable information from this conference is available at 
http://www.e-prescribingconference.com.
    Although there are many benefits to electronic prescribing, there 
has been limited adoption and use of electronic prescribing by 
physicians and other professionals who prescribe medications. It is 
estimated that only 5 to 18 percent of providers currently use e-
prescribing (Bell, Douglas S. and Friedman, Maria A. ``E-Prescribing 
and the Medicare Modernization Act of 2008.'' Health Affairs. 2005; 
Volume 24, no. 5: 1159-1169.). The enactment of the MIPPA in July, 
2008, should encourage significant expansion of the use of electronic 
prescribing by authorizing a combination of financial incentives and 
payment differentials. Financial incentives are available for the years 
2009 through 2013, and payment differentials apply starting 2012 and 
for all subsequent years.
    Specifically, for 2009, in accordance with section 1848(m)(2) of 
the Act, as added by section 132(a) of the MIPPA, a ``successful 
electronic prescriber'' as defined by MIPPA and further discussed 
below, is eligible to receive an incentive payment equal to 2.0 percent 
of the total estimated allowed charges submitted not later than 2 
months after the end of the reporting period for all covered 
professional services furnished during the 2009 reporting period. This 
new E-prescribing Incentive Program is separate from and in addition to 
any incentive payment that eligible professionals may earn through the 
PQRI program discussed above.
    Incentive payments for successful electronic prescribers for future 
years are authorized as follows:
     2.0 percent for 2010.
     1.0 percent for 2011.
     1.0 percent for 2012.
     0.5 percent for 2013.
    Under section 1848(a)(5) of the Act, as added by section 132(b) of 
the MIPPA, a PFS payment differential applies beginning in 2012 to 
those who are not successful electronic prescribers. Specifically, for 
2012 and any subsequent year, if the eligible professional is not a 
successful electronic prescriber for the reporting period for the year, 
the fee schedule amount for covered professional services furnished by 
such professionals during the year shall be less than the fee

[[Page 69848]]

schedule that would otherwise apply by:
     1.0 percent for 2012.
     1.5 percent for 2013.
     2.0 percent for 2014 and each subsequent years.
    The application of the payment differential will be the subject of 
future notice and comment rulemaking and is beyond the scope of this 
rule.
    Under section 1848(m)(6) of the Act, as amended by the MIPPA, the 
definition of ``eligible professional'' for purposes of eligibility for 
the electronic-prescribing incentive program is identical to the 
definition of ``eligible professional'' for the 2009 PQRI under section 
1848(k)(3)(B) of the Act. In other words, eligible professionals 
include physicians, other practitioners as described in section 
1842(b)(18)(C) of the Act, physical and occupational therapists, 
qualified speech-language pathologists, and beginning in 2009, 
qualified audiologists. However, eligibility is further restricted by 
scope of practice to those professionals who have prescribing 
authority.
b. Requirement for Successful Electronic Prescriber
    Under section 1848(m)(3)(B) of the Act, as redesignated and added 
by the MIPPA, in order to qualify for the incentive payment, an 
eligible professional must be a ``successful electronic prescriber,'' 
which the Secretary is authorized to identify using one of two possible 
standards. For 2009, to be a successful electronic prescriber, the 
standard under section 1848(m)(3)(B)(ii) of the Act will apply, in 
which an eligible professional must report on at least 50 percent of 
applicable cases, on such electronic prescribing quality measure(s) 
established by the Secretary under the PQRI, for use in the Electronic 
Prescribing Incentive Program. For 2009, as will be further discussed, 
there is established one electronic prescribing measure, with the 
applicable cases being those where particular services are furnished to 
Medicare beneficiaries and billed under Part B.
    The Secretary also has authority under section 1848(m)(3)(B)(iii) 
of the Act to identify a substitute standard for successful electronic 
prescriber based on the electronic prescribing of a sufficient number 
(as determined by the Secretary) of Part D prescriptions by an eligible 
professional for the requirement to report on electronic prescribing 
measure(s). However, under section 1848(m)(3)(B)(i) of the Act, if this 
standard were substituted by the Secretary for a particular year, then 
the standard based on the reporting on electronic prescribing measures 
would no longer apply or be available. If the Secretary decides to 
establish the substitute requirement, the Secretary is authorized to 
use Part D drug claims data to assess whether a sufficient number of 
prescriptions have been submitted by eligible professionals.
    For the 2009 Electronic Prescribing Incentive Program, as described 
above, we will require eligible professionals to report on the existing 
electronic prescribing measure established by the Secretary as 
described in further detail below. In future years, we intend to 
consider the use of a certain number of Part D prescribing events as 
the basis for the incentive payment. However, our ability to use this 
substitute requirement for 2009 is not feasible. Our future 
consideration will depend on achievement of technical changes that may 
be necessary and would be addressed in future notice and comment 
rulemaking.
c. The 2009 Reporting Period for Successful Electronic Prescriber
    Section 1848(m)(6)(C) of the Act, as redesignated and amended by 
the MIPPA, defines ``reporting period'' for the 2009 E-Prescribing 
Incentive Program to be the entire year. Therefore, like for the 2009 
PQRI, the reporting period for the 2009 E-Prescribing Incentive Program 
is defined as the entire calendar year, or January 1, 2009 through 
December 31, 2009. Successful electronic prescribers are eligible to 
receive an incentive payment equal to 2.0 percent of the total 
estimated allowed charges submitted by no later than February 28, 2010 
for all covered professional services furnished January 1, 2009 through 
December 31, 2009.
d. 2009 Electronic Prescribing Measure
    Section 1848(m)(3)(B)(ii) of the Act provides that a successful 
electronic prescriber is required to report on each such electronic 
prescribing measure established under the PQRI and that are applicable 
to the eligible professional's services. There is one electronic 
prescribing measure that has been established for the PQRI. This 
measure was developed in response to the requirement under section 
1848(k)(2)(B)(i) of the Act that the Secretary include structural 
measures for the 2008 PQRI, such as the use of electronic health 
records (EHRs) and electronic prescribing technology, and again 
proposed for the 2009 PQRI. The measure is identified as Measure 
125 and is included in the 2008 PQRI: ``HIT: Adoption/Use of 
Medication E-Prescribing.'' This measure achieved AQA consensus 
adoption in October 2007, and was included in the 2008 PQRI. The 
measure was endorsed by the NQF during 2008. The measure is being 
reported by physicians and other eligible professionals as a quality 
measure for the 2008 PQRI. As required by section 1848(m)(3)(A) of the 
Act, we will finalize Measure 125 in this final rule with 
comment period (for use in the 2009 E-Prescribing Incentive Program) 
and then the PQRI will have no electronic prescribing measures for 2009 
or thereafter.
    We will post the updated measure and its specifications for the 
2009 Electronic Prescribing Incentive Program (that is, Measure 
125) on or about the date of publication of this final rule 
with comment period. However, as noted below, we retain the authority 
to make specification code changes to the electronic prescribing 
measure until December 31, 2008. Measure specifications and/or 
reporting instructions for Measure 125 for the 2008 PQRI are 
not identical to the measure specifications and/or reporting 
instructions for the 2009 E-Prescribing Incentive Program. The final 
measure specifications and reporting instructions for the E-Prescribing 
Measure 125 for the 2009 E-prescribing incentive program will 
be posted on the PQRI section of the CMS Web site at http://www.cms.hhs.gov/PQRI/03_EPrescribingIncentiveProgram.asp#TopOfPage as 
soon as practical but by no later than December 31, 2008.
e. Reporting the Electronic Prescribing Measure
    Reporting the electronic prescribing measure for 2009 is limited to 
claims based submission. The reporting of the measure is subject to the 
same technical requirements as for PQRI claims based measures in terms 
of the items that need to be submitted on the claim. Examples of 
technical requirements include submission of an NPI for the eligible 
professional, inclusion of the measure reporting codes on the same 
claim that contains the denominator codes, and no resubmission of the 
claims for purpose of reporting numerator codes. Detailed information 
on the technical submission requirements is available on the PQRI 
section of the CMS Web site at http://www.cms.hhs.gov/pqri.
    Measure 125, like other PQRI measures, has two basic 
elements. These include: (1) A reporting denominator (for Measure 
125, this consists of a set of procedure codes) that defines 
the circumstances when the measure is reportable; and (2) a reporting 
numerator (for Measure 125, this consists of three specific 
codes, one of

[[Page 69849]]

which must be reported for successful reporting.)
    The measure becomes applicable to a particular patient and 
reportable when, in billing for Part B services, the professional 
includes at least one of the procedure codes making up the denominator 
on the claim for payment (for example, a medical visit for CPT code 
99213). If one of the denominator codes is included on a claim for Part 
B services, then the physician or other eligible professional must 
report one of the numerator reporting codes on the same claim to meet 
the reporting requirement. Where the eligible professional fails to 
report a numerator reporting code specified for the measure on such a 
claim, then the case would be included in the denominator count, but 
not in the numerator count for satisfactory reporting. More detailed 
information on the specific technical requirements for correctly 
reporting quality data codes is available on the PQRI section of the 
CMS Web site at http://www.cms.hhs.gov/pqri.
i. Reporting Denominator
    The Measure 125 denominator consists of specific billing 
codes for professional services. They are typically billed for services 
in the office or outpatient setting furnished by physicians or other 
eligible professionals. Currently, the denominator codes for the 
electronic prescribing measure are CPT Codes: 90801, 90802, 90804, 
90805, 90806, 90807, 90808, 90809, 92002, 92004, 92012, 92014, 96150, 
96151, 96152, 99201, 99202, 99203, 99204, 99205, 99211, 99212, 99213, 
99214, 99215, 99241, 99242, 99243, 99244, 99245, and G Codes: G0101, 
G0108, G0109. Measure 125 has no diagnosis codes or age/gender 
requirements in order to be included in the denominator (that is, 
reporting of the e-prescribing measure is not further limited to 
certain ages or gender). As previously discussed, for 2009, the measure 
becomes reportable when any one of these procedure codes is billed by 
an eligible professional as Part B services. As discussed further under 
section II.O2.e.iii, however, eligible professionals are not required 
to report this measure in all cases in which the measure is reportable. 
Physicians and other eligible professionals who do not bill for one of 
these procedure codes on at least one claim during 2009 for Part B 
services will have no occasion to report the electronic prescribing 
measure.
    There is also a statutory limitation under section 1848(m)(2)(B) of 
the Act for the E-Prescribing Incentive Program that will be discussed 
below. For 2009, we are applying the limitation that requires that the 
total estimated Part B allowed charges for the denominator codes to 
which the electronic prescribing quality measure (that is, Measure 
125) applies must constitute at least 10 percent of the 
professional's total Part B allowed charges for the incentive to apply. 
This limitation is designed to target the electronic prescribing 
incentive payments to physicians or other eligible professionals who 
have the opportunity to prescribe a statutorily determined sufficient 
amount of prescriptions and not provide incentive payments of 2.0 
percent of allowed charges in a year to those physicians who do not 
have the opportunity to prescribe a threshold amount of prescriptions. 
However, this limitation does not affect the ability to report the 
measure, but rather we will apply it in the final determination as to 
whether an incentive is earned. See the discussion below.
    As initially required under section 1848(k)(2)(A)(ii) of the Act, 
and further established through rulemaking and under section 
1848(m)(2)(B) of the Act, we may modify the codes making up the 
denominator of the electronic prescribing measure. We have considered 
whether to expand the scope of the denominator codes to professional 
services outside the professional office and outpatient setting for 
2009, such as professional services furnished in hospitals or skilled 
nursing facilities. Although we retain the authority to update 
technical specifications of the measure until December 31, 2008 for use 
in the 2009 E-Prescribing Incentive Program, we will not expand the 
basic scope of the denominator outside the professional office and 
outpatient setting.
    We believe that several reasons support the limitation of the 2009 
e-prescribing measure (that is, Measure 125) denominator codes 
to physician and other eligible professional office and outpatient 
settings. First, physicians and other eligible professionals have 
limited ability to influence the adoption and availability of 
electronic prescribing systems in hospitals or other provider settings. 
Second, including codes for professional services in provider facility 
settings may negatively impact the ability of professionals who 
practice in office and facility settings to successfully report the 
electronic prescribing measure at the required 50 percent of cases. 
Without access to electronic prescribing for services furnished in a 
provider setting, the professional would be unable to report and these 
cases would count as not reporting if such codes were included in the 
measure denominator. Third, the effect of the electronic prescribing 
incentive payment is likely to have its greatest impact in stimulating 
adoption and use of electronic prescribing in the professional office 
and outpatient setting. While outpatient services are an imperfect 
marker, outpatient services are likely to represent the largest 
opportunity to expand electronic prescribing where prescribing is 
frequent and the decision to adopt electronic prescribing systems is 
also dependent on the choices, practices and funding by eligible 
professionals. Fourth, the statutory limitation that applies to 
eligibility for the incentive also applies to the future differential 
payment provisions. Extension of the denominator codes to hospital-
based settings of care, may cause professionals who exclusively 
practice in such settings to be liable for a differential payment for 
services furnished in a setting where they have limited ability to 
influence the adoption of electronic prescribing.
ii. Qualified Electronic Prescribing System--Required Functionalities 
and Part D E-Prescribing Standards
    To report Measure 125 the eligible professional must 
report one of three ``G'' codes, as will be discussed below, on the 
same claim for which one of the denominator codes is billed. In 
reporting any of the G codes, however, and thereby qualifying for the 
incentive payment for e-prescribing in 2009, the professional must have 
and regularly use a ``qualified'' electronic prescribing system as 
defined in Measure 125. If the professional does not have 
general access to an e-prescribing system in the practice setting, 
there is nothing to report. In this way, Measure 125 is more 
than a ``pay-for-reporting'' measure since the reporting must relate to 
an already implemented e-prescribing system.
    Required Functionalities for a ``Qualified'' Electronic Prescriber 
System. What constitutes a ``qualified'' electronic prescribing system 
is based upon certain required functionalities that the system can 
perform. As currently specified in Measure 125, a 
``qualified'' electronic prescribing system is one that can:
    (a) Generate a complete active medication list incorporating 
electronic data received from applicable pharmacies and PBMs, if 
available.
    (b) Allow eligible professionals to select medications, print 
prescriptions, electronically transmit prescriptions, and conduct 
alerts (written or acoustic signals to warn the prescriber of possible 
undesirable or unsafe

