[Federal Register: November 2, 1999 (Volume 64, Number 211)]
[Rules and Regulations]               
[Page 59379-59428]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02no99-16]                         
 

[[Page 59379]]

_______________________________________________________________________

Part III

Department of Health and Human Services

_______________________________________________________________________

Health Care Financing Administration

_______________________________________________________________________

42 CFR Parts 410, 411, 414, etc.

Medicare Program; Revisions to Payment Policies Under the Physician Fee 
Schedule for Calendar Year 2000; Final Rule

[[Page 59380]]

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 410, 411, 414, 415, and 485

[HCFA-1065-FC]
RIN 0938-AJ61

 
Medicare Program; Revisions to Payment Policies Under the 
Physician Fee Schedule for Calendar Year 2000

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule with comment period.

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

SUMMARY: This final rule makes several changes affecting Medicare Part 
B payment. The changes include: implementation of resource-based 
malpractice insurance relative value units (RVUs); refinement of 
resource-based practice expense RVUs; payment for physician pathology 
and independent laboratory services; discontinuous anesthesia time; 
diagnostic tests; prostate screening; use of CPT modifier -25; 
qualifications for nurse practitioners; an increase in the work RVUs 
for pediatric services; adjustments to the practice expense RVUs for 
physician interpretation of Pap smears; and revisions to the work RVUs 
for new and revised CPT codes for calendar year 1999 and a number of 
other changes relating to coding and payment. Furthermore, we are 
finalizing the 1999 interim physician work RVUs and are issuing interim 
RVUs for new and revised codes for 2000. This final rule solicits 
public comments on the second 5-year refinement of work RVUs for 
services furnished beginning January 1, 2002 and requests public 
comments on potentially misvalued work RVUs for all services in the CY 
2000 physician fee schedule. This final rule also conforms the 
regulations to existing law and policy regarding: removal of the x-ray 
as a prerequisite for chiropractic manipulation; the exclusion of 
payment for assisted suicide; and optometrist services. This final rule 
also announces the calendar year 2000 Medicare physician fee schedule 
conversion factor under the Medicare Supplementary Medical Insurance 
(Part B) program as required by section 1848(d) of the Social Security 
Act. The 2000 Medicare physician fee schedule conversion factor is 
$36.6137.

DATES: Effective date: This rule is effective January 1, 2000. This 
rule is a major rule as defined in Title 5, United States Code, section 
804(2). In accordance with 5 U.S.C. section 801(a)(1)(A), we are 
submitting a report to the Congress on this final rule on October 29, 
1999.
    Comment date: Comments on interim RVUs for selected procedure codes 
identified in Addendum C and on interim practice expense RVUs and 
malpractice RVUs for all codes as shown in Addendum B will be 
considered if we receive them at the appropriate address, as provided 
in the ADDRESSES section, no later than 5 p.m. on January 3, 2000.
    Comments on all RVUs considered under the 5-year refinement process 
as discussed in section IV of the preamble will be considered if we 
receive them at the appropriate address, as provided below, no later 
than 5 p.m. on March 1, 2000.

ADDRESSES: Mail written comments related to the 5-year refinement 
process (1 original and 3 copies) to the following address: Health Care 
Financing Administration, Department of Health and Human Services, 
Attention: HCFA-1065-FC (5-Year Refinement), P.O. Box 8013, Baltimore, 
MD 21244-8013.
    Mail written comments related to interim RVUs for new and revised 
procedure codes, interim practice expense RVUs, and interim malpractice 
RVUs (1 original and 3 copies) to the following address: Health Care 
Financing Administration, Department of Health and Human Services, 
Attention: HCFA-1065-FC, P.O. Box 8013, Baltimore, MD 21244-8013.
    If you prefer, you may deliver your written comments to one of the 
following addresses:

Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or
Room C5-16-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1065-FC. Comments received timely will be available 
for public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 443-G of 
the Department's offices at 200 Independence Avenue, SW., Washington, 
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7061).

FOR FURTHER INFORMATION CONTACT:
Benjamin Long, (410) 786-0007 (for issues related to accessing the 
physician fee schedule information on the HCFA homepage).
Bob Ulikowski, (410) 786-5721 (for issues related to the resource-based 
malpractice relative value units).
Carolyn Mullen, (410) 786-4589 (for issues related to resource-based 
practice expense relative value units).
Jim Menas, (410) 786-4507 (for issues related to physician pathology 
services and independent labs and discontinuous anesthesia time).
Ken Marsalek, (410) 786-4502 (for issues related to optometrist 
services).
Bill Larson, (410) 786-4639 (for issues related to the coverage of 
prostate screening).
Paul W. Kim, (410) 786-7410 (for issues related to nurse practitioner 
qualifications).
Dorothy Honemann, (410) 786-5702 (for issues related to the X-ray 
requirement for chiropractic services).
Bill Morse, (410) 786-4520 (for issues related to diagnostic tests).
Marc Hartstein, (410) 786-4539 (for issues related to the conversion 
factor and physician fee schedule update and the regulatory impact 
analysis).
Diane Milstead, (410) 786-3355 (for all other issues).

SUPPLEMENTARY INFORMATION: Copies: To order copies of the Federal 
Register containing this document, send your request to: New Orders, 
Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-
7954. Please specify the date of the issue requested, and enclose a 
check or money order payable to the Superintendent of Documents, or 
enclose your Visa, Discover, or Master Card number and expiration date. 
Credit card orders can also be placed by calling the order desk at 
(202) 512-1800 (or toll free at 1-888-293-6498) or by faxing to (202) 
512-2250. The cost for each copy is $8. As an alternative, you can view 
and photocopy the Federal Register document at most libraries 
designated as Federal Depository Libraries and at many other public and 
academic libraries throughout the country that receive the Federal 
Register.
    To order the disks containing this document, send your request to: 
Superintendent of Documents, Attention: Electronic Products, P.O. Box 
37082, Washington, DC 20013-7082. Please specify, ``Medicare Program; 
Revisions to Payment Policies Under the Physicians Fee Schedule for 
Calendar Year 2000,'' and enclose a check or money order payable to the 
Superintendent of Documents, or enclose your VISA, Discover, or 
MasterCard number and expiration date. Credit card orders can be placed 
by calling the order clerk at (202) 512-1530 (or toll free at 1-888-
293-6498) or by

[[Page 59381]]

faxing to (202) 512-1262. The cost of the two disks is $19.
    Information on the Physician Fee Schedule can be found on our HCFA 
homepage. This data can be accessed by using the following directions:
    1. Go to the HCFA homepage (http://www.hcfa.gov).
    2. Click on ``Medicare.''
    3. Click on ``Professional/Technical Information.''
    4. Select Medicare Payment Systems.
    5. Select Physician Fee Schedule.
    You will find information on the Physician Fee Schedule Regulation 
on this page, as well as other documents (for example, Lewin Group 
Report, Health Economics Research Report) that are referenced in the 
preamble. Or, you can go directly to the Physician Fee Schedule page by 
typing the following: http://www.hcfa.gov/medicare/pfsmain.htm.
    To assist readers in referencing sections contained in this 
preamble, we are providing the following 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. Information on the regulation's impact appears throughout 
the preamble and not exclusively in section IX.

Table of Contents

I. Background
    A. Legislative History
    B. Published Changes to the Fee Schedule
    C. Components of the Fee Schedule Payment Amounts
    D. Development of the Relative Value Units
II. Specific Proposals for Calendar Year 2000 and Responses to 
Public Comments
    A. Resource-Based Malpractice Relative Value Units
    1. Current Malpractice Relative Value Unit System
    2. Methodology for Developing Resource-Based Malpractice 
Relative Value Units
    B. Resource-Based Practice Expense Relative Value Units
    1. Resource-Based Practice Expense Legislation
    2. Current Methodology for Computing Practice Expense Relative 
Value Units
    3. Refinement
    C. Adjustment to the Practice Expense Relative Value Units for a 
Physician's Interpretation of Abnormal Papanicolaou Smears
    D. Physician Pathology Services and Independent Laboratories
    E. Discontinuous Anesthesia Time
    F. Optometrist Services
    G. Assisted Suicide
    H. CPT Modifier -25
    I. Nurse Practitioner Qualifications
    J. Relative Value Units for Pediatric Services
    K. Percutaneous Thrombectomy of an Arteriovenous Fistula
    L. Pulse Oximetry, Temperature Gradient Studies, and Venous 
Pressure Determinations
    M. Removal of Requirement for X-ray Before Chiropractic 
Manipulation
    N. Coverage of Prostate Cancer Screening Tests
    O. Diagnostic Tests
    1. Supervision of Diagnostic Test
    2. Independent Diagnostic Testing Facilities
    P. Other Issues
III. Refinement of Relative Value Units for Calendar Year 2000 and 
Response to Public Comments on Interim Relative Value Units for 1999 
(Including the Interim Relative Value Units Contained in the July 
22, 1999 Proposed Rule)
    A. Summary of Issues Discussed Related to the Adjustment of 
Relative Value Units
    B. Process for Establishing Work Relative Value Units for the 
2000 Physician Fee Schedule
    C. Other Changes to the 2000 Physician Fee Schedule and 
Clarification of CPT Definitions
IV. Five Year Refinement of Relative Value Units
    A. Background
    B. Scope of the Five Year Review
    C. Refinement of Work Relative Value Units
    D. Nature and Format of Comments on Work Relative Value Units
    E. New Initiatives
V. Physician Fee Schedule Update and Conversion Factor for Calendar 
Year 2000
VI. Provisions of the Final Rule
VII. Collection of Information Requirements
VIII. Response to Comments
IX. Regulatory Impact Analysis
    A. Resource-Based Malpractice Relative Value Units
    B. Resource-Based Practice Expense Relative Value Units
    C. Adjustment to the Practice Expense Relative Value Units for a 
Physician's Interpretation of Abnormal Papanicolaou Smears
    D. Physician Pathology Services and Independent Laboratories
    E. Discontinuous Anesthesia Time
    F. Optometrist Services
    G. Assisted Suicide
    H. CPT Modifier -25
    I. Nurse Practitioner Qualifications
    J. Relative Value Units for Pediatric Services
    K. Percutaneous Thrombectomy of an Arteriovenous Fistula
    L. Pulse Oximetry, Temperature Gradient Studies, and Venous 
Pressure Determinations
    M. Removal of Requirement for X-ray Before Chiropractic 
Manipulation
    N. Coverage of Prostate Cancer Screening Tests
    O. Diagnostic Tests
    1. Supervision of Diagnostic Test
    2. Independent Diagnostic Testing Facilities
    P. Budget Neutrality
    Q. Impact on Beneficiaries
Addendum A--Explanation and Use of Addenda B
Addendum B--Relative Value Units and Related Information Used in 
Determining Medicare Payments for Calendar Year 2000
Addendum C--Codes with Interim RVUs
Addendum D--GPCI File
Addendum E--Reference Set with 2000 Work RVUs

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

AANA  American Association of Nurse Anesthetists
AMA  American Medical Association
APSA  American Pediatric Surgical Association
ASA  American Society of Anesthesiologists
BBA  Balanced Budget Act of 1997
CF  Conversion factor
CFR  Code of Federal Regulations
CMDs  Carrier Medical Directors
CPEPs  Clinical Practice Expert Panels
CPT  [Physicians'] Current Procedural Terminology [4th Edition, 
1999, copyrighted by the AMA]
CRNA  Certified Registered Nurse Anesthetist
DRE  Digital rectal examination
DRG  Diagnostic Related Group
E/M  Evaluation and management
GAF  Geographic adjustment factor
GPCI  Geographic practice cost index
HCFA  Health Care Financing Administration
HCPAC  Health Care Professionals Advisory Committee
HCPCS  HCFA Common Procedure Coding System
HHS  [Department of] Health and Human Services
IDTFs  Independent Diagnostic Testing Facilities
JUAs  Joint Underwriting Associations
MEDPAC  Medicare Payment Advisory Commission
MEI  Medicare Economic Index
MGMA  Medical Group Management Association
OBRA  Omnibus Budget Reconciliation Act
OIG  Office of the Inspector General
PSA  Prostate-specific antigen
PC  Professional component
PCF  Patient Compensation Fund
PEAC  Practice Expense Advisory Committee
PPS  Prospective payment system
ROS  Risk-of-Service
RUC  [AMA's Specialty Society] Relative [Value] Update Committee
RVU  Relative value unit
SMS  Socioeconomic Monitoring Survey
STS  The Society of Thoracic Surgeons
TC  Technical component

I. Background

A. Legislative History

    Since January 1, 1992, Medicare has paid for physician services 
under section 1848 of the Social Security Act (the Act), ``Payment for 
Physicians''

[[Page 59382]]

Services.'' This section contains three major elements: (1) A fee 
schedule for the payment of physicians' services; (2) a sustainable 
growth rate for the rates of increase in Medicare expenditures for 
physicians' services; and (3) limits on the amounts that 
nonparticipating physicians can charge beneficiaries. The Act requires 
that payments under the fee schedule be based on national uniform 
relative value units (RVUs) based on the resources used in furnishing a 
service. Section 1848(c) of the Act requires that national RVUs be 
established for physician work, practice expense, and malpractice 
expense.
    Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments 
in RVUs because of changes resulting from a review of those RVUs may 
not cause total physician fee schedule payments to differ by more than 
$20 million from what they would have been had the adjustments not been 
made. If this tolerance is exceeded, we must make adjustments to the 
conversion factors (CFs) to preserve budget neutrality.

B. Published Changes to the Fee Schedule

    In the July 22, 1999, proposed rule (64 FR 39609), we listed all of 
the final rules published through November 2, 1998, relating to the 
updates to the RVUs and revisions to payment policies under the 
physician fee schedule. In the July 22, 1999, proposed rule (64 FR 
39608), we discussed several policy issues affecting Medicare payment 
for physicians' services including implementation of resource-based 
malpractice insurance relative value units (RVUs); refinement of 
resource-based practice expense RVUs; payment for physician pathology 
and independent laboratory services; discontinuous anesthesia time; 
prostate screening; diagnostic tests; qualifications for nurse 
practitioners; an increase in the work RVUs for pediatric services; 
adjustments to the practice expense RVUs for physician interpretation 
of Pap smears; revisions to the work RVUs for new and revised CPT codes 
for calendar year 1999; and a number of other issues relating to coding 
and payment. In the proposed rule, we also indicated that we would 
conform the regulations to existing law and policy regarding removal of 
the x-ray as a prerequisite for chiropractic manipulation, the 
exclusion of payment for assisted suicide, and optometrist services.
    This final rule affects the regulations set forth at--
    <bullet> Part 410, Supplementary medical insurance benefits;
    <bullet> Part 411, Exclusions from Medicare and limitations on 
Medicare payment;
    <bullet> Part 414, Payment for Part B medical and other services;
    <bullet> Part 415, Services furnished by physicians in providers, 
supervising physicians in teaching settings, and residents in certain 
settings; and
    <bullet> Part 485, Conditions of participation; specialized 
providers.
    The information in this final rule updates information in the July 
22, 1999 proposed rule (64 FR 39608).

C. Components of the Fee Schedule Payment Amounts

    Under the formula set forth in section 1848(b)(1) of the Act, the 
payment amount for each service paid for under the physician fee 
schedule is the product of three factors: (1) A nationally uniform 
relative value for the service; (2) a geographic adjustment factor 
(GAF) for each physician fee schedule area; and (3) a nationally 
uniform conversion factor (CF) for the service. The CF converts the 
relative values into payment amounts.
    For each physician fee schedule service, there are three relative 
values: (1) An RVU for physician work; (2) an RVU for practice expense; 
and (3) an RVU for malpractice expense. For each of these components of 
the fee schedule there is a geographic practice cost index (GPCI) for 
each fee schedule area. The GPCIs reflect the relative costs of 
practice expenses, malpractice insurance, and physician work in an area 
compared to the national average for each component.
    The general formula for calculating the Medicare fee schedule 
amount for a given service in a given fee schedule area can be 
expressed as:

Payment = [(RVU work  x  GPCI work) + (RVU practice expense  x  GPCI 
practice expense) + (RVU malpractice  x  GPCI malpractice)  x  CF]

    The CF for calendar year 2000 appears in section V. The RVUs for 
calendar year 2000 are in Addendum B. The GPCIs for calendar year 2000 
can be found in Addendum D.
    Section 1848(e) of the Act requires the Secretary to develop GAFs 
for all physician fee schedule areas. The total GAF for a fee schedule 
area is equal to a weighted average of the individual GPCIs for each of 
the three components of the service. Thus, the GPCIs reflect the 
relative practice expenses, malpractice insurance, and physicians' work 
in an area compared to the national average. In accordance with the 
law, however, the GAF for the physician's work reflects one-quarter of 
the relative cost of physician's work compared to the national average.

D. Development of the Relative Value Units

1. Work Relative Value Units
    Approximately 7,500 codes represent services included in the 
physician fee schedule. The work RVUs established for the 
implementation of the fee schedule in January 1992 were developed with 
extensive input from the physician community. The original work RVUs 
for most codes were developed by a research team at the Harvard School 
of Public Health in a cooperative agreement with us. In constructing 
the vignettes for the original RVUs, Harvard worked with panels of 
expert physicians and obtained input from physicians from numerous 
specialties.
    The RVUs for radiology services are based on the American College 
of Radiology relative value scale, which we integrated into the overall 
physician fee schedule. The RVUs for anesthesia services are based on 
RVUs from a uniform relative value guide. We established a separate CF 
for anesthesia services while we continue to recognize time as a factor 
in determining payment for these services. As a result, there is a 
separate payment system for anesthesia services.
2. Practice Expense and Malpractice Expense Relative Value Units
    Section 1848(c)(2)(C) of the Act requires that the practice expense 
and malpractice expense RVUs equal the product of the base allowed 
charges and the practice expense and malpractice percentages for the 
service. Base allowed charges are defined as the national average 
allowed charges for the service furnished during 1991, as estimated 
using the most recent data available. For most services, we used 1989 
charge data ``aged'' to reflect the 1991 payment rules, since those 
were the most recent data available for the 1992 fee schedule.
    Section 121 of the Social Security Act Amendments of 1994 (Public 
Law 103-432), enacted on October 31, 1994, required us to develop a 
methodology for a resource-based system for determining practice 
expense RVUs for each physician service. As amended by the BBA, section 
1848(c) required the new payment methodology to be phased in over 4 
years, effective for services furnished in 1999, with resource-based 
practice expense RVUs becoming fully effective in 2002. The BBA also 
requires us to implement resource-based malpractice RVUs for services 
furnished beginning in 2000.

[[Page 59383]]

II. Specific Proposals for Calendar Year 2000 and Responses to 
Public Comments

    In response to the publication of the July 22, 1999 proposed rule, 
we received approximately 2,050 comments. We received comments from 
individual physicians, health care workers, and professional 
associations and societies. The majority of comments addressed the 
proposals related to resource-based malpractice RVUs, resource-based 
practice expense RVUs, and supervision of diagnostic tests.
    The proposed rule discussed policies that affect the number of RVUs 
on which payment for certain services would be based. Certain changes 
implemented through this final rule are subject to the $20 million 
limitation on annual adjustments contained in section 
1848(c)(2)(B)(ii)(II) of the Act.
    After reviewing the comments and determining the policies we will 
implement, we have estimated the costs and savings of these policies 
and added those costs and savings to the estimated costs associated 
with any other changes in RVUs for 2000. We discuss in detail the 
effects of these changes in the Regulatory Impact Analysis (section 
IX.)
    For the convenience of the reader, the headings for the policy 
issues correspond to the headings used in the July 22, 1999 proposed 
rule. More detailed background information for each issue can be found 
in the July 22, 1999 proposed rule.

A. Resource-Based Malpractice Relative Value Units

1. Current Relative Value Unit System
    Malpractice RVUs are currently charge-based, using the same 
statutory formula discussed above for practice expense RVUs but using 
weighted specialty-specific malpractice expense percentages and 1991 
average allowed charges. As with practice expense RVUs, malpractice 
RVUs for new codes after 1991 were extrapolated from similar existing 
codes or from work RVUs. Section 4505(f) of the BBA requires us to 
implement resource-based malpractice RVUs for services furnished 
beginning in 2000. With the implementation of resource-based 
malpractice RVUs and full implementation of resource-based practice 
expense RVUs in 2002, all physician fee schedule RVUs will be resource-
based, thus eliminating the last vestiges of payment inequities that 
resulted from charges that did not accurately reflect the relative 
resources involved in providing a service.
2. Methodology for Developing Resource-based Malpractice RVUs
    The resource-based malpractice RVU methodology is data-driven based 
on malpractice insurance premium data. Malpractice premium data were 
used because they represent the actual malpractice expense to the 
physician and are widely available. Actual malpractice premium data 
were collected for the top 20 Medicare payment physician specialties. 
Data were collected from all 50 States, Washington D.C., and Puerto 
Rico. Data were collected from commercial and physician-owned insurers 
and from joint underwriting associations (JUAs), typically State 
government administered risk pooling insurance arrangements in areas 
where commercial insurers left the market. Adjustments were made to 
reflect mandatory patient compensation fund or PCF (a fund to pay for 
any claim beyond the statutory amount thereby limiting an individual 
physician's liability in cases of a large suit) surcharges in States 
where PCF participation is mandatory. Premium data reflect at least a 
50 percent market share in each State, with the average market share 
being 77 percent. Adjustments were made to reflect a standard $1 
million/$3 million mature claims made policy (a policy covering claims 
made rather than services provided during the policy term).
    Medicare physician specialties were mapped to malpractice insurance 
rating risk classes. A national average premium was computed for each 
specialty by weighting area geographic premiums by fee schedule RVUs. 
Specialty risk factors or indexes were then calculated by dividing the 
national average premium for each specialty by the national average 
premium for the specialty with the lowest premium, psychiatry. The risk 
factors describe the relative malpractice costs among specialties.
    Specialty-weighted resource-based malpractice RVUs were calculated 
for each procedure by summing, for all specialties providing the 
procedure, the product of each specialty's risk factor times the 
proportion of total service count for that procedure provided by the 
specialty. This number was then multiplied by the procedure's work RVUs 
to account for differences in risk-of-service (ROS) among procedures. 
If ROS differences were not recognized, all services performed 
exclusively by a given specialty would have the same resource-based 
malpractice RVUs, even though they might vary considerably in effort, 
difficulty, total payment, and their contribution to that specialty's 
malpractice liability. Since work RVUs reflect differences in time, 
intensity, and difficulty among procedures and are generally accepted 
as accurate, we proposed them as the best available proxy for 
determining ROS. To attain budget neutrality as required by law, the 
total new fee schedule resource-based malpractice RVUs were compared to 
the total current charge-based malpractice RVUs, and the appropriate 
adjustment was made to retain the same total malpractice RVUs.
    We proposed to add a new Sec. 414.22(c)(3) (Relative value units 
(RVUs)) to specify that, for services furnished in the year 2000 and 
subsequent years, the malpractice RVUs are based on the relative 
malpractice insurance resources for each service.
    A more detailed explanation of our methodology can be found in the 
July 22, 1999 proposed rule (64 FR 39610).
    We received the following comments on our proposed resource-based 
malpractice RVUs:
    Comment: Many commenters agreed that our methodology was generally 
reasonable and that malpractice risk-of-service (ROS) differences among 
procedures must be taken into account. While understanding that we used 
work RVUs to reflect the malpractice ROS differences because we could 
not find a better proxy, they commented that work RVUs may not be the 
best proxy to use for ROS and suggested that we work with the medical 
community to find a better alternative.
    Response: As we stated in the July 1999 proposed rule, we realize 
that work RVUs may not be the perfect proxy to reflect malpractice ROS 
differences. It is the best proxy available at this time. We will be 
happy to work with the medical community to find a better alternative 
and welcome any suggestions.
    Comment: The most frequently recurring comment was that, while the 
law requires that we use the most recent available data, the data used 
(1993 through 1995 malpractice premiums) is outdated and does not 
accurately reflect current malpractice premiums. Commenters suggested 
that we delay implementation of the resource-based malpractice RVUs 
until more recent data can be collected. If delay is not an option, the 
commenters requested that the resource-based malpractice RVUs be 
considered interim subject to change, when more recent data are 
collected and verified.
    Response: We used the 1993 through 1995 data because they were 
readily available. Moreover, we believe the use of these data are 
reasonable because it is our understanding that malpractice

[[Page 59384]]

insurance premiums have been relatively stable in the 1990s. The law 
requires us to implement the new malpractice RVUs in 2000. However, we 
do agree that the RVUs should be considered interim until they can be 
verified by more recent data.
    Comment: Some commenters stated that using two risk factors, 
surgical and nonsurgical, and applying the surgical risk factor to 
surgical services performed by a specialty, and the lower nonsurgical 
risk factor to the nonsurgical services performed by the specialty, 
does not recognize that physicians typically perform a wide range of 
services and that their malpractice costs are spread across the whole 
range. Since a physician's malpractice premium is usually determined by 
the higher risk services performed, the commenters state that the 
higher risk factor should be applied to the whole range of services. 
OBGYN specialties felt particularly strongly about this issue, stating 
that over 80 percent of OBGYNs do both obstetrics and gynecology, and 
that even if a physician only does a very minimal number of deliveries 
a year he or she will pay the much higher obstetric premium.
    Response: It is true that, for an individual physician in a 
specialty with different risk factors depending upon whether or not the 
physician performs surgery, the physician's malpractice premium will 
probably be based upon the higher risk services, depending upon the 
policies of the individual insurer. (For obvious surgical specialties, 
for example, general surgeon and thoracic surgeon, there is only one 
risk factor and this is applied to all services performed by that 
specialty.) The purpose of the resource based malpractice RVUs is not 
to guarantee each physician an absolute return of his or her 
malpractice costs. It is rather to construct malpractice RVUs based on 
the relative malpractice costs among services. We believe it is 
reasonable to use the lower risk factor for the values of the lower 
risk non-surgical services and to allocate the higher relative values 
to the higher risk services that cause them. In the case of OBGYN 
services, the higher obstetric premiums and risk factor were used for 
services that were clearly obstetrical services which drive these 
premiums, while the lower gynecology risk factor was used for all other 
services. This also seems consistent with support from many commenters 
that we use a risk of service adjuster for each service, as discussed 
earlier.
    Comment: Several commenters generally agreed with our policy of 
retaining the existing malpractice RVUs for codes with zero work RVUs 
(generally the technical component (TC) of diagnostic tests) rather 
than making them zero (as they would have been if we multiplied the 
premium-based RVUs by the work RVUs as our risk-of-service methodology 
provides). Some commenters pointed out that retaining the existing 
values leaves them charge based, however, and suggested that we work 
with the physician community to find an alternative proxy to work RVUs 
to use to adjust for risk-of-service. Some commenters suggested that we 
merely leave the work multiplication step out of the calculation. One 
commenter suggested that we use the non-physician clinical labor from 
the practice expense Clinical Practice Expert Panels (CPEPs). It was 
also pointed out that by retaining the present malpractice values for 
the TCs and applying our methodology to the professional component (PC) 
and the global fee, we created anomalies when the value of one of the 
parts, the TC, was greater than the value of the whole, the global fee.
    Response: As stated in the proposed rule, we welcome suggestions 
concerning a different proxy than work to use to reflect ROS 
differences among services with no work RVUs. We considered eliminating 
the work multiplication step, but did not accept this for the reason 
mentioned in the proposed rule: that without adjusting for ROS all 
services performed solely or almost solely by a specialty would have 
the same malpractice RVUs without regard to the different risks they 
may entail. We will consider all suggestions including using the CPEP 
data and may propose additional refinements in a future proposed rule. 
In addition, we have corrected the global PC and TC anomaly. Instead of 
separately calculating global values using our methodology, we have 
added the PC and TC to obtain the global value, because that value by 
definition is the sum of its TC and PC parts.
    Comment: Cardiologists commented that the two-tiered surgical 
breakdown was inadequate to reflect cardiologists' malpractice costs 
because some of their services (for example, angioplasties and cardiac 
catherization) do not neatly fall into either category, and that more 
categories than just surgery or nonsurgery are required. They also 
stated that we did not clearly define what are surgical and nonsurgical 
services.
    Response: As mentioned in the proposed rule we acknowledge that 
insurers vary as to categories of physician risk classifications. 
However, we believe that the major determinants of malpractice premiums 
are physician specialty and whether or not the physician performs 
surgery. We believe that our two risk factor methodology is generally 
adequate. Our proposed methodology was based on the CPT definition of 
surgery as a way to identify specific codes to be considered surgery or 
nonsurgery. We applied the surgical risk factors to services in the 
surgery section of CPT, codes 10000 through 69999, and the nonsurgical 
risk factors to all other services. After considering this comment, we 
acknowledge that the cardiological procedures they mentioned are quite 
invasive and more akin to surgery than most non-surgical services. We 
are, therefore, applying the higher cardiology surgical risk factor to 
the following cardiology catheterization and angioplasty codes: 92980 
to 92998 and 93501 to 93536. Since all malpractice RVUs are considered 
to be interim, we welcome additional comments concerning other codes 
which should be considered as surgery for these purposes.
    Comment: Some commenters objected to our basing the resource-based 
malpractice RVUs on premium data for 20 specialties with other 
specialties being crosswalked to these 20 specialties. They stated that 
the RVUs should be based on actual data for all specialties. Some 
believed that it was particularly inappropriate to crosswalk non-
physician specialties to the ``all physician'' category.
    Response: There are about 100 recognized specialties in our payment 
records. We do not believe it is practical, possible, or necessary to 
collect actual malpractice premium data on all these specialties. The 
20 specialties most prominent in the data represent over 80 percent of 
physician fee schedule payments. The shares of payments of many of the 
other specialties for a specific service are extremely small and thus 
have virtually no effect on the specialty share-weighted calculation. 
As discussed in the proposed rule, insurers create their own risk 
classes generally using ISO codes. We mapped all specialties to the 
risk classes of St. Paul Companies, one of the oldest and largest 
malpractice insurers. These risk classes include multiple specialties 
that represent similar malpractice risk. To our knowledge, no insurer 
has established risk classes for each of the almost 100 Medicare 
specialties.
    Comment: Some commenters objected to our computing the malpractice 
RVUs for a service by weight-averaging the risk factors for all 
specialties providing the service. They state that this rewards the 
specialties with the lowest risk

[[Page 59385]]

factors and punishes the specialties with the highest risk factors.
    Response: The basic principle underlying the physician fee schedule 
is that the relative value for a service represents the resources 
required to provide the typical service for all physicians providing 
the service. Indeed, the law specifically prohibits any specialty 
payment differential. The RVUs are intended to reflect the relative 
resources required to provide the service compared to other services. 
Computing resource-based malpractice RVUs for a service by weight-
averaging the relative costs of all specialties providing the service 
is not intended to reward or punish a particular specialty but to 
reflect average costs across all specialties providing the service and 
is entirely in keeping with the basic principles underlying the fee 
schedule.
    Comment: Radiology groups commented that, while both the TC and PC 
of radiology diagnostic tests contain malpractice RVUs, current and 
proposed malpractice RVUs are generally much higher for the TC than for 
the PC. They state that the radiologist supervising or interpreting the 
test bears the malpractice responsibility and believe that all or the 
bulk of malpractice RVUs currently in the TC should be moved to the PC.
    Response: We disagree with the commenters. The total TC RVUs 
(practice expense and malpractice) for the TC of radiology diagnostic 
tests represent the expenses required to perform the test--equipment, 
supplies, and technicians plus malpractice insurance. The total PC RVUs 
(work, practice expense and malpractice) represent only the 
interpretation of the test by the physician. In general, the current TC 
RVUs for radiology services are significantly higher than the PC RVUs 
because of the very expensive equipment, supplies and other costs. The 
malpractice RVUs are generally split in similar proportion between PC 
and TC as the practice expense RVUs. In cases where the physician or 
group provides both the TC and PC and bills for both components, the 
split is not a significant issue since the physician or group would 
receive the total payment. In many cases, the TC is provided by an 
entity--hospital or free standing imaging center--other than the 
physician providing the interpretation. The entity providing the TC, 
which includes a supervising physician who is most likely a 
radiologist, assumes the risk, such as excessive irradiation of the 
patient, of providing the TC. We can think of no reason to transfer any 
portion of malpractice RVUs from the entity (including a supervising 
physician) providing the majority of the service, the TC, to a 
physician who is providing only the interpretation. The malpractice 
liability associated with interpreting the test is reflected in the PC 
malpractice RVUs.
    Comment: One commenter stated that certain allergy and 
immunotherapy codes (95145 through 95170, 95010, and 95015) should not 
have zero malpractice RVUs as these codes contain work RVUs.
    Response: We agree that all services with physician work RVUs 
contain some potential malpractice liability and expense. This error 
occurred because we rounded to zero in our computation. We have given 
them a malpractice value of 0.01 RVU.
    Comment: Some commenters stated that we should base the resource-
based malpractice RVUs on actual closed claims data as recommended by 
MEDPAC and discussed in the proposed July 1999 proposed rule. MEDPAC 
again recommended this approach in its comments and stated that some 
insurers maintain a data base relating malpractice claims to ICD-9 
codes and that software is available to crosswalk ICD-9 to CPT codes. 
MEDPAC also commented that in using only the costs of malpractice 
premiums that we failed to factor into the malpractice RVUs the ``* * * 
loss of reputation* * *'' that a physician incurs from malpractice 
claims. MEDPAC also indicated that ``* * * psychological costs of 
professional liability are very important to physicians.''
    Response: As stated in the proposed rule, we do not believe that 
closed claims data linking malpractice claims to CPT codes are widely 
available across the country for all or even a significant portion of 
the 7000 plus CPT codes paid under the physician fee schedule. If any 
such data are available, we expect they are for a very few codes on a 
limited geographical basis. Our coding experts tell us it is not 
possible to crosswalk ICD-9 codes to an individual CPT code with any 
degree of accuracy. The statute requires that the new malpractice 
system be based on the malpractice expense resources involved in 
furnishing the service. We believe that the physician's malpractice 
premium best reflects the malpractice expense. We do not believe that 
any loss of a physician's reputation from a malpractice claim would be 
related to the statutory requirement to base malpractice RVUs on the 
malpractice resources involved in furnishing the service; we do not 
believe that this intangible ``loss'' represents a resource used in 
furnishing a service. Indeed, we do not see how loss of reputation and 
psychological costs can be quantified. We encourage MEDPAC to further 
develop their idea, particularly as it relates to the statutory 
requirement, and submit their further analysis in comments to future 
physician fee schedule notices.
    Comment: Some neurologists listed five codes (95829, 95920, 95955, 
95961, and 95962) assigned the neurology non-surgical risk factor that 
they believe are surgical services and should be assigned the higher 
neurology surgical risk factor.
    Response: Our medical consultants believe that these are not 
surgical services and no evidence was presented that these services 
result in higher malpractice premiums for neurologists. At this time, 
we will continue to apply the non-surgical risk factor to these 
services. We will reconsider this decision should evidence be presented 
that performance of these services results in higher malpractice 
premiums.
    Comment: Some neurosurgeons commented that the real effect of 
malpractice changes on neurosurgeons is masked by comparing estimated 
year 2000 allowed charges to 1999 allowed charges, thereby ignoring the 
effect on the malpractice RVU pool of the rebasing of the MEI from 1998 
to 1999. They further commented that, while comparing 2000 to 1999 
malpractice RVUs for neurosurgical procedures shows significant 
increases, comparing 2000 to 1998 malpractice RVUs will substantially 
reduce or eliminate these increases. They also stated that, while the 
updated MEI showed that the average malpractice expense represented 3.2 
percent of gross income across all physician specialties, neurosurgeons 
have much higher malpractice expenses of about 7 percent of gross 
income. Neurosurgeons submitted a detailed methodology that they 
suggested might be used as an alternative to our proposed methodology.
    Response: The MEI was rebased in 1999 to reflect more recent (1997 
as compared to 1989) data from the AMA's Socioeconomic Monitoring 
Survey (SMS) on physician income and expenses. The more recent data 
indicated that malpractice expenses across all physician specialties as 
a percentage of gross income had shrunk from 4.8 to 3.2 percent. In 
order to reflect these more recent data in the physician fee schedule, 
the pool of malpractice RVUs was reduced from 4.8 to 3.2 percent of 
total RVUs. We made this change on a budget-neutral basis: the 1.6 
percentage points were redistributed among the work and practice 
expense RVUs. We always show impacts relative to current law,

[[Page 59386]]

regulations and policies; therefore, comparing 2000 to 1999 changes was 
not done to mask the effects of previous changes but was consistent 
with past practices. The effects of proposed 2000 malpractice RVUs were 
thus compared to existing 1999 levels. We agree that malpractice 
expenses of neurosurgeons are generally higher than the overall average 
3.2 percent of gross income for all physicians. An examination of high 
volume codes performed primarily by neurosurgeons shows that the new 
resource-based malpractice RVUs range from about 6 percent of the total 
1999 transition RVUs to about 9 percent of fully implemented total 2002 
RVUs for a given service. We are examining the alternative methodology 
suggested by the neurosurgeons and will consider it along with other 
alternatives during future refinement of malpractice RVUs.
    Comment: Several surgical specialties commented that many of the 
``winners'' under our proposal are relatively low-risk specialties (for 
example, nephrology, general practice, and family practice) with 
relatively low malpractice premiums, while many of the ``losers'' are 
high-risk specialties (for example, cardiac surgery and thoracic 
surgery) with relatively high malpractice premiums. While acknowledging 
that the gains or losses are minor, usually less than 1 percent, they 
state that the results are counter-intuitive and do not match clinical 
practice experience. Some believe that this is a continuation of a HCFA 
bias in favor of primary care specialties at the expense of surgical 
specialties.
    Response: We do not agree that the results are counter-intuitive or 
reflect any intentional bias. The impacts compare a new resource-based 
system with an existing charge-based system. The systems are on totally 
different bases. All the results show is what provided the Congress 
with the impetus to create the resource-based physician fee schedule in 
the OBRA 1989 and expand it in subsequent legislation: charges for 
physicians' services did not accurately reflect the relative resources 
required to provide the services. While over the course of the 
development of the fee schedule, the changes to a resource-based system 
did generally increase payments for primary care services relative to 
surgical services, it was because this was indicated by the resource 
input data and not as a result of any intentional HCFA bias.
    Result of Evaluation of Comments: After careful examination of 
comments, we are adopting our proposal that new resource-based 
malpractice RVUs calculated using the methodology described in the July 
1999 proposed rule will become effective in 2000. We have modified our 
proposal to identify certain services as surgery for purposes of 
applying specialty risk factors to individual services. These RVUs can 
be found in Addendum B.

