Title 42—Public Health--Volume 1
PART 414—PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
§ 414.502   Definitions.
For purposes of this subpart—
Actual list charge means the publicly available rate on the first day the new advanced diagnostic laboratory test (ADLT) is obtainable by a patient who is covered by private insurance, or marketed to the public as a test a patient can receive, even if the test has not yet been performed on that date.
Advanced diagnostic laboratory test (ADLT) means a clinical diagnostic laboratory test (CDLT) covered under Medicare Part B that is offered and furnished only by a single laboratory and not sold for use by a laboratory other than the single laboratory that designed the test or a successor owner of that laboratory, and meets one of the following criteria:
(1) The test—
(i) Is an analysis of multiple biomarkers of deoxyribonucleic acid (DNA), ribonucleic acid (RNA), or proteins;
(ii) When combined with an empirically derived algorithm, yields a result that predicts the probability a specific individual patient will develop a certain condition(s) or respond to a particular therapy(ies);
(iii) Provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests; and
(iv) May include other assays.
(2) The test is cleared or approved by the Food and Drug Administration.
Applicable information, with respect to each CDLT for a data collection period:
(1) Means—
(i) Each private payor rate for which final payment has been made during the data collection period;
(ii) The associated volume of tests performed corresponding to each private payor rate; and
(iii) The specific Healthcare Common Procedure Coding System (HCPCS) code associated with the test.
(2) Does not include information about a test for which payment is made on a capitated basis.
Applicable laboratory means an entity that:
(1) Is a laboratory, as defined in § 493.2 of this chapter;
(2) Bills Medicare Part B under its own National Provider Identifier (NPI);
(i) For hospital outreach laboratories—bills Medicare Part B on the CMS 1450 under bill type 14x;
(ii) [Reserved]
(3) In a data collection period, receives more than 50 percent of its Medicare revenues, which includes fee-for-service payments under Medicare Parts A and B, prescription drug payments under Medicare Part D, and any associated Medicare beneficiary deductible or coinsurance for services furnished during the data collection period from one or a combination of the following sources:
(i) This subpart G.
(ii) Subpart B of this part.
(4) Receives at least $12,500 of its Medicare revenues from this subpart G. Except, for a single laboratory that offers and furnishes an ADLT, this $12,500 threshold—
(i) Does not apply with respect to the ADLTs it offers and furnishes; and
(ii) Applies with respect to all the other CDLTs it furnishes.
Blood bank or center means an entity whose primary function is the performance or responsibility for the performance of, the collection, processing, testing, storage and/or distribution of blood or blood components intended for transfusion and transplantation.
Data collection period is the 6 months from January 1 through June 30, during which applicable information is collected and that precedes the data reporting period, except that for the data reporting period of January 1, 2026, through March 31, 2026, the data collection period is January 1, 2019, through June 30, 2019.
Data reporting period is the 3-month period, January 1 through March 31, during which a reporting entity reports applicable information to CMS and that follows the preceding data collection period, except that for the data collection period of January 1, 2019, through June 30, 2019, the data reporting period is January 1, 2026, through March 31, 2026.
National Provider Identifier (NPI) means the standard unique health identifier used by health care providers for billing payors, assigned by the National Plan and Provider Enumeration System (NPPES) in 45 CFR part 162.
New advanced diagnostic laboratory test (ADLT) means an ADLT for which payment has not been made under the clinical laboratory fee schedule prior to January 1, 2018.
New ADLT initial period means a period of 3 calendar quarters that begins on the first day of the first full calendar quarter following the later of the date a Medicare Part B coverage determination is made or ADLT status is granted by CMS.
New clinical diagnostic laboratory test (CDLT) means a CDLT that is assigned a new or substantially revised Healthcare Common Procedure Coding System (HCPCS) code, and that does not meet the definition of an ADLT.
New test means any clinical diagnostic laboratory test for which a new or substantially revised Healthcare Common Procedure Coding System Code is assigned on or after January 1, 2005.
Private payor means:
(1) A health insurance issuer, as defined in section 2791(b)(2) of the Public Health Service Act.
(2) A group health plan, as defined in section 2791(a)(1) of the Public Health Service Act.
(3) A Medicare Advantage plan under Medicare Part C, as defined in section 1859(b)(1) of the Act.
(4) A Medicaid managed care organization, as defined in section 1903(m)(1)(A) of the Act.
Private payor rate, with respect to applicable information:
(1) Is the final amount that is paid by a private payor for a CDLT after all private payor price concessions are applied and does not include price concessions applied by a laboratory.
(2) Includes any patient cost sharing amounts, if applicable.
(3) Does not include information about denied payments.
Publicly available rate means the lowest amount charged for an ADLT that is readily accessible in such forums as a company Web site, test registry, or price listing, to anyone seeking to know how much a patient who does not have the benefit of a negotiated rate would pay for the test.
Reporting entity is the entity that reports tax-related information to the Internal Revenue Service (IRS) using its Taxpayer Identification Number (TIN) for its components that are applicable laboratories.
Single laboratory, for purposes of an ADLT, means:
(1) The laboratory, as defined in 42 CFR 493.2, which furnishes the test, and that may also design, offer, or sell the test; and
(2) The following entities, which may design, offer, or sell the test:
(i) The entity that owns the laboratory.
(ii) The entity that is owned by the laboratory.
Specific HCPCS code means a HCPCS code that does not include an unlisted CPT code, as established by the American Medical Association, or a Not Otherwise Classified (NOC) code, as established by the CMS HCPCS Workgroup.
Substantially Revised Healthcare Common Procedure Coding System Code means a code for which there has been a substantive change to the definition of the test or procedure to which the code applies (such as a new analyte or a new methodology for measuring an existing analyte specific test).
Successor owner, for purposes of an ADLT, means a single laboratory, that has assumed ownership of the single laboratory that designed the test or of the single laboratory that is a successor owner to the single laboratory that designed the test, through any of the following circumstances:
(1) Partnership. The removal, addition, or substitution of a partner, unless the partners expressly agree otherwise, as permitted by applicable State law.
(2) Unincorporated sole proprietorship. Transfer of title and property to another party.
(3) Corporation. The merger of the single laboratory corporation into another corporation, or the consolidation of two or more corporations, including the single laboratory, resulting in the creation of a new corporation. Transfer of corporate stock or the merger of another corporation into the single laboratory corporation does not constitute change of ownership.
Taxpayer Identification Number (TIN) means a Federal taxpayer identification number or employer identification number as defined by the IRS in 26 CFR 301.6109-1.
§ 414.504   Data reporting requirements.
(a) In a data reporting period, a reporting entity must report applicable information for each CDLT furnished by its component applicable laboratories during the corresponding data collection period, as follows—
(1) For CDLTs that are not ADLTs, initially January 1, 2017 and every 3 years beginning January 1, 2026.
(2) For ADLTs that are not new ADLTs, every year beginning January 1, 2017.
(3) For new ADLTs—
(i) Initially, no later than the last day of the second quarter of the new ADLT initial period; and
(ii) Thereafter, every year.
(b) Applicable information must be reported in the form and manner specified by CMS.
(c) A laboratory seeking new ADLT status for its test must, in its new ADLT application, attest to the actual list charge.
(d) To certify data integrity, the President, CEO, or CFO of a reporting entity, or an individual who has been delegated authority to sign for, and who reports directly to, such an officer, must sign the certification statement and be responsible for assuring that the data provided are accurate, complete, and truthful, and meets all the reporting parameters described in this section.
(e) If the Secretary determines that a reporting entity has failed to report applicable information for its applicable laboratories, or made a misrepresentation or omission in reporting applicable information for its applicable laboratories, the Secretary may apply a civil monetary penalty to a reporting entity in an amount of up to $10,000 per day, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of the Bipartisan Budget Act of 2015, Pub. L. 114-74, November 2, 2015), for each failure to report or each such misrepresentation or omission. The provisions for civil monetary penalties that apply in general to the Medicare program under 42 U.S.C. 1320a-7b apply in the same manner to the laboratory data reporting process under this section.
(f) CMS or its contractors will not disclose applicable information reported to CMS under this section in a manner that would identify a specific payor or laboratory, or prices charged or payments made to a laboratory, except to permit the Comptroller General, the Director of the Congressional Budget Office, and the Medicare Payment Advisory Commission, to review the information, or as CMS determines is necessary to implement this subpart, such as disclosures to the HHS Office of Inspector General or the Department of Justice for oversight and enforcement activities.
(g) Applicable information may not be reported for an entity that does not meet the definition of an applicable laboratory. For a single laboratory that offers and furnishes an ADLT that is not an applicable laboratory except with respect to its ADLTs, the applicable information of its CDLTs that are not ADLTs may not be reported.
§ 414.506   Procedures for public consultation for payment for a new clinical diagnostic laboratory test.
For a new CDLT, CMS determines the basis for and amount of payment after performance of the following:
(a) CMS makes available to the public (through CMS's Internet Web site) a list that includes codes for which establishment of a payment amount is being considered for the next calendar year.
(b) CMS publishes a Federal Register notice of a meeting to receive public comments and recommendations (and data on which recommendations are based) on the appropriate basis, as specified in § 414.508, for establishing payment amounts for the list of codes made available to the public.
(c) Not fewer than 30 days after publication of the notice in the Federal Register, CMS convenes a meeting that includes representatives of CMS officials involved in determining payment amounts, to receive public comments and recommendations (and data on which the recommendations are based).
(d) Considering the comments and recommendations (and accompanying data) received at the public meeting, CMS develops and makes available to the public (through an Internet Web site and other appropriate mechanisms) a list of—
(1) Proposed determinations with respect to the appropriate basis for establishing a payment amount for each code, with an explanation of the reasons for each determination, the data on which the determinations are based, including recommendations from the Advisory Panel on CDLTs described in paragraph (e) of this section, and a request for written public comments within a specified time period on the proposed determination; and
(2) Final determinations of the payment amounts for tests, with the rationale for each determination, the data on which the determinations are based, and responses to comments and suggestions from the public.
(3) On or after January 1, 2018, in applying paragraphs (d)(1) and (2) of this section, CMS will provide an explanation of how it took into account the recommendations of the Advisory Panel on CDLTs described in paragraph (e) of this section.
(4) On or after January 1, 2018, in applying paragraphs (d)(1) and (2) of this section and § 414.509(b)(2)(i) and (iii) when CMS uses the gapfilling method described in § 414.508(b)(2), CMS will make available to the public an explanation of the payment rate for the test.
(e) CMS will consult with an expert outside advisory panel, called the Advisory Panel on CDLTs, composed of an appropriate selection of individuals with expertise, which may include molecular pathologists researchers, and individuals with expertise in laboratory science or health economics, in issues related to CDLTs. This advisory panel will provide input on the establishment of payment rates under § 414.508 and provide recommendations to CMS under this subpart.
§ 414.507   Payment for clinical diagnostic laboratory tests.
(a) General rule. Except as provided in paragraph (d) of this section, and §§ 414.508 and 414.522, the payment rate for a CDLT furnished on or after January 1, 2018, is equal to the weighted median for the test, as calculated under paragraph (b) of this section. Each payment rate will be in effect for a period of one calendar year for ADLTs and three calendar years for all other CDLTs, until the year following the next data collection period.
(b) Methodology. For each test under paragraph (a) of this section for which applicable information is reported, the weighted median is calculated by arraying the distribution of all private payor rates, weighted by the volume for each payor and each laboratory.
(c) The payment amounts established under this section are not subject to any adjustment, such as geographic, budget neutrality, annual update, or other adjustment.
(d) Phase-in of payment reductions. For years 2018 through 2028, the payment rates established under this section for each CDLT that is not a new ADLT or new CDLT, may not be reduced by more than the following amounts for—
(1) 2018—10 percent of the national limitation amount for the test in 2017.
(2) 2019—10 percent of the payment rate established in 2018.
(3) 2020—10 percent of the payment rate established in 2019.
(4) 2021—0.0 percent of the payment rate established in 2020.
(5) 2022—0.0 percent of the payment rate established in 2021.
(6) 2023-0.0 percent of the payment rate established in 2022.
(7) 2024—0.0 percent of the payment rate established in 2023.
(8) 2025—0.0 percent of the payment rate established in 2024.
(9) 2026—15 percent of the payment rate established in 2025.
(10) 2027—15 percent of the payment rate established in 2026.
(11) 2028—15 percent of the payment rate established in 2027.
(e) There is no administrative or judicial review under sections 1869 and 1878 of the Social Security Act, or otherwise, of the payment rates established under this subpart.
(f) For a CDLT for which CMS receives no applicable information, payment is made based on the crosswalking or gapfilling methods described in § 414.508(b)(1) and (2).
(g) For ADLTs that are furnished between April 1, 2014 and December 31, 2017, payment is based on the crosswalking or gapfilling methods described in § 414.508(a).
§ 414.508   Payment for a new clinical diagnostic laboratory test.
(a) For a new CDLT that is assigned a new or substantially revised code between January 1, 2005 and December 31, 2017, CMS determines the payment amount based on either of the following:
(1) Crosswalking. Crosswalking is used if it is determined that a new CDLT is comparable to an existing test, multiple existing test codes, or a portion of an existing test code.
(i) CMS assigns to the new CDLT code, the local fee schedule amounts and national limitation amount of the existing test.
(ii) Payment for the new CDLT code is made at the lesser of the local fee schedule amount or the national limitation amount.
(2) Gapfilling. Gapfilling is used when no comparable existing CDLT is available.
(i) In the first year, Medicare Administrative Contractor-specific amounts are established for the new CDLT code using the following sources of information to determine gapfill amounts, if available:
(A) Charges for the CDLT and routine discounts to charges;
(B) Resources required to perform the CDLT;
(C) Payment amounts determined by other payors; and
(D) Charges, payment amounts, and resources required for other tests that may be comparable or otherwise relevant.
(ii) In the second year, the test code is paid at the national limitation amount, which is the median of the contractor-specific amounts.
(iii) For a new CDLT for which a new or substantially revised HCPCS code was assigned on or before December 31, 2007, after the first year of gapfilling, CMS determines whether the contractor-specific amounts will pay for the test appropriately. If CMS determines that the contractor-specific amounts will not pay for the test appropriately, CMS may crosswalk the test.
(b) For a new CDLT that is assigned a new or substantially revised HCPCS code on or after January 1, 2018, CMS determines the payment amount based on either of the following until applicable information is available to establish a payment amount under the methodology described in § 414.507(b):
(1) Crosswalking. Crosswalking is used if it is determined that a new CDLT is comparable to an existing test, multiple existing test codes, or a portion of an existing test code.
(i) CMS assigns to the new CDLT code, the payment amount established under § 414.507 of the comparable existing CDLT.
(ii) Payment for the new CDLT code is made at the payment amount established under § 414.507.
(2) Gapfilling. Gapfilling is used when no comparable existing CDLT is available.
(i) In the first year, Medicare Administrative Contractor-specific amounts are established for the new CDLT code using the following sources of information to determine gapfill amounts, if available:
(A) Charges for the test and routine discounts to charges;
(B) Resources required to perform the test;
(C) Payment amounts determined by other payors;
(D) Charges, payment amounts, and resources required for other tests that may be comparable or otherwise relevant; and
(E) Other criteria CMS determines appropriate.
(ii) In the second year, the CDLT code is paid at the median of the Medicare Administrative Contractor-specific amounts.
§ 414.509   Reconsideration of basis for and amount of payment for a new clinical diagnostic laboratory test.
For a new CDLT, the following reconsideration procedures apply:
(a) Reconsideration of basis for payment. (1) CMS will receive reconsideration requests in written format for 60 days after making a determination of the basis for payment under § 414.506(d)(2) regarding whether CMS should reconsider the basis for payment and why a different basis for payment would be more appropriate. If a requestor recommends that the basis for payment should be changed from gapfilling to crosswalking, the requestor may also recommend the code or codes to which to crosswalk the new test.
(2)(i) A requestor that submitted a request under paragraph (a)(1) of this section may also present its reconsideration request at the public meeting convened under § 414.506(c), provided that the requestor requests an opportunity to present at the public meeting as part of its written submission under paragraph (a)(1) of this section.
(ii) If the requestor presents its reconsideration request at the public meeting convened under § 414.506(c), members of the public may comment on the reconsideration request verbally at the public meeting and may submit written comments after the public meeting (within the timeframe for public comments established by CMS).
(3) Considering reconsideration requests and other comments received, CMS may reconsider its determination of the basis for payment. As the result of such a reconsideration, CMS may change the basis for payment from crosswalking to gapfilling or from gapfilling to crosswalking.
(4) If the basis for payment is revised as the result of a reconsideration, the new basis for payment is final and is not subject to further reconsideration.
(b) Reconsideration of amount of payment —(1) Crosswalking. (i) For 60 days after making a determination under § 414.506(d)(2) of the code or codes to which a new test will be crosswalked, CMS receives reconsideration requests in written format regarding whether CMS should reconsider its determination and the recommended code or codes to which to crosswalk the new test.
(ii)(A) A requestor that submitted a request under paragraph (b)(1)(i) of this section may also present its reconsideration request at the public meeting convened under § 414.506(c), provided that the requestor requests an opportunity to present at the public meeting as part of its written submission under paragraph (b)(1)(i) of this section.
(B) If a requestor presents its reconsideration request at the public meeting convened under § 414.506(c), members of the public may comment on the reconsideration request verbally at the public meeting and may submit written comments after the public meeting (within the timeframe for public comments established by CMS).
(iii) Considering comments received, CMS may reconsider its determination of the amount of payment. As the result of such a reconsideration, CMS may change the code or codes to which the new test is crosswalked.
(iv) If CMS changes the basis for payment from gapfilling to crosswalking as a result of a reconsideration, the crosswalked amount of payment is not subject to reconsideration.
(2) Gapfilling. (i) By April 30 of the year after CMS makes a determination under § 414.506(d)(2) or paragraph (a)(3) of this section that the basis for payment for a CDLT will be gapfilling, CMS posts interim Medicare Administrative Contractor-specific amounts on the CMS Web site.
(ii) For 60 days after CMS posts interim Medicare Administrative Contractor-specific amounts on the CMS Web site, CMS will receive public comments in written format regarding the interim Medicare Administrative Contractor-specific amounts.
(iii) After considering the public comments, CMS will post final Medicare Administrative Contractor-specific amounts on the CMS Web site.
(iv) For 30 days after CMS posts final Medicare Administrative Contractor-specific payment amounts on the CMS Web site, CMS will receive reconsideration requests in written format regarding whether CMS should reconsider the final Medicare Administrative Contractor-specific payment amount and median of the Medicare Administrative Contractor-specific payment amount for the CDLT.
(v) Considering reconsideration requests received, CMS may reconsider its determination of the amount of payment. As the result of a reconsideration, CMS may revise the median of the Medicare Administrative Contractor-specific payment amount for the CDLT.
(3) For both gapfilled and crosswalked new tests, if CMS revises the amount of payment as the result of a reconsideration, the new amount of payment is final and is not subject to further reconsideration.
(c) Effective date. If CMS changes a determination as the result of a reconsideration, the new determination regarding the basis for or amount of payment is effective January 1 of the year following reconsideration. Claims for services with dates of service prior to the effective date will not be reopened or otherwise reprocessed.
(d) Jurisdiction for reconsideration decisions. Jurisdiction for reconsidering a determination rests exclusively with the Secretary. A decision whether to reconsider a determination is committed to the discretion of the Secretary. A decision not to reconsider an initial determination is not subject to administrative or judicial review.
§ 414.510   Laboratory date of service for clinical laboratory and pathology specimens.
