Tuesday, 

July 13, 2010 

Book 2 of 2 Books 

Pages 40039–40718 

Part II 

Department of 

Health and Human 

Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 405, 409, et al. 

Medicare Program; Payment Policies 

Under the Physician Fee Schedule and 

Other Revisions to Part B for CY 2011; 

Proposed Rule 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40040 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 409, 410, 411, 413, 

414, 415, and 424 

[CMS–1503–P] 

RIN 0938–AP79 

Medicare Program; Payment Policies 

Under the Physician Fee Schedule and 

Other Revisions to Part B for CY 2011 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule addresses 

proposed changes to the physician fee 

schedule and other Medicare Part B 

payment policies to ensure that our 

payment systems are updated to reflect 

changes in medical practice and the 

relative value of services. It also 

addresses, implements or discusses 

certain provisions of both the Affordable 

Care Act and the Medicare 

Improvements for Patients and 

Providers Act of 2008. In addition, this 

proposed rule discusses payments 

under the Ambulance Fee Schedule, 

Clinical Laboratory Fee Schedule, 

payments to ESRD facilities, and 

payments for Part B drugs. Finally, the 

proposed rule includes a discussion 

regarding the Chiropractic Services 

Demonstration program, the 

Competitive Bidding Program for 

Durable Medical Equipment and 

Provider and Supplier Enrollment 

Issues associated with Air Ambulances. 

(See the Table of Contents for a listing 

of the specific issues addressed in this 

proposed rule.) 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on August 24, 2010. 

ADDRESSES: In commenting, please refer 

to file code CMS–1503–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the instructions for ‘‘submitting a 

comment.’’ 

2. By regular mail. You may mail 

written comments to the following 

address only: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1503– 

P, P.O. Box 8013, Baltimore, MD 21244– 

8013. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address only: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–1503– 

P, Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

FOR FURTHER INFORMATION CONTACT: 

Rebecca Cole, (410) 786–4497, for issues 

related to physician payment and for 

all other issues not identified below. 

Cheryl Gilbreath, (410) 786–5919, for 

issues related to payment for covered 

outpatient drugs and biologicals. 

Roechel Kujawa, (410) 786–9111, for 

issues related to ambulance services. 

Glenn McGuirk, (410) 786–5723, for 

clinical laboratory issues. 

Randall Ricktor, (410) 786–4632, for 

Federally Qualified Health Center 

Issues. 

Pauline Lapin, (410) 786–6883, for 

issues related to the chiropractic 

services demonstration BN issue. 

Troy Barsky, (410)786–8873, or Kristin 

Bohl, (410)786–8680, for issues 

related to physician self-referral. 

Troy Barsky, (410)786–8873, or Fred 

Grabau (410)786–0206, for issues 

related to timely filing rules. 

Henry Richter, (410)786–4562, or Lisa 

Hubbard, (410)786–5472, for issues 

related to renal dialysis provisions 

and payments for end-stage renal 

disease facilities. 

Diane Stern, (410)786–1133, for issues 

related to the physician quality 

reporting initiative and incentives for 

e-prescribing. 

Sheila Roman, 410–786–6004, or 

Pamela Cheetham, 410–786–2259, for 

issues related to the Physician 

Resource Use Feedback Program and 

value-based purchasing. 

Joel Kaiser, (410)786–4499, for issues 

related to the DME provisions. 

Jim Bossenmeyer, (410)786–9317, for 

issues related to provider and 

supplier enrollment issues. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Table of Contents 

To assist readers in referencing 

sections contained in this preamble, we 

are providing a table of contents. Some 

of the issues discussed in this preamble 

affect the payment policies, but do not 

require changes to the regulations in the 

Code of Federal Regulations (CFR). 

Information on the regulation’s impact 

appears throughout the preamble, and 

therefore, is not discussed exclusively 

in section V. of this proposed rule. 

I. Background 

A. Development of the Relative Value 

System 


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1. Work RVUs 

2. Practice Expense Relative Value Units 

(PE RVUs) 

3. Resource-Based Malpractice (MP) RVUs 

4. Refinements to the RVUs 

5. Adjustments to RVUs Are Budget 

Neutral 

B. Components of the Fee Schedule 

Payment Amounts 

C. Most Recent Changes to Fee Schedule 

II. Provisions of the Proposed Rule for the 

Physician Fee Schedule 

A. Resource-Based Practice Expense (PE) 

Relative Value Units (RVUs) 

1. Overview 

2. Practice Expense Methodology 

a. Direct Practice Expense 

b. Indirect Practice Expense per Hour Data 

c. Allocation of PE to Services 

(i) Direct Costs 

(ii) Indirect Costs 

d. Facility and Nonfacility Costs 

e. Services with Technical Components 

(TCs) and Professional Components 

(PCs) 

f. Alternative Data Sources and Public 

Comments on Final Rule for 2010 

g. PE RVU Methodology 

(i) Setup File 

(ii) Calculate the Direct Cost PE RVUs 

(iii) Create the Indirect Cost PE RVUs 

(iv) Calculate the Final PE RVUs 

(v) Setup File Information 

(vi) Equipment Cost per Minute 

3. Proposed PE Revisions for CY 2011 

a. Equipment Utilization Rate 

b. HCPCS Code-Specific PE Proposals 

(1) Biohazard Bags 

(2) PE Inputs for Professional Component 

(PC) Only and Technical Component 

(TC) Only Codes Summing to Global 

Only Codes 

(3) Equipment Time Inputs for Certain 

Diagnostic Tests 

(4) Cobalt-57 Flood Source 

(5) Venom Immunotherapy 

(6) Equipment Redundancy 

(7) Equipment Duplication 

(8) Establishing Overall Direct PE Supply 

Price Inputs Based on Unit Prices and 

Quantities 

c. AMA RUC Recommendations in CY 

2010 for Changes to Direct PE Inputs 

(1) Electrogastrography and Esophageal 

Function Test 

(2) 64-Slice CT Scanner and Software 

(3) Cystometrogram 

(4) Breath Hydrogen Test 

(5) Radiographic Fluoroscopic Room 

d. Referral of Existing CPT Codes for AMA 

RUC Review 

e. Updating Equipment and Supply Price 

Inputs for Existing Codes 

B. Malpractice Relative Value Units (RVUs) 

1. Background 

2. Malpractice RVUs for New and Revised 

Services Effective Before the Next 5-Year 

Review 

3. Revised Malpractice RVUs for Selected 

Disc Arthroplasty Services 

C. Potentially Misvalued Codes Under the 

Physician Fee Schedule 

1. Valuing Services Under the PFS 

2. Identifying, Reviewing, and Validating 

the RVUs of Potentially Misvalued 

Services Under the PFS 

a. Background 

b. Progress in Identifying and Reviewing 

Potentially Misvalued Codes 

c. Validating RVUs of Potentially 

Misvalued Codes 

3. CY 2011 Identification and Review of 

Potentially Misvalued Services 

a. Codes on the Multi-Specialty Points of 

Comparison List 

b. Codes With Low Work RVUs Commonly 

Billed in Multiple Units Per Single 

Encounter 

c. Codes With High Volume and Low Work 

RVUs 

d. Codes With Site-of-Service-Anomalies 

e. Codes With ‘‘23-hour’’ Stays 

4. Expanding the Multiple Procedure 

Payment Reduction (MPPR) Policy to 

Additional Nonsurgical Services 

a. Background 

b. Proposed CY 2011 Expansion of the 

Imaging Technical Component MPPR 

Policy to Additional Combinations of 

Imaging Services 

c. Proposed CY 2011 Expansion of the 

MPPR Policy to Therapy Services 

5. High Cost Supplies 

a. Background 

b. Future Updates to the Prices of HighCost Supplies 

D. Geographic Practice Cost Indices 

(GPCIs) 

1. Background 

2. GPCI Update 

a. Physician Work GPCIs 

b. Practice Expense GPCIs 

(1) The Affordable Care Act Requirements 

for PE GPCIs 

(2) Summary of CY 2011 Proposed PE 

GPCIs 

c. Malpractice GPCIs 

d. General GPCI Update Process 

3. Payment Localities 

E. Physician Fee Schedule Update for CY 

2011 

1. Rebasing the Medicare Economic Index 

(MEI) 

a. Background 

b. Use of More Current Data 

c. Rebasing and Revising Expense 

Categories in the MEI 

(1) Developing the Weights for Use in the 

MEI 

(2) Physician’s Own Time 

(3) Physician’s Practice Expenses 

(A) Non-Physician Employee 

Compensation 

(B) Office Expenses 

(C) Professional Liability Insurance (PLI) 

Expense 

(D) Medical Equipment Expenses 

(E) Medical Supplies Expenses 

(F) All Other Professional Expenses 

d. Selection of Price Proxies for Use in the 

MEI 

(1) Expense Categories in the MEI 

(A) Physician’s Own Time (Physician 

Compensation) 

(B) Nonphysician Employee Compensation 

(C) Utilities 

(D) Chemicals 

(E) Paper 

(F) Rubber and Plastics 

(G) Telephone 

(H) Postage 

(I) All Other Labor-Intensive Services 

(J) Fixed Capital 

(K) Moveable Capital 

(L) Professional Liability Insurance 

(M) Medical Equipment 

(N) Other Professional Expenses 

(2) Productivity Adjustment to the MEI 

e. Results of Rebasing 

f. Adjustments to the RVU Shares to Match 

the Proposed Rebased MEI Weights 

III. Code-Specific Issues for the PFS 

A. Therapy Services 

1. Outpatient Therapy Caps for CY 2011 

2. Alternatives to Therapy Caps 

a. Background 

b. Current Activities 

c. Potential Short-Term Approaches to 

Therapy Caps 

B. Diabetes Self-Management Training 

(DSMT) Services (HCPCS Codes G0108 

and G0109) 

1. Background 

2. Proposed Payment for DSMT Services 

C. End-State Renal Disease Related 

Services for Home Dialysis (CPT Codes 

90963, 90964, 90965, and 90966) 

1. End-Stage Renal Disease Home Dialysis 

Monthly Capitation Payment Services 

(CPT Codes 90963, 90964, 90965, and 

90966) 

2. Daily and Monthly ESRD-Related 

Services (CPT Codes 90951 Through 

90970) 

D. Portable X-Ray Set-Up (HCPCS Code 

Q0092) 

E. Pulmonary Rehabilitation Services 

(HCPCS Code G0424) 

F. Application of Tissue-Cultured Skin 

Substitutes to Lower Extremities (HCPCS 

Codes GXXX1 and GXXX2) 

G. Canalith Repositioning (CPT Code 

95992) 

H. Intranasal/Oral Immunization Codes 

(CPT Codes 90467, 90468, 90473, and 

90474) 

I. Refinement Panel Process 

J. Remote Cardiac Monitoring Services 

(CPT Codes 93012, 93229, 93268, and 

93271) 

IV. Medicare Telehealth Services for the 

Physician Fee Schedule 

A. Billing and Payment for Telehealth 

Services 

1. History 

2. Current Telehealth Billing and Payment 

Policies 

B. Requests for Adding Services to the List 

of Medicare Telehealth Services 

C. Submitted Requests for Addition to the 

List of Telehealth Services for CY 2011 

(1) Individual KDE Services 

(2) Individual DSMT Services 

(3) Group KDE, MNT, DSMT, and HBAI 

Services 

(4) Initial, Subsequent, and Discharge Day 

Management Hospital Care Services 

(5) Initial, Subsequent, Discharge Day 

Management, and Other Nursing Facility 

Care Services 

(6) Neuropsychological Testing Services 

(7) Speech-Language Pathology Services 

(8) Home Wound Care Services 

D. Summary of CY 2011 Telehealth 

Proposals 

V. Provisions of the Patient Protection and 

Affordable Care Act of 2010 

A. Section 3002: Improvements to the 

Physician Quality Reporting System 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40042 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

B. Section 3003: Improvements to the 

Physician Feedback Program and Section 

3007: Value-Based Payment Modifier 

Under the Physician Fee Schedule 

1. Background 

2. Effect of the Patient Protection and 

Affordable Care Act on the Program 

3. Implementation of Sections 3003 and 

3007 of the Affordable Care Act 

4. Comments Sought on Specific Policy 

Topics Related to Both PPACA Sections 

3003 and 3007 

a. Risk Adjustment 

b. Attribution 

c. Benchmarking and Peer Groups 

d. Cost and Quality Measures and 

Composite Measurement 

C. Section 3102: Extension of the Work 

Geographic Index Floor and Revisions to 

the Practice Expense Geographic 

Adjustment Under the Medicare 

Physician Fee Schedule, and Protections 

for Frontier States as Amended by 

Section 10324 of the Affordable Care Act 

D. Section 3103: Extension of Exceptions 

Process for Medicare Therapy Caps 

E. Section 3104: Extension of Payment for 

Technical Component of Certain 

Physician Pathology Services 

F. Section 3105: Extension of Ambulance 

Add-On 

G. Section 3107: Extension of Physician 

Fee Schedule Mental Health Add-On 

H. Section 3108: Permitting Physician 

Assistants to Order Post-Hospital 

Extended Care Services 

I. Section 3111: Payment for Bone Density 

Tests 

J. Section 3114: Improved Access for 

Certified Nurse Midwife Services 

K. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in Certain 

Rural Areas 

L. Section 3134: Misvalued Codes Under 

the Physician Fee Schedule 

M. Section 3135: Modification of 

Equipment Utilization Factor for 

Advanced Imaging Services 

1. Adjustment in Practice Expense to 

Reflect Higher Presumed Utilization 

2. Adjustment in Technical Component 

‘‘Discount’’ on Single-Session Imaging to 

Consecutive Body Parts 

N. Section 3136: Revision for Payment for 

Power-Driven Wheelchairs 

a. Payment Rules for Power Wheelchairs 

b. Elimination of Lump Sum Payment for 

Standard Power Wheelchairs 

c. Revision of Payment Amounts for Power 

Wheelchairs 

O. Section 3139: Payment for Biosimilar 

Biological Products 

P. Section 3401: Revision of Certain Market 

Basket Updates and Incorporation of 

Productivity Improvements Into Market 

Basket Updates That Do Not Already 

Incorporate Such Improvements 

1. ESRD Market Basket Discussion 

2. Productivity Adjustment Regarding 

Ambulance and Clinical Laboratory Fee 

Schedules 

a. Ambulatory Surgery Centers (ASCs) 

b. Ambulance Fee Schedule (AFS) 

c. Clinical Lab Fee Schedule 

Q. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

1. Background 

a. Medicare Coverage of Preventive 

Physical Examinations and Routine 

Checkups 

b. Requirements for Coverage of an Annual 

Wellness Visit 

2. Proposed Revisions 

a. Proposed Revisions to § 411.15, 

Particular Services Excluded From 

Coverage 

b. Proposed Revisions to Part 410, Subpart 

B—Medical and Other Health Services 

(1) Definitions 

(2) Requirements of the First Visit for 

Personalized Prevention Plan Services 

(3) Requirements of Subsequent Visits for 

Personalized Prevention Plan Services 

3. Payment for the Annual Wellness Visit 

Providing Personalized Prevention Plan 

Services (PPPS) 

R. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

1. Definition of ‘‘Preventive Services’’ 

2. Deductible and Coinsurance for 

Preventive Services 

3. Extension of Waiver of Deductible to 

Services Furnished in Connection With 

or in Relation to a Colorectal Cancer 

Screening Test that Becomes Diagnostic 

or Therapeutic 

S. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

1. Section 5501(a): Incentive Payment 

Program for Primary Care Services 

a. Background 

b. Proposed Primary Care Incentive 

Payment Program (PCIP) 

2. Section 5501(b): Incentive Payment 

Program for Major Surgical Procedures 

Furnished in Health Professional 

Shortage Areas 

a. Background 

b. Proposed HPSA Surgical Incentive 

Payment Program (HSIP) 

3. Sections 5501(a) and (b) of the 

Affordable Care Act and Payment for 

Critical Access Hospital Professional 

Services Under the Optional Method 

T. Section 6003: Disclosure Requirements 

for In-Office Ancillary Services 

Exception to the Prohibition on 

Physician Self-Referral for Certain 

Imaging Services 

1. Background 

2. Proposed Disclosure Requirement 

U. Section 6404: Maximum Period for 

Submission of Medicare Claims Reduced 

to Not More Than 12 Months 

1. Background 

2. Provisions of Affordable Care Act 

V. Section 6410 and MIPPA: Adjustments to 

the Medicare Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies Competitive Acquisition 

Program 

1. Background 

2. Subdividing Large MSAs Under Round 

2 

3. Exclusions of Certain Areas After Round 

2 and Prior to 2015 

4. Expansion of Round 2 

W. Section 10501(i)(3)—Proposed 

Collection of HCPCS Data for 

Development and Implementation of a 

Prospective Payment System for the 

Medicare Federally Qualified Health 

Center Program 

VI. Other Provisions of the Proposed 

Regulation 

A. Part B Drug Payment: Average Sales 

Price (ASP) Issues 

1. ‘‘Carry Over’’ ASP 

2. Partial Quarter ASP Data 

3. Determining the Payment Amount for 

Drugs and Biologicals Which Include 

Intentional Overfill 

4. WAMP/AMP 

5. Price Substitutions 

a. AMP threshold 

b. AMP Price Substitution 

B. Ambulance Fee Schedule: Proposed 

Policy for Reporting Units When Billing 

for Ambulance Fractional Mileage 

1. Policy for Reporting Units When Billing 

for Ambulance Fractional Mileage or 

Other Services 

a. History of Medicare Ambulance Services 

(1) Statutory Coverage of Ambulance 

Services 

(2) Medicare Regulations for Ambulance 

Services 

b. Mileage Reporting 

(1) Background and Current Process for 

Reporting Ambulance Mileage 

(2) Potential for Inaccuracies in Reporting 

Units and Associated Risks 

(3) Billing of Fractional Units for Mileage 

C. Clinical Laboratory Fee Schedule: 

Signature on Requisition 

D. Discussion of Chiropractic Services 

Demonstration 

E. Provisions Related to Payment for Renal 

Dialysis Services Furnished by EndStage Renal Disease (ESRD) Facilities 

1. CY 2005 Provisions 

2. CY 2006 Provisions 

3. CY 2007 Provisions 

4. CY 2008 Provisions 

5. CY 2009 Updates 

6. CY 2010 Updates 

7. Proposals for CY 2011 

a. MIPPA Provisions 

b. Affordable Care Act Provision 

8. Proposed Update to the Drug Add-On 

Adjustment to the Composite Rate 

a. Estimating Growth in Expenditures for 

Drugs and Biologicals for CY 2010 

b. Estimating Growth in Expenditures for 

Drugs and Biologicals in CY 2011 

c. Estimating Per Patient Growth 

d. Applying the Proposed Growth Update 

to the Drug Add-On Adjustment 

e. Proposed Update to the Drug Add-On 

Adjustment 

f. Proposed Update to the Geographic 

Adjustments to the Composite Rate 

g. Proposed Updates to Core-Based 

Statistical Area (CBSA) Definitions 

h. Proposed Updated Wage Index Values 

i. Reduction to the ESRD Wage Index Floor 

j. Proposed Wage Index Values for Areas 

With No Hospital Data 

k. Budget Neutrality Adjustment 

l. ESRD Wage Index Tables 

F. Issues Related to the Medicare 

Improvements for Patients and Providers 

Act of 2008 (MIPPA) 

1. Section 131: Physician Payment, 

Efficiency, and Quality Improvements— 


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Physician Quality Reporting Initiative 

(PQRI) 

a. Program Background and Statutory 

Authority 

b. Incentive Payments for the 2011 PQRI 

c. Proposed 2011 Reporting Periods for 

Individual Eligible Professionals 

d. Proposed 2011 PQRI Reporting 

Mechanisms for Individual Eligible 

Professionals 

(1) Proposed Requirements for Individual 

Eligible Professionals Who Choose the 

Claims-Based Reporting Mechanism 

(2) Proposed Requirements for Individual 

Eligible Professionals Who Choose the 

Registry-Based Reporting Mechanism 

(3) Proposed Requirements for Individual 

Eligible Professionals Who Choose the 

EHR-Based Reporting Mechanism 

(4) Proposed Qualification Requirements 

for Registries 

(5) Proposed Qualification Requirements 

for EHR Vendors and Their Products 

e. Proposed Criteria for Satisfactory 

Reporting of Individual Quality 

Measures for Individual Eligible 

Professionals 

f. Proposed Criteria for Satisfactory 

Reporting Measures Groups for 

Individual Eligible Professionals 

g. Proposed Reporting Option for 

Satisfactory Reporting on Quality 

Measures by Group Practices 

(1) Group Practice Reporting Option— 

GPRO I 

(2) Process for Physician Group Practices to 

Participate as Group Practices and 

Criteria for Satisfactory Reporting 

h. Statutory Requirements and Other 

Considerations for 2011 PQRI Measures 

(1) Statutory Requirements for 2011 PQRI 

Measures 

(2) Other Considerations for Measures 

Proposed for Inclusion in the 2011 PQRI 

i. Proposed 2011 PQRI Quality Measures 

for Individual Eligible Professionals 

(1) Proposed 2011 Individual Quality 

Measures Selected From the 2010 PQRI 

Quality Measures Set Available for 

Claims Based Reporting and RegistryBased Reporting 

(2) Proposed 2011 Individual Quality 

Measures Selected From the 2010 PQRI 

Quality Measures Set Available for 

Registry Based Reporting Only 

(3) New Individual Quality Measures 

Selected for Proposed for 2011 

(4) Proposed 2011 Measures Available for 

EHR-Based Reporting 

(5) Measures Proposed for Inclusion in 

2011 Measures Groups 

j. Proposed 2011 PQRI Quality Measures 

for Physician Groups Selected to 

Participate in the Group Practice 

Reporting Option 

k. Public Reporting of PQRI Data 

l. Affordable Care Act Extension of 

Incentive for PQRI Program 

m. Affordable Care Act Timely Feedback 

Reports 

n. Affordable Care Act Informal Appeals 

Process 

o. Affordable Care Act Maintenance of 

Certification Program 

p. Affordable Care Act Physician Compare 

Web Site 

q. Affordable Care Act Integration of PQRI 

EHR Measures and HITECH Measures in 

Years After 2011 

2. Section 132: Incentives for Electronic 

Prescribing (eRx)—The Electronic 

Prescribing Incentive Program 

a. Program Background and Statutory 

Authority 

b. The 2011 Reporting Period for the eRx 

Incentive Program 

c. Proposed Criteria for Determination of 

Successful Electronic Prescriber for 

Eligible Professionals 

(1) Reporting the Electronic Prescribing 

Measure 

(2) The Reporting Denominator for the 

Electronic Prescribing Measure 

(3) Qualified Electronic Prescribing 

System—Required Functionalities and 

Part D eRx Standards 

(4) The Reporting Numerator for the 

Electronic Prescribing Measure 

(5) Criteria for Successful Reporting of the 

Electronic Prescribing Measure 

d. Determination of the 2011 Incentive 

Payment Amount for Individual Eligible 

Professionals Who Are Successful 

Electronic Prescribers 

e. Proposed Reporting Option for 

Satisfactory Reporting of the Electronic 

Prescribing Measure by Group Practices 

(1) Definition of ‘‘Group Practice’’ 

(2) Process for Group Practices to 

Participate as Group Practices and 

Criteria for Successful Reporting of the 

Electronic Prescribing Measure by Group 

Practices 

f. Public Reporting of Names of Successful 

Electronic Prescribers 

G. DMEPOS Competitive Bidding Program 

Issues 

1. Implementation of a National Mail Order 

Competitive Bidding Program for 

Diabetic Testing Supplies 

a. Revision of the Definition of ‘‘Mail 

Order’’ 

(1) Legislative and Regulatory History of 

the Medicare Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies (DMEPOS) Competitive 

Bidding Program 

(2) National Mail Order Competitive 

Bidding Program 

(3) The MIPPA and the Medicare DMEPOS 

Competitive Bidding Program 

(4) Competition for Mail Order Diabetic 

Supplies Under Round 1 of the Medicare 

DMEPOS Competitive Bidding Program 

b. Overview of Proposed Rule 

c. Future Competitions for Diabetic Testing 

Supplies 

d. Definition of Mail Order Item 

e. Special Rule in Case of National Mail 

Order Competition for Diabetic Testing 

Strips 

f. Anti-Switching Rule in Case of National 

Mail Order Competition for Diabetic Test 

Strips 

2. Off-the-Shelf (OTS) Orthotics Exemption 

3. Changes to Payment for Oxygen and 

Oxygen Equipment 

a. Background 

b. Furnishing Oxygen Equipment After the 

36-Month Rental Period (Cap) 

c. Furnishing Oxygen Equipment During 

the 36-Month Rental Period (Cap) 

4. Grandfathering Rules Resulting in Extra 

Payments to Contract Suppliers Under 

the DMEPOS Competitive Bidding 

Program 

5. Appeals Process 

a. Background 

b. Proposed Appeals Process 

(1) Purpose and Definitions: (§ 414.402) 

(2) Applicability 

(3) Contract Termination 

(4) Notice of Termination 

(5) Corrective Action Plan 

(6) Right to Request a Hearing by the CBIC 

Hearing Officer 

(7) Scheduling of the Hearing 

(8) Burden of Proof 

(9) Role of the Hearing Officer 

(10) CMS’s Final Determination 

(11) Effective Date of the Contract 

Termination 

(12) Effect of Contract Termination 

H. Provider and Supplier Enrollment Issue: 

Air Ambulance Provision 

I. Technical Corrections 

1. Physical Therapy, Occupational 

Therapy, and Speech-Language 

Pathology 

2. Scope of Benefits 

VII. Collection of Information Requirements 

VIII. Response to Comments 

IX. Regulatory Impact Analysis 

A. RVU Impacts 

1. Resource Based Work, PE, and 

Malpractice RVUs 

2. CY 2011 PFS Impact Discussion 

a. Changes in RVUs 

b. Combined Impact 

B. Geographic Practice Cost Indices (GPCIs) 

C. Rebasing and Revising of the MEI 

D. The Affordable Care Act Provisions 

1. Section 3103: Extension of Exceptions 

Process for Medicare Therapy Caps 

2. Section 3104: Extension of Payment for 

Technical Component of Certain 

Physician Pathology Services 

3. Sections 3105 and 10311: Extension of 

Ambulance Add-Ons 

4. Section 3107: Extension of Physician Fee 

Schedule Mental Health Add-On 

5. Section 3111: Payment for Bone Density 

Tests 

6. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in Certain 

Rural Areas 

7. Section 3135: Modification of 

Equipment Utilization Factor for 

Advanced Imaging Services 

8. Section 3136: Revisions in Payments for 

Power Wheelchairs 

9. Section 3401: Revisions of Certain 

Market Basket Updates and 

Incorporation of Productivity 

Adjustments 

10. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

11. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

12. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

13. Section 6003: Disclosure Requirements 

for In-Office Ancillary Services 

Exception to the Prohibition of Physician 

Self-referral for Certain Imaging Services 


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14. Section 6404: Maximum Period for 

Submission of Medicare Claims Reduced 

to Not More Than 12 Months 

E. Other Provisions of the Proposed 

Regulation 

1. Part B Drug Payment: ASP Issues 

2. Ambulance Fee Schedule: Proposed 

Policy for Reporting Units When Billing 

for Ambulance Fractional Mileage 

3. Chiropractic Services Demonstration 

4. Renal Dialysis Services Furnished by 

ESRD Facilities 

5. Section 131(b) of the MIPPA: Physician 

Payment, Efficiency, and Quality 

Improvements—Physician Quality 

Reporting Initiative (PQRI) 

6. Section 132 of the MIPPA: Incentives for 

Electronic Prescribing (eRx)—The eRx 

Incentive Program 

7 RHC/FQHC Issues 

8. Durable Medical Equipment-Related 

Issues 

a. Off-the-Shelf (OTS) Orthotics Exemption 

b. Changes to Payment for Oxygen 

Equipment 

F. Alternatives Considered 

G. Impact on Beneficiaries 

H. Accounting Statement 

Regulation Text 

Addendum A—Explanation and Use of 

Addendum B 

Addendum B—Proposed Relative Value 

Units and Related Information Used in 

Determining Medicare Payments for CY 

2011 

Addendum C—[Reserved] 

Addendum D—Proposed CY 2011 

Geographic Adjustment Factors (GAFs) 

Addendum E—Proposed CY 2011 

Geographic Practice Cost Indices (GPCIs) 

by State and Medicare Locality 

Addendum F—Proposed CY 2011 Diagnostic 

Imaging Services Subject to the Multiple 

Procedure Payment Reduction 

Addendum G—CPT/HCPCS Imaging Codes 

Defined by Section 5102(b) of the DRA 

Addendum H—Proposed CY 2011 ‘‘Always 

Therapy’’ Services* Subject to the 

Multiple Procedure Payment Reduction 

Addendum I—[Reserved] 

Addendum J—[Reserved] 

Addendum K—Proposed CY 2011 ESRD 

Wage Index for Urban Areas Based on 

CBSA Labor Market Areas 

Addendum L—Proposed CY 2011 ESRD 

Wage Index for Rural Areas Based on 

CBSA Labor Market Areas 

Acronyms 

In addition, because of the many 

organizations and terms to which we 

refer by acronym in this proposed rule, 

we are listing these acronyms and their 

corresponding terms in alphabetical 

order below: 

AA Anesthesiologist assistant 

AACVPR American Association of 

Cardiovascular and Pulmonary 

Rehabilitation 

AANA American Association of Nurse 

Anesthetists 

ABMS American Board of Medical 

Specialties 

ABN Advanced Beneficiary Notice 

ACA ‘‘Affordable Care Act’’ 

ACC American College of Cardiology 

ACGME Accreditation Council on Graduate 

Medical Education 

ACLS Advanced cardiac life support 

ACR American College of Radiology 

AED Automated external defibrillator 

AFROC Association of Freestanding 

Radiation Oncology Centers 

AHA American Heart Association 

AHFS–DI American Hospital Formulary 

Service—Drug Information 

AHRQ [HHS’] Agency for Healthcare 

Research and Quality 

AMA American Medical Association 

AMA–DE American Medical Association 

Drug Evaluations 

AMP Average manufacturer price 

AO Accreditation organization 

AOA American Osteopathic Association 

APA American Psychological Association 

APTA American Physical Therapy 

Association 

ARRA American Recovery and 

Reinvestment Act (Pub. L. 111–5) 

ASC Ambulatory surgical center 

ASP Average sales price 

ASRT American Society of Radiologic 

Technologists 

ASTRO American Society for Therapeutic 

Radiology and Oncology 

ATA American Telemedicine Association 

AWP Average wholesale price 

BBA Balanced Budget Act of 1997 (Pub. L. 

105–33) 

BBRA [Medicare, Medicaid and State Child 

Health Insurance Program] Balanced 

Budget Refinement Act of 1999 (Pub. L. 

106–113) 

BIPA Medicare, Medicaid, and SCHIP 

Benefits Improvement Protection Act of 

2000 (Pub. L. 106–554) 

BLS Basic Life support 

BN Budget neutrality 

BPM Benefit Policy Manual 

CABG Coronary artery bypass graft 

CAD Coronary artery disease 

CAH Critical access hospital 

CAHEA Committee on Allied Health 

Education and Accreditation 

CAP Competitive acquisition program 

CBIC Competitive Bidding Implementation 

Contractor 

CBP Competitive Bidding Program 

CBSA Core-Based Statistical Area 

CF Conversion factor 

CfC Conditions for Coverage 

CFR Code of Federal Regulations 

CKD Chronic kidney disease 

CLFS Clinical laboratory fee schedule 

CMA California Medical Association 

CMHC Community mental health center 

CMP Civil money penalty 

CMS Centers for Medicare & Medicaid 

Services 

CNS Clinical nurse specialist 

CoP Condition of participation 

COPD Chronic obstructive pulmonary 

disease 

CORF Comprehensive Outpatient 

Rehabilitation Facility 

COS Cost of service 

CPEP Clinical Practice Expert Panel 

CPI Consumer Price Index 

CPI–U Consumer price index for urban 

customers 

CPR Cardiopulmonary resuscitation 

CPT [Physicians’] Current Procedural 

Terminology (4th Edition, 2002, 

copyrighted by the American Medical 

Association) 

CR Cardiac rehabilitation 

CRNA Certified registered nurse anesthetist 

CRP Canalith repositioning 

CRT Certified respiratory therapist 

CSW Clinical social worker 

CY Calendar year 

DEA Drug Enforcement Agency 

DHS Designated health services 

DME Durable medical equipment 

DMEPOS Durable medical equipment, 

prosthetics, orthotics, and supplies 

DOQ Doctor’s Office Quality 

DOS Date of service 

DRA Deficit Reduction Act of 2005 (Pub. L. 

109–171) 

DSMT Diabetes self-management training 

E/M Evaluation and management 

EDI Electronic data interchange 

EEG Electroencephalogram 

EHR Electronic health record 

EKG Electrocardiogram 

EMG Electromyogram 

EMTALA Emergency Medical Treatment 

and Active Labor Act 

EOG Electro-oculogram 

EPO Erythopoeitin 

ESRD End-stage renal disease 

FAX Facsimile 

FDA Food and Drug Administration (HHS) 

FFS Fee-for-service 

FR Federal Register 

GAF Geographic adjustment factor 

GAO General Accounting Office 

GEM Generating Medicare [Physician 

Quality Performance Measurement Results] 

GFR Glomerular filtration rate 

GPO Group purchasing organization 

GPCI Geographic practice cost index 

HAC Hospital-acquired conditions 

HBAI Health and behavior assessment and 

intervention 

HCPAC Health Care Professional Advisory 

Committee 

HCPCS Healthcare Common Procedure 

Coding System 

HCRIS Healthcare Cost Report Information 

System 

HDRT High dose radiation therapy 

HH PPS Home Health Prospective Payment 

System 

HHA Home health agency 

HHRG Home health resource group 

HHS [Department of] Health and Human 

Services 

HIPAA Health Insurance Portability and 

Accountability Act of 1996 (Pub. L. 104– 

191) 

HIT Health information technology 

HITECH Health Information Technology for 

Economic and Clinical Health Act (Title IV 

of Division B of the Recovery Act, together 

with Title XIII of Division A of the 

Recovery Act) 

HITSP Healthcare Information Technology 

Standards Panel 

HIV Human immunodeficiency virus 

HOPD Hospital outpatient department 

HPSA Health Professional Shortage Area 

HRSA Health Resources Services 

Administration (HHS) 

IACS Individuals Access to CMS Systems 

ICD International Classification of Diseases 


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ICF Intermediate care facilities 

ICR Intensive cardiac rehabilitation 

ICR Information collection requirement 

IDTF Independent diagnostic testing facility 

IFC Interim final rule with comment period 

IMRT Intensity-Modulated Radiation 

Therapy 

IPPE Initial preventive physical 

examination 

IPPS Inpatient prospective payment system 

IRS Internal Revenue Service 

ISO Insurance services office 

IVD Ischemic Vascular Disease 

IVIG Intravenous immune globulin 

IWPUT Intra-service work per unit of time 

JRCERT Joint Review Committee on 

Education in Radiologic Technology 

KDE Kidney disease education 

LCD Local coverage determination 

MA Medicare Advantage 

MA–PD Medicare Advantage—Prescription 

Drug Plans 

MAV Measure Applicability Validation 

MCMP Medicare Care Management 

Performance 

MDRD Modification of Diet in Renal 

Disease 

MedCAC Medicare Evidence Development 

and Coverage Advisory Committee 

(formerly the Medicare Coverage Advisory 

Committee (MCAC)) 

MedPAC Medicare Payment Advisory 

Commission 

MEI Medicare Economic Index 

MIEA–TRHCA Medicare Improvements and 

Extension Act of 2006 (that is, Division B 

of the Tax Relief and Health Care Act of 

2006 (TRHCA)) (Pub. L. 109–432) 

MIPPA Medicare Improvements for Patients 

and Providers Act of 2008 (Pub. L. 110– 

275) 

MMA Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (Pub. L. 108–173) 

MMSEA Medicare, Medicaid, and SCHIP 

Extension Act of 2007 (Pub. L. 110–173) 

MNT Medical nutrition therapy 

MOC Maintenance of certification 

MP Malpractice 

MPPR Multiple procedure payment 

reduction 

MQSA Mammography Quality Standards 

Act of 1992 (Pub. L. 102–539) 

MRA Magnetic resonance angiography 

MRI Magnetic resonance imaging 

MSA Metropolitan statistical area 

NBRC National Board for Respiratory Care 

NCD National Coverage Determination 

NCQDIS National Coalition of Quality 

Diagnostic Imaging Services 

NDC National drug code 

NF Nursing facility 

NISTA National Institute of Standards and 

Technology Act 

NP Nurse practitioner 

NPI National Provider Identifier 

NPP Nonphysician practitioner 

NQF National Quality Forum 

NRC Nuclear Regulatory Commission 

OACT [CMS’] Office of the Actuary 

OBRA Omnibus Budget Reconciliation Act 

ODF Open door forum 

OGPE Oxygen generating portable 

equipment 

OIG Office of Inspector General 

OMB Office of Management and Budget 

ONC [HHS’] Office of the National 

Coordinator for Health IT 

OPPS Outpatient prospective payment 

system 

OSCAR Online Survey and Certification 

and Reporting 

PA Physician assistant 

PAT Performance assessment tool 

PC Professional component 

PCI Percutaneous coronary intervention 

PDP Prescription drug plan 

PE Practice expense 

PE/HR Practice expense per hour 

PEAC Practice Expense Advisory 

Committee 

PERC Practice Expense Review Committee 

PFS Physician Fee Schedule 

PGP [Medicare] Physician Group Practice 

PHI Protected health information 

PHP Partial hospitalization program 

PIM [Medicare] Program Integrity Manual 

PLI Professional liability insurance 

POA Present on admission 

POC Plan of care 

PPI Producer price index 

PPIS Physician Practice Information Survey 

PPS Prospective payment system 

PPTA Plasma Protein Therapeutics 

Association 

PQRI Physician Quality Reporting Initiative 

PR Pulmonary rehabilitation 

PRA Paperwork Reduction Act 

PSA Physician scarcity areas 

PT Physical therapy 

PTCA Percutaneous transluminal coronary 

angioplasty 

PVBP Physician and Other Health 

Professional Value-Based Purchasing 

Workgroup 

RA Radiology assistant 

RBMA Radiology Business Management 

Association 

RFA Regulatory Flexibility Act 

RHC Rural health clinic 

RIA Regulatory impact analysis 

RN Registered nurse 

RNAC Reasonable net acquisition cost 

RPA Radiology practitioner assistant 

RRT Registered respiratory therapist 

RUC [AMA’s Specialty Society] Relative 

(Value) Update Committee 

RVU Relative value unit 

SBA Small Business Administration 

SGR Sustainable growth rate 

SLP Speech-language pathology 

SMS [AMA’s] Socioeconomic Monitoring 

System 

SNF Skilled nursing facility 

SOR System of record 

SRS Stereotactic radiosurgery 

STARS Services Tracking and Reporting 

System 

TC Technical Component 

TIN Tax identification number 

TRHCA Tax Relief and Health Care Act of 

2006 (Pub. L. 109–432) 

TTO Transtracheal oxygen 

UPMC University of Pittsburgh Medical 

Center 

USDE United States Department of 

Education 

USP–DI United States Pharmacopoeia-Drug 

Information 

VBP Value-based purchasing 

WAMP Widely available market price 

I. Background 

Since January 1, 1992, Medicare has 

paid for physicians’ services under 

section 1848 of the Social Security Act 

(the Act), ‘‘Payment for Physicians’ 

Services.’’ The Act requires that 

payments under the physician fee 

schedule (PFS) are based on national 

uniform relative value units (RVUs) 

based on the relative resources used in 

furnishing a service. Section 1848(c) of 

the Act requires that national RVUs be 

established for physician work, practice 

expense (PE), and malpractice expense. 

Before the establishment of the 

resource-based relative value system, 

Medicare payment for physicians’ 

services was based on reasonable 

charges. We note that throughout this 

proposed rule, unless otherwise noted, 

the term ‘‘practitioner’’ is used to 

describe both physicians and eligible 

nonphysician practitioners (such as 

physician assistants, nurse practitioners, 

clinical nurse specialists, certified nurse 

midwives, psychologists, or social 

workers) that are permitted to furnish 

and bill Medicare under the PFS for the 

services under discussion. 

A. Development of the Relative Value 

System 

1. Work RVUs 

The concepts and methodology 

underlying the PFS were enacted as part 

of the Omnibus Budget Reconciliation 

Act (OBRA) of 1989 (Pub. L. 101–239), 

and OBRA 1990, (Pub. L. 101–508). The 

final rule, published on November 25, 

1991 (56 FR 59502), set forth the fee 

schedule for payment for physicians’ 

services beginning January 1, 1992. 

Initially, only the physician work RVUs 

were resource-based, and the PE and 

malpractice RVUs were based on 

average allowable charges. 

The physician work RVUs established 

for the implementation of the fee 

schedule in January 1992 were 

developed with extensive input from 

the physician community. A research 

team at the Harvard School of Public 

Health developed the original physician 

work RVUs for most codes in a 

cooperative agreement with the 

Department of Health and Human 

Services (DHHS). In constructing the 

code-specific vignettes for the original 

physician work RVUs, Harvard worked 

with panels of experts, both inside and 

outside the Federal government, and 

obtained input from numerous 

physician specialty groups. 

Section 1848(b)(2)(B) of the Act 

specifies that the RVUs for anesthesia 

services are based on RVUs from a 

uniform relative value guide, with 

appropriate adjustment of the 


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conversion factor (CF), in a manner to 

assure that fee schedule amounts for 

anesthesia services are consistent with 

those for other services of comparable 

value. We established a separate CF for 

anesthesia services, and we continue to 

utilize time units as a factor in 

determining payment for these services. 

As a result, there is a separate payment 

methodology for anesthesia services. 

We establish physician work RVUs for 

new and revised codes based on our 

review of recommendations received 

from the American Medical 

Association’s (AMA) Specialty Society 

Relative Value Update Committee 

(RUC). 

2. Practice Expense Relative Value Units 

(PE RVUs) 

Section 121 of the Social Security Act 

Amendments of 1994 (Pub. L. 103–432), 

enacted on October 31, 1994, amended 

section 1848(c)(2)(C)(ii) of the Act and 

required us to develop resource-based 

PE RVUs for each physician’s service 

beginning in 1998. We were to consider 

general categories of expenses (such as 

office rent and wages of personnel, but 

excluding malpractice expenses) 

comprising PEs. 

Section 4505(a) of the Balanced 

Budget Act of 1997 (BBA) (Pub. L. 105– 

33), amended section 1848(c)(2)(C)(ii) of 

the Act to delay implementation of the 

resource-based PE RVU system until 

January 1, 1999. In addition, section 

4505(b) of the BBA provided for a 4-year 

transition period from charge-based PE 

RVUs to resource-based RVUs. 

We established the resource-based PE 

RVUs for each physicians’ service in a 

final rule, published November 2, 1998 

(63 FR 58814), effective for services 

furnished in 1999. Based on the 

requirement to transition to a resourcebased system for PE over a 4-year 

period, resource-based PE RVUs did not 

become fully effective until 2002. 

This resource-based system was based 

on two significant sources of actual PE 

data: the Clinical Practice Expert Panel 

(CPEP) data; and the AMA’s 

Socioeconomic Monitoring System 

(SMS) data. The CPEP data were 

collected from panels of physicians, 

practice administrators, and 

nonphysicians (for example, registered 

nurses (RNs)) nominated by physician 

specialty societies and other groups. 

The CPEP panels identified the direct 

inputs required for each physician’s 

service in both the office setting and 

out-of-office setting. We have since 

refined and revised these inputs based 

on recommendations from the RUC. The 

AMA’s SMS data provided aggregate 

specialty-specific information on hours 

worked and PEs. 

Separate PE RVUs are established for 

procedures that can be performed in 

both a nonfacility setting, such as a 

physician’s office, and a facility setting, 

such as a hospital outpatient 

department. The difference between the 

facility and nonfacility RVUs reflects 

the fact that a facility typically receives 

separate payment from Medicare for its 

costs of providing the service, apart 

from payment under the PFS. The 

nonfacility RVUs reflect all of the direct 

and indirect PEs of providing a 

particular service. 

Section 212 of the Balanced Budget 

Refinement Act of 1999 (BBRA) (Pub. L. 

106–113) directed the Secretary of 

Health and Human Services (the 

Secretary) to establish a process under 

which we accept and use, to the 

maximum extent practicable and 

consistent with sound data practices, 

data collected or developed by entities 

and organizations to supplement the 

data we normally collect in determining 

the PE component. On May 3, 2000, we 

published the interim final rule (65 FR 

25664) that set forth the criteria for the 

submission of these supplemental PE 

survey data. The criteria were modified 

in response to comments received, and 

published in the Federal Register (65 

FR 65376) as part of a November 1, 2000 

final rule. The PFS final rules published 

in 2001 and 2003, respectively, (66 FR 

55246 and 68 FR 63196) extended the 

period during which we would accept 

these supplemental data through March 

1, 2005. 

In the calendar year (CY) 2007 PFS 

final rule with comment period (71 FR 

69624), we revised the methodology for 

calculating direct PE RVUs from the topdown to the bottom-up methodology 

beginning in CY 2007 and provided for 

a 4-year transition for the new PE RVUs 

under this new methodology. This 

transition ended in CY 2010 and direct 

PE RVUs are calculated in CY 2011 

using this methodology, unless 

otherwise noted. 

In the CY 2010 PFS final rule with 

comment period, we updated the PE/ 

hour (HR) data that are used in the 

calculation of PE RVUs for most 

specialties (74 FR 61749). For this 

update, we used the Physician Practice 

Information Survey (PPIS) conducted by 

the AMA. The PPIS is a multispecialty, 

nationally representative, PE survey of 

both physicians and nonphysician 

practitioners (NPPs) using a survey 

instrument and methods highly 

consistent with those of the SMS and 

the supplemental surveys used prior to 

CY 2010. We note that in CY 2010, for 

oncology, clinical laboratories, and 

independent diagnostic testing facilities 

(IDTFs), we continued to use the 

supplemental survey data to determine 

PE/HR values (74 FR 61752). 

3. Resource-Based Malpractice (MP) 

RVUs 

Section 4505(f) of the BBA amended 

section 1848(c) of the Act requiring us 

to implement resource-based 

malpractice (MP) RVUs for services 

furnished on or after 2000. The 

resource-based MP RVUs were 

implemented in the PFS final rule 

published November 2, 1999 (64 FR 

59380). The MP RVUs were based on 

malpractice insurance premium data 

collected from commercial and 

physician-owned insurers from all the 

States, the District of Columbia, and 

Puerto Rico. 

4. Refinements to the RVUs 

Section 1848(c)(2)(B)(i) of the Act 

requires that we review all RVUs no less 

often than every 5 years. The first FiveYear Review of the physician work 

RVUs was published on November 22, 

1996 (61 FR 59489) and was effective in 

1997. The second Five-Year Review was 

published in the CY 2002 PFS final rule 

with comment period (66 FR 55246) and 

was effective in 2002. The third FiveYear Review of physician work RVUs 

was published in the CY 2007 PFS final 

rule with comment period (71 FR 

69624) and was effective on January 1, 

2007. (Note: Additional codes relating to 

the third Five-Year Review of physician 

work RVUs were addressed in the CY 

2008 PFS final rule with comment 

period (72 FR 66360).) The fourth FiveYear Review of physician work RVUs 

was initiated in the CY 2010 PFS final 

rule with comment period where we 

solicited candidate codes from the 

public for this review (74 FR 61941). 

Changes due to the fourth Five-Year 

Review of physician work RVUs will be 

effective January 1, 2012. 

In 1999, the AMA’s RUC established 

the Practice Expense Advisory 

Committee (PEAC) for the purpose of 

refining the direct PE inputs. Through 

March 2004, the PEAC provided 

recommendations to CMS for over 7,600 

codes (all but a few hundred of the 

codes currently listed in the AMA’s 

Current Procedural Terminology (CPT) 

codes). As part of the CY 2007 PFS final 

rule with comment period (71 FR 

69624), we implemented a new bottomup methodology for determining 

resource-based PE RVUs and 

transitioned the new methodology over 

a 4-year period. A comprehensive 

review of PE was undertaken prior to 

the 4-year transition period for the new 

PE methodology from the top-down to 

the bottom-up methodology, and this 

transition was completed in CY 2010. In 


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CY 2010, we also incorporated the new 

PPIS data to update the specialtyspecific PE/HR data used to develop PE 

RVUs. Therefore, the next Five-Year 

Review of PE RVUs will be addressed in 

CY 2014. 

In the CY 2005 PFS final rule with 

comment period (69 FR 66236), we 

implemented the first Five-Year Review 

of the MP RVUs (69 FR 66263). Minor 

modifications to the methodology were 

addressed in the CY 2006 PFS final rule 

with comment period (70 FR 70153). 

The second Five-Year Review and 

update of resource-based malpractice 

RVUs was published in the CY 2010 

PFS final rule with comment period (74 

FR 61758) and was effective in CY 2010. 

5. Adjustments to RVUs Are Budget 

Neutral 

Section 1848(c)(2)(B)(ii)(II) of the Act 

provides that adjustments in RVUs for a 

year may not cause total PFS payments 

to differ by more than $20 million from 

what they would have been if the 

adjustments were not made. In 

accordance with section 

1848(c)(2)(B)(ii)(II) of the Act, if 

revisions to the RVUs cause 

expenditures to change by more than 

$20 million, we make adjustments to 

ensure that expenditures do not increase 

or decrease by more than $20 million. 

As explained in the CY 2009 PFS final 

rule with comment period (73FR 

69730), as required by section 133(b) of 

the Medicare Improvements for Patients 

and Providers Act of 2008 (MIPPA) 

(Pub. L. 110–275), the separate budget 

neutrality (BN) adjustor resulting from 

the third Five-Year Review of physician 

work RVUs is being applied to the CF 

beginning in CY 2009 rather than to the 

work RVUs. 

For CY 2010, we adopted a number of 

new payment policies for which we 

estimated the potential for a 

redistributive effect under the PFS, 

including the use of the new PPIS data 

to develop the specialty-specific PE/HR 

used for the PE RVUs (74 FR 61749 

through 61752) and the elimination of 

the reporting of all CPT consultation 

codes in order to allow for correct and 

consistent coding and appropriate 

payment for evaluation and 

management services under the PFS (74 

FR 61767 through 61775). We recognize 

that clinical experience with these new 

PFS policies has been growing over the 

first 6 months of CY 2010 and, as we 

seek to improve future PFS payment 

accuracy for services, we are interested 

in public comments on the perspectives 

of physicians and nonphysician 

practitioners caring for Medicare 

beneficiaries under the current PFS 

coding and payment methodologies for 

physicians’ services. 

B. Components of the Fee Schedule 

Payment Amounts 

To calculate the payment for every 

physicians’ service, the components of 

the fee schedule (physician work, PE, 

and MP RVUs) are adjusted by a 

geographic practice cost index (GPCI). 

The GPCIs reflect the relative costs of 

physician work, PE, and malpractice 

expense in an area compared to the 

national average costs for each 

component. 

RVUs are converted to dollar amounts 

through the application of a CF, which 

is calculated by CMS’ Office of the 

Actuary (OACT). 

The formula for calculating the 

Medicare fee schedule payment amount 

for a given service and fee schedule area 

can be expressed as: 

Payment = [(RVU work × GPCI work) + 

(RVU PE × GPCI PE) + (RVU 

malpractice × GPCI malpractice)] × 

CF 

C. Most Recent Changes to the Fee 

Schedule 

The CY 2010 PFS final rule with 

comment period (74 FR 61738) 

implemented changes to the PFS and 

other Medicare Part B payment policies. 

It also finalized some of the CY 2009 

interim RVUs and implemented interim 

RVUs for new and revised codes for CY 

2010 to ensure that our payment 

systems are updated to reflect changes 

in medical practice and the relative 

value of services. The CY 2010 PFS final 

rule with comment period also 

addressed other policies, as well as 

certain provisions of the MIPPA. 

As required by the statute at the time 

of its issuance on October 30, 2009, the 

CY 2010 PFS final rule with comment 

period announced the following for CY 

2010: The PFS update of ¥21.2 percent; 

the initial estimate for the sustainable 

growth rate of ¥8.8 percent; and the CF 

of $28.4061. 

On December 10, 2009, we published 

a correction notice (74 FR 65449) to 

correct several technical and 

typographical errors that occurred in the 

CY 2010 PFS final rule with comment 

period. This correction notice 

announced a revised CF for CY 2010 of 

$28.3895. 

On December 19, 2009, the 

Department of Defense Appropriations 

Act, 2010 (Pub. L. 111–118) was signed 

into law. Section 1011 of Pub. L. 111– 

118 provided a 2-month zero percent 

update to the CY 2010 PFS effective 

only for dates of service from January 1, 

2010 through February 28, 2010. 

On March 2, 2010, the Temporary 

Extension Act of 2010 (Pub. L. 111–144) 

was signed into law. Section 2 of Pub. 

L. 111–144 extended the zero percent 

update to the PFS through March 31, 

2010 that was in effect for claims with 

dates of service from January 1, 2010 

through February 28, 2010. 

In addition, on April 15, 2010, the 

Continuing Extension Act of 2010 (Pub. 

L. 111–157) was signed into law. 

Section 4 of Public Law 111–157 

extended through May 31, 2010 the zero 

percent update to the PFS that was in 

effect for claims with dates of services 

from January 1, 2010 through March 31, 

2010. The law is retroactive to April 1, 

2010. 

In the May 11, 2010 Federal Register 

(75 FR 26350), we published a 

subsequent correction notice to correct 

several technical and typographical 

errors that occurred in the CY 2010 PFS 

final rule with comment period and the 

December 10, 2009 correction notice. 

The May 11, 2010 correction notice 

announced a revised CF for CY 2010 of 

$28.3895. 

Finally, on March 23, 2010 the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148) was signed into law. 

Shortly thereafter, on March 30, 2010, 

the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152) was signed into law. These two 

laws are discussed in this proposed rule 

and are collectively referred to as the 

‘‘Affordable Care Act’’ (ACA) throughout 

this proposed rule. 

II. Provisions of the Proposed Rule for 

the Physician Fee Schedule 

A. Resource-Based Practice Expense 

(PE) Relative Value Units (RVUs) 

1. Overview 

Practice expense (PE) is the portion of 

the resources used in furnishing the 

service that reflects the general 

categories of physician and practitioner 

expenses, such as office rent and 

personnel wages but excluding 

malpractice expenses, as specified in 

section 1848(c)(1)(B) of the Act. Section 

121 of the Social Security Amendments 

of 1994 (Pub. L. 103–432), enacted on 

October 31, 1994, required CMS to 

develop a methodology for a resourcebased system for determining PE RVUs 

for each physician’s service. We develop 

PE RVUs by looking at the direct and 

indirect physician practice resources 

involved in furnishing each service. 

Direct expense categories include 

clinical labor, medical supplies and 

medical equipment. Indirect expenses 

include administrative labor, office 

expense, and all other expenses. The 

sections that follow provide more 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40048 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

detailed information about the 

methodology for translating the 

resources involved in furnishing each 

service into service-specific PE RVUs. In 

addition, we note that section 

1848(c)(2)(B)(ii)(II) of the Act provides 

that adjustments in RVUs for a year may 

not cause total PFS payments to differ 

by more than $20 million from what 

they would have been if the adjustments 

were not made. Therefore, if revisions to 

the RVUs cause expenditures to change 

by more than $20 million, we make 

adjustments to ensure that expenditures 

do not increase or decrease by more 

than $20 million. We refer readers to the 

CY 2010 PFS final rule with comment 

period (74 FR 61743 through 61748) for 

a more detailed history of the PE 

methodology. 

2. Practice Expense Methodology 

a. Direct Practice Expense 

We use a bottom-up approach to 

determine the direct PE by adding the 

costs of the resources (that is, the 

clinical staff, equipment, and supplies) 

typically required to provide each 

service. The costs of the resources are 

calculated using the refined direct PE 

inputs assigned to each CPT code in our 

PE database, which are based on our 

review of recommendations received 

from the American Medical 

Association’s (AMA’s) Relative Value 

Update Committee (RUC). For a detailed 

explanation of the bottom-up direct PE 

methodology, including examples, we 

refer readers to the Five-Year Review of 

Work Relative Value Units Under the 

PFS and Proposed Changes to the 

Practice Expense Methodology proposed 

notice (71 FR 37242) and the CY 2007 

PFS final rule with comment period (71 

FR 69629). 

b. Indirect Practice Expense per Hour 

Data 

We use survey data on indirect 

practice expenses incurred per hour 

worked (PE/HR) in developing the 

indirect portion of the PE RVUs. Prior 

to CY 2010, we primarily used the 

practice expense per hour (PE/HR) by 

specialty that was obtained from the 

AMA’s Socioeconomic Monitoring 

Surveys (SMS). These surveys were 

conducted from 1995 through 1999. For 

several specialties that collected 

additional PE/HR data through 

supplemental surveys, we incorporated 

these data in developing the PE/HR 

values used annually. 

While the SMS was not specifically 

designed for the purpose of establishing 

PE RVUs, we found these data to be the 

best available at the time. The SMS was 

a multispecialty survey effort conducted 

using a consistent survey instrument 

and method across specialties. The 

survey sample was randomly drawn 

from the AMA Physician Masterfile to 

ensure national representativeness. The 

AMA discontinued the SMS survey in 

1999. As required by the Balanced 

Budget Refinement Act of 1999 (BBRA) 

(Pub. L. 106–113), we also established a 

process by which specialty groups could 

submit supplemental PE data. In the 

May 3, 2000 Federal Register, we issued 

the Medicare Program; Criteria for 

Submitting Supplemental Practice 

Expense Survey Data interim final rule 

(65 FR 25664) in which we established 

criteria for acceptance of supplemental 

data. The criteria were modified in the 

CY 2001 and CY 2003 PFS final rules 

with comment period (65 FR 65380 and 

67 FR 79971, respectively). In addition 

to the SMS, we previously used 

supplemental survey data for the 

following specialties: Cardiology; 

dermatology; gastroenterology; 

radiology; cardiothoracic surgery; 

vascular surgery; physical and 

occupational therapy; independent 

laboratories; allergy/immunology; 

independent diagnostic testing facilities 

(IDTFs); radiation oncology; medical 

oncology; and urology. 

Because the SMS data and the 

supplemental survey data were from 

different time periods, we historically 

inflated them by the Medicare Economic 

Index (MEI) to put them on as 

comparable a time basis as we could 

when calculating the PE RVUs. This 

MEI proxy was necessary in the past 

due to the lack of contemporaneous, 

consistently collected, and 

comprehensive multispecialty survey 

data. 

The AMA administered a new survey 

in CY 2007 and CY 2008, the Physician 

Practice Expense Information Survey 

(PPIS), which was expanded (relative to 

the SMS) to include nonphysician 

practitioners (NPPs) paid under the PFS. 

The PPIS was designed to update the 

specialty-specific PE/HR data used to 

develop PE RVUs. The AMA and the 

CMS contractor, The Lewin Group 

(Lewin), analyzed the PPIS data and 

calculated the PE/HR for physician and 

nonphysician specialties, respectively. 

The AMA’s summary worksheets and 

Lewin’s final report are available on the 

CMS Web site at http://www.cms.gov/ 

PhysicianFeeSched/PFSFRN/ 

itemdetail.asp?filterType=none&

filterByDID=-99&

sortByDID=4&sortOrder=

descending&itemID=CMS1223902&

intNumPerPage=10. (See downloads 

labeled AMA PPIS Worksheets 1–3 and 

Physician Practice Expense non MDDO 

Final Report) 

The PPIS is a multispecialty, 

nationally representative, PE survey of 

both physicians and NPPs using a 

consistent survey instrument and 

methods highly consistent with those 

used for the SMS and the supplemental 

surveys. The PPIS gathered information 

from 3,656 respondents across 51 

physician specialty and healthcare 

professional groups. 

We believe the PPIS is the most 

comprehensive source of PE survey 

information available to date. Therefore, 

we used the PPIS data to update the PE/ 

HR data for almost all of the Medicarerecognized specialties that participated 

in the survey for the CY 2010 PFS. 

When we changed over to the PPIS data 

beginning in CY 2010, we did not 

change the PE RVU methodology itself 

or the manner in which the PE/HR data 

are used in that methodology. We only 

updated the PE/HR data based on the 

new survey. Furthermore, as we 

explained in the CY 2010 PFS final rule 

with comment period (74 FR 61751), 

because of the magnitude of payment 

reductions for some specialties resulting 

from the use of the PPIS data, we 

finalized a 4-year transition (75/25 for 

CY 2010, 50/50 for CY 2011, 25/75 for 

CY 2012, and 0/100 for CY 2013) from 

the previous PE RVUs to the PE RVUs 

developed using the new PPIS data. 

Section 303 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173) added section 

1848(c)(2)(H)(i) of the Act, which 

requires us to use the medical oncology 

supplemental survey data submitted in 

2003 for oncology drug administration 

services. Therefore, the PE/HR for 

medical oncology, hematology, and 

hematology/oncology reflects the 

continued use of these supplemental 

survey data. 

We do not use the PPIS data for 

reproductive endocrinology, sleep 

medicine, and spine surgery since these 

specialties are not separately recognized 

by Medicare, and we do not know how 

to blend these data with Medicarerecognized specialty data. 

Supplemental survey data on 

independent labs, from the College of 

American Pathologists, were 

implemented for payments in CY 2005. 

Supplemental survey data from the 

National Coalition of Quality Diagnostic 

Imaging Services (NCQDIS), 

representing IDTFs, were blended with 

supplementary survey data from the 

American College of Radiology (ACR) 

and implemented for payments in CY 

2007. Neither IDTFs nor independent 

labs participated in the PPIS. Therefore, 

we continue to use the PE/HR that was 


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developed from their supplemental 

survey data. 

Finally, consistent with our past 

practice, the previous indirect PE/HR 

values from the supplemental surveys 

for medical oncology, independent 

laboratories, and IDTFs were updated to 

CY 2006 using the MEI to put them on 

a comparable basis with the PPIS data. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61753), we 

miscalculated the indirect PE/HR for 

IDTFs as part of this update process. 

Therefore, for CY 2011, we are 

proposing to use a revised indirect PE/ 

HR of $479.81 for IDTFs, consistent 

with our final policy to update the 

indirect PE/HR values from prior 

supplemental survey data that we are 

continuing to use in order to put these 

data on a comparable basis with the 

PPIS data. This revision changes the 

IDTF indirect percentage from 51 

percent to 50 percent. 

Previously, CMS has established PE/ 

HR values for various specialties 

without SMS or supplemental survey 

data by crosswalking them to other 

similar specialties to estimate a proxy 

PE/HR. For specialties that were part of 

the PPIS for which we previously used 

a crosswalked PE/HR, we instead use 

the PPIS-based PE/HR. We continue 

previous crosswalks for specialties that 

did not participate in the PPIS. 

However, beginning in CY 2010 we 

changed the PE/HR crosswalk for 

portable x-ray suppliers from radiology 

to IDTF, a more appropriate crosswalk 

because these specialties are more 

similar to each other with respect to 

physician time. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61752), we 

agreed that, under the current PE 

methodology, the PPIS data for 

registered dieticians should not be used 

in the calculation of PE RVUs since 

these dieticians are paid 85 percent of 

what a physician would be paid for 

providing the service. To include their 

survey data in the PE calculation would 

influence the ratesetting by 

incorporating what the services would 

be paid if performed by registered 

dieticians and not strictly what the 

payment rates would be if provided by 

physicians. We further stated that we 

would utilize the ‘‘All Physicians’’ PE/ 

HR, as derived from the PPIS, in the 

calculation of resource-based PE RVUs 

in lieu of the PE/HR associated with 

registered dieticians. In the resourcebased PE methodology for CY 2010, 

while we removed the specialty of 

registered dieticians from the ratesetting 

step we did not assign the ‘‘All 

Physicians’’ PE/HR to services furnished 

by registered dieticians. Instead, we 

allowed the PE/HR for those services to 

be generated by a weighted average of 

all the physician specialties that also 

furnished the services. This method was 

consistent with our policy to not use the 

registered dietician PPIS PE/HR in 

calculating the PE RVUs for services 

furnished by registered dieticians but 

we did not actually crosswalk the 

specialty of registered dietician to the 

‘‘All Physicians’’ PE/HR data as we had 

intended according to the final policy. 

Nevertheless, we are affirming for CY 

2011 that the proposed resource-based 

PE RVUs have been calculated in 

accordance with the final policy 

adopted in the CY 2010 PFS final rule 

with comment period (74 FR 61752) for 

registered dietician services that 

crosswalks the specialty to the ‘‘All 

Physicians’’ PE/HR data. 

As provided in the CY 2010 PFS final 

rule with comment period (74 FR 

61751), CY 2011 is the second year of 

the 4-year transition to the PE RVUs 

calculated using the PPIS data. 

Therefore, in general, the CY 2011 PE 

RVUs are a 50/50 blend of the previous 

PE RVUs based on the SMS and 

supplemental survey data and the new 

PE RVUS developed using the PPIS data 

as described above. Note that the 

reductions in the PE RVUs for expensive 

diagnostic imaging equipment 

attributable to the change to an 

equipment utilization rate assumption 

of 75 percent (see 74 FR 61753 through 

61755 and section II.A.3. of this 

proposed rule) are not subject to the 

transition. 

c. Allocation of PE to Services 

To establish PE RVUs for specific 

services, it is necessary to establish the 

direct and indirect PE associated with 

each service. 

(i) Direct costs. The relative 

relationship between the direct cost 

portions of the PE RVUs for any two 

services is determined by the relative 

relationship between the sum of the 

direct cost resources (that is, the clinical 

staff, equipment, and supplies) typically 

required to provide the services. The 

costs of these resources are calculated 

from the refined direct PE inputs in our 

PE database. For example, if one service 

has a direct cost sum of $400 from our 

PE database and another service has a 

direct cost sum of $200, the direct 

portion of the PE RVUs of the first 

service would be twice as much as the 

direct portion of the PE RVUs for the 

second service. 

(ii) Indirect costs. Section II.A.2.b. of 

this proposed rule describes the current 

data sources for specialty-specific 

indirect costs used in our PE 

calculations. We allocate the indirect 

costs to the code level on the basis of 

the direct costs specifically associated 

with a code and the greater of either the 

clinical labor costs or the physician 

work RVUs. We also incorporate the 

survey data described earlier in the PE/ 

HR discussion. The general approach to 

developing the indirect portion of the 

PE RVUs is described below. 

• For a given service, we use the 

direct portion of the PE RVUs calculated 

as described above and the average 

percentage that direct costs represent of 

total costs (based on survey data) across 

the specialties that perform the service 

to determine an initial indirect 

allocator. For example, if the direct 

portion of the PE RVUs for a given 

service were 2.00 and direct costs, on 

average, represented 25 percent of total 

costs for the specialties that performed 

the service, the initial indirect allocator 

would be 6.00 since 2.00 is 25 percent 

of 8.00. 

• We then add the greater of the work 

RVUs or clinical labor portion of the 

direct portion of the PE RVUs to this 

initial indirect allocator. In our 

example, if this service had work RVUs 

of 4.00 and the clinical labor portion of 

the direct PE RVUs was 1.50, we would 

add 6.00 plus 4.00 (since the 4.00 work 

RVUs are greater than the 1.50 clinical 

labor portion) to get an indirect allocator 

of 10.00. In the absence of any further 

use of the survey data, the relative 

relationship between the indirect cost 

portions of the PE RVUs for any two 

services would be determined by the 

relative relationship between these 

indirect cost allocators. For example, if 

one service had an indirect cost 

allocator of 10.00 and another service 

had an indirect cost allocator of 5.00, 

the indirect portion of the PE RVUs of 

the first service would be twice as great 

as the indirect portion of the PE RVUs 

for the second service. 

• We next incorporate the specialtyspecific indirect PE/HR data into the 

calculation. As a relatively extreme 

example for the sake of simplicity, 

assume in our example above that, 

based on the survey data, the average 

indirect cost of the specialties 

performing the first service with an 

allocator of 10.00 was half of the average 

indirect cost of the specialties 

performing the second service with an 

indirect allocator of 5.00. In this case, 

the indirect portion of the PE RVUs of 

the first service would be equal to that 

of the second service. 

d. Facility and Nonfacility Costs 

For procedures that can be furnished 

in a physician’s office, as well as in a 

hospital or facility setting, we establish 

two PE RVUs: facility and nonfacility. 


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The methodology for calculating PE 

RVUs is the same for both the facility 

and nonfacility RVUs, but is applied 

independently to yield two separate PE 

RVUs. Because Medicare makes a 

separate payment to the facility for its 

costs of furnishing a service, the facility 

PE RVUs are generally lower than the 

nonfacility PE RVUs. 

e. Services With Technical Components 

(TCs) and Professional Components 

(PCs) 

Diagnostic services are generally 

comprised of two components: a 

professional component (PC) and a 

technical component (TC), each of 

which may be performed independently 

or by different providers, or they may be 

performed together as a ‘‘global’’ service. 

When services have PC and TC 

components that can be billed 

separately, the payment for the global 

component equals the sum of the 

payment for the TC and PC. This is a 

result of using a weighted average of the 

ratio of indirect to direct costs across all 

the specialties that furnish the global 

components, TCs, and PCs; that is, we 

apply the same weighted average 

indirect percentage factor to allocate 

indirect expenses to the global 

components, PCs, and TCs for a service. 

(The direct PE RVUs for the TC and PC 

sum to the global under the bottom-up 

methodology.) 

f. Alternative Data Sources and Public 

Comments on Final Rule for 2010. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61749 through 

61750), we discussed the Medicare 

Payment Advisory Commission’s 

(MedPAC’s) comment that in the future, 

‘‘CMS should consider alternatives to 

collecting specialty-specific cost data or 

options to decrease the reliance on such 

data.’’ We agreed with MedPAC that it 

would be appropriate to consider the 

future of the PE RVUs moving forward. 

We sought comments from other 

stakeholders on the issues raised by 

MedPAC for the future. In particular, we 

requested public comments regarding 

MedPAC’s suggestion that we consider 

alternatives for collecting specialtyspecific cost data or options to decrease 

the reliance on such data. We noted 

MedPAC’s comment that, ‘‘CMS should 

consider if Medicare or provider groups 

should sponsor future data collection 

efforts, if participation should be 

voluntary (such as surveys) or 

mandatory (such as cost reports), and 

whether a nationally representative 

sample of practitioners would be 

sufficient for either a survey or cost 

reports.’’ MedPAC also stated that one 

option for decreasing the reliance on 

specialty-specific cost data would be the 

elimination of the use of indirect PE/HR 

data in the last step of establishing the 

indirect cost portion of the PE RVUs as 

described previously. 

Almost all of the commenters on the 

CY 2010 PFS final rule with comment 

period that addressed this issue 

expressed a general willingness to work 

with CMS on methodological 

improvements or future data collection 

efforts. Although no commenters 

detailed a comprehensive overall 

alternative methodology, several 

commenters did provide suggestions 

regarding future data collection efforts 

and specific aspects of the current 

methodology. 

The commenters that addressed the 

issue of surveys supported the use of 

surveys if they yielded accurate PE 

information. The few commenters that 

addressed the issue of cost reports were 

opposed to physician cost reports. The 

commenters varied with respect to their 

opinions regarding whether data 

collection efforts should be led by 

organized medicine, individual 

specialty societies, or CMS. Several 

commenters that addressed the issue of 

voluntary versus mandatory data 

collection efforts supported voluntary 

data collection efforts and opposed 

mandatory data collection efforts. 

Some commenters recommended no 

changes to the methodology or PE data 

in the near future. Other commenters 

indicated that the methodology and data 

changes needed to be made for CY 2011. 

Although most commenters did not 

directly address the use of the indirect 

PE/HR data, those that did 

predominately opposed the elimination 

of the use of these data. 

Many commenters addressed specifics 

of the PE methodology (as further 

described in section II.A.2.c. of this 

proposed rule). Some were opposed to 

the scaling factor applied in the 

development of the direct PE portion of 

the PE RVUs so that in the aggregate the 

direct portion of the PE RVUs do not 

exceed the proportion indicated by the 

survey data (See Step 4 in g.(ii) below). 

Several of these commenters advocated 

the elimination of this direct scaling 

factor, while others indicated that the 

issue should be examined more closely. 

A few commenters recommended that 

physician work not be used as an 

allocator in the development of the 

indirect portion of the PE RVUs as 

described earlier in this section. A few 

indicated that physician time, but not 

physician work, should be used in the 

allocation. Other commenters suggested 

that indirect costs should be allocated 

solely on the basis of direct costs. 

We note that many of the issues raised 

by commenters on the CY 2010 PFS 

final rule with comment period are 

similar to issues raised in the 

development of the original resourcebased PE methodology and in 

subsequent revisions to the 

methodology, including the adoption of 

the bottom-up methodology. While we 

are not proposing a broad 

methodological change or broad data 

collection effort in this CY 2011 PFS 

proposed rule, we invite comments on 

our summary of the issues raised by the 

commenters on the CY 2010 PFS final 

rule with comment period, as presented 

above. The complete public comments 

on that final rule are available for public 

review at http://www.regulations.gov by 

entering ‘‘CMS–1413–FC’’ in the search 

box on the main page. 

g. PE RVU Methodology 

For a more detailed description of the 

PE RVU methodology, we refer readers 

to the CY 2010 PFS final rule with 

comment period (74 FR 61745 through 

61746). 

(i) Setup File 

First, we create a setup file for the PE 

methodology. The setup file contains 

the direct cost inputs, the utilization for 

each procedure code at the specialty 

and facility/nonfacility place of service 

level, and the specialty-specific PE/HR 

data from the surveys. 

(ii) Calculate the Direct Cost PE RVUs 

Sum the costs of each direct input. 

Step 1: Sum the direct costs of the 

inputs for each service. Apply a scaling 

adjustment to the direct inputs. 

Step 2: Calculate the current aggregate 

pool of direct PE costs. This is the 

product of the current aggregate PE 

(aggregate direct and indirect) RVUs, the 

CF, and the average direct PE percentage 

from the survey data. 

Step 3: Calculate the aggregate pool of 

direct costs. This is the sum of the 

product of the direct costs for each 

service from Step 1 and the utilization 

data for that service. 

Step 4: Using the results of Step 2 and 

Step 3 calculate a direct PE scaling 

adjustment so that the aggregate direct 

cost pool does not exceed the current 

aggregate direct cost pool and apply it 

to the direct costs from Step 1 for each 

service. 

Step 5: Convert the results of Step 4 

to an RVU scale for each service. To do 

this, divide the results of Step 4 by the 

CF. Note that the actual value of the CF 

used in this calculation does not 

influence the final direct cost PE RVUs, 

as long as the same CF is used in Step 

2 and Step 5. Different CFs will result 


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in different direct PE scaling factors, but 

this has no effect on the final direct cost 

PE RVUs since changes in the CFs and 

changes in the associated direct scaling 

factors offset one another. 

(iii) Create the Indirect Cost PE RVUs 

Create indirect allocators. 

Step 6: Based on the survey data, 

calculate direct and indirect PE 

percentages for each physician 

specialty. 

Step 7: Calculate direct and indirect 

PE percentages at the service level by 

taking a weighted average of the results 

of Step 6 for the specialties that furnish 

the service. Note that for services with 

TCs and PCs, the direct and indirect 

percentages for a given service do not 

vary by the PC, TC, and global 

components. 

Step 8: Calculate the service level 

allocators for the indirect PEs based on 

the percentages calculated in Step 7. 

The indirect PEs are allocated based on 

the three components: the direct PE 

RVUs, the clinical PE RVUs, and the 

work RVUs. 

For most services the indirect 

allocator is: 

indirect percentage * (direct PE RVUs/ 

direct percentage) + work RVUs. 

There are two situations where this 

formula is modified: 

• If the service is a global service (that 

is, a service with global, professional, 

and technical components), then the 

indirect allocator is: indirect percentage 

* (direct PE RVUs/direct percentage) + 

clinical PE RVUs + work RVUs. 

• If the clinical labor PE RVUs exceed 

the work RVUs (and the service is not 

a global service), then the indirect 

allocator is: indirect percentage * (direct 

PE RVUs/direct percentage) + clinical 

PE RVUs. 

(Note: For global services, the indirect 

allocator is based on both the work 

RVUs and the clinical labor PE RVUs. 

We do this to recognize that, for the PC 

service, indirect PEs will be allocated 

using the work RVUs, and for the TC 

service, indirect PEs will be allocated 

using the direct PE RVUs and the 

clinical labor PE RVUs. This also allows 

the global component RVUs to equal the 

sum of the PC and TC RVUs.) 

For presentation purposes in the 

examples in the Table 2, the formulas 

were divided into two parts for each 

service. The first part does not vary by 

service and is the: indirect percentage * 

(direct PE RVUs/direct percentage). The 

second part is either the work RVUs, 

clinical PE RVUs, or both depending on 

whether the service is a global service 

and whether the clinical PE RVUs 

exceed the work RVUs (as described 

earlier in this step). 

Apply a scaling adjustment to the 

indirect allocators. 

Step 9: Calculate the current aggregate 

pool of indirect PE RVUs by multiplying 

the current aggregate pool of PE RVUs 

by the average indirect PE percentage 

from the survey data. 

Step 10: Calculate an aggregate pool of 

indirect PE RVUs for all PFS services by 

adding the product of the indirect PE 

allocators for a service from Step 8 and 

the utilization data for that service. 

Step 11: Using the results of Step 9 

and Step 10, calculate an indirect PE 

adjustment so that the aggregate indirect 

allocation does not exceed the available 

aggregate indirect PE RVUs and apply it 

to indirect allocators calculated in Step 

8. 

Calculate the indirect practice cost 

index. 

Step 12: Using the results of Step 11, 

calculate aggregate pools of specialtyspecific adjusted indirect PE allocators 

for all PFS services for a specialty by 

adding the product of the adjusted 

indirect PE allocator for each service 

and the utilization data for that service. 

Step 13: Using the specialty-specific 

indirect PE/HR data, calculate specialtyspecific aggregate pools of indirect PE 

for all PFS services for that specialty by 

adding the product of the indirect PE/ 

HR for the specialty, the physician time 

for the service, and the specialty’s 

utilization for the service across all 

services performed by the specialty. 

Step 14: Using the results of Step 12 

and Step 13, calculate the specialtyspecific indirect PE scaling factors. 

Step 15: Using the results of Step 14, 

calculate an indirect practice cost index 

at the specialty level by dividing each 

specialty-specific indirect scaling factor 

by the average indirect scaling factor for 

the entire PFS. 

Step 16: Calculate the indirect 

practice cost index at the service level 

to ensure the capture of all indirect 

costs. Calculate a weighted average of 

the practice cost index values for the 

specialties that furnish the service. 

(Note: For services with TCs and PCs, 

we calculate the indirect practice cost 

index across the global components, 

PCs, and TCs. Under this method, the 

indirect practice cost index for a given 

service (for example, echocardiogram) 

does not vary by the PC, TC, and global 

component.) 

Step 17: Apply the service level 

indirect practice cost index calculated 

in Step 16 to the service level adjusted 

indirect allocators calculated in Step 11 

to get the indirect PE RVUs. 

(iv) Calculate the Final PE RVUs 

Step 18: Add the direct PE RVUs from 

Step 6 to the indirect PE RVUs from 

Step 17 and apply the final PE budget 

neutrality (BN) adjustment, MEI 

rebasing adjustment, and multiple 

procedure payment reduction (MPPR) 

adjustment. 

The final PE BN adjustment is 

calculated by comparing the results of 

Step 18 (prior to the MEI rebasing and 

MPPR adjustments) to the current pool 

of PE RVUs. This final BN adjustment 

is required primarily because certain 

specialties are excluded from the PE 

RVU calculation for ratesetting 

purposes, but all specialties are 

included for purposes of calculating the 

final BN adjustment. (See ‘‘Specialties 

excluded from ratesetting calculation’’ 

below in this section.) 

As discussed in section II.E.1. of this 

proposed rule, we are proposing to 

rebase and revise the Medicare 

Economic Index (MEI) for CY 2011. As 

discussed in section II.C.4. of this 

proposed rule, section 1848(c)(2)(K) of 

the Act (as added by section 3134 of the 

ACA) specifies that the Secretary shall 

identify potentially misvalued codes by 

examining multiple codes that are 

frequently billed in conjunction with 

furnishing a single service. There is 

inherent duplication in the PE 

associated with those services which are 

frequently furnished together, so 

reducing PFS payment for the second 

and subsequent services to account for 

the efficiencies in multiple service 

sessions may be appropriate. Consistent 

with this provision of the ACA, we are 

proposing a limited expansion of the 

current MPPR policy for imaging 

services for CY 2011 and a new MPPR 

policy for therapy services. 

(v) Setup File Information 

• Specialties excluded from 

ratesetting calculation: For the purposes 

of calculating the PE RVUs, we exclude 

certain specialties, such as certain 

nonphysician practitioners paid at a 

percentage of the PFS and low volume 

specialties, from the calculation. These 

specialties are included for the purposes 

of calculating the BN adjustment. They 

are displayed in Table 1. 


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40052 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 1—SPECIALTIES EXCLUDED FROM RATESETTING CALCULATION

Specialty code Specialty description 

42 ............................................................................... Certified nurse midwife. 

49 ............................................................................... Ambulatory surgical center. 

50 ............................................................................... Nurse practitioner. 

51 ............................................................................... Medical supply company with certified orthotist. 

52 ............................................................................... Medical supply company with certified prosthetist. 

53 ............................................................................... Medical supply company with certified prosthetist-orthotist. 

54 ............................................................................... Medical supply company not included in 51, 52, or 53. 

55 ............................................................................... Individual certified orthotist. 

56 ............................................................................... Individual certified prosthetist. 

57 ............................................................................... Individual certified prosthetist-orthotist. 

58 ............................................................................... Individuals not included in 55, 56, or 57. 

59 ............................................................................... Ambulance service supplier, e.g., private ambulance companies, funeral homes, etc. 

60 ............................................................................... Public health or welfare agencies. 

61 ............................................................................... Voluntary health or charitable agencies. 

73 ............................................................................... Mass immunization roster biller. 

74 ............................................................................... Radiation therapy centers. 

87 ............................................................................... All other suppliers (e.g., drug and department stores). 

88 ............................................................................... Unknown supplier/provider specialty. 

89 ............................................................................... Certified clinical nurse specialist. 

95 ............................................................................... Competitive Acquisition Program (CAP) Vendor. 

96 ............................................................................... Optician. 

A0 ............................................................................... Hospital. 

A1 ............................................................................... SNF. 

A2 ............................................................................... Intermediate care nursing facility. 

A3 ............................................................................... Nursing facility, other. 

A4 ............................................................................... HHA. 

A5 ............................................................................... Pharmacy. 

A6 ............................................................................... Medical supply company with respiratory therapist. 

A7 ............................................................................... Department store. 

1 ................................................................................. Supplier of oxygen and/or oxygen related equipment. 

2 ................................................................................. Pedorthic personnel. 

3 ................................................................................. Medical supply company with pedorthic personnel. 

• Crosswalk certain low volume 

physician specialties: Crosswalk the 

utilization of certain specialties with 

relatively low PFS utilization to the 

associated specialties. 

• Physical therapy utilization: 

Crosswalk the utilization associated 

with all physical therapy services to the 

specialty of physical therapy. 

• Identify professional and technical 

services not identified under the usual 

TC and 26 modifiers: Flag the services 

that are PC and TC services, but do not 

use TC and 26 modifiers (for example, 

electrocardiograms). This flag associates 

the PC and TC with the associated 

global code for use in creating the 

indirect PE RVUs. For example, the 

professional service, CPT code 93010 

(Electrocardiogram, routine ECG with at 

least 12 leads; interpretation and report 

only), is associated with the global 

service, CPT code 93000 

(Electrocardiogram, routine ECG with at 

least 12 leads; with interpretation and 

report). 

• Payment modifiers: Payment 

modifiers are accounted for in the 

creation of the file. For example, 

services billed with the assistant at 

surgery modifier are paid 16 percent of 

the PFS amount for that service; 

therefore, the utilization file is modified 

to only account for 16 percent of any 

service that contains the assistant at 

surgery modifier. 

• Work RVUs: The setup file contains 

the work RVUs from this proposed rule. 

(vi) Equipment Cost per Minute 

The equipment cost per minute is 

calculated as: 

(1/(minutes per year * usage)) * price * 

((interest rate/(1 ¥ (1/((1 + interest 

rate) * life of equipment)))) + 

maintenance) 

Where: 

minutes per year = maximum minutes per 

year if usage were continuous (that is, 

usage = 1); generally 150,000 minutes. 

usage = equipment utilization assumption; 

0.75 for certain expensive diagnostic 

imaging equipment (see 74 FR 61753 

through 61755 and section II.A.3. of this 

proposed rule) and 0.5 for others. 

price = price of the particular piece of 

equipment. 

interest rate = 0.11. 

life of equipment = useful life of the 

particular piece of equipment. 

maintenance = factor for maintenance; 0.05. 

Note: The use of any particular conversion 

factor (CF) in Table 2 to illustrate the PE 

calculation has no effect on the resulting 

RVUs. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40053 

TABLE 2—CALCULATION OF PE RVU

S

UNDER

METHODOLOGY FOR

SELECTED

CODES

Step Source Formula 

99213 

Office visit, est 

nonfacility 

33533 

CABG, arterial, 

single facility 

71020 

Chest x-ray 

nonfacility 

71020–TC 

Chest x-ray 

nonfacility 

71020–26 

Chest x-ray 

nonfacility 

93000 

ECG, complete 

nonfacility 

93005 

ECG, tracing 

nonfacility 

93010 

ECG, report 

nonfacility 

(1) Labor cost (Lab) ..... Step 1 ............ AMA ............................. ...................................... 13.32 77.52 5.74 5.74 0.00 6.12 6.12 0.00 (2) Suppy cost (Sup) .... Step 1 ............ AMA ............................. ...................................... 2.98 7.34 3.39 3.39 0.00 1.19 1.19 0.00 (3) Equipment cost 

(Eqp).

Step 1 ............ AMA ............................. ...................................... 0.19 0.65 8.17 8.17 0.00 0.12 0.12 0.00

(4) Direct cost (Dir) ...... Step 1 ............ ...................................... =(1)+(2)+(3) ................. 16.50 85.51 17.31 17.31 0.00 7.43 7.43 0.00 (5) Direct adjustment 

(Dir Adj).

Steps 2–4 ...... See footnote* ............... ...................................... 0.484 0.484 0.484 0.484 0.484 0.484 0.484 0.484 

(6) Adjusted labor ......... Steps 2–4 ...... =Lab * Dir Adj .............. =(1) * (5) ...................... 6.45 37.52 2.78 2.78 0.00 2.96 2.96 0.00 (7) Adjusted supplies ... Steps 2–4 ...... =Sup * Dir Adj ............. =(2) * (5) ...................... 1.44 3.55 1.64 1.64 0.00 0.58 0.58 0.00 (8) Adjusted equipment Steps 2–4 ...... =Eqp * Dir Adj ............. =(3) * (5) ...................... 0.09 0.32 3.96 3.96 0.00 0.06 0.06 0.00 (9) Adjusted direct ........ Steps 2–4 ...... ...................................... =(6)+(7)+(8) ................. 7.99 41.39 8.38 8.38 0.00 3.60 3.60 0.00 (10) Conversion Factor 

(CF).

Step 5 ............ PFS .............................. ...................................... 36.0791 36.0791 36.0791 36.0791 36.0791 36.0791 36.0791 36.0791 

(11) Adj. labor cost converted. Step 5 ............ =(Lab * Dir Adj)/CF ...... =(6)/(10) ....................... 0.18 1.04 0.08 0.08 0.00 0.08 0.08 0.00 (12) Adj. supply cost 

converted.

Step 5 ............ =(Sup * Dir Adj)/CF ..... =(7)/(10) ....................... 0.04 0.10 0.05 0.05 0.00 0.02 0.02 0.00 

(13) Adj. equip cost 

converted.

Step 5 ............ =(Eqp * Dir Adj)/CF ..... =(8)/(10) ....................... 0.00 0.01 0.11 0.11 0.00 0.00 0.00 0.00 

(14) Adj. direct cost 

converted.

Step 5 ............ ...................................... =(11)+(12)+(13) ........... 0.22 1.15 0.23 0.23 0.00 0.10 0.10 0.00 

(15) Wrk RVU ............... Setup File ...... PFS .............................. ...................................... 0.97 33.75 0.22 0.00 0.22 0.17 0.00 0.17 (16) Dir_pct ................... Steps 6, 7 ...... Surveys ........................ ...................................... 25.5% 18.0% 28.9% 28.9% 28.9% 29.0% 29.0% 29.0% (17) Ind_pct .................. Steps 6, 7 ...... Surveys ........................ ...................................... 74.5% 82.0% 71.2% 71.2% 71.2% 71.1% 71.1% 71.1% (18) Ind. Alloc. formula 

(1st part).

Step 8 ............ See Step 8 ................... ...................................... ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) ((14)/(16)) * (17) 

(19) Ind. Alloc. (1st 

part).

Step 8 ............ ...................................... See (18) ....................... 0.65 5.23 0.57 0.57 0.00 0.24 0.24 0.00 

(20) Ind. Alloc. formulas 

(2nd part).

Step 8 ............ See Step 8 ................... ...................................... (15) (15) (15)+(11) (11) (15) (15)+(11) (11) (15) 

(21) Ind. Alloc. (2nd 

part).

Step 8 ............ ...................................... See (20) ....................... 0.97 33.75 0.30 0.08 0.22 0.25 0.08 0.17

(22) Indirect Allocator 

(1st+2nd).

Step 8 ............ ...................................... =(19)+(21) .................... 1.62 38.98 0.87 0.65 0.22 0.50 0.33 0.17 

(23) Indirect Adjustment 

(Ind Adj).

Steps 9–11 .... See footnote** ............. ...................................... 0.369 0.369 0.369 0.369 0.369 0.369 0.369 0.369 

(24) Adjusted Indirect 

Allocator.

Steps 9–11 .... =Ind Alloc * Ind Adj ..... ...................................... 0.60 14.37 0.32 0.24 0.08 0.18 0.12 0.06 

(25) Ind.Practice Cost 

Index (PCI).

Steps 12–16 .. See Steps 12–16 ......... ...................................... 1.104 0.831 0.852 0.852 0.852 0.926 0.926 0.926 

(26) Adjusted Indirect ... Step 17 .......... = Adj. Ind Alloc * PCI .. =(24) * (25) .................. 0.66 11.95 0.27 0.20 0.07 0.17 0.11 0.06 (27) MEI Rebasing Adjustment. Step 18 .......... PFS .............................. ...................................... 1.168 1.168 1.168 1.168 1.168 1.168 1.168 1.168 (28) MPPR Adjustment Step 18 .......... PFS .............................. ...................................... 1.011 1.011 1.011 1.011 1.011 1.011 1.011 1.011 (29) PE RVU ................ Step 18 .......... =(Adj Dir+Adj Ind) * 

budn * MEI Adj * MPPR Adj.

=((14)+(26)) * budn * 

(27) * (28).

1.03 15.36 0.59 0.51 0.08 0.32 0.25 0.07 

Note: PE RVUs in Table 2, row 27, may not match Addendum B due to rounding. * The direct adj = [current pe rvus * CF * avg dir pct]/[sum direct inputs] = [Step 2]/[Step 3]. ** The indirect adj = [current pe rvus * avg ind pct]/[sum of ind allocators] = [Step 9]/[Step 10]. 


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40054 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

3. Proposed PE Revisions for CY 2011 

a. Equipment Utilization Rate 

As part of the PE methodology 

associated with the allocation of 

equipment costs for calculating PE 

RVUs, we currently use an equipment 

utilization rate assumption of 50 percent 

for most equipment, with the exception 

of expensive diagnostic imaging 

equipment (which is equipment priced 

at over $1 million, for example, 

computed tomography (CT) and 

magnetic resonance imaging (MRI) 

scanners), for which we adopted a 90 

percent utilization rate assumption and 

provided for a 4-year transition 

beginning in CY 2010 (74 FR 61755). 

Therefore, CY 2010 is the first 

transitional payment year. Payment is 

made in CY 2010 for the diagnostic 

services listed in Table 3 (those that 

include expensive diagnostic imaging 

equipment in their PE inputs) based on 

25 percent of the new PE RVUs and 75 

percent of the prior PE RVUs for those 

services. 

Section 1848(b)(4)(C) of the Act (as 

added by section 3135(a) of the ACA) 

requires that with respect to fee 

schedules established for CY 2011 and 

subsequent years, in the methodology 

for determining PE RVUs for expensive 

diagnostic imaging equipment under the 

CY 2010 PFS final rule with comment 

period, the Secretary shall use a 75 

percent assumption instead of the 

utilization rates otherwise established in 

that rule. The provision also requires 

that the reduced expenditures 

attributable to this change in the 

utilization rate for CY 2011 and 

subsequent years shall not be taken into 

account when applying the budget 

neutrality limitation on annual 

adjustments described in section 

1848(c)(2)(B)(ii)(II) of the Act. 

As a result, the 75 percent equipment 

utilization rate assumption will be 

applied to expensive diagnostic imaging 

equipment in a nonbudget neutral 

manner for CY 2011, and the changes to 

PE RVUs will not be transitioned over 

a period of years. We will apply the 75 

percent utilization rate assumption in 

CY 2011 to all of the services to which 

we currently apply the transitional 90 

percent utilization rate assumption in 

CY 2010. These services are listed in a 

file on the CMS Web site that is posted 

under downloads for the CY 2010 PFS 

final rule with comment period at: 

(http://www.cms.gov/

physicianfeesched/downloads/CODES_

SUBJECT_TO_90PCT_

USAGE_RATE.zip). These codes are also 

displayed in Table 3. 

TABLE 3—CURRENT CPT CODES SUBJECT TO FIRST YEAR (CY 2010) OF

4-YEAR TRANSITION TO 90 PERCENT

EQUIPMENT UTILIZATION RATE ASSUMPTION AND THAT WILL BE SUBJECT TO THE 75 PERCENT EQUIPMENT UTILIZATION RATE ASSUMPTION IN CY 2011 

CPT code Short descriptor 

70336 ...... Mri, temporomandibular joint(s). 

70450 ...... Ct head/brain w/o dye. 

70460 ...... Ct head/brain w/dye. 

70470 ...... Ct head/brain w/o & w/dye. 

70480 ...... Ct orbit/ear/fossa w/o dye. 

70481 ...... Ct orbit/ear/fossa w/dye. 

70482 ...... Ct orbit/ear/fossa w/o & w/dye. 

70486 ...... Ct maxillofacial w/o dye. 

70487 ...... Ct maxillofacial w/dye. 

70488 ...... Ct maxillofacial w/o & w/dye. 

70490 ...... Ct soft tissue neck w/o dye. 

70491 ...... Ct soft tissue neck w/dye. 

70492 ...... Ct soft tissue neck w/o & w/dye. 

70540 ...... Mri orbit/face/neck w/o dye. 

70542 ...... Mri orbit/face/neck w/dye. 

70543 ...... Mri orbit/face/neck w/o & w/dye. 

70551 ...... Mri brain w/o dye. 

70552 ...... Mri brain w/dye. 

70553 ...... Mri brain w/o & w/dye. 

70554 ...... Fmri brain by tech. 

71250 ...... Ct thorax w/o dye. 

71260 ...... Ct thorax w/dye. 

71270 ...... Ct thorax w/o & w/dye. 

71550 ...... Mri chest w/o dye. 

71551 ...... Mri chest w/dye. 

71552 ...... Mri chest w/o & w/dye. 

72125 ...... CT neck spine w/o dye. 

72126 ...... Ct neck spine w/dye. 

72127 ...... Ct neck spine w/o & w/dye. 

72128 ...... Ct chest spine w/o dye. 

72129 ...... Ct chest spine w/dye. 

72130 ...... Ct chest spine w/o & w/dye. 

72131 ...... Ct lumbar spine w/o dye. 

72132 ...... Ct lumbar spine w/dye. 

72133 ...... Ct lumbar spine w/o & w/dye. 

72141 ...... Mri neck spine w/o dye. 

72142 ...... Mri neck spine w/dye. 

72146 ...... Mri chest spine w/o dye. 

72147 ...... Mri chest spine w/dye. 

72148 ...... Mri lumbar spine w/o dye. 

72149 ...... Mri lumbar spine w/dye. 

72156 ...... Mri neck spine w/o & w/dye. 

72157 ...... Mri chest spine w/o & w/dye. 

72158 ...... Mri lumbar spine w/o & w/dye. 

72192 ...... Ct pelvis w/o dye. 

72193 ...... Ct pelvis w/dye. 

72194 ...... Ct pelvis w/o & w/dye. 

72195 ...... Mri pelvis w/o dye. 

72196 ...... Mri pelvis w/dye. 

72197 ...... Mri pelvis w/o & w/dye. 

73200 ...... Ct upper extremity w/o dye. 

73201 ...... Ct upper extremity w/dye. 

73202 ...... Ct upper extremity w/o & w/dye. 

73218 ...... Mri upper extr w/o dye. 

73219 ...... Mri upper extr w/dye. 

73220 ...... Mri upper extremity w/o & w/dye. 

73221 ...... Mri joint upper extr w/o dye. 

73222 ...... Mri joint upper extr w/dye. 

73223 ...... Mri joint upper extr w/o & w/dye. 

73700 ...... Ct lower extremity w/o dye. 

73701 ...... Ct lower extremity w/dye. 

73702 ...... Ct lower extremity w/o & w/dye. 

73718 ...... Mri lower extremity w/o dye. 

TABLE 3—CURRENT CPT CODES SUBJECT TO FIRST YEAR (CY 2010) OF

4-YEAR TRANSITION TO 90 PERCENT

EQUIPMENT UTILIZATION RATE ASSUMPTION AND THAT WILL BE SUBJECT TO THE 75 PERCENT EQUIPMENT UTILIZATION RATE ASSUMPTION IN CY 2011—Continued 

CPT code Short descriptor 

73719 ...... Mri lower extremity w/dye. 

73720 ...... Mri lower ext w/dye & w/o dye. 

73721 ...... Mri joint of lwr extr w/o dye. 

73722 ...... Mri joint of lwr extr w/dye. 

73723 ...... Mri joint of lwr extr w/o & w/dye. 

74150 ...... Ct abdomen w/o dye. 

74160 ...... Ct abdomen w/dye. 

74170 ...... Ct abdomen w/o & w/dye. 

74181 ...... Mri abdomen w/o dye. 

74182 ...... Mri abdomen w/dye. 

74183 ...... Mri abdomen w/o and w/dye. 

74261 ...... Ct colonography, w/o dye. 

74262 ...... Ct colonography, w/dye. 

75557 ...... Cardiac mri for morph. 

75559 ...... Cardiac mri w/stress img. 

75561 ...... Cardiac mri for morph w/dye. 

75563 ...... Cardiac mri w/stress img & dye. 

75571 ...... Ct hrt w/o dye w/ca test. 

75572 ...... Ct hrt w/3d image. 

75573 ...... Ct hrt w/3d image, congen. 

77058 ...... Mri, one breast. 

77059 ...... Mri, both breasts. 

77078 ...... Ct bone density, axial. 

77084 ...... Magnetic image, bone marrow. 

Additionally, for CY 2011, we are 

proposing to expand the list of services 

to which the higher equipment 

utilization rate assumption applies to all 

other diagnostic imaging services that 

utilize similar expensive CT and MRI 

scanners. The additional 24 CPT codes 

(listed in Table 4) to which we are 

proposing to apply the 75 percent 

equipment utilization rate assumption 

also have expensive diagnostic imaging 

equipment (priced at over $1 million) 

included in their PE inputs. These 

services are predominantly diagnostic 

computed tomographic angiography 

(CTA) and magnetic resonance 

angiography (MRA) procedures that 

include similar expensive CT and MRI 

scanners in their direct PE inputs. We 

indicated in the CY 2010 PFS final rule 

with comment period (74 FR 61754) that 

we were persuaded by PPIS data on 

angiography that the extrapolation of 

MRI and CT data (and their higher 

equipment utilization rate) may be 

inappropriate. However, this reference 

was limited to those procedures that 

include an angiography room in the 

direct PE inputs, such as CPT code 

93510 (Left heart catheterization, 

retrograde, from the brachial artery, 

axillary artery or femoral artery; 

percutaneous). In contrast, CTA and 

MRA procedures include a CT room or 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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MRI room, respectively, in the direct PE 

inputs, and the PPIS data confirm that 

a higher assumed utilization rate than 

50 percent would be appropriate. The 

PPIS angiography room data that 

reflected a 56 percent equipment 

utilization rate would not specifically 

apply to CTA and MRA procedures. 