B. Resource-Based Practice Expense Relative Value Units

1. Resource-Based Practice Expense Legislation
    Section 121 of the Social Security Act Amendments of 1994 (Public 
Law 103-432), enacted on October 31, 1994, required us to develop a 
methodology for a resource-based system for determining practice 
expense RVUs for each physician's service beginning in 1998. The 
legislation specifically required that, in implementing the new system 
of practice expense RVUs, we must apply the same budget-neutrality 
provisions that we apply to other adjustments under the physician fee 
schedule.
    The BBA was enacted on August 5, 1997, before publication of the 
October 1997 final rule (62 FR 59103). Section 4505(a) of the BBA 
delayed the effective date of the resource-based practice expense RVUs 
until January 1, 1999. In addition, the BBA provided for the following 
revisions in the requirements to change from charge-based practice 
expense RVUs to resource-based RVUs.
    Instead of paying for all services entirely under a resource-based 
RVU system in 1999, section 4505(b) of the BBA provided for a 4-year 
transition period. The practice expense RVUs for the year 1999 will be 
the sum of 75 percent of charge-based RVUs and 25 percent of the 
resource-based RVUs. For the year 2000, the percentages will be 50 
percent charge-based RVUs and 50 percent resource-based RVUs. For the 
year 2001, the percentages will be 25 percent charge-based RVUs and 75 
percent resource-based RVUs. For subsequent years, the RVUs will be 
totally resource-based.
    Section 4505(e) of the BBA provided that, in 1998, the practice 
expense RVUs would be adjusted for certain services in anticipation of 
the implementation of resource-based practice expenses beginning in 
1999. Thus, practice expense RVUs for office visits were increased. For 
other services whose practice expense RVUs exceeded 110 percent of the 
work RVUs and which were furnished less than 75 percent of the time in 
an office setting, the 1998 practice expense RVUs were reduced to a 
number equal to 110 percent of the work RVUs. This limitation did not 
apply to services that had proposed resource-based practice expense 
RVUs in the June 18, 1997 proposed rule (62 FR 33196) that increased 
from their 1997 practice expense RVUs. The procedure codes affected and 
the final RVUs for 1998 were published in the October 31, 1997 final 
rule (62 FR 59103).
    Section 4505(d)(3) also required that a proposed rule be published 
by May 1, 1998, with a 90-day comment period. A final rule was 
published on November 2, 1998, (63 FR 58816) and the transition began 
on January 1, 1999.
    The BBA also required that we develop new resource-based practice 
expense RVUs. In developing these new practice expense RVUs, section 
4505(d)(1) required us to--(1) use, to the maximum extent practicable, 
generally accepted accounting principles that recognize all staff, 
equipment, supplies, and expenses, not just those that can be tied to 
specific procedures, and use actual data on equipment use and other key 
assumptions; (2) consult with organizations representing physicians 
regarding the methodology and data to be used; and (3) develop a 
refinement process to be used during each of the four years of the 
transition period.
2. Current Methodology for Computing Practice Expense Relative Value 
Units
    Effective with services furnished after January 1, 1999, we 
established a new methodology for computing resource-based practice 
expense RVU that uses the two significant sources of actual practice 
expense data we have available--the Clinical Practice Expert Panel 
(CPEP) data and the American Medical Association's (AMA's) 
Socioeconomic Monitoring System (SMS) data. This methodology is based 
on an assumption that current aggregate specialty practice costs are a 
reasonable basis for establishing initial estimates of relative 
resource costs of physicians' services across specialties. It then 
allocates these aggregate specialty practice costs to specific 
procedures and, thus, can be seen as a ``top-down'' approach. The 
following summarizes the general methodology used. (For more specific 
information refer to the June 5, 1998 proposed rule (63 FR 30826) and 
the November 1998 final rule with comment (63 FR 58816).)

Practice Expense Cost Pools

    We used actual practice expense data by specialty, derived from the 
1995 through 1997 SMS survey data, to create six cost pools: 
administrative labor, clinical labor, medical supplies, medical 
equipment, office supplies, and all other expenses. There were three 
steps in the creation of the cost pools. They are as follows:

[[Page 59387]]

    (Step 1) We used the AMA's SMS survey of actual cost data to 
determine practice expenses per hour by cost category. The practice 
expense per hour for each physician respondent's practice was 
calculated as the practice expenses for the practice divided by the 
total number of hours spent in patient care activities by the 
physicians in the practice.
    (Step 2) We determined the total number of physician hours, by 
specialty, spent treating Medicare patients. This was calculated from 
physician time data for each procedure code and the Medicare claims 
data.
    (Step 3) We then calculated the practice expense pools by specialty 
and by cost category by multiplying the practice expenses per hour for 
each category by the total physician hours.
    For services with work RVUs equal to zero (including the TC of 
services with PC and TC), we created a separate practice expense pool 
using the average clinical staff time from the CPEP data (since these 
codes by definition do not have physician time), and the ``all 
physicians'' practice expense per hour.

Cost Allocation Methodology

    For each specialty, we separated the six practice expense pools 
into two groups, direct costs and indirect costs, and used a different 
allocation basis for each group.
    <bullet> For direct costs, which include clinical labor, medical 
supplies, and medical equipment, we used the CPEP data as the 
allocation basis.
    For the separate practice expense pool for services with work RVUs 
equal to zero, we are using, as an interim measure, 1998 practice 
expense RVUs to allocate the direct cost pools (clinical labor, medical 
supplies and medical equipment).
    Also, for all radiology services that are assigned work RVUs, we 
used the 1998 practice expense RVUs as an interim measure to allocate 
the direct practice expense cost pool for the specialty of radiology. 
For all other specialties that perform radiology services that are 
assigned work RVUs, we used the CPEP data for radiology services in the 
allocation of that specialty's direct practice expense cost pools.
    <bullet> For indirect costs, which include administrative labor, 
office expenses, and all other expenses, we used the total direct costs 
or the 1998 practice expense RVUs, as described above, in combination 
with the physician fee schedule work RVUs, to allocate the cost pools. 
We converted the work RVUs to dollars using the Medicare CF (expressed 
in 1995 dollars for consistency with the SMS survey years).
    <bullet> For procedures performed by more than one specialty, the 
final procedure code allocation was a weighted average of allocations 
for the specialties that perform the procedure, with the weights being 
the frequency with which each specialty performs the procedure on 
Medicare patients.

Other Methodological Issues

    <bullet> Global Practice Expense Relative Value Units
    For services with the PC and TC paid under the physician fee 
schedule, the global practice expense RVUs are set equal to the sum of 
the PC and TC.
    <bullet> Practice Expenses per Hour Adjustments and Specialty 
Crosswalks
    Since many specialties identified in our claims data did not 
correspond exactly to the specialties included in the practice expenses 
tables from the SMS survey data, it was necessary to crosswalk these 
specialties to the most appropriate SMS specialty category. We also 
made the following adjustments to the practice expense per hour data 
(the rationale for these adjustments is explained in the November 1998 
proposed rule (63 FR 58817):
    + For the specialty of ``oncology'' we set the medical materials 
and supplies practice expense per hour equal to the ``all physician'' 
medical materials and supplies practice expenses per hour.
    + We based the administrative payroll, office, and other practice 
expenses per hour for the specialties of ``physical therapy'' and 
``occupational therapy'' on data used to develop the salary equivalency 
guidelines for these specialties. We set the practice expense per hour 
for the direct cost categories equal to the ``all physicians'' practice 
expense per hour from the SMS survey data.
    + We derived the resource-based practice expense RVUs for codes 
performed by audiologists from the practice expenses per hour of the 
other specialties that perform these codes.
    + For the specialty ``emergency medicine'' we used the ``all 
physician'' practice expense per hour to create practice expense cost 
pools for the categories ``clerical payroll'' and ``other expenses.''
    + For the specialty ``podiatry'' and the specialty of 
``maxillofacial prosthetics'' we used the ``all physician'' practice 
expenses per hour to create the practice expense pool.
    + For the specialty ``pathology'' we removed the supervision and 
autopsy hours reimbursed through Part A of the Medicare program from 
the practice expense per hour calculation.
    <bullet> Time Associated with the Work Relative Value Units
    The time data resulting from the more current RUC refinement of the 
work RVUs have been, on the average, 25 percent greater than the time 
data obtained by the original Harvard research team for the same 
services in 1992. We adjusted the Harvard research team's time data by 
comparisons within families of CPT codes in order to ensure consistency 
between these data sources and fairness to those services not yet 
valued by the RUC.
    For services with no assigned physician times, such as dialysis, 
physical therapy, psychology and many radiology and other diagnostic 
services, we calculated estimated total physician times based on work 
RVUs, maximum clinical staff time for each service as shown in the CPEP 
data, or the judgment of our clinical staff.
    We calculated the time for the anesthesia CPT codes 00100 through 
01996 using the base and time units from the anesthesia fee schedule 
and the Medicare allowed claims data.
3. Refinement

Background

    Section 4505(d)(1)(C) of the BBA requires us to develop a 
refinement process to be used during each of the four years of the 
transition period. In the June 1998 proposed rule (63 FR 30822) and the 
November 2, 1998 final rule (63 FR 58818) we set out the parameters for 
a refinement process and indicated that RVUs for all codes would be 
considered interim for 1999 and for future years during the transition 
period.
    As part of the initial refinement process, in the November 1998 
final rule, we outlined the steps we are undertaking to resolve the 
outstanding general methodological issues. These steps include the 
establishment of a mechanism to receive additional technical advice for 
dealing with these broad practice expense RVU methodological issues; 
evaluation of any additional recommendations from the GAO, MEDPAC, and 
the Practicing Physicians Advisory Council; and consultation with 
physicians' and other groups about these issues. In addition, we 
solicited comments and suggestions about methodology from organizations 
that have a broad range of interest and expertise in practice expense 
and survey issues.
    We also discussed a proposal submitted by the Relative Update 
Committee (RUC), which was supported by almost every medical specialty 
society, for the establishment of a Practice Expense Advisory Committee 
(PEAC), to review comments and make recommendations on the code-
specific

[[Page 59388]]

CPEP data (that is, the clinical staff types and times, medical 
supplies, and medical equipment needed for each procedure) during this 
refinement period. This committee would make recommendations to the 
RUC, which would make final recommendations to us.
Current Status of Refinement Activities

Top-Down Methodology

    Comment: Several physician specialty societies expressed concern 
about what they perceive as a lack of progress in the refinement 
process. One surgical society noted the final report of the contractor 
we chose to evaluate methodological issues is not due until May 2000. 
Other commenters requested that we identify our plans for refinement, 
provide guidance to specialty societies for refining key data sources 
and inform the medical community of our progress. Several commenters 
recommended that we lengthen the time period for transition, while 
another requested that we consider all practice expense RVUs as interim 
until all refinements are complete, even beyond 2002. Two surgical 
specialty societies stated their concern that many of the 
methodological issues on which they previously commented have not yet 
been resolved, such as averaging of the CPEP inputs for services valued 
by more than one CPEP panel, the negative effect of high patient care 
hours on certain specialties, the effects of rounding on the physician 
time for evaluation and management (E/M) services, and the impact of 
errors in the Medicare claims data.
    Response: We can understand the frustration expressed by many of 
the commenters about the lack of many immediate revisions to our top-
down methodology. However, this methodology is complex and is also 
dependent on the accuracy and interrelationship among five separate 
data sources: the SMS survey, the CPEP inputs, Harvard and RUC 
physician times, the Medicare claims data, and the work RVUs. In 
addition, because the RVUs must be budget neutral, any change we make 
that advantages one group could disadvantage another. Therefore, we 
must ensure that all refinements we make are methodologically sound, 
are consistent with Medicare policy, and, to the greatest degree 
possible, are based on objective information.
    We believe that we are now in a position to begin addressing many 
of the methodological issues that are of concern to those commenting on 
our refinement efforts. As indicated in the July 22, 1999 proposed rule 
(64 FR 39608), one of our main strategies for resolving the outstanding 
practice expense methodological issues was to establish a mechanism for 
obtaining expert advice and technical support. We awarded a one-year 
contract, beginning May 24, 1999, to The Lewin Group to provide 
technical assistance in evaluating the following aspects of the 
practice expense methodology:
    <bullet> Evaluate the validity and reliability of the SMS data for 
specialty and subspecialty groups and academic and hospital-based 
specialties to determine which groups may not be adequately represented 
in the SMS survey.
    <bullet> Assist us in our consultations with the AMA and the 
medical community on considering possible ways to improve the 
representativeness of the aggregate specialty-specific data so that 
sampling error is decreased and to eliminate as many sources of non-
response and measurement error as possible.
    <bullet> Evaluate the appropriateness of crosswalking unrepresented 
specialties to a specialty included in the AMA survey and develop 
alternative options to crosswalking.
    <bullet> Determine which specialties' SMS data may be affected by 
inclusion of mid-level practitioners in specialty survey cost data and 
develop alternative methodologies to address the issue.
    <bullet> Determine whether the impact on AMA SMS of non-billable 
hours is significant and, if so, develop methodologies for adjusting 
AMA/SMS to account for non-billable hours.
    <bullet> Determine whether the impact of uncompensated care is 
significant and, if so, develop methodologies for adjusting the SMS 
data to account for uncompensated care.
    <bullet> Identify and evaluate alternative and supplementary data 
from sources such as specialty and multi-speciality societies and 
future SMS surveys.
    <bullet> Determine under what circumstances, if any, we should 
consider use of survey data other than AMA SMS data and, if this data 
could be used, develop criteria for accepting other surveys and 
determine the appropriate form of these surveys.
    <bullet> Consider ways that specialty data that significantly 
change in a future survey can be selectively validated by AMA SMS 
through an independent auditor or other appropriate entity.
    <bullet> Develop options for validating the Harvard/RUC physician 
procedure time data.
    <bullet> Determine whether the effect of rounding time data for 
high volume/low time services is significant and, if so, develop 
methodologies to address it.
    <bullet> Review options supplied by us for allocating indirect 
costs, including substituting physician time for physician work.
    <bullet> Provide advice on developing a process for the 5-year 
review of practice expense RVUs.
    Our contractor has accomplished the following to date:
    <bullet> Met with us and the AMA to discuss our future use of the 
AMA SMS survey and to discuss the design and structure of the AMA's new 
practice-level survey. The AMA plans to conduct its survey of practices 
in alternating years with the SMS survey. Our contractor has completed 
an evaluation of the 1998 SMS questionnaire and has completed an 
initial review of the methodology of the practice expense per hour 
values derived from the SMS data. Our contractor is developing 
recommendations regarding the practice survey design and methodology 
and is considering how we can use the practice-level survey and how we 
can cross-walk the information to the SMS survey. We hope to present 
the details of the final recommendations and our proposals regarding 
them in next year's physician fee schedule proposed rule.
    <bullet> Met with the Society of Thoracic Surgeons (STS) to review 
the methodology used in their survey to make a specific recommendation 
concerning the use of this survey to calculate the practice expense per 
hour for cardiothoracic surgery.
    <bullet> Hosted a meeting on September 15, 1999 with 37 
representatives of physician specialty societies, 11 representatives of 
nonphysician practitioners and a number of representatives of the AMA.
    Our contractor held the meeting at our urging to allow an 
opportunity for representatives of physicians and other practitioners 
to raise issues and concerns regarding methodological issues which 
effect Medicare payment for practice expenses. Among other issues, our 
contractor discussed:
    + Improving collection reliability of practice expense data from 
the SMS survey including data on practitioners not represented in the 
SMS survey.
    + Developing and evaluating criteria for use of supplemental data 
collection efforts.
    + Defining and validating the number of hours physicians spend in 
patient care activities.
    + Appropriateness of crosswalk between HCFA and AMA specialty 
designations.
    Our contractor discussed concerns related to these and other issues 
and facilitated a discussion among the

[[Page 59389]]

participants of potential ways of improving the top down methodology.
    <bullet> Submitted their first draft report, Practice Expense 
Methodology, dated September 24, 1999, containing an analysis and 
recommendations concerning SMS and other practice expense data. This 
report has been placed on HCFA's homepage under the title ``Lewin Group 
Report'' for anyone interested in reviewing it. (Access to our homepage 
was discussed under the ``Address'' section earlier.)
    Comment: We have received several comments regarding the effect of 
the step in our methodology that weight-averages all scaled specialty-
specific dollar inputs for each CPT code to arrive at a single value 
for each service. Commenters claim that this step can cause 
redistributions in the specialty-specific practice expense pools and, 
in some cases, can cause anomalies in the payment for certain services. 
Several commenters indicate that payments for some nerve block 
injections will rise by several hundred percent in the office. The 
American Society of Anesthesiologists commented that the values for 
some of the nerve block injections make no sense in the real world and 
urged us to allow the refinement process to work before taking action 
with respect to in-facility practice expense values. Some commenters 
objected to the proposed increase in payments for outpatient E/M. A 
number of commenters noted that office-based E/M services will increase 
substantially under the proposed policy. The Society for Vascular 
Surgery objected to the proposed 4 to 7 percent increase in total RVUs 
for outpatient E/M. They indicated that the additional payments for an 
intermediate office visit (CPT code 99213) alone will increase 
$312,000,000 which will require further adjustments to the CF. The 
American College of Cardiology recommended that we should implement a 
way to reduce or eliminate the ``pool leakage'' for specialties such as 
cardiology that have a high practice expense per hour. Such high 
practice expense specialties can lose a portion of their pool to 
specialties with lower expenses when the costs are averaged. Other 
commenters also suggested that we should eliminate ``pool leakage.'' 
The American Association of Neurological Surgeons (AANS) made a similar 
comment regarding ``pool leakage.'' AANS asserted that pool leakage is 
unfair and violates that BBA mandate to develop a system that reflects 
physicians' actual practice expenses.
    The Society of Thoracic Surgeons (STS) commented that, because of 
the dropping of clinical staff time in the facility setting from the 
CPEP data, the values for cardiac and thoracic surgical procedures are 
reduced while values for cardiac and thoracic office visits are 
increased. The commenter asserted that the effect of this 
``misallocation and subsequent weighted-averaging of E/M services 
across specialties is a virtual draining and redistribution of cardiac 
and thoracic surgery practice expenses to other specialties.'' The 
commenter further stated that other anomalies demonstrate the 
fallibility of this approach. For example, the scaling factors for 
clinical staff for thoracic and cardiac surgery become 1.75 and 2.2 
respectively, which are far from the norm for other specialties. As a 
result of these high scaling factors, the values in the cardiac and 
thoracic surgery practice expense pools for E/M services are increased 
while the values for these same services are decreased in the internal 
medicine practice expense pool. Cardiac and thoracic surgery have a 
value for an E/M service which is about six times the values for these 
services in the internal medicine practice expense pool. Finally, these 
changes in the direct cost values for E/M services also cause the 
indirect practice expense for these services to increase in a distorted 
fashion.
    Response: We are required by statute to have a single payment for 
each service, regardless of the specialty performing that service. It 
is for this reason that we adopted the weight averaging of services. 
Under the top-down methodology, we calculate an ``SMS'' pool using the 
practice expense per hour from the AMA's SMS as follows:

SMS Pool=Practice expense per hour * time per procedure * allowed 
services.

    This is summed by specialty across all procedures a specialty 
performs.
    We then calculate a ``CPEP'' pool using the estimates of direct 
expenses for specific procedures by the CPEP:

CPEP Pool=Practice Expense for a procedure (as estimated by the CPEP) * 
allowed services.

    This is summed across all services a specialty does.
    There is a separate pool for each category of direct costs 
(clinical labor, supplies and equipment). The SMS pool is divided by 
the CPEP pool for each specialty to produce a scaling factor which is 
applied to the CPEP direct cost inputs. This process is intended to 
match costs counted as practice expenses in the SMS survey with items 
counted as a practice expense in the CPEP process. Ideally, all of the 
scaling factors would equal 1.0, which would suggest that practice 
expenses are being identified consistently within each pool. If the 
scaling factor is more than 1.0, the CPEP inputs for each specialty are 
increased prior to the weight-averaging step. If the scaling factor is 
less than 1.0, the CPEP inputs for each specialty are decreased prior 
to the weight-averaging step. If the scaling factors all equaled 1.0 or 
alternatively were within a narrow range of each other, the weight 
averaging step will have little impact on the final value for a 
procedure relative to the original CPEP estimates. Thus, the ideal is 
that the scaling factor equals 1.0.
    Alternatively, if the scaling factors among different specialties 
are equal to each other, each specialty specific value that goes into 
the weight-averaging step would be the same. Since the scaling factors 
tend to be less than one for the direct inputs, most specialties 
overestimated practice expenses in the CPEP relative to how the costs 
were estimated in the SMS survey. In the refinement process, one of our 
key interests is ensuring that there is consistency between costs 
counted as practice expenses in the SMS survey and costs which were 
counted as practice expenses in the CPEP process. To the extent this 
occurs and we can obtain reliable information on physician time related 
to performing individual procedures, we believe that scaling factors 
should approach 1.0 and these refinements would be an improvement in 
the top-down methodology. In the interim, we believe the policies in 
this final rule are an improvement in the top-down methodology.
    The scaling factors for clinical labor costs for most specialties 
move closer to 1.0 in this final rule. The scaling factor for all 
physicians increased from 0.54 to 0.72 in this final rule relative to 
last year's final rule. For a few specialties, the scaling factor 
deviates sharply from 1.0 as a result of these new policies. For 
instance, the scaling factor increased from 0.40 to 2.42 for thoracic 
surgery, 0.36 to 3.07 for cardiac surgery, and 0.51 to 5.72 for 
anesthesiology. Since the scaling factors for most specialties and for 
all physician pools move closer to 1.0, we do not believe that 
significant changes in policy related to the top-down methodology such 
as the ones suggested by commenters are necessary. We continue to 
believe the refinement process should be used to obtain better 
information on physician practice expenses to further improve the top-
down methodology. We do not believe that results for a few specialties 
that deviate from the general trend indicate a significant problem with 
the top-down methodology. In fact, it is possible that the increase in 
the scaling factor that

[[Page 59390]]

results from changes in this final rule is due to an overstatement of 
SMS costs on practice expense per hour rather than an understatement of 
the CPEP pool. For instance, if a physician brings nonphysician 
practitioners to the hospital, whose services are charged for 
separately, the expenses associated with these practitioners generate 
physician revenue and should be considered as a part of the physician 
work RVU. Indeed, the STS indicated in its comments that thoracic 
surgeons frequently bring physician assistants to the operating room to 
perform duties typical of ``the first assistant-at-surgery.'' In this 
situation, the service of the assistant-at-surgery would be separately 
billable and would generate additional revenue to the physician. If it 
is commonplace for thoracic surgeons to bring physician assistants to 
the hospital for whose services Medicare may make an additional 
payment, it would be appropriate to examine whether expenses for 
physician assistants are included as a practice expense in the SMS and 
thus whether the practice expense per hour is overstated.
    Similarly, we believe it is possible that anesthesiologists 
responding to the SMS survey may have counted certified registered 
nurse anesthetists as a clinical practice expense even though they may 
receive an additional payment for the service of a CRNA providing 
anesthesia services during a surgical procedure. We do not know that 
this is the case but are instead indicating that this is an avenue for 
further research to explain the very high scaling factor for 
anesthesiology.
    We acknowledge that payments under our rule will largely decline 
for services which are predominantly performed in a facility and which 
had substantial inputs for clinical staff. However, we do not believe 
that this is illustrative of a problem with the top-down methodology. 
Indeed, as we explained above, we believe our policies are an 
improvement in the top-down methodology with a few exceptions.
    With respect to some of the code level results that were pointed 
out by commenters, we are concerned that there are a few instances 
where the scaling and weight-averaging methodology could cause changes 
in payment or redistributions that do not reflect the relative costs of 
performing certain services. These occur for a few services that are 
performed predominantly by a specialty whose scaling factor deviates 
sharply from 1.0. For instance, as indicated by some commenters, 
practice expense RVUs for pain management injection services would have 
increased substantially for reasons unrelated to the relative resources 
used in providing the service. This occurs because of the very high 
scaling factor for anesthesia that is applied to these services. As 
some commenters have noted, including anesthesiologists themselves, 
these values ``make absolutely no sense in the real world.'' For this 
reason, as an interim measure until refinement is completed, we will 
use the average scaling factor in place of the specialty specific 
scaling factor if the specialty specific scaling factor exceeds the 
average scaling factor by more than 3 standard deviations. This change 
will largely result in a reduction in the enormous increase in some of 
the pain management services from the proposed rule as a result of a 
different scaling factor being used for anesthesiology. Although these 
services still appear to have higher RVUs, the changes do not seem so 
extreme. We believe this change is warranted as an interim measure in 
situations where there is an extreme deviation in specialty scaling 
factor relative to the average scaling factor. As we have indicated, 
this interim measure is being taken to avoid extremely anomalous 
payments for certain services until we can further identify the reason 
for aberrant scaling factors.

SMS Data

    As we explained in the July 1999 proposed rule we have received 
comments from a large number of medical specialty societies concerning 
the SMS data and the parameters under which we would accept 
supplementary data or new data. We identified as the top priority of 
the technical contractor the determination of (1) the circumstances, if 
any, under which we should consider use of survey data other than the 
SMS data; (2) the appropriate form of these other surveys; and (3) how 
these surveys or future SMS surveys can be appropriately validated for 
our use.
    Comment: Many organizations reiterated the concerns expressed in 
previous comments that their services or their actual costs are not 
adequately represented in the SMS data or, in the case of non-physician 
specialties, are not represented at all. Organizations representing 
emergency medicine, vascular surgery, podiatry, and optometry requested 
that we use supplementary data already collected for their specialties. 
Two organizations representing cardiology recommended that we use the 
most current SMS data in developing practice expense values for the 
year 2000. One of the comments states that a review of the most recent 
data indicates that no ``gaming'' took place in the responses to this 
new SMS survey, once reported practice expenses have only grown at 
about the rate of medical inflation.
    Two primary care specialty societies support our decision not to 
use supplementary data at this time and instead to use our outside 
contractor to develop reliable and standardized criteria for accepting 
and validating additional specialty-specific data.
    Response: We are still in the process of developing the general 
criteria for the use of supplementary practice expense surveys and more 
recent SMS survey data that could be used in the calculation of the 
specialty-specific practice expense per hour. We have made this issue 
the top priority for our methodological contractor. As stated above, 
our contractor has already met with AMA staff on several occasions to 
discuss the future use of the SMS survey, in particular the design, 
structure and potential use of the new practice-level SMS survey. Our 
contractor also held a meeting on this issue to which all major 
national specialty societies were invited in order to obtain input on 
concerns relating to the AMA SMS survey and other supplementary survey 
data. As mentioned earlier, we have just received the first draft 
report with our contractor's findings and recommendations on the 
criteria for acceptance of future data. We have not yet had the 
opportunity to review closely this report and its recommendations. 
Therefore, we are not yet ready to determine which already submitted or 
potential additional survey data would be acceptable, although we have 
previously stated our preference for future surveys to be carried out 
on a multi-specialty level, as is the SMS. We are pleased that, 
according to the comment mentioned above, the results in general from 
the latest SMS survey may not have differed significantly from the data 
that are used for this rule.
    Comment: The Society of Thoracic Surgeons (STS) had commented on 
last year's proposed rule (63 FR 30817) that the sample size in the SMS 
surveys used by us for cardiac, thoracic and vascular surgery was 
insufficient for use calculating accurate practice expenses for these 
specialties. The STS submitted a supplementary survey with these 
earlier comments that had a larger sample size and that showed a higher 
practice expense for cardiac and thoracic surgery. The comments stated 
that STS contracted with the AMA in April 1998, before it was known 
that the SMS data would be used in the determination of practice 
expense, to conduct an SMS-clone oversample. This survey showed a 
practice expense per

[[Page 59391]]

hour of $75.90, rather than the $63.80 from the 1994 through 1996 data. 
The STS requests that we use this later SMS data in the calculation of 
cardiac and thoracic surgery's practice expense per hour.
    Response: We believe that the STS survey is unique among all 
specialty surveys that we have received in that it both appears to be a 
clone of the SMS surveys already used in our calculations and was 
undertaken before our top-down methodology was proposed. Therefore, we 
asked our contractor to evaluate and advise us on the utility of 
considering the STS survey at this time. Our contractor met with the 
STS, discussed the issue with SMS technical staff and submitted a 
detailed questionnaire to STS about the methodology used in the survey.
    In the draft report on practice expense methodology mentioned 
above, our contractor discusses the standards that could be applied to 
supplementary data provided by specialty groups. The draft report 
suggests that supplemental data collection efforts: draw the sample 
from the AMA Physician Masterfile, when possible; survey a large enough 
number of individuals to assure an adequate number of useable 
responses; are based on SMS survey instruments and protocols, including 
administration and follow-up efforts; use the same contractors as SMS 
and be fielded during the same time-frame; consistently define, through 
the SMS and all additional surveys, practice expense and hours spent in 
patient care; give responsibility for data editing and analysis to the 
AMA's SMS project team.
    In a memo to us accompanying the above mentioned draft report, our 
contractor stated: ``We believe that the survey conducted by the 
Society of Thoracic Surgeons meets the standards we have set forth in 
the paper. Therefore, it is our recommendation that HCFA incorporate 
their supplemental survey data into its calculation of practice expense 
RVUs.'' We agree with this recommendation and will use the survey 
submitted by STS in the calculation of thoracic and cardiac surgery's 
practice expense per hour.
Result of Evaluation of Comments
    We will use the survey submitted by STS in the calculation of 
thoracic and cardiac surgery's practice expense per hour. We 
recalculated the practice expense per hour for cardiac and thoracic 
surgery by weight-averaging the new survey information with practice 
expense SMS survey data from 1995 and 1996. Consistent with other 
specialty information we deflated values to reflect 1995 costs. We used 
the number of survey responses adjusted for non-response as the 
weights. In addition, we did not include the responses from vascular 
surgeons in the calculations for thoracic and cardiac surgery because 
we are now crosswalking vascular surgery to all physician practice 
expense per hour. This produced the following practice expense per 
hour:

----------------------------------------------------------------------------------------------------------------
       Clinical Labor                  Supplies                    Equipment           Clerical, Office & Other
----------------------------------------------------------------------------------------------------------------
                $19.50                        $1.93                       $2.34                      $48.20
----------------------------------------------------------------------------------------------------------------

Adjustment to Direct Patient Care Hours for Pathology

    In the November 1998 final rule, we made adjustments to the direct 
patient care hours for pathologists to account for the fact that time 
spent performing autopsies and supervising technicians are Part A 
services. The pathologists had also requested that we eliminate some of 
the time for ``personally performing nonsurgical laboratory procedures 
including reports'' because this time also includes some part A 
services. We did not make this adjustment at the time because we did 
not have appropriate data. We now have the necessary information and in 
the July 1999 rule we proposed to remove three hours from the total 
patient care hours for pathologists.
    Comment: The College of American Pathologists, as well as 
individual commenters, supported the proposal to eliminate three of the 
6.77 hours of pathology SMS time for performing nonsurgical laboratory 
procedures. The AMA also supports this proposal because the SMS survey 
shows that 45 percent of the 6.77 weekly hours spent on performing 
these procedures is non-reimbursable under the physician fee schedule.
    One surgical organization expressed concern that this adjustment 
will be made at the expense of all other specialty pools. Other 
commenters contended that many other physicians, besides pathologists, 
spend time in direct patient care activities for patients which is not 
separately billable including phone calls, waiting time, ``hallway'' 
patient consultations and ``stand-by'' time, or uncompensated care. Two 
commenters argued that specialties with high patient care hours are not 
treated fairly in the calculation of practice expense RVUs and ask that 
we consider removing such time from the SMS data for surgical 
specialties as well. In a similar comment, an anesthesiology society, 
though not opposed to the proposed pathology adjustment, urged its 
extension to other specialties as part of an across-the-board 
refinement of SMS-generated values.
    Response: We believe that the data presented by the College of 
American Pathologists, in conjunction with the AMA, is persuasive that 
three hours should be eliminated from the SMS direct patient care 
weekly hours for pathology. Therefore, we will make the adjustment at 
this time. However, though we do believe that pathology may differ from 
most specialties with regard to their split between Part A and Part B 
payments, we also agree that the other commenters raised a valid point 
concerning other specialties' non-billable hours that may be 
inadvertently captured in the SMS direct patient care hours data. It is 
because of this concern that we included the issue of the SMS patient 
care hours in the scope of work for our contractor. Over three pages in 
the draft report from our contractor, which is referenced above and 
which is available on our home page, are dedicated to this issue. The 
report points out that, if there is a discrepancy between the 
activities captured in the code-specific physician time values in the 
Harvard and RUC database and the activities that physicians considered 
in responding to the patient care hour question in the SMS survey, the 
practice expense pools could be biased in either direction. We hope to 
discuss recommendations on improving the accuracy of the patient care 
hours data in our next proposed rule.
    Result of Evaluation of Comments: We will eliminate 3 hours from 
pathology's direct patient care hours for ``personally performing 
nonsurgical laboratory procedures including reports'' because this time 
includes some part A services.

CPEP Data

Response to Comments on Egregious CPEP Errors and Anomalies/RUC 
Recommendations
    As we stated in last year's final rule, comments were submitted on 
the CPEP inputs for about 3000 CPT codes. In response to the July 1999 
proposed rule,

[[Page 59392]]

a few additional comments on CPEP inputs have been received, most of 
them reiterations of comments previously submitted. In this year's 
proposed rule we stated that we plan to wait until we receive 
recommendations from the RUC before making significant changes to most 
code-specific inputs. The PEAC held its organizing meeting in February 
1999 and met again in April to begin the task of refining the code-
specific CPEP data. The PEAC and RUC then met at the end of September 
to further develop the approach to the refinement of the CPEP data and 
as a result of this meeting the RUC has forwarded recommendations to us 
on 65 CPT codes. The November 1998 final rule also pointed out that we 
had received comments on a number of egregious errors and anomalies 
that we would address in future rulemaking. Our responses to the 
comments on the errors and anomalies and to the RUC recommendations are 
discussed further below.
    Comment: One organization representing pediatric services supports 
our decision to wait for RUC recommendations on code-specific direct 
practice expense inputs, while an ophthalmology subspecialty society 
strongly recommends adopting the CPEP input changes suggested by 
ophthalmology groups now, without waiting for RUC recommendations. A 
primary care group recommended that we publish the CPEP errors and 
anomalies for review before we correct them in this final rule. A few 
other organizations suggested further changes to the RUC recommended 
inputs or changes in inputs for codes not yet reviewed or not agreed to 
by the PEAC and RUC.
    Response: We believe that, particularly at these first steps in 
refining the CPEP inputs, it is preferable to have a multi-specialty 
agreement on changing these data, rather than accepting the 
recommendations of a single group without the level of peer input that 
a group like the PEAC and RUC can afford. That is the major reason we 
have chosen to wait for the RUC recommendations before refining most of 
the CPEP data and why, at this point, we are not addressing the few 
additional changes suggested by commenters to the July 1999 proposed 
rule. The commenters pointed out at the same time that there are some 
obvious errors or anomalies when the corrective action is of a more 
technical nature. Therefore, we believe that it will be helpful to the 
refinement process to make these corrections at this time.