The date of service for either a clinical laboratory test or the technical component of physician pathology service is as follows:
(a) Except as provided under paragraph (b) of this section, the date of service of the test must be the date the specimen was collected.
(b)(1) If a specimen was collected over a period that spans 2 calendar days, then the date of service must be the date the collection ended.
(2) In the case of a test performed on a stored specimen, if a specimen was stored for—
(i) Less than or equal to 30 calendar days from the date it was collected, the date of service of the test must be the date the test was performed only if—
(A) The test is ordered by the patient's physician at least 14 days following the date of the patient's discharge from the hospital;
(B) The specimen was collected while the patient was undergoing a hospital surgical procedure;
(C) It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted;
(D) The results of the test do not guide treatment provided during the hospital stay; and
(E) The test was reasonable and medically necessary for the treatment of an illness.
(ii) More than 30 calendar days before testing, the specimen is considered to have been archived and the date of service of the test must be the date the specimen was obtained from storage.
(3) In the case of a chemotherapy sensitivity test performed on live tissue, the date of service of the test must be the date the test was performed only if—
(i) The decision regarding the specific chemotherapeutic agents to test is made at least 14 days after discharge;
(ii) The specimen was collected while the patient was undergoing a hospital surgical procedure;
(iii) It would be medically inappropriate to have collected the sample other than during the hospital procedure for which the patient was admitted;
(iv) The results of the test do not guide treatment provided during the hospital stay; and,
(v) The test was reasonable and medically necessary for the treatment of an illness.
(4) For purposes of this section, “chemotherapy sensitivity test” means a test identified by the Secretary as a test that requires a fresh tissue sample to test the sensitivity of tumor cells to various chemotherapeutic agents. The Secretary identifies such tests through program instructions.
(5) In the case of a molecular pathology test performed by a laboratory other than a blood bank or center, a test designated by CMS as an ADLT under paragraph (1) of the definition of an advanced diagnostic laboratory test in § 414.502, a test that is a cancer-related protein-based Multianalyte Assays with Algorithmic Analyses, or the test described by CPT code 81490, the date of service of the test must be the date the test was performed only if—
(i) The test was performed following a hospital outpatient's discharge from the hospital outpatient department;
(ii) The specimen was collected from a hospital outpatient during an encounter (as both are defined in § 410.2 of this chapter);
(iii) It was medically appropriate to have collected the sample from the hospital outpatient during the hospital outpatient encounter;
(iv) The results of the test do not guide treatment provided during the hospital outpatient encounter; and
(v) The test was reasonable and medically necessary for the treatment of an illness.
§ 414.522   Payment for new advanced diagnostic laboratory tests.
(a) The payment rate for a new ADLT—
(1) During the new ADLT initial period, is equal to its actual list charge.
(2) Prior to the new ADLT initial period, is determined by the Medicare Administrative Contractor based on information provided by the laboratory seeking new ADLT status for its laboratory test.
(b) After the new ADLT initial period, the payment rate for a new ADLT is equal to the weighted median established under the payment methodology described in § 414.507(b).
(c) If, after the new ADLT initial period, the actual list charge of a new ADLT is greater than 130 percent of the weighted median established under the payment methodology described in § 414.507, CMS will recoup the difference between the ADLT actual list charge and 130 percent of the weighted median.
(d) If CMS does not receive any applicable information for a new ADLT by the last day of the second quarter of the new ADLT initial period, the payment rate for the test is determined either by the gapfilling or crosswalking method as described in § 414.508(b)(1) and (2).
§ 414.523   Payment for laboratory specimen collection fee and travel allowance.
(a) Specimen collection fee and travel allowance. In addition to the payment amounts provided under this subpart for CDLTs, new CDLTs, and new ADLTs, CMS pays a specimen collection fee, as set forth in paragraph (a)(1) of this section, and a travel allowance, as set forth in paragraph (a)(2) of this section.
(1) Payment for specimen collection. Except as provided in paragraph (a)(1)(v) of this section and subject to the annual update in paragraph (a)(1)(iv) of this section, beginning January 1, 2023, CMS pays $8.57 for all specimens collected in one patient encounter, where the specimen(s) is:
(i) Used to perform a CDLT paid under this subpart G;
(ii) Collected by a trained technician from a Medicare beneficiary who is——
(A) Homebound as described in 42 CFR 424.22(a)(1)(ii).
(B) A non-hospital inpatient, but only when no qualified personnel are available at the facility to collect the specimen;
(iii) Of the following type—
(A) Blood specimen collected through venipuncture.
(B) A urine sample collected by catheterization.
(iv) Beginning January 1, 2024, CMS updates the specimen collection fee amount under paragraph (a)(1) of this section for each calendar year by the percent change in the Consumer Price Index for All Urban Consumers (CPI-U) (U.S. city average) for the 12-month period ending June 30th of the year preceding the update year.
(v) For a specimen collected from a Medicare beneficiary.
(2) Payment for travel allowance —(i) General requirement. CMS pays a travel allowance, as calculated under paragraph (a)(2)(iii) of this section, where the specimen is one for which a specimen collection fee is paid under paragraph (a)(1) of this section.
(ii) Travel allowance basis. CMS pays a travel allowance on the following bases:
(A) Flat-rate travel allowance. The flat-rate travel allowance applies when the trained technician travels 20 eligible miles or less (calculated in accordance with paragraph (a)(2)(iii)(A) of this section) to and from one location for specimen collection from one or more Medicare beneficiaries; or
(B) Per-mile travel allowance. The per-mile travel allowance applies when:
( 1 ) The trained technician travels more than 20 eligible miles (calculated in accordance with paragraph (a)(2)(iii)(A) of this section) to and from one location for specimen collection from one or more Medicare beneficiaries; or
( 2 ) The trained technician travels to more than one location for specimen collection from more than one Medicare beneficiary.
(iii) Travel allowance amount —(A) Eligible miles. Eligible miles begin at the laboratory or the starting point of the technician's travel for specimen collection as specified in paragraph (a)(1) of this section, and end at the laboratory or the ending point of the technician's travel for specimen collection as specified in paragraph (a)(1) of this section. Eligible miles do not include miles traveled for any purpose unrelated to specimen collection as specified in paragraph (a)(1) of this section, such as collecting specimens from non-Medicare beneficiaries or for personal reasons.
(B) Travel allowance mileage rate. The travel allowance mileage rate is equal to the IRS standard mileage rate plus an amount to cover expenses for a trained technician equal to the most recent median hourly wage for phlebotomists, as published by the United States Bureau of Labor Statistics, divided by 40 to represent an average miles-per-hour driving speed.
(C) Travel allowance amount calculation. ( 1 ) For the flat-rate travel allowance basis specified in paragraph (a)(2)(ii)(A) of this section, the travel allowance amount is the travel allowance mileage rate specified in paragraph (a)(2)(iii)(B) of this section multiplied by ten, divided by the number of beneficiaries for whom a specimen collection fee is paid under paragraph (a)(1) of this section.
( 2 ) For the per-mile travel allowance basis specified in paragraph (a)(2)(ii)(B) of this section, the travel allowance amount is the number of eligible miles multiplied by the travel allowance mileage rate specified in paragraph (a)(2)(iii)(B) of this section, divided by the number of beneficiaries for whom a specimen collection fee is paid under paragraph (a)(1) of this section.
(b) [Reserved]
§ 414.601   Purpose.
This subpart implements section 1834(l) of the Act by establishing a fee schedule for the payment of ambulance services. Section 1834(l) of the Act requires that, except for services furnished by certain critical access hospitals (see § 413.70(b)(5) of this chapter), payment for all ambulance services, otherwise previously payable on a reasonable charge basis or retrospective reasonable cost basis, be made under a fee schedule. Section 1834(l)(17) of the Act requires the development of a data collection system to collect cost, revenue, utilization, and other information determined appropriate from providers of services and suppliers of ground ambulance services.
§ 414.605   Definitions.
As used in this subpart, the following definitions apply to both land and water (hereafter collectively referred to as “ground”) ambulance services and to air ambulance services unless otherwise specified:
Advanced life support (ALS) assessment is an assessment performed by an ALS crew as part of an emergency response that was necessary because the patient's reported condition at the time of dispatch was such that only an ALS crew was qualified to perform the assessment. An ALS assessment does not necessarily result in a determination that the patient requires an ALS level of service.
Advanced life support (ALS) intervention means a procedure that is, in accordance with State and local laws, required to be furnished by ALS personnel.
Advanced life support, level 1 (ALS1) means transportation by ground ambulance vehicle, medically necessary supplies and services and either an ALS assessment by ALS personnel or the provision of at least one ALS intervention.
Advanced life support, level 2 (ALS2) means either transportation by ground ambulance vehicle, medically necessary supplies and services, and the administration of at least three medications by intravenous push/bolus or by continuous infusion, excluding crystalloid, hypotonic, isotonic, and hypertonic solutions (Dextrose, Normal Saline, Ringer's Lactate); or transportation, medically necessary supplies and services, and the provision of at least one of the following ALS procedures:
(1) Manual defibrillation/cardioversion.
(2) Endotracheal intubation.
(3) Central venous line.
(4) Cardiac pacing.
(5) Chest decompression.
(6) Surgical airway.
(7) Intraosseous line.
(8) Prehospital blood transfusion which includes:
(i) Administration of low titer O+ and O− whole blood (WBT);
(ii) Administration of packed red blood cells (PRBCs);
(iii) Administration of plasma; or
(iv) Administration of a combination of PRBCs and plasma.
Advanced life support (ALS) personnel means an individual trained to the level of the emergency medical technician-intermediate (EMT-Intermediate) or paramedic. The EMT-Intermediate is defined as an individual who is qualified, in accordance with State and local laws, as an EMT-Basic and who is also qualified in accordance with State and local laws to perform essential advanced techniques and to administer a limited number of medications. The EMT-Paramedic is defined as possessing the qualifications of the EMT-Intermediate and also, in accordance with State and local laws, as having enhanced skills that include being able to administer additional interventions and medications.
Basic life support (BLS) means transportation by ground ambulance vehicle and medically necessary supplies and services, plus the provision of BLS ambulance services. The ambulance must be staffed by at least two people who meet the requirements of state and local laws where the services are being furnished. Also, at least one of the staff members must be certified, at a minimum, as an emergency medical technician-basic (EMT-Basic) by the State or local authority where the services are furnished and be legally authorized to operate all lifesaving and life-sustaining equipment on board the vehicle. These laws may vary from State to State.
Conversion factor (CF) is the dollar amount established by CMS that is multiplied by relative value units to produce ground ambulance service base rates.
Emergency response means responding immediately at the BLS or ALS1 level of service to a 911 call or the equivalent in areas without a 911 call system. An immediate response is one in which the ambulance entity begins as quickly as possible to take the steps necessary to respond to the call.
Fixed wing air ambulance (FW) means transportation by a fixed wing aircraft that is certified as a fixed wing air ambulance and such services and supplies as may be medically necessary.
Geographic adjustment factor (GAF) means the practice expense (PE) portion of the geographic practice cost index (GPCI) from the physician fee schedule as applied to a percentage of the base rate. For ground ambulance services, the PE portion of the GPCI is applied to 70 percent of the base rate for each level of service. For air ambulance services, the PE portion of the GPCI is applied to 50 percent of the applicable base rate.
Ground ambulance organization means a Medicare provider or supplier of ground ambulance services.
Loaded mileage means the number of miles the Medicare beneficiary is transported in the ambulance vehicle.
Paramedic ALS intercept (PI) means EMT-Paramedic services furnished by an entity that does not furnish the ground ambulance transport, provided the services meet the requirements specified in § 410.40(d) of this chapter.
Point of pick-up means the location of the beneficiary at the time he or she is placed on board the ambulance.
Relative value units (RVUs) means a value assigned to a ground ambulance service.
Rotary wing air ambulance (RW) means transportation by a helicopter that is certified as an ambulance and such services and supplies as may be medically necessary.
Rural adjustment factor (RAF) means an adjustment applied to the base payment rate when the point of pick-up is located in a rural area.
Rural area means an area located outside an urban area, or a rural census tract within a Metropolitan Statistical Area as determined under the most recent version of the Goldsmith modification as determined by the Office of Rural Health Policy of the Health Resources and Services Administration.
Specialty care transport (SCT) means interfacility transportation of a critically injured or ill beneficiary by a ground ambulance vehicle, including medically necessary supplies and services, at a level of service beyond the scope of the EMT-Paramedic. SCT is necessary when a beneficiary's condition requires ongoing care that must be furnished by one or more health professionals in an appropriate specialty area, for example, nursing, emergency medicine, respiratory care, cardiovascular care, or a paramedic with additional training.
Urban area means a Metropolitan Statistical Area, as defined by the Executive Office of Management and Budget.
§ 414.610   Basis of payment.
(a) Method of payment. Medicare payment for ambulance services is based on the lesser of the actual charge or the applicable fee schedule amount. The fee schedule payment for ambulance services equals a base rate for the level of service plus payment for mileage and applicable adjustment factors. Except for services furnished by certain critical access hospitals or entities owned and operated by them, as described in § 413.70(b) of this chapter, all ambulance services are paid under the fee schedule specified in this subpart (regardless of the vehicle furnishing the service).
(b) Mandatory assignment. Effective with implementation of the ambulance fee schedule described in § 414.601 (that is, for services furnished on or after April 1, 2002), all payments made for ambulance services are made only on an assignment-related basis. Ambulance suppliers must accept the Medicare allowed charge as payment in full and may not bill or collect from the beneficiary any amount other than the unmet Part B deductible and Part B coinsurance amounts. Violations of this requirement may subject the provider or supplier to sanctions, as provided by law (part 402 of this chapter).
(c) Formula for computation of payment amounts. The fee schedule payment amount for ambulance services is computed according to the following provisions:
(1) Ground ambulance service levels. The CF is multiplied by the applicable RVUs for each level of service to produce a service-level base rate.
(i) For services furnished during the period July 1, 2004 through December 31, 2006, ambulance services originating in—
(A) Urban areas (both base rate and mileage) are paid based on a rate that is 1 percent higher than otherwise is applicable under this section; and
(B) Rural areas (both base rate and mileage) are paid based on a rate that is 2 percent higher than otherwise is applicable under this section.
(ii) For services furnished during the period July 1, 2008 through December 31, 2024, ambulance services originating in:
(A) Urban areas (both base rate and mileage) are paid based on a rate that is 2 percent higher than otherwise is applicable under this section.
(B) Rural areas (both base rate and mileage) are paid based on a rate that is 3 percent higher than otherwise is applicable under this section.
(iii) The service-level base rate is then adjusted by the GAF. Compare this amount to the actual charge. The lesser of the actual charge or the GAF adjusted base rate amount is added to the lesser of the actual mileage charges or the payment rate per mile, multiplied by the number of miles that the beneficiary was transported. When applicable, the appropriate RAF is applied to the ground mileage rate to determine the appropriate payment rates. The RVU scale for the ambulance fee schedule is as follows:
(2) Air ambulance service levels. The base payment rate for the applicable type of air ambulance service is adjusted by the GAF and, when applicable, by the appropriate RAF to determine the amount of payment. Air ambulance services have no CF or RVUs. This amount is compared to the actual charge. The lesser of the charge or the adjusted GAF rate amount is added to the payment rate per mile, multiplied by the number of miles that the beneficiary was transported. When applicable, the appropriate RAF is also applied to the air mileage rate.
(3) Loaded mileage. Payment is based on loaded miles. Payment for air mileage is based on loaded miles flown as expressed in statute miles. There are three mileage payment rates: a rate for FW services, a rate for RW services, and a rate for all levels of ground transportation.
(4) Geographic adjustment factor (GAF). For ground ambulance services, the PE portion of the GPCI from the physician fee schedule is applied to 70 percent of the base rate for ground ambulance services. For air ambulance services, the PE portion of the physician fee schedule GPCI is applied to 50 percent of the base rate for air ambulance services.
(5) Rural adjustment factor (RAF). (i) For ground ambulance services where the point of pickup is in a rural area, the mileage rate is increased by 50 percent for each of the first 17 miles and, for services furnished before January 1, 2004, by 25 percent for miles 18 through 50. The standard mileage rate applies to every mile over 50 miles and, for services furnished after December 31, 2003, to every mile over 17 miles. For air ambulance services where the point of pickup is in a rural area, the total payment is increased by 50 percent; that is, the rural adjustment factor applies to the sum of the base rate and the mileage rate.
(ii) For services furnished during the period July 1, 2004 through December 31, 2024, the payment amount for the ground ambulance base rate is increased by 22.6 percent where the point of pickup is in a rural area determined to be in the lowest 25 percent of rural population arrayed by population density. The amount of this increase is based on CMS's estimate of the ratio of the average cost per trip for the rural areas in the lowest quartile of population compared to the average cost per trip for the rural areas in the highest quartile of population. In making this estimate, CMS may use data provided by the GAO.
(6) Multiple patients. The allowable amount per beneficiary for a single ambulance transport when more than one patient is transported simultaneously is based on the total number of patients (both Medicare and non-Medicare) on board. If two patients are transported simultaneously, then the payment allowance for the beneficiary (or for each of them if both patients are beneficiaries) is equal to 75 percent of the service payment allowance applicable for the level of care furnished to the beneficiary, plus 50 percent of the applicable mileage payment allowance. If three or more patients are transported simultaneously, the payment allowance for the beneficiary (or each of them) is equal to 60 percent of the service payment allowance applicable for the level of care furnished to the beneficiary, plus the applicable mileage payment allowance divided by the number of patients on board.
(7) Payment rate for mileage greater than 50 miles. For services furnished during the period July 1, 2004 through December 31, 2008, each loaded ambulance mile greater than 50 (that is, miles 51 and greater) for ambulance transports originating in either urban areas or in rural areas are paid based on a rate that is 25 percent higher than otherwise is applicable under this section.
(8) Transport of an individual with end-stage renal disease for renal dialysis services. For ambulance services furnished during the period October 1, 2013 through September 30, 2018, consisting of non-emergency basic life support (BLS) services involving transport of an individual with end-stage renal disease for renal dialysis services (as described in section 1881(b)(14)(B) of the Act) furnished other than on an emergency basis by a provider of services or a renal dialysis facility, the fee schedule amount otherwise applicable (both base rate and mileage) is reduced by 10 percent. For such services furnished on or after October 1, 2018, the fee schedule amount otherwise applicable (both base rate and mileage) is reduced by 23 percent.
(9) Payment reduction for failure to report data. In the case of a ground ambulance organization (as defined at § 414.605) that is selected by CMS under § 414.626(c) for a year that does not sufficiently submit data under § 414.626(b) and is not granted a hardship exemption under § 414.626(d), the payments made under this section are reduced by 10 percent for the applicable period. For purposes of this paragraph, the applicable period is the calendar year that begins following the date that CMS provided written notification to the ground ambulance organization under § 414.626(e)(1) that the ground ambulance did not sufficiently submit the required data.
(d) Payment. Payment, in accordance with this subpart, represents payment in full (subject to applicable Medicare Part B deductible and coinsurance requirements as described in subpart G of part 409 of this chapter or in subpart I of part 410 of this chapter) for all services, supplies, and other costs for an ambulance service furnished to a Medicare beneficiary. No direct payment will be made under this subpart if billing for the ambulance service is required to be consolidated with billing for another benefit for which payment may be made under this chapter.
(e) Point of pick-up. The zip code of the point of pick-up must be reported on each claim for ambulance services so that the correct GAF and RAF may be applied, as appropriate.