[[Page 69850]]

situations including potentially inappropriate dose or route of 
administration of a drug, drug-drug interactions, allergy concerns, or 
warnings and cautions).
    (c) Provide information related to lower cost, therapeutically 
appropriate alternatives (if any). The ability of an electronic 
prescribing system to receive tiered formulary information, if 
available, would suffice for this requirement for 2009 and until this 
function is more widely available in the marketplace.
    (d) Provide information on formulary or tiered formulary 
medications, patient eligibility, and authorization requirements 
received electronically from the patient's drug plan (if available).
    Part D E-Prescribing Standards. Section 1848(m)(3)(B)(v) of the 
Act, as redesignated and added by the MIPPA, requires that, to the 
extent practicable, ``the Secretary shall ensure that eligible 
professionals utilize electronic prescribing systems in compliance with 
standards established for such systems pursuant to the Part D 
Electronic Prescribing Program under section 1860D-4(e) of the Act.'' 
Part D sponsors must use when they transmit prescriptions and certain 
prescription related information for Part D covered drugs that are 
prescribed for Part D eligible individuals. In the qualified electronic 
prescribing system context of this rule, electronic systems must convey 
the information listed above under (a) through (d) using the standards 
currently in effect for the Part D e-prescribing program. New Part D e-
prescribing standards will be effective April 1, 2009. These new Part D 
e-prescribing standards can be found on the CMS Web site at http://www.cms.hhs.gov/eprescribing.
    To ensure that eligible professionals utilize electronic 
prescribing systems that meet these requirements, E-Prescribing Measure 
125 requires that those functionalities required for a 
``qualified'' electronic prescribing system must utilize the adopted 
Part D e-prescribing standards.
    The Part D e-prescribing standards relevant to the four 
functionalities for a ``qualified'' system in Measure 125, 
described above and listed as (a), (b), (c), and (d), are:
    (a) Generate medication list--Use the National Council for 
Prescription Drug Programs (NCPDP) Prescriber/Pharmacist Interface 
SCRIPT Standard, Implementation Guide, Version 8, Release 1, October 
2005 (hereinafter ``NCPDP SCRIPT 8.1'') Medication History Standard;
    (b) Transmit prescriptions electronically--Use the NCPDP SCRIPT 8.1 
for the transactions listed at 42 CFR 423.160(b)(2);
    (c) Provide information on lower cost alternatives--Use the NCPDP 
Formulary and Benefits Standard, Implementation Guide, Version 1, 
Release 0 (Version 1.0), October 2005 (hereinafter ``NCPDP Formulary 
and Benefits 1.0'');
    (d) Provide information on formulary or tiered formulary 
medications, patient eligibility, and authorization requirements 
received electronically from the patient's drug plan--use:
    (1) NCPDP Formulary and Benefits 1.0
    (2) Accredited Standards Committee (ASC) X12N 270/271-Health Care 
Eligibility Benefit Inquiry and Response, Version 4010, May 2000, 
Washington Publishing Company, 004010X092 and Addenda to Health Care 
Eligibility Benefit Inquiry and Response, Version 4010A1, October 2002, 
Washington Publishing Company, 004010X092A1 for communicating eligibly 
information between Medicare Part D sponsors and prescribers.
    (4) NCPDP Telecommunication Standard Specification, Version 5, 
Release 1 (Version 5.1), September 1999, and equivalent NCPDP Batch 
Standard Batch Implementation Guide, Version 1, Release 1 (Version 
1.1), January 2000 for communicating eligibility information between 
Medicare Part D sponsors and dispensers.
    There are, however, Part D e-prescribing standards that are or will 
shortly be in effect for functionalities that are not commonly utilized 
at this time. Such functionalities are not currently required for a 
``qualified'' system under Measure 125. One example is Rx Fill 
Notification, which is discussed in the e-prescribing final rule (73 FR 
18918, 18926). For purposes of the 2009 electronic prescribing program 
and incentive payments, it is not required that the electronic 
prescribing system contain all functionalities for which there are 
available Part D e-prescribing standards. Rather, the only required 
functionalities are those stated in the measure and described above in 
the section entitled ``Required Functionalities for a `Qualified' 
Electronic Prescribing System.'' For those required functionalities 
described above, a ``qualified'' system must use the adopted Part D e-
prescribing standards for electronic messaging. There are other aspects 
of the functionalities for a ``qualified'' system that are not 
dependent on electronic messaging and are part of the software of the 
electronic prescribing system, for which Part D standards for 
electronic prescribing do not pertain. For example, the requirements in 
qualification (b) listed above that require the system to allow 
professionals to select medications, print prescriptions, and conduct 
alerts are functions included in the particular software, for which 
Part D standards for electronic messaging do not apply.
    We are aware that there are significant numbers of eligible 
professionals who are interested in earning the incentive payment, but 
currently do not have an electronic prescribing system. The electronic 
prescribing measure does not require the use of any particular system 
or transmission network, but only that the system be a ``qualified'' 
system having the functionalities described based on Part D e-
prescribing standards. While it is not appropriate for us to suggest 
particular products, we will post general information at or about the 
time of publication of this rule that may be helpful to the eligible 
professional in selecting a system that meets the requirements of a 
``qualified'' system under Measure 125. Additionally, we will 
provide additional clarifying information, as needed, in the form of 
Frequently Asked Questions (FAQs) and post them on the CMS Web site.
iii. Reporting Numerator
    To report for an applicable case where one of the denominator codes 
is billed on a claim for Part B services, an eligible professional must 
submit one of three G codes specified in Measure 125 on the 
same Medicare Part B claim.
     One G code is used to report that all prescriptions in 
connection with the visit billed were electronically prescribed;
     Another G code indicates that no prescriptions were 
generated during the visit; and
     A third G code is used when some or all prescriptions were 
written or phoned in due to patient request, State or Federal law, the 
pharmacy's system being unable to receive the data electronically or 
because the prescription was for a narcotic or other controlled 
substance.
    As we have previously discussed, to qualify for an incentive 
payment under the electronic prescribing incentive program, the 
eligible professional must report applicable G codes on claims 
containing one or more denominator billing codes, in at least 50 
percent of applicable cases. Since the measure does not apply to claims 
for services not containing one of the denominator codes, professionals 
need not report G codes for the electronic prescribing measure on 
claims not containing one of the denominator codes.

[[Page 69851]]

    Although only one of the three reportable G codes indicates that 
the physician or eligible professional used electronic prescribing for 
all of the prescriptions provided during the encounter, the reporting 
of any one of the G codes counts as successful reporting and toward the 
required 50 percent reporting requirement. However, as previously 
discussed by reporting any one of the G codes, the physician or 
eligible professional is indicating that an electronic prescribing 
system has been adopted for use.
    With respect to narcotics and controlled substances, the third G 
code is reported in connection with using written prescriptions rather 
than electronic prescribing for such medications, because electronic 
prescribing of these medications is currently prohibited by Federal 
regulation. We are aware that the Drug Enforcement Agency (DEA) has 
proposed regulatory changes which if finalized would allow electronic 
prescribing of controlled substances under certain circumstances. This 
third G code would continue to be reportable for the 2009 Electronic 
Prescribing Measure without regard to possible changes in the DEA's 
regulations with respect to the electronic prescribing of controlled 
substances. Based on concerns expressed to us, we are aware that 
professionals may find it impractical to utilize electronic prescribing 
for controlled substances, depending on specific requirements that may 
be finalized by the DEA. Therefore, to alleviate uncertainty with 
respect to the electronic prescribing incentive program, for 2009, 
physicians and other eligible professionals may report the electronic 
prescribing measure without any requirement to use electronic 
prescribing for narcotics or other controlled substances without regard 
to final action that the DEA may take on this subject, based on the G 
codes contained in the Electronic Prescribing Measure.
f. Determination of Successful Electronic Prescriber and Amount of 
Incentive Payment
    Determination of professionals who are Successful Electronic 
Prescribers for 2009 is at the individual professional level, based on 
the National Provider Identifier (NPI) as it is under PQRI. However, 
payment is made to the practice represented by the Tax Identification 
Number (TIN) to which payments are made for the individual 
professional's services. Inasmuch as some individuals (NPIs) may be 
associated with more than one practice or TIN, determination of 
Successful Electronic Prescriber for 2009, as it is for PQRI, will be 
made for each unique NPI-TIN combination. Payment will be made to the 
applicable TIN.
    Under PQRI, a physician or other eligible professional may meet, in 
theory, the criteria for satisfactory reporting on as few as a single 
patient falling within the denominator of a measure and correctly 
reporting on that measure. In the case of the E-Prescribing Incentive 
Program, however, section 1848(m)(2)(B) of the Act, as added by the 
MIPPA, imposes a limitation. As discussed above, for 2009, the 
limitation provides that the electronic prescribing incentive is not 
available to an eligible professional unless the eligible 
professional's total estimated allowed charges for covered Medicare 
Part B services furnished for the codes in the denominator of the 2009 
Electronic Prescribing Measure make up at least 10 percent of the 
eligible professional's total allowed charges for all covered Medicare 
Part B professional services furnished by the eligible professional 
during the 2009 reporting period (that is, January 1, 2009 through 
December 31, 2009). The statutory limitation also applies to the future 
application of the payment differential, which limits those to whom the 
differential will apply as well.
    Therefore, in determining whether an eligible professional will 
receive an electronic prescribing incentive payment, CMS will determine 
whether the 10 percent threshold is met based on the claims submitted 
by the eligible professional at the NPI/TIN level. This calculation is 
expected to take place in the first quarter of 2010 and will be 
performed by dividing the individual's total 2009 charges submitted for 
the measure's HCPCS codes by the individual's total Medicare Part B 
charges (as assessed at the NPI/TIN level). If the result is 10 percent 
or more, then the statutory limitation does not apply and a successful 
electronic prescriber would earn the electronic prescribing incentive 
payment. If the result were less than 10 percent, then the statutory 
limitation would apply and the eligible professional could not receive 
an electronic prescribing incentive payment.
    As discussed previously, this limitation will be applied by CMS in 
determining whether the individual professional meets the requirements 
for the incentive payment. Although individual eligible professionals 
may decide about whether to report based on their own assessment of 
what portion of their allowed charges for Part B services are likely to 
be made up of services represented by the denominator codes, individual 
professionals may report the numerator codes without regard to the 
statutory limitation for the incentive payment.
    If an eligible professional meets the 10 percent threshold for 
2009, we will determine whether the professional is a successful 
electronic prescriber by reporting the numerator codes for 50 percent 
of applicable cases. If the professional is determined to be a 
successful electronic prescriber, then the incentive payment will be 
made.
    As indicated above, for 2009, the electronic prescribing incentive 
payment is 2.0 percent of the total estimated Part B allowed charges 
for the reporting period (that is, the entire year, for 2009). Thus, 
the incentive payment is not solely 2.0 percent of the estimated Part B 
allowed charges for services for which the measure is reported, but 2.0 
percent of all estimated Part B allowed charges for the year. In other 
words, although the measure denominator is limited to certain office 
and outpatient professional services, and the requirement to be an 
electronic prescriber is based on those services, the incentive payment 
is paid as 2.0 percent of all estimated Part B allowed charges for the 
professional, submitted by the end of February 2010.
g. Uses of Information on Successful Electronic Prescribers
    As discussed in section II.O1.e.i. above, section 1848(m)(5)(G) of 
the Act, as added by the MIPPA and described in section III. of this 
final rule with comment period, requires the Secretary to post on the 
CMS Web site, in an easily understandable format, a list of the names 
of eligible professionals (or group practices) who satisfactorily 
submitted data on quality measures for the PQRI and the names of the 
eligible professionals (or group practices) who are successful 
electronic prescribers. As noted previously, this requirement cannot be 
applied retrospectively to data that was collected prior to the 
enactment of the MIPPA.
    In order to implement this requirement we will report publicly the 
names of eligible professionals who are successful electronic 
prescribers for the 2009 E-Prescribing Incentive Program. Along with 
the names of eligible professionals who satisfactorily submitted data 
on quality measures for the 2009 PQRI, the names of eligible 
professionals who are successful electronic prescribers will be 
available in 2010, in an easily understandable format, on a Physician 
and Other Health Care Professional Compare Web site at http://www.medicare.gov/Physician/Home.asp?bhcp=1.