Comments on Egregious Errors and Anomalies

    Outlined below are comments and our responses concerning those 
anomalies and errors for which corrections could easily be determined. 
It is important to note that while we are making some revisions now, 
all practice expense inputs for these codes are still subject to 
further comment, our refinement and potential PEAC and RUC review and 
action. In addition, we have made minor adjustments to the CPEP supply 
list by deleting a few supplies either because of the difficulty in 
measuring their use, or because the supplies were not fully used up 
during a single procedure and do not fit the definition that we use for 
direct supply costs. Therefore, the costs for tissues, biohazard bags 
and Lysol spray will be treated as indirect costs. This change should 
not affect the practice expense RVUs for any service, but it will help 
simplify the refinement of the supply inputs.
    Comment: The American Academy of Orthopaedic Surgeons and the 
American College of Surgeons both commented that we should delete 
separately billable casting materials from the CPEP inputs.
    Response: Casting materials are bundled into the payment for the 
initial fracture management procedures and separate billing for the 
supplies is not allowed under Medicare billing rules. Therefore, for 
these procedures, the casting supplies should remain as inputs. 
However, for casting and strapping codes CPT codes 29000 through 29750, 
casting supplies can be billed for separately, and including the 
supplies in the CPEP data would lead to double counting. Therefore, we 
have deleted the fiberglass roll, cast padding and cast shoe from the 
list of supplies for these procedures.
    Comment: The American College of Surgeons commented that we should 
delete Romazicon (used to reverse conscious sedation) from supplies 
wherever it appears since it is not typically used.
    Response: This comment brought to our attention that many drugs in 
addition to Romazicon are included in the supply lists of many 
procedures. Most drugs are separately billable and are not paid under 
the physician fee schedule. Therefore, in keeping with our general 
policy to retain in the CPEP data only those inputs that would be paid 
as practice expense under the physician fee schedule, we have deleted 
from the supply lists all those drugs that would be billed separately, 
which would include Romazicon. We have also deleted self-administrable 
drugs that are not payable under Medicare. The drugs that have been 
removed are: fentanyl, demerol injection, versed injection, valium 
injection, ativan syringe, bacitracin ointment, neosporin, benadryl, 
steroid kenalog, IV fluids, such as saline in various quantities, D5W, 
droperidol, romazicon, narcan, ancef, nubain, sodium chloride 
injection, lasix, brevital, decadron, esmolol IV, metopropol IV, sodium 
amobarbital, tylenol and ibuprofen.
    Comment: The American College of Surgeons commented that the supply 
lists for the insertion of bile duct catheters (CPT code 47510) and 
stents (CPT code 47511) include an extensive and costly list of 
supplies used to perform the procedure in the out-of-office setting. 
However, these supply costs are covered by the facility and therefore 
should be removed from the list of supplies for these codes.
    Response: We agree and note that the supplies listed in the 
facility setting appear to be connected with the performance of the 
procedure and will be included in the payment to the facility. 
Therefore, we have removed these supply costs from the data. However, 
since this is a 90-day global code and would be expected to have post-
procedure visits in the office, we would welcome comments about 
appropriate supplies for the office visits during the global period. In 
addition, one CPEP panel listed 210 minutes of angio technician time in 
the post-procedure period. Because the services of an angio tech would 
only be needed during the procedure itself and not during the post-
procedure office visits, we are deleting this time.
    Comment: The American College of Surgeons commented that the supply 
costs for the procto-sigmoidoscopies and flexible sigmoidoscopies are 
significantly higher than the supply costs for colonoscopy codes. They 
attributed this rank order problem partially to the inappropriate 
inclusion in the supply list of an expensive lumen tube for the 
sigmoidoscopy codes. They asserted that a lumen tube is not a typical 
supply for sigmoidoscopy codes and recommended the removal of this 
supply from these codes.
    Response: We are in agreement with the College of Surgeons that the 
lumen tube is not a typical supply for these procedures and are 
therefore deleting this supply from the sigmoidoscopy codes 
(specifically: CPT codes 45300, 45303, 45305, 45307, 45308, 45309, 
45315, 45317, 45320, 45330, 45331, 45332, 45333, 45338 and 45339).
    Comment: The American Academy of Ophthalmology and the Macula, 
Retina and Vitreous Societies questioned the

[[Page 59393]]

prices identified in the CPEP data for the superblade. They indicated 
the price for the superblade should be $1.00 instead of the $30 listed 
in the Abt pricing file.
    Response: We have verified this lower price and will make the price 
change to the CPEP database.
    Comment: The American Academy of Ophthalmology, the American 
Optometric Association and the American Society of Cataract and 
Refractive Surgery stated that the CPEP data included a discrepancy in 
the supply costs for CPT code 92012 (eye exam, established patient, 
intermediate). The supply costs reflected were much higher than supply 
costs for the other eye exam codes. They felt the supplies for the eye 
exam codes are essentially the same and recommended that the supply 
values for CPT code 92012 should be changed to be consistent with the 
value used for the other codes in the series.
    Response: We have reviewed the CPEP data and made revisions to the 
supplies used for CPT code 92012 so that these supplies are consistent 
with those for other eye exam codes. (We removed as suggested: patient 
education booklet; fox shield; patch, eye; bleach; gonisol; contact 
lens solution; tape, VHS).
    Comment: The Macula, Retina and Vitreous Societies believed the 
price allocated for an 18 gauge filter needle, (listed at $46) was in 
error. They recommended a price of $1 for this supply. They initially 
also questioned the cost allocated for color film, but in later 
discussion agreed that the list price of $.85 is reasonable.
    Response: We agree that the price allocated for the 18 gauge filter 
needle is in error and after reviewing supply catalogs believe that the 
price suggested by the commenter ($1.00) is reasonable. We will revise 
the CPEP data accordingly.
    Comment: The American College of Cardiology pointed out that a cast 
cutter is listed in the supply list for two cardiovascular 
rehabilitation procedures (CPT codes 93797 and 93798) and should be 
removed.
    Response: The cast cutter has been deleted from the supply list for 
these codes.
    Comment: The American Academy of Neurology commented that CPT code 
62270, spinal fluid tap, diagnostic and CPT code 62272, drainage of 
spinal fluid, are erroneously listed as having no supplies. A short 
list of suggested routine supplies was included with the comment.
    Response: We believe that the list is appropriate and have included 
these supplies in the CPEP inputs for these services.
    Comment: The Joint Council of Allergy, Asthma and Immunology 
(JCAAI) pointed out that no supplies were allotted to CPT 95070, 
bronchial allergy tests, though other codes in the family did have 
supplies listed.
    Response: We agree that the CPEP panel left out the supplies that 
should have been assigned to CPT 95070, and we found that this is also 
true for CPT 95071. Therefore, until the inputs for these bronchial 
allergy test codes can be refined, we are assigning to them the same 
supplies that are listed for the other codes in the family, such as CPT 
code 95065, nose allergy test, except that, because CPT codes 95070 and 
95071 are inhalation tests, we are omitting the band aid, swab, gauze, 
tape and syringe included in other codes in the family.
    Comment: JCAAI also commented that there were rank order anomalies 
for the venom immunotherapy codes (CPT codes 95145 through 95149), 
because the needed antigens were not included in the supplies. The 
comment lists the antigens (adjusted for a single 1 cc dose) that are 
necessary for each service: CPT code 95145 requires a single venom; CPT 
code 95146 requires two venoms; CPT code 95147 requires three venoms; 
CPT code 95148 requires a three vespid mix plus a single venom; CPT 
code 95149 requires a three vespid mix, a single venom and a honey bee 
venom.
    Response: We agree that these venom antigens should be added to the 
supply lists for these codes and have made the necessary adjustments.
    Comment: The American College of Obstetrics and Gynecology (ACOG) 
commented that the CPEP inputs for CPT code 58350, reopen fallopian 
tube, show time for angiography supplies although this is not an 
angiography procedure.
    Response: Although the comment stated that the angiography supplies 
are in CPT code 58350, they actually are present in CPT code 58340, 
catheter for hysterography,(which ACOG states is overvalued in 
comparison to CPT code 58350). Consistent with the comment, we are 
deleting the angiographic vessel dilator and the vascular sheath. We 
also noticed that CPT code 58340 shows 63 minutes of angio technician, 
which we are deleting as this is not an angiography procedure. In 
addition, CPT code 58340 has 175 minutes of RN time in the intra-period 
in the non-facility setting, while CPT code 58350 shows only 63 minutes 
RN/MA in this period. In line with ACOG's comment that CPT code 58340 
is overvalued, we are changing the intra time for CPT code 58340 to 63 
minutes of RN/MA clinical time to match the input for CPT code 58350.
    Comment: Raytel Cardiac Services were concerned that data on 
supplies and clinical staff for arrhythmia monitoring services were 
based on only one monitored event during a 30-day period. The comment 
requested that we check for the appropriateness of the CPEP supplies 
and staff time for these services.
    Response: The CPEP panel stated that there were no clinical 
supplies associated with these monitoring services, and the commenter 
did not supply any information regarding the clinical staff duties 
required for these codes. Therefore, we have no basis for making any 
changes to the inputs for these monitoring services at this time, but 
would welcome further information on this issue from additional 
comments or from the PEAC and RUC.
    Comment: The American Academy of Dermatology commented that the 
actinotherapy and photochemotherapy CPT codes 96900, 96910, 96912 and 
96913 were grossly undervalued because the CPEP equipment data do not 
include the costs of a photochemotherapy unit. The comment stated that 
these units also use almost 200 lamps a year.
    Response: It is clear that a photochemotherapy unit was omitted 
from the CPEP data in error, because these procedures could not be 
performed without this equipment. We will add the photochemotherapy 
unit and lamps to the CPEP database.
    Comment: The American College of Radiology pointed out that many of 
the cardiovascular nuclear medicine codes had two types of cameras 
assigned in the CPEP files, but that only one camera is needed.
    Response: We found that almost all of the nuclear medicine codes 
(CPT codes 78000 through 78999) had two or three cameras listed. We 
have included only one camera for each of these codes as suggested by 
the commenter.
    Comment: The American Urological Association commented that the 
cost of a lithotriptor is not included in the equipment in the in-
office setting for CPT code 50590, extracorporeal shock wave 
lithotripsy.
    Response: The CPEP panel only evaluated inputs for this procedure 
in the facility setting. However, we assigned practice expense RVUs to 
both settings; the in-office inputs were crosswalked from the facility 
setting. As a result, there is no procedure-specific equipment listed 
in the office setting. We are adding a lithotriptor as requested by the 
commenter.

[[Page 59394]]

    Comment: The College of American Pathologists (CAP) commented that 
the price of $1,481 in the CPEP data for a compound microscope was 
insufficient to cover the cost of the microscope used for pathology 
services. CAP submitted a quotation from a pathology equipment supplier 
which listed the cost of a pathologist's professional microscope at 
$11,600.
    Response: The price submitted by CAP appears more reasonable to us 
than the original CPEP price, and we will use the new price for the 
final rule, subject to later review.
    Comment: The American Association of Neurological Surgeons 
recommended that all receptionist time listed in the clinical 
activities field in the CPEP database be deleted from the labor file, 
since this should be indirect expense.
    Response: We agree and have deleted all administrative staff types 
from our current CPEP database since all administrative staff costs are 
included in our indirect expense pool.
    Comment: The American Academy of Orthopaedic Surgeons pointed out 
that the CPEP panel did not assign direct inputs to CPT code 27740, 
thus creating an anomaly in the family of codes 27730 through 27742.
    Response: The CPEP panel only included inputs for CPT code 27740 in 
the facility setting. We are adding the same clinical staff, supplies 
and equipment inputs to CPT code 27740, repair of leg epiphyses, in the 
office setting as are assigned to CPT code 27730, repair of tibia 
epiphyses. This should help eliminate this anomaly.
    Comment: The American Academy of Dermatology (AAD) commented that 
there are rank order anomalies in the family of excision of malignant 
lesions, CPT codes 11600 through 11606.
    Response: We examined these CPT codes and noted that 11601, 11603 
and 11604 were missing routine supplies in the office setting and 11601 
had no supply inputs in the facility setting. We are including the same 
supply inputs as are assigned to 11600, which should bring this code 
family back in line.
    Comment: AAD commented that there is a lack of logical progression 
in the values for lesions of different sizes in the CPT code series 
11400, excision of benign lesions, and 17260, destruction of malignant 
lesions.
    Response: We determined that the 17260 series appeared to have a 
logical progression in the proposed rule. However, CPT codes 11403, 
11404, 11423, 11424, 11444 have supplies missing in the office setting. 
These services should have at least the same supplies as their 
``parent'' CPT codes, i.e., CPT codes 11403 and 11404 should have the 
same supplies as CPT codes 11400; CPT codes 11423 and 11424 the same as 
11420; and CPT code 11444 the same as 11440. We are including these 
missing supplies.
    Comment: The American College of Chest Physicians and the National 
Association for Medical Direction of Respiratory Care commented that 
the practice expense RVUs for complex pulmonary stress testing, CPT 
code 94621, are lower than those for simple pulmonary stress testing, 
CPT code 94620. The commenter requested that this anomaly be corrected.
    Response: We agree that this anomaly should be corrected. As an 
interim correction until actual practice expense direct inputs can be 
developed for these services, which were not evaluated by the CPEP 
panels, we have crosswalked the supply and equipment inputs for CPT 
code 94621 from CPT code 94620, but have crosswalked the clinical staff 
time from the higher of the two CPEP panels' assigned clinical staff 
time for CPT code 93015, cardiovascular stress test.
    Comment: The American College of Nuclear Physicians/Society of 
Nuclear Medicine commented that CPT code 78494, heart image spect, 
should be referenced to CPT code 78464, heart image,(3D) single, and 
CPT code 78588, perfusion lung image, should be referenced to CPT code 
78585, Lung V/Q imaging.
    Response: We agree that these crosswalks are appropriate, and we 
have made the changes.
    Comment: The American College of Obstetrics and Gynecology 
recommended the following crosswalk changes: CPT code 57308, fistula 
repair transperineal, should be crosswalked to either CPT code 57305, 
repair rectum-vagina fistula, or CPT code 57307, fistula repair and 
colostomy; CPT 57531, removal of cervix radical, should be crosswalked 
to CPT code 58210, extensive hysterectomy; CPT code 59866, abortion 
should be crosswalked to CPT code 59000, amniocentesis or CPT code 
59015, chorion biopsy. The values for the CPT vaginectomy codes 57107, 
57109, 57111 and 57112 are too low in comparison to other gynecologic 
oncology procedures. The commenter recommends that we use CPT code 
58210, radical abdominal hysterectomy, as a crosswalk for these four 
codes, since the clinical staff time, supplies and equipment are 
similar.
    Response: We will crosswalk CPT codes 57308 to 57305, 57531 to 
58210, and 59866 to 59000 as requested. Due to the clinical similarity 
of the procedures and the comparable follow up care, we are 
crosswalking the CPEP inputs from CPT code 57110 to CPT codes 57107 and 
57111. For similar reasons we are crosswalking the CPEP inputs from 
58200 to CPT codes 57109 and 57112.

RUC Recommendations on CPEP Inputs

    The AMA forwarded for our consideration the direct input 
recommendations for 65 codes originally reviewed by the PEAC and 
subsequently approved by the RUC. The RUC states that in the majority 
of cases, the PEAC examined all of the direct inputs for a particular 
code, but that in several instances, the PEAC examined only a subset of 
the direct practice expenses. The comment also explains that, in those 
instances where the RUC approved crosswalking direct impact data to 
multiple codes, those crosswalked codes are listed. Several 
organizations representing neurology, ophthalmology, urology, 
dermatology and other specialties requested that we use these PEAC/RUC 
recommended refined inputs to calculate the practice expense RVUs for 
the year 2000 physician fee schedule.
    Response: We have reviewed the submitted codes and discuss our 
specific responses to each of them below. We appreciate the work of the 
PEAC and RUC in developing the recommendations on these 65 codes. From 
all of our previous experience in both the CPEP and validation panels, 
it is a very difficult, time-consuming and complex process to deal with 
the amount of detail required to arrive at reasonable inputs for a 
specific procedure. In addition, it takes time for all participants to 
achieve a level of comfort with our methodology.
    We are accepting most of the recommendations with the exceptions 
noted below, but some of the inputs may still need further review. It 
does appear that in reviewing the inputs more attention was 
understandably paid to the changes proposed by the presenting groups 
than to the original CPEP data that we believe could still need 
refining. For example, the quantity of supplies associated with many 
procedures would appear to need further discussion with a view to 
ensuring appropriate standardization among different services. Another 
problem lies in the inconsistent assignment in the CPEP data of 
equipment to either the procedure-specific or overhead equipment 
categories. This process, we acknowledge, has been hampered by the lack 
of clear definitions which we hope to correct in the near future.
    We would also appreciate more comments and discussion about what 
constitutes appropriate clinical staff

[[Page 59395]]

duties and times during the pre-service period. As most of the 65 codes 
are related to other codes that have not yet been reviewed by the PEAC 
and RUC, we are recommending that, as the group gains more experience 
and reviews related codes, this group of codes be reassessed to see if 
any further adjustments in inputs are warranted. As an alternative, we 
could propose our own changes to these codes in a future proposed rule.
    As discussed above, we have deleted a few minor supplies from the 
overall CPEP supply list either because of the difficulty in measuring 
their use or because the supplies were not fully used up during a 
single procedure. Therefore, tissues, biohazard bags, and Lysol spray 
have also been deleted from the supplies of these 65 procedures, when 
applicable. We also have deleted all separately billable and self-
administrable drugs and casting supplies as described earlier. In 
addition, consistent with our policy excluding the CPEP inputs for 
clinical staff services for a facility patient, all clinical staff time 
in the out of office intra-service period has been eliminated.
    Other adjustments that we have applied to these 65 codes, when 
relevant, are as follows: We standardized all exam table paper to a 
quantity of 7 feet per visit, as that appears to be the most common 
quantity reported. We adjusted the quantity of patient gowns and pillow 
cases and other supplies to be consistent with the number of visits. We 
deleted items that could be considered office supplies or office 
equipment. We did not add any suggested equipment that was costed at 
less than $500, in order to fit the equipment definition used by Abt. 
Because we believe that betadine is only used on the day of a 
procedure, we deleted it from post-procedure visits.
    Listed below are the 65 codes on which we received RUC 
recommendations. We have noted any revisions, other than those 
specified above, that we have made to these recommendations. The RUC 
recommendations are available on our home page, as discussed earlier. 
Access to the homepage is discussed in the introductory section of this 
regulation under ADDRESS.

CPT code 17000, Destruction by any method, including laser with or 
without surgical curettement, all benign or premalignant lesions other 
than skin tags or cutaneous vascular proliferate lesions, including 
local anesthesia; first lesion

    The RUC forwarded a recommendation for supplies only. We accepted 
their recommendation but deleted what appeared to be duplicated gauze 
supplies.

CPT code 17003, Destruction by any method, including laser with or 
without surgical curettement, all benign or premalignant lesions other 
than skin tags or cutaneous vascular proliferate lesions, including 
local anesthesia; second through 14 lesions

    The RUC forwarded a recommendation only on the supplies for this 
service. This is an add-on code, for which there would be few added 
supplies since most are contained in the base code. We adjusted the 
supply list accordingly. In comments, the society representing 
dermatologists had indicated that this CPT code appeared to be over-
valued in comparison with other CPT codes in the family.

CPT code 17004, Destruction by any method, including laser with or 
without surgical curettement, all benign or premalignant lesions other 
than skin tags or cutaneous vascular proliferate lesions, including 
local anesthesia; 15 or more lesions

    The RUC forwarded a recommendation only on the supplies for this 
service. We accepted the recommendation but deleted what appeared to be 
duplicated gauze supplies and the drape sheet.

CPT code 17304, Chemosurgery (Mohs micrographic technique), including 
removal of all gross tumor, surgical excision of tissue specimens, 
mapping, color coding of specimens, microscopic examination of 
specimens by the surgeon, and complete histopathologic preparation; 
first stage, fresh tissue technique, up to 5 specimens.

    We reviewed and made no changes to the RUC recommendation on 
clinical staff at this time. We accepted the recommended additions to 
the supply list; however, we removed the Mohs kit listed in the 
original CPEP data because it duplicated the pathology supplies that 
have been added to the list. For equipment, we moved the doppler, 
suction machine, x-ray view box and smoke evacuator from procedure-
specific to overhead equipment because this equipment is used for a 
wide range of services and thus fits the definition of overhead 
equipment. We deleted the ECG machine from equipment since it is not 
needed for this procedure.

CPT code 17305, Chemosurgery (Mohs micrographic technique), including 
removal of all gross tumor, surgical excision of tissue specimens, 
mapping, color coding of specimens, microscopic examination of 
specimens by the surgeon, and complete histopathologic preparation; 
second stage, fixed or fresh tissue, up to 5 specimens

    We made no changes to the RUC recommendation on clinical staff at 
this time. We deleted the Mohs kit from the supplies (as noted in 
discussion for CPT code 17304) as well as the sutures, suture kit and 
patient education pamphlet because we do not believe they are needed 
for each stage of this procedure. We also deleted the nerve stimulator 
because it is not typically used for this service. We made the same 
adjustments for equipment as we did for CPT code 17304.

CPT code 17306, Chemosurgery (Mohs micrographic technique), including 
removal of all gross tumor, surgical excision of tissue specimens, 
mapping, color coding of specimens, microscopic examination of 
specimens by the surgeon, and complete histopathologic preparation; 
third stage, fixed or fresh tissue, up to 5 specimens

    We made no changes to the RUC recommendation on clinical staff at 
this time. We made the same adjustments in the supply and equipment 
lists as made for CPT code 17304.

CPT code 17310, Chemosurgery (Mohs micrographic technique), including 
removal of all gross tumor, surgical excision of tissue specimens, 
mapping, color coding of specimens, microscopic examination of 
specimens by the surgeon, and complete histopathologic preparation; 
more than five specimens, fixed or fresh tissue, any stage

    We reviewed and made no changes to the RUC recommendation on 
clinical staff at this time. We deleted the Mohs kit for the reasons 
discussed for CPT code 17304 above. We also deleted gel foam, xylocain 
and the syringe from the supply list and all equipment because this is 
essentially an add-on code representing an increased number of 
specimens and these supplies and the equipment are reflected in the 
base code.

CPT code 32000, Thoracentesis, puncture of pleural cavity for 
aspiration, initial or subsequent

    We reviewed and made no changes to the RUC recommendations for 
clinical

[[Page 59396]]

staff time or equipment. We deleted a syringe, xylocain and atropine 
from the supply list since these items should be included in the 
thoracentesis kit that is also on the supply list.

CPT code 43239, Upper gastrointestinal endoscopy including esophagus, 
stomach, and either the duodenum and/or jejenum as appropriate; with 
biopsy single or multiple

    The RUC made recommendations only on supplies and we accepted them.

CPT code 45330, Sigmoidoscopy, flexible diagnostic, with or without 
collection of specimen(s) by brushing or washing (separate procedure)

    The RUC made recommendations for supplies only. We accepted the 
recommendations with the following adjustments. We decreased the staff 
gowns and surgical masks to two items each to reflect that there would 
typically only be two staff, a physician and a nurse, involved in this 
procedure.

CPT code 56340 Laparoscopy, surgical; cholecystectomy (any method).

    Only refinements to clinical staff time were proposed by the RUC. 
We reviewed the proposed changes and the original CPEP inputs. While 
the RUC proposed changes to the pre-service clinical staff time, we are 
not accepting these changes at this time because there was an 
inadequate explanation for these changes. We will continue to use the 
original CPEP time of 15 minutes for the pre-service clinical staff 
time. We also noted that the post-service staff time included two RNs. 
Since it is more typical for one RN to assist with patient care during 
post-operative visits, we allowed 76 minutes of staff time for one RN 
and deleted 25 minutes for a second RN from the original CPEP inputs. 
Total staff time is now 91 minutes. This is an interim value, and the 
CPT code may be subject to further refinements.

CPT code 58100, Endometrial sampling (biopsy) with or without 
endocervical sampling (biopsy), without cervical dilation, any method 
(separate procedure)

    We reviewed and made no change to the RUC recommendation on 
clinical labor or supplies. We deleted the vaginal/surgical procedure 
tray from the procedure-specific equipment because it was less than 
$500 and the colposcope from the overhead equipment since it is not 
typically used for this procedure.

CPT code 65855, Trabeculoplasty by laser surgery, one or more sessions

    We made changes based upon review of both the RUC recommendations 
and the comments of the American Academy of Ophthalmology (AAO) that 
described the practice expense proposals they made to the RUC. We will 
continue to use the original CPEP inputs for pre-service clinical staff 
time of zero minutes. We accepted the RUC's proposed refinements for 
intra-service time in the office, 62 minutes, and post-service time, 
82.5 minutes. We also accepted the RUC's proposal for supplies and 
equipment. These values were crosswalked to CPT codes 66762, 66770 and 
66761 as recommended by the RUC.

CPT code 66170, Fistulization of sclera for glaucoma; trabeculectomy ab 
externo in absence of previous surgery

    We accepted the RUC's recommendation to value the procedure only in 
the facility setting. Based upon review of both the recommendations of 
the RUC and the comments of the AAO, we retained the original CPEP 
value of zero minutes for pre-service clinical staff time and decreased 
the post-service clinical staff time to 247 minutes. We accepted the 
recommendations for supplies and deleted the Argon Laser and Hoskins 
Lens from equipment because this procedure is performed in the facility 
setting only and therefore this equipment is not used in the office for 
this procedure. These are interim values and the code may be subject to 
further refinement. These values were crosswalked to CPT codes 66150 
66155, 66160, and 66165 as recommended by the RUC.

CPT code 66172, Fistulization of sclera for glaucoma; trabeculectomy ab 
externo with scarring from previous ocular surgery or trauma (included 
injection of antibiotic agents).

    This procedure was valued only in the facility setting. Based upon 
review of both the recommendations of the RUC and comments from the 
AAO, we retained the original CPEP value of zero minutes for pre-
service clinical staff time and decreased the post-service clinical 
staff time to 330 minutes. We accepted the RUC's proposals for supplies 
and equipment. These are interim values and the code will be subject to 
further refinement.

CPT code 66821, Discission of secondary membranous cataract (opacified 
posterior lens capsule and/or anterior hyaloid); laser surgery (eg YAG 
laser) (one or more stages)

    Based upon review of both the recommendations of the RUC and the 
comments of the AAO, we retained the original CPEP value of zero 
minutes for pre-service clinical staff time, we decreased the post-
service clinical staff time to 55 minutes, and we accepted the RUC 
proposed refinement of 37 minutes of intra-service clinical staff time 
in the office. We accepted the RUC's proposals for supplies and 
equipment. These are interim values and the code may be subject to 
further refinement.

CPT code 66984, Extracapsular cataract removal with insertion of 
intraocular lens prosthesis (one stage procedure), manual or mechanical 
technique (eg, irrigation and aspiration or phacoemulsification).

    This procedure was valued only in the facility setting. Based upon 
review of both the recommendations of the RUC and the comments of the 
AAO, we retained the original CPEP value of zero minutes for pre-
service clinical staff time, and we decreased the post-service clinical 
staff time to 110 minutes. We accepted the RUC's proposals for supplies 
and equipment. These are interim values and the code will be subject to 
further refinement. These adjusted values were crosswalked to CPT codes 
66830, 66840, 66850, 66852, 66920, 66983, 66985, and 66986 as 
recommended by the RUC.

CPT code 67036, Vitrectomy, mechanical, pars plana approach

    This procedure was valued only in the facility setting. Based upon 
review of both the recommendations of the RUC and the comments of AAO, 
we retained the original CPEP value of zero minutes for pre-service 
clinical staff time, and we decreased the post-service clinical staff 
time to 124 minutes. We accepted the RUC's proposals for supplies and 
equipment. These are interim values and the code will be subject to 
further refinement.

CPT code 67038, Vitrectomy, mechanical, pars plana approach; with 
epiretinal membrane stripping

    This procedure was valued only in the facility setting. Based upon 
review of both the recommendations of the RUC and the comments the AAO, 
we retained the original CPEP value of zero minutes for pre-service 
clinical staff time and we adjusted the post-service clinical staff 
time to 220 minutes. We accepted the RUC's proposals for supplies and 
equipment. These are interim values and the code will be subject to 
further refinement. These adjusted values were crosswalked to CPT codes 
67039 and 67040 as recommended by the RUC.

[[Page 59397]]

CPT code 67800, Excision of chalazion; single

    Based upon review of both the recommendations of the RUC and the 
comments of the AAO, we retained the original CPEP value of zero 
minutes of pre-service clinical staff time, and we accepted the RUC's 
proposed refinements of 35 minutes for intra-service clinical staff 
time and 20 minutes of post-service clinical staff time. We also 
accepted their recommendations for supplies and equipment but corrected 
typographical errors in the quantity of betadine, irrigation fluid and 
sterile towels. These are interim values and the code will be subject 
to further refinement. These adjusted values were crosswalked to CPT 
codes 67700, 67710, 67715, 677801, 67805, 67810, 67840, 68020, 68040, 
68100, 68110, 68115, 68130, 68135, 68440, 68705, and 68760 as 
recommended by the RUC.

CPT code 67820, Correction of trichiasis; epilation, by forceps only

    This procedure was valued only in the office setting. We accepted 
the RUC proposed refinement of 35 minutes for intra-service clinical 
staff time. We also accepted the RUC's proposed refinements for 
supplies and equipment, except that we decreased the number of sterile 
towels and cotton tipped applicators because of typographical errors. 
These are interim values and the code will be subject to further 
refinement.

CPT code 71020, Radiologic examination, chest, two views, frontal and 
lateral

CPT code 72100, Radiologic examination, spine, lumbosacral; 
anteroposterior and lateral

CPT code 72170, Radiologic examination, pelvis; anteroposterior only

CPT code 73560, Radiologic examination, knee; one or two views

CPT code 74000, Radiologic examination, abdomen; single anteroposterior 
view

CPT code 74020, Radiologic examination, abdomen; complete, including 
decubitus and/or erect views

    For all these radiologic services we reviewed and made no changes 
in the RUC recommendation for clinical staff time. Date stickers and 
insert folders were deleted from the medical supplies because these are 
considered office supplies. We accepted the RUC recommendation for 
equipment except for deleting dictation equipment because it is 
considered office equipment and the lead shield because it does not 
cost over $500.

CPT code 76519, Ophthalmic biometry by ultrasound echography, A-scan; 
with intraocular lens power calculation

    We reviewed and made no changes in the RUC recommendations for 
clinical staff time or supplies. We moved the printer from procedure-
specific to overhead equipment because it can be used across a range of 
services.

CPT code 76700, Echography, abdominal, B-scan and/or real time with 
image documentation complete

    The RUC made recommendations only on supplies and, after reviewing, 
we made no changes to their recommendations.

CPT code 85060, Blood smear, peripheral, interpretation by physician 
with written report

CPT code 85097, Bone marrow, smear interpretation only, with or without 
differential cell count

    Since these are professional services only, all clinical staff 
time, supplies, and equipment were deleted. Practice expenses are 
included for payment with other applicable CPT codes and, if practice 
expense inputs were included here, would result in a duplicate payment.

CPT code 88104, Cytopathology, fluids, washings or brushings, except 
cervical or vaginal; smears with interpretation

    We made no changes in the clinical staff time, but made a minor 
revision to the supplies listed. We deleted the marking pen from the 
supplies because the cost per procedure was negligible and deleted the 
metal slide storage cabinet from overhead equipment because it is 
considered furniture.

CPT code 88304, Level III--Surgical pathology, gross and microscopic 
examination

CPT code 88305, Level IV--Surgical pathology, gross and microscopic 
examination

    We made no changes in the clinical staff time, but made a minor 
revision to the supply list. We deleted the marking pen from the 
supplies because the cost per procedure was negligible, and deleted the 
metal slide storage cabinet and the plastic block storage cabinet from 
overhead equipment because these items are considered furniture. We 
also deleted the Stryker saw which is not typically used with these 
procedures.

CPT code 88312, Special stains; Group I for microorganisms, each

    We reviewed and made no changes to the RUC recommendations for 
clinical labor, equipment and supplies.

CPT code 92004, Ophthalmological services; medical examination and 
evaluation with initiation of diagnostic and treatment program; 
comprehensive, new patient, one or more visits

    The RUC recommendation was for supplies only; we accepted the 
recommendation except for deleting the betadine from the supply list 
because it would not be used during an eye examination.

CPT code 92012, Ophthalmological services; medical examination and 
evaluation with initiation or continuation of diagnostic and treatment 
program; intermediate, established patient

CPT code 92014, Ophthalmological services; medical examination and 
evaluation with initiation or continuation of diagnostic and treatment 
program; comprehensive, established patient, one or more visits

    The RUC recommendation was for supplies only; we accepted this 
recommendation, except for deleting the betadine from the supply list 
because it would not be used during an eye examination. We also deleted 
the patient education pamphlet and contact lens solution to be 
consistent with comments from the American Academy of Ophthalmology.

CPT code 92083, Visual field examination, unilateral or bilateral, with 
interpretation and report; extended examination

    We reviewed and made no changes to the RUC recommendations for 
clinical staff time or equipment. We deleted the black pins from the 
supply list because they are a reusable supply. These adjusted values 
were crosswalked to CPT code 92081 and 92082 as recommended by the RUC.

CPT code 92235, Fluorescein angiography (includes multiframe imaging) 
with interpretation and report

    We reviewed and made no change to the RUC recommendations on 
supplies. For equipment, we deleted the electric table because a 
reclining exam chair is also included and both are not needed for this 
procedure.

CPT code 92240, Indocyanine-green angiography (includes multiframe 
imaging) with interpretation and report

    We received RUC recommendations on equipment only. We deleted the

[[Page 59398]]

electric table because a reclining exam chair is also included and both 
would not be used for a given service.

CPT code 92250, Fundus photography with interpretation and report

    We received a RUC recommendation on equipment only. We deleted the 
electric table because a reclining exam chair is also included and both 
are not needed for a given service. These adjusted values were 
crosswalked to CPT code 92230 as recommended by the RUC.

CPT code 92507, Treatment of speech, language , voice, communication, 
and/or auditory processing disorder (includes aural rehabilitation); 
individual

CPT code 92526, Treatment of swallowing dysfunction and/or oral 
function for feeding

CPT code 92585, Auditory evoked potentials for evoked response 
audiometry and/or testing of the central nervous system

    We reviewed and made no change to the clinical staff time 
recommended by the RUC. However, we did not increase the wage rate for 
the audiologist as suggested by the RUC because we will address this 
issue globally for all staff types during refinement.

CPT code 93307, Echocardiography, transthoracic, real-time with image 
documentation (2D) with or without M-mode recording; complete

    The RUC made recommendations only for supplies that we reviewed and 
made no changes.

CPT code 93320, Doppler echocardiography, pulsed wave and/or continuous 
wave with spectral display ; complete

    A comment accompanying the RUC recommendation stated that this is 
an add-on code and questioned whether the RUC recommended equipment 
should be included. Because the cost of the equipment is reflected in 
the values for the base code, we have deleted all the equipment listed 
for this service.

CPT code 94010, Spirometry, including graphic record, total and timed 
vital capacity, expiratory flow rate measurement(s), with or without 
maximal voluntary ventilation

    We reviewed and made no changes to the RUC recommendations for 
clinical labor, supplies or equipment.

CPT code 95819, Electroencephalogram (EEG) including recording awake 
and asleep, with hyperventilation and/or photic stimulation

    We reviewed and made no changes to the RUC's clinical labor 
recommendations. We deleted the following items from the list of 
supplies: printer toner cartridge, since this is an office expense; the 
skin marking pen because the cost per procedure is negligible; the 
nasopharyngeal-electrode because it is not typically used with this 
procedure; and seconal and chloral hydrate since these are drugs that 
are not paid under the physician fee schedule. We moved the pulse 
oximeter from procedure-specific to overhead equipment because it can 
be used for a wide range of services and deleted the exam table because 
an electric bed is included with the equipment and both would not be 
needed for a given service.