(f) Updates. The CF, the air ambulance base rates, and the mileage rates are updated annually by an inflation factor established by law. The inflation factor is based on the consumer price index for all urban consumers (CPI-U) (U.S. city average) for the 12-month period ending with June of the previous year and, for 2011 and each subsequent year, is reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act.
(g) Adjustments. The Secretary monitors payment and billing data on an ongoing basis and adjusts the CF and air ambulance rates as appropriate to reflect actual practices under the fee schedule. These rates are not adjusted solely because of changes in the total number of ambulance transports.
(h) Treatment of certain areas for payment for air ambulance services. Any area that was designated as a rural area for purposes of making payments under the ambulance fee schedule for air ambulance services furnished on December 31, 2006, must be treated as a rural area for purposes of making payments under the ambulance fee schedule for air ambulance services furnished during the period July 1, 2008 through June 30, 2013.
§ 414.615   Transition to the ambulance fee schedule.
The fee schedule for ambulance services will be phased in over 5 years beginning April 1, 2002. Subject to the first sentence in § 414.610(a), payment for services furnished during the transition period is made based on a combination of the fee schedule payment for ambulance services and the amount the program would have paid absent the fee schedule for ambulance services, as follows:
(a) 2002 Payment. For services furnished in 2002, the payment for the service component, the mileage component and, if applicable, the supply component is based on 80 percent of the reasonable charge for independent suppliers or on 80 percent of reasonable cost for providers, plus 20 percent of the ambulance fee schedule amount for the service and mileage components. The reasonable charge or reasonable cost portion of payment in CY 2002 is equal to the supplier's reasonable charge allowance or provider's reasonable cost allowance for CY 2001, multiplied by the statutory inflation factor for ambulance services.
(b) 2003 Payment. For services furnished in CY 2003, payment is based on 60 percent of the reasonable charge or reasonable cost, as applicable, plus 40 percent of the ambulance fee schedule amount. The reasonable charge and reasonable cost portion in CY 2003 is equal to the supplier's reasonable charge or provider's reasonable cost for CY 2002, multiplied by the statutory inflation factor for ambulance services.
(c) 2004 Payment. For services furnished in CY 2004, payment is based on 40 percent of the reasonable charge or reasonable cost, as applicable, plus 60 percent of the ambulance fee schedule amount. The reasonable charge and reasonable cost portion in CY 2004 is equal to the supplier's reasonable charge or provider's reasonable cost for CY 2003, multiplied by the statutory inflation factor for ambulance services.
(d) 2005 Payment. For services furnished in CY 2005, payment is based on 20 percent of the reasonable charge or reasonable cost, as applicable, plus 80 percent of the ambulance fee schedule amount. The reasonable charge and reasonable cost portion in CY 2005 is equal to the supplier's reasonable charge or provider's reasonable cost for CY 2004, multiplied by the statutory inflation factor for ambulance services.
(e) 2006 and Beyond Payment. For services furnished in CY 2006 and thereafter, the payment is based solely on the ambulance fee schedule amount.
(f) Updates. The portion of the transition payment that is based on the existing payment methodology (that is, the non-fee-schedule portion) is updated annually for inflation by a factor equal to the percentage increase in the CPI-U (U.S. city average) for the 12-month period ending with June of the previous year. The CY 2002 inflation update factor used to update the 2001 payment amounts is applied to the annualized (average) payment amounts for CY 2001. For the period January 1, 2001 through June 30, 2001, the inflation update factor is 2.7 percent. For the period July 1, 2001 through December 31, 2001, the inflation update factor is 4.7 percent. The average for the year is 3.7 percent. Thus, the annualized (average) CY 2001 payment amounts used to derive the CY 2002 payment amounts are equivalent to the CY 2001 payment amounts that would have been determined had the inflation update factor for the entire CY 2001 been 3.7 percent. Both portions of the transition payment (that is, the portion that is based on reasonable charge or reasonable cost and the portion that is based on the ambulance fee schedule) are updated annually for inflation by the inflation factor described in § 414.610(f).
(g) Exception. There will be no blended payment allowance as described in paragraphs (a), (b), (c), and (d) of this section for ground mileage in those States where the Medicare carrier paid separately for all out-of-county ground ambulance mileage, but did not, before the implementation of the Medicare ambulance fee schedule, make a separate payment for any ground ambulance mileage within the county in which the beneficiary was transported. Payment for ground ambulance mileage in that State will be made based on the full ambulance fee schedule amount for ground mileage. This exception applies only to carrier-processed claims and only in those States in which the carrier paid separately for out-of-county ambulance mileage, but did not make separate payment for any in-county mileage throughout the entire State.
§ 414.617   Transition from regional to national ambulance fee schedule.
For services furnished during the period July 1, 2004 through December 31, 2009, the amount for the ground ambulance base rate is subject to a floor amount determined by establishing nine fee schedules based on each of the nine census divisions using the same methodology as used to establish the national fee schedule. If the regional fee schedule methodology for a given census division results in an amount that is less than or equal to the national ground base rate, then it is not used, and the national FS amount applies. If the regional fee schedule methodology for a given census division results in an amount that is greater than the national ground base rate, then the FS portion of the base rate for that census division is equal to a blend of the national rate and the regional rate in accordance with the following schedule:
§ 414.620   Publication of the ambulance fee schedule.
(a) Changes in payment rates resulting from incorporation of the annual inflation factor and the productivity adjustment as described in § 414.610(f) will be announced by CMS by instruction and on the CMS Web site.
(b) CMS will follow applicable rulemaking procedures in publishing revisions to the fee schedule for ambulance services that result from any factors other than those described in § 414.610(f).
§ 414.625   Limitation on review.
There will be no administrative or judicial review under section 1869 of the Act or otherwise of the amounts established under the fee schedule for ambulance services, including the following:
(a) Establishing mechanisms to control increases in expenditures for ambulance services.
(b) Establishing definitions for ambulance services that link payments to the type of services provided.
(c) Considering appropriate regional and operational differences.
(d) Considering adjustments to payment rates to account for inflation and other relevant factors.
(e) Phasing in the application of the payment rates under the fee schedule in an efficient and fair manner.
§ 414.626   Data reporting by ground ambulance organizations.
(a) Definitions. For purposes of this section, the following definitions apply:
Data collection period means, with respect to a year, the 12-month period that reflects the ground ambulance organization's annual accounting period.
Data reporting period means, with respect to a year, the 5-month period that begins the day after the last day of the ground ambulance organization's data collection period.
For a year means one of the calendar years from 2020 through 2024.
Medicare Ground Ambulance Data Collection Instrument means the single survey-based data collection instrument that can be accessed by sampled ambulance organizations under this section via a secure web-based system for reporting data under this section.
(b) Data collection and submission requirement. Except as provided in paragraph (d) of this section, a ground ambulance organization selected by CMS under paragraph (c) of this section must do the following:
(1) Within 30 days of the date that CMS notifies a ground ambulance organization under paragraph (c)(3) of this section that it has selected the ground ambulance organization to report data under this section, the ground ambulance organization must select a data collection period that corresponds with its annual accounting period and provide the start date of that data collection period to CMS or its contractor.
(2) Collect during its selected data collection period the data necessary to complete the Medicare Ground Ambulance Data Collection Instrument.
(3) Submit to CMS a completed Medicare Ground Ambulance Data Collection Instrument during the data reporting period that corresponds to the ground ambulance organization's selected data collection period.
(c) Representative sample. (1) Random sample. For purposes of the data collection described in paragraph (b) of this section, and for a year, CMS will select a random sample of 25 percent of eligible ground ambulance organizations that is stratified based on:
(i) Provider versus supplier status and ownership (for-profit, non-profit, and government);
(ii) Service area population density (transports originating in primarily urban, rural, and super rural zip codes); and
(iii) Medicare-billed transport volume categories.
(2) Selection eligibility. A ground ambulance organization is eligible to be selected for data reporting under this section for a year if it is enrolled in Medicare and has submitted to CMS at least one Medicare ambulance transport claim during the year prior to the selection under paragraph (b)(1) of this section.
(3) Notification of selection for a year. CMS will notify an eligible ground ambulance organization that it has been selected to report data under this section for a year at least 30 days prior to the beginning of the calendar year in which the ground ambulance organization must begin to collect data by posting a list of selected organizations on the CMS web page and providing written notification to each selected ground ambulance organization via email or U.S. mail.
(4) Limitation. CMS will not select the same ground ambulance organization under this paragraph (c) in 2 consecutive years, to the extent practicable.
(d) Hardship exemption. A ground ambulance organization selected under paragraph (c) of this section may request and CMS may grant an exception to the reporting requirements under paragraph (b) of this section in the event of a significant hardship, such as a natural disaster, bankruptcy, or similar situation that the Secretary determines interfered with the ability of the ground ambulance organization to submit such information in a timely manner for the data collection period selected by the ground ambulance organization.
(1) To request a hardship exemption, the ground ambulance organization must submit a request to CMS, in the form and manner specified by CMS, within 90 calendar days of the date that CMS notified the ground ambulance organization that it would receive a 10 percent payment reduction as a result of not submitting sufficient information under the data collection system. The request form must include all of the following:
(i) Ground ambulance organization name.
(ii) NPI number.
(iii) Ground ambulance organization address.
(iv) Chief executive officer and any other designated personnel contact information, including name, email address, telephone number and mailing address (must include a physical address, a post office box address is not acceptable).
(v) Reason for requesting a hardship exemption.
(vi) Evidence of the impact of the hardship (such as photographs, newspaper or other media articles, financial data, bankruptcy filing, etc.).
(vii) Date when the ground ambulance organization would be able to begin collecting data under paragraph (b) of this section.
(viii) Date and signature of the chief executive officer or other designated personnel of the ground ambulance organization.
(2) CMS will provide a written response to the hardship exemption request within 30 days of its receipt of the hardship exemption form.
(e) Notification of non-compliance and informal review. (1) Notification of non-compliance. A ground ambulance organization selected under paragraph (c) of this section for a year that does not sufficiently report data under paragraph (b) of this section, will receive written notification from CMS that it will receive a payment reduction under § 414.610(c)(9).
(2) Informal review. A ground ambulance organization that receives a written notification under paragraph (e)(1) of a payment reduction under § 414.610(c)(9) may submit a request for an informal review within 90 days of the date it received the notificationby submitting a request to CMS, in the form and manner specified by CMS, that includes all of the following information:
(i) Ground ambulance organization name.
(ii) NPI number.
(iii) Chief executive officer and any other designated personnel contact information, including name, email address, telephone number and mailing address with the street location of the ground ambulance organization.
(iv) Ground ambulance organization's selected data collection period and data reporting period.
(v) A statement of the reasons why the ground ambulance organization does not agree with CMS' determination and any supporting documentation.
(f) Public availability of data . Beginning in 2024, and at least once every 2 years thereafter, CMS will post on its website data that it collected under this section, including but not limited to summary statistics and ground ambulance organization characteristics.
(g) Limitations on review. There is no administrative or judicial review under section 1869 or section 1878 of the Act, or otherwise of the data required for submission under paragraph (b) of this section or the selection of ground ambulance organizations under paragraph (c) of this section.
§ 414.701   Purpose.
This subpart implements section 1842(o) of the Act by specifying the methodology for determining the payment allowance limit for drugs and biologicals covered under Part B of Title XVIII of the Act (hereafter in this subpart referred to as the “program”) that are not paid on a cost or prospective payment system basis. Examples of drugs that are subject to the rules contained in this subpart are: Drugs furnished incident to a physician's service; durable medical equipment (DME) drugs; separately billable drugs at independent dialysis facilities not under the ESRD composite rate; statutorily covered drugs, for example, influenza, pneumococcal, hepatitis, and COVID-19 vaccines, antigens, hemophilia blood clotting factor, immunosuppressive drugs and certain oral anti-cancer drugs.
§ 414.704   Definitions.
As used in this subpart, the following definition applies. Drug refers to both drugs and biologicals.
§ 414.707   Basis of payment.
(a) Method of payment. (1) Payment for a drug in calendar year 2004 is based on the lesser of—
(i) The actual charge on the claim for program benefits; or
(ii) 85 percent of the average wholesale price determined as of April 1, 2003, subject to the exceptions as specified in paragraphs (a)(2) through (a)(8) of this section.
(2) The payment limits for the following drugs are calculated using 95 percent of the average wholesale price:
(i) Blood clotting factors.
(ii) A drug or biological furnished during 2004 that was not available for Medicare payment as of April 1, 2003.
(iii) Pneumococcal, influenza, and COVID-19 vaccines as well as hepatitis B vaccine that is furnished to individuals at high or intermediate risk of contracting hepatitis B (as defined in § 410.63(a) of this subchapter).
(iv) A drug or biological furnished during 2004 in connection with the furnishing of renal dialysis services if separately billed by renal dialysis facilities.
(3) The payment limits for infusion drugs furnished through a covered item of durable medical equipment are calculated using 95 percent of the average wholesale price in effect on October 1, 2003.
(4) The payments limits for drugs contained in the following table are calculated based on the percentages of the average wholesale price determined as of April 1, 2003 that are specified in the table.
(5) The payment limits for imiglucerase and alglucerase are calculated using 94 percent of the average wholesale price determined as of April 1, 2003.
(6) Exception. The payment limit for a drug otherwise subject to paragraph (a)(1)(ii) or paragraph (a)(4) of this section may be calculated using the percentage of the average wholesale price as the Secretary deems appropriate based on data and information submitted by the drug manufacturer.
(i) The manufacturer must submit data after October 15, 2003 and before January 1, 2004.
(ii) The percentage only applies for drugs furnished on or after April 1, 2004.
(7) In the case of blood and blood products (other than blood clotting factors), the payment limits shall be determined in the same manner as such payment limit was determined on October 1, 2003.
(b) Mandatory assignment. Effective with services furnished on or after February 1, 2001, payment for any drug covered under Part B of Medicare may be made on an assignment-related basis only. All billers must accept the program allowed charge as payment in full and may not bill nor collect from the beneficiary any amount other than the unmet Part B deductible and Part B coinsurance amounts, if applicable. Violations of this requirement may subject the supplier to sanctions, as provided by the statute (See § 402 of this chapter).
(c) Mandatory reporting of anemia quality indicators. The following provisions are effective January 1, 2008:
(1) Each request for payment for anti-anemia drugs furnished to treat anemia resulting from the treatment of cancer must report the beneficiary's most recent hemoglobin or hematocrit level;
(2) Each request for payment for use of erythropoiesis stimulating agents must report the beneficiary's most recent hemoglobin or hematocrit level.
§ 414.800   Purpose.
This subpart implements section 1847A of the Act by specifying the requirements for submission of a manufacturer's average sales price data for certain drugs and biologicals covered under Part B of Title XVIII of the Act that are paid under sections 1842(o)(1)(D), 1847A, and 1881(b)(13)(A)(ii) of the Act.
§ 414.802   Definitions.
As used in this subpart, unless the context indicates otherwise—
Bona fide service fees means fees paid by a manufacturer to an entity, that represent fair market value for a bona fide, itemized service actually performed on behalf of the manufacturer that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and that are not passed on in whole or in part to a client or customer of an entity, whether or not the entity takes title to the drug.
Drug means a drug or a biological, and for purposes of applying section 1847A(f) of the Act, includes an item, service, supply, or product that is payable under Medicare Part B as a drug or biological.
Manufacturer means any entity that is engaged in the following (This term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law):
(1) Production, preparation, propagation, compounding, conversion or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis.
(2) The packaging, repackaging, labeling, relabeling, or distribution of prescription drug products.
Unit means the product represented by the 11-digit National Drug Code, unless otherwise specified by CMS to account for situations where labeling indicates that the amount of drug product represented by a National Drug Code varies. The method of counting units excludes units of CAP drugs (as defined in § 414.902 of this part) sold to an approved CAP vendor (as defined in § 414.902 of this part) for use under the CAP (as defined in § 414.902 of this part).
§ 414.804   Basis of payment.
(a) Calculation of manufacturer's average sales price. (1) The manufacturer's average sales price for a quarter for a drug represented by a particular 11-digit National Drug Code must be calculated as the manufacturer's sales to all purchasers in the United States for that particular 11-digit National Drug Code (after excluding sales as specified in paragraph (a)(4) of this section and then deducting price concessions as specified in paragraphs (a)(2) and (a)(3) of this section) divided by the total number of units sold by the manufacturer in that quarter (after excluding units associated with sales as specified in paragraph (a)(4) of this section).
(2) Price concessions. (i) In calculating the manufacturer's average sales price, a manufacturer must deduct price concessions. Price concessions include the following types of transactions and items:
(A) Volume discounts.
(B) Prompt pay discounts.
(C) Cash discounts.
(D) Free goods that are contingent on any purchase requirement.
(E) Chargebacks and rebates (other than rebates under the Medicaid program).
(ii) For the purposes of paragraph (a)(2)(i), bona fide services fees are not considered price concessions.
(3) To the extent that data on price concessions, as described in paragraph (a)(2) of this section, are available on a lagged basis, the manufacturer must estimate this amount in accordance with the methodology described in this paragraph.
(i)(A) For each National Drug Code with at least 12 months of sales (including products for which the manufacturer has redesignated the National Drug Code for the specific product and package size and has 12 months of sales across the prior and current National Drug Codes), after adjusting for exempted sales, the manufacturer calculates a percentage equal to the sum of the price concessions for the most recent 12-month period available associated with sales subject to the average sales price reporting requirement divided by the total in dollars for the sales subject to the average sales price reporting requirement for the same 12-month period.
(B) For each National Drug Code with less than 12 months of sales, the calculation described in paragraph (i)(A) of this section is performed for the time period equaling the total number of months of sales.
(ii) The manufacturer multiplies the applicable percentage described in paragraph (a)(3)(i)(A) or (a)(3)(i)(B) of this section by the total in dollars for the sales subject to the average sales price reporting requirement (after adjusting for exempted sales) for the quarter being submitted. (The manufacturer must carry a sufficient number of decimal places in the calculation of the price concessions percentage in order to round accurately the net total sales amount for the quarter to the nearest whole dollar.) The result of this multiplication is then subtracted from the total in dollars for the sales subject to the average sales price reporting requirement (after adjusting for exempted sales) for the quarter being submitted.
(iii) The manufacturer uses the result of the calculation described in paragraph (a)(3)(ii) of this section as the numerator and the number of units sold in the quarter (after adjusting for exempted sales) as the denominator to calculate the manufacturer's average sales price for the National Drug Code for the quarter being submitted.
(iv) Example. After adjusting for exempted sales, the total lagged price concessions (discounts, rebates, etc.) over the most recent 12-month period available associated with sales for National Drug Code 12345-6789-01 subject to the ASP reporting requirement equal $200,000, and the total in dollars for the sales subject to the average sales price reporting requirement for the same period equals $600,000. The lagged price concessions percentage for this period equals 200,000/600,000 = 0.33333. The total in dollars for the sales subject to the average sales price reporting requirement for the quarter being reported, equals $50,000 for 10,000 units sold. The manufacturer's average sales price calculation for this National Drug Code for this quarter is: $50,000−(0.33333 × $50,000) = $33,334 (net total sales amount); $33,334/10,000 = $3.33 (average sales price).
(4) Exempted sales. (i) In calculating the manufacturer's average sales price, a manufacturer must exclude sales that are exempt from inclusion in the determination of the best price under section 1927(c)(1)(C)(i) of the Act and sales that are merely nominal in amount as applied for purposes of section 1927(c)(1)(C)(ii)(III) of the Act, as limited by section 1927(c)(1)(D) of the Act.