[[Page 69852]]

    Accordingly, we will post on the CMS Web site the names of eligible 
professionals (1) whose 2009 Medicare Part B charges for codes in the 
denominator of the E-Prescribing Measure 125 make up at least 
10 percent of the eligible professional's Medicare Part B charges for 
2009; (2) who reported the E-Prescribing Measure 125 in at 
least 50 percent of the cases in which the measure was reportable 
during 2009; and (3) who received an e-prescribing incentive payment 
for covered professional services furnished January 1, 2009 through 
December 31, 2009.
    Since the PQRI and the E-Prescribing Incentive Program are two 
separate incentive programs, it is feasible for an eligible 
professional who participated in both incentive programs to be listed 
both as an individual eligible professional who satisfactorily 
submitted data on quality measures for the PQRI and a successful 
electronic prescriber if he or she met the criteria for both incentive 
programs.
d. Summary of Comments and Responses
    Although the MIPPA was not enacted until after publication of the 
CY 2009 PFS proposed rule, we received some comments related to this 
new incentive program that was authorized by the MIPPA. A summary of 
these comments and our responses is below.
    Comment: We received a few comments about the PQRI Measure 
125. These commenters suggested that prior to implementation 
of this quality measure in the e-prescribing incentive program, the 
quality measure and our design of the e-prescribing incentive program 
should go through a public comment process. One commenter indicated 
support for the e-prescribing incentive but noted that implementing e-
prescribing in physicians' offices is resource intensive and many local 
pharmacies are not prepared to use e-prescribing.
    Response: As described above, the MIPPA requires us to implement an 
incentive payment for successful electronic prescribers beginning in 
2009. Many of the MIPPA requirements with respect to the incentive 
payment for successful electronic prescribers are generally self-
implementing, require little exercise of discretion, and build on 
existing aspects of the PQRI that have already been proposed. In 
addition, although section 1848(m)(5)(C) of the Act, as redesignated 
and amended by the MIPPA, authorizes us to implement certain aspects of 
the 2009 e-prescribing incentive program by program instruction or 
otherwise, we are finalizing this program for 2009 in this final rule 
with comment period. The quality measure that we are using to determine 
whether an eligible professional qualifies as a successful electronic 
prescriber was available for public comment during its development by 
QIP as well as during the consensus process for AQA adoption and NQF 
endorsement, both of which have been achieved. Additionally, as this 
quality measure was one of the quality measures proposed for the 2009 
PQRI in the CY 2009 PFS proposed rule, the public had an opportunity to 
comment on this quality measure during the proposed rule's comment 
period.
    Comment: One commenter was concerned that future DEA regulation 
changes may complicate e-prescribing. The commenter urged us to exempt 
e-prescribing of controlled substances from any assessment of 
differential payments.
    Response: We are aware of the proposed DEA regulation changes and 
believe the modification and explanation of the third G code described 
above adequately addresses this issue.
    Comment: We received one comment that emergency department 
evaluation and management codes do not appear in the denominator of the 
e-prescribing measure proposed for the 2009 PQRI (Measure 
125). Another commenter suggested that we maintain the eye 
visit codes in this measure so that ophthalmologists can participate in 
the e-prescribing incentive program.
    Response: We have addressed in the body of the preamble the comment 
with respect to hospital based services of professionals. The current 
measure specifications contain office and outpatient codes applying to 
eye care. As stated above, we will post the final specifications for 
the e-prescribing measure for purposes of the 2009 e-prescribing 
incentive program no later than December 31, 2008.
    Comment: A few commenters objected to the fact that there is no 
definition as to what constitutes an acceptable hardship exemption for 
the e-prescribing incentive initiative.
    Response: As discussed briefly above, section 1848(a)(5)(A) of the 
Act, as added by the MIPPA, authorizes the Secretary, starting in 2012, 
to apply a differential fee schedule amount for covered professional 
services furnished by an eligible professional who is not a successful 
electronic prescriber. In accordance with section 1848(a)(5)(B) of the 
Act, the Secretary may, on a case-by-case basis, exempt an eligible 
professional from the application of the payment differential if the 
Secretary ``determines, subject to annual renewal, that compliance with 
the requirement for being a successful electronic prescriber would 
result in a significant hardship.'' This hardship exemption is to be 
used at the discretion of the Secretary.
    Since this hardship exemption pertains only to those eligible 
professionals subject to a payment differential because they did not 
meet the criteria for becoming a successful electronic prescriber, this 
provision will not become effective until 2012 when the payment 
differential for those eligible professionals who are not successful 
electronic prescribers is first required. As such, the definition of 
what constitutes an acceptable hardship is beyond the scope of this 
final rule with comment period.

P. Discussion of Chiropractic Services Demonstration

    In the CY 2006, CY 2007, and CY 2008 PFS final rules with comment 
period (70 FR 70266, 71 FR 69707, 72 FR 66325, respectively), we 
included a discussion of the 2-year chiropractic services demonstration 
that ended on March 31, 2007. This demonstration was required by 
section 651 of the MMA to evaluate the feasibility and advisability of 
covering chiropractic services under Medicare. These services extended 
beyond the current coverage for manipulation to care for 
neuromusculoskeletal conditions typical among eligible beneficiaries, 
and covered diagnostic and other services that a chiropractor was 
legally authorized to perform by the State or jurisdiction in which the 
treatment was provided. The demonstration was conducted in four sites, 
two rural and two urban. The demonstration was required to be budget 
neutral as the statute requires the Secretary to ensure that the 
aggregate payment made under the Medicare program does not exceed the 
amount which would be paid in the absence of the demonstration.
    Ensuring BN requires that the Secretary develop a strategy for 
recouping funds should the demonstration result in costs higher than 
those that would occur in the absence of the demonstration. As we 
stated in the CY 2006 and CY 2007 PFS final rules with comment period, 
we would make adjustments to the chiropractor fees under the Medicare 
PFS to recover aggregate payments under the demonstration in excess of 
the amount estimated to yield BN. We will assess BN by determining the 
change in costs based on a pre- and post-comparison of aggregate 
payments and the rate of change for specific

[[Page 69853]]

diagnoses that were treated by chiropractors and physicians in the 
demonstration sites and control sites. Because the aggregate payments 
under the expanded chiropractor services may have an impact on other 
Medicare expenditures, we will not limit our analysis to reviewing only 
chiropractor claims.
    Any needed reduction to chiropractor fees under the PFS would be 
made in the CY 2010 and CY 2011 physician fee schedules as it will take 
approximately 2 years after the demonstration ends to complete the 
claims analysis. If we determine that the adjustment for BN is greater 
than 2 percent of spending for the chiropractor fee schedule codes 
(comprised of the 3 currently covered CPT codes 98940, 98941, and 
98942), we would implement the adjustment over a 2-year period. 
However, if the adjustment is less than 2 percent of spending under the 
chiropractor fee schedule codes, we would implement the adjustment over 
a 1-year period. We intend to provide a detailed analysis of BN and the 
proposed offset during the CY 2010 PFS rulemaking process.
    The following is a summary of the public comments we received and 
our responses.
    Comment: We received one comment concerning the methodology for 
determining BN. The commenter stated that the Congressional intent for 
implementing BN is clearly spelled out in section 651(f)(1)(A) of the 
MMA. The commenter believes the demonstration's costs should be offset 
from the totality of services payable under the Part B Trust Fund, and 
not a discrete minority of services. The commenter stated that our 
methodology is flawed because it offsets demonstration costs only from 
existing chiropractic services.
    Response: Section 651(f)(1)(A) of the MMA requires that ``* * * the 
Secretary shall ensure that the aggregate payment made by the Secretary 
under the Medicare program do not exceed the amount which the Secretary 
would have paid under the Medicare program if the demonstration 
projects under this section were not implemented.'' The statute does 
not specify a specific methodology for ensuring BN. Our methodology 
meets the statutory requirement for BN and appropriately impacts the 
chiropractic profession that is directly affected by the demonstration. 
The BN adjustment under PFS will be limited to adjusting the 
chiropractor fee schedule codes (comprised of the 3 currently covered 
CPT codes: 98940, 98941, and 98942). No other codes would be affected.

Q. Educational Requirements for Nurse Practitioners and Clinical Nurse 
Specialists

    In the CY 2009 PFS proposed rule (73 FR 38576), we proposed a 
technical correction to the nurse practitioner (NP) qualifications at 
Sec.  410.75(b) to require that, in order for NP services furnished by 
an individual to be covered by Medicare, a NP who obtains Medicare 
billing privileges as a NP for the first time on or after January 1, 
2003, must meet all of the following criteria: (1) Be a registered 
professional nurse who is authorized by State law to practice as a NP; 
(2) be nationally certified as a NP; and (3) have a master's degree in 
nursing. The current NP qualification standards in our regulations 
include progressive requirements that are not entirely date specific. 
The absence of a date specification for each of the qualification 
standards could allow nurses who have never been enrolled under 
Medicare and obtained Medicare billing privileges as a NP an 
opportunity to enroll as a NP after January 1, 2003, without a master's 
degree in nursing. Such an enrollment would be contrary to our policy, 
as explained further below.
    We discussed the NP qualifications and our intent to move 
progressively toward requiring a master's degree in nursing as the 
standard for all new NPs enrolling and participating under the Medicare 
Part B benefit in the CY 2000 PFS proposed rule (64 FR 39625) and the 
subsequent final rule (64 FR 59411). In the CY 2000 PFS final rule, we 
stated, ``the requirement that a NP applying for a Medicare billing 
number for the first time must have a master's degree in nursing as of 
January 1, 2003, will provide NPs without a master's degree with enough 
time to earn such a degree. We believe it is reasonable to require 
ultimately, a master's degree as the minimum educational level for new 
practitioners independently treating beneficiaries and directly billing 
the Medicare program.''
    In the CY 2009 PFS proposed rule (73 FR 38576), we also proposed to 
amend our regulations at Sec.  410.75(b)(4) which require that NPs must 
have a master's degree in nursing. We proposed to also recognize a 
Doctor of Nursing Practice (DNP) doctoral degree (which can be obtained 
without a master's degree in nursing). In addition, we proposed to 
amend a similar qualification standard for clinical nurse specialists 
(CNSs) at Sec.  410.76(b)(2) that requires advanced practice nurses 
(APNs) to have a master's degree in a defined clinical area of nursing 
from an accredited educational institution in order to allow CNSs, 
alternatively, to meet these requirements with a DNP doctoral degree.
    In the proposed rule, we acknowledged that we are aware that some 
educational institutions are offering programs to prospective NPs and 
CNSs that allow students to move from a baccalaureate degree in nursing 
directly to the doctoral degree in nursing where they earn a DNP as a 
terminal clinical doctoral degree. Therefore, some APNs who earn the 
DNP degree do not receive a master's degree in nursing even though they 
will have met all of the educational requirements for a master's degree 
in nursing, in addition to the preparation that merits them the DNP 
degree. We noted that a Wall Street Journal article (published April 2, 
2008) stated that by the year 2015, the American Association of 
Colleges of Nursing aims to make the doctoral degree the standard for 
all new APNs. We believe that it is logical for Medicare to recognize 
APNs with more extensive education and training. Therefore, we proposed 
to permit qualified APNs with the DNP degree to enroll and receive 
Medicare Part B payment as NPs and CNSs.
    We received several comments on our proposals with the majority 
from national organizations. The following is a summary of the comments 
received and our responses.
    Comment: All of the comments that we received on our proposed 
technical correction supported the change. The commenters agreed that 
the intent of the graduated NP educational qualifications was to ensure 
that practicing NPs and their patients were not left unable to enroll 
in Medicare after we adopted our rules requiring national certification 
and a master's degree in nursing for enrollment. Many commenters stated 
that these NPs had already been recognized and practicing as Part B 
suppliers. The commenters also stated that the technical correction 
does not appear to violate the intent of the NP educational 
qualifications and should reduce any confusion that might still remain 
regarding this requirement.
    Response: We are finalizing the technical correction as proposed in 
order to clarify our requirement that effective on or after January 1, 
2003, all NPs must have a master's degree in nursing.
    Comment: The majority of commenters commended CMS for our proposal 
to recognize the DNP degree and stated that we are keeping pace with 
the transformation in advanced practice registered nursing education. 
The commenters applaud CMS for recognizing the DNP degree as a valid

[[Page 69854]]

degree that exceeds a master's degree in nursing and stated that 
recognition of the DNP degree will be positive for patients.
    However, some commenters cautioned against eliminating the master's 
degree in nursing for NPs and CNSs and replacing it with the DNP degree 
only. The commenters stated that transitioning to the DNP degree as the 
national standard by 2015 is only a goal toward which the nursing 
profession will work and that it may take longer for some programs than 
others to address State licensing and institutional issues. 
Accordingly, the commenters requested that both the master's degree in 
nursing and the DNP degree must be recognized by CMS as appropriate 
credentials for APN reimbursement. Additionally, one commenter urged 
CMS not to require a master's of science in nursing (MSN) degree 
instead of a master's degree in nursing.
    Response: As we stated in the CY 2009 PFS proposed rule, we believe 
that it is logical for Medicare to recognize APNs with more extensive 
education and experience while continuing to recognize NPs and CNSs 
with a master's degree in nursing. NPs or CNSs with a doctoral degree 
in nursing practice should not be denied enrollment in the Medicare 
program because our educational standard for NPs and CNSs is a master's 
degree. Additionally, we do not intend to eliminate the master's degree 
in nursing requirement and replace it with solely the DNP degree. We 
also have no plans to require a MSN degree in lieu of a master's degree 
in nursing.
    Comment: Two commenters stated that they have not yet taken a 
position on the DNP degree and on the various DNP programs that 
graduate APNs. However, the commenters noted that many schools offering 
the DNP degree have programs that focus on areas other than clinical 
practice such as administration, leadership, business, and nursing 
policy. The commenters also stated that DNP graduates seeking to enroll 
in Medicare as new suppliers should hold a clinically-based DNP degree 
and also, ideally, attain advanced practice certification. The 
commenters believe that NPs and CNSs who graduate from DNP programs 
should not be allowed to bypass the master's degree in nursing before 
achieving the DNP degree because they believe that the master's 
education provides the appropriate foundation for CNS practice. One 
commenter is opposed to Medicare's recognition of the DNP degree in 
Medicare regulations at this time because of the varying routes of 
entry into a DNP program have not been resolved, there is a lack of 
standardization of DNP programs' multiple accreditation processes. The 
commenters also stated that, and Federal recognition of an unproven 
nursing doctoral program seems premature given that no State licensing 
agency or State board of nursing has developed statutes or regulations 
authorizing the utilization of the DNP as a substitute for the master's 
education requirement and NP or CNS certification.
    Response: We believe that as any new educational program develops, 
there are likely to be some uncertainty and inconsistency inherent in 
the process. However, the APN community has a stated goal of moving 
toward a national standard of graduating APNs from DNP programs. We do 
not believe that it is sensible to deny Medicare enrollment to a 
registered professional nurse with a DNP degree who meets all of the 
other qualification requirements when we enroll nurses with a master's 
degree. We have relied on our contractors to enroll only those NPs and 
CNSs who have graduated with a master's degree in nursing in addition 
to meeting other qualification standards that require State licensure 
and certification by a recognized national certifying body. We believe 
that these collective qualifications ensure that only qualified nurses 
with proper clinical training furnish services to Medicare patients. 
However, we plan to study and monitor DNP programs as they continue to 
evolve. If we discover that APNs enrolling in Medicare as graduates of 
DNP programs are not sufficiently qualified to furnish services to 
Medicare patients, we will reconsider our education requirements and 
take appropriate action.
    Comment: One commenter suggested revising the definition of a 
physician under the NP and CNS qualifications.
    Response: We believe this comment is outside the scope of this 
regulation, and therefore, we are not addressing this comment at this 
time.
    After reviewing the public comments, we are finalizing our 
proposals to amend the NP qualifications to incorporate the technical 
correction and to include the DNP degree under the educational 
qualification requirements for NPs and CNSs. However, we will continue 
to study and monitor DNP nursing programs, State legislative action, 
and the State boards of nursing as the DNP degree evolves.