CPT code 95860, Needle electromyography, one extremity with or without 
relaxed paraspinal areas

    We reviewed and made no changes to the RUC's clinical labor 
recommendations. For supplies, we deleted the sharps container and 
blood medical waste bag since they are not disposed of after only one 
procedure. We also substituted the ENG electrode needle for the 
concentric ENG needle electrode because it is more typically used for 
this procedure. For equipment, we moved the hydrocollator from 
procedure-specific to overhead equipment because it is used for a wide 
range of services.

CPT code 95900, Nerve conduction, amplitude and latency/velocity study, 
each nerve, any /all site(s) along the nerve; motor, without F-wave 
study

CPT code 95904, Nerve conduction, amplitude and latency/velocity study, 
each nerve, any /all site(s) along the nerve; sensory

    We reviewed and made no changes to the RUC's clinical labor 
recommendations. For supplies, we deleted the skin marking pen and the 
stimulator bar electrode and pick-up electrodes because they are not 
disposable supplies. For equipment, we moved the hydrocollator from 
procedure-specific to overhead equipment because it is used for a wide 
range of services.

CPT code 97022, Application of a modality to one or more areas; 
whirlpool

    Based on a review of the RUC recommendation and the original CPEP 
data, we are using the original CPEP staff time of 31 minutes in the 
intra-service period because the RUC recommended set-up time of 13 
minutes is excessive. For supplies, we deleted the sterile drape, 
culterette and culture media because they are rarely used for this 
procedure, and we are deleting the patient education booklet because 
this procedure would be performed on the same patient more than once 
and a booklet would not be required at each session. We deleted the 
hilo table and hoyer lift from the equipment because they are not 
typically used for the service.

CPT code 97035, Application of a modality to one or more areas; 
ultrasound, each 15 minutes

    We reviewed and made no changes to the RUC's clinical staff time 
recommendation. However, we deleted the patient education booklet from 
supplies because it is not provided with every treatment. We also 
deleted the utility cart from equipment because the cost was under 
$500.

CPT code 97110, Therapeutic procedure, one or more areas, each 15 
minutes; therapeutic exercises to develop strength and endurance, range 
of motion and flexibility

    We made no changes to the RUC's clinical staff time recommendation. 
However, from the supply list we deleted the patient education booklet, 
because it would not be provided at each therapeutic session, as well 
as tape and ace bandage because they are not typically used. For 
equipment, the RUC recommendation suggested 50 percent utilization for 
the isokinetic strengthening equipment and the therapeutic exercise 
equipment set. We have instead assumed 100 percent utilization of the 
therapeutic exercise equipment as it is much more typically used than 
the isokinetic equipment. We also deleted the hilo table because there 
is another table listed in the equipment and only one or the other 
would be used for a specific procedure.

CPT code 97530, Therapeutic activities, direct (one on one) patient 
contact by the provider (use of dynamic activities to improve 
functional performance); each 15 minutes

    We reviewed and made no changes to the RUC's clinical staff time 
recommendation. However, we deleted the patient education booklet, as 
well as tape and ace bandage, from supplies, because they are not 
typically used. For equipment, the RUC recommendation suggested 50 
percent utilization for the isokinetic strengthening equipment and the 
therapeutic exercise equipment set.

[[Page 59399]]

We have instead used 100 percent utilization of the therapeutic 
exercise equipment as it is much more typically used. We also deleted 
the hilo table and the low mat table because the patient would 
typically be standing during this service.
    The RUC also forwarded to us recommendations for the CPEP inputs 
for the following services:

CPT code 11100, Biopsy of skin, subcutaneous tissue and/or mucous 
membrane (including simple closure), unless otherwise listed (separate 
procedure); single,

CPT code 52647, Non-contact laser coagulation of prostate, including 
control of postoperative bleeding, complete (vasectomy, meatotomy, 
cystourethroscopy, urethral calibration and/or dilation, and internal 
urethrotomy are included),

CPT code 53850, Transurethral destruction of prostate tissue; by 
microwave thermotherapy,

CPT code 53852, Transurethral destruction of prostate tissue; by 
radiofrequency thermotherapy,

CPT code 64721, Neuroplasty and/or transposition; median nerve at 
carpal tunnel,

CPT code 96408, Chemotherapy administration, intravenous; push 
technique, and

CPT code 96410, Chemotherapy administration, intravenous; infusion 
technique, up to one hour.

    Since many of the changes proposed for these CPT codes included 
items not typically used for the procedures, duplicate inputs, 
inconsistent inputs or extensive additional in-office inputs for 
services currently only costed in the facility setting, we have 
concluded that further review is required before the proposed changes 
can be adopted or rejected. Therefore, the original CPEP inputs will 
remain unchanged. We solicit comments on these CPT codes to assist us 
with those refinements.

Physicians' Clinical Staff in the Facility Setting

    In the ``top-down'' methodology set forth in the 1998 regulation, 
we used the raw CPEP inputs without applying edits to any of the data, 
and the staff time allotted to the use of clinical staff in the 
facility setting was therefore included. In our July 1999 rule, we 
proposed to exclude from the raw CPEP data all clinical staff time in 
the facility setting. The CPEP data is used in our methodology solely 
to allocate the specialty-specific practice expense pools to the 
individual CPT codes. We proposed to exclude this clinical staff time 
for the following reasons: (1) Medicare should not pay twice for the 
same service; (2) It is not typical practice for most specialties to 
use their own staff in the facility setting; (3) Inclusion of these 
costs is arguably inconsistent with both the law and Medicare 
regulations. We believe these reasons strongly support not including 
the costs of physicians' clinical staff used in the facility setting in 
the calculation of practice expense values. However, in the proposed 
rule, we invited comments on this issue and particularly solicited 
information about any possible instances where it would be appropriate 
to include data on the use of a physician's clinical staff in the 
facility setting.
    Comment: Several commenters, from the American Hospital Association 
(AHA) and other hospital trade groups, as well as from several 
physician specialty societies, believe we have correctly determined 
that it is not a typical practice for physicians to bring their own 
staff to the hospital. The AHA commented that 1,459 hospitals in the 
National Hospital Panel Survey were surveyed on physician practices in 
their institutions. They believe the Panel Survey ensures reliable 
national estimates by stratifying hospitals according to size and 
randomly selecting from each stratum in each of the nine census regions 
in disproportionately larger numbers as bed size increases. There were 
573 responses to the survey. They stated that, though 63 percent of the 
hospitals surveyed answered that at some time in the last 6 months a 
physician brought his or her own staff to the hospital, only 11 percent 
of all responding hospitals said this was a regular practice. Two 
primary care specialty groups agreed that it is not typical for 
physicians to use their own clinical staff in the facility setting. One 
specialty group representing urologists acknowledged that a survey of 
its physician membership showed that less than 15 percent of its 
members take their clinical staff to facility settings.
    We also received many comments that took issue with the argument in 
the proposed rule that it is not typical practice for most specialties 
to use their own staff in the facility setting. Several commenters 
questioned the validity of the AHA survey. Some commenters argued that 
the category ``not a regular practice'' in the AHA survey was ambiguous 
because a negative answer to the question could mean either that no 
physicians regularly brought staff to the hospital or that only certain 
specialties, such as cardiothoracic surgeons or anesthesiologists, 
regularly brought staff to the hospital. Another specialty society 
commented that the AHA survey provides no basis for concluding that 
cardiothoracic surgeons do not bring their staff into the hospital 
because less than 25 percent of the hospitals in the U.S. provide open 
heart surgery.
    Many commenters merely stated, with no data to support their view, 
that it is common for their particular specialty to bring nurses or 
physician assistants with them to the facility to prepare the patient 
for surgery, assist during the procedure, and provide post-operative 
care. Other commenters referred to the results of one or more surveys 
that would indicate use of physicians' clinical staff in the facility 
setting, but did not include a copy of the survey or provide any 
details of the survey methodology, the sample used, or the questions 
asked. An organization representing neurosurgery referred to data 
collected by their society that suggests that between 40 and 60 percent 
of practices in the mid-West and South Central regions of the country 
use their employed clinical staff in the hospital. One organization 
representing a sub-specialty of cardiology cited a survey of its 
members that indicated that 55 percent of its members follow the 
practice of bringing staff to the hospital for purposes of patient 
education when performing such procedures as electrophysiology studies, 
pacing procedures and ablations. The commenter contended that hospital 
nurses are not knowledgeable enough about the above procedures to talk 
comprehensively with patients or families.
    Two specialty societies provided more extensive information 
regarding survey data on the use of clinical staff in the facility 
setting. The American Society of Anesthesiologists (ASA) stated that 
the ASA surveyed 220 anesthesia practice managers in August of this 
year. The survey referenced the fact that our proposed rule proposed to 
exclude from CPEP data the costs of clinical staff in the facility 
partly because of our belief that it was not typical and asked 
respondents if their practice used any of their own staff, excluding 
those who can bill separately, in the facility setting. The commenter 
reported that with a 65 percent response rate, 40 percent of the 
managers reported that they did use clinical staff in the facility 
setting. ASA further stated that a 1997 Abt survey for the ASA 
suggested that many anesthesia practices employ clinical staff with a 
mean of 0.32 employees per practice; this total included a mean of 0.19

[[Page 59400]]

registered nurses and 0.04 anesthesia technicians. The commenter also 
argued that the typical cost criterion does not rest on any statutory 
footing and that allowances for practice expenses should be based on 
average cost rather than typical cost. The STS referred to surveys 
undertaken by the American Association of Physician Assistants and the 
Association of Physician Assistants in Cardiovascular Surgery that 
report physician assistants (PAs) are involved in at least 200,000 
cardiac cases a year, that almost all these PAs have responsibilities 
in the operating room, and 85 percent are involved in postoperative 
care in the hospital.
    Response: We want to make it clear that we are not asserting that 
physicians never bring their own clinical staff into the facility 
setting or that this practice may not be more common among some 
specialties than among others. However, as stated in the proposed rule, 
we have not seen sufficient data to convince us that the use of the 
physician's clinical staff in the facility setting is a typical 
practice.
    The search for sufficient data did not start with the proposal in 
this year's proposed rule. Rather, the inclusion by most of the CPEP 
panels of varying amounts of inputs for clinical staff in the facility 
setting has been controversial from the start. While many medical 
specialties insist that the physicians' practice of bringing staff to 
the hospital is common, other specialties indicate that this is not a 
typical practice.
    In our Notice of Intent to Regulate published on October 31, 1997, 
we stated that there seemed to be some question of whether the practice 
of bringing a physician's staff to a facility was, in fact, common and 
widespread. We explicitly solicited information about this practice. We 
asked for comments about the extent to which the practice occurs, 
procedures involved, functions performed, type of staff employed, and 
staff training and credentialling. We specifically requested the name, 
location and characteristics of any facility where this practice 
occurred and the facility's requirements for credentialling the staff, 
including any limits on duties of the staff by the facility. In 
addition, we requested that where surveys had been conducted to 
document this practice, we wanted to receive copies of the surveys and 
results, including such details as the survey methodology and sampling 
design.
    The response to this request for information was sparse. We 
received only 16 responses to this issue, most were anecdotal without 
any specific information. Only two comments from specialty societies 
included information from surveys or objective sources. The American 
Academy of Ophthalmology (AAO) surveyed 300 ophthalmologists and 
reported that 45 percent of the respondents said they utilized staff 
out of the office. There was no information on the sample size, 
composition, or response rate. In addition, the information on the 
frequency of this practice was not clear. It appears from the 
information provided that a large portion of those who brought their 
own staff into the facility did so less than 100, and many probably 
less than 50, times a year. The STS included the PA surveys that are a 
part of their current comments from which they drew indirect inferences 
regarding the use of physicians' staff in the facility setting. 
However, neither the AAO nor the STS surveys answered the specific 
questions asked in the Notice.
    In December 1997, we received a copy of the AHA survey mentioned 
above that indicated that only 11 percent of the hospitals that 
responded to the survey said that it was a regular practice for 
physicians to bring their staff into the facility. We compared the 
results of the AHA survey with the AMA's 1996 SMS survey of physicians 
that included responses from 153 surgeons and obstetricians and 
gynecologists about the use of clinical staff in the facility setting 
and found that the findings correlated closely. In answer to the 
question, ``When the physician provides services in the hospital how 
often is he or she assisted by non-physician personnel employed by the 
physician's practice?,'' only 11 percent of the physicians answered 
``always.'' In contrast, 68 percent answered ``never'' and another 9 
percent ``occasionally.'' Equally important, in answer to the question, 
``Are these non-physician personnel reimbursed by the hospital, 
reimbursed by a third party or are they paid directly by the practice 
for services provided in the hospital?,'' 38 percent of those who 
brought their staff to the facility answered ``reimbursed by 
hospital,'' and only 51 percent said they were paid by the practice. 
Therefore, it was both the absence of requested data that could 
actually demonstrate that it was typical for physicians to bring their 
staff to the hospital, as well as existence of data that strongly 
indicated that this indeed was not a typical practice, that has led us 
to the conclusion that it is indeed not typical for physicians to bring 
their staff to a facility.
    The only hard data supplied to us in the comments on the proposed 
rule were provided by the ASA and STS. The ASA reported the results of 
two surveys. The Abt study reported a mean of 0.32 full time equivalent 
(FTE) total clinical staff per practice, of which 0.19 FTE were 
registered nurses and only 0.04 FTE were anesthesia technicians. These 
relatively low numbers of clinical staff per practice would actually 
seem to support a conclusion that it is not typical to bring these 
staff to the hospital. The ASA also conducted their own study of 220 
anesthesia practice managers. With a 65 percent response rate, about 40 
percent of the respondents indicated that their practice employed 
clinical support personnel who were not eligible for direct 
reimbursement. There is, however, no indication in their comment about 
what this staff is doing and where they are doing it. In addition, this 
survey actually shows that 60 percent of practices do not employ 
clinical staff; therefore, this is not a typical practice. Apparently 
aware of this, the ASA argues that the typicality standard ``merely 
derives from the original studies undertaken as part of the development 
of physician work values when the Fee Schedule was initiated.'' The ASA 
then contends that we should base our practice expense on the cost of 
the average patient, not the typical patient. The ASA is correct that 
all of the RVUs, both work and practice expense, have been based on the 
services provided to the typical patient. Though we would be willing to 
discuss in the future the merits of using the typical versus the 
average patient for certain practice expense categories, we do not 
believe that the costs of an average patient would be meaningful 
regarding the use of clinical staff in the facility setting when there 
is such obvious inconsistency in practice patterns. All the use of the 
cost of an average patient would accomplish would be to consistently 
underpay some, while consistently overpaying others.
    As stated above, while STS submitted surveys compiled by two PA 
organizations, no information was included regarding the use of nurses 
in the facility setting. From the submitted surveys, it would appear 
that cardiovascular PAs are very active in the hospital setting. For 
example, the surveys showed that almost all cardiovascular PAs assist 
in the operating room. The problem with the submitted data is that, 
because PAs are eligible for direct reimbursement from Medicare, the 
physicians' costs associated with PAs cannot, in general, be considered 
practice expense. The same would be true of nurse practitioners.

[[Page 59401]]

    After reviewing all the available data, we remain convinced that 
our position in the proposed rule was correct: it is not a typical 
practice for physicians to bring their own staff into the facility 
setting.
    Comment: We received only a few comments in response to our 
statement in the proposed rule that Medicare should not pay twice for 
the same service and that this was a major reason to exclude the 
clinical staff time for physicians' staff used in the facility setting 
from the CPEP data. Two groups contended that, to the extent that Part 
A is paying for the cost of clinical staff brought to the hospital by 
the physician, we should take measures to see that Part A monies are 
shifted to Part B. Two other organizations took issue with our 
statement that, because the hospital is already paid for providing all 
nursing care to its patients, the inclusion of the costs of physicians' 
clinical staff in calculating the practice expense RVUs would amount to 
paying twice for the same service. These commenters claimed that 
because hospital payments are reweighted annually to reflect changes in 
costs and charges, these facilities are not being reimbursed for the 
costs of clinical staff that physicians now bring themselves to the 
facilities.
    The STS argued that, though our observation in the proposed rule 
that there is separate Part B reimbursement for a PA acting as an 
assistant-at-surgery is generally true, this is not true in the 
academic setting where a resident is available, nor in California where 
state law requires that two physicians be present for every case. The 
commenters also raised the more general point that PAs are also used in 
the office setting and point out that 15,000 PAs are employed in family 
practice, either billing directly or being included as ``incident to'' 
physicians' services. The commenters asked why we have not raised this 
issue more broadly across all specialties and suggested that we could 
better eliminate duplicate payment for these clinical services by 
reducing the SMS specialty pools by the amount of income received for 
staff who can bill directly to Medicare.
    In response to our statement that much of the time claimed for 
clinical staff in the facility for making patient rounds is really a 
substitute for physician work, the STS states that the Congress and the 
government have explicitly encouraged the use of such physician 
extenders. The commenter conceded that it is possible that the work 
RVUs may need to be adjusted for all specialties, but added that it is 
not clear what activities are a substitute for physician work and which 
are added services. Finally, STS argued that excluding hospital-related 
clinical staff costs from CPEP data because they are not otherwise 
covered services or because they are separately reimbursable without 
taking similar action for all other CPEP inputs with similar 
characteristics is discriminatory.
    Response: In the proposed rule we stated our belief that the duties 
that were being attributed by many specialties to physicians' clinical 
staff in the facility setting were already paid for by Medicare through 
a mechanism other than physician expense. For example, an assistant at 
surgery can be paid separately. In addition, we already pay the 
facility to provide all nursing care to the facility patient whether 
that nurse is acting as a scrub nurse or monitoring a patient 
undergoing conscious sedation. We also pointed out that reviewing 
charts, making patient rounds or pulling chest tubes are physicians' 
services that are paid for through the physician work RVUs.
    In response to the comment that we should shift Part A monies to 
Part B so that a double payment would not be made, we believe this 
implies that we should adjust inpatient hospital PPS rates to remove 
costs associated with clinical staff brought to the hospital by 
physicians. We do not believe that such an adjustment is consistent 
with section 1886(d)(2)(C) of the Act which prescribes the methodology 
for standardizing PPS base year costs and calculating PPS rates for 
each fiscal year. We disagree with the comment that annual reweighting 
of hospital costs and charges means that hospitals are not being 
reimbursed for staff allegedly replaced by the clinic staff physicians 
bring to hospitals. The relative weights which determine payment for a 
diagnostic related group (DRG) are reweighted annually based on 
hospital charges. However, this only affects the relative payment for 
each DRG. Payment would continue to be included in the PPS rates unless 
a specific adjustment were made to remove these costs. As stated above, 
we do not believe such an adjustment is consistent with section 
1886(d)(2)(C) of the Act.
    The STS made several interesting points in their comments, and we 
will respond to each. STS conceded that a PA acting as an assistant-at-
surgery can be separately paid, but not when another doctor is there to 
assist. The STS did not clarify why the use of a PA would be necessary 
in such a situation or why, if a PA is used, Medicare should recognize 
any such extra costs. We believe that the STS has raised a valid issue 
about the general use of physician extenders across all specialties. It 
is true that in our proposed rule we only addressed the possible 
substitution of nonphysician practitioners' work for physician work in 
the facility setting for all specialties. It is not possible in the 
CPEP data to readily identify in office setting what clinical staff 
time might be a substitute for physician work or what staff is eligible 
for separate payment. It was relatively rare for the CPEP panels to 
identify a PA or nurse practitioner as the clinical staff type in the 
office setting. However, this is clearly an issue that we intend to 
address during the refinement process. In addition, as specific in-
office codes are refined, either by us or by the PEAC and RUC, the 
question of possible duplication of physician work should be raised for 
all services.
    The STS also suggests adjustment of the SMS data to account for 
staff that may bill directly. As we noted above, we have asked our 
contractor to determine which specialties' SMS data may be affected by 
inclusion of mid-level practitioners in specialty survey cost data and 
to develop alternative methodologies to address it. It should also be 
noted that the practice-level SMS survey that is in development breaks 
out the costs for clinical staff who are eligible for direct payment.
    Regarding the commenter's argument that we are acting in a 
discriminatory manner unless we exclude from the CPEP data all inputs 
that are separately billable or not covered, we are attempting to do 
just that. In last year's final rule, we used the raw CPEP data and 
made no modifications for any separately billable or non-covered CPEP 
inputs. However, we have in this final rule identified separately 
billable supplies, such as drugs and casting materials, and have 
excluded these from the CPEP data. We have also excluded self-
administered drugs from the supply list because they are not covered by 
Medicare. We invite comments about any other inputs currently in our 
CPEP database that fall into either category.
    After reviewing the comments on this issue, we continue to believe 
that including in CPEP data the costs of physicians' clinical staff in 
the facility setting would represent a duplicate payment that Medicare 
should not make.
    Comment: We also stated in the proposed rule that inclusion in CPEP 
data of the costs of clinical staff brought into the facility is 
arguably inconsistent with both the law and Medicare regulations. No 
commenter directly challenged this contention. However, several groups 
stated the general concern that the elimination of clinical staff costs 
from the CPEP data

[[Page 59402]]

contradicts the intent of section 4505(d) of the BBA that specifically 
states that, in developing such units, the Secretary shall utilize to 
the maximum extent practicable, generally accepted cost accounting 
principles which recognize all staff, equipment, supplies, and 
expenses, not just those which can be tied to specific procedures. The 
STS submitted an extensive comment on this point which stated that even 
if it were true that the clinical staff costs would be excluded from 
coverage under Medicare if physicians sought to bill separately for 
those services, the point is irrelevant and inconsistent with the 
statutory language and the history of the practice expense provisions. 
The comment stated that the Congress defined the term practice expense 
as ``all expenses for furnishing physicians'' services, excluding 
malpractice expenses, physician compensation, and other physician 
fringe benefits.'' The STS concluded that nothing in these definitions 
requires or even permits the agency to carve out from practice expenses 
RVU costs that would not be covered services on their own or that are 
separately reimbursable under Medicare. The commenter added that, to 
the contrary, the agency's mandate is to identify all practice expenses 
incurred by physicians in their practice and then to allocate all of 
those costs to particular procedures.
    Response: We believe that a reading of both the law and Medicare 
regulations leads to the conclusion that no payment should be made 
under the physician fee schedule that is attributable to the costs of 
physicians' clinical staff used in the facility setting.
    <bullet> Section 1862(a)(14) of the Act which discusses exclusions 
from coverage states that,
    ``Notwithstanding any other provision of this title, no payment may 
be made under part A or part B * * * for any expenses incurred for 
items or services which are other than physicians' services (as defined 
in regulations promulgated specifically for purposes of this paragraph) 
* * * and which are furnished to an individual who is a patient of a 
hospital * * * by an entity other than the hospital * * * unless the 
services are furnished under arrangements. * * *''
    (This section also exempts services of physician assistants, nurse 
practitioners, clinical nurse specialists, certified nurse-midwife 
services, qualified psychologist services, and services of certified 
registered nurse anesthetists from the above exclusion.)
    <bullet> In Sec. 411.15 (Particular Services Excluded from 
Coverage) subparagraph (m)(1), the text paraphrases the above provision 
for hospital inpatients and adds that ``services subject to exclusion 
under this paragraph include * * * services incident to physicians' 
services.'' Section 411.15(m)(2) implements the exceptions to this 
exclusion, among them ``physician services that meet the criteria of 
Sec. 415.102(a) of this chapter for payment on a reasonable charge or 
fee schedule basis.''
    <bullet> Section 415.102(a) contains the definition of physicians' 
services required by section 1862(a)(14) of the Act and the criteria 
referred to in Sec. 411.15(m) above: ``If the physician furnishes 
services to beneficiaries in providers, the carrier pays on a fee 
schedule basis provided the following requirements are met: (1) The 
services are personally furnished for an individual beneficiary by a 
physician. (2) The services contribute directly to the diagnosis or 
treatment of an individual beneficiary. (3) The services ordinarily 
require performance by a physician.''
    <bullet> On September 8, 1998, we published a proposed rule on a 
prospective payment system for hospital outpatient services (63 FR 
47552). This rule proposed to add Sec. 410.39 which embodies in 
regulation for the hospital outpatient setting the exclusion in 
Sec. 411.15 described above. Section 410.39(c) would exempt from the 
exclusion physicians' services that meet the requirements of 
Sec. 415.102(a) as described above, physician assistant, nurse 
practitioner, clinical nurse specialist, certified nurse midwife, and 
qualified psychologist services, as well as services of an anesthetist.
    A reading of all of the above suggests that no payment should be 
made under the physician fee schedule that reflects the costs of 
physicians' clinical staff used in the hospital setting. Services 
performed by nonphysician clinical staff do not fulfill the definition 
of services personally furnished by a physician, and, therefore, the 
exception to the exclusion for the physicians' services created by 
section 1862(a)(14) of the Act does not apply. In addition, nursing 
services, such as those performed by a scrub nurse working for a 
physician, do not ordinarily require performance by a physician and, 
thus, are not physicians' services for the purpose of section 
1862(a)(14) of the Act. Finally, services ``incident to a physician's 
service'' are explicitly excluded from coverage in the hospital setting 
by Sec. 411.15(m)(1).
    As stated above, we received no comments that directly addressed 
our reading of the statute and regulations. The commenters merely cited 
the requirement of the BBA that we should utilize generally accepted 
cost accounting principles which recognize all staff, equipment, 
supplies, and expenses, not just those which can be tied to specific 
procedures. We believe that this section of the BBA, with its reference 
to the recognition of costs that are not tied to specific procedures, 
is primarily directed at our prior methodology of computing indirect 
costs; this section of the law does not supersede other provisions of 
the law or regulations governing Medicare payment. Nor is there any 
indication that the BBA was intended to prevent us from excluding 
noncovered or otherwise paid for services as allocators of direct 
practice expense. We are still convinced that the inclusion of the 
costs of clinical staff brought into the facility setting is 
inconsistent with the law and Medicare regulations.
    Comment: Several groups commented that there are appropriate 
services that clinical staff in the physician's office do perform for 
facility patients that are typical, are not paid for by Medicare under 
any other mechanism, and that would be permitted by our regulations. 
For example, clinical staff may help with arranging a psychiatric 
admission to the hospital, may make follow-up telephone calls to 
patients to give post-surgical instruction on drugs or pain management, 
or may give other clinical guidance to the patient or patient's family. 
The comments recommended that these clinical staff services be included 
as direct inputs in the facility setting.
    Response: We agree that there may be some clinical tasks that 
clinical staff in the office can appropriately perform for a facility 
patient. There first needs to be a general discussion about what are 
the appropriate clinical tasks that clinical staff might perform during 
each of the different global periods. (For example, we would not 
consider scheduling tests or procedures to be a clinical task but an 
administrative task and most of the CPEP panels assigned time for a 
scheduling secretary.) We would also like to obtain a general consensus 
about what are reasonable parameters for the times it takes to perform 
these clinical tasks. Once there is a general approach to this issue, 
we would consider recommendations for specific services. We welcome 
general comments on this issue; it would also seem to be an appropriate 
topic for discussion for the PEAC and RUC.
    Comment: Several commenters recommended that we delay 
implementation of this proposal until further data could be collected. 
Some of the commenters suggested that the PEAC or our contractors help 
resolve

[[Page 59403]]

the issue of including within practice expense inputs physicians' 
clinical staff time in a facility. Another group of commenters advised 
HCFA to survey physicians to identify the extent to which physicians 
use their own staff to provide services in facilities and their reasons 
for doing so. The AMA asked us to defer action on this proposal until 
the physician fee schedule final rule for 2001 because specialty groups 
have been given no opportunity for meaningful review of the 
reasonableness of the approach or its impacts. Other organizations 
suggested that we proceed with the proposal but allow affected 
specialty groups to present survey data on this issue to the PEAC to 
justify whether any of these costs should be included in the CPEP data.
    Response: We do not plan to delay implementation of our proposal to 
exclude the costs of physicians' clinical staff used in the facility 
setting from the CPEP inputs. We have reviewed and analyzed the 
submitted comments and continue to believe that the policy in our 
proposed rule on this issue is correct. Though the PEAC is free to 
discuss the issue of clinical staff in the facility setting if they so 
choose, we have the ultimate responsibility for making a decision on 
this basic policy issue. We will implement this proposal and will use 
the adjusted CPEP data in the calculation of the practice expense RVUs 
for the year 2000 physician fee schedule.

Physician Time

Pediatric Surgery Physician Time Data

    The physician time assigned to pediatric surgery codes was based on 
erroneously low time data from the original Harvard study, rather than 
on later data from the study of pediatric services performed by the 
same Harvard study team for the American Pediatric Surgical Association 
(APSA) in 1992. We proposed updating the physician times for these 48 
pediatric surgical services upon receipt of the needed data.
    Comment: The APSA and the American College of Surgeons have 
forwarded to us the updated physician times for 48 pediatric surgical 
services and have requested that we use the times for the calculation 
of the practice expense pools that contain these services. Included 
with the comments is a detailed report entitled, ``Pediatric Surgery 
and the Medicare Fee Schedule for Physicians' Services: History, 
Analysis and Correction of Data on Physician Work and Physician Time.'' 
This request is supported by comments from the American Urological 
Association and the American Academy of Pediatrics.
    Response: We have substituted the revised times for these pediatric 
surgical services into our physician time database and will use them in 
all of our practice expense calculations.

Physical Therapy and Occupational Therapy Times

    We had received comments indicating the times for the physical 
therapy codes (CPT 97001 through 97770) contained in the November 1998 
final rule were too low due to the fact that only intra-service times 
were used. We agreed that it was appropriate to include some preservice 
and postservice times for these procedures and proposed adjusting the 
total code-specific times used to create the practice expense pools as 
shown in Table 6 ``Revised Times for CPT codes 97001 through 97770'' in 
the July 1999 proposed rule.
    Comment: Two major organizations commended us for recognizing that 
it is appropriate to include pre-service and post-service time and for 
adjusting the RVUs to reflect this time. However, they wanted us to use 
the times identified by the expert panel established by the American 
Physical Therapy Association (APTA) for CPT codes 97001 through 97770. 
They considered such times to more accurately reflect the times 
associated with each code.
    Response: We carefully evaluated the expert panel's submitted time 
for CPT codes 97001 through 97770 and used it in collaboration with our 
staff physicians' medical judgment to adjust the practice expense RVUs 
for these codes. The times as adjusted reflect nonduplicated pre- and 
post-service times that may occur when multiple services are provided 
during the same therapy session. The APTA acknowledged the potential 
for such overlap in commenting on our proposed rule.
    Comment: The American Occupational Therapy Association was pleased 
that we agreed to revise the occupational therapy times to include some 
pre- and post-service times for the physical medicine and 
rehabilitation CPT codes and the RUC surveyed intra-service time for 
the occupational therapy evaluation and occupational therapy re-
evaluation CPT codes (97003 and 97004, respectively).
    Response: We appreciate the association's comment.
    Comment: An association representing physical therapists 
recommended that we include additional times for two CPT codes that 
were not reflected in the proposed rule. It was recommended that we use 
a 20 minute time period for new CPT code 97140. In addition, the 
association stated that CPT code 97150 should be added with a typical 
group session of approximately 45 minutes and pre- and post-time.
    Response: We are not clear about the commenter's statement that CPT 
codes 97140 and 97150 were not reflected in the proposed rule. These 
codes were listed in Addendum B of the proposed rule. We cannot adopt 
the recommendation to treat code 97140 as a 20 minute code. When the 
AMA added 97140 to the CPT codes in 1999, it defined it as a 15 minute 
code. Therefore, we cannot comply with commenter's request to increase 
the code's time to 20 minutes. After reviewing the comment for CPT code 
97150, we have decided to refer it for close examination during the 
five year refinement process.

RUC Time Database

    The primary sources for the physician time data used in creating 
the specialty-specific practice expense pools are the surveys done for 
the initial establishment of the work RVUs and the surveys submitted to 
the AMA's RUC. Some of the times used for the November 1998 final rule 
differed from the official RUC database. We indicated in the proposed 
rule that we plan to use the times from the verified database, in 
conjunction with the Harvard times, as the basis for determining 
physician times.
    Comment: The AMA has submitted a database that contains verified 
physician times for those codes considered by the RUC. However, 
according to a letter received September 30, 1999 from the RUC, there 
are certain complications in trying to calculate total physician time 
for the global surgical codes. The letter states: ``* * * it became 
apparent that a key assumption would need to be made about the E/M time 
for each office visit included in a global surgical period. At the most 
recent RUC meeting, it became apparent that there is not an obvious 
standard for this data element. * * * It is apparent that this is an 
issue of real importance and we will, therefore, place this issue back 
on the RUC's agenda for next year. However, we will be unable, at this 
time, to provide `total time calculations' for many of the codes in the 
RUC database, as we have not yet agreed on the most appropriate E/M 
time to be utilized in the calculations of the codes with global 
surgical periods.''
    Response: We believe that it would not be appropriate to utilize 
the submitted RUC database until the RUC resolves the question of the 
E/M time

[[Page 59404]]

assigned to global surgical visits. The premature use of this data 
could potentially have unwarranted negative impacts on the specialties 
that perform these global services. Therefore, we will use the current 
time database as part of the calculation of the practice expense pools.
    Comment: One association commented that our adjustments to the 
physician time data as described in the 1998 Physician Fee Schedule 
final rule seem arbitrary and premature and decreased the time for 
urologic endoscopic procedures by a factor of 0.979. The commenter 
recommended that we dispense with these adjustments until the 
contractor has a chance to review the time data. A surgical association 
recommended that the unadjusted RUC or Harvard times be used in our 
practice expense calculations because the adjustments were arbitrary; 
for example the time for E/M codes was increased by 4 to 6 percent 
which has a serious impact. The commenter included a lengthy technical 
attachment entitled, ``Are Physician Time Data Correct?'' A primary 
care organization also stated it is not convinced that our decision to 
adjust the Harvard time data to ensure consistency between the RUC and 
Harvard data is appropriate.
    Response: The adjustment to reconcile the Harvard and RUC physician 
times was proposed in the June 5, 1998 proposed rule (63 FR 30818) and 
was adopted in the November 2, 1998 final rule (63 FR 58814). In this 
final rule we stated, ``We still believe this adjustment is appropriate 
and we will continue to use the adjusted values in our calculations for 
this final rule.'' There was not a discussion or proposal on this issue 
in the July 22, 1999 proposed rule. Therefore, we are not changing or 
dispensing with these adjustments in this final rule. However, we agree 
that the accuracy and consistency of the physician time data is vitally 
important to the appropriate calculation of the specialty practice 
expense pools, and we welcome further discussion on this issue from all 
parties. As noted above, we have asked our contractor to develop 
options for validating the Harvard and RUC time data and will share 
this discussion and any recommended options with the medical community.
    Comment: One organization noted that, for services with a small 
amount of time, a minor error in the time allotted can result in a 
relatively large difference in the practice expense allocated to such 
services. The commenter also recommended that we consider using an 
alternative approach for determining the time used in the calculation 
of practice expense for those services not performed by physicians.
    Response: We would be interested in receiving any suggestions about 
improved methods of verifying time for any specialty, physician or non-
physician, and would be glad to consider any specific approaches that 
the commenter might want to suggest.
    Comment: The American Psychiatric Association commented that the 
physician times for psychotherapy codes with E/M services are sometimes 
less than those services without an E/M component. The commenter 
recommended that the times assigned to the codes with E/M be increased 
so that they are seven minutes more than the corresponding service 
without E/M.
    Response: We agree that the codes with E/M should be at least equal 
to those corresponding codes without E/M and are making this 
adjustment. The current discrepancy in times could be due to the 
previous changes in the coding of psychiatric services. However, we 
believe that any further increases in time for these codes might be 
better addressed during the 5-year review of work or by the RUC 
process.
    Comment: The American Psychiatric Association also commented that 
the physician times for CPT code 90847 (family psychotherapy with 
patient present) should be increased from 76 minutes to 101 minutes, so 
that it is the same as CPT code 90846 (family psychotherapy without 
patient present) and that the physician time for CPT code 90857 
(interactive group psychotherapy) should be increased from 123 to 134 
minutes so it is the same as CPT code 90853 (group psychotherapy).
    Response: The times for these codes were originally assigned by the 
RUC and were not affected by the change in CPT coding for psychiatric 
services. Therefore, we have decided to defer changes in these times to 
either the RUC process or the 5-year review.