(ii) In determining nominal sales exempted under section 1927(c)(1)(C)(ii)(III) of the Act, the manufacturer calculates the average manufacturer price as defined in section 1927(k) of the Act and then identifies sales that are eligible to be considered a nominal sale under section 1927(c)(1)(D) of the Act and are at less than 10 percent of the average manufacturer price. To identify nominal sales, the manufacturer must use the average manufacturer price for the calendar quarter that is the same calendar quarter as the average sales price reporting period.
(5) The manufacturer's average sales price must be calculated by the manufacturer every calendar quarter and submitted to CMS within 30 days of the close of the quarter. The first quarter submission must be submitted by April 30, 2004. Subsequent reports are due not later than 30 days after the last day of each calendar quarter.
(6) The manufacturer's average sales price must be calculated based on the amount of product in a vial or other container as conspicuously reflected on the FDA approved label as defined by section 201(k) of the Food, Drug, and Cosmetic Act.
(7) Each report must be certified by one of the following:
(i) The manufacturer's Chief Executive Officer (CEO).
(ii) The manufacturer's Chief Financial Officer (CFO).
(iii) An individual who has delegated authority to sign for, and who reports directly to, the manufacturer's CEO or CFO.
(b) [Reserved]
§ 414.806   Penalties associated with misrepresentation and the failure to submit timely and accurate ASP data.
(a) Misrepresentation . Section 1847A(d)(4)(A) of the Act specifies the penalties associated with misrepresentations in the reporting of the manufacturer's average sales price for a drug as defined at § 414.802.
(b) Failure to provide timely information or the submission of false information . (1) For a manufacturer that has entered into and has in effect a rebate agreement under section 1927 of the Act, section 1927(b)(3)(C) of the Act specifies the penalties associated with a manufacturer's failure to submit timely information or the submission of false information.
(2) For a manufacturer that has not entered into and does not have in effect a rebate agreement under section 1927 of the Act, sections 1847A(d)(4)(B) and (C) of the Act specify the penalties associated with a manufacturer's failure to submit timely information or the submission of false information.
§ 414.900   Basis and scope.
(a) This subpart implements sections 1842(o), 1847A, and 1847B of the Act and outlines two payment methodologies applicable to drugs and biologicals covered under Medicare Part B that are not paid on a cost or prospective payment system basis.
(b) Examples of drugs that are subject to the requirements specified in this subpart are:
(1) Drugs furnished incident to a physician's service; durable medical equipment (DME) drugs.
(2) Separately billable drugs at independent dialysis facilities not under the ESRD composite rate.
(3) Statutorily covered drugs, for example—
(i) Influenza.
(ii) Pneumococcal, Hepatitis B, and COVID-19 vaccines.
(iii) Antigens.
(iv) Hemophilia blood clotting factor.
(v) Immunosuppressive drugs.
(vi) Certain oral anti-cancer drugs.
§ 414.902   Definitions.
As used in this subpart, unless the context indicates otherwise—
Applicable five-year period means:
(1) For a qualifying biosimilar biological product for which payment has been made under section 1847A(b)(8) of the Act as of September 30, 2022, the 5-year period beginning on October 1, 2022; and
(2) For a qualifying biosimilar biological product for which payment is first made under section 1847A(b)(8) of the Act during a calendar quarter during the period beginning October 1, 2022 and ending December 31, 2027, the 5-year period beginning on the first day of such calendar quarter during which such payment is first made.
Approved CAP vendor means an entity that has been awarded a contract by CMS to participate in the competitive acquisition program under 1847B of the Act.
Bid means an offer to furnish a CAP drug within a category of CAP drugs in a competitive acquisition area for a particular price and time period.
Biosimilar biological product means a biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section 351 of the Public Health Service Act (PHSA) as defined at section 1847A(c)(6)(H) of the Act.
CAP drug means a physician-administered drug or biological furnished on or after January 1, 2006 described in section 1842(o)(1)(C) of the Act and supplied by an approved CAP vendor under the CAP as provided in this subpart.
Competitive acquisition area means a geographic area established by the Secretary for purposes of implementing the CAP required by section 1847B of the Act.
Competitive acquisition program (CAP) means a program as defined under section 1847B of the Act.
Designated carrier means an entity assigned by CMS to process and pay claims for drugs and biologicals under the CAP.
Drug means both drugs and biologicals.
Emergency delivery means delivery of a CAP drug within one business day in appropriate shipping and packaging, in all areas of the United States and its territories, with the exception of the Pacific Territories. In the Pacific Territories, emergency delivery means delivery of a CAP drug within 5 business days in appropriate shipping and packaging. In each case, this timeframe shall be reduced if product stability requires it, meaning that the manufacturer's labeling instructions, drug compendia, or specialized drug stability references indicate that a shorter delivery timeframe is necessary to avoid adversely affecting the product's integrity, safety, or efficacy.
Emergency situation means, for the purposes of the CAP, an unforeseen occurrence or situation determined by the participating CAP physician, in his or her clinical judgment, to require prompt action or attention for purposes of permitting the participating CAP physician to use a drug from his or her own stock, if the other requirements of § 414.906(e) are met.
Local carrier means an entity assigned by CMS to process and pay claims for administration of drugs and biologicals under the CAP.
Low volume dose means, with respect to determination of whether an increased applicable percentage is warranted, an FDA-labeled dose of a drug for which the volume removed from the vial or container containing the labeled dose does not exceed 0.4 mL.
Manufacturer's average sales price means the price calculated and reported by a manufacturer under part 414, subpart J of this chapter.
Multiple source drug means a drug described by section 1847A(c)(6)(C) of the Act.
New refund quarter means a calendar quarter that is included in a report described in § 414.940(a) that is sent in the first year following the year in which the calendar quarter occurs.
Pacific Territories means, for purposes of the CAP, American Samoa, Guam, or the Northern Mariana Islands.
Participating CAP physician means a physician electing to participate in the CAP, as described in this subpart. The participating CAP physician must complete and sign the participating CAP physician election agreement. Physicians who do not participate in Medicare but who elect to participate in the CAP must agree to accept assignment for CAP drug administration claims.
Participating CAP physician election agreement means the agreement that the physician signs to notify CMS of the physician's election to participate in the CAP and to agree to the terms and conditions of CAP participation as set forth in this subpart.
Prescription order means a written order submitted by the participating CAP physician to the approved CAP vendor that meets the requirements of this subpart.
Qualifying biosimilar biological product means a biosimilar biological product (as described in section 1847A(b)(1)(C) of the Act) with an average sales price (as described in section 1847A(b)(8)(A)(i) of the Act) less than the average sales price of the reference biological for a calendar quarter during the applicable 5-year period.
Reference biological product means the biological product licensed under such section 351 of the PHSA that is referred to in the application of the biosimilar biological product as defined at section 1847A(c)(6)(I) of the Act.
Refundable single-dose container or single-use package drug means:
(1) A single source drug or biological or a biosimilar biological product for which payment is made under this part and that is—
(i) Furnished from a single-dose container or single-use package based on FDA-approved labeling or product information; or
(ii) Furnished from an ampule for which product labeling does not have discard statement or language indicating if the container is single-dose container, single-use package, multiple-dose container, or single-patient-use container; or
(iii) Furnished from a container with a total labeled volume of 2 mL or less for which product labeling does not have language indicating if the container is single-dose container, single-use package, multiple-dose container, or single-patient-use container.
(2) Excludes—
(i) A drug that is a therapeutic radiopharmaceutical, a diagnostic radiopharmaceutical, or an imaging agent as identified in the drug's FDA-approved labeling.
(ii) A drug for which the FDA-approved labeling for any National Drug Code assigned to a billing and payment code of such drug requires filtration during the drug preparation process, prior to dilution and administration and that any unused portion of such drug after the filtration process be discarded after the completion of such filtration process.
(iii) A drug approved or licensed by the FDA on or after November 15, 2021, until the last day of the sixth full quarter for which the drug has been marketed (as reported to CMS) for the first National Drug Code assigned to the billing and payment code of such drug.
(iv) A drug approved or licensed by FDA on or after November 15, 2021 and for which the date the drug was first marketed (as reported to CMS) does not adequately approximate the date of first payment under Part B due to an applicable national coverage determination, until the last day of the sixth full quarter for which the drug has been covered and paid under Medicare Part B for the first National Drug Code assigned to the billing and payment code of such drug.
Routine delivery means delivery of a drug within 2 business days in appropriate shipping and packaging in all areas of the United States and its territories, with the exception of the Pacific Territories. In the Pacific Territories, routine delivery of drug means delivery of a CAP drug within 7 business days in appropriate shipping and packaging. In each case, this timeframe will be reduced if product stability requires it, meaning that the manufacturer's labeling instructions, drug compendia, or specialized drug stability references indicate that a shorter delivery timeframe is necessary to avoid adversely affecting the product's integrity, safety, or efficacy.
Single source drug means a drug described by section 1847A(c)(6)(D) of the Act.
Timely delivery means delivery of a CAP drug within the defined routine and emergency delivery timeframes. Compliance with timely delivery standards is also a factor for evaluation of potential and approved CAP vendors.
Unit is defined as in part 414, subpart J of this chapter.
Updated refund quarter means a calendar quarter that is included in a report described in § 414.940(a) that is sent in the second year following the year in which the calendar quarter occurs.
Wholesale acquisition cost (WAC) means the price described by section 1847A(c)(6)(B) of the Act.
§ 414.904   Average sales price as the basis for payment.
(a) Method of payment. Payment for a drug furnished on or after January 1, 2005 is based on the lesser of—
(1) The actual charge on the claim for program benefits; or
(2) 106 percent of the average sales price, subject to the applicable limitations specified in paragraph (d) of this section or subject to the exceptions described in paragraph (e) of this section.
(3) For purposes of this paragraph—
(i) CMS calculates an average sales price payment limit based on the amount of product included in a vial or other container as reflected on the FDA-approved label.
(ii) Additional product contained in the vial or other container does not represent a cost to providers and is not incorporated into the ASP payment limit.
(iii) No payment is made for amounts of product in excess of that reflected on the FDA-approved label.
(b) Multiple source drugs —(1) Average sales prices. The average sales price for all drug products included within the same multiple source drug billing and payment code is the volume-weighted average of the manufacturers' average sales prices for those drug products.
(2) Calculation of the average sales price. (i) For dates of service before April 1, 2008, the average sales price is determined by—
(A) Computing the sum of the products (for each National Drug Code assigned to the drug products) of the manufacturer's average sales price and the total number of units sold; and
(B) Dividing that sum by the sum of the total number of units sold for all NDCs assigned to the drug products.
(ii) For dates of service on or after April 1, 2008, the average sales price is determined by—
(A) Computing the sum of the products (for each National Drug Code assigned to such drug products) of the manufacturer's average sales price, determined by the Secretary without dividing such price by the total number of billing units for the National Drug Code for the billing and payment code and the total number of units sold; and
(B) Dividing the sum determined under clause (A) by the sum of the products (for each National Drug Code assigned to such drug products) of the total number of units sold and the total number of billing units for the National Drug Code for the billing and payment code.
(iii) For purposes of this subsection and subsection (c), the term billing unit means the identifiable quantity associated with a billing and payment code, as established by CMS.
(c) Single source drugs —(1) Average sales price. The average sales price is the volume-weighted average of the manufacturers' average sales prices for all National Drug Codes assigned to the drug or biological product.
(2) Calculation of the average sales price. (i) For dates of service before April 1, 2008, the average sales price is determined by—
(A) Computing the sum of the products (for each National Drug Code assigned to the drug product) of the manufacturer's average sales price and the total number of units sold; and
(B) Dividing that sum by the sum of the total number of units sold for all NDCs assigned to the drug product.
(ii) For dates of service on or after April 1, 2008, the average sales price is determined by—
(A) Computing the sum of the products (for each National Drug Code assigned to such drug products) of the manufacturer's average sales price, determined by the Secretary without dividing such price by the total number of billing units for the National Drug Code for the billing and payment code and the total number of units sold; and
(B) Dividing the sum determined under clause (A) by the sum of the products (for each National Drug Code assigned to such drug products) of the total number of units sold and the total number of billing units for the National Drug Code for the billing and payment code.
(d) Limitations on the average sales price —(1) Wholesale acquisition cost for a single source drug. The payment limit for a single source drug product is the lesser of 106 percent of the average sales price for the product or 106 percent of the wholesale acquisition cost for the product.
(2) Payment limit for a drug furnished to an end-stage renal disease patient. (i) Effective for drugs and biologicals furnished in 2005, the payment for such drugs and biologicals, including erythropoietin, furnished to an end-stage renal disease patient that is separately billed by an end-stage renal disease facility and not paid on a cost basis is acquisition cost as determined by the Inspector General report as required by section 623(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 inflated by the percentage increase in the Producer Price Index.
(ii) Except as provided in paragraph (a) of this section, the payment for drugs and biologicals, furnished to an end-stage renal disease patient that is separately billed by an end-stage renal disease facility, is based on 106 percent of the average sales price.
(iii) Effective for drugs and biologicals furnished in CY 2006 and subsequent calendar years, the payment for such drugs and biologicals furnished in connection with renal dialysis services and separately billed by freestanding and hospital-based renal dialysis facilities not paid on a cost basis is the amount determined under section 1847A of the Act.
(3) Widely available market price and average manufacturer price. If the Inspector General finds that the average sales price exceeds the widely available market price or the average manufacturer price by the applicable threshold percentage specified in paragraph (d)(3)(iii) or (iv) of this section, the Inspector General is responsible for informing the Secretary (at such times as specified by the Secretary) and the payment amount for the drug or biological will be substituted subject to the following adjustments:
(i) The payment amount substitution will be applied at the next average sales price payment amount calculation period after the Inspector General informs the Secretary (at such times specified by the Secretary) about billing codes for which the average sales price has exceeded the average manufacturer price by the applicable threshold percentage, and will remain in effect for 1 quarter after publication.
(ii) Payment at 103 percent of the average manufacturer price for a billing code will be applied at such times when all of the following criteria are met:
(A) The threshold for making price substitutions, as defined in paragraph (d)(3)(iii) of this section is met.
(B) 103 percent of the average manufacturer price is less than the 106 percent of the average sales price for the quarter in which the substitution would be applied.
(C) Beginning in 2013, the drug and dosage form described by the HCPCS code is not identified by the FDA to be in short supply at the time that ASP calculations are finalized.
(iii) The applicable percentage threshold for average manufacturer price comparisons is 5 percent and is reached when—
(A) The average sales price for the billing code has exceeded the average manufacturer price for the billing code by 5 percent or more in 2 consecutive quarters, or 3 of the previous 4 quarters immediately preceding the quarter to which the price substitution would be applied; and
(B) The average manufacturer price for the billing code is calculated using the same set of National Drug Codes used for the average sales price for the billing code.
(iv) The applicable percentage threshold for widely available market price comparisons is 5 percent.
(4) Payment adjustment for certain drugs for which there is a self-administered version —(i) In general . Except as provided in paragraphs (d)(4)(ii) and (iii) of this section, if the Inspector General identifies a drug or biological product in a study described in section 1847A(g)(1) of the Act, the Secretary must apply the payment limit for the applicable billing and payment code as specified in paragraph (d)(4)(iv) of this section, beginning with the first day of the second quarter after such study is publicly available. The methodology described in this paragraph will be recalculated each quarter thereafter, except when conditions described in paragraph (d)(4)(ii) are met.
(ii) Exception . The adjustment described in paragraph (d)(4)(i) of this section does not apply to the payment limit for a billing and payment code for a quarter if, at the time that ASP calculations are finalized for such quarter, the drug in the dosage form described by the billing and payment code is included by the FDA on the drug shortage list in effect under section 506E of the Federal Food, Drug, and Cosmetic Act.
(iii) Special rule for certain billing and payment codes . Effective July 1, 2021, for a billing and payment code described under section 1847A(g)(3) of the Act, the payment limit for the applicable billing and payment code must be determined as described in paragraph (d)(4)(iv) of this section, and the exception specified at paragraph (d)(4)(ii) of this section does not apply.
(iv) Lesser-of methodology . For purposes of this section, the payment limit is the lesser of:
(A) The payment limit determined under section 1847A of the Act for such billing and payment code if each National Drug Code for such product so identified under section 1847A(g)(1) of the Act were excluded from such determination; and
(B) The payment limit otherwise determined under section 1847A of the Act for such billing and payment code without application of section 1847A(g) of the Act.
(v) NDC changes . For an Inspector General-identified National Drug Code, as described under section 1847A(g)(1) or (3) of the Act, for which the manufacturer has redesignated the National Drug Code (without changes to the dosage form), the application of the lesser-of methodology described in this paragraph must use manufacturer-reported ASP data associated with the redesignated National Drug Code in the same manner as the one originally identified by the Inspector General.
(e) Exceptions to the average sales price —(1) Vaccines. The payment limits for hepatitis B vaccine furnished to individuals at high or intermediate risk of contracting hepatitis B (as defined in § 410.63(a) of this subchapter), pneumococcal vaccine, influenza vaccine, and COVID-19 vaccine are calculated using 95 percent of the average wholesale price.
(2) Infusion drugs furnished through a covered item of durable medical equipment. The payment limit for an infusion drug furnished before January 1, 2017, through a covered item of durable medical equipment is calculated using 95 percent of the average wholesale price in effect on October 1, 2003.
(3) Blood and blood products. In the case of blood and blood products (other than blood clotting factors), the payment limits are determined in the same manner as the payment limits were determined on October 1, 2003.
(4) Payment amount in a case where the average sales price during the first quarter of sales is unavailable. During an initial period (not to exceed a full calendar quarter) in which data on the prices for sales of the drug are not sufficiently available from the manufacturer to compute an average sales price:
(i) In general. Except as provided in paragraph (e)(4)(ii) of this section,
(A) For dates of service before January 1, 2019, the payment amount for the drug is based on the wholesale acquisition cost or the Medicare Part B drug payment methodology in effect on November 1, 2003.
(B) For dates of service on or after January 1, 2019, the payment amount for the drug is an amount not to exceed 103 percent of the wholesale acquisition cost or based on the Medicare Part B drug payment methodologies in effect on November 1, 2003.
(ii) Limitation on payment amount for biosimilar biological products during initial period. For dates of service on or after July 1, 2024, the payment amount for a biosimilar biological product (as defined in § 414.902) during the initial period is the lesser of the following:
(A) The payment amount for the biosimilar biological product as determined under clause (e)(4)(i)(B) of this section or
(B) 106 percent of the amount determined under section 1847A(b)(1)(B) of the Act for the reference biological product (as defined in § 414.902).
(5) Treatment of certain drugs. Beginning with April 1, 2008, the payment amount for—
(i) Each single source drug or biological described in section 1842(o)(1)(G) that is treated as a multiple source drug because of the application of section 1847A(c)(6)(C)(ii) is the lower of—
(A) The payment amount that would be determined for such drug or biological applying section 1847A(c)(6)(C)(ii); or
(B) The payment amount that would have been determined for such drug or biological if section 1847A(c)(6)(C)(ii) were not applied.
(ii) A multiple source drug described in section 1842(o)(1)(G) (excluding a drug or biological that is treated as a multiple source drug because of the application of section 1847A(c)(6)(C)(ii)) is the lower of—
(A) The payment amount that would be determined for such drug or biological taking into account the application of section 1847A(c)(6)(C)(ii); or
(B) The payment amount that would have been determined for such drug or biological if section 1847A(c)(6)(C)(ii) were not applied.