R. Portable X-Ray Issue

    The Conditions for Coverage (CfC) for Portable X-Ray services are 
authorized by section 1861(s)(3) of the Act and were adopted in January 
1969. These requirements have, for the most part, been subjected to 
minimal modification over the years.
    The current requirements in our regulations at Sec.  486.104 
(Qualifications, orientation, and health of technical personnel) are 
inconsistent with existing professional standards of practice and 
training requirements. Specifically, the current qualification 
requirements for x-ray personnel in Sec.  486.104(a)(1), (a)(2), and 
(a)(3) rely on credentialing activities from the Council on Education 
of the American Medical Association (CEAMA) and the American 
Osteopathic Association (AOA) which no longer approve formal training 
programs for x-ray technology and have not done so since 1992.
    Beginning in 1976, the Joint Review Committee on Education in 
Radiologic Technology (JRCERT) worked in collaboration with the 
Committee on Allied Health Education and Accreditation (CAHEA) of the 
American Medical Association (AMA) to accredit programs. However, the 
CAHEA was dissolved by the AMA in 1992 and JRCERT subsequently sought 
approval from the United States Department of Education (USDE) to 
approve and accredit x-ray technology programs. Approval was granted to 
JRCERT by the USDE in 1992. JRCERT is now the only accrediting entity 
recognized by the USDE that approves these programs; however, JCERT is 
not a recognized accrediting body under the current regulation at Sec.  
486.104.
    Before an x-ray technology program can be approved by JRCERT, the 
American Society of Radiologic Technologists (ASRT) must approve the 
program's curriculum. Prior to 1992, the curriculum for x-ray 
technology programs was based on 24 months, which is reflected in the 
current regulations at Sec.  486.104. ASRT no longer bases its 
evaluation on program duration, but rather on program requirements. 
Thus, a program could be less than 24 months in duration and still be 
eligible for JRCERT approval and accreditation if its curriculum was 
ASRT approved. Because Sec.  486.104(a)(1) reflects the outdated 24-
month standard, some x-ray technicians who actually meet community 
standards for education and training do not meet Medicare standards as 
they stand.
    Since the current Medicare requirements in Sec.  486.104(a)(1) are 
outdated, referencing organizations that no longer perform the stated 
function and requiring a specific duration of training that is no 
longer the community standard, we proposed to revise the regulation to 
reflect the current

[[Page 69855]]

requirements. References to schools approved by the CEAMA or the AOA 
will be deleted, and approval by JRCERT will be added. In addition, we 
proposed that the requirement for formal training of not less than 24 
months in duration be deleted, since this criterion has not been part 
of the criteria established by entities that evaluate and approve x-ray 
technology programs since 1993.
    We proposed to retain the 24-month criterion in Sec.  486.104(a)(2) 
and (a)(3) (affecting persons obtaining training prior to July 1, 1966) 
as program duration was one determinant of program quality at that 
time. To address those who completed their training after July 1, 1966 
but before January 1, 1993, the time period during which CEAMA and the 
AOA were approving training programs, we proposed the addition of a new 
paragraph Sec.  486.104(a)(4) to this section. This addition will 
reflect the standards for credentialing activities during this time 
frame.
    The following is a summary of the comments we received and our 
responses.
    Comment: Commenters suggested an alternate requirement for 
qualification as an x-ray technologist, namely American Registry of 
Radiologic Technologists (ARRT) certification. The commenters also 
stated that restricting recognition to only graduates of JRCERT 
accredited educational programs could create a shortage of 
radiographers eligible to furnish procedures.
    Response: We agree that certification by the ARRT is widely 
recognized; however, ARRT certification is voluntary, and therefore, 
may not be required as a condition of employment. Requiring ARRT 
certification would present an additional expense and testing 
obligation that individuals who are otherwise qualified might not 
choose to incur. Such a requirement would also make it necessary for 
those who are already working in the field to obtain ARRT certification 
if they are not already certified.
    The goal of our proposed revision was to update our regulations to 
reflect the accurate accrediting entity and program requirements for x-
ray technology programs. As it stood, the regulation was inaccurate by 
referencing organizations that no longer approve and accredit x-ray 
technology programs, and by specifying an outdated 24-month program 
requirement. It was not our intention to consider imposing new or 
additional qualification requirements for technicians.
    In accordance with existing regulations, we will continue to 
recognize as qualified those individuals who have successfully 
completed a program of formal training in x-ray technology in a school 
approved by the JRCERT, as well as those who have earned a bachelor's 
or associate degree in radiologic technology from an accredited college 
or university. States will continue to have the autonomy to utilize the 
ARRT exam for State licensing purposes.
    After reviewing the public comments, we are finalizing the 
provisions as proposed.

S. Other Issues

1. Physician Certification (G0180) and Recertification (G0179) for 
Medicare-Covered Home Health Services Under a Home Health Plan of Care 
(POC) in the Home Health Prospective Payment System (HH PPS)
    In the CY 2009 PFS proposed rule (73 FR 38578), we solicited public 
comments on policy options regarding physician involvement in the 
certification and recertification for Medicare-covered home health 
services under a home health plans of care (POC), payment for those 
services, and the basis for those payments (relative resources measured 
in RVUs). Currently, we pay physicians for both the certification and 
recertification of home health POCs under HCPCS codes G0180 and G01779, 
respectively. We make payment for these services through the PFS.
    In the CY 2009 PFS proposed rule, we expressed our concern that 
physician involvement in the home health POC may not be as extensive as 
we had hoped. We recognize that there exists a vast array of differing 
levels of physician involvement in the certification and 
recertification of home health POCs. We continue to believe that the 
active involvement of the physician (to include ``in-person'' contact 
with the patient) in the certification, recertification, and review of 
the home health POC is essential for delivery of high quality home 
health services to Medicare beneficiaries.
    To that end, we offered different policy options and solicited the 
public for comment on those options in an effort to gather more 
information on this issue, and any other possible underlying issues 
that may exist.
    The following is a summary of the comments and our response.
    Comment: Most commenters suggested that we leave our current 
policies and payment to physicians unchanged, at least until the 
further analysis is completed. To that end, it was suggested by 
commenters that we continue to study the role of the physician in home 
care and determine which factors enhance a physician's ability to 
conduct oversight activities, ensure appropriateness of care, and work 
collaboratively with home health agencies without further burdening 
Medicare beneficiaries. Commenters urged CMS to engage with industry 
organizations that represent the physicians that furnish these 
services, to determine goals and assess options. Commenters further 
suggested that goals and options could include revising the procedure 
codes used for billing, assessing the current RVUs, and establishing 
documentation expectations.
    Some commenters suggested that payments to physicians for 
certifying and recertifying HH POCs should be restructured to provide 
incentives for greater physician involvement, to include personally 
seeing the patients. Specifically, some commenters suggested adding 
different payments for the varying levels of physician involvement in 
the certification and recertification of HH POCs. Other commenters 
urged CMS to consider how home telehealth can be employed to a greater 
degree to increase input of clinical information directly to physicians 
in lieu of face-to-face contact.
    Other commenters suggested that we actively support amending the 
Medicare statute to allow nurse practitioners (NPs) to certify and 
recertify HH POCs. Some commenters suggested that we actively support 
demonstrations and legislative proposals to build on the concept of 
merging home care with primary care under a single care management 
entity for persons in the advanced stages of chronic illnesses. Other 
commenters suggested that payment to medical directors should be 
restored to HHAs, along with requirements for their education and a 
definition of their role, and that we consider reimbursement for a 
planning teleconference between the physician and home health 
personnel.
    Response: We appreciate the comments from the public on this matter 
and will continue to analyze and consider those comments and 
suggestions in future rulemaking.
2. Prohibition Concerning Payment of Continuous Positive Airway 
Pressure (CPAP) Devices
a. Background
    Obstructive Sleep Apnea (OSA, sometimes referred to as Obstructive 
Sleep Apnea Hypopnea Syndrome-OSAHS) is associated with significant 
morbidity and mortality. It is a

[[Page 69856]]

commonly under-diagnosed condition that occurs in 4 percent of men and 
2 percent of women. The prevalence increases with age (up to 10 percent 
in persons 65 and older), as well as with increased weight. 
Complications of OSA include excessive daytime sleepiness, 
concentration difficulty, coronary artery disease, and stroke. It is 
estimated that 10 percent of patients with congestive heart failure 
(CHF) have OSA, which is independently associated with systemic 
arterial hypertension. Also, untreated OSA is associated with a ten-
fold increased risk of motor vehicle accidents.
    Continuous Positive Airway Pressure (CPAP) is prescribed by 
physicians to treat OSA. The patient wears a face mask that provides 
air pressure to help keep the breathing passages open during sleep. The 
purpose is to prevent the collapse of the oropharyngeal walls and 
thereby prevent the obstruction to airflow during sleep, which occurs 
in OSA. This treatment is generally continued for the rest of the 
patient's life.
    In 2006, Medicare spent approximately $750 million for the 
diagnosis and treatment of OSA. Sixty five percent of those 
expenditures represent the amount Medicare spent on diagnostic related 
costs of OSA using attended facility-based polysomnography (PSG). The 
remaining $260 million represents the amount spent on treatment related 
costs associated with the CPAP.
    Stakeholders in the sleep community suggest that OSA is currently 
underdiagnosed and that the numbers of persons using of CPAP will 
rapidly grow with greater public awareness and the convenient 
availability of in home testing. It is difficult to precisely estimate 
the ultimate growth because the true proportion of undiagnosed 
beneficiaries is unknown, and the current stakeholder estimates may 
reflect the prior limited access to home sleep testing in the Medicare 
population. We expect that this combined with the March 2008 expansion 
of CPAP coverage may lead to significantly increased overall Medicare 
payments related to OSA diagnosis and CPAP treatment. Though we believe 
that most of this increase will likely arise from greater beneficiary 
access to medically appropriate care, we are concerned that even a 
limited proportion of fraud and abuse will be a significant 
vulnerability when applied in a very large benefit.
    On March 13, 2008, we published a national coverage determination 
(NCD) that extends coverage of CPAP devices to beneficiaries whose OSA 
has been diagnosed by certain unattended sleep tests furnished in a 
setting other than a sleep laboratory facility, that is, tests that are 
furnished in the beneficiary's home, commonly referred to as home sleep 
tests (HSTs). Prior Medicare policy had covered CPAP devices only for 
beneficiaries who's OSA had been diagnosed by facility-based attended 
PSG. Attended facility-based PSG is a comprehensive diagnostic sleep 
test including at least electroencephalography, electro-oculography, 
electromyography, heart rate or electrocardiography, airflow, breathing 
effort, and arterial oxygen saturation furnished in a sleep laboratory 
facility in which a technologist supervises the recording during sleep 
time and has the ability to intervene if needed.
    The NCD represents a significant expansion of coverage and 
facilitates the new participation of new entities that had not 
previously been involved in the provision of this benefit. This also 
allows testing to occur in patient homes, which are not regulated as 
health care facilities. For these and additional reasons we describe 
below, we believe that the diagnosis of OSA for coverage of CPAP merits 
proactive and ongoing oversight by CMS. Therefore, we intend to closely 
monitor this benefit.
    During the NCD public comment period, we received many comments 
expressing concern that financial incentives could lead to abusive 
testing practices that may harm Medicare beneficiaries and the Medicare 
program. Though these concerns were largely focused on vulnerability 
that might accompany the entry of new types of entities into the sleep 
test business following a broad expansion of coverage, some commenters 
suggested that vulnerabilities would be found in sleep test facilities. 
Therefore, in the CY 2009 PFS proposed rule, we proposed to prohibit 
the provider of a qualifying sleep test--both PSG and HST--from also 
being the supplier of the CPAP device. Our use of the term provider 
throughout this rule refers to those individuals or entities that 
administer and/or interpret the sleep test and/or furnish the sleep 
test device, as described below. The provision of diagnostic sleep 
testing includes TCs and PCs related to the administration and 
interpretation of the test itself. Commonly one entity will furnish the 
sleep test device and another entity, such as a physician, will furnish 
the professional interpretation of the result generated by the device. 
Depending on the location in which the test is performed (that is, 
attended facility-based PSG or a HST), a sleep test provider may 
furnish the sleep test in its own physical facility, that is, the sleep 
laboratory, or may furnish the sleep test device and deliver it to and 
retrieve it from the beneficiary's home.
    We believe that Medicare beneficiaries and the Medicare program are 
vulnerable if the provider of a diagnostic test has a financial 
interest in the outcome of the test itself. This creates incentive to 
test more frequently or less frequently than is medically necessary and 
to interpret a test result with a bias that favors self-interest. In 
the specific context of this rule, we believe that the provider of a 
sleep test has self-interest in the result of that test if that 
provider is affiliated with the supplier of the CPAP device that would 
be covered by the Medicare program. We believe that in most cases the 
provider that would be submitting a claim for payment related to the 
sleep test will not be the beneficiary's primary physician but will be 
another party, for example, another physician or a diagnostic testing 
entity. We note that only rarely would a Medicare participating 
physician also be enrolled as a Medicare DME supplier.
b. Regulation
    In the CY 2009 PFS proposed rule, we proposed to prohibit DME 
supplier payment for a CPAP device if the provider of a sleep test that 
is used to diagnose obstructive sleep apnea (OSA) in the Medicare 
beneficiary is the DME supplier or an affiliate of the supplier of the 
CPAP machine used to treat the beneficiary's sleep apnea. The proposal 
applied to all sleep testing from attended facility-based PSG to 
unattended HST.
    Based on section 1871(a)(1) of the Act, which provides the 
Secretary with the authority to ``prescribe such regulations as may be 
necessary to carry out the administration of the insurance programs 
under this title,'' and section 1834(j)(1)(B)(ii)(IV), which requires 
suppliers of equipment and supplies to ``meet such other requirements 
as the Secretary may specify,'' and due to our concerns with respect to 
the potential for unnecessary utilization of sleep tests, we shall 
prohibit payment to the supplier of the CPAP device when such supplier, 
or its affiliate defined as a person or organization that is related to 
another person or organization through a compensation arrangement or 
some type of ownership, is directly or indirectly the provider or the 
interpreter of the unattended out of facility sleep test that is used 
to diagnose a Medicare beneficiary with OSA.
    We considered several options. We considered whether a narrower