Thus, on further review, we believe it is 

appropriate to include CTA and MRA 

procedures in the list of procedures for 

which we assume a 75 percent 

equipment utilization rate, and we are 

proposing to do so beginning in CY 

2011. 

Consistent with section 

1848(c)(2)(B)(v)(III) of the Act (as 

amended by section 3135 of the ACA), 

the reduced expenditures attributable to 

this change in the utilization rate 

assumption applicable to CY 2011 shall 

not be taken into account when 

applying the budget neutrality 

limitation on annual adjustments 

described in section 1848(c)(2)(B)(ii)(III) 

of the Act. 

As provided in the CY 2010 PFS final 

rule with comment period (74 FR 

61751), CY 2011 is the second year of 

the 4-year transition to the PE RVUs 

calculated using the PPIS data. The 

reductions in the PE RVUs for expensive 

diagnostic imaging equipment 

attributable to the change to an 

equipment utilization rate assumption 

of 75 percent for CY 2011 are not subject 

to the transition. 

TABLE 4—PROPOSED CPT CODE ADDITIONS TO THE 75 PERCENT EQUIPMENT UTILIZATION RATE ASSUMPTION CY 2011 

CPT code Short descriptor 

70496 ...... Ct angiography, head. 

70498 ...... Ct angiography, neck. 

70544 ...... Mr angiography head w/o dye. 

70545 ...... Mr angiography head w/dye. 

70546 ...... Mr angiography head w/o & w/ 

dye. 

TABLE 4—PROPOSED CPT CODE ADDITIONS TO THE 75 PERCENT EQUIPMENT UTILIZATION RATE ASSUMPTION CY 2011—Continued 

CPT code Short descriptor 

70547 ...... Mr angiography neck w/o dye. 

70548 ...... Mr angiography neck w/dye. 

70549 ...... Mr angiography neck w/o & w/ 

dye. 

71275 ...... Ct angiography, chest. 

71555 ...... Mri angio chest w/ or w/o dye. 

72159 ...... Mr angio spone w/o & w/dye. 

72191 ...... Ct angiography, pelv w/o & w/ 

dye. 

72198 ...... Mri angio pelvis w/ or w/o dye. 

73206 ...... Ct angio upper extr w/o & w/dye. 

73225 ...... Mr angio upr extr w/o & w/dye. 

73706 ...... Ct angio lower ext w/o & w/dye. 

73725 ...... Mr angio lower ext w/ or w/o 

dye. 

74175 ...... Ct angiography, abdom w/o & w/ 

dye. 

74185 ...... Mri angio, abdom w/ or w/o dye. 

75565 ...... Card mri vel flw map add-on. 

75574 ...... Ct angio hrt w/3d image. 

75635 ...... Ct angio abdominal arteries. 

76380 ...... CAT scan follow up study. 

77079 ...... Ct bone density, peripheral. 

b. HCPCS Code-Specific PE Proposals 

In this section, we discuss other 

specific CY 2011 proposals and changes 

related to direct PE inputs. The 

proposed changes that follow are 

included in the proposed CY 2011 

direct PE database, which is available 

on the CMS Web site under the 

downloads for the CY 2011 PFS 

proposed rule at http://www.cms.gov/ 

PhysicianFeeSched/. 

(1) Biohazard Bags 

We have identified 22 codes for 

which the supply item ‘‘biohazard bag’’ 

(SM004) is currently considered a direct 

PE input. The item is already properly 

accounted for in the indirect PE because 

it is not attributable to an individual 

patient service. Therefore, we are 

proposing to remove the biohazard bag 

from the CY 2011 direct PE database 

and the changes in direct PE inputs for 

the associated services are reflected in 

the proposed CY 2011 direct PE 

database. 

(2) PE Inputs for Professional 

Component (PC) Only and Technical 

Component (TC) Only Codes Summing 

to Global Only Codes 

In the case of selected diagnostic tests, 

different but related CPT codes are used 

to describe global, professional, and 

technical components of a service. 

These codes are unlike the majority of 

other diagnostic test CPT codes where 

modifiers may be used in billing a single 

CPT code in order to differentiate 

professional and technical components. 

When different but related CPT codes 

are used to report the components of 

these services, the different CPT codes 

are referred to as ‘‘global only,’’ 

‘‘professional (PC) only,’’ and ‘‘technical 

(TC) only’’ codes. Medicare payment 

systems are programmed to ensure that 

the PE RVUs for global only codes equal 

the sum of the PE RVUs for the PC and 

TC only codes. However, it has come to 

our attention that the direct PE inputs 

for certain global only codes do not 

reflect the appropriate summation of 

their related TC only and PC only 

component code PE inputs as they 

appear in the direct PE database. While 

the PFS payment calculations have been 

programmed to apply the correct PE 

RVUs for the global only code based on 

a summation of component code PE 

RVUs, the direct PE database has 

reflected incorrect inputs that are 

overridden by the payment system. 

Therefore, we are proposing to correct 

the direct PE inputs for the global only 

codes so that the inputs reflect the 

appropriate summing of the PE inputs 

for the associated PC only and TC only 

codes. The proposed CY 2011 direct PE 

database includes PE corrections to the 

14 CPT codes listed in Table 5. 

TABLE 5—GROUPS OF RELATED CPT CODES WITH PROPOSED CHANGES TO PE INPUTS SO THAT INPUTS FOR

PROFESSIONAL COMPONENT (PC) ONLY AND TECHNICAL COMPONENT (TC) ONLY CODES SUM TO GLOBAL ONLY CODES

CPT code Long descriptor 

93224 ................ Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage, with visual superimposition scanning; includes recording, scanning analysis with report, physician review and interpretation. 

93225 ................ Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage, with visual superimposition scanning; recording (includes connection, recording, disconnection). 

93226 ................ Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage, with visual superimposition scanning; scanning analysis with report. 

93230 ................ Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage 

without superimposition scanning utilizing a device capable of producing a full miniaturized printout; including recording, 

microprocessor-based analysis with report, physician review and interpretation. 

93231 ................ Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage 

without superimposition scanning utilizing a device capable of producing a full miniaturized printout; recording (includes 

connection, recording, and disconnection. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40056 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 5—GROUPS OF RELATED CPT CODES WITH PROPOSED CHANGES TO PE INPUTS SO THAT INPUTS FOR PROFESSIONAL COMPONENT (PC) ONLY AND TECHNICAL COMPONENT (TC) ONLY CODES SUM TO GLOBAL ONLY CODES— 

Continued 

CPT code Long descriptor 

93232 ................ Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and storage 

without superimposition scanning utilizing a device capable of producing a full miniaturized printout; microprocessor-based 

analysis with report. 

93268 ................ Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; includes transmission, physician review and interpretation. 

93270 ................ Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; recording (includes connection, recording, and disconnection). 

93271 ................ Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour attended monitoring, per 30 day period of time; monitoring, receipt of transmissions, and analysis. 

93720 ................ Plethysmography, total body; with interpretation and report. 

93721 ................ Plethysmography, total body; tracing only, without interpretation and report. 

93784 ................ Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or longer; 

including recording, scanning analysis, interpretation and report. 

93786 ................ Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or longer; 

recording only. 

93788 ................ Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or longer; 

scanning analysis with report. 

(3) Equipment Time Inputs for Certain 

Diagnostic Tests 

We have recently identified incorrect 

equipment time inputs for four CPT 

codes associated with certain diagnostic 

tests (each is displayed in Table 5): 

• CPT code 93225 is the TC only code 

that includes the connection, recording, 

and disconnection of the holter monitor 

(CMS Equipment Code EQ127) used in 

24 hour continuous 

electrocardiographic rhythm derived 

monitoring. The current equipment time 

input for the holter monitor is 42 

minutes, which parallels the intraservice clinical labor input time for the 

CPT code. However, the equipment time 

should reflect the 24 hours of 

continuous monitoring in which the 

device is used exclusively by the 

patient. Therefore, we are proposing to 

change the monitor equipment time for 

CPT code 93225 to 1440 minutes, the 

number of minutes in 24 hours. 

• CPT code 93226 is the TC only code 

that includes the scanning analysis with 

report. The number of minutes the 

monitor (CMS Equipment Code EQ127) 

is used in this service should parallel 

the intra-service clinical labor input 

time of 52 minutes during which the 

monitor is in use, instead of the current 

equipment time of 1440 minutes, 

because this code does not represent 24 

hours of device use. Therefore, we are 

proposing to change the monitor 

equipment time for CPT code 93226 to 

52 minutes. 

• CPT 93224 is the global only code 

that includes the connection, recording, 

and disconnection of the monitor (CMS 

Equipment Code EQ127) and the 

scanning analysis with report, as well as 

the physician review and interpretation. 

Under our proposal, its direct PE inputs 

have been appropriately summed to 

include the 1492 total minutes of time 

for the holter monitor that are included 

in CPT codes 93225 and 93226. 

• CPT code 93788 is the TC only code 

that describes the scanning analysis 

with report for ambulatory blood 

pressure monitoring. The equipment 

time input for the blood pressure 

monitor should parallel the 10 minutes 

of clinical labor input for the CPT code 

since that is the time during which the 

monitor is in use. Currently, the 

equipment time input for the monitor is 

1440 minutes, which is appropriate only 

for CPT code 93786, the code that 

describes the 24 hours of ambulatory 

blood pressure monitoring recording. In 

this case, CPT code 93786’s direct PE 

inputs are correct. Therefore, we are 

proposing to correct the equipment time 

input for the ambulatory blood pressure 

monitor in CPT code 93788 to 10 

minutes. 

• CPT code 93784 is the global only 

code that includes the recording, the 

scanning analysis with report, and the 

physician interpretation and report for 

ambulatory blood pressure monitoring. 

Under our proposal, its direct PE inputs 

have been appropriately summed to 

include the 1450 total minutes of time 

for the ambulatory blood pressure 

monitor that are included in CPT codes 

93786 and 93788. 

We have modified the proposed CY 

2011 direct PE database to reflect these 

changes. 

(4) Cobalt-57 Flood Source 

Stakeholders have requested that CMS 

reevaluate the useful life of the Cobalt57 flood source (CMS Equipment Code 

ER001), given their estimate of 

approximately 271 days for the source’s 

half-life. The current useful life input 

for the Colbalt-57 flood source is 5 

years. Using publicly available catalogs, 

we found that the Cobalt-57 flood 

source is marketed with a useful life of 

2 years. Therefore, we are proposing to 

change the useful life input from the 

current 5 years to 2 years. The Cobalt57 flood source is included with the 

revised useful life input for 96 HCPCS 

codes in the proposed CY 2011 direct 

PE database. 

(5) Venom Immunotherapy 

One stakeholder provided updated 

price information for the venoms used 

for the five venom immunology CPT 

codes, specifically 95145 (Professional 

services for the supervision of 

preparation and provision of antigens 

for allergen immunotherapy (specify 

number of doses); single stinging insect 

venom); 95146 (Professional services for 

the supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 2 single stinging insect venoms); 

95147 (Professional services for the 

supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 3 single stinging insect venoms); 

95148 (Professional services for the 

supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 4 single stinging insect venoms); 

95149 (Professional services for the 

supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 5 single stinging insect venoms). 

In the CY 2004 PFS final rule with 

comment period (68 FR 63206), we 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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adopted a pricing methodology that 

utilizes the average price of a 1 milliliter 

dose of venom and adds that price per 

dose as direct PE inputs for CPT codes 

95145 and 95146. When a patient 

requires three stinging insect venoms, as 

for CPT code 95147, the price input for 

a 3-vespid mix is used. This 3-vespid 

mix price is also used to value CPT 

codes 95148 (four venoms) and 96149 

(five venoms), with the single venom 

price added once to CPT code 97148 

and twice to CPT code 97149. 

As requested by the stakeholder, we 

are updating the price inputs for the 1- 

milliliter dose of venom to $16.67 and 

for the 3-vespid mix to $30.22 in the 

proposed CY 2011 direct PE database. 

(6) Equipment Redundancy 

Stakeholders have recently brought to 

our attention that the ECG, 3-channel 

(with SpO2, NIBP, temp, resp) (CMS 

Equipment Code EQ011) incorporates 

all of the functionality of the pulse 

oximeter with printer (CMS Equipment 

Code EQ211). Therefore, in HCPCS 

codes where CMS Equipment Code 

EQ011 is present, CMS Equipment Code 

EQ211 is redundant. On this basis, we 

are proposing to remove the pulse 

oximeter with printer (CMS Equipment 

Code EQ211) as an input for the 118 

codes that also contain the ECG, 3- 

channel (with SpO2, NIBP, temp, resp) 

(CMS Equipment Code EQ011). We have 

made these adjustments in the proposed 

CY 2011 direct PE database. 

(7) Equipment Duplication 

We recently identified a number of 

CPT codes with duplicate equipment 

inputs in the PE database. We are 

proposing to remove the duplicate 

equipment items and have modified the 

proposed CY 2011 direct PE database 

accordingly as detailed in Table 6. 

TABLE 6—CPT CODES WITH PROPOSED REMOVAL OF DUPLICATE EQUIPMENT ITEMS IN THE DIRECT PE DATABASE

CPT code 

CMS equipment 

code for duplicate equipment Description of equipment 

19302 P-mastectomy w/ln removal ......................................... EF014 ............... light, surgical. 

19361 Breast reconstr w/lat flap ............................................. ED005 .............. camera, digital system, 12 megapixel (medical grade). 

EF031 ............... table, power. 

EQ168 .............. light, exam. 

44157 Colectomy w/ileoanal anast ......................................... EF031 ............... table, power. 

EQ168 .............. light, exam. 

44158 Colectomy w/neo-rectum pouch .................................. EF031 ............... table, power. 

EQ168 .............. light, exam. 

56440 Surgery for vulva lesion ............................................... EF031 ............... table, power. 

EQ170 .............. light, fiberoptic headlight w-source. 

57296 Revise vag graft, open abd .......................................... EF031 ............... table, power. 

EQ170 .............. light, fiberoptic headlight w-source. 

58263 Vag hyst w/t/o & vag repair ......................................... EF031 ............... table, power. 

59610 Vbac delivery ................................................................ EF031 ............... table, power. 

67228 Treatment of retinal lesion ........................................... EL005 ............... lane, exam (oph). 

EQ230 .............. slit lamp (Haag-Streit), dedicated to laser use. 

76813 Ob us nuchal meas, 1 gest .......................................... ED024 ............... film processor, dry, laser. 

77371 Srs, multisource ........................................................... EQ211 .............. pulse oximeter w-printer. 

93540 Injection, cardiac cath .................................................. ED018 .............. computer workstation, cardiac cath monitoring. 

EL011 ............... room, angiography. 

EQ011 .............. ECG, 3-channel (with SpO2, NIBP, temp, resp). 

EQ032 .............. IV infusion pump. 

EQ088 .............. contrast media warmer. 

EQ211 .............. pulse oximeter w-printer. 

93542 Injection for heart x-rays .............................................. ED018 .............. computer workstation, cardiac cath monitoring. 

EL011 ............... room, angiography. 

EQ011 .............. ECG, 3-channel (with SpO2, NIBP, temp, resp). 

EQ032 .............. IV infusion pump. 

EQ088 .............. contrast media warmer. 

EQ211 .............. pulse oximeter w-printer. 

(8) Establishing Overall Direct PE 

Supply Price Inputs Based on Unit 

Prices and Quantities 

We have identified minor errors in 

total price inputs for a number of supply 

items due to mathematical mistakes in 

multiplying the item unit price and the 

quantity used in particular CPT codes 

for the associated services. We are 

proposing to modify the direct PE 

database to appropriately include the 

overall supply price input for a supply 

item as the product of the unit price and 

the quantity of the supply item used in 

the CPT code. Most of the overall 

supply price input changes are small, 

and we have adjusted the proposed CY 

2011 direct PE database accordingly. 

The CPT and Level II HCPCS codes and 

associated supplies for nonfacility and 

facility settings that are subject to these 

corrections are displayed in Tables 7 

and 8, respectively. 

TABLE 7—OVERALL SUPPLY PRICE CALCULATION CORRECTIONS FOR NONFACILITY SETTINGS

CPT/HCPCS 

code Short descriptor 

CMS Supply 

code with overall 

price corrections 

Description of supply 

11952 ................. Therapy for contour defects .......... SC029 .............. needle, 18–27g. 

11954 ................. Therapy for contour defects .......... SC029 .............. needle, 18–27g. 

15820 ................. Revision of lower eyelid ................ SA082 ............... pack, ophthalmology visit (w-dilation). 


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40058 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 7—OVERALL SUPPLY PRICE CALCULATION CORRECTIONS FOR NONFACILITY SETTINGS—Continued 

CPT/HCPCS 

code Short descriptor 

CMS Supply 

code with overall 

price corrections 

Description of supply 

15821 ................. Revision of lower eyelid ................ SA082 ............... pack, ophthalmology visit (w-dilation). 

15822 ................. Revision of upper eyelid ............... SA082 ............... pack, ophthalmology visit (w-dilation). 

17311 ................. Mohs, 1 stage, h/n/hf/g ................. SG078 .............. tape, surgical occlusive 1in (Blenderm). 

17312 ................. Mohs addl stage ........................... SG078 .............. tape, surgical occlusive 1in (Blenderm). 

17313 ................. Mohs, 1 stage, t/a/l ....................... SG078 .............. tape, surgical occlusive 1in (Blenderm). 

17314 ................. Mohs, addl stage, t/a/l .................. SG078 .............. tape, surgical occlusive 1in (Blenderm). 

21011 ................. Exc face les sc < 2 cm ................. SH046 .............. lidocaine 1% w-epi inj (Xylocaine w-epi). 

21013 ................. Exc face tum deep < 2 cm ........... SH046 .............. lidocaine 1% w-epi inj (Xylocaine w-epi). 

21073 ................. Mnpj of tmj w/anesth ..................... SG079 .............. tape, surgical paper 1in (Micropore). 

21076 ................. Prepare face/oral prosthesis ......... SL047 ............... dental stone powder. 

21081 ................. Prepare face/oral prosthesis ......... SK024 ............... film, dental. 

21310 ................. Treatment of nose fracture ........... SB034 ............... mask, surgical, with face shield. 

23075 ................. Exc shoulder les sc < 3 cm .......... SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

....................................................... SH021 ............... bupivacaine 0.25% inj (Marcaine). 

24075 ................. Exc arm/elbow les sc < 3 cm ....... SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

....................................................... SH021 ............... bupivacaine 0.25% inj (Marcaine). 

25075 ................. Exc forearm les sc < 3 cm ............ SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

....................................................... SH021 ............... bupivacaine 0.25% inj (Marcaine). 

26115 ................. Exc hand les sc < 1.5 cm ............. SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

....................................................... SH021 ............... bupivacaine 0.25% inj (Marcaine). 

27327 ................. Exc thigh/knee les sc < 3 cm ....... SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

27618 ................. Exc leg/ankle tum < 3 cm ............. SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

28039 ................. Exc foot/toe tum sc > 1.5 cm ........ SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

28043 ................. Exc foot/toe tum sc < 1.5 cm ........ SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

28045 ................. Exc foot/toe tum deep < 1.5cm .... SG056 .............. gauze, sterile 4in x 4in (10 pack uou). 

28306 ................. Incision of metatarsal .................... SA048 ............... pack, minimum multi-specialty visit. 

28307 ................. Incision of metatarsal .................... SA048 ............... pack, minimum multi-specialty visit. 

28310 ................. Revision of big toe ........................ SA048 ............... pack, minimum multi-specialty visit. 

28312 ................. Revision of toe .............................. SA048 ............... pack, minimum multi-specialty visit. 

28313 ................. Repair deformity of toe ................. SA048 ............... pack, minimum multi-specialty visit. 

28315 ................. Removal of sesamoid bone .......... SA048 ............... pack, minimum multi-specialty visit. 

28340 ................. Resect enlarged toe tissue ........... SA048 ............... pack, minimum multi-specialty visit. 

28344 ................. Repair extra toe(s) ........................ SA048 ............... pack, minimum multi-specialty visit. 

28345 ................. Repair webbed toe(s) ................... SA048 ............... pack, minimum multi-specialty visit. 

28496 ................. Treat big toe fracture .................... SA048 ............... pack, minimum multi-specialty visit. 

28755 ................. Fusion of big toe joint ................... SA048 ............... pack, minimum multi-specialty visit. 

28820 ................. Amputation of toe .......................... SA048 ............... pack, minimum multi-specialty visit. 

28890 ................. High energy eswt, plantar f ........... SC051 .............. syringe 10–12ml. 

29870 ................. Knee arthroscopy, dx .................... SG079 .............. tape, surgical paper 1in (Micropore). 

32553 ................. Ins mark thor for rt perq ................ SB034 ............... mask, surgical, with face shield. 

36475 ................. Endovenous rf, 1st vein ................ SC074 ............... iv pressure infusor bag. 

36592 ................. Collect blood from picc ................. SG050 .............. gauze, non-sterile 2in x 2in. 

41530 ................. Tongue base vol reduction ........... SD009 .............. canister, suction. 

41805 ................. Removal foreign body, gum .......... SD134 .............. tubing, suction, non-latex (6ft) with Yankauer tip (1). 

41806 ................. Removal foreign body, jawbone ... SD134 .............. tubing, suction, non-latex (6ft) with Yankauer tip (1). 

42107 ................. Excision lesion, mouth roof ........... SD009 .............. canister, suction. 

46505 ................. Chemodenervation anal musc ...... SD009 .............. canister, suction. 

49411 ................. Ins mark abd/pel for rt perq .......... SB034 ............... mask, surgical, with face shield. 

49440 ................. Place gastrostomy tube perc ........ SK089 ............... x-ray developer solution. 

49441 ................. Place duod/jej tube perc ............... SK089 ............... x-ray developer solution. 

49442 ................. Place cecostomy tube perc .......... SK089 ............... x-ray developer solution. 

49446 ................. Change g-tube to g-j perc ............. SK089 ............... x-ray developer solution. 

49450 ................. Replace g/c tube perc ................... SK089 ............... x-ray developer solution. 

49451 ................. Replace duod/jej tube perc ........... SK089 ............... x-ray developer solution. 

49452 ................. Replace g-j tube perc ................... SK089 ............... x-ray developer solution. 

49460 ................. Fix g/colon tube w/device ............. SK089 ............... x-ray developer solution. 

49465 ................. Fluoro exam of g/colon tube ......... SK089 ............... x-ray developer solution. 

50382 ................. Change ureter stent, percut .......... SB034 ............... mask, surgical, with face shield. 

50384 ................. Remove ureter stent, percut ......... SB034 ............... mask, surgical, with face shield. 

50385 ................. Change stent via transureth ......... SB034 ............... mask, surgical, with face shield. 

50386 ................. Remove stent via transureth ......... SB034 ............... mask, surgical, with face shield. 

50387 ................. Change ext/int ureter stent ........... SB034 ............... mask, surgical, with face shield. 

50389 ................. Remove renal tube w/fluoro .......... SB034 ............... mask, surgical, with face shield. 

51100 ................. Drain bladder by needle ............... SH047 .............. lidocaine 1%–2% inj (Xylocaine). 

51101 ................. Drain bladder by trocar/cath ......... SH047 .............. lidocaine 1%–2% inj (Xylocaine). 

51727 ................. Cystometrogram w/up ................... SC051 ............... syringe 10–12ml. 

51728 ................. Cystometrogram w/vp ................... SC051 .............. syringe 10–12ml. 

51729 ................. Cystometrogram w/vp&up ............. SC051 .............. syringe 10–12ml. 

52649 ................. Prostate laser enucleation ............ SA048 ............... pack, minimum multi-specialty visit. 

53855 ................. Insert prost urethral stent .............. SB024 ............... gloves, sterile. 


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TABLE 7—OVERALL SUPPLY PRICE CALCULATION CORRECTIONS FOR NONFACILITY SETTINGS—Continued 

CPT/HCPCS 

code Short descriptor 

CMS Supply 

code with overall 

price corrections 

Description of supply 

59300 ................. Episiotomy or vaginal repair ......... SG062 .............. packing, gauze plain 0.25–0.50in (5 yd uou). 

59812 ................. Treatment of miscarriage .............. SA052 ............... pack, post-op incision care (staple). 

64490 ................. Inj paravert f jnt c/t 1 lev ............... SK025 ............... film, dry, radiographic, 8in x 10in. 

64493 ................. Inj paravert f jnt l/s 1 lev ............... SH021 ............... bupivacaine 0.25% inj (Marcaine). 

....................................................... SK025 ............... film, dry, radiographic, 8in x 10in. 

65272 ................. Repair of eye wound ..................... SA082 ............... pack, ophthalmology visit (w-dilation). 

65286 ................. Repair of eye wound ..................... SA082 ............... pack, ophthalmology visit (w-dilation). 

66250 ................. Follow-up surgery of eye .............. SA082 ............... pack, ophthalmology visit (w-dilation). 

67031 ................. Laser surgery, eye strands ........... SA082 ............... pack, ophthalmology visit (w-dilation). 

67105 ................. Repair detached retina ................. SA082 ............... pack, ophthalmology visit (w-dilation). 

67110 ................. Repair detached retina ................. SA082 ............... pack, ophthalmology visit (w-dilation). 

67120 ................. Remove eye implant material ....... SA082 ............... pack, ophthalmology visit (w-dilation). 

67228 ................. Treatment of retinal lesion ............ SA082 ............... pack, ophthalmology visit (w-dilation). 

67901 ................. Repair eyelid defect ...................... SA048 ............... pack, minimum multi-specialty visit. 

75571 ................. Ct hrt w/o dye w/ca test ................ SJ019 ............... electrode adhesive disk. 

75572 ................. Ct hrt w/3d image ......................... SJ019 ............... electrode adhesive disk. 

75573 ................. Ct hrt w/3d image, congen ........... SJ019 ............... electrode adhesive disk. 

75574 ................. Ct angio hrt w/3d image ............... SJ019 ............... electrode adhesive disk. 

75960 ................. Transcath iv stent rs&i .................. SK034 ............... film, x-ray 14in x 17in. 

76821 ................. Middle cerebral artery echo .......... SM013 .............. disinfectant, surface (Envirocide, Sanizide). 

77371 ................. Srs, multisource ............................ SG079 .............. tape, surgical paper 1in (Micropore). 

77372 ................. Srs, linear based ........................... SG079 .............. tape, surgical paper 1in (Micropore). 

77373 ................. Sbrt delivery .................................. SG079 .............. tape, surgical paper 1in (Micropore). 

78452 ................. Ht muscle image spect, mult ........ SC051 .............. syringe 10–12ml. 

....................................................... SK092 ............... x-ray fixer solution 

78454 ................. Ht musc image, planar, mult ......... SK092 ............... x-ray fixer solution. 

88125 ................. Forensic cytopathology ................. SL026 ............... clearing agent (Histo-clear). 

88355 ................. Analysis, skeletal muscle .............. SK073 ............... skin marking ink (tattoo). 

....................................................... SL061 ............... embedding paraffin. 

....................................................... SL078 ............... histology freezing spray (Freeze-It). 

....................................................... SL201 ............... stain, eosin. 

88356 ................. Analysis, nerve .............................. SB023 ............... gloves, non-sterile, nitrile. 

....................................................... SK073 ............... skin marking ink (tattoo). 

....................................................... SL061 ............... embedding paraffin. 

....................................................... SL078 ............... histology freezing spray (Freeze-It). 

....................................................... SL108 ............... pipette. 

....................................................... SL201 ............... stain, eosin. 

88365 ................. Insitu hybridization (fish) ............... SF004 ............... blade, microtome. 

....................................................... SL179 ............... 1.0N NaOH. 

....................................................... SL183 ............... slide, organosilane coated. 

....................................................... SL189 ............... ethanol, 100%. 

....................................................... SL190 ............... ethanol, 70%. 

....................................................... SL194 ............... Hemo-De. 

....................................................... SM016 .............. eye shield, splash protection. 

88367 ................. Insitu hybridization, auto ............... SC057 .............. syringe 5–6ml. 

....................................................... SF004 ............... blade, microtome. 

....................................................... SL030 ............... cover slip, glass. 

....................................................... SL085 ............... label for microscope slides. 

....................................................... SL178 ............... 0.2N HCL. 

....................................................... SL179 ............... 1.0N NaOH. 

....................................................... SL181 ............... pipette tips, sterile. 

....................................................... SL183 ............... slide, organosilane coated. 

....................................................... SL189 ............... ethanol, 100%. 

....................................................... SL190 ............... ethanol, 70%. 

....................................................... SL191 ............... ethanol, 85%. 

....................................................... SL194 ............... Hemo-De. 

....................................................... SM016 .............. eye shield, splash protection. 

88368 ................. Insitu hybridization, manual .......... SF004 ............... blade, microtome. 

....................................................... SL179 ............... 1.0N NaOH. 

....................................................... SL183 ............... slide, organosilane coated. 

....................................................... SL189 ............... ethanol, 100%. 

....................................................... SL190 ............... ethanol, 70%. 

....................................................... SL194 ............... Hemo-De. 

....................................................... SM016 .............. eye shield, splash protection. 

88385 ................. Eval molecul probes, 51–250 ....... SL207 ............... air, filtered, compressed. 

....................................................... SL218 ............... DNA, Versagene, blood kit. 

....................................................... SL220 ............... ethanol, 200%. 

....................................................... SL225 ............... gas, nitogen, ultra-high purity (compressed), grade 5.0. 

88386 ................. Eval molecul probes, 251–500 ..... SL207 ............... air, filtered, compressed. 

....................................................... SL218 ............... DNA, Versagene, blood kit. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40060 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 7—OVERALL SUPPLY PRICE CALCULATION CORRECTIONS FOR NONFACILITY SETTINGS—Continued 

CPT/HCPCS 

code Short descriptor 

CMS Supply 

code with overall 

price corrections 

Description of supply 

....................................................... SL220 ............... ethanol, 200%. 

....................................................... SL225 ............... gas, nitogen, ultra-high purity (compressed), grade 5.0. 

90470 ................. Immune admin H1N1 im/nasal ..... SB036 ............... paper, exam table. 

91065 ................. Breath hydrogen test .................... (blank) ............... Sivrite-4. 

91132 ................. Electrogastrography ...................... SD062 .............. electrode, surface. 

91133 ................. Electrogastrography w/test ........... SD062 .............. electrode, surface. 

92550 ................. Tympanometry & reflex thresh ...... SK059 ............... paper, recording (per sheet). 

92597 ................. Oral speech device eval ............... SB022 ............... gloves, non-sterile. 

92610 ................. Evaluate swallowing function ........ SB022 ............... gloves, non-sterile. 

92626 ................. Eval aud rehab status ................... SK008 ............... audiology scoring forms. 

92627 ................. Eval aud status rehab add-on ...... SK008 ............... audiology scoring forms. 

92640 ................. Aud brainstem implt programg ...... SK068 ............... razor. 

95004 ................. Percut allergy skin tests ................ SC023 .............. multi-tine device. 

95024 ................. Id allergy test, drug/bug ................ SA048 ............... pack, minimum multi-specialty visit. 

....................................................... SG050 .............. gauze, non-sterile 2in x 2in. 

95027 ................. Id allergy titrate-airborne ............... SA048 ............... pack, minimum multi-specialty visit. 

....................................................... SC052 ............... syringe 1ml. 

95044 ................. Allergy patch tests ........................ SK087 ............... water, distilled. 

95052 ................. Photo patch test ............................ SK087 ............... water, distilled. 

95148 ................. Antigen therapy services .............. SH009 .............. antigen, venom. 

95805 ................. Multiple sleep latency test ............ SK094 ............... x-ray marking pencil. 

96040 ................. Genetic counseling, 30 min .......... SK062 ............... patient education booklet. 

96102 ................. Psycho testing by technician ........ SK057 ............... paper, laser printing (each sheet). 

96360 ................. Hydration iv infusion, init ............... SC018 .............. iv infusion set. 

....................................................... SC051 ............... syringe 10–12ml. 

....................................................... SG050 .............. gauze, non-sterile 2in x 2in. 

96365 ................. Ther/proph/diag iv inf, init ............. SC018 .............. iv infusion set. 

....................................................... SC051 ............... syringe 10–12ml. 

....................................................... SG050 .............. gauze, non-sterile 2in x 2in. 

96366 ................. Ther/proph/diag iv inf addon ......... SB022 ............... gloves, non-sterile. 

96367 ................. Tx/proph/dg addl seq iv inf ........... SB022 ............... gloves, non-sterile. 

96369 ................. Sc ther infusion, up to 1 hr ........... SC013 .............. infusion pump cassette-reservoir. 

96371 ................. Sc ther infusion, reset pump ......... SC013 ............... infusion pump cassette-reservoir. 

96372 ................. Ther/proph/diag inj, sc/im ............. SB022 ............... gloves, non-sterile. 

96374 ................. Ther/proph/diag inj, iv push .......... SB022 ............... gloves, non-sterile. 

....................................................... SC051 ............... syringe 10–12ml. 

....................................................... SG050 .............. gauze, non-sterile 2in x 2in. 

96375 ................. Tx/pro/dx inj new drug addon ....... SB022 ............... gloves, non-sterile. 

....................................................... SC051 ............... syringe 10–12ml. 

96401 ................. Chemo, anti-neopl, sq/im .............. SC051 ............... syringe 10–12ml. 

....................................................... SG050 .............. gauze, non-sterile 2in x 2in. 

96402 ................. Chemo hormon antineopl sq/im .... SC051 .............. syringe 10–12ml. 

....................................................... SG050 .............. gauze, non-sterile 2in x 2in. 

96409 ................. Chemo, iv push, sngl drug ............ SC018 .............. iv infusion set 22. 

....................................................... SC051 ............... syringe 10–12ml. 

96411 ................. Chemo, iv push, addl drug ........... SC018 .............. iv infusion set. 

....................................................... SC051 ............... syringe 10–12ml. 

96413 ................. Chemo, iv infusion, 1 hr ................ SC018 .............. iv infusion set. 

....................................................... SC051 ............... syringe 10–12ml. 

96417 ................. Chemo iv infus each addl seq ...... SC018 .............. iv infusion set. 

96445 ................. Chemotherapy, intracavitary ......... SC018 .............. iv infusion set. 

....................................................... SH069 ............... sodium chloride 0.9% irrigation (500–1000ml uou). 

96542 ................. Chemotherapy injection ................ SC018 .............. iv infusion set. 

99366 ................. Team conf w/pat by hc pro ........... SK062 ............... patient education booklet. 

G0270 ................ MNT subs tx for change dx .......... SK057 ............... paper, laser printing (each sheet). 

....................................................... SK062 ............... patient education booklet. 

G0271 ................ Group MNT 2 or more 30 mins .... SK057 ............... paper, laser printing (each sheet). 

TABLE 8—OVERALL SUPPLY PRICE CALCULATION CORRECTIONS FOR FACILITY SETTINGS

CPT/HCPCS 

Code Short descriptor 

CMS supply 

code with overall 

price corrections 

Description of supply 

15738 ................. Muscle-skin graft, leg .................... SG017 .............. bandage, Kling, non-sterile 2in. 

15820 ................. Revision of lower eyelid ................ SA082 ............... pack, ophthalmology visit (w-dilation). 

15821 ................. Revision of lower eyelid ................ SA082 ............... pack, ophthalmology visit (w-dilation). 

15822 ................. Revision of upper eyelid ............... SA082 ............... pack, ophthalmology visit (w-dilation). 

19303 ................. Mast, simple, complete ................. SB006 ............... drape, non-sterile, sheet 40in x 60in. 

20900 ................. Removal of bone for graft ............. SA054 ............... pack, post-op incision care (suture). 


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TABLE 8—OVERALL SUPPLY PRICE CALCULATION CORRECTIONS FOR FACILITY SETTINGS—Continued 

CPT/HCPCS 

Code Short descriptor 

CMS supply 

code with overall 

price corrections 

Description of supply 

21011 ................. Exc face les sc < 2 cm ................. SA048 ............... pack, minimum multi-specialty visit. 

21013 ................. Exc face tum deep < 2 cm ........... SA048 ............... pack, minimum multi-specialty visit. 

21193 ................. Reconst lwr jaw w/o graft .............. SJ061 ............... tongue depressor. 

21194 ................. Reconst lwr jaw w/graft ................. SJ061 ............... tongue depressor. 

21240 ................. Reconstruction of jaw joint ............ SJ061 ............... tongue depressor. 

21366 ................. Treat cheek bone fracture ............ SJ061 ............... tongue depressor. 

21435 ................. Treat craniofacial fracture ............. SJ061 ............... tongue depressor. 

21555 ................. Exc neck les sc < 3 cm ................ SA048 ............... pack, minimum multi-specialty visit. 

21930 ................. Exc back les sc < 3 cm ................ SA048 ............... pack, minimum multi-specialty visit. 

22902 ................. Exc abd les sc < 3 cm .................. SA048 ............... pack, minimum multi-specialty visit. 

23075 ................. Exc shoulder les sc < 3 cm .......... SA048 ............... pack, minimum multi-specialty visit. 

24075 ................. Exc arm/elbow les sc < 3 cm ....... SA048 ............... pack, minimum multi-specialty visit. 

25075 ................. Exc forearm les sc < 3 cm ............ SA048 ............... pack, minimum multi-specialty visit. 

26115 ................. Exc hand les sc < 1.5 cm ............. SA048 ............... pack, minimum multi-specialty visit. 

27047 ................. Exc hip/pelvis les sc < 3 cm ......... SA048 ............... pack, minimum multi-specialty visit. 

27327 ................. Exc thigh/knee les sc < 3 cm ....... SA048 ............... pack, minimum multi-specialty visit. 

27618 ................. Exc leg/ankle tum < 3 cm ............. SA048 ............... pack, minimum multi-specialty visit. 

28307 ................. Incision of metatarsal .................... SA048 ............... pack, minimum multi-specialty visit. 

28340 ................. Resect enlarged toe tissue ........... SA048 ............... pack, minimum multi-specialty visit. 

28345 ................. Repair webbed toe(s) ................... SA048 ............... pack, minimum multi-specialty visit. 

28820 ................. Amputation of toe .......................... SA048 ............... pack, minimum multi-specialty visit. 

33516 ................. Cabg, vein, six or more ................ SA052 ............... pack, post-op incision care (staple). 

34510 ................. Transposition of vein valve ........... SA054 ............... pack, post-op incision care (suture). 

35013 ................. Repair artery rupture, arm ............ SA048 ............... pack, minimum multi-specialty visit. 

41150 ................. Tongue, mouth, jaw surgery ......... SA048 ............... pack, minimum multi-specialty visit. 

41153 ................. Tongue, mouth, neck surgery ....... SA048 ............... pack, minimum multi-specialty visit. 

41155 ................. Tongue, jaw, & neck surgery ........ SA048 ............... pack, minimum multi-specialty visit. 

41805 ................. Removal foreign body, gum .......... SD134 .............. tubing, suction, non-latex (6ft) with Yankauer tip (1). 

41806 ................. Removal foreign body, jawbone ... SD134 .............. tubing, suction, non-latex (6ft) with Yankauer tip (1). 

42160 ................. Treatment mouth roof lesion ......... SD122 ............... suction tip, Yankauer. 

51925 ................. Hysterectomy/bladder repair ......... SB006 ............... drape, non-sterile, sheet 40in x 60in. 

56620 ................. Partial removal of vulva ................ SA048 ............... pack, minimum multi-specialty visit. 

57284 ................. Repair paravag defect, open ........ SA051 ............... pack, pelvic exam. 

SB006 ............... drape, non-sterile, sheet 40in x 60in. 

57285 ................. Repair paravag defect, vag .......... SA051 ............... pack, pelvic exam. 

SB006 ............... drape, non-sterile, sheet 40in x 60in. 

57423 ................. Repair paravag defect, lap ........... SA051 ............... pack, pelvic exam. 

SB006 ............... drape, non-sterile, sheet 40in x 60in. 

58660 ................. Laparoscopy, lysis ........................ SB006 ............... drape, non-sterile, sheet 40in x 60in. 

58662 ................. Laparoscopy, excise lesions ......... SJ046 ............... silver nitrate applicator. 

58670 ................. Laparoscopy, tubal cautery ........... SJ046 ............... silver nitrate applicator. 

58940 ................. Removal of ovary(s) ...................... SA052 ............... pack, post-op incision care (staple). 

58952 ................. Resect ovarian malignancy ........... SB006 ............... drape, non-sterile, sheet 40in x 60in. 

64632 ................. N block inj, common digit .............. SA048 ............... pack, minimum multi-specialty visit. 

65112 ................. Remove eye/revise socket ............ SA050 ............... pack, ophthalmology visit (no dilation). 

65114 ................. Remove eye/revise socket ............ SA050 ............... pack, ophthalmology visit (no dilation). 

65235 ................. Remove foreign body from eye .... SA082 ............... pack, ophthalmology visit (w-dilation). 

65265 ................. Remove foreign body from eye .... SA082 ............... pack, ophthalmology visit (w-dilation). 

65272 ................. Repair of eye wound ..................... SA082 ............... pack, ophthalmology visit (w-dilation). 

65273 ................. Repair of eye wound ..................... SA082 ............... pack, ophthalmology visit (w-dilation). 

65280 ................. Repair of eye wound ..................... SA082 ............... pack, ophthalmology visit (w-dilation). 

65285 ................. Repair of eye wound ..................... SA082 ............... pack, ophthalmology visit (w-dilation). 

65286 ................. Repair of eye wound ..................... SA082 ............... pack, ophthalmology visit (w-dilation). 

65290 ................. Repair of eye socket wound ......... SA082 ............... pack, ophthalmology visit (w-dilation). 

65770 ................. Revise cornea with implant ........... SA050 ............... pack, ophthalmology visit (no dilation). 

65850 ................. Incision of eye ............................... SA082 ............... pack, ophthalmology visit (w-dilation).

65865 ................. Incise inner eye adhesions ........... SA082 ............... pack, ophthalmology visit (w-dilation). 

65870 ................. Incise inner eye adhesions ........... SA082 ............... pack, ophthalmology visit (w-dilation). 

66180 ................. Implant eye shunt ......................... SA082 ............... pack, ophthalmology visit (w-dilation). 

66185 ................. Revise eye shunt .......................... SA082 ............... pack, ophthalmology visit (w-dilation). 

66220 ................. Repair eye lesion .......................... SA082 ............... pack, ophthalmology visit (w-dilation). 

66250 ................. Follow-up surgery of eye .............. SA082 ............... pack, ophthalmology visit (w-dilation). 

66500 ................. Incision of iris ................................ SA082 ............... pack, ophthalmology visit (w-dilation). 

66600 ................. Remove iris and lesion ................. SA082 ............... pack, ophthalmology visit (w-dilation). 

66605 ................. Removal of iris .............................. SA082 ............... pack, ophthalmology visit (w-dilation). 

66625 ................. Removal of iris .............................. SA082 ............... pack, ophthalmology visit (w-dilation). 

66630 ................. Removal of iris .............................. SA082 ............... pack, ophthalmology visit (w-dilation). 

66635 ................. Removal of iris .............................. SA082 ............... pack, ophthalmology visit (w-dilation). 

66682 ................. Repair iris & ciliary body ............... SA082 ............... pack, ophthalmology visit (w-dilation). 

66820 ................. Incision, secondary cataract ......... SA082 ............... pack, ophthalmology visit (w-dilation). 


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TABLE 8—OVERALL SUPPLY PRICE CALCULATION CORRECTIONS FOR FACILITY SETTINGS—Continued 

CPT/HCPCS 

Code Short descriptor 

CMS supply 

code with overall 

price corrections 

Description of supply 

66850 ................. Removal of lens material .............. SA082 ............... pack, ophthalmology visit (w-dilation). 

66852 ................. Removal of lens material .............. SA082 ............... pack, ophthalmology visit (w-dilation). 

66930 ................. Extraction of lens .......................... SA082 ............... pack, ophthalmology visit (w-dilation). 

66940 ................. Extraction of lens .......................... SA082 ............... pack, ophthalmology visit (w-dilation). 

66983 ................. Cataract surg w/iol, 1 stage .......... SA082 ............... pack, ophthalmology visit (w-dilation). 

67015 ................. Release of eye fluid ...................... SA082 ............... pack, ophthalmology visit (w-dilation). 

67031 ................. Laser surgery, eye strands ........... SA082 ............... pack, ophthalmology visit (w-dilation). 

67036 ................. Removal of inner eye fluid ............ SA082 ............... pack, ophthalmology visit (w-dilation). 

67040 ................. Laser treatment of retina .............. SA082 ............... pack, ophthalmology visit (w-dilation). 

67105 ................. Repair detached retina ................. SA082 ............... pack, ophthalmology visit (w-dilation). 

67107 ................. Repair detached retina ................. SA082 ............... pack, ophthalmology visit (w-dilation). 

67110 ................. Repair detached retina ................. SA082 ............... pack, ophthalmology visit (w-dilation). 

67115 ................. Release encircling material ........... SA082 ............... pack, ophthalmology visit (w-dilation). 

67120 ................. Remove eye implant material ....... SA082 ............... pack, ophthalmology visit (w-dilation). 

67228 ................. Treatment of retinal lesion ............ SA082 ............... pack, ophthalmology visit (w-dilation). 

67400 ................. Explore/biopsy eye socket ............ SA082 ............... pack, ophthalmology visit (w-dilation). 

67412 ................. Explore/treat eye socket ............... SA082 ............... pack, ophthalmology visit (w-dilation). 

67440 ................. Explore/drain eye socket .............. SA082 ............... pack, ophthalmology visit (w-dilation). 

67908 ................. Repair eyelid defect ...................... SG008 .............. applicator, cotton-tipped, non-sterile 6in. 

88356 ................. Analysis, nerve .............................. SL108 ............... pipette. 

c. AMA RUC Recommendations in CY 

2010 for Changes to Direct PE Inputs 

In a March 2010 letter, the AMA RUC 

made specific PE recommendations that 

we consider below. As stated earlier, the 

proposed changes that follow are 

included in the proposed CY 2011 

direct PE database, which is available 

on the CMS Web site under the 

downloads for the CY 2011 PFS 

proposed rule at http://www.cms.gov/ 

PhysicianFeeSched/. 

(1) Electrogastrography and Esophageal 

Function Test 

We are accepting the AMA RUC 

recommendations for the CY 2011 PE 

inputs for the following CPT codes: 

91132 (Electrogastrography, diagnostic, 

transcutaneous); 91133 

(Electrogastrography, diagnostic, 

transcutaneous; with provocative 

testing); 91038 (Esophageal function 

test, gastroesophageal reflux test with 

nasal catheter intraluminal impedance 

electrode(s) placement, recording, 

analysis and interpretation; prolonged 

(greater than 1 hour, up to 24 hours)). 

For CPT code 91038, we have assumed 

a useful life of 5 years for the equipment 

item ‘‘ZEPHR impedance/pH reflux 

monitoring system with data recorder, 

software, monitor, workstation and 

cart,’’ based on its entry in the AHA’s 

publication, ‘‘Estimated Useful Lives of 

Depreciable Hospital Assets,’’ which we 

use as a standard reference. The 

proposed CY 2011 direct PE database 

has been changed accordingly. 

(2) 64-Slice CT Scanner and Software 

The AMA RUC submitted an updated 

recommendation regarding the correct 

pricing of the 64-slice CT scanner and 

its accompanying software. Based on the 

documentation accompanying the 

recommendation, we are accepting this 

recommendation and updating the price 

input for the 64-slice scanner and 

software. This affects the following four 

CPT codes that use either the scanner, 

the software, or both: 75571 (computed 

tomography, heart, without contrast 

material, with quantitative evaluation of 

coronary calcium); 75572 (Computed 

tomography, heart, with contrast 

material, for evaluation of cardiac 

structure and morphology (including 3D 

image postprocessing, assessment of 

cardiac function, and evaluation of 

venous structures, if performed)); 75573 

(Computed tomography, heart, with 

contrast material, for evaluation of 

cardiac structure and morphology in the 

setting of congenital heart disease 

(including 3D image postprocessing, 

assessment of LV cardiac function, RV 

structure and function and evaluation of 

venous structures, if performed)); and 

75574 (Computed tomographic 

angiography, heart, coronary arteries 

and bypass grafts (when present), with 

contrast material, including 3D image 

postprocessing (including evaluation of 

cardiac structure and morphology, 

assessment of cardiac function, and 

evaluation of venous structure, if 

performed)). The proposed CY 2011 

direct PE database has been modified 

accordingly. 

(3) Cystometrogram 

The AMA RUC recently identified a 

rank order anomaly regarding CPT code 

51726 (Complex cystometrogram (i.e., 

calibrated electronic equipment)). 

Currently, this procedure has higher PE 

RVUs, despite being less resourceintensive than the three CPT codes for 

which it serves as the base: 51727 

(Complex cystometrogram (i.e., 

calibrated electronic equipment); with 

urethral pressure profile studies (i.e., 

urethral closure pressure profile), any 

technique); 51728 (Complex 

cystometrogram (i.e., calibrated 

electronic equipment); with voiding 

pressure studies (i.e., bladder voiding 

pressure), any technique); and 51729 

(Complex cystometrogram (i.e., 

calibrated electronic equipment); with 

voiding pressure studies (i.e., bladder 

voiding pressure) and urethral pressure 

profile studies (i.e., urethral closure 

pressure profile), any technique). 

Since usual AMA RUC policy is that 

CPT codes with a 0-day global period do 

not have pre-service time associated 

with the code, the AMA RUC 

recommended removing the nonfacility 

pre-service clinical staff time from the 

PE inputs for 51726. Additionally, the 

AMA RUC recommended that the 

nonfacility clinical intra-service staff 

time for CPT code 51276 be reduced 

from the 118 minutes of intra-service 

clinical staff time currently assigned to 

the code to 85 minutes of intra-service 

clinical staff time. These changes would 

resolve the rank order anomaly and 

bring the PE inputs for CPT code 51726 

into alignment with the other three 

codes. Finally, and for the reasons 


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stated above, the AMA RUC 

recommended that CMS remove the 23 

minutes of pre-service nonfacility 

clinical staff time from CPT code 51725 

(Simple cystometrogram (CMG) (e.g., 

spinal manometer)). We are accepting 

these recommendations and, therefore, 

have changed the direct PE inputs for 

CPT codes 51725 and 51726 in the 

nonfacility setting in the proposed CY 

2011 direct PE database. 

(4) Breath Hydrogen Test 

The AMA RUC provide 

recommendations regarding the PE 

inputs for CPT code 91065 (breath 

hydrogen test (e.g., for detection of 

lactase deficiency, fructose intolerance, 

bacterial overgrowth, or oro-cecal 

gastrointestinal transit). We are 

accepting the recommendations with 

two modifications. We have folded the 

two pieces of equipment listed as 

‘‘quinGas Table-Top Support Stand, 3 

Tank’’ and ‘‘Drying Tube, Patient 

Sample’’ into the ‘‘BreathTrackerDigital 

SC Instrument’’ and summed their 

inputs into one equipment line-item, 

since these equipment items are used 

together specifically for the service in 

question. We have increased the useful 

life input of the ‘‘BreathTrackerDigital 

SC Instrument’’ from 7 to 8 years based 

on our use of the American Hospital 

Association (AHA)’s publication 

entitled, ‘‘Estimated Useful Lives of 

Depreciable Hospital Assets’’ as a 

standard reference. Additionally, 

because the AMA RUC did not include 

equipment times in their 

recommendations for this CPT code, we 

have used 53 minutes as the total time 

for all equipment items based on the 

total intra-service period for the clinical 

labor, consistent with our general policy 

for establishing equipment times. These 

modifications are reflected in the 

proposed CY 2011 direct PE database. 

(5) Radiographic Fluoroscopic Room 

A recent AMA RUC review of services 

that include the radiographic 

fluoroscopic room (CMS Equipment 

Code EL014) as a direct PE revealed that 

the use of the item is no longer typical 

for certain services in which it is 

specified within the current direct cost 

inputs. The AMA RUC recommended to 

CMS that the radiographic fluoroscopic 

room be deleted from CPT codes 64420 

(Injection, anesthetic agent; intercostal 

nerve, single); 64421 (Injection, 

anesthetic agent; intercostal nerves, 

multiple, regional block); and 64620 

(Destruction by neurolytic agent, 

intercostal nerve). 

We are accepting these 

recommendations and, therefore, these 

changes are included in the proposed 

CY 2011 direct PE database. 

The AMA RUC also informed us that 

it has convened a workgroup to examine 

the inclusion of the fluoroscopic room 

across a broader range of codes. We will 

consider any future recommendations 

from the AMA RUC on this topic when 

they are submitted. 

d. Referral of Existing CPT Codes for 

AMA RUC Review 

As part of our review of high cost 

supplies, we conducted a clinical 

review of the procedures associated 

with high cost supplies to confirm that 

those supplies currently are used in the 

typical case described by the CPT codes. 

While we confirmed that most high cost 

supplies could be used in the 

procedures for which they are currently 

direct PE inputs, we noted that one of 

the high cost supplies, fiducial screws 

(CMS Supply Code SD073) with a 

current price of $558, is included as a 

direct PE input for two CPT codes, 

specifically 77301 (Intensity modulated 

radiotherapy plan, including dosevolume histograms for target and critical 

structure partial tolerance 

specifications) and 77011 (Computed 

tomography guidance for stereotactic 

localization). The documentation used 

in the current pricing of the supply item 

describes a kit that includes 

instructions, skull screws, a drill bit, 

and a collar for the TALON® System 

manufactured by Best nomos. Best 

nomos’ literature describes the insertion 

of the screws into the patient’s skull to 

ensure accurate set-up. When CPT codes 

77301 and 77011 were established in CY 

2002 and CY 2003, respectively, we 

accepted the AMA RUC 

recommendations to include fiducial 

screws in the PE for these services. 

Upon further review, while we 

understand why this supply may be 

considered a typical PE input for CPT 

code 77011, we do not now believe that 

fiducial screws, as described in the Best 

nomos literature, would typically be 

used in CPT code 77301, where the 

most common clinical scenario would 

be treatment of prostate cancer. 

Therefore, in order to ensure that CPT 

codes 77301 and 77011 are 

appropriately valued for CY 2011 

through the inclusion or exclusion of 

fiducial screws in their PE, we are 

asking the AMA RUC to review these 

CPT codes with respect to the inclusion 

of fiducial screws in their PE. We are 

requesting that the AMA RUC make 

recommendations to us regarding 

whether this supply should be included 

in the PE or removed from the PE for 

CPT codes 77301 and 77011 in a 

timeframe that would allow us to adopt 

interim values for these codes for CY 

2011, should the AMA RUC recommend 

a change. If the AMA RUC continues to 

recommend the inclusion of fiducial 

screws in the PE for CPT code 77301 

and/or 77011 for CY 2011, we are 

requesting that the AMA RUC provide 

us with a detailed rationale for the 

inclusion of this specialized supply in 

the PE for the typical case reported 

under the relevant CPT code. We would 

also request that the AMA RUC furnish 

updated pricing information for the 

screws if they continue to recommend 

the screws as a PE input for one or both 

of these CPT codes in CY 2011. 

e. Updating Equipment and Supply 

Price Inputs for Existing Codes 

Historically, we have periodically 

received requests to change the PE price 

inputs for supplies and equipment in 

the PE database. In the past, we have 

considered these requests on an ad hoc 

basis and updated the price inputs as 

part of quarterly or annual updates if we 

believed them to be appropriate. In this 

proposed rule, we are proposing to 

establish a regular and more transparent 

process for considering public requests 

for changes to PE database price inputs 

for supplies and equipment used in 

existing codes. 

We are proposing to act on public 

requests to update equipment and 

supply price inputs annually through 

rulemaking by following a regular and 

consistent process as discussed in the 

following paragraphs. We are proposing 

to use the annual PFS proposed rule 

released in the summer and the final 

rule released on or about November 1 

each year as the vehicle for making 

these changes. 

We will accept requests for updating 

the price inputs for supplies and 

equipment on an ongoing basis; requests 

must be received no later than 

December 31 of each CY to be 

considered for inclusion in the next 

proposed rule. In that next proposed 

rule, we would present our review of 

submitted requests to update price 

inputs for specific equipment or 

supplies and our proposals for the 

subsequent calendar year. We would 

then finalize changes in the final rule 

for the upcoming calendar year. Our 

review of the issues and consideration 

of public comments may result in the 

following outcomes that would be 

presented in the final rule with 

comment period: 

• Updating the equipment or supply 

price inputs, as requested. 

• Updating the equipment or supply 

price inputs, with modifications. 

• Rejecting the new price inputs. 


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• Declining to act on the request 

pending a recommendation from the 

AMA RUC. 

To facilitate our review and 

preparation of issues for the proposed 

rule, at a minimum, we would expect 

that requesters would provide the 

following information: 

• Name and contact information for 

the requestor. 

• The name of the item exactly as it 

appears in the direct PE file under 

downloads for the most recent PFS final 

rule with comment period, available on 

the CMS Web site at http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. 

In order to best evaluate the requests 

in the context of our goal of utilizing 

accurate market prices for these items as 

direct PE inputs, we also would expect 

requestors to provide multiple invoices 

from different suppliers/manufacturers. 

In some cases, multiple sources may not 

be available, whereupon a detailed 

explanation should be provided to 

support the request. When furnishing 

invoices, requestors should take into 

consideration the following parameters: 

++ May be either print or electronic 

but should be on supplier and/or 

manufacturer stationery (for example, 

letterhead, billing statement, etc.) 

++ Should be for the typical, 

common, and customary version of the 

supply or equipment that is used to 

furnish the services. 

++ Price should be net of typical 

rebates and/or any discounts available, 

including information regarding the 

magnitude and rationale for such 

rebates or discounts. 

++ If multiple items are presented on 

the same invoice, relevant item(s) 

should be clearly identified. 

We are soliciting public comments on 

this proposed process, including the 

information that requestors should 

furnish to facilitate our full analysis in 

preparation for the next calendar year’s 

rulemaking cycle. 

B. Malpractice Relative Value Units 

(RVUs) 

1. Background 

Section 1848(c) of the Act requires 

that each service paid under the PFS be 

comprised of three components: work, 

PE, and malpractice. From 1992 to 1999, 

malpractice RVUs were charge-based, 

using weighted specialty-specific 

malpractice expense percentages and 

1991 average allowed charges. 

Malpractice RVUs for new codes after 

1991 were extrapolated from similar 

existing codes or as a percentage of the 

corresponding work RVU. Section 

4505(f) of the BBA required us to 

implement resource-based malpractice 

RVUs for services furnished beginning 

in 2000. Therefore, initial 

implementation of resource-based 

malpractice RVUs occurred in 2000. 

The statute also requires that we 

review, and if necessary adjust, RVUs 

no less often than every 5 years. The 

first review and update of resourcebased malpractice RVUs was addressed 

in the CY 2005 PFS final rule with 

comment period (69 FR 66263). Minor 

modifications to the methodology were 

addressed in the CY 2006 PFS final rule 

with comment period (70 FR 70153). In 

the CY 2010 PFS final rule with 

comment period, we implemented the 

second review and update of 

malpractice RVUs. For a discussion of 

the second review and update of 

malpractice RVUs see the CY 2010 PFS 

proposed rule (74 FR 33537) and final 

rule with comment period (74 FR 

61758). 

2. Malpractice RVUs for New and 

Revised Services Effective Before the 

Next 5-Year Review 

Currently, malpractice RVUs for new 

and revised codes effective before the 

next 5-Year Review (for example, 

effective CY 2011 through CY 2014) are 

determined by a direct crosswalk to a 

similar ‘‘source’’ code or a modified 

crosswalk to account for differences in 

work RVUs between the new/revised 

code and the source code. For the 

modified crosswalk approach, we adjust 

the malpractice RVUs for the new/ 

revised code to reflect the difference in 

work RVUs between the source code 

and the AMA RUC’s recommended 

work value (or the work value we are 

applying as an interim final value under 

the PFS) for the new code. For example, 

if the interim final work RVUs for the 

new/revised code are 10 percent higher 

than the work RVUs for the source code, 

the malpractice RVUs for the new/ 

revised code would be increased by 10 

percent over the source code RVUs. This 

approach presumes the same risk factor 

for the new/revised code and source 

code but uses the work RVUs for the 

new/revised code to adjust for risk-ofservice. The assigned malpractice RVUs 

for new/revised codes effective between 

updates remain in place until the next 

5-Year Review. 

We will continue our current 

approach for determining malpractice 

RVUs for new/revised codes that 

become effective before the next 5-Year 

Review and update. Under this 

approach we will crosswalk the new/ 

revised code to the RVUs of a similar 

source code and adjust for differences in 

work (or, if greater, the clinical labor 

portion of the fully implemented PE 

RVUs), between the source code and the 

new/revised code. Additionally, we will 

publish a list of new/revised codes and 

the analytic crosswalk(s) used for 

determining their malpractice RVUs in 

the final rule with comment period, 

which we have not previously done. 

The CY 2011 malpractice RVUs for new/ 

revised codes will be implemented as 

interim final values in the CY 2011 PFS 

final rule with comment period, where 

they will be subject to public comment. 

They will then be finalized in the CY 

2012 PFS final rule with comment 

period. 

3. Revised Malpractice RVUs for 

Selected Disc Arthroplasty Services 

As discussed in the CY 2010 PFS 

proposed rule (74 FR 33539), we assign 

malpractice RVUs to each service based 

upon a weighted average of the risk 

factors of all specialties that furnish the 

service. For the CY 2010 review of 

malpractice RVUs, we used CY 2008 

Medicare payment data on allowed 

services to establish the frequency of a 

service by specialty. CPT code 22856 

(Total disc arthroplasty (artificial disc), 

anterior approach, including discectomy 

with end plate preparation (includes 

osteophytectomy for nerve root or spinal 

cord decompression and 

microdissection), single interspace, 

cervical) had zero allowed services for 

CY 2008. Therefore, our contractor 

initially set the level of services to 1, 

and assigned a risk factor according to 

the average risk factor for all services 

that do not explicitly have a separate 

technical or professional component. 

We proposed to adopt our contractor’s 

initial malpractice RVUs for CPT code 

22856 in the CY 2010 proposed rule. 

Application of the average physician 

risk factor would have resulted in a 

significant decrease in malpractice 

RVUs for CPT code 22856 in CY 2010. 

Several commenters on the CY 2010 

PFS proposed rule expressed concern 

regarding the proposed malpractice 

RVUs for CPT code 22856, which 

represented a proposed reduction of 

more than 77 percent. The commenters 

stated that this service is predominantly 

furnished by neurosurgeons and 

orthopedic surgeons. Given the high risk 

factors associated with these specialty 

types and the changes in malpractice 

RVUs for comparable services, the 

commenters stated that a reduction in 

the malpractice RVUs of this magnitude 

for CPT code 22856 could not be 

correct. 

After consideration of the public 

comments, for CY 2010, we set the risk 

factor for CPT code 22856 as the 

weighted average risk factor of six 

comparable procedures mentioned by 


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the commenters: CPT code 22554 

(Arthrodesis, anterior interbody 

technique, including minimal 

discectomy to prepare interspace (other 

than for decompression); cervical below 

C2); CPT code 22558 (Arthrodesis, 

anterior interbody technique, including 

minimal discectomy to prepare 

interspace (other than for 

decompression); lumbar); CPT code 

22857 (Total disc arthroplasty (artificial 

disc), anterior approach, including 

discectomy to prepare interspace (other 

than for decompression), single 

interspace, lumbar); CPT code 22845 

(Anterior instrumentation; 2 to 3 

vertebral segments (list separately in 

addition to code for primary 

procedure)); CPT code 63075 

(Discectomy, anterior, with 

decompression of spinal cord and/or 

nerve root(s), including 

osteophytectomy; cervical, single 

interspace); and CPT code 20931 

(Allograft for spine surgery only; 

structural (list separately in addition to 

code for primary procedure)). The 

weighted average risk factor for these 

services is 8.4. 

Since publication of the CY 2010 PFS 

final rule with comment period, 

stakeholders have mentioned that we 

made significant changes to the 

malpractice RVUs for CPT code 22856 

in CY 2010. The commenters also 

brought to our attention that other 

services are clinically similar to CPT 

code 22856 and have similar work 

RVUs, and therefore, some stakeholders 

believe these services should all have 

similar malpractice RVUs. Services 

mentioned by the stakeholders that are 

clinically similar to CPT code 22856 

include CPT code 22857; CPT code 

22861 (Revision including replacement 

of total disc arthroplasty (artificial disc), 

anterior approach, single interspace; 

cervical); CPT code 22862 (Revision 

including replacement of total disc 

arthroplasty (artificial disc) anterior 

approach, lumbar); CPT code 22864 

(Removal of total disc arthroplasty 

(artificial disc), anterior approach, 

single interspace; cervical); and CPT 

code 22865 (Removal of total disc 

arthroplasty (artificial disc), anterior 

approach, single interspace; lumbar). 

After further review of this issue, we 

are proposing to apply the same risk 

factor used for CPT code 22856 to 

certain other services within this family 

of services (CPT codes 22857 through 

22865) for which there were no allowed 

services in CY 2008. CPT codes 22861 

and 22864 had zero allowed services in 

CY 2008 and our contractor initially set 

their malpractice RVUs in the same way 

as it did for CPT code 22856. Therefore, 

we will assign the weighted average risk 

factor we use for CPT code 22856 (that 

is, the weighted average of the risk 

factors for CPT codes 20931, 22554, 

22558, 22845, 22857, and 63075) to CPT 

codes 22861 and 22864. However, CPT 

codes 22857, 22862, and 22865 are low 

volume services (allowed services under 

100). Our policy for low volume 

services is to apply the risk factor of the 

dominant specialty as indicated by our 

claims data. We will continue to apply 

our policy for low volume services to 

CPT codes 22857, 22862, and 22865. 

C. Potentially Misvalued Services Under 

the Physician Fee Schedule 

1. Valuing Services Under the PFS 

As discussed in section I. of this 

proposed rule, in order to value services 

under the PFS, section 1848(c) of the 

Act requires the Secretary to determine 

relative values for physicians’ services 

based on three components: the work, 

practice expense (PE), and malpractice 

components. Section 1848(c)(1)(A) of 

the Act defines the work component to 

include ‘‘the portion of the resources 

used in furnishing the service that 

reflects physician time and intensity in 

furnishing the service.’’ Additionally, 

the statute provides that the work 

component shall include activities that 

occur before and after direct patient 

contact. Furthermore, the statute 

specifies that with respect to surgical 

procedures, the valuation of the work 

component for the code would reflect a 

‘‘global’’ concept in which pre-operative 

and post-operative physicians’ services 

related to the procedure would also be 

included. 

In addition, section 1848(c)(2)(C)(i) of 

the Act specifies that ‘‘the Secretary 

shall determine a number of work 

relative value units (RVUs) for the 

service based on the relative resources 

incorporating physician time and 

intensity required in furnishing the 

service.’’ As discussed in detail in 

sections I.A.2. and I.A.3 of this 

proposed rule, the statute also defines 

the PE and malpractice components and 

provides specific guidance in the 

calculation of the RVUs for each of these 

components. Section 1848(c)(1)(B) of 

the Act defines the PE component as 

‘‘the portion of the resources used in 

furnishing the service that reflects the 

general categories of expenses (such as 

office rent and wages of personnel, but 

excluding malpractice expenses) 

comprising practice expenses.’’ 

Section 1848(c)(2)(C)(ii) of the Act 

specifies that the ‘‘Secretary shall 

determine a number of practice expense 

relative value units for the services for 

years beginning with 1999 based on the 

relative practice expense resources 

involved in furnishing the service.’’ 

Furthermore, section 1848(c)(2)(B) of 

the Act directs the Secretary to conduct 

a periodic review, not less often than 

every 5 years, of the RVUs established 

under the PFS. Finally, on March 23, 

2010, the Affordable Care Act was 

enacted, further requiring the Secretary 

to periodically review and identify 

potentially misvalued codes and make 

appropriate adjustments to the relative 

values of those services identified as 

being potentially misvalued. Section 

3134(a) of the ACA added a new section 

1848(c)(2)(K) of the Act which requires 

the Secretary to periodically identify 

potentially misvalued services using 

certain criteria, and to review and make 

appropriate adjustments to the relative 

values for those services. Section 

3134(a) of the ACA also added a new 

section 1848(c)(2)(L) which requires the 

Secretary to develop a validation 

process to validate the RVUs of 

potentially misvalued codes under the 

PFS and make appropriate adjustments. 

As discussed in section I.A.1. of this 

proposed rule, we establish physician 

work RVUs for new and revised codes 

based on our review of 

recommendations received from the 

AMA RUC. The AMA RUC also 

provides recommendations to CMS on 

the values for codes that have been 

identified as potentially misvalued. To 

respond to concerns expressed by 

MedPAC, the Congress, and other 

stakeholders regarding accurate 

valuation of services under the PFS, the 

AMA RUC created the Five-Year Review 

Identification Workgroup. In addition to 

providing recommendations to CMS for 

work RVUs, the AMA RUC’s Practice 

Expense Subcommittee reviews direct 

PE (clinical labor, medical supplies, and 

medical equipment) for individual 

services and examines the many broad 

and methodological issues relating to 

the development of PE RVUs. 

In accordance with section 1848(c) of 

the Act, we determine appropriate 

adjustments to the RVUs, taking into 

account the recommendations provided 

by the AMA RUC and MedPAC, and 

publish the explanation for the basis of 

these adjustments in the PFS proposed 

and final rules. We note that section 

1848(c)(2)(A)(ii) of the Act authorizes 

the use of extrapolation and other 

techniques to determine the RVUs for 

physicians’ services for which specific 

data are not available, in addition to 

taking into account the results of 

consultations with organizations 

representing physicians. 


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2. Identifying, Reviewing, and 

Validating the RVUs of Potentially 

Misvalued Services Under the PFS 

a. Background 

In its March 2006 Report to Congress, 

MedPAC noted that ‘‘misvalued services 

can distort the price signals for 

physicians’ services as well as for other 

health care services that physicians 

order, such as hospital services.’’ In that 

same report MedPAC postulated that 

physicians’ services under the PFS can 

become misvalued over time for a 

number of reasons: ‘‘For example, when 

a new service is added to the physician 

fee schedule, it may be assigned a 

relatively high value because of the 

time, technical skill, and psychological 

stress that are required to perform it. 

Over time, skill, and stress involved 

may decline as physicians become more 

familiar with the service and more 

efficient at providing it. The amount of 

physician work needed to furnish an 

existing service may decrease when new 

technologies are incorporated. Services 

can also become overvalued when 

practice expenses decline. This can 

happen when the costs of equipment 

and supplies fall, or when equipment is 

used more frequently, reducing its cost 

per use. Likewise, services can become 

undervalued when physician work 

increases or practice expenses rise.’’ In 

the ensuing years since MedPAC’s 2006 

report, additional groups of potentially 

misvalued services have been identified 

by Congress, CMS, MedPAC, the AMA 

RUC, and other stakeholders. 

In recent years CMS and the AMA 

RUC have taken increasingly significant 

steps to address potentially misvalued 

codes. As MedPAC noted in its March 

2009 Report to Congress, in the 

intervening years since MedPAC made 

the initial recommendations, ‘‘CMS and 

the AMA RUC have taken several steps 

to improve the review process.’’ Most 

recently, section 1848(c)(2)(K)(ii) of the 

Act (as added by section 3134 of the 

ACA) directed the Secretary to 

specifically examine potentially 

misvalued services in seven categories. 

(1) Codes and families of codes for 

which there has been the fastest growth. 

(2) Codes or families of codes that 

have experienced substantial changes in 

practice expenses. 

(3) Codes that are recently established 

for new technologies or services. 

(4) Multiple codes that are frequently 

billed in conjunction with furnishing a 

single service. 

(5) Codes with low relative values, 

particularly those that are often billed 

multiple times for a single treatment. 

(6) Codes which have not been subject 

to review since the implementation of 

the RBRVS (the so-called ‘Harvardvalued codes’). 

(7) Other codes determined to be 

appropriate by the Secretary. 

Section 1848(c)(2)(K)(iii) of the Act 

(as added by section 3134 of the ACA) 

also specifies that the Secretary may use 

existing processes to receive 

recommendations on the review and 

appropriate adjustment of potentially 

misvalued services. In addition, the 

Secretary may conduct surveys, other 

data collection activities, studies, or 

other analyses as the Secretary 

determines to be appropriate to facilitate 

the review and appropriate adjustment 

of potentially misvalued services. This 

section authorizes the use of analytic 

contractors to identify and analyze 

potentially misvalued codes, conduct 

surveys or collect data, and make 

recommendations on the review and 

appropriate adjustment of potentially 

misvalued services. Finally, section 

1848(c)(2)(K)(iii)(V) of the Act (as added 

by section 3134 of the ACA) specifies 

that the Secretary may make appropriate 

coding revisions (including using 

existing processes for consideration of 

coding changes) which may include 

consolidation of individual services into 

bundled codes for payment under the 

physician fee schedule. 

b. Progress in Identifying and Reviewing 

Potentially Misvalued Codes 

Over the last several years, CMS, in 

conjunction with the AMA RUC, has 

identified and reviewed numerous 

potentially misvalued codes in all seven 

of the categories specified in section 

1848(c)(2)(K)(ii) (as added by section 

3134 of the ACA), and we plan to 

continue our work examining 

potentially misvalued codes in these 

areas over the upcoming years, 

consistent with the new legislative 

mandate on this issue. In the current 

process, the AMA RUC reviews 

potentially misvalued codes that are 

identified either by CMS or through its 

own processes and recommends revised 

work RVUs and/or direct PE inputs for 

those codes to CMS. CMS then assesses 

the recommended revised work RVUs 

and/or direct PE inputs and, in 

accordance with section 1848(c) of the 

Act, we determine if the 

recommendations constitute appropriate 

adjustments to the RVUs under the PFS. 

Since CY 2009, CMS and the AMA RUC 

have identified over 700 potentially 

misvalued codes. 

For example, in regards to the first 

category (codes and families of codes for 

which there has been the fastest 

growth), for CY 2009 CMS identified 

over 100 potentially misvalued codes 

for which an analysis of the utilization 

data showed an annual growth in 

allowed services of 10 percent (or more) 

for 3 consecutive years (73 FR 38586). 

Each of these codes had allowed charges 

of $1 million or more in CY 2007. We 

published this list in the CY 2009 

proposed rule (73 FR 38586 through 

38589) and requested that the AMA 

RUC immediately begin a review of the 

codes on this list. Meanwhile, in 

parallel with CMS’ efforts, the AMA 

RUC also initiated processes to identify 

and review potentially misvalued codes 

on an ongoing basis using certain 

screens, including screens for ‘‘CMS 

fastest growing procedures’’ and ‘‘high 

volume growth.’’ Both of these AMA 

RUC screens are applicable to the first 

category of potentially misvalued codes 

specified in ACA. We plan to continue 

to analyze Medicare claims data over 

future years to identify additional 

services that exhibit rapid growth and 

high Medicare expenditures for referral 

to the AMA RUC for review as 

potentially misvalued codes. 

Pertaining to the second category 

specified in section 1848(c)(2)(K)(ii) of 

the Act (as added by section 3134 of 

ACA) (codes or families of codes that 

have experienced substantial changes in 

practice expenses), in CY 2009 we 

requested that the AMA RUC continue 

its review of direct PE inputs, focusing 

particularly on high-volume codes 

where the PE payments are increasing 

significantly under the transition to the 

new PE methodology (73 FR 38589). 

The AMA RUC has responded by 

sending CMS recommendations for 

revised direct PE inputs for codes 

identified for PE review on an ongoing 

basis. 

Additionally in CY 2009, we began an 

initiative to review and update the 

prices for high-cost supplies in order to 

ensure the accuracy and completeness 

of the direct PE inputs. We discuss our 

most recent efforts in refining the 

process to update the prices of high-cost 

supplies in section II.C.5. of this 

proposed rule. 

For the third category of potentially 

misvalued codes identified in section 

1848(c)(2)(K)(ii) (as added by section 

3134 of the ACA) (codes that are 

recently established for new 

technologies or services), the AMA RUC 

routinely identifies such codes through 

a screen based on 3 years of Medicare 

claims data, and sends CMS 

recommendations for revised work 

RVUs and/or direct PE inputs for these 

codes on an ongoing basis. The AMA 

RUC may determine that a code for a 

new service requires reevaluation or 

does not require reevaluation, or it may 

conclude, on a case-by-case basis, that 

more than 3 years of claims data are 


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necessary before the code can be 

reviewed. In that case, it would 

determine the appropriate future 

timeframe for review. 

We also note that in its June 2008 

Report to Congress entitled ‘‘Reforming 

the Health Care System’’ and in the 

context of a discussion about primary 

care, MedPAC acknowledges, ‘‘* * * 

Efficiency can improve more easily for 

other types of services, such as 

procedures, with advances in 

technology, technique, and other 

factors. Ideally, when such efficiency 

gains are achieved, the fee schedule’s 

relative value units (RVUs) for the 

affected services should decline 

accordingly, while budget neutrality 

would raise the RVUs for the fee 

schedule’s primary care services.’’ (page 

27). Section III.C.5. of this proposed rule 

includes a discussion regarding periodic 

updates to the costs of high cost 

supplies. This discussion is highly 

relevant to new technology services, 

where growth in volume of a service as 

it diffuses into clinical practice may 

lead to a decrease in the cost of 

expensive supplies. We also expect that 

other efficiencies in physician work and 

PE may be achieved after an initial 

period of relative inefficiency that 

reflects the ‘‘learning curve.’’ We plan to 

pay particular attention to the work 

values and direct PE inputs for these 

new services and the AMA RUC’s 

periodic review process to ensure that 

any efficiencies are captured under the 

PFS over time, recognizing that the 

appropriate timing for revaluing these 

services needs to be considered on a 

case-by-case basis depending on the 

growth rate in service volume. 

We have also addressed the fourth 

category (multiple codes that are 

frequently billed in conjunction with 

furnishing a single service) in 

rulemaking prior to the enactment of the 

ACA. As discussed in the CY 2009 PFS 

proposed rule (73 FR 38586), we have 

a longstanding policy of reducing 

payment for multiple surgical 

procedures performed on the same 

patient, by the same physician, on the 

same day. Over the ensuing years, the 

multiple procedure payment reduction 

(MPPR) policy has been extended to a 

number of nuclear diagnostic and 

diagnostic imaging procedures. We 

continue our work to recognize 

efficiencies in this area with a proposal 

to expand the MPPR policy to 

additional combinations of imaging 

services and to therapy services for CY 

2011 as described in section II.C.4. of 

this proposed rule. 

We note the AMA RUC has also 

established a screen to identify services 

performed by the same physician on the 

same date of service 95 percent of the 

time or more. Over the past 2 years, the 

CPT Editorial Panel has established new 

bundled codes to describe a 

comprehensive service for certain 

combinations of these existing services 

that are commonly furnished together, 

and the AMA RUC has recommended 

work values and direct PE inputs to 

CMS for these comprehensive service 

codes that recognize the associated 

efficiencies. CMS looks forward to 

working with the AMA RUC in this joint 

effort to examine codes commonly 

reported together and more 

appropriately value common 

combinations services. 

We address the fifth category of 

potentially misvalued codes (codes with 

low relative values, particularly those 

that are often billed multiple times for 

a single treatment) in section II.C.3.b. of 

this proposed rule. That is, we are 

providing a list of services with low 

work RVUs that are commonly reported 

with multiple units in a single 

encounter and requesting that the AMA 

RUC review these codes that we have 

identified as potentially misvalued. 

The sixth category (codes which have 

not been subject to review since the 

implementation of the RBRVS (the socalled ‘Harvard-valued codes’)) also 

continues to be addressed by CMS and 

the AMA RUC on an ongoing basis. As 

we noted in the CY 2009 PFS proposed 

rule (73 FR 38589), there were at that 

time approximately 2900 codes, 

representing $5 billion in annual 

spending, that were originally valued 

using Harvard data and have not 

subsequently been evaluated by the 

AMA RUC. Consequently, in CY 2009, 

we requested that the AMA RUC engage 

in an ongoing effort to review the 

remaining Harvard-valued codes, 

focusing first on the high-volume, low 

intensity codes (73 FR 38589). In 

response to our request, the AMA RUC 

initially conducted an analysis of 

Harvard-valued services with utilization 

above 10,000 services per year, which 

resulted in a list of 296 distinct services 

(73 FR 69883). The AMA RUC, in its 

public comment on the CY 2009 

proposed rule, stated that it believes it 

would be effective to limit any review 

to these 296 services and also noted that 

of the 296 services identified, 23 had 

already been identified by another 

screen and were in the process of being 

reviewed (73 FR 69883). To date, the 

AMA RUC has reviewed and submitted 

to CMS recommendations for revised 

work RVUs and/or direct PE inputs for 

a number of Harvard-valued codes, 

prioritizing those codes with utilization 

of over 1 million services. The AMA 

RUC and CMS intend to continue our 

ongoing assessment of Harvard-valued 

codes, next targeting codes with 

utilization of over 100,000 services. 

Finally, the seventh category of 

potentially misvalued codes mentioned 

in section 1848(c)(2)(K)(ii) (as added by 

section 3134 of the ACA) is all other 

codes determined to be appropriate by 

the Secretary. In this category, CMS has 

previously proposed policies and 

requested that the AMA RUC review 

codes for which there have been shifts 

in the site-of-service (site-of-service 

anomalies), as well as codes that qualify 

as ‘‘23-hour stay’’ outpatient services. 

The policies for valuation of both the 

site-of-service anomaly codes and the 

‘‘23-hour stay’’ codes are developed 

further in sections II.C.3.d. and e., 

respectively, of this proposed rule. For 

CY 2011, we are also identifying codes 

with low work RVUs but are high 

volume based on claims data as another 

category of potentially misvalued codes 

and are referring these codes to the 

AMA RUC for review, as discussed in 

section II.C.3.b. of this proposed rule. In 

addition, for CY 2011 we are newly 

targeting key codes that the AMA RUC 

uses as reference services for valuing 

other services, termed ‘‘multispecialty 

points of comparison’’ services, and 

referring these to the AMA RUC for 

review as potentially misvalued codes 

as described in section II.C.3.a. of this 

proposed rule. Finally, we note the 

AMA RUC has also established screens 

to identify potentially misvalued codes 

in additional categories, including codes 

with a high intra-service work per unit 

of time (IWPUT) and codes representing 

services that had been surveyed by one 

specialty, but are now performed by a 

different specialty. We will continue to 

review AMA RUC recommendations for 

revised work RVUs and/or direct PE 

inputs for codes that fall into these 

categories. 

As a result of the combined efforts of 

CMS and the AMA RUC to address 

potentially misvalued codes, for CY 

2009 the AMA RUC recommended 

revised work values and/or PE inputs 

for 204 misvalued services (73 FR 

69883). For CY 2010, an additional 113 

codes were identified as misvalued and 

the AMA RUC provided new 

recommendations for revised work 

RVUs and/or PE inputs to CMS as 

discussed in the CY 2010 PFS final rule 

with comment period (74 FR 61778). 

Upon review of the AMA RUCrecommended work RVUs, CMS 

accepted the majority of the values as 

appropriate adjustments to the RVUs 

under the PFS, in accordance with 

section 1848(c) of the Act. However, for 

a number of codes, mainly the site-ofservice anomaly codes, we indicated 


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that although we would accept the AMA 

RUC valuations for these site-of-service 

anomaly codes on an interim basis 

through CY 2010, we had ongoing 

concerns about the methodology used 

by the AMA RUC to review these 

services (73 FR 69883 and 74 FR 61776 

through 61778, respectively). In the CY 

2010 PFS final rule with comment 

period, we requested that the AMA RUC 

reexamine the site-of-service anomaly 

codes and use the building block 

methodology to revalue the services (74 

FR 61777). In that same rule, we also 

stated that we would continue to 

examine these codes and consider 

whether it would be appropriate to 

propose additional changes in future 

rulemaking. We discuss our CY 2011 

proposal with respect to these codes in 

section II.C.3.d. of this proposed rule. 

c. Validating RVUs of Potentially 

Misvalued Codes 

In addition to identifying and 

reviewing potentially misvalued codes, 

section 1848(c)(2)(L) (as added by 

section 3134 of the ACA) specifies that 

the Secretary shall establish a formal 

process to validate relative value units 

under the PFS. The validation process 

may include validation of work 

elements (such as time, mental effort 

and professional judgment, technical 

skill and physical effort, and stress due 

to risk) involved with furnishing a 

service and may include validation of 

the pre, post, and intra-service 

components of work. The Secretary is 

directed to validate a sampling of the 

work RVUs of codes identified through 

any of the seven categories of 

potentially misvalued codes specified 

by section 1848(c)(2)(K)(ii) (as added by 

section 3134 of the ACA). Furthermore, 

the Secretary may conduct the 

validation using methods similar to 

those used to review potentially 

misvalued codes, including conducting 

surveys, other data collection activities, 

studies, or other analyses as the 

Secretary determines to be appropriate 

to facilitate the validation of RVUs of 

services. Currently, while CMS does 

assess the AMA RUC- recommended 

work RVUs to determine if the 

recommendations constitute appropriate 

adjustments to the RVUs under the PFS, 

we intend to establish a more extensive 

validation process of RVUs in the future 

in accordance with the requirements of 

section 1848(c)(2)(L) (as added by 

section 3134 of the ACA). Therefore, we 

are soliciting public comments on this 

proposed rule on possible approaches 

and methodologies that we should 

consider for a validation process. We are 

especially interested in public 

comments regarding approaches, 

including the use of time and motion 

studies, to validate estimates of 

physician time and intensity that are 

factored into the work RVUs for services 

with rapid growth in Medicare 

expenditures, one of the categories that 

the statute specifically directs CMS to 

examine. We plan to discuss the 

validation process in a future PFS rule 

once we have considered the matter 

further in conjunction with any public 

comments and other input from 

stakeholders that we receive. 

3. CY 2011 Identification and Review of 

Potentially Misvalued Services 

In this section, we discuss codes that 

may be misvalued according to five 

different criteria: 

• Codes on the multi-specialty points 

of comparison list; 

• Codes with low work RVUs 

commonly billed in multiple units per 

single encounter; 

• Codes with high volume and low 

work RVUs; 

• Codes with site-of-service 

anomalies; and 

• Codes that qualify as ‘‘23-hour stay’’ 

outpatient services. 

a. Codes on the Multispecialty Points of 

Comparison List 

The AMA RUC uses a scale referred 

to as the multispecialty points of 

comparison (MPC) to evaluate the 

reasonableness of a specialty society’s 

recommended RVU value for a service. 

The MPC list contains reference codes 

of established comparison services that 

are used in the valuation of new codes. 

The current MPC list consists of 316 

codes which the AMA RUC may use to 

compare and contrast the relativity of 

codes under review to existing relative 

values. Since the AMA RUC may use 

the values on the MPC list as a basis for 

relativity when determining the values 

for new, revised, and newly reviewed 

codes (including potentially misvalued 

codes), it is essential that the services on 

the MPC list be appropriately valued 

since any codes misvalued on the MPC 

list could contribute to the misvaluing 

of other codes under review. While we 

believe that the entire MPC list should 

be assessed to ensure that services are 

paid appropriately under the PFS, we 

have prioritized the review of the MPC 

list, ranking the codes by allowed 

service units and charges based on CY 

2009 claims data. We are proposing to 

refer the codes in Table 9 to the AMA 

RUC for review. 

TABLE 9—CODES ON THE MPC LIST

REFERRED FOR AMA RUC REVIEW

CPT Code Short descriptor 

66984 ...... Cataract surg w/iol, 1 stage. 

97110 ...... Therapeutic exercises. 

43239 ...... Upper GI endoscopy, biopsy. 

20610 ...... Drain/inject, joint/bursa. 

78815 ...... Pet image w/ct, skull-thigh. 

45385 ...... Lesion removal colonoscopy. 

45380 ...... Colonoscopy and biopsy. 

11721 ...... Debride nail, 6 or more. 

17000 ...... Destruct premalg lesion. 

92980 ...... Insert intracoronary stent. 

74160 ...... Ct abdomen w/dye. 

71020 ...... Chest x-ray. 

11100 ...... Biopsy, skin lesion. 

66821 ...... After cataract laser surgery. 

52000 ...... Cystoscopy. 

92083 ...... Visual field examination(s). 

73721 ...... Mri jnt of lwr extre w/o dye. 

93010 ...... Electrocardiogram report. 

77334 ...... Radiation treatment aid(s). 

92250 ...... Eye exam with photos. 

95810 ...... Polysomnography, 4 or more. 

77003 ...... Fluoroguide for spine inject. 

11056 ...... Trim skin lesions, 2 to 4. 

76700 ...... Us exam, abdom, complete. 

77290 ...... Set radiation therapy field. 

77300 ...... Radiation therapy dose plan. 

43235 ...... Uppr gi endoscopy, diagnosis. 

71275 ...... Ct angiography, chest. 

95900 ...... Motor nerve conduction test. 

31231 ...... Nasal endoscopy, dx. 

95165 ...... Antigen therapy services. 

94060 ...... Evaluation of wheezing. 

31575 ...... Diagnostic laryngoscopy. 

b. Codes With Low Work RVUs 

Commonly Billed in Multiple Units per 

Single Encounter 

Consistent with section 

1848(c)(2)(K)(ii) (as added by section 

3134 of the ACA) which identifies 

categories of potentially misvalued 

codes for our review, we believe 

services with low work RVUs that are 

commonly billed with multiple units in 

a single encounter are an additional 

appropriate category for identifying 

potentially misvalued codes. An 

example of a high multiple/low work 

RVU service is CPT code 95004 

(Percutaneous tests (scratch, puncture, 

prick) with allergenic extracts, 

immediate type reaction, including test 

interpretation and report by a physician, 

specify number of tests). For purposes of 

compiling a list of the high multiple/ 

low work RVU services, we defined a 

high multiple service as one that is 

commonly performed in multiples of 5 

or more per day. Then, we selected from 

high multiple services with work RVUs 

of less than or equal to 0.5 RVUs. We 

note that in selecting 5 per day as the 

minimum threshold for the number of 

common services performed in a 

multiple service encounter, we intended 

to establish a meaningful threshold 

which, in conjunction with the 


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threshold for work RVUs of 0.5 RVUs or 

less, would produce a reasonable 

number of services for the RUC to 

review that have substantial total work 

RVUs for the comprehensive service 

furnished during a single treatment. 

That is, as a general example, with a 

work RVU threshold of 0.5 RVUs and a 

multiple threshold of 5 per day, the total 

work RVUs for a typical treatment 

would equate to 2.5 RVUs, which is 

approximately comparable to a high 

level office visit, an interpretation of a 

complex imaging procedure, or a minor 

surgical procedure. 

We are asking the AMA RUC to 

review the codes in Table 10. 

TABLE 10—CODES WITH LOW WORK

RVUS THAT ARE COMMONLY BILLED

IN MULTIPLE UNITS REFERRED FOR

AMA RUC REVIEW

CPT Code Short descriptor 

95904 ...... Sense nerve conduction test. 

17003 ...... Destruct premalg les, 2–14. 

95004 ...... Percut allergy skin tests. 

11101 ...... Biopsy, skin add-on. 

95024 ...... Id allergy test, drug/bug. 

76000 ...... Fluoroscope examination. 

95144 ...... Antigen therapy services. 

95010 ...... Percut allergy titrate test. 

88300 ...... Surgical path, gross. 

95027 ...... Id allergy titrate-airborne. 

95015 ...... Id allergy titrate-drug/bug. 

95148 ...... Antigen therapy services. 

c. Codes With High Volume and Low 

Work RVUs 

We believe that codes that have low 

work RVUs but are high volume based 

on claims data are another category of 

potentially misvalued codes. Although 

these codes have low work RVUs (less 

than or equal to 0.25 RVUs), the high 

utilization of these codes represents 

significant expenditures under the PFS 

such that their appropriate valuation is 

especially important. Table 11 contains 

a list of such codes and we are 

requesting that the AMA RUC review 

these codes. 

TABLE 11—CODES WITH LOW WORK

RVUS THAT ARE HIGH VOLUME REFERRED FOR AMA RUC REVIEW

CPT Code Short descriptor 

71010 ...... Chest x-ray. 

73510 ...... X-ray exam of hip. 

97035 ...... Ultrasound therapy. 

88313 ...... Special stains group 2. 

73630 ...... X-ray exam of foot. 

72100 ...... X-ray exam of lower spine. 

73030 ...... X-ray exam of shoulder. 

73562 ...... X-ray exam of knee, 3. 

73560 ...... X-ray exam of knee, 1 or 2. 

94010 ...... Breathing capacity test. 

TABLE 11—CODES WITH LOW WORK

RVUS THAT ARE HIGH VOLUME REFERRED FOR AMA RUC REVIEW— 

Continued 

CPT Code Short descriptor 

77052 ...... Comp screen mammogram addon. 

88304 ...... Tissue exam by pathologist. 

73564 ...... X-ray exam, knee, 4 or more. 

72170 ...... X-ray exam of pelvis. 

74000 ...... X-ray exam of abdomen. 

73610 ...... X-ray exam of ankle. 

11719 ...... Trim nail(s). 

73620 ...... X-ray exam of foot. 

92567 ...... Tympanometry. 

73110 ...... X-ray exam of wrist. 

73130 ...... X-ray exam of hand. 

93701 ...... Bioimpedance, cv analysis. 

72040 ...... X-ray exam of neck, spine. 

92543 ...... Caloric vestibular test 

d. Codes With Site-of-Service 

Anomalies 

In previous years, we requested that 

the AMA RUC review codes that, 

according to the Medicare claims 

database, have experienced a change in 

the typical site of service since the 

original valuation of the code. For 

example, we have found services that 

originally were provided in the 

inpatient setting but for which current 

claims data show the typical case has 

shifted to being furnished outside the 

inpatient setting. Since the procedures 

were typically performed in the 

inpatient setting when the codes were 

originally valued, the work RVUs for 

these codes would have been valued to 

include the inpatient physician work 

provided, as well as to reflect the 

intensive care and follow-up normally 

associated with an inpatient procedure. 

If the typical case for the procedure has 

shifted from the inpatient setting to an 

outpatient or physician’s office setting, 

it is reasonable to expect that there have 

been changes in medical practice, and 

that such changes would represent a 

decrease in physician time or intensity 

or both. The AMA RUC reviewed and 

recommended to CMS revised work 

RVUs for 29 codes for CY 2009 and 11 

codes for CY 2010 that were identified 

as having site-of-service anomalies. 

In the CY 2010 PFS proposed and 

final rules with comment period (74 FR 

33556 and 74 FR 61777, respectively), 

we encouraged the AMA RUC to utilize 

the building block methodology when 

revaluing services with site-of-service 

anomalies. Specifically, where the AMA 

RUC has determined in its review that 

changes in the inclusion of inpatient 

hospital days, office visits, and hospital 

discharge day management services 

(that is, the ‘‘building blocks’’ of the 

code) are warranted in the revaluation 

of the code, we asked the AMA RUC to 

adjust the site-of-service anomaly code 

for the work RVUs associated with those 

changes. 

Additionally, we suggested that in 

cases where the AMA RUC has adjusted 

the pre-service, intra-service and postservice times of the code under review, 

the AMA RUC should also make 

associated work RVU adjustments to 

account for those changes. However, we 

remain concerned that in the AMA 

RUC’s recommendations of the work 

RVUs for the CYs 2009 and 2010 siteof-service anomaly codes, the AMA 

RUC may have determined that 

eliminating or reallocating pre-service 

and post-service times, hospital days, 

office visits, and hospital discharge day 

management services was appropriate to 

reflect the typical case that is now 

occurring in a different setting, but the 

work RVUs associated with those 

changes may not have been 

systematically extracted or reallocated 

from the total work RVU value for the 

service. 

In the CYs 2009 and 2010 PFS final 

rules with comment period (73 FR 

69883 and 74 FR 61776 through 61778, 

respectively), we indicated that 

although we would accept the AMA 

RUC valuations for these site-of-service 

anomaly codes on an interim basis 

through CY 2010, we had ongoing 

concerns about the methodology used 

by the AMA RUC to review these 

services. We requested that the RUC 

reexamine the site-of-service anomaly 

codes and use the building block 

methodology to revalue the services (74 

FR 61777). We also stated that we 

would continue to examine these codes 

and consider whether it would be 

appropriate to propose additional 

changes in future rulemaking. 

Accordingly, in preparation for CY 

2011 rulemaking, we conducted a 

comprehensive analysis of the codes 

that the AMA RUC reviewed for CYs 

2009 and 2010 due to site-of-service 

anomaly concerns. We systematically 

applied the reverse building block 

methodology to the 29 codes from CY 

2009 and 11 codes from CY 2010 as 

follows: 

• First, we obtained the original work 

RVU value assigned to the code (this is 

the ‘‘starting value’’) and made a list of 

the building block services with RVUs 

that were originally associated with the 

code (that is, before the AMA RUC 

reviewed the code for site-of-service 

anomalies). 

• Next, we examined the AMA RUCrecommended changes to the building 

blocks of the code. 


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• We then deducted the RVUs 

associated with the AMA RUC’s 

recommended eliminations from the 

code’s starting RVU value. 

Generally, the AMA RUC eliminated 

inpatient hospital visit building blocks 

from the value of the code since the siteof-service for the code has shifted from 

the inpatient setting to another setting. 

We note in some cases, the AMA RUC 

left an inpatient hospital visit in the 

valuation of the code. We believe this is 

inconsistent with the change in the site 

of service to non-inpatient settings. 

Accordingly, we adhered to the 

methodology and deducted the RVUs 

associated with all inpatient hospital 

visits from the starting value. In cases 

where the AMA RUC recommended 

adding or substituting outpatient visits, 

we also added or substituted the RVUs 

associated with those changes to the 

starting value. If the AMA RUC 

recommended changes to the pre-, 

intra-, or post-service times, we 

calculated the incremental change in 

RVUs associated with that time and 

either added or deducted that RVU 

amount from the starting value. We note 

that the RVU values associated with the 

incremental time change are calculated 

using the intensity associated with the 

particular pre-, intra-, or post period. 

For the intensity of the intra-service 

period, we utilized the original IWPUT 

associated with the code. The AMA 

RUC generally recommended allowing 

only half of a hospital discharge day 

management service for the site-ofservice anomaly codes. That is, CPT 

code 99238 (Hospital discharge day 

management; 30 minutes or less) has a 

work RVU value of 1.28; therefore, half 

the value associated with CPT code 

99238 is 0.64. Accordingly, if a code 

had one CPT code 99238 listed as part 

of the original valuation, we deducted 

0.64 RVUs from the starting value. 

We standardized the methodology so 

that each of the site-of-service anomaly 

codes has half of a hospital discharge 

day management service value 

accounted in the valuation. Finally, we 

note that while we eliminated the RVUs 

associated with all inpatient hospital 

visits built into the code’s starting value, 

because the typical case no longer 

occurs in the inpatient setting, we 

allowed for the possibility that in some 

cases, some part of the work which had 

been performed in the inpatient setting 

may continue to be provided even in the 

outpatient setting. Therefore, to be 

conservative in our deductions of work 

RVUs associated with the inpatient 

hospital codes from the starting values, 

we allowed the intra-time of any 

inpatient hospital visits included in the 

original valuation to migrate to the postservice period of the code. Accordingly, 

while we deducted the full RVUs of an 

inpatient hospital visit from the starting 

value, we added the intra-service time 

of the inpatient hospital visit to the 

post-service time of the code and 

accounted for the incremental change in 

RVUs. The following description 

provides an example of our 

methodology. 

CPT code 21025 (Excision of bone 

(e.g., for osteomyelitis or bone abscess); 

mandible) has a starting value of 11.07 

RVUs. Table 12 shows the building 

blocks that are included in the original 

valuation of the code. 

TABLE 12 

Pre-service 

time 

Median intraservice time 

Immediate 

post-service 

time 

99231 99232 99238 99211 99212 99213 Original 

IWPUT 

75 min ............ 120 min ......... 43 min ........... 1 visit (0.76 

RVUs).

1 visit (1.39 

RVUs).

1 visit (1.28 

RVUs).

2 visits (0.36 

RVUs).

2 visits (0.96 

RVUs).

2 visits (1.94 

RVUs).

0.0145 

The AMA RUC removed two inpatient 

hospital visits and reduced the 

outpatient visits from 6 to 4 visits. Table 

13 shows the building blocks that were 

recommended for CY 2009 by the AMA 

RUC after its review of the code for siteof-service anomalies. 

TABLE 13 

Pre-service 

time 

Median intraservice time 

Immediate 

post-service 

time 

99231 99232 99238 99211 99212 99213 Revised 

IWPUT 

85 min ............ 90 min ........... 30 min ........... ....................... ....................... ....................... ....................... 2 visits ........... 2 visits ........... 0.0530 

Next we calculated the RVUs 

associated with the changes to the 

building blocks recommended by the 

AMA RUC. We note that the immediate 

post-service value of 0.38 RVUs (Table 

14) includes 30 minutes of intra-service 

time from inpatient hospital CPT code 

99231 (Level 1 subsequent hospital care, 

per day). Also, the median intra-service 

value of 0.44 RVUs (Table 14) was 

determined using the starting IWPUT 

value of 0.0145. Additionally, our 

methodology accounted for a half of a 

hospital discharge day management 

service (CPT code 99238) for the site-ofservice anomaly code. Table 14 shows 

the RVU changes to the building blocks 

that were calculated based on the 

methodology discussed above. 