(6) Radiopharmaceuticals furnished in settings other than the hospital outpatient department. Medicare administrative contractors must determine payment limits for radiopharmaceuticals based on any methodology used to determine payment limits for radiopharmaceuticals in place on or prior to November 2003. Such methodology may include, but is not limited to, the use of invoice-based pricing.
(f) Except as otherwise specified (see paragraph (e)(2) of this section) for infusion drugs, the payment limits are updated quarterly.
(g) The payment limit is computed without regard to any special packaging, labeling, or identifiers on the dosage form or product or package.
(h) The payment amount is subject to applicable deductible and coinsurance.
(i) Manufacturer's average sales price (ASP) data not available prior to the publication deadline for quarterly payment limits. For circumstances in which manufacturer's ASP data is not available prior to the publication deadline for quarterly payment limits as described in this section, payment limit must be determined as follows:
(1) For a multiple source drug (as defined in § 414.902)—
(i) In circumstances in which negative or zero manufacturer's ASP data is reported for one or more, but not all, NDCs associated with a billing and payment code for that drug for a given quarter, the payment limit for the given quarter is calculated using only NDCs for that drug with positive manufacturer's ASP data, except in circumstances described in paragraph (i)(1)(iii) of this section.
(ii) In circumstances in which negative or zero manufacturer's ASP data is reported for all NDCs associated with a billing and payment code for that drug for a given quarter, the payment limit for the given quarter is calculated by carrying over all positive manufacturer's ASP data from the most recently available previous quarter with positive manufacturer's ASP data for at least one NDC until at least one NDC for the drug has positive manufacturer's ASP data for a quarter.
(iii) In circumstances in which manufacturer's ASP data is not available and the unavailability of the manufacturer's ASP data results in a significant change in the ASP payment limit compared to the previous quarter, the payment limit is calculated by carrying over the most recently available ASP data for the individual NDC(s), adjusted by the weighted average of the change in the manufacturer's ASP data for the NDCs that were reported for both the most recently available previous quarter and the current quarter.
(2) For a single source drug, excluding biosimilar biological products (both as defined in § 414.902)—
(i) In circumstances in which negative or zero manufacturer's ASP data is reported for one or more, but not all, NDCs associated with a billing and payment code for that drug for a given quarter, the payment limit for the given quarter is calculated using only NDCs for that drug with positive manufacturer's ASP data.
(ii) In circumstances in which negative or zero manufacturer's ASP data is reported for all NDCs associated with a billing and payment code for that drug for a given quarter, the payment limit for the given quarter is the lesser of the following until at least one NDC for the drug has positive manufacturer's ASP data for a quarter:
(A) 106 percent of the volume-weighted average of the most recently available positive manufacturer's ASP data from a previous quarter in which at least one NDC for the drug has positive manufacturer's ASP data for the quarter. If the payment limit from such quarter was based on 106 percent of the wholesale acquisition cost because of the application of paragraph (d)(1) of this section, that payment limit is carried over; or
(B) 106 percent of the wholesale acquisition cost. If there is more than one WAC per billing unit for the drug, the payment limit is set using the lowest WAC per billing unit.
(3) For a biosimilar biological product (as defined in § 414.902)—
(i) In circumstances in which negative or zero manufacturer's ASP data is reported for one or more, but not all, NDCs for a given quarter, the payment limit for the given quarter is calculated using only NDCs with positive manufacturer's ASP data.
(ii) In circumstances in which negative or zero manufacturer's ASP data is reported for all NDCs for a given quarter, the payment limit for the given quarter is the sum of the following until at least one NDC for the drug has positive manufacturer's ASP data for a quarter:
(A) The volume-weighted average of the most recently available positive manufacturer's ASP data from a previous quarter; and
(B) Either:
( 1 ) If the biosimilar is not a qualifying biosimilar (as both are defined at § 414.902), 6 percent of the amount determined under section 1847A(b)(4) of the Act for the reference biological product (as defined in § 414.902) for the given quarter; or
( 2 ) If the biosimilar is a qualifying biosimilar (as both are defined at § 414.902), 8 percent of the amount determined under section 1847A(b)(4) of the Act for the reference biological product (as defined in § 414.902) for the given quarter.
(j) Biosimilar biological products —(1) In general. Except as provided in paragraph (j)(2), effective January 1, 2016, the payment amount for a biosimilar biological product (as defined in § 414.902), for all NDCs assigned to such product, is the sum of the average sales price of all NDCs assigned to the biosimilar biological products included within the same billing and payment code as determined under section 1847A(b)(6) of the Act, and 6 percent of the amount determined under section 1847A(b)(4) of the Act for the reference biological product (as defined in § 414.902).
(2) Temporary increase in Medicare Part B payment for qualifying biosimilar biological products. In the case of a qualifying biosimilar biological product (as defined in § 414.902) that is furnished during the applicable 5-year period (as defined in § 414.902) for such product, the payment amount for such product with respect to such period is the sum determined under as determined under section 1847A(b)(6) of the Act and 8 percent of the amount determined under section 1847A(b)(4) of the Act for the reference biological product (as defined in § 414.902).
§ 414.906   Competitive acquisition program as the basis for payment.
(a) Program payment. Beginning in 2006, as an alternative to payment under § 414.904, payment for a CAP drug may be made through the CAP if the following occurs:
(1) The CAP drug is supplied under the CAP by an approved CAP vendor as specified in § 414.908(b).
(2) The claim for the prescribed drug is submitted by the approved CAP vendor that supplied the drug, and payment is made only to that vendor.
(3) The approved CAP vendor collects applicable deductible and coinsurance with respect to the drug furnished under the CAP only after the drug is administered to the beneficiary.
(4) The approved CAP vendor delivers CAP drugs directly to the participating CAP physician in unopened vials or other original containers as supplied by the manufacturer or from a distributor that has acquired the products directly from the manufacturer and includes language with the shipping material stating that the drug was acquired in a manner consistent with all statutory requirements. If the approved CAP vendor opts to split shipments, the participating CAP physician must be notified in writing which can be included with the initial shipment, and each incremental shipment must arrive at least 2 business days before the anticipated date of administration.
(5) The approved CAP vendor bills Medicare only for the amount of the drug administered to the patient, and the beneficiary's coinsurance will be calculated from the quantity of drug that is administered.
(b) Exceptions to competitive acquisition. Specific CAP drugs, including a category of these drugs, may be excluded from the CAP if the application of competitive bidding to these drugs—
(1) Is not likely to result in significant savings; or
(2) Is likely to have an adverse impact on access to those drugs.
(c) Computation of payment amount. Except as specified in paragraph (c)(2) of this section, payment for CAP drugs is based on bids submitted as a result of the bidding process as described in § 414.910 of this subpart.
(1) Single payment amount. (i) A single payment amount for each CAP drug in the competitive acquisition area is determined on the basis of the bids submitted and accepted and updated from the bidding period to the beginning of the payment year.
(ii) The single payment amount is then updated quarterly based on the approved CAP vendor's reasonable net acquisition costs for that category as determined by CMS, and limited by the weighted payment amount established under section 1847A of the Act across all drugs for which a composite bid is required in the category.
(iii) The payment amount for each other drug for which the approved CAP vendor submits a bid in accordance with § 414.910 of this subpart and each other drug that is approved by CMS for the approved CAP vendor to furnish under the CAP is also updated quarterly based on the approved CAP vendor's reasonable net acquisition costs for each HCPCS code and limited by the payment amount established under section 1847A of the Act.
(2) Updates to payment amount. (i) The first update is effective on the first day of claims processing for the first quarter of an approved CAP vendor's contract. The first quarterly contract update is based on the reasonable net acquisition cost (RNAC) data reported to CMS or its designee for any purchases of drug before the beginning of CAP claims processing for the contract period and reported to CMS no later than 30 days before the beginning of CAP claims processing.
(ii) For subsequent quarters, each approved CAP vendor must report to CMS or its designee RNAC data for a quarter of CAP drug purchases within 30 days of the close of that quarter.
(iii) For all quarters, only RNAC data from approved CAP vendors that are supplying CAP drugs under their CAP contract at the time updates are being calculated must be used to calculate updated CAP payment amounts.
(iv) CMS excludes such RNAC data submitted by an approved CAP vendor if, during the time calculations are being done, CMS knows that the approved CAP vendor will not be under contract for the applicable quarterly update.
(v) The payment amount weights must be calculated based on the more recent of the following:
(A) Contract bidding weights.
(B) CAP claims data.
(vi) The payment limit must be determined using the most recent payment limits available to CMS under section 1847A of the Act.
(vii) The following payment amount update calculation must be applied for the group of all drugs for which a composite bid is required.
(A) The most recent previous composite payment amount for the group is updated by—
( 1 ) Calculating the percent change in reasonable net acquisition costs for each approved CAP vendor;
( 2 ) Calculating the median of all participating approved CAP vendors' adjusted CAP payment amounts; and
( 3 ) Limiting the payment as described in paragraph (c)(1) of this section.
(B) The median percent change, subject to the limit described in paragraph (c)(1) of this section, must be the update percentage for that quarter.
(C) The single update percentage must be applied to the payment amount for each drug in the group of drugs for which a composite bid is required in the category.
(viii) The following payment amount update calculation must be applied for each of the following items: Each HCPCS code not included in the composite bid list; Each HCPCS code added to the drug list during the contract period; and each drug that has not yet been assigned a HCPCS code, but for which a HCPCS code will be established.
(A) The most recent previous payment amount for each drug must be updated by calculating the percent change in reasonable net acquisition costs for each approved CAP vendor, then calculating the median of all participating approved CAP vendors' adjusted CAP payment amounts.
(B) The median percent change calculated for each drug, subject to the limit described in paragraph (c)(1) of this section, must be applied to the payment amount for each drug.
(3) Alternative payment amount. The alternative payment amount established under section 1847A of the Act may be used to establish payment for a CAP drug if—
(i) The drug is properly assigned to a category established under the CAP; and
(ii) It is a drug for which a HCPCS code must be established.
(d) Adjustments. There is an established process for adjustments to payments to account for drugs that were billed, but which were not administered.
(e) Resupply of participating CAP physician drug inventory. A participating CAP physician may acquire drugs under the CAP to resupply his or her private inventory if all of the following requirements are met:
(1) The drugs were required immediately.
(2) The participating CAP physician could not have anticipated the need for the drugs.
(3) The approved CAP vendor could not have delivered the drugs in a timely manner. For purposes of this section, timely manner means delivery within the emergency delivery timeframe, as defined in § 414.902.
(4) The participating CAP physician administered the drugs in an emergency situation, as defined in § 414.902.
(f) Substitution or addition of drugs on an approved CAP vendor's CAP drug list —(1) Short-term substitution of a CAP drug. On an occasional basis (for a period of time less than 2 weeks), an approved CAP vendor may agree to furnish a substitute NDC within a HCPCS code on the approved CAP vendor's CAP drug list if the approved CAP vendor—
(i) Is willing to accept the payment amount that was established for the HCPCS code under this section; and
(ii) Obtains the participating CAP physician's prior approval.
(2) Long-term substitution or addition of a CAP drug. An approved CAP vendor may submit a request, as specified in paragraph (f)(3) of this section, for approval to substitute an NDC supplied by the approved CAP vendor for another NDC within the same HCPCS code or to add an NDC to the approved CAP vendor's drug list, if at least one of the following criteria is met:
(i) Proposed substitution of an NDC for a period of 2 weeks or longer.
(ii) Proposed addition of one or more NDCs within a HCPCS code included in the CAP drug category specified by CMS or on the approved CAP vendor's approved CAP drug list.
(iii) Proposed addition of—
(A) One or more newly issued HCPCS codes; or
(B) One of the following single indication orphan drug J codes or their updates: J0205, J0256, J9300, J1785, J2355, J3240, J7513, J9010, J9015, J9017, J9160, J9216.
(iv) Beginning January 1, 2007, the proposed addition of a drug(s) that has not yet been assigned a HCPCS code, but for which a HCPCS code must be established.
(v) On or after January 1, 2010, the proposed addition of drugs with similar therapeutic uses to drugs already supplied under the CAP by the approved CAP vendor(s).
(3) Requesting the addition or substitution of CAP drug. An approved CAP vendor that meets the one of the criteria specified in paragraph (f)(2) must submit a written request to CMS or its designee. The request must—
(i) Specify the NDC(s) and the respective HCPCS code that is to be added or substituted.
(ii) Address the rationale for the substitution or addition of the NDC(s) or the addition of the HCPCS code(s) as applicable; and
(iii) Address the impact of the substitution of the NDC(s) or the addition of the NDC(s) or HCPCS code(s), or both on—
(A) Patient and drug safety;
(B) Drug waste; and
(C) The potential for cost savings.
(iv) In the case of additions requested under paragraph (f)(2)(v) of this section, address and document the need for such an expansion based on demand for the product(s).
(4) Approval of a request(s). CMS or its designee notifies the approved CAP vendor of its decision.
(i) Except as specified in paragraph (f)(4)(ii) of this section, an approved request is effective at the beginning of the next calendar quarter.
(ii) Approved substitutions for request based on a drug shortage or other exigent circumstance may become effective immediately provided that—
(A) CMS approves the immediate substitution; and
(B) The approved CAP vendor's notifies its CAP participating physicians of the substitution immediately following CMS approval.
(5) Payment for an approved drug change(s). The payment for—
(i) Substituted or added CAP drugs that are within a HCPCS code for which payment is computed under paragraph (c)(1) of this section is the single payment for that HCPCS code, as determined and updated in accordance with paragraph (c)(1) of this section; or
(ii) Added CAP drugs that are not within a HCPCS code for which payment is computed under paragraph (c)(1) of this section is specified under paragraph (c)(2) of this section.
(g) Deletion of drugs on an approved CAP vendor's CAP drug list. Deletion of drugs on an approved CAP vendor's CAP drug list due to unavailability requires a written request and approval as described in paragraphs (f)(3)(i) through (iii) and (f)(4) of this section.
§ 414.908   Competitive acquisition program.
(a) Participating CAP physician selection of an approved CAP vendor. (1) CMS provides the participating CAP physician with a process for the selection of an approved CAP vendor on an annual basis, with exceptions as specified in § 414.908(a)(2). Participating CAP physicians will also receive information about the CAP in the enrollment process for Medicare participation set forth in section 1842(h) of the Act.
(2) A participating CAP physician may select an approved CAP vendor outside the annual selection process or opt out of the CAP for the remainder of the annual selection period when—
(i) The selected approved CAP vendor ceases participation in the CAP;
(ii) The physician leaves a group practice participating in CAP;
(iii) The participating CAP physician relocates to another competitive acquisition area; or
(iv) The approved CAP vendor refuses to ship to the participating CAP physician because the conditions of § 414.914(i) have been met (if this subparagraph (a)(2)(iv) applies, the physician can withdraw from the CAP category for the remainder of the year immediately upon notice to CMS and the approved CAP vendor); or
(v) Other exigent circumstances defined by CMS are present, including—
(A) If, up to and including 60 days after the effective date of the physician's CAP election agreement, the participating CAP physician submits a written request to the designated carrier to terminate the CAP election agreement because CAP participation imposes a burden on the physician's practice. The written request must document the burden. The designated carrier will process the participating CAP physician's request and CMS will approve or deny the request under the dispute resolution process as specified under § 414.917 of this subpart.
(B) If, more than 60 days after the effective date of the physician's CAP election agreement, the participating CAP physician submits a written request to the designated carrier to terminate the CAP election agreement because, based on a change in circumstances of which the participating CAP physician was not previously aware, CAP participation imposes a burden on the physician's practice. The written request must document the burden. The designated carrier will process the participating CAP physician's request and CMS will approve or deny the request under the dispute resolution process as specified under § 414.917 of this subpart.
(3) The physician participating in the CAP—
(i) Elects to use an approved CAP vendor for the drug category and area as set forth in § 414.908(b);
(ii) Completes and signs the CAP election agreement;
(iii) Submits a written prescription order to the approved CAP vendor with complete patient information for patients new to the approved CAP vendor or when information changes. Abbreviated information may be sent on all subsequent orders for a patient for which the approved CAP vendor has previously received complete information and that has no changes to the original information. Prescription orders may be initiated by telephone, with a follow-up written order provided within 8 hours for routine deliveries and immediately for emergency deliveries;
(iv) Does not receive payment for the CAP drug;
(v) Except where applicable State pharmacy law prohibits it, provides the following information to the approved CAP vendor to facilitate collection of applicable deductible and coinsurance as described in § 414.906(a)(3):
(A) Date of order.
(B) Beneficiary name, address, and phone number.
(C) Physician identifying information:
Name, practice location/shipping address, group practice information (if applicable), PIN, and UPIN.
(D) Drug name.
(E) Strength.
(F) Quantity ordered.
(G) Dose.
(H) Frequency/instructions.
(I) Anticipated date of administration.
(J) Beneficiary Medicare information/Health insurance (HIC) number.
(K) Supplementary insurance information (if applicable).
(L) Medicaid information (if applicable).
(M) Additional patient information: date of birth, allergies, height/weight, ICD-9-CM (if necessary).
(vi) Agrees to accept the particular National Drug Codes (NDCs) supplied by the approved CAP vendor for the duration of the participating CAP physician's enrollment with the approved CAP vendor, subject to paragraphs (a)(3)(vii) and (a)(3)(xiv) of this section. By electing to participate with an approved CAP vendor, the participating CAP physician also agrees to accept the changes to the approved CAP vendor's CAP drug list that have been approved in accordance with § 414.906(f).
(vii) Agrees to place routine orders for CAP drugs at the HCPCs level, except when medical necessity requires a particular formulation on the approved CAP vendor's CAP drug list. Medical necessity must be documented. When the conditions of this paragraph are met, the participating CAP physician may submit a prescription order to the approved CAP vendor that specifies the NDC.
(viii) Notifies the approved CAP vendor when a drug is not administered or a smaller amount was administered than was originally ordered. The participating CAP physician and the approved CAP vendor agree on how to handle the unused CAP drug. If it is agreed that the participating CAP physician will maintain the CAP drug in his inventory for administration at a later date, the participating CAP physician submits a new prescription order at that time. This prescription order specifies that the CAP drug is being obtained from the participating CAP physician's CAP inventory and shipment should not occur;
(ix) Maintains a separate electronic or paper inventory for each CAP drug obtained;
(x) Agrees to file the Medicare claim within 30 calendar days of the date of drug administration.
(xi) Agrees to submit documentation such as medical records or certification, as necessary, to support payment for a CAP drug;
(xii) Agrees not to transport CAP drugs from one practice location or place of service to another location except in accordance with a written agreement between the participating CAP physician and the approved CAP vendor that requires that drugs are not subjected to conditions that will jeopardize their integrity, stability, and/or sterility while being transported.
(xiii) Agrees to provide the CMS-developed CAP fact sheet to beneficiaries; and
(xiv) May receive payment under the ASP system when medical necessity requires a certain brand or formulation of a drug that the approved CAP vendor has not been contracted to furnish under the CAP.
(4) Physician group practices. If a physician group practice using a group billing number(s) elects to participate in the CAP, all physicians in the group are considered to be participating CAP physicians when using the group's billing number(s).
(b) Program requirements. (1) CMS selects approved CAP vendors through a competition among entities based on the following:
(i) Submission of the bid prices using the OMB-approved Vendor Application and Bid Form for CAP drugs within the category and competitive acquisition area that—
(A) Places the vendor among the qualified bidders with the lowest five composite bids; and
(B) Does not exceed the weighted payment amount established under section 1847A of the Act across all drugs in that category.
(ii) Ability to ensure product integrity.
(iii) Customer service/Grievance process.
(iv) At least 3 years experience in furnishing Part B injectable drugs.