Crosswalk Issues

Physical and Occupational Therapy Indirect Costs

    Based upon comments received on the November 2, 1998 rule and after 
consultation with industry representatives, we proposed increasing the 
estimated space requirements that were used as part of the calculation 
of the indirect practice expense per hour for physical and occupational 
therapists from 250 square feet to 500 square feet per therapist.
    Comment: The APTA commended us for recognizing that 250 square feet 
is not representative of the actual space needed by therapists in 
private practice and for proposing to increase the space allocation to 
500 square feet. However, APTA asserted that 700-850 square feet is a 
more accurate measure of the square feet required for such therapists.
    Response: As stated in our proposed rule of July 1999, we currently 
crosswalk physical and occupational therapy services to the ``all 
physician'' practice expense per hour for direct costs. However, for 
indirect costs we believed that the crosswalk to ``all physicians'' 
would overstate the actual practice expense for therapy services. 
Instead, we used the data that were used to develop the therapy salary 
equivalency guidelines to create the practice expense per hour for 
these costs. These guidelines, which were developed for therapists 
working under contract for a facility, assumed a required space of 250 
square feet per therapist. After further consideration of previous 
objections received from organizations representing both physical and 
occupational therapists about the insufficiency of the 250 square feet, 
we agreed that the 250 square feet space requirements might not be 
representative of the actual space needed by privately practicing 
therapists. Based on our analysis of the available data, we increased 
the space requirements to 500 feet.
    We have carefully considered the treatment space necessary for a 
therapist in private practice and have determined that 500 square feet 
or a space 25 feet by 20 feet is more than sufficient space for a 
single therapist to deliver services to a single typical patient. 
Although some treatment areas are larger, they are designed for 
multiple therapists to work simultaneously and serve multiple patients. 
Space requirements for areas such as waiting rooms, record rooms, and 
restrooms are considered in the overhead for therapists in private 
practice.
    Comment: Several organizations have remained strongly opposed to 
the use of salary equivalency guidelines to determine the clerical, 
office, and other practice expense pools for therapists. The 
associations recommended the SMS data in the ``all physician'' category 
as a more accurate measure of the expenses associated with operating a 
therapist's office. These commenters contended that the salary 
equivalency guidelines were not intended to serve as the basis for 
payment for patient treatment delivered in the therapist's office but 
rather to pay providers directly for these services when furnished by 
contract therapists who maintained separate administrative offices. 
They stated that

[[Page 59405]]

the guidelines established the maximum hourly rates that Medicare will 
reimburse the provider for therapy services furnished by such 
therapists. Thus, they argued that the salary equivalency guidelines 
should not be used to determine the clerical, office, and other 
practice expense pools for therapists because the overhead costs data 
used in the guidelines are associated with operating a contract 
therapist's administrative office but not the setting where the 
clinical services are furnished.
    Response: We continue to believe the salary equivalency guidelines 
better approximate the actual expenses for this cost pool than the 
``all physicians'' practice expense category. As previously stated, we 
believe that using the ``all physicians'' practice expense category 
would considerably overstate the actual practice expense for 
occupational and physical therapists. We will continue to use the 
salary equivalency guidelines to calculate this portion of the practice 
expense pool for occupational and physical therapists for this final 
rule. However, during the refinement process, we will consider all data 
submitted on any service.
    Comment: An association objected to the use of salary equivalency 
data to determine the indirect expense portion of the practice expense 
portions of the RVUs. The association recommended that we use SMS 
survey data for a specialty whose indirect cost structure is similar to 
that of a therapy provider. It was suggested that the SMS survey data 
on physical medicine and rehabilitation, manipulation therapy or 
podiatry would be a more accurate measure of the expenses associated 
with operating a physical therapy office than the salary equivalency 
guidelines.
    Response: There is no SMS data specifically regarding podiatry 
services. The other recommended specialties are primarily hospital-
based. Therefore, we continue to believe that the salary equivalency 
guidelines are the best estimate of the indirect costs for outpatient 
rehabilitation services.

Vascular Surgery

    Based upon comments received on last year's proposed and final 
rules, we proposed to change vascular surgery's crosswalk from 
cardiothoracic surgery to the ``all physician'' practice expense per 
hour because this more appropriately reflects the office-based nature 
of much of vascular surgery's caseload.
    Comment: The International Society for Cardiovascular Surgery and 
The Society for Vascular Surgery stated their appreciation for the 
interim increase in vascular surgery's practice expense per hour to the 
``all physician'' rate. However, the Societies are concerned that, 
despite this 5.8 percent increase in the practice expense per hour, and 
the overall lack of impact on vascular surgery of removing clinical 
staff from the facility setting, the fully implemented resource-based 
practice expense RVUs for eleven of their top fifteen services were 
decreased in the proposed rule. The American College of Surgeons (ACS) 
agreed that vascular surgeons have patients with more co-morbidities 
who require more E/M services than certain other specialties. The ACS 
thus supported the change in the crosswalk of vascular surgery from 
cardiac and thoracic surgeons to the ``all physician'' practice expense 
per hour.
    Response: We agree with the commenters that the use of the ``all 
physician'' practice expense per hour rate is an appropriate interim 
crosswalk for vascular surgery, and we are implementing this change. 
Concerning the decrease in the practice expense RVUs for the 11 listed 
services, all of these services are facility services that were 
originally assigned large amounts of clinical staff time in the 
facility setting. Because vascular surgeons perform a relatively large 
number of office-based services as well, the impact of the decreases in 
their facility services was offset by the increases in their office-
based services, and therefore the removal of the inputs for clinical 
staff in the facility had little impact on the specialty as a whole.

Calculation of Practice Expense Pools--Other Issues

Medicare Claims Data

    Comment: The American College of Cardiology recommended that we use 
the most current Medicare claims data available because in the older 
data many cardiologists identified themselves as internists. This had 
the effect of decreasing the size of cardiology's practice expense 
pool.
    Response: We will be using the 1998 Medicare claims data, the most 
current data available, for the purposes of calculating expense RVUs 
for the year 2000.

``Zero Work'' Pool

    In the November 2, 1998 final rule, as an interim solution, we 
created a separate practice expense pool for all services with zero 
work RVUs because of the possibility that inaccuracies in the data were 
causing substantial reductions for these services. We used the ``all 
physicians'' category for the practice expense per hour for this pool 
and instead of allocating this pool by the CPEP data, we used the 1998 
RVUs as the allocator. This was of benefit to most of the services 
included in this interim separate expense pool, but some specialties 
such as sleep medicine, neurology, ophthalmology and pathology were 
negatively affected by this methodological change. We received comments 
requesting that certain services negatively impacted by the adjustment 
in the 1998 final rule be taken out of this special pool and instead be 
treated in the same way as the vast majority of codes (that is, treated 
in the same manner as they were treated before the 1998 final rule 
adjustment). In the proposed rule, we requested comments both on an 
adjustment in general and on specific services that should either be 
included or excluded from the adjustment.
    Comment: We received many comments supporting the removal of 
requested services for the ``zero'' work pool. The comment from the AMA 
urged us to implement this provision with respect to any codes that 
specialties have requested be removed from the ``zero work'' pool. The 
AMA supported the establishment of this pool but only for true 
radiology services; all other ``zero work'' services should be 
developed in the same way as other services provided by the other 
specialties. Another comment from an organization representing primary 
care physicians supported a proposal to treat codes with zero work RVUs 
more consistently with other codes in the fee schedule. This commenter 
stated that the reason given for the creation of the pool was concern 
about possible inaccuracies in the CPEP data for the ``zero work'' 
codes, but since concern was expressed regarding the data for other 
codes as well, ``zero work'' codes should not be given special 
treatment. Several organizations representing ophthalmology and 
optometry opposed the use of the ``zero work'' pool and favored 
removing the ophthalmology codes from this pool. These commenters 
contended that the current approach is not resource-based and that the 
creation of the ``zero work'' pool undermined the rationale of the top-
down approach. In addition, the commenters stated that ophthalmology 
has a practice expense per hour that is much higher than the ``all 
physician'' rate assigned to the ``zero work'' pool and that neither 
optometry nor ophthalmology were among the specialties requesting a 
change in methodology for their ``zero work'' services, because the 
data for eye care services is relatively good. A major surgical 
specialty society supported

[[Page 59406]]

plans to move services with zero work RVUs from their own pool and to 
treat them like other services and opposed retaining any services in 
the special pool.
    Several specialty societies representing imaging services, 
radiation oncology, cardiology subspecialties, and vascular surgery 
objected to the removal of any services from the ``zero work'' practice 
expense pool or modification of this pool. One of these commenters 
stated that the ``zero work'' pool should be retained, because it was 
created to approximate the costs of independently owned facilities that 
are not captured in the SMS data. The commenter offered as an 
alternative recommendation that the current RVUs of those services in 
the pool be maintained even if other codes are extracted from the pool. 
Several of the commenters stated that, because the current technical 
component allowances are virtually identical to those in effect prior 
to the institution of resource-based practice expense RVUs, a decision, 
which the commenters support, appeared to be have been made by HCFA 
that these values should remain unchanged pending further data 
collection and analysis. For those services that have been 
disadvantaged by their move to this ``zero work'' pool, the commenters 
suggested that we change their charge-based RVUs without removing them 
from the ``zero work'' pool. One commenter suggested that all ``zero'' 
work codes should be treated uniformly and the fact that some of these 
services fared better under the original top-down methodology is not a 
sufficient basis for removing them from the ``zero work'' pool.
    Response: We still believe that, although we regard the ``zero 
work'' pool as an interim solution, there is a need to maintain this 
pool until we have greater confidence in the data for the technical 
component and ``zero work'' services. However, we do not believe that 
we should force specialties to keep their services in this ``zero 
work'' pool if there is a stated preference to have these services 
treated by the same methodology as the vast majority of services. We 
also do not agree that our decision to create the ``zero work'' pool 
implied that the values for the technical component (TC) codes should 
necessarily be maintained in the change from a charge-based to a 
resource-based practice expense methodology. In the 1998 proposed rule, 
before we created the ``zero work'' pool, many of the TC services would 
have received large decreases in practice expense RVUs. In response to 
comments in the final rule of the same year, we stated, ``the 
possibility exists that inaccuracies in the CPEP data * * * are causing 
the substantial reductions * * *. Therefore * * * as an interim 
solution until the CPEP data for these services have been validated, we 
have created a practice expense pool for all services without work 
RVUs.'' The purpose of this pool was only to protect the TC services 
from the substantial decreases referred to in the above quote until 
further refinement could take place; the purpose, notwithstanding the 
specific outcomes of the complex practice expense calculations, was not 
to guarantee that these services alone would be unaffected by any 
changes in our methodology. We also stated that we were not convinced 
that there was a bias in the SMS survey data against TC services, 
although we agreed to examine the issue during refinement.
    While the creation of the ``no work'' pool was of benefit to most 
of the TC services contained in it, there was an unintended result of 
the pool's creation: the values of some specialties' TC services were 
severely reduced. We believe that it is appropriate to remove those 
services from the ``no work'' pool if the specialties performing these 
services make that request. We have no basis for increasing the charge-
based RVUs for these codes as a way to offset the negative effects of 
the ``no work'' pool.
    Comment: The following comments were received that requested 
services be removed from the ``zero work'' pool:
    <bullet> The American Academy of Sleep Medicine reiterated their 
request that the TC of CPT codes 95805 through 95811 be moved back into 
the practice expense pools of the specialties performing these 
services, allocating these pools using the CPEP data. The commenter 
stated that this recommendation has the support of the major 
organizations whose members provide sleep medicine services.
    <bullet> The American Society of Electroneurodiagnostic 
Technologists supported the removal of neurology codes, CPT codes 95808 
through 95956, from the ``zero work'' pool.
    <bullet> The National Association of Epilepsy Centers, supported by 
the American Academy of Neurology, requested the removal of four of the 
major epilepsy services, CPT codes 95950, 95951, 95954, and 95956 from 
the ``zero work'' pool. The commenter stated that the resource-based 
data for these services collected through the CPEP process is more 
representative of the costs of these services than the charge-based 
values.
    <bullet> The American Academy of Neurology commented that CPT codes 
95805 through 95956 should be removed from the ``zero work'' pool 
because the CPEP-derived RVUs are more accurate than the historical 
charge-based values.
    <bullet> The American College of Chest Physicians supported the 
proposal to move the sleep medicine CPT codes out of the ``zero work'' 
pool, and requested that any of the pulmonary CPT codes 94010 through 
94799 that are contained in this pool be treated in the same way.
    <bullet> The American Academy of Ophthalmology requested that we 
move any of the CPT codes 76511 through 76529 and 92081 through 92499 
that are in the ``zero work'' pool back into the practice expense pools 
of the specialties that are providing these services. For all of these 
codes, ophthalmologists are the predominant specialty. This change is 
also supported in comments from the American Society of Cataract and 
Refractive Surgery. The American Optometric Association made the same 
request and added CPT codes 92060 and 92065 to the list of codes to 
remove; this same request was made by the Macula, Retina and Vitreous 
Societies.
    <bullet> The College of American Pathologists requested that CPEP 
data be used to calculate all pathology technical component RVUs for 
the year 2000 rather than historical charge data. This recommendation 
was also supported by comments from the American Academy of Dermatology 
and individual commenters.
    Response: We will remove all of the above services from the ``zero 
work'' pool and return them to the practice expense pools of the 
specialties performing the services.
    Comment: The American College of Cardiology, the American Society 
of Echocardiography, and the American Society of Nuclear Cardiology 
commented that CPT codes 93307 and 93350 should not be removed from the 
``zero work'' pool.
    Response: We will leave these services in the ``zero work'' pool as 
requested by the commenters.

Site-of-Service Differential

Clarification of Site-of-Service Policy

    In the 1998 final rule, we defined hospitals, skilled nursing 
facilities (SNFs) and ambulatory surgical centers (ASCs) as facilities 
for practice expense purposes. For purposes of physician practice 
expenses, all other sites of service are considered to be non-facility 
settings. The distinction between the non-facility and facility setting 
takes into account the higher expenses of the practitioner in the non-
facility setting, where the practitioner typically bears the cost of 
the resources (for example,

[[Page 59407]]

clinical staff, supplies and equipment) associated with the service.
    The major purpose of the site of service distinction is to ensure 
that Medicare does not make a duplicate payment for any of the practice 
expenses incurred in providing a service for a Medicare patient. When 
the beneficiary is a hospital, SNF or ASC patient, the facility is paid 
for the clinical staff, supplies and equipment needed to take care of 
that patient, and the lower facility rate should be paid to the 
practitioner. Therefore, if the patient is a facility patient or if a 
facility bills for the service, the practitioner must bill for a 
facility site-of-service so that the practice expense accurately 
reflects the setting in which the service was furnished. In the 
proposed rule, we clarified the circumstances under which either the 
non-facility or facility RVUs are used to calculate payment for a 
service. Specifically, we clarified application of the site-of-service 
differential for procedures performed in an ASC that are not on the 
Medicare approved list; for therapy services provided in the facility 
setting; and for services provided to facilities where there is a 
``mixture'' of nursing home and SNF patients. With respect to provision 
of services in a ``mixed'' facility, we specifically solicited comments 
on ways to examine the relative costs of treating patients in different 
settings, so that we can determine whether an adjustment to certain 
non-facility practice expense payments is appropriate.
    Comment: One organization objected to our stated policy that, in a 
mixed facility, the physician is responsible for ascertaining that 
there will be no Part A bill for the service in order to use the non-
facility designation. The commenter stated that this would be a time 
consuming effort.
    Response: We do not believe that it would be an onerous task for 
the physician to determine at the time of service whether the patient 
is a SNF or a nursing home patient. This information is needed to pay 
the bill correctly, and the physician is in the best position to obtain 
this information quickly.
    Comment: The Renal Physicians Association, supported by comments 
from the American College of Physicians/The American Society of 
Internal Medicine, expressed concern about the application of the site-
of-service differential to the monthly capitated payment (MCP) for end-
stage renal disease services (CPT codes 90918 through 90921). The 
commenter stated that the series of E/M services that are represented 
by the MCP are highly variable and unpredictable and can be provided in 
a multitude of settings during the month. Therefore, the use of the 
site-of-service differential is not relevant to the MCP and should not 
apply.
    Response: We agree that the site-of-service designations are not 
meaningful for a monthly service that may be provided in different 
settings for the same patient during a given month. Therefore, CPT 
codes 90918 through 90921 should always be reported as a nonfacility 
service.
    Comment: An association representing speech-language pathologists 
and audiologists sought confirmation that there are no settings where 
speech-language pathology and audiology services would be classified as 
facility based for purposes of the physician fee schedule.
    Response: The commenter is correct. As stated in the final rule of 
November 2, 1998, outpatient rehabilitation services are subject to the 
non-facility based practice expense.
    Comment: One specialty society reiterated their belief that the 
site-of-service differential is inappropriately applied to some 
pediatric subspecialty services performed in the facility setting. The 
commenter maintained that the use of the facility practice expense RVUs 
could sacrifice access to high quality pediatric care. Two 
organizations representing gastroenterologists objected to the use of 
the site-of-service differential for endoscopy services, which require 
conscious sedation, because the higher rate paid for these services in 
the office could provide an incentive for physicians to perform these 
procedures in the inappropriate office setting. One of these commenters 
argued that we should either use a threshold that would require a 
procedure be performed a given percent of the time in the office before 
applying the site-of-service rule, or adopt MEDPAC's recommendation to 
establish a clinical consensus about the settings in which a service 
should be provided. An organization representing podiatrists commented 
that because they bring their own supplies into a skilled nursing 
facility (SNF) when providing services in that site, the lower facility 
rate should not be applied. The commenter contended that, even though 
multiple patients may be seen, each patient requires individual 
treatment. Another organization suggested we establish a site-of-
service differential for services performed in a SNF in order to 
correct the inadequacies of payment for services performed in this 
site. An individual physician commented that there should not be a 
site-of-service penalty for the 67900 series of CPT codes, because 
these procedures are most safely and appropriately done in the facility 
setting.
    Response: We believe that these commenters do not understand the 
purpose or the calculation of the site-of-service differential under 
our new resource-based practice expense methodology. As stated above, 
the purpose of the differential is both to ensure that Medicare does 
not make a duplicate payment for any of the practice expenses incurred 
and to take into account the higher expenses of the practitioner in the 
non-facility setting. To the extent that the appropriate practice 
expense inputs--clinical staff, supplies and equipment, and indirect 
costs--have been assigned to the two settings, there should be no 
question of penalizing those who perform their services in a facility. 
The difference in practice expense RVUs in the two settings should only 
reflect the difference in the relative costs of performing that 
particular procedure in the facility or office setting. For that reason 
there should also be no financial incentive to perform a service in one 
or the other setting. As stated in previous rules, if there is evidence 
that it is not safe to perform a particular service in the office 
setting, this information should be submitted to HCFA's Office of 
Clinical Standards and Quality.

Limitation on Facility RVUs

    As we explained in the proposed rule, non-facility RVUs would be 
expected to be higher than the facility RVUs for a given service, 
because the practitioner bears the costs of the necessary clinical 
staff, supplies, and equipment. However, because of anomalies in our 
calculations, generally due to the different mix of specialties 
delivering the service in the two settings, for some codes the facility 
RVUs are higher than the non-facility RVUs. We proposed to limit the 
facility rate so that it cannot be higher than the non-facility rate 
for any given code.
    Comment: An association representing urologists commented that we 
should not assume that any higher facility rate is always due to 
calculation errors and that we should evaluate these codes further 
before implementing the proposal. The AMA and an association 
representing gastroenterologists stated their belief that the 
imposition of such an across-the-board limit on facility RVUs is 
inappropriate, because the higher practice expense RVUs in the facility 
may be due to the different mix of specialties that care for the more 
complex, more costly cases in the facility setting. The AMA recommended

[[Page 59408]]

that we either use a weighted average of the RVUs from both settings or 
maintain the higher facility practice expense RVUs until each affected 
code can be reviewed.
    Several primary care organizations commented that they agree with 
the proposal to limit the facility rate so that it cannot be higher 
than the non-facility rate for any given code. One commenter agreed 
that non-facility RVUs would be higher than facility RVUs for a given 
service, because the practitioner bears the costs of the staff, 
supplies and equipment needed. Another commenter also supported the 
proposal because it addresses some of the anomalies in the practice 
expense RVUs.
    Response: We will implement the proposal so that the facility 
practice expense RVUs can never be higher than the non-facility 
practice expense RVUs. Because practice costs would always be expected 
to be at least somewhat higher in the office setting, where the 
practitioner is responsible for the costs of the staff, supplies and 
equipment, it would be an anomaly for the facility setting to have 
higher practice expense RVUs assigned. This adjustment only affects 222 
facility services at this time, and the decrease in value for the 
affected services is minimal. There is no impact on any specialty as a 
result of this adjustment.
    Comment: One commenter stated that we stated under Site-of-Service 
Differential in the July 1999 proposed rule (64 FR 39622) our policy 
that when a service is performed in an ASC and the service is not on 
the Medicare approved list of procedures and we do not make a facility 
payment to the ASC, we consider the ASC a physician's office and use 
the non-facility (higher) RVUs. However, the commenter notes that in 
our proposed revision in Sec. 414.22(b)(5)(I) in the July 1999 proposed 
rule (62 FR 39641) we do not clearly state this point.
    Response: Upon review, we agree that our revision to 42 CFR 
Sec. 414.22 is not clear enough. We appreciate the commenter bringing 
this oversight to our attention. We, therefore, are revising 
Sec. 414.22 (b)(5)(i) to clarify that, when a physician performs a 
procedure on the ASC approved procedures list in an ASC, the lower 
facility practice expense RVUs apply, and that when a physician 
performs a procedure in an ASC that is not on the ASC approved 
procedures list, the higher non-facility practice expense RVUs apply.

C. Adjustment to the Practice Expense Relative Value Units for a 
Physician's Interpretation of Abnormal Papanicolaou Smears

    As explained in the July 22, 1999 proposed rule, the codes for a 
physician's interpretation of an abnormal Papanicolaou (Pap) smear were 
revised in the November 1998 final rule to include three HCPCS level II 
codes (P3001, G0124, and G0141) in addition to the CPT code 88141. This 
revision was made to accommodate differences in Pap smear technology, 
and we evaluated the practice expense RVUs for each of these three 
codes in a slightly different manner. We now believe that it would be 
more appropriate to evaluate the work, practice expense, and 
malpractice RVUs for these codes identically and comparable to the 
values for CPT code 88141.
    We received a comment from one organization in support of our 
proposal. We are finalizing this proposal and making the practice 
expense RVUs identical for HCPCS codes P3001, G0124 and G0141.

D. Physician Pathology Services and Independent Laboratories

    We proposed to revise our regulations to end payments to 
independent laboratories under the physician fee schedule for technical 
component physician pathology services furnished to hospital 
inpatients. (Some hospitals provide pathology services through hospital 
laboratories, and this provision does not affect them.) Under this 
proposal, independent laboratories would still be able to bill and 
receive payment from their Medicare carrier for the technical component 
of a physician pathology service furnished to beneficiaries who are not 
hospital inpatients. For the technical component of physician pathology 
services provided to a hospital inpatient, the hospital would have to 
bill and the independent laboratory would have to make arrangements 
with the hospital to receive payment.
    Specifically, we proposed revising Sec. 415.130(c) to state that 
after December 31, 1999, we would pay only hospitals for technical 
components of physician pathology services furnished to their 
inpatients.
    We received 55 comments mainly from pathology groups. Most of these 
commenters requested that the proposed regulation be withdrawn and the 
current policy continued. Other commenters, mainly specialty 
organizations, recommended that the implementation of the proposal be 
delayed two years and that arrangements in effect as of July 22, 1999, 
the date of the proposed regulation, be grandfathered and the current 
payment policy continued for them.
    Comment: Several commenters pointed out that if the proposal is 
implemented, hospitals might not compensate the independent 
laboratories for the technical component of physician pathology 
services. They referred to past practices where hospitals have not 
adequately compensated hospital pathologists for management functions 
related to the clinical laboratory, even though this cost was 
appropriately reflected in the hospital's prospective payment. The 
commenters refer to the Office of the Inspector General's (OIG) 1991 
``Report of Financial Relationships between Hospitals and Hospital-
Based Physicians'' as well as the OIG's 1998 ``Compliance Program 
Guidance for Hospitals''. One commenter specifically asked if HCFA and 
OIG would create a safe harbor that sets forth a ``bright line'', for 
example 80 percent of the physician fee schedule allowance, for deeming 
as reasonable the negotiated technical component between hospitals that 
bill for the TC service and the independent laboratories that provide 
the service to the hospitals.
    Response: The anti-kickback statute, section 1128B(b) of the Act, 
prohibits any person from soliciting or accepting anything of value to 
induce the referral of business that is reimbursable by a Federal 
health care program. If a hospital were to condition, express or 
implied, the referral of physician pathology services to a clinical 
laboratory on the lab's agreement to accept less than fair market value 
for the technical component, it would implicate the anti-kickback 
statute. Under section 1128D(b)(3) of the Act, the OIG is prohibited 
from determining what constitutes fair market value in any specific 
situation.
    Comment: Some commenters contend that the factual information in 
the proposed rule is not correct and question whether double payment 
is, indeed, being made for the TC services. They believe there is 
significant question about whether, when the diagnostic related groups 
(DRGs) were constructed, initially priced and updated through the 
years, the TC for physician pathology services were adequately captured 
and incorporated in the DRGs. A few commenters remarked that it was and 
is the common practice in their State for hospitals to out-source the 
TC of physician pathology services to independent laboratories.

[[Page 59409]]

    Response: Before the prospective payment system (PPS) system was 
implemented in 1983, we advised intermediaries that hospitals could 
appropriately include in their base period costs the laboratory cost of 
the physician pathology services furnished directly to hospital 
inpatients by that hospital laboratory. At the same time, we stated 
that if an independent laboratory billed the carrier for the physician 
pathology services, it could continue to do so, and these costs should 
not be included in the hospital's base period costs. At that time, the 
TC was incidental to the pathologist's professional service, and was 
not treated as a service in itself; it was the common practice at that 
time for the independent laboratory to bill a single charge that 
reflected both the TC and the PC physician pathology service.
    During the early, transitional years of the PPS, the prospective 
payment was based on a blend of a target amount (reflecting the 
hospital's specific cost) and a DRG amount. The DRG amount was a blend 
of regional and national standardized amounts, with separate 
standardized amounts for rural and urban areas. After the transition, 
hospital specific amounts were no longer used in payment, except for 
sole community hospitals. In Federal fiscal year 1995, the separate 
rural rate was eliminated, and rural hospitals began receiving the same 
rate as urban hospitals.
    Given that urban hospitals were much more likely to have the 
laboratory costs of physician pathology services included in their PPS 
base period costs used to calculate the urban standardized amount, it 
is our view that the DRG payment methodology compensates hospitals for 
the TC of physician pathology services. Also, the elimination of the 
separate rural standardized amount in Federal fiscal year 1995 
similarly compensates rural hospitals for the TC of physician pathology 
services. It would be improper to continue to allow hospitals to 
receive Part A payments that reflect the TC of physician pathology 
services and simultaneously allow an independent laboratory to bill and 
be paid under the physician fee schedule for the same service.
    Comment: A few commenters question the assumption in the regulatory 
impact analysis that 60 percent of the allowed charges for independent 
laboratories represent billings for hospital inpatients. Based on 
information from its membership, the College of American Pathologists 
(CAP) estimated that, on average, 20 percent of Medicare payments to 
independent laboratories are for Medicare inpatient services. The 
commenters requested that this estimate of savings to Medicare be 
appropriately reduced.
    Response: We are accepting CAP's comment and calculating the 
estimate based on this information.

Result of Evaluation of Comments

    We are adopting our proposal to pay only hospitals for the TC of 
pathology services furnished to its inpatients, but delaying 
implementation until January 1, 2001 to allow independent laboratories 
and hospitals sufficient time to negotiate arrangements.

E. Discontinuous Anesthesia Time

    We proposed to revise our regulations to allow anesthesiologists 
and certified registered nurse anesthetists (CRNAs) to sum blocks of 
time around a break in continuous anesthesia care as long as there is 
continuous monitoring of the patient within the blocks of time. Payment 
for anesthesia services is based on the sum of base units plus time 
units multiplied by a locality-specific anesthesia CF. Under current 
regulations at Sec. 414.46(a)(1) (Additional rules for payment of 
anesthesia services), the base unit is the value for each anesthesia 
code reflecting all activities other than anesthesia time. Anesthesia 
time, as defined under Sec. 414.46(a)(2), starts when the 
anesthesiologist or CRNA prepares the patient for anesthesia care and 
ends when the anesthesiologist or CRNA is no longer in personal 
attendance; that is, when the patient is placed under postoperative 
care. While in most instances the anesthesiologist or CRNA remains 
continuously with the patient from the establishment of venous access 
to the conclusion of anesthesia attendance, there may be instances when 
there are breaks in the continuous presence of the anesthesiologist or 
CRNA. (See the July 22, 1999 proposed rule (64 FR 39624) for specific 
examples.) We proposed to revise the regulations in Sec. 414.46 to 
include this exception to the general requirement and to revise 
Sec. 414.60 (Payment for the services of CRNAs) to clarify this issue.
    Comment: Both of the national specialty groups, the American 
Society of Anesthesiologists and the American Association of Nurse 
Anesthetists, support the proposal to allow anesthesiologists and CRNAs 
to sum blocks of anesthesia time around a break in continuous 
anesthesia care as long as there is continuous monitoring of the 
patient within the blocks of time. Both groups requested that we 
provide guidance to anesthesiologists and CRNAs on how to report 
discontinuous anesthesia time.
    Response: Anesthesiologists and CRNAs should report the total 
anesthesia time on the HCFA claim form as the sum of the continuous 
anesthesia block times. The medical record should be documented so that 
a medical record auditor can see the continuous and discontinuous 
periods and that the reported total anesthesia time sums to the blocks 
of continuous time.
    Result of Evaluation of Comments: We are adopting the proposed 
policy and are revising the regulations accordingly.

F. Optometrist Services

    The provisions of OBRA 1986 expanded coverage for optometrist 
services. While this statutory provision had been implemented through 
manual provisions, we had not revised the regulations to reflect this 
change. We proposed to revise the regulations at Sec. 410.23 
(Limitations on services of an optometrist) to specify that Medicare 
Part B pays for the services of a doctor of optometry, acting within 
the scope of his or her license, if the services would be covered as 
physicians' services if performed by a doctor of medicine or 
osteopathy. The American Optometric Association supported the proposed 
revision to the regulations.
    Comment: The American Occupational Therapy Association (AOTA) asked 
that we clarify that optometrists may certify and recertify a 
beneficiary's need for occupational therapy services. According to 
AOTA, conforming changes should be made to Sec. 424.11(e) (Limitation 
on authorization to sign statements) and relevant manual provisions on 
physician certification procedures for outpatient therapy. AOTA states 
that the proposed Sec. 410.23 codifies the statutory provision that 
places optometrists in the same category as other physicians. 
Therefore, if a service is within the optometrists' lawful scope of 
practice, they contend it is permissible for a doctor of optometry to 
certify and recertify a beneficiary's need for occupational therapy 
services.
    Response: Section 1861(r)(4) of the law provides that an 
optometrist is a physician ``only with respect to the provision of 
items or services described in section 1861(s).'' Because certification 
and recertification are not services described in section 1861(s), we 
believe that the law does not permit optometrists to be considered 
physicians for the performance of these functions. We are changing the 
text of the regulation (Sec. 410.23) to more directly reflect the 
language of the law.
    Result of Evaluation of Comments: We are revising the regulations 
at Sec. 410.23

[[Page 59410]]

to specify that Medicare Part B pays for services of a doctor of 
optometry, acting within the scope of his or her license, if he or she 
furnishes services described in section 1861(s) that would be covered 
as physicians' services when performed by a doctor of medicine or 
osteopathy.

G. Assisted Suicide

    The Assisted Suicide Funding Restriction Act of 1997 prohibits the 
use of Federal funds to furnish or pay for any health care service or 
health benefit coverage for the purpose of causing, or assisting to 
cause, the death of an individual. The prohibition does not apply to 
withholding or withdrawing medical treatment, nutrition, or hydration. 
In addition, the prohibition does not apply to furnishing a service to 
alleviate pain, even if doing so may increase the risk of death, as 
long as the purpose is not to cause or assist in causing death.
    We are conforming our regulations to the provisions of this Act by 
adding a new paragraph (q) to Sec. 411.15 (Particular services excluded 
from coverage) to exclude from coverage any health care service for the 
specific purpose of causing, or assisting to cause, the death of an 
individual. Long standing Medicare policy has excluded such services 
under section 1862(a)(1)(A) of the Act. This section of the Act states 
that no payment may be made under Part A or Part B for any expenses for 
items or services that are not necessary for the diagnosis or treatment 
of illness or injury or to improve the functioning of a malformed body 
member.
    One physician group expressed support for this provision, and we 
are including the provision in the final rule.