[[Page 69857]]

prohibition could reasonably accomplish the purposes of this regulation 
at this time. Exceptions for providers that offer integrated disease 
management models were considered. We also considered allowing an 
exception for nationally accredited disease management programs but we 
are unaware of any current model that was encompass accreditation for 
both OSA diagnosis and CPAP supply under a single accreditation 
certificate.
    Therefore, we proposed to revise the durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) supplier enrollment 
safeguards set forth at Sec.  424.57 to protect the Medicare program 
and its beneficiaries from fraudulent or abusive practices that may be 
related to CPAP devices. We also proposed to add new definitions to 
paragraph (a) to define ``Continuous positive airway pressure (CPAP)'' 
and ``sleep test'' and to add a new paragraph (f), which would 
establish a specific payment prohibition that would not allow the 
supplier to receive Medicare payment for a CPAP device if that 
supplier, or its affiliate as defined above, is directly or indirectly 
related to the provider of the sleep test that would used to diagnose 
the beneficiary with OSA.
    In this final rule, in response to public comment, we are adding 
additional definitions for ``affiliate'', and ``attended facility-based 
polysomnogram'', and clarify the definitions of ``Continuous positive 
airway pressure (CPAP)'', and ``sleep test.'' In addition, we are 
adding a new paragraph (g), which would create an exception to the 
prohibition contained in (f) if the sleep test is an attended facility-
based PSG.
    The following is a summary of the comments we received and our 
responses.
    Comment: Many commenters maintained that the prohibition is unfair 
and that it ``singles out'' sleep diagnostics and therapies for a 
special payment prohibition. They maintain that there is no evidence 
that sleep tests promote ``self interested'' referrals any more than do 
referrals from any other diagnostic tests.
    Response: We disagree. During the process leading to the revised 
NCD, we received many public comments expressing concern that financial 
incentives involving sleep test providers being affiliated with CPAP 
suppliers might very well lead to abusive practices that would harm 
Medicare beneficiaries and threaten the integrity of the Medicare 
program.
    As we noted above, testing for the diagnosis of OSA will expand 
into settings that are not regulated as health care facilities. CPAP 
for the treatment of OSA differs from many other DME items in several 
ways that are significant here. The clinical symptoms that prompt the 
use of CPAP, for example, snoring, sleeplessness, daytime drowsiness, 
generally occur in the home setting and are self reported by the 
patient. The physical findings of patients with OSA are also seen in 
persons who do not have OSA.
    The diagnosis of OSA which may lead to coverage of CPAP hinges upon 
the results of a clinical examination and a diagnostic test, the single 
night sleep study. The interpretation of a sleep study is subject to 
inter-interpreter variability. Sleep study results are known to vary 
from night to night and are also technique dependent. Other conditions 
for which Medicare covers DME, for example chronic obstructive 
pulmonary disease, are generally diagnosed based on the combined 
results of multiple tests such as chest x-rays, arterial blood gas 
measurements and pulmonary function tests. Thus it is less likely that 
a diagnosis of OSA will be supported by consistent findings across 
multiple test platforms. We are concerned that the provider of a sleep 
test will have a bias to interpret an inconclusive sleep test as 
positive if that provider has a financial interest in the payment for 
the CPAP device that would be used to treat the beneficiary. We believe 
that this represents a vulnerability to the Medicare program.
    We believe that we have sufficient reason to believe that OSA and 
CPAP are more amenable to fraud and abuse than some other items and 
services. We have seen program vulnerabilities in a similar benefit, 
specifically oximetry testing in the home for coverage of the home use 
of oxygen. For example, our local contractors informed us that 
laboratories and DME suppliers were, without an order from the treating 
physician, initiating oximetry testing. As a result, we acted to 
prohibit DME suppliers from furnishing the oximetry testing used in 
part to establish the beneficiary's eligibility for home oxygen 
coverage.
    Comment: Several commenters state that the best models utilize high 
degrees of coordination and affiliation. The commenters claim that 
integrated care models result in higher CPAP compliance and better 
quality of care for the patient. The commenters state that the proposed 
rule would force integrated sleep management programs to refer 
beneficiaries to outside entities for the CPAP device, thus creating a 
break in continuity and accountability. During the public comment 
period on the proposed rule, several institutional stakeholders noted 
that if finalized unchanged, the regulation would essentially eliminate 
integrated sleep management programs that furnish coordinated 
management of OSA from testing to therapy including provision of CPAP. 
The commenters claimed that these programs, all facility-based, provide 
a level of patient support in ensuring appropriate provision and 
titration of CPAP that is not typical with many DME suppliers. These 
programs note that under this scenario they would have reduced ability 
to monitor the beneficiary's compliance with CPAP, including ensuring 
that the CPAP device has been and continues to be optimized for the 
individual beneficiary. The commenters believe that finalization of the 
proposed rule would remove this option, thus they believe leading to 
fragmented care, loss of accountability and potential harm to patients.
    Response: Integrated sleep management programs furnish 
comprehensive diagnostic and therapeutic services with a single 
coordinated program that commonly includes ongoing assessment of the 
patient's response to therapy and modifications to therapy as needed.
    If finalized as proposed, the regulation would likely result in 
these programs referring all beneficiaries to outside DME suppliers for 
the CPAP device, thus creating a break in continuity of care.
    This concern, which we recognize with attended facility-based PSG 
furnished in integrated sleep management programs, is not applicable 
outside of this setting. There is no substantive claim of continuity of 
care and coordinated disease management in other settings where a sleep 
test provider may have some other relationship with a DME supplier.
    Our administrative contractors informed us that they have not 
historically found these integrated sleep management programs 
furnishing attended facility-based PSG to be a significant 
vulnerability. We cannot at this time confidently exclude the 
possibility that disrupting this model of care might be harmful to some 
patients. To avoid disrupting established integrated sleep management 
programs, this final rule with comment period will not prohibit DME 
payment to suppliers of CPAP to beneficiaries who have been diagnosed 
with OSA using attended facility-based PSG.
    We are unaware of a reliable way to prospectively distinguish bona 
fide integrated sleep management programs from other entities for the 
purposes of this regulation. As we note below, there

[[Page 69858]]

is no currently available accreditation program under which an entity 
can, under a single certificate, be accredited for sleep diagnosis and 
the supply of CPAP treatment. Thus we considered how to balance these 
concerns and minimize disruptions to continuity of care while 
maintaining the necessary protections for the Medicare program and its 
beneficiaries.
    We believe that creating an exception for facility-based PSG 
strikes a reasonable balance of these concerns. In the context of OSA 
diagnosis and treatment for Medicare beneficiaries these integrated 
sleep management programs have historically (before the March 2008 NCD) 
used attended facility-based PSG for OSA diagnosis, as alternative 
diagnostic strategies did not support Medicare coverage of the CPAP 
device.
    Excepting attended facility-based PSG from the payment prohibition 
for CPAP does not exempt HST furnished by the same entity, that is, the 
exception is at the test level not the program or facility level. Thus, 
this final rule with comment period avoids disrupting established 
integrated sleep management programs when they furnish attended 
facility-based PSG while affording the public more time to propose 
alternatives.
    Comment: Several commenters stated that they would be forced to 
provide supplementary, nonreimbursable services to CPAP patients as a 
result of the rule. Sleep clinicians point to the fact that follow-up 
care of an OSA patient is a requirement for AASM accreditation. The 
commenters stated that under the provisions of the proposed rule, the 
DME supplier would be reimbursed for the care, even when the DME fails 
to furnish the follow up care.
    Response: We disagree. We expect that treating physicians and other 
recognized clinicians who evaluate and manage beneficiaries' sleep 
apnea would continue to submit claims for Medicare payment for the 
services that they furnish. This rule does not prohibit treating 
physicians from appropriately providing follow up care to their 
patients who use CPAP. A DME supplier that is not also enrolled by 
Medicare as a physician would not furnish services that are properly 
within the scope of practice of the beneficiary's physician, and we 
would not expect to receive claims for Medicare payment for such 
services.
    Comment: Several commenters suggested that accredited entities 
should be exempt from the prohibition. Some commenters have proposed 
that facilities that have been accredited by a recognized accrediting 
body to provide full diagnostic, therapeutic, and DME services should 
have an exception from the prohibition required as stated in the 
proposed rule.
    Response: We agree that an entity that has been accredited by a 
recognized sleep therapy accrediting body would likely have protections 
in place that would minimize the potential fraud and abuse concerns we 
addressed above. We believe that the scope of such accreditation 
programs should be broad enough to include OSA diagnosis and the supply 
of CPAP treatment under a unified certificate.
    We have contacted JCAHO and AASM (American Academy of Sleep 
Medicine) to determine whether either has an accreditation program that 
could be applied to an integrated sleep management program that 
includes complete patient management to include managing the DME. AASM 
accredits sleep testing but not DME; JCAHO has nonspecific criteria 
that might be applied to the testing and DME supplier separately. 
However, we are unaware of any current model that would encompass both 
under a single accreditation certificate. One commenter estimated that 
it would take approximately 6 months to develop such an accreditation 
framework. We expect that it would take 1 to 2 years to implement and 
accredit sufficient programs to make this a viable alternative.
    Ideally, we would like to require that all entities that furnish 
both sleep testing and CPAP be accredited. We solicit public input on 
accreditation models that might support this option. Once we are made 
aware of appropriate accrediting models, we may readdress this issue in 
future rulemaking.
    Comment: Several commenters expressed concern regarding the delays 
from time of OSA diagnosis to time of CPAP treatment that might arise 
if the beneficiary is supplied CPAP from an unaffiliated supplier. The 
commenters believe that this will have an adverse impact on the patient 
and will affect their follow through related to the plan of care.
    Response: OSA is not an acute condition. We are not aware of 
credible evidence of serious harm due to delay of days or weeks between 
OSA diagnosis and CPAP treatment.
    The attended facility-based PSG testing paradigm may include same 
night initiation and titration of CPAP treatment. The final rule 
provides an exception for attended facility-based PSG. Thus, we believe 
that the exception provides a reasonable option should the 
beneficiary's treating physician determine that there is a pressing 
need for urgent treatment in the case of an individual beneficiary.
    Comment: Several commenters believe that the adoption of this rule 
would cause disruptions in care of OSA treatments for patients in rural 
areas by imposing new restrictions. These commenters expressed wishes 
for a Stark-like rural exception, based on access to care arguments.
    Response: Though various commenters have compared the provisions of 
this rule to the ``Stark'' rules, this rule is distinct from Stark and 
addresses separate concerns.
    We acknowledge that rural beneficiaries are more likely to live at 
greater distances from sleep facilities. Thus, these beneficiaries 
would be more likely to avail themselves of home sleep testing if it 
were available.
    We also note that the final rule allows an exception for attended 
facility-based PSG. Thus, when compared to Medicare coverage before the 
March 2008 NCD expansion, the final rule's provisions in this regard do 
not impose new restrictions for Medicare beneficiaries located in rural 
areas. Therefore we believe that a specific rural exception is not 
needed at this time.
    Comment: Many commenters state that existing fraud and abuse laws 
adequately address abuses arising out of affiliations. For example, the 
commenters stated that the Stark regulations do not allow a physician 
who has a financial relationship (ownership or compensation) with a DME 
supplier to refer a patient to that DME supplier for CPAP, unless an 
exception applies. In addition, commenters stated that under many State 
regulations a physician cannot have a substantial ownership interest in 
a DMEPOS supplier and still refer Medicare patients for DME. The 
commenters also state that fraud and abuse is prevented by other 
Medicare provisions, such as those limiting coverage of CPAP to a 12-
week period to identify beneficiaries diagnosed with OSA who benefit 
from CPAP.
    Response: We disagree. While Stark and other statutes and rules, 
including the Federal anti-kickback statute, afford some protections, 
we believe this regulation to be necessary in order to further protect 
Medicare beneficiaries from potential abusive practices and to further 
reduce the Medicare program's vulnerability to fraud and abuse. We 
believe that the payment prohibition for CPAP in this rule will be 
applied to a broader set of CPAP supplier relationships than would be 
prohibited under Stark. We here address additional CPAP supplier 
relationships that do not

[[Page 69859]]