(v) Financial performance and solvency.
(vi) Record of integrity and the implementation of internal integrity measures.
(vii) Internal financial controls.
(viii) Acquisition of all CAP drugs directly from the manufacturer or from a distributor that has acquired the products directly from the manufacturer.
(ix) Maintenance of appropriate licensure to supply CAP drugs in States in which they are supplying CAP drugs.
(x) Cost-sharing assistance as described in § 414.914(g).
(xi) Other factors as determined by CMS.
(2) Approved CAP vendors must also meet the contract requirements under § 414.914.
(c) Additional considerations. CMS may refuse to award a contract or terminate an approved CAP vendor contract based upon the following:
(1) Suspension or revocation by the Federal or State government of the entity's license for distribution of drugs, including controlled substances.
(2) Exclusion of the entity under section 1128 of the Act from participation in Medicare or other Federal health care programs. These considerations are in addition to CMS' ability to terminate the approved CAP vendor for cause as specified in § 414.914(a).
(3) Past violations or misconduct related to the pricing, marketing, distribution, or handling of drugs provided incident to a physician's service.
(d) Multiple source drugs. In the case of multiple source drugs, there must be a competition among entities for the acquisition of at least one CAP drug within each billing and payment code within each category for each competitive acquisition area.
(e) Multiple contracts for a category and area. The number of bidding qualified entities that are awarded a contract for a given category and area may be limited to no fewer than two.
§ 414.910   Bidding process.
(a) Entities may bid to furnish CAP drugs in all competitive acquisition areas of the United States, or one or more specific competitive acquisition areas.
(b) The amount of the bid for any CAP drug for a specific competitive acquisition area must be uniform for all portions of that competitive acquisition area.
(c) A submitted bid price must include the following:
(1) All costs related to the delivery of the drug to the participating CAP physician.
(2) The costs of dispensing (including shipping) of the drug and management fees. The costs related to the administration of the drug or wastage, spillage, or spoilage may not be included.
§ 414.912   Conflicts of interest.
(a) Approved CAP vendors and applicants that bid to participate in the CAP are subject to the following:
(1) The conflict of interest standards and requirements of the Federal Acquisition Regulation (FAR) organizational conflict of interest guidance, found under FAR subpart 9.5.
(2) Those requirements and standards contained in each individual contract awarded to perform functions under section 1847B of the Act.
(b) Post-award conflicts of interest. Approved CAP vendors must have a code of conduct that establishes policies and procedures for recognizing and resolving conflicts of interest between the approved CAP vendor and any entity, including the Federal Government, with whom it does business. The code of conduct which is submitted as part of the application must—
(1) State the need for management, employees, contractors, and agents to comply with the approved CAP vendor's code of conduct, and policies and procedures for conflicts of interest; and
(2) State the approved CAP vendor's expectations for management, employees, contractors, and agents to comply with the approved CAP vendor's code of conduct, and policies and procedures for detecting, preventing, and resolving conflicts of interest.
§ 414.914   Terms of contract.
(a) The contract between CMS and the approved CAP vendor will be for a term of 3 years, unless terminated or suspended earlier as provided in this section or provided in § 414.917. The contract may be terminated—
(1) By CMS for default if the approved CAP vendor violates any term of the contract; or
(2) In the absence of a contract violation, by either CMS or the approved CAP vendor, if the terminating party notifies the other party by June 30 for an effective date of termination of December 31 of that year.
(b) The contract will provide for a code of conduct for the approved CAP vendor that includes standards relating to conflicts of interest standards as set forth at § 414.912.
(c) The approved CAP vendor will have and implement a compliance plan that contains policies and procedures that control program fraud, waste, and abuse, and consists of the following minimum elements:
(1) Written policies, procedures, and standards of conduct articulating the organization's commitment to comply with all applicable Federal and State laws, regulations, and guidance, including, but not limited to, the Prescription Drug Marketing Act (PDMA), the physician self-referral (“Stark”) prohibition, the Anti-Kickback statute and the False Claims Act.
(2) The designation of a compliance officer and compliance committee accountable to senior management.
(3) Effective training and education of the compliance officer and organization employees, contractors, agents, and directors.
(4) Enforcement of standards through well publicized disciplinary guidelines.
(5) Procedures for effective internal monitoring and auditing.
(6) Procedures for ensuring prompt responses to detected offenses and development of corrective action initiatives relating to the organization's contract as an approved CAP vendor.
(i) If the approved CAP vendor discovers evidence of misconduct related to payment or delivery of drugs or biologicals under the contract, it will conduct a timely and reasonable inquiry into that conduct.
(ii) The approved CAP vendor will conduct appropriate corrective actions including, but not limited to, repayment of overpayments and disciplinary actions against responsible individuals, in response to potential violations referenced at paragraph (c)(6)(i) of this section.
(7) Procedures to voluntarily self-report potential fraud or misconduct related to the CAP to the appropriate government agency.
(d) The contract must provide for disclosure of the approved CAP vendor's reasonable, net acquisition costs for a specified period of time, not to exceed quarterly.
(e) The contract must provide for appropriate adjustments as described in § 414.906(c)(1).
(f) Under the terms of the contract, the approved CAP vendor must also—
(1) Have sufficient arrangements to acquire and deliver CAP drugs within the category in the competitive acquisition area specified by the contract;
(2) Have arrangements in effect for shipment at least 5 weekdays each week of CAP drugs under the contract, including the ability to comply with the routine and emergency delivery timeframes defined in § 414.902;
(3) Have procedures in place to address and resolve complaints of participating CAP physicians and individuals and inquiries regarding shipment of CAP drugs;
(4) Have a grievance and appeals process for dispute resolution;
(5) Respond within 2 business days to any inquiry, or sooner if the inquiry is related to drug quality;
(6) Staff a toll-free telephone line from 8:30 a.m. or earlier and until 5 p.m. or later for all time zones served in the continental United States by the CAP vendor on business days (Monday through Friday excluding Federal holidays) to provide customer assistance, and establish reasonable hours of operation for Hawaii, Alaska, Puerto Rico, and the other U.S. territories;
(7) Staff an emergency toll-free telephone line for weekend and evening access when the call center is closed, and determine what hours on Saturday and Sunday the call center is staffed and which hours a toll-free emergency line is activated; and
(8) Include assistance for the disabled, the hearing impaired, and Spanish-speaking inquirers in all customer service operations.
(9) Meet applicable licensure requirements in each State in which it supplies drugs under the CAP;
(10) Be enrolled in Medicare as a participating supplier;
(11) Comply with all applicable Federal and State laws, regulations and guidance related to the prevention of fraud and abuse;
(12) Supply CAP drugs upon receipt of a prescription order to all participating CAP physicians who have selected the approved CAP vendor, except when the conditions of paragraph (h) of this section or § 414.916(b) of this subpart are met;
(13) Provide direct notification to participating CAP physicians enrolled with them of updates to the approved CAP vendor's CAP drug list on a quarterly basis. Changes must be disseminated at least 30 days before the approved changes are due to take effect, unless immediate notification as described in § 414.906(f)(4) is required. The approved CAP vendor's entire CAP drug list must be disseminated at least once yearly; and approved CAP vendors must make a complete list that incorporates the most recent updates available to physicians on an ongoing basis. CMS posts on its web site the updated CAP drug lists for each approved CAP vendor.
(14) Ensure that subcontractors who are involved in providing services under the approved CAP contractor's CAP contract meet all requirements and comply with all laws and regulations relating to the services they provide under the CAP program. Notwithstanding any relationship the CAP vendor may have with any subcontractor, the approved CAP vendor maintains ultimate responsibility for adhering to and otherwise fully complying with all terms and conditions of its contract with CMS;
(15) Comply with product integrity and record keeping requirements including but not limited to drug acquisition, handling, storage, shipping, drug waste, and return processes; and
(16) Comply with such other terms and conditions as CMS may specify in the CAP contract consistent with section 1847B of the Act.
(g) Under the terms of the contract, the approved CAP vendor must provide assistance to beneficiaries experiencing financial difficulty in paying their cost-sharing amounts through any one or all of the following:
(1) Referral to a bona fide and independent charitable organization.
(2) Implementation of a reasonable payment plan.
(3) A full or partial waiver of the cost-sharing amount after determining in good faith that the individual is in financial need or the failure of reasonable collection efforts, provided that the waiver meets all of the requirements of section 1128A(i)(6)(A) of the Act and the corresponding regulations at paragraph (1) of the definition of “Remuneration” in § 1003.101 of this title. The availability of waivers may not be advertised or be made as part of a solicitation. Approved CAP vendors must inform beneficiaries that they generally make available the categories of assistance described in paragraphs (g)(1), (g)(2), and (g)(3) of this section. In no event may the approved CAP vendor include or make any statements or representations that promise or guarantee that beneficiaries receive cost-sharing waivers.
(h) The approved CAP vendor must verify drug administration prior to collection of any applicable cost sharing amount.
(1) The approved CAP vendor documents, in writing, the following information necessary to verify drug administration:
(i) Beneficiary name.
(ii) Health insurance number.
(iii) Expected date of administration.
(iv) Actual date of administration.
(v) Identity of the participating CAP physician.
(vi) Prescription order number.
(vii) Identity of the individuals who supply and receive the information.
(viii) Dosage supplied.
(ix) Dosage administered.
(2) If the information is obtained verbally, the approved CAP vendor must also maintain the following information:
(i) The identities of individuals who exchanged the information.
(ii) The date and time that the information was obtained.
(3) The approved CAP vendor must provide this information to CMS or the beneficiary upon request.
(i) The approved CAP vendor must comply with the following procedures before it may refuse to make further shipments of CAP drugs to a participating CAP physician on behalf of a beneficiary:
(1) Subsequent to receipt of payment by Medicare, or the verification of drug administration by the participating CAP physician, the approved CAP vendor must bill any applicable supplemental insurance policies.
(2) An approved CAP vendor that has received payment from the designated carrier for CAP drugs that have not been administered must promptly refund payment for such drugs to the designated carrier and must refund any coinsurance and deductible collected from the beneficiary and his or her supplemental insurer.
(3) At the time of billing the beneficiary, or the participating CAP physician's presentation of the bill on behalf of the approved CAP vendor, the approved CAP vendor must inform the beneficiary of any types of cost-sharing assistance that may be available consistent with the requirements of section 1128A(a)(5) of the Act and § 414.914(g).
(4) If the beneficiary demonstrates a financial need, the approved CAP vendor must follow the conditions outlined in paragraph (g) of this section.
(5) For purposes of paragraph (i) of this section delivery means postmark date, or the date the coinsurance bill or notice was presented to the beneficiary by the participating CAP physician on behalf of the approved CAP vendor.
(i) Except as specified in paragraph (i)(5)(ii) of this section, if after 45 days from delivery of the approved CAP vendor's bill to the beneficiary, the beneficiary's cost-sharing obligation remains unpaid, the approved CAP vendor may refuse further shipments to the participating CAP physician for that beneficiary.
(ii) If the beneficiary has requested cost-sharing assistance within 45 days of receiving delivery of the approved CAP vendor's bill, provisions of paragraphs (i)(6), (i)(7), or (i)(8) of this section, apply.
(6) If the approved CAP vendor implements a reasonable payment plan, as specified in § 414.914(g)(2), the approved CAP vendor must continue to ship CAP drugs for the beneficiary, as long as the beneficiary remains in compliance with the payment plan and makes an initial payment under the plan within 15 days after the delivery of the approved CAP vendor's written notice to the beneficiary offering the payment plan.
(7) If the approved CAP vendor has waived the cost-sharing obligations in accordance with section 1128A of the Act and § 414.914(g)(3), the approved CAP vendor may not refuse to ship drugs for that beneficiary.
(8) If the approved CAP vendor refers the beneficiary to a bona fide and independent charity in accordance with § 414.914(g)(1), the approved CAP vendor may refuse to ship drugs if the past due balance is not paid 15 days after the date of delivery of the approved CAP vendor's written notice to the beneficiary containing the referral for cost-sharing assistance.
(9) The approved CAP vendor may refuse to make further shipments to that participating CAP physician on behalf of the beneficiary for the lesser of the end of the calendar year or until the beneficiary's balance is paid in full.
§ 414.916   Dispute resolution for vendors and beneficiaries.
(a) General rule. Cases of an approved CAP vendor's dissatisfaction with denied drug claims are resolved through a voluntary alternative dispute resolution process delivered by the designated carrier, and a reconsideration process provided by CMS.
(b) Dispute resolution. (1) When an approved CAP vendor is not paid on claims submitted to the designated carrier, the vendor may appeal to the designated carrier to counsel the responsible participating CAP physician on his or her agreement to file a clean claim and pursue an administrative appeal in accordance with subpart H of part 405 of this chapter. If problems persist, the approved CAP vendor may ask the designated carrier to—
(i) Review the participating CAP physician's performance; and
(ii) Potentially recommend to CMS that CMS suspend the participating CAP physician's CAP election agreement.
(2) The designated carrier—
(i) Gathers information from the local carrier, the participating CAP physician, the beneficiary, and the approved CAP vendor; and
(ii) Makes a recommendation to CMS on whether the participating CAP physician has been filing his or her CAP drug administration claims in accordance with the requirements for physician participation in the CAP as set forth in § 414.908(a)(3). The recommendation will include numbered findings of fact.
(3) CMS will review the recommendation of the designated carrier and gather relevant additional information from the participating CAP physician before deciding whether to suspend the participating CAP physician's CAP election agreement. A suspension commencing before October 1 will conclude on December 31 of the same year. A suspension commencing on or after October 1 will conclude on December 31 of the next year.
(4) Upon notification from CMS of a participating CAP physician's suspension from the program, the approved CAP vendor must cease delivery of CAP drugs to the suspended participating CAP physician until the suspension has been lifted.
(5) The participating CAP physician may appeal that suspension by requesting a reconsideration of CMS' decision. The reconsideration will address whether the participating CAP physician's denied claims and appeals were the result of the participating CAP physician's failure to participate in accordance with the requirements of § 414.908(a)(3).
(c) Reconsideration —(1) Right to a reconsideration. A participating CAP physician dissatisfied with a determination that his or her CAP election agreement has been suspended by CMS or a determination under § 414.917(d) denying the participating CAP physician's request to terminate participation in the CAP under § 414.908(a)(v) is entitled to a reconsideration as provided in this subpart.
(2) Eligibility for reconsideration. CMS reconsiders any determination to suspend a participating CAP physician's election agreement if the participating CAP physician files a written request for reconsideration in accordance with paragraphs (c)(3) and (c)(4) of this section.
(3) Manner and timing of request for reconsideration. A participating CAP physician who is dissatisfied with a CMS decision to suspend his or her CAP election agreement may request a reconsideration of the decision by filing a request with CMS. The request must be filed within 30 days of receipt of the CMS decision letter notifying the participating CAP physician of CMS' decision to suspend his or her CAP election agreement. From the date of receipt of the decision letter until the day the reconsideration determination is final, the ASP payment methodology under section 1847A of the Act applies to the physician.
(4) Content of request. The request for reconsideration must specify—
(i) The findings or issues with which the participating CAP physician disagrees;
(ii) The reasons for the disagreement;
(iii) A recital of the facts and law supporting the participating CAP physician's position;
(iv) Any supporting documentation; and
(v) Any supporting statements from approved CAP vendors, local carriers, or beneficiaries.
(5) Withdrawal of request for reconsideration. A participating CAP physician may withdraw his or her request for reconsideration at any time before the issuance of a reconsideration determination.
(6) Discretionary informal hearing. In response to a request for reconsideration, CMS may, at its discretion, provide the participating CAP physician the opportunity for an informal hearing that—
(i) Is conducted by a hearing officer appointed by the director of the CMS Center for Medicare Management or his or her designee; and
(ii) Provides the participating CAP physician the opportunity to present, by telephone or in person, evidence to rebut CMS' decision to suspend or terminate a participating CAP physician's CAP election agreement.
(7) Informal hearing procedures. (i) CMS provides written notice of the time and place of the informal hearing at least 10 days before the scheduled date.
(ii) The informal reconsideration hearing will be conducted in accordance with the following procedures:
(A) The hearing is open to CMS and the participating CAP physician requesting the reconsideration, including—
( 1 ) Authorized representatives;
( 2 ) Technical advisors (individuals with knowledge of the facts of the case or presenting interpretation of the facts);
( 3 ) Representatives from the local carrier;
( 4 ) Representatives from the approved CAP vendor; and
( 5 ) Legal counsel.
(B) The hearing is conducted by the hearing officer who receives relevant testimony;
(C) Testimony and other evidence may be accepted by the hearing officer even though it would be inadmissible under the rules of evidence applied in Federal courts;
(D) Either party may call witnesses from among those individuals specified in paragraph (c)(7)(ii)(A) of this section; and
(E) The hearing officer does not have the authority to compel by subpoena the production of witnesses, papers, or other evidence.
(8) Hearing officer's findings. (i) Within 30 days of the hearing officer's receipt of the hearing request, the hearing officer presents the findings and recommendations to the participating CAP physician who requested the reconsideration. If the hearing officer decides to conduct an in-person or telephone hearing, the hearing officer will send a hearing notice to the participating CAP physician within 10 days of receipt of the hearing request, and the findings and recommendations are due to the participating CAP physician within 30 days of the hearing's conclusion.
(ii) The written report of the hearing officer includes separate numbered findings of fact and the legal conclusions of the hearing officer.
(9) Final reconsideration determination. (i) The hearing officer's decision is final unless the director of the CMS Center for Medicare Management or his or her designee chooses to review that decision within 30 days. If the decision is favorable to the participating CAP physician, then the participating CAP physician may resume his or her participation in CAP. The hearing officer and the CMS official may review decisions that are favorable or unfavorable to the participating CAP physician.
(ii) The CMS official may accept, reject, or modify the hearing officer's findings.
(iii) If the CMS official reviews the hearing officer's decision, the CMS official issues a final reconsideration determination to the participating CAP physician on the basis of the hearing officer's findings and recommendations and other relevant information.
(iv) The reconsideration determination of the CMS official is final. If the final decision is unfavorable to the participating CAP physician, then the participating CAP physician's CAP election agreement is terminated.
(d) The approved CAP vendor may not charge the beneficiary for the full drug coinsurance amount if the designated contractor did not pay the approved CAP vendor in full, unless a properly executed advance beneficiary notice is in place. When a beneficiary receives an inappropriate coinsurance bill, the beneficiary may participate in the approved CAP vendor's grievance process to request correction of the approved CAP vendor's file. If the beneficiary is dissatisfied with the result of the approved CAP vendor's grievance process, the beneficiary may request intervention from the designated carrier. This is in addition to, rather than in place of, any other beneficiary appeal rights. The designated carrier will first investigate the facts and then facilitate correction to the appropriate claim record and beneficiary file.
§ 414.917   Dispute resolution and process for suspension or termination of approved CAP contract and termination of physician participation under exigent circumstances.
(a) General rule. If a participating CAP physician finds an approved CAP vendor's service, or the quality of a CAP drug supplied by the approved CAP vendor to be unsatisfactory, then the physician may address the issue first through the approved CAP vendor's grievance process, and second through an alternative dispute resolution process administered by the designated carrier and CMS. If CMS suspends an approved CAP vendor's CAP contract for noncompliance or terminates the CAP contract in accordance with § 414.914(a), the approved CAP vendor may request a reconsideration in accordance with paragraph (c) of this section.