H. CPT Modifier -25

    Currently, the global surgery payment policies described in section 
4820 of the Medicare Carriers Manual apply to procedures that have 
global periods of 0, 10, and 90 days as shown on the physician fee 
schedule database. We proposed to apply these policies also to those 
services and procedures for which the global period indicator is 
``XXX.'' Currently, it is only when a significant, separately 
identifiable E/M service is furnished before furnishing a procedure 
with a global period of 0, 10, or 90 days that the E/M service may be 
paid in addition to the procedure. The coding mechanism for indicating 
that the E/M service is not related to the surgical procedure is to 
append modifier -25 (significant, separately identifiable evaluation 
and management service by the same physician on the same day of the 
procedure or other service) to the E/M service code.
    We proposed that, for selected procedures that have a global period 
indicator of ``XXX,'' when a significant, separately identifiable E/M 
service is furnished at the same time by the same physician, the 
physician must append to the E/M service code the modifier -25.
    The basis for this policy is that, because every procedure has an 
inherent E/M component, for an E/M service to be paid separately, a 
significant, separately identifiable service would need to be 
documented in the medical record. In other words, we want to prevent 
the practice of physicians reporting an E/M service code for the 
inherent evaluative component of the procedure itself.
    Comment: Some commenters expressed the view that rather than 
implement this coding instruction, the carrier should determine if 
there is a problem with a physician billing for E/M codes with surgical 
codes and target the physician for review.
    Response: We have received this suggestion many times in relation 
to other proposed coding edits. It is only within the past few years 
that the CPT Editorial Panel has begun to articulate more clarifying 
guidelines pertaining to the use of CPT-4 codes. In the meantime, the 
Congress has mandated that we promote uniformity in paying for 
services. Establishing coding principles associated with the CPT-4 
coding system helps to achieve uniformity. We believe that establishing 
coding guidelines is an important adjunct to conducting reviews of 
problem practitioners.
    Comment: Many commenters agreed that the proposal is consistent 
with CPT guidelines but strongly urged clarification of the categories 
of services to which this policy would apply. For example, these 
commenters were unclear whether this policy would apply to diagnostic 
tests, immunizations, laboratory, and pathology services.
    Response: We are not making a blanket requirement that modifier -25 
be used with every code in a specific category of services. Rather, we 
will implement this coding policy for specific HCPCS codes when we 
believe there is abuse or the potential for abuse in the reporting of 
an E/M service. Before implementing an edit for a specific code 
combination, we will provide an opportunity for review by physician 
groups.
    Comment: One commenter suggested we clarify that modifier -25 
should be used and recognized as denoting a separate E/M service 
furnished in conjunction with a minor procedure bearing either the 
``XXX'' or the ``000'' global period policy.
    Response: Our current policy for using modifier -25 is applicable 
to codes with global periods of 0, 10, and 90 days as stated in section 
4822.A of the Medicare Carriers Manual. We proposed that, in furnishing 
a diagnostic or therapeutic service that has a global period of ``XXX'' 
as well, the same policy would apply and practitioners should decide 
whether the E/M component of a service having a global period of 
``XXX'' is routinely furnished as part of the procedure or is a 
significantly, separately identifiable service. In general, for 
services with global periods of ``XXX,'' as well as those with 0, 10 
and 90 days, when the E/M service is a significant, separately 
identifiable service, that is, the physician work furnished meets the 
criteria for the level of E/M service reported, modifier -25 should be 
appended to the procedure code.
    Comment: A few commenters questioned the accuracy of the statement 
in the proposal, ``Since every procedure has an inherent E/M component, 
in order for an E/M service to be billed, there must be a significant, 
separately identifiable service documented in the medical record.'' 
They asserted that the only procedures that have an ``inherent'' E/M 
component are those that are subject to our own global surgery policies 
that have been developed with input from the specialty societies. 
However, there are procedures, for example, radiation oncology services 
such as treatment planning and simulation which are not subject to our 
global surgery policies nor do they have an E/M component. Therefore, 
our statement that ``every procedure has an inherent E/M component'' is 
in error. In addition, commenters stated that since we worked with the 
CPT Editorial Panel to create modifier -25 to be used in appropriate 
specific instances, to propose using modifier -25 for all services is 
inconsistent with our previous actions. Commenters requested that we 
not implement the proposal without input from the AMA's Correct Coding 
Policy Committee (CCPC) and without adequate time for physician 
education.
    Response: One of the factors we will take into consideration as we 
identify the specific procedures for which the modifier -25 policy for 
separate payment for an E/M service will apply is whether the 
procedure, by definition, has an inherent E/M component.
    We intend to submit correct coding edits associated with this 
coding policy to the AMA's CCPC for comment with a potential 
implementation date of no

[[Page 59411]]

earlier than October 2000. Assuming CCPC's comments are furnished 
expeditiously, we believe there will be sufficient time for us to 
notify carriers of its decisions, for the specialty societies and the 
AMA to notify their members, and for carriers to publish the edits in 
their bulletins.
    Comment: Several commenters cited particular examples of diagnostic 
and treatment situations in which the E/M service and the procedure may 
be reported without the need for appending modifier -25. These examples 
are services represented by ophthalmology E/M codes 92002 through 92014 
that result in the decision to perform a visual field examination or a 
fluorescein angioscopy and urology services ``that do not have a global 
period and, therefore, an E/M service would always be performed.''
    Response: We will take these comments into consideration when we 
develop correct coding edits based on the coding instruction related to 
the use of modifier -25.
    Comment: Many commenters had reservations about the burden on 
physicians and carriers if this proposal were implemented. They were 
concerned that this proposal would lead to using modifier -25 
routinely, which in turn would lead to more carrier audits.
    Another potential result with burdensome consequences to the 
practitioner and the carrier would be the number of appeals that would 
be generated because of contested denials when the practitioner is 
found to have adequate documentation for the services furnished but the 
denial was based on inadequate information.
    Response: While we agree that these scenarios are possible, our 
experience with the coding instruction associated with the modifier -59 
(Distinct Procedural Service) has not validated this kind of concern. 
While carrier post-payment reviews of two of these scenarios, namely 
abuse of modifier -59 and lack of appropriate use of modifier -59, have 
not been extensive, we have no evidence that practitioners are 
routinely billing modifier -59 with multiple procedures performed on 
the same day by the same practitioner. The carrier claims processing 
systems contain edits that identify incorrect coding combinations. When 
an incorrect code combination is detected, payment for one of the codes 
is denied. These denials decrease Medicare expenditures. If the use of 
modifier -59 had become routine, we would expect to see an increase in 
expenditures because of the increased use of the modifier. This has not 
been the case. In fact, expenditure data show that billing of the same 
code pairs is fairly consistent from one quarter to the next, thus 
suggesting that practitioners are not routinely using modifiers.
    Comment: Other commenters suggested we identify the services that 
are problematic and work with the AMA to clarify CPT descriptions.
    Response: We will work with the AMA at the same time that we are 
implementing the modifier -25 policy.
    Comment: One specialty society stated that its members rarely 
furnish a service designated as one with no global period without 
performing services represented by an E/M visit code.
    Response: We agree that an identifiable E/M service may be 
furnished with many procedures for which no global period applies. 
However, we are concerned about those instances in which a minimum 
amount of evaluation is an inherent component of the service or 
procedure. For these instances, we do not agree that it is appropriate 
to report a minimum level E/M code in addition to the service or 
procedure.
    Comment: Pertaining to physical therapy codes, the assertion was 
made that the physical therapy evaluation codes 97001 and 97002 are not 
comparable to the ``E/M'' codes because they do not include the concept 
of ``management'' as do the E/M service codes. Since 97001 and 97002 
are not comparable to the E/M codes and since modifier -25 can be used 
only with an E/M service, it would not be appropriate for it to be used 
with a physical therapy evaluation code when the physical therapy 
evaluation code is billed with a modality or therapeutic service.
    Response: We disagree with the assertion that physical therapy 
codes are not comparable to the codes usually referred to as E/M codes. 
The E/M service codes are described in such a way that they may be used 
to report either evaluation or management services; or evaluation and 
management services. We believe that modifier -25 may accurately be 
used with evaluation codes associated with occupational therapy, 
ophthalmology, physical therapy, psychiatry, and radiation 
consultation.
    Comment: Another commenter suggested that since many private payers 
do not recognize modifiers appropriately, our policy would create 
inconsistencies in how physicians report Medicare and non-Medicare 
services.
    Response: Under the current circumstances, this comment may be 
valid in relation to the use of any modifier, not just modifier -25. It 
is expected, however, that when the relevant portions of the Health 
Insurance Portability and Accountability Act are implemented, the 
format for claims for physicians' services will be standardized. In the 
meantime, the requirement to use modifier -25 in those instances when 
the E/M service is distinguishable from the pre-procedure work may 
actually strengthen the claim for payment. This result may persuade 
other third party payers to recognize this coding guideline thereby 
ensuring more consistency in payment.
    Result of Evaluation of Comments: We have considered the comments 
we received on the proposal and are proceeding to include procedures 
with a global period indicator of ``XXX'' the application of the global 
surgery payment policy in as it relates to the use of modifier -25.
    We will not, however, require the routine use of modifier -25 with 
all procedures having a global indicator of ``XXX.'' Instead, we will 
identify specific codes with which the E/M service furnished would need 
to be one that is documented as being significant and separately 
identifiable, and, hence, should be reported with modifier -25.
    We will seek review of these codes from physician specialty 
societies as well as those nonphysician practitioners who are 
authorized to bill Medicare on their own.
    Specific procedure codes for which the use of modifier -25 is 
required when a significant, separately identifiable E/M service is 
furnished and reported by the same physician or nonphysician 
practitioner will be included as edits in the Correct Coding Initiative 
edits. These edits will be implemented no earlier than October 1, 2000 
and will continue to be added as appropriate on an ongoing basis.
    In the meantime, however, since modifiers are an inherent part of 
HCPCS, we urge all practitioners to familiarize themselves with them 
and to make it a practice to use them when applicable.

I. Nurse Practitioner Qualifications

    As explained in the July 22, 1999, proposed rule (64 FR 39608), we 
gave additional consideration to the nurse practitioner (NP) 
qualifications because we realized that the qualifications would 
exclude many experienced NPs from continuing to qualify as NPs under 
the Medicare program. It was not our intention to establish 
qualifications in the November 1998 final rule (63 FR 58874) that would 
cause experienced NPs, who have been furnishing services to Medicare 
patients, to be barred from

[[Page 59412]]

billing under the Medicare program because they do not posses a 
master's degree or national certification. Therefore, we proposed NP 
qualifications that are less restrictive but that still ensure quality 
services are furnished to Medicare patients. We proposed progressively 
enhanced qualifications, including providing lead time for NPs to 
obtain a Medicare billing number under Section 2158 of the Medicare 
Carriers Manual, national certification, or (ultimately) a master's 
degree in nursing. Specifically, we proposed to revise Sec. 410.75(b) 
so that for Medicare Part B coverage of his or her services, a nurse 
practitioner must:
    (1)(i) Be a registered professional nurse who is authorized by the 
State in which services are furnished to practice as a nurse 
practitioner in accordance with State law; and
    (ii) Be certified as a nurse practitioner by a recognized national 
certifying body that has established standards for nurse practitioners; 
or
    (2) Be a registered professional nurse who is authorized by the 
State in which the services are furnished to practice as a nurse 
practitioner in accordance with State law and has been granted a 
Medicare billing number as a nurse practitioner by December 31, 2000; 
or
    (3) Be a nurse practitioner who, on or after January 1, 2001, 
applies for a Medicare billing number for the first time and meets the 
standards for nurse practitioners in paragraphs (b)(1)(i) and 
(b)(1)(ii) of this section; or
    (4) Be a nurse practitioner who, on or after January 1, 2003, 
applies for a Medicare billing number for the first time and possesses 
a master's degree in nursing and meets the standards for nurse 
practitioners in paragraphs (b)(1)(i) and (b)(1)(ii) of this section.
    Comment: Several individuals and some organizations, including the 
American College of Nurse Practitioners, American Nurses Association, 
and the National Association of Pediatric Nurse Associates & 
Practitioners, submitted comments in support of the proposal. However, 
a couple of the commenters expressed concern that an NP whose Medicare 
number expires in the future may encounter new and more stringent 
qualification requirements depending on the year he or she reapplies 
for a new Medicare number. One commenter was also concerned that 
certain NPs, who qualify to receive Medicare billing numbers under 
current requirements, would be unfairly disadvantaged if they do not 
need to apply for Medicare numbers before January 1, 2001.
    Response: As specified in the rule, the new qualifications 
beginning January 1, 2001, would apply only to those NPs applying for 
Medicare numbers for the very first time. Therefore, an NP would be 
subject only to the qualification requirements under which he or she 
received the initial Medicare number.
    As for those NPs who qualify for the Medicare program under current 
rules but have not billed Medicare, we do not share their concern. This 
proposal was specifically intended to (1) avoid barring veteran NPs 
from continuing to furnish services to Medicare beneficiaries and, (2) 
provide a lead time for the new NPs to obtain the master's degree. 
These revised qualification requirements do not detract from our goal 
to ultimately require all Medicare NPs to have a master's degree.
    Comment: Of the physicians and physician organizations that 
submitted comments, all but the American Academy of Family Physicians 
(AAFP) opposed the proposal. They stated that it would lessen the 
qualification requirements of NPs and endanger the safety of Medicare 
patients. A few individual doctors commented that they were appalled 
because the proposed rule would allow NPs to perform and bill Medicare 
directly for physicians' services. They believed that the proposal 
would not only raise issues regarding quality of care but also 
jeopardize the Medicare Trust Fund.
    Response: It is the Social Security Act (as amended by the BBA), 
and not this proposed rule, that authorizes NPs to directly bill 
Medicare for performing physicians' services. Moreover, we do not agree 
with these conclusions because the proposed qualification requirements 
are clearly stricter than those that exist currently. We note that the 
November 1998, final rule regarding NP qualifications was scheduled to 
become effective January 1, 2000 (see 64 FR 25456). Thus, the new rule 
merely permits the veteran NPs who have been serving the Medicare 
beneficiaries to continue to do so.
    Comment: The comments from most of the physician groups, such as 
the American Medical Association, and many of the individual doctors 
suggested that we emphasize and elaborate upon the provision requiring 
NPs to collaborate with physicians. Even AAFP requested that we address 
the definition of ``collaboration'' in a rule. In addition, some 
commenters asked that we specify in a rule that NPs should perform only 
those services specifically authorized by State law.
    Response: ``Collaboration'' was not a subject of the proposed rule, 
and we have no plans at this time to change the current definition.
    Comment: The women's health care NPs requested that we begin 
requiring the master's degree in 2007 to coincide with their plan to 
require master's degree of all women's health care NPs.
    Response: We believe that the lead time provided under our proposal 
is sufficient for all new NPs to obtain the master's degree in nursing. 
We recognize that even some states do not require the master's degree. 
Nevertheless, we note that we are not precluded from establishing our 
own qualification requirements for NPs who furnish services to Medicare 
patients.

Result of Evaluation of Comments

    The rule concerning NP qualifications is adopted as proposed. In 
addition to revising Sec. 410.75(b), we are also making conforming 
changes to Sec. 485.705(c)(8).

J. Relative Value Units for Pediatric Services

    During the 5-year review, we did not appropriately adjust work RVUs 
for certain pediatric surgical services. The present values reflect E/M 
services of the postoperative period as determined in the original 
study conducted by the Harvard research team and not the subsequent 
study of pediatric surgical services performed in 1992 by the Harvard 
research team for the American Pediatric Surgical Association (APSA). 
We proposed changing the RVUs for E/M services during the global 
surgical period for pediatric surgical services to reflect the findings 
of the 1992 Harvard study.
    Comment: The American Urological Association and the American 
Academy of Pediatrics supported this proposal. The American College of 
Surgeons and the APSA forwarded information from the 1992 Harvard study 
on work RVUs for pediatric surgical services and requested we use this 
data.
    Response: We have accepted the RVUs from the 1992 Harvard study and 
have substituted them in our database.
    Result of Evaluation of Comments: We are changing the RVUs to 
reflect the 1992 data.

K. Percutaneous Thrombectomy of an Arteriovenous Fistula

    We proposed to implement a HCPCS code, defined as ``percutaneous 
thrombectomy and/or revision, arteriovenous fistula, autogenous or 
nonautogenous dialysis graft'' to be used until the AMA creates a 
permanent CPT code. We defined it analogously to open surgical 
procedures, CPT codes 36831 to 36833 and proposed a 90-day global 
period for this service to be consistent with the open surgical 
procedure codes and to facilitate comparisons with them.

[[Page 59413]]

We proposed individual local carrier pricing for the new HCPCS code.
    Comment: The International Society for Cardiovascular Surgery and 
the Society for Vascular Surgery expressed support for our proposal, 
and while the American College of Radiology was also in agreement with 
our proposal, they recommended a ``000'' global period rather than a 90 
day global, as proposed.
    Response: We continue to believe that a 90-day global period is 
appropriate for this procedure because the effectiveness has been 
compared to open thrombectomies, for which 90-day global periods are 
used.
    Comment: The American Medical Association commented that adding the 
codes to HCPCS Level II , rather than through CPT, adds to the 
potential for confusion and incorrect coding.
    Response: We have defined a HCPCS Level II code because no 
appropriate CPT code exists. These procedures are currently being 
performed, so we believe that it is necessary to have a code for 
billing even though no CPT code has yet been developed. As we have 
stated, we also plan to collect data in conjunction with the reporting 
of the new code so that we, or the CPT Editorial Panel, may refine its 
definition.
    Comment: The Society for Cardiovascular and Interventional 
Radiology expressed support for our proposal; however, they recommended 
that the ``revision'' be dropped from the code description since a 
graft revision and declotting usually occur at separate sessions and a 
revision typically involves another physician. They also recommended 
that the interim HCPCS have a global period of ``000'' like other 
percutaneous therapies rather than the 90 day period proposed and that 
RVUs should be assigned for this interim code rather than allowing the 
procedure to be carrier priced.
    A manufacturer also expressed concern about the 90 day global 
period and that this code would be carrier priced.
    Response: We have specified carrier-pricing for this procedure for 
the reasons outlined by the commenters. If this is a heterogenous 
procedure with variations in how the thrombectomy is performed or 
whether a revision is done simultaneously, the carrier will be able to 
adjust the payment appropriately. We plan to collect data regarding the 
procedure variations, and we will consider revisions of the code 
definition, global period, and alternate codes after we have reviewed 
the data.

Result of Evaluation of Comments

    We will implement this code as proposed with a 90 day global period 
and will review the collected data to determine if revisions to the 
code definition, global period and alternate codes should be made.

L. Pulse Oximetry, Temperature Gradient Studies and Venous Pressure 
Determinations

    We proposed to discontinue separate payment for CPT codes 94760, 
94761, 94762, 93740, and 93770 (pulse oximetry, temperature gradient 
studies and venous pressure determinations) and to list them in the 
physician fee schedule with a status code of ``B'' for ``payment always 
bundled into payment for other services.'' We stated that continuing to 
pay separately for these codes duplicates amounts included in both 
facility payments and practice expense RVUs.
    Comment: Several professional societies commented that we should 
not consider these services to be bundled with E/M service payments. 
One commenter noted that the CPT specifies that diagnostic studies may 
be reported separately. Another commenter stated that if we would not 
pay separately for pulse oximetry, physicians would not perform pulse 
oximetry but would refer patients for arterial blood gas 
determinations. Another commenter observed that the interpretation of 
pulse oximetry results can be complex. The American College of Chest 
Physicians and the American Academy of Sleep Medicine commented 
specifically that CPT code 94762, pulse oximetry by continuous 
overnight monitoring, is not performed in conjunction with an E/M. All 
commenters noted that pulse oximetry is a valuable procedure.
    Response: We agree that pulse oximetry is a valuable procedure. 
Because the technology has progressed and been simplified and reduced 
in cost, pulse oximetry is a routine inclusion in many procedures and 
visits. Pulse oximetry is no more invasive and arguably less invasive 
than recording the patient's temperature, another example of a 
diagnostic service for which we do not make separate payment. If 
interpretation of pulse oximetry or temperature data is complex, then 
that interpretation is clearly part of the medical decision making 
included in the E/M services. We believe that payment for pulse 
oximetry equipment is included in our facility and practice expense 
payments just as the costs of electronic thermometers are included.
    While we believe that pulse oximetry with continuous overnight 
monitoring is always performed in conjunction with an E/M service, we 
agree that the patient's use of the oximeter is separate from the 
typical use of equipment during the E/M service.
Medicare coverage policy or some type of utilization standards to guide 
Medicare carrier review.
    Response: As required by the BBA, we are developing utilization 
guidelines for manual manipulation to treat subluxation of the spine 
when an x-ray is not required.
    Result of Evaluation of Comments: We are revising Sec. 410.22(b)(1) 
to delete the x-ray requirement. Thus, this section will state that 
Medicare Part B pays only for a chiropractor's manual manipulation of 
the spine to correct a subluxation if the subluxation has resulted in a 
neuromusculoskeletal condition for which manipulation is appropriate 
treatment.

N. Coverage of Prostate Cancer Screening Tests

    Effective January 1, 2000, section 4103 of the BBA provides for 
Medicare coverage of certain prostate cancer screening tests for all 
male Medicare beneficiaries subject to certain frequency and other 
limitations. The BBA defines a prostate cancer screening test to mean a 
test (among other things) that is ``provided for the purpose of early 
detection of prostate cancer to a man over 50 years of age who has not 
had such a test during the preceding year.'' We interpreted this 
language to mean that payment may be made for a male beneficiary over 
50 years of age or older (that is, starting at least one day after he 
has attained age 50) for both an annual screening digital rectal 
examination (DRE) and an annual screening prostate-specific antigen 
(PSA) test.
    We proposed to add a new Sec. 410.39 to provide coverage for two 
types of prostate cancer screening. To ensure that the screening DRE is 
performed as safely and accurately as possible, we proposed to require, 
in Sec. 410.39(b), that the examination be performed by the patient's 
attending physician who is either a doctor of medicine or osteopathy 
(as defined in section 1861(r)(1) of the Act), or by the beneficiary's 
attending physician assistant, nurse practitioner, clinical nurse 
specialist, or certified nurse midwife (as defined in section 1861(aa) 
and section 1861(gg) of the Act) who is authorized under State law to 
perform the examinations. In Sec. 410.39(c), we proposed that payment 
may not be made for a screening DRE performed for

[[Page 59414]]

a man age 50 or younger. For a patient over 50 years of age, payment 
would be made for a screening DRE only if the beneficiary has not had 
such an examination paid for by Medicare during the preceding 11 months 
following the month in which his last Medicare-covered screening DRE 
was performed. In Sec. 410.39(d), we specified that coverage is 
available for screening PSA tests only if they are ordered by the 
beneficiary's attending physician, or by the beneficiary's attending 
physician assistant, nurse practitioner, clinical nurse specialist, or 
certified nurse midwife who is authorized to order this test under 
State law. We included this coverage requirement to assure that 
beneficiaries receive appropriate information about the potential 
implications of screening tests. In Sec. 410.39(e), we proposed that 
payment may not be made for a screening PSA test performed for a man 
age 50 or younger. For an individual over 50 years of age, payment may 
be made for a screening PSA test only if he has not had such an 
examination paid for by Medicare during the preceding 11 months 
following the month in which his last Medicare-covered screening PSA 
test was performed.
    We also created a new HCPCS code, G0102, prostate cancer screening 
DRE, to be used for the screening DRE. A DRE is a relatively quick and 
simple procedure, and we have assigned it the same value as CPT code 
99211, the lowest level E/M service. A DRE is usually furnished as part 
of an E/M service. We believe that it would be extremely rare for a DRE 
to be the only service provided during a patient encounter. For this 
reason, we proposed to bundle the DRE into the payment for an E/M 
service when a covered E/M service is furnished on the same day as a 
DRE. If the DRE is the only service furnished or is provided as part of 
an otherwise noncovered service, such as CPT code 99397 (preventive 
services visit), HCPCS code G0102 would be payable separately if all 
the aforementioned coverage requirements are met.
    We also created a new HCPCS code, G0103, prostate screening; 
prostate specific antigen (PSA), to be used for the screening PSA test. 
The screening PSA test is priced at the same payment rate as CPT code 
84153 (PSA; total) and would be paid under the clinical diagnostic 
laboratory fee schedule.
    Comment: All the comments we received on this subject supported 
implementation of the prostate cancer screening provisions created by 
the BBA. One commenter indicated that the proposed requirements are 
consistent with current professional medical standards and generally in 
accord with the views of practicing physicians and various national 
medical societies.
    However, one commenter expressed concern that the BBA was silent 
with respect to the need for the ``attending'' requirement and 
suggested that we needed to furnish additional rationale for adopting 
the requirements in the final rule. Specifically, it was suggested that 
physicians other than the beneficiary's attending physician, such as a 
physician partner, might be qualified to substitute for the attending 
physician in his or her absence from the office or clinic.
    Response: Although the BBA is silent about who should perform DREs 
or order PSA tests for Medicare patients, section 1862(a)(1)(A) of the 
Act prohibits payment for services that are not reasonable and 
necessary for the diagnosis or treatment of illness or injury. 
Reasonable and appropriate qualification requirements help ensure that 
quality screening services are delivered to Medicare patients and that 
they are furnished with sufficient information about the implications 
and possible results of having a PSA blood test completed. It is true 
that an appropriately trained physician or other practitioner can 
perform this service safely and it does not have to be limited to the 
patient's attending physician. Based on the comments received from 
various medical societies, we believe that we can best help ensure that 
these new Medicare screening services are furnished safely and 
effectively to patients by requiring that they be done by the physician 
or other recognized practitioner (as stated elsewhere in this section) 
who is fully knowledgeable about the patient and would be responsible 
for explaining the results of the screening examination or test. We 
believe that under this formulation, a physician other than the 
patient's attending physician in a group practice can easily meet the 
requirement.
    Result of Evaluation of Comments: We are modifying our proposal to 
delete the word ``attending''. The revised requirement will be that the 
screening DREs and the screening PSA tests must be performed and 
ordered, respectively, by the beneficiary's physician, physician 
assistant, nurse practitioner, clinical nurse specialist, or certified 
nurse midwife who is fully knowledgeable about the patient and would be 
responsible for explaining the results of the screening examination 
(test). This revision is reflected in the new Sec. 410.39.
    Comment: One commenter indicated that Secs. 410.39(c)(1) and 
410.39(e)(1) relating to the limitation on coverage of screening DREs 
and screening PSA tests are in conflict, and need to be clarified to 
make them consistent with the law and our interpretation of the law as 
explained in the preamble to the proposed rule.
    Response: We agree with the commenter. There is an inaccuracy in 
proposed Sec. 410.39(e)(1) that needs to be corrected. As we discussed 
in the preamble to the proposed rule, the BBA defines a prostate cancer 
screening test to mean a test (among other things) that is ``provided 
for the purpose of early detection of prostate cancer to a man over 50 
years of age who has not had such a test during the preceding year.'' 
We have interpreted this to mean that payment may be made for a male 
beneficiary over 50 years of age or older (that is, starting at least 
one day after he has attained age 50) for both an annual screening DRE 
and an annual screening PSA test. This means, however, that payment may 
not be made for a male beneficiary on or before the day he attains age 
50.
    Result of Evaluation of Comments: We are revising Sec. 410.39(e)(1) 
to provide that payment ``may not be made for a screening PSA blood 
test performed for a man on or before the day he attains age 50.'' We 
are leaving Sec. 410.39(c)(1) unchanged.
    Comment: Commenters agreed with our proposal to create a new code, 
G0102, for a DRE and pay for it at the same level as the lowest level 
E/M code, 99211. Two commenters agreed with our proposal to bundle the 
payment for a DRE into the payment for a covered E/M service furnished 
on the same day. Two other commenters stated that since the DRE is a 
separate covered benefit that it should always be paid separately.
    Response: As stated in the July 1999 proposed rule (64 FR 39627), a 
DRE is a very quick and simple examination taking only a few seconds. 
We believe it is rarely the sole reason for a physician encounter and 
is usually part of an E/M encounter. In those instances when it is the 
only service furnished or it is furnished as part of an otherwise non-
covered service, we will pay separately for code G0102. In those 
instances when it is furnished on the same day as a covered E/M 
service, we believe it is appropriate to bundle it into the payment for 
the covered E/M encounter.
    Result of Evaluation of Comments: We are adopting our proposal to 
pay for a DRE (G0102) at the same level as the lowest level E/M service 
(99211) and to bundle the payment for the DRE into the payment for a 
covered E/M service

[[Page 59415]]

when the two services are furnished to the patient on the same day.

O. Diagnostic Tests

1. Supervision of Diagnostic Tests
    Sections 4511 and 4512 of the BBA removed the restrictions on the 
areas and settings in which nurse practitioners (NPs), clinical nurse 
specialists (CNSs) and physician assistants (PAs) may be paid under the 
physician fee schedule for services that would be physicians' services 
if furnished by a physician. We proposed to revise Sec. 410.32(b) 
concerning diagnostic x-ray and other diagnostic tests and add an 
exception at Sec. 410.32(b)(2) to specify that no physician supervision 
of NPs and CNSs is required for diagnostic tests performed by NPs and 
CNSs when they are authorized by the State to perform these tests. In 
addition, we proposed to modify Sec. 410.32(b)(3) by means of a 
parenthetical to state that diagnostic tests that a PA is legally 
authorized to perform under State law require only a general level of 
physician supervision of the PA.
    We also proposed to add an exception criterion at Sec. 410.32(b)(2) 
so that physician supervision rules would not apply to pathology and 
laboratory codes in the 80000 series of the CPT payable under the 
physician fee schedule. These codes are within the scope of the 
Clinical Laboratory Improvement Amendments of 1988 (CLIA) regulations 
(Part 493), and we determined it would be unnecessarily confusing to 
apply another separate set of supervision rules to the performance of 
these procedures. The CLIA regulations should determine the level of 
supervision necessary, if any, for these procedures.
    We received many comments opposing the proposal to modify 
Sec. 410.32 to permit NPs and CNSs to order, interpret, and perform 
radiological procedures without physician supervision when they are 
authorized by the State to perform these services. Our proposal 
addressed only the last activity. The legal authority for NPs and CNSs 
to order and to interpret tests (and for PAs to perform these 
activities under physician supervision) is not at issue. Section 
410.10(a)(3) already provides that nonphysician practitioners 
(including PAs, NPs, and CNSs) who are operating within the scope of 
their authority under State law may order diagnostic tests. With regard 
to the interpretation of diagnostic tests, Congress has specifically 
recognized the ability of PAs, NPs, and CNSs to furnish services that 
would be physician services, if furnished by a physician, subject to 
the provisions of State law.
    Several commenters expressed their approval of the proposal 
regarding PAs, NPs, and CNSs.
    Comment: Several commenters indicated that the proposal to change 
the regulation to permit NPs and CNSs to perform diagnostic tests 
without physician supervision did not explain why this change was being 
proposed.
    Response: As indicated in the July 1999 proposed rule (64 FR 
39638), the proposal would conform the requirements of the physician 
supervision policy in Sec. 410.32(b) to the BBA provisions relating to 
PAs, NPs, and CNSs. Those provisions generally permitted these 
practitioners to bill directly for services that would be physicians' 
services if they were furnished by a physician.
    Comment: Many commenters expressed concern about the qualifications 
of NPs and CNSs to perform radiology procedures without physician 
supervision. The commenters pointed out that--
    <bullet> Radiologists undergo 4 to 5 years of residency training 
after medical school;
    <bullet> NPs and CNSs do not have the training, education, or 
experience to be qualified to furnish radiology services;
    <bullet> The lack of training undergone by NPs and CNSs in x-ray 
physics as well as nuclear medicine, magnetic resonance physics, and 
ultrasound physics, places the patient in a life-threatening position; 
and
    <bullet> The policy on this matter should be a national policy, 
rather than a policy debated in each State legislature.
    Response: As indicated in the July 1999 proposed rule, we made the 
proposals to remove the requirement for physician supervision of NPs 
and CNSs for diagnostic tests for services NPs and CNSs are authorized 
to perform under State law and to establish a level of general 
supervision by a physician for diagnostic tests that PAs are authorized 
to perform under State law. Further, since we have not imposed 
requirements regarding specific training requirements for physician 
specialties to be able to perform and bill for these diagnostic tests, 
we believe that it is inappropriate to apply these requirements to 
practitioners whom the Congress has specifically recognized as having 
the ability to furnish services that would be physician services if 
furnished by a physician, subject to the provisions of State law. The 
Medicare law generally leaves the scope of practice of NPs, CNSs, and 
PAs to be determined by the individual States. Finally, we have no 
indication that NPs and CNSs will abuse their benefit by trying to 
perform diagnostic tests they are not qualified to do.
    Comment: A national organization of radiologic technologists 
questioned the reliance on the statutory language in section 4511 of 
the BBA for policy on the issue of supervision of NPs or CNSs for 
diagnostic testing and suggested that we are incorrectly interpreting 
this section by proposing to allow these practitioners to perform 
diagnostic testing without a supervising physician. The commenter went 
on to indicate that the proposed rule creates a practice opportunity 
for nurses that is not justified by the cited legislation, that it 
ignores existing law, and that we are in violation of the 
Administrative Procedure Act by making law that exceeds its 
congressional authority.
    Response: We believe that our proposal is within the law and 
reflects the intent of the Congress with regard to services of NPs and 
CNSs.
    Comment: One commenter said that it should be made clear in the 
final rule that the technical component which is the issue at hand, is 
not subject to the payment reduction applicable to services of 
nonphysician practitioners.
    Response: We agree with the commenter. Since May 1992, Section 
16000 of the Medicare Carriers Manual has stated: ``For those services 
that have both a technical component and a professional component (such 
as a radiology service or a diagnostic test) or if the nonphysician 
practitioner provides an incident to service that is routinely 
separately billed, the percentage payment limitations do not apply to 
the technical component or to the incident to part of the service that 
is separately billed.''
    Comment: Some commenters expressed concern about the effect of this 
proposal, if adopted, on the mammography certification program.
    Response: Mammography certification programs are regulated by the 
FDA (21 CFR Part 900), and entities performing mammography must comply 
with those regulations in order to be certified. Our regulations would 
not affect that process.
    Comment: Some commenters indicated that the proposed revision would 
be contrary to Stark I and II that was formulated to reduce self-
referral and its potential for abuse. It was pointed out that self-
referral has been shown to be an incentive for overutilization of 
imaging services.
    Response: The Stark provisions do not apply to the services of 
nonphysician practitioners.
    Comment: The American Medical Association suggested that the 
proposal not to require physician supervision for

[[Page 59416]]

tests NPs and CNSs are authorized to perform under State law be delayed 
until the controversy surrounding the requirement for NPS and CNSs to 
be working in collaboration is better resolved.
    Response: The collaboration requirement is not an issue upon which 
comments were sought under this year's proposed rule, and we do not 
believe that issue should delay implementation of this proposal.
    Comment: Several commenters expressed their opinions on issues 
relating to the levels of physician supervision that should be required 
for individual diagnostic tests.
    Response: No proposals on the levels of physician supervision 
required for individual diagnostic tests were included in the proposed 
rule, and we will not discuss them here. We plan to issue a program 
memorandum setting forth revised levels of supervision.
    Comment: One commenter indicated that the proposed rule cites 
section 4511 of the BBA as one of the reasons for eliminating the 
physician supervision requirements for NPs and CNSs and pointed out 
that section 4511 could be interpreted to mean that the provision only 
applies to ``incident to'' services. The commenter went on to say that, 
since ``incident to'' (as set forth in section 1861(s)(2)(A)) does not 
apply to diagnostic tests that have technical components, that 
provision of the BBA does not mandate the elimination of the physician 
supervision requirement for diagnostic tests performed by NPs and CNSs.
    Response: The technical components of diagnostic tests are covered 
under section 1861(s)(3) of the Act. Section 1848(j) of the Act 
specifies that services covered under that section are ``physicians' 
services'' for purposes of payment under the Medicare physician fee 
schedule. Section 4511 of the BBA provides that NPs and CNSs may bill 
directly for services that would be physician services if they were 
furnished by a physician, so long as the practitioners are authorized 
under State law to perform the services. This provision is not limited 
to ``incident to'' services. (In fact, the very definition of 
``incident to'' services is that they are services which are included 
in a physician's bill and not separately billed; thus it would be 
difficult to read section 4511 as applying only to those services.)
    Comment: One commenter characterized the language used in our 
proposal to exclude pathology and laboratory codes in the 80000 series 
of the CPT from the physician supervision requirements of 
Sec. 410.32(b) as ``inflammatory, patronizing, and gratuitous.'' The 
language related to our statement that the decision as to the necessity 
of physician supervision in connection with these services should be 
made solely under the CLIA regulations and not under both the CLIA 
regulations and the physician fee schedule regulations.
    Response: Obviously, there was no intent to offend pathologists. We 
made the proposal to remove confusion with regard to the physician 
supervision requirements that apply to a class of codes.

Result of Evaluation of Comments

    We are adopting our proposal to provide that--
    <bullet> Diagnostic tests payable under the physician fee schedule 
and performed by a nurse practitioner or clinical nurse specialist 
authorized to perform such tests under applicable State laws are 
excluded from the physician supervision requirement set forth in 42 CFR 
410.32(b);
    <bullet> Pathology and laboratory procedures listed in the 80000 
series of the CPT and payable under the physician fee schedule are 
excluded from the physician supervision requirements of Sec. 410.32(b); 
and
    <bullet> Diagnostic tests payable under the physician fee schedule 
and performed by a physician assistant authorized to perform tests 
under applicable State laws require only a general level of physician 
supervision.
2. Independent Diagnostic Testing Facilities
    In keeping with the BBA provisions concerning services furnished by 
NPs, CNSs and PAs as discussed in paragraph 1. above, we proposed to 
revise Sec. 410.33(a), which establishes criteria for the operation of 
independent diagnostic testing facilities (IDTFs), to include NPs and 
CNSs who perform diagnostic tests that the State authorizes them to 
perform in the list of entities that may be paid directly by the 
carrier. We also proposed to modify the implementation date for IDTFs 
from July 1, 1998 to March 15, 1999 to reflect the actual 
implementation date.
    Comment: Several commenters expressed concern that the proposal to 
add NPs and CNSs to the list of entities that may be paid directly by 
the carrier for diagnostic tests under the physician fee schedule would 
enable these practitioners to open their own imaging facilities and 
independently perform diagnostic imaging tests.
    Response: The Congress has specifically recognized the ability of 
NPs and CNSs to furnish physician services subject to the requirements 
of State law. The law evidences the intent of the Congress that the 
determination of the scope of services of NPs and CNSs may be 
determined by the individual States. We have no reason to believe that 
NPs and CNSs will abuse their benefit by trying to perform diagnostic 
tests they are not qualified to do. NPs and CNSs are not precluded from 
opening an IDTF. However, IDTFs that are owned and/or operated by NPs 
and CNSs must meet IDTF physician supervision requirements; that is, 
the IDTFs must employ or contract with a physician (MD or DO) to 
provide the required levels of supervision of technicians and 
equipment.

Result of Evaluation of Comments

    We are adopting our proposal to amend Sec. 410.33(a) to change the 
effective date and to add NPs and CNSs to the list of entities that may 
be paid directly by the carrier for diagnostic tests under the 
physician fee schedule.

P. Other Issues

Orthopedic Physician Assistants

    OPAs are not recognized as PAs under Medicare. We received many 
comments concerning the recognition of orthopedic physician assistants 
(OPAs) as PAs for Medicare coverage purposes. We proposed including 
OPAs as PAs as part of last year's proposed rule, but we chose not to 
include the proposal in the final rule. For the reasons stated in the 
1998 final rule (63 FR 58876 through 58878) we have no current plans to 
address the issue again.

Image-Guided Biopsy

    We received comments concerning the current image-guided biopsy 
code, CPT code 19101. The commenters stated that currently two 
different procedures, open incisional biopsy and image-guided breast 
biopsy with the equipment that integrates imaging and biopsy are 
assigned this code and it cannot be fairly valued as it does not 
adequately reflect the skills, work or practice expense for the image 
guided stereotaxic breast biopsy procedure. The commenters recommended 
that a new separate code for image-guided vacuum assisted breast biopsy 
be established. Since this issue is under consideration for a change in 
coverage criteria, we will consider coding changes needed to implement 
any change in coverage. No changes will be made at this time.