TABLE 14 

Pre-service 

time 

Median intraservice time 

Immediate 

post-service 

time 

99231 99232 99238 99211 99212 99213 

0.22 RVUs .... ¥0.44 RVUs 0.38 RVUs ... ¥0.76 RVUs ¥1.39 RVUs ¥0.64 RVUs ¥0.36 RVUs.

In the final step, the RVUs associated 

with the changes to the building blocks 

recommended by the AMA RUC (Table 

14) were deducted from or added to the 

starting value of 11.07 RVUs, which 

resulted in the CY 2011 reverse building 


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block value of 8.08 RVUs 

(11.07+0.22¥0.44+0.38¥0.76¥1.39 

¥0.64¥0.36=8.08) 

. 

The methodology discussed above 

was applied to each of the site-of-service 

anomaly codes from CYs 2009 and 2010 

and the results are summarized in 

Tables 15 and 16. 

TABLE 15—CY 2009 SITE-OF-SERVICE ANOMALY CODES 1

CPT code Short descriptor 

CY 2008 

RVUs 

(‘‘starting 

value’’) 

RUC 

Recommended 

value for 

CY 2009 

CY 2011 

Reverse building 

block value 

21025 ................ Excision of bone, lower jaw .............................................................. 11.07 9.87 8.09 

23415 ................ Release of shoulder ligament ........................................................... 10.09 9.07 10.63 

25116 ................ Remove wrist/forearm lesion ............................................................ 7.38 7.38 7.21 

42440 ................ Excise submaxillary gland ................................................................ 7.05 7.05 6.52 

52341 ................ Cysto w/ureter stricture tx ................................................................. 6.11 5.35 5.62

52342 ................ Cysto w/up stricture tx ...................................................................... 6.61 5.85 6.20 

52343 ................ Cysto w/renal stricture tx .................................................................. 7.31 6.55 5.90

52344 ................ Cysto/uretero, stricture tx ................................................................. 7.81 7.05 5.58

52345 ................ Cysto/uretero w/up stricture .............................................................. 8.31 7.55 5.76 

52346 ................ Cystouretero w/renal strict ................................................................ 9.34 8.58 6.05 

52400 ................ Cystouretero w/congen repr ............................................................. 10.06 8.66 7.00 

52500 ................ Revision of bladder neck .................................................................. 9.39 7.99 8.72 

52640 ................ Relieve bladder contracture .............................................................. 6.89 4.73 5.01 

53445 ................ Insert uro/ves nck sphincter ............................................................. 15.21 15.21 11.72

54410 ................ Remove/replace penis prosth ........................................................... 16.48 15.00 14.00 

54530 ................ Removal of testis .............................................................................. 9.31 8.35 8.88 

57287 ................ Revise/remove sling repair ............................................................... 11.49 10.97 10.20

62263 ................ Epidural lysis mult sessions ............................................................. 6.41 6.41 6.99 

62350 ................ Implant spinal canal cath .................................................................. 8.04 6.00 0.41 

62355 ................ Remove spinal canal catheter .......................................................... 6.60 4.35 -0.43 

62360 ................ Insert spine infusion device .............................................................. 3.68 4.28 -3.14 

62361 ................ Implant spine infusion pump ............................................................. 6.59 5.60 -0.92 

62362 ................ Implant spine infusion pump ............................................................. 8.58 6.05 -0.51 

62365 ................ Remove spine infusion device .......................................................... 6.57 4.60 -0.35 

63650 ................ Implant neuroelectrodes ................................................................... 7.57 7.15 4.25 

63685 ................ Insrt/redo spine n generator ............................................................. 7.87 6.00 4.80 

64708 ................ Revise arm/leg nerve ........................................................................ 6.22 6.22 6.17

64831 ................ Repair of digit nerve ......................................................................... 10.23 9.00 8.87 

65285 ................ Repair of eye wound ........................................................................ 14.43 14.43 13.52 

1We note that in this table, we have not adjusted the RVUs for these codes for the RVU changes to the evaluation and management codes 

that resulted from the CY 2010 elimination of the consultation codes (74 FR 61775). However, we note that we may, if appropriate, adjust the 

RVUs for services with global periods to account for relevant changes in the RVUs for evaluation and management services as necessary. 

TABLE 16—CY 2010 SITE-OF-SERVICE ANOMALY CODES 2

CPT code Short descriptor 

CY 2009 

RVUs 

(‘‘starting 

value’’) 

RUC 

Recommended 

value for 

CY 2010 

CY 2011 

Reverse building 

block value 

28120 ................ Part removal of ankle/heel ................................................................ 5.64 8.08 6.03 

28122 ................ Partial removal of foot bone ............................................................. 7.56 7.56 6.79 

28725 ................ Fusion of foot bones ......................................................................... 11.97 11.97 12.41 

28730 ................ Fusion of foot bones ......................................................................... 12.21 12.21 10.06 

36825 ................ Artery-vein autograft ......................................................................... 10.00 15 13.12 

42415 ................ Excise parotid gland/lesion ............................................................... 17.99 17.99 15.17 

42420 ................ Excise parotid gland/lesion ............................................................... 20.87 20.87 17.80 

49507 ................ Prp i/hern init block >5 yr ................................................................. 9.97 9.97 9.37

49521 ................ Rerepairing hernia, blocked .............................................................. 12.36 12.36 11.59

49587 ................ Rpr umbil hern, block > 5 yr ............................................................. 7.96 7.96 7.19 

61885 ................ Insrt/redo neurostim 1 array ............................................................. 7.37 7.57 3.22 

2We note that in this table, we have not adjusted the RVUs for these codes for the RVU changes to the evaluation and management codes 

that resulted from the CY 2010 elimination of the consultation codes (74 FR 61775). However, we note that we may, if appropriate, adjust the 

RVUs for services with global periods to account for relevant changes in the RVUs for evaluation and management services as necessary. 

For most codes in Tables 15 and 16, 

the CY 2011 reverse building block 

methodology produced a value that is 

somewhat lower than the AMA RUCrecommended value. While our results 

suggest that the majority of the codes 

with site-of-service anomalies continue 

to be overvalued under the AMA RUC’s 

most recent recommendations, we also 

found that the methodology may 

produce a result that is considerably 

reduced or, in several cases, a negative 

value. We understand that in previous 

years, stakeholders have expressed 

confusion as to why the application of 

a building block methodology would 

produce negative values. We believe in 

some cases, the starting value, that is, 


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the original work RVU, may have been 

misvalued using building block inputs 

that were not consistent with the 

service, although the overall work value 

of the code may have been consistent 

with the values for other similar 

services. Moreover, a number of these 

services are the Harvard-valued codes, 

for which the RVUs were established 

many years ago based on historical 

inputs that may no longer be 

appropriate for the code. An attempt to 

extract the RVUs associated with these 

inappropriate inputs through the reverse 

building block methodology could 

produce aberrant results. Furthermore, 

in some cases, we noticed that the 

original IWPUT of the code was 

negative even before the code was 

reviewed by the AMA RUC for a site-ofservice anomaly. A negative value for 

the IWPUT is counterintuitive to the 

IWPUT concept, indicating that the 

code was originally misvalued at the 

building block level. At a minimum, we 

believe that in cases where the reverse 

building block methodology produces 

aberrant results, and where clinical 

review indicates a need for further 

analysis, the codes should be referred 

back to the AMA RUC for review and 

new valuation should be performed 

based on the building block 

methodology. 

We note the application of the reverse 

building block methodology is an 

objective way to account for changes in 

the resources resulting from the change 

in the site-of-service in which the 

typical service is provided. However, 

because relative values under the PFS 

are ‘‘relative,’’ that is, where work 

relative value units for a code are 

established relative to work relative 

value units for other codes, the 

recommended methodology of valuing 

services based on input building blocks 

is best applied within the context of the 

AMA RUC discussion. For example, we 

recognize that the AMA RUC looks at 

families of codes and may assign RVUs 

based on a particular code ranking 

within the family. This method of 

valuing services preserves relativity 

within the relative value scale for that 

code family. However, we have stated 

that we believe the relative value scale 

requires each service to be valued based 

on the resources used in furnishing the 

service as specified in section 

1848(c)(1)(A) of the Act, which defines 

the physician work component to 

include ‘‘the portion of the resources 

used in furnishing the service that 

reflects physician time and intensity in 

furnishing the service.’’ Furthermore, 

section 1848(c)(2)(C)(i) of the Act 

specifies that ‘‘the Secretary shall 

determine a number of work relative 

value units (RVUs) for the service based 

on the relative resources incorporating 

physician time and intensity required in 

furnishing the service.’’ Read together, 

these two sections of the statute support 

our intention to rely on the building 

block methodology to determine 

appropriate work RVUs for codes. 

We note that we continue to rely on 

the extensive expertise provided by the 

AMA RUC to recommend appropriate 

input building blocks for codes. 

Additionally, the AMA RUC’s unique 

infrastructure and broad perspective 

permits the valuation of a code within 

the context of relativity to the entire 

relative value system. Therefore, we 

believe that the recommended 

methodology of valuing services based 

on input building blocks is best applied 

within the context of the AMA RUC 

discussion. 

Accordingly, we are requesting that 

the AMA RUC review the CPT codes 

displayed in Tables 15 and 16. In 

addition, where the application of the 

CY 2011 reverse building block 

methodology produces an aberrant 

result that is clearly not a reflection of 

physician work for the service, we are 

requesting that the AMA RUC review 

the input building blocks and 

recommend an appropriate RVU value 

that is both consistent with the building 

blocks of the code and appropriate 

relative to the values for other codes in 

the family. For other codes where the 

application of the CY 2011 reverse 

building block methodology produces a 

result that is consistent with the 

physician work for the service, we 

encourage the AMA RUC to confirm the 

values and recommend these work 

values for CY 2011. In this way, we 

would hope to receive new AMA RUC 

recommendations for all of the codes in 

Tables 15 and 16 for CY 2011. 

Furthermore, if the recommendations 

that we receive from the AMA RUC are 

not consistent with the building block 

methodology and not appropriate 

relative to the values of other services, 

and the application of the CY 2011 

reverse building block methodology 

produces a result that CMS medical 

advisors believe is consistent with the 

work for the service, we are proposing 

to adopt the CY 2011 reverse building 

block methodology values that are listed 

in Tables 15 and 16 for CY 2011. In 

cases where the reverse building block 

methodology produces a negative work 

value, we are suggesting that the AMA 

RUC review and revise the building 

blocks of the code so that a new 

valuation can be determined based on 

the building block methodology. For 

such codes, if the revised 

recommendations that we would hope 

to receive from the AMA RUC are still 

not consistent with the building block 

methodology upon revision, because we 

cannot pay for these services based on 

negative work RVUs, we are proposing 

to modify the AMA RUC-recommended 

values for these codes as CMS 

determines clinically appropriate and 

adopt the CMS-modified RVUs on a 

interim final basis for CY 2011. 

In their future work, we urge the 

AMA RUC to use the building block 

methodology when valuing services or 

provide CMS with extensive rationale 

for cases where the AMA RUC believes 

the building block methodology is 

inappropriate for a specific code. Since 

section 1848(c)(2)(L) (as added by 

section 3134 of the ACA) specifies that 

the Secretary shall establish a process to 

validate work RVUs of potentially 

misvalued codes under the PFS, as we 

have discussed earlier in this section, 

we believe codes that are valued using 

the building block methodology would 

be more likely to meet the standards of 

a systematic RVU validation process 

that could be developed in accordance 

with the requirements of the statute. 

e. Codes With ‘‘23-hour’’ Stays 

In the CY 2010 PFS proposed rule (74 

FR 33557), we requested that the AMA 

RUC review services that are typically 

performed in the outpatient setting and 

require a hospital stay of less than 24 

hours. We stated in the proposed rule 

that we believed these to be primarily 

outpatient services and expressed 

concern that the value of evaluation and 

management (E/M) visits for inpatients 

was inappropriately included in the 

valuation of codes that qualify as ‘‘23- 

hour stay’’ outpatient services. 

We received a number of comments in 

response to the discussion in the CY 

2010 proposed rule. The AMA RUC 

stated that it already values stays of less 

than 23 hours appropriately by reducing 

the hospital discharge day management 

service (that is, CPT code 99238), from 

1 day to a half day. The AMA RUC also 

explained that when the AMA RUC 

refers to 23-hour stay services in 

discussions at AMA RUC meetings, it is 

referring primarily to services that are 

reported in the Medicare claims 

database as typically outpatient 

services, but where the patient is kept 

overnight and, on occasion, even longer 

in the hospital. Because the AMA RUC 

believes the patient stays overnight in 

the hospital, it believes the inclusion of 

inpatient E/M visits to be appropriate in 

the valuation of this category of codes. 

We believe that the 23-hour stay issue 

encompasses several scenarios. The 

typical patient is commonly in the 


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hospital for less than 24 hours, which 

often means the patient may indeed stay 

overnight in the hospital. On occasion, 

the patient may stay longer than a single 

night in the hospital; however, in both 

cases, the patient is considered for 

Medicare purposes to be a hospital 

outpatient, not an inpatient, and our 

claims data support that the typical 23- 

hour stay service is billed as an 

outpatient service. Accordingly, we 

believe that the valuation of the codes 

that fall into the 23-hour stay category 

should not reflect work that is typically 

associated with an inpatient service. For 

example, inpatient E/M visit codes such 

as CPT codes 99231 (Level 1 subsequent 

hospital care, per day); 99232 (Level 2 

subsequent hospital care, per day); and 

99233 (Level 3 subsequent hospital care, 

per day), should not be included at the 

full value in the valuation of 23-hour 

stay services. 

Currently, the valuation of 23-hour 

stay services is conducted in a 

nonuniform manner by the AMA RUC. 

The AMA RUC has indicated that it 

currently includes a half hospital 

discharge day management service and 

no hospital inpatient visits for 

outpatient services with expected 

hospital stays of 23 hours or less. In 

contrast, for those outpatient services 

where the AMA RUC believes that the 

recovery period could be longer than 23 

hours, the AMA RUC stated in its 

comment on the CY 2010 PFS proposed 

rule that it currently includes a full 

hospital discharge day management 

service and one or more inpatient E/M 

visits in the code’s value. However, we 

note the typical 23-hour stay service is 

billed as an outpatient service and so 

long as the typical case continues to be 

billed as an outpatient service, we 

believe the code should not incorporate 

physician work values for services that 

are typically associated with an 

inpatient service. In the 2010 PFS 

proposed and final rule with comment 

period (74 FR 33556 and 74 FR 61777, 

respectively), we stated that we believed 

the use of inpatient E/M visit codes for 

services rendered in the post-service 

period for outpatient 23-hour stay 

procedures would result in 

overpayment for pre- and post-service 

work that would not be provided. 

Accordingly, we proposed in the CY 

2010 proposed rule (74 FR 33556 

through 33557) not to allow any 

additional inpatient E/M service to be 

billed for care furnished during the 

post-procedure period when care is 

furnished for an outpatient service 

requiring less than a 24-hour hospital 

stay. 

However, we find it is plausible that 

while the patient receiving the 23-hour 

stay service remains a hospital 

outpatient, the patient would typically 

be cared for by the physician furnishing 

the procedure during that postprocedure period. While we do not 

believe that post-procedure hospital 

‘‘visits’’ would be at the inpatient level 

since the typical case is an outpatient 

who would be ready to be discharged 

from the hospital in 23 hours or less, we 

agree that the intra-service time of the 

inpatient hospital visit may be included 

in the valuation for the 23-hour stay 

code. 

Accordingly, we are modifying our 

proposed CY 2010 approach and 

suggesting that in the future, when the 

AMA RUC reviews new and potentially 

misvalued codes that are identified as 

23-hour stay services, the AMA RUC 

would apply the following 

methodology: 

(1) Begin with the starting RVU value 

of the 23-hour stay code under review 

and decrease the hospital discharge day 

management service from one day to a 

half day. 

(2) Deduct the RVUs of inpatient 

hospital visits from the starting RVU 

value. 

(3) Reallocate the time associated with 

the intra-service portion of the inpatient 

hospital visits to the immediate postservice time of the 23-hour stay code 

under review. 

Example: A 23-hour stay code is 

currently valued at 15 RVUs and has 1 

hospital discharge day management 

service and 1 level 3 subsequent 

hospital care visit incorporated in this 

value. 

• Applying step (1): 15¥0.64* = 

14.36 

• Applying step (2): 14.36¥2** = 

12.36 

• Applying step (3): 12.36 + (30 

minutes × 0.0224)*** = 13.032 RVUs *Value associated with 1⁄2 hospital 

discharge day management service. **Value associated with an inpatient 

hospital visit, CPT code 99233. ***Value associated with the 

reallocated intra-service time multiplied 

by the post-service intensity of the 23- 

hour stay code. 

Finally, we note that since work 

relative value units are established by 

the Secretary in the context of relativity 

to other codes in the system, the 

recommended methodology for the 

evaluation of 23-hour stay codes is best 

applied within the context of relativity. 

We appreciate that the AMA RUC has 

the ability to assess the 23-hour stay 

code after application of the 

recommended methodology to ensure 

appropriate relativity of this code and 

other codes within the system. We 

strongly encourage the AMA RUC to 

apply the recommended methodology to 

ensure the consistent and appropriate 

valuation of the physician work for 

these services. 

4. Expanding the Multiple Procedure 

Payment Reduction (MPPR) Policy to 

Additional Nonsurgical Services 

a. Background 

Medicare has a longstanding policy to 

reduce payment by 50 percent for the 

second and subsequent surgical 

procedures furnished to the same 

patient by the same physician on the 

same day, largely based on the presence 

of efficiencies in the PE and pre- and 

post-surgical physician work. Effective 

January 1, 1995, the multiple procedure 

payment reduction (MPPR) policy, with 

the same percentage reduction, was 

extended to nuclear medicine diagnostic 

procedures (CPT codes 78306, 78320, 

78802, 78803, 78806, and 78807). In the 

CY 1995 PFS final rule with comment 

period (59 FR 63410), we indicated that 

we would consider applying the policy 

to other diagnostic tests in the future. 

Consistent with recommendations of 

MedPAC in its March 2005 Report to 

Congress on Medicare Payment Policy, 

under the CY 2006 PFS, the MPPR 

policy was extended to the technical 

component (TC) of certain diagnostic 

imaging procedures performed on 

contiguous areas of the body in a single 

session (70 FR 70261). The reduction 

recognizes that, for the second and 

subsequent imaging procedures, there 

are some efficiencies in clinical labor, 

supplies, and equipment time. In 

particular, certain clinical labor 

activities and supplies are not 

duplicated for subsequent procedures 

and, because equipment time and 

indirect costs are allocated based on 

clinical labor time, those would also be 

reduced accordingly. 

The imaging MPPR policy currently 

applies to computed tomography (CT) 

and computed tomographic angiography 

(CTA), magnetic resonance imaging 

(MRI) and magnetic resonance 

angiography (MRA), and ultrasound 

services within 11 families of codes 

based on imaging modality and body 

region. When we adopted the policy in 

CY 2007, we stated that we believed 

efficiencies were most likely to occur 

when contiguous body areas are the 

focus of the imaging because the patient 

and equipment have already been 

prepared for the second and subsequent 

procedures, potentially yielding 

resource savings in areas such as 

clerical time, technical preparation, and 

supplies (70 FR 45850). Therefore, the 

MPPR policy currently applies only to 

procedures involving contiguous body 


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areas within a family of codes, not 

across families, and to those procedures 

that are provided in a single session. 

Additionally, while the MPPR policy 

applies to TC-only services and to the 

TC of global services, it does not apply 

to professional component (PC) services. 

Under the current imaging MPPR 

policy, full payment is made for the TC 

of the highest-paid procedure, and 

payment is reduced by 25 percent of the 

TC for each additional procedure when 

an MPPR scenario applies. We had 

originally planned to phase in the MPPR 

policy over a 2-year period, with a 25 

percent reduction in CY 2006 and a 50 

percent reduction in CY 2007 (70 FR 

70263). However, the Deficit Reduction 

Act of 2005 (Pub. L. 109–171) (DRA) 

capped the PFS payment amount for 

most imaging procedures at the amount 

paid under the hospital Outpatient 

Prospective Payment System (OPPS). In 

view of the DRA, we determined that it 

would be prudent to retain the MPPR at 

25 percent while we continued to 

examine the appropriate payment levels 

(71 FR 69659). The DRA also exempted 

reduced expenditures attributable to the 

MPPR policy from the PFS budget 

neutrality provision. Most recently, 

effective July 1, 2010, section 3135(b) of 

the ACA increased the MPPR on the TC 

of imaging services under the policy 

established in the CY 2006 PFS final 

rule with comment period from 25 to 50 

percent and exempted the reduced 

expenditures attributable to this further 

change from the PFS budget neutrality 

provision. 

In the July 2009 GAO report entitled, 

‘‘Medicare Physician Payments: Fees 

Could Better Reflect Efficiencies 

Achieved when Services are Provided 

Together,’’ the GAO recommended that 

we take further steps to ensure that fees 

for services paid under the PFS reflect 

efficiencies that occur when services are 

performed by the same physician on the 

same beneficiary on the same day. The 

GAO recommended the following: (1) 

Expanding the existing MPPR policy to 

the PC to reflect efficiencies in 

physician work for certain imaging 

services; and (2) expanding the MPPR to 

reflect PE efficiencies that occur when 

certain nonsurgical, nonimaging 

services are provided together. The GAO 

also encouraged us to focus on service 

pairs that have the most impact on 

Medicare spending. 

In the March 2010 report, MedPAC 

noted its concerns about mispricing of 

services under the PFS. MedPAC 

indicated that it would explore whether 

expanding the unit of payment through 

packaging or bundling would improve 

payment accuracy and encourage more 

efficient use of services. 

In the CYs 2009 and 2010 PFS 

proposed rules (73 FR 38586 and 74 FR 

33554, respectively), we stated that we 

planned to analyze nonsurgical services 

commonly furnished together (for 

example, 60 to 75 percent of the time) 

to assess whether an expansion of the 

MPPR policy could be warranted. 

MedPAC encouraged us to consider 

duplicative physician work, as well as 

PE, in any expansion of the MPPR 

policy. 

b. Proposed CY 2011 Expansion of the 

Imaging Technical Component MPPR 

Policy to Additional Combinations of 

Imaging Services 

Over the past 2 years, the AMA RUC 

has examined several services billed 90 

percent or more of the time together as 

part of the potentially misvalued service 

initiative and, in several cases, created 

one code to describe the complete 

service, with a value that reflects the 

expected efficiencies. Notwithstanding 

the bundling work of the RUC, there 

may be additional imaging and other 

diagnostic services that are furnished 

together less than 90 percent of the time 

where we could still expect efficiencies 

in the TC, and in some cases in the PC, 

resulting in potential overpayment for 

these services under current policy 

when furnished together. 

Section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) 

specifies that the Secretary shall 

identify potentially misvalued codes by 

examining multiple codes that are 

frequently billed in conjunction with 

furnishing a single service, and review 

and make appropriate adjustments to 

their relative values. As a first step in 

applying this provision, we are 

proposing a limited expansion of the 

current imaging MPPR policy for CY 

2011. We will continue to review other 

possible expansions of the MPPR policy 

to the TC and/or PC of imaging 

procedures or other diagnostic tests for 

the future. Any further changes would 

be addressed in future rulemaking. 

In a related policy for hospital 

outpatient payment of imaging services, 

in the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68559 

through 68569), the OPPS adopted a 

policy to pay for two or more CT and 

CTA, MRI and MRA, or ultrasound 

procedures furnished in the same 

session through a single composite 

ambulatory payment classification 

(APC) group. These composite APC 

payments were based on the 11 families 

of codes subject to the MPPR under the 

PFS that were collapsed into 3 imaging 

families for the OPPS according to their 

modality—1 for ultrasound, 1 for CT 

and CTA, and 1 for MRI and MRA 

services. 

At that time, we stated our belief that 

the contiguous body area concept that 

was incorporated in the PFS imaging 

families was not necessary for potential 

efficiencies to be achieved in an imaging 

session. We provided examples to 

illustrate that we would not expect 

second and subsequent imaging services 

of the same modality involving 

noncontiguous body areas to require 

duplicate facility resources (comparable 

to the TC under the PFS) for clinical 

labor activities such as greeting the 

patient, providing education and 

obtaining consent, retrieving prior 

exams, setting up an intravenous 

infusion, and preparing and cleaning 

the room, any more than second and 

subsequent imaging procedures of the 

same modality involving contiguous 

body areas. While we noted that 

multiple imaging claims under the 

OPPS are generally within the same 

imaging modality and involve 

contiguous body areas the vast majority 

of the time, we estimated that the 

collapsed 3 families, as opposed to the 

11 PFS families, would add 12 percent 

additional claims to those eligible for a 

single composite APC payment under 

the OPPS based on the provision of 2 or 

more imaging services in a single 

session, allowing us to capture 

additional claims with efficiencies. 

Taking into consideration the OPPS 

policy that was adopted in the CY 2009 

OPPS/ASC final rule with comment 

period, in this proposed rule, we are 

proposing to apply the MPPR regardless 

of family, that is, the policy would 

apply to multiple imaging services 

furnished within the same family of 

codes or across families. This proposal 

would simplify the current imaging 

MPPR policy in a way that is consistent 

with the standard PFS MPPR policy for 

surgical procedures that does not group 

procedures by body region. Therefore, 

the MPPR would apply to CT and CTA, 

MRI and MRA, and ultrasound 

procedures services furnished to the 

same patient in the same session, 

regardless of the imaging modality, and 

not limited to contiguous body areas. 

Because of the different pieces of 

equipment used for CT/CTA, MRI/MRA, 

and ultrasound procedures, it would be 

highly unlikely that a single practitioner 

would furnish more than one imaging 

procedure involving 2 different 

modalities to one patient in a single 

session where the proposed MPPR 

policy would apply. On the other hand, 

while most multiple procedures 

furnished with a single modality in one 

session would involve procedures 

currently assigned to one of the 11 


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imaging families, it would not be 

uncommon for more than one imaging 

procedure of the same modality to be 

furnished across families and, like the 

scenario for hospital outpatient imaging 

services, we would expect efficiencies 

to occur in these cases. Therefore, we 

believe that an expansion of the current 

imaging MPPR policy to account for 

efficiencies in such situations would 

allow us to pay more appropriately for 

these multiple imaging procedure 

sessions, consistent with our ongoing 

efforts to address misvalued services. 

The proposed expansion of the 

imaging MPPR policy to include all of 

the current codes in a single family to 

which the standard 50 percent 

reduction for second and subsequent 

procedures would apply would reduce 

payment for 20 percent more services 

than the current MPPR policy under the 

PFS. Thus, under the CY 2011 proposal, 

we would capture additional 

efficiencies and pay more appropriately 

in these cases. We note that, as 

indicated above, section 3135(b)(2) of 

the ACA specifies that reduced 

expenditures attributable to the increase 

in the imaging MPPR from 25 to 50 

percent in CY 2011 are excluded from 

the PFS budget neutrality adjustment. 

However, the reduced payment for code 

combinations that would newly be 

subject to the imaging MPPR policy 

under this proposal would be made in 

a budget neutral manner under the PFS, 

as these new combinations are not 

included under section 1848(b)(4)(D) 

(added by section 3135(b) of the ACA), 

which addresses ‘‘single-session imaging 

to consecutive body parts’’ under the 

established imaging MPPR policy. 

Finally, we are also proposing to add 

the codes displayed in Table 17 to the 

list of imaging services subject to the 

MPPR policy in CY 2011. These codes 

were newly created for CY 2010 and are 

similar to codes currently in imaging 

family 2, titled CT and CTA (Chest/ 

Thorax/Abdomen/Pelvis). 

We further note that new CY 2010 

CPT codes 74261 (Computed 

tomography (CT) colonography, 

diagnostic, including image 

postprocessing; without contrast 

material) and 74262 (Computed 

tomography (CT) colonography, 

diagnostic, including image 

postprocessing; with contrast material(s) 

including non-contrast images, if 

performed) were added to the CY 2010 

MPPR policy through the July 2010 PFS 

quarterly update, with a retroactive 

effective date of January 1, 2010. These 

codes replaced CPT code 0067T 

(Computed tomographic (CT) 

colonography (i.e., virtual colonoscopy); 

diagnostic) in CY 2010, which was on 

the list of procedures subject to the 

imaging MPPR policy prior to CY 2010. 

As discussed earlier in this section, 

reduced expenditures attributable to the 

increase in the MPPR for multiple 

imaging procedures to consecutive body 

parts (that is, those previously 

designated in the same family of codes) 

are exempt from the budget neutrality 

provision of the PFS. However, the 

reduced expenditures attributable to the 

MPPR for combinations of multiple 

imaging procedures that we are 

proposing for CY 2011 (the MPPR for 

multiple imaging procedures not 

involving consecutive body parts) 

would be subject to budget neutrality 

adjustment under the PFS. We note that 

this formulation for whether reduced 

expenditures are exempt from budget 

neutrality applies both to procedures 

currently subject to the imaging MPPR 

and to new codes that are subject to the 

policy in CY 2011 and in future years. 

To the extent that imaging procedures 

described by the new codes are 

furnished in combination with other 

procedures that are subject to the 

imaging MPPR on consecutive body 

areas, the reduced expenditures 

attributable to the MPPR for these 

combinations would be exempt from the 

PFS budget neutrality adjustment. 

The complete list of codes subject to 

the proposed CY 2011 MPPR policy for 

diagnostic imaging services is included 

in Addendum F to this proposed rule. 

TABLE 17—PROPOSED CPT CODE ADDITIONS TO THE DIAGNOSTIC IMAGING MPPR POLICY FOR CY 2011 

CPT code Short descriptor 

75571 ....... Ct hrt w/o dye w/ca test. 

75572 ....... Ct hrt w/3d image. 

75573 ....... Ct hrt w/3d image, congen. 

75574 ....... Ct angio hrt w/3d image. 

c. Proposed CY 2011 Expansion of the 

MPPR Policy to Therapy Services 

In the July 2009 GAO report entitled, 

‘‘Medicare Physician Payments: Fees 

Could Better Reflect Efficiencies 

Achieved when Services are Provided 

Together,’’ the GAO found efficiencies 

when multiple physical therapy services 

were furnished in one session and 

concluded that an MPPR policy could 

be appropriate for these services. In the 

report, the GAO noted that officials from 

the AMA RUC explained that time spent 

on pre-service and post-service therapy 

activities is spread across the number of 

services in a typical session in order to 

avoid duplication of the PE for the 

services. Nevertheless, the GAO found 

that there was duplication of certain 

activities in the intra-service period, and 

provided the example of time spent 

testing range of motion or muscle 

flexibility that was duplicated in 

commonly observed code pairs. 

In the typical clinical scenario for 

therapy services, we believe that 

therapy services are misvalued for PFS 

payment when multiple services are 

furnished to a patient in a single session 

because duplicate clinical labor and 

supplies are included in the PE of the 

services furnished. We believe this 

duplication should be accounted for 

under the PFS, as we currently account 

for efficiencies in multiple surgical and 

multiple diagnostic imaging procedures 

furnished in a single session. Over the 

past 2 years, the AMA RUC has 

examined several services billed 90 

percent or more of the time together as 

part of its potentially misvalued service 

initiative and, in several cases, created 

one code to describe the complete 

service, with a value that reflects the 

expected efficiencies. Notwithstanding 

the AMA RUC’s analyses, in most cases 

it has not created one code to describe 

a complete therapy service, in part 

because many of the core therapy CPT 

codes are timed codes based on 

increments of treatment time. 

Therefore, we are proposing a further 

step to implement section 1848(c)(2)(K) 

of the Act (as added by section 3134 of 

the ACA) that specifies that the 

Secretary shall identify potentially 

misvalued codes by examining multiple 

codes that are frequently billed in 

conjunction with furnishing a single 

service. For CY 2011 we are proposing 

an MPPR policy for the HCPCS codes 

listed in Table 18, specifically the 

separately payable ‘‘always therapy’’ 

services that are only paid by Medicare 

when furnished under a therapy plan of 

care. These services are designated 

‘‘always therapy’’ services regardless of 

who furnishes them and always require 

therapy modifiers to be reported, 

specifically –GP (Services rendered 

under outpatient physical therapy plan 

of care); –GO (Services rendered under 

outpatient occupational therapy plan of 

care); or –GN (Services rendered under 

outpatient speech pathology plan of 

care). The therapy codes are available in 

a file on the CMS Web site at: http:// 

www.cms.gov/TherapyServices/. We 

have excluded both contractor-priced 

and bundled codes from Table 18 

because, under our proposal, an MPPR 

would not be applicable for ‘‘always 

therapy’’ services furnished in 

combination with these codes. In the 

case of bundled codes that are not 

separately paid, there are no explicit 

efficiencies in the direct PE to be 

reflected in payment for the second and 

subsequent therapy services furnished 


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to the patient on the same day. In the 

case of contractor-priced codes, there is 

no nationally established pricing that 

could be uniformly adjusted to reflect 

the expected efficiencies when multiple 

therapy services are furnished. 

TABLE 18—SEPARATELY PAYABLE

‘‘ALWAYS THERAPY’’ SERVICES SUBJECT TO THE PROPOSED CY 2011 

MPPR POLICY* 

CPT/ 

HCPCS 

code 

Short descriptor 

92506 ....... Speech/hearing evaluation. 

92507 ....... Speech/hearing therapy. 

92508 ....... Speech/hearing therapy. 

92526 ....... Oral function therapy. 

92597 ....... Oral speech device eval. 

92607 ....... Ex for speech device rx, 1hr. 

92608 ....... Ex for speech device rx addl. 

92609 ....... Use of speech device service. 

96125 ....... Cognitive test by hc pro. 

97001 ....... Pt evaluation. 

97002 ....... Pt re-evaluation. 

97003 ....... Ot evaluation. 

97004 ....... Ot re-evaluation. 

97010 ....... Hot or cold packs therapy. 

97012 ....... Mechanical traction therapy. 

97016 ....... Vasopneumatic device therapy. 

97018 ....... Paraffin bath therapy. 

97022 ....... Whirlpool therapy. 

97024 ....... Diathermy eg, microwave. 

97026 ....... Infrared therapy. 

97028 ....... Ultraviolet therapy. 

97032 ....... Electrical stimulation. 

97033 ....... Electric current therapy. 

97034 ....... Contrast bath therapy. 

97035 ....... Ultrasound therapy. 

97036 ....... Hydrotherapy. 

97110 ....... Therapeutic exercises. 

97112 ....... Neuromuscular reeducation. 

97113 ....... Aquatic therapy/exercises. 

97116 ....... Gait training therapy. 

97124 ....... Massage therapy. 

97140 ....... Manual therapy. 

97150 ....... Group therapeutic procedures. 

97530 ....... Therapeutic activities. 

97533 ....... Sensory integration. 

97535 ....... Self care mngment training. 

97537 ....... Community/work reintegration. 

97542 ....... Wheelchair mngment training. 

97750 ....... Physical performance test. 

97755 ....... Assistive technology assess. 

97760 ....... Orthotic mgmt and training. 

97761 ....... Prosthetic training. 

97762 ....... C/o for orthotic/prosth use. 

G0281 ...... Elec stim unattend for press. 

G0283 ...... Elec stim other than wound. 

G0329 ...... Electromagntic tx for ulcers. 

* Excludes contractor-priced and bundled 

codes. 

At this time, we are not proposing an 

MPPR policy for ‘‘sometimes therapy’’ 

services, specifically those services that 

may be furnished under a therapy plan 

of care or otherwise by physicians or 

NPPs as medical services. We believe 

that the care patterns are different for 

the latter group of services that may 

sometimes be furnished as therapy 

services, and note that they are less 

commonly furnished with multiple 

services in a single session than the 

‘‘always therapy’’ services. In the 

discussion that follows, our reference to 

therapy services means those HCPCS 

codes designated annually as ‘‘always 

therapy’’ services by CMS. 

Based on CY 2009 PFS claims data, 

we identified over 500 therapy service 

code pairs billed for the same patient in 

a single session. We then reviewed a 

sample of the most common therapy 

code pairs, specifically those high 

volume code pairs with more than 

250,000 combined services per year, to 

examine the potential for duplication in 

the PE. These codes pairs represented 

more than half of the occurrences of 

therapy services billed together. While 

we acknowledge that the PE inputs per 

service for some therapy services were 

included in the direct PE database based 

on one-half of the total PE inputs 

required for two services provided in a 

single session, which would account for 

some duplication, this was not the case 

for all combinations of therapy services. 

Of the high volume therapy services 

examined, approximately one-fourth of 

the code pairs were not valued based on 

two services. In addition, we note that 

the CY 2009 PFS claims data show that 

when multiple therapy services are 

billed on a claim for the same date of 

service, the median number is four 

services per day. Therefore, even for 

those clinical labor times that may 

reflect the allocation of total time across 

two units of therapy services, we believe 

that some elements of the current PE 

inputs are duplicated based on current 

patterns of therapy service delivery 

where most multiple service claims 

involve delivery of more than 2 services 

in a session. 

Duplicate labor activities currently 

included in the PE for the service period 

for these high volume pairs of therapy 

services are as follows: clean room/ 

equipment; education/instruction/ 

counseling/coordinating home care; 

greet patient/provide gowning; obtain 

measurements, for example, ROM/ 

strength/edema; and post-treatment 

patient assistance. The most common 

duplicate supply item included in the 

PE was the multispecialty visit pack. 

Examples of duplicated and 

unduplicated labor activities and 

supplies for two sample therapy code 

pairs and our estimates of potential 

clinically appropriate time and quantity 

reductions for multiple service sessions 

are displayed in Table 19. We note that 

CY 2009 PFS claims data for these 

sample code pairs include over 3.4 

million pairs of CPT codes 97112 

(Therapeutic procedure, 1 or more areas, 

each 15 minutes; neuromuscular 

reeducation of movement, balance, 

coordination, kinesthetic sense, posture, 

and/or proprioception for sitting and/or 

standing activities) and 97110 

(Therapeutic procedure, 1 or more areas, 

each 15 minutes; therapeutic exercises 

to develop strength and endurance, 

range of motion and flexibility) 

furnished by the same practitioner on 

the same day and over 500,000 pairs of 

CPT codes 97001 (Physical therapy 

evaluation) and 97140 (Manual therapy 

techniques (e.g., mobilization/ 

manipulation, manual lymphatic 

drainage, manual traction), 1 or more 

regions, each 15 minutes). 

Table 19: Examples of Duplicate PE 

Inputs for Therapy Services That 

Should Be Accounted for When 

Multiple Services Are Furnished in One 

Session 

Example 1: CPT code 97112 

(Therapeutic procedure, 1 or more areas, 

each 15 minutes; neuromuscular 

reeducation of movement, balance, 

coordination, kinesthetic sense, posture, 

and/or proprioception for sitting and/or 

standing activities) and CPT code 97110 

(Therapeutic procedure, 1 or more areas, 

each 15 minutes; therapeutic exercises 

to develop strength and endurance, 

range of motion and flexibility) 

Staff description Labor task description Time period 

Code A 

97112 

labor task 

time 

Code B 

97110 

labor task 

time 

Total minute 

reduction 

Physical Therapy Aide Clean room/equipment .................................... Service Period, PostService.1 1 1 


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Staff description Labor task description Time period 

Code A 

97112 

labor task 

time 

Code B 

97110 

labor task 

time 

Total minute 

reduction 

Physical Therapy Assistant.Education/instruction/counseling/coord home 

care.

Service Period, PostService.2 .5 2 .5 2 .5 

Physical Therapy Aide Greet patient/provide gowning ........................ Service Period, PreService.1 .5 1 .5 1 .5 

Physical Therapy Assistant.Obtain measurements, e.g., ROM/strength/ 

edema.

Service Period, PreService.1 .5 1 .5 1 .5 

Physical Therapy Assistant.Obtain vital signs ............................................ Service Period, PreService.1 1 1 

Physical Therapy Assistant.Phone calls between visits with patient, family Post-Service Period ... 1 1 1 

Physical Therapy Aide Post treatment patient assistance .................. Service Period, PostService.1 1 1 

Physical Therapy Assistant.Review/read documentation, plan of care, 

treatment goals.

Pre-Service Period ..... 1 .5 1 .5 1 .5 

Physical Therapy Aide Verify/Coordinate availability of resources/ 

equip.

Pre-Service Period ..... 1 .5 1 .5 1 .5 

Supply description Price 

Code A 

97112 

quantity 

Code B 

97110 

quantity 

Code B 

97110 

quantity reduction 

pack, minimum multi-specialty visit ................................................................. $1.14 0.5 0.5 0 

Thera-bands (6in width) ................................................................................... 0.06 1.5 1.5 1.5 

Example 2: CPT code 97001 (Physical 

therapy evaluation) and CPT Code 

97140 (Manual therapy techniques (eg, 

mobilization/manipulation, manual 

lymphatic drainage, manual traction), 1 

or more regions, each 15 minutes) 

Staff description Labor task description Time period 

Code A 

97001 

labor task 

time 

Code B 

97140 

labor task 

time 

Total minute 

reduction 

Physical Therapy Aide Clean room/equipment .................................... Service Period, PostService.3 1 1 

Physical Therapy Assistant.Education/instruction/counseling/coord home 

care.

Service Period, PostService.2 1 1 

Physical Therapy Aide Greet patient/provide gowning ........................ Service Period, PreService.3 1 .5 1 .5 

Physical Therapy Assistant.Obtain measurements, e.g., ROM/strength/ 

edema.

Service Period, PreService.8 1 .5 1 .5 

Physical Therapy Assistant.Obtain vital signs ............................................ Service Period, PreService.3 1 1 

Physical Therapy Assistant.Phone calls between visits with patient, family Post-Service Period ... 2 1 1 

Physical Therapy Assistant.Review/read documentation, plan of care, 

treatment goals.

Pre-Service Period ..... 1 .5 .5 

Physical Therapy Aide Verify/Coordinate availability of resources/ 

equip.

Pre-Service Period ..... 3 1 .5 1 .5 

Physical Therapy Aide Prep and position patient ................................ Service Period, PreService.2 0 0 

Physical Therapy Aide Prepare room, equipment, supplies ................ Service Period, PreService.2 0 0 

Physical Therapy Aide Post treatment assistance .............................. Service Period, PostService.0 1 0 

Supply description Price 

Code A 

97001 

quantity 

Code B 

97140 

quantity 

Code B 

97140 

quantity reduction 

pack, minimum multi-specialty visit ............................................................. $1 .14 1 0.5 0 .5 

lotion, message, unscented ......................................................................... 0 .158 0 0.5 0 


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We did not remove minutes for 

clinical labor tasks that were not 

duplicated. For example, for CPT code 

pair 97001 and 97140 the following 

tasks were not duplicated: Post 

treatment patient assistance; prep and 

position patient; and prepare room, 

equipment, and supplies. In addition, 

we did not remove any supply items 

that would be required for only one of 

the separate services because these 

would not be duplicated in the PE 

applicable to the combination of 

services. We estimated no reduction for 

equipment time, even though 

efficiencies would be expected for 

equipment that is used in both services 

when they are furnished together. 

Finally, a corresponding reduction to 

the indirect expenses is appropriate 

since indirect costs are allocated 

partially based on direct costs. For five 

high volume therapy code pairs that 

each occur over 2 million time in PFS 

claims for multiple therapy services and 

account for almost half of such claims, 

we estimated that the resulting 

reduction in the PE for the lower paying 

code would range from 28 to 56 percent. 

In summary, given the duplicative 

clinical labor activities and supplies as 

shown in the code combination 

examples, we believe it would be 

appropriate to extend the 50 percent 

MPPR policy that is currently applied to 

surgical services and the TC of imaging 

services, to the PE component of certain 

therapy services. Specifically, we are 

proposing to apply a 50 percent 

payment reduction to the PE component 

of the second and subsequent therapy 

services for multiple ‘‘always therapy’’ 

services furnished to a single patient in 

a single day. Because it would be 

difficult to determine the precise 

beginning and end of therapy sessions 

and we do not believe that beneficiaries 

would typically have more than one 

therapy session in a single day, we are 

proposing to apply the 50 percent MPPR 

policy to the PE component of 

subsequent therapy services provided to 

the same patient on the same day, rather 

than in the same session. 

We note that many therapy services 

are time-based CPT codes, so multiple 

units of a single code may be billed for 

a single session that lasts for a longer 

period of time than one unit of the code. 

The proposed MPPR policy would 

apply to multiple units of the same 

therapy service, as well as to multiple 

different services, when furnished to the 

same patient on the same day. Full 

payment would be made for the service 

or unit with the highest PE and payment 

would be made at 50 percent of the PE 

component for the second and 

subsequent procedures or units of the 

service. The work and malpractice 

components of the therapy service 

payment would not be reduced. For 

therapy services furnished by a group 

practice or ‘‘incident to’’ a physician’s 

service, the MPPR would apply to all 

‘‘always therapy’’ services furnished to a 

patient on the same day, regardless of 

whether the services are provided in 

one therapy discipline or multiple 

disciplines, for example, physical 

therapy, occupational therapy, or 

speech-language pathology. The 

proposed CY 2011 MPPR policy would 

apply to both those services paid under 

the PFS that are furnished in the office 

setting and those services paid at the 

PFS rates that are furnished by 

outpatient hospitals, home health 

agencies, comprehensive outpatient 

rehabilitation facilities (CORFs), and 

other entities that are paid by Medicare 

for outpatient therapy services. Table 20 

provides a sample calculation of the 

current and proposed CY 2011 payment 

for multiple therapy services furnished 

on the same day. For those services paid 

under the PFS, the PFS budget 

neutrality provision would apply so that 

the estimated reduced expenditures for 

therapy services would be redistributed 

to increase payment for other PFS 

services. 

TABLE 20—SAMPLE PROPOSED PAYMENT CALCULATION FOR MULTIPLE THERAPY SERVICES FURNISHED TO A SINGLE

PATIENT ON THE SAME DAY

Procedure 1 

Unit 1 

Procedure 1 

Unit 2 Procedure 2 

Current 

total 

payment 

Proposed 

CY 2011 

total 

payment 

Proposed payment calculation 

Work ................................ $7.00 $7.00 $11.00 $25.00 $25.00 no reduction. 

PE ................................... 10.00 10.00 8.00 28.00 19.00 $10 + (0.5 × $10) + (0.5 × $8). 

Malpractice ...................... 1.00 1.00 1.00 3.00 3.00 no reduction. 

Total ......................... 18.00 18.00 20.00 56.00 47.00 $18 + $7 + (0.5 × $10) + $1 + $11 + 

(0.5 × $8) + $1. 

We believe this proposed therapy 

MPPR policy would provide more 

appropriate payment for therapy 

services that are commonly furnished 

together by taking into account the 

duplicative clinical labor activities and 

supplies in the PE that are not furnished 

more than once in the single therapy 

session. This approach is consistent 

with the statutory requirement for the 

Secretary to identify, review, and adjust 

the relative values of potentially 

misvalued services under the PFS as 

specified by section 3134 of the ACA. 

We also believe this proposed policy is 

responsive to Congressional concerns 

about significant growth in therapy 

spending and to MedPAC and GAO 

recommendations regarding the 

expansion of MPPR policies under the 

PFS to account for additional 

efficiencies. We note that paying more 

appropriately for therapy services based 

on PE relative values that are adjusted 

for the clinical scenario under which 

the services are furnished would result 

in reduced therapy expenditures, and 

beneficiaries would be able to receive 

more medically necessary outpatient 

therapy services before reaching the 

therapy cap. For a further discussion of 

potential alternatives to the therapy 

caps, we refer readers to section III.A.2. 

of this proposed rule. 

5. High Cost Supplies 

a. Background 

MedPAC and the AMA RUC have 

long recommended that CMS establish a 

frequent price update process for highcost supplies that are direct PE inputs 

in the PE database for services paid 

under the PFS because of their 

speculation that prices for these items 

may decrease over time as competition 

increases and new technologies 

disseminate into medical practice. 

MedPAC in particular has perennially 

noted that it is important for CMS to 

update the prices of high-priced 

supplies on a regular basis as inaccurate 

prices can distort PE RVUs over time, 


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contributing to the misvaluing of 

established services under the PFS. 

Most of the current prices for highcost supplies included in the direct PE 

database are from 2004 or earlier. There 

are currently 62 unique supplies with 

prices of $150 or more in the proposed 

CY 2011 PE database, which is available 

on the CMS Web site under the 

supporting data files for the CY 2011 

PFS proposed rule at http:// 

www.cms.gov/PhysicianFeeSched/. 

Finally, we note that we do not actually 

pay the supply prices included in the 

PE database but, instead, use them to 

develop the PE RVUs according to our 

standard PE methodology as described 

in section II.A.2. of this proposed rule. 

Payment for a procedure that uses a 

supply is based upon the PE RVUs that 

result from the PE methodology, and 

supplies are among the direct PE inputs 

for procedures. Therefore, it is the 

relativity of high-cost supply prices to 

prices for other PE items (equipment, 

low-cost supplies, and clinical labor) 

that is important. 

Accordingly, in the CY 2009 PFS 

proposed rule (73 FR 38582), we 

proposed a process to update the prices 

for high-cost supplies priced at $150 or 

more that are included in the PE inputs 

for procedures paid under the PFS PE 

methodology. The CY 2009 proposed 

rule described a publicly transparent 

process in which CMS would publish a 

list of the high-cost supplies in the PFS 

proposed rule (65 supplies were 

included in the CY 2009 PFS proposed 

rule), and specialty societies or other 

relevant organizations would provide 

acceptable documentation supporting 

the pricing for the supplies during the 

60-day public comment period. 

Furthermore, in that same proposed rule 

(73 FR 38582), we provided guidance on 

what constitutes valid, reliable 

documentation that reflects the typical 

price of the high-cost item in the 

marketplace. We outlined examples of 

acceptable documentation, such as a 

detailed description (including system 

components), sources, and current 

pricing information, confirmed by 

copies of catalog pages, invoices, and 

quotes from manufacturers, vendors, or 

distributors. We indicated that 

documentation that does not include 

specific pricing information such as 

phone numbers and addresses of 

manufacturers, vendors, or distributors 

or Web site links without pricing 

information would not be acceptable. 

We also noted that if acceptable 

documentation was not received within 

the proposed rule’s 60-day public 

comment period, we would use prices 

from the Internet, retail vendors, and 

supply catalogs to determine the 

appropriate cost, and that we would use 

the lowest price identified by these 

sources (73 FR 38582). Finally, we 

solicited public comments on 

alternatives that could be used to update 

pricing information in the absence of 

acceptable documentation provided by 

specialty societies or other interested 

organizations. 

In the CY 2009 PFS final rule with 

comment period (73 FR 69882), we 

indicated that we received many 

comments on the proposed process and, 

while some commenters expressed 

support, others believed the proposed 

process was flawed and burdensome. 

Moreover, although we received some 

data in response to our request for 

information on the 65 high-cost supplies 

with prices of $150 or more, much of 

what we received was not complete or 

did not represent typical market prices. 

In particular, we expressed concern that 

the submitted data often represented 

manufacturer list prices for the premier 

models of many supplies, while we 

believed there were less expensive 

alternatives. Therefore, we were unable 

to determine the most appropriate, 

typical supply prices for our PFS 

payment methodology that prices the 

typical service described by a HCPCS 

code. Rather than finalizing the 

proposed process for updating high-cost 

supplies and revising the prices for the 

65 supplies based on inadequate pricing 

information, we stated in the CY 2009 

PFS final rule with comment period (73 

FR 69882) that we would research the 

possibility of using an independent 

contractor to assist us in obtaining 

accurate pricing information. 

Furthermore, we informed the public 

that we planned to study the limitations 

of available pricing data and determine 

how to revise our proposed process to 

elicit better data. 

In the CY 2010 PFS proposed rule and 

final rule with comment period (74 FR 

33554 and 61776, respectively), we 

stated that we were continuing to 

examine ways to obtain accurate pricing 

information for high-cost supplies. We 

noted again in the CY 2010 PFS 

proposed rule that we would depend 

upon the cooperation of the medical 

community to obtain typical prices in 

the marketplace, and we provided 

stakeholders with another opportunity 

to submit public comments on the 

process. In the CY 2010 PFS final rule 

with comment period, we 

acknowledged commenters’ general 

support for an initiative to ensure 

accurate pricing of high-cost supplies. 

In general, the commenters strongly 

preferred a transparent and public 

process, and we stated that we would 

consider this perspective as we explore 

the best way to ensure that accurate 

supply pricing information is used in 

the PFS payment methodology. 

b. Future Updates to the Prices of HighCost Supplies 

In working towards refining a process 

to update the prices of high-cost 

supplies and consistent with our 

intention expressed in the CY 2009 PFS 

final rule with comment period (73 FR 

69882), we contracted with an 

independent contractor during CY 2009 

to help us study the availability of 

accurate pricing information. We 

requested that the independent 

contractor, L&M Policy Research, 

research pricing information for the 65 

high-cost supplies listed in the CY 2009 

proposed rule (73 FR 38583 through 

38585) and determine what, if any, 

pricing information reflecting typical 

market prices could be obtained for 

these high-cost supplies. 

We first requested that the contractor 

explore publicly available sources to 

obtain typical market prices for these 

supplies. The contractor utilized supply 

vendor catalogs and Web sites and 

directly contacted vendors, 

manufacturers, group purchasing 

organizations (GPOs), and any other 

suppliers that the contractor identified 

in their research in order to identify 

prices for each of the supplies. Where 

more than one version of a supply item 

appeared to match a description of a 

high-cost supply and/or more than one 

possible vendor or manufacturer was 

identified, the contractor attempted to 

obtain prices from the multiple sources. 

Upon review of the high-cost supply 

list, the contractor refined the list to 62 

unique high-cost items with prices of 

$150 or more for the study. The original 

list only consisted of 64 items but 

included one item inadvertently listed 

twice (CMS Supply Code SD207 (suture 

device for vessel closure (Perclose A–T)) 

and one item (CMS Supply Code SH079 

(collagen implant)) that was deleted 

from the PE database after CY 2007 

because it was no longer used as an 

input for any codes. While the 

contractor was able to obtain prices for 

37 of the 62 unique supplies, the 

contractor was unable to obtain pricing 

information for the remaining 25 

supplies. Documentation of these prices, 

a requirement we discussed in the CY 

2009 PFS proposed rule (73 FR 38582), 

was only obtained for 25 of the 36 

supplies with new pricing information. 

For the remainder, while the contractor 

was given price quotes over the phone, 

the sales agents or customer service 

representatives declined to provide any 

form of written documentation, in some 

cases because company policies 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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restricted providing pricing 

documentation to prospective customers 

without an account. Moreover, 

information on typical discounts was 

obtained for only seven products, and 

only one discount was documented. In 

the case of these products, companies 

disclosed the maximum available 

discounts, ranging from 18 percent to 45 

percent. Relative to prices currently 

included in the PE database, the 

contractor found higher prices for the 

majority of the medical supplies that 

were researched, specifically 23 

supplies with higher prices, 8 with 

lower prices, and 3 with the same price. 

The high-cost supplies studied by the 

contractor and their current database 

prices are displayed in Table 20. 

TABLE 20—HIGH-COST SUPPLIES WITH PRICES OF $150 OR GREATER IN THE PFS DIRECT PE DATABASE THAT WERE

STUDIED BY THE CMS CONTRACTOR

CMS supply 

code Supply description Current database unit price 

Associated CPT 

codes 

stent, ureteral, wguidewire, 3cm flexible tip ........................................................................... $235 52332 

probe, cryoablation, renal ...................................................................................................... 1,175 50593 

catheter, intradiscal (spineCATH) .......................................................................................... 1,380 22526, 22527 

probe, cryoablation (Visica ICE 30 or 40) ............................................................................. 1,589 19105 

kit, capsule, ESO, endoscopy w-application supplies (ESO) ................................................ 450 91111 

catheter, balloon, lacrimal ...................................................................................................... 306 68816 

catheter, CVA, system, tunneled w-port, dual (LifeSite) ....................................................... 1,750 36566 

stent, vascular, deployment system, Cordis SMART ............................................................ 1,645 37205, 37206 

agent, embolic, 2 ml uou ....................................................................................................... 258 37210 

tube, jejunostomy ................................................................................................................... 195 49441, 49446, 

49451, 49452 

SA005 ......... kit, capsule endoscopy w-application supplies (M2A) ........................................................... 450 91110 

SA010 ......... kit, CVA catheter, tunneled, without portpump ...................................................................... 308 36557, 36558, 

36581 

SA011 ......... kit, CVA catheter, tunneled, with subcut port ........................................................................ 495 36560, 36561, 

36563, 36582, 

36583 

SA015 ......... kit, for percutaneous thrombolytic device (Trerotola) ............................................................ 488 36870, 37184, 

37186, 37187, 

37188 

SA020 ......... kit, loop snare (Microvena) .................................................................................................... 275 36595, 37203 

SA022 ......... kit, percutaneous neuro test stimulation ................................................................................ 305 63610, 64561 

SA024 ......... kit, photopheresis procedure .................................................................................................. 858 36522 

SA025 ......... kit, PICC with subcut port ...................................................................................................... 586 36570, 36571, 

36585 

SA036 ......... kit, transurethral microwave thermotherapy ........................................................................... 1,149 53850 

SA037 ......... kit, transurethral needle ablation (TUNA) .............................................................................. 1,050 53852 

SA038 ......... kit, transurethral waterinduced thermotherapy ...................................................................... 650 53853 

SA039 ......... kit, vertebroplasty (LP2, CDO) ............................................................................................... 696 22520, 22521 

SA074 ......... kit, endovascular laser treatment ........................................................................................... 519 36478 

SA075 ......... kit, hysteroscopic tubal implant for sterilization ..................................................................... 1,245 58565 

SA077 ......... kit, pleural catheter insertion .................................................................................................. 329 32550, 96440 

SA087 ......... tray, RTS applicator (Mammosite) ......................................................................................... 2,550 19296 

SA091 ......... tray, scoop, fast track system ................................................................................................ 750 31730 

SA092 ......... kit, gene, MLL fusion .............................................................................................................. 1,395 88385 

SA093 ......... kit, priming, random ............................................................................................................... 1 463 88385, 88386 

SC085 ......... tubing set, plasma exchange ................................................................................................. 173 36514 

SD018 ......... catheter, balloon, thermal ablation (Thermachoice) .............................................................. 727 58353 

SD019 ......... catheter, balloon, ureteral-GI (strictures) ............................................................................... 166 43456, 45303, 

45340, 45386, 

46604 

SD020 ......... catheter, CVA, tunneled, dual (Tesio) ................................................................................... 355 36565 

SD023 ......... catheter, enteroclysis ............................................................................................................. 183 74251, 74260, 

89100, 89105, 

89130, 89132, 

89135, 89136, 

89140, 89141 

SD058 ......... electrode, grid ........................................................................................................................ 475 95829 

SD072 ......... eyelid weight implant, gold ..................................................................................................... 218 67912 

SD073 ......... fiducial screws (set of 4) ........................................................................................................ 2 558 77011, 77301 

SD094 ......... mammotome probe ................................................................................................................ 200 19103 

SD109 ......... probe, radiofrequency, 3 array (StarBurstSDE) ..................................................................... 1,995 20982, 32998, 

41530, 50592 

SD151 ......... catheter, balloon, low profile PTA .......................................................................................... 432 35470, 35471, 

35474 

SD152 ......... catheter, balloon, PTA ........................................................................................................... 244 35472, 35473, 

35475, 35476, 

G0392, G0393 

SD154 ......... catheter, microcatheter (selective 3rd order) ......................................................................... 338 36217, 36247, 

36481, 37183, 

37210 


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TABLE 20—HIGH-COST SUPPLIES WITH PRICES OF $150 OR GREATER IN THE PFS DIRECT PE DATABASE THAT WERE

STUDIED BY THE CMS CONTRACTOR—Continued 

CMS supply 

code Supply description Current database unit price 

Associated CPT 

codes 

SD155 ......... catheter, RF endovenous occlusion ...................................................................................... 725 36475 

SD175 ......... guidewire, steerable (Transcend) .......................................................................................... 180 36217, 36247, 

36481, 37183, 

37205, 37206, 

37210, 49440, 

49441, 49442, 

49446, 49450, 

49451, 49452, 

49460 

SD177 ......... hysteroscope, ablation device ................................................................................................ 1,146 58563 

SD185 ......... plasma antibody adsorption column (Prosorba) .................................................................... 1,150 36515 

SD186 ......... Plasma LDL adsorption column (Liposorber) ........................................................................ 1,380 36516 

SD189 ......... plate, surgical, mini-compression, 4 hole .............................................................................. 226 21208 

SD191 ......... plate, surgical, reconstruction, left, 5 × 16 hole ..................................................................... 719 21125, 21127, 

21215 

SD193 ......... plate, surgical, rigid comminuted fracture .............................................................................. 389 21461, 21462 

SD204 ......... sensor, pH capsule (Bravo) ................................................................................................... 225 91035 

SD205 ......... sheath, endoscope ultrasound balloon .................................................................................. 154 31620 

SD207 ......... suture device for vessel closure (Perclose A–T) ................................................................... 225 35470, 35471, 

35472, 35473, 

35474, 35475, 

37184, 37187, 

37188, 37205, 

G0392 

SD215 ......... probe, endometrial cryoablation (Her Option) ....................................................................... 1,250 58356 

SD216 ......... catheter, balloon, esophageal or rectal (graded distention test) ........................................... 165 91040, 91120 

SD218 ......... stent, ureteral, without guidewire ........................................................................................... 162 50382, 50384, 

50385 

SF028 .......... laser tip (single use) ............................................................................................................... 290 30117, 52214, 

52224, 52317 

SF029 .......... laser tip, bare (single use) ..................................................................................................... 150 46917, 46924 

SF030 .......... laser tip, diffuser fiber ............................................................................................................ 850 52647, 52648 

SL055 .......... DNA stain kit (per test) .......................................................................................................... 3 150 88358 

SL209 .......... array kit, Genosensor ............................................................................................................. 2,121 88386 

SL225 .......... gas, nitogen, ultra-high purity (compressed) grade 5.0 ......................................................... 190 88385, 88386 

1Six pack. 

2Set of 4. 

3 10 pack. 

Next, we directed the contractor to 

access the United States General 

Services Administration (GSA) medical 

supply schedule to augment the results 

obtained through review of vendor 

materials and direct contact with 

vendors, manufacturers, and GPOs. We 

note that the GSA establishes long-term 

government-wide contracts with 

commercial firms for many products, 

negotiating contracts and determining 

prices to be fair and reasonable prior to 

placing them on schedule. Included on 

the schedule are thousands of medical 

supplies at prices that, in most cases, 

are established through competition. 

The GSA schedule is an open 

solicitation and a business of any size, 

if it is stable and financially sound, can 

request to be included on the schedule. 

GSA’s vendors usually are nationwide 

vendors with substantial nongovernment sales, and products on the 

schedule must be manufactured in the 

U.S. or in a nation with a trade 

agreement with the United States. 

Submissions for the schedule are 

received 365 days per year, vendor 

contracts can be of varying lengths, and 

vendors can add or delete products from 

the schedule. Depending on the 

aggregate cost estimate associated with 

the vendor’s supply items, the time to 

achieve inclusion on the schedule can 

vary from as short as several months to 

as long as 2 years. The GSA has 

delegated authority to the Department of 

Veterans Affairs (VA) to procure 

medical supplies under the VA Federal 

Supply Schedules Program. 

Using the GSA general search engine 

under the category ‘‘Laboratory, 

Scientific, & Medical’’ available at 

https://www.gsaadvantage.gov/advgsa/ 

advantage/main/start_page.do the 

contractor obtained nine prices for items 

similar to the high-cost supplies in the 

PE database and that are displayed in 

Table 20 from the publicly available 

information on the Internet, including 

pricing for one product for which its 

prior work did not yield an updated 

price. We believe that additional items 

that are similar to the high-cost supplies 

in the PE database and that may be used 

with the same procedures may be on the 

GSA schedule but we are still working 

through the crosswalk between our 

supplies and the way the supplies are 

presented on the GSA schedule. 

Examples of high-cost supplies in the 

PE database that the contractor located 

on the GSA schedule include: (1) Kit, 

capsule, ESO, endoscopy w-application 

supplies (ESO), priced at $450 in the PE 

database and $444 on the GSA schedule; 

and (2) tube, jejunostomy, priced at 

$195 in the PE database and $60 to $83 

on the GSA schedule, depending on the 

characteristics of the tube. 

Since the GSA medical supply 

schedule is a source for pricing 

information that is public and 

transparent and reflects the best 

government contract price for a product, 

we believe it is a desirable resource for 

us to use in a refined process for 

updating the prices of high-cost 


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supplies. For historical context, CMS 

has previously proposed to use VA 

prices that result from the competitive 

marketplace as comparison points to 

limit the Medicare prices for oxygen and 

certain items of durable medical 

equipment and prosthetic devices (62 

FR 38100 through 38107, and 64 FR 

44227 through 44231) in 1997 and 1999, 

respectively. These prior proposals were 

based on our determination that the 

Medicare payment amounts for these 

items as durable medical equipment or 

prosthetics (not as physicians’ services) 

were not inherently reasonable. We 

note, however, that our current interest 

in the GSA schedule for pricing highcost supplies for payment of physicians’ 

services is not based on considerations 

of inherent reasonableness, and we do 

not actually pay the prices in the PE 

database for supplies under the PFS. 

We further note that public 

commenters on pricing high-cost 

supplies have consistently requested 

that CMS ensure that the pricing 

information used to update the prices is 

provided publicly. The commenters 

have observed that this transparency 

would enable stakeholders to evaluate 

and provide feedback to the agency on 

pricing accuracy (74 FR 61776). We also 

acknowledge that our past attempts over 

several years to identify typical market 

prices for the high-cost supplies have 

been inhibited by the limited 

availability of public data that meet the 

documentation requirements we have 

previously established. Individual 

vendors do not always publish their 

product prices or provide typical 

discounts. Moreover, discounts may 

vary depending on suppliers and the 

volume of supplies purchased. Our 

understanding of the GSA medical 

supply schedule is that the publicly 

listed fair and reasonable prices on the 

schedule generally do not include 

volume and or certain other discounts 

that may be subsequently negotiated by 

the buyer. Consequently, we would 

consider the prices available on the GSA 

schedule to represent the ‘‘individual 

item ceiling’’ price for a single item 

purchase, which we believe would be 

appropriate to estimate the high-cost 

supply prices for physicians’ office 

purchases. We are soliciting public 

comments regarding the high-cost 

supplies in the direct PE database for 

the CY 2011 PFS proposed rule, 

available on the CMS Web site as noted 

earlier in this section, and the 

corresponding supplies or alternative 

items that could be used for the same 

function that are currently on the GSA 

supply schedule. We encourage 

commenters to provide a detailed 

analysis of the current relationships 

between the items in the PE database 

and those on the GSA schedule. 

At this time, we would like to 

describe a refined process for regularly 

updating prices for high-cost supplies 

under the PFS and solicit comments on 

how we could improve on this process. 

The process could occur every 2 years 

beginning as soon as CY 2013, although 

we note that we would propose the 

refined process through rulemaking 

before revising the prices for any highcost supply item based on the GSA 

schedule. We could also consider 

establishing a different price update 

period depending on whether a highcost supply was a new supply in the PE 

database or had been in use for some 

time, in which case we might expect 

that the price would have stabilized 

and, therefore, could be updated less 

frequently. In general, we would expect 

that the periodicity of updating prices 

for high-cost supplies that we 

eventually adopted would balance the 

associated administrative burden with 

the rate of price changes, to ensure that 

the associated procedures remain 

appropriately valued, rather than 

increasingly misvalued, over time. 

We envision that we would base highcost supply price inputs on the publicly 

available price listed on the GSA 

medical supply schedule. Since the 

medical community would have several 

years to examine the GSA medical 

supply schedule before the refined 

process would be adopted, and we have 

found no apparent limitations on 

vendors placing products on the GSA 

schedule, beyond the schedule’s interest 

in competitive, best value 

procurements, stakeholders would have 

the opportunity to ensure that any highcost direct PE input for a PFS service 

that may currently be missing from the 

GSA medical supply schedule would be 

included before CMS needs to access 

the publicly available price for the item. 

If a supply price were not publicly 

available on the GSA medical supply 

schedule by the time CMS needs to 

access the price, we would propose to 

reduce the current price input for the 

supply by a percentage that would be 

based on the relationship between GSA 

prices at that time and the existing PE 

database prices for similar supplies 

(currently an average 23 percent 

reduction). We believe that this refined 

process is desirable because it is 

consistent with commenters’ repeated 

requests for the updating methodology 

to be transparent and predictable. 

Moreover, the VA (with responsibility 

delegated by the GSA) determines 

whether prices are fair and reasonable 

by comparing the prices and discounts 

that a company offers the government 

with the prices and discounts that the 

company offers to commercial 

customers. Therefore, using the GSA 

medical supply schedule as a source for 

publicly available prices would also 

better account for product-specific 

market dynamics than the alternative of 

an across-the-board percentage 

reduction for supplies not on the GSA 

schedule based on general price trends 

for the high-cost supplies on the 

schedule. That is, if the market price of 

a particular supply were not to drop 

according to broad trends for other highcost supplies, suppliers would have the 

opportunity to provide their price to the 

public on the GSA schedule in order to 

preclude any reduction in Medicare 

payment for procedures associated with 

that supply. 

Finally, we would like to reiterate that 

we are interested in receiving detailed 

public comments on the refined process 

discussed above, including all aspects of 

the price update methodology that we 

have presented. Moreover, we believe a 

similar approach could potentially be 

appropriate to update the prices for 

other supplies in the PE database that 

would not fall under our definition of 

high-cost supplies, and we welcome 

further public comments on that 

possible extension. We also invite 

further suggestions for alternative 

approaches to updating high-cost 

supply prices, specifically those that 

would result in a predictable, public, 

and transparent methodology that 

would ensure that the prices in the PE 

database reflect typical market prices. 

These principles are particularly 

important in order to ensure that the 

services that utilize the high-cost 

supplies when provided in the 

physician’s office are appropriately 

valued under the PFS and continue to 

be appropriately valued over time. 

D. Geographic Practice Cost Indices 

(GPCIs) 

1. Background 

Section 1848(e)(1)(A) of the Act 

requires us to develop separate 

Geographic Practice Cost Indices 

(GPCIs) to measure resource cost 

differences among localities compared 

to the national average for each of the 

three fee schedule components (that is, 

work, PE, and malpractice). While 

requiring that the PE and malpractice 

GPCIs reflect the full relative cost 

differences, section 1848(e)(1)(A)(iii) of 

the Act requires that the physician work 

GPCIs reflect only one-quarter of the 

relative cost differences compared to the 

national average. In addition, section 

1848(e)(1)(G) of the Act sets a 


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permanent 1.5 work GPCI floor in 

Alaska for services furnished beginning 

January 1, 2009. Section 1848(e)(1)(C) of 

the Act requires us to review and, if 

necessary, adjust the GPCIs at least 

every 3 years. This section also specifies 

that if more than 1 year has elapsed 

since the last GPCI revision, we must 

phase in the adjustment over 2 years, 

applying only one-half of any 

adjustment in each year. As discussed 

in the CY 2009 PFS final rule with 

comment period (73 FR 69740), the CY 

2009 adjustment to the GPCIs reflected 

the fully implemented fifth 

comprehensive GPCI update. CY 2010 

would have typically included no 

adjustments to the GPCIs. However, 

section 3102(a) of the ACA amends 

section 1848(e)(1)(E) of the Act to 

extend the 1.0 work GPCI floor for 

services furnished through December 

31, 2010. Additionally, section 3102(b) 

of the ACA adds a new subparagraph 

1848(e)(1)(H) to the Act, which specifies 

that for CY 2010 and CY 2011, the 

employee compensation and rent 

portions of the PE GPCI must reflect 

only one-half of the relative cost 

differences for each locality compared 

to the national average. The new 

subparagraph also includes a ‘‘hold 

harmless’’ provision for CY 2010 and CY 

2011 for any PFS locality that would 

otherwise receive a reduction to its PE 

GPCI resulting from the limited 

recognition of cost differences. 

Additionally, section 1848(e)(1)(I) of the 

Act (as added by section 10324(c) of 

ACA) establishes a 1.0 PE GPCI floor for 

services furnished in frontier States 

effective January 1, 2011. In May 2010, 

we provided our Medicare contractors 

with an updated CY 2010 payment file 

that included the 1.0 work GPCI floor 

and the PE GPCIs calculated according 

to the methodology required by section 

1848(e)(1)(H) of the Act (as added by 

section 3102(b) of ACA) for CY 2010, to 

be used for payment of services 

furnished on or after January 1, 2010. 

For the CY 2011 PFS proposed rule, 

we have completed the sixth review of 

the GPCIs and are proposing new GPCIs. 

We note that section 1848(e)(1)(E) of the 

Act (as amended by section 3102(a) of 

ACA) extends the 1.0 work GPCI floor 

only through December 31, 2010. Under 

current statute, the 1.0 work GPCI floor 

will expire on January 1, 2011. 

Therefore, the CY 2011 physician work 

GPCIs and summarized geographic 

adjustment factors (GAFs) do not reflect 

the 1.0 work floor. However, section 

1848(e)(1)(G) of the Act (as amended by 

section 134(b) of the MIPPA) set a 

permanent 1.5 work GPCI floor in 

Alaska for services furnished beginning 

January 1, 2009; and, as noted above, 

section 1848(e)(1)(I) of the Act (as added 

by section 10324(c) of ACA) provides 

for a permanent 1.0 PE GPCI floor for 

frontier States effective January 1, 2011. 

Therefore, as required by the statute, the 

1.5 work GPCI floor for Alaska and the 

1.0 PE GPCI floor for frontier States will 

be in effect for CY 2011. In addition to 

the limited recognition of certain cost 

differences for the PE GPCIs, section 

1848(e)(1)(H) of the Act (as added by 

section 3102(b) of ACA) also requires us 

to complete an analysis of the data 

sources used and cost share weights 

assigned to the PE GPCIs. 

Implementation of ACA provisions 

related to the CY 2011 PE GPCIs is 

discussed in more detail in the GPCI 

update section below. 

See Addenda D and E to this 

proposed rule for the proposed CY 2011 

GPCIs and summarized GAFs. 

2. GPCI Update 

The proposed updated GPCI values 

were developed by Acumen, LLC 

(Acumen) under contract to CMS. As 

mentioned above, there are three GPCI 

components (physician work, PE, and 

malpractice), and all GPCIs are 

developed through comparison to a 

national average for each component. 

Additionally, each of the three GPCIs 

relies on its own data source(s) and 

methodology for calculating its value as 

described below. 

a. Physician Work GPCIs 

The physician work GPCIs are 

designed to capture the relative cost of 

physician labor by Medicare PFS 

locality. Previously, the physician work 

GPCIs were developed using the median 

hourly earnings from the 2000 Census of 

workers in seven professional specialty 

occupation categories which we used as 

a proxy for physicians’ wages and 

calculated to reflect one-quarter of the 

relative cost differences for each locality 

compared to the national average. 

Physicians’ wages are not included in 

the occupation categories because 

Medicare payments are a key 

determinant of physicians’ earnings. 

Including physicians’ wages in the 

physician work GPCIs would, in effect, 

have made the indices dependent upon 

Medicare payments. 

The physician work GPCIs were 

updated in CYs 2001, 2003, 2005, and 

2008 using professional earnings data 

from the 2000 Census. However, wage 

and earnings data are no longer 

available from the Census long form and 

the 2000 data are outdated. Therefore, 

for the proposed sixth GPCI update, we 

used the 2006 through 2008 Bureau of 

Labor Statistics (BLS) Occupational 

Employment Statistics (OES) data as a 

replacement for the 2000 Census data. 

The use of BLS OES data as a 

replacement for the 2000 Census data is 

discussed in more detail in the update 

of the PE GPCIs section. As noted above, 

the 1.0 work GPCI floor is set to expire 

under current statute on December 31, 

2010. Therefore, the CY 2011 proposed 

physician work GPCIs reflect the 

removal of this floor. 

b. Practice Expense GPCIs 

(1) The Affordable Care Act 

Requirements for PE GPCIs 

General Methodology for the CY 2011 

GPCIs 

ACA added a new subparagraph 

1848(e)(1)(H) to the Act which revises 

the methodology for calculating the PE 

GPCIs for CY 2010 and CY 2011 so that 

the employee compensation and rent 

portions of the PE GPCIs reflect only 

one-half of the relative cost differences 

for each locality compared to the 

national average. Additionally, under 

section 1848(e)(1)(H)(iii) of the Act (as 

added by section 3102(b) of the ACA), 

each PFS locality is held harmless so 

that the PE GPCI will not be reduced as 

a result of the change in methodology 

for PE GPCIs. In accordance with 

section 1848(e)(1)(H)(ii) of the Act (as 

added by section 3102(b) of ACA), the 

employee compensation and rent 

components of the proposed CY 2011 

PE GPCIs were calculated to reflect onehalf of the cost differences for each PFS 

locality relative to the national average 

cost. Additionally, as required by the 

statute, physicians’ services furnished 

in each PFS locality would be adjusted 

by the higher of the locality’s PE GPCI 

calculated with the limited recognition 

of employee compensation and rent cost 

differences or the PE GPCI calculated 

without the limited recognition of cost 

differences. 

Phase-In of PE GPCIs 

Section 1848(e)(1)(C) of the Act 

requires us to phase in GPCI 

adjustments over 2 years if there was 

more than 1 year between GPCI 

adjustments. In accordance with the 

statute, we are proposing to phase in the 

updated PE GPCIs using one-half of the 

CY 2010 values and one-half of the fully 

implemented values (as described in 

this section). To apply the phase-in and 

hold harmless provisions of the Act, we 

calculated transitional PE GPCIs based 

on two scenarios. Under the first 

scenario, we calculated transitional CY 

2011 PE GPCIs using the full recognition 

of employee compensation and rent cost 

differences for each locality as 

compared to the national average. The 


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CY 2011 transitional PE GPCI values 

with full recognition of cost differences 

were calculated using one-half of the CY 

2010 PE GPCI values with full 

recognition of cost differences and onehalf of the updated PE GPCIs with full 

recognition of cost differences. The first 

scenario represents the transitional PE 

GPCI values prior to the limited 

recognition of cost differences. In other 

words, this scenario does not include 

the effects of sections 1848(e)(1)(H)(i) 

and (ii) of the Act (as added by section 

3102(b) of ACA). 

For the second scenario, we 

calculated transitional CY 2011 PE 

GPCIs with the limited recognition of 

cost differences for the employee 

compensation and rent components (as 

required by sections 1848(e)(1)(H)(i) and 

(ii) of the Act (as added by section 

3102(b) of ACA)). The CY 2011 

transitional PE GPCI values with the 

limited recognition of cost differences 

were calculated using one-half of the CY 

2010 PE GPCIs with the limited cost 

differences and one-half of the updated 

PE GPCIs with the limited cost 

differences. The hold harmless 

provision under section 

1848(e)(1)(H)(iii) of the Act (as added by 

section 3102(b) of ACA) was applied by 

selecting the greater of the CY 2011 

transitional PE GPCI value calculated 

with the limited recognition of cost 

differences or the CY 2011 transitional 

PE GCPI value calculated with full 

recognition of cost differences. The 

phase-in of the CY 2011 PE GPCIs and 

application of the hold harmless 

provision are illustrated in Table 21 

below. 

TABLE 21—PHASE-IN OF THE CY 2011 PE GPCIS

CY 2010 Updated GPCIs CY 2011 

(transitional year) Hold harmless 

File 1 

PE GPCI Without 3102(b) of 

ACA.

Without ACA .. Without ACA (Updated Data) (1⁄2 of 2010) + (1⁄2 Updated 

GPCI).

Greater of File 1 Transitional 

Value. 

File 2 

PE GPCI With 3102(b) of 

ACA.

With ACA ....... With ACA (Updated Data) ..... (1⁄2 of 2010 w/ACA) + (1⁄2 Updated GPCI w/ACA).or File 2 Transitional Value. 

*ACA in this table means the Affordable Care Act. 

Data Analysis 

Section 1848(e)(1)(H)(iv) of the Act (as 

added by section 3102(b) of ACA) also 

requires the Secretary to ‘‘analyze 

current methods of establishing practice 

expense adjustments under 

subparagraph (A)(i) and evaluate data 

that fairly and reliably establishes 

distinctions in the cost of operating a 

medical practice in different fee 

schedule areas.’’ This section also 

requires the Secretary to make 

appropriate adjustments to the PE GPCIs 

no later than by January 1, 2012. To 

implement this statutory requirement, 

we are proposing to implement changes 

in PE data sources and cost share 

weights discussed herein effective 

beginning in CY 2011. 

In accordance with section 

1848(e)(1)(H)(iv) of the Act (as added by 

section 3102(b) of ACA), we have 

analyzed the current methods and data 

sources used in the establishment of the 

PE GPCIs. With respect to the method 

used, we began with a review of the 

GAO’s March 2005 Report entitled, 

‘‘MEDICARE PHYSICIAN FEES: 

Geographic Adjustment Indices Are 

Valid in Design, but Data and Methods 

Need Refinement’’ (GAO–05–119). 

While we have raised concerns in the 

past about some of the GAO’s GPCI 

recommendations, we note that with 

respect to the PE GPCIs, the GAO did 

not indicate any significant issues with 

the methods underlying the PE GPCIs. 

Rather, the report focused on some of 

the data sources used in the method. 

For example, the GAO stated that the 

wage data used for the PE GPCIs are not 

current. Similarly, upon our 

reexamination of public comments we 

have received on the PE GPCIs for 

previous updates, we note that the 

commenters predominately focused on 

either the data sources used in the 

method or raised issues such as 

incentivizing the provision of care in 

different geographic areas. However, the 

latter issue (incentivizing the provision 

of care) is outside the scope of the 

statutory requirement that the PE GPCIs 

reflect the relative costs of the mix of 

goods and services comprising practice 

expenses in the different fee schedule 

areas relative to the national average. 

One key component of the PE GPCI 

method that our analysis identified 

involved the office expense portion of 

the PE GPCIs and the cost share weight 

assigned to this component. Most 

significantly, we are proposing that the 

weight for the office rent component be 

revised from 12.209 percent to 8.410 

percent to reflect our more detailed 

breakout of the types of office expenses 

that are determined in local markets 

instead of national markets. For 

example, for previous GPCI updates, we 

used the office expenses cost category as 

the cost share weight for office rent and, 

therefore, all individual components 

previously included in the office 

expenses category were adjusted for 

local area cost differences by the GPCIs. 

As discussed in section II.E.1. of this 

proposed rule, we are proposing to 

disaggregate the broader office expenses 

component into 9 new cost categories as 

part of the proposed CY 2011 MEI 

rebasing. The disaggregation of the 

office expenses category indicates that 

the fixed capital cost category, for which 

the consumer price index (CPI) for 

owner’s equivalent rent is the price 

proxy, is the office expense category 

applicable to the office rent component 

of the PE GPCI. Therefore, the fixed cost 

capital cost category is the only 

component of office expenses that we 

are proposing to adjust for local area 

cost differences beginning in CY 2011. 

We are proposing to assign other newly 

defined components of the office 

expenses category (for example, 

utilities, chemicals, paper, rubber and 

plastics, telephone, postage, and 

moveable capital) to the medical 

equipment, supplies, and other 

miscellaneous expenses cost component 

of the PE GPCIs. As discussed later in 

this section, the medical equipment, 

supplies, and other miscellaneous 

expenses component of the PE GPCIs is 

assumed to have a national market and, 

therefore, this component is not 

adjusted for local area cost differences. 

The proposed expense categories for 

the PE GPCIs, along with their 

respective cost share weights, are 

primarily derived from the 2006 

American Medical Association (AMA) 

Physician Practice Information Survey 

(PPIS) for self-employed physicians and 

selected self-employed non-medical 

doctor specialties. The PPIS is the most 

comprehensive, multispecialty, 

contemporaneous, and consistently 

collected PE data source available. It 


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was developed by medical organizations 

and captures the costs of operating a 

medical practice, including office rents 

and nonphysician staff wages. 

Moreover, we also examined the 

feasibility of using the American 

Community Survey (ACS) and the 

Bureau of Labor and Statistics (BLS) 

Occupational Employment Statistics 

(OES) data for the employee 

compensation component of the PE 

GPCI. For previous updates, the 

employee compensation component was 

based on the 2000 Decennial Census 

long form data. Since the Census data 

are significantly outdated and the 2010 

Census no longer includes occupational 

wage data, we believed the ACS or BLS 

OES data might be viable alternatives. 

While the ACS 3-year public use 

microsample (PUMS) is currently 

available, it reflects only about 3 percent 

of households and the data exhibit 

significant variation due to the small 

sample. In particular, the ACS PUMS 

has fewer than 10 observations of 

pharmacists in the Manhattan, 

Beaumont Texas, and Southern Maine 

localities. Therefore, we believe it 

would be premature to use the ACS data 

for determining GPCI values. The 2006, 

2007, and 2008 panels from the BLS 

OES represent a larger sample than the 

ACS PUMS and more recent data than 

the 2000 Census. As such, we are 

proposing to use the BLS OES data for 

updating the GPCIs. We look forward to 

exploring the use of the full ACS data 

when they become available. 

Additionally, we explored other 

sources of rent data (including 

commercial rental data and survey data) 

for use in calculating the PE GPCIs. We 

could not identify a reliable alternative 

rental data source available on a 

national basis with coverage of nonmetropolitan areas. 

We do not believe there is a national 

data source better than the Housing and 

Urban Development (HUD) data for 

determining the relative cost differences 

in office rents. Therefore, based on our 

review of the available data sources, we 

are proposing to use the 2010 apartment 

rental data produced by HUD at the 50th 

percentile as a proxy for the relative cost 

difference in physician office rents. 

We believe our analysis of the current 

methods of establishing PE GPCIs and 

our evaluation of data that fairly and 

reliably establish distinctions in the cost 

of operating a medical practice in the 

different fee schedule areas meet the 

statutory requirements of section 

1848(e)(1)(H)(iv) of the Act (as added by 

section 3102(b) of ACA). A more 

detailed discussion of our analysis of 

current methods of establishing PE 

GPCIs and evaluation of data sources is 

included in Acumen’s draft report. 

Acumen’s draft report and associated 

analysis of the sixth GPCI update, 

including the PE GPCIs, will be posted 

on the CMS Web site after display of 

this CY 2011 PFS proposed rule. The 

draft report may be accessed from the 

PFS Web site at: http://www.cms.gov/ 

PhysicianFeeSched/ under the 

‘‘Downloads’’ section of the CY 2011 

PFS proposed rule web page. 

Determining the Proposed PE GPCI Cost 

Share Weights 

To determine the cost share weights 

for the proposed CY 2011 GPCIs, we 

used the proposed 2006-based Medicare 

Economic Index (MEI) as discussed in 

section II.E.1. of this proposed rule. The 

proposed MEI was rebased and revised 

to reflect the weighted-average annual 

price change for various inputs needed 

to provide physicians’ services. As 

discussed in detail in that section, the 

proposed expense categories in the MEI, 

along with their respective weights, are 

primarily derived from data collected in 

the 2006 AMA PPIS for self-employed 

physicians and selected self-employed 

non-medical doctor specialties. 

For the cost share weight for the PE 

GPCIs, we used the 2006-based MEI 

weight for the PE category of 51.734 

percent minus the professional liability 

insurance category weight of 4.295 

percent. Therefore, the proposed cost 

share weight for the PE GPCIs is 47.439 

percent. For the employee 

compensation portion of the PE GPCIs, 

we used the nonphysician employee 

compensation category weight of 19.153 

percent. The fixed capital category 

weight of 8.410, for which the CPI for 

owner’s equivalent rent is the price 

proxy, was used for the office rent 

component. To determine the medical 

equipment, supplies, and other 

miscellaneous expenses component, we 

removed professional liability (4.295 

percent), nonphysician employee 

compensation (19.153 percent), and 

fixed capital (8.410 percent) from the PE 

category weight (51.734 percent). 

Therefore, the proposed cost share 

weight for the medical equipment, 

supplies, and other miscellaneous 

expenses component is 19.876 percent. 

Furthermore, the physician 

compensation cost category and its 

weight of 48.266 percent reflect the 

proposed work GPCI cost share weight 

and the professional liability insurance 

weight of 4.295 percent was used for the 

malpractice GPCI cost share weight. We 

believe our analysis and evaluation of 

the weights assigned to each of the 

categories within the PE GPCIs meets 

the statutory requirements of section 

1848(e)(1)(H)(iv) of the Act (as added by 

section 3102(b) of ACA). 

The proposed cost share weights for 

the CY 2011 GPCIs are displayed in 

Table 22 below. 

TABLE 22—PROPOSED COST SHARE WEIGHTS FOR CY 2011 GPCI UPDATE

Expense category 

Current cost share 

weight 

(percent) 

Proposed cost 

share weight 

(percent) 

Physician Work ........................................................................................................................................ 52 .466 48 .266 

Practice Expense ..................................................................................................................................... 43 .669 47 .439 

—Employee Compensation .............................................................................................................. 18 .654 19 .153 

—Office Rent .................................................................................................................................... 12 .209 8 .410 

—Equipment, Supplies, Other .......................................................................................................... 12 .806 19 .876 

Malpractice Insurance .............................................................................................................................. 3 .865 4 .295 

Total ........................................................................................................................................... 100 100 

PE GPCI Floor for Frontier States 

Section 10324(c) of ACA added a new 

subparagraph (I) under section 

1848(e)(1) of the Act to establish a 1.0 

PE GPCI floor for physicians’ services 

furnished in frontier States. In 

accordance with section 1848(e)(1)(I) of 

the Act (as added by section 10324(c) of 

ACA), beginning in CY 2011, we will 

apply a 1.0 PE GPCI floor for physicians’ 

services furnished in States determined 

to be frontier States. The statute requires 

us to define any State as a frontier State 

if at least 50 percent of the State’s 

counties are determined to be frontier 


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counties, which the statute defines as 

counties that have a population density 

less than 6 persons per square mile. 

However, section 1848(e)(1)(I) of the Act 

(as added by section 10324(c) of ACA) 

also specifies that this provision shall 

not apply to States receiving a non-labor 

related share adjustment under section 

1886(d)(5)(H) of the Act (which 

excludes Alaska and Hawaii from 

qualifying as a frontier State). 

Consistent with the proposed FY 2011 

hospital inpatient prospective payment 

system (IPPS) 1.0 wage index floor for 

frontier States (as required by section 

10324(a) of the ACA) (75 FR 30920 

through 30921), we are proposing to 

identify frontier counties by analyzing 

population data and county definitions 

based upon the most recent annual 

population estimates published by the 

U.S. Census Bureau. We divide each 

county’s population total by each 

county’s reported land area (according 

to the decennial census) in square miles 

to establish population density. We also 

are proposing to update this analysis 

from time to time, such as upon 

publication of a subsequent decennial 

census, and if necessary, add or remove 

qualifying States from the list of frontier 

States based on the updated analysis. 

For a State that qualifies as a frontier 

State, in accordance with section 

1848(e)(1)(I) of the Act (as added by 

section 10324(c) of the ACA), we are 

proposing that physicians’ services 

furnished within that State would 

receive the higher of the applicable PE 

GPCI value calculated according to the 

standard CY 2011 methodology or a 

minimum value of 1.00. Furthermore, in 

accordance with section 1848(e)(1)(I) of 

the Act (as added by section 10324(c) of 

the ACA), the frontier State PE GPCI 

floor is not subject to budget neutrality 

and would only be extended to 

physicians’ services furnished within a 

frontier State. 

For determining the proposed CY 

2011 PFS PE GPCI values, the frontier 

States are the following: Montana; 

Wyoming; North Dakota; Nevada; and 

South Dakota (as reflected in Table 23). 

TABLE 23—FRONTIER STATES UNDER SECTION 1848(E)(1)(I) OF THE ACT (AS ADDED BY SECTION 10324(c) OF THE

AFFORDABLE CARE ACT) 

State Total counties Frontier counties Percent frontier 

counties 

Montana ........................................................................................................................... 56 45 80 

Wyoming .......................................................................................................................... 23 17 74 

North Dakota .................................................................................................................... 53 36 68 

Nevada ............................................................................................................................. 17 11 65 

South Dakota ................................................................................................................... 66 34 52 

(2) Summary of CY 2011 Proposed PE 

GPCIs 

The PE GPCIs include three 

components: employee compensation, 

office rent, and medical equipment, 

supplies and miscellaneous expenses as 

discussed below: 

(i) Employee Compensation: We used 

the 2006 through 2008 BLS OES data to 

determine the proposed employee 

compensation component of the PE 

GPCIs. Employee compensation 

accounts for 40.4 percent of the total PE 

GPCIs. 

(ii) Office Rents: Consistent with the 

previous GPCI update, we used the most 

recent residential apartment rental data 

produced by HUD (2010) at the 50th 

percentile as a proxy for the relative cost 

differences in physician office rents. 

Office rent accounts for 17.7 percent of 

the PE GPCIs. 

(iii) Medical Equipment, Supplies, 

and other Miscellaneous Expenses: We 

assumed that items such as medical 

equipment and supplies have a national 

market and that input prices do not vary 

among geographic areas. As discussed 

in previous GPCI updates in the CY 

2005 and CY 2008 PFS proposed rules, 

specifically the fourth GPCI update (69 

FR 47503) and fifth GPCI update (72 FR 

38138), respectively, some price 

differences may exist, but we believe 

these differences are more likely to be 

based on volume discounts rather than 

on geographic market differences. 

Medical equipment, supplies, and 

miscellaneous expenses are factored 

into the PE GPCIs with a component 

index of 1.000. The medical equipment, 

supplies, and other miscellaneous 

expense component are 41.9 percent of 

the PE GPCIs. 

c. Malpractice GPCIs 

The malpractice GPCIs are calculated 

based on insurer rate filings of premium 

data for $1 million to $3 million mature 

claims-made policies (policies for 

claims made rather than services 

furnished during the policy term). The 

proposed CY 2011 malpractice GPCI 

update reflects 2006 and 2007 premium 

data. 

d. General GPCI Update Process 

The periodic review and adjustment 

of GPCIs is mandated by section 

1848(e)(1)(C) of the Act. At each update, 

the proposed GPCIs are published in the 

PFS proposed rule the year before they 

would take effect in order to provide an 

opportunity for public comment and 

further revisions in response to 

comments prior to implementation. As 

mentioned above, the proposed CY 2011 

updated GPCIs for the first year of the 

2-year transition and summarized GAFs 

are displayed in Addenda D and E to 

this proposed rule. 

3. Payment Localities 

The current PFS locality structure was 

developed and implemented in 1997. 

There are currently 89 localities; 34 

localities are Statewide areas. There are 

52 localities in the other 18 States, with 

10 States having 2 localities, 2 States 

having 3 localities, 1 State having 4 

localities, and 3 States having 5 or more 

localities. The District of Columbia, 

Maryland, and Virginia suburbs, Puerto 

Rico, and the Virgin Islands are 

additional localities that make up the 

remainder of the total of 89 localities. 

The development of the current locality 

structure is described in detail in the CY 

1997 PFS proposed rule (61 FR 34615) 

and the subsequent final rule with 

comment period (61 FR 59494). 

As we have previously noted in the 

CYs 2008 and 2009 proposed rules (72 

FR 38139 and 73 FR 38513), any 

changes to the locality configuration 

must be made in a budget neutral 

manner within a State and can lead to 

significant redistributions in payments. 

For many years, we have not considered 

making changes to localities without the 

support of a State medical association in 

order to demonstrate consensus for the 

change among the professionals whose 

payments would be affected (with some 

increasing and some decreasing). 

However, we have recognized that, over 

time, changes in demographics or local 

economic conditions may lead us to 

conduct a more comprehensive 


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examination of existing payment 

localities. 

For the past several years, we have 

been involved in discussions with 

physician groups and their 

representatives about recent shifts in 

relative demographics and economic 

conditions, most notably within the 

current California payment locality 

structure. We explained in the CY 2008 

PFS final rule with comment period that 

we intended to conduct a thorough 

analysis of potential approaches to 

reconfiguring localities and would 

address this issue again in future 

rulemaking. For more information, we 

refer readers to the CY 2008 PFS 

proposed rule (72 FR 38139) and 

subsequent final rule with comment 

period (72 FR 66245). 

As a follow-up to the CY 2008 PFS 

final rule with comment period, we 

contracted with Acumen to conduct a 

preliminary study of several options for 

revising the payment localities on a 

nationwide basis. The contractor’s 

interim report was posted on the CMS 

Web site on August 21, 2008, and we 

requested comments from the public. 

The report entitled, ‘‘Review of 

Alternative GPCI Payment Locality 

Structures,’’ remains accessible from the 

CMS PFS Web page under the heading 

‘‘Interim Study of Alternative Payment 

Localities under the PFS.’’ The report 

may also be accessed directly from the 

following link: http://www.cms.hhs.gov/ 

PhysicianFeeSched/ 

10_Interim_Study.asp#TopOfPage. 

We accepted public comments on the 

interim report through November 3, 

2008. The alternative locality 

configurations discussed in the report 

are described briefly below in this 

section. 

Option 1: CMS Core-Based Statistical 

Area (CBSA) Payment Locality 

Configuration 

This option uses the Office of 

Management and Budget (OMB’s) 

Metropolitan Statistical Area (MSA) 

designations for the payment locality 

configuration. MSAs would be 

considered as urban CBSAs. 

Micropolitan Areas (as defined by OMB) 

and rural areas would be considered as 

non-urban (rest of State) CBSAs. This 

approach would be consistent with the 

IPPS pre-reclassification CBSA 

assignments and with the geographic 

payment adjustments used in other 

Medicare payment systems. This option 

would increase the number of PFS 

localities from 89 to 439. 

Option 2: Separate High-Cost Counties 

From Existing Localities (Separate 

Counties) 

Under this approach, higher cost 

counties are removed from their existing 

locality structure and they would each 

be placed into their own locality. This 

option would increase the number of 

PFS localities from 89 to 214, using a 5 

percent GAF differential to separate 

high-cost counties. 

Option 3: Separate MSAs From 

Statewide Localities (Separate MSAs) 

This option begins with statewide 

localities and creates separate localities 

for higher cost MSAs (rather than 

removing higher cost counties from 

their existing locality as described in 

Option 2). This option would increase 

the number of PFS localities from 89 to 

130, using a 5 percent GAF differential 

to separate high-cost MSAs. 

Option 4: Group Counties Within a State 

Into Locality Tiers Based on Costs 

(Statewide Tiers) 

This option creates tiers of counties 

(within each State) that may or may not 

be contiguous but share similar practice 

costs. This option would increase the 

number of PFS localities from 89 to 140, 

using a 5 percent GAF differential to 

group similar counties into statewide 

tiers. 

As discussed in Acumen’s interim 

report, all four studied alternative 

locality configurations would increase 

the number of localities and separate 

higher cost areas from rural ‘‘rest of 

state’’ areas. As a result, payments to 

urban areas would increase, while rural 

areas would see a decrease in payment 

because they would no longer be 

grouped with higher cost ‘‘urbanized’’ 

areas. A number of public commenters 

on the draft report expressed support for 

Option 3 (separate MSAs from 

Statewide localities) because the 

commenters believed this alternative 

would improve payment accuracy over 

the current locality configuration and 

could mitigate possible payment 

reductions to rural areas as compared to 

Option 1 (CMS CBSAs). Therefore, 

Acumen is conducting a more in-depth 

analysis of the dollar impacts that 

would result from the application of 

Option 3. 

For a detailed discussion of the public 

comments on the contractor’s interim 

locality study report, we refer readers to 

the CY 2010 PFS proposed rule (74 FR 

33534) and subsequent final rule with 

comment period (74 FR 61757). 

E. PFS Update for CY 2010 

1. Rebasing and Revising of the 

Medicare Economic Index (MEI) 

a. Background 

The Medicare Economic Index (MEI) 

is required by section 1842(b)(3) of the 

Act, which states that prevailing charge 

levels beginning after June 30, 1973 may 

not exceed the level from the previous 

year except to the extent that the 

Secretary finds, on the basis of 

appropriate economic index data, that 

such higher level is justified by year-toyear economic changes. Beginning July 

1, 1975, and continuing through today, 

the MEI has met this requirement by 

reflecting the weighted-average annual 

price change for various inputs needed 

to provide physicians’ services. The MEI 

is a fixed-weight input price index, with 

an adjustment for the change in 

economy-wide, private nonfarm 

business multifactor productivity. This 

index is comprised of two broad 

categories: (1) Physician’s own time; 

and (2) physician’s practice expense 

(PE). 