necessarily depend on a relationship with the beneficiary's treating 
physician who makes a referral, for example, a relationship between a 
sleep test provider and a DME supplier when the provider of the sleep 
test is not the beneficiary's treating physician who made the referral 
for the test.
    Comment: One commenter stated that this proposal is unlawful. 
First, the commenter stated that general rulemaking authority cannot 
support a ``Stark-like'' proposal such as the one under consideration. 
Further, the commenter states that the preamble lacks sufficient facts 
or data to support the statutory predicate under section 1871(a)(1) 
that the rule must be ``necessary to carry out the administration'' of 
the Medicare program. The commenter summarizes their concerns by 
stating that the general grant of rulemaking authority is not plenary. 
The commenter also stated that the rule is inconsistent with the Stark 
statute and it's implementing regulations, which the commenter asserted 
would not preclude a physician from selling a CPAP device to his or her 
patient if the physician is enrolled as a DME supplier and personally 
furnishes all of the services associated with the provision of the 
CPAP. In addition, the commenter concludes that this rule is in direct 
contradiction to the Stark law because, unlike the Stark law, this rule 
does not contain an exception for referrals made by a physician who has 
an ownership or investment interest in a ``rural provider.''
    Response: We do not agree. Our authority for promulgating this rule 
is supported by two different provisions in the Act. First, we believe 
that section 1871(a)(1) of the Act, which authorizes the Secretary to 
``prescribe such regulations as may be necessary to carry out the 
administration of the insurance programs under this title,'' provides 
sufficient authority for this regulation. We believe that the 
prevention of fraud and abuse in the provision of CPAP devices is 
essential to the efficient administration of the Medicare program. 
While the use of unattended HSTs will provide more beneficiaries with 
access to diagnosis and treatment of OSA, we are concerned that the 
increased number of unattended HSTs will in turn increase the potential 
for a test provider's affiliation with a CPAP supplier to lead to 
overutilization as we discussed above. We believe that the 
administration of the Medicare program includes a responsibility to 
protect the program and its beneficiaries from the harmful effects of 
fraud and abuse. Second, we also believe that section 
1834(j)(1)(B)(ii)(IV) of the Act, which requires suppliers of equipment 
and supplies to ``meet such other requirements as the Secretary may 
specify,'' provides sufficient authority for this regulation.
    We also disagree with the commenter's assertion that a physician's 
furnishing of CPAP can easily escape the purview of Stark and that this 
rule therefore conflicts with the Stark law. As we stated in the 
``Phase III'' Stark final rule, although personally performed services 
are not a ``referral'' for Stark purposes, ``the dispensing of CPAP 
equipment by a physician would almost always constitute a ``referral'' 
* * *, as would the dispensing of CPAP equipment by anyone else 
affiliated with the referring physician, such as a nurse or physician 
assistant'' (72 FR 51020). This is because a referring physician 
claiming to personally provide DME must personally furnish the CPAP 
equipment as well as personally perform all activities necessary to 
satisfy the DME supplier standards. Thus, in all but the rarest of 
circumstances, the prohibition promulgated under this final rule does 
not conflict with the Stark prohibition as applied to physicians who 
refer for and furnish CPAP in their own medical practices. Moreover, 
given our general rulemaking authority and our authority under section 
1834(j)(1)(B)(ii)(IV) of the Act, we are not prevented from regulating 
the provision of CPAP in those unusual circumstances in which Stark is 
not implicated because there has been no ``referral.''
    Similarly, we do not agree with the commenter's assertion that this 
rule conflicts with the Stark prohibition because it does not contain 
an exception for referrals made by a physician who has an ownership or 
investment interest in a ``rural provider.'' Under the Stark statute, 
section 1877(d)(2) of the Act, there ``shall not be considered to be an 
ownership or investment interest * * * [i]n the case of designated 
health services [including DME, such as CPAP] furnished in a rural area 
(as defined in section 1886(d)(2)(D)) by an entity, if * * * 
substantially all of the designated health services furnished by the 
entity are furnished to individuals residing in such a rural area.'' 
Thus, Stark is not implicated in those circumstances. Nevertheless, we 
are not precluded from using other authority to limit or prohibit 
payment for items and services that are provided in a manner that does 
not implicate Stark. Notwithstanding Stark, we have authority under 
sections 1871(a)(1) and 1834(j)(1)(B) of the Act to issue this rule.
    Comment: One commenter stated concerns that the rule will limit 
appropriately trained and qualified DMEPOS suppliers' ability to 
furnish home sleep tests. The association claims that the rule creates 
unnecessary and artificially high barriers to DMEPOS suppliers' ability 
to furnish services that are uniquely within their area of expertise. 
The commenter stated that the DME business model is premised on the 
ability to furnish medical equipment to patients in their homes and 
DMEPOS suppliers may be the only providers with the immediate capacity 
to furnish HST to Medicare beneficiaries.
    Response: Only the physician treating the beneficiary can order a 
HST and prescribe CPAP therapy. We expect that the sleep test would be 
interpreted by a physician, and we do not believe CPAP suppliers should 
be paid for supplying CPAP equipment when an affiliated physician has 
interpreted the HST or ordered the equipment. We are not persuaded that 
DME suppliers have any uniquely valuable expertise in the provision of 
diagnostic testing.
    Comment: Many commenters claimed the regulation will result in an 
under availability of CPAP equipment and services in many communities. 
One commenter explained that IDTFs are now permitted to utilize HST to 
diagnose OSA, but point out that the vast majority of IDTFs do not have 
the resources and infrastructure needed to deliver or pick-up HST 
equipment to and/or from the beneficiary's home. The commenter 
requested that CMS furnish a detailed analysis on beneficiary access to 
CPAP supplies and services locally before implementing such a 
provision.
    Response: This rule does not prohibit IDTFs from establishing and 
maintaining sufficient resources and infrastructure to deliver or pick 
up HSTs, so long as the DME supplier who will be furnishing the CPAP to 
the beneficiary as a result of the HST is not the same DME supplier 
that the IDTF has affiliated with for purposes of delivering or picking 
up the HSTs or performing other functions related to providing the HST. 
In addition, the exception we are providing for attended facility-based 
PSG is sufficient to maintain beneficiary access at historical levels 
before the 2008 NCD.
    Comment: One commenter stated that the mission of all nonprofit 
healthcare systems includes furnishing care for the under and un-
insured populations. The commenter stated that healthcare systems would 
no longer furnish sleep tests to the under and uninsured if the 
healthcare system is prohibited from furnishing CPAP devices to 
Medicare beneficiaries.
    Response: It is not clear to us why a nonprofit would refuse to 
offer HSTs to

[[Page 69860]]

the under- or uninsured simply because the nonprofit entity cannot use 
an affiliated DME supplier to furnish a CPAP device prescribed after 
the HST. We note that health care entities can continue to provide CPAP 
when prescribed as a result of an attended facility-based PSG.
    Comment: One commenter points to guidance issued in mid 2002, where 
CMS recognized a separation between a hospital system and its ownership 
of a DME business (otherwise referred to as a Hospital-based supplier). 
By enacting this provision, the commenter concludes that CMS would no 
longer recognize this separation. The commenter concludes that this 
provision, if enacted, would result in other prohibitions for follow-up 
care following a diagnostic test.
    Response: We disagree with the commenter's conclusion, and we note 
that the final rule's exemption of attended facility-based PSG would 
likely apply to many hospital affiliated sleep programs.
    Comment: Several commenters stated that there is a clear conflict 
of interest for the provider of the test to also profit from the 
provision of the CPAP therapy.
    Response: We appreciate the supportive comments.
    Comment: Several commenters wrote that physicians who work for 
hospitals are under increasing pressure to generate revenue by 
conducting more tests and prescribing CPAP through a hospital owned DME 
supplier. Other commenters claim that bonus payments are made to 
physician's who prescribe CPAP through a hospital owned DME supplier. 
These commenters favor the payment prohibition.
    Response: We appreciate the overall concerns expressed by the 
commenters about pressure on physicians, but we wish to minimize the 
disruption to programs that were in place prior to the March 2008 NCD 
expansion of coverage. We believe that an exemption for attended 
facility-based PSG is a reasonable balance between beneficiary access 
and protection at this time.
    Comment: Several commenters support a payment prohibition where the 
diagnostic test facilities are not permitted to provide the CPAP and 
related supplies. According to the commenters, the DMEPOS suppliers 
claim to possess a higher degree of sophistication surrounding CPAP 
technologies and related supplies by focusing exclusively on the 
technologies rather than on the sleep diagnostics.
    Response: We appreciate the supportive comment on the proposed 
regulation. However we have been persuaded for reasons described above 
to except attended facility-based PSG from the payment prohibition for 
CPAP.
    Comment: Several commenters stated that hospital-owned DME 
qualifies as a monopoly, and results in an unfair competitive advantage 
for hospitals and large sleep centers. The commenters favor the payment 
prohibition and state that such a prohibition is good for small 
businesses.
    Response: Business monopoly is beyond the scope of this regulation 
and we will not discuss it here.
    Comment: Several commenters stated that the term ``affiliate'' is 
ambiguous, and that the proposed rule is vague and overly broad in its 
use of the terms ``affiliate'' and ``directly or indirectly''. The 
commenters requested that CMS provide a clear definition of 
``affiliate''. The commenters stated that without clear definitions 
from CMS it is impossible to discern what types of affiliations CMS 
intends to preclude under the rule or how the proposed rule would apply 
to any given set of circumstances. One commenter recommended that a 
definition of affiliate be common ownership of greater than 50 percent 
of the supplier of the CPAP device.
    Response: We define ``affiliate'' as a person or organization that 
is related to another person or organization through a compensation 
arrangement or some type of ownership.
    We have defined a provider of sleep test as an individual or entity 
that directly or indirectly administers and/or interprets the test and/
or furnishes the sleep test device. By indirect we mean that one or 
more intermediary actors are used to accomplish the sleep test to its 
end. For example, if a DME supplier contracted with a sleep test 
provider to furnish HST, that supplier would indirectly provide the 
HST. Directly providing the test means there are no intermediary 
actors--no intervening persons or entities between them.
    Comment: One commenter requested that sleep labs be permitted to 
develop criteria to gauge the competency of the DME. Further, the 
commenter requested that sleep labs be permitted to use such criteria 
to discriminate against DME companies who fail to perform at an 
acceptable level of competency.
    Response: We believe that this concern can be addressed through the 
development and implementation of accreditation standards. Ideally, we 
would like to require that all entities furnishing sleep tests in any 
settings in addition to supplying CPAP be accredited. Once we are made 
aware of appropriate accrediting models, we will readdress the issue in 
future rulemaking.
    Based on section 1871(a)(1) of the Act, which provides the 
Secretary with the authority to ``prescribe such regulations as may be 
necessary to carry out the administration of the insurance programs 
under this title,'' and section 1834(j)(1)(B)(ii)(IV), which requires 
suppliers of equipment and supplies to ``meet such other requirements 
as the Secretary may specify,'' and due to our concerns with respect to 
the potential for unnecessary utilization of sleep tests, we shall 
prohibit payment to the supplier of the CPAP device when such supplier 
or its affiliate is directly or indirectly the provider of the HST that 
is used to diagnose a Medicare beneficiary with OSA.
    We considered several options. We considered whether a narrower 
prohibition could reasonably accomplish the purposes of this regulation 
at this time. Exceptions for providers that offer integrated sleep 
management programs were considered. We also considered allowing an 
exception for nationally accredited disease management programs but we 
are unaware of any current model that would encompass accreditation for 
both OSA diagnosis and CPAP supply under a single accreditation 
certificate.
    After reviewing the public comments, we are finalizing the 
prohibition in Sec.  424.57 as proposed but with an exception for 
attended facility-based PSG. Excepting facility-based PSG from the 
prohibition on providing CPAP would not except HST performed by the 
same entity, that is, the exception is at the test level not the 
facility level. We plan to solicit public input on accreditation models 
that might support future exceptions to this prohibition. We add 
additional definitions for ``affiliate'', ``attended facility-based 
polysomnogram,'' and clarify the definitions of ``Continuous positive 
airway pressure (CPAP)'' and ``Sleep test''.
3. Beneficiary Signature for Nonemergency Ambulance Transport Services
    In the CY 2008 PFS final rule with comment period (72 FR 66406), we 
created an additional exception to the beneficiary signature 
requirements, applicable for emergency ambulance transports, in Sec.  
424.36(b)(6). The exception allows ambulance providers and suppliers to 
sign on behalf of the beneficiary, at the time of transport (that is, 
the time during which the beneficiary is picked up and dropped off at 
the receiving facility), provided that certain documentation 
requirements are met. To take advantage of the exception at Sec.  
424.36(b)(6), an

[[Page 69861]]

ambulance provider or supplier must maintain in its files: (1) A 
contemporaneous statement, signed by an ambulance employee who is 
present during the trip, that the beneficiary was mentally or 
physically incapable of signing (and that no other authorized person 
was available and or willing to sign); (2) documentation as to the 
date, time and place of transport; and (3) either a signed 
contemporaneous statement from the receiving facility that documents 
the name of the beneficiary and the date and time the beneficiary was 
received by that facility, or a secondary form of verification from the 
facility that is received at a later date.
    In the CY 2008 PFS final rule with comment period (72 FR 66324), we 
clarified that, apart from the new exception in Sec.  424.36(b)(6), 
where a beneficiary is unable to sign a claim at the time the service 
is rendered, ambulance providers and suppliers are required to use 
reasonable efforts to follow-up with the beneficiary and obtain his or 
her signature before submitting the claim with a signature from one of 
the individuals or entities specified in Sec.  424.36(b)(1) through 
(b)(5). We further clarified that only providers of services, and not 
ambulance suppliers, can take advantage of Sec.  424.36(b)(5), which 
states that a representative of the provider or of the nonparticipating 
hospital may sign on behalf of the beneficiary if the provider or 
nonparticipating hospital was unable to have a claim signed in 
accordance with Sec.  424.36(b)(1) through (b)(4) (72 FR 66322).
    Subsequent to publication of the CY 2008 PFS final rule with 
comment period, ambulance provider and supplier stakeholders requested 
that we extend the exception in Sec.  424.36(b)(6) to nonemergency 
ambulance transports in instances where the beneficiary is physically 
or mentally incapable of signing. These stakeholders stated that there 
are many nonemergency transports for which a beneficiary is physically 
or mentally incapable of signing a claim form. For example, 
stakeholders asserted that beneficiaries residing in long term care 
facilities often need to be transported for nonemergency medical 
treatment, yet may be incapable of signing the claim due to physical or 
mental ailments, such as Alzheimer's disease or other forms of 
dementia. In these instances, there may be no other individual who is 
immediately available and authorized to sign the claim as specified in 
Sec.  424.36(b).
    Because we do not anticipate an increased risk of fraud or program 
abuse if the exception in Sec.  424.36(b)(6) is extended to include 
nonemergency transports, we proposed to revise Sec.  424.36(b)(6) to 
refer specifically to nonemergency transports. We also proposed to add 
language to Sec.  424.36(a) to clarify that, apart from the use of the 
exception in Sec.  424.36(b)(6), providers and suppliers must make 
reasonable efforts to obtain the beneficiary's signature before relying 
on one of the exceptions in Sec.  424.36(b). We note that Sec.  
424.36(b)(5) specifies that a provider may not invoke the exception to 
sign a claim on behalf of a beneficiary unless it is unable to have one 
of the persons specified in Sec.  424.36(b)(1) through (b)(4) sign the 
claim. Finally, given that most claims are submitted electronically, we 
proposed to amend Sec.  424.36(a) to define ``claim'' for purposes of 
the beneficiary signature requirements as the claim form itself or a 
form that contains adequate notice to the beneficiary or other 
authorized individual that the purpose of the signature is to authorize 
a provider or supplier to submit a claim to Medicare for specified 
services furnished to the beneficiary.
    We received comments that urged us to eliminate entirely the 
beneficiary signature requirement where a beneficiary is mentally or 
physically incapable of signing a claim and no other person authorized 
to sign a claim on behalf of the beneficiary is available or willing to 
sign at the time of transport. In addition, the commenters stated that 
the proposed documentation requirements would be costly and burdensome 
to ambulance providers and suppliers. Several commenters objected to 
our proposal to amend Sec.  424.36(a) to clarify that, apart from the 
use of the exception in Sec.  424.36(b)(6), providers and suppliers 
must make reasonable efforts to obtain the beneficiary's signature 
before relying upon one of the exceptions in 424.36(b).
    We are adopting our proposals, with modification. Specifically, we 
are amending the exception in Sec.  424.36(b)(6) to include 
nonemergency ambulance transports. We are also amending Sec.  424.36(a) 
to define ``claim'' for purposes of the beneficiary signature 
requirements, as the claim form itself, or a form that contains 
adequate notice to the beneficiary or other authorized individual that 
the purpose of the signature is to authorize a provider or supplier to 
submit a claim to Medicare for specified services furnished to the 
beneficiary. We are revising Sec.  424.36(b)(6)(ii)(C)(2) to include 
secondary forms of verification from either a hospital or a facility.
    The following is a summary of the comments we received and our 
responses.
    Comment: The majority of commenters stated that it is a burden on 
ambulance providers and suppliers to obtain a signature for 
nonemergency ambulance transports when a beneficiary is mentally 
incapable of signing the ``waiver.'' The commenters contended that 
asking for additional documentation to verify that a patient was 
transported creates a financial burden on the ambulance provider. One 
commenter stated that its billing office has to do more mailings, 
follow-up calls and faxes to get a ``waiver'' completed, and that 
spouses are reluctant to sign the form for fear that they will be 
responsible for the ambulance transport bill. The commenter also stated 
that the forms are confusing to its ambulance crew and that hospital 
and rehabilitation representatives are reluctant to sign forms. One 
commenter suggested that checking hospital and rehabilitation bills 
would be an easier way to document a patient transport, whereas another 
commenter suggested that we should abolish the signature requirement 
entirely.
    Response: We note that whereas several commenters referred to a 
``waiver'' of the signature requirement of Sec.  424.36, in fact Sec.  
424.36 sets forth a signature requirement and alternative means of 
satisfying the signature requirement. That is, Sec.  424.36 generally 
requires that the beneficiary sign the claim, unless the beneficiary is 
deceased or unavailable to sign the claim, in which case other 
individuals or entity representatives (as enumerated in Sec.  
424.36(b), (c) and (d)) may sign the claim. We are adopting our 
proposal to amend Sec.  424.36(a) to clarify that ``the claim'' 
includes the actual claim form or such other form that contains 
adequate notice to the beneficiary or other authorized individual 
signing on behalf of the beneficiary that the purpose of the signature 
is to authorize a provider or supplier to submit a claim to Medicare 
for specified services furnished to the beneficiary. The purpose of the 
beneficiary signature is to verify that the services were in fact 
rendered and were rendered as billed.
    Our proposal does not impose any new burdens on ambulance providers 
or suppliers, but rather offers an optional, alternative method, for 
satisfying the beneficiary signature requirement. We do not agree with 
the commenters that it is a significant burden on ambulance providers 
and suppliers to comply with the proposed signature and documentation 
requirements in order to meet the proposed exception for nonemergency 
ambulance transports when a beneficiary is incapable of signing a claim 
form; however, those