Portable X-ray Transportation

    We received comments concerning the payment rate for portable x-ray 
transportation codes R0070 and R0075. The commenters suggested that new

[[Page 59417]]

regional rates, independent of the physician fee schedule, be proposed 
for portable x-ray transportation codes R0070 and R0075. Until such 
regional rates are finalized, the commenters believed it would be 
appropriate to continue carrier pricing based on current year rates 
plus an annual adjustment for inflation. We continue to believe that 
the physician fee schedule is the appropriate vehicle for portable x-
ray transportation payments because these services are payable only by 
virtue of section 1861(s)(3) of the Act. Also, we did not propose new 
RVUs for these services in this year's proposed rule. We will continue 
to require that these codes be carrier priced at least through the end 
of 2000. It is within the carrier's discretion to raise or lower 
payment levels, after appropriate notification, for reasons of 
inflation or other considerations.

Supervision Requirements for Therapy Assistants

    An association representing physical therapists and another 
association representing occupational therapists, commented that the 
level of supervision required for therapy assistants in the private 
practice setting should be direct supervision rather than the personal 
supervision stipulated in the November 1998 final rule. They indicated 
that the personal supervision requirement changed the long-standing 
direct supervision requirement that was applicable to therapy 
assistants in private practice prior to January 1, 1999 (then known as 
therapy assistants in independent practice). The commenters further 
stated that the personal supervision requirement imposed a level of 
supervision higher than that required for therapy assistants furnishing 
such services in other Medicare settings and that the requirement is 
contrary to state law.
    While we acknowledge that we have been urged to revisit this issue, 
we did not include it in our proposed rule and we will not address the 
issue in this final rule. We believe that supervision issues raise 
concerns about quality of care, and we would prefer that any changes be 
the subject of public discussion. Therefore, before we would make 
changes in supervision requirements, we would include them in a future 
proposed rule.

III. Refinement of Relative Value Units for Calendar Year 2000 and 
Response to Public Comments on Interim Relative Value Units for 
1999 (Including the Relative Value Units Contained in the July 22, 
1999 Proposed Rule)

A. Summary of Issues Discussed Related to the Adjustment of Relative 
Value Units

    Section III. B. of this final rule describes the methodology used 
to review the comments received on the RVUs for physician work and the 
RVUs for new and revised CPT codes. Changes to CPT codes on the 
physician fee schedule reflected in Addendum B are effective for 
services furnished beginning January 1, 2000.

B. Process of Establishing Work Relative Value Units for 2000 Physician 
Fee Schedule

    Our November 2, 1998 final rule (63 FR 58814) announced the final 
RVUs for Medicare payment for existing procedure codes under the 
physician fee schedule and interim RVUs for new and revised procedure 
codes. The RVUs contained in the rule applied to physician services 
furnished beginning January 1, 1999. We announced that we considered 
the RVUs for the interim procedure codes would be subject to public 
comment under the annual refinement process. We also included an 
additional 16 new and revised CPT codes in the July 22, 1999 proposed 
rule and requested comments on these CPT codes. We had received the 
RUC's recommendations for these CPT codes too late for them to be 
included in the November 1998 final rule.
    In this section, we summarize the refinements to the interim work 
RVUs that have occurred since publication of the November 1998 final 
rule and our establishment of the work and practice expense, and 
malpractice RVUs for new and revised procedure codes for the 2000 
physician fee schedule.

Work Relative Value Unit Refinements of Interim and Related Relative 
Value Units (Includes Table 1--Work RVU Refinement of 1999 Interim and 
Related Relative Value Units)

    Although the work RVUs in the November 1998 final rule were used to 
calculate 1999 payment amounts, we considered the work RVUs for the new 
or revised procedure codes to be interim. We accepted comments for a 
period of 60 days. We also included additional RUC work RVU 
recommendations in the July 22, 1999 proposed rule. We accepted 
comments on these work RVU recommendations for a period of 60 days. We 
received comments from four specialty societies on four CPT codes with 
interim work RVUs. Only comments received on codes listed in Addendum C 
of the November 1998 final rule or codes listed in section P. of the 
July 1999 proposed rule were considered. Due to the limited number of 
comments received, we did not convene multispecialty refinement panels. 
Rather, determinations were made by our medical staff. In reaching 
their conclusions they analyzed written comments of the specialty 
societies that commented.
    Table 1 lists the interim and related codes reviewed during the 
1999 refinement process described in this section. This table includes 
the following information:
    <bullet> CPT Code. This is the CPT code for a service.
    <bullet> Description. This is an abbreviated version of the 
narrative description of the code.
    <bullet> 1999 Work RVU. The work RVUs that appeared in the November 
1998 or July 1999 rule are shown for each reviewed code.
    <bullet> Requested Work RVU. This column identifies the work RVUs 
requested by the commenters.
    <bullet> 2000 Work RVU. This column contains the final RVUs for 
physician work.
    The final work RVUs emerged from analysis of the specialty 
societies written comments on the 1999 interim valued CPT codes.

                         Table 1.--Work RVU Refinement of 1999 Interim and Related RVUs
----------------------------------------------------------------------------------------------------------------
                                                                            1999 Work    Requested    2000 Work
       CPT Code               MOD                   Description                RVU        Work RVU       RVU
----------------------------------------------------------------------------------------------------------------
33975................  .................  Ventricular access device......        21.00        21.00        21.00
33976................  .................  Ventricular access device......        23.00        23.00        23.00
69990................  .................  Microsurgery add-on............         3.47         3.47         3.47
78020................  26...............  Thyroid met uptake.............         0.60         0.67         0.60
----------------------------------------------------------------------------------------------------------------
* All CPT codes and descriptors copyright 1998 American Medical Association.

[[Page 59418]]

Implantation of ventricular assist device (CPT codes 33975 and 33976)

    Comment: One speciality society commented that they concur with our 
proposed work RVUs for the intraoperative work associated with the 
implantation of a ventricular assist device. It should be noted that 
the concurrence was contingent upon the global period of ``XXX'' days 
that we assigned to CPT codes 33975 and 33976.
    Response: We believe that the substitution of an ``XXX'' global 
period for the original global period of 90 days, and the resulting 
reduction in the work RVUs for the implantation of ventricular assist 
devices, has resulted in equitable work RVUs for the implantation of 
ventricular assist devices. We appreciate the opportunity to work with 
specialty societies to accomplish equitable work RVUs.

Microsurgery add-on (CPT code 69990)

    Comment: Many surgical groups commented that we should always pay 
separately for the use of the operating microscope unless its use is 
explicitly stated in the definition of the procedure. They claim that 
increasing use of the operating microscope has led to increased work.
    Response: We are sympathetic to the idea that increasing use of the 
operating microscope has led to increased work. However, the current 
evaluation of CPT code 69990 was not based on an evaluation of the 
increased work for the myriad of procedures for which an operating 
microscope may be used. We believe that it is unlikely that one add-on 
code can correctly reimburse for work done on procedures varying from 
cranial neurosurgery to foot surgery. Our 5-year review of work RVUs 
will be active in the coming year. We believe that the 5-year review 
process is the appropriate mechanism for reviewing appropriate payment 
for microsurgery.
    Comment: Two specialty groups recommended that we increase the 
physician work RVU of CPT code 78020, Thyroid carcinoma metastases, 
from 0.60 work RVUs to the AMA RUC recommended value of 0.67 work RVUs.
    Response: The specialty society reported that this procedure was 
previously reported with unlisted CPT code 78099. The specialty survey 
also estimated that this code will be billed approximately 15 percent 
of the time that CPT code 78018 is billed. According to Medicare 
frequency data, CPT code 78099 was only billed 61 times in 1997 while 
the projected utilization for CPT code 78020 for 1999 is approximately 
575 claims annually. In order to keep budget neutrality within this 
family of codes we will retain its proposed recommendation of 0.60 work 
RVUs for CPT code 78020.

Establishment of Interim Work Relative Value Units for New and Revised 
Physicians' Current Procedural Terminology Codes and New HCFA Common 
Procedure Coding System Codes for 2000 Methodology (Includes Table 2--
American Medical Association Specialty Society Relative Value Update 
Committee and Health Care Professionals Advisory Committee 
Recommendations and HCFA's Decisions for New and Revised 2000 CPT 
Codes)

    One aspect of establishing work RVUs for 2000 was related to the 
assignment of interim work RVUs for all new and revised CPT codes. As 
described in our November 25, 1992 notice on the 1993 fee schedule (57 
FR 55938) and in section III.B of our November 22, 1996 final rule (61 
FR 59505 through 59506) we established a process, based on 
recommendations received from the AMA's RUC, for establishing interim 
work RVUs for new and revised codes.
    This year we received work RVU recommendations for approximately 61 
new and revised CPT codes from the RUC. Our staff and medical officers 
reviewed the RUC recommendations by comparing them to our reference set 
or to other comparable services for which work RVUs that had been 
established previously, or to both of these criteria. We also 
considered the relationships among the new and revised codes for which 
we received RUC recommendations. We agreed with the majority of those 
relationships reflected in the RUC values. In some cases, when we 
agreed with the RUC relationships, we revised the work RVUs recommended 
by the RUC to achieve work neutrality within families of codes. That 
is, the work RVUs have been adjusted so that the sum of the new or 
revised work RVUs (weighted by projected frequency of use) for a family 
of codes will be the same as the sum of the current work RVUs (weighted 
by their current frequency of use). For approximately 69 percent of the 
RUC recommendations, proposed work RVUs were accepted, and for 
approximately 31 percent, the work RVUs were decreased.
    There were also 7 CPT codes for which we did not receive a RUC 
recommendation. After review of these CPT codes by our staff and 
medical officers, we established interim work RVUs for all 7 CPT codes.
    Table 2 lists the new or revised CPT codes, and their associated 
work RVUs, that will be interim in 2000. This table includes the 
following information:
    <bullet> A ``#'' identifies a new code for 2000.
    <bullet> CPT code. This is the CPT code for a service.
    <bullet> Modifier. A ``26'' in this column indicates that the work 
RVUs are for the professional component of the code.
    <bullet> Description. This is an abbreviated version of the 
narrative description of the code.
    <bullet> RUC recommendations. This column identifies the work RVUs 
recommended by the RUC.
    <bullet> HCPAC recommendations. This column identifies work RVUs 
recommended by the HCPAC.
    <bullet> HCFA decision. This column indicates whether we agreed 
with the RUC recommendation (``agree''); we established work RVUs that 
are higher than the RUC recommendation (``increase''); or we 
established work RVUs that were less than the RUC recommendation 
(``decrease''). Codes for which we did not accept the RUC 
recommendation are discussed in greater detail following Table 2. An 
``(a)'' indicates that no RUC recommendation was provided. A discussion 
follows the table.
    <bullet> HCFA Work RVUs. This column contains the RVUs for 
physician work based on our reviews of the RUC recommendations.
    <bullet> 2000 Work RVUs. This column establishes the 2000 RVUs for 
physician work.

        Table 2.--AMA RUC and HCPAC Recommendations and HCFA Decisions for New and Revised 2000 CPT Codes
----------------------------------------------------------------------------------------------------------------
                                              RUC            HCPAC                       HCFA Work    2000 Work
 CPT* code     MOD       Description    recommendation  recommendation   HCFA decision      RVU          RVU
----------------------------------------------------------------------------------------------------------------
11980#.....  .......  Hormone pellet    ..............  ..............  (<SUP>a</SUP>)...........         1.48         1.48
                       implanation.
13102#.....  .......  Repair wound/               1.24  ..............  Agree.........         1.24         1.24
                       lesion add-on.
13122#.....  .......  Repair wound/               1.44  ..............  Agree.........         1.44         1.44
                       lesion add-on.

[[Page 59419]]

13133#.....  .......  Repair wound/               2.19  ..............  Agree.........         2.19         2.19
                       lesion add-on.
13153#.....  .......  Repair wound/               2.38  ..............  Agree.........         2.38         2.38
                       lesion add-on.
20979#.....  .......  US bone           ..............  ..............  (<SUP>a</SUP>)...........         0.17         0.17
                       stimulation.
22318#.....  .......  Treat odontoid             21.50  ..............  Agree.........        21.50        21.50
                       fx w/o graft.
22319#.....  .......  Treat odontoid             24.00  ..............  Agree.........        24.00        24.00
                       fx w/ graft.
27096#.....  .......  Inject                      1.40  ..............  Decrease......         1.10         1.10
                       sacroiliac
                       joint.
33140#.....  .......  Heart                      20.00  ..............  Agree.........        20.00        20.00
                       Revascularize
                       (TMR).
33244......  .......  Remove eltrd,              13.76  ..............  Agree.........        13.76        13.76
                       Transven.
33249......  .......  Eltrd/insert               14.23  ..............  Agree.........        14.23        14.23
                       pace-defib.
33282#.....  .......  Implant pat-                4.17  ..............  Agree.........         4.17         4.17
                       active ht
                       record.
33284#.....  .......  Remove pat-                 2.50  ..............  Agree.........         2.50         2.50
                       active ht
                       record.
33405......  .......  Replacement of             30.61  ..............  Agree.........        30.61        30.61
                       aortic valve.
33410#.....  .......  Replacement of             32.46  ..............  Agree.........        32.46        32.46
                       aortic valve.
33968#.....  .......  Remove aortic               2.00  ..............  Decrease......         0.64         0.64
                       assist device.
35879#.....  .......  Revise graft w/            16.00  ..............  Agree.........        16.00        16.00
                       vein.
35881#.....  .......  Revise graft w/            18.00  ..............  Agree.........        18.00        18.00
                       vein.
36521#.....  .......  Apheresis w/      ..............  ..............  (<SUP>a</SUP>)...........         1.74         1.74
                       adsorp/reinfuse.
36550#.....  .......  Declot vascular   ..............  ..............  (<SUP>a</SUP>)...........         0.00         0.00
                       device.
36819#.....  .......  AV fusion by               14.00  ..............  Agree.........        14.00        14.00
                       basilic vein.
39560#.....  .......  Resect                     12.00  ..............  Agree.........        12.00        12.00
                       diaphragm,
                       simple.
39561#.....  .......  Resect                     17.50  ..............  Agree.........        17.50        17.50
                       diaphragm,
                       complex.
50541#.....  .......  Laparo ablate              16.00  ..............  Agree.........        16.00        16.00
                       renal cyst.
50544#.....  .......  Laparoscopy,               22.40  ..............  Agree.........        22.40        22.40
                       pyeloplasty.
50546#.....  .......  Laparoscopic               20.48  ..............  Agree.........        20.48        20.48
                       nephrectomy.
50547#.....  .......  Laparo removal             25.50  ..............  Agree.........        25.50        25.50
                       donor kidney.
50548#.....  .......  Laparo-asst                24.40  ..............  Agree.........        24.40        24.40
                       remove k/ureter.
50945#.....  .......  Laparo                     17.00  ..............  Agree.........        17.00        17.00
                       ureterolithotom
                       y.
51990#.....  .......  Laparo urethral            12.50  ..............  Agree.........        12.50        12.50
                       suspension.
51992#.....  .......  Laparo sling               14.01  ..............  Agree.........        14.01        14.01
                       operation.
54692#.....  .......  Laparoscopy,               12.88  ..............  Agree.........        12.88        12.88
                       orchiopexy.
61751......  .......  Brain biopsy w/            17.62  ..............  Agree.........        17.62        17.62
                       CT/MR guide.
61862#.....  .......  Implant                    27.34  ..............  Decrease......        19.34        19.34
                       neurostim,
                       subcort.
61885......  .......  Implant                     8.00  ..............  Decrease......         5.85         5.85
                       neurostim one
                       array.
61886#.....  .......  Implant                     8.00  ..............  Agree.........         8.00         8.00
                       neurostim
                       arrays.
62263#.....  .......  Lysis epidural              7.20  ..............  Decrease......         6.02         6.02
                       adhesions.
62310#.....  .......  Inject spine C/T            2.20  ..............  Decrease......         1.91         1.91
62311#.....  .......  Inject spine L/S            1.78  ..............  Decrease......         1.54         1.54
                       (CD).
62318#.....  .......  Inject spine w/             2.35  ..............  Decrease......         2.04         2.04
                       cath, C/T.
62319#.....  .......  Inject spine w/             2.15  ..............  Decrease......         1.87         1.87
                       cath L/S (CD).
64470#.....  .......  Inj                         1.85  ..............  Agree.........         1.85         1.85
                       paravertebral C/
                       T.
64472#.....  .......  Inj                         1.29  ..............  Agree.........         1.29         1.29
                       paravertebral C/
                       T Add-on.
64479#.....  .......  Inj foramen                 2.20  ..............  Agree.........         2.20         2.20
                       epidural C/T.
64480#.....  .......  Inj foramen                 1.54  ..............  Agree.........         1.54         1.54
                       epidural add-on.
64483#.....  .......  Inj foramen                 1.90  ..............  Agree.........         1.90         1.90
                       epidural L/S.
64484#.....  .......  Inj foramen                 1.33  ..............  Agree.........         1.33         1.33
                       epidural add-on.
64573#.....  .......  Implant                     7.50  ..............  Agree.........         7.50         7.50
                       neuroelectrodes.
64626#.....  .......  Destr                       3.28  ..............  Agree.........         3.28         3.28
                       paravertebri
                       nerve C/T.
64627#.....  .......  Destr                       1.16  ..............  Agree.........         1.16         1.16
                       paravertebral N
                       add-on.
72275#.....  26.....  Epidurography...            0.83  ..............  Decrease......         0.54         0.54
72285......  26.....  X-ray C/T spine             1.16  ..............  Agree.........         1.16         1.16
                       disk.
73542#.....  26.....  X-ray exam,                 0.64  ..............  Decrease......         0.54         0.54
                       sacroiliac
                       joint.
76005#.....  26.....  Fluoroguide for             0.60  ..............  Decrease......         0.54         0.54
                       spine inject.
76873#.....  26.....  Echograph trans             1.92  ..............  Decrease......         0.99         0.99
                       R, pros study.
77427#.....  .......  Radiation TX                3.31  ..............  Agree.........         3.31         3.31
                       management, x5.
78267......  .......  Breath test                 0.00  ..............  Agree.........         0.00         0.00
                       attain/anal, C-
                       14.
78268......  .......  Breath test                 0.19  ..............  Decrease......         0.00         0.00
                       analysis, C-14.
78456#.....  26.....  Acute venous                1.00  ..............  Agree.........         1.00         1.00
                       thrombus image.
92961#.....  .......  Cardioversion,              4.60  ..............  Agree.........         4.60         4.60
                       electric, int.
93727#.....  26.....  Analyze ILR                 0.52  ..............  Agree.........         0.52         0.52
                       system.
93741#.....  26.....  Analyze ht pace             0.90  ..............  Decrease......         0.64         0.64
                       device sngl.
93742#.....  26.....  Analyze ht pace             1.03  ..............  Decrease......         0.73         0.73
                       device sngl.
93743#.....  26.....  Analyze ht pace             1.17  ..............  Decrease......         0.83         0.83
                       device doub.
93744#.....  26.....  Analyze ht pace             1.33  ..............  Decrease......         0.95         0.95
                       device doub.
96570#.....  .......  Photodynamic tx,  ..............  ..............  (<SUP>a</SUP>)...........         1.10         1.10
                       30 min.
96571#.....  .......  Photodynamic tx,  ..............  ..............  (<SUP>a</SUP>)...........         0.55         0.55
                       addl 15 min.
99170#.....  .......  Anogenital exam,            1.75  ..............  Agree.........         1.75         1.75
                       child.
99173#.....  .......  Visual screening  ..............  ..............  (<SUP>a</SUP>)...........         0.00         0.00
                       test.
99291......  .......  Critical care,              4.00  ..............  Decrease......         3.60         3.60
                       first hour.
99292......  .......  Critical care,              2.00  ..............  Decrease......         1.80         1.80
                       addl 30 min.
----------------------------------------------------------------------------------------------------------------
<SUP>a</SUP> No RUC recommendation provided.

[[Page 59420]]

# New Codes.
* All numeric HCPCS CPT Copyright 1997 American Medical Association.

Discussion of Codes for Which There Were No RUC Recommendations or for 
Which the RUC Recommendations Were Not Accepted

    The following is a summary of our rationale for not accepting 
particular RUC work RVU recommendations. It is arranged by type of 
service in CPT order. Additionally, we also discuss those CPT codes for 
which we received no RUC recommendations for physician work RVUs. This 
summary refers only to work RVUs.

Subcutaneous hormone pellet implantation (CPT code 11980)

    We did not receive a work RVU recommendation from the RUC for CPT 
code 11980. Our clinical staff estimate that the work associated with 
CPT code 11980 is similar to that for insertion of implantable 
contraceptive capsules, CPT code 11975. For the 2000 fee schedule we 
will use the work RVUs from CPT code 11975 for CPT code 11980. The work 
RVU for CPT code 11980 will be considered interim for 2000.

Low intensity ultrasound stimulation to aid bone healing, 
noninvasive (CPT code 20979)

    We did not receive a work RVU recommendation from the RUC for CPT 
code 20979. Our clinical staff estimate that the work associated with 
CPT code 20979 is comparable to a level 1 office visit for an 
established patient, CPT code 99211. The work RVU for CPT code 20979 
will be considered interim for 2000.

Injection procedure for sacroiliac joint arthrography and/or 
anesthetic/steroid (CPT code 27096)

    The RUC evaluated the work for this procedure based on a survey of 
radiologists and a clinical description of the service including the 
injection of both contrast and therapeutic substances. The RUC assigned 
a work RVU of 1.4, comparable to other contrast injection procedures. 
However, the RUC description also notes that this procedure is 
performed without contrast in which case it is reported as CPT code 
20610 for a large joint injection. The work RVU for CPT code 20610 is 
0.79. Our medical staff has confirmed that CPT 27096 is also commonly 
done without contrast. We estimate that CPT code 27096 will be 
performed half of the time without contrast. To maintain work 
neutrality, we assigned a work RVU of 1.10 based on the weighted 
average of procedures with contrast (CPT codes 27093 and 27095) valued 
at 1.40 work RVUs and a procedure without contrast (CPT code 20610) 
valued at 0.79 work RVUs.

Removal of a percutaneous intra-aortic balloon assist device or 
pump (IABP) (CPT code 33968)

    The RUC evaluated the removal of a percutaneous IABP as equivalent 
to 30 minutes of critical care time and assigned a value of 2.00 work 
RVUs. Our medical staff wishes to emphasize that the time involved with 
weaning and observation of the patient prior to removal of the IABP 
should be billed under the appropriate E/M service. Furthermore, since 
weaning and observation prior to removal of the IABP ensures that the 
patient is hemodynamically able to tolerate removal of the IABP, we 
disagree with the RUC's conclusion that the work of removing an IABP is 
equivalent to the work of providing critical care services.
    Our medical staff estimate that the physician work involved is 
considerably less than 30 minutes. While compression of the removal 
site may be required for up to 30 minutes, the compression and 
observation is frequently delegated to hospital staff after a shorter 
physician observation period immediately following removal. The work 
has also decreased recently due to the use of smaller, 8 French IABPs 
and the availability of special compression devices. We have estimated 
the typical work as comparable to a level 1 subsequent hospital visit, 
CPT code 99231, and have assigned work RVUs of 0.64 to this procedure.
    We advise that this procedure must be performed personally by the 
billing physician in order to be considered a covered physician 
service. If the procedure is performed by nursing staff or a hospital 
catheterization lab technician, then the physician may not claim 
payment. When a claim is submitted for CPT code 33968, the time 
involved in removing the IABP may not be counted towards critical care 
time.

Therapeutic apheresis with extracorporeal column adsorption and 
plasma reinfusion (CPT code 36521)

    We did not receive a recommendation from the RUC for CPT code 
36521. Our clinical staff estimate that the work for this procedure is 
comparable to therapeutic apheresis involving plasma or cell exchange, 
CPT code 36520.

Declotting by thrombolytic agent of implanted reservoir vascular 
access device or catheter (CPT code 36550)

    This is a new CPT code for which no work recommendation was made by 
the RUC. Our medical staff reviewed the submission to the AMA CPT panel 
and the RUC survey and determined that the skill level required for 
this procedure was that of a registered nurse with some specialized 
training. Furthermore, the procedure is generally performed by a 
registered nurse with physician assistance upon request. In the past, 
this procedure has been billed under CPT code 99211 (level 1 visit for 
an established patient), which is frequently used for services provided 
by ancillary staff under physician supervision. Therefore, we have 
assigned 0.00 physician work RVUs for this procedure. An E/M service 
may be billed separately if the physician participates in this 
procedure, or provides another, separately identifiable medically 
necessary E/M service. Therefore, inclusion of physician work RVUs for 
CPT code 36550 would lead to duplicate payments.

Subcortical neurostimulator array implantation (CPT code 61862)

    The RUC evaluated this code with a building block approach that 
included the work of stereotactic localization, the device 
implantation, and 140 minutes of intraoperative testing contributing 
8.00 work RVUs. The RUC recommendation for the entire procedure is 
27.34 work RVUs. Because the time for intraoperative testing is 
variable, we are subtracting 8.00 work RVUs and assigning a value for 
the procedure of 19.34. We are advising using CPT codes 95961 (work 
RVUs of 2.97) and 95962 (work RVUs of 3.21), functional cortical and 
subcortical mapping, to report the work of intraoperative testing. We 
also note that since the work of stereotactic localization is included 
in 61862, we will deny payment for other stereotactic localization 
codes billed in conjunction with this code.

[[Page 59421]]

Incision and subcutaneous placement of cranial neurostimulator 
pulse generator or receiver, direct or inductive coupling; with 
connection to a single electrode array (CPT code 61885) and 
Incision and subcutaneous placement of cranial neurostimulator 
pulse generator or receiver, direct or inductive coupling; with 
connection to two or more electrode arrays (CPT code 61886)

    CPT code 61885 was revised to describe the placement of a cranial 
neurostimulator connected to a single electrode array while CPT code 
61886 is a new code that describes the same procedure with connection 
to two or more electrode arrays.
    Currently most cranial neurostimulator placement is reported under 
CPT code 61885, whether connected to one, two, or more electrode 
arrays. In the future 100 percent of old CPT code 61885 will be billed 
as either CPT code 61885 or CPT code 61886. The RUC recommended an 
increase in work RVUs from 5.85 to 8.00 for CPT code 61885 and 
recommended a work RVU of 8.00 for CPT code 61886. Our medical staff 
does not think an increase in work for CPT code 61885 is justified. The 
work RVU for CPT code 61885 was increased during the last 5-year review 
of physician work, and the review of the material submitted by the RUC 
did not include evidence that the physician work for CPT code 61885 has 
changed in the last two years. Therefore, we will continue to assign 
5.85 work RVUs to CPT code 61885. Our medical staff agrees that the 
physician work for CPT code 61886 is greater than the work for CPT code 
61885 and will assign 8.00 work RVUs, as recommended by the RUC, to CPT 
code 61886. Additionally, we will monitor the utilization pattern for 
these codes to determine if a work neutrality adjustment is required in 
the future.

Percutaneous lysis of epidural adhesions using solution injection 
(for example, hypertonic saline, enzyme) or mechanical means (for 
example, spring-wound catheter) including radiologic localization 
(includes contrast when administered) (CPT code 62263)

    This is a new CPT code for which the RUC recommended a work value 
of 7.20 work RVUs using a building block approach. We found flaws in 
the RUC construction of the building blocks. One building block, CPT 
code 62279 (Injection of diagnostic or therapeutic anesthetic or 
antispasmodic substance (including narcotics); epidural, lumbar, or 
caudal, continuous) was counted twice. This is incorrect since the 
catheter is only placed once. To correct this, we adopted the RUC's 
estimate that the injection portion of an injection code (which 
includes catheter placement) is \1/3\ of the total work of the code, 
and we assumed a total of two injections. This resulted in counting CPT 
code 62270 1.33 times instead of twice.
    Our medical staff also determined that the building block for 
fluoroscopic guidance was incorrectly crosswalked to new CPT code 76005 
(see below) and that the appropriate crosswalk for fluoroscopic 
guidance was CPT code 76003 (Fluoroscopic localization for needle 
biopsy or fine needle aspiration) which requires comparable work. These 
corrections result in a work RVU of 6.02 for CPT code 62263.

Epidural or subarachnoid spine injection procedures (CPT codes 
62310, 62311, 62318, and 62319)

    New CPT codes 62310 through 62319 were developed to organize 
different routes (subarachnoid, epidural) at different levels 
(cervical, thoracic, lumber, caudal), for different substances 
(narcotic, anesthetic, steroid, antispasmodic). Nine CPT codes, 
previously used to report these services, were deleted and crosswalked 
into these four new CPT codes. Although we agree with the relativity 
established by the RUC, in order to retain budget neutrality within 
this family of codes the RUC recommendations had to be uniformly 
reduced. The work RVUs for these four new CPT codes will be: 62310 
(work RVU=1.91), 62311 (work RVU=1.54), 62318 (work RVU=2.04), and 
62319 (work RVU=1.87).

Epidurography (CPT code 72275)

    The RUC compared this procedure to myelography, CPT code 72265, and 
assigned identical work RVUs of 0.83. While the RUC survey and 
discussion state that the work of epidurography is comparable, or even 
greater, than the work of myelography, the RUC notes also state that 
this service was previously reported as 72265-52, myelography with 
reduced service. The RUC discussion also notes that this procedure will 
be done as an adjunct procedure to epidural injections. Our medical 
staff has also determined that the work of epidurography is comparable 
to CPT codes 73525 (Hip Arthrography), 76003 (Fluoroscopic localization 
for needle biopsy and fine needle aspiration), and 73542 (Sacroiliac 
joint arthrography, see below). In view of the conflicting information 
received from the RUC, the comparability of work to the CPT codes 
above, and because use of epidurography as an adjunct procedure to 
epidural injections is very similar to the adjunctive use of sacroiliac 
joint arthrography for sacroiliac joint injections, we are assigning a 
work RVU of 0.54 to CPT code 72275.

Sacroiliac joint arthrography (CPT code 73542)

    The RUC recommended a work RVU of 0.64 based on an evaluation that 
this procedure requires more work than the similar reference procedure, 
hip arthrography, CPT code 73525. However, the survey time estimates 
are virtually identical and the RUC description also notes that this 
procedure was previously reported as CPT code 73525. Our medical staff 
does not believe there is enough difference in the physician work 
components of CPT codes 73542 and 73525 to justify a higher work RVU 
for 73542. Therefore, we are assigning a work RVU of 0.54 to CPT code 
73542.

Fluoroscopic guidance and localization of needle or catheter tip 
for spine or paraspinous diagnostic or therapeutic injection 
procedures (epidural, transforaminal epidural, subarachnoid, 
paravertebral facet joint nerve or sacroiliac joint) including 
neurolytic agent destruction (CPT code 76005)

    The RUC recommended a work RVU of 0.60 for CPT code 76005 based on 
its estimate that more work was required than the similar referenced 
procedure, Fluoroscopic localization for needle biopsy or fine needle 
aspiration, CPT 76003, that is valued at 0.54 work RVUs. However, 
survey time estimates were almost identical and this procedure was 
previously reported as CPT code 76003. Based on the RUC survey, our 
medical staff does not believe there is enough difference in the 
physician work components of 76005 and 76003 to justify a higher work 
RVU for 76005. Therefore, we are assigning a work RVU of 0.54 to CPT 
code 76005.

Prostate Volume Study (CPT code 76873)

    This procedure takes place weeks before interstitial radioactive 
seed placement for prostate cancer. Our medical staff are aware of two 
approaches to map the prostate for this purpose. The first involves 
measuring prostate volume by transrectal sonography, making 5 mm cuts 
of the prostate, and mapping prostate anatomy to a grid that is then 
used to implant the radioactive seeds accurately several weeks later. 
This approach does not involve the use of general anesthesia. The 
second approach takes place after the patient has been placed under

[[Page 59422]]

general anesthesia for seed implantation and involves positioning the 
patient, performing the volume study (with 5mm cuts of the prostate), 
calculating the treatment dose (by the radiation physicist), and 
immediately implanting the seeds. Even though this new CPT code was 
developed to describe the first approach, the RUC recommendation of 
1.92 work RVUs was based on the use of general anesthesia for 
performance of the prostate volume study. Our medical staff estimates 
that the average time to perform the procedure is 30 minutes and that 
the work is comparable to performance of CPT code 76805, Echography, 
pregnant uterus, B-scan and/or real time with image documentation; 
complete. Therefore, we have assigned it a work RVU of 0.99.
    CPT code 76873 should not be used on the same day as seed 
implantation and, therefore, we will not allow payment for this service 
on the same day as seed implantation or other services that are part of 
seed implantation.

Urea breath test, C-14; acquisition for analysis (CPT code 78267), 
and Breath test analysis, C-14 (CPT code 78268)

    The RUC recommended a work RVU of 0.00 for CPT code 78267 and 0.19 
work RVUs for CPT code 78268. These CPT codes describe procedures 
currently paid under the lab fee schedule under CPT codes 83013 and 
83014 respectively. Our medical staff have reviewed these codes and do 
not believe any physician work is required for the performance of 
either service. Moreover, the work required for performance of these 
services is practically identical to those services still described 
under CPT codes 83013 and 83014 which are urea breath tests using the 
C-13 isotope. Therefore, these codes will continue to be paid under the 
lab fee schedule with CPT code 78267 crosswalked to CPT code 83014 and 
CPT code 78268 crosswalked to CPT code 83013. Payment rates will be 
identical to the crosswalk codes.

Electronic Analysis of pacing cardioverter-defibrillator * * * 
without reprogramming (CPT code 93741)

    The RUC recommended a work RVU of 0.90 for CPT code 93741. This 
recommendation was inconsistent with both the RUC survey data and with 
the building block approach that the RUC offered as an alternative. The 
reference procedure used in the RUC survey was CPT code 93737, 
Electronic analysis of cardioverter-defibrillator only * * * without 
reprogramming, that has a work RVU of 0.45. Our medical staff believes 
that the physician work for CPT code 93741 is greater than that of CPT 
code 93737, and notwithstanding the conflicting information received 
from the RUC, has assigned 0.64 work RVUs to CPT code 93741. This value 
is based on a building block approach combining 100 percent of CPT code 
93737 and 50 percent of CPT code 93734, Electronic analysis of single 
chamber pacemaker system * * * without reprogramming which has a work 
RVU of 0.38.

Electronic analysis of pacing cardioverter-defibrillator * * * 
single chamber, with reprogramming (CPT code 93742)

    The RUC recommended a work RVU of 1.03 based on their estimate that 
CPT code 93742 required 14 percent more work than CPT code 93741. This 
recommendation was inconsistent with both the results of the RUC survey 
and with their building block approach that combined 100 percent of CPT 
code 93738 (Electronic analysis of cardioverter/defibrillator only * * 
* with reprogramming, work RVU of 0.92) plus 50 percent of CPT code 
93735 (Electronic analysis of single chamber pacemaker system * * * 
with reprogramming, work RVUs of 0.74). Our medical staff agrees that 
CPT code 93742 requires more physician work than CPT code 93741 because 
it includes reprogramming. After analysis of the conflicting 
information received from the RUC, we agree that CPT code 93742 
requires 14 percent more work than CPT code 93741. Therefore, we have 
assigned 0.73 work RVUs to CPT code 93742.

Electronic analysis of pacing cardioverter-defibrillator * * * dual 
chamber, without reprogramming (CPT code 93743)

    The RUC recommended 1.17 work RVUs for CPT code 93743 because of 
its estimate that CPT code 93743 required 30 percent more work than CPT 
code 93741. This recommendation was inconsistent with both the RUC 
survey data and its building block approach that combined 100 percent 
of CPT code 93738 with 50 percent of CPT code 93735. Our medical staff 
agrees that CPT code 93743 requires more work than CPT code 93741. 
After analysis of the conflicting information received from the RUC, we 
agree that CPT code 93743 requires 30 percent more work than CPT code 
93741. Therefore, we have assigned 0.83 work RVUs to CPT code 93743.

Electronic analysis of pacing cardioverter-defibrillator * * * dual 
chamber, with reprogramming (CPT code 93744)

    The RUC recommended 1.33 work RVUs for CPT code 93744 based on its 
estimate that CPT code 93744 required 14 percent more work than CPT 
code 93743. This recommendation was inconsistent with both the RUC 
survey data and its building block approach. After analysis of the 
information received from the RUC, our medical staff agrees that CPT 
code 93744 requires 14 percent more work than CPT code 93743. 
Therefore, we have assigned 0.95 work RVUs to CPT code 93744.