The current form of the MEI was 

detailed in the November 25, 1992 

Federal Register (57 FR 55896) and was 

based in part on the recommendations 

of a Congressionally-mandated meeting 

of experts held in March 1987. Since 

that time, the structure of the MEI has 

remained essentially unchanged, with 

three exceptions. First, the MEI was 

rebased in 1998 (63 FR 58845), which 

moved the cost structure of the index 

from 1992 data to 1996 data. Second, 

the methodology for the productivity 

adjustment was revised in the CY 2003 

PFS final rule (67 FR 80019) to reflect 

the percentage change in the 10-year 

moving average of economy-wide 

private nonfarm business multifactor 

productivity. Third, the MEI was 

rebased in 2003 (68 FR 63239), which 

moved the cost structure of the index 

from 1996 data to 2000 data. 

We are proposing to rebase and revise 

the MEI and incorporate it into the CY 

2011 PFS update. The terms ‘‘rebasing’’ 

and ‘‘revising’’, while often used 

interchangeably, actually denote 

different activities. Rebasing refers to 

moving the base year for the structure of 

costs of an input price index, while 

revising relates to other types of changes 

such as changing data sources, cost 

categories, or price proxies used in the 

input price index. As is always the case 

with a rebasing and revising exercise, 

we have attempted to use the most 

recently available, relevant, and 

appropriate information to develop the 

proposed MEI cost category weights and 

price proxies. In the following sections 


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40088 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

of this proposed rule, we detail our 

proposals regarding the updated cost 

weights for the MEI expense categories, 

our rationale for selecting the price 

proxies in the MEI, and the results of 

the proposed rebasing and revising of 

the MEI. 

b. Use of More Current Data 

The MEI was last rebased and revised 

in 2003 in the CY 2004 PFS final rule 

with comment period (68 FR 63239). 

The current base year for the MEI is 

2000, which means that the cost weights 

in the index reflect physicians’ expenses 

in 2000. However, we believe it is 

desirable to periodically rebase and 

revise the index so that the expense 

shares and their associated price proxies 

reflect more current conditions. For this 

reason, we propose to rebase the MEI to 

reflect appropriate physicians’ expenses 

in 2006. 

We are proposing several changes to 

the expenses that are eligible to be 

included in the MEI. For instance, we 

are proposing to remove all costs related 

to drug expenses as drugs are not paid 

for under the PFS nor are they included 

in the definition of ‘‘physicians’ 

services’’ for purposes of the Sustainable 

Growth Rate (SGR) system that is used 

to update the PFS. The details of the 

decision regarding the removal of 

physician-administered drugs from the 

SGR system can be found in the CY 

2010 PFS proposed rule and finalized in 

the CY 2010 final rule with comment 

period (74 FR 33651 and 74 FR 61961, 

respectively). Additionally, we are 

proposing to remove costs associated 

with separately billable supplies. The 

rationale for removing the separately 

billable supplies is discussed further 

below in section III.E.1.X of this 

proposed rule. 

We are proposing to revise the cost 

categories in the MEI by expanding the 

Office Expense category into nine 

detailed categories with additional price 

proxies associated with these categories. 

Additionally, we will continue to adjust 

the MEI for economy-wide multifactor 

productivity based on the 10-year 

moving average of total private nonfarm 

business multi-factor productivity. 

c. Rebasing and Revising Expense 

Categories in the MEI 

The MEI is used in conjunction with 

the SGR system to update the PFS and 

represents the price component of that 

update. The proposed expense 

categories in the index, along with their 

respective weights, are primarily 

derived from data collected in the 2006 

AMA Physician Practice Information 

Survey (PPIS) for self-employed 

physicians and selected self-employed 

non-Medical Doctor (non-MD) 

specialties. We included data from the 

following specialties in the MEI cost 

weight calculations (optometrists, oral 

surgeons, podiatrists, and chiropractors) 

consistent with the definition of the 

term ‘‘physician’’ in section 1861(r) of 

the Act. In summary, the term 

‘‘physician’’ when used in connection 

with the performance of functions or 

actions an individual is legally 

authorized to perform means the 

following: (1) A doctor of medicine or 

osteopathy; (2) a doctor of dental 

surgery or of dental medicine; (3) a 

doctor of podiatric medicine; (4) a 

doctor of optometry; or (5) a 

chiropractor. For a complete definition, 

please see section 1861(r) of the Act. We 

weighted the expense data from the 

above-referenced specialties with the 

self-employed physician expense data 

using physician counts by specialty. 

The AMA data from the PPIS were 

used to determine expenditure weights 

for total expenses, physicians’ earnings, 

physicians’ benefits, employed 

physician payroll, nonphysician 

compensation, office expenses, 

professional liability insurance (PLI), 

medical equipment, medical supplies, 

and all other expenses. To further 

disaggregate into subcategories 

reflecting more detailed expenses, we 

used data from the 2002 Bureau of 

Economic Analysis (BEA) Benchmark 

Input-Output table (I/O), the 2006 

Bureau of the Census Current 

Population Survey (CPS), the 2006 

Bureau of Labor Statistics (BLS) 

Occupational Employment Survey 

(OES) and Employment Cost for 

Employee Compensation Survey 

(ECEC), and the 2006 Internal Revenue 

Service (IRS) Statistics of Income (SOI) 

data. The development of each of the 

cost categories using these sources is 

described in detail below. 

(1) Developing the Weights for Use in 

the MEI 

Developing a rebased and revised MEI 

requires selecting a base year and 

determining the appropriate expense 

categories. We are proposing to rebase 

the MEI to CY 2006. We choose CY 2006 

as the base year for two primary reasons: 

(1) CY 2006 is the most recent year for 

which data were available; and (2) we 

believe that the CY 2006 data provide a 

representative distribution of 

physicians’ compensation and PEs. 

Compared to the 2000-based MEI, we 

are proposing to include 9 new cost 

categories (along with their respective 

weights) that disaggregate the costs 

under the broader Office Expenses cost 

category. The 2000-based MEI did not 

break these expenses into individual 

categories. A more detailed discussion 

is provided below in this section. In 

addition, we are proposing to exclude 

the Pharmaceutical cost category as 

pharmaceuticals are neither paid for 

under the PFS nor are they included in 

the definition of ‘‘physicians’ services’’ 

for purposes of calculating the 

physician update via the SGR system 

(for more details see the CY 2010 PFS 

final rule with comment period (74 FR 

61961 through 61962)). Lastly, we are 

proposing to exclude the expenses 

associated with separately billable 

supplies since these items are not paid 

for under the PFS. 

We determined the number and 

composition of expense categories based 

on the criteria used to develop the 

current MEI and other CMS input price 

index expenditure weights. These 

criteria are timeliness, reliability, 

relevance, and public availability. Table 

24 lists the set of mutually exclusive 

and exhaustive cost categories that make 

up the proposed rebased and revised 

MEI. 

TABLE 24—PROPOSED 2006 MEI COST CATEGORIES, WEIGHTS, AND PRICE PROXIES COMPARED TO THE 2000 MEI 

COST CATEGORIES AND WEIGHTS

Cost category 

Proposed 

2006– 

expense 

weights 1 2

2000 Expense 

weights Proposed 2006 price proxies 

Total ........................................................................................................... 100.00 100.000 

Physician’s Own Time 3 ............................................................................. 48.266 52.466 

Wages and Salaries ........................................................................... 43.880 42.730 AHE Total Nonfarm Private.5


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TABLE 24—PROPOSED 2006 MEI COST CATEGORIES, WEIGHTS, AND PRICE PROXIES COMPARED TO THE 2000 MEI 

COST CATEGORIES AND WEIGHTS—Continued 

Cost category 

Proposed 

2006– 

expense 

weights 1 2

2000 Expense 

weights Proposed 2006 price proxies 

Benefits 3 4 ........................................................................................... 4.386 9.735 ECI–Benefits Total Nonfarm Private.6

Physician’s Practice Expense .................................................................... 51.734 47.534 

Nonphysician Employee Compensation ............................................. 19.153 18.654 

Nonphysician Employee Wages and Salaries ................................... 13.752 13.809 

Prof/Tech Wages ......................................................................... 6.006 5.887 ECI–Wages/Salaries: Private Professional &Technical. 

Managerial Wages ...................................................................... 1.446 3.333 ECI–Wages/Salaries: Private Managerial. 

Clerical Wages ............................................................................ 4.466 3.892 ECI–Wages/Salaries: Private Clerical. 

Services Wages .......................................................................... 1.834 0.696 ECI–Wages/Salaries: Private Service. 

Nonphysician Employee Benefits 4 .................................................... 5.401 4.845 ECI–Ben: Private Blend. 

Office Expenses ................................................................................. 20.035 12.209 

Utilities ................................................................................................ 1.139 ........................ CPI Fuel & Utilities.7

Chemicals .................................................................................... 0.679 ........................ PPI for Other Basic Organic Chemical Manufacturing PPI325190.8

Paper ........................................................................................... 0.616 ........................ PPI for converted paper. 

Rubber & Plastics ........................................................................ 0.563 ........................ PPI for rubber and plastics. 

Telephone .................................................................................... 1.415 ........................ CPI for Telephone Services. 

Postage ....................................................................................... 0.661 ........................ CPI for Postage. 

All Other Labor-Related .............................................................. 4.718 ........................ ECI Compensation Services Occupations (ECIPCSONS). 

Fixed Capital ............................................................................... 8.410 ........................ CPI for Owner’s Equivalent Rent. 

Moveable Capital ......................................................................... 1.834 ........................ PPI for Machinery and Equipment. 

PLI ...................................................................................................... 4.295 3.865 CMS–Prof. Liab. Phys. Premiums. 

Medical Equipment ............................................................................. 1.978 2.055 PPI–Medical Instruments & Equip. 

Pharmaceuticals and Medical Materials and Supplies ...................... 1.760 4.320 

Pharmaceuticals ........................................................................................ ........................ 2.309 

Medical Materials and Supplies .................................................. 1.760 2.011 PPI Surg. Appliances and Supplies/ 

CPI(U) Med Supplies. 

Other Professional Expenses ............................................................. 4.513 6.433 CPI–U All Items Less Food and Energy. 

(1) Due to rounding, weights may not sum to 100.000 percent. 

(2) Sources: 2006 Physician Practice Information Survey (PPIS), Center for Health Policy Research, American Medical Association; 2006 Employment Cost for Employee Compensation, U.S. Department of Labor, Bureau of Labor Statistics; 2006 Occupational Employment Statistics 

(OES), BLS; U.S. Department of Commerce, Bureau of Economic Analysis 2002 Benchmark Input Output Tables, and U.S. Department of Commerce, Bureau of the Census, 2006 Current Population Survey. 

(3) Includes employed physician payroll. 

(4) Includes paid leave. 

(5) Average Hourly Earnings (AHE). 

(6) Employment Cost Index (ECI). 

(7) Consumer Price Index (CPI). 

(8) Producer Price Index (PPI). 

The development of each of the cost 

categories in the proposed 2006 MEI is 

described, in detail, below. 

(2) Physician’s Own Time 

The component of the MEI that 

reflects the physician’s own time is 

represented by the net income portion 

of business receipts. The proposed 2006 

cost weight associated with the 

physician’s own time (otherwise 

referred to as the Physician’s 

Compensation cost weight) is based on 

2006 AMA PPIS data for mean 

physician net income (physician 

compensation) for self-employed 

physicians and for the selected selfemployed specialties referenced 

previously in this rule. 

We are proposing to continue to add 

employed physician compensation to 

self-employed physician compensation 

in order to calculate an aggregate 

Physician Compensation cost weight. By 

including the compensation of 

employed physicians in the physician 

compensation expense category, these 

expenses will be adjusted by the 

appropriate price proxies for a 

physician’s own time. The proposed 

2006 Physician Compensation cost 

weight is 48.266 percent as compared to 

a 52.466 percent share in the 2000-based 

MEI. We split the physician 

compensation component into 

subcategories: Wages & Salaries and 

Benefits. For Physician Compensation, 

the ratio for Wages & Salaries and 

Benefits was calculated using data from 

the PPIS. Self-employed physician 

wages & salaries accounted for 92.3 

percent of physician earnings while 

physician benefits accounted for the 

remaining 7.8 percent. For employed 

physician payroll, the distribution for 

wages & salaries and benefits for 2006 

was 85.8 percent and 14.2 percent, 

respectively. This ratio was determined 

by calculating a weighted average of 

available SOI data for partnerships, 

corporations, and S-corporations 

specific to physicians and outpatient 

care centers. Based on these proposed 

methods, the proposed 2006 Physician 

Wages & Salaries cost weight is 43.880 

percent and the proposed 2006 


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Physician Benefits cost weight is 4.386 

percent. 

(3) Physician’s Practice Expenses 

To determine the remaining 

individual Practice Expenses cost 

weights, we use mean expense data 

from the 2006 PPIS survey. The detailed 

explanations for the derivation of the 

individual weights under Practice 

Expenses are listed below. 

(A) Nonphysician Employee 

Compensation 

The cost weight for Nonphysician 

Employee Compensation was developed 

using the 2006 AMA PPIS mean 

expenses for these costs. We further 

divided this cost share into Wages & 

Salaries and Benefits using 2006 BLS 

Employer Costs for Employee 

Compensation (ECEC) data for the 

Health Care and Social Assistance 

(private industry). Although this survey 

does not contain data specifically for 

offices of physicians, data are available 

to help determine the shares associated 

with wages & salaries and benefits for 

private industry health care and social 

assistance services (which include 

hospitals, nursing homes, offices of 

physicians, and offices of dentists). We 

believe these data provide a reasonable 

estimate of the split between wages and 

benefits for employees in physicians’ 

offices. Data for 2006 in the ECEC for 

Health Care and Social Assistance 

indicate that wages and benefits are 71.8 

percent and 28.2 percent of 

compensation, respectively. The 2000- 

based MEI included a wage and benefit 

split of 74.0 percent and 26.0 percent of 

compensation. 

As in the 2000-based MEI, we are 

proposing to use 2006 Current 

Population Survey (CPS) data and 2006 

BLS Occupational Employment 

Statistics (OES) data to develop cost 

weights for wages for nonphysician 

occupational groups. We determined 

total annual earnings for offices of 

physicians using employment data from 

the CPS and mean annual earnings from 

the OES. To arrive at a distribution for 

these separate categories, we 

determined annual earnings for each of 

the four categories (which are 

Professional & Technical workers, 

Managers, Clerical workers, and Service 

workers), using the Standard 

Occupational Classification (SOC) 

system. We then determined the overall 

share of the total for each. The proposed 

distribution, as well as the distribution 

from the 2000-based MEI are presented 

in Table 25. 

TABLE 25—PERCENT DISTRIBUTION OF NONPHYSICIAN PAYROLL EXPENSE BY OCCUPATIONAL GROUP: 2006 AND 2000 

BLS Occupational Group 

2006 

Expenditure 

shares 

2000 

Expenditure 

shares 

Total ................................................................................................................................................................. 100.000 100.000 

Professional & Technical Workers ........................................................................................................... 43.671 42.635 

Managers .................................................................................................................................................. 10.517 24.138 

Clerical Workers ....................................................................................................................................... 32.477 28.187 

Service Workers ....................................................................................................................................... 13.336 5.040 

Values may not sum to 100 due to rounding. 

The decrease in the Management 

expenditure share is directly related to 

a decrease in the total number of 

employees in Management occupations 

in physicians’ offices, in particular, 

‘‘Medical and health service managers.’’ 

The decrease in expenditure share may 

also be due, in part to the methods used 

in this rebasing. That is, for the 2006- 

based MEI, we are using data limited to 

‘‘Offices of physicians.’’ In the 2000- 

based version of the index, the only data 

that were available to inform these 

estimates were inclusive of physician 

offices and clinics (‘‘Offices of 

physicians and clinics’’). An 

examination of 2006 CPS and OES data 

comparing ‘‘Outpatient care centers’’ to 

‘‘Offices of physicians’’ indicates that 

there is a higher share of management 

occupations in the ‘‘Outpatient care 

centers’’ than in ‘‘Offices of physicians.’’ 

The increase in the Service Workers 

expenditures share is attributable to a 

substantive increase in the number of 

employees in service occupations, 

particularly, ‘‘Medical assistants and 

other health care support occupations’’. 

(B) Office Expenses 

The aggregate Office Expenses cost 

weight was derived using the 2006 

AMA PPIS and is explained in more 

detail below in this section. This 

calculation resulted in a 20.035 percent 

share of total costs in 2006 compared to 

a 12.209 percent share in the 2000-based 

index. 

For the 2006-based MEI, we propose 

to further disaggregate the Office 

Expenses into more detailed cost 

categories using the BEA 2002– 

Benchmark I/O data for Offices of 

physicians, dentists, and other health 

practitioners (NAICS 621A00). We used 

this data to develop the nine detailed 

2002 costs weights as a percent of total 

office expenses, as measured by the BEA 

I/O data. The total Office Expenses cost 

category was calculated by matching the 

BEA I/O data as closely as possible to 

the AMA survey data, the latter of 

which defined office expenses as ‘‘office 

(non-medical) equipment and office 

(non-medical) supplies, as well as rent, 

mortgage, interest, maintenance, 

refrigeration, storage, security, janitorial, 

depreciation on medical buildings used 

in your practice, utilities, or other office 

computer systems (including 

information management systems/ 

electronic medical record systems) and 

telephone.’’ 

We then aged the 2002 weights 

forward to 2006 to derive the 2006 

detailed office expense cost weights as 

a percent of total Office Expenses. The 

methodology we used to age the data 

forward involved applying the annual 

price changes from each respective price 

proxy to the appropriate cost categories. 

We repeated this practice for each year 

of the interval. We then applied the 

resulting 2006 distributions to the 

aggregate 2006 AMA Office Expenses 

weight to yield the detailed 2006 Office 

Expenses’ weights as a percent of total 

expenses. 

We are proposing to introduce these 

new, more detailed weights for the 

2006-based index based on our intent to 

derive an increased level of precision 

while maintaining appropriate levels of 

aggregation in the market basket. The 

proposed proxies are described in 

section X. of this proposed rule. The 

following is a description of what is 

included in each of the detailed cost 

categories. 

• Utilities: The Utilities cost weight 

includes expenses classified in the fuel, 


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oil and gas, water and sewage, and 

electricity industries. The proposed cost 

weight for utilities is 1.139 percent. 

• Paper: The Paper cost weight 

includes expenses classified in the 

paper (including but not limited to 

paper, paperboard, and sanitary paper 

products) and printing industries. The 

proposed cost weight for paper is 0.616 

percent. 

• Chemicals: The Chemicals cost 

weight includes expenses classified in 

the basic organic and inorganic 

chemical manufacturing industry 

(accounting for about 45 percent of the 

chemical expenses), as well as other 

chemical industries including but not 

limited to industrial gas manufacturing 

and all other chemical product 

manufacturing. The proposed cost 

weight for chemicals is 0.679 percent. 

• Rubber and Plastics: The Rubber 

and Plastics cost weight includes 

expenses classified in the rubber and 

plastic industries, including but not 

limited to, urethane and other foam 

product manufacturing and other plastic 

and rubber manufacturing industries. 

The proposed cost weight for Rubber 

and Plastics is 0.563 percent. 

• Telephone: The telephone cost 

weight includes expenses classified in 

the telecommunications (accounting for 

the majority of the telephone expenses) 

and cable industries. The proposed cost 

weight for Telephone services is 1.415 

percent. 

• Postage: The Postage cost weight 

includes postal service expenses. The 

proposed cost weight for Postage is 

0.661 percent. 

• All Other Services: The All Other 

Services cost weight includes other 

service expenses including, but not 

limited to, nonresidential maintenance 

and repair, machinery repair, janitorial, 

and security services. This cost weight 

does not include expenses associated 

with professional services such as 

accounting, billing, legal and marketing 

which are included in the All Other 

Expenses cost weight derived using the 

AMA PPIS survey. The proposed cost 

weight for All Other Services is 4.718 

percent. 

• Fixed Capital: The Fixed Capital 

cost weight includes expenses for 

building leases and depreciation. The 

proposed cost weight for Fixed Capital 

is 8.410 percent. 

• Moveable Capital: The Moveable 

Capital cost weight includes expenses 

for non-medical equipment including 

but not limited to, computer equipment 

and software, as well as the rental and 

leasing of automotive and industrial 

machinery equipment. The proposed 

cost weight for Moveable Capital is 

1.834 percent. 

(C) Professional Liability Insurance (PLI) 

Expense 

The weight for PLI expense was 

derived from the 2006 AMA survey and 

was calculated as the mean PLI expense 

expressed as a percentage of total 

expenses. This calculation resulted in a 

4.513 percent share of total costs in 

2006 compared to a 3.865 percent share 

in the 2000-based index. The increase in 

the weight for PLI reflects the current 

prices of premiums, as well as an 

update to the level of coverage 

purchased by physicians in 2006 

compared to 2000. 

(D) Medical Equipment Expenses 

The proposed weight for Medical 

Equipment was calculated using the 

2006 AMA PPIS mean expense data. 

This calculation resulted in a 1.978 

percent share of total costs in 2006 

compared to a 2.055 percent share in the 

2000-based index. By definition, this 

category includes the expenses related 

to depreciation, maintenance contracts, 

leases/rental of medical equipment used 

in diagnosis or treatment of patients. 

The category would also include the 

tax-deductible portion of the purchase 

price or replacement value of medical 

equipment, if not leased. 

(E) Medical Supplies Expenses 

The proposed weight for Medical 

Supplies was calculated using the 2006 

AMA PPIS mean expense data. This 

calculation resulted in a 1.760 percent 

share of total costs in 2006 compared to 

a 2.011 percent share in the 2000-based 

index. By definition, this category 

includes the expenses related to medical 

supplies such as sterile gloves, needles, 

bandages, specimen containers, and 

catheters. Additionally, we are 

proposing to exclude the expenses 

related to separately billable supplies as 

these expenses are not paid for under 

the PFS. The Medical Supply cost 

category does not include expenses 

related to drugs. 

(F) All Other Professional Expenses 

The proposed weight for All Other 

Professional expenses was calculated 

using the 2006 AMA PPIS mean 

expense data. This calculation resulted 

in a 4.513 percent share of total costs in 

2006 compared to a 6.433 percent share 

in the 2000-based index. By definition, 

this category includes the expenses 

related to tax-deductible expenses for 

any other expenses not reported in 

another category from the PPIS. These 

expenses would include fees related to 

legal, marketing, accounting, billing, 

office management services, 

professional association memberships, 

maintenance of certification or 

licensure, journals and continuing 

education, professional car upkeep and 

depreciation, and any other professional 

expenses not reported elsewhere on the 

PPIS. 

d. Selection of Price Proxies for Use in 

the MEI 

After the proposed 2006 cost weights 

for the rebased and revised MEI were 

developed, we reviewed all of the price 

proxies to evaluate their 

appropriateness. As was the case in the 

development of the 2000-based MEI (68 

FR 63239), most of the proxy measures 

we considered are based on BLS data 

and are grouped into one of the 

following five categories: 

• Producer Price Indices (PPIs): PPIs 

measure price changes for goods sold in 

markets other than retail markets. These 

fixed-weight indexes are a measure of 

price change at the intermediate or final 

stage of production. They are the 

preferred proxies for physician 

purchases as these prices appropriately 

reflect the product’s first commercial 

transaction. 

• Consumer Price Indices (CPIs): CPIs 

measure change in the prices of final 

goods and services bought by 

consumers. Like the PPIs, they are fixedweight indexes. Since they may not 

represent the price changes faced by 

producers, CPIs are used if there are no 

appropriate PPIs or if the particular 

expenditure category is likely to contain 

purchases made at the final point of 

sale. 

• Average Hourly Earnings (AHEs): 

AHEs are available for production and 

nonsupervisory workers for specific 

industries, as well as for the nonfarm 

business economy. They are calculated 

by dividing gross payrolls for wages & 

salaries by total hours. The series 

reflects shifts in employment mix and, 

thus, is representative of actual changes 

in hourly earnings for industries or for 

the nonfarm business economy. 

• ECIs for Wages & Salaries: These 

ECIs measure the rate of change in 

employee wage rates per hour worked. 

These fixed-weight indexes are not 

affected by employment shifts among 

industries or occupations and thus, 

measure only the pure rate of change in 

wages. 

• ECIs for Employee Benefits: These 

ECIs measure the rate of change in 

employer costs of employee benefits, 

such as the employer’s share of Social 

Security taxes, pension and other 

retirement plans, insurance benefits 

(life, health, disability, and accident), 

and paid leave. Like ECIs for wages & 

salaries, the ECIs for employee benefits 

are not affected by employment shifts 

among industries or occupations. 


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When choosing wage and price 

proxies for each expense category, we 

evaluate the strengths and weaknesses 

of each proxy variable using the 

following four criteria. 

• Relevance: The price proxy should 

appropriately represent price changes 

for specific goods or services within the 

expense category. Relevance may 

encompass judgments about relative 

efficiency of the market generating the 

price and wage increases. 

• Reliability: If the potential proxy 

demonstrates a high sampling 

variability, or inexplicable erratic 

patterns over time, its viability as an 

appropriate price proxy is greatly 

diminished. Notably, low sampling 

variability can conflict with relevance— 

since the more specifically a price 

variable is defined (in terms of service, 

commodity, or geographic area), the 

higher the possibility of high sampling 

variability. A well-established time 

series is also preferred. 

• Timeliness of actual published 

data: For greater granularity and the 

need to be as timely as possible, we 

prefer monthly and quarterly data to 

annual data. 

• Public availability: For 

transparency, we prefer to use data 

sources that are publicly available. 

The BLS price proxy categories 

previously described meet the criteria of 

relevance, reliability, timeliness, and 

public availability. Below we discuss 

the proposed price-wage proxies for the 

rebased and revised MEI (as shown in 

Table 23). 

(1) Expense Categories in the MEI 

(A) Physician’s Own Time (Physician 

Compensation) 

In the proposed revised and rebased 

MEI, we are using the AHE for the 

private nonfarm economy as the proxy 

for the Physician Wages & Salaries 

component (BLS series code: 

CEU0500000008). 

As discussed extensively in the 

November 2, 1998 final rule (63 FR 

58848), and again in the December 31, 

2002 final rule (67 FR 80019), we 

believe that this price proxy represents 

the most appropriate proxy for use in 

the MEI. The AHE for the nonfarm 

business economy reflects the impacts 

of supply, demand, and economy-wide 

productivity for the average worker in 

the economy. As such, use of this proxy 

is consistent with the original legislative 

intent that the change in the physicians’ 

earnings portion of the MEI follow the 

change in general earnings for the 

economy. Since earnings are expressed 

per hour, a constant quantity of labor 

input per unit of time is reflected. 

Finally, the use of the AHE data is also 

consistent with our using the BLS 

economy-wide private nonfarm business 

sector multifactor productivity measures 

since economy-wide wage increases 

reflect economy-wide productivity 

increases. 

The current 2000-based MEI uses the 

ECI for Total Benefits (BLS series code: 

CIU2030000000000I) for total private 

industry as the price proxy for 

Physician Benefits. We are proposing to 

use the same proxy for the 2006-based 

MEI. This means that both the wage and 

benefit proxies for physician earnings 

are derived from the private nonfarm 

business sector and are computed on a 

per-hour basis. 

(B) Nonphysician Employee 

Compensation 

For the 2006-based MEI, we are 

proposing to use Current Population 

Survey (CPS) data on employment by 

occupation and earnings from the BLS 

Occupational Employment Statistics for 

NAICS 6211, Office of Physicians, to 

develop labor cost shares for the 

nonphysician occupational groups 

shown in Table 23. The 2000-based MEI 

was based on CPS data for the Standard 

Industrial Classification 801 and 803, 

which included both office of 

physicians and outpatient care centers. 

Beginning in 2003, BLS began 

publishing CPS data on a NAICS basis 

which provided data for office of 

physicians (NAICS 6211)and outpatient 

care centers (NAICS 6214) separately. 

We believe using data for office of 

physicians is appropriate for the 2006- 

based MEI. The BLS maintains an ECI 

for each selected industry group. We 

propose to use these ECIs as price 

proxies for nonphysician employee 

wages in the same manner they are used 

in the current MEI. 

As described in the CY 2008 PFS 

proposed rule (72 FR 38190), as a result 

of the discontinuation of the White 

Collar Benefit ECI for private workers, 

we are currently using a composite ECI 

benefit index. We are proposing to 

continue to use the composite ECI for 

nonphysician employees in the 

proposed rebased and revised MEI; 

however, we are proposing to revise the 

weights within that blend in order to 

reflect the more recent 2006 data. Table 

26 lists the four ECI series and 

corresponding weights used to construct 

the 2006 composite benefit index. 

TABLE 26—CMS COMPOSITE PRICE

INDEX FOR NONPHYSICIAN EMPLOYEE BENEFITS

ECI series 

2006 

Weight 

(%) 

Benefits, Private, Professional & 

Related ...................................... 44 

Benefits, Private, Management, 

Business, Financial ................... 11 

Benefits, Private, Office & Administrative Support ........................ 32 

Benefits, Private, Service Occupations ........................................... 13 

(C) Utilities 

For the 2006-based MEI, we are 

proposing to use the CPI for Fuel and 

Utilities (BLS series code 

#CUUR0000SAH2) to measure the price 

growth of this cost category. This cost 

category was not broken-out separately 

in the 2000-based MEI. 

(D) Chemicals 

For the 2006-based MEI, we are 

proposing to use the PPI for Other Basic 

Organic Chemical Manufacturing (BLS 

series code #PCU32519–32519) to 

measure the price changes of this cost 

category. We are proposing this 

industry-based PPI because BEA’s 2002 

benchmark I/O data show that the 

majority of the office of physicians’ 

chemical expenses are attributable to 

Other Basic Organic Chemical 

Manufacturing (NAICS 32519). This cost 

category was not broken-out separately 

in the 2000-based MEI. 

(E) Paper 

For the 2006-based MEI, we are 

proposing to use the PPI for Converted 

Paper and Paperboard (BLS series code 

#WPU0915) to measure the price growth 

of this cost category. This cost category 

was not broken-out separately in the 

2000-based MEI. 

(F) Rubber and Plastics 

For the 2006-based MEI, we are 

proposing to use the PPI for Rubber and 

Plastic Products (BLS series code 

#WPU07) to measure the price growth of 

this cost category. This cost category 

was not broken-out separately in the 

2000-based MEI. 

(G) Telephone 

For the 2006-based MEI, we are 

proposing to use the CPI for Telephone 

Services (BLS series code 

#CUUR0000SEED) to measure the price 

growth of this cost category. This cost 

category was not broken-out separately 

in the 2000-based MEI. 


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(H) Postage 

For the 2006-based MEI, we are 

proposing to use CPI for Postage (BLS 

series code #CUUR0000SEEC01) to 

measure the price growth of this cost 

category. This cost category was not 

broken-out separately in the 2000-based 

MEI. 

(I) All Other Services 

For the 2006-based MEI, we are 

proposing to use the ECI for 

Compensation for Service Occupations 

(private industry) (BLS series code 

#CIU2010000300000I) to measure the 

price growth of this cost category. This 

cost category was not broken-out 

separately in the 2000-based MEI. 

(J) Fixed Capital 

For the 2006-based MEI, we are 

proposing to use the CPI for Owner’s 

Equivalent Rent (BLS series code 

#CUUS0000SEHC) to measure the price 

growth of this cost category. This price 

index represents about 50 percent of the 

CPI for Housing which was used to in 

the 2000-based MEI to proxy total office 

expenses. 

(K) Moveable Capital 

For the 2006-based MEI, we are 

proposing to use the PPI for Machinery 

and Equipment (series code #WPU11) to 

measure the price growth of this cost 

category. This cost category was not 

broken-out separately in the 2000-based 

MEI. 

(L) Professional Liability Insurance 

In order to accurately reflect the price 

changes associated with PLI, each year, 

we solicit PLI premium data for 

physicians from a sample of commercial 

carriers. This information is not 

collected through a survey form, but 

instead is requested directly from, and 

provided by (on a voluntary basis), 

several national commercial carriers. As 

we require for our other price proxies, 

the professional liability price proxy is 

intended to reflect the pure price change 

associated with this particular cost 

category. Thus, it does not include 

changes in the mix or level of liability 

coverage. To accomplish this result, we 

obtain premium information from a 

sample of commercial carriers for a 

fixed level of coverage, currently $1 

million per occurrence and a $3 million 

annual limit. This information is 

collected for every State by physician 

specialty and risk class. Finally, the 

State-level, physician-specialty data are 

aggregated by effective premium date to 

compute a national total, using counts 

of physicians by State and specialty as 

provided in the AMA publication, 

Physician Characteristics and 

Distribution in the U.S. 

The resulting data provide a quarterly 

time series, indexed to a base year 

consistent with the MEI, and reflect the 

national trend in the average 

professional liability premium for a 

given level of coverage, generally $1 

million/$3 million of claims-made 

mature policies. From this series, 

quarterly and annual percent changes in 

PLI are estimated for inclusion in the 

MEI. 

The most comprehensive data on 

professional liability costs are held by 

the State insurance commissioners, but 

these data are available only with a 

substantial time lag and hence, the data 

currently incorporated into the MEI are 

much timelier. We believe that, given 

the limited data available on 

professional liability premiums, the 

information and methodology described 

above adequately reflect the PLI price 

trends facing physicians. 

(M) Medical Equipment 

The Medical Equipment cost category 

includes depreciation, leases, and rent 

on medical equipment. We are 

proposing to use the PPI for Medical 

Instruments and Equipment (BLS series 

code: WPU1562) as the price proxy for 

this category, consistent with the price 

proxy used in the 2000-based MEI and 

other CMS input price indexes. 

(N) Medical Materials and Supplies 

As is used in the 2000-based MEI, we 

are proposing to use a blended index 

comprised of 50/50 blend of the PPI 

Surgical Appliances (BLS series code: 

WPU156301) and the CPI–U for Medical 

Equipment and Supplies (BLS series 

code: CUUR0000SEMG). We believe 

physicians purchase the types of 

supplies contained within these proxies, 

including such items as bandages, 

dressings, catheters, I.V. equipment, 

syringes, and other general disposable 

medical supplies, via wholesale 

purchase, as well as at the retail level. 

Consequently, we are proposing to 

combine the two aforementioned 

indexes to reflect those modes of 

purchase. 

(O) Other Professional Expenses 

This category includes the residual 

subcategory of other professional 

expenses such as accounting services, 

legal services, office management 

services, continuing education, 

professional association memberships, 

journals, professional car expenses, and 

other professional expenses. Given this 

heterogeneous mix of goods and 

services, we are proposing to use the 

CPI–U for All Items Less Food and 

Energy, consistent with the price proxy 

used in the 1996 and 2000-based MEI. 

(2) Productivity Adjustment to the MEI 

The MEI has been adjusted for 

changes in productivity since its 

inception. In the CY 2003 PFS final rule 

(67 FR 80019), we implemented a 

change in the way the MEI was adjusted 

to account for those changes in 

productivity The MEI used for the 2003 

physician payment update incorporated 

changes in the 10-year moving average 

of private nonfarm business (economywide) multifactor productivity that were 

applied to the entire index. Previously, 

the index incorporated changes in 

productivity by adjusting the labor 

portions of the index by the 10-year 

moving average of economy-wide 

private nonfarm business labor 

productivity. 

We are proposing to continue to use 

the current method for adjusting the full 

MEI for multifactor productivity in the 

rebased and revised MEI. 

As described in the CY 2003 PFS final 

rule, we believe this adjustment is 

appropriate because it explicitly reflects 

the productivity gains associated with 

all inputs (both labor and non-labor). 

We believe that using the 10-year 

moving average percent change in 

economy-wide multifactor productivity 

is appropriate for deriving a stable 

measure that helps alleviate the 

influence that the peak (or a trough) of 

a business cycle may have on the 

measure. The adjustment will be based 

on the latest available historical 

economy-wide nonfarm business 

multifactor productivity data as 

measured and published by BLS. 

e. Results of Rebasing 

Table 27 illustrates the results of 

updating the MEI from the following 

changes to the weights for the Physician 

Compensation, Practice Expenses 

(excluding PLI), and PLI. 

TABLE 27—PERCENT DISTRIBUTION OF

SELECTED PHYSICIAN EXPENSES

USED TO CALIBRATE RVUS: CYS

2006 AND 2000 

CY 2006 

weight 

(%) 

CY 2000 

weight 

(%) 

Physician Compensation (Own Time) .... 48.266 52.466 

Practice Expenses 

(less PLI) ............... 47.439 43.669 

PLI ............................ 4.295 3.865 

The rebased and revised MEI has 

several differences as compared to the 

2000-based MEI; these changes have 

been discussed in detail in prior 


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sections of this rule. Table 28 shows the 

average calendar year percent change 

from CY 2004 to CY 2011 for both the 

2000- and 2006-based MEIs. The 2006- 

based MEI annual percent changes differ 

from the 2000-based MEI annual percent 

changes by 0.0 to 0.8 percentage point. 

In the 5 most recent years (CYs 2007– 

2011), the annual percent change in the 

rebased and revised MEI was within 0.3 

percentage point of the percent change 

in the 2000-based MEI. In the earlier 

years, there were bigger differences 

between the annual percent change in 

the rebased and revised MEI and the 

2000-based MEI. The majority of these 

differences can be attributed to the 

lower benefit cost weight, as measured 

by the 2006 AMA data, and the 

exclusion of the drug cost weight. The 

remaining differences are attributable to 

the higher cost weight for PLI, as 

measured by the 2006 AMA data. 

TABLE 28—ANNUAL PERCENT CHANGE IN THE CURRENT AND PROPOSED REVISED AND REBASED MEI 

Update year A

Proposed 

2006-based 

MEI 

Current 

2000-based 

MEI 

CY 2004 ................................................................................................................................................................... 2.4 2.7 

CY 2005 ................................................................................................................................................................... 2.1 2.9 

CY 2006 ................................................................................................................................................................... 2.0 2.5 

CY 2007 ................................................................................................................................................................... 1.7 2.0 

CY 2008 ................................................................................................................................................................... 1.9 1.8 

CY 2009 ................................................................................................................................................................... 1.7 1.7 

CY 2010 ................................................................................................................................................................... 1.4 1.2 

CY 2011 B ................................................................................................................................................................ 0.3 0.3 

Avg. Change for CYs 2004–2011 ........................................................................................................................... 1.7 1.9 

A Update year based on historical data through the second quarter of the prior calendar year. For example, the 2010 update is based on historical data through the second quarter 2009. B Based on the 1st quarter 2010 forecast by HIS Global Insight. With historical data through the 4th quarter 2009. 

As shown in Table 29, the projection 

of the proposed rebased and revised 

MEI for the CY 2011 PFS proposed rule 

is an increase of 0.3 percent, identical 

to the projected increase using the 2000- 

based MEI. In the CY 2011 PFS final 

rule, we will incorporate historical data 

through the second quarter of 2010; 

therefore, the current estimated increase 

of 0.3 percent for 2011 may differ in the 

final rule. 

TABLE 29—FORECASTED ANNUAL PERCENT CHANGE IN THE CURRENT AND PROPOSED REVISED AND REBASED MEI FOR

CY 2011 

Proposed 

2006-based 

MEI 

2000-based 

MEI 

CY 2011 ................................................................................................................................................................... 0.3 0.3 

TABLE 30—FORECASTED ANNUAL PERCENT CHANGE IN THE PROPOSED REVISED AND REBASED MEI CY 2011, ALL

CATEGORIES 1

Cost categories 2006 Weight 2

(%) 

Projected 

CY 2011 

percent 

changes 

MEI Total, productivity adjusted .............................................................................................................................. 100.000 0.3 

Productivity: 10-year moving average of MFP ........................................................................................................ N/A 1.3 

MEI Total, without productivity adjustment .............................................................................................................. 100.000 1.6 

Physician Compensation (Own Time) 3 ............................................................................................................ 48.266 2.4 

Wages and Salaries .................................................................................................................................. 43.880 2.5 

Benefits ...................................................................................................................................................... 4.386 1.5 

Practice Expenses ............................................................................................................................................ 51.734 0.9 

Nonphysician Compensation ..................................................................................................................... 19.153 1.5 

Nonphysician Wages ......................................................................................................................... 13.752 1.5 

P&T ............................................................................................................................................. 6.006 1.2 

Management ............................................................................................................................... 1.446 1.0 

Clerical ........................................................................................................................................ 4.466 1.8 

Services ...................................................................................................................................... 1.834 2.0 

Nonphysician Benefits ........................................................................................................................ 5.401 1.4 

Other Practice Expenses .......................................................................................................................... 26.308 0.4 

Office Expenses ................................................................................................................................. 20.035 0.8 

Utilities ......................................................................................................................................... 1.139 ¥3.0 

Chemicals ................................................................................................................................... 0.679 ¥1.1 

Paper ........................................................................................................................................... 0.616 ¥1.0 

Rubber & Plastics ....................................................................................................................... 0.563 ¥0.7 

Telephone ................................................................................................................................... 1.415 1.1 

Postage ....................................................................................................................................... 0.661 5.5 

All Other Services ....................................................................................................................... 4.718 2.0 


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TABLE 30—FORECASTED ANNUAL PERCENT CHANGE IN THE PROPOSED REVISED AND REBASED MEI CY 2011, ALL

CATEGORIES 1—Continued 

Cost categories 2006 Weight 2

(%) 

Projected 

CY 2011 

percent 

changes 

Fixed Capital ............................................................................................................................... 8.410 0.9 

Moveable Capital ........................................................................................................................ 1.834 ¥0.1 

PLI 4 .................................................................................................................................................... 4.295 ¥2.2 

Medical Equipment ............................................................................................................................. 1.978 0.8 

Medical supplies ................................................................................................................................. 1.760 0.5 

All Other Expenses ................................................................................................................................... 4.513 1.4 

1The forecasts are based upon the latest available Bureau of Labor Statistics data as of December 2009. 

2The weights shown for the MEI components are the 2006 base-year weights, which may not sum to subtotals or totals because of rounding. 

The MEI is a fixed-weight, Laspeyres-type input price index whose category weights indicate the distribution of expenditures among the inputs to 

physicians’ services for CY 2006. To determine the MEI level for a given year, the price proxy level for each component is multiplied by its 2006 

weight. The sum of these products (weights multiplied by the price index levels) overall cost categories yields the composite MEI level for a given 

year. The annual percent change in the MEI levels is an estimate of price change over time for a fixed market basket of inputs to physicians’ 

services. 3The measures of productivity, average hourly earnings, Employment Cost Indexes, as well as the various Producer and Consumer Price Indexes can be found on the Bureau of Labor Statistics Web site at http://stats.bls.gov. 4 Derived from a CMS survey of several major commercial insurers N/A Productivity is factored into the MEI categories as an adjustment to the 

price variables; therefore, no explicit weight exists for productivity in the MEI. 

In addition to the proposed revisions 

to the MEI mentioned earlier in this 

section, we are also proposing to 

convene a technical advisory panel later 

this year to review all aspects of the 

MEI, including the inputs, input 

weights, price-measurement proxies, 

and productivity adjustment. We will 

ask the panel to assess the relevance and 

accuracy of these inputs to current 

physician practices. The panel’s 

analysis and recommendations will be 

considered in future rule making to 

ensure that the MEI accurately and 

appropriately meets its intended 

statutory purpose. We are requesting 

comments from the physician 

community and other interested 

members of the public on any other 

specific issues that should be 

considered by the technical panel. 

f. Adjustments to the RVU Shares To 

Match the Proposed Rebased MEI 

Weights 

As described in the previous section, 

we are proposing to rebase the MEI for 

CY 2011 based on the most current data 

and establish new weights for physician 

work, PE, and malpractice under the 

MEI. As stated in the previous section, 

the MEI was rebased to a CY 1996 base 

year beginning with the CY 1999 MEI 

(63 FR 58845), and to a CY 2000 base 

year beginning with the CY 2004 MEI 

(68 FR 63239). For both the CY 1999 

and CY 2004 rebasing, we made 

adjustments to ensure that our estimates 

of aggregate PFS payments for work, PE, 

and malpractice were in proportion to 

the weights for these categories in the 

rebased MEI (63 FR 58829 and 69 FR 

1095). 

Consistent with our past practice 

when the MEI has been rebased, we are 

proposing to make adjustments to 

ensure that estimates of aggregate CY 

2011 PFS payments for work, PE, and 

malpractice are in proportion to the 

weights for these categories in the 

rebased CY 2011 MEI. 

Our proposal would necessitate 

increasing the proportion of aggregate 

CY 2011 PFS payments for PE and 

malpractice and decreasing the 

proportion for work. This could be 

accomplished by applying adjustments 

directly to the work, PE, and 

malpractice RVUs. However, we are 

cognizant of the public comments made 

during prior rulemaking on issues 

related to scaling the work RVUs. Many 

commenters have indicated a preference 

for the work RVUs to remain stable over 

time and for any necessary adjustments 

that would otherwise be made broadly 

to the work RVUs to be accomplished in 

an alternative manner. For example, in 

past 5-Year Reviews of the work RVUs, 

many commenters have cited stability in 

the work RVUs, among other reasons, in 

their requests that any required budget 

neutrality adjustments not be made 

directly to the work RVUs. Given these 

prior comments, we are proposing to 

make the necessary MEI rebasing 

adjustments without adjusting the work 

RVUs. Instead, we are proposing to 

increase the PE RVUs by an adjustment 

factor of 1.168 and the malpractice 

RVUs by an adjustment factor of 1.413. 

The RVUs in Addendum B to this 

proposed rule reflect the application of 

these adjustment factors. We note that 

an application of the 1.413 adjustment 

factor to the malpractice RVUs for 

services with malpractice RVUs of 0.01 

will, due to rounding, result in 

malpractice RVUs of 0.01. 

Section 1848(c)(2)(B)(ii)(II) of the Act 

requires that changes to RVUs cannot 

cause the amount of expenditures for a 

year to differ by more than $20 million 

from what expenditures would have 

been in the absence of the changes. 

Therefore, as required by section 

1848(c)(2)(B)(ii) of the Act, we are 

proposing to make an adjustment of 

0.921 to the CY 2011 conversion factor 

to ensure that the 1.168 adjustment to 

the PE RVUs and the 1.413 adjustment 

to the malpractice RVUs do not cause an 

increase in CY 2011 PFS expenditures. 

The current law estimate of the CY 2011 

CF is $26.6574. 

III. Code-Specific Issues for the PFS 

A. Therapy Services 

1. Outpatient Therapy Caps for CY 2011 

Section 1833(g) of the Act applies an 

annual, per beneficiary combined cap 

on expenses incurred for outpatient 

physical therapy and speech-language 

pathology services under Medicare Part 

B. A similar separate cap for outpatient 

occupational therapy services under 

Medicare Part B also applies. The caps 

do not apply to expenses incurred for 

therapy services furnished in an 

outpatient hospital setting. The caps 

were in effect during 1999, from 

September 1, 2003 through December 7, 

2003, and beginning January 1, 2006. 

The caps are a permanent provision, 

that is, there is no end date specified in 

the statute for therapy caps. Beginning 

January 1, 2006, the Deficit Reduction 

Act (Pub. L. 109–171) (DRA) provided 

for exceptions to the therapy caps until 

December 31, 2006. The exceptions 


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40096 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

process for therapy caps has been 

extended through December 31, 2009 

pursuant to three subsequent 

amendments (in MEIA–TRHCA, 

MMSEA, and MIPPA). 

Section 1833(g)(5) of the Act (as 

amended by section 3103 of the ACA) 

extended the exceptions process for 

therapy caps through December 31, 

2010. We will announce the amount of 

the therapy cap for CY 2011 in the CY 

2011 PFS final rule with comment 

period. The annual change in the 

therapy cap is computed by multiplying 

the cap amount for CY 2010, which is 

$1,860, by the MEI for CY 2011, and 

rounding to the nearest $10. This 

amount is added to the CY 2010 cap to 

obtain the CY 2011 cap. The agency’s 

authority to provide for exceptions to 

therapy caps (independent of the 

outpatient hospital exception) will 

expire on December 31, 2010, unless the 

Congress acts to extend it. If the current 

exceptions process expires, the caps 

will be applicable in accordance with 

the statute, except for services furnished 

and billed by outpatient hospitals. 

2. Alternatives to Therapy Caps 

a. Background 

In section 4541 of the Balanced 

Budget Act of 1997 (Pub. L. 105–33) 

(BBA), the Congress enacted the 

financial limitations on outpatient 

therapy services (the ‘‘therapy caps’’ 

discussed above for physical therapy, 

occupational therapy, and speechlanguage pathology). At the same time, 

the Congress requested that the 

Secretary submit a Report to Congress 

that included recommendations on the 

establishment of a revised coverage 

policy for outpatient physical therapy 

services and outpatient occupational 

therapy services under the statute. The 

Balanced Budget Refinement Act of 

1999 (Pub. L. 106–113) (BBRA) placed 

the first of a series of moratoria on 

implementation of the limits. In 

addition, it required focused medical 

review of claims and revised the report 

requirements in section 4541(d)(2) of 

the BBA to request a report that 

included recommendations on the 

following: (A) The establishment of a 

mechanism for assuring appropriate 

utilization of outpatient physical 

therapy services, outpatient 

occupational therapy services, and 

speech-language pathology services; and 

(B) the establishment of an alternative 

payment policy for such services based 

on classification of individuals by 

diagnostic category, functional status, 

prior use of services (in both inpatient 

and outpatient settings), and such other 

criteria as the Secretary determines 

appropriate, in place of the limits. 

In 1999, therapy services were not 

defined, but services documented as 

therapy were billed and reported when 

furnished by a variety of individuals in 

many different settings. These services 

were not identified in a way that would 

allow analysis of utilization or 

development of alternative payment 

policies. 

We have studied therapy services 

with the assistance of a number of 

contractors over the past 11 years. 

Reports of these projects are available 

on the CMS Web site at http:// 

www.cms.gov/TherapyServices/. On 

November 9, 2004, we delivered the 

Report to Congress, Number 137953, 

‘‘Medicare Financial Limitations on 

Outpatient Therapy Services’’ that 

referenced two utilization analyses. We 

periodically updated the utilization 

analyses and posted other contracted 

reports in order to further respond to the 

requirements of the BBRA. Subsequent 

reports highlighted the expected effects 

of limiting services in various ways and 

presented plans to collect data about 

patient condition using available tools. 

The general belief was that if patient 

condition could be reliably determined, 

an objective payment policy could be 

developed that would ensure 

appropriate payment for appropriately 

utilized services. 

Over the past decade, significant 

progress has been made in identifying 

the outpatient therapy services that are 

billed to Medicare, the demographics of 

the beneficiaries who utilize those 

services, the types of services, the 

HCPCS codes used to bill the services, 

the allowed and paid amounts of the 

services, and the settings, geographic 

locations, and provider types where 

services are furnished. 

Some of the information that is 

necessary to ensure appropriate 

utilization and develop objective and 

equitable payment alternatives to 

therapy caps based on patient condition 

has proven difficult to develop. The 

influence of prior use of inpatient 

services on outpatient use of therapy 

services was not accessible due to 

systems issues and differences in the 

policies, billing, and reporting practices 

for inpatient and outpatient therapy 

services. The weakness of the ICD–9– 

CM diagnostic codes in describing the 

condition of the rehabilitation patient 

obscured analyses of claims to assess 

the need for therapy services. The 

primary diagnosis on the claim is a poor 

predictor for the type and duration of 

therapy services required, which 

complicates assignment of patient 

cohorts for analysis. Although changes 

to the guidance in the Medicare Benefit 

Policy Manual (Pub. 100–02) on 

documentation of therapy services in 

2005 improved the consistency of 

records and facilitated chart review, it 

became increasingly obvious that 

neither claims analysis nor chart review 

could serve as a reliable and valid 

method to determine a patient’s need for 

services or to form the basis for 

equitable payment. We concluded that 

in order to develop alternative payment 

approaches to the therapy caps, we 

needed a method to identify patients 

with similar risk-adjusted conditions 

(cohorts) and then we would identify 

the therapy services that are necessary 

for the patients to attain the best 

outcomes with the most efficient use of 

resources. 

While we studied therapy utilization, 

a number of proprietary tools were 

developed by researchers in the 

professional community to assess the 

outcomes of therapy. Some tool 

sponsors collected sufficient 

information to predict with good 

reliability the amount or length of 

treatment that would result in the best 

expected outcomes. We encouraged the 

use of these proprietary tools in manual 

instructions, but proprietary tools do 

not serve CMS’ purposes because 

modification of proprietary tools may 

only be done by the tool sponsor. There 

now are some versions of the tools in 

the public domain and they are being 

utilized widely to identify patient 

conditions and, by some insurers, to pay 

for efficient and effective treatment. 

Examples of such tools including the 

National Outcomes Measurement 

System (NOMS) by the American 

Speech-Language Hearing Association 

and Patient Inquiry by Focus On 

Therapeutic Outcomes, Inc. (FOTO). 

In 2006, Focus on Therapeutic 

Outcomes, Inc. delivered to CMS a 

report titled, ‘‘Pay for Performance for 

Physical Therapy and Occupational 

Therapy,’’ which is also available on the 

CMS Web site at http://www.cms.gov/ 

TherapyServices. The purpose of this 

project was to simulate a pay-forperformance implementation, designed 

to align financial incentives with the 

achievement of better clinical outcomes 

from services that were delivered 

efficiently. The project, funded by HHS/ 

CMS Grant #18–P–93066/9–01, 

demonstrated the predictive validity of 

the risk-adjusted pay-for-performance 

model and the feasibility of reducing 

payments without affecting services to 

beneficiaries who need them. 

b. Current Activities 

The Tax Relief and Health Care Act of 

2006 (TRHCA) extended the therapy cap 


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exceptions process through December 

31, 2007 and provided funds used for 

two CMS projects related to developing 

alternative payment approaches for 

therapy services that are based on 

beneficiary needs. A 5-year project titled 

‘‘Development of Outpatient Therapy 

Alternatives’’ (DOTPA), awarded to RTI 

International, was initiated in order to 

develop a comprehensive and uniform 

therapy-related data collection 

instrument, assess its feasibility, and 

determine the subset of the measures 

that we could routinely and reliably 

collect in support of payment 

alternatives. While DOTPA will identify 

measurement items relevant to payment, 

the project will not deliver a 

standardized measurement tool. We 

may either develop a tool or allow other 

tools to be used for payment purposes 

when they include those items that 

identify the following: (a) Beneficiary 

need; and (b) outcomes (that is 

effectiveness of therapy services). In 

addition to therapy caps, the DOTPA 

project addresses our interest in valuebased purchasing by identifying 

components of value, including 

beneficiary need and the effectiveness of 

therapy services. 

The DOTPA project reports are 

available on the contractor’s Web site at 

http://optherapy.rti.org/. The data 

collection design and instrument 

development have been completed, and 

a Paperwork Reduction Act (PRA) 

package was submitted for approval of 

the data collection forms by the Office 

of Management and Budget (OMB). The 

Federal Register notice for the second 

round of public comment on this 

package was published on April 23, 

2010 (75 FR 21296). Once the PRA 

package is approved, the contractor will 

begin data collection. While approval is 

pending, the contractor is recruiting 

potential participants in the data 

collection, developing training materials 

for participants, and updating the 

project web site. We are not seeking 

public comments on the DOTPA project 

in this proposed rule. 

The TRCHA also funded the 2-year 

project contracted to Computer Sciences 

Corporation (CSC) titled ‘‘Short Term 

Alternatives for Therapy Services’’ 

(STATS). STATS will provide 

recommendations regarding alternative 

payment approaches to therapy caps 

that could be considered before 

completion of the DOTPA project. The 

STATS project draws upon the 

analytical and clinical expertise of 

contractors and stakeholders to consider 

policies, measurement tools, and claims 

data that are currently available to 

provide further information about 

patient condition and the outcomes of 

therapy services. The final report, due 

in the fall of CY 2010, will include 

recommended actions we could take 

within 2 or 3 calendar years to replace 

the current cap limits on therapy 

services with a policy that pays 

appropriately for necessary therapy 

services. 

c. Potential Short-Term Approaches to 

Therapy Caps 

On June 30, 2009, we received a draft 

of the CSC report titled ‘‘STATS 

Outpatient Therapy Practice 

Guidelines,’’ a summary of expert 

workgroup discussions, and several 

short-term payment alternatives for 

consideration. CSC discussed options 

based on the assumption that short-term 

policy changes should facilitate the 

development of adequate function and/ 

or outcomes reporting tools. In the longterm, CSC recommended that payment 

be based on function or quality 

measurements that adequately perform 

risk adjustment for episode-based 

payment purposes. 

Based on the draft report, additional 

stakeholder input, and subsequent 

communications with the contractor, in 

this proposed rule we are discussing 

several potential alternatives to the 

therapy caps that could lead to more 

appropriate payment for medically 

necessary and effective therapy services 

that are furnished efficiently. We are 

soliciting public comments on this 

proposed rule regarding all aspects of 

these alternatives, including the 

potential associated benefits or 

problems, clinical concerns, practitioner 

administrative burden, consistency with 

other Medicare and private payer 

payment policies, and claims processing 

considerations. We are not proposing 

either short-term or long-term payment 

alternatives to the therapy caps at this 

time. However, we refer readers to 

section II.C.4.(c) of this proposed rule 

for our CY 2011 proposal to expand the 

MPPR policy to ‘‘always therapy’’ 

services furnished in a single session in 

order to pay more appropriately for 

therapy services, taking into 

consideration the expected efficiencies 

when services are furnished together. 

While we are not proposing the 

adoption of an MPPR policy for therapy 

services specifically as an alternative to 

the therapy caps, we acknowledge that 

by paying more appropriately for 

combinations of therapy services that 

are commonly furnished in a single 

session, practitioners would be able to 

furnish more medically necessary 

therapy services to a given beneficiary 

before surpassing the caps. This 

proposed policy would have the 

potential to reduce the number of 

beneficiaries impacted by the therapy 

caps in a given year. 

The three specific short-term options 

that we are discussing in this proposed 

rule would not require statutory 

changes. Some would require moderate 

reporting changes that would yield more 

detailed information about patient 

function and progress to inform future 

payment approaches and facilitate the 

medical review of services above the 

therapy caps at the present time. Others 

require new coding and bundled persession payment that would be a first 

step toward episode-based payment. 

They are not necessarily independent of 

each other. Under each of these 

alternatives, administrative 

simplification with respect to current 

policies, such as HCPCS code edits and 

‘‘ICD–9–CM to HCPCS code’’ crosswalk 

edits that serve to limit utilization 

without regard to the patient’s clinical 

presentation, could be pursued in the 

context of these options. 

The first option would modify the 

current therapy caps exceptions process 

to capture additional clinical 

information regarding therapy patient 

severity and complexity in order to 

facilitate medical review. This approach 

would complement the DOTPA project, 

which is identifying items to measure 

patient condition and outcomes. We 

believe the first option may have the 

greatest potential for rapid 

implementation that could yield useful 

information in the short-term. We are 

especially interested in detailed public 

comments on this option that could 

inform a potential proposal to adopt 

such an alternative through future 

rulemaking. The second option would 

involve introducing additional claims 

edits regarding medical necessity, in 

order to reduce overutilization. The 

third option would be to adopt a persession bundled payment that would 

vary based on patient characteristics 

and the complexity of evaluation and 

treatment services furnished in the 

session. Each option would require 

significant provider and contractor 

education, and all would necessitate 

major claims processing systems 

changes. Moreover, some of the options 

may affect beneficiaries by changing the 

type or amount of services covered by 

Medicare or the beneficiary’s cost 

sharing obligations. 

Option (1): Revise therapy caps 

exceptions process by requiring the 

reporting of new patient functionrelated Level II HCPCS codes and 

severity modifiers. 

This option would require that 

clinicians submit beneficiary functionrelated nonpayable HCPCS codes to 

replace the –KX modifier (Specific 


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required documentation on file). Codes 

would not be submitted on every claim, 

but at episode onset and at periodic 

intervals (for example, progress report 

intervals of 12 sessions or 30 days— 

whichever is less). Codes would be 

submitted for all patients in order for 

the claims to be paid and not only those 

claims approaching or surpassing the 

therapy caps. The current –KX modifier 

is not useful to identify claims 

exceeding therapy caps, because it is 

used for services both before and after 

the caps are exceeded, and it must be 

used on the entire claim for facilities. 

New codes also would not identify 

claims above the cap, but they would 

perform the same function as the 

current –KX modifier to signal that 

documentation in the medical record 

supported medical necessity that should 

lead to an exception to the therapy caps. 

The codes would also provide more 

information for medical review. 

Six Level II HCPCS G-codes 

representing functions addressed in the 

plan of care and 5 (or 7) modifiers 

representing severity/complexity would 

be utilized to report information on the 

claim. 

Examples of six new function-related 

G-codes: 

• GXXXU—Impairments to body 

functions and/or structures—current. 

• GXXXV—Impairments to body 

functions and/or structures—goal. 

• GXXXW—Activity limitations and/ 

or participation restrictions—current. 

• GXXXX—Activity limitations and/ 

or participation restrictions—goal. 

• GXXXY—Environmental barriers— 

current. 

• GXXXZ—Environmental barriers— 

goal. 

Two potential severity/complexity 

scales have been suggested that would 

require the adoption of 5 or 7 new 

severity modifiers, respectively. Under 

one scenario, modifiers based on the 

International Classification of Function 

could identify severity as follows: 

• None (0 to 4 percent); 

• MILD (5 to 24 percent); 

• MODERATE (25 to 49 percent); 

• SEVERE (50 to 95 percent); or 

• COMPLETE (96 to 100 percent). 

Alternatively, a proportional severity/ 

complexity scale would use 7 modifiers 

to describe impairments, limitations, or 

barriers: 

• 0 percent; 

• 1 to 19 percent; 

• 20 to 39 percent; 

• 40 to 59 percent; 

• 50 to 79 percent; 

• 80 to 99 percent; or 

• 100 percent. 

Implementation of this general 

approach would require 6 months to 2 

years to modify claims processing for 

the current therapy caps and exceptions 

processing of claims, and to develop, 

pilot test, and refine coding before 

applying the approach nationally. While 

therapists initially would need to learn 

the new codes and update their billing 

systems, ultimately their reporting 

burden would be reduced because the 

–KX modifier would not be required on 

each claim line for patients with 

expenditures approaching or exceeding 

the therapy caps. This option could 

potentially result in a small reduction in 

outpatient therapy expenditures due to 

increased Medicare contractor scrutiny 

of episodes where functional severity 

scores did not change over time, or to 

other atypical reporting patterns 

associated with the new codes. 

In the long-term, these codes and 

modifiers could be mapped to reliable 

and validated measurement tools (either 

currently available tools in the public 

domain or newly developed tools from 

items on the DOTPA instrument or the 

Continuity Assessment Record and 

Evaluation (CARE) tool). When 

statistically robust patient condition 

information has been collected from 

claims data, it may be possible to 

develop Medicare payment approaches 

for outpatient therapy services that 

would pay appropriately and similarly 

for efficient and effective services 

furnished to beneficiaries with similar 

conditions who have good potential to 

benefit from the services furnished. At 

a minimum, the new codes would allow 

contractors to more easily identify and 

limit the claims for beneficiaries that 

show no improvement over reasonable 

periods of time. 

Option (2): Enhance existing therapy 

caps exceptions process by applying 

medical necessity edits when perbeneficiary expenditures reach a 

predetermined value. 

The existing automatic process for 

exceptions, and the revised exceptions 

process described in Option 1 above, 

pay practitioners indefinitely for 

services if they attest on the claim by 

appending a specific modifier to therapy 

HCPCS codes that the services being 

furnished are medically necessary and 

that supporting documentation is 

included in the medical record. Unless 

the contractor uses claims edits or does 

post payment review, these processes do 

not identify or limit unusually high 

annual per-beneficiary utilization. High 

utilization is not limited to beneficiaries 

with multiple or complex conditions. 

We could use existing therapy 

utilization data to develop annual perbeneficiary medical necessity payment 

edits, such as limits to the number of 

services per session, per episode, or per 

diagnostic grouping, for exceptions to 

the therapy caps which could be set at 

benchmark payment levels that only a 

small percentage of beneficiaries would 

surpass in a single year. Once these 

levels were reached, additional claims 

would be denied and practitioners 

would need to appeal those denials if 

they wished to challenge Medicare’s 

nonpayment. 

This alternative would require 1 to 2 

years to implement as an expansion of 

existing policy, and its effects could be 

anticipated by analysis of the current 

utilization of therapy services. 

Additional practitioner burden would 

be incurred in the small number of cases 

exceeding the per-beneficiary 

expenditure edits when the practitioner 

chooses to appeal the medical necessity 

denial. 

Option (3): Introduce per-session 

‘‘Evaluation/Assessment and 

Intervention’’ (E&I) codes to bundle 

payment for groups of current therapy 

HCPCS codes into a single per-session 

payment. 

As discussed in section II.C.4.(c) of 

this proposed rule, multiple therapy 

services are often furnished in a single 

session, and we are proposing to expand 

the MPPR policy to ‘‘always therapy’’ 

services in CY 2011 in order to take into 

consideration the efficiencies that occur 

when multiple services (the typical 

therapy scenario) are furnished in one 

session to a beneficiary. Furthermore, 

we note that section 1848(c)(2)(K) of the 

Act (as added by section 3134 of the 

ACA) regarding potentially misvalued 

codes under the PFS specifies that the 

Secretary may make appropriate coding 

changes, which may include 

consolidation of individual services into 

bundled codes for payment under the 

PFS, as part of her review and 

adjustment of the relative values for 

services identified as potentially 

misvalued. 

This option would require that 

practitioners submit a single new Level 

II HCPCS code to represent all the 

therapy services currently reported and 

paid separately for an outpatient 

therapy session. Payment for the HCPCS 

code would be based on patient 

characteristics (as identified through 

prior CMS contractor analyses) and the 

complexity of the evaluation/assessment 

and intervention services furnished 

during the session. The new coding 

requirements would not disrupt the 

current exceptions process or the 

revised exceptions process described in 

Option (1) above. Approximately 12 E&I 

codes would be needed, taking into 

consideration the basic algorithm shown 

in Table 31. 


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TABLE 31—EVALUATION/ASSESSMENT & INTERVENTION LEVEL II HCPCS CODES

Evaluation/Assessment complexity 

Minimal Moderate Significant 

Intervention Level: 

None ................................................................ E&I Code #1 E&I Code #2 E&I Code #3. 

Minimal ............................................................ E&I Code #4 E&I Code #5 E&I Code #6. 

Moderate .......................................................... E&I Code #7 E&I Code #8 E&I Code #9. 

Significant ........................................................ E&I Code #10 E&I Code #11 E&I Code #12. 

We would need to develop and test 

operational definitions for each E&I 

code so that practitioners would be able 

to properly report services and 

appropriate relative values could be 

established for each per-session code. 

We believe that a pilot study might 

reveal that the different practice 

patterns for the three therapy 

professions (physical therapy, 

occupational therapy, and speechlanguage pathology) could necessitate 

separate relative value determinations 

for each E&I code by type of therapy 

service furnished. As a result, up to 36 

total new Level II HCPCS codes could 

be needed (12 per discipline). 

We anticipate that the definitions of 

E&I codes 1 through 3 and 7 through 12 

would describe services that may only 

be furnished by a ‘‘clinician’’ (therapist, 

physician, or nonphysician 

practitioner). E&I codes 1 through 3 

would be reported for sessions that 

consisted only of evaluations. In 

addition, the definitions of E&I codes 4 

through 6 would describe services that 

could be furnished by or under the 

permissible supervision of all qualified 

outpatient therapy professionals. Based 

upon historical therapy utilization 

patterns, the vast majority of E&I codes 

submitted would likely fall in the 4 

through 9 code range. We would expect 

the RVUs under the PFS for all E&I 

codes to take into consideration the 

efficiencies when multiple services 

(those that would be currently reported 

under multiple CPT codes) are 

furnished. 

This option would require 2 to 4 years 

to add new codes and conduct a shortterm pilot study to refine coding and 

value the 12 new HCPCS codes (or 36 

if they are specific to each therapy 

discipline). There would be significant 

initial practitioner administrative 

burden to learn new codes and update 

billing systems. However, ultimately, 

with elimination of the practitioner’s 

reporting of 76 different codes and 

many of the associated claims 

processing edits, the administrative 

burden of reporting therapy services to 

Medicare would be minimized. This 

bundled approach to reporting and 

payment could result in more 

appropriate valuation of therapy 

services that reflects efficiencies when 

individually reported services are 

furnished in the same session. As a 

result, it could lead to reduced therapy 

expenditures, as well as a reduction in 

the number of beneficiaries affected by 

the therapy caps in a given year. 

In conclusion, we emphasize that we 

continue to be committed to developing 

alternatives to the therapy caps that 

would provide appropriate payment for 

medically necessary and effective 

therapy services furnished to Medicare 

beneficiaries based on patient needs, 

rather than the current therapy caps 

which establish financial limitations on 

Medicare payment for therapy services 

in some settings regardless of medical 

necessity. The Congress has repeatedly 

intervened to allow exceptions to these 

caps for certain time periods, and the 

current exceptions are automatically 

processed based on a practitioner’s 

attestation that medical necessity is 

documented in the chart for an 

individual patient. We believe that, 

ultimately, payment for therapy services 

should incentivize the most effective 

and efficient care, consistent with 

Medicare’s focus on value in its 

purchasing. 

Therefore, we are soliciting public 

comments on potential alternatives to 

the therapy caps, including those 

discussed in this section of this 

proposed rule. The STATS contractor 

has worked closely with a broad variety 

of clinicians, administrators, scientists, 

researchers, and other contractors to 

develop the 3 alternatives presented this 

discussion. We welcome all public 

comments on this propose rule from 

interested stakeholders, including 

individual therapists from both facility 

and nonfacility settings treating Part B 

(outpatient) beneficiaries. Among the 

topics of interest to us are the following: 

• Recommendations for alternative 

payment policies (options discussed in 

this proposed rule or others) that 

address patient needs, while 

minimizing payment for inefficient 

services or those of limited patient 

benefit; 

• Assessment of the practitioner 

burden associated with the 

recommended policies; 

• Likelihood that recommended 

changes would minimize fraud, abuse, 

and waste; 

• Whether the recommendations 

could assist CMS in obtaining 

meaningful information on patient 

function and how that information 

could be utilized; 

• Whether measurement tools 

relevant to assessing the need for 

therapy services exist in the public 

domain and how they might be utilized; 

• What function information should 

be collected and how it could be 

utilized to ensure necessary care, while 

minimizing payment for inefficient 

services or those of limited patient 

benefit; and 

• How therapist behavior, plans of 

care, or patient scheduling would be 

affected by the recommended 

alternatives. 

We are committed to finding 

alternatives to the current therapy cap 

limitations on expenditures for 

outpatient therapy services that will 

ensure that beneficiaries continue to 

receive those medically necessary 

therapy services that maximize their 

health outcomes. We continue to 

dedicate our resources to identifying 

alternatives that would encourage the 

most efficient and cost-effective 

treatments. We believe motivated 

therapists, with attention to the most 

cost-effective practices, can incorporate 

practice efficiencies that benefit patients 

by achieving the best possible results at 

the lowest cost. 

Our STATS and DOTPA projects, 

which are currently engaged in data 

collection and analysis to inform shortterm and long-term alternatives to the 

therapy caps, respectively, lay the 

foundation for future payment 

alternatives for outpatient therapy 

services. We are optimistic that the 

STATS project will identify short-term, 

feasible alternatives that may be tested 

in the future. The DOTPA project will 

create a tool and test its use to collect 

patient condition information that can 

then be applied to identify patient need 


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for therapy services. Together, these 

projects may provide the basis for a 

long-term plan to reshape Medicare’s 

payment policy for outpatient therapy 

services to align with the value-based 

purchasing principles that are now 

guiding principles of the Medicare 

program. We encourage the public to 

provide comments so that we may 

consider all perspectives as we continue 

our work in this important area. 

B. Diabetes Self-Management Training 

(DSMT) Services (HCPCS Codes G0108 

and G0109) 

1. Background 

Section 4105(a) of BBA provided 

coverage for DSMT in outpatient 

settings without limiting this coverage 

to hospital outpatient departments. 

DSMT services consist of educational 

and training services furnished to an 

individual with diabetes by a certified 

provider in an outpatient setting. 

Section 4105(a) of the BBA stipulated 

that training would be furnished by a 

‘‘certified provider’’ which is a physician 

or other individual or entity that also 

provides other items or services for 

which payment may be made under 

Medicare. This program is intended to 

educate beneficiaries in the successful 

self-management of diabetes. The 

program includes instructions in selfmonitoring of blood glucose; education 

about diet and exercise; an insulin 

treatment plan developed specifically 

for the patient who is insulindependent; and motivation for patients 

to use the skills for self-management. 

DSMT services are reported under 

HCPCS codes G0108 (Diabetes 

outpatient self-management training 

services, individual, per 30 minutes) 

and G0109 (Diabetes outpatient selfmanagement training services, group 

session (2 or more), per 30 minutes). 

2. Proposed Payment for DSMT Services 

In accordance with section 4105(a) of 

the BBA, Medicare payment for 

outpatient DSMT services is made 

under the PFS as specified in § 414.1 

through § 414.48. When we created 

HCPCS codes G0108 and G0109, the 

only direct costs included in the PE 

were registered nurse labor. Section 

410.144(a)(4)(a) states that the DSMT 

team includes at least a registered 

dietitian and a certified diabetes 

educator. We did not establish work 

RVUs for DSMT services because we 

believed training would typically be 

performed by individuals other than a 

physician, such as a registered nurse (65 

FR 83130). However, since that time, we 

have received requests from a number of 

stakeholders, including the American 

Association of Clinical Endocrinologists 

(AACE), the American Association of 

Diabetes Educators (AADE), and the 

Juvenile Diabetes Research Foundation, 

to include physician work in valuing 

DSMT services that is similar to the 

physician work that has been included 

in medical nutrition therapy (MNT) 

services since CY 2007 and kidney 

disease education (KDE) services since 

CY 2010. The stakeholders argued that 

because physicians coordinate DSMT 

programs, provide patient instruction, 

and communicate with referring 

physicians, physician work should be 

included in the RVUs for DSMT 

services. The stakeholders also 

requested that we reconsider the direct 

PE inputs for DMST services and 

include clinical labor for diabetes 

educators at a higher hourly rate instead 

of registered nurse labor. In addition, 

they stated that the supplies and 

equipment in the PE for DSMT services 

should be the same as for KDE services, 

with additional direct PE inputs for a 

diabetic educator curriculum, data 

tracking software, and DSMT program 

accreditation. 

For CY 2011, we are proposing to 

assign physician work RVUs to DSMT 

services that are comparable, as adjusted 

for the service times of the HCPCS 

codes, to the work RVUs for MNT 

services. We are proposing that HCPCS 

G0108 for 30 minutes of individual 

DSMT services would be crosswalked to 

CPT code 97803 (Medical nutrition 

therapy; re-assessment and intervention, 

individual, face-to-face with the patient, 

each 15 minutes) for purposes of 

assigning work RVUs, with the 

physician work RVUs for CPT code 

97803 multiplied by two to account for 

the greater time associated with HCPCS 

code G0108 (that is, 30 minutes). We are 

also proposing that HCPCS G0109 for 30 

minutes of group DSMT services would 

be crosswalked to CPT code 97804 

(Medical nutrition therapy; group (2 or 

more individuals(s)), each 30 minutes) 

for purposes of assigning work RVUs. 

The rationale for the proposed work 

RVUs for the DSMT HCPCS G-codes is 

based on the similarity of DSMT 

services to MNT services in the 

individual (CPT code 97803) and group 

(CPT code 97804) setting. 

For CY 2011, we are also proposing to 

modify the PE inputs for DSMT services 

to reflect the current equipment and 

supplies for the KDE HCPCS G-codes 

implemented in the CY 2010 PFS final 

rule with comment period (74 FR 

61901) (that is, HCPCS codes G0420 

(Face-to-face educational services 

related to the care of chronic kidney 

disease; individual, per session, per one 

hour) and G0421 (Face-to-face 

educational services related to the care 

of chronic kidney disease; group, per 

session, per one hour)), based on the 

similarity in the equipment and 

supplies necessary for DSMT and KDE 

services. We have made adjustments to 

some of the equipment times for the 30 

minute DSMT individual and group 

services as compared to the 1 hour 

individual and group KDE services. We 

are also including a diabetic educator 

curriculum and data tracking software 

in the PE inputs for DSMT services, but 

it is our general practice not to include 

program accreditation costs in those PE 

inputs. With respect to clinical labor, 

rather than changing the current labor 

type for DSMT services, we are 

proposing to utilize the same approach 

as we adopted for MNT services when 

we provided physician work RVUs for 

those services in CY 2007 (71 FR 

69645). Specifically, we are removing 

all of the clinical labor from the group 

DSMT code and most of the clinical 

labor from the individual DSMT code, 

given that we are proposing work RVUs 

for both DSMT codes for CY 2011. 

We believe these proposals would 

value DSMT services more consistently 

with other similar services that are paid 

under the PFS. As a result of our 

proposed CY 2011 changes, the 

proposed work RVUs for HCPCS codes 

G0108 and G0109 are 0.90 and 0.25, 

respectively. As described above, we are 

also proposing to modify the direct PE 

inputs for these codes for CY 2011. 

C. End-Stage Renal Disease Related 

Services for Home Dialysis (CPT Codes 

90963, 90964, 90965, and 90966) 

1. End-Stage Renal Disease Home 

Dialysis Monthly Capitation Payment 

Services (CPT Codes 90963, 90964, 

90965, and 90966) 

In the CY 2004 PFS final rule with 

comment period (68 FR 63216), we 

established new Level II HCPCS G-codes 

for end-stage renal disease (ESRD) 

monthly capitation payment (MCP) 

services. For center-based patients, 

payment for the G-codes varied based 

on the age of the beneficiary and the 

number of face-to-face visits furnished 

each month (for example, 1 visit, 2–3 

visits and 4 or more visits). Under the 

MCP methodology, the lowest payment 

applied when a physician provided one 

visit per month; a higher payment was 

provided for two to three visits per 

month. To receive the highest payment, 

a physician would have to provide at 

least four ESRD-related visits per 

month. However, payment for home 

dialysis MCP services only varied by the 

age of beneficiary. Although we did not 

initially specify a frequency of required 


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visits for home dialysis MCP services, 

we stated that we ‘‘expect physicians to 

provide clinically appropriate care to 

manage the home dialysis patient’’ (68 

FR 63219). 

Effective January 1, 2009, the CPT 

Editorial Panel created new CPT codes 

to replace the G-codes for monthly 

ESRD-related services, and we accepted 

the new codes for use under the PFS in 

CY 2009. The CPT codes for monthly 

ESRD-related services for home dialysis 

patients include the following, as 

displayed in Table 32: 90963, 90964, 

90965, and 90966. In addition, the 

clinical vignettes used for the valuation 

of CPT codes 90963, 90964, 90965, and 

90966 include scheduled (and 

unscheduled) examinations of the ESRD 

patient. 

Given that we pay for a physician (or 

practitioner) to evaluate the ESRD 

patient over the course of an entire 

month under the MCP, we believe that 

it is clinically appropriate for the 

physician (or practitioner) to have at 

least one in-person, face-to-face 

encounter with the patient per month. 

Therefore, we are proposing to require 

the MCP physician (or practitioner) to 

furnish at least one in-person patient 

visit per month for home dialysis MCP 

services (as described by CPT codes 

90963 through 90966). This requirement 

would be effective for home dialysis 

MCP services beginning January 1, 2011. 

We believe this requirement reflects 

appropriate, high quality medical care 

for ESRD patients being dialyzed at 

home and generally would be consistent 

with the current standards of medical 

practice. 

2. Daily and Monthly ESRD–Related 

Services (CPT Codes 90951 through 

90970) 

In CY 2008, the AMA RUC submitted 

recommendations for valuing the new 

CY 2009 CPT codes displayed in Table 

32 that replaced the MCP HCPCS Gcodes for monthly ESRD-related 

services. We accepted these codes for 

use under the PFS. 

TABLE 32—MCP CODES RECOGNIZED UNDER THE PFS 

MCP code Long descriptor 

90951 ................ End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring for 

the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face 

physician visits per month. 

90952 ................ End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring for 

the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2–3 face-to-face physician visits per month. 

90953 ................ End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring for 

the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician 

visit per month. 

90954 ................ End-stage renal disease (ESRD) related services monthly, for patients 2–11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month. 

90955 ................ End-stage renal disease (ESRD) related services monthly, for patients 2–11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2–3 face-to-face physician visits 

per month. 

90956 ................ End-stage renal disease (ESRD) related services monthly, for patients 2–11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit 

per month. 

90957 ................ End-stage renal disease (ESRD) related services monthly, for patients 12–19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face physician visits per month. 

90958 ................ End-stage renal disease (ESRD) related services monthly, for patients 12–19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2–3 face-to-face physician visits 

per month. 

90959 ................ End-stage renal disease (ESRD) related services monthly, for patients 12–19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician visit 

per month. 

90960 ................ End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 4 or more face-to-face 

physician visits per month. 

90961 ................ End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 2–3 face-to-face physician visits per month. 

90962 ................ End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 1 face-to-face physician visit per month. 

90963 ................ End-stage renal disease (ESRD) related services for home dialysis per full month, for patients younger than 2 years of age to 

include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents. 

90964 ................ End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 2–11 years of age to include 

monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents. 

90965 ................ End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 12–19 years of age to include 

monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents. 

90966 ................ End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 20 years of age and older. 

There are four additional CPT codes 

for ESRD-related services that are 

reported on a per-day basis. These daily 

CPT codes are: 90967 (End-stage renal 

disease (ESRD) related services for 

dialysis less than a full month of 

service, per day; for patients younger 

than 2 years of age); 90968 (End-stage 

renal disease (ESRD) related services for 

dialysis less than a full month of 

service, per day; for patients 2–11 years 

of age); 90969 (End-stage renal disease 

(ESRD) related services for dialysis less 

than a full month of service, per day; for 

patients 12–19 years of age); and 90970 

(End-stage renal disease (ESRD) related 

services for dialysis less than a full 

month of service, per day; for patients 

20 years of age and older). 

For the MCP codes displayed in Table 

32, the AMA RUC initially 


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recommended 36 minutes of clinical 

labor time for the pre-service period. 

They also recommended an additional 6 

minutes in the post-period for CPT 

codes 90960, 90961, 90962, and 90966. 

For the four codes describing daily 

services (CPT codes 90967 through 

90970), the AMA RUC recommended 

including 1.2 minutes of clinical labor 

per day, which is the prorated amount 

of pre-service clinical labor included in 

the monthly codes. The AMA RUC also 

recommended that CPT codes 90952 

and 90953 be contractor-priced. 

In the CY 2009 PFS final rule with 

comment period (73 FR 69898), we 

asked the AMA RUC to reconsider their 

recommended PE inputs in the interest 

of making certain that they accurately 

reflected the typical direct PE resources 

required for these services. In addition, 

we asked the AMA RUC to review the 

physician times for CPT codes 90960 

and 90961 that are used in the 

calculation of the PE RVUs. We 

accepted the work values for the new 

CPT codes for ESRD-related services 

that were recommended by the AMA 

RUC. 

Since CY 2009, we have continued to 

calculate the PE RVUs for the entire 

series of MCP codes displayed in Table 

32 by using the direct PE inputs from 

the predecessor HCPCS G-codes, except 

for CPT codes 90952 and 90953 which 

are contractor-priced. We have also 

continued to use the physician time 

associated with the predecessor HCPCS 

G-codes for CPT codes 90960 and 90961 

for purposes of calculating the PE RVUs. 

In CY 2009, the AMA RUC submitted 

new recommendations for CPT codes 

90951 and 90954 through 90970. For 

each of the MCP codes (CPT code 90951 

and CPT codes 90954 through 90966), 

the AMA RUC recommended an 

increased pre-service clinical staff time 

of 60 minutes. For each of the daily 

dialysis service codes (CPT codes 90967 

through 90970), the AMA RUC 

recommended an increased clinical 

labor time of two minutes, which is the 

prorated amount of clinical labor 

included in the monthly codes. The 

AMA RUC also recommended an 

additional 38 minutes of physician time 

for CPT codes 90960 and 90961. This 

resulted in a total physician time of 128 

minutes and 113 minutes, respectively, 

for these codes. The AMA RUC 

continued to recommend that CPT 

codes 90952 and 90953 be contractorpriced. 

For CY 2011, we are proposing to 

accept these AMA RUC 

recommendations as more accurate 

reflections of the typical direct PE 

resources required for these services. 

Therefore, we are proposing to develop 

the PE RVUs for CPT code 90951 and 

CPT codes 90954 through 90970 using 

the direct PE inputs as recommended by 

the AMA RUC and reflected in the 

proposed CY 2011 PE database, which 

is available on the CMS Web site under 

the supporting data files for the CY 2011 

PFS proposed rule at: http:// 

www.cms.gov/PhysicianFeeSched/. We 

are also proposing to use the AMA RUCrecommended physician times for CPT 

codes 90960 and 90961. Consistent with 

the AMA RUC’s recommendations, we 

are proposing to continue to contractorprice CPT codes 90952 and 90953. 

D. Portable X-Ray Set-Up (HCPCS Code 

Q0092) 

When a portable x-ray is furnished to 

a single patient, as many as four 

component HCPCS codes may be billed 

and paid for the service, including the 

portable x-ray transportation (HCPCS 

code R0070 (Transportation of portable 

x-ray equipment and personnel to home 

or nursing home, per trip to facility or 

location, one patient seen)); the portable 

x-ray set-up (HCPCS code Q0092 (Setup of portable x-ray equipment)); and 

the professional and technical 

components of the x-ray service itself 

(CPT 70000 series). Currently, the direct 

PE database contains x-ray equipment in 

both the radiology codes in the 70000 

series of CPT and HCPCS code Q0092, 

the code for the set-up of a portable xray. In the technical component of the 

x-ray service is the direct PE input of a 

radiology room which contains x-ray 

equipment for the various radiology 

codes in the 70000 series of CPT. In 

addition, portable x-ray equipment is 

included as a direct PE input for HCPCS 

code Q0092. Thus, x-ray equipment 

currently is recognized within the direct 

PE values for two of the HCPCS codes 

that would be reported for the portable 

x-ray service, resulting in an 

overvaluation of the comprehensive 

portable x-ray service. 

Therefore, for CY 2011 we are 

proposing to remove portable x-ray 

equipment as a direct PE input for 

HCPCS code Q0092, in order to pay 

more appropriately for the x-ray 

equipment used to furnish a portable xray service. We believe the resulting 

payment for the comprehensive portable 

x-ray service would more appropriately 

reflect the resources used to furnish 

portable x-ray services by providing 

payment for the x-ray equipment solely 

through payment for the technical 

component of the x-ray service that is 

furnished. 

E. Pulmonary Rehabilitation Services 

(HCPCS Code G0424) 

In the CY 2010 PFS proposed rule (74 

FR 33614), we proposed to create new 

HCPCS G-code G0424 (Pulmonary 

rehabilitation, including aerobic 

exercise (includes monitoring), per 

session, per day) to describe the services 

of a pulmonary rehabilitation (PR) 

program as specified in section 144(a) of 

the Medicare Improvements for Patients 

and Providers Act of 2008 (MIPPA). 

Using CPT code 93797 (Cardiac rehab 

without telemetry) as a reference code, 

we proposed to assign 0.18 work RVUs 

and 0.01 malpractice RVUs to G0424. To 

establish PE RVUs, we reviewed the PE 

inputs of similar services, particularly 

those of the respiratory therapy HCPCS 

codes G0237 (Therapeutic procedures to 

increase strength or endurance or 

respiratory muscles, face to face, one on 

one, each 15 minutes (includes 

monitoring)) and G0238 (Therapeutic 

procedures to improve respiratory 

function, other than described by 

G0237, one on one, face to face, per 15 

minutes (includes monitoring)), as well 

as the cardiac rehabilitation codes, CPT 

codes 93797 and 93798 (Physician 

services for outpatient cardiac 

rehabilitation; with continuous ECG 

monitoring (per session)). In the CY 

2010 PFS final rule with comment 

period (74 FR 61886), we finalized our 

proposal with modifications to the code 

descriptor and PE inputs, as 

recommended by some commenters. 

Based on commenters’ 

recommendations from the CY 2010 PFS 

final rule with comment period and 

further information furnished by 

stakeholders, we are proposing to 

increase the work RVUs for HCPCS code 

G0424 to 0.28 for CY 2011 to be 

comparable to the work RVUs for 

cardiac rehabilitation with monitoring 

(CPT code 93798) in view of the 

monitoring required for HCPCS code 

G0424. 

In addition, we are also proposing to 

increase the clinical labor time for the 

respiratory therapist from 15 minutes to 

30 minutes and to crosswalk the PE 

equipment inputs for HCPCS code 

G0424 to those for respiratory treatment 

services (HCPCS code G0238), which 

include a 1-channel ECG and a pulse 

oximeter. We would retain the treadmill 

currently assigned to HCPCS code 

G0424 and adjust the equipment time to 

45 minutes. While several public 

commenters recommended this 

equipment, these commenters also 

requested a full 60 minutes of 

respiratory therapist time be included in 

the PE for HCPCS code G0424, 

comparable to the 15 minutes of 


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respiratory therapist time included in 

the one-on-one codes for 15 minutes of 

respiratory treatment services (HCPCS 

codes G0237 and G0238). However, 

because PR services reported under 

HCPCS code G0424 can be furnished 

either individually or in groups, we 

believe that 30 minutes of respiratory 

therapist time would be more 

appropriate for valuing the typical PR 

service. 

F. Application of Tissue-Cultured Skin 

Substitutes to Lower Extremities 

(HCPCS Codes GXXX1 and GXXX2) 

There are currently two biological 

products, Apligraf and Dermagraft, 

which are FDA-approved for the 

treatment of diabetic foot ulcers. While 

commonly used by podiatrists for this 

purpose, these products are also used by 

other specialists in the treatment of 

other clinical conditions, such as burns. 

Many Medicare contractors have 

established local coverage 

determinations specifying the 

circumstances under which these 

services are covered. In the case of 

diabetic foot ulcers, clinical studies of 

Apligraf weekly application were based 

on up to 5 treatments over a 12-week 

period. In contrast, Dermagraft was 

applied weekly, up to 8 treatments over 

a 12-week period. 

The skin substitute CPT codes were 

reviewed and new codes were last 

created by the CPT Editorial Panel for 

CY 2006. There are currently 2 skin 

repair CPT codes that describe Apligraf 

application, one primary code, CPT 

code 15340 (Tissue cultured allogeneic 

skin substitute; first 25 sq cm or less) 

and one add-on code, CPT code 15341 

(Tissue cultured allogeneic skin 

substitute; each additional 25 sq cm, or 

part thereof (List separately in addition 

to code for primary procedure)) and 4 

codes that describe Dermagraft 

application, two initial codes based on 

body area, CPT codes 15360 (Tissue 

cultured allogeneic dermal substitute, 

trunk, arms, legs; first 100 sq cm or less, 

or 1 percent of body area of infants and 

children) and 15365 (Tissue cultured 

allogeneic dermal substitute, face, scalp, 

eyelids, mouth, neck, ears, orbits, 

genitalia, hands, feet, and/or multiple 

digits; first 100 sq cm or less, or 1 

percent of body area of infants and 

children) and two add-on codes, CPT 

codes 15361 (Tissue cultured allogeneic 

dermal substitute, trunk, arms, legs; 

each additional 100 sq cm, or each 

additional 1 percent of body area of 

infants and children, or part thereof 

(List separately in addition to code for 

primary procedure)) and 15366 (Tissue 

cultured allogeneic dermal substitute, 

face, scalp, eyelids, mouth, neck, ears, 

orbits, genitalia, hands, feet, and/or 

multiple digits; each additional 100 sq 

cm, or each additional 1 percent of body 

area of infants and children, or part 

thereof (List separately in addition to 

code for primary procedure)). 

Several stakeholders have expressed 

concern about the appropriateness and 

equity of the coding and payment for 

these services, given their similar uses 

and the office resources required when 

the products are applied repeatedly over 

a number of weeks for treatment of 

lower extremity ulcers. They are 

concerned that current coding, with the 

associated payment policies and relative 

values, does not provide for appropriate 

payment for the services based on how 

they are furnished. In addition, some 

stakeholders believe that the current 

coding and payment provides a 

financial incentive for the selection of 

one tissue-cultured product over 

another, rather than facilitating clinical 

decisionmaking based solely on the 

most clinically appropriate product for 

the patient’s case. For example, the 

Dermagraft and Apligraf application 

codes have 90-day and 10-day global 

periods, respectively, and their current 

values include several follow-up office 

visits. When patients are treated 

periodically with repeated applications 

of the products over several weeks, the 

patients may be seen in follow-up by the 

physician. However, those encounters 

would not be evaluation and 

management visits but, instead, would 

be procedural encounters that would 

typically be valued differently under the 

PFS than the follow-up office visits 

currently included in the values for the 

Dermagraft and Apligraf application 

codes. Furthermore, while different 

stakeholders have indicated that 

debridement and site preparation are 

variably performed when these products 

are applied, the CPT codes for 

Dermagraft application allow separate 

reporting of these preparation services 

when they are performed, while the 

Apligraf application codes bundle these 

services. Since CY 2006, the PFS has 

accepted the RUC work and PE 

recommendations for the Dermagraft 

and Apligraf application codes and has 

paid accordingly. 

With respect to Medicare payment 

policy, some Medicare contractors allow 

the use of modifier -58 (Staged or 

related procedure or service by the same 

physician during the postoperative 

period) to be reported with the skin 

substitute application codes and 

provide full payment for the service 

each time it is performed, even if the 

subsequent application(s) is within the 

global period of the service. Other 

contractors do not allow the use of 

modifier -58, and therefore, provide a 

single payment for a series of 

applications over 90 days or 10 days, as 

applicable to the particular code 

reported for the product’s initial 

application. 

Because of the current inconsistencies 

in valuing similar skin substitute 

application services and the common 

clinical scenarios for their use for 

Medicare beneficiaries, we believe that 

it would be appropriate to temporarily 

create Level II HCPCS G-codes to report 

application of tissue-cultured skin 

substitutes applied to the lower 

extremities in order to provide 

appropriate and consistent payment for 

the services as they are commonly 

furnished. Therefore, we are proposing 

to create two new HCPCS G-codes for 

CY 2011, GXXX1 (Application of tissue 

cultured allogeneic skin substitute or 

dermal substitute; for use on lower limb, 

includes the site preparation and 

debridement if performed; first 25 sq cm 

or less) and GXXX2 (Application of 

tissue cultured allogeneic skin or 

dermal substitute; for use on lower limb, 

includes the site preparation and 

debridement if performed; each 

additional 25 sq cm), that would be 

recognized for payment under the PFS 

for the application of Apligraf or 

Dermagraft to the lower limb. These 

codes would not allow separate 

reporting of CPT codes for site 

preparation or debridement. We 

emphasize that we would expect that 

the use of these HCPCS G-codes for 

payment under Medicare would be 

temporary, while stakeholders work 

through the usual channels to establish 

appropriate coding for these services 

that reflects the current common 

clinical scenarios in which the skin 

substitutes are applied. Furthermore, we 

would expect to receive 

recommendations from the AMA RUC 

for appropriate work values and direct 

practice expense inputs for the 

applicable codes, according to the usual 

process for new or revised codes. 

Under the PFS, as a temporary 

measure, the HCPCS G-codes would be 

assigned a 0-day global period so 

payment would be made each a time a 

covered service was furnished. We are 

proposing to base payment on the 

physician work relative values and the 

direct PE inputs for the existing CPT 

codes for Apligraf application, with 

adjustments for the global period 

differences because the HCPCS G-codes 

and the Apligraf application CPT codes. 

These CPT codes resemble the new 

HCPCS G-codes in terms of wound size 

description and the inclusion of site 

preparation and debridement in their 

current values so we believe they 


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appropriately represent the physician 

work involved in the proposed HPCPCS 

G-codes. However, we would adjust the 

work RVUs of the Apligraf application 

codes to derive the HCPCS G-code 

proposed CY 2011 work values by 

extracting the values for any office visits 

and discharge day management services 

because the HCPCS G-codes have a 0- 

day global period. In addition, we 

would adjust the direct PE inputs of the 

Apligraf application codes to develop 

the proposed CY 2011 direct PE inputs 

of the HPCPS G-codes that have a 0-day 

global period. 

Our crosswalks and adjustments 

result in proposed CY 2011 work RVUs 

of 2.22 for HPCPCS code GXXX1 and 

0.50 for HCPCPS GXXX2. The proposed 

direct PE inputs for HCPCS codes 

GXXX1 and GXXX2 are included in the 

direct PE database for the CY 2011 

proposed rule that is posted on the CMS 

Web site at http://www.cms.gov/ 

PhysicianFeeSched/PFSFRN/list.asp. 

We note that many Medicare 

contractors currently have local 

coverage policies that specify the 

circumstances under which Medicare 

covers the application of skin 

substitutes. The local coverage policies 

may include diagnostic or prior 

treatment requirements, as well as 

frequency limitations on the number 

and periodicity of treatments. We expect 

that these policies would be updated in 

the context of the temporary new 

HCPCS G-codes that we are proposing 

for use in CY 2011 to report the 

application of tissue cultured allogeneic 

skin or dermal substitutes. We are 

proposing to establish the HCPCS Gcodes for temporary use in CY 2011 in 

order to improve the consistency and 

resource-based nature of PFS payments 

for skin substitute application services 

that require similar resources. However, 

we note our continued interest in 

ensuring that skin substitutes are 

properly utilized for Medicare 

beneficiaries who will benefit from that 

treatment. We will continue to monitor 

the utilization of these services and plan 

to identify any concerning trends in 

utilization that contractors may want to 

examine further through medical review 

or other approaches. 

G. Canalith Repositioning (CPT Code 

95992) 

For CY 2009, CPT created a new code 

for canalith repositioning, specifically 

CPT code 95992 (Canalith repositioning 

procedure(s) (e.g., Epley maneuver, 

Semont maneuver), per day). This 

service may be furnished by both 

physicians and therapists. Although we 

accepted the RUC-recommended work 

RVUs and PE inputs, we initially 

bundled this procedure on an interim 

basis in the CY 2009 PFS final rule with 

comment period (73 FR 69896), 

indicating that we believed it would be 

paid through the E/M service that it 

would accompany. Subsequently, in 

view of concerns from therapists who 

cannot furnish E/M services, we 

clarified that therapists could report one 

of the generally defined therapy CPT 

codes when canalith repositioning was 

furnished. In the CY 2010 PFS final rule 

with comment period (74 FR 61766), we 

changed the code’s status under the PFS 

to ‘‘not recognized for payment under 

Medicare,’’ consistent with our 

expectation that another payable code 

would be reported when the service was 

furnished. 

Based on further information from 

stakeholders regarding the distinct and 

separate nature of this procedure from 

an E/M service and their request that we 

recognize this CPT code for payment, 

similar to our separate payment for most 

other procedures commonly furnished 

in association with an E/M service, we 

are proposing to recognize CPT code 

95992 for payment under the CY 2011 

PFS, consistent with our typical 

treatment of most other codes for minor 

procedures. In doing so, we are 

proposing to change the code’s status to 

‘‘A’’ and utilize the CY 2009 RUC 

recommendations for work RVUs (0.75) 

and PE inputs for establishing its 

payment in CY 2011. (That is, status ‘‘A’’ 

means Active code. These codes are 

separately payable under the PFS if 

covered.) Because canalith repositioning 

(CPT code 95992) can be furnished by 

physicians or therapists as therapy 

services under a therapy plan of care or 

by physicians as physicians’ services 

outside of a therapy plan of care, we 

would add CPT code 95992 to the 

‘‘sometimes therapy’’ list on the therapy 

code abstract file. 

H. Intranasal/Oral Immunization Codes 

(CPT Codes 90467, 90468, 90473, and 

90474) 

To ensure that the PE RVUs are 

consistent between the intranasal/oral 

and injectable immunization 

administration CPT codes that describe 

services that utilize similar PE 

resources, we are proposing to 

crosswalk the PE values for CPT code 

90471 (Immunization administration 

(includes percutaneous, intradermal, 

subcutaneous, or intramuscular 

injections); one vaccine (single or 

combination vaccine/toxoid)) to CPT 

codes 90467 (Immunization 

administration younger than age 8 years 

(includes intranasal or oral routes of 

administration) when the physician 

counsels the patient/family; first 

administration (single or combination 

vaccine/toxoid), per day) and 90473 

(Immunization administration by 

intranasal or oral route; one vaccine 

(single or combination vaccine/toxoid)). 