(b) Dispute resolution. (1) When a participating CAP physician is dissatisfied with an approved CAP vendor's service or the quality of a CAP drug supplied by the approved CAP vendor, then the participating CAP physician may use the approved CAP vendor's grievance process. If the service or quality issues are not resolved through the grievance process to the physician's satisfaction, then the participating CAP physician may ask the designated carrier to—
(i) Review the approved CAP vendor's performance; and
(ii) Potentially recommend termination of the approved CAP vendor's CAP contract.
(2) Responsibility of the designated carrier. The designated carrier—
(i) Gathers information from the local carrier, the participating CAP physician, the beneficiary, and the approved CAP vendor; and
(ii) Makes a recommendation to CMS on whether the approved CAP vendor has been meeting the service and quality obligations of its CAP contract. This recommendation will include numbered findings of fact.
(3) CMS will review the recommendation of the designated carrier and, gather relevant additional information from the approved CAP vendor, the participating CAP physician, the local carrier, and the beneficiary before deciding whether to terminate the approved CAP vendor's CAP contract.
(4) The approved CAP vendor may appeal that termination by requesting a reconsideration. A determination must be made as to whether the approved CAP vendor has been meeting the service and quality obligations of its CAP contract. The approved CAP vendor's contract will remain suspended during the reconsideration process.
(c) Reconsideration —(1) Right to reconsideration. An approved CAP vendor dissatisfied with a determination that its CAP contract has been suspended or terminated by CMS is entitled to a reconsideration as provided in this subpart.
(2) Eligibility for reconsideration. CMS will reconsider any determination to suspend or terminate an approved CAP vendor's contract if the approved CAP vendor files a written request for reconsideration in accordance with paragraphs (c)(3) and (c)(4) of this section.
(3) Manner and timing of request for reconsideration. An approved CAP vendor that is dissatisfied with a CMS decision to suspend or terminate its CAP contract may request a reconsideration of the decision by filing a request with CMS. The request must be filed within 30 days of receipt of the CMS decision letter notifying the approved CAP vendor of the suspension or termination of its CAP contract.
(4) Content of request. The request for reconsideration must specify—
(i) The findings or issues with which the approved CAP vendor disagrees;
(ii) The reasons for the disagreement;
(iii) A recital of the facts and law supporting the approved CAP vendor's position;
(iv) Any supporting documentation; and
(v) Any supporting statements from participating CAP physicians, the local carrier, or beneficiaries.
(5) Withdrawal of request for reconsideration. An approved CAP vendor may withdraw its request for reconsideration at any time before the issuance of a reconsideration determination.
(6) Discretionary informal hearing. In response to a request for reconsideration, CMS may, at its discretion, provide the approved CAP vendor the opportunity for an informal hearing that—
(i) Is conducted by a hearing officer appointed by the Director of the CMS Center for Medicare Management or his or her designee; and
(ii) Provides the approved CAP vendor the opportunity to present, by telephone or in person, evidence to rebut CMS' decision to suspend or terminate the approved CAP vendor's CAP contract.
(7) Informal hearing procedures. (i) CMS will provide written notice of the time and place of the informal hearing at least 10 days before the scheduled date.
(ii) The informal reconsideration hearing will be conducted in accordance with the following procedures:
(A) The hearing is open to CMS and the approved CAP vendor requesting the reconsideration, including—
( 1 ) Authorized representatives;
( 2 ) Technical advisors (individuals with knowledge of the facts of the case or presenting interpretation of the facts);
( 3 ) Representatives from the local carriers and the designated carrier;
( 4 ) The participating CAP physician who requested the suspension, if any; and
( 5 ) Legal counsel.
(B) The hearing will be conducted by the hearing officer, who will receive relevant testimony;
(C) Testimony and other evidence may be accepted by the hearing officer even though it would be inadmissible under the rules of evidence applied in Federal courts;
(D) Either party may call witnesses from among those individuals specified in the paragraph (c)(7)(ii)(A) of this section; and
(E) The hearing officer does not have the authority to compel by subpoena the production of witnesses, papers, or other evidence.
(8) Hearing officer's findings. (i) Within 30 days of the hearing officer's receipt of the hearing request, the hearing officer will present the findings and recommendations to the approved CAP vendor that requested the reconsideration. If the hearing officer conducts a hearing in person or by phone, the hearing officer will send a hearing notice to the approved CAP vendor within 10 days of receipt of the hearing request, and the findings and recommendations are due to the approved CAP vendor within 30 days from of the hearing's conclusion.
(ii) The written report of the hearing officer will include separate numbered findings of fact and the legal conclusions of the hearing officer.
(9) Final reconsideration determination. (i) The hearing officer's decision is final unless the Director of the CMS Center for Medicare Management or his or her designee (CMS official) chooses to review that decision within 30 days. If the decision is favorable to the approved CAP vendor, then the approved CAP vendor may resume participation in CAP. The hearing officer and the CMS official may review decisions that are favorable or unfavorable to the approved CAP vendor.
(ii) The CMS official may accept, reject, or modify the hearing officer's findings.
(iii) If the CMS official reviews the hearing officer's decision, the CMS official will issue a final reconsideration determination to the approved CAP vendor on the basis of the hearing officer's findings and recommendations and other relevant information.
(iv) The reconsideration determination of the CMS official is final.
(d) CAP participating physicians' exigent circumstances provision. The following process must be completed for participating CAP physicians' requests to terminate their participation in the program under exigent circumstances provisions described in § 414.908(a)(2)(v):
(1) The designated carrier must—
(i) Determine whether a request to terminate CAP participation was related to approved CAP vendor service, and if so, forward the issue to the approved CAP vendor's grievance process within 1 business day of the receipt of the request; or
(ii) Continue to investigate, consistent with § 414.916(b)(2) of this chapter, and within 2 business days of receipt, do any of the following:
(A) Request a single, 2-business day extension. No later than the end of any 2-business day extension, the designated carrier must make findings and a recommendation as provided in subparagraph (B) or (C).
(B) Submit a recommendation and relevant findings to CMS that the requesting participating CAP physician be permitted to terminate his or her participation in the CAP.
(C) Submit a recommendation and relevant findings to CMS that the requesting participating CAP physician not be permitted to terminate his or her participation in the CAP.
(ii) In the case of a request made under § 414.908(a)(2)(v)(B), the designated carrier also shall include in its recommendation its finding with respect to whether the request is based on a change in circumstances of which the participating CAP physician was previously unaware.
(2) CMS will consider the carrier's findings and recommendation and may also make its own findings. As a result, CMS will—
(i) Approve or deny the request to terminate participation in the CAP within 2 business days of receipt of the recommendation.
(ii) Communicate the decision to the appropriate Medicare contractors and the participating CAP physician.
(3) A denial of the participating CAP physician's request to terminate participation in the CAP must include written notification of the right to request reconsideration under § 414.916(c).
(4) Upon termination of participation in the CAP a physician must—
(i) Continue to submit claims for drugs supplied and administered under the CAP prior to the effective date of the physician's termination from the CAP consistent with § 414.908(a) until all such claims are timely submitted.
(ii) Return any unused CAP drugs that had not been administered to the beneficiary prior to the effective date of the physician's termination from the CAP to the approved CAP vendor consistent with applicable law and regulation and any agreement with the approved CAP vendor.
(iii) Cooperate in any post-payment review activities on claims submitted under the CAP, as required under section 1847B(a)(3) of the Act.
(5) An approved CAP vendor that has billed and been paid for CAP drugs that have not been administered must refund any payments made by CMS or the beneficiary and his or her supplemental insurer in accordance with § 414.914(h)(3)(i)(2) of this chapter.
§ 414.918   Assignment.
Payment for a CAP drug may be made only on an assignment-related basis.
§ 414.920   Judicial review.
The following areas under the CAP are not subject to administrative or judicial review:
(a) The establishment of payment amounts.
(b) The awarding of vendor contracts.
(c) The establishment of competitive acquisition areas.
(d) The selection of CAP drugs.
(e) The bidding structure.
(f) The number of vendors selected.
§ 414.930   Compendia for determination of medically-accepted indications for off-label uses of drugs and biologicals in an anti-cancer chemotherapeutic regimen.
(a) Definitions. For the purposes of this section:
Compendium means a comprehensive listing of FDA-approved drugs and biologicals or a comprehensive listing of a specific subset of drugs and biologicals in a specialty compendium, for example a compendium of anti-cancer treatment. A compendium—
(i) Includes a summary of the pharmacologic characteristics of each drug or biological and may include information on dosage, as well as recommended or endorsed uses in specific diseases.
(ii) Is indexed by drug or biological.
(iii) Has a publicly transparent process for evaluating therapies and for identifying potential conflicts of interests.
Publicly transparent process for evaluating therapies means that the process provides that the following information from an internal or external request for inclusion of a therapy in a compendium are available to the public for a period of not less than 5 years, which includes availability on the compendium's Web site for a period of not less than 3 years, coincident with the compendium's publication of the related recommendation:
(i) The internal or external request for listing of a therapy recommendation including criteria used to evaluate the request.
(ii) A listing of all the evidentiary materials reviewed or considered by the compendium pursuant to the request.
(iii) A listing of all individuals who have substantively participated in the review or disposition of the request.
(iv) Minutes and voting records of meetings for the review and disposition of the request.
Publicly transparent process for identifying potential conflicts of interests means that process provides that the following information is identified and made timely available in response to a public request for a period of not less than 5 years, coincident with the compendium's publication of the related recommendation:
(i) Direct or indirect financial relationships that exist between individuals or the spouse or minor child of individuals who have substantively participated in the development or disposition of compendia recommendations and the manufacturer or seller of the drug or biological being reviewed by the compendium. This may include, for example, compensation arrangements such as salary, grant, contract, or collaboration agreements between individuals or the spouse or minor child of individuals who have substantively participated in the review and disposition of the request and the manufacturer or seller of the drug or biological being reviewed by the compendium.
(ii) Ownership or investment interests between individuals or the spouse or minor child of individuals who have substantively participated in the development or disposition of compendia recommendations and the manufacturer or seller of the drug or biological being reviewed by the compendium.
(b) Process for listing compendia for determining medically-accepted uses of drugs and biologicals in anti-cancer treatment. (1) The CMS process—
(i) Receives formal written requests for changes to the list of compendia during a 30 day window beginning January 15 each year.
(ii) Publishes a listing of the timely, complete requests by March 15th and solicits public comment on the requests for 30 days. The listing identifies the requestor and the requested action.
(iii) Considers a compendium's attainment of the MedCAC (Medicare Evidence Development and Coverage Advisory Committee, previously known as the MCAC—Medicare Coverage Advisory Committee) recommended desirable characteristics of compendia (including explicit listing and recommendations) in reviewing requests. CMS may consider additional reasonable factors.
(iv) Considers a compendium's grading of evidence used in making recommendations regarding off-label uses and the process by which the compendium grades the evidence.
(v) Considers whether the publication that is the subject of the request meets the definition of a compendium in this section.
(vi) Publishes its decision no later than 90 days after the close of the public comment period.
(2) Exception. In addition to the annual process outlined in paragraph (b)(1) of this section, CMS may internally generate a request for changes to the list of compendia at any time.
(c) Written request for review. (1) CMS will review a complete, written request that is submitted in writing, electronically or via hard copy (no duplicate submissions) and includes the following:
(i) The full name and contact information of the requestor.
(ii) The full identification of the compendium that is the subject of the request, including name, publisher, edition if applicable, date of publication, and any other information needed for the accurate and precise identification of the specific compendium.
(iii) A complete written copy of the compendium that is the subject of the request.
(iv) The specific action that is requested of CMS.
(v) Materials that the requestor must submit for CMS review in support of the requested action.
(vi) A single compendium as its subject.
(d) CMS may at its discretion combine and consider multiple requests that refer to the same compendium.
(e) For the purposes of this section, publication by CMS may be accomplished by posting on the CMS Web site.
§ 414.940   Refund for certain discarded single-dose container or single-use package drugs.
(a) Provision of information to manufacturers —(1) In general. For each calendar quarter beginning on or after January 1, 2023, CMS reports to each manufacturer (as defined in § 414.802) of a refundable single-dose container or single-use package drug the following for the calendar quarter:
(i) Information on the total number of billing units of the billing and payment code of such drug, if any, that were discarded during such quarter, as determined by the JW modifier (or any successor modifier that includes the same data).
(ii) The refund amount that the manufacturer is liable for pursuant to paragraph (a)(3) of this section.
(iii) Reports will include information in paragraphs (a)(1)(i) and (ii) of this section for new refund quarters and updated refund quarters (as defined at § 414.902).
(iv) For purposes of this section, the term billing unit means the identifiable quantity associated with a billing and payment code, as established by CMS.
(2) Exclusion of units of packaged drugs. The total number of billing units of the billing and payment code of a refundable single-dose container or single-use package drug of a manufacturer furnished during a calendar quarter for purposes of paragraph (a)(1) of this section, and the determination of the estimated total allowed charges for the drug in the quarter for purposes of paragraph (c)(2) of this section, shall not include such units that are packaged into the payment amount for an item or service and are not separately payable.
(3) Report Timing. Reports are sent once annually.
(b) Manufacturer requirement. For each calendar quarter beginning on or after January 1, 2023, the manufacturer of a refundable single-dose container or single-use package drug shall, for such drug, pay a refund that is equal to the amount determined in accordance with paragraph (c) of this section for such drug for such quarter.
(1) Refund amounts for which the manufacturer is liable, pursuant to this paragraph, must be paid by December 31 of the year in which the report described in paragraph (a) of this section is sent, except that refund amounts for which the manufacturer is liable, pursuant to this paragraph, for amounts in the initial report for calendar quarters in 2023 must be paid no later than February 28, 2025.
(2) In the case that a disputed report results in a refund amount due, refund amounts that the manufacturer is liable for pursuant to this paragraph shall be paid no later than the dates specified in paragraph (b)(1) of this section or 30 days following the resolution of the dispute, whichever is later.
(3) Amounts paid as refunds pursuant to this paragraph shall be deposited into the Federal Supplementary Medical Insurance Trust Fund established under section 1841 of the Act.
(c) Refund amount. The amount of the refund specified in this paragraph is with respect to a refundable single-dose container or single-use package drug of a manufacturer assigned to a billing and payment code (except as provided in paragraph (c)(4) of this section) for:
(1) A new refund quarter (as defined at § 414.902) beginning on or after January 1, 2023, an amount equal to the estimated amount (if any) by which:
(i) The product of the total number of units of the billing and payment code for such drug that were discarded during such new refund quarter; and the amount of payment determined for such drug or biological under section 1847A(b)(1)(B) or (C) of the Act, as applicable, for such new refund quarter;
(ii) Exceeds an amount equal to the applicable percentage of the estimated total allowed charges for such drug for the new refund quarter.
(2) The refund amount owed by a manufacturer for an updated refund quarter (as defined at § 414.902) beginning on or after January 1, 2023, an amount equal to the estimated amount (if any) by which:
(i) The product of the total number of units of the billing and payment code for such drug that were discarded during such updated refund quarter; and the amount of payment determined for such drug or biological under section 1847A(b)(1)(B) or (C) of the Act, as applicable, for such quarter.
(ii) Exceeds the difference of:
(A) An amount equal to the applicable percentage of the estimated total allowed charges for such a drug during the updated refund quarter; and
(B) The refund amount already paid for such refundable drug for such quarter.
(3) Negative refund amount for an updated refund quarter. If the refund amount described in paragraph (c)(2) of this section is negative, the amount will be netted from refunds owed for other updated and new refund quarters included in the same report as such updated refund quarter.
(4) Exception when there are multiple manufacturers. If there is more than one manufacturer of a refundable single-dose container or single-use package drug for a quarter, the refund amount for which a manufacturer is liable is an amount equal to the estimated amount (if any) by which—
(i) The product of the amount calculated in paragraph (c)(1) of this section and the percentage of billing unit sales (of the applicable billing and payment code attributed to the National Drug Code; exceeds:
(ii) The product of the amount in paragraph (c)(2) of this section and percentage of billing unit sales of the applicable billing and payment code attributed to the National Drug Code.
(iii) The number of billing unit sales for each NDC is the reported number of NDCs sold (as submitted in the ASP report to CMS each quarter) multiplied by the billing units per package for such NDC.
(d) Applicable percentage. For purposes of paragraph (c) of this section, and except as provided in paragraph (e) of this section, the applicable percentage is:
(1) 10 percent, unless specified otherwise in this section.
(2) 35 percent for a drug that is reconstituted with a hydrogel and has variable dosing based on patient-specific characteristics.
(3) 90 percent for a drug with a low volume dose (as defined at § 414.902) contained within 0.1 mL or less.
(4) 45 percent for a drug with a low volume dose (as defined in § 414.902) contained within 0.11 mL up to 0.4 mL.
(5) 26 percent for a drug designated an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act for a rare disease or condition (or diseases or conditions) and approved by the FDA only for one or more indications within such designated rare disease or condition (or diseases or conditions) and is furnished to fewer than 100 unique beneficiaries per calendar year. A drug is furnished to fewer than 100 unique beneficiaries per calendar year when one of the following two conditions is met:
(i) The number of unique beneficiaries to whom the drug is furnished is less than 100 during the calendar year in which the refund quarter occurs; or
(ii) Either:
(A) In the case of a drug for which 3 or more years of data is available, the average of unique beneficiaries per year to whom the drug is furnished during the calendar year in which the refund quarter occurs and the 2 previous calendar years is less than 100; or
(B) In the case of a drug for which at least 2 but less than 3 years of data is available, the average of unique beneficiaries per year to whom the drug is furnished during the calendar year in which the refund quarter occurs and the previous calendar year is less than 100.
(e) Application process for increased applicable percentage. Manufacturers may submit an application to CMS requesting consideration of an increased applicable percentage for purposes of paragraph (c) of this section because of the drug's unique circumstances. The process for submitting such an application is as follows:
(1) Application. An application must include:
(i) A written request that a drug be considered for an increased applicable percentage based on its unique circumstances;
(ii) FDA-approved labeling for the drug, or, if the drug is not approved by the February 1 application deadline described in paragraph (e)(2) of this section, documentation of FDA acceptance of the application for review;
(iii) Justification for the consideration of an increased applicable percentage based on such unique circumstances; and
(iv) Justification for the requested applicable percentage.
(2) Application timeline. An application must be submitted in a form and manner specified by CMS by February 1 of the calendar year prior to the year the increased applicable percentage would apply. An application for a drug that is not FDA-approved by February 1 must have FDA approval by August 1 and the manufacturer must notify and submit the FDA-approved label to CMS by September 1 of the calendar year prior to the year the increased applicable percentage would apply.
(3) Application processing. Following a review of timely applications, CMS will summarize its analyses of applications and propose appropriate increases in rulemaking. If adopted, the increased applicable percentage will be the applicable percentage for purposes of paragraph (c) of this section beginning as of the following January 1.
(f) Dispute resolution. Each manufacturer has an opportunity to dispute information in the report described in paragraph (a) of this section by submitting an error report as described in this paragraph.
(1) Error report information. To assert that there have been one or more errors in the report, a manufacturer must submit a dispute with each asserted error and provide the following information—
(i) Manufacturer name and address;
(ii) The name, telephone number, and email address of one or more employees or representatives of the manufacturer.
(iii) For a mathematical calculation error, the specific calculation element(s) that the manufacturer disputes and its proposed corrected calculation;
(iv) For any other asserted error, an explanation of the nature of the error, how the error affects the refund calculation, an explanation of why the manufacturer believes that an error occurred, the proposed correction to the error, and an explanation of why CMS should use the proposed corrected data.
(2) Form, manner, and timing of submission. Each manufacturer asserting an error must submit its error report(s), in the form and manner specified by CMS, within 30-days after the issuance of the report.