Photodynamic therapy by endoscopic application of light to ablate 
abnormal tissue via activation of photosensitive drug(s); first 30 
minutes (CPT code 96570), and Photodynamic therapy by endoscopic 
application of light to ablate abnormal tissue via activation of 
photosensitive drug(s); each additional 15 minutes (CPT code 96571)

    These CPT codes describe a procedure that is performed to ablate 
abnormal tissue during a bronchoscopy or upper gastrointestinal 
endoscopy. These procedures have been billed using CPT codes for 
ablation or destruction of tumors not amenable to other described 
methods of destruction during endoscopy. Our medical staff reviewed the 
work RVUs for the base endoscopic procedure codes and the procedure 
codes used for billing photodynamic therapy (CPT 31641, 43228, and 
43258) and valued the work for the new CPT codes as the difference 
between the work RVU of the CPT code billed and the CPT value of the 
endo base. We also assumed a procedure time of 60 minutes and are 
valuing CPT code 96570 at 1.10 work RVUs and CPT 96571 at 0.55 work 
RVUs. We will not allow payment for other endoscopy procedures on the 
same date unless it is for a significant, separately identifiable 
service (for example, ablation of a separate lesion) and the claim 
contains the appropriate modifier.

Screening test of visual acuity (CPT code 99173)

    We consider this procedure to be a screening procedure for which 
Medicare payment is not authorized. There are no work RVUs associated 
with CPT code 99173.

[[Page 59423]]

Critical Care, 1st hour (CPT code 99291), and Critical Care, each 
additional thirty minutes (CPT code 99292)

    The definition of critical care in CPT 2000 has been revised and 
the RUC has forwarded a recommendation that the revised definition of 
critical care was editorial and did not warrant a change in work RVUs, 
which are 4.0 RVUs for code 99291 and 2.0 RVUs for CPT code 99292. Our 
medical staff disagrees. Therefore, in accordance with our policy of 
making work neutrality adjustments at the time a new or revised CPT 
code is published, we have made a work neutrality adjustment to these 
codes. We have assigned work values of 3.6 RVUs to CPT code 99291 and 
1.8 RVUs to CPT code 99292 for the reasons set forth below.
    We compared the work intensity (RVUs per hour) of critical care to 
other E/M services. The work intensity for each E/M service was 
calculated from the ``typical'' performance time in the CPT code 
descriptor. Initial and subsequent hospital visits have a work 
intensity of 2.56 RVUs per hour, initial inpatient consultations have a 
work intensity of 1.98 RVUs per hour, and initial/established office 
visits have a work intensity of 2.67 RVUs per hour. Similar E/M 
services have similar work intensities to ensure that the assigned RVU 
is not anomalous. This facilitates appropriate utilization, coding, and 
payment. The work intensity of critical care, 4.0 RVUs per hour, is 
considerably higher than the work intensity of other E/M services. This 
higher work intensity has been justified on the basis that critical 
care is significantly different from care described by other E/M 
services. These differences have been said to include the following:
    <bullet> Critical care is provided to critically ill patients who, 
by definition, are more severely ill than other patients.
    <bullet> The analysis of multiple and complex databases needed to 
care for critically ill patients is a highly work intensive process, 
clearly greater than that required to care for non-critically ill 
patients.
    <bullet> The frequent application of advanced technology essential 
to the care of critically ill patients clearly requires more intense 
work than is needed for the care of other patients.
    <bullet> CPT 2000 includes significant and substantive changes in 
the definition of critical care that directly affect the work intensity 
of critical care. Among these changes are:
    <bullet> Deletion of the word ``unstable'' to describe critically 
ill or injured patients.
    <bullet> Redefinition of a critical illness to say, ``A critical 
illness or injury acutely impairs one or more vital organ systems such 
that the patient's survival is jeopardized.''
    <bullet> A change in the frequency for which the work of 
``extensive interpretation of multiple databases and the application of 
advanced technology'' is required to meet the standards for critical 
care. CPT 1999 says that such work is ``often required'' while CPT 2000 
says that such work ``may be required.''
    As discussed below, the result of these new work requirements for 
critical care is to make it somewhat more comparable to the work 
requirements of E/M services with lower work intensities. In some 
situations this could allow E/M services with lower work intensities to 
be coded as critical care.
    The new definition of critical illness or injury does not 
sufficiently distinguish critically ill patients from other patients 
whose care is appropriately described by other E/M services with less 
work intensity. For example, many patients with an acute exacerbation 
of congestive heart failure, regardless of severity, could meet the new 
definition of critical illness. The problem is compounded by the 
elimination of the requirement for ``extensive interpretation of 
multiple databases and the application of advanced technology'' as a 
typical component of critical care. This will make it more difficult to 
distinguish between the work of critical care and the work of care 
appropriately coded under other E/M services. For example, the 
physician work required to manage patients with congestive heart 
failure varies significantly depending on the severity of illness. The 
care provided to many of these patients would, appropriately, be coded 
as a non-critical care E/M service because of the lower intensity of 
physician work required.
    In making the work neutrality adjustment we considered the work 
intensity of other E/M services as described above, and we modeled 
probable changes in the utilization pattern of critical care services. 
Our modeling included projections of the number of E/M services 
currently, and appropriately, coded as non-critical care that will be 
coded as critical care next year. Based upon this analysis, we estimate 
that the appropriate work neutrality adjustment for critical care 
services is 3.6 RVUs for code 99291 and 1.8 RVUs for code 99292.
    We will analyze the utilization data for codes 99291 and 99292 and 
other appropriate E/M services starting in January 2000 to determine 
whether actual utilization patterns match our projections. Based on 
this analysis, we will consider making further work neutrality 
adjustments, either increasing or decreasing the work RVUs, as 
appropriate.

    Note : Codes 99295 through 99298 were revised in CPT 2000. 
However, due to the different payment methodology for CPT codes 
99295 through 99298, we are not proposing a work neutrality 
adjustment for these codes.

Establishment of Interim Practice Expense Relative Value Units for New 
and Revised Physicians' Current Procedural Terminology (CPT) Codes and 
New HCFA Common Procedure Coding System Codes for 2000 Methodology

    We have developed a process for establishing interim practice 
expense RVUs (PERVUs) for new and revised codes that is similar to that 
used for work RVUs. Under this process, the RUC will recommend the 
practice expense direct inputs, that is, the staff time, supplies, and 
equipment associated with each new code. We will then review the 
recommendations in a manner similar to our evaluation of the 
recommended work RVUs. Because this is the first year that the RUC has 
been asked to develop the practice expense inputs for new CPT codes, 
and developing the practice expense inputs for new procedures is a 
complicated and time-consuming endeavor, the RUC recommended actual 
direct inputs for a minority of the new CPT codes. For the other 
procedures, the RUC either recommended a crosswalk to the inputs of an 
existing CPT code or made no recommendation at this time. For a few of 
the codes without a RUC recommendation, the interested specialty 
society sent us recommendations for possible crosswalks of the direct 
inputs. We will consider all direct cost input crosswalks to be a 
temporary proxy for the values for these crosswalked services until 
procedure-specific actual inputs can be developed.
    The table below lists the new CPT codes for which we agree with the 
RUC recommended crosswalk to the practice expense inputs of an existing 
CPT code:

[[Page 59424]]

------------------------------------------------------------------------
              New CPT Code                      Existing CPT Code
------------------------------------------------------------------------
22318  Treat odontoid FX w/o graft.....  63075  Neck spine disk surgery.
22319  Treat odontoid FX w/ graft......  22548  Neck spine Fusion.
27096  Inject sacroiliac joint.........  27093  Injection for hip X-ray.
35879  Revise graft w/ vein............  35301  Rechanneling of artery.
35881  Revise graft w/ vein............  35301  Rechanneling of artery.
50547  Lapro removal donor kidney......  36830  Artery-vein graft.
62310  Inject spine C/T................  56349  Esophagogastric
                                          fundoplasty.
62311  Inject spine L/S (CD)...........  62298  Injection into spinal
                                          canal.
62318  Inject spine w/ cath, C/T.......  62289  Injection into spinal
                                          canal.
62319  Inject spine w/ cath, L/S (CD)..  62277  Inject spinal
                                          anesthetic.
64470  Injection paravertebral C/T.....  64442  Injection for nerve
                                          block.
64479  Injection foramen epidural C/T..  64442  Injection for nerve
                                          block.
64483  Injection foramen epidural L/S..  64442  Injection for nerve
                                          block.
64626  Destroy paravertebral nerve C/T.  64622  Destroy paravertebral
                                          nerve L/S.
72275  Epidurography...................  72265  Contrast X-ray, lower
                                          spine.
73542  X-ray exam, sacroiliac joint....  73525  Contrast X-ray of hip.
76005  Fluoroguide for spine injection.  76003  Needle localization by X-
                                          ray.
77427  Radiation TX management, X5.....  77430  Weekly radiation
                                          therapy.
------------------------------------------------------------------------

    The following table shows the CPT codes for which the RUC provided 
no practice expense recommendations. Therefore, we crosswalked these 
new CPT codes to what we believe to be the most appropriate existing 
CPT codes.

------------------------------------------------------------------------
              New CPT Code                      Existing CPT Code
------------------------------------------------------------------------
11980  Implant hormone pellet(s).......  11975  Insert contraceptive
                                          cap.
20979  US bone stimulation.............  20974  Electrical bone
                                          stimulation.
33140  Heart revascularize (TMR).......  33020  Incision of heart sac.
33282  Implant pat-active HT record....  33212  Insertion of pulse
                                          generator.
33284  Remove pat-active HT record.....  33233  Removal of pacemaker
                                          system.
33968  Remove aortic assist device.....  No direct costs.
36521  Apheresis w/ adsorp/reinfuse....  36520  Plasma and/or cell
                                          exchange.
36550  Declot vascular device..........  99211  Office/outpatient visit,
                                          est.
61862  Implant neurostimu, subcort.....  61855  Implant neuroreceiver.
61886  Implant neurostim arrays........  61855  Implant neuroreceiver.
92961  Cardioversion, electric, int....  93610  Intra-atrial pacing.
93727  Analyze IRL system..............  93272  ECG/review, interpret
                                          only.
93741  Analyze HT pace device single...  93737  Analyze cardio/
                                          defibrillator.
93742  Analyze HT pace device single...  93738  Analyze cardio/
                                          defibrillator.
93743  Analyze HT pace device dual.....  93738  Analyze cardio/
                                          defibrillator.
93744  Analyze HT pace device dual.....  93738  Analyze cardio/
                                          defibrillator.
99170  Anogenital exam, child..........  57452  Examination of vagina.
------------------------------------------------------------------------

    For the following CPT codes we received practice expense 
recommendations, from either the RUC or a specialty society, that 
require a short discussion. If we have made any modifications to the 
recommendations as a result of our review process, the specific changes 
are discussed.

CPT Code 13102, Repair, complex, trunk; each additional 5 cm or less

CPT Code 13122, Repair, complex, scalp, arms and/or legs; each 
additional 5 cm or less

CPT Code 13133, Repair, complex, forehead, cheeks, chin, mouth, neck, 
axillae, genitalia, hands and or feet; each additional 5 cm or less

CPT Code 13153, Repair, complex, eyelids, nose, ears and/or lips; each 
additional 5 cm or less

    The RUC made no practice expense recommendations for these above 
four CPT codes. However, the American Society of Plastic and 
Reconstructive Surgeons recommended to us that we reference these CPT 
codes to the practice expense inputs for the respective parent codes 
(CPT codes 13101, 13121, 13132 and 13152, respectively) and that we 
make the appropriate adjustments to account for the fact that these are 
add-on codes. We have accepted this recommendation.

CPT Code 33410, Replacement, aortic valve, with cardiopulmonary bypass, 
with stentless tissue valve

    The RUC made no recommendation on this CPT code. However, the 
Society of Thoracic Surgeons recommended that we crosswalk the direct 
inputs for this procedure to the direct inputs of CPT code 33406, 
Repacement, aortic valve, with cardiopulmonary bypass, with homograft 
valve (freehand). We agree that this is an appropriate crosswalk.

CPT Code 36819, Arteriovenous anastomosis, open; by basilic vein 
transposition

    The RUC approved a list of inputs that had been developed with 
reference to the inputs for existing CPT code 36830 and recommended 
their acceptance. We agree with the list of inputs, but have adjusted 
the supplies and staff times to reflect that there are only two post-
visits assigned to CPT code 36819.

CPT 39560, Resection, diaphragm; with simple repair

CPT 39561, Resection, diaphragm; with complex repair

    The RUC made no recommendations on these CPT codes. However, the 
Society of Thoracic Surgeons recommended that we crosswalk the direct 
inputs for these procedures to the direct inputs of CPT codes 39501, 
Repair diaphragmatic laceration and 39502, Repair paraesophageal hiatus 
hernia, transabdominal, with or without

[[Page 59425]]

fundoplasty, vagotomy, and/or phyloroplasty, except neonatal, 
respectively. We agree that these are appropriate crosswalks.

CPT Code 50541, Laparoscopy, surgical; ablation of renal cysts

CPT Code 50544, Laparoscopy, surgical; pyeloplasty

CPT Code 50546, Laparoscopy, surgical; nephrectomy

CPT Code 50548, Laparoscopically assisted nephrourereterectomy

CPT Code 50945, Laparoscopy, surgical; ureterolithotomy

CPT Code 51990, Laparoscopy, surgical; urethral suspension for stress 
incontinence

CPT Code 51992, Laparoscopy, surgical; sling operation for stress 
incontinence

CPT Code 54692, Laparoscopy, surgical; ochiopexy for intra-abdominal 
testis

    The RUC recommended direct practice expense inputs for each of the 
above CPT codes. We accepted these recommendations with only minor 
modification. We removed the autoclave from the overhead equipment 
because it is not needed for the post-procedure visits for these 
services and adjusted the supplies for CPT code 50544 to reflect that 
the service is assigned two rather than three office visits. We did not 
add the female catheter at this time to the list of supplies for CPT 
codes 51990 and 51992 because we had no information on this supply.

CPT Code 64472, Injection anesthetic agent and/or steroid, 
paravertebral facet joint or facet joint nerve; cervical or thoracic, 
each addition level

CPT Code 64480, Injection, anesthetic agent and/or steroid, 
transforaminal epidural; cervical or thoracic, each additional level

CPT Code 64484, Injection, anesthetic agent and/or steroid, 
transforaminal epidural; lumbar or sacral, each additional level

CPT Code 64627, Destruction by neurolytic agent, paravertebral facet 
joint nerve; cervical or thoracic, each additional level

    The RUC sent us only suggested clinical staff intra-service times 
for these four add-on codes. These clinical staff times were derived by 
comparison to the RUC physician intra-service times. Because the 
clinical staff times and physician times are not always the same for a 
given service, we are, in the interim, crosswalking the practice 
expense inputs for CPT codes 64472, 64480, and 64484 to the direct 
inputs for a similar add-on code, CPT code 64443, Injection, anesthetic 
agent; paravertebral facet joint nerve, lumbar, each additional level. 
We are crosswalking the practice expense inputs for CPT code 64627 to 
another appropriate add-on code, CPT code 64623, Destruction by 
neurolytic agent; paravertebral facet joint nerve, lumbar, each 
additional level.

CPT Code 76873, Echography, transrectal; prostate volume study for 
brachytherapy treatment planning

    The RUC recommended a list of direct cost inputs for this CPT code. 
However, because these practice expense recommendations differed 
greatly from the CPEP inputs for other CPT codes in the same family, 
we, as an interim measure, crosswalked the practice expense inputs for 
this code to CPT code 76872, Echography, transrectal, which was used by 
the RUC as the reference CPT code for this service and was also the CPT 
code used formerly to report this procedure.

CPT Code 78456, Acute venous thrombosis imaging, peptide

    We accepted the RUC recommended direct practice expense inputs 
except that we deleted forms and labels (considered office supplies 
from the medical supply list) and the dictation machine (considered 
office equipment). We have not included the bar phantom at this time 
because the data provided with the recommendation was insufficient to 
develop a cost for this equipment.

CPT Code 90471, Immunization administration; one vaccine

    We accepted the RUC's practice expense recommendations concerning 
clinical labor, supplies, and equipment inputs with the following 
adjustments: office supplies, which included the record sheet, school 
record form and Xerox copy, were deleted from the medical supply list; 
the APAP elixir was also removed since Medicare does not include 
coverage of self-administered drugs. We deleted the examination table 
from the overhead equipment, because it is not needed for the procedure 
and, in keeping with the CPEP definitions of the equipment categories, 
moved the refrigerator from the procedure-specific to the overhead 
medical equipment category.

CPT Code 90472, Immunization administration; each additional vaccine

    We accepted the RUC recommendation for clinical staff time and made 
the same adjustments to the RUC recommendation for supplies as we did 
for CPT code 90471. In addition, we deleted all equipment because this 
is an add-on CPT code and all equipment costs are captured in the base 
CPT code.
    For the following CPT codes we did not receive practice expense 
recommendations from either the RUC or a specialty society and we were 
unable to do a direct crosswalk to existing CPT codes.

CPT Code 62263, Percutaneous lysis of eipidural adhesions, with or 
without endoscopic guidance, using solution injection or mechanical 
means including x-ray localization with or without contrast

    We are crosswalking this service to CPT code 62282, Injection of 
neurolytic substance; epidural, lumbar or caudal, which is a service 
assigned three post-procedure visits. We are adjusting the inputs of 
CPT code 62263 to reflect the two post-procedure visits assigned to 
this procedure.

CPT Code 96570, Photodynamic therapy by endoscopic application of light 
to ablate abnormal tissue via activation of photsensitive drug(s); 
first 30 minutes, and CPT code 96571 Photodynamic therapy by endoscopic 
application of light to ablate abnormal tissue via activation of 
photsensitive drug(s); each additional 15 minutes.

    These codes are add-on codes. That is, they will always be billed 
along with another procedure. Most of the direct practice expense 
inputs will be assigned to the base procedure. The inputs for 96570 and 
96571 only reflect the additional inputs that are required. We have 
included an argon laser under equipment and 30 minutes of clinical 
staff intra-service time for CPT code 96570. For CPT code 95671, we 
included 15 minutes of clinical staff intra-service time. This is 
consistent with the discussion for these codes contained in the 
evaluation of the work RVUs.

C. Other Changes to the 2000 Physician Fee Schedule and Clarification 
of CPT Definitions

    For the 2000 physician fee schedule, we are establishing or 
revising several alpha-numeric HCPCS codes for the reporting of certain 
services that are not clearly described by existing CPT codes. We view 
these codes as temporary since we will be referring them to the CPT 
Editorial Panel for possible inclusion in future editions of the CPT. 
Additionally, included in this section are some clarifications of 
proper usages of some new or revised codes.

[[Page 59426]]

External Counterpulsation (G0166)

    A new level 2 HCPCS code has been created to describe this 
technology. External counterpulsation (ECP) consists of sequential 
compression and decompression of a series of leg and lower trunk air-
filled cuffs, coordinated with the cardiac cycle. ECP has been approved 
for patients with severe stable angina pectoris refractory to medical 
and/or surgical treatment. An average course of treatment consists of 
35, one-hour treatments over seven weeks. We determined that the 
procedure is performed by non-physician personnel, but requires a 
physician to be available for emergencies and intermittent physician 
supervision. Because of the minimal physician involvement we have 
assigned .07 work RVU to HCPCS code G0166.
    We will not allow payment for the following services on the same 
day as ECP unless they are medically necessary and delivered in a 
clinical setting not involving ECP treatment:
    <bullet> CPT code 97016 (vasopneumatic devices).
    <bullet> CPT codes 93720, 93721, 93722 (total body 
plethysmography).
    <bullet> CPT codes 93000, 93005, 93010 (electrocardiogram).
    <bullet> CPT code 92971 (external cardioassist).
    <bullet> CPT code 93922 (noninvasive physiologic studies of 
extremity arteries). If patients undergoing ECP require significant E/M 
services in the same period, those services should be billed using the 
appropriate E/M code with modifier -25 to indicate a significant 
separately identifiable service.
    Interim practice expense direct cost inputs were established based 
on the information available to us concerning the cost of the machine, 
hours per week of use, registered nurse/technical time per use, 
disposable supplies, and overhead. Because this is a new procedure, 
information on practice expense was limited. Therefore, we expect to 
refine these inputs as more information becomes available.

Hyperbaric oxygen treatment not requiring physician attendance, per 
treatment session (G0167)

    This code was created because the only current code for hyperbaric 
oxygen treatment is CPT code 99183. Because many providers have stated 
that physician attendance may not be needed for hyperbaric oxygen 
treatment, the new HCPCS code G0167 was created to allow coding of 
these services. The creation of a code does not change current coverage 
policy.
    The physician work of this code is zero. The practice expense 
inputs were crosswalked to CPT code 99183, though we will consider a 
lower value in the future if we find that the practice expenses are 
lower in situations in which there is no physician attendance.

Wound closure utilizing tissue adhesives only (G0168)

    This new code should only be used when a wound is closed solely 
with the use of this new product. Wounds closed with a combination of 
wound closure adhesives and other traditional methods of wound closure 
(staples or sutures) should still be coded using the appropriate CPT 
code (12001-12007). FDA data shows that the time needed to close a 
wound with wound adhesive is, on average, one quarter of the time 
needed to close a wound with traditional methods (including use of 
wound closure tapes). We estimate that the work of HCPCS code G0168 is 
comparable to the work of a level two E/M service and have assigned a 
work RVU of .45.
    We established interim practice expense inputs for this service by 
crosswalking inputs from CPT code 12001. We then adjusted the inputs by 
adding the cost of the wound adhesive and removing the supplies that 
would not be needed for this type of wound closure. We also reduced the 
clinical staff time to reflect that the wound size is less complex and 
treatment method less time consuming.

Removal of devitalized tissue, without use of anesthesia (G0169)

    This code was created because the CPT codes 11040 through 11044 for 
debridement were created to describe complex surgical services 
requiring the use of general anesthesia. Many practitioners, including 
physical therapists, occupational therapists, and nurses, do active 
wound care under physicians' orders. Active care involves the use of 
high pressure water jets, scissors, or scalpels. Wound care involving 
use of dressings, gauze, or medications, but not active tissue removal, 
should not be coded using HCPCS code G0169. The service to be coded 
with HCPCS code G0169 typically involves regular removal of devitalized 
tissues in ulcers or non-healing wounds. We have created this code to 
eliminate the confusion involved in using debridement codes, some of 
which have 10 day global periods. This code will be recognized as a 
therapy service for purposes of the outpatient rehabilitation payment 
system and will replace the CPT codes 11040 and 11044 for use by 
physical and occupational therapists.
    We estimate that the work of HCPCS code G0169 is comparable to the 
work of CPT code 11040; therefore, we have assigned 0.5 work RVUs to 
this new code. For the practice expense component, we crosswalked the 
inputs for this code to the inputs for CPT code 97022, whirlpool 
therapy.

Application of tissue cultured skin grafts, including bilaminate 
skin substitutes or neodermis, including site preparation, initial 
25 sq cm; and G0171 Application of tissue cultured skin grafts, 
including bilaminate skin substitutes or neodermis, including site 
preparation, each additional 25 sq cm (G0170)

    CPT 1999 recommended that CPT codes 15100 to 15121, for split-
thickness skin grafting, be used for tissue cultured or bilaminate skin 
substitutes or neodermis. Instead, we have decided that effective 
January 1, 2000, these services should be reported with the new HCPCS 
codes G0170 and G0171 on Medicare claims. The CPT codes for split-
thickness skin grafts may no longer be used to describe tissue cultured 
or bilaminate skin substitutes or neodermis. Because the tissue 
cultured and ``bioengineered'' products are available for use on small 
skin ulcers, and because there is no need to harvest a graft and care 
for the donor site, we estimate that the physician work in using these 
cultures and ``bioengineered'' products is considerably less than the 
work in performing split-thickness skin grafts. The work value for the 
new codes was calculated with a building block approach using CPT code 
15000 (skin graft with work value of 4.00) and either CPT code 15350 
(skin homograft with work value of 4.00) or CPT code 15400 (skin 
heterograft with work value of 4.00).
    The work in preparing a graft site and placing a graft equals the 
work of CPT code 15000 plus 50 percent of the work of either CPT code 
15350 or 15400, due to the multiple procedure reduction rule. Since the 
work values for CPT codes 15000, 15350, and 15400 are based upon graft 
site preparation and placement of a 100 sq. cm. graft or less, and 
HCPCS G0170 describes a graft size of 25 cm or less, the work value for 
HCPCS code G0170 is 25 percent of the work value of CPT code 15000 
(4.00) plus 50 percent of CPT code 15350 or 15400 (2.00). This results 
in a work RVU of 1.5 (25 percent of 6.00). The work RVU for HCPCS code 
G0171 was calculated similarly using CPT codes 15001 (skin graft add-on 
with work

[[Page 59427]]

value of 1.00) and 15351 (skin homograft add-on with a work value of 
1.00) resulting in a work RVU of .38 for HCPCS code G0171.
    We calculated the practice expense inputs for HCPCS code G0170 by 
crosswalking the supply and overhead equipment inputs from CPT 15350. 
We added a power table and soft tissue tray as the procedure-specific 
equipment inputs and added 80 minutes of RN/MA clinical time in the 
intra service period. For HCPCS code G0171 we added 20 minutes of RN/MA 
clinical time in the intra service period.

IV. Five Year Refinement of Relative Value Units

A. Background

    Section 1848(c)(2)(B)(i) of the Act requires that we review all 
RVUs no less often than every five years. As part of the final rule 
published December 8, 1994 (59 FR 63410), we solicited public comment 
on all work RVUs for approximately 7,000 CPT and HCPCS codes. The scope 
of the 5-year review was limited to work values, since at that time, 
the law required practice expense and malpractice RVUs be calculated 
based on 1991 allowed charges and practice expense and malpractice 
expense shares for the specialties performing the services. We applied 
the specialty practice cost shares from the AMA's Socioeconomic Survey 
to 1989 actual charges ``aged'' forward to approximate 1991 charges. In 
addition, we were aware of the move to replace the charge-based 
practice expense system by a resource-based methodology. The December 
8, 1994 final rules also outlined the proposed process for refinement 
of the work RVUs and provided a suggested format for submission of 
comments.
    As a result of the December 8, 1994 final rule, we received more 
than 500 comments on approximately 1,100 codes. Subsequent to review of 
the comments by our medical staff, comments on approximately 700 codes 
were forwarded to the RUC for review. An additional 300 codes 
identified by our staff as potentially misvalued were also forwarded to 
the RUC. A process similar to that used for the annual physician fee 
schedule update was used for evaluating the proposed changes to the 
work RVUs and a notice discussing these proposed changes was published 
in the Federal Register May 3, 1996 (61 FR 19992). As outlined in the 
notice, for 28 percent of the codes we proposed to increase the work 
RVUs; for 61 percent of the codes we proposed to maintain the work RVUs 
and for 11 percent of the codes we proposed to decrease the work RVUs. 
(Our proposed work RVUs agreed with the RUC recommendations for 93 
percent of the codes.)
    In response to the May 3, 1996 proposed notice, we received more 
than 2,900 comments on approximately 133 codes plus all anesthesia 
services. In order to address these comments, we convened 
multispecialty panels of physicians. A detailed discussion of this 
process, as well as the final results of the 5-year review, were 
included in the final rule with comment period published November 22, 
1996 (61 FR 59490).

B. Scope of the Five Year Refinement

    We have made several preliminary decisions about the scope of the 
5-year refinement and issues for which we are requesting public 
comment. All work RVUs are subject to comment. Practice expense and 
malpractice expense RVUs will not be subject to comment and will not be 
recalculated as part of the 5-year refinement.
    Section 4505(f) of the BBA requires us to implement malpractice 
resource-based RVUs for services furnished beginning in CY 2000. The 
BBA at section 4505 also provides for a gradual 4-year transition for 
resource-based practice expenses, with resource-based practice expenses 
becoming fully effective in CY 2002. Since resource-based malpractice 
RVUs will have only just been implemented in CY 2000, and resource-
based practice expenses will be in the middle of transitioning to a 
fully resource-based system, it would be premature to include these 
components in this 5-year review. While these components of the fee 
schedule will also eventually be subject to review, we will be 
evaluating how to best approach this task.

C. Refinement of Work Relative Value Units

    During the first 5-year review, we relied on public commenters to 
identify services that were misvalued. For the second 5-year refinement 
of work RVUs for services furnished beginning January 1, 2002, we are 
requesting public comments on potentially misvalued work RVUs for all 
services in the CY 2000 physician fee schedule. These comments will be 
an important source of information that we will consider in developing 
further plans for the 5-year review which we will propose in 2001. 
However, since this process generally elicits comments focusing on 
undervalued codes, we will supplement the information we receive 
through these comments with other data and analyses we are initiating, 
as described in section IV.E.
    Comments will be considered if we receive them at the appropriate 
address as provided below, no later than 5 p.m., March 1, 2000. Mail 
written comments related to the 5-year refinement process (1 original 
and 3 copies) to the following address: Health Care Financing 
Administration, Department of Health and Human Services, Attention: 
HCFA-1065-FC (5-Year Refinement), P.O. Box 8013, Baltimore, MD 21244-
8013. Comments must include the appropriate CPT code (for example CPT 
code 90918) and the suggested RVUs (for example, 11.00 RVUs). Unless 
otherwise specified, we will assume that all suggested RVUs are on the 
2000 scale. Failure to provide this information may result in our 
inability to evaluate the comments adequately. We will consider all 
comments on all work RVUs in the development of a proposed rule that we 
intend to publish in 2001. In that rule, we will propose the revisions 
to work RVUs that we believe need to be made. Finalization of that rule 
will be based on review and analysis of comments received in response 
to the proposed rule.
    In addition to internal review and analysis, we propose to share 
comments we receive on all CY 2000 RVUs with the RUC, which currently 
makes recommendations to us on the assignment of RVUs to new and 
revised CPT codes. This process was used during the first 5-year review 
and we believe that it was beneficial. The RUC's perspective will be 
helpful because of its experience in recommending RVUs for the codes 
that have been added to, or revised by, the CPT panel since we 
implemented the physician fee schedule in 1992. Furthermore, the RUC, 
by virtue of its multispecialty membership and consultation with 
approximately 65 specialty societies, involves the medical community in 
the refinement process. We emphasize, however, as we reiterated for the 
first 5-year review, that we retain the responsibility for analyzing 
the comments in the 2000 physician fee schedule, developing the 
proposed rule for 2001, evaluating the comments on the proposed rule, 
and deciding whether to revise RVUs. We are not delegating this 
responsibility to the RUC or any other organization.

D. Nature and Format of Comments on Work Relative Value Units

    While all written public comments are welcomed, based on our past 
experience we have found it particularly beneficial if the comments 
include information in a particular format. This includes the CPT code, 
a clinical description of the service, and a discussion of how the work 
of that

[[Page 59428]]

service is analogous to one or more reference services. The use of one 
or more reference services is of fundamental importance because the 
relative value of the work in a physicians' service exists only in 
comparison with the physician work in another service.
    The reference services cited should be commonly performed services 
with established work RVUs and also fairly well understood outside of 
their specialty. We have included a list of suggested reference 
services in Addendum E. The RVUs assigned to these services represent 
benchmarks to serve as a basis for comparison with the work represented 
by other codes. However, the inclusion of these services in the 
reference set does not mean that they are exempted from public comment 
on the RVUs assigned to them. If none of the services in the reference 
set are suitable for reference, we recommend choosing another service 
from the physician fee schedule and explaining why it is a better 
reference procedure.
    Physician work has two components; time and intensity. The clinical 
analogy for many services can be strengthened by dividing the service 
into the following three time segments and comparing them with the 
respective segments of the reference services:
    <bullet> Preservice work--Work performed before the actual 
procedure such as review of records, solicitation of informed consent, 
and preparation of equipment. Time spent by the physician dressing, 
scrubbing, and waiting for the patient should be identified. Preservice 
work also includes the time spent scrubbing, positioning, or otherwise 
preparing the patient. For surgical procedures with global periods, 
commenters should include estimates of the number, time, and type of 
visits from the day before surgery until the patient enters the 
operating room. The visit when the physician decides to operate and the 
visits preceding it should not be included in the estimate of 
preservice work since these services are not included in the Medicare 
definition of global period.
    <bullet> Intraservice work--The actual performance of the 
procedure. For evaluation and management services, this would be 
described as ``face to face'' time in the inpatient setting. For 
surgical procedures, the customary term would be ``skin-to-skin'' or 
its equivalent for those procedures not beginning with incisions.
    <bullet> Postservice work--Analysis of data collected from the 
encounter, preparation of a report, and communication of the results. 
For procedures with global periods, commenters should identify the time 
spent by the physician with the patient after the procedure on the same 
day and whether the patient typically goes home to an ordinary hospital 
bed or to the intensive care unit. Commenters should describe the 
number, time, and type of physician visits from the day after the 
procedure until the end of the global period. They should also 
distinguish inpatient from outpatient visits.
    In making these estimations, we encourage detailed clinical 
information such as data derived from operating logs, operative 
reports, medical charts concerning the length of service, the amount of 
work performed before and after the service, and the length of stay in 
the hospital. The usefulness of these data is greatly increased if the 
data are presented with comparable data for reference services and 
evidence that justifies that the data presented are nationally 
representative of the average work involved in furnishing the service. 
One common mistake commenters make is to provide data that are not 
representative of national practices. Another common mistake is to 
present a lengthy and elaborate description of the work in the service, 
but to omit, or to provide an incomplete description of, the 
comparability of the work in the service to the work in the reference 
procedure or procedures identified.
    Intensity of the work in the service is best compared by breaking 
the intensity into the following elements:
    <bullet> Mental effort and judgment--Commenters should compare the 
service in question with a reference service as to the amount of 
clinical data that needs to be considered, the fund of knowledge 
required, the range of possible decisions, the number of factors 
considered in making a decision, and the degree of complexity of the 
interaction of these factors.
    <bullet> Technical skill and physical effort--One useful measure of 
skill is the point in training when a resident is expected to be able 
to perform the procedure. Physical effort can be compared by dividing 
services into tasks and making the direct comparisons of tasks. In 
making the comparison, it is necessary to show that the differences in 
physician effort are not reflected accurately by differences in the 
time involved; if they are, considerations of physician effort amount 
to double counting of physician work in the service.
    <bullet> Psychological stress--Two kinds of psychological stress 
are usually associated with physician work. The first is the pressure 
involved when the outcome is heavily dependent upon skill and judgment 
and a mistake has serious consequences. The second is related to 
unpleasant conditions connected with the work that are not affected by 
skill or judgment. These circumstances would include situations with 
high rates of mortality or morbidity regardless of the physician's 
skill or judgment, difficult patients or families, or physician 
physical discomfort. Of the two forms of stress, only the former is 
fully accepted as an aspect of work; many consider the latter to be a 
highly variable function of physician personality.
    Intensity often varies significantly in the course of furnishing a 
service. One common mistake commenters make is to ``anchor'' the value 
of the service to a point of maximum intensity during the service as 
the basis for comparing services. It is unlikely that the maximum 
intensity is an accurate reflection of the average intensity of a 
service; a lengthy procedure that is simple except for a few moments of 
extreme intensity is probably less work than one of equal length during 
which a fairly high level of intensity is maintained throughout.

E. New Initiatives

    While we intend to continue the process used during the first 5-
year review, we realize there were limitations to that process, 
particularly with respect to identifying overvalued codes.
    In preparation for the second 5-year review of work RVUs, we 
awarded a contract to Health Economic Research (HER) to obtain 
technical assistance to establish a framework for the second 5-year 
review. We were interested in identifying methods by which we could 
identify CPT codes in the physician fee schedule that may have been 
assigned inappropriate work RVUs and also identify services whose work 
RVUs may have changed since they were originally developed or last 
revised.
    HER identified seven methods that we could potentially use to 
identify misvalued services. These methods focus upon different 
components of the work RVU: Total work; time components of total work; 
that is, total service time, pre- and intra-service time, and post-
operative visits; and work per unit of time. They include:
    1. Clinical Panels. The use of clinical panels to evaluate total 
physician work. The panels could identify within clinical family rank 
order anomalies and cross-specialty anomalies in similar services and 
recalibrate reference set procedures.
    2. Rasch Paired Comparison Method. This method identifies misvalued 
CPT codes in terms of either total or intra-

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