Similarly, we are also proposing to 

crosswalk the PE values for CPT code 

90472 (Immunization administration 

(includes percutaneous, intradermal, 

subcutaneous, or intramuscular 

injections); each additional vaccine 

(single or combination vaccine/toxoid) 

(List separately in addition to code for 

primary procedure)) to CPT codes 90468 

(Immunization administration younger 

than age 8 years (includes intranasal or 

oral routes of administration) when the 

physician counsels the patient/family; 

each additional administration (single 

or combination vaccine/toxoid), per day 

(List separately in addition to code for 

primary procedure)) and 90474 

(Immunization administration by 

intranasal or oral route; each additional 

vaccine (single or combination vaccine/ 

toxoid) (List separately in addition to 

code for primary procedure)). 

I. Refinement Panel Process 

As discussed in the November 25, 

1992 PFS final rule (57 FR 55938), we 

adopted a refinement panel process to 

assist us in reviewing the public 

comments on interim physician work 

RVUs for CPT codes with that status in 

each year and developing final work 

values for the subsequent year. Our 

decision to convene multispecialty 

panels of physicians was based on our 

need to balance the interests of those 

who commented on the work RVUs 

against the budgetary and redistributive 

effects that could occur if we accepted 

extensive increases in work RVUs across 

a broad range of services. The 

refinement panel reviews and discusses 

the work involved in each procedure 

and then each member individually 

rates the work of the procedure. Since 

1992, the refinement panels’ 

recommendation to change a work value 

or to retain the interim value has hinged 

solely on the outcome of a statistical test 

on the ratings (an F-test). 

Depending on the number and range 

of codes that public commenters, 

typically specialty societies, request be 

subject to refinement, we establish 

refinement panels with representatives 

from 4 groups of physicians: Clinicians 

representing the specialty most 

identified with the procedures in 

question; physicians with practices in 

related specialties; primary care 

physicians; and contractor medical 

directors (CMDs). Typically the 

refinement panels meet in the summer 

prior to the promulgation of the final 

rule finalizing the RVUs for the codes. 


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Typical panels have included 8 to 10 

physicians across the 4 groups. Over 

time, the statistical test used to evaluate 

the RVU ratings of individual panel 

members have become less reliable as 

the physicians in each group have 

tended to select a previously discussed 

value, rather than independently 

evaluating the work. In addition, the 

resulting RVUs have occasionally 

exhibited rank order anomalies (that is, 

a more complex procedure is assigned 

lower RVUs than a less complex 

procedure). 

Most recently, section 1848(c)(2)(K) of 

the Act (as added by section 3134 of the 

ACA) authorizes the Secretary to review 

potentially misvalued codes and make 

appropriate adjustments to the relative 

values. In addition, MedPAC has 

encouraged CMS to critically review the 

values assigned to the services under 

the PFS. MedPAC has stated its belief 

that CMS has historically relied too 

heavily on specialty societies to identify 

services that are misvalued by accepting 

so many recommendations of the RUC. 

We believe the refinement panel 

process continues to provide 

stakeholders with a meaningful 

opportunity for review and discussion 

of the interim work RVUs with a 

clinically diverse group of experts that 

then provides informed 

recommendations to CMS. Therefore, 

we would like to continue the 

refinement process, including the 

established composition that includes 

representatives from the 4 groups of 

physicians, but with administrative 

modification and clarification. 

Specifically, for refinement panels 

beginning in CY 2011 (that is, for those 

codes with CY 2011 interim values that 

would be subject to refinement during 

CY 2011), we are proposing to eliminate 

the use of the F-test and instead base 

revised RVUs on the median work value 

of the panel members’ ratings. We 

believe this approach will simplify the 

refinement process administratively, 

while resulting in a final panel 

recommendation that reflects the 

summary opinion of the panel members 

based on a commonly used measure of 

central tendency that is not significantly 

affected by outlier values. In addition, 

we are clarifying that we have the final 

authority to set the RVUs, and therefore, 

may make adjustments to the work 

RVUs resulting from refinement if 

policy concerns warrant their 

modification. 

J. Remote Cardiac Monitoring Services 

(CPT Codes 93012, 93229, 93268, and 

93271) 

In the CY 2010 PFS final rule with 

comment period (74 FR 61755), we 

indicated that we continued to have 

concerns about the issue of developing 

PE RVUs for services that are utilized 24 

hours a day, 7 days a week (24/7), such 

as those that require certain monitoring 

system equipment. The PE equipment 

methodology was developed for 

equipment that is in use during 

standard physician’s office business 

hours and not this type of 24/7 

equipment. We stated that we would 

conduct further analysis of this issue. 

Services that were contractor-priced in 

CY 2009 remained contractor-priced in 

CY 2010. We also indicated that any 

proposed changes will be 

communicated through future 

rulemaking. 

Since publication of the CY 2010 PFS 

final rule with comment period, we 

have focused our additional analysis on 

four of the CPT codes that commenters 

have brought to our attention because 

they involve concurrent, remote, 24/7 

attended monitoring of multiple 

patients from a central location: CPT 

code 93012 (Telephonic transmission of 

post-symptom electrocardiogram 

rhythm strip(s); 24-hour attended 

monitoring, per 30 day period of time; 

tracing only); CPT code 93229 

(Wearable mobile cardiovascular 

telemetry with electrocardiographic 

recording, concurrent computerized real 

time data analysis and greater than 24 

hours of accessible ECG data storage 

(retrievable with query) with ECG 

triggered and patient selected events 

transmitted to a remote attended 

surveillance center for up to 30 days; 

technical support for connection and 

patient instructions for use, attended 

surveillance, analysis and physician 

prescribed transmission of daily and 

emergent data reports); CPT code 93268 

(Wearable patient activated 

electrocardiographic rhythm derived 

event recording with presymptom 

memory loop, 24-hour attended 

monitoring, per 30 day period of time; 

includes transmission, physician review 

and interpretation); and CPT 93271 code 

(Wearable patient activated 

electrocardiographic rhythm derived 

event recording with presymptom 

memory loop, 24-hour attended 

monitoring, per 30 day period of time; 

monitoring, receipt of transmissions, 

and analysis). 

Of these four codes, CPT code 93229 

is currently contractor-priced in CY 

2010, meaning that the local Medicare 

contractors determine payment rates for 

the service within the PFS geographic 

areas in their jurisdiction. The three 

services that are currently nationallypriced on the PFS are in the first year 

of a 4-year transition to lower payment 

rates based on the use of the PPIS data 

adopted in the CY 2010 PFS final rule 

with comment period. We refer readers 

to section II.A.2. of this proposed rule 

for a description of the general PFS PE 

methodology that is the basis for the 

following discussion of approaches to 

establishing PE RVUs for these four CPT 

codes. 

We examined several alternative 

methods for developing PE RVUS upon 

which PFS payment rates for these four 

CPT codes could be based. Each of these 

services involves transmission of 

information from multiple patients who 

wear individual monitoring devices that 

transmit patient-specific information to 

centralized equipment that is 

simultaneously in use for multiple 

patients. We believe it would be most 

consistent with the principles 

underlying the PFS PE methodology to 

classify the centralized monitoring 

equipment as an indirect cost since it is 

servicing multiple patients at the same 

time. After classifying this equipment as 

an indirect cost, we used our standard 

methodology to calculate an indirect 

practice cost index value for each code 

based on the PE/HR survey data of the 

historical mix of specialties providing 

these services. Establishing payment 

rates for these codes based on this 

approach would result in decreases in 

the payment rates for these services, 

including the typical contractor’s price 

for CPT code 93229. For the three 

services that are nationally priced, these 

decreases would be relative to the lower 

payment rates based on the use of the 

PPIS data after the 4-year transition. 

We also received PE/HR data from the 

Remote Cardiac Services Provider 

Group (RCSPG), a group of IDTF 

suppliers of these types of services. For 

sensitivity analysis purposes, we 

substituted these data for the PE/HR 

data of the specialties performing these 

services, while continuing to treat the 

centralized monitoring equipment as an 

indirect cost. We found that establishing 

payment rates for these codes based on 

the approach of using the submitted 

RCSPG PE/HR data would again result 

in decreases in the payment rates for 

these services, including the typical 

contractor’s price for CPT code 93229. 

As in the prior alternative, the decreases 

for the nationally priced codes would be 

relative to the payment rates reflecting 

the 4-year transition to the PPIS data. 

Although we believe that it would be 

most consistent with the principles 

underlying the PE methodology to 

classify the centralized monitoring 

equipment as an indirect cost, we also 

performed a sensitivity analysis of the 

payment rates if the centralized 

monitoring equipment were classified as 

a direct cost. In this simulation, we 


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assumed that the centralized monitoring 

equipment was in year-round use, 7 

days per week for 24 hours per day. We 

found that establishing payment rates 

for these codes based on the approach 

of classifying the centralized monitoring 

equipment as a direct cost would again 

result in decreases in the payment rates 

for the nationally priced services 

relative to their payment rates after the 

4-year transition to the use of the PPIS 

data, as well as to the typical current 

contractor’s price for CPT code 93229. 

Finally, we considered proposing 

contractor-pricing for all four of these 

services for CY 2011. However, we are 

cognizant of past public comments on 

this issue that have requested that all of 

these services be priced nationally on 

the PFS, including the one service (CPT 

code 93229) that is currently contractorpriced. 

We also considered that the services 

currently priced nationally on the PFS 

are scheduled to receive lower payment 

rates under the 4-year transition to the 

PPIS data and that the contractor’s price 

for CPT 93229 was recently reduced in 

the area where the majority of the 

billings for this service currently occur. 

After taking all these factors into 

consideration, we are not proposing CY 

2011 methodological or direct cost input 

changes for CPT codes 93012, 93268, or 

93271—the services that are currently 

nationally priced under the PFS. We are 

also proposing to continue contractorpricing for CPT 93229 for CY 2011. We 

continue to be interested in public 

comments on this issue, including 

responses to our analysis of alternative 

approaches to establishing PE RVUs for 

24/7 services, and further discussion of 

the issues we have identified in our 

alternative pricing methodologies. In 

addition, while we have focused the 24/ 

7 services analysis to date on 

developing the PE RVUs for remote 

cardiac monitoring services, there may 

be 24/7 services in other areas of 

medicine, either currently paid under 

the PFS or in development for the 

future. Therefore, we are also interested 

in public comments on these current or 

emerging 24/7 services, including 

descriptions of the similarities or 

differences between these other services 

and remote cardiac monitoring services, 

particularly with respect to the issues 

we have identified in our analysis of 

alternative approaches to establishing 

PE RVUs for remote cardiac monitoring 

services under the PFS. 

IV. Medicare Telehealth Services for 

the Physician Fee Schedule 

A. Billing and Payment for Telehealth 

Services 

1. History 

Prior to January 1, 1999, Medicare 

coverage for services delivered via a 

telecommunications system was limited 

to services that did not require a faceto-face encounter under the traditional 

model of medical care. Examples of 

these services included interpretation of 

an x-ray or electrocardiogram or 

electroencephalogram tracing, and 

cardiac pacemaker analysis. 

Section 4206 of the BBA provided for 

coverage of, and payment for, 

consultation services delivered via a 

telecommunications system to Medicare 

beneficiaries residing in rural health 

professional shortage areas (HPSAs) as 

defined by the Public Health Service 

Act. Additionally, the BBA required that 

a Medicare practitioner (telepresenter) 

be with the patient at the time of a 

teleconsultation. Further, the BBA 

specified that payment for a 

teleconsultation had to be shared 

between the consulting practitioner and 

the referring practitioner and could not 

exceed the fee schedule payment which 

would have been made to the consultant 

for the service provided. The BBA 

prohibited payment for any telephone 

line charges or facility fees associated 

with the teleconsultation. We 

implemented this provision in the CY 

1999 PFS final rule with comment 

period (63 FR 58814). 

Effective October 1, 2001, section 223 

of the Medicare, Medicaid and SCHIP 

Benefits Improvement Protection Act of 

2000 (Pub. L. 106–554) (BIPA) added a 

new section 1834(m) to the Act which 

significantly expanded Medicare 

telehealth services. Section 

1834(m)(4)(F)(i) of the Act defines 

Medicare telehealth services to include 

consultations, office visits, office 

psychiatry services, and any additional 

service specified by the Secretary, when 

delivered via a telecommunications 

system. We first implemented this 

provision in the CY 2002 PFS final rule 

with comment period (66 FR 55246). 

Section 1834(m)(4)(F)(ii) required the 

Secretary to establish a process that 

provides for annual updates to the list 

of Medicare telehealth services. We 

established this process in the CY 2003 

PFS final rule with comment period (67 

FR 79988). 

As specified in regulations at 

§ 410.78(b), we generally require that a 

telehealth service be furnished via an 

interactive telecommunications system. 

Under § 410.78(a)(3), an interactive 

telecommunications system is defined 

as multimedia communications 

equipment that includes, at a minimum, 

audio and video equipment permitting 

two-way, real-time interactive 

communication between the patient and 

the practitioner at the distant site. 

Telephones, facsimile machines, and 

electronic mail systems do not meet the 

definition of an interactive 

telecommunications system. An 

interactive telecommunications system 

is generally required as a condition of 

payment; however, section 1834(m)(1) 

of the statute does allow the use of 

asynchronous ‘‘store-and-forward’’ 

technology in delivering these services 

when the originating site is a Federal 

telemedicine demonstration program in 

Alaska or Hawaii. As specified in 

regulations at § 410.78(a)(1), store and 

forward means the asynchronous 

transmission of medical information 

from an originating site to be reviewed 

at a later time by the practitioner at the 

distant site. 

Medicare telehealth services may be 

provided to an eligible telehealth 

individual notwithstanding the fact that 

the individual practitioner providing 

the telehealth service is not at the same 

location as the beneficiary. An eligible 

telehealth individual means an 

individual enrolled under Part B who 

receives a telehealth service furnished at 

an originating site. As specified in BIPA, 

originating sites are limited under 

section 1834(m)(3)(C) of the statute to 

specified medical facilities located in 

specific geographic areas. The initial list 

of telehealth originating sites included 

the office of a practitioner, a critical 

access hospital (CAH), a rural health 

clinic (RHC), a federally qualified health 

center (FQHC) and a hospital. More 

recently, section 149 of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (Pub. L. 110–275) 

(MIPPA) expanded the list of telehealth 

originating sites to include hospitalbased renal dialysis centers, skilled 

nursing facilities (SNFs), and 

community mental health centers 

(CMHCs). In order to serve as a 

telehealth originating site, these sites 

must be located in an area designated as 

a rural health professional shortage area 

(HPSA), in a county that is not in a 

metropolitan statistical area (MSA), or 

must be an entity that participates in a 

Federal telemedicine demonstration 

project that has been approved by (or 

receives funding from) the Secretary of 

Health and Human Services as of 

December 31, 2000. Finally, section 

1834(m) of the statute does not require 

the eligible telehealth individual to be 


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presented by a practitioner at the 

originating site. 

2. Current Telehealth Billing and 

Payment Policies 

As noted above, Medicare telehealth 

services can only be furnished to an 

eligible telehealth beneficiary in an 

originating site. An originating site is 

defined as one of the specified sites 

where an eligible telehealth individual 

is located at the time the service is being 

furnished via a telecommunications 

system. In general, originating sites 

must be located in a rural HPSA or in 

a county outside of an MSA. The 

originating sites authorized by the 

statute are as follows: 

• Offices of a physician or practitioner 

• Hospitals 

• CAHs 

• RHCs 

• FQHCs 

• Hospital-Based or Critical Access 

Hospital-Based Renal Dialysis Centers 

(including Satellites) 

• SNFs 

• CMHCs 

Currently approved Medicare 

telehealth services include the 

following: 

• Initial inpatient consultations 

• Follow-up inpatient consultations 

• Office or other outpatient visits 

• Individual psychotherapy 

• Pharmacologic management 

• Psychiatric diagnostic interview 

examination 

• End Stage Renal Disease (ESRD) 

related services 

• Individual medical nutrition therapy 

(MNT) 

• Neurobehavioral status exam 

• Individual health and behavior 

assessment and intervention (HBAI) 

In general, the practitioner at the 

distant site may be any of the following, 

provided that the practitioner is 

licensed under State law to furnish the 

service being furnished via a 

telecommunications system: 

• Physician 

• Physician assistant (PA) 

• Nurse practitioner (NP) 

• Clinical nurse specialist (CNS) 

• Nurse midwife 

• Clinical psychologist 

• Clinical social worker 

• Registered dietitian or nutrition 

professional 

Practitioners furnishing Medicare 

telehealth services are located at a 

distant site, and they submit claims for 

telehealth services to the Medicare 

contractors that process claims for the 

service area where their distant site is 

located. Section 1834(m)(2)(A) of the 

Act requires that a practitioner who 

furnishes a telehealth service to an 

eligible telehealth individual be paid an 

amount equal to the amount that the 

practitioner would have been paid if the 

service had been furnished without the 

use of a telecommunications system. 

Distant site practitioners must submit 

the appropriate HCPCS procedure code 

for a covered professional telehealth 

service, appended with the –GT (Via 

interactive audio and video 

telecommunications system) or –GQ 

(Via asynchronous telecommunications 

system) modifier. By reporting the –GT 

or –GQ modifier with a covered 

telehealth procedure code, the distant 

site practitioner certifies that the 

beneficiary was present at a telehealth 

originating site when the telehealth 

service was furnished. The usual 

Medicare deductible and coinsurance 

policies apply to the telehealth services 

reported by distant site practitioners. 

Section 1834(m)(2)(B) of the Act 

provides for payment of a facility fee to 

the originating site. To be paid the 

originating site facility fee, the provider 

or supplier where the eligible telehealth 

individual is located must submit a 

claim with HCPCS code Q3014 

(Telehealth originating site facility fee), 

and the provider or supplier is paid 

according to the applicable payment 

methodology for that facility or location. 

The usual Medicare deductible and 

coinsurance policies apply to HCPCS 

code Q3014. By submitting HCPCS code 

Q3014, the originating site authenticates 

that it is located in either a rural HPSA 

or non-MSA county or is an entity that 

participates in a Federal telemedicine 

demonstration project that has been 

approved by (or receives funding from) 

the Secretary of Health and Human 

Services as of December 31, 2000 as 

specified in section 1834(m)(4)(C)(i)(III) 

of the Act. 

As described above, certain 

professional services that are commonly 

furnished remotely using 

telecommunications technology, but 

that do not require the patient to be 

present in-person with the practitioner 

when they are furnished, are covered 

and paid in the same way as services 

delivered without the use of 

telecommunications technology when 

the practitioner is in-person at the 

medical facility furnishing care to the 

patient. Such services typically involve 

circumstances where a practitioner is 

able to visualize some aspect of the 

patient’s condition without the patient 

being present and without the 

interposition of a third person’s 

judgment. Visualization by the 

practitioner can be possible by means of 

x-rays, electrocardiogram or 

electroencephalogram tracings, tissue 

samples, etc. For example, the 

interpretation by a physician of an 

actual electrocardiogram or 

electroencephalogram tracing that has 

been transmitted via telephone (that is, 

electronically, rather than by means of 

a verbal description) is a covered 

physician’s service. These remote 

services are not Medicare telehealth 

services as defined under section 

1834(m). Rather, these remote services 

that utilize telecommunications 

technology are considered physicians’ 

services in the same way as services that 

are furnished in-person without the use 

of telecommunications technology; they 

are paid under the same conditions as 

in-person physicians’ services (with no 

requirements regarding permissible 

originating sites), and should be 

reported in the same way (that is, 

without the –GT or –GQ modifier 

appended). 

B. Requests for Adding Services to the 

List of Medicare Telehealth Services 

As noted above, in the December 31, 

2002 Federal Register (67 FR 79988), we 

established a process for adding services 

to or deleting services from the list of 

Medicare telehealth services. This 

process provides the public with an 

ongoing opportunity to submit requests 

for adding services. We assign any 

request to make additions to the list of 

Medicare telehealth services to one of 

the following categories: 

• Category 1: Services that are similar 

to professional consultations, office 

visits, and office psychiatry services. In 

reviewing these requests, we look for 

similarities between the requested and 

existing telehealth services for the roles 

of, and interactions among, the 

beneficiary, the physician (or other 

practitioner) at the distant site and, if 

necessary, the telepresenter. We also 

look for similarities in the 

telecommunications system used to 

deliver the proposed service, for 

example, the use of interactive audio 

and video equipment. 

• Category 2: Services that are not 

similar to the current list of telehealth 

services. Our review of these requests 

includes an assessment of whether the 

use of a telecommunications system to 

deliver the service produces similar 

diagnostic findings or therapeutic 

interventions as compared with the inperson delivery of the same service. 

Requestors should submit evidence 

showing that the use of a 

telecommunications system does not 

affect the diagnosis or treatment plan as 

compared to in-person delivery of the 

requested service. 


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Since establishing the process to add 

or remove services from the list of 

approved telehealth services, we have 

added the following to the list of 

Medicare telehealth services: Individual 

HBAI services; psychiatric diagnostic 

interview examination; ESRD services 

with 2 to 3 visits per month and 4 or 

more visits per month (although we 

require at least 1 visit a month to be 

furnished in-person by a physician, 

CNS, NP, or PA in order to examine the 

vascular access site); individual MNT; 

neurobehavioral status exam; and initial 

and follow-up inpatient telehealth 

consultations for beneficiaries in 

hospitals and skilled nursing facilities 

(SNFs). 

Requests to add services to the list of 

Medicare telehealth services must be 

submitted and received no later than 

December 31 of each calendar year to be 

considered for the next rulemaking 

cycle. For example, requests submitted 

before the end of CY 2010 are 

considered for the CY 2012 proposed 

rule. Each request for adding a service 

to the list of Medicare telehealth 

services must include any supporting 

documentation the requester wishes us 

to consider as we review the request. 

Because we use the annual PFS 

rulemaking process as a vehicle for 

making changes to the list of Medicare 

telehealth services, requestors should be 

advised that any information submitted 

is subject to public disclosure for this 

purpose. For more information on 

submitting a request for an addition to 

the list of Medicare telehealth services, 

including where to mail these requests, 

we refer readers to the CMS Web site at 

http://www.cms.gov/telehealth/. 

C. Submitted Requests for Addition to 

the List of Telehealth Services for CY 

2011 

We received requests in CY 2009 to 

add the following services as Medicare 

telehealth services effective for CY 2011: 

(1) Individual kidney disease education 

(KDE) services; (2) individual diabetes 

self-management training (DSMT) 

services; (3) group KDE, DSMT, MNT, 

and HBAI services; (4) initial, 

subsequent, and discharge day 

management hospital care services; (5) 

initial, subsequent, discharge day 

management, and other nursing facility 

care services; (6) neuropsychological 

testing services; (7) speech-language 

pathology services; and (8) home wound 

care services. The following presents a 

discussion of these requests, including 

our proposals for additions to the CY 

2011 telehealth list. 

1. Individual KDE Services 

The American Society of Nephrology, 

Dialysis Patient Citizens, AMGEN, and 

Kidney Care Partners submitted requests 

to add individual KDE services, 

reported by HCPCS code G0420 (Faceto-face educational services related to 

the care of chronic kidney disease; 

individual, per session, per one hour), 

to the list of approved telehealth 

services for CY 2011 on a category 1 

basis. 

Individual KDE services, covered 

under the new Medicare KDE benefit 

effective for services furnished 

beginning in CY 2010, are defined as 

face-to-face educational services 

provided to a patient with stage IV 

chronic kidney disease (CKD). We 

believe the interaction between a 

practitioner and a beneficiary receiving 

individual KDE services is similar to the 

education, assessment, and counseling 

elements of individual MNT services, 

reported by HCPCS code G0270 

(Medical nutrition therapy; 

reassessment and subsequent 

intervention(s) following second referral 

in same year for change in diagnosis, 

medical condition or treatment regimen 

(including additional hours needed for 

renal disease), individual, face to face 

with the patient, each 15 minutes); CPT 

code 97802 (Medical nutrition therapy; 

initial assessment and intervention, 

individual, face-to-face with the patient, 

each 15 minutes); and CPT code 97803 

(Medical nutrition therapy; reassessment and intervention, 

individual, face-to-face with the patient, 

each 15 minutes), all services that are 

currently on the telehealth list. 

Therefore, we are proposing to add 

HCPCS code G0420 to the list of 

telehealth services for CY 2011 on a 

category 1 basis. Consistent with this 

proposal, we are also proposing to 

revise our regulations at § 410.78(b) and 

§ 414.65(a)(1) to include individual KDE 

as a Medicare telehealth service. 

2. Individual DSMT Services 

The Tahoe Forest Health System and 

the Marshfield Clinic submitted 

requests to add individual DSMT 

services, reported by HCPCS code 

G0108 (Diabetes outpatient selfmanagement training services, 

individual, per 30 minutes), to the list 

of telehealth services for CY 2011 on a 

category 1 basis. In the CY 2009 PFS 

final rule with comment period (73 FR 

69743), we stated that we believe 

individual DSMT services are not 

analogous to individual MNT services 

because of the element of skill-based 

training that is encompassed within 

individual DSMT services that is not an 

aspect of individual MNT services (or 

any other services currently approved 

for telehealth). Due to the statutory 

requirement that DSMT services include 

teaching beneficiaries the skills 

necessary for the self-administration of 

injectable drugs, we have stated our 

belief that DSMT, whether provided to 

an individual or a group, must be 

evaluated as a category 2 service as 

specified in the CY 2009 PFS proposed 

rule (73 FR 38516). We have considered 

several previous requests to add DSMT 

to the list of Medicare telehealth 

services. We have not added individual 

DSMT to the list of telehealth services 

because we believe that skill-based 

training, such as teaching patients how 

to inject insulin, would be difficult to 

accomplish effectively without the 

physical presence of the teaching 

practitioner (70 FR 45787 and 70157, 

and 73 FR 38516 and 69743). 

In considering the new request to add 

individual DSMT services to the list of 

telehealth services in CY 2011, we have 

taken into account requestors’ argument 

that individual DSMT services are 

highly similar to individual MNT 

services and that injection training 

constitutes just a small proportion of 

DSMT services. Except for the 

component of individual DSMT services 

that involves instruction in selfadministration of injectable drugs for 

eligible beneficiaries, we agree with the 

requestors that individual DSMT 

services are similar to individual MNT 

services, which are currently on the list 

of Medicare telehealth services. We note 

that Medicare coverage of DSMT 

services was initially authorized in the 

Balanced Budget Act of 1997. After 

more than a decade of Medicare 

coverage, the most recent information 

shows that DSMT continues to be 

significantly underutilized in the 

context of the eligible population of 

Medicare beneficiaries. While we are 

uncertain to what extent geographic 

barriers to care contribute to this 

underutilization, given the morbidity 

associated with poorly managed 

diabetes and the growing evidence-base 

regarding effective DSMT services, we 

believe it is very important to facilitate 

Medicare beneficiary access to these 

underutilized services. While we have 

previously been concerned about 

treating the components of DSMT 

services differently in the context of 

considering DSMT services for the 

telehealth list, we believe that our 

concern regarding the skill-based 

injection training component of DSMT 

services can be addressed by imposing 

a requirement that a minimum portion 

of the training be furnished in-person. 


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We note that for beneficiaries who meet 

the coverage criteria, Medicare covers 

10 hours of DSMT services in the year 

following the initial training, as 

described in the Medicare Benefit Policy 

Manual (Pub. 100–02, Chapter 15, 

Section 300.3). Taking into 

consideration the initial year coverage 

of DSMT services, we are proposing that 

a minimum of 1 hour of instruction in 

injection training must be furnished inperson during the year following the 

initial DSMT service. Imposing this 

condition would allow us to expand 

access to DSMT services by adding 

individual DSMT services to the list of 

telehealth services, while ensuring 

effective injection training for 

beneficiaries. 

Therefore, we are proposing to add 

HCPCS code G0108 to the list of 

telehealth services beginning in CY 

2011. We are also proposing that, as a 

condition of payment for individual 

DSMT services furnished as telehealth 

services to an eligible telehealth 

individual, a minimum of 1 hour of inperson instruction in the selfadministration of injectable drugs must 

be furnished to the individual during 

the year following the initial DSMT 

service. The injection training may be 

furnished through either individual or 

group DSMT services. By reporting the 

–GT or –GQ modifier with HCPCS code 

G0108 as a telehealth service, the 

distant site practitioner would certify 

that the beneficiary has received or will 

receive 1 hour of in-person DSMT 

services for purposes of injection 

training during the year following the 

initial DSMT service. Consistent with 

this proposal, we are proposing to revise 

our regulations at § 410.78(b) and 

§ 414.65(a)(1) to include individual 

DSMT services as a Medicare telehealth 

service, with the exception of 1 hour of 

in-person instruction in selfadministration of injectable drugs which 

must be furnished to the eligible 

telehealth individual as individual or 

group DSMT services during the year 

following the initial DSMT service. 

We note that, as specified in 

§ 410.141(e), individual DSMT services 

may be furnished by a physician, 

individual, or entity that furnishes other 

services for which direct Medicare 

payment may be made and that submits 

necessary documentation to, and is 

accredited by, an accreditation 

organization approved by CMS. 

However, consistent with the statutory 

requirements of section 1834(m)(1) of 

the Act and as provided in 

§ 410.78(b)(1) and (b)(2) of our 

regulations, Medicare telehealth 

services, including individual DSMT 

furnished as a telehealth service, could 

only be furnished by a licensed PA, NP, 

CNS, certified nurse-midwife, clinical 

psychologist, clinical social worker, or 

registered dietitian or nutrition 

professional. 

3. Group KDE, MNT, DSMT, and HBAI 

Services 

The American Society of Nephrology, 

Dialysis Patient Citizens, AMGEN, 

Tahoe Forest Health Systems, Kidney 

Care Partners, the American 

Telemedicine Association, and the 

Marshfield Clinic submitted requests to 

add one or more of the following group 

services to the telehealth list for CY 

2011: 

• Group KDE services, reported by 

HCPCS code G0421 (Face-to-face 

educational services related to the care 

of chronic kidney disease; group, per 

session, per one hour); 

• Group MNT services, reported by 

CPT code 97804 (Medical nutrition 

therapy; group (2 or more individual(s)), 

each 30 minutes); 

• Group DSMT services, reported by 

HCPCS code G0109 (Diabetes outpatient 

self-management training services, 

group session (2 or more), per 30 

minutes); and/or 

• Group HBAI services, reported by 

CPT code 96153 (Health and behavior 

intervention, each 15 minutes, face-toface; group (2 or more patients)) and 

96154 (Health and behavior 

intervention, each 15 minutes, face-toface; family (with the patient present)). 

When furnished as individual 

services, HBAI and MNT services are 

currently on the list of Medicare 

telehealth services. Furthermore, we are 

proposing to add individual KDE and 

DSMT services to the list of Medicare 

telehealth services beginning in CY 

2011 as described above. 

In the CY 2007 and CY 2010 PFS 

rulemaking cycles (70 FR 45787 and 

70157, and 74 FR 33543 and 61764), we 

stated that we did not believe that group 

services could be appropriately 

delivered through telehealth. We have 

observed that currently there are no 

group services approved as Medicare 

telehealth services and that there is a 

different interactive dynamic between 

the practitioner and his or her patients 

in group services as compared to 

individual services. We previously have 

considered requests to add various 

group services to the list of Medicare 

telehealth services on a category 2 basis 

because we have believed that, 

especially given the interactive dynamic 

between practitioners and their patients, 

group services are not similar to other 

services on the list of Medicare 

telehealth services. Therefore, we have 

maintained that it is necessary to 

evaluate the addition of group services 

by comparing diagnostic findings or 

therapeutic interventions when services 

are furnished via telehealth versus when 

services are furnished in-person. 

We continue to believe that the group 

dynamic may be a critical and defining 

element for certain services, and that 

this characteristic precludes many 

group services from being considered on 

a category 1 basis for addition to the list 

of Medicare telehealth services. For 

example, we believe that due to the 

therapeutic nature of the group dynamic 

that is integral to group psychotherapy, 

group psychotherapy is fundamentally 

different from other Medicare telehealth 

services and, therefore, could not be 

considered on a category 1 basis for 

addition to the telehealth services list. 

For the same reason, in the absence of 

evidence to the contrary, we do not 

believe group psychotherapy services 

could be appropriately delivered 

through telehealth. 

However, upon further consideration, 

with regard to the particular group 

education and training services for 

which we received requests for addition 

to the Medicare telehealth services list, 

we believe the group dynamic is not 

central to the core education and 

training components of these particular 

services, specifically DSMT, MNT, KDE, 

and HBAI services. We believe that 

these group services are sufficiently 

similar to the individual, related 

services that are already on the 

telehealth services list or are proposed 

for addition beginning in CY 2011. 

Specifically, we believe that for these 

group services, which consist 

principally of an information exchange 

for the purpose of education and 

training, the roles of, and interactions 

between, the patients and the 

practitioner are sufficiently similar to 

the related individual education and 

training services that the services can be 

furnished appropriately as a telehealth 

service. 

Therefore, we are proposing to add 

HCPCS code G0421 for group KDE 

services, CPT code 97804 for group 

MNT services, HCPCS code G0109 for 

group DSMT services, and CPT codes 

96153 and 96154 for group HBAI 

services to the Medicare telehealth 

services list on a category 1 basis. 

Furthermore, because the concerns we 

raised above regarding adequate 

injection training with the addition of 

individual DSMT are also present for 

group DSMT, we are proposing to 

require the same minimum of 1 hour of 

in-person instruction for injection 

training within the year following the 

initial DSMT service for any beneficiary 

that receives DSMT services via 


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telehealth. By reporting the –GT or –GQ 

modifier with HCPCS code G0109, the 

distant site practitioner would certify 

that the beneficiary has received or will 

receive 1 hour of in-person DSMT 

services for purposes of injection 

training during the year following the 

initial DSMT service. Consistent with 

this proposal to add these group 

education and training services, we are 

also proposing to revise our regulations 

at § 410.78(b) and § 414.65(a)(1) to 

include group KDE, MNT, DSMT, and 

HBAI services as Medicare telehealth 

services, with the exception of 1 hour of 

in-person instruction of individual or 

group DSMT services in the year 

following the initial DSMT service. 

As described above for individual 

DSMT services, we note that group 

DSMT services may be furnished by a 

physician, individual, or entity that 

furnishes other services for which direct 

Medicare payment may be made and 

that submits necessary documentation 

to, and is accredited by, an accreditation 

organization approved by CMS, as 

specified in § 410.141(e) for DSMT 

services. However, consistent with the 

statutory requirements of section 

1834(m)(1) of the Act and as provided 

in § 410.78(b)(1) and (b)(2) of our 

regulations, Medicare telehealth 

services, including group DSMT 

furnished as a telehealth service, could 

only be furnished by a licensed PA, NP, 

CNS, certified nurse-midwife, clinical 

psychologist, clinical social worker, or 

registered dietitian or nutrition 

professional. 

4. Initial, Subsequent, and Discharge 

Day Management Hospital Care Services 

The University of Louisville School of 

Medicine, the American Telemedicine 

Association, and Mille Lacs Health 

System submitted various requests to 

add initial hospital care services 

(reported by CPT codes 99221 (Level 1 

initial hospital care), 99222 (Level 2 

initial hospital care), and 99223 (Level 

3 initial hospital care)); subsequent 

hospital care services (reported by CPT 

codes 99231 (Level 1 subsequent 

hospital care), 99232 (Level 2 

subsequent hospital care), and 99233 

(Level 3 subsequent hospital care)); and/ 

or hospital discharge day management 

services (reported by CPT codes 99238 

(Hospital discharge day management; 30 

minutes or less) and 99239 (Hospital 

discharge day management; more than 

30 minutes) to the Medicare telehealth 

services list beginning in CY 2011, 

generally on a category 1 basis. Some of 

the requestors also recommended that 

we limit the delivery of these services 

through telehealth to the provision of 

services to patients with a psychiatric 

diagnosis or to those treated in a 

psychiatric hospital or licensed 

psychiatric bed. 

We appreciate the recommendations 

of the requestors to substantially expand 

the list of Medicare telehealth services. 

The requestors submitted a number of 

studies regarding the outcomes of 

telehealth services in caring for patients 

with psychiatric diagnoses. However, 

we note that the CPT codes for hospital 

care services are used to report care for 

hospitalized patients with a variety of 

diagnoses, including psychiatric 

diagnoses. We do not believe it would 

be appropriate to add services to the 

telehealth list only for certain diagnoses 

because the service described by a 

HCPCS code is essentially the same 

service, regardless of the patient’s 

diagnosis. When evaluating the addition 

of services for telehealth on a category 

1 basis, our focus is on the roles of, and 

interactions among, the beneficiary, the 

physician or practitioner, and the 

telepresenter (if applicable), which 

generally are similar across diagnoses 

for services that may be reported with 

the same HCPCS codes. Even in the 

unique case of certain ESRD services, 

we limited additions to the list of 

Medicare telehealth services based on 

the appropriateness of certain specific 

codes, taking into consideration the full 

service descriptions (69 FR 47511). 

Therefore, we continue to believe that it 

is most appropriate to consider 

additions to the list of telehealth 

services based on the overall suitability 

of the services described by the relevant 

HCPCS codes to delivery through 

telehealth. 

In the CY 2005, CY 2008, and CY 

2009 PFS rulemakings (69 FR 47510 and 

66276, 72 FR 38144 and 66250, and 73 

FR 38517 and 69745, respectively), we 

did not add initial, subsequent, or 

discharge day management hospital care 

services to the list of approved 

telehealth services because of our 

concern regarding the use of telehealth 

for the ongoing evaluation and 

management (E/M) for the generally 

high acuity of hospital inpatients. While 

we continue to have some concern in 

this area, we also share the requestors’ 

interest in improving access for 

hospitalized patients to care furnished 

by treating practitioners. Therefore, we 

have reevaluated these services in the 

context of the CY 2011 requests, 

including considering the possibility 

that these services could be added on a 

category 1 basis based on their 

resemblance to services currently on the 

telehealth list, such as initial and 

follow-up inpatient telehealth 

consultations. The following presents a 

discussion of our review of the 

subcategories of hospital care services 

included in these requests. 

Currently, one of the three codes for 

an initial hospital care service 

(specifically CPT codes 99221, 99222, or 

99223) is reported for the first hospital 

inpatient E/M visit to the patient by the 

admitting or a consulting practitioner 

when that visit is furnished in-person. 

In addition, we note that currently there 

are several HCPCS G-codes on the 

Medicare telehealth services list that 

may be reported for initial and followup inpatient consultations through 

telehealth, specifically HCPCS codes 

G0406 (Follow-up inpatient telehealth 

consultation, limited, physicians 

typically spend 15 minutes 

communicating with the patient via 

telehealth); G0407 (Follow-up inpatient 

telehealth consultation, intermediate, 

physicians typically spend 25 minutes 

communicating with the patient via 

telehealth); G0408 (Follow-up inpatient 

telehealth consultation, complex, 

physicians typically spend 35 minutes 

or more communicating with the patient 

via telehealth); G0425 (Initial inpatient 

telehealth consultation, typically 30 

minutes communicating with the 

patient via telehealth); G0426 (Initial 

inpatient telehealth consultation, 

typically 50 minutes communicating 

with the patient via telehealth); and 

G0427 (Initial inpatient telehealth 

consultation, typically 70 minutes or 

more communicating with the patient 

via telehealth). 

While initial inpatient consultation 

services are currently on the list of 

approved telehealth services, there are 

no services on the current list of 

telehealth services that resemble initial 

hospital care for an acutely ill patient by 

the admitting practitioner who has 

ongoing responsibility for the patient’s 

treatment during the hospital course. 

Therefore, we are unable to consider 

initial hospital care services on a 

category 1 basis for the telehealth list. 

We have reviewed the documentation 

submitted in support of adding the 

initial hospital care codes to the 

Medicare telehealth services list as 

category 2 requests. Most of the studies 

provided by the requestors were specific 

to the treatment of patients with 

particular diagnoses. Additionally, the 

studies were not specific to initial 

hospital care visits by admitting 

practitioners. Finally, most of the 

studies concluded that more research 

was required in order to establish 

medical equivalence between telehealth 

and in-person services. Therefore, we 

received no information that provides 

robust support for the addition of initial 

hospital care services to the approved 

telehealth list on a category 2 basis. The 


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initial hospital care codes describe the 

first visit to the hospitalized patient by 

the admitting practitioner who may or 

may not have seen the patient in the 

decision-making phase regarding 

hospitalization. We believe it is critical 

that the initial hospital visit by the 

admitting practitioner be conducted inperson to ensure that the practitioner 

with ongoing treatment responsibility 

comprehensively assesses the patient’s 

condition upon admission to the 

hospital through a thorough in-person 

examination. Therefore, we are not 

proposing to add initial hospital care 

services to the Medicare telehealth 

services list for CY 2011. 

We have again considered adding 

subsequent hospital care services 

reported by CPT codes 99231 through 

99233 to the telehealth list for CY 2011 

on a category 1 basis. In the CY 2005 

and CY 2008 PFS proposed rules (69 FR 

47511 and 72 FR 38155), we stated that 

the potential acuity of patients in the 

hospital setting precludes consideration 

of subsequent hospital visits as similar 

to existing telehealth services. However, 

as stated earlier, we also note that 

HCPCS codes for initial and follow-up 

inpatient consultation services are on 

the list of telehealth services. These E/ 

M services are furnished to high acuity 

hospitalized patients, although not by 

the admitting practitioner himself or 

herself. However, in light of the 

increasingly prevalent care model that 

entails multidisciplinary team care for 

patients with complex medical illnesses 

that involve multiple body systems, 

consulting practitioners may often play 

a key, intensive, and ongoing role in 

caring for hospitalized patients. 

Therefore, we believe that subsequent 

hospital care visits by a patient’s 

admitting practitioner may sufficiently 

resemble follow-up inpatient 

consultation services to consider these 

subsequent hospital care services on a 

category 1 basis for the telehealth list. 

While we still believe the potential 

acuity of hospital inpatients is greater 

than those patients likely to receive 

currently approved Medicare telehealth 

services, we also believe that it would 

be appropriate to permit some 

subsequent hospital care services to be 

furnished through telehealth in order to 

ensure that hospitalized patients have 

frequent encounters with their 

admitting practitioner. However, we 

also continue to believe that the 

majority of these visits should be inperson to facilitate the comprehensive, 

coordinated, and personal care that 

medically volatile, acutely ill patients 

require on an ongoing basis. 

Therefore, we are proposing that 

subsequent hospital care services, 

specifically CPT codes 99231, 99232, 

and 99233, be added to the list of 

telehealth services on a category 1 basis 

for CY 2011, but with some limitations 

on the frequency that these services may 

be furnished through telehealth. 

Because of our concerns regarding the 

potential acuity of hospital inpatients, 

we are proposing to limit the provision 

of subsequent hospital care services 

through telehealth to once every 3 days. 

We are confident that admitting 

practitioners will continue to make 

appropriate in-person visits to all 

patients who need such care during 

their hospitalization. Consulting 

practitioners should continue to use the 

inpatient telehealth consultation HCPCS 

G-codes, specifically G0406, G0407, 

G0408, G0425, G0426, or G0427 when 

reporting consultations furnished to 

inpatients via telehealth. 

Consistent with this proposal, we are 

proposing to revise § 410.78(b) and 

§ 414.65(a)(1) to include subsequent 

hospital care services as Medicare 

telehealth services, with the limitation 

of one telehealth subsequent hospital 

care service every 3 days. 

We also considered adding hospital 

discharge day management services to 

the list of telehealth services. These 

services, reported by CPT codes 99238 

and 99239, include the final 

examination of the patient, discussion 

of the hospital stay, instructions for 

continuing care to all relevant 

caregivers, and preparation of discharge 

records, prescriptions, and referral 

forms. These services are furnished 

when a practitioner deems it medically 

reasonable and necessary to assess a 

patient’s readiness for discharge and to 

prepare a patient for discharge from an 

acute care environment to a less 

intensive setting. There are no services 

on the current list of telehealth services 

that resemble such preparation of a 

patient for discharge. We believe it is 

especially important that, if a 

practitioner furnishes a discharge day 

management service, the service be 

furnished in-person in order to allow 

the practitioner to comprehensively 

assess the patient’s status in preparation 

for discharge so that the patient will 

have a higher likelihood of making a 

successful transition to the less 

intensive setting. Therefore, we are not 

considering hospital discharge day 

management services for addition to the 

Medicare telehealth services list on a 

category 1 basis. 

We have reviewed the documentation 

submitted by requestors in support of 

adding these codes to the Medicare 

telehealth services list on a category 2 

basis. Most of the submitted studies 

were specific to the treatment of 

patients with specific diagnoses and 

were not specific to discharge services. 

Additionally, most of the studies 

concluded that more research was 

required in order to establish medical 

equivalence between telehealth and inperson services. The submitted 

documentation did not provide the 

necessary evidence to alter our previous 

conclusion that hospital discharge day 

management services should be 

provided in-person in light of the acuity 

of hospitalized patients, their typically 

complex post-hospitalization care 

needs, and the importance of patient 

education by the admitting practitioner 

who had ongoing responsibility for the 

patient’s treatment during the hospital 

stay. Therefore, we are not proposing to 

add hospital discharge day management 

services to the list of telehealth services 

for CY 2011. 

5. Initial, Subsequent, Discharge Day 

Management, and Other Nursing 

Facility Care Services 

The American Telemedicine 

Association and the Marshfield Clinic 

submitted requests to add nursing 

facility care codes, covering the 

spectrum of initial (reported by CPT 

codes 99304 (Level 1 initial nursing 

facility care), 99305 (Level 2 initial 

nursing facility care) and 99306 (Level 

3 initial nursing facility care)); 

subsequent (reported by CPT codes 

99307 (Level 1 subsequent nursing 

facility care), 99308 (Level 2 subsequent 

nursing facility care), 99309 (Level 3 

subsequent nursing facility care), and 

99310 (Level 4 subsequent nursing 

facility care)); discharge day 

management (reported by CPT codes 

99315 (Nursing facility discharge day 

management; 30 minutes or less) and 

99316 (Nursing facility discharge day 

management; more than 30 minutes)); 

and other (reported by CPT code 99318 

(Evaluation and management of a 

patient involving an annual nursing 

facility assessment)) services, to the 

Medicare telehealth services list 

beginning in CY 2011. The requests for 

the addition of these services expressed 

concerns regarding limited access to 

care if we do not allow these services to 

be furnished through telehealth, and 

requested that CMS acknowledge the 

recent Congressional inclusion of 

nursing facilities as telehealth 

originating sites by adding these codes 

to the list of Medicare telehealth 

services. 

In the CY 2010 PFS proposed and 

final rules (74 FR 33544 and 74 FR 

61762), we discussed concerns about 

potential disparities in patient acuity 

between nursing facility services and 

the current list of Medicare telehealth 


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services. We have also declined to add 

HCPCS codes to the Medicare telehealth 

services list that are used exclusively to 

describe Federally-mandated nursing 

facility visits. As discussed in the CY 

2010 PFS proposed rule (74 FR 33543), 

the long-term care regulations at 

§ 483.40(c) require that residents of 

SNFs receive initial and periodic 

personal visits. These regulations ensure 

that at least a minimal degree of 

personal contact between a practitioner 

and a SNF resident is maintained, both 

at the point of admission to the facility 

and periodically during the course of 

the resident’s stay. We continue to 

believe that these federally-mandated 

visits should be conducted in-person, 

and not as Medicare telehealth services. 

Therefore, in the CY 2010 PFS final rule 

with comment period, we revised 

§ 410.78 to preclude physicians and 

other practitioners from furnishing the 

physician visits required under 

§ 483.40(c) through telehealth. 

We reviewed the use of telehealth for 

each of the subcategories of nursing 

facility services included in the requests 

for CY 2011. We identified the E/M 

services that fulfill Federal requirements 

for personal visits under § 483.40(c), 

and we are not proposing for CY 2011 

to add any HCPCS codes to the 

Medicare telehealth services list that are 

used exclusively to describe these 

Federally-mandated visits. These codes 

include the CPT codes for initial 

nursing facility care (CPT codes 99304 

through 99306) that are used to report 

the initial E/M visit that fulfills 

Federally-mandated requirements under 

§ 483.40(c) and other nursing facility 

service (CPT code 99318) that is only 

payable by Medicare if the visit is 

substituted for a federally-mandated 

visit under § 483.40(c). 

The nursing facility discharge day 

management services reported under 

CPT code 99315 and 99316 are E/M 

visits that prepare a nursing facility 

resident for discharge from the facility. 

There are no Medicare requirements 

that such a service be furnished. If a 

practitioner chooses to furnish this 

service, we continue to believe that an 

in-person visit is most appropriate in 

order to ensure the resident is prepared 

for discharge from the nursing facility. 

These services are furnished when a 

practitioner deems it medically 

reasonable and necessary to assess a 

patient’s readiness for and to prepare a 

patient being discharged from the 

monitored nursing facility environment 

to another typically less intensive 

setting. There are no services on the 

current list of telehealth services that 

resemble such preparation of a patient 

for discharge. As in the case of hospital 

discharge day management services, we 

believe it is especially important that, if 

a practitioner furnishes a nursing 

facility discharge day management 

service, the service be furnished inperson. The practitioner must be able to 

comprehensively assess the patient’s 

status in preparation for discharge so 

that the patient will have a higher 

likelihood of making a successful 

transition from the nursing facility to 

another setting. Therefore, we are not 

considering nursing facility discharge 

day management services for addition to 

the Medicare telehealth services list on 

a category 1 basis. When we considered 

the addition of these services under 

category 2, we had no evidence that 

nursing facility discharge services 

furnished through telehealth are 

equivalent to in-person discharge 

services. Therefore, we are not 

proposing to add nursing facility 

discharge day management services to 

the CY 2011 telehealth list. 

Subsequent nursing facility services, 

reported by CPT codes 99307 through 

99310, may be used to report either a 

federally-mandated periodic visit under 

§ 483.40(c) or another E/M visit, prior to 

or after the initial nursing facility care 

visit, as long as the subsequent nursing 

facility care visit is medically 

reasonable and necessary for the 

resident’s care. While we continue to 

believe that many SNF residents have 

complex medical care needs, we believe 

that it is appropriate to consider the 

addition of these codes to the telehealth 

list on a category 1 basis. As we state 

above in the context of our discussion 

of subsequent hospital care services, the 

HCPCS codes for initial and follow-up 

inpatient consultation services for 

nursing facility patients are on the list 

of Medicare telehealth services, and 

subsequent nursing facility services are 

similar to those services. These E/M 

services are furnished to high acuity, 

complex SNF patients, although not by 

the admitting practitioner himself or 

herself. Therefore, we believe that 

subsequent nursing facility visits by a 

patient’s admitting practitioner 

sufficiently resemble follow-up 

inpatient consultation services to 

consider them on a category 1 basis for 

the telehealth list. We have concluded 

that it would be appropriate to permit 

some subsequent nursing facility care 

services to be furnished through 

telehealth to ensure that complex 

nursing facility patients have frequent 

encounters with their admitting 

practitioner, although we continue to 

believe that the federally-mandated 

visits should be in-person to facilitate 

the comprehensive, coordinated, and 

personal care that these complex 

patients require on an ongoing basis. 

Therefore, we are proposing that 

subsequent nursing facility care 

services, specifically CPT codes 99307, 

99308, 99309 and 99310, be added to 

the list of Medicare telehealth services 

on a category 1 basis beginning in CY 

2011, with some limitations on 

furnishing these services through 

telehealth. Because of our concerns 

regarding the potential acuity and 

complexity of SNF inpatients, we are 

proposing to limit the provision of 

subsequent nursing facility care services 

furnished through telehealth to once 

every 30 days. We are especially 

interested in public comments, 

including any evidence regarding 

patterns of high quality care and clinical 

outcomes, regarding this proposal to 

limit the provision of subsequent 

nursing facility care services furnished 

through telehealth to once every 30 

days. We remain committed to ensuring 

that SNF inpatients receive appropriate 

in-person visits and that Medicare pays 

only for medically reasonable and 

necessary care. Currently and 

continuing in CY 2011, an unlimited 

number of initial and follow-up 

consultation services may be furnished 

through telehealth to these patients so 

we believe that only a limited number 

of subsequent nursing facility care 

services by the admitting practitioner 

would be appropriate for SNF 

inpatients. Finally, we are specifying 

that subsequent nursing facility care 

services reported for a Federallymandated periodic visit under 

§ 483.40(c) may not be furnished 

through telehealth. In light of this 

proposal for CY 2011, we remain 

confident that admitting practitioners 

will continue to make appropriate inperson visits to all patients who need 

such care during their SNF stay. 

Consistent with this proposal, we are 

proposing to revise § 410.78(b) and 

§ 414.65(a)(1) to include subsequent 

nursing facility care services as 

Medicare telehealth services, with the 

limitation of one telehealth subsequent 

nursing facility care service every 30 

days. Federally-mandated periodic 

visits may not be furnished through 

telehealth, as specified currently in 

§ 410.78(e)(2). 

6. Neuropsychological Testing 

The American Telemedicine 

Association submitted a request to add 

neuropsychological testing services, 

described by CPT codes 96119 

(Neuropsychological testing (e.g., 

Halstead-Reitan Neuropsychological 

Battery, Wechsler Memory Scales and 

Wisconsin Card Sorting Test), per hour 


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Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40113 

1The 12 geographic areas are: Boston, MA, 

Syracuse, NY, Northern New Jersey, Greenville, SC, 

Miami, FL, Little Rock, AR, Indianapolis, IN, 

Cleveland, OH, Lansing, MI, Phoenix, AZ, Seattle, 

WA, and Orange County, CA. 

of the psychologist’s or physician’s 

time, both face-to-face time 

administering tests to the patient and 

time interpreting these test results and 

preparing the report); and 96119 

(Neuropsychological testing (e.g., 

Halstead-Reitan Neuropsychological 

Battery, Wechsler Memory scales and 

Wisconsin Card Sorting Test), with 

qualified health care professional 

interpretation and report, administered 

by technician, per hour of technician 

time, face-to-face), to the list of 

telehealth services for CY 2011 based on 

their similarity to other telehealth 

services. 

In the CY 2008 PFS final rule with 

comment period (72 FR 66251), we 

stated that we have received conflicting 

comments and data regarding the 

appropriateness of furnishing 

neuropsychological testing via 

telehealth. While we appreciate the 

recent request for addition of these same 

services to the Medicare telehealth 

services list, we do not believe that 

these services are similar to services 

currently on the Medicare telehealth 

services list and, therefore, we conclude 

that they would not be appropriate for 

consideration or addition under 

category 1. In this year’s request for the 

addition of the these services, we 

received no information to indicate that 

the diagnostic findings of 

neuropsychological testing through 

telehealth are similar to those based 

upon in-person testing, and therefore, 

that testing through telehealth does not 

affect the patient’s diagnosis. Therefore, 

we are not proposing to add 

neuropsychological testing services to 

the list of approved Medicare telehealth 

services for CY 2011. 

7. Speech-Language Pathology Services 

The Marshfield Clinic submitted a 

request to add various speech-language 

pathology services to the list of 

approved telehealth services for CY 

2011. Speech-language pathologists are 

not permitted under section 

1842(b)(18)(C) of the Act to furnish and 

receive payment for Medicare telehealth 

services. Therefore, we are not 

proposing to add any speech-language 

pathology services to the list of 

Medicare telehealth services for CY 

2011. For further discussion of these 

services in the context of telehealth, we 

refer readers to the CY 2005 and CY 

2007 PFS proposed and final rules with 

comment period (69 FR 47512 and 

66276, and 71 FR 48995 and 69657). 

8. Home Wound Care Services 

Wound Care Associates, LLC, 

submitted a request to add wound care 

in the home setting to the list of 

Medicare telehealth services. A patient’s 

home is not permitted under current 

statute to serve as an originating site for 

Medicare telehealth services. Therefore, 

we are not proposing to add home 

wound care services to the list of 

Medicare telehealth services for CY 

2011. 

D. Summary of CY 2011 Telehealth 

Proposals 

In summary, we are proposing to add 

the following requested services to the 

list of Medicare telehealth services for 

CY 2011: 

• Individual and group KDE services 

(HCPCS codes G0420 and G0421, 

respectively); 

• Individual and group DSMT 

services, with a minimum of 1 hour of 

in-person instruction to be furnished in 

the year following the initial DSMT 

service to ensure effective injection 

training (HCPCS codes G0108 and 

G0109, respectively); 

• Group MNT and HBAI services 

(CPT codes 97804, and 96153 and 

96154, respectively); 

• Subsequent hospital care services, 

with the limitation for the patient’s 

admitting practitioner of one telehealth 

visit every 3 days (CPT codes 99231, 

99232, and 99233); and 

• Subsequent nursing facility care 

services, with the limitation for the 

patient’s admitting practitioner of one 

telehealth visit every 30 days (CPT 

codes 99307, 99308, 99309, and 99310). 

Furthermore, we are proposing to 

revise § 410.78(b) and § 414.65(a)(1) 

accordingly. Specifically, we are 

proposing to add individual and group 

KDE services, individual and group 

DSMT services, group MNT services, 

group HBAI services, and subsequent 

hospital care and nursing facility care 

services to the list of telehealth services 

for which payment will be made at the 

applicable PFS payment amount for the 

service of the practitioner. In addition, 

we have reordered the listing of services 

in these two sections and removed 

‘‘initial and follow-up inpatient 

telehealth consultations furnished to 

beneficiaries in hospitals and SNFs’’ in 

§ 410.78(b) because these are described 

by the more general term ‘‘professional 

consultations’’ that is in the same 

section. Finally, we are continuing to 

specify that the physician visits 

required under § 483.40(c) may not be 

furnished as telehealth services. 

V. Provisions of the Patient Protection 

and Affordable Care Act of 2010 

The following section addresses 

certain provisions of the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148), enacted on March 23, 

2010, as amended by the Health Care 

and Education Reconciliation Act of 

2010 (Pub. L. 111–152) enacted on 

March 30, 2010 (collectively known as 

the Affordable Care Act (ACA)). 

A. Section 3002: Improvements to the 

Physician Quality Reporting System 

Section 3002 of ACA makes a number 

of changes to the Physician Quality 

Reporting Initiative (PQRI), including 

authorizing incentive payments through 

2014, and requiring a penalty beginning 

in 2015, for eligible professionals who 

do not satisfactorily submit quality data. 

For a more detailed discussion of the 

provisions of section 3002 of the ACA, 

please refer to section VI.G.1. of this 

proposed rule. 

B. Section 3003: Improvements to the 

Physician Feedback Program and 

Section 3007: Value-based Payment 

Modifier Under the Physician Fee 

Schedule 

1. Background 

As required under section 1848(n) of 

the Act, as added by section 131(c) of 

MIPPA, we established and 

implemented by January 1, 2009, the 

Physician Resource Use Measurement & 

Reporting (RUR) Program for purposes 

of providing confidential reports to 

physicians that measure the resources 

involved in furnishing care to Medicare 

beneficiaries. Section 1848(n) of the Act 

also authorizes CMS to include 

information on the quality of care 

furnished to Medicare beneficiaries by a 

physician or group of physicians. 

We are continuing a phased 

implementation of the program. Phase I 

was discussed in the CY 2010 proposed 

and final rules (74 FR 33589, and 74 FR 

61844, respectively), and has been 

completed. Phase I consisted of several 

activities including extensive data 

analysis to inform decisions about 

topics such as measures, attribution, 

and risk adjustment and formative 

testing of report design with practicing 

physicians. We concluded Phase I by 

sending to individual practicing 

physicians in 12 geographic areas 1

several hundred reports that contained 

per capita and episode-based cost 

information. 

Phase I of the Program focused on 

providing confidential feedback on 

resource use measures. Section 

1848(n)(1)(A)(iii) of the Act states that 

the Secretary may also include 

information on the quality of care 


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furnished to Medicare beneficiaries by 

physicians (or groups of physicians) in 

the feedback reports. We believe that 

providing physicians with feedback on 

both quality and cost is consistent with 

the direction of other CMS value based 

purchasing (VBP) initiatives. As a result, 

we decided to include quality measures 

in Phase II of the program and, in 

particular, we considered measures 

used in PQRI and claims-based 

measures such as GEM measures (74 FR 

61846). 

Section 1848(n)(1)(A)(ii) also states 

that the Secretary may provide reports 

at the physician group level. 

Accordingly, as part of Phase II of the 

program, we will also include reporting 

to group practices, defined as more than 

one physician practicing medicine 

together (74 FR 61846). In addition, we 

noted that the definition applies to the 

following types of physician groups: (1) 

Formally established single or multispecialty group practices; (2) physicians 

practicing in defined geographic 

regions; and (3) physicians practicing 

within facilities or larger systems of care 

(74 FR 61846). As we continue with 

Phase II, we plan to report to both 

physician group practices and their 

affiliated practitioners, recognizing that 

many physicians practice in 

arrangements other than solo practices. 

We believe that using both group and 

individual level reporting will also 

allow us to gain experience with the 

sample size issues that arise when 

individual physicians have too few 

Medicare beneficiaries with specific 

conditions to generate reliable 

information. (See the CY 2010 final rule 

with comment period (74 FR 61844) for 

a detailed discussion of plans for Phase 

II.) 

2. Effect of the ACA of 2010 on the 

Program 

The ACA contains two provisions 

relevant to the RUR program. Section 

3003 continues the confidential 

feedback program and requires the 

Secretary, beginning in 2012, to provide 

reports that compare patterns of 

resource use of individual physicians to 

other physicians. In addition, section 

3007 of the ACA requires the Secretary 

to apply a separate, budget-neutral 

payment modifier to the Fee-For-Service 

physician fee schedule payment 

formula. The payment modifier, which 

will be phased in beginning January 1, 

2015 through January 1, 2017, will 

provide for differential payment under 

the fee schedule to a physician or 

groups of physicians, and later, possibly 

to other eligible professionals, based 

upon the relative quality and cost of 

care of their Medicare beneficiaries. 

Accordingly, our goal is to have 

Medicare physicians receive a 

confidential feedback report prior to 

implementation of the payment 

modifier. We view these two provisions 

as complementary, as we expect the 

work done for the confidential feedback 

program under section 3003 of the ACA 

will inform our implementation of the 

payment modifier under section 3007 of 

the ACA. The approach used in the 

confidential feedback reports will serve 

as the foundation for implementing the 

payment modifier. Specifically, 

throughout future phases of reports 

under the RUR program, we will 

continue to enhance our measures and 

methods and improve the content of the 

reports based on both our research and 

the feedback of stakeholders before the 

payment modifier begins to affect 

physician payments in 2015. 

We plan to engage in a large-scale 

effort to garner widespread stakeholder 

involvement with regard to how we 

continue to build and expand the 

confidential feedback program and 

transition to implementation of the 

payment modifier. We recognize that 

such a payment modifier may have an 

impact on the delivery of care to 

Medicare beneficiaries. Reports that will 

be produced in the future based on 

changes as a result of section 3003 of the 

ACA will contain both cost and quality 

data, and work done to improve these 

reports with regard to fair and 

actionable measures in each of these 

domains will aid our decision making in 

how to apply the payment modifier. We 

intend to seek stakeholder input on 

various aspects of program design, 

including cost and quality measures, 

methodologies for compositing 

measures, and feedback report content 

and delivery. Such feedback may be 

gathered through rulemaking, open door 

forums, or other mechanisms. 

3. Phase II Proposed Changes 

We anticipate that reports in Phase II 

of the RUR Program will be distributed 

in the fall of 2010. We are proposing, 

however, several changes to the program 

parameters for Phase II that were 

finalized in prior rules. First, we plan to 

discontinue our use of commerciallyavailable proprietary episode grouping 

software. In particular, section 3003 of 

the ACA requires that the Secretary 

develop a Medicare-specific episode 

grouper by January 1, 2012, the details 

of which must be made public. This 

grouper will address the limitations 

found in the proprietary software. 

We recognize that episode-specific 

cost information is meaningful and 

actionable for physicians, and we plan 

to provide such information in feedback 

reports after the public grouper software 

is developed. Prior to that, we may 

consider other potential interim options 

for grouping to provide such 

information. We believe that our use of 

proprietary episode grouping software 

in previous phases of the program had 

limitations. These software products 

were not intended for use with 

Medicare claims data, and we 

discovered several problems with the 

data outputs. Specifically, the groupers 

do not work well to create episodes for 

beneficiaries with multiple chronic 

conditions, which is a significant 

portion of Medicare beneficiaries. 

For example, when a beneficiary with 

a chronic disease is hospitalized for an 

acute condition, that beneficiary most 

likely also receives treatments unrelated 

to the condition for which he or she is 

hospitalized, but related to the chronic 

disease. The groupers, which are 

proprietary and often referred to as 

‘‘black boxes,’’ do not enable users to 

understand the coding to determine 

how to accomodate these issues. 

Therefore, CMS had to make several 

decisions about how to pre-process the 

claims data so that the groupers could 

recognize and attempt to deal with these 

issues in the clinical grouping logic. 

After report production in Phase I, we 

discovered several problems with the 

pre-processing, which resulted in 

inaccurate episode cost information 

being disseminated. 

Until a Medicare-specific episode 

grouping software is developed, we plan 

to produce reports for Phase II that 

contain per capita cost information. 

More specifically, instead of episodespecific cost information, we plan to 

provide overall per capita cost 

information, as well as per capita cost 

information for those beneficiaries with 

five common chronic diseases: (1) 

Diabetes, (2) congestive heart failure, (3) 

coronary artery disease, (4) chronic 

obstructive pulmonary disease, and (5) 

prostate cancer. This information will 

not be specific to the cost of treating the 

disease itself, but will provide total Part 

A/B per capita cost information, as well 

as service category breakdowns, for 

treating the subset of attributed 

beneficiaries with that disease. 

Second, while commenters have been 

generally supportive of including PQRI 

measures in the reports, we propose not 

including data from PQRI in the reports. 

The current support contractor for this 

program has only 2007 PQRI data. This 

was the first year of PQRI, and 

participation was still quite low. 

Because of the low number of 

physicians reporting under PQRI, and 

because providers have the flexibility to 

choose which measures to report under 


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2 http://www.cms.gov/GEM. 

PQRI, we believe it would be difficult to 

make meaningful peer comparisons for 

purposes of these reports. Instead, for 

Phase II, we propose using the claimsbased measures developed by CMS in 

the Generating Medicare Physician 

Quality Performance Measurement 

Results (GEM) project.2 This is a core set 

of 12 process quality measures that can 

be calculated using only administrative 

claims data. However, in future phases 

of the program, we intend to explore the 

possibility of linking this program to the 

HITECH incentive program for 

meaningful use of electronic health 

records, and the group practice 

reporting option in PQRI. Both of these 

programs offer measures and measure 

sets, as well as methods of reporting 

data which may be more conducive to 

meaningful peer comparisons among 

physicians. 

Third, we propose to distribute 

reports electronically in Phase II, by 

leveraging the infrastructure used to 

distribute PQRI feedback reports. This 

infrastructure will enable groups to 

utilize an electronic portal to download 

their Phase II reports. Individual 

practitioners will be able to contact their 

MACs/fiscal intermediaries to receive 

an e-mailed copy of their reports. We 

have received feedback from physicians 

that the reports distributed in Phase I 

were too long and cumbersome to 

manage in hard copy. Our intent is a 

condensed report with electronic 

dissemination that allows for easier 

navigation. We are seeking public 

comment on the above proposals. 

4. Implementation of Sections 3003 and 

3007 of the ACA 

The Affordable Care Act provisions 

that we mention above contain several 

important implementation dates. In 

addition to developing an episode 

grouper by January 1, 2012, we are 

required to publish the cost and quality 

measures we intend to use in 

determining the payment modifier to be 

effective on January 1, 2012. We are also 

required to begin implementing the 

program parameters through rulemaking 

in 2013. The payment modifier is 

effective on January 1, 2015, with a 

phased implementation so that all 

physicians paid under the physician fee 

schedule will be subject to the modifier 

by January 1, 2017. On or after January 

1, 2017, we have the authority to also 

apply the payment modifier to other 

eligible professionals. 

In anticipation of implementing 

sections 3003 and 3007 of the ACA, we 

intend to perform extensive data 

analysis and research, and to seek 

stakeholder input on issues related to 

cost and quality measures so that we 

can be prepared to publish, by January 

1, 2012, those measures we intend to 

use for the payment modifier. We intend 

for the work done in determining 

measures for use in the payment 

modifier to inform the continued 

dissemination of confidential feedback 

reports to both individual physicians 

and physician groups. Specifically, the 

measures chosen for use in the payment 

modifier will be candidates for 

inclusion in future phases of the 

confidential feedback reports. 

As mentioned above, Phase I included 

reports to several hundred physicians. 

In Phase II we anticipate disseminating 

reports to about 40 large physician 

groups and the approximately 2,000 

physicians affiliated with those groups. 

We anticipate future phases of the 

reports to include additional 

dissemination to increasing numbers of 

practitioners and groups such that 

virtually every applicable Medicare 

practitioner receives a report prior to 

implementation of the payment 

modifier. 

5. Comments Sought on Specific 

Statistical Issues Related to the ACA 

Sections 3003 and 3007 

We recognize that there are many 

important decisions to be made when 

implementing a program that compares 

physicians to their peers, especially 

when such information can lead to 

differential payment. Since the 

inception of the RUR program, all data 

have been price standardized which 

includes accounting for geographic 

adjustments. We have identified 

important statistical issues in previous 

rules, and as we have done in previous 

rules, CMS seeks input on several of 

these topics as they relate to future 

phases of reports. These include, but are 

not limited to: risk adjustment; 

attribution; benchmarking; peer groups; 

minimum case sizes; cost and quality 

measures; and compositing methods. To 

date, the public comments we have 

received have not led us to a single 

methodology to propose for dealing 

with any of these issues. Therefore, we 

do not make formal proposals in this 

proposed rule. Specific parameters of 

the RUR program are based on the most 

current information we have available to 

us. These parameters will continue to 

evolve and we will continue to evaluate 

them as the state of the art in these areas 

continues to improve. Therefore, we 

seek public comment on these issues. 

a. Risk Adjustment 

The cost data used in Phase I will be 

risk adjusted. For the per capita costs, 

we used the Hierarchical Condition 

Categories (HCC) model developed for 

risk adjustment in Medicare Advantage 

plans. This model takes into account 

beneficiary characteristics such as age, 

sex, and Medicaid status, and then 

predicts costs for beneficiaries based on 

their unique mix of health conditions. 

Several other socioeconomic factors, 

such as the median income per capita in 

the county where the physician 

practices, were used. For the episode 

costs, we used the risk adjustment/ 

severity levels in the proprietary 

grouper software. 

The cost data in Phase II are risk 

adjusted using the HCC model, but 

excluding the additional socioeconomic 

factors such as the median income per 

capita in the county where the 

physician practices, as mentioned 

above. Regression analyses indicated 

that these additional socioeconomic 

factors did little to improve the fit of the 

model, so we will not include them. 

And since there are no episode-based 

costs in Phase II—only annual per 

capita costs—the HCC model will be the 

only method used. Other methods of 

risk adjustment exist that we have not 

used, such as the CC (complications and 

comorbidities) and MCC (major 

complications and comorbidities) 

indicators implemented in the 2008 

MS–DRG system. 

The quality data included in Phase II 

will not be risk adjusted because the 

GEM measures are all clinical process 

measures, and it is generally accepted 

that such measures need not be risk 

adjusted. Beneficiaries should receive 

the indicated preventive services (for 

example, breast cancer screening) 

regardless of their demographic 

characteristics or presence or absence of 

health conditions. 

We seek comment on the appropriate 

method for risk adjusting cost data, as 

well as our reasoning for not risk 

adjusting clinical process quality 

measures. 

b. Attribution 

Deciding which physician(s) is/are 

responsible for the care of which 

beneficiaries is an important aspect of 

measurement. CMS must strike a 

balance between only attributing cost 

information to physicians for the 

services they personally delivered, and 

attributing costs to physicians based on 

a more encompassing view of the 

services provided to each beneficiary so 

as to encourage better care coordination 

and accountability for patient outcomes. 

There are several methods that are 

generally used for attributing 

beneficiaries’ costs to physicians for the 

purposes of measuring and comparing 


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performance. In Phase I, we used two 

different attribution methodologies. Half 

of the reports used the ‘‘multipleproportional’’ attribution, in which a 

beneficiary’s costs were summed, and 

then divided among the physicians who 

treated that beneficiary in the same 

proportion as their share of evaluation 

and management (E&M) services 

provided. The other half of the reports 

used the ‘‘plurality-minimum’’ method, 

in which a beneficiary’s entire cost 

(either for the episode or for the year) 

was attributed to the physician who 

performed the plurality of the E&M 

services, subject to a minimum 

percentage (in that case, 10 percent). 

In Phase II reports, we plan to use the 

‘‘plurality-minimum’’ method with a 

minimum percentage threshold of E&M 

services of 20 percent for individual 

physicians and a minimum percentage 

threshold of E&M services of 30 percent 

of the E&M services for physician group 

level reports. These minimum threshold 

determinations were based on our 

analysis of the claims data. We 

recognize that other attribution methods 

exist, which may be either more or less 

appropriate given the aspect of care one 

is measuring. For example, it may be 

desirable to attribute the entire cost of 

a surgical episode to the performing 

surgeon. Another method for attributing 

costs is referred to as ‘‘multiple-even,’’ in 

which the entire beneficiary’s cost is 

attributed to multiple physicians who 

treated the beneficiary. 

We seek comment on the topic of 

attribution methodologies, including 

both of those we have already used in 

the program, as well as others that may 

or may not be mentioned here. 

c. Benchmarking and Peer Groups 

Determining the relevant comparisons 

to make among physicians is also an 

important policy aspect of the program. 

CMS’ research conducted in Phase I of 

the program indicated that physicians 

prefer to be compared only to those 

physicians most like them (that is, the 

narrowest peer group). We recognize the 

importance of fair comparison, but are 

also faced with the challenge that very 

narrow peer groups are most often not 

large enough to make statistically 

significant comparisons. 

The individual-level reports in both 

phases of the program have contained, 

or will contain, two peer group 

comparisons: (1) Physicians in the same 

specialty in the same geographic area; 

and (2) physicians in the same specialty 

across all 12 geographic areas. In each 

of these peer groups, a physician is 

shown where he or she falls on a 

distribution that specifically identified 

the 10th, 50th, and 90th percentiles. 

These benchmarks were finalized on an 

interim basis in the CY 2010 proposed 

rule (74 FR 33589). 

In determining applicability for 

episode measures in Phase I, we used a 

statistical reliability test. For per capita 

measures in Phase I, a physician had to 

have 20 or more beneficiaries to be 

measured and compared. There was no 

minimum peer group size requirement. 

The original MIPPA mandate requires 

CMS to make comparisons among 

physicians on cost, and gives the 

Secretary the authority to include 

comparisons on quality. The use of 

quality measures in the program was 

finalized in the CY 2010 final rule (74 

FR 61846). In Phase II, comparisons 

with appropriate peer groups will be 

made for both cost and quality. Phase II 

reports will be provided only to those 

physicians that have 30 or more patients 

for each of the cost measures. For the 

quality measures, we plan to use the 

measure specifications in the GEM 

project to define minimum case sizes, 

which are at least 11 beneficiaries. We 

also plan to impose a minimum peer 

group size of 30 in Phase II for both the 

cost and quality measures. A minimum 

sample size of 30 is generally accepted 

in the research community as the 

minimum sample size to represent a 

group and make comparisons. 

We seek comment on the most 

appropriate and relevant peer groups for 

comparison, including the appropriate 

minimum case sizes and minimum peer 

group sizes. We are also interested in 

methodologies that can account for 

small case sizes. 

d. Cost and Quality Measures and 

Compositing Methods 

As mentioned above, and in previous 

rules, section 1848(n)(1)(A)(ii) of the Act 

gives the Secretary the authority to 

include both cost and quality 

information in the feedback reports. In 

Phase I, we chose to use only cost 

information, and used both per capita 

and episode cost measurements. As 

mentioned above, we previously 

finalized the use of quality measures in 

Phase II (74 FR 61846), but propose to 

discontinue our use of episode cost 

measurements. We have yet to include 

any composite measures of cost or 

quality in the feedback reports. 

Section 3007 of the ACA requires 

CMS to pay physicians differentially 

based on a modifier derived with 

composites of both quality and cost 

measures. Accordingly, we will need to 

devise a methodology in the future for 

compositing cost measures and quality 

measures, including considering, among 

other things, possible methodologies to 

develop a single score. In the future, 

episode-based cost measures developed 

using the public Medicare-specific 

episode grouper software also may be 

considered in developing a composite 

score. Other domains of measures that 

may be considered include patient-level 

utilization statistics (for example, 

emergency department visits per 1,000 

patients) and structural measures such 

as whether a provider has adopted an 

electronic health record. We recognize 

that measure composites are 

methodologically and operationally 

complex and, therefore, we are seeking 

comment on this topic. 

We plan to continue a phased 

approach in the future. Although we 

will continue to move from phase-tophase, any substantive changes to the 

RUR program will be implemented 

through rulemaking. We also anticipate 

continuing to gather feedback from 

stakeholders about the important datadriven policy topics that affect the 

feedback reports. 

C. Section 3102: Extension of the Work 

Geographic Index Floor and Revisions 

to the Practice Expense Geographic 

Adjustment Under the Medicare 

Physician Fee Schedule, and Protections 

for Frontier States as Amended by 

Section 10324 

Section 1848(e)(1)(E) of the Act (as 

amended by section 3102(a) of the ACA) 

extends application of the 1.0 work 

GPCI floor for services furnished 

through December 31, 2010. In addition, 

section 1848(e)(1) of the Act (as 

amended by section 3102(b) of the ACA) 

specifies that for CY 2010 and CY 2011, 

the employee wage and rent portions of 

the PE GPCI must reflect only one-half 

of the relative cost differences for each 

locality compared to the national 

average and includes a ‘‘hold harmless’’ 

provision for any PFS locality that 

would receive a reduction to its PE GPCI 

resulting from the limited recognition of 

cost differences. Section 1848(e)(1) of 

the Act (as amended by section 3102(b) 

of the ACA) also requires an analysis of 

the current methods and data sources 

used to determine the relative cost 

differences in office rent and employee 

wages compared to the national average 

and the cost share weights assigned to 

each PE GPCI component: Employee 

wages, office rent, and supplies. Finally, 

section 1848(e)(1) of the Act (as 

amended by section 3102(b) of the ACA) 

requires the Secretary to make 

appropriate adjustments to the PE GPCI 

by no later than January 1, 2012. In 

addition, section 1848(e)(1) of the Act 

(as amended by section 10324(c) of the 

ACA) establishes a 1.0 PE GPCI floor for 

services furnished in frontier states 

effective January 1, 2011. The 


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provisions of the ACA related to the 

GPCIs are discussed in detail in section 

II.D. of this proposed rule. 

D. Section 3103: Extension of 

Exceptions Process for Medicare 

Therapy Caps 

Section 1833(g)(5) of the Act (as 

amended by section 3103 of the ACA) 

extends the exceptions process for 

therapy caps through December 31, 

2010. Therapy caps are discussed in 

detail in section III.A. of this proposed 

rule. 

E. Section 3104: Extension of Payment 

for Technical Component of Certain 

Physician Pathology Services 

Section 542(c) of the Medicare, 

Medicaid, and SCHIP Benefits 

Improvement and Protection Act of 

2000 (BIPA) (Pub. L. 106–554), as 

amended by section 732 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173), section 104 of division B of 

the Tax Relief and Health Care Act of 

2006 (MIEA–TRHCA) (Pub. L. 109–432), 

section 104 of the Medicare, Medicaid, 

and SCHIP Extension Act of 2007 

(MMSEA) (Pub. L. 110–173), and 

section 136 of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) (Pub. L. 

110–275) is amended by section 3104 of 

the ACA to continue payment to 

independent laboratories for the TC of 

physician pathology services for fee-forservice Medicare beneficiaries who are 

inpatients or outpatients of a covered 

hospital through CY 2010. The technical 

component (TC) of physician pathology 

services refers to the preparation of the 

slide involving tissue or cells that a 

pathologist interprets. The professional 

component (PC) of physician pathology 

services refers to the pathologist’s 

interpretation of the slide. 

When the hospital pathologist 

furnishes the PC service for a hospital 

patient, the PC service is separately 

billable by the pathologist. When an 

independent laboratory’s pathologist 

furnishes the PC service, the PC service 

is usually billed with the TC service as 

a combined service. 

Historically, any independent 

laboratory could bill the Medicare 

contractor under the PFS for the TC of 

physician pathology services for 

hospital patients even though the 

payment for the costs of furnishing the 

pathology service (but not its 

interpretation) was already included in 

the bundled inpatient stay payment to 

the hospital. In the CY 2000 PFS final 

rule with comment period (64 FR 59408 

through 59409), we stated that this 

policy has contributed to the Medicare 

program paying twice for the TC service: 

(1) To the hospital, through the 

inpatient prospective payment rate, 

when the patient is an inpatient; and (2) 

to the independent laboratory that bills 

the Medicare contractor, instead of the 

hospital, for the TC service. While the 

policy also permits the independent 

laboratory to bill for the TC of physician 

pathology services for hospital 

outpatients, in this case, there generally 

would not be duplicate payment 

because we would expect the hospital to 

not also bill for the pathology service, 

which would be paid separately to the 

hospital only if the hospital were to 

specifically bill for it. We further 

indicated that we would implement a 

policy to pay only the hospital for the 

TC of physician pathology services 

furnished to its inpatients. 

Therefore, in the CY 2000 PFS final 

rule with comment period, we revised 

§ 415.130(c) to state that for physician 

pathology services furnished on or after 

January 1, 2001 by an independent 

laboratory, payment is made only to the 

hospital for the TC furnished to a 

hospital inpatient. Ordinarily, the 

provisions in the PFS final rule with 

comment period are implemented in the 

following year. However, the change to 

§ 415.130 was delayed 1 year (until 

January 1, 2001), at the request of the 

industry, to allow independent 

laboratories and hospitals sufficient 

time to negotiate arrangements. 

Full implementation of § 415.130 was 

further delayed by section 542 of the 

BIPA and section 732 of the MMA, 

which directed us to continue payment 

to independent laboratories for the TC 

of physician pathology services for 

hospital patients for a 2-year period 

beginning on January 1, 2001 and for 

CYs 2005 and 2006, respectively. 

In the CY 2007 MPFS final rule with 

comment period (71 FR 69624 and 

69788), we amended § 415.130 to 

provide that, for services furnished after 

December 31, 2006, an independent 

laboratory may not bill the carrier for 

the TC of physician pathology services 

furnished to a hospital inpatient or 

outpatient. However, section 104 of the 

MIEA–TRHCA continued payment to 

independent laboratories for the TC of 

physician pathology services for 

hospital patients through CY 2007, and 

section 104 of the MMSEA further 

extended such payment through the first 

six months of CY 2008. 

Section 136 of the MIPPA extended 

the payment through CY 2009. Most 

recently, section 3104 of the ACA 

amended the prior legislation to extend 

the payment through CY 2010. 

Consistent with this legislative 

change, we are proposing to revise 

§ 415.130(d) to: (1) Amend the effective 

date of our payment policy to reflect 

that for services furnished after 

December 31, 2010, an independent 

laboratory may not bill the Medicare 

contractor for the TC of physician 

pathology services furnished to a 

hospital inpatient or outpatient; and (2) 

reformat this subsection into 

subparagraphs. 

F. Sections 3105 and 10311: Extension 

of Ambulance Add-Ons 

1. Amendment to Section 1834(l)(13) of 

the Act 

Section 146(a) of the MIPPA amended 

section 1834(l)(13)(A) of the Act to 

specify that, effective for ground 

ambulance services furnished on or after 

July 1, 2008 and before January 1, 2010, 

the ambulance fee schedule amounts for 

ground ambulance services shall be 

increased as follows: 

• For covered ground ambulance 

transports which originate in a rural 

area or in a rural census tract of a 

metropolitan statistical area, the fee 

schedule amounts shall be increased by 

3 percent. 

• For covered ground ambulance 

transports which do not originate in a 

rural area or in a rural census tract of 

a metropolitan statistical area, the fee 

schedule amounts shall be increased by 

2 percent. 

Sections 3105(a) and 10311(a) of the 

ACA further amend section 

1834(l)(13)(A) of the Act to extend the 

payment add-ons described above for an 

additional year, such that these add-ons 

also apply to covered ground ambulance 

transports furnished on or after January 

1, 2010 and before January 1, 2011. We 

are revising § 414.610(c)(1)(i) to conform 

the regulations to this statutory 

requirement. This statutory requirement 

is self-implementing. A plain reading of 

the statute requires only a ministerial 

application of the mandated rate 

increase, and does not require any 

substantive exercise of discretion on the 

part of the Secretary. For further 

information regarding the extension of 

these payment add-ons, please see 

Transmittal 706 (Change Request 6972) 

dated May 21, 2010. 

2. Amendment to Section 146(b)(1) of 

MIPPA 

Section 146(b)(1) of the MIPPA 

amended the designation of rural areas 

for payment of air ambulance services. 

The statute specified that 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, shall continue to be 


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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 December 31, 2009. Sections 

3105(b) and 10311(b) of the ACA amend 

section 146(b)(1) of MIPPA to extend 

this provision for an additional year, 

through December 31, 2010. 

Accordingly, for areas that were 

designated as rural on December 31, 

2006, and were subsequently redesignated as urban, we have reestablished the ‘‘rural’’ indicator on the 

ZIP Code file for air ambulance services, 

effective January 1, 2010 through 

December 31, 2010. We are revising 

§ 414.610(h) to conform the regulations 

to this statutory requirement. This 

statutory requirement is selfimplementing. A plain reading of the 

statute requires only a ministerial 

application of a rural indicator, and 

does not require any substantive 

exercise of discretion on the part of the 

Secretary. For further information 

regarding the extension of this MIPPA 

provision, please see Transmittal 706 

(Change Request 6972) dated May 21, 

2010. 

3. Amendment to Section 1834(l)(12) of 

the Act 

Section 414 of the MMA added 

paragraph (12) to section 1834(l) of the 

Act, which specified that in the case of 

ground ambulance services furnished on 

or after July 1, 2004, and before January 

1, 2010, for which transportation 

originates in a qualified rural area (as 

described in the statute), the Secretary 

shall provide for a percent increase in 

the base rate of the fee schedule for such 

transports. The statute requires this 

percent increase to be based on the 

Secretary’s estimate of the average cost 

per trip for such services (not taking 

into account mileage) in the lowest 

quartile of all rural county populations 

as compared to the average cost per trip 

for such services (not taking into 

account mileage) in the highest quartile 

of rural county populations. Using the 

methodology specified in the July 1, 

2004 interim final rule (69 FR 40288), 

we determined that this percent 

increase was equal to 22.6 percent. As 

required by the MMA, this payment 

increase was applied to ground 

ambulance transports that originated in 

a ‘‘qualified rural area’’; that is, to 

transports that originated in a rural area 

included in those areas comprising the 

lowest 25th percentile of all rural 

populations arrayed by population 

density. For this purpose, rural areas 

included Goldsmith areas (a type of 

rural census tract). Sections 3105(c) and 

10311(c) of the ACA amend section 

1834(l)(12)(A) of the Act to extend this 

rural bonus for an additional year 

through December 31, 2010. Therefore, 

as directed by the ACA, we are 

continuing to apply the rural bonus 

described above (in the same manner as 

in previous years), to ground ambulance 

services with dates of service on or after 

January 1, 2010 and before January 1, 

2011 where transportation originates in 

a qualified rural area. 

We are revising § 414.610(c)(5)(ii) to 

conform the regulations to this statutory 

requirement. This statutory requirement 

is self-implementing. The statute 

requires a one-year extension of the 

rural bonus (which was previously 

established by the Secretary), and does 

not require any substantive exercise of 

discretion on the part of the Secretary. 

For further information regarding the 

extension of this rural bonus, please see 

Transmittal 706 (Change Request 6972) 

dated May 21, 2010. 

G. Section 3107: Extension of Physician 

Fee Schedule Mental Health Add-On 

Section 3107 of the ACA amends 

section 138(a)(1) of the MIPPA to 

continue the 5 percent increase in 

Medicare payment for specified mental 

health services through December 31, 

2010. This payment increase was 

originally authorized under section 138 

of the MIPPA from July 1, 2008 until 

December 31, 2009. Accordingly, 

payment for the 24 psychiatry CPT 

codes in Table 33, representing 

‘‘specified services,’’ remains increased 

by 5 percent until December 31, 2010. 

TABLE 33—SPECIFIED MENTAL HEALTH SERVICES SUBJECT TO THE FIVE PERCENT INCREASE IN MEDICARE PAYMENT

THROUGH DECEMBER 31, 2010 

Office or Other Outpatient Facility 

Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy 

90804 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 20 to 

30 minutes face-to-face with the patient). 

90805 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 20 to 

30 minutes face-to-face with the patient; with medical evaluation and management services). 

90806 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 to 

50 minutes face-to-face with the patient). 

90807 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 to 

50 minutes face-to-face with the patient; with medical evaluation and management services). 

90808 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 75 to 

80 minutes face-to-face with the patient). 

90809 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 75 to 

80 minutes face-to-face with the patient; with medical evaluation and management services). 

Interactive Psychotherapy 

90810 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient). 

90811 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and 

management services). 

90812 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient). 

90813 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and 

management services). 

90814 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient). 


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TABLE 33—SPECIFIED MENTAL HEALTH SERVICES SUBJECT TO THE FIVE PERCENT INCREASE IN MEDICARE PAYMENT

THROUGH DECEMBER 31, 2010—Continued 

90815 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and 

management services). 

Inpatient Hospital, Partial Hospital or Residential Care Facility 

Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy 

90816 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential 

care setting, approximately 20 to 30 minutes face-to-face with the patient). 

90817 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential 

care setting, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services). 

90818 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential 

care setting, approximately 45 to 50 minutes face-to-face with the patient). 

90819 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential 

care setting, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services). 

90821 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential 

care setting, approximately 75 to 80 minutes face-to-face with the patient). 

90822 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential 

care setting, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services). 

Interactive Psychotherapy 

90823 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient). 

90824 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services). 

90826 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient). 

90827 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services). 

90828 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient). 

90829 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of non-verbal 

communication, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services). 

H. Section 3108: Permitting Physician 

Assistants To Order Post-Hospital 

Extended Care Services 

The ACA included a selfimplementing provision relating to 

SNFs. Section 3108 adds physician 

assistants (PAs) to the list of 

practitioners (that is, physicians, nurse 

practitioners (NPs), and clinical nurse 

specialists) that can perform the 

required initial certification and 

periodic recertifications under section 

1814(a)(2)(B) of the Act with respect to 

the SNF level of care. Accordingly, we 

are proposing to make appropriate 

revisions to include PAs in 

§ 424.20(e)(2), in which we refer to NPs, 

clinical nurse specialists, and PAs 

collectively as ‘‘physician extenders.’’ 

I. Section 3111: Payment for Bone 

Density Tests 

Section 1848(b) of the Act (as 

amended by section 3111 of the ACA) 

changes the payment calculation for 

dual-energy X-ray absorptiometry (DXA) 

services described by two specified 

DXA CPT codes for CYs 2010 and 2011. 

This provision requires payment for 

these services at 70 percent of the 

product of the CY 2006 RVUs for these 

DXA codes, the CY 2006 conversion 

factor (CF), and the geographic 

adjustment for the relevant payment 

year. 

Effective January 1, 2007, the CPT 

codes for DXA services were revised. 

The former DXA CPT codes 76075 (Dual 

energy X-ray absorptiometry (DXA), 

bone density study, one or more sites; 

axial skeleton (e.g., hips, pelvis, spine)); 

76076 (Dual energy X-ray 

absorptiometry (DXA), bone density 

study, one or more sites; appendicular 

skeleton (peripheral) (e.g., radius, wrist, 

heel)); and 76077 (Dual energy X-ray 

absorptiometry (DXA), bone density 

study, one or more sites; vertebral 

fracture assessment) were deleted and 

replaced with new CPT codes 77080, 

77081, and 77082 that have the same 

respective code descriptors as the 

predecessor codes. Section 1848(b) of 

the Act (as amended by section 3111 of 

the ACA) specifies that the revised 

payment applies to two of the 

predecessor codes (CPT codes 76075 

and 76077) and ‘‘any succeeding codes,’’ 

which are, in this case, CPT codes 

77080 and 77082. 

Section 1848(b) (as amended by 

section 3111 of the ACA) revises the 

payment for CPT codes 77080 and 

77082 during CY 2010 and CY 2011. We 

have provided payment in CY 2010 

under the PFS for CPT codes 77080 and 

77082 at the specified rates. We note 

that the RVUs included in Addendum B 

to this proposed rule reflect the RVUs 

that result from application of this 

statutory provision and the proposed CY 

2011 conversion factor. Because the 

statute specifies a payment amount for 

these services as described previously, 

we imputed RVUs for CY 2011 to 

include in Addendum B that would 

provide the specified payment amount 

for these services when multiplied by 

the CY 2011 CF. Specifically, we 

divided the payment amount based on 

the statutory requirements by the CY 


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2011 CF for this proposed rule, and 

distributed the imputed total RVUs 

across the work, PE, and malpractice 

components proportionately to their CY 

2006 distribution. Therefore, these 

imputed RVUs for CPT codes 77080 and 

77082 are displayed in Addendum B to 

this proposed rule. 

J. Section 3114: Improved Access for 

Certified Nurse-Midwife Services 

Section 1833(a)(1)(K) of the Act (as 

amended by section 3114 of the ACA) 

increases the amount of Medicare 

payment made under the PFS for 

certified nurse-midwife (CNM) services. 

Currently, section 1833(a)(1)(K) of the 

Act specifies that the payment amount 

for CNM services is 80 percent of the 

lesser of the actual charge or 65 percent 

of the PFS amount. Under section 

1833(a)(1)(K) of the Act (as amended by 

section 3114 of the ACA), effective for 

services furnished on or after January 1, 

2011, Medicare payment for CNM 

services is increased to 100 percent of 

the PFS amount (or 80 percent of the 

actual charge if that is less). We are 

proposing to revise our regulations at 

§ 414.54 (Payment for certified nursemidwives’ services) accordingly to 

reflect the increased payment for CNM 

services effective for services furnished 

on or after January 1, 2011. 

Although CNMs are currently paid 

under Medicare Part B for their 

professional services, there is no 

mention of CNMs under the regulatory 

provision that lists the providers and 

suppliers of services to whom payment 

is made under the Medicare Part B 

program. Accordingly, we are proposing 

to make a technical revision to § 410.150 

(To whom payment is made) to specify 

that Medicare Part B pays CNMs for 

professional services in all settings, as 

well as services and supplies furnished 

incident to those services. 

CNMs are authorized under the 

statute to be paid directly for services 

that they are legally authorized to 

furnish under State law and that are of 

the type that would otherwise be 

covered if furnished by a physician or 

incident to a physician’s services. 

Additionally, there is no requirement 

under the CNM benefit for physician 

oversight or supervision. Accordingly, 

CNMs are authorized to personally 

furnish diagnostic tests that fall under 

their State scope of practice without 

regard to the levels of physician 

supervision required under the 

diagnostic tests benefit. Therefore, we 

are amending § 410.32(b)(2) (Exceptions 

to the levels of physician supervision 

required for diagnostic tests) to include 

CNMs who furnish diagnostic tests that 

fall within their State scope of practice. 

K. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in 

Certain Rural Areas 

Section 416 of the MMA established 

a reasonable cost payment for outpatient 

clinical diagnostic laboratory tests 

furnished by hospitals with fewer than 

50 beds that are located in qualified 

rural areas for cost reporting periods 

beginning during the 2-year period 

beginning on July 1, 2004. 

Section 105 of the Tax Relief and 

Health Care Act of 2006 (Pub. L. 109– 

432) (TRHCA) extended the 2-year 

period in section 416(b) of the MMA for 

an additional cost-reporting year. 

Section 107 of the Medicare, 

Medicaid, and SCHIP Extension Act of 

2007 (Pub. L. 110–173) (MMSEA) 

extended the time period for cost 

reporting periods beginning on July 1, 

2004, and ending on June 30, 2008. For 

some hospitals with cost reports that 

began as late as June 30, 2008, this 

extension affected services performed as 

late as June 29, 2009, because this was 

the date those cost reports would have 

closed. 

Section 3122 of the ACA reinstitutes 

reasonable cost payment for clinical 

diagnostic laboratory tests performed by 

hospitals with fewer than 50 beds that 

are located in qualified rural areas as 

part of their outpatient services for cost 

reporting periods beginning on or after 

July 1, 2010, through June 30, 2011. For 

some hospitals with cost reports that 

begin as late as June 30, 2011, this 

reinstitution of reasonable cost payment 

could affect services performed as late 

as June 29, 2012, because this is the date 

those cost reports will close. 

L. Section 3134: Misvalued Codes Under 

the Physician Fee Schedule 

Section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) 

requires the Secretary to periodically 

review and identify potentially 

misvalued codes and make appropriate 

adjustments to the relative values of 

those services identified as being 

potentially misvalued. Section 

1848(c)(2)(K) of the Act (as added by 

section 3134 of the ACA) further 

specifies that the Secretary may use 

existing processes to receive 

recommendations on the review and 

appropriate adjustment of potentially 

misvalued services, as well as conduct 

surveys or implement other data 

collection activities, studies, or other 

analyses as the Secretary determines to 

be appropriate to facilitate the review 

and appropriate adjustment of the 

relative values of potentially misvalued 

codes. Finally, section 1848(c)(2)(L) of 

the Act (as added by section 3134 of the 

ACA) provides that the Secretary shall 

establish a process to validate relative 

value units under the PFS. 

We note that over the past several 

years, we have been working with the 

AMA RUC to identify approaches to 

addressing the issue of potentially 

misvalued services. Our proposed CY 

2011 approaches to categories of 

potentially misvalued codes are 

discussed in section II.C. of this 

proposed rule. 

M. Section 3135: Modification of 

Equipment Utilization Factor for 

Advanced Imaging Services 

1. Adjustment in Practice Expense To 

Reflect Higher Presumed Utilization 

Section 1848(b)(4)(C) of the Act (as 

added by section 3135(a) of the ACA) 

adjusts the utilization rate for expensive 

diagnostic imaging equipment to 75 

percent in the methodology for 

establishing the PE of the associated 

procedures. As discussed further in 

section II.A.3.a. of this proposed rule, 

effective January 1, 2011, we are 

proposing to assign a 75 percent 

equipment utilization rate assumption 

to expensive diagnostic imaging 

equipment used in services described by 

the HCPCS codes displayed in Table 4. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61755), we 

finalized a policy to increase the 

utilization rate to 90 percent for 

expensive diagnostic equipment priced 

at more than $1 million (CT and MRI 

scanners), providing for a 4-year 

transition to the 90 percent utilization 

rate from the CY 2009 utilization rate of 

50 percent. Therefore, in CY 2010 we 

were transitioning to a 90 percent 

equipment utilization rate assumption, 

applying a 25/75 blend of the new and 

old PE RVUs, respectively, for the 

associated procedures. Section 

1848(b)(4)(C) of the Act (as added by 

section 3135(a) of the ACA) does not 

provide for any further transition and, 

therefore, we are assigning a 75 percent 

equipment utilization rate assumption 

to CT and MRI scanners, effective 

January 1, 2011. Under section 

1848(b)(4) of the Act (as amended by 

section 3135(a) of the ACA), this change 

in the equipment utilization rate 

assumption from CY 2010 to CY 2011 is 

not budget neutral under the PFS. The 

equipment utilization rate assumption 

remains at 50 percent for all other 

equipment included in the PFS PE 

methodology. 


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2. Adjustment in Technical Component 

‘‘Discount’’ on Single-Session Imaging to 

Consecutive Body Parts 

Section 1848(b)(4)(D) of the Act (as 

added by section 3135(a) of the ACA) 

increases the established PFS multiple 

procedure payment reduction (MPPR) 

for the technical component (TC) of 

certain single-session imaging services 

to consecutive body areas from 25 to 50 

percent, effective July 1, 2010, and 

section 1848(c)(2)(B)(v)(VI) of the Act 

(as added by section 3135(b) of the 

ACA) exempts this change from the PFS 

budget neutrality provision. This policy 

is discussed in detail in section II.C.4 of 

this proposed rule. 

Effective January 1, 2006, we adopted 

an MPPR of 25 percent for the technical 

component (TC) of certain diagnostic 

imaging procedures, applied to the 

second and subsequent services when 

more than one service in one of 11 

imaging families, defined by imaging 

modality and contiguous body area, is 

furnished in a single session (70 FR 

70261 through 70263). The established 

imaging MPPR applies to TC-only 

services and to the TC of global services. 