[[Page 69862]]

ambulance providers and suppliers that believe that the signature and 
documentation requirements of the new exception at Sec.  424.36(b)(6) 
are burdensome may avail themselves of the other means specified in 
Sec.  424.36 for satisfying the beneficiary signature requirement.
    In response to the assertion that the forms are confusing, we 
reiterate that we did not create any new forms for ambulance personnel 
or facility staff to sign. Ambulance providers or suppliers may use 
whatever forms they wish (such as the patient care trip report, etc.) 
for capturing the signature and documentation requirements specified in 
Sec.  424.36(b)(6). In response to the assertion that spouses are 
reluctant to sign a form for fear that they will be responsible for the 
ambulance transport bill, signing of the claim form (or such other form 
used as a proxy for the claim form) does not make a person financially 
liable to pay the provider or supplier. However, if a beneficiary or 
the beneficiary's authorized representative refuses to sign the claim 
form, the ambulance company may bill the beneficiary directly for the 
transport service. In addition, if the transport service is deemed not 
medically necessary, and thus is not covered by Medicare, the 
beneficiary may be held responsible for payment (subject to the 
limitation of liability provisions of section 1879 of the Act and our 
regulations at Sec. Sec.  411.404).
    We are not persuaded to adopt the suggestion that we eliminate 
entirely the beneficiary signature requirement for ambulance 
transports. We are concerned that there may be an increased risk of 
fraud or program abuse if we were to remove the signature requirement. 
Moreover, we did not propose to eliminate the signature requirement and 
therefore may lack the authority to abolish the requirement through 
this final rule even if we were otherwise inclined to do so. With 
respect to the suggestion that we should check hospital and 
rehabilitation bills to document a patient transport (which is 
tantamount to suggesting that we eliminate the signature requirement), 
we do not agree that it should be the program's responsibility, at the 
time of processing the claim, to guess whether the beneficiary would 
have authorized the claim if asked, or to have to secure documentation 
from providers and suppliers (which, to the extent that they have not 
furnished the transport, may not be required to supply us with such 
documentation and may even be precluded by privacy laws from supplying 
us with such documentation). Accordingly, we believe providers and 
suppliers should go on record, at the time of submitting the claim, 
that the beneficiary (or someone authorized on his behalf) authorized 
the filing of the claim.
    Comment: Several commenters noted that, in light of our proposal to 
expand the (b)(6) exception to include nonemergency ambulance 
transports as well as emergency ambulance transports, the signature 
requirements may apply when a beneficiary is being transported from or 
to skilled nursing facilities, hospitals and other permissible 
destinations. Therefore, the commenters requested that we revise Sec.  
424.36(b)(6)(ii)(C)(2), which makes reference to ``the hospital 
registration/admission sheet'', ``the hospital log'', or ``other 
internal hospital records,'' and replace ``hospital'' with 
``facility.''
    Response: We agree with the commenter that there may be 
nonemergency transports where the beneficiary is being transported from 
or to skilled nursing facilities, hospitals and other permissible 
destinations. Thus, we are revising Sec.  424.36(b)(6)(ii)(C)(2) to 
replace ``hospital'' with ``hospital or other facility''.
    Comment: One commenter requested that we clarify whether secondary 
forms of verification must be signed by a representative of the 
receiving facility. In response to a similar request for clarification 
in the CY 2008 PFS final rule (72 FR 66323) we stated that secondary 
forms of verification did require a signature; however, this 
requirement was not included in the text of Sec.  
424.36(b)(6)(ii)(C)(2), as finalized in the CY 2008 PFS final rule. The 
commenter also stated that hospitals are moving toward electronic 
recordkeeping, and urged us to clarify that secondary forms of 
documentation used to verify transport do not need to be signed by a 
representative of the facility, provided that the form of documentation 
obtained is an official facility record that clearly indicates the name 
of the patient, and the date and time the patient was received by or 
transported from that facility.
    Response: We acknowledge that, although the preamble language in 
the CY 2008 PFS final rule stated that all forms of secondary 
documentation used to verify transport need to be signed by a 
representative of the receiving facility, the regulation text at Sec.  
424.36(b)(6), as published in the 2008 CY PFS final rule, did not 
include this specific requirement. We are clarifying Sec.  
424.36(b)(6)(ii)(C)(2)to provide that secondary forms of documentation 
used to verify transport do not need to be signed by a representative 
of the receiving facility if the form of documentation obtained is an 
official hospital or facility record, (such as the facility or hospital 
registration/admissions sheet, patient medical record, facility or 
hospital log, or other facility or hospital record), and it documents 
the beneficiary's name, date, and time the beneficiary was received by 
that facility.
    Comment: Several commenters objected to our proposal to clarify 
Sec.  424.36(a) to state that a provider or supplier must make 
``reasonable efforts to locate and obtain the beneficiary's signature'' 
before a provider or supplier could rely upon one of the exceptions set 
forth in Sec.  424.36(b)(1) through (5).
    Response: We are not adopting our proposal because, having 
reexamined the issue, we believe that the current language in Sec.  
424.36(b)(5) provides adequate protection for the beneficiary and the 
Medicare program. Prior to, and during the course of, the CY 2008 PFS 
rulemaking, we were alerted to the fact that some ambulance providers 
and suppliers were signing the claim on behalf of the beneficiary 
simply because the beneficiary was not able to sign the claim at the 
time of transport. We clarified in the preamble to the CY 2008 PFS 
final rule with comment period that signing the claim on behalf of the 
beneficiary simply because the beneficiary was not able to sign the 
claim at the time of transport was not proper and, further, that only 
providers (and not suppliers) are eligible to use the exception at 
Sec.  424.36(b)(5). Our decision to make an exception to the 
requirement that reasonable efforts must be made to obtain the 
signature of the beneficiary, by creating a new exception at Sec.  
424.36(b)(6) in the CY 2008 PFS final rule with comment period for 
emergency ambulance transports, and in this final rule for nonemergency 
ambulance transports, and to allow the provider or supplier to sign the 
claim on behalf of the beneficiary at the time of the service, provided 
certain safeguards are met, was a deliberate departure from the general 
rule. However, because we amended Sec.  424.36(b)(5) in the CY 2008 PFS 
final rule with comment period to state that, before relying on that 
exception, providers must ``mak[e] reasonable efforts to locate and 
obtain the signature of one of the individuals specified in paragraph 
(b)(1), (2), (3) or (4) of this section,'' rather than to state that 
the provider must first make reasonable efforts to locate and obtain 
the signature of the beneficiary, we are concerned that we might create 
confusion or add an unneeded degree of complexity if we were to 
finalize our proposal to amend Sec.  424.36(a) to state

[[Page 69863]]

that a provider or supplier must make reasonable efforts to locate and 
obtain the beneficiary's signature before a provider or supplier could 
rely upon one of the exceptions set forth in Sec.  424.36(b)(1) through 
(5). By requiring providers and suppliers to not sign claims on behalf 
of the beneficiary under Sec.  424.36(b)(5) without having first made 
reasonable efforts to procure the signature of the beneficiary or an 
authorized individual, we address our core concerns. It is true that, 
as clarified, our regulations allow providers and suppliers to procure 
the signature of an authorized individual in a situation where the 
beneficiary may be only temporarily unable to sign the claim, but, on 
balance, we believe it is preferable, for the sake of convenience, to 
give providers and suppliers some flexibility as to whether they obtain 
the signature of the beneficiary or that of an authorized individual. 
With respect to ambulance providers and suppliers, the matter of making 
reasonable efforts to locate and obtain the signature of the 
beneficiary or another authorized individual should largely be moot. 
Ambulance providers and suppliers should be able to rely on the 
exception at Sec.  424.36(b)(6) to sign the claim in the case of both 
emergency and nonemergency transports, provided they meet the 
documentation requirements therein. To the extent that ambulance 
providers and suppliers do not wish to, or are unable to, comply with 
the documentation requirements of Sec.  424.36(b)(6), they may obtain 
the signature of an authorized individual specified at Sec.  
424.36(b)(1) through (b)(4) (including in the situation where one of 
the authorized individuals is available and willing to sign at the time 
of transport). Moreover, an ambulance provider (but not a supplier), 
may rely on the exception at Sec.  424.36(b)(5) to, itself, sign the 
claim, after having made reasonable efforts (including over a 
reasonable period of time) to locate and obtain the signature of either 
the beneficiary or an authorized individual.
    Comment: Several commenters requested that we make the new 
exception in Sec.  424.36(b)(6) for nonemergency transports retroactive 
to January 1, 2008. Commenters also asked us to clarify in this final 
rule and/or in guidance on the CMS Web site that we will not take any 
adverse action against an ambulance provider or supplier that made good 
faith (but unsuccessful) attempts to comply with the beneficiary 
signature requirement rules prior to January 1, 2009. The commenters 
stated that, despite multiple attempts to obtain the required 
signatures from the beneficiary or the beneficiary's authorized 
representative, many ambulance providers and suppliers have been 
unsuccessful, and thus, they are holding claims for nonemergency 
transports. The commenters also asserted that ambulance providers and 
suppliers have experienced difficulty in obtaining signatures from 
facility representatives because of concerns that their signature would 
render the facility financially liable for the transport.
    Response: We are not making the new exception in Sec.  424.36(b)(6) 
for nonemergency ambulance transports retroactive to January 1, 2008, 
and are not making an exception for good faith efforts to comply with 
the regulation as it existed prior to this final rule with comment 
period. There would be significant legal issues if we were to make the 
rule retroactive to January 1, 2008 or to waive the requirements as 
they existed prior to this final rule. Moreover, apart from the legal 
constraints, we are not persuaded that either course of action is 
warranted. The CY 2008 PFS final rule did not create any new burden for 
ambulance providers and suppliers (and, to the contrary, made it easier 
for ambulance providers and suppliers to comply with the beneficiary 
signature requirement for emergency transports). It did, however, 
clarify our longstanding policy that providers and suppliers must make 
reasonable efforts to obtain the beneficiary's signature before 
submitting the claim and that it was not sufficient for providers to 
submit the claim (utilizing the exception at Sec.  424.36(b)(5)) simply 
because the beneficiary was able to sign the claim at the time of 
transport. We also clarified that only providers, and not suppliers, 
may utilize the exception at Sec.  424.36(b)(5), consistent with the 
plain language of the exception. To the extent that, following the 
November 27, 2007 final rule, ambulance providers and suppliers have 
found it difficult to obtain the beneficiary's signature for 
nonemergency transports (because they had not previously been following 
our rules), we have addressed their concerns in two ways. First, on 
July 24, 2008, we placed guidance on the CMS Web site at http://www.cms.hhs.gov/AmbulanceFeeSchedule/downloads/Guidance_On_Beneficiary_Signature_Requirements_for_Ambulance_Claims.pdf that 
reiterated our position that ambulance providers and suppliers may 
utilize the exception at Sec.  424.36(b)(4), which allows facilities to 
sign on behalf of the beneficiary, and explained that such facilities 
do not assume liability for payment of the services simply by signing 
on behalf of the beneficiary. Second, in this final rule we are 
finalizing our proposal to expand the exception in Sec.  424.36(b)(6) 
to nonemergency transports. The new exception is effective for 
``claims'' filed on or after January 1, 2009. Therefore, if claims have 
been held and are still within the timely filing limit, as specified in 
Sec.  424.44, the claims may be submitted to Medicare for payment in 
accordance with the new exception.
    Comment: A commenter recommended that the existing language in 
Sec.  424.36(b)(6)(ii)(A) be modified to state that, in the case of an 
emergency transport, the general crew signature on an emergency 
ambulance incident report is sufficient to meet the requirements of 
Sec.  424.36(b) and that a separate crew signature is not required. The 
commenter suggested, as an alternative, that if we determine that the 
signature of an ambulance employee present during the transport is 
necessary, it should be sufficient if the employee signature on the 
incident report is obtained ``after the fact,'' rather than 
contemporaneous with the transport. The commenter stated that it is 
necessary that we allow signatures obtained after the transport because 
the ambulance crew's primary concern is taking care of the patient, not 
doing paperwork, such as a signed incident report.
    Response: We are not persuaded to modify the requirement in Sec.  
424.36(b)(6)(ii)(A) to state that the general crew signature on an 
incident report is sufficient and that a separate crew signature is not 
required. We believe that the commenter's suggestion that any member of 
the general crew be permitted to sign the incident report as evidence 
that the service was rendered as billed would not satisfy our integrity 
concerns, because the general crew member would have no direct 
knowledge regarding the transport services. It is also our 
understanding that the ambulance crew completes a trip report that 
describes the condition of the beneficiary, treatment, origin/
destination, etc. Therefore, we believe it would be a minimal burden 
upon the ambulance crew signing the incident or trip report to prepare 
a statement detailing why the beneficiary is unable to sign a claim 
form at the time of transport. We also emphasize that Sec.  
424.36(b)(6)(ii)(A) requires that a contemporaneous statement signed by 
an ambulance employee present during the trip be obtained. A 
contemporaneous statement, rather than one obtained after the fact, is 
necessary to meet our integrity concerns, that is,