(g) Enforcement —(1) Manufacturer audit s. Each manufacturer of a refundable single-dose container or single-use package drug that is required to provide a refund under this section shall be subject to periodic audit with respect to such drug and such refunds.
(2) Civil money penalty. The Secretary shall impose a civil money penalty on a manufacturer of a refundable single-dose container or single-use package drug who has failed to comply with the requirement under paragraph (b) of this section for such drug for a calendar quarter in an amount equal to the sum of—
(i) The amount that the manufacturer would have paid under such paragraph with respect to such drug for such quarter; and
(ii) 25 percent of such amount.
§ 414.1000   Purpose.
This subpart implements section 1842(o)(2) and section 1842(o)(6) of the Act, as added by section 303(e)(2) of the MMA, by specifying a supplying fee for drugs and biologicals covered under Part B of Title XVIII of the Act that are described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act.
§ 414.1001   Basis of payment.
(a) Supplying fees. Beginning in CY 2006—
(1) A supplying fee of $24 is paid to a pharmacy (no more often than once every 30 days) for the first prescription of drugs and biologicals described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act, that the pharmacy provided to a beneficiary, except as provided in paragraph (a)(2) of this section.
(2) A supplying fee of $50 is paid to pharmacy for the initial supplied prescription of drugs and biologicals described in section 1861(s)(2)(J) of the Act, that the pharmacy provided to a patient during the first 30-day period following a transplant.
(3) A supplying fee of $16 is paid to a pharmacy (no more often than once every 30 days) for each prescription following the first prescription (as specified in paragraphs (a)(1) and (2) of this section) of drugs and biologicals described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act, that the pharmacy provided to a beneficiary.
(4) A separate supplying fee is paid to a pharmacy for each prescription of drugs and biologicals described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act.
(b) 30-day dispensing fees. Beginning CY 2006—(1) A dispensing fee of $57 is paid to a supplier to the extent that the prescription is for the initial dispensed 30-day supply of inhalation drugs furnished through durable medical equipment covered under section 1861(n) of the Act, regardless of the number of partial shipments of that 30-day supply.
(2) Except for supplied inhalation drugs that meet criteria described in paragraph (b)(1) of this section, a dispensing fee of $33 is paid for each dispensed 30-day supply of inhalation drugs furnished through durable medical equipment covered under section 1861(n) of the Act, regardless of the number of partial shipments of that 30-day supply.
(c) 90-day dispensing fee. Beginning CY 2006, a dispensing fee of $66 is paid to a supplier for each dispensed 90-day supply of inhalation drugs furnished through durable medical equipment covered under section 1861(n) of the Act, regardless of the number of partial shipments of that 90-day supply.
§ 414.1100   Basis and scope.
This subpart implements sections 1834(k)(1) and (k)(3) of the Act by specifying the payment methodology for comprehensive outpatient rehabilitation facility services covered under Part B of Title XVIII of the Act that are described at section 1861(cc)(1) of the Act.
§ 414.1105   Payment for Comprehensive Outpatient Rehabilitation Facility (CORF) services.
(a) Payment under the physician fee schedule. Except as otherwise specified under paragraphs (b), (c), (d), and (e) of this section payment for CORF services, as defined under § 410.100 of this chapter, is paid the lesser of 80 percent of the following:
(1) The actual charge for the item or service; or
(2) The nonfacility amount determined under the physician fee schedule established under section 1848(b) of the Act for the item or service.
(b) Payment for physician services. No separate payment for physician services that are CORF services under § 410.100(a) of this chapter will be made.
(c) Payment for supplies and durable medical equipment, prosthetic and orthotic devices, and drugs and biologicals. Supplies and durable medical equipment that are CORF services under § 410.100(l) of this chapter, prosthetic device services that are CORF services under § 410.100(f), orthotic devices that are CORF services under § 410.100(g) of this chapter and drugs and biologicals that are CORF services under § 410.100(k) of this chapter are paid the lesser of 80 percent of the following:
(1) The actual charge for the service provided that payment for such item is not included in the payment amount for other CORF services paid under paragraphs (a) or (d); or
(2) The amount determined under the DMEPOS fee schedule established under part 414 subparts D and F for the item or the single payment amount established under the DMEPOS competitive bidding program provided that payment for such item is not included in the payment amount for other CORF services paid under paragraphs (a) or (d).
(d) Payment for drugs and biologicals. Drugs and biologicals that are CORF services under § 410.100(j) of this chapter, are paid the lesser of 80 percent of the following:
(1) The actual charge for the service provided that payment for such item is not included in the payment amount for other CORF services paid under paragraphs (a) or (c); or
(2) The amount determined using the same methodology for drugs (as defined in § 414.704 of this chapter) described in section 1842(o)(1) of the Act provided that payment for such drug is not included in the payment amount for other CORF services paid under paragraphs (a) or (c).
(e) Payment for CORF services when no fee schedule amount for the service. If there is no fee schedule amount established for a CORF service, payment for the item or service will be the lesser of 80 percent of:
(i) The actual charge for the service provided that payment for such item or service is not included in the payment amount for other CORF services paid under paragraphs (a), (c), or (d) of this section.
(ii) The amount determined under the fee schedule established for a comparable service as specified by the Secretary provided that payment for such item or service is not included in the payment amount for other CORF services paid under paragraphs (a), (c), or (d) of this section.
§ 414.1200   Basis and scope.
(a) Basis. This subpart implements section 1848(p) of the Act by establishing a payment modifier that provides for differential payment starting in 2015 to a group of physicians and starting in 2017 to a group and a solo practitioner under the Medicare Physician Fee Schedule based on the quality of care furnished compared to cost during a performance period.
(b) Scope. This subpart sets forth the following:
(1) The application of the value-based payment modifier.
(2) Performance and payment adjustment periods.
(3) Reporting mechanisms for the value-based payment modifier.
(4) Alignment of PQRS quality of care measures with the quality measures for the value-based payment modifier.
(5) Additional measures for groups and solo practitioners.
(6) Cost measures.
(7) Attribution for quality of care and cost measures.
(8) Scoring methods for the value-based payment modifier.
(9) Benchmarks for quality of care measures.
(10) Benchmarks for cost measures.
(11) Composite scores.
(12) Reliability of measures.
(13) Payment adjustments.
(14) Value-based payment modifier quality-tiering scoring methodology.
(15) Limitation of review.
(16) Inquiry process.
§ 414.1205   Definitions.
As used in this subpart, unless otherwise indicated—
Accountable care organization (ACO) has the same meaning given this term under § 425.20 of this chapter.
Certified registered nurse anesthetist (CRNA) has the same meaning given this term under section 1861(bb)(2) of the Act.
Critical access hospital has the same meaning given this term under § 400.202 of this chapter.
Electronic health record (EHR) has the same meaning given this term under § 414.92 of this chapter.
Eligible professional has the same meaning given this term under section 1848(k)(3)(B) of the Act.
Federally Qualified Health Center has the same meaning given this term under § 405.2401(b) of this chapter.
Group of physicians (Group) means a single Taxpayer Identification Number (TIN) with 2 or more eligible professionals, as identified by their individual National Provider Identifier (NPI), who have reassigned their Medicare billing rights to the TIN.
Performance period means the calendar year that will be used to assess the quality of care furnished compared to cost.
Performance rate mean the calculated rate for each quality or cost measure such as the percent of times that a particular clinical quality action was reported as being performed, or a particular outcome was attained, for the applicable persons to whom a measure applies as described in the denominator for the measure.
Physician has the same meaning given this term under section 1861(r) of the Act.
Physician assistant (PA), nurse practitioner (NP), and clinical nurse specialist (CNS) have the same meanings given these terms under section 1861(aa)(5) of the Act.
Physician Fee Schedule has the same meaning given this term under part 410 of this chapter.
Physician Quality Reporting System means the system established under section 1848(k) of the Act.
Risk score means the beneficiary risk score derived from the CMS Hierarchical Condition Categories (HCC) model.
Solo practitioner means a single Taxpayer Identification Number (TIN) with one eligible professional who is identified by an individual National Provider Identifier (NPI) billing under the TIN.
Taxpayer Identification Number (TIN) has the same meaning given this term under § 425.20 of this chapter.
Value-based payment modifier means the percentage as determined under § 414.1270 by which amounts paid to a group or solo practitioner under the Medicare Physician Fee Schedule established under section 1848 of the Act are adjusted based upon a comparison of the quality of care furnished to cost as determined by this subpart.
§ 414.1210   Application of the value-based payment modifier.
(a) The value-based payment modifier is applicable:
(1) For the CY 2015 payment adjustment period, to physicians in groups with 100 or more eligible professionals based on the performance period described at § 414.1215(a).
(2) For the CY 2016 payment adjustment period, to physicians in groups with 10 or more eligible professionals based on the performance period described at § 414.1215(b).
(3) For the CY 2017 payment adjustment period and each subsequent calendar year payment adjustment period, to physicians in groups with 2 or more eligible professionals and to physicians who are solo practitioners based on the performance period for the payment adjustment period as described at § 414.1215.
(4) For the CY 2018 payment adjustment period, to nonphysician eligible professionals who are physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists in groups with 2 or more eligible professionals and to physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists who are solo practitioners based on the performance period for the payment adjustment period as described at § 414.1215.
(b) Exceptions. (1) Groups of physicians that are participating in the Medicare Shared Savings Program, the testing of the Pioneer ACO model, or other similar Innovation Center or CMS initiatives shall not be subject to any adjustments under the value-based payment modifier for CY 2015 and CY 2016.
(2) Application of the value-based payment modifier to participants in the Shared Savings Program.
(i) For the CY 2017 payment adjustment period and each subsequent calendar year payment adjustment period, the value-based payment modifier is applicable to physicians in groups with 2 or more eligible professionals and to physicians who are solo practitioners that participate in an ACO under the Shared Savings Program during the performance period for the payment adjustment period as described at § 414.1215. The value-based payment modifier for a group or solo practitioner that participates in an ACO under the Shared Savings Program during the performance period is determined based on paragraphs (b)(2)(i)(A) through (D) of this section.
(A) The cost composite is classified as “average” under § 414.1275(b).
(B) For groups and solo practitioners that participate in a Shared Savings Program ACO that successfully reports quality data as required by the Shared Savings Program under § 425.504 of this chapter, the quality composite score is calculated under § 414.1260(a) using quality data reported by the ACO for the performance period through the ACO GPRO Web interface as required under § 425.504(a)(1) of this chapter or another mechanism specified by CMS and the ACO all-cause readmission measure. Groups and solo practitioners that participate in two or more ACOs during the applicable performance period receive the quality composite score of the ACO that has the highest numerical quality composite score. For the CY 2018 payment adjustment period, the CAHPS for ACOs survey also will be included in the quality composite score. For the CY 2017 and 2018 payment adjustment periods, for groups and solo practitioners who participate in a Shared Savings Program ACO that does not successfully report quality data as required by the Shared Savings Program under § 425.504 and who meet the requirements to avoid the PQRS payment adjustment for CY 2018 by reporting to the PQRS outside the ACO, the quality composite is classified as “average” under § 414.1275(b).
(C) For the CY 2017 payment adjustment period, the value-based payment modifier adjustment will be equal to the amount determined under § 414.1275 for the payment adjustment period, except that if the ACO (or groups and solo practitioners that participate in the ACO) does not successfully report quality data as described in paragraph (b)(2)(i)(B) of this section for the performance period, such adjustment will be equal to -4% for groups of physicians with 10 or more eligible professionals and equal to -2% for groups of physicians with two to nine eligible professionals and for physician solo practitioners. If the ACO has an assigned beneficiary population during the performance period with an average risk score in the top 25 percent of the risk scores of beneficiaries nationwide, and a group of physician or physician solo practitioner that participates in the ACO during the performance period is classified as high quality/average cost under quality-tiering for the CY 2017 payment adjustment period, the group or solo practitioner receives an upward adjustment of +3 × (rather than +2 ×) if the group has 10 or more eligible professionals or +2 × (rather than +1 ×) for a solo practitioner or the group has two to nine eligible professionals.
(D) For the CY 2018 payment adjustment period, the value-based payment modifier adjustment will be equal to the amount determined under § 414.1275 for the payment adjustment period, except that if the ACO (or groups and solo practitioners that participate in the ACO) does not successfully report quality data as described in paragraph (b)(2)(i)(B) of this section for the performance period, such adjustment will be equal to the downward payment adjustment amounts described at § 414.1270(d)(1). If the ACO has an assigned beneficiary population during the performance period with an average risk score in the top 25 percent of the risk scores of beneficiaries nationwide, and a group or solo practitioner that participates in the ACO during the performance period is classified as high quality/average cost under quality-tiering for the CY 2018 payment adjustment period, the group or solo practitioner receives an upward adjustment of +3 × (rather than +2 ×) if the group of physicians has 10 or more eligible professionals, +2 × (rather than +1 ×) for a physician solo practitioner or if the group of physicians has two to nine eligible professionals, or +2 × (rather than +1 ×) for a solo practitioner who is a nonphysician eligible professional or if the group consists of nonphysician eligible professionals.
(E) For the CY 2017 payment adjustment period and each subsequent calendar year payment adjustment period, the value-based payment modifier for groups and solo practitioners that participate in an ACO under the Shared Savings Program during the applicable performance period is determined as described under paragraph (b)(2) of this section, regardless of whether any eligible professionals in the group or the solo practitioner also participate in an Innovation Center model during the performance period.
(F) For groups and solo practitioners that participate in a Shared Savings Program ACO that successfully reports quality data as required by the Shared Savings Program under § 425.504 of this chapter, the same value-based payment modifier adjustment will be applied in the payment adjustment period to all groups based on size as specified under § 414.1275 and solo practitioners that participated in the ACO during the performance period.
(ii) For the CY 2018 payment adjustment period and each subsequent calendar year payment adjustment period, the value-based payment modifier is applicable to nonphysician eligible professionals in groups with 2 or more eligible professionals and to nonphysician eligible professionals who are solo practitioners that participate in an ACO under the Shared Savings Program during the performance period for the payment adjustment period as described at § 414.1215. The value-based payment modifier for nonphysician eligible professionals is determined in the same manner as for physicians as described under paragraphs (b)(2)(i)(A) through (D) of this section.
(3) Application of the value-based payment modifier to participants in the Pioneer ACO Model and the Comprehensive Primary Care Initiative . (i) For the CY 2017 payment adjustment period, the value-based payment modifier is waived under section 1115A(d)(1) of the Act for physicians in groups with 2 or more eligible professionals and for physicians who are solo practitioners that participate in the Pioneer ACO Model or the Comprehensive Primary Care (CPC) Initiative during the performance period for the payment adjustment period as described at § 414.1215.
(ii) For the CY 2018 payment adjustment period, the value-based payment modifier is waived under section 1115A(d)(1) of the Act for physicians and nonphysician eligible professionals in groups with 2 or more eligible professionals and for physicians and nonphysician eligible professionals who are solo practitioners that participate in the Pioneer ACO Model or the Comprehensive Primary Care (CPC) Initiative during the performance period for the payment adjustment period as described at § 414.1215.
(iii) For purposes of the value-based payment modifier, a group or solo practitioner is considered to be participating in the Pioneer ACO Model or CPC Initiative if at least one eligible professional billing under the TIN in the performance period for the payment adjustment period as described at § 414.1215 is participating in the Pioneer ACO Model or CPC Initiative in the performance period.
(4) Application of the value-based payment modifier to participants in other similar Innovation Center models . (i) For the CY 2017 payment adjustment period, the value-based payment modifier is waived under section 1115A(d)(1) of the Act for physicians in groups with 2 or more eligible professionals and for physicians who are solo practitioners that participate in other similar Innovation Center models during the performance period for the payment adjustment period as described at § 414.1215.
(ii) For the CY 2018 payment adjustment period, the value-based payment modifier is waived under section 1115A(d)(1) of the Act for physicians and nonphysician eligible professionals in groups with 2 or more eligible professionals and for physicians and nonphysician eligible professionals who are solo practitioners that participate in other similar Innovation Center models during the performance period for the payment adjustment period as described at § 414.1215.
(iii) For purposes of the value-based payment modifier, a group or solo practitioner is considered to be participating in a similar Innovation Center model if at least one eligible professional billing under the TIN in the performance period for the payment adjustment period as described at § 414.1215 is participating in the similar model in the performance period.
(c) Group size and composition determination . (1) The list of groups of physicians subject to the value-based payment modifier for the CY 2015 payment adjustment period is based on a query of PECOS on October 15, 2013. For each subsequent calendar year payment adjustment period, the list of groups and solo practitioners subject to the value-based payment modifier is based on a query of PECOS that occurs within 10 days of the close of the Physician Quality Reporting System group registration process during the applicable performance period described at § 414.1215. Groups are removed from the PECOS-generated list if, based on a claims analysis, the group did not have the required number of eligible professionals, as defined in paragraph (a) of this section, that submitted claims during the performance period for the applicable calendar year payment adjustment period. Solo practitioners are removed from the PECOS-generated list if, based on a claims analysis, the solo practitioner did not submit claims during the performance period for the applicable calendar year payment adjustment period.
(2) Beginning with the CY 2016 payment adjustment period, the size of a group during the applicable performance period will be determined by the lower number of eligible professionals as indicated by the PECOS-generated list or claims analysis.
(3) For the CY 2018 payment adjustment period, the composition of a group during the applicable performance period will be determined based on whether the group includes physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and/or other types of nonphysician eligible professionals as indicated by the PECOS-generated list or claims analysis.
§ 414.1215   Performance and payment adjustment periods for the value-based payment modifier.
(a) The performance period is calendar year 2013 for value-based payment modifier adjustments made in the calendar year 2015 payment adjustment period.
(b) The performance period is calendar year 2014 for value-based payment modifier adjustments made in the calendar year 2016 payment adjustment period.
(c) The performance period is calendar year 2015 for value-based payment modifier adjustments made in the calendar year 2017 payment adjustment period.
(d) The performance period is calendar year 2016 for value-based payment modifier adjustments made in the calendar year 2018 payment adjustment period.
§ 414.1220   Reporting mechanisms for the value-based payment modifier.
Solo practitioners and groups subject to the value-based payment modifier (or individual eligible professionals within such groups) may submit data on quality measures as specified under the Physician Quality Reporting System using the reporting mechanisms for which they are eligible.
§ 414.1225   Alignment of Physician Quality Reporting System quality measures and quality measures for the value-based payment modifier.
All of the quality measures for which solo practitioners and groups (or individual eligible professionals within such groups) are eligible to report under the Physician Quality Reporting System in a given calendar year are used to calculate the value-based payment modifier for the applicable payment adjustment period, as defined in § 414.1215, to the extent a solo practitioner or a group (or individual eligible professionals within such group) submit data on such measures.
§ 414.1230   Additional measures for groups and solo practitioners.
The value-based payment modifier includes the following additional quality measures (outcome measures) as applicable for all groups and solo practitioners subject to the value-based payment modifier:
(a) A composite of rates of potentially preventable hospital admissions for heart failure, chronic obstructive pulmonary disease, and diabetes. The rate of potentially preventable hospital admissions for diabetes is a composite measure of uncontrolled diabetes, short term diabetes complications, long term diabetes complications and lower extremity amputation for diabetes.
(b) A composite of rates of potentially preventable hospital admissions for dehydration, urinary tract infections, and bacterial pneumonia.
(c) Rates of an all-cause hospital readmissions measure, except for groups with between two to nine eligible professionals and solo practitioners starting with the CY 2017 payment adjustment period.