It does not apply to professional 

component (PC) services. Under this 

policy, full payment was made for the 

TC of the highest priced procedure, 

while payment was made at 75 percent 

of the TC for each additional procedure. 

As of July 1, 2010, and continuing in CY 

2011, payment is made at 50 percent of 

the TC for each additional procedure, 

consistent with the statutory provision. 

N. Section 3136: Revision for Payment 

for Power-Driven Wheelchairs 

1. Payment Rules for Power Wheelchairs 

Durable medical equipment (DME) is 

defined at section 1861(n) of the Act 

and includes wheelchairs necessary for 

use in the patient’s home. Section 

1861(n) provides that wheelchairs 

included in the definition of DME ‘‘may 

include a power-operated vehicle that 

may be appropriately used as a 

wheelchair, but only where the use of 

such a vehicle is determined to be 

necessary on the basis of the 

individual’s medical and physical 

condition.’’ The general Medicare 

payment rules for DME are set forth in 

section 1834(a) of the Act and 42 CFR 

part 414, subpart D of our regulations. 

Section 1834(a)(1) of the Act and 

§ 414.210(a) of our regulations establish 

that the Medicare payment for a DME 

item is generally equal to 80 percent of 

either the lower of the actual charge or 

the fee schedule amount for the item. 

The beneficiary coinsurance is generally 

equal to 20 percent of either the lower 

of the actual charge or the fee schedule 

amount for the item once the deductible 

is met. 

For Medicare payment purposes, 

power wheelchairs or power-driven 

wheelchairs are classified under various 

codes in the Healthcare Common 

Procedure Coding System (HCPCS) 

based on the level of performance and 

functional characteristics of each power 

wheelchair that accommodate the 

specific needs of patients. Power 

wheelchairs classified under 

performance Groups 1 through 3 are 

covered under Medicare for use in the 

patient’s home. Power wheelchair 

groups were established in 2006 with 

the release of the Power Mobility Device 

Coding Guidelines published by the 

Durable Medical Equipment Regional 

Carriers (DMERCs) currently called the 

Durable Medical Equipment Medicare 

Administrative Contractors (DME 

MACs). The DMEPOS quality standards 

define certain power wheelchairs falling 

as ‘‘complex, rehabilitative’’ power 

wheelchairs, and these ‘‘complex, 

rehabilitative’’ power wheelchairs are 

treated as a separate product category 

for the purpose of implementing the 

DMEPOS Competitive Bidding Program 

(CBP) mandated by section 1847(a) of 

the Act. In both the quality standards 

and the DMEPOS competitive bidding 

program, complex, rehabilitative power 

wheelchairs are defined or identified as 

power wheelchairs classified as Group 2 

power wheelchairs with power options 

that can accommodate rehabilitative 

features (for example, tilt in space) or 

Group 3 power wheelchairs. 

With the exception of power 

wheelchairs furnished during calendar 

year 1990, power wheelchairs have been 

paid under the capped rental category of 

DME since January 1, 1989. The 

payment rules for capped rental DME 

are provided at section 1834(a)(7) of the 

Act and § 414.229 of our regulations. 

Payment for these items is generally on 

a monthly rental basis, with rental 

payments capped at 13 months. After a 

13-month period of continuous use 

during which rental payments are made, 

the statute and regulations require that 

the supplier transfer title to the 

wheelchair to the beneficiary. In 

addition, effective for power 

wheelchairs furnished on or after 

January 1, 1***, section 1834(a)(7) of 

the Act, as amended by section 

4152(c)(2) (D) of the Omnibus Budget 

Reconciliation Act of 1990 (Pub. L. 101– 

508), mandates that the supplier of the 

power wheelchair offer the patient the 

option to purchase rather than rent the 

item. Since 1991, over 95 percent of 

Medicare beneficiaries have exercised 

this lump-sum purchase option for 

power wheelchairs. 

Consistent with payment for other 

DMEPOS items, § 414.210(f)(1) permits 

payment for replacement of capped 

rental DME if the item has been in 

continuous use for the equipment’s 

reasonable useful lifetime or is lost, 

stolen, or irreparably damaged. Section 

414.210(f)(1) states the reasonable useful 

lifetime for equipment is determined 

through program instructions. In the 

absence of CMS program instructions, 

the carrier may determine the 

reasonable useful lifetime for 

equipment, but in no case can it be less 

than 5 years. Computation is based on 

when the equipment is delivered to the 

beneficiary, not the age of the 

equipment. If the beneficiary elects to 

obtain a new capped rental item after 

the reasonable useful lifetime, a new 13- 

month rental payment period would 

begin for the new equipment in 

accordance with the requirements of 

§ 414.229. 

Section 1834(a)(7)(A) of the Act, 

§ 414.229(b) and (c) set forth the current 

fee schedule amounts for capped rental 

items. Pursuant to section 

1834(a)(7)(A)(i)(II) of the Act and 

§ 414.229(b), the current rental fee 

schedule amounts for months 1 thru 3 

of the 13-month capped rental period 

are calculated to pay 10 percent of the 

average of allowed purchase price for 

the item. The rental fee schedule 

amounts for months 4 thru 13 of the 13- 

month capped rental period are 

calculated to pay 7.5 percent of the 

average of allowed purchase price for 

the item. The purchase price is 

determined consistent with section 

1834(a)(8) of the Act and § 414.229(c) 

and § 414.220(e) and (f) and is updated 

by the covered item update, as required 

by section 1834(a)(14) of the Act and 

§ 414.229(d). The current purchase price 

amount for power wheelchairs acquired 

on a lump sum purchase basis is 100 

percent of the purchase price calculated 

for the item when rented, as discussed 

above. 

2. Revision of Payment Amounts for 

Power Wheelchairs 

Section 3136(a) of the ACA made 

several changes to section 1834(a)(7)(A) 

of the Act. Section 3136(a)(1) of the 

ACA amends section 1834(a)(7)(A) of 

the Act by adding a new subclause (III) 

to section 1834(a)(7)(A)(i) of the Act. 

Subclause (III) revises the capped rental 

fee schedule amounts for all power 

wheelchairs, modifying the current 

payment structure of 10 percent of the 

purchase price for months 1 thru 3 and 

7.5 percent of that purchase price for 

months 4 through 13 that was discussed 

above. The rental fee schedule amount 

for months 1 thru 3 of the 13-month 


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capped rental period for power 

wheelchairs is revised to 15 percent of 

the purchase price for the item. The 

rental fee schedule amounts for months 

4 thru 13 of the 13-month capped rental 

period for power wheelchairs is revised 

to 6 percent of the purchase price for the 

item. The statutory provision does not 

change the methodologies used to 

calculate and subsequently update of 

the purchase price of power 

wheelchairs. Therefore, the 

methodology described above for 

determining the purchase price amounts 

will continue to apply. 

Pursuant to section 3136(c) of the 

ACA, the changes made by section 

3136(a) of the ACA apply to powerdriven wheelchairs furnished on or after 

January 1, 2011. 

Furthermore, as discussed above, 

section 3136(c)(2) of the ACA states that 

the changes made by section 3136(a), 

including the new payment structure for 

power wheelchairs, do not apply to 

payment made for items and services 

furnished pursuant to contracts entered 

into under section 1847 of the Act for 

the DMEPOS CBP prior to January 1, 

2011 which applies to the 

implementation of the first round of the 

DMEPOS CBP. As a result, contract 

suppliers furnishing power wheelchairs 

in competitive bidding areas (CBA) 

pursuant to contracts entered into prior 

to January 1, 2011 as part of Round 1 of 

the DMEPOS CBP will continue to be 

paid based under the current regulations 

using 10 percent of the purchase price 

for months 1 through 3 and 7.5 percent 

for each of the remaining months. As a 

result, we are proposing to make 

changes to §§ 414.202, 414.229 and 

414.408 to reflect these statutory 

requirements. 

3. Elimination of Lump Sum Payment 

for Standard Power Wheelchairs 

Section 3136(a)(2) of the ACA further 

amends section 1834(a)(7)(A)(iii) by 

inserting the term ‘‘complex 

rehabilitative’’ before the term ‘‘powerdriven wheelchairs.’’ As a result, section 

1834(a)(7)(A)(iii) of the Act now extends 

the lump sum purchase option only to 

complex rehabilitative power 

wheelchairs. As discussed above, 

‘‘complex rehabilitative power 

wheelchairs are power wheelchairs that 

are classified as: (1) Group 2 power 

wheelchairs with power options that 

can accommodate rehabilitative features 

(for example, tilt in space), or (2) Group 

3 power wheelchairs. We consider all 

other power wheelchairs to be standard 

power wheelchairs. Therefore, we 

propose to interpret the language 

‘‘complex rehabilitative’’ in section 

1834(a)(7)(A) of the Act consistent with 

this longstanding classification. As a 

result, the changes made by section 

3136 to section 1834(a)(7)(A)(iii) 

eliminate the lump sum purchase 

option for standard power wheelchairs. 

Pursuant to section 3136(c) of the 

ACA, the changes made to section 

1834(a)(7)(A)(iii) of the Act apply to 

power-driven wheelchairs furnished on 

or after January 1, 2011. The lump sum 

purchase payment option will no longer 

extend to standard power driven 

wheelchairs furnished on or after 

January 1, 2011. 

Furthermore, section 3136(c)(2) of the 

ACA states that the changes made by 

section 3136(a), including the limitation 

of the lump sum purchase payment 

option to complex, rehabilitative power 

wheelchairs, do not apply to payment 

made for items and services furnished 

pursuant to contracts entered into under 

section 1847 of the Act for the DMEPOS 

CBP prior to January 1, 2011 pursuant 

to the implementation of the first round 

of the DMEPOS CBP. As a result, 

contract suppliers furnishing power 

wheelchairs in CBAs pursuant to 

contracts entered into prior to January 1, 

2011 as part of Round 1 of the DMEPOS 

CBP must continue to offer beneficiaries 

the lump sum purchase option for all 

power wheelchairs. 

We are proposing changes to 

§§ 414.229 and 414.408 to reflect our 

interpretation of these statutory 

requirements. 

O. Section 3139: Payment for Biosimilar 

Biological Products 

Section 3139 of the ACA amends 

section 1847A of the Act to provide for 

Medicare payment of biosimilar 

biological products using the average 

sale price (ASP) methodology. 

Section 1847A of the Act, as amended 

by the ACA, defines a biosimilar 

biological product as 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). The reference 

biological product for a biosimilar 

biological product is defined by the 

statute as the biological product 

licensed under such section 351 of the 

PHSA that is referred to in the 

application of the biosimilar biological 

product. 

The ACAct also amends section 

1847A of the Act to specify that the 

payment amount for a biosimilar 

biological product will be the sum of the 

following two amounts: the ASP of all 

NDCs assigned to the biosimilar 

biological drug product determined 

using the methodology in section 

1847A(b)(6) of the Act, and 6 percent of 

the payment amount determined using 

the methodology in section 1847A(b)(4) 

of the Act for the corresponding 

reference biological product. Sections 

7001 to 7003 of the ACA also 

established a licensing pathway for 

biosimilar biological products, and in 

accordance with the statute, the 

effective date for Medicare ASP 

statutory provisions is July 1, 2010. We 

are proposing conforming regulation 

text changes at § 414.902 and § 414.904 

and we welcome comments on these 

conforming changes. 

We anticipate that as biosimilar 

biological drug products are approved, 

we will receive ASP sales data through 

the ASP data submission process and 

publish national payment amounts in a 

manner that is consistent with our 

current approach to other drugs and 

biologicals that are paid under section 

1847A of the Act and set forth in 42 CFR 

part 414 subpart J. Until we have 

collected sufficient sales data, as 

reported by manufacturers, payment 

limits will be determined in accordance 

with the provisions in section 

1847A(c)(4) of the Act. If no 

manufacturer data is collected, prices 

will be determined by local contractors 

using any available pricing information, 

including provider invoices. More 

information about the ASP payment 

methodology and the data submission 

process may be found on the CMS Web 

site at http://www.cms.gov/ 

McrPartBDrugAvgSalesPrice/ 

01_overview.asp and in this rule, in the 

section VI.A.1. of this proposed rule, 

‘‘Carry Over’’ ASP. 

P. Section 3401: Revision of Certain 

Market Basket Updates and 

Incorporation of Productivity 

Improvements Into Market Basket 

Updates That Do Not Already 

Incorporate Such Improvements. 

1. ESRD Market Basket Discussion 

Section 3401(h) of the ACA amended 

section 1881(b)(14)(F) of the Act and 

directs the Secretary to annually 

increase payment amounts established 

under the ESRD market basket. Please 

see section VI.E. of this proposed rule 

for a detailed description of these 

provisions. 

2. Productivity Adjustment Regarding 

Ambulatory Surgical Center, 

Ambulance, Clinical Laboratory and 

DMEPOS Fee Schedules 

Section 3401 of the ACA requires that 

the update factor under certain payment 

systems be annually adjusted by 

changes in economy-wide productivity. 


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The year that the productivity 

adjustment is effective varies by 

payment system. Specifically, section 

3401 of the ACA requires that in CY 

2011 (and in subsequent years) update 

factors under the ambulatory surgical 

center (ASC) payment system, the 

ambulance fee schedule (AFS), and the 

clinical laboratory fee schedule (CLFS) 

be adjusted by changes in economywide productivity. Section 3401(a) 

amends section 1886(b)(3)(B) of the Act 

to add clause (xi)(II) which sets forth the 

definition of this productivity 

adjustment. The statute defines the 

productivity adjustment to be equal to 

the 10-year moving average of changes 

in annual economy-wide private 

nonfarm business multifactor 

productivity (MFP) (as projected by the 

Secretary for the 10-year period ending 

with the applicable fiscal year, year, 

cost reporting period, or other annual 

period) (the ‘‘MFP adjustment’’). Please 

see http://www.bls.gov/mfp for more 

information on MFP. This is the link to 

the Bureau of Labor Statistics (BLS) 

historical published data on the 

measure of MFP. 

The projection of MFP will be 

produced by an economic forecasting 

firm, currently HIS Global Insight (IGI). 

In order to generate a forecast of MFP, 

IGI would replicate the MFP measure 

calculated by the BLS using a series of 

proxy variables derived from the IGI US 

Macro-economic models. These models 

take into account a very broad range of 

factors that influence the total US 

economy. IGI forecasts the underlying 

proxy components such as Gross 

Domestic Product (GDP), capital, and 

labor inputs required to estimate MFP, 

and will combine those projections 

according to the BLS methodology. For 

more information on the BLS measure of 

MFP, including technical notes, visit: 

http://www.bls.gov/mfp/. Table 34 lists 

the MFP component series employed by 

the BLS and the corresponding concepts 

estimated by IGI. 

TABLE 34—MULTIFACTOR PRODUCTIVITY COMPONENT SERIES EMPLOYED BY THE BUREAU OF LABOR STATISTICS AND

HIS GLOBAL INSIGHT

BLS Series IGI Series 

Real value-added output, constant 2000 dollars ..................................... Real gross non-farm value added output, chained 2005 dollar billions. 

Private non-farm business sector labor input; 2000=100.00 ................... Hours of all persons-private nonfarm business sector; 1992=1.0. 

Aggregate capital inputs; 2000=100.00 .................................................... Real effective capital stock used for full employment GDP, chained 

2005 dollar billions. 

To identify the appropriate proxy 

variables, IGI compared the historical 

growth rates of the BLS and IGI 

components listed above and found they 

were consistent across all series and 

therefore suitable proxies for calculating 

MFP. IGI would use the growth rates of 

the forecasted IGI concepts to project 

BLS’ components of MFP, and derive 

the MFP adjustment that would be used 

under section 3401 to adjust the updates 

for the ASC payment system, the AFS, 

and the CLFS. 

As discussed below, for each of these 

payment systems, the update factor is 

the percentage increase (or percentage 

decrease for the CLFS) in the consumer 

price index for all urban consumers 

(CPI–U) (referred to as the ‘‘CPI–U 

update factor’’). 

The statute for all three payment 

systems generally states that the 

Secretary shall reduce the CPI–U 

adjustment by the MFP adjustment. In 

order to calculate the MFP-adjusted 

updates to these payment systems, the 

MFP percentage adjustment would be 

subtracted from the CPI–U update factor 

(for the most recent 12-month period 

beginning with July 1 of the previous 

year and ending with June 30 of the 

current year). For example, if the update 

factor (CPI–U) is 4.0 percent, and the 

projected MFP is 1.3 percent, the MFP– 

Adjusted update factor (or MFP– 

Adjusted CPI–U for these payment 

systems) would be a 2.7 percent 

increase. 

The period on which the CPI–U is 

calculated is for the most recent 12- 

month period beginning with July 1 of 

the previous year and ending with June 

30 of the current year, and we propose 

that the end of the 10-year moving 

average of changes in the MFP should 

coincide with the end of this CPI–U 

timeframe. Since the CPI–U update 

factor is reduced by the MFP adjustment 

to determine the annual update for these 

payment systems, we believe it is 

appropriate for the numbers associated 

with both parts of the calculation to be 

projected as of the same end date (in 

this case, the end date of the time frame 

for both estimates would be June 30th 

of the year preceding the update year 

itself). In this way, changes in market 

conditions are aligned. We will round 

the final annual adjustment to the onetenth of one percentage point level up 

or down as applicable according to 

conventional rounding rules (that is, if 

the number we are rounding is followed 

by 5, 6, 7, 8, or 9, we will round the 

number up; if the number we are 

rounding is followed by 0, 1, 2, 3, or 4, 

we will round the number down). 

Below, we provide more information 

on the statutory requirements and 

proposals for each of the three payment 

systems. The statutory requirements for 

the ASC payment system will also be 

addressed in the CY 2011 OPPS/ASC 

proposed rule. We note that, in this 

proposed rule, we are describing the 

legislative provision and outlining the 

methodology we propose to use to 

calculate and apply the MFP adjustment 

to determine the annual updates for 

ASCs, the AFS, and the CLFS for CY 

2011 and each subsequent year. We will 

set forth the final MFP adjustment for 

CY 2011 in the CY 2011 PFS final rule. 

Once we finalize the methodology for 

determining and applying the MFP 

adjustment to the CPI–U update factors 

for these payment systems, for 

subsequent calendar years, as we have 

done in the past, we intend to notify the 

general public of the annual update to 

the AFS and CLFS via CMS instruction 

and on the CMS Web site. These 

notifications would set forth both the 

CPI–U percentage increase or decrease 

and the MFP adjustment for the 

applicable year. For ASCs, for 

subsequent calendar years, as we have 

done in the past, we would continue to 

notify the general public of the annual 

update to the ASC payment amount via 

OPPS/ASC rulemaking. 

We welcome comments on these 

proposals. 

a. Ambulatory Surgical Centers (ASCs) 

Section 1833(i)(2)(C) of the Act 

requires that, if the Secretary has not 

updated the ASC payment amounts in a 

calendar year, the payment amounts 

shall be increased by the percentage 

increase in the CPI–U as estimated by 

the Secretary for the 12-month period 

ending with the midpoint of the year 

involved. Because the Secretary does 

update the ASC payment amounts 

annually, we adopted a policy, which 

we codified at § 416.171(a)(2)(ii), to 

update the ASC conversion factor using 

the CPI–U for CY 2010 and subsequent 

calendar years. Therefore, the annual 


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update to the ASC payment system is 

the CPI–U (referred to as the CPI–U 

update factor). Section 3401(k) of the 

ACA amends section 1833(i)(2)(D) of the 

Act by adding a new clause (v) which 

requires that ‘‘any annual update under 

[the ASC payment] system for the year 

* * * shall be reduced by the 

productivity adjustment described in 

section 1886(b)(3)(B)(xi)(II)’’ (which we 

refer to as the MFP adjustment) effective 

with the calendar year beginning 

January 1, 2011. Section 3401(k) of the 

ACA states that application of the MFP 

adjustment to the ASC payment system 

may result in the update to the ASC 

payment system being less than zero for 

a year and may result in payment rates 

under the ASC payment system for a 

year being less than such payment rates 

for the preceding year. 

In accordance with section 

1833(i)(2)(C)(i) of the Act, before 

applying the MFP adjustment, the 

Secretary first determines the 

‘‘percentage increase’’ in the CPI–U, 

which we interpret cannot be a negative 

number. Thus, in the instance where the 

percentage change in the CPI–U for a 

year is negative, we propose to hold the 

CPI–U update factor for the ASC 

payment system to zero. Section 

1833(i)(2)(D)(v) of the Act, as added by 

section 3401(k) of the ACA, then 

requires that the Secretary reduce the 

CPI–U update factor (which would be 

held to zero if the CPI–U percentage 

change is negative) by the MFP 

adjustment, and states that application 

of the MFP adjustment may reduce this 

percentage change below zero. If the 

application of the MFP adjustment to 

the CPI–U percentage increase would 

result in a MFP-adjusted CPI–U update 

factor that is less than zero, then the 

annual update to the ASC payment rates 

would be negative and payments would 

decrease relative to the prior year. 

Table 35 provides illustrative 

examples of how the MFP would be 

applied to the ASC payment system. 

These examples show the implication of 

a positive CPI–U update factor with a 

smaller MFP, a positive CPI–U update 

factor with a large MFP, and a CPI–U 

update factor of 0. We discuss the 

application of the MFP to the CPI–U 

update factor for the ASC payment 

system under the OPPS/ASC CY 2001 

proposed rule (1504–P), which will be 

published around the same time as this 

proposed rule. Comments on the 

specific mathematical calculation of the 

MFP should be made to this PFS 

proposed rule. Comments on the 

application of the MFP to the CPI–U 

update factor under the ASC payment 

system should be made to the OPPS/ 

ASC CY 2011 proposed rule (1504–P). 

TABLE 35—MULTIFACTOR PRODUCTIVITY ADJUSTED PAYMENT UPDATE: 

ILLUSTRATIVE EXAMPLE

CPI–U 

(percent) 

MFP 

(percent) 

MFP–Adjusted 

CPI–U update 

factor 

(percent) 

4.0 1.3 2 .7 

4.0 4.7 ¥0 .7 

0.0 0.2 ¥0 .2 

b. Ambulance Fee Schedule (AFS) 

In accordance with section 

1834(l)(3)(B) of the Act, the AFS is 

required to be increased each year by 

the percentage increase in the CPI–U 

(U.S. city average) for the 12-month 

period ending with June of the previous 

year. We refer to this update as the 

Ambulance Inflation Factor (AIF). 

Section 3401(j) of the ACA amends 

section 1834(l)(3) of the Act to add a 

new subparagraph (C) which states that, 

for CY 2011 and each subsequent year, 

after determining the percentage 

increase under section 1834(l)(3)(B) 

(that is, the CPI–U percentage increase, 

or AIF), the Secretary shall reduce such 

percentage increase by the MFP 

adjustment described in section 

1886(b)(3)(B)(xi)(II) (as discussed 

above). Section 3401(j) further amends 

section 1834(l)(3) to state that the 

application of subparagraph (C) (that is, 

the reduction of the CPI–U percentage 

increase by the MFP adjustment) may 

result in that percentage increase being 

less than zero for a year, and may result 

in payment rates for a year being less 

than such payment rates for the 

preceding year. 

In accordance with section 1834(l)(3) 

of the Act as amended by section 3401(j) 

of the ACA, before applying the MFP 

adjustment, the Secretary first 

determines the ‘‘percentage increase’’ in 

the CPI–U, which we interpret cannot 

be a negative number. Thus, in the 

instance where the percentage change in 

the CPI–U for a year is negative, we 

propose to hold the AIF to zero. The 

statute then requires that the Secretary 

reduce the CPI–U percentage increase 

(which would be held to zero if the CPI– 

U percentage change is negative) by the 

MFP adjustment, and states that 

application of the MFP adjustment may 

reduce this percentage increase below 

zero. If the application of the MFP 

adjustment to the CPI–U percentage 

increase would result in an MFPadjusted AIF that is less than zero, then 

the annual update to the AFS would be 

negative and payments would decrease 

relative to the prior year. 

Table 36 provides illustrative 

examples of how the MFP would be 

applied to the AFS. Finally, we propose 

to revise § 414.610(f) to require that the 

AIF be reduced by the MFP adjustment 

as required by the statute in determining 

the annual update under the ambulance 

fee schedule for CY 2011 and each 

subsequent year, and to revise § 414.620 

to state that changes in payment rates 

resulting from the incorporation of the 

AIF and the MFP adjustment will be 

announced by CMS by instruction and 

on the CMS Web site, as we discussed 

above. 

TABLE 36—EXAMPLES OF THE APPLICATION OF THE MULTIFACTOR PRODUCTIVITY ADJUSTMENT TO THE AMBULANCE FEE

SCHEDULE

A B C D 

CPI–UA AIF MFP Final update rounded 

2.0% 2.0% 1.3% 0.7% 

0.0% 0.0% 1.3% ¥1.3% 

¥2.0% 0.0% 1.3% ¥1.3% 

1.0% 1.0% 1.3% ¥0.3% 

c. Clinical Laboratory Fee Schedule 

Section 1833(h)(2)(A)(i) of the Act, as 

amended by section 3401(l) of the ACA, 

requires the Secretary to annually adjust 

the CLFS ‘‘by a percentage increase or 

decrease equal to the percentage 

increase or decrease in the Consumer 

Price Index for All Urban Consumers 

(United States city average minus, for 

each of the years 2009 through 2010, 0.5 

percentage points.’’ Therefore, the 


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adjustment to the fee schedule can be an 

increase or a decrease. 

Section 3401(l) of the ACA also adds 

new clause (iv) that applies in CY 2011 

and each subsequent year. This clause 

requires the Secretary to reduce the 

adjustment in clause (i): (1) By the MFP 

adjustment described in section 

1886(b)(3)(B)(xi)(II) for 2011 and each 

subsequent year and (2) by 1.75 

percentage points for each of 2011 

through 2015 (the ‘‘percentage 

adjustment’’). However, section 3401(l) 

of the ACA states that the MFP 

adjustment will not apply in a year 

where the adjustment to the fee 

schedule determined under clause (i) is 

zero or a percentage decrease for a year. 

Further, the application of the MFP 

adjustment may not result in an 

adjustment to the fee schedule under 

clause (i) of less than zero for a year. 

Therefore, we are proposing to apply 

the MFP adjustment as follows: 

• If the CPI–U update factor is 

positive, it would be reduced by the 

MFP. However, if application of the 

MFP would result in a negative update, 

the update would be held to zero. 

• If the CPI–U update factor is zero or 

negative, the MFP adjustment would not 

be applied. 

Section 3401(l) of the ACA also states 

that the application of the percentage 

adjustment may result in an adjustment 

to the fee schedule under clause (i) 

being less than zero for a year and may 

result in payment rates for a year being 

less than such payment rates for the 

preceding year. Therefore, we are 

proposing to apply the percentage 

reduction of 1.75 percentage points to 

any adjustment to the fee schedule 

under the CLFS as directed by Section 

3401(l) of the ACA. 

Table 37 provides illustrative 

examples of how these adjustments 

would be applied to fees under the 

CLFS. 

TABLE 37—EXAMPLES OF THE APPLICATION OF THE MULTIFACTOR PRODUCTIVITY ADJUSTMENT TO THE CLINICAL LAB FEE

SCHEDULE

CPI–U MFP 

Productivity adjusted 

update (¥1.75%) 

Percentage point reduction 

Resultant change to CLFS 

Greater of 0.0% or 

(Col.A)¥(Col.B) 

Col.C¥Col.D 

A B C D E 

2.0% 1.3% 0.7% ¥1.75% ¥1.05% 

0.0% N/A 0.0% ¥1.75% ¥1.75% 

¥2.0% N/A 0.0% ¥1.75% ¥1.75% 

d. DMEPOS Fee Schedule 

Sections 1834(a)(14), 1834(h)(4), and 

1842(s)(1) of the Act mandate annual 

updates to the fee schedule amounts 

established in accordance with these 

respective sections for covered items of 

durable medical equipment defined in 

section 1834(a)(13) of the Act, prosthetic 

devices, orthotics, and prosthetics 

defined in section 1834(h)(4)(B) and (C) 

of the Act, and parenteral and enteral 

nutrients, equipment, and supplies 

described in section 1842(s)(2)(D) of the 

Act. The annual updates for 2011 for 

these sections are based on the 

percentage increase in the CPI–U for the 

12-month period ending with June 2010. 

The annual updates for years 

subsequent to 2011 are based on the 

percentage increase in the CPI–U for the 

12-month period ending with June of 

the previous year (that is, June 2011 for 

2012, June 2011 for 2013, etc.). Since 

1990 for durable medical equipment, 

prosthetic devices, orthotics, and 

prosthetics and 2003 for parenteral and 

enteral nutrients, equipment, and 

supplies, these annual fee schedule 

updates have been implemented on an 

annual basis through program 

instructions. 

Section 3401(m) of the ACA amends 

section 1834(a)(14) of the Act to add a 

new subparagraph (L) which provides 

that, for CY 2011 and each subsequent 

year, the fee schedule update factor 

based on the CPI–U for the 12-month 

period ending with June of the previous 

year is to be reduced by the MFP 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act (as 

discussed above). Section 3401(m) of 

the ACA further amends section 

1834(a)(14) of the Act to state that the 

application of subparagraph (L) (that is, 

the reduction of the CPI–U percentage 

increase by the MFP adjustment) may 

result in that percentage increase being 

less than zero for a year, and may result 

in payment rates for a year being less 

than such payment rates for the 

preceding year. 

Section 3401(n) of ACA amends 

section 1834(h)(4)(A) of the Act to add 

a new clause (xi) which provides that, 

for CY 2011 and each subsequent year, 

the fee schedule update factor based on 

the CPI–U for the 12-month period 

ending with June of the previous year is 

to be reduced by the MFP adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act (as discussed above). Section 

3401(n) of the ACA further amends 

section 1834(h)(4) of the Act to state that 

the application of subparagraph (A)(xi) 

(that is, the reduction of the CPI–U 

percentage increase by the MFP 

adjustment) may result in that 

percentage increase being less than zero 

for a year, and may result in payment 

rates for a year being less than such 

payment rates for the preceding year. 

Section 3401(o) of ACA amends 

section 1842(s)(1) of the Act to add a 

new subparagraph (B) and clause (ii) 

which provides that, for CY 2011 and 

each subsequent year, the fee schedule 

update factor based on the CPI–U for the 

12-month period ending with June of 

the previous year is to be reduced by the 

MFP adjustment described in section 

1886(b)(3)(B)(xi)(II) (as discussed 

above). Section 3401(o) further amends 

section 1842(s)(1) to state that the 

application of subparagraph (B)(ii) (that 

is, the reduction of the CPI–U 

percentage increase by the MFP 

adjustment) may result in that 

percentage increase being less than zero 

for a year, and may result in payment 

rates for a year being less than such 

payment rates for the preceding year. 

The MFP adjustments to the CPI–U 

percentage increases used in calculating 

the fee schedule adjustment factors for 

these DMEPOS items and services as 

mandated by sections 3401(m), (n), and 

(o) of ACA are simple mathematical 

calculations and are ministerial in 

nature. Therefore, we plan to implement 

these adjustments for 2011 and 

subsequent years as part of the annual 

program instructions related to the 

DMEPOS fees schedule updates. 


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Q. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

1. Background 

a. Medicare Coverage of Preventive 

Physical Examinations and Routine 

Checkups 

Section 1862(a)(7) of the Act 

explicitly prohibits Medicare payment 

for routine physical checkups with 

certain exceptions. One exception is for 

the Initial Preventive Physical Exam 

(also referred to as the ‘‘Welcome to 

Medicare’’ exam) established for new 

beneficiaries effective for services 

furnished on or after January 1, 2005. 

Section 4103 of the ACA has provided 

another exception to section 1862(a)(7). 

Congress has expanded Medicare 

coverage under part B to include an 

Annual Wellness Visit Providing 

Personalized Prevention Plan Services 

(hereinafter referred to as the annual 

wellness visit) in sections 1861(s)(2)(FF) 

and 1861(hhh) of the Act. This 

expanded benefit will be effective on 

January 1, 2011. Preventive care has 

become an increasing focus of the 

Medicare program. For instance, section 

101 of the MIPPA expanded Medicare’s 

authority to establish coverage for 

preventive services that meet specified 

criteria. Among other things, the annual 

wellness visit will encourage 

beneficiaries to obtain the preventive 

services already covered by Medicare, 

and that are appropriate for each 

individual beneficiary. 

b. Requirements for Coverage of an 

Annual Wellness Visit 

Section 4103 of the ACA provides for 

coverage of an annual wellness visit, 

which includes and/or takes into 

account a health risk assessment (HRA), 

and creates a personalized prevention 

plan for beneficiaries, subject to certain 

eligibility and other limitations. Section 

4103 of the ACA also requires the 

identification of elements that must be 

provided to a beneficiary as part of the 

first visit for personalized prevention 

plan services and requires the 

establishment of a yearly schedule for 

appropriate provision of such elements 

thereafter. 

The Affordable Care Act specifies 

elements that may be included in a 

personalized prevention plan, including 

establishment of, or update to, the 

individual’s medical and family history, 

a list of the individual’s current 

providers and suppliers and 

medications prescribed for the 

individual; measurement of height, 

weight, body-mass index (BMI) or waist 

circumference, and blood pressure; 

detection of any cognitive impairment; 

establishment or update of an 

appropriate screening schedule for the 

next 5 to 10 years; establishment or 

update of a list of risk factors and 

conditions (including any mental health 

conditions) for which interventions are 

recommended or underway; and 

furnishing of personalized health advice 

and referral, as appropriate, to health 

education or preventive counseling 

services or programs. The Affordable 

Care Act also permits the Secretary to 

add other elements to the annual 

wellness visit determined to be 

appropriate. 

2. Proposed Revisions 

a. Proposed Revisions to § 411.15, 

Particular Services Excluded From 

Coverage 

To conform the regulations to the 

statutory requirements of the ACA, we 

are proposing to revise § 411.15 by 

specifying an exception to the routine 

physical checkups exclusion from 

coverage in § 411.15(a)(1) and modifying 

§ 411.15(k)(15). We would add a 

provision to permit coverage of annual 

wellness visits that meet the eligibility 

limitation and the conditions for 

coverage we are specifying in § 410.15 

(Annual Wellness Visit Providing 

Personalized Prevention Plan Services). 

Coverage of the annual wellness visit is 

furnished under Medicare Part B only. 

As provided in the statute, this new 

coverage allows payment for an annual 

wellness visit if provided after January 

1, 2011 for an individual who is no 

longer within 12 months after the 

effective date of his or her first Medicare 

Part B coverage period, and has not 

received either an IPPE or an annual 

wellness visit within the past 12 

months. 

b. Proposed Revisions to Part 410, 

Subpart B—Medical and Other Health 

Services 

We propose to add § 410.15(a), 

Condition for Coverage of Annual 

Wellness Visits Providing Personalized 

Prevention Plan Services, and 

§ 410.15(b), Limitation on Coverage of 

Annual Wellness Visits Providing 

Personalized Prevention Plan Services, 

to codify the coverage of the annual 

wellness visit providing personalized 

prevention plan services. 

We are proposing to define several 

terms in § 410.15. These include the 

following terms: (1) Detection of any 

cognitive impairment; (2) Review of the 

individual’s functional ability and level 

of safety; (3) Health professional; (4) 

Establishment of, or update to the 

individual’s medical and family history; 

(5) Eligible beneficiary; (6) First annual 

wellness visit providing personalized 

prevention plan services; and (7) 

Subsequent annual wellness visit 

providing personalized prevention plan 

services. 

Further, the ACA allows the addition 

of any other element determined 

appropriate by the Secretary for 

inclusion in an annual wellness visit. 

We reviewed the relevant medical 

literature, current clinical practice 

guidelines, and the recommendations of 

the United States Preventive Services 

Task Force (USPSTF). Pursuant to that 

review, we propose to add depression 

screening and functional status 

screening as elements of the first annual 

wellness visit only. In their December 

2009 Recommendation Statement, the 

U.S. Preventive Services Task Force 

(USPSTF) recommends screening adults 

for depression when staff-assisted 

depression care supports are in place to 

assure accurate diagnosis, effective 

treatment and follow-up (Grade: B 

recommendation). That is, the USPSTF 

recommends the service; and there is 

high certainty that the net benefit is 

moderate or there is moderate certainty 

that the net benefit is moderate to 

substantial. 

The USPSTF is currently updating its 

1996 recommendation regarding 

screening for hearing impairment in 

older adults as well as its 

recommendation on falls in the elderly. 

Until those recommendations can be 

published, functional status screening 

(including assessment of hearing 

impairment, ability to successfully 

perform activities of daily living, fall 

risk and home safety) appears 

supportable by evidence only for the 

first annual wellness visit. 

We also are proposing that the 

definition of the term ‘‘Establishment of, 

or an update to the individual’s medical 

and family history’’ include more than a 

list of all of an individual’s prescribed 

medications as provided in the statute, 

but also supplements such as vitamins 

and calcium that an individual may use 

or be exposed to. Supplements such as 

these are commonly used by many 

beneficiaries and the medical literature 

supports that their use be closely 

monitored by health professionals 

because they can interact with 

prescribed medications and may result 

in unintended medical problems in 

individual cases. The statute expressly 

permits the Secretary to add other 

elements such as this to the annual 

wellness visits. 

(1) Definitions 

We are proposing to add the following 

definitions to § 410.15: 


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• Detection of any cognitive 

impairment, for purposes of this section, 

means assessment of an individual’s 

cognitive function by direct observation, 

with due consideration of information 

obtained by way of patient report, 

concerns raised by family members, 

friends, caretakers, or others. 

• Review of the individual’s 

functional ability and level of safety, for 

purposes of this section includes, at a 

minimum, assessment of the following 

topics: 

++ Hearing impairment; 

++ Ability to successfully perform 

activities of daily living; 

++ Fall risk; 

++ Home safety. 

• Health professional, for purposes of 

this section means: 

++ A physician who is a doctor of 

medicine or osteopathy (as defined in 

section 1861(r)(1) of the Act); or 

++ A practitioner as described in clause 

(i) of section 1842(b)(18)(C) of the Act, 

that is, a physician assistant, nurse 

practitioner, or clinical nurse 

specialist (as defined in section 

1861(aa)(5) of the Social Security 

Act); or 

++ A medical professional (including a 

health educator, registered dietitian, 

or nutritionist) or a team of medical 

professionals, who are working under 

the supervision of a physician as 

defined in this definition. 

• Establishment of, or an update to 

the individual’s medical and family 

history, for purposes of this section, 

means at a minimum the collection and 

documentation of the following: 

++ Past medical and surgical history, 

including experiences with illnesses, 

hospital stays, operations, allergies, 

injuries, and treatments. 

++ Use or exposure to medications and 

supplements, including calcium and 

vitamins. 

++ Medical events experienced by the 

beneficiary’s parents and any siblings 

and children, including diseases that 

may be hereditary or place the 

individual at increased risk. 

• Eligible beneficiary, for purposes of 

this section, means an individual who is 

no longer within 12 months after the 

effective date of his or her first Medicare 

Part B coverage period, and has not 

received either an initial preventive 

physical examination or an annual 

wellness visit providing a personalized 

prevention plan within the past 12 

months. 

(2) Requirements of the First Visit for 

Personalized Prevention Plan Services 

We are proposing that the first annual 

wellness visit for purposes of this 

benefit include the following: 

• Establishment of the individual’s 

medical and family history; 

• Establishment of a list of current 

providers and suppliers that are 

regularly involved in providing medical 

care to the individual; 

• Measurement of the individual’s 

height, weight, body mass index (or 

waist circumference, if appropriate), 

blood pressure, and other routine 

measurements as deemed appropriate, 

based on the individual’s medical and 

family history; 

• Detection of any cognitive 

impairment that the individual may 

have; 

• Review of the individual’s potential 

(risk factors) for depression, including 

current or past experiences with 

depression or other mood disorders, 

based on the use of an appropriate 

screening instrument for persons 

without a current diagnosis of 

depression, which the health 

professional as defined in this section 

may select from various available 

screening questions or standardized 

questionnaires designed for this purpose 

and recognized by national professional 

medical organizations; 

• Review of the individual’s 

functional ability and level of safety, 

based on direct observation or the use 

of appropriate screening questions or a 

screening questionnaire, which the 

health professional as defined in this 

section may select from various 

available screening questions or 

standardized questionnaires designed 

for this purpose and recognized by 

national professional medical 

organizations; 

• Establishment of the following: 

++ A written screening schedule, such 

as a checklist, for the next 5 to 10 

years as appropriate, based on 

recommendations of the USPSTF and 

the Advisory Committee on 

Immunization Practices, and the 

individual’s health status, screening 

history, and age-appropriate 

preventive services covered by 

Medicare; and 

++ A list of risk factors and conditions 

for which primary, secondary or 

tertiary interventions are 

recommended or are underway, 

including any mental health 

conditions or any such risk factors or 

conditions that have been identified 

through an initial preventive physical 

examination (as described under 

§ 410.16), and a list of treatment 

options and their associated risks and 

benefits; 

• Furnishing of personalized health 

advice and a referral, as appropriate, to 

health education or preventive 

counseling services or programs aimed 

at reducing identified risk factors and 

improving self management, or 

community-based lifestyle interventions 

to reduce health risks and promote selfmanagement and wellness, including 

weight loss, physical activity, smoking 

cessation, fall prevention, and nutrition; 

and 

• Any other element determined 

appropriate by the Secretary through the 

National Coverage Determination 

process. 

(3) Requirements of Subsequent Visits 

for Personalized Prevention Plan 

Services 

We are proposing that subsequent 

annual wellness visits providing 

personalized prevention plan services 

for purposes of this benefit include the 

following: 

• An update of the individual’s 

medical and family history; 

• An update of the list of current 

providers and suppliers that are 

regularly involved in providing medical 

care to the individual, as that list was 

developed for the first annual wellness 

visit providing personalized prevention 

plan services; 

• Measurement of an individual’s 

weight, blood pressure, and other 

routine measurements as deemed 

appropriate, based on the individual’s 

medical and family history; 

• Detection of any cognitive 

impairment, as that term is defined in 

this section, that the individual may 

have; 

• An update to the following: 

++ The written screening schedule for 

the individual as that schedule was 

developed at the first annual wellness 

visit providing personalized 

prevention plan services; and 

++ The list of risk factors and 

conditions for which primary, 

secondary or tertiary interventions are 

recommended or are underway for the 

individual as that list was developed 

at the first annual wellness visit 

providing personalized prevention 

plan services; 

• Furnishing of personalized health 

advice to the individual and a referral, 

as appropriate, to health education or 

preventive counseling services or 

programs as that advice and related 

services are defined in paragraph (a) of 

this section; 

• Any other element determined 

appropriate by the Secretary through the 

National Coverage Determination 

process. Body-mass index (BMI) should 

be calculated at the first annual 

wellness visit and may be recalculated 

at subsequent visits, if indicated. Given 


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the general stability of adult height, we 

would not expect the BMI to 

meaningfully change in the absence of 

significant weight change. We have not 

in the definition of the subsequent 

annual visit required measurement of 

the individual’s height. 

We are proposing to add two distinct 

elements to the definition of the first 

annual wellness visit only: depression 

screening and functional status 

assessment. Our review of the medical 

literature and the USPSTF 

recommendations indicates that the 

optimum frequency for those services is 

unknown. Thus we believe it would be 

premature and beyond the current 

evidence to require that they be 

included in the definition of subsequent 

visits, but they may be performed at 

these visits, if indicated. 

In addition, to facilitate future 

consideration of coverage of additional 

elements in the definitions of the first 

and subsequent annual wellness visits 

in § 410.15(a), we are proposing that the 

determination of other required 

elements for those purposes will be 

made through the National Coverage 

Determination (NCD) process. The NCD 

process is evidence based, transparent 

and furnishes the opportunity for public 

comment, and is described in sections 

1862(l) of the Act. 

While section 4103 of the ACA 

ultimately requires that an HRA be 

included in the new annual wellness 

visit benefit beginning January 1, 2011, 

the HRA guidelines (with standards for 

interactive telephonic and web-based 

HRAs) and the model HRA tool also 

required by section 4103 are not yet 

available. As a result, we have not 

included requirements related to the 

HRA in this proposed rule. When HRA 

guidelines and standards have been 

established, and a model HRA 

instrument is available and determined 

by the Secretary to be appropriate for 

the Medicare population, we will revise 

these regulations to include the HRA as 

an element in the definition of the 

annual wellness visit. 

We are requesting public comments 

on the components of both the first and 

subsequent annual wellness visits, as 

well as the definitions of related terms 

in the document. We ask that 

commenters making specific 

recommendations on this or any related 

issue provide documentation from the 

medical literature, current clinical 

practice guidelines, or the USPSTF or 

Advisory Committee on Immunization 

Practices recommendations. 

3. Payment for the Annual Wellness 

Visit Providing Personalized Prevention 

Plan Services (PPPS) 

Section 4103 of the ACA created a 

new benefit for the ‘‘annual wellness 

visit’’ with personalized prevention plan 

services. The Affordable Care Act 

amends section 1861(s)(2) of the Act by 

adding a new subsection (FF) to provide 

for coverage of the annual wellness visit 

beginning January 1, 2011. Section 4103 

also adds new subsection (hhh) to 

section 1861 of the Act to define 

‘‘personalized prevention plan services’’ 

and to specify who may furnish these 

services. Finally, section 4103 amends 

section 1848(j)(3) of the Act to provide 

for payment of annual wellness visits 

under the PFS, and specifically 

excludes the annual wellness visit from 

the hospital outpatient prospective 

payment system (OPPS). Therefore, a 

single payment under the PFS will be 

made when an annual wellness visit is 

furnished by a physician, physician 

assistant, nurse practitioner, or clinical 

nurse specialist, or by a medical 

professional or team of medical 

professionals, as determined 

appropriate by the Secretary, under the 

supervision of a physician. 

To allow for Medicare reporting and 

payment of the annual wellness visit, 

we are proposing to create two new 

HCPCS G-codes for reporting the first 

wellness visit and creation of the PPPS 

and the subsequent visits available to 

the beneficiary every 12 months. 

Specifically, we are proposing to 

establish the following two new HCPCS 

codes for CY 2011: GXXXA (Annual 

wellness visit; includes a personalized 

prevention plan of service (PPPS), first 

visit) and GXXXB (Annual wellness 

visit; includes a personalized 

prevention plan of service (PPPS), 

subsequent visit). A beneficiary’s first 

annual wellness visit to a practitioner 

would be reported to Medicare under 

HCPCS code GXXXA, even if the 

beneficiary had previously received an 

initial preventive physical examination 

(IPPE) that was covered by Medicare. 

Beneficiaries, in their first 12 months of 

Part B coverage, will continue to be 

eligible only for an IPPE. After the first 

12 months of Part B coverage, on and 

after January 1, 2011, beneficiaries will 

be eligible for an annual wellness visit 

described by HCPCS code GXXXA or 

GXXXB, provided that the beneficiary 

has not received an IPPE or annual 

wellness visit within the preceding 12- 

month period. 

A beneficiary would be eligible for 

one initial annual wellness visit covered 

by Medicare that must include all of the 

required elements that we are proposing 

for the first visit as described in the 

preceding section. All other annual 

wellness visits that would include the 

required elements for those visits would 

be reported as subsequent visits, even if 

a different practitioner furnished the 

subsequent annual wellness visit. We 

would expect there to be continuity and 

communication among the practitioners 

caring for beneficiaries over time with 

respect to the PPPS, and that would 

include the case where a different 

practitioner furnishing a subsequent 

annual wellness visit would update the 

information in the patient’s medical 

record based on the patient’s interval 

history since the previous annual 

wellness visit. 

The first wellness visit described by 

HCPCS code GXXXA is similar to the 

IPPE that is currently reported with 

HCPCS code G0402 (Initial preventive 

physical examination; face-to-face visit, 

services limited to new beneficiary 

during the first 12 months of Medicare 

enrollment). We believe that the 

physician work and nonfacility PE of 

the IPPE and the first annual wellness 

visit are very similar, given that both 

represent an initial beneficiary visit 

focused on prevention. In the CY 2010 

PFS final rule with comment period 

discussion of payment for the IPPE (74 

FR 61767), we noted that in the context 

of physician work and intensity, HCPCS 

code G0402 was most equivalent to CPT 

code 99204 (Level 4 new patient office 

or other outpatient visit). Therefore, for 

CY 2011, we are proposing to crosswalk 

the same physician work RVUs of 2.43 

from CPT code 99204 to HCPCS codes 

G0402 and GXXXA. Similarly, we 

believe the direct PE inputs for all of 

these services are similar and, therefore, 

we are proposing to assign the same 

direct PE inputs to HCPCS codes G0402 

and GXXXA as are included for CPT 

code 99204. We note that currently, the 

direct PE inputs for HCPCS code G0402 

also include preventive assessment 

forms, and we are proposing to add this 

supply to the PE for HCPCS code 

GXXXA as well because we believe it 

would be used in the first wellness visit. 

The proposed CY 2011 PE and 

malpractice RVUs for HCPCS code 

GXXXA are displayed in Addendum B 

to this proposed rule. We also note that 

we are proposing no facility PE RVUs 

for HCPCS code GXXXA because only a 

single payment will be made under the 

PFS when this service is furnished. 

There is no separate facility payment for 

GXXXA when a practitioner furnishes 

this service in the facility setting. 

Moreover, we believe that a 

subsequent annual wellness visit 

described by HCPCS code GXXXB is 

most similar, from the perspectives of 


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physician work and PE, to CPT code 

99214 (Level 4 established patient office 

or other outpatient visit). The 

subsequent annual wellness visit is a 

patient visit for PPPS that includes 

certain required elements, such as 

updating information regarding the 

patient’s history, risk factors, and 

regular medical care providers and 

suppliers since the prior annual visit, 

and obtaining routine measurements. 

We believe the physician work and 

direct PE of a subsequent annual 

wellness visit are similar, in terms of 

evaluation and management (E/M) visit 

level, to the first wellness visit, which 

we are proposing to value like a level 4 

new patient office or other outpatient 

visit, as we have previously valued the 

IPPE. However, the subsequent annual 

wellness visit would typically be for an 

established patient and, as described 

earlier in this section, we are proposing 

that certain wellness visit elements only 

must be furnished in the first wellness 

visit. As a result, we believe it would be 

most appropriate to value the 

subsequent annual wellness visit based 

upon an E/M visit for an established 

patient. Therefore, for CY 2011 we are 

proposing to crosswalk the same 

physician work RVUs of 1.50 from CPT 

code 99214 to HCPCS code GXXXB. 

Furthermore, we believe the direct PE 

inputs for these two services are also 

similar and, therefore, we are proposing 

to assign the same direct PE inputs to 

HCPCS code GXXXB as are assigned to 

CPT code 99214. We note that we are 

also proposing to add the same 

preventive assessment forms to the PE 

for HCPCS code GXXXB as we are 

proposing to add for HCPCS code 

GXXXA because we believe this supply 

would be used in both the first and 

subsequent annual wellness visits. The 

proposed CY 2011 PE and malpractice 

RVUs for HCPCS code GXXXB are 

displayed in Addendum B to this 

proposed rule. Similar to our treatment 

of HCPCS code GXXXA for the first 

wellness visit, we are proposing no 

facility PE RVUs for HCPCS code 

GXXXB as only a single payment will be 

made under the PFS when this service 

is furnished. There is no separate 

facility payment for GXXXB when a 

practitioner furnishes this service in the 

facility setting. 

While we believe there could be 

overlap in the direct PE, malpractice 

expense, and physician work in both 

history taking and examination of the 

patient in the context of the initial or 

subsequent wellness visit and another 

E/M service, we are not proposing to 

limit the level of a medically necessary 

E/M visit when furnished and billed 

with a wellness visit. As we stated in 

the CY 2005 PFS final rule with 

comment period with respect to the 

IPPE (69 FR 66289 through 66290), we 

do not want to prohibit the reporting of 

an appropriate level of service when it 

is necessary to evaluate and treat the 

beneficiary for acute and chronic 

conditions. However, at the same time, 

we believe the practitioner is better able 

to discuss health promotion, disease 

prevention, and the educational 

opportunities available with 

beneficiaries when their health status 

has been stabilized and the beneficiary 

is physically receptive. Therefore, 

depending on the clinical 

circumstances, a CPT code for a 

medically necessary E/M visit may be 

reported and appended with CPT 

modifier -25 (significant, separately 

identifiable evaluation and management 

service by the same physician on the 

same day of the procedure or other 

service) to designate the E/M visit as a 

separately identifiable service from the 

initial or subsequent wellness visit. 

However, we believe this scenario 

would be uncommon, and we expect 

that no components of an encounter 

attributable to the annual wellness visit 

would be used in determining the level 

of a separate E/M visit that would also 

be reported. 

With respect to beneficiary costsharing, section 4103(c) of the ACA 

amends section 1833(a)(1) of the Act by 

adding subparagraph (X), referring to 

the PPPS to state that the amount paid 

shall be 100 percent of the lesser of the 

actual charge for the services or the 

amount determined under the payment 

basis determined under section 1848 of 

the Act, thereby eliminating 

coinsurance for the annual wellness 

visit. Finally, section 4103(b)(4) of the 

ACA amends section 1833(b) of the Act 

to specify that the Part B deductible 

does not apply to the annual wellness 

visit. We expect that practitioners will 

work to ensure that this valuable new 

Medicare benefit is furnished to the 

beneficiaries that they care for in their 

practices, effective January 1, 2011. 

R. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

1. Definition of ‘‘Preventive Services’’ 

Section 4104 of the ACA revises 

section 1861(ddd) of the Act to add 

paragraph (3), which defines the term 

‘‘preventive services’’ as follows: 

• The specific services currently 

listed in section 1861(ww)(2) of the Act 

with the explicit exclusion of 

electrocardiograms (as specified in 

section 1861(ww)(2)(M) of the Act); 

• The initial preventive physical 

examination (IPPE) established by 

section 611 of the MMA and defined in 

section 1861(ww)(1) of the Act; and 

• The annual wellness visit, as 

specified by section 1861(hhh) of the 

Act as added by section 4103 of the 

ACA. We refer readers to section V.Q. of 

this proposed rule for the proposed 

provisions related to the coverage of and 

payment for the annual wellness visit. 

The regulations regarding coverage of 

the IPPE are specified in § 410.16 and 

remain unchanged by the ACA. 

The specific preventive services 

included in the definition of ‘‘preventive 

services’’ in section 1861(ddd)(3)(A) of 

the Act as cross-referenced to section 

1861(ww)(2) of the Act, excluding 

electrocardiograms, include the 

following: 

• Pneumococcal, influenza, and 

hepatitis B vaccine and administration. 

• Screening mammography. 

• Screening pap smear and screening 

pelvic exam. 

• Prostate cancer screening tests. 

• Colorectal cancer screening tests. 

• Outpatient diabetes selfmanagement training (DSMT). 

• Bone mass measurement. 

• Screening for glaucoma. 

• Medical nutrition therapy (MNT) 

services. 

• Cardiovascular screening blood 

tests. 

• Diabetes screening tests. 

• Ultrasound screening for abdominal 

aortic aneurysm (AAA). 

• Additional preventive services 

identified for coverage through the 

national coverage determination (NCD) 

process. 

We note that currently the only 

additional preventive service identified 

for coverage through the NCD process is 

HIV testing. A proposed NCD for 

smoking cessation services for 

asymptomatic patients was released in 

May 2010 on the CMS Web site at: 

http://www.cms.gov/mcd/ 

index_list.asp?list_type=nca. We will 

address the applicability of section 

1861(ddd)(3)(A) of the Act (as added by 

section 4104 of the ACA) to these 

services if an NCD establishing them as 

additional preventive services is 

finalized. 

We are proposing to add the 

definition of ‘‘preventive services’’ in 

§ 410.2 to implement the provisions of 

section 1861(ddd)(3) of the Act (as 

amended by section 4104 of the ACA). 

2. Deductible and Coinsurance for 

Preventive Services 

Section 4104(b)(4) of the ACA amends 

section 1833(a)(1) of the Act by 

requiring 100 percent Medicare 


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payment for the IPPE and for those 

preventive services recommended by 

the United States Preventive Services 

Task Force (USPSTF) with a grade of A 

or B for any indication or population 

and that are appropriate for the 

individual. This provision waives any 

coinsurance that would otherwise be 

applicable under section 1833(a)(1) of 

the Act for those items and services 

listed in section 1861(ww)(2) of the Act 

(excluding electrocardiograms) to which 

the USPSTF has given a grade of A or 

B. In addition, section 4103(c)(1) of the 

ACA amends section 1833(c)(1) of the 

Act to waive the coinsurance for the 

annual wellness visit. The coinsurance 

represents the beneficiary’s share of the 

payment to the provider or supplier for 

furnished services. Coinsurance 

generally refers to a percentage (for 

example, 20 percent) of the Medicare 

payment rate for which the beneficiary 

is liable and is applicable under the 

PFS, while copayment generally refers 

to an established amount that the 

beneficiary must pay that is not 

necessarily related to a particular 

percentage of the Medicare payment, 

and is applicable under the hospital 

Outpatient Prospective Payment System 

(OPPS). We refer readers to the CY 2011 

OPPS/ASC proposed rule for proposed 

provisions related to payment for 

preventive services, including waiver of 

the deductible and copayment, under 

the OPPS. 

Section 4104(c) of the ACA amends 

section 1833(b)(1) of the Act to waive 

the Part B deductible for preventive 

services described in subparagraph (A) 

of section 1861(ddd)(3) of the Act that 

have a grade of A or B from the 

USPSTF. In addition, section 1833(b)(1) 

of the Act (as amended by section 

4103(c)(4) of the ACA) waives the Part 

B deductible for the annual wellness 

visit. These provisions are effective for 

services furnished on and after January 

1, 2011. Section 101(b)(2) of the MIPPA 

amended section 1833(b) of the Act to 

waive the deductible for the IPPE 

effective January 1, 2009. 

Not all preventive services described 

in subparagraph (A) of section 

1861(ddd)(3) are recommended by the 

USPSTF with a grade of A or B and, 

therefore, some of the preventive 

services do not meet the criteria in 

sections 1833(a)(1) and (b)(1) of the Act 

for the waiver of the deductible and 

coinsurance. However, with certain 

exceptions noted below, the changes 

made by section 4104 of the ACA do not 

affect most of the preexisting specific 

provisions in sections 1833(a) and 

1833(b) of the Act (that are codified in 

regulations in § 410.160(b) and 

§ 410.152) that waive the deductible and 

coinsurance for specific services. For 

example, section 1833(a)(1)(D) of the 

Act already waives the coinsurance and 

section 1833(b)(3) of the Act waives the 

deductible for clinical laboratory tests 

(including tests furnished for screening 

purposes). Section 4104 of the ACA 

does not change this provision and, 

therefore, the waiver of both the 

deductible and coinsurance remains in 

place for all laboratory tests, regardless 

of whether the particular clinical 

laboratory test meets the USPSTF 

grading criteria specified in sections 

1833(a)(1) and 1833(b)(1) of the Act (as 

amended by section 4104 of the ACA) 

for waiver of the deductible and 

coinsurance as a preventive service. 

The following preventive services 

listed in section 1833(ddd)(3)(A) of the 

Act are not recommended by the 

USPSTF with a grade of A or B for any 

indication or population: digital rectal 

examination furnished as a prostate 

cancer screening service; glaucoma 

screening; DSMT services; and barium 

enema furnished as a colorectal cancer 

screening service. 

Specifically, HCPCS code G0102 

(Prostate cancer screening; digital rectal 

exam), which does not have a grade of 

A or B from the USPSTF for any 

indication or population, will continue 

to be subject to the deductible and 

coinsurance as there is no statutory 

provision to the contrary. However, the 

deductible and coinsurance for HCPCS 

code G0103 (Prostate cancer screening; 

prostate specific antigen test (PSA)) will 

continue to be waived in accordance 

with section 1833(a)(1)(D) of the Act, 

even though this service also does not 

have a grade of A or B from the 

USPSTF. 

Glaucoma screening services, 

described by HCPCS codes G0117 

(Glaucoma screening for high risk 

patients furnished by an optometrist or 

ophthalmologist) and G0118 (Glaucoma 

screening for high risk patient furnished 

under the direct supervision of an 

optometrist or ophthalmologist), will 

continue to be subject to the deductible 

and coinsurance because these services 

are not recommended with a grade of A 

or B by the USPSTF for any indication 

or population and there is no other 

statutory provision to except them. 

Similarly, DSMT services are currently 

not rated by the USPSTF, and there is 

no other statutory provision to except 

them from applicability of the 

deductible and coinsurance. Therefore 

the deductible and coinsurance 

requirements will continue to apply. 

Barium enemas furnished as 

colorectal cancer screening tests, 

described by HCPCS codes G0106 

(Colorectal cancer screening; alternative 

to G0104, screening sigmoidoscopy, 

barium enema) and G0120 (Colorectal 

cancer screening; alternative to G0105, 

screening colonoscopy, barium enema), 

do not have a grade of A or B from the 

USPSTF for any indication or 

population. However, the deductible 

does not apply to barium enemas 

furnished as colorectal cancer screening 

tests, because colorectal cancer 

screening tests are explicitly excluded 

from the deductible in section 

1833(b)(8) of the Act. However, there is 

no specific exclusion of barium enemas 

from the coinsurance requirement in 

section 1833(b)(1) of the Act and, 

therefore, this requirement, as 

applicable, continues to apply to barium 

enemas. We note that the USPSTF has 

given a grade of A to screening 

colonoscopy, screening flexible 

sigmoidoscopy, and fecal occult blood 

screening tests, and that, as a result, 

these colorectal cancer screening tests 

are subject to the statutory waiver of 

both the deductible and coinsurance. 

We note also that the USPSTF ceased 

to make recommendations with regard 

to vaccines and vaccine administration 

after CY 1996, so as not to conflict with 

the recommendations of the Centers for 

Disease Control and Prevention’s 

Advisory Committee on Immunization 

Practices. However, the USPSTF’s most 

recent vaccine recommendations gave a 

grade of B to influenza and 

pneumococcal vaccines and their 

administration and a grade of A to 

hepatitis B vaccine and its 

administration. While sections 

1833(a)(1) and 1833(b)(1) of the Act 

require that the preventive services 

receive a grade of A or B from the 

USPSTF for the coinsurance and 

deductible to be waived, the statute 

does not specify that the recommended 

grade must be furnished by the USPSTF 

within any given timeframe. The 

USPSTF grades for these preventive 

services are the most current USPSTF 

grade and have never been withdrawn. 

Therefore, we believe that these 

preventive services meet the 

requirements of the statute for the 

waiver of the deductible and 

coinsurance. We also note that the 

Centers for Disease Control and 

Prevention’s Advisory Committee on 

Immunization Practices currently 

recommends influenza, pneumococcal, 

and hepatitis B vaccines. 

We are proposing to update 

§ 410.160(b), which lists the services for 

which expenses incurred are not subject 

to the Part B annual deductible and do 

not count toward meeting that 

deductible. Specifically, we are 

proposing to revise § 410.160(b)(2) to 

include influenza and hepatitis B 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40131 

vaccines and their administration, in 

addition to pneumococcal vaccine and 

its administration. In addition, in 

§ 410.160(b), we are also proposing to 

add exceptions for bone mass 

measurement, MNT services, and the 

annual wellness visit. 

In § 410.152, we are proposing to 

revise paragraph (l) to establish the 

amount of payment under the 

applicable payment system for 

providers and suppliers of the services 

listed in the paragraph and displayed in 

Table 38. Table 38 displays the HCPCS 

codes that we are proposing as 

‘‘preventive services’’ under section 

1861(ddd)(3)(A) of the Act and 

identifies the HCPCS codes for the IPPE 

and the annual wellness visit. Table 38 

also indicates the most recent USPSTF 

grade, if any, that is the basis for our 

proposed policy with regard to waiver 

of the deductible and coinsurance, as 

applicable, and the Medicare payment 

system under which the HCPCS code 

would be paid when furnished outside 

of the facility setting. We note that the 

changes made by section 4104 of the 

ACA with respect to the deductible and 

coinsurance apply in all settings in 

which the services are furnished. 

In developing recommendations 

regarding preventive services, we 

recognize that the USPSTF may make 

recommendations that are specific to an 

indication or population, at times 

including characteristics such as gender 

and age in its recommendations. While 

we are proposing to waive the 

deductible and coinsurance for any 

Medicare covered preventive service 

recommended with a grade of A or B for 

any indication or population, with no 

limits on the indication or population as 

long as the USPSTF has recommended 

the preventive service for at least one 

indication and/or population with a 

grade of A or B, we note that all existing 

Medicare coverage policies for such 

services, including any limitations 

based on indication or population, 

continue to apply. In some cases, 

national coverage policies may currently 

limit Medicare coverage based on the 

indication or population, consistent 

with the USPSTF recommendations 

with a grade of A or B for the indication 

or population. In other cases where 

Medicare does not explicitly noncover 

preventive services for a specific 

population or indication, we would 

expect that, particularly in those cases 

where the USPSTF recommendation 

grade is a D (that is, the USPSTF 

recommends against the service because 

there is moderate or high certainty that 

the service has no net benefit or that the 

harms outweigh the benefits), 

practitioners would only order those 

preventive services that are clinically 

appropriate for the beneficiary. If we 

have concerns in the future about the 

appropriateness of preventive services 

for an indication or population in light 

of the USPSTF’s recommendations, we 

may consider using our authority under 

section 1834(n)(1) of the Act (as added 

by section 4105 of the ACA) to modify 

Medicare coverage of any preventive 

service to be consistent with the 

recommendations of the USPSTF. 

Section 10501(i)(2) of the ACA 

amended the definition of Federally 

Qualified Health Center (FQHC) services 

as defined in section 1861(aa)(3)(A) of 

the Act by replacing the specific 

references to services provided under 

section 1861(qq) and (vv) of the Act 

(diabetes outpatient self-management 

training services and medical nutrition 

therapy services, respectively) with 

preventive services as defined in section 

1861(ddd)(3) of the Act, as established 

by section 4014(a)(3) of the ACA. These 

changes are effective for services 

provided on or after January 1, 2011. 

Accordingly, we are proposing to 

conform the regulations to the new 

statutory requirement by adding a new 

section § 405.2449 which would add the 

new preventive services definition to 

the definition of FQHC services effective 

for services provided on or after January 

1, 2011. 

Section 1861(ddd)(3) of the Act 

defines ‘‘preventive services’’ as 

consisting of the following three 

components: 

• Screening and preventive services 

described in section 1861(ww)(2) of the 

Act (other than electrocardiograms 

described in subparagraph (M) of that 

same subsection). 

• An initial preventive physical 

examination, as defined in section 

1861(ww) of the Act. 

• Personalized prevention plan 

services as defined in section 

1861(hhh)(1) of the Act. 

We are proposing to add each of these 

three components into the new 

Medicare FQHC preventive services 

definition in a new § 405.2449. 

Section 4104(b)(1) of the ACA, as 

amended by section 10406 of the same 

Act, waives coinsurance for preventive 

services by adding section 1833(a)(1)(Y) 

to the Act to require, essentially, waiver 

of coinsurance for preventive services 

that are recommended with a grade of 

A or B by the USPSTF for any 

indication or population. This provision 

is specifically designed to remove 

barriers to affording and obtaining such 

preventive services under Medicare. 

In addition, section 10501(i)(3)(B)(ii) 

of the ACA added section 1833(a)(1)(Z) 

to the Act to require a 20-percent copay 

on all FQHC services after 

implementation of the FQHC 

prospective payment system. We believe 

we can give both section 1833(a)(1)(Y) 

and (Z) of the Act, and the definition of 

FQHC services (revised to include the 

broader scope of preventive services) 

their best effect by permitting a 100 

percent reimbursement rate for 

preventive services as defined at section 

1861 (ddd)(3) of Act, effective January 1, 

2011. 

Section 1833(b)(4) of the Act 

stipulates that the Medicare Part B 

deductible shall not apply to Federally 

qualified health center services. The 

ACA makes no change to this provision, 

therefore Medicare shall continue to 

waive the Part B deductible for all 

federally qualified health center 

services, including preventive services 

added by the ACA. 

TABLE 38—PROPOSED CY 2011 DEDUCTIBLE AND COINSURANCE FOR PREVENTIVE SERVICES UNDER SECTION

1861(ddd)(3)(A) OF THE ACT (INCLUDES THE IPPE AND THE ANNUAL WELLNESS VISIT) 

Preventive 

service 

CPT/ 

HCPCS 

Code 

Long descriptor USPSTF 

rating 1

Payment 

method 

CY 2010 coins./ 

deductible 

CY 2011 coins./ 

deductible 

Initial Preventive Physical 

Examination, IPPE.

G0402 Initial preventive physical examination; 

face to face visits, services limited to 

new beneficiary during the first 12 

months of Medicare enrollment.

* Not 

Rated.

PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

G0403 Electrocardiogram, routine ECG with 12 

leads; performed as a screening for the 

initial preventive physical examination 

with interpretation and report.

.................. PFS .......... Not Waived ............. Not Waived. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40132 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 38—PROPOSED CY 2011 DEDUCTIBLE AND COINSURANCE FOR PREVENTIVE SERVICES UNDER SECTION

1861(ddd)(3)(A) OF THE ACT (INCLUDES THE IPPE AND THE ANNUAL WELLNESS VISIT)—Continued 

Preventive 

service 

CPT/ 

HCPCS 

Code 

Long descriptor USPSTF 

rating 1

Payment 

method 

CY 2010 coins./ 

deductible 

CY 2011 coins./ 

deductible 

G0404 Electrocardiogram, routine ECG with 12 

leads; tracing only, without interpretation and report, performed as a screening for the initial preventive physical examination.

.................. PFS .......... Not Waived ............. Not Waived. 

G0405 Electrocardiogram, routine ECG with 12 

leads; interpretation and report only, 

performed as a screening for the initial 

preventive physical examination.

.................. PFS .......... Not Waived ............. Not Waived. 

Ultrasound 

Screening 

for Abdominal Aortic 

Aneurysm 

(AAA).

G0389 Ultrasound, B-scan and/or real time with 

image documentation; for abdominal 

aortic aneurysm (AAA) ultrasound 

screening.

B .............. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

Cardiovascular 

Disease 

Screening.

80061 Lipid panel ................................................ A .............. CLFS ....... WAIVED .................. WAIVED. 

82465 Cholesterol, serum or whole blood, total .. .................. CLFS ....... WAIVED .................. WAIVED. 

83718 Lipoprotein, direct measurement; high 

density cholesterol (hdl cholesterol).

.................. CLFS ....... WAIVED .................. WAIVED. 

84478 Triglycerides .............................................. .................. CLFS ....... WAIVED .................. WAIVED. 

Diabetes 

Screening 

Tests.

82947 Glucose; quantitative, blood (except reagent strip).B .............. CLFS ....... WAIVED .................. WAIVED. 

82950 Glucose; post glucose dose (includes glucose)................... CLFS ....... WAIVED .................. WAIVED. 

82951 Glucose; tolerance test (gtt), three specimens (includes glucose).* Not 

Rated.

CLFS ....... WAIVED .................. WAIVED. 

Diabetes SelfManagement Training Services.

(DSMT) ..........

G0108 Diabetes outpatient self-management 

training services, individual, per 30 

minutes.

* Not 

Rated.

PFS .......... Not Waived ............. Not Waived. 

G0109 Diabetes outpatient self-management 

training services, group session (2 or 

more), per 30 minutes.

.................. PFS .......... Not Waived ............. Not Waived. 

Medical Nutrition Therapy 

(MNT) Services.

97802 Medical nutrition therapy; initial assessment and intervention, individual, faceto-face with the patient, each 15 minutes.B .............. PFS .......... Not Waived ............. WAIVED. 

97803 Medical nutrition therapy; re-assessment 

and intervention, individual, face-toface with the patient, each 15 minutes.

.................. PFS .......... Not Waived ............. WAIVED. 

97804 Medical nutrition therapy; group (2 or 

more individual(s)), each 30 minutes.

.................. PFS .......... Not Waived ............. WAIVED. 

G0270 Medical nutrition therapy; reassessment 

and subsequent intervention(s) following second referral in same year for 

change in diagnosis, medical condition 

or treatment regimen (including additional hours needed for renal disease), 

individual, face to face with the patient, 

each 15 minutes.

B .............. PFS .......... Not Waived ............. WAIVED. 

G0271 Medical nutrition therapy, reassessment 

and subsequent intervention(s) following second referral in same year for 

change in diagnosis, medical condition, 

or treatment regimen (including additional hours needed for renal disease), 

group (2 or more individuals), each 30 

minutes.

.................. PFS .......... Not Waived ............. WAIVED. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40133 

TABLE 38—PROPOSED CY 2011 DEDUCTIBLE AND COINSURANCE FOR PREVENTIVE SERVICES UNDER SECTION

1861(ddd)(3)(A) OF THE ACT (INCLUDES THE IPPE AND THE ANNUAL WELLNESS VISIT)—Continued 

Preventive 

service 

CPT/ 

HCPCS 

Code 

Long descriptor USPSTF 

rating 1

Payment 

method 

CY 2010 coins./ 

deductible 

CY 2011 coins./ 

deductible 

Screening Pap 

Test.

G0123 Screening cytopathology, cervical or vaginal (any reporting system), collected in 

preservative fluid, automated thin layer 

preparation, screening by 

cytotechnologist under physician supervision.

A .............. CLFS ....... WAIVED .................. WAIVED. 

G0124 Screening cytopathology, cervical or vaginal (any reporting system), collected in 

preservative fluid, automated thin layer 

preparation, requiring interpretation by 

physician.

.................. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

G0141 Screening cytopathology smears, cervical 

or vaginal, performed by automated 

system, with manual rescreening, requiring interpretation by physician.

A .............. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

G0143 Screening cytopathology, cervical or vaginal (any reporting system), collected in 

preservative fluid, automated thin layer 

preparation, with manual screening and 

rescreening by cytotechnologist under 

physician supervision.

A .............. CLFS ....... WAIVED .................. WAIVED. 

G0144 Screening cytopathology, cervical or vaginal (any reporting system), collected in 

preservative fluid, automated thin layer 

preparation, with screening by automated system, under physician supervision.

A .............. CLFS ....... WAIVED .................. WAIVED. 

G0145 Screening cytopathology, cervical or vaginal (any reporting system), collected in 

preservative fluid, automated thin layer 

preparation, with screening by automated system and manual rescreening 

under physician supervision.

A .............. CLFS ....... WAIVED .................. WAIVED. 

G0147 Screening cytopathology smears, cervical 

or vaginal, performed by automated 

system under physician supervision.

A .............. CLFS ....... WAIVED .................. WAIVED. 

G0148 Screening cytopathology smears, cervical 

or vaginal, performed by automated 

system with manual rescreening.

A .............. CLFS ....... WAIVED .................. WAIVED. 

P3000 Screening papanicolaou smear, cervical 

or vaginal, up to three smears, by technician under physician supervision.

.................. CLFS ....... WAIVED .................. WAIVED. 

P3001 Screening papanicolaou smear, cervical 

or vaginal, up to three smears, requiring interpretation by physician.

.................. PFS .......... Coins. applies & 

ded. is waived.

WAIVED. 

Q0091 Screening papanicolaou smear; obtaining, preparing and conveyance of cervical or vaginal smear to laboratory................... PFS .......... Coins. applies & 

ded. is waived.

WAIVED. 

Screening Pelvic Exam.G0101 Cervical or vaginal cancer screening; pelvic and clinical breast examination.A .............. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

Screening 

Mammography.

77052 Computer-aided detection (computer algorithm analysis of digital image data 

for lesion detection) with further physician review for interpretation, with or 

without digitization of film radiographic 

images; screening mammography (list 

separately in addition to code for primary procedure).

B .............. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

77057 Screening mammography, bilateral (2- 

view film study of each breast).

B .............. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

G0202 Screening mammography, producing direct digital image, bilateral, all views................... PFS .......... Coins. applies & 

ded. is waived.

WAIVED. 

Bone Mass 

Measurement.

G0130 Single energy x-ray absorptiometry (sexa) 

bone density study, one or more sites; 

appendicular skeleton (peripheral) 

(e.g., radius, wrist, heel).

B .............. PFS .......... Not Waived ............. WAIVED. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40134 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 38—PROPOSED CY 2011 DEDUCTIBLE AND COINSURANCE FOR PREVENTIVE SERVICES UNDER SECTION

1861(ddd)(3)(A) OF THE ACT (INCLUDES THE IPPE AND THE ANNUAL WELLNESS VISIT)—Continued 

Preventive 

service 

CPT/ 

HCPCS 

Code 

Long descriptor USPSTF 

rating 1

Payment 

method 

CY 2010 coins./ 

deductible 

CY 2011 coins./ 

deductible 

77078 Computed tomography, bone mineral 

density study, 1 or more sites; axial 

skeleton (e.g., hips, pelvis, spine).

.................. PFS .......... Not Waived ............. WAIVED. 

77079 Computed tomography, bone mineral 

density study, 1 or more sites; appendicular skeleton (peripheral) (e.g., radius, wrist, heel).

.................. PFS .......... Not Waived ............. WAIVED. 

77080 Dual-energy x-ray absorptiometry (dxa), 

bone density study, 1 or more sites; 

axial skeleton (e.g., hips, pelvis, spine).

.................. PFS .......... Not Waived ............. WAIVED. 

77081 Dual-energy x-ray absorptiometry (dxa), 

bone density study, 1 or more sites; 

appendicular skeleton (peripheral) 

(e.g., radius, wrist, heel).

.................. PFS .......... Not Waived ............. WAIVED. 

77083 Radiographic absorptiometry (e.g., 

photodensitometry, radiogrammetry), 1 

or more sites.

.................. PFS .......... Not Waived ............. WAIVED. 

76977 Ultrasound bone density measurement 

and interpretation, peripheral site(s), 

any method.

B .............. PFS .......... Not Waived ............. WAIVED. 

Colorectal 

Cancer 

Screening.

G0104 Colorectal cancer screening; flexible 

sigmoidoscopy.

A .............. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

G0105 Colorectal cancer screening; colonoscopy 

on individual at high risk.

.................. PFS .......... Coins. applies and; 

ded. is waived.

WAIVED. 

G0106 Colorectal cancer screening; alternative 

to G0104, screening sigmoidoscopy, 

barium enema.

* Not 

Rated.

PFS .......... Coins. applies and 

ded. is waived.

Coins. applies and 

ded. is waived. 

G0120 Colorectal cancer screening; alternative 

to G0105, screening colonoscopy, barium enema..

.................. PFS .......... Coins. applies and 

ded. is waived.

Coins. applies and 

ded. is waived. 

G0121 Colorectal cancer screening; colonoscopy 

on individual not meeting criteria for 

high risk.

A .............. PFS .......... Coins. applies and 

ded. is waived.

WAIVED. 

82270 Blood, occult, by peroxidase activity (e.g., 

guaiac), qualitative; feces, consecutive.

.................. CLFS ....... WAIVED .................. WAIVED. 

G0328 Colorectal cancer screening; fecal occult 

blood test, immunoassay, 1–3 simultaneous.

.................. CLFS ....... Coins. applies and 

ded. is waived.

WAIVED. 

Prostate Cancer Screening.G0102 Prostate cancer screening; digital rectal 

examination.

D .............. PFS .......... Not Waived ............. Not Waived. 

G0103 Prostate cancer screening; prostate specific antigen test (PSA)................... CLFS ....... WAIVED .................. WAIVED. 

Glaucoma 

Screening.

G0117 Glaucoma screening for high risk patients 

furnished by an optometrist or ophthalmologist.

I ................ PFS .......... Not Waived ............. Not Waived. 

G0118 Glaucoma screening for high risk patient 

furnished under the direct supervision 

of an optometrist or ophthalmologist.

.................. PFS .......... Not Waived ............. Not Waived. 

Influenza 

Virus Vaccine.

90655 Influenza virus vaccine, split virus, preservative free, when administered to 

children 6–35 months of age, for 

intramuscular use.

B .............. Drug Pricing File.WAIVED .................. WAIVED. 

90656 Influenza virus vaccine, split virus, preservative free, when administered to individuals 3 years and older, for 

intramuscular use.

.................. Drug Pricing File.WAIVED .................. WAIVED. 

90657 Influenza virus vaccine, split virus, when 

administered to children 6–35 months 

of age, for intramuscular use.

.................. Drug Pricing File.WAIVED .................. WAIVED. 

90658 Influenza virus vaccine, split virus, when 

administered to individuals 3 years of 

age and older, for intramuscular use.

.................. Drug Pricing File.WAIVED .................. WAIVED. 

90660 Influenza virus vaccine, live, for intranasal 

use.

.................. Drug Pricing File.WAIVED .................. WAIVED. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40135 

TABLE 38—PROPOSED CY 2011 DEDUCTIBLE AND COINSURANCE FOR PREVENTIVE SERVICES UNDER SECTION

1861(ddd)(3)(A) OF THE ACT (INCLUDES THE IPPE AND THE ANNUAL WELLNESS VISIT)—Continued 

Preventive 

service 

CPT/ 

HCPCS 

Code 

Long descriptor USPSTF 

rating 1

Payment 

method 

CY 2010 coins./ 

deductible 

CY 2011 coins./ 

deductible 

90662 Influenza virus vaccine, split virus, preservative free, enhanced 

immunogenicity via increased antigen 

content, for intramuscular use.

.................. Drug Pricing File.WAIVED .................. WAIVED. 

G0008 Administration of influenza virus vaccine .................. PFS .......... WAIVED .................. WAIVED. 

G9141 Influenza A (H1N1) immunization administration (includes the physician counseling the patient/family)................... PFS .......... WAIVED .................. WAIVED. 

G9142 Influenza A (H1N1) vaccine, any route of 

administration.

.................. Drug Pricing File 

(if not 

supplied 

at no 

cost).

WAIVED .................. WAIVED. 

Pneumococcal 

Vaccine.

90669 Pneumococcal conjugate vaccine, polyvalent, when administered to children 

younger than 5 years, for intramuscular 

use.

B .............. Drug Pricing File.WAIVED .................. WAIVED. 

90670 Pneumococcal conjugate vaccine, 13 valent, for intramuscular use.................... Drug Pricing File.WAIVED .................. WAIVED. 

90732 Pneumococcal polysaccharide vaccine, 

23-valent, adult or immunosuppressed 

patient dosage, when administered to 

individuals 2 years or older, for subcutaneous or intramuscular use.

.................. Drug Pricing File.WAIVED .................. WAIVED. 

G0009 Administration of pneumococcal vaccine .................. PFS .......... WAIVED .................. WAIVED. 

Hepatitis B 

Vaccine.

90740 Hepatitis B vaccine, dialysis or 

immunosuppressed patient dosage (3 

dose schedule), for intramuscular use.

A .............. Drug Pricing File.Not Waived ............. WAIVED. 

90743 Hepatitis B vaccine, adolescent (2 dose 

schedule), for intramuscular use.

.................. Drug Pricing File.Not Waived ............. WAIVED. 

90744 Hepatitis B vaccine, pediatric/adolescent 

dosage (3 dose schedule), for 

intramuscular use.

.................. Drug Pricing File.Not Waived ............. WAIVED. 

90746 Hepatitis B vaccine, adult dosage, for 

intramuscular use.

.................. Drug Pricing File.Not Waived ............. WAIVED. 

90747 Hepatitis B vaccine, dialysis or 

immunosuppressed patient dosage (4 

dose schedule), for intramuscular use.

.................. Drug Pricing File.Not Waived ............. WAIVED. 

G0010 Administration of hepatitis B vaccine ....... A .............. PFS .......... Not Waived ............. WAIVED. 

HIV Screening 86689 HTLV or HIV antibody, confirmatory test 

(e.g., Western Blot).

A .............. CLFS ....... WAIVED .................. WAIVED. 

G0432 Infectious agent antigen detection by enzyme immunoassay (EIA) technique, 

qualitative or semi-qualitative, multiplestep method, HIV–1 or HIV–2, screening.

.................. CLFS ....... WAIVED .................. WAIVED. 

G0433 Infectious agent antigen detection by enzyme-linked immunosorbent assay 

(ELISA) technique, antibody, HIV–1 or 

HIV–2, screening.

.................. CLFS ....... WAIVED .................. WAIVED. 

G0435 Infectious agent antigen detection by 

rapid antibody test of oral mucosa 

transudate, HIV–1 or HIV–2, screening.

.................. CLFS ....... WAIVED .................. WAIVED. 

Annual 

Wellness 

Visit.

GXXXA Annual wellness visit, including PPPS, 

first visit.

* Not 

Rated.

PFS .......... N/A .......................... WAIVED. 

GXXXB Annual wellness visit, including PPPS, 

subsequent visit.

.................. PFS .......... N/A .......................... WAIVED. 

1 U.S. Preventive Services Task Force Recommendations. 

A—The USPSTF strongly recommends that clinicians routinely provide [the service] to eligible patients. (The USPSTF found good evidence 

that [the service] improves important health outcomes and concludes that benefits substantially outweigh harms.) 

B—The USPSTF recommends that clinicians routinely provide [the service] to eligible patients. (The USPSTF found at least fair evidence that 

[the service] improves important health outcomes and concludes that benefits outweigh harms.) 

C—The USPSTF makes no recommendation for or against routine provision of [the service]. (The USPSTF found at least fair evidence that 

[the service] can improve health outcomes but concludes that the balance of benefits and harms is too close to justify a general recommendation.) 

D—The USPSTF recommends against routinely providing [the service] to asymptomatic patients. (The USPSTF found at least fair evidence 

that [the service] is ineffective or that harms outweigh benefits.) 


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I—The USPSTF concludes that the evidence is insufficient to recommend for or against routinely providing [the service]. (Evidence that [the 

service] is effective is lacking, of poor quality, or conflicting and the balance of benefits and harms cannot be determined.) 

4. Extension of Waiver of Deductible to 

Services Furnished in Connection With 

or in Relation to a Colorectal Cancer 

Screening Test That Becomes Diagnostic 

or Therapeutic 

Section 4104(c) of the ACA amends 

section 1833(b) of the Act to waive the 

Part B deductible for colorectal cancer 

screening tests that become diagnostic. 

Specifically, section 1833(b)(1) of the 

Act (as amended by section 4104(c)(2) of 

the ACA) waives the deductible with 

respect to a colorectal cancer screening 

test regardless of the code that is billed 

for the establishment of a diagnosis as 

a result of the test, or for the removal of 

tissue or other matter or other procedure 

that is furnished in connection with, as 

a result of, and in the same clinical 

encounter as a screening test. We are 

proposing that all surgical services 

furnished on the same date as a planned 

screening colonoscopy, planned flexible 

sigmoidoscopy, or barium enema be 

considered to be furnished in 

connection with, as a result of, and in 

the same clinical encounter as the 

screening test. In the event of a 

legislative change to this policy (for 

example, a statutory change that would 

waive the coinsurance for these related 

services in addition to the deductible), 

we would reassess the appropriateness 

of this proposed definition of services 

that are furnished in connection with, as 

a result of, and in the same clinical 

encounter as the colorectal cancer 

screening test that becomes diagnostic. 

We also note that the beneficiary’s 

annual deductible would likely be met 

when any surgical procedure (related or 

not) is furnished on the same day as the 

scheduled screening test. 

We are proposing to implement this 

provision by creating a HCPCS modifier 

that providers and practitioners would 

append to the diagnostic procedure 

code that is reported instead of the 

screening colonoscopy or screening 

flexible sigmoidoscopy HCPCS code or 

as a result of the barium enema when 

the screening test becomes a diagnostic 

service. The claims processing system 

would respond to the modifier by 

waiving the deductible for all surgical 

services on the same date as the 

diagnostic test. Coinsurance would 

continue to apply to the diagnostic test 

and to other services furnished in 

connection with, as a result of, and in 

the same clinical encounter as the 

screening test. 

S. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

1. Section 5501(a): Incentive Payment 

Program for Primary Care Services 

a. Background 

Section 5501(a) of the ACA revises 

section 1833 of the Act by adding a new 

paragraph (x), ‘‘Incentive Payments for 

Primary Care Services.’’ Section 1833(x) 

of the Act states that in the case of 

primary care services furnished on or 

after January 1, 2011 and before 

January 1, 2016 by a primary care 

practitioner, there shall also be paid on 

a monthly or quarterly basis an amount 

equal to 10 percent of the payment 

amount for such services under Part B. 

Section 1833(x)(2)(A) of the Act (as 

added by section 5501(a) of the ACA) 

defines a primary care practitioner as: 

(1) A physician, as described in section 

1861(r)(1) of the Act, who has a primary 

specialty designation of family 

medicine, internal medicine, geriatric 

medicine, or pediatric medicine; or (2) 

a nurse practitioner, clinical nurse 

specialist, or physician assistant as 

defined in section 1861(aa)(5) of the 

Act, and in all cases, for whom primary 

care services accounted for at least 60 

percent of the allowed charges under 

Part B for the practitioner in a prior 

period as determined appropriate by the 

Secretary. 

Section 1833(x)(2)(B) (as added by 

section 5501(a)(2)(B) of the ACA) 

defines primary care services as those 

services identified by the following 

HCPCS codes as of January 1, 2009 (and 

as subsequently modified by the 

Secretary, as applicable): 

• 99201 through 99215 for new and 

established patient office or other 

outpatient evaluation and management 

(E/M) visits; 

• 99304 through 99340 for initial, 

subsequent, discharge, and other 

nursing facility E/M services; new and 

established patient domiciliary, rest 

home (e.g., boarding home), or custodial 

care E/M services; and domiciliary, rest 

home (e.g., assisted living facility), or 

home care plan oversight services; and 

• 99341 through 99350 for new and 

established patient home E/M visits. 

These codes are displayed in Table 

39. All of these codes remain active in 

CY 2010 and there are no other codes 

used to describe these services. 

TABLE 39—PRIMARY CARE SERVICES ELIGIBLE FOR PRIMARY CARE INCENTIVE PAYMENTS IN CY 2011 

CPT codes Description 

99201 ................ Level 1 new patient office or other outpatient visit. 

99202 ................ Level 2 new patient office or other outpatient visit. 

99203 ................ Level 3 new patient office or other outpatient visit. 

99204 ................ Level 4 new patient office or other outpatient visit. 

99205 ................ Level 5 new patient office or other outpatient visit. 

99211 ................ Level 1 established patient office or other outpatient visit. 

99212 ................ Level 2 established patient office or other outpatient visit. 

99214 ................ Level 4 established patient office or other outpatient visit. 

99215 ................ Level 5 established patient office or other outpatient visit. 

99304 ................ Level 1 initial nursing facility care. 

99305 ................ Level 2 initial nursing facility care. 

99306 ................ Level 3 initial nursing facility care. 

99307 ................ Level 1 subsequent nursing facility care. 

99308 ................ Level 2 subsequent nursing facility care. 

99309 ................ Level 3 subsequent nursing facility care. 

99310 ................ Level 4 subsequent nursing facility care. 

99315 ................ Nursing facility discharge day management;. 30 minutes. 

99316 ................ Nursing facility discharge day management; more than 30 minutes. 

99318 ................ Other nursing facility services; evaluation and management of a patient involving an annual nursing facility assessment. 

99324 ................ Level 1 new patient domiciliary, rest home, or custodial care visit. 


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TABLE 39—PRIMARY CARE SERVICES ELIGIBLE FOR PRIMARY CARE INCENTIVE PAYMENTS IN CY 2011—Continued 

CPT codes Description 

99325 ................ Level 2 new patient domiciliary, rest home, or custodial care visit. 

99326 ................ Level 3 new patient domiciliary, rest home, or custodial care visit. 

99327 ................ Level 4 new patient domiciliary, rest home, or custodial care visit. 

99328 ................ Level 5 new patient domiciliary, rest home, or custodial care visit. 

99334 ................ Level 1 established patient domiciliary, rest home, or custodial care visit. 

99335 ................ Level 2 established patient domiciliary, rest home, or custodial care visit. 

99336 ................ Level 3 established patient domiciliary, rest home, or custodial care visit. 

99337 ................ Level 4 established patient domiciliary, rest home, or custodial care visit. 

99339 ................ Individual physician supervision of a patient in home, domiciliary or rest home recurring complex and multidisciplinary care 

modalities; 30 minutes. 

99340 ................ Individual physician supervision of a patient in home, domiciliary or rest home recurring complex and multidisciplinary care 

modalities; 30 minutes or more. 

99341 ................ Level 1 new patient home visit. 

99342 ................ Level 2 new patient home visit. 

99343 ................ Level 3 new patient home visit. 

99344 ................ Level 4 new patient home visit. 

99345 ................ Level 5 new patient home visit. 

99347 ................ Level 1 established patient home visit. 

99348 ................ Level 2 established patient home visit. 

99349 ................ Level 3 established patient home visit. 

99350 ................ Level 4 established patient home visit. 

b. Proposed Primary Care Incentive 

Payment Program (PCIP) 

For primary care services furnished 

on or after January 1, 2011 and before 

January 1, 2016, we are proposing to 

provide a 10 percent incentive payment 

to primary care practitioners, identified 

as the following: (1) In the case of 

physicians, enrolled in Medicare with a 

primary specialty designation of 08— 

family practice, 11—internal medicine, 

37—pediatrics, or 38—geriatrics; or (2) 

in the case of nonphysician 

practitioners (NPPs), enrolled in 

Medicare with a primary care specialty 

designation of 50—nurse practitioner, 

89—certified clinical nurse specialist, or 

97—physician assistant; and (3) for 

whom the primary care services 

displayed in Table 39 accounted for at 

least 60 percent of the allowed charges 

under Part B for such practitioner 

during the time period that is specified 

by the Secretary, and proposed in this 

section. 

We are proposing to use the most 

current full year of claims data to 

identify primary care practitioners 

eligible for the PCIP for a CY based on 

the practitioner’s primary specialty (as 

identified on claims) and the 

practitioner’s percentage of all allowed 

charges for the primary care services 

displayed in Table 39. We commonly 

use the most recent full year of claims 

data for purposes of establishing annual 

payment amounts under a number of 

Medicare’s fee-for-service programs. A 

practitioner with a primary care 

specialty designation would be eligible 

for the PCIP in a CY if the percentage 

of his or her allowed charges for 

primary care services (identified in 

Table 39) on claims where the 

practitioner is identified as one of the 

primary care specialties described above 

meets or exceeds the 60 percent 

threshold. We note that the 

practitioner’s specialty is applied to the 

claim by the claims processing system 

and reflects the physician’s primary 

specialty designation for purposes of 

Medicare enrollment on the date the 

claim is processed, which would 

usually be close to the date on which 

the service was actually furnished to the 

beneficiary. We would identify primary 

care practitioners eligible for the PCIP 

for a year by the individual physician/ 

practitioner national provider identifier 

(NPI) number using the most current 

full year of claims data available. 

Therefore, for determining PCIP 

practitioner eligibility for CY 2011, we 

would use CY 2009 PFS claims data, 

processed through June 30, 2010. This 

would ensure analysis of about 99 

percent of CY 2009 claims to determine 

practitioner eligibility for PCIP payment 

beginning January 2011. We note that 

the MMA changed the requirements for 

critical access hospital (CAH) billing for 

practitioners’ professional services and, 

therefore, modifications were made to 

the Medicare claims processing system 

to require CAHs to identify the 

practitioner furnishing a service on the 

CAH claim for that professional service. 

However, because the rendering 

practitioner has only been identified on 

CAH claims since July 1, 2009, for the 

first year of the PCIP we are proposing 

to identify eligible practitioners using 

only 6 months of CAH data for those 

CAHs paid under the optional method. 

Thereafter, we would update the list of 

practitioners eligible for the PCIP 

annually based on the most recent 

available full year of PFS and CAH 

claims data. 

To the extent practitioners were paid 

under the PFS during the historical 

claims data year for some primary 

services and, for other services, CAHs 

were paid under the optional method 

for those same practitioners’ 

professional services, we would 

aggregate the historical claims data from 

all settings by the practitioner’s NPI in 

order to determine whether the 

practitioner is eligible for PCIP 

payments. We note that for all 

practitioners (both practitioners paid 

under the PFS and practitioners for 

whose professional services CAHs are 

paid under the optional method), the 

period of claims data used for the 

annual determination of the primary 

care service percentage of allowed 

charges with a practitioner specialty of 

primary care would lag the PCIP 

payment year by 2 years (for example, 

CY 2010 claims data would be used for 

the CY 2012 PCIP). This 2-year lag is 

consistent with other areas of the 

Medicare program where we rely on 

information from claims data to inform 

payment in a future year, such as the 

use of CY 2009 PFS utilization data in 

the establishment of certain aspects of 

CY 2011 PFS payment rates. 

Under the proposed PCIP eligibility 

determination method, it would be 

necessary to revise the list of eligible 

practitioners based on updated claims 

data regarding primary specialty 

designation and the percentage of a 

practitioner’s allowed charges for 

primary care services each year. The 


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revised list of practitioners developed 

prior to the beginning of the next CY 

would establish a practitioner’s 

eligibility for PCIP payments for the full 

next CY. That is, once eligible for the 

PCIP for a given CY, the practitioner 

would receive PCIP payments for 

primary care services furnished 

throughout that full CY until we 

reassess the practitioner’s PCIP 

eligibility for the next year’s payments. 

As a result, a practitioner newly 

enrolling in Medicare during a CY 

would not be eligible for the PCIP until 

Medicare claims data reflecting the 

practitioner’s primary care specialty and 

a percentage of allowed charges for 

primary care services that equals or 

exceeds the 60 percent threshold were 

available to establish the practitioner’s 

eligibility for the next PCIP year. 

Similarly, an enrolled practitioner’s 

change in primary specialty designation 

(either to or from a primary care 

specialty) would not affect that 

practitioner’s eligibility for the PCIP 

until the practitioner’s claims reflecting 

the change were available for analysis in 

preparation for the next applicable CY 

PCIP. Given the statutory requirement 

that a practitioner’s primary care 

services account for at least 60 percent 

of the allowed charges under Part B for 

the practitioner in a prior period as 

determined by the Secretary, we see no 

clear alternative methodologies that 

would allow PCIP payments to be made 

to those practitioners newly enrolling in 

Medicare without the 2-year lag in 

eligibility determination that was 

described previously. However, given 

our general interest in supporting 

primary care practitioners and entry 

into primary care practice by new 

physicians and NPPs in order to ensure 

that Medicare beneficiaries have access 

to these important services, we are 

seeking public comments on alternative 

approaches for establishing PCIP 

eligibility for newly enrolled 

practitioners that would be consistent 

with the statutory requirement. 

We plan to monitor changes in the 

primary specialties of enrolled 

practitioners over time and would 

expect not to see significant changes in 

the specialties of currently enrolled 

practitioners as a result of the PCIP 

payments. We would expect that 

physicians changing their primary 

specialty to one of the primary care 

specialties of family medicine, internal 

medicine, geriatric medicine, or 

pediatric medicine and who would be 

newly eligible for the PCIP would be 

furnishing primary care services to the 

patients in their practices. Consistent 

with our past policies, we would expect 

that physicians changing their primary 

specialty designation under Medicare 

would make such changes only so that 

their primary specialty designation is 

fully consistent with the specific or 

unique type of medicine they practice. 

If we find that physicians are changing 

their specialty designations (for 

example, cardiologists who designate 

their primary specialty as internal 

medicine, although they practice 

cardiology) in order to take advantage of 

the PCIP payments, we would 

considering making future revisions to 

eliminate such an outcome. 

Consistent with the established 

Medicare HPSA physician bonus 

program (Medicare Claims Processing 

Manual, Pub. 100–04, Chapter 12, 

Section 90.4.4) and the proposed Health 

Professional Shortage Area Surgical 

Incentive Payment Program (HSIP) 

described in section III.S.2. of this 

proposed rule, we are proposing that 

PCIP payments would be calculated by 

the Medicare contractors and made 

quarterly on behalf of the eligible 

primary care practitioner for the 

primary care services furnished by the 

practitioner in that quarter. The primary 

care practitioners’ professional services 

may be paid under the PFS based on a 

claim for professional services or, where 

the practitioner has reassigned his or 

her benefits to a CAH paid under the 

optional method, to the CAH based on 

an institutional claim. 

As discussed above, eligible primary 

care practitioners would be identified 

on a claim based on the NPI of the 

rendering practitioner. If the claim is 

submitted by a practitioner’s group 

practice or a CAH, the rendering 

practitioner’s NPI must be included on 

the line-item for the primary care 

service (identified in Table 39 above) in 

order for a determination to be made 

regarding whether or not the service is 

eligible for payment of the PCIP. We 

note that, in order to be eligible for the 

PCIP, physician assistants, clinical 

nurse specialists, and nurse 

practitioners must be billing for their 

services under their own NPI and not 

furnishing services incident to 

physicians’ services. Regardless of the 

specialty area in which they may be 

practicing, these specific NPPs would be 

eligible for the PCIP based on their 

specialty if their historical percentage of 

allowed charges for primary care 

services equals or exceeds the 60 

percent threshold. 