[[Page 69864]]

to verify that the trip took place as claimed on the bill.
    Comment: Several commenters suggested that we eliminate the terms 
``emergency and nonemergency ambulance transport services'' in Sec.  
424.36(b)(6) and replace those words with ``ambulance services.''
    Response: We are not persuaded to revise Sec.  424.36(b)(6) in the 
manner suggested by the commenters. Although readers familiar with the 
Federal Register publications of the CY 2008 PFS final rule and the CY 
2009 PFS final rule would realize that ``ambulance services'' would 
refer to both emergency and nonemergency transports, we wish the 
regulation text that will appear in the CFR to be clear on its own, 
particularly to readers who may be accessing the regulation years from 
now. Therefore, we believe it is preferable to retain the proposed 
language ``emergency and nonemergency ambulance transport services'' so 
as to leave no doubt that both emergency and nonemergency transports 
are covered by the exception in Sec.  424.36(b)(6).
4. Solicitation of Comments and Data Pertaining to Physician Organ 
Retrieval Services
    Since 1987, we have limited the amount an Organ Procurement 
Organization (OPO) may reimburse a physician for cadaveric kidney donor 
retrieval services. Chapter 27 of the Provider Reimbursement Manual 
(CMS-Pub. 15-1) limits the payment to a physician for cadaveric kidney 
retrieval to $1,250 per donor (one or two kidneys). Although the 
payments made to physicians for organ retrieval services associated 
with other types of organ transplants have increased, kidney retrieval 
rates have remained at $1,250. We have received several requests to 
change the amount we pay for kidney retrievals. To date, we do not have 
data upon which to base a change in payment.
    In order to determine fair and reasonable payment for cadaveric 
organ retrieval services, we solicited public comments and data that 
are reflective of organ retrieval service costs. We did not limit our 
solicitation to costs associated with kidney retrieval services, but 
rather stated that we are interested in receiving comments and data 
pertaining to retrieval services for all types of organs. We indicated 
that we may use this information to determine the extent to which a 
recalculation of the payment for cadaveric organ retrieval services 
furnished by a physician is warranted and to inform any future 
rulemaking on this subject. Any future rulemaking would provide for 
notice and public comment.
    We received four timely public comments in response to our request 
for information and data for use in updating the organ retrieval 
physician payment amount included in organ acquisition costs. The 
following is a summary of the comments we received and our responses.
    Comment: The commenters believed that the kidney retrieval rate of 
$1,250 per donor is insufficient and three of the commenters 
recommended that we increase that limit by either the Consumer Price 
Index for all urban consumers (CPI-U) or the Medicare Economic Index. 
Two commenters stated that little or no data on actual organ retrieval 
services exists, and that any rulemaking without such data would be 
inappropriate. The commenters stated that due to the extreme 
variability associated with these services, they had serious concerns 
as to the feasibility of establishing an accurate cost or payment for 
organ retrieval using an approach like that employed by the AMA's 
Relative Value Scale Update Committee (RUC). According to the 
commenters, there are specific factors impacting the cost of organ 
retrieval including donor evaluation, travel and wait time, dry runs 
and other risks and costs. These factors contribute to the great 
variability in measuring the time and expense associated with organ 
retrieval services. These commenters offered to assist us in 
establishing a process to collect data for the purpose of updating the 
organ retrieval rates. One commenter stated that the retrieval rate 
should be paid per kidney and not per donor.
    Response: We thank the commenters who responded to our solicitation 
of comments and appreciate the offer that some made to be involved in 
future efforts to design a revised payment method. We are not inclined 
to propose that the base organ retrieval rate for kidneys and other 
organs simply be increased by an indexed amount (such as the CPI-U) 
because we believe the base payment amounts for retrieval of the 
various organs may need to be updated. Therefore, we are again 
soliciting information from the transplant community. Specifically we 
would like to obtain information on the physician effort and resources 
required to procure an organ. These resources include surgical time, 
dry runs (number and percentage of retrievals in which an organ is not 
recovered), travel and wait times, as well as the incremental time 
required for extended criteria donors and donors after cardiac death. 
Additionally, because currently we limit kidney retrieval physician 
reimbursement to $1,250 per donor, we would need resource information 
to determine the difference in procuring one kidney or a pair of 
kidneys from a single donor in order to determine a payment on a per 
kidney basis as suggested by a commenter.
5. Revision to the ``Appeals of CMS or CMS Contractor Determinations 
When a Provider or Supplier Fails To Meet the Requirements for Medicare 
Billing Privileges'' Final Rule
    In the June 27, 2008 Federal Register, we published the ``Appeals 
of CMS or CMS contractor Determinations When a Provider or Supplier 
Fails to Meet the Requirements for Medicare Billing Privileges'' final 
rule. In Sec.  405.874(b)(2), we stated, ``The revocation of a 
provider's or supplier's billing privileges is effective 30 days after 
CMS or the CMS contractor mails notice of its determination to the 
provider or supplier. A revocation based on Federal exclusion or 
debarment is effective with the date of the exclusion or debarment.''
    During the 30 days after CMS or our contractor mails a revocation 
notice to a provider or supplier, the provider or supplier is afforded 
the opportunity to submit a corrective action plan. A corrective action 
plan gives a provider or supplier an opportunity to provide evidence 
that demonstrates that the provider or supplier is in compliance with 
Medicare requirements. Moreover, a provider or supplier can use a 
corrective action plan to correct the deficiency without filing an 
appeal under 42 CFR part 498, and remain in the Medicare program when 
the provider demonstrates that the provider or supplier is in 
compliance with Medicare requirements and the Medicare contractor 
accepts the corrective action plan. In those situations where a 
provider or supplier submits an acceptable corrective action plan, the 
provider or supplier maintains their billing privileges and the 
revocation determination is not implemented.
    We maintain that providers or suppliers are able to provide 
sufficient evidence through a corrective action plan that demonstrates 
that they are in compliance with Medicare requirements when CMS or our 
contractor imposes a revocation based on certain types of adverse 
actions such as a Federal exclusion or debarment. Accordingly, 
consistent with revoking billing privileges with the date of exclusion 
or debarment, we believe that similarly situated revocations such as 
felony convictions and license suspension or revocation do not lend 
themselves to a

[[Page 69865]]

corrective action plan and that the revocation should be effective with 
the date of the felony conviction or the license suspension or 
revocation. Moreover, we maintain that when CMS or our contractor 
determines that a provider or supplier, including a DMEPOS supplier, is 
no longer operating at the practice location provided to Medicare on a 
paper or electronic Medicare enrollment application that the revocation 
should be effective with the date that CMS or our contractor determines 
that the provider or supplier is no longer operating at the practice 
location.
    Further, while we do not believe that revocations based on felony 
convictions, license suspension or revocation, or a revocation based on 
a provider or a supplier no longer being operational at a specific 
practice location, lend themselves to a corrective action plan, we 
believe that these providers and suppliers should be afforded appeal 
rights in 42 CFR part 498. We believe that the appeals process will 
permit a provider or supplier who believes that CMS or our contractor 
has made an incorrect decision regarding revocation based on Federal 
exclusion or debarment, felony conviction, license suspension or 
revocation, or when we have determined that the provider or supplier is 
no longer operating at the practice location the opportunity to have 
CMS or our contractor reconsider its initial revocation determination.
    Accordingly, we proposed to revise Sec.  405.874(b)(2) from, `` The 
revocation of provider's or supplier's billing privileges is effective 
30 days after CMS or the CMS contractor mails notice of its 
determination to the provider or supplier. A revocation based on 
Federal exclusion or debarment is effective with the date of the 
exclusion or debarment.'' to ``The revocation of a provider's or 
supplier's billing privileges is effective 30 days after CMS or the CMS 
contractor mails notice of its determination to the provider or 
supplier, except if the revocation is based on Federal exclusion or 
debarment, felony conviction, license suspension or revocation, or the 
practice location is determined by CMS or its contractor not to be 
operational. When a revocation is based on an exclusion or debarment 
Federal exclusion or debarment, felony conviction, license suspension 
or revocation, or the practice location is determined by CMS or its 
contractor not to be operational, the revocation is effective with the 
date of exclusion or debarment, felony conviction, license suspension 
or revocation or the date that CMS or its contractor determined that 
the provider or supplier was no longer operational.''
    In addition, to ensure consistency, we proposed to revise Sec.  
424.535(f) (redesignated as Sec.  424.535(g)) from, ``Revocation 
becomes effective within 30 days of the initial revocation 
notification.'' to ``Revocation becomes effective 30 days after CMS or 
the CMS contractor mails notice of its determination to the provider or 
supplier, except if the revocation is based on Federal exclusion or 
debarment, felony conviction, license suspension or revocation, or the 
practice location is determined by CMS or its contractor not to be 
operational. When a revocation is based on a Federal exclusion or 
debarment, felony conviction, license suspension or revocation, or the 
practice location is determined by CMS or its contractor not to be 
operational, the revocation is effective with the date of exclusion or 
debarment, felony conviction, license suspension or revocation or the 
date that CMS or its contractor determined that the provider or 
supplier was no longer operational.''
    We believe that these changes will ensure that providers and 
suppliers are afforded due process rights under 42 CFR part 498, but 
also ensure that Medicare is not making or continuing to make payments 
to providers and suppliers who are no longer eligible to receive 
payments.
    We solicited comments on whether we should establish an expedited 
reconsideration process for providers and suppliers for when we issue a 
revocation for the following reasons: (1) Federal debarment or 
exclusion, (2) felony conviction, (3) license suspension or revocation, 
or (4) when CMS or our contractor determines that the provider is not 
operational at the practice location provided to Medicare and the 
provider or supplier furnishes sufficient evidence to demonstrate that 
CMS or our contractor made a factual error when issuing the initial 
revocation determination.
    In addition, we solicited comments on whether CMS or our 
contractors should consider processing expedited reconsiderations 
within a specified time period such as 30 days of the date the provider 
or supplier furnishes sufficient evidence to make a reconsideration 
determination.
    The following is a summary of the comments we received and our 
responses.
    Comment: Several commenters recommended that we withdraw our 
proposed changes to the appeals process.
    Response: We disagree with these commenters because we continue to 
believe that we should not make further payments to physicians and NPPs 
who have had their State medical license suspended or revoked, were 
convicted of a felony as described in Sec.  424.535(a)(3), were 
excluded or debarred from participating in a Federal program, or were 
determined by CMS or its contractor not to be operational.
    Comment: One commenter urged CMS to require contractors to send 
revocation notices in an effective manner that would establish a date 
of receipt and the recipient.
    Response: While this comment is outside the scope of the proposed 
rule, Medicare contractors are instructed to mail revocation notices to 
the correspondence address of the provider.
    Comment: One commenter recommended that we create an expedited 
reconsideration process of not more than 30 days in cases where 
revocation is based on CMS/contractor error.
    Response: While we have considered establishing an expedited 
reconsideration process for those cases in which Medicare revoked 
billing privileges due to a Federal exclusion or debarment, a felony 
conviction as described in Sec.  424.535(a)(3), a State license 
suspension or revocation, or the practice location is determined by CMS 
or our contractor not to be operational, we do not believe that an 
expedited reconsideration process is warranted.
    Comment: One commenter stated that our proposal to make revocation 
effective with limited notice and appeal rights in certain situations 
is a violation of due process.
    Response: While we agree that physicians, NPPs and physician and 
NPP organizations will receive limited notice when CMS or our 
contractor revokes Medicare billing privileges due to State licensure 
suspension/revocation, Federal debarment or exclusion, felony 
convictions as described in Sec.  424.535(a)(3), or when a practice 
location is found to no longer to be in operation, we disagree with 
this commenter's statement that we are violating due process rights. 
Physicians, NPPs, and physician and NPP organizations are afforded 
identical appeal rights as any other provider or supplier whose 
Medicare billing privileges were revoked.
    Comment: One commenter stated that retroactive revocation creates a 
situation where Medicare denies payment for services physicians have 
furnished in good faith reduces the time available for appeal and then 
locks the physician out of Medicare for at least a year.

[[Page 69866]]

    Response: We disagree with this commenter. Whenever a physician or 
NPP's State medical license is suspended or revoked, is convicted of 
felony as described in Sec.  424.535(a)(3), excluded or debarred from 
participating the Federal exclusion or debarment, or is determined by 
CMS or our contractor not to be operational, we believe that the 
payments to these practitioners should immediately cease.
    Comment: One commenter suggested, at the very least, current rights 
of appeal should be preserved for all proposed denials and we should 
actively research the performance of its contractors in auditing 
clinicians who make ``all or substantially all of their clinical 
encounters in the patient's home,'' and give provider feedback a 
defined role in the evaluation and subsequent award of contracts to 
intermediaries.
    Response: This comment is outside the scope of this proposed rule 
and can not be addressed in this final rule.
    After reviewing public comments, we are finalizing Sec.  
405.874(b)(2) to state ``The revocation of a provider's or supplier's 
billing privileges is effective 30 days after CMS or the CMS contractor 
mails notice of its determination to the provider or supplier, except 
if the revocation is based on Federal exclusion or debarment, felony 
conviction as described in Sec.  424.535(a)(3), license suspension or 
revocation, or the practice location is determined by CMS or its 
contractor not to be operational. When a revocation is based on a 
Federal exclusion or debarment, felony conviction, license suspension 
or revocation, or the practice location is determined by CMS or its 
contractor not to be operational, the revocation is effective with the 
date of exclusion or debarment, felony conviction, license suspension 
or revocation or the date that CMS or its contractor determined that