We note that section 1833(x)(4) of the 

Act (as added by section 5501(a) of the 

ACA) specifies ‘‘there shall be no 

administrative or judicial review under 

section 1869, 1878, or otherwise, 

respecting the identification of primary 

care practitioners.’’ We believe that the 

inclusion of this language is intended to 

provide a means for the practical 

implementation of this provision. That 

is, because we must develop a process 

and identify primary care practitioners 

before we can make payment under the 

PCIP to the eligible primary care 

practitioners, the statute gives CMS the 

authority to make final determinations 

of eligible primary care practitioners 

that are not subject to appeal through 

the various channels normally available 

to practitioners, in order for the timely 

payments under the PCIP to occur. In 

contrast, if the determinations that CMS 

must make under this provision were 

subject to appeal, the timely 

implementation of this provision could 

be jeopardized and payments under the 

PCIP could be significantly delayed. 

However, we do not believe that the ‘‘no 

administrative or judicial review’’ clause 

precludes CMS from correcting errors 

resulting from clerical or mathematical 

mistakes. Therefore, we note that 

practitioners would have the 

opportunity to notify CMS of clerical or 

mathematical errors that may have 

occurred during the process of 

identifying eligible primary care 

practitioners for PCIP payment, and 

which could result in a mistaken 

eligibility determination for the PCIP. 

In summary, under the PCIP 

beginning in CY 2011, we are proposing 

to identify primary care practitioners 

based on their primary specialty and 

percentage of allowed charges for 

primary care services that equals or 

exceeds the 60 percent threshold based 

upon the most current full year of 

Medicare claims data, which would be 

the claims data for 2 years prior to the 

incentive payment year (for example, 

CY 2009 claims data processed through 

June 2010 would be used to identify 

primary care practitioners for the CY 

2011 PCIP). Practitioners identified as 

eligible for the PCIP immediately prior 

to the PCIP payment year would then 

receive quarterly incentive payments 

during the PCIP year equal to 10 percent 

of the payment amount for their primary 

care services under Part B, in addition 

to the amount the primary care 

practitioner would otherwise be paid for 

their professional services under Part B 

for furnishing the primary care services. 

For example, primary care practitioners 

identified in late CY 2010 for the CY 

2011 PCIP would receive quarterly PCIP 

payments in CY 2011 that equal 10 

percent of the Part B payment for the 

primary care services those practitioners 

furnish during CY 2011. 

We further note that section 

1833(x)(3) of the Act (as added by 

section 5501(a) of the ACA) authorizes 


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payment under the PCIP as an 

additional payment amount for 

specified primary care services without 

regard to any additional payment for the 

service under section 1833(m) of the 

Act. Therefore, an eligible primary care 

physician furnishing a primary care 

service in a HPSA may receive both a 

HPSA physician bonus payment under 

the established program and a PCIP 

payment under the new program 

beginning in CY 2011, but the PCIP 

payment is made without regarding to 

the HPSA physician bonus payment 

amount. In addition, payments for 

outpatient CAH services under section 

1834(g)(2)(B) of the Act (as amended by 

section 5501(a) of the ACA) are not 

affected by the PCIP payment amounts 

made to the CAH on behalf of the 

primary care practitioner. 

Accordingly, for CY 2011, we are 

proposing to add a new § 414.80 to our 

regulations to specify the requirements 

of the PCIP. Proposed § 414.80(a) would 

define primary care practitioners and 

primary care services. Proposed 

§ 414.80(b) would provide eligible 

primary care practitioners a 10 percent 

incentive payment with respect to 

primary care services, in addition to the 

amount that would otherwise be paid 

for their professional services under Part 

B. Quarterly PCIP payments would be 

made to eligible practitioners or to 

CAHs paid under the optional method 

that are billing on behalf of practitioners 

for their professional services for 

identified primary care services. 

2. Section 5501(b): Incentive Payment 

Program for Major Surgical Procedures 

Furnished in Health Professional 

Shortage Areas 

a. Background 

Section 1833(m) of the Act provides 

for an additional 10 percent incentive 

payment for physicians’ services 

furnished to a covered individual in an 

area that is designated as a geographic 

Health Professional Shortage Area 

(HPSA) as identified by the Secretary 

prior to the beginning of such year. 

Section 5501(b) of the ACA revises 

section 1833 of the Act by adding the 

new subparagraph (y), ‘‘Incentive 

Payments for Major Surgical Procedures 

Furnished in Health Professional 

Shortage Areas.’’ 

In the case of major surgical 

procedures furnished by a general 

surgeon on or after January 1, 2011 and 

before January 1, 2016, in an area 

designated under section 332(a)(1)(A) of 

the Public Health Service Act as a 

geographic HPSA, there shall be paid on 

a monthly or quarterly basis, an amount 

equal to 10 percent of the payment 

amount for eligible services under Part 

B. Section 1833(y)(2)(A) of the Act (as 

added by section 5501(b) of the ACA) 

defines a general surgeon as a physician 

who is described in section 1861(r)(1) of 

the Act and who has designated a CMS 

specialty code of 02—General Surgery 

as his or her primary specialty code in 

the physician enrollment under section 

1866(j) of the Act. 

Section 1833(y)(2)(B) of the Act (as 

added by section 5501(b) of the ACA) 

defines major surgical procedures as 

surgical procedures for which a 10-day 

or 90-day global period is used for 

payment under the PFS in section 

1848(b) of the Act. In Addendum B to 

the CY 2010 PFS final rule with 

comment period (74 FR 62017 through 

62143), as corrected in the correction 

notice (74 FR 65455 through 65457), we 

identified 489 10-day global procedure 

codes and 3,796 90-day global 

procedure codes for a total of 4,285 

surgical procedure codes that would 

have met the surgical procedure criteria 

for the incentive payment if it were 

applicable in CY 2010. 

b. Proposed HPSA Surgical Incentive 

Payment Program (HSIP) 

For services furnished on or after 

January 1, 2011 and before January 1, 

2016, we are proposing to provide a 10 

percent incentive payment to general 

surgeons, identified by their enrollment 

in Medicare with a primary specialty 

code of 02—general surgery, in addition 

to the amount they would otherwise be 

paid for their professional services 

under Part B, when they furnish a major 

surgical procedure in a location that was 

defined by the Secretary as of December 

31 of the prior year as a geographic 

HPSA. As with the PCIP described 

above, we do not believe that surgeons 

will change their Medicare specialty 

designation in order to take advantage of 

the HSIP payments. However, we will 

monitor the specialty designations of 

enrolled physicians, and if we find that 

surgeons are changing their primary 

specialty designation to general surgery 

in order to take advantage of the HSIP 

payments, we would consider making 

future revisions to eliminate such an 

outcome. 

Consistent with the established 

Medicare HPSA physician bonus 

program, we are proposing that these 

HSIP payments would be calculated by 

the Medicare contractors based on the 

criteria for payment that we have 

established as discussed earlier in this 

section, and payments would be made 

quarterly on behalf of the qualifying 

general surgeon for the qualifying major 

surgical procedures. The surgeons’ 

professional services may be paid under 

the PFS based on a claim for 

professional services or, where the 

physician has reassigned his or her 

benefits to a critical access hospital 

(CAH) paid under the optional method, 

to the CAH based on an institutional 

claim. 

Qualifying general surgeons would be 

identified on a claim for a major surgical 

procedure based on the primary 

specialty of the rendering physician, 

identified by his or her NPI, of 02— 

general surgery. If the claim is 

submitted by a physician’s group 

practice or a CAH, the rendering 

physician’s NPI must be included on the 

line-item for the major surgical 

procedure in order for a determination 

to be made regarding whether or not the 

procedure is eligible for payment under 

the HSIP. 

For HSIP payment to be applicable, 

the major surgical procedure must be 

furnished in an area designated by the 

Secretary as of December 31 of the prior 

year as a geographic HPSA. We would 

provide HSIP payments for major 

surgical procedures furnished by 

general surgeons in the same HPSAs as 

we currently recognize for purposes of 

payment of all physicians under the 

established Medicare HPSA physician 

bonus program under section 1833(m) of 

the Act. 

Each year, we publish a list of zip 

codes eligible for automatic payment of 

the HPSA physician bonus payment at: 

http://www.cms.gov/ 

hpsapsaphysicianbonuses/ 

01_overview.asp. We are proposing to 

use the same list of zip codes for 

automatic payment of the bonus for 

eligible services furnished by general 

surgeons. We are also proposing to 

create a new HCPCS code modifier to 

identify circumstances when general 

surgeons furnish services in areas that 

are designated as HPSAs as of December 

31 of the prior year, but that are not on 

the list of zip codes eligible for 

automatic payment. The new modifier 

would be appended to the major 

surgical procedure on claims submitted 

for payment, similar to the current 

process for payment of the Medicare 

HPSA physician bonus when the 

geographic HPSA is not a HPSA 

identified for automatic payment. 

Consistent with the statutory 

requirement, we are proposing to define 

major surgical procedures as those for 

which a 10-day or 90-day global period 

is used for payment under the PFS. For 

CY 2011, approximately 4,300 10-day 

and 90-day global surgical procedures 

codes are identified in Addendum B to 

this proposed rule under the far right 

column labeled ‘‘Global’’ and designated 

with ‘‘010’’ or ‘‘090,’’ respectively. 


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We further note that section 

1833(y)(3) of the Act (as added by 

section 5501(b)(1) of the ACA) 

authorizes payment under the HSIP as 

an additional payment amount for 

specified surgical services without 

regard to any additional payment for the 

service under section 1833(m) of the 

Act. Therefore, a general surgeon may 

receive both a HPSA physician bonus 

payment under the established 

Medicare HPSA physician bonus 

program and an HSIP payment under 

the new program beginning in CY 2011, 

but the HSIP payment is made without 

regarding to the HPSA physician bonus 

payment amount. In addition, payments 

for outpatient CAH services under 

section 1834(g)(2)(B) of the Act (as 

amended by section 5501(b) of the ACA) 

are not affected by the HSIP payment 

amounts made to the CAH on behalf of 

the general surgeon. 

Accordingly, for CY 2011, we are 

proposing to amend § 414.2 by adding 

the definitions of ‘‘HPSA’’ and ‘‘major 

surgical procedure.’’ We are also 

proposing to revise § 414.67 to move the 

existing provisions to paragraph (a) to 

be grouped as the ‘‘Health Professional 

Shortage Area (HPSA) physician bonus 

program’’ and adding a new paragraph 

(b) for the ‘‘HPSA surgical incentive 

payment program’’ provisions. Proposed 

§ 414.67(b) would state that general 

surgeons who furnish identified 10-day 

and 90-day global period surgical 

procedures in an area designated by the 

Secretary as of December 31 of the prior 

year as a geographic HPSA that is 

recognized by Medicare for the HPSA 

physician bonus program as specified 

under renumbered § 414.67(a)(1) would 

receive a 10 percent incentive payment 

in addition to the amount that would 

otherwise be paid for their professional 

services under Part B. Physicians 

furnishing services in areas that are 

designated as geographic HPSAs prior to 

the beginning of the year but not 

included on the published list of zip 

codes for which automated HPSA 

surgical bonus payments are made 

should report a specified HCPCS code 

modifier to receive the HSIP payment. 

Quarterly incentive payments would be 

made to physicians or to CAHs paid 

under the optional method that are 

billing on behalf of physicians for their 

professional services. 

3. Sections 5501(a) and (b) of the ACA 

and Payment for Critical Access 

Hospital Professional Services Under 

the Optional Method 

Section 1834(g) of the Act establishes 

the payment rules for outpatient 

services furnished by a CAH. In 1999, 

section 403(d) of the Balanced Budget 

Refinement Act of 1999 (Pub. L. 106– 

113) (BBRA) amended section 1834(g) of 

the Act to provide for two methods of 

payment for outpatient services 

furnished by a CAH. Specifically, 

section 1834(g)(1) of the Act, as 

amended by the BBRA, specifies that 

the amount of payment for outpatient 

services furnished by a CAH is equal to 

the reasonable costs of the CAH in 

furnishing such services. (The physician 

or other practitioner furnishing the 

professional service receives payment 

under the PFS.) In the alternative, the 

CAH may make an election, under 

section 1834(g)(2) of the Act, to receive 

amounts that are equal to ‘‘the 

reasonable costs’’ of the CAH for facility 

services plus, with respect to the 

professional services, the amount 

otherwise paid for professional services 

under Medicare, less the applicable 

Medicare deductible and coinsurance 

amount. The election made under 

section 1834(g)(2) of the Act is 

sometimes referred to as ‘‘method II’’ or 

‘‘the optional method.’’ Throughout this 

section of this preamble, we refer to this 

election as ‘‘the optional method.’’ 

In 2000, section 202 of the Medicare, 

Medicaid and SCHIP Benefits 

Improvement and Protection Act of 

2000) (Pub. L. 106–554) (BIPA) 

amended section 1834(g)(2)(B) of the 

Act to increase the payment for 

professional services under the optional 

method to 115 percent of the amount 

otherwise paid for professional services 

under Medicare. In addition, in 2003 

section 405(a)(1) of the MMA amended 

section 1834(g)(l) of the Act by inserting 

the phrase ‘‘equal to 101 percent of’’ 

before the phrase ‘‘the reasonable costs.’’ 

However, section 405 of the MMA did 

not make a corresponding change to 

section 1834(g)(2)(A) of the Act 

regarding the amount of payment for 

facility services under the optional 

method. In 2010, Section 3128 of the 

ACA amended section 1834(g)(2)(A) of 

the Act by inserting the phrase ‘‘101 

percent of’’ before ‘‘the reasonable costs.’’ 

Section 5501(a) of the ACA amends 

section 1833 of the Act by adding a new 

paragraph (x), ‘‘Incentive Payments for 

Primary Care Services,’’ that authorizes 

additional Part B payments to primary 

care practitioners for primary care 

services. Section 5501(b) of the ACA 

further amends section 1833 of the Act 

by adding new paragraph (y), ‘‘Incentive 

Payments for Major Surgical Procedures 

Furnished in Health Professional 

Shortage Areas,’’ that authorizes 

additional Part B payments for major 

surgical procedures furnished by 

general surgeons in HPSAs. Sections 

5501(a)(3) and 5501(b)(3) of the ACA 

make conforming amendments to 

section 1834(g)(2)(B) of the Act, which 

refers to payment to the CAH for 

professional services under the optional 

method, by adding at the end of section 

1834(g)(2)(B) the following phrase, 

‘‘Subsections (x) and (y) of 1833 shall 

not be taken into account in 

determining the amounts that would 

otherwise be paid pursuant to the 

preceding sentence.’’ As such, section 

1834(g)(2)(B) of the Act (as amended by 

sections 5501(a)(2) and 5501(b)(2) of the 

ACA) requires that under the optional 

method, the 115 percent adjustment 

payment to the CAH for professional 

services is calculated without 

considering the incentive payments for 

primary care services furnished by 

primary care practitioners and major 

surgical procedures furnished by 

general surgeons in HPSAs as these 

terms are defined under sections 

1833(x) and (y) of the Act. 

The regulations implementing section 

1834(g)(2)(B) of the Act, payment to the 

CAH for professional services under the 

optional method, are in 

§ 413.70(b)(3)(ii)(B). In order to 

implement the amendments to section 

1834(g)(2)(B) of the Act as specified by 

sections 5501(a)(2) and 5501(b)(2) of the 

ACA, we are proposing to amend the 

regulations in § 413.70(b)(3)(ii)(B) to 

state that, effective for primary care 

services furnished by primary care 

practitioners and major surgical 

procedures furnished by general 

surgeons in HPSAs on or after January 

1, 2011 and before January 1, 2016, the 

additional incentive payment amounts 

as specified in § 414.67 and § 414.80 are 

not included in the determination of the 

payment for professional services made 

to the CAH under the optional method. 

Accordingly, we are proposing that 

payment for professional services to the 

CAH at 115 percent of the PFS amount 

under the optional method would not 

take into account the additional Part B 

incentive payments for primary services 

furnished by primary care practitioners 

and major surgical procedures furnished 

by general surgeons in HPSAs as 

provided in § 414.67 and § 414.80. 

T. Section 6003: Disclosure 

Requirements for In-Office Ancillary 

Services Exception to the Prohibition on 

Physician Self-Referral for Certain 

Imaging Services 

1. Background 

Section 1877 of the Act also known as 

the physician self-referral law: (1) 

Prohibits a physician from making 

referrals for certain ‘‘designated health 

services’’ (DHS) payable by Medicare to 

an entity with which he or she (or an 

immediate family member) has a 


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financial relationship (ownership or 

compensation), unless an exception 

applies; and (2) prohibits the entity from 

filing claims with Medicare (or billing 

another individual, entity, or third party 

payer) for those DHS rendered as a 

result of a prohibited referral. The 

statute establishes a number of specific 

exceptions and grants the Secretary the 

authority to create regulatory exceptions 

that pose no risk of program or patient 

abuse. 

Section 1877(b)(2) of the Act, entitled 

‘‘In-office Ancillary Services’’ sets forth 

the exception that permits a physician 

in a solo or group practice to order and 

provide designated health services 

(DHS), other than most durable medical 

equipment and pretrial and enteral 

nutrients, in the office of the physician 

or group practice, provided that certain 

specific criteria are met. Under this 

exception, the statute limits who can 

furnish the service, designates where 

the service must be performed, and 

limits who can bill for the service. As 

explained at the end of the statutory 

exception, the service may also be 

subject to ‘‘such other requirements as 

the Secretary may impose by regulation 

as needed to protect against program or 

patient abuse.’’ The in-office ancillary 

services exception is interpreted at 

§ 411.355(b). 

Section 6003 of the ACA amends 

section 1877(b)(2) of the Act by creating 

a new disclosure requirement for the inoffice ancillary services exception to the 

prohibition on physician self-referral. 

Specifically, section 6003 provides that, 

with respect to referrals for magnetic 

resonance imaging (MRI), computed 

topography (CT), positron emission 

topography (PET), and any other DHS 

specified under section 1877(h)(6)(D) 

that the Secretary determines 

appropriate, we must promulgate a 

requirement that the referring physician 

inform a patient in writing at the time 

of the referral that the patient may 

obtain the service from a person other 

than the referring physician or someone 

in the physician’s group practice and 

provide the patient with a list of 

suppliers who furnish the service in the 

area in which the patient resides. 

2. Proposed Disclosure Requirement 

We are proposing to implement 

section 6003 of the ACA by amending 

§ 411.355(b) to add new paragraph 

(b)(7). We describe below our proposal 

for the new disclosure requirement. 

a. Services That Trigger the Disclosure 

Requirement 

Section 6003(a) of the ACA requires 

that the new disclosure requirement 

apply to MRI, CT, and PET services as 

well as such other radiology or imaging 

services included in the DHS category 

specified in section 1877(h)(6)(D) of the 

Act that the Secretary determines 

appropriate. We are considering 

whether to expand this disclosure 

requirement to other radiology and 

imaging services. We are not inclined to 

expand the disclosure requirement but 

we solicit comments regarding whether 

other radiology or imaging services that 

fall under section 1877(h)(6)(D) of the 

Act should be included in this 

requirement, and if so, which services, 

and the purpose served by extending the 

disclosure requirement to additional 

radiology or imaging services. 

b. General Disclosure Requirements 

In § 411.355(b)(7), we are proposing 

that the disclosure notice should be 

written in a manner sufficient to be 

reasonably understood by all patients 

and must, as the ACA requires, be given 

to the patient at the time of the referral. 

This notice must indicate to the patient 

that the services may be obtained from 

a person other than the referring 

physician or his or her group practice 

and include a list of other suppliers who 

provide the service being referred (MRI, 

CT, or PET). 

We believe one purpose of the 

disclosure requirement is to inform a 

patient’s decision-making regarding his 

or her own care. The list of suppliers 

provided to the patient by the physician 

is meant to serve as a resource for the 

patient. Nothing on the disclosure 

notice or list of suppliers may indicate 

to the patient that he or she must 

receive imaging from a supplier on the 

list if not receiving the service from the 

referring physician. The patient may 

receive the imaging service from the 

referring physician, from a supplier 

identified on the notice, or from another 

supplier of the patient’s choice. The 

patient is free to choose the supplier of 

the service. 

c. List of Alternate Suppliers 

Section 6003(a) of the ACA specifies 

that the referring physician must 

provide a written list of ‘‘suppliers (as 

defined in section 1861(d)).’’ Section 

1861(d) of the Act defines supplier as ‘‘a 

physician or other practitioner, a 

facility, or other entity (other than a 

provider of services) that furnishes 

items or services under this title.’’ We 

are proposing that only suppliers be 

included on the written list. We are not 

proposing to permit or require the list to 

include ‘‘providers of services’’, which is 

defined in section 1861(u) of the Act to 

include hospitals and critical access 

hospitals, among other facilities. We are 

soliciting comments regarding whether 

inclusion of providers of services on the 

written notice would benefit patients in 

choosing an alternate entity for an 

imaging service by providing more, and 

varied, options. 

Section 6003(a) of the ACA also 

requires that the alternate suppliers 

specified in the notice provided to the 

patient must furnish the relevant 

services ‘‘in the area in which [the 

patient] resides.’’ We are aware that a 

patient may travel outside the area in 

which he or she resides in order to 

receive medical care. We believe that 

requiring an original written notice for 

each patient based upon a certain 

distance from the patient’s residence 

could place a significant administrative 

burden on physicians practicing in a 

solo or group practice. It would be 

impractical for a physician to prepare a 

separate list for every area in which his 

or her patients reside. Additionally, we 

believe that if a patient has traveled to 

see the referring physician, the 

physician is located in an area 

convenient to the patient and therefore, 

a referral within a certain distance of 

this location would also be convenient 

for the patient. 

In order to ease the administrative 

burden of creating multiple lists while 

still implementing the requirements of 

the statute, we are proposing that the 

suppliers included in this notice should 

be located within a 25-mile radius of the 

physician’s office location at the time of 

the referral. We believe that a 25-mile 

radius is large enough in most areas to 

generate a list of suppliers that will be 

useful to patients. We note that we have 

used a 25-mile radius in other physician 

self-referral exceptions, including the 

intra-family rural referrals exception 

(§ 411.355(j)) and the physician 

recruitment exception (§ 411.357(e)). 

Even if a patient resides more than 25 

miles away, we are proposing that it 

will be sufficient to provide a list of 

suppliers located within a 25-mile 

radius of the physician’s office location 

at the time the referral is made. As 

discussed above, we believe that 

measuring the distance from the 

physician’s office location will better 

serve patients who have perhaps 

traveled from long distances to receive 

specialized treatment. 

We are soliciting comments regarding 

the proposed 25-mile radius 

requirement. In attempting to minimize 

confusion and burden related to 

implementing this provision, we have 

proposed the same standard for both 

urban and rural areas. We realize that in 

some areas 25 miles may be too small 

to generate a sufficient list of other 

suppliers. We are interested in hearing 

whether an alternative distance may be 


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more effective for urban or rural areas as 

well as what other criteria should be 

considered in finalizing regulations for 

physicians in both urban and rural 

areas. 

In order to help a patient make an 

informed decision regarding other 

options for the recommended imaging 

services, we propose that the written 

notice include no fewer than 10 other 

suppliers. We considered proposing that 

the list include the 10 closest suppliers, 

but we want to allow physicians some 

flexibility in drafting the list of 

suppliers. On the other hand, we are 

concerned that physicians located in 

large metropolitan areas will draft a list 

that includes suppliers located mostly at 

the edges of the 25-mile radius, thereby 

increasing the chances that the patient 

will choose to receive imaging services 

from the referring physician’s practice. 

We are soliciting comments regarding 

whether providing a list of 10 suppliers 

is sufficient or too burdensome or 

susceptible to abuse and whether there 

are alternate criteria we should use that 

would result in an adequate list of 

convenient suppliers that does not 

impose an undue burden on physician 

practices or a risk of abuse. 

We recognize that there may be fewer 

than 10 other suppliers within a 25-mile 

radius of the referring physician’s office 

location. We propose that, under these 

circumstances, the physician shall list 

all of the other suppliers of the 

particular imaging service that are 

present within a 25-mile radius of the 

referring physician’s office location, 

including up to 10 suppliers as required 

by these regulations. If no other 

suppliers of the imaging services 

ordered exist within the 25-mile radius 

of the physician’s office location, the 

physician need not provide a list of 

alternative suppliers, but must still 

disclose to his or her patients that the 

patients may receive the imaging 

services from another supplier. In this 

last situation, simply providing this 

disclosure statement will satisfy the 

disclosure requirement of this provision 

even though alternative suppliers are 

not listed. The physician must maintain 

documentation of the disclosure. 

We are proposing that the written 

notice be required to include certain 

information about the listed suppliers in 

order to satisfy this disclosure 

requirement. The list must include the 

name, address, phone number, and 

distance from the physician’s office 

location at the time of the referral. We 

propose to require inclusion of the 

distance from the physician’s location to 

the other suppliers in order to 

emphasize to the patient the relative 

convenience of the listed suppliers. 

We are not proposing an exception to 

the disclosure requirement for MRI, CT, 

or PET services furnished on an 

emergency or time-sensitive basis. We 

are soliciting comments related to 

whether there are other procedures or 

circumstances in which it may be 

difficult or impractical to provide the 

written disclosure prior to provision of 

the imaging services. 

This proposal sets forth criteria that 

apply to the disclosure requirement and 

list of alternative suppliers. These 

criteria are intended to provide clear 

guidance as to how physicians may 

comply with the new requirement of the 

in-office ancillary services exception. 

We understand that there may be 

alternative ways to implement these 

statutory requirements. One possible 

alternative is to only require a 

‘‘reasonable’’ list of other suppliers with 

general requirements for the disclosure 

to patients, while providing that if the 

physician meets the more specific 

requirements set forth in this proposal, 

he or she will be deemed to have a 

‘‘reasonable’’ disclosure. We seek 

comments on this specific alternative 

and any other alternative methods of 

compliance that still satisfy the 

statutory requirements. 

d. Documentation of Disclosure 

In order to document that this 

disclosure requirement has been 

satisfied, we propose that a record of the 

patient’s signature on the disclosure 

notification must be maintained as an 

element of the patient’s medical record. 

We are soliciting comments regarding 

the burden of this recordkeeping 

requirement. We are also interested in 

comments that suggest alternative 

means of recording that the disclosure 

was made to the patient at the time of 

referral. 

e. Effective Date 

As discussed above, section 6003(a) of 

the ACA amends section 1877(b)(2) of 

the Act by instructing that the new 

disclosure requirement be added as one 

of the additional requirements of the inoffice ancillary services exception. The 

last sentence of the statutory exception 

preceding this amendment authorizes 

the Secretary to impose ‘‘such other 

requirements * * * by regulation as 

needed to protect against program or 

patient abuse’’ (emphasis added). The 

amendment specifies that ‘‘[s]uch 

requirements shall * * * include a 

[disclosure] requirement * * *’’ In 

reading the last sentence of section 

1877(b)(2) together with the 

amendment, we do not believe that the 

amendment is self-effectuating. Instead, 

the new disclosure requirement of 

section 6003 must be promulgated by 

regulation. Therefore, we believe that a 

correct reading of section 6003(a) is that 

this amendment shall not be effective 

until the Secretary promulgates a final 

regulation implementing this new 

requirement and the regulation becomes 

effective. 

We considered whether, pursuant to 

section 6003 of the ACA, the final rule 

setting forth the disclosure requirement 

should apply retroactively to all services 

furnished on or after January 1, 2010. 

Given the structure of the amended inoffice ancillary services exception and 

the statute as a whole, however, we 

believe that retroactive rulemaking is 

not required. Therefore, we are 

proposing that the new disclosure 

requirement shall apply only to services 

furnished on or after the effective date 

of the final regulation implementing 

section 6003 of the ACA. We are 

proposing an effective date of January 1, 

2011 for the regulation implementing 

this provision. 

U. Section 6404: Maximum Period for 

Submission of Medicare Claims 

Reduced to Not More Than 12 Months 

1. Background 

Sections 1814(a)(1), 1835(a), and 

1842(b)(3)(B) of the Act establish time 

limits for filing Medicare Part A and B 

claims. Prior to the enactment of the 

ACA, under sections 1814(a)(1) and 

1835(a) of the Act, providers could file 

for Part A and Part B claims, 

respectively, ‘‘* * * no later than the 

close of the period of 3 calendar years 

following the year in which such 

services are furnished (deeming any 

services furnished in the last 3 calendar 

months of any calendar year to have 

been furnished in the succeeding 

calendar year) except that, where the 

Secretary deems that efficient 

administration so requires, such period 

may be reduced to not less than 1 

calendar year * * *’’. Prior to the 

enactment of the ACA, CMS was 

authorized to establish a minimum time 

limit for provider-submitted Part A and 

Part B claims of at least 1 calendar year 

from the date of service, and a 

maximum time limit not to exceed 4 

years and 3 months after the date of 

service. 

Additionally, prior to the enactment 

of the ACA, under section 1842(b)(3)(B) 

of the Act, Part B claims for physician 

and other supplier services could be 

filed with Medicare ‘‘* * * no later than 

the close of the calendar year following 

the year in which such service is 

furnished (deeming any service 

furnished in the last 3 months of any 

calendar year to have been furnished in 


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the succeeding calendar year) * * *’’. 

Therefore, prior to the enactment of the 

ACA, CMS was authorized to establish 

a minimum time limit for filing Part B 

claims of 15 months and a potential 

maximum of 27 months after the service 

was furnished, depending on what 

month of the year the service was 

furnished. 

Section 424.44 implements sections 

1814(a)(1), 1835(a), and 1842(b)(3)(B) of 

the Act. In order to effectively 

administer the Medicare Program, CMS, 

through regulations, modified the 

potential minimum and maximum time 

periods for filing Part A claims so that 

Part A claims would have the same time 

limits as Part B claims. At § 424.44(a), 

CMS adopted the minimum time limit 

of 15 months and potential maximum of 

27 months after the service was 

furnished that was permitted under 

section 1842(b)(3)(B) of the Act for Part 

B claims and uniformly applied that 15 

to 27 month time limit to both Part A 

and B claims. Also, under § 424.44(b), 

CMS allowed providers and suppliers 

the opportunity to file claims after the 

15 to 27 month deadline for filing 

claims expired when the failure to file 

‘‘* * * was caused by error or 

misrepresentation of an employee, 

intermediary, carrier, or agent of the 

Department that was performing 

Medicare functions and acting within 

the scope of its authority.’’ 

2. Provisions of the ACA 

Section 6404 of the ACA amended 

sections 1814(a)(1), 1835(a), and 

1842(b)(3)(B) of the Act regarding 

Medicare fee-for-service (FFS) claims for 

services furnished on or after January 1, 

2010. Under section 6404(b)(1) of the 

ACA, all claims for services furnished 

on or after January 1, 2010 must be filed 

within 1 calendar year after the date of 

service. The provisions of the ACA did 

not amend these sections of the Act for 

services furnished before January 1, 

2010. However, section 6404(b)(2) of the 

ACA created a new requirement that 

claims for services furnished before 

January 1, 2010 must be filed on or 

before December 31, 2010. Thus, the 

statutory provisions prior to the 

enactment of the ACA remain in effect 

for pre-2010 services, subject to this 

new requirement. The practical effect of 

this change is that any claims for 

services furnished before October 1, 

2009 will follow the current existing 

regulations. But for any services 

furnished during the last three months 

of 2009, those claims must be filed no 

later than December 31, 2010. For 

services furnished between October 1, 

2009 and December 31, 2009, providers 

and suppliers will only have 12–15 

months to file a claim, whereas before 

the ACA amendments, they would have 

had an additional year to file their 

claims, or 24 to 27 months. Therefore, 

in order to effectuate the changes made 

by the ACA, we are proposing to amend 

§ 424.44 so that it is consistent with the 

amended statutory provisions. 

We are proposing to amend 

§ 424.44(a) by replacing the current text 

with the requirement that claims for 

services provided on or after January 1, 

2010 must be submitted no later than 

the close of the period ending 1 

calendar year after the date of service. 

As noted above, any services furnished 

before January 1, 2010 will still be 

subject to the pre-existing statutory 

provisions. Therefore, we are proposing 

that for pre-2010 services, the preexisting regulatory structure will 

continue to apply. For those services 

furnished before January 1, 2010, claims 

must be filed on or before December 31 

of the following year for services that 

were furnished during the first 9 months 

of a calendar year, and on or before 

December 31st of the second following 

year for services that were furnished 

during the last 3 months of the calendar 

year. However, for those services 

provided in the last three months of 

2009, we propose that all claims for 

those services must be filed no later 

than December 31, 2010. 

Section 6404 of the ACA also gives 

the Secretary authority to create 

exceptions to the 1 year timely filing 

period. In addition to the existing 

exception to the timely filing 

requirement due to error or 

misrepresentation by CMS, our 

contractors or agents, we propose to 

create two new exceptions. First, we are 

proposing to create an exception for 

those situations where a beneficiary 

becomes retroactively entitled to 

Medicare benefits, but was not entitled 

at the time the services were furnished. 

Second, we are proposing to permit 

providers and suppliers to file claims 

after the time limit for filing claims has 

expired in limited dual eligible 

Medicare/Medicaid beneficiary 

situations. 

The first new proposed exception at 

§ 424.44(b)(2) will permit providers and 

suppliers to file claims after the time 

limit for filing claims expires when 

CMS or our contractors determines that 

the following conditions have been met: 

• At the time the service was 

furnished the beneficiary was not 

entitled to Medicare; and 

• The beneficiary subsequently 

received notification of Medicare 

entitlement effective retroactively to or 

before the date of the furnished service. 

In these situations, if CMS or one of 

our contractors determines that both of 

the conditions in § 424.44(b)(2) are met, 

then the time to file a claim will be 

extended through the last day of the 6th 

calendar month following the month in 

which the beneficiary received 

notification of Medicare entitlement 

effective retroactively to or before the 

date of the furnished service. Therefore, 

instead of the beneficiary having to pay 

out of his or her own pocket for the 

service or instead of the beneficiary’s 

other insurance or some other payer that 

is secondary to Medicare having to pay 

primary for the service, Medicare may 

pay primary (or secondary or tertiary) 

for the service since the beneficiary was 

entitled to Medicare (although 

retroactively) at the time the service was 

furnished. All of Medicare’s payment 

rules including Medicare’s Secondary 

Payer rules still apply in these 

retroactive entitlement situations. 

The second proposed new exception 

at § 424.44(b)(3) will permit providers 

and suppliers to file claims for duallyeligible beneficiaries after the time limit 

for filing claims expires when CMS or 

our contractors determine that all of the 

following conditions have been met: 

• At the time the service was 

furnished the beneficiary was not 

entitled to Medicare; 

• The beneficiary subsequently 

received notification of Medicare 

entitlement effective retroactively to or 

before the date of the furnished service; 

and 

• A State Medicaid agency recovered 

the Medicaid payment for the furnished 

service from the provider or supplier 11 

months or more after the date of service. 

This proposed exception applies to 

situations where a provider or supplier 

bills (and receives payment from) 

Medicaid for the services that a dual 

eligible Medicare/Medicaid beneficiary 

receives from the provider or supplier. 

However, at the time the services were 

furnished, the patient was not a dual 

eligible Medicare/Medicaid beneficiary 

yet because Medicare entitlement was 

granted to the individual retroactively 

after the service was actually furnished 

to the individual. In addition, after the 

State Medicaid Program discovers that 

the individual was granted Medicare 

entitlement retroactively, the State 

Medicaid Program recovers its payments 

from the provider or supplier for that 

individual’s services instructing the 

provider or supplier that Medicare 

should be billed for the services (not 

Medicaid). If all three of the conditions 

outlined above occur within 11 months 

of the date the service was furnished, 

then the provider or supplier will have 

enough time to bill Medicare for the 


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service. However, if Medicaid recovers 

their incorrect payment 11 months or 

more after the date the service was 

furnished, then the provider or supplier 

will not have enough time to file a claim 

with Medicare for the covered services 

because the time limit for filing claims 

expires 1 calendar year after the date of 

service. In these situations, if CMS or 

one of our contractors determines that 

all of the conditions at § 424.44(b)(3) are 

met, then the time to file a claim will 

be extended through the last day of the 

6th calendar month following the month 

in which the State Medicaid agency 

recovered the Medicaid payment for the 

furnished service from the provider or 

supplier. Therefore, we are proposing 

that this exception along with the 

aforementioned retroactive entitlement 

exception be added to § 424.44. 

We are proposing that for the one 

existing exception due to error or 

misrepresentation by CMS, our 

contractors or agents (see § 424.44(b)(1)) 

that no extension of time will be granted 

beyond 4 years from the date of service. 

Limiting the exception for this timely 

filing extension is consistent with 

current CMS policy. Moreover, we 

believe that limiting this exception to 4 

years after the date of service strikes an 

appropriate balance between fairness 

and equity for providers, suppliers, and 

beneficiaries and administrative finality 

for the Medicare program. We recognize 

that limiting the exceptions process 

could have potential impacts on those 

that wish to avail themselves of this 

exception. Therefore, we are soliciting 

comments on how this proposed four 

year limitation on the exception at 

§ 424.44(b)(1) will impact providers, 

suppliers and beneficiaries and the 

frequency of such occurrences. In 

addition, we are soliciting comments on 

whether the proposed four year 

limitation for this particular exception 

is appropriate, or what changes, if any, 

should be made to the limitation on the 

exceptions process, including a 

rationale or justification for an 

alternative time limitation. 

CMS is not proposing a definition of 

the term ‘‘date of service’’ in this 

regulation. Yet we recognize that the 

definition of this term is very important 

to providers, suppliers, and 

beneficiaries because the ‘‘date of 

service’’ will ultimately determine when 

the claim has to be filed in order to meet 

the new 1 calendar year requirement. In 

most cases the ‘‘date of service’’ will be 

the date that the item or service is 

actually furnished to the beneficiary; 

however, we recognize that for many 

Part A and B services it is difficult to 

craft a uniform rule that will apply a 

consistent date of service standard. It is 

our intention to provide sub-regulatory 

guidance on what constitutes the date of 

service for different Part A and B 

services. We are soliciting comments 

regarding whether CMS should provide 

a regulatory definition of ‘‘date of 

service’’ and, if so, how should it define 

this term. 

We are also clarifying the exception 

that appears at § 424.44(e). We are 

making clear that this regulation does 

not supersede the restriction on 

retrospective billing that appears in 

§§ 424.520 and 424.521. Under these 

provisions certain newly-enrolled 

suppliers, such as physicians, nonphysician practitioners, physician or 

non-physician practitioner 

organizations and IDTFs, have only a 

limited ability to submit claims for 

items or services furnished prior to the 

effective date of their Medicare billing 

privileges even if these claims would 

otherwise be considered timely. In 

addition, we want to make clear that the 

one calendar year timely filing limit in 

section 424.44(a) does apply to any 

retrospective claims permitted by 

sections 424.520 and 424.521 and to 

claims for items or services furnished 

after the effective date of the supplier’s 

billing privileges. 

V. Section 6410 and MIPPA: 

Adjustments to the Metropolitan 

Statistical Areas (MSA) for Medicare 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

Competitive Acquisition Program 

We are proposing a number of 

revisions to the DMEPOS CBP as a 

result of changes to the statute made by 

both the Medicare Improvements for 

Patients and Provider Act of 2008 

(MIPPA) and the ACA. Since both 

MIPPA and the ACA specify 

requirements for MSA selection for 

round 2 and beyond we are outlining 

our proposals for implementing the 

statutory requirements related to MSA 

selection in both MIPPA and the ACA 

in this section. First, we propose to use 

the authority provided by the statute at 

section 1847(a)(1)(D)(ii) of the Act, as 

amended by MIPPA to subdivide 

Metropolitan Statistical Areas (MSAs) 

with populations of greater than 

8,000,000 under Round 2 of the 

DMEPOS CBP. Second, we propose to 

exclude certain areas from competitive 

bidding after round 2 as mandated by 

section 1847(a)(1)(D)(iii) of the Act, as 

amended by MIPPA. Third, we propose 

to implement the requirement of section 

6410 of the ACA to expand Round 2 of 

the program by adding 21 of the largest 

MSAs based on total population to the 

original 70 already selected for round 2. 

1. Background 

Section VI.H of this proposed rule 

provides background on the DMEPOS 

CBP, including a description of many of 

the changes made to the program by 

section 154 of MIPPA. In this section, 

we provide additional information 

regarding changes made by both MIPPA 

and Section 6410 of the ACA. In 

addition to the changes discussed 

previously in this proposed rule, MIPPA 

also added subparagraph (D) to section 

1847(a)(1) of the Act. Section 

1847(a)(1)(D)(ii), as added by MIPPA, 

addresses Round 2 of the DMEPOS CBP, 

and section 1847(a)(1)(D)(iii) addresses 

subsequent rounds of the Program. 

Section 1847(a)(1)(D)(ii)(II) of the Act 

specifies that the Secretary shall 

implement DMEPOS competitive 

bidding in the areas previously selected 

for round 2 of the program and also 

allows the Secretary, in implementing 

round 2 of the program, to subdivide 

metropolitan statistical areas (MSAs) 

with populations of greater than 

8,000,000 into separate CBAs. 

Previously, we believe the statute could 

have been interpreted to allow CMS to 

subdivide large MSAs but MIPPA gave 

CMS the explicit authority to subdivide 

large MSAs. Section 1847(a)(1)(D)(iii) 

imposes new requirements on the 

Secretary for competitions occurring 

before 2015 in subsequent rounds of the 

program. For such competitions (other 

than national mail order), the following 

areas are to be excluded from the 

program: (I) Rural areas; (II) MSAs not 

selected under Round 1 or 2 with a 

population of less than 250,000; and (III) 

certain areas with low population 

density within a selected MSA. These 

requirements do not apply to a national 

mail order program. 

Finally, MIPPA required that we 

implement Round 2 of the DMEPOS 

CBP in the same MSAs that were 

designated as of June 1, 2008. In 2010, 

section 6410(a) of the ACA amended 

sections 1847(a)(1)(B)(i)(II) and (D)(ii) of 

the Act to expand Round 2 of the 

program from 70 MSAs to 91 MSAs by 

adding the next 21 largest MSAs by total 

population not already selected for 

Rounds 1 or 2. 

2. Subdividing Large MSAs Under 

Round 2 

We have selected MSAs for Round 1 

and for Round 2 consistent with 

MIPPA’s requirement. For round 1 

CBAs generally were comparable to 

MSAs, however, for round 2 we are 

proposing to subdivide MSAs of 

8,000,000 or more in population. The 

authority to subdivide MSAs into 

separate areas for competitive bidding 


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purposes is set forth in section 

1847(a)(1)(D)(ii)(II) of the Act which 

states, ‘‘[t]he Secretary may subdivide 

metropolitan statistical areas with 

populations (based upon the most 

recent data from the Census Bureau) of 

at least 8,000,000 into separate areas for 

competitive acquisition purposes.’’ We 

have identified three MSAs which, 

based on the 2009 estimate from the 

Census Bureau data, could be 

subdivided under section 

1847(a)(1)(D)(ii)(II): (1) ChicagoNaperville-Joliet, Illinois-IndianaWisconsin (IL-IN-WI) MSA with a 

population of 9,569,624; (2) Los 

Angeles-Long Beach-Santa Ana, 

California (CA) MSA with a population 

of 12,872,808; and (2) New YorkNorthern New Jersey-Long Island, New 

York-New Jersey-Pennsylvania (NY-NJPA) MSA with a population of 

19,006,798. We are proposing to divide 

these MSAs into separate CBAs because 

we believe this approach would create 

more manageable CBAs for contract 

suppliers to serve and allow more small 

suppliers to be considered for 

participation in the program. 

We considered certain factors when 

considering whether to propose 

subdividing the MSAs with populations 

of at least 8,000,000. We considered the 

geographic, social, and economic 

integration of each of the MSAs. We 

apply all of these factors when grouping 

counties into CBAs considered at a 

county level in each MSA and we 

believe it is also appropriate to use these 

factors to determine: (1) Whether or not 

to subdivide an MSA into separate 

CBAs, and (2) once the decision is made 

to subdivide the MSA, how to subdivide 

the MSA. We considered the following 

factors, generally in the order in which 

they are listed: 

• Geographic size of the MSA and the 

location of the counties within each 

MSA compared to neighboring counties; 

• The driving distances from north to 

south and east to west within each MSA 

and county; 

• The total population and the 

population of FFS Medicare 

beneficiaries using DMEPOS items 

subject to competitive bidding; 

• The DMPOS allowed charges for 

items subject to competitive bidding; 

• Comparably sized Round 1 and 

Round 2 MSAs based on beneficiary 

counts and allowed charges for 

competitive bid items; 

• The interstate highway 

infrastructures of the MSAs; and 

• The current service patterns of 

suppliers in each county of the MSA. 

We used each of the factors to the 

extent practical to develop initial 

proposals for reasonable and workable 

subdivisions of these highly and 

densely populated MSAs. We believe 

consideration of these factors will help 

us meet our goal of subdividing large 

and densely populated MSAs and 

creating CBAs that are attractive to 

suppliers and incentivize them to bid 

competitively for a contract. With this 

goal in mind, we are trying to establish 

CBAs that provide for a good volume of 

DMEPOS business for winning bidders, 

avoid obvious geographic obstacles, 

mimic existing supplier service 

patterns, and, to the extent possible, do 

not cross State lines. We believe the 

factors we have selected will achieve 

those objectives. 

We found that counties clearly 

delineate areas within a MSA, and as we 

have done for Round 1 by identifying 

CBAs by counties and zip codes, we are 

proposing to subdivide the MSAs at a 

county level. Since the Office of 

Management and Budget (OMB) defines 

the MSAs by counties and county-based 

subdivisions are stable, we use counties 

to subdivide CBAs. When subdividing 

an MSA into counties, we consider 

counties that share social, economic and 

geographic integration. The ChicagoNaperville-Joliet IL-IN-WI MSA 

comprises 14 counties within 3 States: 

Illinois, Indiana, and Wisconsin. This 

MSA has 207,106 beneficiaries and 

$218,161,562 of DMEPOS allowed 

charges subject to the DMEPOS CBP. 

Using the factors that we indentified, we 

would subdivide the ChicagoNaperville-Joliet, IL-IN-WI MSA into 

four separate CBAs: Indiana-Chicago 

Metro CBA; South-West-Chicago-Metro 

CBA; Central-Chicago Metro CBA; and 

Northern-Chicago Metro CBA. The 

counties, DMEPOS allowed charges, and 

the number of beneficiaries subject to 

competitive bidding, and the general 

population that comprise each of these 

proposed CBAs are shown in Table 40. 

TABLE 40—CHICAGO-NAPERVILLE-JOLIET, IL-IN-WI 

CBA name/County DMEPOS 

allowed Charles* 

DMEPOS 

beneficiary count 

subject to 

competitive 

bidding* 

General 

population ** 

Indiana-Chicago Metro CBA: 

Lake, IN ........................................................................................................ $18,600,917 16,637 493,800 

Jasper, IN ..................................................................................................... 1,238,119 1,191 32,544 

Newton, IN .................................................................................................... 580,842 393 13,933 

Porter, IN ...................................................................................................... 4,856,838 4,526 162,181 

CBA TOTAL .......................................................................................... 25,276,716 22,747 702,458 

South-West-Chicago-Metro CBA: 

Will, IL ........................................................................................................... 13,523,185 12,522 681,097 

Grundy, IL ..................................................................................................... 1,417,511 1,405 47,958 

Kendall, IL ..................................................................................................... 978,215 1,052 103,460 

DeKalb, IL ..................................................................................................... 2,358,319 2,323 106,321 

Kane, IL ........................................................................................................ 9,273,504 9,082 507,579 

CBA TOTAL .......................................................................................... 27,550,734 26,384 1,446,415 

Central-Chicago Metro CBA: 

Cook, IL ........................................................................................................ 124,854,279 116,360 5,294,664 

DuPage, IL .................................................................................................... 16,945,135 18,492 930,528 

CBA TOTAL .......................................................................................... 141,799,414 134,852 6,225,192 

Northern-Chicago Metro CBA: 


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TABLE 40—CHICAGO-NAPERVILLE-JOLIET, IL-IN-WI—Continued 

CBA name/County DMEPOS 

allowed Charles* 

DMEPOS 

beneficiary count 

subject to 

competitive 

bidding* 

General 

population ** 

Lake, IL ......................................................................................................... 12,352,802 12,482 712,453 

McHenry, IL .................................................................................................. 7,020,768 6,852 318,641 

Kenosha, WI ................................................................................................. 4,161,128 3,789 164,465 

CBA TOTAL .......................................................................................... 23,534,698 23,123 1,195,559 

MSA TOTAL .......................................................................................... 218,161,562 207,106 9,569,624 

* Source: Medicare claims from 10/1/08 to 9/30/09 for items subject to competitive bidding. 

** Source: U.S. Census Bureau 2009 population estimates. 

Figure 1 shows the boundaries of each 

proposed CBA. 

BILLING CODE 4120–01–P 


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BILLING CODE 4120–01–C 


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The Indiana-Chicago Metro CBA 

would include all four of the Indiana 

counties that are part of the MSA. The 

other CBAs in the MSA would be as 

follows: 

• The South-West-Chicago Metro 

CBA would include counties in Illinois 

located to the south and west of the 

Central-Chicago Metro CBA. 

• The Central-Chicago Metro CBA 

would include the city of Chicago 

covering both Cook and DuPage 

counties. 

• The Northern-Chicago Metro CBA 

which is north of the Central-Chicago 

Metro CBA subdivision that 

encompasses the city of Chicago. 

The Los Angeles-Long Beach-Santa 

Ana, CA MSA comprises two counties: 

Los Angeles County and Orange County. 

The MSA has 173,631 fee-for-service 

beneficiaries receiving DMEPOS subject 

to competitive bidding and 

$244,523,957 in DMEPOS allowed 

charges subject to the DMEPOS CBP. We 

propose to subdivide the Los AngelesLong Beach-Santa Ana, CA MSA into 

two CBAs: Los Angeles County CBA and 

Orange County CBA. The DMEPOS 

allowed amount and beneficiary count 

subject to competitive bidding, and the 

general population that comprises these 

two proposed CBAs are shown in Table 

41. 

TABLE 41—LOS ANGELES-LONG BEACH-SANTA ANA, CA 

CBA name DMEPOS 

allowed amount * 

DMEPOS 

beneficiary 

count * 

General 

population ** 

Los Angeles County CBA ................................................................................................ $201,244,121 137,408 9,862,049 

CBA Total ................................................................................................................. 201,244,121 137,408 * 9,862,049 

Orange County CBA ........................................................................................................ 43,279,836 36,223 3,010,759 

CBA Total ................................................................................................................. 43,279,836 36,223 3,010,759 

MSA Total .......................................................................................................... 244,523,957 173,631 12,872,808 

*Source: Medicare claims from 10/1/08 to 9/30/09 for items subject to competitive bidding. 

**Source: U.S. Census Bureau 2009 population estimates. 

Figure 2 shows the boundaries of each 

proposed CBA. 


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As mentioned earlier, we propose to 

subdivide MSAs using counties, and 

since the Los Angeles-Long Beach-Santa 

Ana, CA MSA only has two counties, it 

offers only one subdivision along the 

county lines. Hence, we have proposed 

to divide the MSA by the two counties 

creating two CBAs. 

We also propose to use the authority 

in section 1847(a)(3)(A) of the Act to 

exclude certain areas within the Los 

Angeles-Long Beach-Santa Ana, CA 

MSA. We believe these areas meet the 

requirement of section 1847(a)(3)(A); 

they are rural areas with a low 

population density within an urban area 

that are not competitive. In the final rule 

CMS–1270 F § 414.410(c) published in 

April 2007, we defined the factors we 

consider when determining an area is 

considered a low population density 

area or an area that would not be 

competitive. Based on our review of the 

County Subdivision Population from the 

2000 Census from the U.S. Census 

Bureau, and using the factors set forth 

in the April 2007 proposed rule, we 

propose to exclude the area of Los 

Angeles County north of the San Gabriel 

mountains. This large geographic area 

has a population of about 357,000, 

which is only 4 percent of the total 

population of Los Angeles County, and 

is separated from the rest of the county 

by the San Gabriel Mountains. The area 

north of the San Gabriel Mountains has 

one major road and many terrains which 

make this area remote. The majority of 

the population in LA County lives south 

of the San Gabriel Mountains. 

We believe that excluding this area 

will create a more manageable CBA that 

still provides sufficient volume of 

DMEPOS items while avoiding the 

geographic obstacle of the mountains. 

We believe including this area in the 

DMEPOS CBP would result in fewer 

small suppliers being considered for 

participation under the program, 

because we would not expect small 

suppliers to have the resources to serve 

these more remote areas. As a result, we 

expect that if this proposal is finalized 

it will increase the number of bids 

submitted for the CBAs within the Los 

Angeles-Long Beach-Santa Ana, CA 

MSA. 

The Los Angeles County includes the 

two islands of Santa Catalina and San 

Clemente off the west coast. We are 

proposing that the two islands be 

included as a part of the Los Angeles 

County CBA in order to ensure that 


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beneficiaries presently residing on these 

islands or who move to these islands in 

the future are ensured access to 

competitively bid items by contract 

suppliers. San Clemente Island is a 

military base with a current population 

of zero, and therefore, the inclusion of 

this area in the CBA would not result in 

an increase in the supplier service area 

at this time. 

We also propose to subdivide the New 

York-Northern New Jersey-Long Island, 

NY–NJ–PA MSA into five CBAs. This 

MSA comprises 23 counties in three 

States: New York, New Jersey and 

Pennsylvania. The MSA has 344,879 

FFS beneficiaries receiving DMEPOS 

subject to the DMEPOS CBP and 

$350,449,795 in allowed charges for 

DMEPOS items subject to competitive 

bidding. The counties, DMEPOS 

allowed amount and beneficiary count 

subject to competitive bidding and the 

general populations that comprise each 

of these proposed CBAs are shown in 

Table 42. 

TABLE 42—NEW YORK-NORTHERN NEW JERSEY-LONG ISLAND, NY-NJ-PA 

CBA name/County DMEPOS 

allowed amount * 

DMEPOS 

beneficiary count * 

General 

population ** 

Nassau-Brooklyn-Queens County Metro CBA: 

Nassau, NY .................................................................................................. $30,888,889 29,857 1,351,625 

Kings, NY ...................................................................................................... 47,044,915 44,893 2,556,598 

Queens, NY .................................................................................................. 33,406,236 32,798 2,293,007 

CBA TOTAL .......................................................................................... 111,340,040 107,548 6,201,230 

Suffolk County CBA: 

Suffolk, NY .................................................................................................... 31,950,806 31,476 1,512,224 

CBA TOTAL .......................................................................................... 31,950,806 31,476 1,512,224 

Bronx-Manhattan NY CBA: 

Bronx, NY ..................................................................................................... 19,791,646 17,002 1,391,903 

New York, NY ............................................................................................... 26,483,792 26,414 1,634,795 

CBA TOTAL .......................................................................................... 46,275,438 43,416 3,026,698 

North-West NY Metro CBA: 

Hudson, NJ ................................................................................................... 13,622,910 12,644 595,419 

Bergen, NJ .................................................................................................... 19,948,837 20,278 894,840 

Passaic, NJ ................................................................................................... 10,266,137 10,233 490,948 

Putnam, NY .................................................................................................. 1,997,668 1,876 99,244 

Rockland, NY ................................................................................................ 6,421,317 6,265 298,545 

Essex, NJ ..................................................................................................... 1,392,770 1,379 770,675 

Morris, NJ ..................................................................................................... 9,094,758 9,830 487,548 

Sussex, NJ ................................................................................................... 2,905,240 2,819 150,909 

Pike, PA ........................................................................................................ 1,393,003 1,475 59,664 

Westchester, NY ........................................................................................... 16,971,210 17,220 953,943 

CBA TOTAL .......................................................................................... 84,013,850 84,019 4,801,735 

Southern NY Metro CBA: 

Hunterdon, NJ .............................................................................................. 2,709,880 2,356 129,031 

Richmond, NY .............................................................................................. 7,054,863 6,626 487,407 

Union, NJ ...................................................................................................... 10,466,838 10,654 523,249 

Middlesex, NJ ............................................................................................... 15,803,473 16,649 789,102 

Monmouth. NJ .............................................................................................. 14,979,747 15,110 642,448 

Ocean, NJ ..................................................................................................... 20,913,022 21,600 569,111 

Somerset, NJ ................................................................................................ 4,941,838 5,425 324,563 

CBA TOTAL .......................................................................................... 76,869,661 78,420 3,464,911 

MSA TOTAL .......................................................................................... 350,449,795 344,879 19,006,798 

* Source: Medicare claims from 10/1/08 to 9/30/09 for items subject to competitive bidding. 

** Source: U.S. Census Bureau 2009 population estimates. 

Figure 3 shows the boundaries of each 

proposed CBA. 


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The Nassau-Brooklyn-Queens CBA 

would be contiguous to Suffolk County 

and would consist of the western part of 

Long Island and extend to the eastern 

part of New York City. The Suffolk 

County CBA would consist of the 

eastern part of Long Island and would 

encompass most of Long Island. The 

Bronx-Manhattan NY CBA would 

include the entire area of Manhattan 

and the Bronx. The North-West NY 

Metro CBA would be situated north and 

west of New York City and would 

extend into New Jersey and 

Pennsylvania. The Southern NY Metro 

CBA would include Staten Island and 

would extend south to Ocean County, 

New Jersey. 

At the March 17, 2010 meeting of the 

Program Advisory and Oversight 

Committee (PAOC), we presented these 

proposals for subdividing these three 

large MSAs. Various members of the 

PAOC had the following suggestions for 

subdividing these MSAs: 

• Draw the boundaries of CBAs using 

the interstate highways rather than the 

divisions by County; 

• Determine the current servicing 

areas of suppliers by MSA and product 

category by using a scatter plot; 

• Use the Hudson River to divide the 

CBAs for the New York MSA; 

• Carve out Pike and Putnam 

Counties from the New York MSA due 

to their location and their low 

population density; 

• Include Manhattan as a separate 

CBA, due to its unique nature as a self 

contained area; 

• Consider State licensure 

requirements when we divide the MSAs 

into CBAs; 

• In the LA County CBA, exclude the 

area north of the San Gabriel Mountains 

from the CBA; and 

• Consider traffic patterns when 

dividing the Los Angeles MSAs into 

CBAs. 

We are considering the PAOC’s advice 

and recommendations and invite further 

comments on the proposed subdivisions 

and PAOC’s advice of these three MSAs. 

3. Exclusions of Certain Areas After 

Round 2 and Prior to 2015 

The MIPPA amended the statute by 

requiring that competition under Round 

2 takes place in 2011 and by adding 

section 1847(a)(1)(D)(iii) that requires 

CMS to exclude the following areas 

from the competitive bid program for 

competitions after Round 2 of the 

program and before 2015: 

• Rural Areas; 

• Metropolitan Statistical Areas not 

selected under Round 1 or Round 2 with 

a population of less than 250,000; and 

• Areas with a low population 

density within a MSA that is otherwise 

selected consistent with section 

1847(a)(3)(A). 

We propose to incorporate these 

requirements and timeframes in 

proposed § 414.410(c). 

4. Expansion of Round 2 

Section 6410(a) of the ACA expanded 

the areas to be included in Round 2 of 

the program. As amended by section 

6410(a) of the ACA, section 

1847(a)(1)(B)(i)(II) requires that the 

competition for Round 2 of the program 

occur in 91 of the largest MSAs in 2011. 

Prior to this change, Round 2 was to 

include 70 MSAs. Section 

1847(a)(1)(D)(ii)(II), as added by section 

6410(a), specifies that the additional 21 

MSAs to be included in Round 2 

‘‘include the next 21 largest 

metropolitan statistical areas by total 

population’’ (after those already selected 

Round 2). The 2009 annual population 

estimates from the U.S. Census Bureau 


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are the most recent estimates of 

population that will be available prior to 

the Round 2 competition mandated to 

take place in 2011. We therefore 

propose to use these estimates to 

determine the additional 21 MSAs to be 

included in Round 2 of the program. 

Table 43 is a list of the additional 21 

MSAs added to Round 2. 

TABLE 43—ADDITIONAL 21 MSAS ADDED TO ROUND 2 

21 Additional MSAs 2009 Total 

population 

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD .............................................................................................................................. 5,968,252 

Washington-Arlington-Alexandria, DC-VA-MD-WV ............................................................................................................................. 5,476,241 

Boston-Cambridge-Quincy, MA-NH ..................................................................................................................................................... 4,588,680 

Phoenix-Mesa-Scottsdale, AZ ............................................................................................................................................................. 4,364,094 

Seattle-Tacoma-Bellevue, WA ............................................................................................................................................................. 3,407,848 

St. Louis, MO-IL ................................................................................................................................................................................... 2,828,990 

Baltimore-Towson, MD ........................................................................................................................................................................ 2,690,886 

Portland-Vancouver-Beaverton, OR-WA ............................................................................................................................................. 2,241,841 

Providence-New Bedford-Fall River, RI-MA ........................................................................................................................................ 1,600,642 

Buffalo-Niagara Falls, NY .................................................................................................................................................................... 1,123,804 

Rochester, NY ..................................................................................................................................................................................... 1,035,566 

Tucson, AZ .......................................................................................................................................................................................... 1,020,200 

Honolulu, HI ......................................................................................................................................................................................... 907,574 

Albany-Schenectady-Troy, NY ............................................................................................................................................................ 857,592 

Worcester, MA ..................................................................................................................................................................................... 803,701 

Oxnard-Thousand Oaks-Ventura, CA ................................................................................................................................................. 802,983 

Springfield, MA .................................................................................................................................................................................... 698,903 

Bradenton-Sarasota-Venice, FL .......................................................................................................................................................... 688,126 

Poughkeepsie-Newburgh-Middletown, NY .......................................................................................................................................... 677,094 

Stockton, CA ........................................................................................................................................................................................ 674,860 

Boise City-Nampa, ID .......................................................................................................................................................................... 606,376 

W. Section 10501(i)(3)—Proposed 

Collection of HCPCS Data for 

Development and Implementation of a 

Prospective Payment System for the 

Medicare Federally Qualified Health 

Center Program 

The Omnibus Budget Reconciliation 

Act (OBRA) of 1989 amended the Social 

Security Act by creating new FQHC 

benefit programs under both Medicare 

and Medicaid. The Medicare FQHC 

benefit provides coverage for a full 

range of primary care services, 

including physician and certain 

nonphysician services (PAs, NPs), 

clinical social worker, psychologist 

services, and preventive services. 

FQHCs are ‘‘safety net’’ providers (for 

example, community health centers and 

programs serving migrants, the 

homeless, public housing centers, and 

tribal groups). The main purpose of the 

FQHC program is to enhance the 

provision of primary care services in 

underserved urban and rural 

communities. FQHCs typically enhance 

the availability of care to vulnerable 

populations, including Medicare, 

Medicaid, SCHIP, and the uninsured. 

Most of these health centers receive 

HRSA grants for services to the 

uninsured. 

Medicare pays FQHCs on the basis of 

reasonable cost, subject to an upper 

payment limit on the reasonableness of 

incurred cost. Actual Medicare 

reasonable cost is determined based 

upon a Medicare cost report filed by the 

FQHC after the end of its fiscal year. 

Prior to the start of the year, an interim 

all-inclusive per-visit payment amount, 

based upon an estimate of Medicare 

reasonable costs, is calculated for each 

Medicare FQHC. During the year, this 

interim all-inclusive per-visit payment 

amount is paid for each covered visit 

between a Medicare beneficiary and an 

FQHC health professional. After the end 

of the Medicare FQHC’s cost reporting 

year, interim per-visit payments are 

reconciled to actual Medicare 

reasonable costs based upon the 

Medicare cost report filed by the FQHC. 

Section 10501(i)(3) of the ACA now 

amends this current Medicare FQHC 

payment policy with an entirely 

different payment system, effective with 

cost reporting periods beginning on or 

after October 1, 2014. 

Section 10501(i)(3)(A) of the ACA 

amended section 1834 of the Act by 

adding a new subsection (o), 

Development and Implementation of 

Prospective Payment System. This 

subsection provides the statutory 

framework for development and 

implementation of a prospective 

payment system for Medicare FQHCs. 

Section 1834(o)(1)(B) of the Act, as 

established by the ACA, addresses 

collection of data necessary to develop 

and implement the new Medicare FQHC 

prospective payment system. 

Specifically, section 1834(o)(1)(B) of the 

Act, Collection of Data and Evaluation, 

grants the Secretary of HHS the 

authority to require FQHCs to submit 

such information as may be required in 

order to develop and implement the 

Medicare FQHC prospective payment 

system, including the reporting of 

services using HCPCS codes. Section 

1834(o)(1)(B) of the Act requires that the 

Secretary impose this data collection 

submission requirement no later than 

January 1, 2011. Accordingly, we are 

proposing to add a new paragraph (d) to 

§ 405.2470 to require Medicare FQHCs 

to begin reporting all services furnished 

and using HCPCS codes for these 

services starting January 1, 2011. 

Beginning January 1, 2011, the Medicare 

FQHC would be required to report on 

Medicare FQHC claims all pertinent 

service(s) provided for each Medicare 

FQHC visit (defined in § 405.2463). This 

additional reporting would include the 

information needed to develop and 

implement a PPS for FQHCs. For 

example, corresponding HCPCS code(s) 

would be required to be reported along 

with the presently required Medicare 

revenue code(s) for the Medicare FQHC 

visit(s). CMS’ Medicare FQHC claims 

processing system would be revised to 

accept the addition of the new reporting 

requirements effective January 1, 2011. 

The proposed new data collection effort 

would be for informational and data 

gathering purposes only, and would not 

be utilized to determine Medicare 

payment to the FQHC. Until the FQHC 

prospective payment system is 

implemented in 2014 and the Medicare 

claims processing system is revised to 

reflect such a system, Medicare FQHC 


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payment would continue in the current 

manner (utilizing revenue codes and the 

interim per-visit payment rate 

methodology). 

We further note that Medicare FQHCs 

would be required to adhere to the 

information collection requirements in 

accordance with the content and terms 

of their Medicare agreement as 

stipulated at § 405.2434. Failure to do so 

could result in the termination of the 

FQHC’s Medicare agreement in 

accordance with § 405.2436 of the 

Medicare FQHC regulations. 

At this time, we do not foresee 

additional claims or other information 

collection needs beyond collection of 

HCPCS codes. Accordingly, we are not 

proposing additional information 

collection requirements at this time. 

However, we invite public comment on 

any additional information FQHCs 

believe may be necessary in order to 

develop and implement a prospective 

payment system for Medicare FQHCs. 

VI. Other Provisions of the Proposed 

Regulation 

A. Part B Drug Payment: Average Sales 

Price (ASP) Issues 

1. ‘‘Carry Over’’ ASP 

The ASP payment methodology is 

authorized under section 303(c) of the 

MMA which amends Title XVIII of the 

Act by adding section 1847A of the Act. 

This section establishes the use of the 

ASP methodology for payment for drugs 

and biologicals described in section 

1842(o)(1)(C) of the Act furnished on or 

after January 1, 2005. For purposes of 

this part, the term ‘‘drugs’’ will hereafter 

refer to both drugs and biologicals. The 

ASP methodology applies to most drugs 

furnished incident to a physician’s 

service, drugs furnished under the 

durable medical equipment (DME) 

benefit, certain oral anti-cancer drugs, 

and oral immunosuppressive drugs. 

Sections 1847A and 1927(b) of the Act 

specify quarterly ASP data reporting 

requirements for manufacturers. 

Specific ASP reporting requirements are 

set forth in section 1927(b) of the Act. 

Although delays in reporting have been 

uncommon, they create a risk that: 

(1) Could result in the publication of 

payment limits which do not reflect 

prices for drug products, and (2) could 

result in inaccurate payments, the need 

for correction of files and unintentional 

ASP payment limit variability. 

As a result of these concerns, we are 

seeking to establish a process for 

addressing situations where 

manufacturers fail to report 

manufacturer ASP data in a timely 

fashion. This proposal is intended to 

allow us to calculate and report ASP 

payment limits for a given quarter 

within the existing timelines and does 

not affect the CMS or OIG’s authority to 

assess civil monetary penalties 

associated with untimely or false ASP 

reporting. Manufacturers who 

misrepresent or fail to report 

manufacturer ASP data will remain 

subject to civil monetary penalties, as 

applicable and described in sections 

1847A and 1927(b) of the Act. 

For the purposes of reporting under 

section 1847A of the Act, the term 

manufacturer is defined in section 

1927(k)(5) of the Act and means any 

entity engaged in the following: 

production, preparation, propagation, 

compounding, conversion or processing 

of prescription drug product, 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; or 

packaging, repackaging, labeling, 

relabeling, or distribution of 

prescription drug products. The term 

manufacturer does not include a 

wholesale distributor of drugs or a retail 

pharmacy licensed under State law. 

However, manufacturers that also 

engage in certain wholesaler activities 

are required to report ASP data for those 

drugs that they manufacture. Note that 

the definition of manufacturers for the 

purposes of ASP data reporting includes 

repackagers. 

In accordance with section 1847A of 

the Act, manufacturers are required to 

report data on the NDC level, which 

include the following elements: the 

manufacturer ASP for drugs; the 

Wholesale Acquisition Cost (WAC) in 

effect on the last day of the reporting 

period; the number of ASP units sold; 

and the NDC. Currently, when 

manufacturer ASP data or specific data 

elements are not available, we calculate 

an ASP price for a billing code based on 

other applicable and available pricing 

data from manufacturers for that drug. 

This includes WAC prices from 

compendia if manufacturer data are not 

available for a billing code. WAC prices 

tend to be higher than manufacturer 

ASP prices. 

Although problems with reporting 

have been uncommon, we have recently 

encountered situations where delays in 

manufacturer ASP reporting could have 

led to significant ASP payment limit 

fluctuations for highly utilized HCPCS 

codes. The greatest potential impact 

occurs when data for high volume drug 

products within a HCPCS code that is 

represented by a limited number of 

NDCs have not been reported and 

cannot be included in the ASP volume 

weighted calculations described in 

section 1847A(b) of the Act. For 

multisource drugs, such a situation is 

likely to artificially increase or decrease 

Medicare ASP payment limits, which in 

turn would affect beneficiary cost 

sharing amounts. Such artificial 

fluctuations of the ASP payment limit 

could provide the appearance of 

instability unrelated to market forces 

and could also create access issues for 

providers and beneficiaries and 

confusion that could ultimately affect 

product demand in the marketplace. 

In order to minimize the possibility of 

ASP payment limit fluctuations due to 

missing data, we are proposing a 

process, consistent with our authority in 

section 1847A(c)(5)(B), to update ASPs, 

based on the manufacturer’s ASP 

calculated for the most recent quarter 

for which data is available. Specifically, 

we are proposing to carry over the 

previously reported manufacturer ASP 

for an NDC(s) when missing 

manufacturer ASP and/or WAC data 

could cause significant changes or 

fluctuations in ASP payment limits, and 

efforts by us to obtain manufacturer 

reported ASP before Medicare ASP 

payment limits publication deadlines 

have not been successful. For example, 

the most recently reported manufacturer 

ASP prices for products on the market 

would be carried over to the next 

quarter if an entire manufacturer’s 

submission was not received, 

manufacturer ASP price data for specific 

NDCs has not been reported, or only 

WAC data has been reported; however, 

NDCs that have zero sales or are no 

longer being manufactured will not be 

subjected to this process. Also, we are 

proposing to apply the carryover 

process only in cases where missing 

data results in a 10 percent or greater 

change in the ASP payment limit 

compared to the previous quarter. Based 

on experience with ASP methodology 

since 2006, we believe that this 

percentage threshold meets the 

definition of significant. We are 

specifically seeking comments on our 

use of 10 percent as the threshold 

amount. In order to better represent 

actual market trends, that is actual 

increases or decreases in manufacturer 

reported ASP for the group of NDCs that 

represent the HCPCS code, we are 

proposing that the manufacturer ASP 

payment amounts for the individual 

NDCs that are carried over will be 

adjusted by the weighted average of the 

change in the manufacturer ASP for the 

NDCs that were reported during both 

the most recently available quarter and 

the current quarter. We would 

appreciate comments about whether 

other methods to account for 


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marketplace price trends to the carried 

over NDCs could be a better substitute 

for applying the weighted average 

change. The previous quarter’s sales 

volumes will be carried over. An 

example of the proposed process 

appears in Table 44. 

We propose to apply this process to 

both single source drugs and multiple 

source drugs. However, we are 

concerned that including single source 

drugs in the carry over process could 

create an incentive for non-reporting in 

situations where ASP prices for a single 

source drug are falling and the 

manufacturer stops reporting ASP in an 

effort to preserve a higher payment 

amount despite the risk of significant 

statutory penalties for such an action. 

Therefore, we are specifically requesting 

comments on this option and the effect 

of limiting this proposal to multiple 

source drugs only. We will consider 

these comments carefully before 

including both single source and 

multisource drugs in this process. 

TABLE 44—PROPOSED ASP CARRYOVER EXAMPLE FOR NDCS IN A SPECIFIC HCPCS CODE

Previous quarter reported NDCs 

Previous 

Qtr reported vol- ume 

Previous 

Qtr ASP 

price 

Current Qtr 

reported 

NDCs 

Current Qtr 

reported 

volume 

Current Qtr 

ASP price 

Current Qtr 

NDCs for calculation 

Current Qtr 

volume for 

calculation 

Current Qtr 

price for 

calculation 

12345–6789–10 ........................................................ 2000 $1.000 12345–6789– 

10 

2500 $0.980 12345–6789– 

10 

2500 $0.980 

12345–6789–11 ........................................................ 3000 1.000 12345–6789– 

11 

1700 0.980 12345–6789– 

11 

1700 0.980 

12345–6789–12 ........................................................ 5000 1.000 12345–6789– 

12 

5500 0.980 12345–6789– 

12 

5500 0.980 

45678–1234–90 ........................................................ 9000 1.100 (**) (**) (**) 45678–1234– 

90 

9000 * 1.078 

45678–1234–99 ........................................................ 27000 1.100 (**) (**) (**) 45678–1234– 

99 

27000 * 1.078 

* This result is obtained by calculating the weighted average price change in NDCs available (that is, 12345–6789–10 thru 12345–6789–12) in both the previous 

and current quarters, which is ¥2% [(0.98–1.00)*100], and applying that change to the previous quarter’s manufacturer ASP for the missing NDCs (that is, 45678–

1234–90 and 45678–1234–99). The last two columns on the right would be used to calculate the weighted ASP and payment limits for the 5 NDCs as a HCPCS code 

and accounts for missing prices for two high volume NDCs that represent most of the units sold within the HCPCS code and therefore heavily influence the price calculation for the HCPCS code. 

** Missing. 

Our proposed approach is intended to 

establish a straightforward and 

transparent solution that minimizes the 

effect of missing manufacturer ASP data 

on Medicare ASP payment limits. We 

believe that the availability of a 

mechanism to minimize non-market 

related price fluctuations is desirable 

when efforts to obtain manufacturer’s 

ASP data by deadlines have not been 

successful. Our proposed mechanism is 

not intended to alter or adjust reported 

prices and will not be used to do so, but 

instead is intended to more accurately 

represent prices in the marketplace if 

manufacturer ASP data for particular 

drug product(s) is missing. Based on our 

experience with ASP reporting since 

2004, we do not believe that this process 

will be used frequently. However, as we 

stated previously, recent concerns with 

delays in reporting of manufacturer ASP 

data have led to this proposal. 

We also remind manufacturers that 

significant civil monetary penalties for 

not reporting or misrepresenting 

manufacturer ASP data are authorized 

under sections 1847A(d)(4) and 

1927(b)(3)(C) of the Act and codified in 

regulations at § 414.806. This proposal 

should not be interpreted to mean that 

CMS and the OIG will refrain from 

collecting such penalties for ASP 

reporting violations. Late or missing 

reports will not be tolerated. This 

proposed policy would be implemented 

regardless of any efforts by the OIG to 

enforce Civil Monetary Penalties for 

non-reporting. 

We would also like to remind 

manufacturers that additional specific 

information about reporting ASP data to 

us is available. (See for example.: 69 FR 

17936, 69 FR 66299, 70 FR 70215, 71 FR 

69665, 72 FR 66256, 73 FR 69751, and 

74 FR 61904.) Also, Frequently Asked 

Questions are posted in the Related 

Links Inside CMS Section of the ASP 

Overview Web page at http:// 

www.cms.hhs.gov/ 

McrPartBDrugAvgSalesPrice/ 

01_overview.asp#TopOfPage, and the 

Downloads section of the same webpage 

contains a link to the ASP Data Form 

(addendum A), which includes 

examples of how ASP data must be 

reported and formatted for submission. 

In particular, we would like to remind 

manufacturers to report sales volume in 

quantities of NDC units sold (not vials 

or other units of sale), and to use a zero 

(that is the character ‘‘0’’) instead of a 

blank when reporting items that did not 

have any sales in a particular quarter. In 

addition, manufacturers should report 

both the ASP and the WAC for each 

NDC, the expiration date for the last lot 

sold, if applicable, and the date of first 

sale for an NDC. 

In summary, in situations where any 

current quarter’s manufacturer ASP data 

is unavailable, we are proposing, 

consistent with our authority in section 

1847A(c)(5)(B), to use the most recent 

data available in the ASP payment limit 

calculation for single source and 

multiple source drugs. We look forward 

to comments on this proposal and the 

proposed changes to § 414.904(i). 

2. Partial Quarter ASP Data 

Section 1847A(c)(4) of the Act states 

that ‘‘In the case of a drug or biological 

during an initial period (not to exceed 

a full calendar quarter) in which data on 

the prices for sales for the drug or 

biological is not sufficiently available 

from the manufacturer to compute an 

average sales price for the drug or 

biological, the Secretary may determine 

the amount payable under this section 

for the drug or biological based on—(A) 

the wholesale acquisition cost; or 

(B) the methodologies in effect under 

this part on November 1, 2003, to 

determine payment amounts for drugs 

or biological.’’ 

When a new drug product enters the 

market, the first date of sale rarely 

coincides with the beginning of a 

calendar quarter. Therefore, the ASP 

data for many new drug products falls 

into partial quarter status during the 

first quarter of sales. We are taking this 

opportunity to describe our policy 

regarding how reported data is used in 

the calculation of ASP payment limits 

during the first quarter of sales for single 

source and multiple source drugs. 

In accordance with section 

1847A(c)(4)(A) of the Act, it has been 

our policy to price new single source 

drugs at WAC for the first quarter 

(unless the date of first sale is on the 

first day of the quarter), and to add new 


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NDCs for multi source drugs and 

product line expansions of single source 

drugs to the ASP calculation for a 

quarter as soon as these products are 

reported. 

We believe that the approaches for 

both single source and multi source 

drugs are consistent with the statute, 

particularly section 1847A(c)(4) of the 

Act, and we intend to continue this 

policy. 

3. Determining the Payment Amount for 

Drugs and Biological Which Include 

Intentional Overfill 

The methodology for developing 

Medicare drug payment allowances 

based on the manufacturers’ submitted 

ASP data is specified in 42 CFR part 

414, subpart K. We initially established 

this regulatory text in the CY 2005 PFS 

final rule with comment period (69 FR 

66424). We further described the 

formula we use to calculate the payment 

amount for each HCPCS billing code in 

the CY 2006 PFS proposed rule (70 FR 

45844) and final rule with comment 

period (70 FR 70217). With the 

enactment of the Medicare, Medicaid 

and SCHIP Extension Act (MMSEA) 

(Pub. L. 110–173), the formula we use 

changed beginning April 1, 2008. 

Section 112(a) of the MMSEA requires 

us to calculate payment amounts using 

a specified volume-weighting 

methodology. In addition, section 112(b) 

of the MMSEA sets forth a special rule 

for determining the payment amount for 

certain drugs and biological. We 

addressed these changes in the CY 2009 

PFS proposed and final rules (73 FR 

38520 and 69571, respectively). For 

each billing code, we calculate a 

volume-weighted, ASP-based payment 

amount using the ASP data submitted 

by manufacturers. Manufacturers submit 

ASP data to us at the 11-digit National 

Drug Code (NDC) level, including the 

number of units of the 11-digit NDC 

sold and the ASP for those units. We 

determine the number of billing units in 

an NDC based on the amount of drug in 

the package. 

For example: A manufacturer sells a 

box of 4 vials of a drug. Each vial 

contains 20 milligrams (mg); the billing 

code is per 10 MG. The number of 

billing units in this NDC for this billing 

code is (4 vials × 20mg)/10mg = 8 

billable units. 

Beginning April 1, 2008, we use a 

two-step formula to calculate the 

payment amount for each billing code. 

We sum the product of the 

manufacturer’s ASP and the number of 

units of the 11-digit NDC sold for each 

NDC assigned to the billing and 

payment code, and then divide this total 

by the sum of the product of the number 

of units of the 11-digit NDC sold and the 

number of billing units in that NDC for 

each NDC assigned to the billing and 

payment code. 

The provisions in section 112 of the 

MMSEA were self-implementing for 

services on and after April 1, 2008. 

Because of the limited time between 

enactment and the implementation date, 

it was not practical to undertake and 

complete rulemaking on this issue prior 

to implementing the required changes. 

As a result of the legislation, we revised 

§ 414.904 to codify the changes to the 

determination of payment amounts 

consistent with section 112 of the 

MMSEA. 

Since that time, we have become 

aware of situations where 

manufacturers, by design, include a 

small amount of ‘‘intentional overfill’’ in 

containers of drugs. We understand that 

this ‘‘intentional overfill’’ is intended to 

compensate for loss of product when a 

dose is prepared and administered 

properly. For instance, a hypothetical 

drug is intended to be delivered at a 0.5 

mg dose which must be drawn into a 

syringe from a vial labeled for single use 

only. The vial is labeled to contain 0.5 

mg of product but actually contains 1.5 

mg of product. The additional 1.0 mg of 

product is included, by design, and is 

intended to be available to the provider 

so as to ensure a full 0.5 mg dose is 

administered to the patient. 

Our ASP payment calculations are 

based on data reported to us by 

manufacturers. This data includes the 

‘‘volume per item.’’ In our ‘‘Appendix 

A—Average Sales Price Reporting Data 

Elements’’ available on our Web site at 

http://www.cms.gov/ 

McrPartBDrugAvgSalesPrice/, we define 

‘‘volume per item’’ as ‘‘The amount in 

one item. (ex., 10 ml in one vial, or 500 

tablets in one bottle) Enter ‘‘1’’ for 

certain forms of drugs (for example, 

powders and sheets) when ‘‘Strength of 

the Product’’ indicates the amount of the 

product per item.’’ In order to accurately 

calculate Medicare ASP payment limits 

under section 1847A, we interpret ‘‘the 

amount in one item’’ to be the amount 

of product in the vial or other container 

as indicated on the FDA-approved label. 

It has been longstanding Medicare 

policy that in order to meet the general 

requirements for coverage under the 

‘‘incident to’’ provision, services or 

supplies should represent an expense 

incurred by the physician or entity 

billing for the services or supplies (See 

Medicare Benefit Policy Manual 

(Publication #100–02), Chapter 15, 

Sections 50.3, 60.1.A). Such physicians’ 

services and supplies include drugs and 

biological under section 1861(s)(2)(A). 

In accordance with this policy, 

providers may only bill for the amount 

of drug product actually purchased and 

that the cost of the product must 

represent an expense to the physician. 

We further understand that when a 

provider purchases a vial or container of 

product, the provider is purchasing an 

amount of drug defined by the product 

packaging or label. Any excess, free 

product (that is, overfill) is provided 

without charge to the provider. In 

accordance with our policy, providers 

may not bill Medicare for overfill 

harvested from containers, including 

overfill amounts pooled from more than 

one container, because that overfill does 

not represent a cost to the provider. 

Claims for drugs and biological that do 

not represent a cost to the provider are 

not reimbursable, and providers who 

submit such claims may be subject to 

scrutiny and follow up action by CMS, 

its contractors, and OIG. 

Because such overfill is not included 

in the calculation of payment limits 

under the methodology in section 

1847A of the Act and does not represent 

an incurred cost to a provider, we are 

proposing to update our regulations at 

42 CFR part 414 subpart J to clearly state 

that Medicare ASP payment limits are 

based on the amount of product in the 

vial or container as reflected on the 

FDA-approved label. We are also 

proposing to update our regulations to 

clearly state that payment for amounts 

of free product, or product in excess of 

the amount reflected on the FDAapproved label, will not be made under 

Medicare. 

4. WAMP/AMP 

Section 1847A(d)(1) of the Act states 

that ‘‘the Inspector General of HHS shall 

conduct studies, which may include 

surveys to determine the widely 

available market prices (WAMP) of 

drugs and biologicals to which this 

section applies, as the Inspector 

General, in consultation with the 

Secretary, determines to be 

appropriate.’’ Section 1847A (d)(2) of the 

Act states that, ‘‘Based upon such 

studies and other data for drugs and 

biologicals, the Inspector General shall 

compare the ASP under this section for 

drugs and biologicals with— 

• The widely available market price 

(WAMP) for these drugs and biologicals 

(if any); and 

• The average manufacturer price 

(AMP) (as determined under section 

1927(k)(1) of the Act) for such drugs and 

biologicals.’’ 

Section 1847A(d)(3)(A) of the Act 

states that, ‘‘The Secretary may disregard 

the ASP for a drug or biological that 

exceeds the WAMP or the AMP for such 

drug or biological by the applicable 


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threshold percentage (as defined in 

subparagraph (B)).’’ Section 

1847A(d)(3)(C) of the Act states that if 

the OIG finds that the ASP for a drug or 

biological is found to have exceeded the 

WAMP or AMP by this threshold 

percentage, the OIG ‘‘shall inform the 

Secretary (at such times as the Secretary 

may specify to carry out this 

subparagraph) and the Secretary shall, 

effective as of the next quarter, 

substitute for the amount of payment 

otherwise determined under this section 

for such drug or biological, the lesser 

of—(i) the widely available market price 

for the drug or biological (if any); or (ii) 

103 percent of the average manufacturer 

price * * *.’’ 

The applicable threshold percentage 

is specified in section 1847A(d)(3)(B)(i) 

of the Act as 5 percent for CY 2005. For 

CY 2006 and subsequent years, section 

1847A(d)(3)(B)(ii) of the Act establishes 

that the applicable threshold percentage 

is ‘‘the percentage applied under this 

subparagraph subject to such 

adjustment as the Secretary may specify 

for the WAMP or the AMP, or both.’’ In 

the CY 2006 (70 FR 70222), CY 2007 (71 

FR 69680), CY 2008 (72 FR 66258), CY 

2009 (73 FR 69752), and CY 2010 (74 FR 

61904) PFS final rules with comment 

period, we specified an applicable 

threshold percentage of 5 percent for 

both the WAMP and AMP. We based 

this decision on the fact that data was 

too limited to support an adjustment to 

the current applicable threshold 

percentage. 

For CY 2011, we are proposing to 

specify two separate adjustments to the 

applicable threshold percentages. When 

making comparisons to the WAMP, we 

propose the applicable threshold 

percentage to remain at 5 percent. The 

applicable threshold percentage for the 

AMP is addressed below in this section 

of the preamble. Although the latest 

WAMP comparison was published in 

2008, the OIG is continuing to perform 

studies comparing ASP to WAMP. 

Based on available OIG reports that have 

been published comparing WAMP to 

ASP, we do not have sufficient 

information to determine that the 5 

percent threshold percentage is 

inappropriate. As a result, we believe 

that continuing the 5 percent applicable 

threshold percentage for the WAMP is 

appropriate for CY 2011. Therefore we 

are proposing to revise § 414.904(d)(3) 

to include the CY 2011 date. 

As we noted in the CY 2010 PFS final 

rule with comment period (74 FR 

61904), we understand that there are 

complicated operational issues 

associated with this policy. We continue 

to proceed cautiously in this area. We 

remain committed to providing 

stakeholders, including providers and 

manufacturers of drugs impacted by 

potential price substitutions with 

adequate notice of our intentions 

regarding such, including the 

opportunity to provide input with 

regard to the processes for substituting 

the WAMP for the ASP. 

We welcome comments on our 

proposal to continue the applicable 

threshold percentage at 5 percent for the 

WAMP for 2011. 

5. AMP Threshold and Price 

Substitutions 

a. AMP Threshold 

As mentioned elsewhere in this 

proposal, when making comparisons of 

ASP to AMP, the applicable threshold 

percentage for CY 2005 was specified in 

statute as 5 percent. Section 1847A(d)(3) 

of the Act allows the Secretary to 

specify adjustments to this threshold 

percentage for years subsequent to 2005, 

and to specify the timing for any price 

substitution. For CY 2006 (70 FR 

70222), CY 2007 (71 FR 69680), CY 2008 

(72 FR 66258), CY 2009 (73 FR 69752), 

and CY 2010 (74 FR 61904), the 

Secretary made no adjustments to the 

threshold percentage; it remained at 5 

percent. 

For CY 2011, we are proposing with 

respect to AMP substitution to apply the 

applicable percentage subject to certain 

adjustment such that comparisons of 

ASP to AMP will only be made when 

the ASP exceeds the AMP by 5 percent 

in two consecutive quarters 

immediately prior to the current pricing 

quarter, or three of the previous four 

quarters immediately prior to the 

current quarter. 

In general, the ASP methodology 

reflects average market prices for Part B 

drugs for a quarter. The ASP is based, 

in part, on the average sales price to all 

purchasers for a calendar quarter; the 

AMP, in turn, represents the average 

price paid by certain wholesalers. 

Accordingly, while the ASP payment 

amount for a billing code may exceed its 

AMP for that billing code for any given 

quarter, this may only reflect a 

temporary fluctuation in market prices 

that would be otherwise corrected in a 

subsequent quarter. We believe this 

fluctuation is demonstrated by how few 

billing codes exceed the applicable 

threshold percentage over multiple 

quarters. For example, in the Inspector 

General’s report ‘‘Comparison of 

Average Sales Prices and Average 

manufacturer Prices: An Overview of 

2008’’, only 33 of 482 examined billing 

codes exceeded the applicable threshold 

percentage over multiple quarters. This 

figure also included billing codes that 

exceeded the threshold based on partial 

price comparisons (OEI–03–09–00350). 

We are concerned that comparisons of a 

single quarter’s ASP to AMP will not 

adequately account for these temporary 

fluctuations and underlying market 

trends. We believe that applying this 

threshold percentage adjusted to reflect 

data from multiple quarters will account 

for continuing differences between ASP 

and AMP, and allow us to better 

identify those drugs that consistently 

trigger the substitution threshold. 

We further propose to apply the 

applicable AMP threshold percentage 

only for those situations where AMP 

and ASP comparisons are based on the 

same set of NDCs for a billing code (that 

is, ‘‘complete’’ AMP data). Prior to 2008, 

the OIG calculated a volume-weighted 

AMP and made ASP and AMP 

comparisons for only billing codes with 

such ‘‘complete’’ AMP data. In such 

comparisons, a volume-weighted AMP 

for a billing code was calculated when 

NDC-level AMP data was available for 

the same NDCs used by us to calculate 

the volume-weighted ASP. Beginning in 

the first quarter of 2008, the OIG also 

began to make ASP and AMP 

comparisons based on ‘‘partial’’ AMP 

data (that is, AMP data for some, but not 

all NDCs in a billing code). For these 

comparisons, the volume-weighted 

AMP for a billing code is calculated 

even when only such limited AMP data 

is available. That is, the volumeweighted AMP calculated by the 

Inspector General is based on fewer 

NDCs than the volume-weighted ASP 

calculated by CMS. Moreover, volumeweighted ASPs are not adjusted by the 

Inspector General to reflect the fewer 

number of NDCs in the volumeweighted AMP. 

Because the OIG’s partial AMP data 

comparison does not reflect all the 

NDCs used in our volume-weighted ASP 

calculations, we have some concerns 

using the volume-weighted AMP. We 

believe that such AMP data may not 

adequately account for market-related 

drug price changes and may lead to the 

substitution of incomplete and 

inaccurate volume-weighted prices. 

Such substitutions may impact 

physician and beneficiary access to 

drugs. Therefore, in accordance with 

our authority as set forth in section 

1847A(d)(1) and (3) of the Act, we are 

proposing the substitution of 103 

percent of AMP for 106 percent of ASP 

should be limited to only those drugs 

with ASP and AMP comparisons based 

on the same set of NDCs. We are 

proposing to revise § 414.904(d)(3) to 

reflect corresponding regulatory text 

changes, and we welcome comments on 

all aspects of this proposal. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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b. AMP Price Substitution 

(1) Inspector General Studies 

Section 1847A(d) of the Act requires 

the Inspector General to conduct studies 

of the widely available market price for 

drugs and biological to which section 

1847A of the Act applies. However, it 

does not specify the frequency of when 

such studies should be conducted. The 

Inspector General has conducted studies 

comparing AMP to ASP for essentially 

each quarter since the ASP system has 

been implemented. Since 2005, the OIG 

has published 18 reports pertaining to 

the price substitution issue (see Table 

45), of which 16 have identified billing 

codes with volume-weighted ASPs that 

have exceeded their volume-weighted 

AMPs by the applicable threshold 

percentage. 

TABLE 45—PUBLISHED OIG REPORTS ON PRICE SUBSTITUTIONS

Date Report title 

7/2008 ............... A Comparison of Average Sales Price to Widely Available Market Prices for Inhalation Drugs (OEI–03–07–00190). 

6/2006 ............... A Comparison of Average Sales Price to Widely Available Market Prices: Fourth Quarter 2005 (OEI–03–05–00430). 

4/2010 ............... Comparison of Third-Quarter 2009 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2010 (OEI–03–10–00150). 

2/2010 ............... Comparison of Average Sales Prices and Average Manufacturer Prices: An Overview of 2008 (OEI–03–09–00350).

1/2010 ............... Comparison of Second-Quarter 2009 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2009 (OEI–03–09–00640). 

8/2009 ............... Comparison of First-Quarter 2009 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2009 (OEI–03–09–00490). 

8/2009 ............... Comparison of Fourth-Quarter 2008 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Second Quarter 2009 (OEI–03–09–00340). 

4/2009 ............... Comparison of Third-Quarter 2008 Average Sales Prices and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2009 (OEI–03–09–00150). 

2/2009 ............... Comparison of Second-Quarter 2008 Average Sales Prices and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2008 (OEI–03–09–00050). 

12/2008 ............. Comparison of First-Quarter 2008 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2008 (OEI–03–08–00530). 

12/2008 ............. Comparison of Average Sales Prices and Average Manufacturer Prices: An Overview of 2007 (OEI–03–08–00450). 

8/2008 ............... Comparison of Fourth-Quarter 2007 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Second Quarter 2008 (OEI–03–08–00340). 

5/2008 ............... Comparison of Third-Quarter 2007 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2008 (OEI–03–08–00130). 

12/2007 ............. Comparison of Second-Quarter 2007 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2007 (OEI–03–08–00010). 

9/2007 ............... Comparison of First-Quarter 2007 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2007 (OEI–03–07–00530). 

7/2007 ............... Comparison of Third-Quarter 2006 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2007 (OEI–03–07–00140). 

7/2006 ............... Comparison of Fourth-Quarter 2005 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Second Quarter 2006 (OEI–03–06–00370). 

4/2006 ............... Monitoring Medicare Part B Drug Prices: A Comparison of Average Sales Price to Average Manufacturer Prices (OEI–03–04– 

00430). 

For example, in their latest report 

comparing AMP to ASP entitled 

‘‘Comparison of Third-Quarter 2009 

Average Sales Price and Average 

Manufacturer Prices: Impact on 

Medicare Reimbursement for First 

Quarter 2010’’ (OEI–03–10–00150), the 

Inspector General found that of 356 

billing codes with complete AMP data 

in the third quarter of 2009, 16 met the 

5 percent threshold, that is, ASP 

exceeded AMP by at least 5 percent. 

Eight of these 16 billing codes were also 

eligible for price adjustments in one or 

more of the previous four quarters, with 

three drugs meeting the 5-percent 

threshold in all five quarters under 

review. This Inspector General report 

further indicates that, ‘‘If reimbursement 

amounts for all 16 drugs had been based 

on 103 percent of the AMPs, we 

estimate that Medicare expenditures 

would have been reduced by over half 

a million dollars in the first quarter of 

2010.’’ These drugs and the savings 

found by the Inspector General 

constitute potential savings for the 

Medicare program and beneficiaries. 

(2) Regulatory, Judicial, and Legislative 

Changes 

Since 2005, regulatory and legislative 

changes, as well as litigation, have had 

a direct impact on this price 

substitution issue. In 2007, we 

published a final rule that, in 

accordance with section 6001(c) of the 

Deficit Reduction Act, was designed to 

clarify the definition of AMP (72 FR 

39142). On December 19, 2007, the 

United States District Court for the 

District of Columbia issued a 

preliminary injunction in National 

Association of Chain Drug Stores et al. 

v. Health and Human Services, Civil 

Action No. 1:07-cv-02017(RCL) that 

enjoins CMS, in part, from posting any 

AMP data on a public Web site or 

otherwise disclosing any AMP data to 

certain individuals or entities, 

including, but not limited to, States or 

their representatives. (For additional 

information on this injunction, please 

see our Web site at http:// 

www.cms.hhs.gov/DeficitReductionAct/ 

Downloads/AMPPIOrder.pdf). 

In 2010, section 2503 of ACA 

amended the definition of AMP, in part, 

to reflect the average price paid for 

covered outpatient drugs: (1) By 

wholesalers for drugs distributed to 

retail community pharmacies; and (2) by 

retail community pharmacies that 

purchase drugs directly from the 

manufacturer. The statute defines retail 

community pharmacies, in part, as 

independent, chain, and supermarket 

pharmacies. 

(3) Proposal 

Overall, we are cognizant that any 

policy must reflect market-related 

pricing changes. Additionally, we 

continue to recognize the need, in light 

of the statute, to implement a price 

substitution policy. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40158 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

As discussed previously, section 

1847A(d)(3) of the Act provides 

authority for us to determine the 

applicable percentage subject to ‘‘such 

adjustment as the Secretary may specify 

for the widely available market price or 

the average manufacturer price, or 

both.’’ We also have authority to specify 

the timing of any ASP substitution. 

Consistent with this authority, we are 

proposing a policy to substitute 103 

percent of AMP for 106 percent of ASP 

where the applicable percentage has 

been satisfied for a number of calendar 

quarters, as discussed elsewhere in this 

rule. This policy would apply to both 

single source and multiple source drugs 

and biologicals as defined respectively 

at section 1847A(c)(6)(C) and (D) of the 

Act. 

We acknowledge the limitation of the 

preliminary injunction on our ability to 

publicly disclose AMP data and until 

that injunction is modified, we will not 

implement this price substitution 

policy. 

Because of the lack of data regarding 

WAMP to ASP comparisons, we are 

explicitly excluding WAMP from this 

price substitution proposal though we 

are proposing to maintain the WAMP 

threshold at 5 percent for CY 2011 in a 

separate section of this rule. Overall, we 

are interested in implementing a price 

substitution policy that reflects marketrelated pricing changes and which 

focuses on those drugs that consistently 

exceed the price substitution threshold 

over multiple quarters. Unlike the OIG’s 

AMP studies, the published WAMP 

studies have recommended price 

substitutions based on specific 

timeframes that do not illustrate 

whether such pricing discrepancies are 

singular or consistent across multiple 

quarters. We will reconsider proposing 

a policy for the substitution of WAMP 

at a later date. 

(4) Timeframe for and Duration of Price 

Substitutions 

As stated in § 414.804(a)(5), a 

manufacturer’s average sales price must 

be submitted to CMS within 30 days of 

the close of the quarter. We then 

calculate an ASP for each billing code 

as per the process outlined at § 414.904. 

Then, as per our CY 2005 PFS final rule 

(69 FR 66300), we implement these new 

prices through program instructions or 

otherwise at the first opportunity after 

we receive the data, which is the 

calendar quarter after receipt. 

Section 1847A(d)(3)(C) of the Act 

indicates that a price substitution would 

be implemented ‘‘effective as of the next 

quarter’’ after the OIG has informed us 

that the ASP for a drug or biological 

exceeds its AMP by the applicable 

percentage threshold. The OIG does not 

receive new ASP prices for a given 

quarter until after we have finalized 

them. Also, the results of their pricing 

comparisons are not available until after 

the ASP prices for a given quarter have 

gone into effect. Therefore, we 

anticipate that there will be a three 

quarter lag for substituted prices from 

the quarter in which manufacturer sales 

occurred, though this will depend in 

great part upon the timeframe in which 

we obtain comparison data from the 

OIG. Table 46 provides an example of 

this timeframe. 

TABLE 46—EXAMPLE PRICE SUBSTITUTION TIMEFRAME

Q2–10 Q3–10 Q4–10 Q1–11 

ASP Process ....... Manufacturer 

sells drug.

Manufacturer submits Q2–10 

pricing data. CMS calculates 

ASP payment limits for Q4–10.

CMS publishes Q4–10 payment 

limits.

............................. ........................... ...................................................... CMS calculates ASP payment 

limits for Q1–11. Compares 

calculated payment limits to 

OIG substitute prices. Publishes Q1–11 prices that may 

include OIG substitute prices.

OIG Process ....... ........................... ...................................................... OIG receives Q4–10 pricing from 

CMS and compares it to Q2– 

10 volume-weighted AMP data. 

Notifies CMS of eligible 

HCPCS for substitution.

Given this lag in time, the ASP price 

for a billing code may have decreased 

since the OIG’s comparison. Therefore, 

consistent with our authorities in 

section 1847A(d)(3) of the Act and our 

desire to provide accurate payments 

consistent with these provisions, we 

believe that the timing of any 

substitution policy should permit a final 

comparison between the OIG’s volumeweighted 103 percent AMP for a billing 

code (calculated from the prior quarter’s 

data) and the billing code’s volumeweighted 106 percent ASP, as calculated 

by CMS, for the current quarter. This 

final comparison would assure the 

Secretary that the 106 percent ASP 

payment limit continues to exceed 103 

percent of the OIG’s calculated AMP in 

order to avoid a situation in which the 

Secretary would inadvertently raise the 

Medicare payment limit through this 

price substitution policy. We 

specifically request comments on this 

proposal. 

ASP payment limits are calculated on 

a quarterly basis as per section 

1847A(c)(5)(A) of the Act, and we are 

particularly mindful that the ASP-based 

payment allowance for a billing code 

may change from quarter to quarter. As 

such, we propose that any price 

substitution would last for one quarter. 

Overall, we believe that our proposal 

as outlined above to substitute 103 

percent of AMP for 106 percent of ASP 

provides us with a viable mechanism for 

generating savings for the Medicare 

program and its beneficiaries since it 

will allow Medicare to pay based off 

lower market prices for those drugs and 

biologicals that consistently exceed the 

applicable threshold percentage. 

Moreover, it will enable us to address a 

programmatic vulnerability identified 

by the OIG. We welcome comments on 

all aspects of our proposal. 

We are also seeking comment on other 

issues related to the comparison 

between ASP and AMP, such as— 

• Any effect of definitional 

differences between AMP and ASP, 

particularly in light of the revised 

definition of AMP per ACA; 

• The impact of any differences in 

AMP and ASP reporting by 

manufacturers on price substitution 

comparisons; and 

• Whether and/or how general 

differences and similarities between 

AMP and manufacturer’s ASP would 

affect comparisons between these two. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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B. Ambulance Fee Schedule Issue: 

Policy for Reporting Units When Billing 

for Ambulance Fractional Mileage 

Under the ambulance fee schedule, 

the Medicare program pays for 

transportation services for Medicare 

beneficiaries when other means of 

transportation are contraindicated and 

all other applicable medical necessity 

requirements are met. Ambulance 

services are classified into different 

levels of ground (including water) and 

air ambulance services based on the 

medically necessary treatment provided 

during transport. These services include 

the following levels of service: 

• For Ground— 

++ Basic Life Support (BLS) 

(emergency and nonemergency). 

++ Advanced Life Support, Level 1 

(ALS1) (emergency and nonemergency). 

++ Advanced Life Support, Level 2 

(ALS2). 

++ Specialty Care Transport (SCT). 

++ Paramedic ALS Intercept (PI). 

• For Air— 

++ Fixed Wing Air Ambulance (FW). 

++ Rotary Wing Air Ambulance 

(RW). 

1. History of Medicare Ambulance 

Services 

a. Statutory Coverage of Ambulance 

Services 

Under sections 1834(l) and 1861(s)(7) 

of the Act, Medicare Part B 

(Supplementary Medical Insurance) 

covers and pays for ambulance services, 

to the extent prescribed in regulations, 

when the use of other methods of 

transportation would be contraindicated 

by the beneficiary’s medical condition. 

The House Ways and Means Committee 

and Senate Finance Committee Reports 

that accompanied the 1965 Social 

Security Amendments suggest that the 

Congress intended that— 

• The ambulance benefit cover 

transportation services only if other 

means of transportation are 

contraindicated by the beneficiary’s 

medical condition; and 

• Only ambulance service to local 

facilities be covered unless necessary 

services are not available locally, in 

which case, transportation to the nearest 

facility furnishing those services is 

covered (H.R. Rep. No. 213, 89th Cong., 

1st Sess. 37 and Rep. No. 404, 89th 

Cong., 1st Sess. Pt 1, 43 (1965)). 

The reports indicate that 

transportation may also be provided 

from one hospital to another, to the 

beneficiary’s home, or to an extended 

care facility. 

b. Medicare Regulations for Ambulance 

Services 

Our regulations relating to ambulance 

services are set forth at 42 CFR part 410, 

subpart B, and 42 CFR part 414, subpart 

H. Section 410.10(i) lists ambulance 

services as one of the covered medical 

and other health services under 

Medicare Part B. Therefore, ambulance 

services are subject to basic conditions 

and limitations set forth at § 410.12 and 

to specific conditions and limitations as 

specified in § 410.40 and § 410.41. Part 

414, subpart H, describes how payment 

is made for ambulance services covered 

by Medicare. 

2. Mileage Reporting 

a. Background and Current Process for 

Reporting Ambulance Mileage 

Historically, the Medicare fee-forservice (FFS) claims processing system 

lacked the capability to accept and 

process fractional unit amounts reported 

in any claim format. Therefore, the 

standard for reporting units for 

ambulance mileage was to bill in whole 

number increments. Thus, if the total 

units of service for ambulance mileage 

included a fractional amount, providers 

and suppliers of ambulance services 

(hereafter referred to collectively as 

‘‘providers and suppliers’’) were 

instructed to round the fraction up to 

the next whole number. Claims billed 

with fractional units of service were, at 

that time, returned as unprocessable as 

CMS’ claims processing systems could 

not accept nor adjudicate fractional unit 

amounts properly. 

Consequently, in Change Request (CR) 

1281 (Transmittal AB–00–88, issued on 

September 18, 2000), we instituted an 

operational procedure requiring wholeunit reporting of mileage on ambulance 

claims. Specifically, we instructed 

providers and suppliers that ‘‘If mileage 

is billed, the miles must be whole 

numbers. If a trip has a fraction of a 

mile, round up to the nearest whole 

number.’’ Our instructions also stated 

that ‘‘1’’ should be reported for trips 

totaling less than a single mile. This was 

an operational instruction based on 

Medicare’s FFS system limitations and 

capabilities at the time, as our claims 

processing systems were not capable of 

accepting and processing claims 

submitted with fractional units of 

service. Since then, our claims 

processing system functionality has 

evolved to the point where this 

rounding process is no longer necessary 

for most ambulance transports, as it is 

now possible for our FFS systems to 

capture and accurately process 

fractional units on both paper and 

electronic forms. 

Under our current instructions, 

providers and suppliers continue to 

report loaded mileage as whole-number 

units on both paper and electronic 

claims. Providers and suppliers utilize 

the appropriate Healthcare Common 

Procedure Coding System (HCPCS) code 

for ambulance mileage to report the 

number of miles traveled during a 

Medicare-covered trip rounded up to 

the nearest whole mile at a minimum of 

1 unit for the purpose of determining 

payment for mileage. Transmittal AB– 

00–88 established a list of HCPCS codes 

accepted by Medicare for the purpose of 

billing mileage. Providers and suppliers 

were instructed to use these specific 

HCPCS codes and enter the total 

number of covered miles in the ‘‘units’’ 

field of the claim form. For example, if 

a covered trip from the point of pickup 

(POP) to the Medicare-approved 

destination (see § 414.40 for a list of 

approved destinations) totaled 9.1 

miles, the provider would enter the 

appropriate HCPCS code for covered 

mileage and a ‘‘10’’ in the units field. 

Providers and suppliers billing for trips 

totaling, for example, 0.5 covered miles, 

would enter ‘‘1’’ in the units field along 

with the appropriate HCPCS code for 

mileage. 

b. Concerns Regarding the Potential for 

Inaccuracies in Reporting Units and 

Associated Considerations 

Often an ambulance provider will 

transport a distance that is either not an 

exact whole number of miles or less 

than one whole mile during a covered 

trip. Currently, providers and suppliers 

billing for ambulance services must 

round up the total billable mileage to 

the nearest whole mile for trips that 

include a fraction of a mile or less than 

one whole mile. Under our current 

instructions, a provider or supplier is 

required to bill as much as .9 of a mile 

more than what was actually traveled. 

We have been contacted by suppliers 

on several occasions with concerns 

regarding our current instructions for 

reporting ambulance mileage. Certain 

suppliers believe that our instructions 

require them to bill inaccurately. One 

company in particular stated that they 

routinely need to bill for trips totaling 

less than 1 mile. The beneficiaries that 

are being transported by this company 

live in the immediate vicinity of the 

facility to which they are being 

transported, and therefore, the number 

of loaded miles for each trip totals 

approximately one half of a mile. The 

company was concerned that since 

Medicare requires that they enter a ‘‘1’’ 

in the units field of their claims for 

mileage, they are being overpaid by 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40160 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

Medicare for mileage based on the 

service they actually provided. 

However, the company’s main 

concern revolved around the risk of 

creating an appearance of impropriety. 

Although our instructions clearly state 

that providers and suppliers should, as 

a matter of procedure, round up 

fractional mileage amounts to the 

nearest whole mile, some providers and 

suppliers indicated that they wanted to 

bill as accurately as possible and that 

they only wanted to be paid for the 

service they actually provided. We 

thoroughly considered these concerns 

while reevaluating the procedure for 

reporting units for fractional mileage 

amounts. 

Our first priority in considering the 

issues raised by ambulance providers 

and suppliers was to ascertain the basis 

for the current mileage reporting 

instructions. As previously discussed, 

the original instructions for reporting 

fractional mileage were published in 

Transmittal AB–00–88, issued on 

September 18, 2000. We instructed 

providers and suppliers to round 

fractional mileage amounts ‘‘up to the 

nearest whole mile’’ and to enter ‘‘1’’ for 

fractional mileage totaling less than one 

mile. This particular process had also 

been in place prior to issuance of the 

transmittal. The reason for the 

procedure was that our claims 

processing systems were not capable of 

accepting and processing claims 

submitted with fractional units of 

service—even if the service was 

commonly measured in fractional 

amounts, as with ambulance mileage. 

We then explored whether a change 

in our procedure would be: (a) 

Appropriate, (b) possible considering 

our current system capabilities and 

industry standards of measurement, and 

(c) applicable to any service other than 

ambulance mileage. As to the 

appropriateness of changing the 

procedure for reporting units of service 

on provider claims for fractional 

ambulance mileage, we believe that we 

should make every effort to create and 

implement policies and processes that 

create the best opportunity for accuracy 

in billing. It is not our intention to put 

providers and suppliers in a position 

where they are required to bill 

inaccurately for the service they 

provide. We continue to strive toward 

ensuring that providers and suppliers 

bill and are paid only for services 

actually provided. We believe that 

changing our current procedure for 

reporting units of service to require 

reporting of fractional mileage will help 

to ensure that providers and suppliers 

can submit claims that more precisely 

reflect actual mileage, and are 

reimbursed more accurately for the 

services they actually provided. We 

originally instituted a policy of 

accepting and processing only whole 

units because at that time, system 

limitations prevented us from accepting 

and processing fractional ambulance 

mileage. 

Second, we considered whether it is 

currently possible for our claims 

processing systems to accept and 

process fractional unit amounts on both 

paper and electronic claims. Upon 

reevaluating our system capabilities, we 

found that technological advancements 

in Optical Character Recognition (OCR) 

and electronic claim submission have 

made it possible for our FFS systems to 

capture and accurately process 

fractional units on both paper and 

electronic claims. We note that our 

systems currently have the capability to 

accept fractional units with accuracy up 

to as much as one thousandth of a unit 

(that is, to 3 decimal places). 

We also considered whether 

ambulance providers and suppliers have 

the capability to measure fractional 

mileage. This was an important point 

because if providers and suppliers are 

not able to measure mileage with any 

more specificity than the nearest whole 

number mile, then there would be no 

need to modify the current procedure 

for billing fractional mileage. In that 

case, providers and suppliers would 

continue to report mileage as whole 

numbers since they could measure no 

more accurately than that. However, 

both analog and digital motor vehicle 

odometers are designed to measure 

mileage accurately to within a minimum 

of a tenth of a mile. While we found that 

some vehicle odometers measure 

mileage more accurately than a tenth of 

a mile, most odometers are accurate to 

the nearest tenth of a mile. Additionally, 

aircraft geographic positioning system 

(GPS) technology provides the means to 

accurately determine billable mileage to 

the tenth of a mile. 

Third, we considered whether a 

policy of billing fractional units would 

be applicable to any other service 

besides ambulance mileage. The units of 

service field on both the electronic and 

paper claim is used to report the 

quantity of services or supplies 

provided to Medicare beneficiaries and 

is used to report a wide range of services 

and supplies including, but not limited 

to: Number of office visits; anesthesia 

minutes; quantity of drugs 

administered; covered miles. Although 

Medicare currently makes payment 

based on fractional units for some 

services (for example, calculation of 

payment after conversion of anesthesia 

time reported in minutes to time units), 

there is currently no requirement that 

providers bill fractional units on the 

claim. If we were to implement a policy 

of requiring reporting of fractional units 

for other types of services or supplies 

we would first need to evaluate whether 

it is possible to do so considering 

industry standards of measurement. As 

previously discussed, providers and 

suppliers of ambulance services have 

the capability to determine fractional 

mileage using standard onboard 

equipment, that is, an odometer, GPS, 

and/or other similar equipment used to 

measure distance traveled. This would 

enable us to readily implement a 

fractional unit billing policy for 

ambulance mileage; whereas 

applicability to other areas (such as 

anesthesia, drugs, etc.) would require 

more analysis to determine whether a 

fractional unit billing policy is feasible, 

efficacious, and cost effective. 

Additionally, this issue was first raised 

by ambulance suppliers who were 

concerned about overbilling and being 

overpaid by Medicare. Therefore, we 

believe it is most reasonable to first 

address the area where concerns have 

been raised (that is, ambulance mileage) 

and consider applicability of this 

procedure to other types of services and 

items in the future. 

Finally, and perhaps most 

importantly, we considered that our 

claims processing system should be 

configured to process claims as 

accurately as possible so as to provide 

for more accurate payments and to 

safeguard Medicare dollars. As 

previously discussed, ambulance 

providers and suppliers currently have 

the capability to measure mileage 

accurately to within a minimum of a 

tenth of a mile using devices (for 

example, odometers, GPS technology, 

etc.) already equipped onboard their 

vehicles. We believe that requiring 

ambulance providers and suppliers to 

round (and report) fractional ambulance 

mileage up to the next tenth of a mile 

strikes a proper balance between 

ensuring that the claims processing 

system adjudicates a claim as accurately 

as the system will permit without 

unduly burdening the ambulance 

community. 

Based on all of the above 

considerations, we have decided that 

our claims processing instructions for 

submission of claims for ambulance 

mileage should be revised to reflect the 

current functionality of our claims 

processing systems so as to maximize 

the accuracy of claims payment, as 

further discussed below in this section. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40161 

c. Billing of Fractional Units for Mileage 

It is both reasonable and prudent that, 

in order to ensure accuracy of payment, 

we facilitate and allow submission of 

the most accurate information on all 

Medicare ambulance claims. 

Furthermore, since our claims 

processing systems are currently 

capable of accepting and processing 

fractional units of service, we believe 

that ambulance mileage should be billed 

to and paid by Medicare in fractional 

amounts to enhance payment accuracy. 

Based on all the considerations 

discussed above, we are proposing to 

require that claims for mileage 

submitted by ambulance providers and 

suppliers for an ambulance transport 

(ground and air) be billed in fractional 

units, by rounding up to the nearest 

tenth of a mile (with the exception 

discussed below). As discussed above, 

we believe that requiring ambulance 

providers and suppliers to round (and 

report) fractional mileage up to the next 

tenth of a mile would allow us to 

provide for more accurate claims 

payment without unduly burdening the 

ambulance community. 

Therefore, we are proposing that, 

effective for claims with dates of service 

on and after January 1, 2011, ambulance 

providers and suppliers would be 

required to report mileage rounded up 

to the nearest tenth of a mile for all 

claims for mileage totaling up to 100 

covered miles. Providers and suppliers 

would submit fractional mileage using a 

decimal in the appropriate place (for 

example, 99.9). Since standard vehicle 

mileage (analog, digital, and GPS) is or 

can be calculated accurately to the 

nearest tenth of a mile, we are proposing 

that the mileage billed to Medicare by 

ambulance providers and suppliers be 

reported by rounding up to the next 

tenth of a mile. 

Although the electronic claim formats 

can accommodate fractional mileage 

when mileage is equal to or greater than 

100 covered miles (for example, 100.0), 

the paper claim cannot. Because the 

Form CMS–1500 paper claim currently 

only supports four characters (including 

the decimal point) in the units field 

(Item 24G), we also propose that mileage 

equal to or greater than 100 covered 

miles continue to be reported in whole 

number miles on both paper and 

electronic claims. We propose that 

providers and suppliers would round 

up fractional mileage to the next whole 

number for mileage that exceeds 100 

covered miles and report the resulting 

whole number in the units’ field. We 

would revise the instructions set forth 

in our Claims Processing Manual to 

reflect the revised procedures for 

submitting and paying claims for 

fractional ambulance. 

C. Clinical Laboratory Fee Schedule: 

Signature on Requisition 

In the March 10, 2000 Federal 

Register, we published the ‘‘Medicare 

Program; Negotiated Rulemaking: 

Coverage and Administrative Policies 

for Clinical Diagnostic Laboratory 

Services’’ proposed rule (65 FR 13082) 

announcing and soliciting comments on 

the results of our negotiated rulemaking 

committee tasked to establish national 

coverage and administrative policies for 

clinical diagnostic laboratory tests 

under Part B of Medicare. In our final 

rule published in the November 23, 

2001 Federal Register (66 FR 58788), we 

explained our policy on ordering 

clinical diagnostic laboratory services 

and amended § 410.32 to make our 

policy more explicit. Our regulation at 

§ 410.32(a) states the requirement that 

‘‘[a]ll diagnostic x-ray tests, diagnostic 

laboratory tests, and other diagnostic 

tests must be ordered by the physician 

who is treating the beneficiary.’’ In the 

November 23, 2001 final rule, we added 

paragraph (d)(2) to § 410.32 to require 

that the physician or qualified 

nonphysician practitioner (NPP) (that is, 

clinical nurse specialists, clinical 

psychologists, clinical social workers, 

nurse-midwives, nurse practitioners 

(NPs), and physician assistants (PAs)) 

who orders the service must maintain 

documentation of medical necessity in 

the beneficiary’s medical record (66 FR 

58809). In the preamble discussions to 

the March 10, 2000 proposed rule and 

November 23, 2001 final rule (65 FR 

13089 and 66 FR 58802, respectively), 

we noted that ‘‘[w]hile the signature of 

a physician on a requisition is one way 

of documenting that the treating 

physician ordered the test, it is not the 

only permissible way of documenting 

that the test has been ordered.’’ In those 

preambles, we described the policy of 

not requiring physician signatures on 

requisitions for clinical diagnostic 

laboratory tests, but implicitly left in 

place the existing requirements for a 

written order to be signed by the 

ordering physician or NPP for clinical 

diagnostic laboratory tests, as well as 

other types of diagnostic tests. We 

further stated in the preambles of the 

proposed and final rules that we would 

publish an instruction to Medicare 

contractors clarifying that the signature 

of the ordering physician is not required 

for Medicare purposes on a requisition 

for a clinical diagnostic laboratory test 

(65 FR 13089 and 66 FR 58802). 

On March 5, 2002, we published a 

program transmittal implementing the 

administrative policies set forth in the 

final rule, including the following 

instruction: ‘‘Medicare does not require 

the signature of the ordering physician 

on a laboratory service requisition. 

While the signature of a physician on a 

requisition is one way of documenting 

that the treating physician ordered the 

service, it is not the only permissible 

way of documenting that the service has 

been ordered. For example, the 

physician may document the ordering of 

specific services in the patient’s medical 

record.’’ (Transmittal AB–02–030, 

Change Request 1998, dated March 5, 

2002). 

On January 24, 2003, we published a 

program transmittal in order to 

manualize the March 5, 2002 

Transmittal. (Transmittal 1787, Change 

Request 2410, dated January 24, 2003). 

The cover note to the transmittal states, 

‘‘Section 15021, Ordering Diagnostic 

Tests, manualizes Transmittal AB–02– 

030, dated March 5, 2002. In accordance 

with negotiated rulemaking for 

outpatient clinical diagnostic laboratory 

services, no signature is required for the 

ordering of such services or for 

physician pathology services.’’ In the 

manual instructions in that transmittal 

in a note, we stated: ‘‘No signature is 

required on orders for clinical 

diagnostic services paid on the basis of 

the physician fee schedule or for 

physician pathology services.’’ The 

manual instructions did not explicitly 

reference clinical diagnostic laboratory 

tests as the cover note did. Rather, the 

transmittal seemed to extend the policy 

set forth in the Federal Register (that no 

signature is required on requisitions for 

clinical diagnostic laboratory tests paid 

under the Clinical Laboratory Fee 

Schedule (CLFS)) to also apply to 

clinical diagnostic tests paid on the 

basis of the Physician Fee Schedule 

(PFS) and physician pathology services. 

In addition, the manual instructions 

used the term ‘‘order’’ instead of 

‘‘requisition,’’ which some members of 

the industry have asserted caused 

confusion. 

When we transitioned from paper 

manuals to the current electronic 

Internet Only Manual system, these 

manual instructions were inadvertently 

omitted from the new Benefit Policy 

Manual (BPM). 

In August 2008, we issued a program 

transmittal (Transmittal 94, Change 

Request 6100, dated August 29, 2008) to 

update the BPM to incorporate language 

that was previously contained in section 

15021 of the Medicare Carriers Manual. 

The reissued language states, ‘‘No 

signature is required on orders for 

clinical diagnostic tests paid on the 

basis of the clinical laboratory fee 

schedule, the physician fee schedule, or 


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for physician pathology services.’’ Based 

on further review, we have determined 

that there are no clinical diagnostic 

laboratory tests paid under the PFS. 

After Transmittal 94 was published, we 

received numerous inquiries from 

laboratory, diagnostic testing, and 

hospital representatives who had 

questions about whether the provision 

applied to all diagnostic services, 

including x-rays, MRIs, and other 

nonclinical laboratory fee schedule 

diagnostic services. 

To resolve any existing confusion 

surrounding the implementation of the 

policy in 2001 and subsequent 

transmittals, we restated and solicited 

public comments on our policy in the 

CY 2010 PFS proposed rule (74 FR 

33641). Our current policy is that a 

physician’s signature is not required on 

a requisition for clinical diagnostic 

laboratory tests paid on the basis of the 

CLFS; however, it must be evident, in 

accordance with our regulations at 

§ 410.32(d)(2) and (3), that the physician 

ordered the services. 

We note that we solicited and 

received comments on this signature 

requirement during the notice and 

comment period for the March 10, 2000 

proposed rule in the context of our 

proposal to add paragraph (d)(2)(i) to 

§ 410.32 to require that the practitioner 

who orders a diagnostic laboratory test 

must maintain documentation of 

medical necessity in the beneficiary’s 

medical record. The majority of 

comments supported the adoption of a 

policy that the signature of the 

practitioner on a requisition for a 

clinical diagnostic laboratory test paid 

under the CLFS is not the only way of 

documenting that the test has been 

ordered and, thus, should not be 

required provided such documentation 

exists in an alternate form. 

This policy regarding requisitions for 

clinical diagnostic laboratory tests does 

not supersede other applicable Medicare 

requirements (such as those related to 

hospital Conditions of Participation 

(CoPs)) which require the medical 

record to include an order signed by the 

physician who is treating the 

beneficiary. Nor do we believe that 

anything in our policy regarding 

signatures on requisitions for clinical 

diagnostic laboratory tests supersedes 

other requirements mandated by 

professional standards of practice or 

obligations regarding orders and 

medical records promulgated by 

Medicare, the Joint Commission, or 

State law; nor do we believe the policy 

would require providers to change their 

business practices. 

We also restated and solicited public 

comment on our long-standing policy 

consistent with the principle in 

§ 410.32(a) that a written order for 

diagnostic tests including those paid 

under the CLFS and those that are not 

paid under the CLFS (for example, that 

are paid under the PFS or under the 

OPPS), such as X-rays, MRIs, and the TC 

of physician pathology services, must be 

signed by the ordering physician or 

NPP. That is, the policy that signatures 

are not required on requisitions for 

clinical diagnostic laboratory tests paid 

based on the CLFS applies only to 

requisitions (as opposed to written 

orders) (74 FR 33642). 

Additionally, we solicited public 

comments about the distinction between 

an order and a requisition (74 FR 

33642). We note that an ‘‘order’’ as 

defined in our IOM, 100–02, Chapter 15, 

Section 80.6.1, is a communication from 

the treating physician/practitioner 

requesting that a diagnostic test be 

performed for a beneficiary. The order 

may conditionally request an additional 

diagnostic test for a particular 

beneficiary if the result of the initial 

diagnostic test ordered yields to a 

certain value determined by the treating 

physician/practitioner (for example, if 

test X is negative, then perform test Y). 

As set forth in the CY 2010 MPFS final 

rule (FR 74 61930), an order may be 

delivered via any of the following forms 

of communication: 

• A written document signed by the 

treating physician/practitioner, which is 

hand-delivered, mailed, or faxed to the 

testing facility. 

• A telephone call by the treating 

physician/practitioner or his or her 

office to the testing facility. 

• An electronic mail, or other 

electronic means, by the treating 

physician/practitioner or his or her 

office to the testing facility. 

If the order is communicated via 

telephone, both the treating physician/ 

practitioner, or his or her office, and the 

testing facility must document the 

telephone call in their respective copies 

of the beneficiary’s medical records. 

In the proposed rule (74 FR 33642), 

we defined a ‘‘requisition’’ as the actual 

paperwork, such as a form, which is 

provided to a clinical diagnostic 

laboratory that identifies the test or tests 

to be performed for a patient. It may 

contain patient information, ordering 

physician information, referring 

institution information, information 

about where to send reports, billing 

information, specimen information, 

shipping addresses for specimens or 

tissue samples, and checkboxes for test 

selection. We believe it is ministerial in 

nature, assisting laboratories with 

billing and handling of results, and 

serves as an administrative convenience 

to providers and patients. We believe 

that a written order, which may be part 

of the medical record, and the 

requisition are two different documents, 

although a requisition that is signed 

may serve as an order. We welcomed 

comments from the public about the 

distinction between requisitions and 

orders. 

During the proposed and final 

rulemaking process for CY 2010, we 

received numerous comments on these 

issues, including, among others: 

Expressions of continued confusion 

over the difference between an ‘‘order’’ 

and a ‘‘requisition’’; requests that CMS 

develop a single policy for all outpatient 

laboratory services, without the 

distinction for those paid under the 

CLFS or the PFS; and concerns about 

reference laboratory technicians who 

felt compelled to perform a test in order 

to protect the viability of the specimen 

although they did not have the proper 

documentation. See 74 FR 61930–32 for 

a complete discussion of the comments 

received and responses to these issues. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61931), we 

stated that, in light of the issues and 

concerns raised during the comment 

period, and our desire to create policy 

that will address the concerns in a 

meaningful, clear and thoughtful way, 

we would continue to carefully consider 

the issues of physician signatures on 

requisitions and orders and that we plan 

to revisit these issues in the future 

paying particular attention to the 

definitions of order and requisition. 

Since the publication of the CY 2010 

PFS final rule with comment period, we 

have considered an approach that 

would address the concerns raised. We 

are proposing to require a physician’s or 

NPP’s signature on requisitions for 

clinical diagnostic laboratory tests paid 

on the basis of the CLFS. 

We believe that this policy would 

result in a less confusing process. We 

believe that it would be less confusing 

because a physician’s signature would 

then be required for all requisitions and 

orders, eliminating uncertainty over 

whether the documentation is a 

requisition or an order, whether the type 

of test being ordered requires a 

signature, or which payment system 

does or does not require a physician or 

NPP signature. We also believe that it 

would not increase the burden on 

physicians because it is our 

understanding that, in most instances, 

physicians are annotating the patient’s 

medical record with either a signature 

or an initial (the ‘‘order’’), as well as 

providing a signature on the paperwork 

that is provided to the clinical 

diagnostic laboratory that identifies the 


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test or tests to be performed for a patient 

(the ‘‘requisition’’) as a matter of course. 

Further, this policy would make it 

easier for the reference laboratory 

technicians to know whether a test is 

appropriately requested, and potential 

compliance problems would be 

minimized for laboratories during the 

course of a subsequent Medicare audit 

because a signature would be 

consistently required. As already 

discussed, this minimizes confusion 

and provides a straightforward directive 

for laboratories to meet. 

We welcome comments on this 

proposal. 

D. Discussion of Chiropractic Services 

Demonstration 

Section 651 of MMA requires the 

Secretary to conduct a 2-year 

demonstration to evaluate the feasibility 

and advisability of expanding coverage 

for chiropractic services under 

Medicare. Medicare coverage for 

chiropractic services is limited to 

manual manipulation of the spine to 

correct a subluxation described in 

section 1861(r)(5) of the Act. The 

demonstration expanded current 

Medicare coverage to include ‘‘care for 

neuromusculoskeletal conditions 

typical among eligible beneficiaries and 

diagnostic and other services that a 

chiropractor is legally authorized to 

perform by the State or jurisdiction in 

which such treatment is provided’’ and 

was conducted in four geographically 

diverse sites, two rural and two urban 

regions, with each type including a 

Health Professional Shortage Area 

(HPSA). The two urban sites were 26 

counties in Illinois and Scott County, 

Iowa, and 17 counties in Virginia. The 

two rural sites were the States of Maine 

and New Mexico. The demonstration, 

which ended on March 31, 2007, was 

required to be budget neutral as section 

651(f)(1)(B) of MMA mandates the 

Secretary to ensure that ‘‘the aggregate 

payments made by the Secretary under 

the Medicare program do not exceed the 

amount which the Secretary would have 

paid under the Medicare program if the 

demonstration projects under this 

section were not implemented.’’ 

In the CY 2006, 2007, and 2008 PFS 

final rules with comment period (70 FR 

70266, 71 FR 69707, 72 FR 66325, 

respectively), we included a discussion 

of the strategy that would be used to 

assess budget neutrality (BN) and the 

method for adjusting chiropractor fees 

in the event the demonstration resulted 

in costs higher than those that would 

occur in the absence of the 

demonstration. We stated BN would be 

assessed by determining the change in 

costs based on a pre-post comparison of 

Medicare costs for beneficiaries in the 

demonstration and their counterparts in 

the control groups and the rate of 

change for specific diagnoses that are 

treated by chiropractors and physicians 

in the demonstration sites and control 

sites. We also stated that our analysis 

would not be limited to only review of 

chiropractor claims because the costs of 

the expanded chiropractor services may 

have an impact on other Medicare costs. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61926), we 

discussed the evaluation of this 

demonstration conducted by Brandeis 

University and the two sets of analyses 

used to evaluate budget neutrality. In 

the ‘‘All Neuromusculoskeletal 

Analysis,’’ which compared the 

Medicare costs of all beneficiaries who 

received services for a 

neuromusculoskeletal condition in the 

demonstration areas with those of 

beneficiaries with similar characteristics 

from similar geographic areas that did 

not participate in the demonstration, the 

total effect of the demonstration to 

Medicare was $114 million. In the 

‘‘Chiropractic User Analysis,’’ which 

compared the Medicare costs of 

beneficiaries who used expanded 

chiropractic services to treat a 

neuromusculoskeletal condition in the 

demonstration areas, with those of 

beneficiaries with similar characteristics 

who used chiropractic services as 

currently covered by Medicare to treat a 

neuromusculoskeletal condition from 

similar geographic areas that did not 

participate in the demonstration, the 

total effect of the demonstration to 

Medicare was $50 million. 

As explained in the CY 2010 PFS final 

rule, we based the BN estimate on the 

‘‘Chiropractic User Analysis’’ because of 

its focus on users of chiropractic 

services rather than all Medicare 

beneficiaries with neuromusculoskeletal 

conditions, including those who did not 

use chiropractic services and who 

would not have become users of 

chiropractic services even with 

expanded coverage for them (74 FR 

61926 through 61927). Users of 

chiropractic services are most likely to 

have been affected by the expanded 

coverage provided by this 

demonstration. Cost increases and 

offsets, such as reductions in 

hospitalizations or other types of 

ambulatory care, are more likely to be 

observed in this group. 

As explained in the CY 2010 PFS final 

rule (74 FR 61927), because the costs of 

this demonstration were higher than 

expected and we did not anticipate a 

reduction to the PFS of greater than 2 

percent per year, we finalized a policy 

to recoup $50 million in expenditures 

from this demonstration over a 5-year 

period, that is, CYs 2010 through 2014 

(74 FR 61927). Specifically, we are 

recouping $10 million for each such 

year through adjustments to the 

chiropractic CPT codes. Payment under 

the PFS for these codes will be reduced 

by approximately 2 percent. We believe 

that spreading this adjustment over a 

longer period of time will minimize its 

potential negative impact on 

chiropractic practices. 

We are continuing the 

implementation of the required budget 

neutrality adjustment by recouping $10 

million in CY 2011. Our Office of the 

Actuary estimates chiropractic 

expenditures in CY 2011 to be 

approximately $524 million based on 

actual Medicare spending for 

chiropractic services for the most recent 

available year. To recoup $10 million in 

CY 2011, the payment amount under the 

PFS for the chiropractic CPT codes (that 

is, CPT codes 98940, 98941, and 98942) 

will be reduced by approximately 2 

percent. We are reflecting this reduction 

only in the payment files used by the 

Medicare contractors to process 

Medicare claims rather than through 

adjusting the RVUs. Avoiding an 

adjustment to the RVUs would preserve 

the integrity of the PFS, particularly 

since many private payers also base 

payment on the RVUs. 

E. Provisions Related to Payment for 

Renal Dialysis Services Furnished by 

End-Stage Renal Disease (ESRD) 

Facilities 

Since August 1, 1983, payment for 

dialysis services furnished by ESRD 

facilities has been based on a composite 

rate payment system that provides a 

fixed, prospectively determined amount 

per dialysis treatment, adjusted for 

geographic differences in area wage 

levels. The composite rate is designed to 

cover a package of goods and services 

needed to furnish dialysis treatments 

that include, but not be limited to, 

certain routinely provided drugs, 

laboratory tests, supplies, and 

equipment. Unless specifically included 

in the composite rate, other injectable 

drugs and laboratory tests medically 

necessary for the care of patients on 

dialysis are separately billable. 

Other than periodic updates, there 

were no significant changes to the 

composite rate payment system until the 

implementation of the basic case-mix 

adjusted composite rate payment system 

beginning January 1, 2005. The Congress 

has enacted a number of adjustments to 

the composite rate since that time. As a 

result of the July 15, 2008 enactment of 

MIPPA, we are required to implement 

an end-stage renal disease (ESRD) 


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bundled prospective payment system 

effective January 1, 2011 (referred to as 

the ‘‘ESRD PPS’’). Below we briefly 

discuss the ESRD PPS, the basic casemix composite payment system, as well 

as our proposed updates to the 

composite rate portion of the blended 

payment for CY 2011. 

a. MIPPA—The ESRD PPS 

On September 29, 2009, we published 

in the Federal Register a proposed rule 

entitled ‘‘End-Stage Renal Disease 

Prospective Payment System’’ (74 FR 

49922). In that rule, we proposed to 

implement a case-mix adjusted bundled 

PPS for renal dialysis services beginning 

January 1, 2011, in accordance with the 

statutory provisions set forth in section 

153(b) of MIPPA. The ESRD PPS would 

replace the current basic case-mix 

adjusted composite payment system and 

the methodologies for the 

reimbursement of separately billable 

outpatient ESRD services. 

As explained in the ESRD PPS 

proposed rule (74 FR 50019), section 

1881(b)(14)(E)(i) of the Act requires a 4- 

year transition (phase-in) from the 

current composite payment system to 

the ESRD PPS, and section 

1881(b)(14)(E)(ii) of the Act allows 

ESRD facilities to make a one-time 

election to be excluded from the 

transition. Electing to be excluded from 

the 4-year transition means that the 

ESRD facility receives payment for renal 

dialysis services based on 100 percent of 

the payment rate established under the 

ESRD PPS, rather than a blended rate 

under each year of the transition based 

in part on the payment rate under the 

current payment system and in part on 

the payment rate under the ESRD PPS. 

As of January 1, 2011, ESRD facilities 

that elect to go through the transition 

would be paid in the first year a blended 

amount that will consist of 75 percent 

of the basic case-mix adjusted 

composite payment system and the 

remaining 25 percent would be based on 

the ESRD PPS payment. Thus, we must 

continue to update the basic case-mix 

composite payment system for purposes 

of determining the composite rate 

portion of the blended payment amount 

during the ESRD PPS 4-year transition 

(CYs 2011 through 2013.) Accordingly, 

in this proposed rule, we are proposing 

the composite rate portion of the blend, 

which includes an update to the drug 

add-on and the application of the wage 

index, as well as the payment amount 

for the first-year (CY 2011) of the ESRD 

PPS transition. We anticipate that the 

final rule for the ESRD PPS will be 

published this summer. 

b. Medicare Modernization Act 

(MMA)—The Basic Case-Mix Adjusted 

Composite Payment System 

Section 623 of the MMA amended 

section 1881 of the Act to require 

changes to the composite rate payment 

methodology, as well as to the pricing 

methodology for separately billable 

drugs and biologicals furnished by 

ESRD facilities. Section 1881(b)(12) of 

the Act, as added by section 623(d) of 

the MMA, requires the establishment of 

a basic case-mix adjusted composite 

payment system that includes services 

comprising the composite rate and an 

add-on to the composite rate component 

to account for the difference between 

current payments for separately billed 

drugs and the revised drug pricing 

specified in the statute. In addition, 

section 1881(b)(12)(A) of the Act 

requires that the composite rate be 

adjusted for a number of patient 

characteristics (case-mix) and section 

1881(b)(12)(D) of the Act gives the 

Secretary discretion to revise the wage 

indices and the urban and rural 

definitions used to develop them. 

Finally, section 1881(b)(12)(E) of the Act 

imposed a budget neutrality (BN) 

requirement, so that aggregate payments 

under the basic case-mix adjusted 

composite payment system equal the 

aggregate payments for the same period 

if section 1881(b)(12) of the Act did not 

apply. 

1. CY 2005 Revisions 

In the CY 2005 PFS final rule with 

comment period (69 FR 66319 through 

66334), we implemented section 

1881(b)(12) of the Act, as added by 

section 623 of the MMA, and revised 

payments to ESRD facilities. These 

revisions that were effective January 1, 

2005, included an update of 1.6 percent 

to the composite rate component of the 

payment system; a drug add-on 

adjustment of 8.7 percent to the 

composite rate to account for the 

difference between pre-MMA payments 

for separately billable drugs and 

payments based on revised drug pricing 

for 2005 which used acquisition costs. 

Also, to implement section 

1881(b)(13) of the Act, we revised 

payments for drugs billed separately by 

independent ESRD facilities, paying for 

the top 10 ESRD drugs based on 

acquisition costs (as determined by the 

OIG) and for other separately billed 

drugs at the average sales price +6 

percent (ASP+6). 

In addition, effective April 1, 2005, 

we implemented the case-mix 

adjustments to the composite rate for 

certain patient characteristics (that is, 

age, low body mass index, and body 

surface area). For further explanation of 

the development of the basic case-mix 

adjusted composite payment system, see 

the CY 2005 PFS final rule with 

comment period (69 FR 66319 through 

66334). 

2. CY 2006 Revisions 

In the CY 2006 PFS final rule with 

comment, we implemented additional 

revisions to payments to ESRD facilities 

required under section 623 of the MMA. 

We revised the drug payment 

methodology applicable to drugs 

furnished by ESRD facilities. Effective 

January 1, 2006, all separately billed 

drugs and biologicals furnished by both 

hospital-based and independent ESRD 

facilities were paid based on ASP+6 

percent. The drug add-on adjustment 

was updated to 14.5 percent to reflect 

the expected growth in expenditures for 

separately billable drugs in CY 2006. 

We also implemented a revised 

geographic adjustment authorized by 

section 1881(b)(12)(D) of the Act. This 

adjustment revised the labor market 

areas to incorporate the Core-Based 

Statistical Area (CBSA) designations 

established by the Office of Management 

and Budget (OMB) by providing a 4-year 

transition from the previous wageadjusted composite rates. Effective 

January 1, 2006, 25 percent of the 

payment was based on the revised 

geographic adjustments, and the 

remaining 75 percent of payment was 

based on the metropolitan statistical 

area-based (MSA-based) adjustments. 

Other adjustments included the 

elimination of the wage index ceiling, 

and reducing the wage index floor to 

0.8500, as well as a revised labor 

portion of the composite rate to which 

the geographic adjustment is applied. 

In addition, section 5106 of the DRA 

(Pub. L. 109–171) provided for a 1.6 

percent update to the composite rate 

component of the basic case-mix 

adjusted composite payment system, 

effective January 1, 2006. For further 

explanation of the revisions to the basic 

case-mix adjusted composite payment 

system, see the CY 2006 PFS final rule 

with comment period (70 FR 70161 

through 70771). 

3. CY 2007 Revisions 

In the CY 2007 PFS final rule with 

comment period, we implemented a 

method to annually calculate the growth 

update to the drug add-on adjustment 

required by section 1881(b)(12) of the 

Act, as well as a growth update of 0.5 

percent to the drug add-on adjustment. 

Also, section 103 of the MIEA–TRHCA 

(Pub. L. 109–432) established a 1.6 

percent update to the composite rate 

portion of the payment system, effective 


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April 1, 2007. The effect of this increase 

in the composite rate was a reduction in 

the drug add-on adjustment to 14.9 

percent, effective April 1, 2007. As a 

result, the drug add-on adjustment to 

the composite rate increased from 14.5 

to 15.1 percent. Since we compute the 

drug add-on adjustment as a percentage 

of the weighted average base composite 

rate, increases in the composite rate 

portion of the payment reduce the drug 

add-on percentage. 

We provided an update to the wage 

index adjustments to reflect the latest 

hospital wage data, including a BN 

adjustment factor. We also implemented 

the second year of the transition to the 

CBSA-based wage index, where 50 

percent of the payment was based on 

the CBSA-based geographic 

adjustments, and the remaining 50 

percent of payment was based on the 

MSA-based adjustments. In addition, we 

reduced the wage index floor 0.85 to 

0.80. 

For further explanation of the 

development of the basic case-mix 

adjusted composite payment system, see 

the CY 2007 PFS final rule with 

comment period (71 FR 69681 through 

69688). 

4. CY 2008 Revisions 

In the CY 2008 PFS final rule with 

comment period (72 FR 66280), we 

implemented a growth update to the 

drug add-on adjustment of 0.5 percent. 

As a result, the drug add-on adjustment 

to the composite payment rate increased 

from 14.9 percent to 15.5 percent. In 

addition, we updated the wage index 

adjustments to reflect the latest hospital 

wage data, including a wage index BN 

adjustment of 1.055473 to the wage 

index for CY 2008, and finally, for CY 

2008, we implemented the third year of 

the transition to the CBSA-based wage 

index, where 75 percent of the payment 

was based on the the CBSA-based 

adjustments and the remaining 25 

percent of payment was based on the 

MSA-based adjustments. In addition, we 

reduced the wage index floor from 0.80 

to 0.75. 

5. CY 2009 Revisions 

For CY 2009, section 153(a) of the 

MIPPA updated sections 1881(b)(12)(G) 

and 1881(b)(12)(A) of the Act to revise 

payments to ESRD facilities effective for 

services furnished on or after January 1, 

2009 and January 1, 2010. The revisions 

included an update of 1 percent to the 

composite rate, and the establishment of 

a site neutral composite rate to both 

hospital-based and independent dialysis 

facilities that reflects the labor share 

applicable to independent dialysis 

facilities (53.711). The 1 percent 

increase to the independent dialysis 

facility’s CY 2008 composite rate of 

$132.49 resulted in a CY 2009 base 

composite rate for hospital-based and 

independent dialysis facilities of 

$133.81. The one percent increase in the 

composite rate portion of the payment 

system effective January 1, 2009, 

reduced the drug add-on adjustment 

from 15.5 to 15.2 percent. 

Also, we updated the wage index 

adjustments to reflect the latest 

available wage data, including a wage 

index BN adjustment of 1.056672 to the 

wage index for CY 2009. Finally, we 

completed the 4-year transition to the 

CBSA-based geographic adjustments 

and reduced the wage index floor from 

0.7500 to 0.700. For further detail, 

regarding the ESRD provisions, see the 

2008 PFS final rule with comment 

period (73 FR 61921 through 61926). 

6. CY 2010 Revisions 

For CY 2010, we updated the casemix adjusted composite rate payment 

system by updating the drug add-on 

component of the composite rate 

system, as well as the wage index values 

used to adjust the labor component of 

the composite rate. Specifically, to 

update the drug add-on adjustment, we 

conducted a trend analysis of CY 2006 

through 2008, we implemented a zero 

growth update to the drug add-on 

adjustment to the composite rates for 

2010 required by section 1881(b)(12)(F) 

of the Act. 

Also, section 1881(b)(12)(G)(iv) of the 

Act, as added by section 153(a)(1) of the 

MIPPA, increased the composite rate by 

1.0 percent for ESRD services furnished 

on or after January 1, 2010. The 1.0 

percent increase resulted in a base 

composite rate of $135.15 per treatment 

and reduced the drug add-on 

adjustment from 15.2 to 15.0 percent. 

Lastly, we updated the wage index to 

reflect the latest available wage data, 

including a revised BN adjustment 

factor of 1.057888. We applied a 

reduction to the wage index floor from 

0.700 to 0.6500. 

For further detail, regarding the ESRD 

provisions, see the 2009 final rule with 

comment period (74 FR 33634 through 

33639). 

7. CY 2011 Proposals 

For purposes of establishing the 

composite rate portion of the blended 

payments under the ESRD PPS for those 

facilities electing to go through the 

transition in CY 2011, CMS is proposing 

the following: 

• An update to the drug add-on 

adjustment to the composite rate, using 

a refined methodology for projecting 

growth in drug expenditures; and 

• An update to the wage index 

adjustment to reflect the latest available 

wage data, including a revised BN 

adjustment. 

• A reduction in the ESRD wage 

index floor from 0.6500 to 0.600. 

8. The Affordable Care Act 

Section 1881(b)(14)(F) of the Act, as 

added by section 153(b) of MIPPA and 

amended by section 3401(h) of ACA, 

governs the ESRD market basket 

increase factor (that is, the ESRD market 

basket). As explained in the ESRD PPS 

proposed rule (74 FR 4997), we 

described how the ESRD Bundled 

market basket would be used to update 

the composite rate portion of the ESRD 

payments during the PPS transition. 

Ordinarily in updating the composite 

payment system, we discuss any 

updates to the composite rate. However, 

beginning in 2011, the composite 

payment would be used as part of the 

blended payments during the ESRD PPS 

transition. Since the publication of the 

ESRD PPS proposed rule, and as 

explained in the ESRD PPS final rule, 

which we anticipate will be published 

this summer, we interpret this provision 

as requiring that the composite rate 

portion of the blended payment amount 

be increased in CY 2011 by the ESRD 

market basket percentage increase factor 

(the ‘‘ESRD market basket’’). 

For purposes of this proposed rule, for 

CY 2011, we anticipate an estimate of a 

2.5 percent increase to the ESRD 

composite rate portion of the blended 

payment amount, resulting in a CY 2011 

composite rate of $138.53 

($135.15*1.025). This 2.5 percent 

increase does not apply to the drug addon adjustment to the composite rate. 

Also, we note that the drug add-on 

percentage would be reduced from 15.0 

to 14.7 as a result of the proposed 

increase to the composite rate in CY 

2011. (A detailed explanation of the 

reduction to the drug add-on adjustment 

is discussed below). 

9. Proposed Update to the Drug Add-on 

Adjustment to the Composite Rate 

a. Estimating Growth in Expenditures 

for Drugs and Biologicals in CY 2011 

Section 1881(b)(12)(F) of the Act 

specifies that the drug add-on increase 

must reflect ‘‘the estimated growth in 

expenditures for drugs and biologicals 

(including erythropoietin) that are 

separately billable * * *.’’ By referring 

to ‘‘expenditures,’’ we believe the statute 

contemplates that the update would 

account for both increases in drug 

prices, as well as increases in utilization 

of those drugs. 

Since we now have 4 years of drug 

expenditure data based on ASP pricing, 


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we propose to continue estimating 

growth in drug expenditures based on 

the trends in available data. Therefore, 

for CY 2011, we are proposing to use 

trend analysis from drug expenditure 

data to update the per treatment drug 

add-on adjustment. We then removed 

growth in enrollment for the same time 

period from the expenditure growth so 

that the residual reflects per patient 

expenditure growth (which includes 

price and utilization combined). 

We further propose to use the per 

patient growth update to the drug addon adjustment for CY 2011. To estimate 

drug expenditure growth using trend 

analysis, we looked at the average 

annual growth in total drug 

expenditures between 2006 and 2009. 

First, we estimated the total drug 

expenditures for all ESRD facilities in 

CY 2009. For this proposed rule, we 

used the final CY 2006, through CY 

2008 ESRD claims data and the latest 

available CY 2009 ESRD facility claims, 

updated through December 31, 2009 

(that is, claims with dates of service 

from January 1 through December 31, 

2009, that were received, processed, 

paid, and passed to the National Claims 

History File as of December 31, 2009). 

For the CY 2011 PFS final rule, we plan 

to use additional updated CY 2009 

claims with dates of service for the same 

timeframe. This updated CY 2009 data 

file will include claims received, 

processed, paid, and passed to the 

National Claims History File as of June 

30, 2010. 

While the CY 2009 claims file used in 

this proposed rule is the most current 

available, we recognize that it does not 

reflect a complete year, as claims with 

dates of service towards the end of the 

year have not all been processed. To 

more accurately estimate the update to 

the drug add-on, aggregate drug 

expenditures are required. Based on an 

analysis of the 2008 claims data, we are 

proposing to inflate the CY 2009 drug 

expenditures to estimate the June 30, 

2010 update of the 2009 claims file. We 

used the relationship between the 

December 2008 and the June 2009 

versions of 2008 claims to estimate the 

more complete 2009 claims that will be 

available in June 2010 and applied that 

ratio to the 2009 claims data from the 

December 2009 claims file. The net 

adjustment to the CY 2009 claims data 

is an increase of 12.22 percent to the 

2009 expenditure data. This adjustment 

allows us to more accurately compare 

the 2008 and 2009 drug expenditure 

data to estimate per patient growth. As 

stated earlier in this section, we plan to 

use additional updated CY 2009 claims 

in the CY 2011 PFS final rule. 

Using the full-year 2009 drug 

expenditure figure, we calculated the 

average annual change in drug 

expenditures from 2006 through 2009. 

This average annual change showed an 

increase of 2.1 percent for this 

timeframe. We propose to use this 2.1 

percent increase to project drug 

expenditures for both 2010 and 2011. 

b. Estimating Per Patient Growth 

Once we had the projected growth in 

drug expenditures from 2010 to 2011, 

which is what we believe that section 

1881(b)(12)(F) of the Act requires us to 

use to update the drug add-on 

adjustment. To calculate the per patient 

growth between CYs 2010 and 2011, we 

removed the enrollment component by 

using the estimated growth in 

enrollment data between CY 2010 and 

CY 2011. This was approximately 3.6 

percent. To do this, we divided the total 

drug expenditure change between 2010 

and 2011 (1.021) by enrollment growth 

of 3.6 percent (1.036) for the same 

timeframe. The result is a per patient 

growth factor equal to 0.986 (1.021/ 

1.036 = 0.986). Thus, we are projecting 

a 1.4 percent decrease in per patient 

growth in drug expenditures between 

2010 and 2011. 

c. Applying the Proposed Growth 

Update to the Drug Add-On Adjustment 

In CY 2006, we applied the projected 

growth update percentage to the total 

amount of drug add-on dollars 

established for CY 2005 to establish a 

dollar amount for the CY 2006 growth 

update. In addition, we projected the 

growth in dialysis treatments for CY 

2006 based on the projected growth in 

ESRD enrollment. We divided the 

projected total dollar amount of the CY 

2006 growth by the projected growth in 

total dialysis treatments to develop the 

per treatment growth update amount. 

This growth update amount, combined 

with the CY 2005 per treatment drug 

add-on amount, resulted in an average 

drug add-on amount per treatment of 

$18.88 (or a 14.5 percent adjustment to 

the composite rate) for CY 2006. 

In the CY 2007 PFS final rule with 

comment period (71 FR 69684), we 

revised our update methodology by 

applying the growth update to the per 

treatment drug add-on amount. That is, 

for CY 2007, we applied the growth 

update factor of 4.03 percent to the 

$18.88 per treatment drug add-on 

amount for an updated amount of 

$19.64 per treatment (71 FR 69684). For 

CY 2008, the per treatment drug add-on 

amount was updated to $20.33. In the 

CY 2009 and 2010 PFS final rule with 

comment period (73 FR 69755 through 

69757 and 74 FR 61923), we applied a 

zero update to per treatment drug addon amount which left it at $20.33. As 

discussed in detail below, for CY 2011, 

we are again proposing no update to the 

per treatment drug add-on amount of 

$20.33 established in CY 2008. 

d. Proposed Update to the Drug Add-On 

Adjustment 

As discussed previously in this 

section, we estimate a 2.1 percent 

increase in drug expenditures between 

CY 2010 and CY 2011. Combining this 

reduction with a 3.6 percent increase in 

enrollment, as described above, we are 

projecting a 1.4 percent decrease in per 

patient growth of drug expenditures 

between CY 2010 and CY 2011. 

Therefore, we are projecting that the 

combined growth in per patient 

utilization and pricing for CY 2011 

would result in a negative update equal 

to 0.2 percent. However, similar to last 

year and as indicated above, we are 

proposing a zero update to the drug addon adjustment. We believe this 

approach is consistent with the 

language under section 1881(b)(12)(F) of 

the Act which states in part that ‘‘the 

Secretary shall annually increase’’ the 

drug add-on amount based on the 

growth in expenditures for separately 

billed ESRD drugs. Our understanding 

of the statute contemplates ‘‘annually 

increase’’ to mean a positive or zero 

update to the drug add-on. Therefore, 

we propose to apply a zero update, and 

to maintain the $20.33 per treatment 

drug add-on amount for CY 2011. 

e. Proposed Update to the Geographic 

Adjustments to the Composite Rate 

The purpose of the wage index is to 

adjust the composite rates for differing 

wage levels covering the areas in which 

ESRD facilities are located. The wage 

indexes are calculated for each urban 

and rural area. 

In addition, we generally have 

followed wage index policies related to 

these definitions as used under the 

inpatient hospital prospective payment 

system (IPPS), but without regard to any 

approved geographic reclassification 

authorized under sections 1886(d)(8) 

and (d)(10) of the Act or other 

provisions that only apply to hospitals 

paid under the IPPS (70 FR 70167). For 

purposes of the ESRD wage index 

methodology, the hospital wage data we 

use is pre-classified, pre-floor hospital 

data and unadjusted for occupational 

mix. 

f. Proposed Updates to Core-Based 

Statistical Area (CBSA) Definitions 

In the CY 2006 PFS final rule with 

comment period (70 FR 70167), we 

announced our adoption of the OMB’s 


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CBSA-based geographic area 

designations to develop revised urban/ 

rural definitions and corresponding 

wage index values for purposes of 

calculating ESRD composite rates. The 

CBSA-based geographic area 

designations are described in OMB 

Bulletin 03–04, originally issued June 6, 

2003, and is available online at http:// 

www.whitehouse.gov/omb/bulletins/ 

b03-04.html. In addition, OMB has 

published subsequent bulletins 

regarding CBSA changes, including 

changes in CBSA numbers and titles. 

We wish to point out that this and all 

subsequent ESRD rules and notices are 

considered to incorporate the CBSA 

changes published in the most recent 

OMB bulletin that applies to the 

hospital wage index used to determine 

the current ESRD wage index. The OMB 

bulletins may be accessed online at 

http://www.whitehouse.gov/omb/ 

bulletins/index.html. 

g. Updated Wage Index Values 

In the CY 2007 PFS final rule with 

comment period (71 FR 69685), we 

stated that we intended to update the 

ESRD wage index values annually. The 

ESRD wage index values for CY 2011 

were developed from FY 2007 wage and 

employment data obtained from the 

Medicare hospital cost reports. As we 

indicated, the ESRD wage index values 

are calculated without regard to 

geographic classifications authorized 

under sections 1886(d)(8) and (d)(10) of 

the Act and utilize pre-floor hospital 

data that is unadjusted for occupational 

mix. We propose to use the same 

methodology for CY 2011, with the 

exception that FY 2007 hospital data 

would be used to develop the CY 2011 

wage index values. For a detailed 

description of the development of the 

proposed CY 2011 wage index values 

based on FY 2007 hospital data, see the 

FY 2011 IPPS proposed rule (75 FR 

23944). Section III.G, of the preamble to 

the FY 2011 IPPS proposed rule, 

‘‘Method for Computing the Proposed 

FY 2011 Unadjusted Wage Index,’’ 

describes the cost report schedules, line 

items, data elements, adjustments, and 

wage index computations. The wage 

index data affecting the ESRD composite 

rate for each urban and rural locale may 

also be accessed on the CMS Web site 

at http://www.cms.hhs.gov/ 

AcuteInpatientPPS/WIFN/list.asp. The 

wage data are located in the section 

entitled, ‘‘FY 2011 Proposed Rule 

Occupational Mix Adjusted and 

Unadjusted Average Hourly Wage and 

Pre-reclassified Wage Index by CBSA.’’ 

i. Reduction to the ESRD Wage Index 

Floor 

In the CY 2010 PFS final rule with 

comment period, we stated our 

intention to continue to reassess the 

need for a wage index floor (74 FR 

61924). We also stated that a gradual 

reduction in the floor is needed to 

support continuing patient access to 

dialysis in areas that have low wage 

index values, especially in Puerto Rico 

where the wage index values are below 

the current wage index floor. 

In the ESRD PPS proposed rule (74 FR 

49968), we stated our intent to continue 

to reduce the wage index floor to the 

composite rate during the transition. For 

CY 2011, we propose that the ESRD 

wage index floor would be reduced from 

0.65 to 0.60. 

j. Proposed Wage Index Values for Areas 

With No Hospital Data 

As discussed in the CY 2010 PFS final 

rule (74 FR 61925), and the ESRD PPS 

proposed rule (74 FR 49969) we have a 

methodology for identifying the small 

number of ESRD facilities in both urban 

and rural geographic areas where there 

are no hospital wage data from which to 

calculate ESRD wage index values. At 

that time those rules were published, 

the affected areas were rural Puerto 

Rico, and the urban area Hinesville-Fort 

Stewart, GA (CBSA 25980), and rural 

Massachusetts. 

In the case of Massachusetts, the 

entire rural area consists of Dukes and 

Nantucket Counties. We determined 

that the borders of Dukes and Nantucket 

counties are contiguous with CBSA 

12700, Barnstable Town, MA, and CBSA 

39300, Providence-New Bedford-Fall 

River, RI–MA. We intend to use the 

same methodology for CY 2011. Under 

this methodology, this results in a 

proposed CY 2011 wage index value of 

1.3577 for the composite rate portion of 

the blend, and a wage index value of 

1.2844 for the ESRD PPS portion of the 

blend for Barnstable Town, MA (CBSA 

12700) and also results in a proposed 

CY 2011 wage index value of 1.1343 for 

the composite rate portion of the blend, 

and a wage index value of 1.0731 for the 

ESRD PPS portion of the blend for 

(Providence-New Bedford-Fall River, 

RI–MA (CBSA 39300). These averages 

result in an imputed proposed wage 

index value of 1.2460 for rural 

Massachusetts in CY 2011, for the 

composite rate portion of the blend, and 

a wage index value of 1.1788 for the 

ESRD PPS portion of the blend. 

For Hinesville-Fort Stewart, GA 

(CBSA 25980), which is an urban area 

without specific hospital wage data, we 

propose to apply the same methodology 

used to impute a wage index value that 

we used in CYs 2006 through 2010. 

Specifically, we compute the average 

wage index value of all urban areas 

within the State of Georgia. This results 

in a CY 2011 wage index value of 0.9465 

for the composite rate portion of the 

blend, and a wage index value of 0.8954 

for the ESRD PPS portion of the blend 

for Hinesville-Fort Stewart, GA (CBSA 

25980). 

For CY 2011, there is an additional 

urban area—Anderson, SC—with no 

hospital data. For this urban area, 

Anderson, SC (CBSA 11340), we 

propose to use the same methodology 

we have used for the other urban area 

with no hospital data, that is, 

Hinesville-Fort Stewart, GA (CBSA 

25980). Under the methodology used for 

that area, we compute the average of all 

urban areas within the State of South 

Carolina. This approach would result in 

a CY 2011 wage index value of 0.9480 

for the composite rate portion of the 

blend, and a wage index value of 0.8839 

for the ESRD PPS portion of the blend 

for the Anderson, SC CBSA (CBSA 

11340). 

For Puerto Rico, because all 

geographic areas in Puerto Rico were 

subject to the wage index floor in CYs 

2006 through 2010, we applied the 

ESRD wage index floor to rural Puerto 

Rico as well. Therefore, for CY 2011, all 

urban areas in Puerto Rico that have a 

wage index are eligible for the ESRD 

wage index floor of 0.60. Currently there 

are no ESRD facilities located in rural 

Puerto Rico, however, should any 

facilities open in rural Puerto Rico, we 

intend to apply the CY 2011 proposed 

wage index floor of 0.60 to facilities that 

are located in rural Puerto Rico. The 

proposed reduction to the wage index 

floor of 0.60 remains higher than the 

actual wage index values for ESRD 

facilities located in Puerto Rico, which 

currently range from 0.3674 to 0.4828. 

Also, in the CY 2010 PFS final rule with 

comment period (74 FR 61925), we 

stated that we would continue to 

evaluate existing hospital wage data and 

possibly wage data from other sources 

such as the Bureau of Labor Statistics, 

to determine if other methodologies 

might be appropriate for imputing wage 

index values for areas without hospital 

wage data for CY 2011 and subsequent 

years. To date, no data from other 

sources, superior to that currently used 

in connection with the IPPS wage index 

has emerged. For ESRD purposes, we 

continue to believe this is an 

appropriate policy. 

Finally, for CY 2011, we are 

proposing to use the FY 2011 wage 

index data (collected from cost reports 

submitted by hospitals for cost reporting 


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periods beginning FY 2007) to compute 

the ESRD composite payment rates 

effective beginning January 1, 2011. 

k. Budget Neutrality Adjustment 

We have previously interpreted the 

statute as requiring that the geographic 

adjustment be made in a budget neutral 

manner. Given our application of the 

ESRD wage index, this means that 

aggregate payments to ESRD facilities in 

CY 2011 would be the same as aggregate 

payments that would have been made if 

we had not made any changes to the 

geographic adjusters. We note that this 

BN adjustment only addresses the 

impact of changes in the geographic 

adjustments. A separate BN adjustment 

was developed for the case-mix 

adjustments required by the MMA. 

As we are not proposing any changes 

to the case-mix measures for CY 2011, 

the current case-mix BN adjustment of 

0.9116 would remain in effect for CY 

2011. Consistent with prior rulemaking, 

For CY 2011, we propose to apply the 

wage-index BN adjustment factor of 

1.057057 directly to the ESRD wage 

index values to the composite rate 

portion of the blend. Because the ESRD 

wage index is only applied to the laborrelated portion of the composite rate, we 

computed the BN adjustment factor 

based on that proportion (53.711 

percent). 

To compute the proposed CY 2011 

wage index BN adjustment factor 

(1.057057), we used the FY 2007 prefloor, pre-reclassified, non-occupational 

mix-adjusted hospital data to compute 

the wage index values, 2009 outpatient 

claims (paid and processed as of 

December 31, 2009), and geographic 

location information for each facility 

which may be found through Dialysis 

Facility Compare Web page on the CMS 

Web site at 

http://www.cms.hhs.gov/ 

DialysisFacilityCompare/. The FY 2011 

hospital wage index data for each urban 

and rural locale by CBSA may also be 

accessed on the CMS Web site at http:// 

www.cms.hhs.gov/AcuteInpatientPPS/ 

WIFN/list.asp. The wage index data are 

located in the section entitled, ‘‘FY 2011 

Proposed Rule Occupational Mix 

Adjusted and Unadjusted Average 

Hourly Wage and Pre-Reclassified Wage 

Index by CBSA.’’ 

Using treatment counts from the 2009 

claims and facility-specific CY 2010 

composite rates, we computed the 

estimated total dollar amount each 

ESRD provider would have received in 

CY 2010. The total of these payments 

became the target amount of 

expenditures for all ESRD facilities for 

CY 2011. Next, we computed the 

estimated dollar amount that would 

have been paid for the same ESRD 

facilities using the proposed ESRD wage 

index for CY 2011. The total of these 

payments becomes the new CY 2011 

amount of wage-adjusted composite rate 

expenditures for all ESRD facilities. 

After comparing these two dollar 

amounts (target amount divided by the 

new CY 2011 amount), we calculated an 

adjustment factor that, when multiplied 

by the applicable CY 2011 ESRD wage 

index value, would result in aggregate 

payments to ESRD facilities that would 

remain within the target amount of 

composite rate expenditures. When 

making this calculation, the ESRD wage 

index floor value of 0.6000 is applied 

whenever appropriate. The proposed 

wage BN adjustment factor for CY 2011 

is 1.057057. 

To ensure BN, we also must apply the 

BN adjustment factor to the wage index 

floor of 1.057057 which results in an 

adjusted wage index floor of 0.6343 

(0.6000 x 1.057057) for CY 2011. This 

budget neutrality factor is not applied to 

the wage index values for the ESRD PPS 

portion of the blend. 

l. ESRD Wage Index Tables 

The CY 2011 ESRD proposed wage 

index tables are located in Addenda K 

and L of this proposed rule. The wage 

index tables lists two separate columns 

of wage index values. The first column 

lists the wage index values will be 

applied under the composite rate 

portion and includes the budget 

neutrality adjustment of 1057057. The 

second column lists the wage index 

values that will be applied under the 

ESRD PPS. 

F. Issues Related to the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) 

1. Section 131: Physician Payment, 

Efficiency, and Quality Improvements— 

Physician Quality Reporting Initiative 

(PQRI) 

a. Program Background and Statutory 

Authority 

The Physician Quality Reporting 

Initiative (PQRI) is a voluntary reporting 

program, first implemented in 2007, that 

provides an incentive payment to 

identified EPs (EPs) who satisfactorily 

report data on quality measures for 

covered professional services furnished 

during a specified reporting period. We 

propose to add § 414.90 to title 42 of the 

Code of Federal Regulations to 

implement the provisions of the PQRI 

discussed in this section of the 

proposed rule. 

Under section 1848(k)(3)(B) of the 

Act, the term ‘‘EP’’ means any of the 

following: (1) A physician; (2) a 

practitioner described in section 

1842(b)(18)(C); (3) a physical or 

occupational therapist or a qualified 

speech-language pathologist; or (4) a 

qualified audiologist. The PQRI was first 

implemented in 2007 as a result of 

section 101 of Division B of the Tax 

Relief and Health Care Act of 2006—the 

Medicare Improvements and Extension 

Act of 2006 (Pub.L. 109–432) (MIEA– 

TRHCA), which was enacted on 

December 20, 2006. The PQRI was 

extended and further enhanced as a 

result of the Medicare, Medicaid, and 

SCHIP Extension Act of 2007 (Pub. L. 

110–173) (MMSEA), which was enacted 

on December 29, 2007, and the MIPPA, 

which was enacted on July 15, 2008. 

Changes to the PQRI as a result of these 

laws, as well as information about the 

PQRI in 2007, 2008, 2009, and 2010 are 

discussed in detail in the CY 2008 PFS 

proposed and final rules (72 FR 38196 

through 38204 and 72 FR 66336 through 

66353, respectively), CY 2009 PFS 

proposed and final rules (73 FR 38558 

through 38575 and 73 FR 69817 through 

69847, respectively), and CY 2010 PFS 

proposed and final rules (74 FR 33559 

through 33600 and 74 FR 61788 through 

61861, respectively). Further detailed 

information, about the PQRI program, 

related laws, and help desk resources, is 

available on the CMS Web site at 

http://www.cms.gov/PQRI. 

The ACA makes a number of changes 

to the PQRI, including authorizing 

incentive payments through 2014, and 

requiring a penalty beginning in 2015 

for EPs who do not satisfactorily report 

data on quality measures in the 

applicable reporting period for the year. 

The various provisions of the ACA, with 

respect to PQRI, are further discussed in 

sections VI.F.1.b., VI.F.1.k., and VI.F.1.l. 

of this proposed rule. 

Prior to the enactment of the ACA, 

PQRI incentive payments were only 

authorized through 2010. As discussed 

further in sections VI.F.1.b. and VI.F.1.l. 

below, under section 1848(m)(1)(A) of 

the Act, as amended by section 3002(a) 

of the ACA, PQRI incentive payments 

are extended through 2014 for EPs that 

satisfactorily report data on PQRI 

quality measures for the applicable 

reporting period. Section 1848(m)(1)(B) 

of the Act, as amended by section 

3002(a) of the ACA, authorizes a 1.0 

percent incentive payment for program 

year 2011 and a 0.5 percent incentive 

payment for program years 2012 

through 2014 for qualified EPs who 

satisfactorily submit PQRI quality 

measures data. Beginning in 2015, an 

incentive payment adjustment will be 

implemented for EPs who do not 

satisfactorily report quality measures as 

required by section 1848(a)(8) of the Act 


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and added by section 3002(b) of the 

ACA. 

Section 3002(e) of the ACA amends 

section 1848(m)(5) of the Act to require 

the Secretary to provide timely feedback 

to EPs on the performance of the EP 

with respect to satisfactorily submitting 

data on quality measures. This is 

discussed further in section VI.F.1.l.(4) 

below. 

Section 3002(f)(2) amends section 

1848(m)(5) of the Act by adding a 

requirement with respect to an informal 

appeals process. Specifically, section 

1848(m)(5)(I) of the Act, as discussed 

further in section VI.F.1.l.(5) below, 

requries that the Secretary establish and 

have in place an informal process by 

January 1, 2011, whereby EPs may seek 

a review of the determination that an EP 

did not satisfactorily submit data on 

quality measures for purposes of 

qualifying for a PQRI incentive 

payment. 

Section 1848(m)(7) of the Act 

(‘‘Additional Incentive Payment’’), as 

added by section 10327(a) of the ACA, 

provides that for years 2011 through 

2014, the applicable quality percent 

under PQRI for EPs satisfactorily 

reporting PQRI quality measures data 

will be increased by 0.5 percentage 

points, if the EP also meets certain 

requirements, including satisfactorily 

reporting data on quality measures for a 

year and having such data submitted on 

their behalf through a Maintenance of 

Certification Program (MOCP) (as 

defined under section 1848(m)(7) of the 

Act) and participating in an MOCP 

practice assessment more frequently 

than is required to qualify for or 

maintain board certification status. 

Section 1848(m)(7) of the Act 

(‘‘Additional Incentive Payment’’) is 

discussed in more detail in section 

VI.F.1.l.(2). Furthermore, section 

3002(c) of the ACA, as amended by 

section 10327(b) of the ACA authorizes 

the Secretary to incorporate 

participation and successful completion 

in an MOCP and successful completion 

of a qualified MOCP practice assessment 

into the composite of measures of 

quality of care furnished under the PFS 

payment modifier. 

Also discussed further in section 

VI.F.1.k. below, section 10331 of the 

ACA requires the Secretary to develop 

a Physician Compare Internet web site 

by January 1, 2011, on which 

information on physicians enrolled in 

the Medicare program and other EPs 

who participate in the PQRI program 

would be posted. With respect to 

measures collected under the PQRI 

program, to the extent practicable, the 

Secretary will implement a plan by 

January 1, 2013, to report 2012 PQRI 

information on the Physician Compare 

Web site. 

Finally, section 1848(m)(7) of the Act 

(‘‘Integration of Physician Quality 

Reporting and EHR Reporting’’), as 

added by section 3002 of the ACA 

requires that not later than January 1, 

2012, the Secretary shall develop a plan 

to integrate reporting on quality 

measures under subsection (o) relating 

to the meaningful use of electronic 

health records (EHRs), as discussed 

further in section VI.F.1.l.(3) below. 

b. Incentive Payments for the 2011 PQRI 

As stated above, for years 2011 

through 2014, section 3002(a) of the 

ACA extends the opportunity for EPs to 

earn a PQRI incentive payment for 

satisfactorily reporting PQRI quality 

measures. For 2011 PQRI, section 

1848(m)(2)(B) of the Act, as amended by 

section 3002(a) of the ACA, authorizes 

a 1.0 percent incentive, and for 2012 

through 2014, a 0.5 percent incentive, 

for qualified EPs who satisfactorily 

submit PQRI quality measures data. 

Regardless of the reporting mechanism, 

and/or the associated reporting period 

(both discussed in detail below) an EP 

chooses to report quality data for 

purposes of PQRI, if the EP meets the 

respective criteria for satisfactory 

reporting, the EP may receive a 1.0 

percent incentive. 

The PQRI incentive payment amount 

is calculated using estimated Medicare 

Part B PFS allowed charges for all 

covered professional services, not just 

those charges associated with the 

reported quality measures. ‘‘Allowed 

charges’’ refers to total charges, 

including the beneficiary deductible 

and coinsurance, and is not limited to 

the 80 percent paid by Medicare or the 

portion covered by Medicare where 

Medicare is secondary payer. Amounts 

billed above the PFS amounts for 

assigned and non-assigned claims will 

not be included in the calculation of the 

incentive payment amount. In addition, 

since, by definition under section 

1848(k)(3)(A) of the Act, ‘‘covered 

professional services’’ are limited to 

services for which payment is made 

under, or is based on, the PFS and 

which are furnished by an EP, other Part 

B services and items that may be billed 

by EPs, but are not paid under or based 

upon the Medicare Part B PFS, are not 

included in the calculation of the 

incentive payment amount. 

As mentioned above, we are 

proposing a number of reporting 

mechanisms that EPs may choose in 

order to participate in PQRI. Our 

proposals for claims-based reporting, 

registry-based reporting, and EHR-based 

reporting are discussed below with 

respect to the opportunity for individual 

EPs to participate in PQRI. For 

satisfactory reporting at the individual 

level in 2011, 1.0 percent of qualified 

charges would be paid at the TIN/NPI 

level. These proposed reporting 

mechanisms are addressed in section 

G.1.d. below. Our proposed criteria for 

satisfactorily reporting using the various 

reporting mechanisms are discussed in 

further detail in sections VI.F.1.e. and 

VI.F.1.f. below. Our proposals with 

respect to the reporting mechanisms and 

criteria for satisfactorily reporting for 

group practices are also addressed 

below, in section VI.F.1.g. Those group 

practices that satisfactorily report will 

also be paid a 1.0 percent incentive 

payment based upon the qualified 

charges for the group practice TIN. 

c. Proposed 2011 Reporting Periods for 

Individual EPs 

Under section 1848(m)(6)(C) of the 

Act, the ‘‘reporting period’’ for the 2008 

PQRI and subsequent years is defined to 

be the entire year, but the Secretary is 

authorized to revise the reporting period 

for years after 2009 if the Secretary 

determines such revision is appropriate, 

produces valid results on measures 

reported, and is consistent with the 

goals of maximizing scientific validity 

and reducing administrative burden. For 

the 2011 PQRI, we propose the 

following reporting periods: (1) 12- 

month reporting period for claims-based 

reporting and registry-based reporting 

(that is, January 1, 2011 through 

December 31, 2011); (2) 12-month 

reporting period for EHR-based 

reporting (that is, January 1, 2011 

through December 31, 2011; and (3) 6- 

month reporting period for claims-based 

reporting and registry-based reporting 

(that is, July 1, 2011 through December 

31, 2011). Additionally, as discussed 

further below in their respective 

sections, we propose the 12-month 

reporting period for the group practice 

reporting option (GPRO) for both PQRI 

and the eRx Prescribing Incentive 

Program (January 1, 2011 through 

December 31, 2011). 

The proposed 2011 PQRI reporting 

periods are consistent with the 2010 

reporting periods. In addition, in prior 

program years, we received input from 

stakeholders in support of partial year 

reporting for all reporting mechanisms, 

to give more EPs the opportunity to 

begin reporting later in the year. We 

agree that having the same reporting 

periods for all mechanisms may be less 

complex, and may facilitate 

participation in 2011 PQRI for certain 

EPs. In an effort to be consistent with 

prior program years, and move in the 

direction of maintaining program 


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stability and continuing program 

flexibility, while increasing successful 

reporting of 2011 PQRI measures, we 

propose to retain 2010 PQRI reporting 

periods as described above. We invite 

comments on the proposed reporting 

periods for 2011 PQRI. 

d. Proposed 2011 PQRI Reporting 

Mechanisms for Individual EPs 

When the PQRI was first implemented 

in 2007, there was only 1 reporting 

mechanism available to submit data on 

PQRI quality measures. For the 2007 

PQRI, EPs had to submit quality data 

codes (QDCs) on Medicare Part B claims 

(claims-based reporting). QDCs are 

Current Procedural Terminology (CPT) 

Category II codes or G-codes (where CPT 

Category II codes are not yet available). 

CPT Category II codes and G-codes are 

Healthcare Common Procedure Coding 

System (HCPCS) codes for reporting 

quality data. For the 2008 PQRI, we 

added registry-based reporting as an 

alternative reporting mechanism as 

required by section 1848(k)(4) of the 

Act. Under this option, EPs may submit 

data on PQRI quality measures to a 

qualified PQRI registry and request the 

registry to submit PQRI quality 

measures results and numerator and 

denominator data on the 2008 PQRI 

quality measures or measures groups. 

For the 2009 PQRI, we retained the 2 

reporting mechanisms used in the 2008 

PQRI (that is, claims-based reporting 

and registry-based reporting) for 

reporting individual PQRI quality 

measures and for reporting measures 

groups. 

Finally, to promote the adoption of 

EHRs, and to facilitate quality measure 

data reporting, we sought to establish an 

EHR reporting option by conducting 

limited testing of EHR reporting for the 

2008 and 2009 PQRI. This involved the 

submission of clinical quality data 

extracted from an EHR, or the EHRbased reporting mechanism. No 

incentive payment was available to 

those EPs who participated in testing 

the EHR-based reporting mechanism. 

For the 2010 PQRI, we retained the 

claims-based reporting mechanism, the 

registry-based reporting mechanism, 

and established EHR reporting for a 

limited subset of the 2010 PQRI quality 

measures, as identified in Table 14 of 

the CY 2010 PFS final rule with 

comment period (74 FR 61831), 

contingent upon the successful 

completion of our 2009 EHR data 

submission testing process and a 

determination based on that testing 

process that accepting data from EHRs 

on quality measures for the 2010 PQRI 

was practical and feasible. In the 2010 

PQRI, following the successful 

completion of the 2009 EHR data 

submission testing process, it was 

determined that it is practical and 

feasible to accept data from EHRs on 

quality measures for the 2010 PQRI. 

For the 2011 PQRI, we are proposing 

to retain the claims-based reporting 

mechanism and the registry-based 

reporting mechanism. We also propose 

to retain the 2010 EHR-based reporting 

mechanism, by which we will continue 

to accept quality measures data 

extracted from a qualified EHR product 

for a limited subset of the proposed 

2011 PQRI quality measures, as 

identified in Tables 55 and 56. Under 

the 2011 PQRI, we propose that the EHR 

submission is optional. 

For the 2011 PQRI, we are not 

proposing to offer additional reporting 

options for individual EPs beyond those 

discussed above. In contrast to prior 

program years (2008 PQRI, 2009 PQRI, 

and 2010 PQRI), we believe that other 

options would not facilitate reporting of 

quality data for PQRI by EPs. However, 

we seek public comment on these 

proposals and invite suggestions as to 

other options that could be included in 

the PQRI. 

We recognize that there continues to 

be a number of limitations associated 

with claims-based reporting since the 

claims processing system was 

developed for billing purposes and not 

for the submission of quality data. 

Claims submission, however, is 

available to all EPs. We have observed 

that only about half of those EPs who 

participated in PQRI via the claimsbased reporting mechanism satisfied the 

criteria for satisfactory reporting (that is, 

reported at least 3 PQRI measures or 

1–2 measures if there were fewer than 

3 applicable measures, for at least 80 

percent of the EP’s Medicare Part B FFS 

patients for whom services were 

furnished during the reporting period to 

which the measure applies) and 

qualified for the incentive. We have also 

found that measures with complex 

specifications, such as those that require 

multiple diagnosis codes are not as 

conducive to claims-based reporting and 

may be associated with a greater number 

of invalidly reported QDCs. Similarly, 

when multiple measures share the same 

codes it may be difficult to determine 

which measure(s) the EP intended to 

report through claims. Finally, for 

pragmatic efficiency it is not practical to 

allow resubmission of claims for the 

sole purpose of adding QDCs. This 

means that claims-based reporting must 

be concurrent with billing. 

By contrast, our experience with the 

registry-based reporting mechanism 

continues to be a favorable option, as 

the drawbacks discussed above do not 

apply. Data has shown that not only 

have the participation rates for registrybased reporting increased, but also 

satisfactory reporting, resulting in an 

incentive payment for EPs, has also 

increased. Furthermore, the available 

number of qualified registries has also 

increased since 2008, and we expect 

additional registries to become qualified 

in future years. For these reasons, we 

maintain that the registry-based 

reporting option remains viable, and 

furthermore, we anticipate continuing to 

expand this option in future years. 

We also believe that EHR-based 

reporting continues to be a viable option 

for overcoming the limitations 

associated with claims-based reporting 

of quality measures, as clinical quality 

data is extracted from the EHR for 

submission. We believe further that 

retaining the EHR-based reporting 

mechanism for 2011 PQRI will continue 

to promote the adoption and use of 

EHRs and further align with the 

provision in the ACA related to the 

integration of PQRI EHR measures and 

the EHR incentive program measures in 

years after 2011, which is discussed in 

further detail in section VI.F.1.l.(3) 

below. 

In summary, we propose that for 

2011, an EP may choose to report data 

on PQRI quality measures through 

claims, a qualified registry (for the 

proposed qualification requirements for 

registries, see section VI.F.1.d.(4) of this 

proposed rule), or through a qualified 

EHR product (for the proposed 

qualification requirements for the EHR 

vendors and their products, see section 

VI.F.1.d.(5) of this proposed rule). As in 

previous years, depending on which 

PQRI individual quality measures or 

measures groups an EP selects, one or 

more of the proposed reporting 

mechanisms may not be available for 

reporting a particular 2011 PQRI 

individual quality measure or measures 

group. For example, the EHR reporting 

mechanism currently is not available for 

reporting measures groups and 

specifications for the electronic 

transmission of a measure via an EHR 

are not available for all of the individual 

PQRI measures. In addition, as 

discussed previously the specifications 

for some measures are too complex for 

claims-based reporting. The proposed 

2011 reporting mechanisms through 

which each proposed 2011 PQRI 

individual quality measure and 

measures group could be reported are 

identified in Tables 47 and 48. We 

invite comments on our proposal for the 

2011 reporting mechanisms. 

While we propose to retain the 

claims-based reporting mechanism for 

2011, we note that we continue to 


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consider significantly limiting the 

claims-based mechanism of reporting 

clinical quality measures in future 

program years. This limitation 

continues to be contingent upon there 

being an adequate number and variety 

of registries available and/or the 

continuation and/or expansion of the 

EHR reporting option. Potentially, we 

would continue to retain claims-based 

reporting in years after 2011 principally 

for the reporting of structural measures, 

such as Measure #124 Health 

Information Technology (HIT): 

Adoption/Use of Electronic Health 

Records (EHR), and in circumstances 

where claims-based reporting is the only 

available mechanism for certain 

categories of EPs to report on PQRI 

quality measures. 

Continuing to reduce our reliance on 

the claims-based reporting mechanism 

after 2011 would allow us and EPs to 

continue to devote available resources 

towards maximizing the potential of 

registries and EHRs for quality 

measurement reporting. Both 

mechanisms hold the promise of more 

sophisticated and timely reporting of 

clinical quality measures. Clinical data 

registries allow the collection of more 

detailed data, including outcomes, 

without the necessity of a single 

submission contemporaneously with 

claims billing, which overcomes some 

of the limitations of the claims-based 

reporting mechanism. Registries can 

also provide feedback and quality 

improvement information based on 

reported data. Finally, clinical data 

registries can also receive data from 

EHRs, and therefore, serve as an 

alternative means to reporting clinical 

quality data extracted from an EHR. As 

we continue to qualify additional 

registries (qualified registries are listed 

on the CMS PQRI Web site http:// 

www.cms.gov/PQRI/20_Alternative

ReportingMechanisms.asp#TopOfPage), 

we believe there may be a sufficient 

number of registries by 2012 to make it 

possible to reduce the claims-based 

reporting mechanism for many 

measures after 2011. We again invite 

comments on our intent to lessen our 

reliance on the claims-based reporting 

mechanism for the PQRI program 

beyond 2011. 

As in previous years, regardless of the 

reporting mechanism chosen by an EP, 

there is no requirement for the EP to 

sign up or register to participate in the 

PQRI. However, there may be some 

requirements for participation through a 

specific reporting mechanism that are 

unique to that particular reporting 

mechanism. In addition to the proposed 

criteria for satisfactory reporting of 

individual measures and measures 

groups described in section VI.F.1.e. 

and section VI.F.1.f., respectively, of 

this proposed rule, EPs must ensure that 

they meet all requirements for their 

chosen reporting mechanism for 2011. 

(1) Proposed Requirements for 

Individual EPs Who Choose the ClaimsBased Reporting Mechanism 

For EPs who choose to participate in 

the 2011 PQRI by submitting data on 

individual quality measures or measures 

groups through the claims-based 

reporting mechanism, we propose the 

EP would be required to submit the 

appropriate PQRI QDCs on the 

professionals’ Medicare Part B claims. 

QDCs for the EP’s selected individual 

PQRI quality measures or measures 

group may be submitted to CMS at any 

time during 2011. Please note, however, 

that as required by section 

1848(m)(1)(A) of the Act, all claims for 

services furnished between January 1, 

2011 and December 31, 2011, would 

need to be processed by no later than 

February 28, 2012, to be included in the 

2011 PQRI analysis. 

(2) Proposed Requirements for 

Individual EPs Who Choose the 

Registry-Based Reporting Mechanism 

We propose that in order to report 

quality data on the 2011 PQRI 

individual quality measures, or 

measures groups, through a qualified 

clinical registry, an EP must enter into 

and maintain an appropriate legal 

arrangement with a qualified 2011 PQRI 

registry. Such arrangements would 

provide for the registry’s receipt of 

patient-specific data from the EP and 

the registry’s disclosure of quality 

measures results and numerator and 

denominator data on PQRI quality 

measures or measures groups on behalf 

of the EP to CMS. Thus, the registry 

would act as a Health Insurance 

Portability and Accountability Act of 

1996 (Pub. L. 104–191) (HIPAA) 

Business Associate and agent of the EP. 

Such agents are referred to as ‘‘data 

submission vendors.’’ The ‘‘data 

submission vendors’’ would have the 

requisite legal authority to provide 

clinical quality measures results and 

numerator and denominator data on 

individual quality measures or measures 

groups on behalf of the EP for the PQRI. 

We propose that the registry, acting as 

a data submission vendor, would submit 

CMS-defined registry-derived measures 

information to our designated database 

for the PQRI, using a CMS-specified 

record layout, which would be provided 

to the registry by CMS. 

To maintain compliance with 

applicable statutes and regulations, our 

program and our data system must 

maintain compliance with the HIPAA 

requirements for requesting, processing, 

storing, and transmitting data. EPs that 

conduct HIPAA covered transactions 

also would need to maintain 

compliance with the HIPAA 

requirements. 

We propose that EPs choosing to 

participate in PQRI through the registrybased reporting mechanism for 2011 

would need to select a qualified PQRI 

registry and submit information on 

PQRI individual quality measures or 

measures groups to the selected registry 

in the form and manner and by the 

deadline specified by the registry. 

We propose to post on the PQRI 

section of the CMS Web site at http:// 

www.cms.gov a list of qualified 

registries for the 2011 PQRI, including 

the registry name, contact information, 

and the 2011 measure(s) and/or 

measures group(s) and eRx reporting (if 

qualified) for which the registry is 

qualified and intends to report. As in 

the 2010 PQRI, we propose for the 2011 

PQRI to post the names of the 2011 

PQRI qualified registries in 3 phases, 

which are discussed below. In any 

event, even though a registry is listed as 

‘‘qualified,’’ we cannot guarantee or 

assume responsibility for the registry’s 

successful submission of the required 

PQRI quality measures results or 

measures group results or required data 

elements submitted on behalf of a given 

EP. 

In the first phase, we propose to post, 

by December 31, 2010, a list of those 

registries qualified for the 2011 PQRI 

based on the following: (1) Being a 

qualified registry for a prior PQRI 

program year that successfully 

submitted 2008 and/or 2009 PQRI 

quality measures results and numerator 

and denominator data on the quality 

measures; (2) having received a letter 

indicating their continued interest in 

being a PQRI registry for 2011 by 

October 31, 2010; and (3) the registry’s 

compliance with the 2011 PQRI registry 

requirements. This list may be modified 

if any given registry fails to meet any 

new requirement(s) proposed for 2011. 

The testing of any additional 

requirements will be completed as soon 

as possible but by the end of the first 

quarter of 2011 at the latest. By posting 

this first list of qualified registries for 

the 2011 PQRI, we seek to make 

available the names of registries that can 

be used at the start of the 2011 reporting 

period. 

We propose in the second phase, to 

add the names of the registries that were 

initially qualified in 2010 and submitted 

actual quality data on behalf of their EPs 

to CMS for the first time in early 2011. 

Successful submission of data to CMS 


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for the year in which a registry is 

qualified is the final step in the 

qualification process and a necessary 

requirement if the registry desires to 

continue to participate in PQRI in 

subsequent years. We propose that these 

registries also must meet any new 2011 

requirements and will also undergo 

testing, which will be completed by the 

end of the first quarter of 2011 at the 

latest. 

In the third phase, we propose to 

complete posting of the list of qualified 

2011 registries as soon as we have 

completed vetting the additional 

registries interested in and capable of 

participating in the 2011 PQRI. We 

anticipate this will be completed no 

later than the summer of 2011. An EP’s 

ability to report PQRI quality measures 

data and numerator and denominator 

data on PQRI quality measures or 

measures groups using the registrybased reporting mechanism should not 

be impacted by the complete list of 

qualified registries for the 2011 PQRI 

being made available after the start of 

the reporting period. First, registries 

would not begin submitting EPs’ PQRI 

quality measures results and numerator 

and denominator data on the quality 

measures or measures groups to CMS 

until 2012. Second, if an EP decides that 

he or she is no longer interested in 

submitting quality measures data and 

numerator and denominator data on 

PQRI individual quality measures or 

measures group through the registrybased reporting mechanism after the 

complete list of qualified registries 

becomes available, this would not 

preclude the EP from attempting to meet 

the criteria for satisfactory reporting 

through another 2011 PQRI reporting 

mechanism, such as claims or EHRbased data submission. 

In addition to meeting the above 

proposed requirements specific to 

registry-based reporting, we propose 

that EPs who choose to participate in 

PQRI through the registry-based 

reporting mechanism would need to 

meet the relevant criteria proposed for 

satisfactory reporting of individual 

measures or measures groups that all 

EPs must meet in order to satisfactorily 

report for PQRI 2011. However, in 2011, 

we propose not to count measures that 

are reported through a registry or EHR 

that have a zero percent performance 

rate. That is, if the recommended 

clinical quality action is not performed 

on at least 1 patient for a particular 

measure or measures group reported by 

the EP via a registry or EHR, we will not 

count the measure (or measures groups) 

as a measure (or measures group) 

reported by an EP. We propose to 

disregard measures (or measures groups) 

that are reported through a registry or 

EHR that have a zero percent 

performance rate in the 2011 PQRI 

because we are assuming that the 

measure was not applicable to the EP 

and was likely reported from EHRderived data (or from data mining) and 

was unintentionally submitted from the 

registry or EHR to CMS. We also seek to 

avoid the possibility of intentional 

submission of spurious data solely for 

the purpose of receiving an incentive 

payment for reporting. 

(3) Proposed Requirements for 

Individual EPs Who Choose the EHRBased Reporting Mechanism 

For 2011, in addition to meeting the 

criteria for satisfactory reporting of at 

least 3 individual measures, we propose 

the following requirements associated 

with EHR-based reporting: (1) Selection 

of a PQRI qualified EHR product; and 

(2) submission of clinical quality data 

extracted from the EHR to a CMS 

clinical data warehouse in the CMSspecified manner and format. These 

proposed requirements are identical to 

the 2010 requirements for individual 

EPs who choose the EHR-based 

requirements. We are proposing to 

retain the 2010 requirements because 

results from 2010 EHR data submission 

will not be available until 2011. A test 

of quality data submission from EPs 

who wish to report 2010 quality 

measure data directly from their 

qualified EHR product will be required 

and occur in early 2011 immediately 

followed by the submission of the EP’s 

actual 2010 PQRI data. This entire final 

test/production 2010 data submission 

timeframe is expected to be January 

2011 through March 2011. As discussed 

in the CY 2010 PFS final rule with 

comment period (74 FR 61800), 

throughout most of 2010, we will 

continue to vet newly self-nominated 

EHR vendor products for possible 

qualification for the 2011 PQRI program 

year. We expect to list any additional 

PQRI qualified EHR products by January 

2011. It is expected that these newly 

qualified products would be able to 

submit 2011 PQRI data in early 2012. 

Measures group reporting is not an 

option for EHR based quality measure 

reporting for 2010. We propose to 

continue this policy for 2011 and 

therefore, propose not to include 

measures group reporting via EHRs for 

the 2011 PQRI. We will receive 2010 

production data in early 2011 and since 

this will be the first time we have an 

opportunity to receive direct EHR data 

submission for quality reporting and to 

calculate the results, we believe it is 

best not to add another reporting option 

using EHRs at this time. We propose 

that EPs who choose the EHR-based 

reporting mechanism for the 2011 PQRI 

would be required to (in addition to 

meeting the criteria for satisfactory 

reporting of individual measures)— 

• Have a qualified EHR product; 

• Have an active Individuals 

Authorized Access to CMS Computer 

Services (IACS) user account with a data 

submission role or be able to use the 

surrogate data submission method (if 

one exists) that will be used to submit 

clinical quality data extracted from the 

EHR to a CMS clinical data warehouse 

or another CMS approved means of 

securely transmitting the quality 

measures data to CMS such as a CMS/ 

OCSQ approved HIE (health information 

exchange) if we are able to collect data 

from HIEs in 2012 using the NHIN 

(national health information network) or 

NHIN direct network; 

• Submit a test file containing real or 

test clinical quality data extracted from 

the EHR to a CMS clinical data 

warehouse via an approved data 

submission method such as IACS, an 

HIE, or the NHIN between July 1, 2011 

and September 30, 2011 (if technically 

feasible); and 

• Submit a file containing the EP’s 

2011 PQRI clinical quality data 

extracted from the EHR for the entire 

reporting period (that is January 1, 2011 

through December 31, 2011) via IACS or 

an acceptable surrogate (if technically 

feasible) between January 1, 2012, 

through February 28, 2012. 

However, as stated above, the 2010 

EHR Testing Program is still ongoing. 

Since we are proposing that only EHR 

vendors that self-nominated to 

participate in the 2011 EHR Testing 

Program and successfully complete the 

2011 EHR Testing Program would be 

considered qualified EHR vendors for 

the 2011 PQRI, there is no guarantee 

that there will be any additionally 

qualified EHR vendors available for the 

2011 PQRI. In addition, as we complete 

the 2010 EHR Testing Program and are 

better able to determine what is 

technically feasible, the actual dates on 

which EPs are required to submit their 

test files and/or to begin submitting 

their actual 2011 PQRI data are subject 

to change. 

We cannot assume responsibility for 

the successful submission of data from 

an EP’s EHR. Any EP who chooses to 

submit PQRI data extracted from an 

EHR should contact the EHR product’s 

vendor to determine if the product is 

qualified and has been updated to 

facilitate PQRI quality measures data 

submission. Such professionals also 

should begin attempting submission 

soon after the opening of the clinical 

data warehouse in order to assure the 


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professional has a reasonable period of 

time to work with his or her EHR and/ 

or its vendor to correct any problems 

that may preclude successful quality 

measures data submission through that 

EHR. As we indicated above, we are 

proposing that data submission for the 

2011 PQRI would need to be completed 

by February 28, 2012. 

The specifications for the electronic 

transmission of the 2011 PQRI 

measures, identified in Tables 55 and 56 

of this proposed rule as being available 

for EHR-based reporting in 2011, will be 

posted on the Alternative Reporting 

Mechanisms page of the PQRI section of 

the CMS Web site during the summer of 

2010. 

(4) Proposed Qualification 

Requirements for Registries 

In order to be ‘‘qualified’’ to submit 

quality measures results and numerator 

and denominator data on PQRI quality 

measures and measures groups on 

behalf of EPs pursuing a PQRI incentive 

for the 2008, 2009, and 2010 PQRI, we 

required registries to complete a selfnomination process and to meet certain 

technical and other requirements. For 

the 2010 PQRI, registries that were 

qualified for 2009 did not need to be ‘‘requalified’’ for 2010 unless they were 

unsuccessful at submitting 2009 PQRI 

data (that is, failed to submit 2009 PQRI 

data per the 2009 PQRI registry 

requirements). Registries that were 

‘‘qualified’’ for 2009 and wished to 

continue to participate in 2010 were 

only required to communicate their 

desire to continue participation for 2010 

by submitting a letter to CMS indicating 

their continued interest in being a PQRI 

registry for 2010 and their compliance 

with the 2010 PQRI registry 

requirements by March 31, 2010. 

For the 2011 PQRI, we are proposing 

to require a self-nomination process for 

registries wishing to submit 2011 PQRI 

quality measures or measures groups on 

behalf of EPs for services furnished 

during the applicable reporting periods 

in 2011. We propose that the registry 

self-nomination process for the 2011 

PQRI would be based on a registry 

meeting specific technical and other 

requirements, as discussed below. 

To be considered a qualified registry 

for purposes of submitting individual 

quality measures and measures groups 

on behalf of EPs who choose to report 

using this reporting mechanism under 

the 2011 PQRI, we propose that all 

registries (new to PQRI and those 

previously qualified) must: 

• Be in existence as of January 1, 

2011; 

• Have at least 25 participants by 

January 1, 2011; 

• Provide at least 1 feedback report 

per year to participating EPs; 

• Not be owned and managed by an 

individual locally-owned singlespecialty group (in other words, singlespecialty practices with only 1 practice 

location or solo practitioner practices 

would be prohibited from selfnominating to become a qualified PQRI 

registry); 

• Participate in ongoing 2011 PQRI 

mandatory support conference calls 

hosted by CMS (approximately 1 call 

per month), including an in-person 

registry kick-off meeting to be held at 

CMS headquarters in Baltimore, MD. 

Registries that miss more than one 

meeting will be precluded from 

submitting PQRI data for the reporting 

year (2011); 

• Be able to collect all needed data 

elements and transmit to CMS the data 

at the TIN/NPI level for at least 3 

measures in the 2011 PQRI program 

(according to the posted 2011 PQRI 

Measure Specifications); 

• Be able to calculate and submit 

measure-level reporting rates or the data 

elements needed to calculate the 

reporting rates by TIN/NPI; 

• Be able to calculate and submit, by 

TIN/NPI, a performance rate (that is, the 

percentage of a defined population who 

receive a particular process of care or 

achieve a particular outcome) for each 

measure on which the TIN/NPI reports 

or the data elements needed to calculate 

the reporting rates; 

• Be able to separate out and report 

on Medicare Part B FFS patients; 

• Provide the name of the registry; 

• Provide the reporting period start 

date the registry will cover; 

• Provide the reporting period end 

date the registry will cover; 

• Provide the measure numbers for 

the PQRI quality measures on which the 

registry is reporting; 

• Provide the measure title for the 

PQRI quality measures on which the 

registry is reporting; 

• Report the number of eligible 

instances (reporting denominator); 

• Report the number of instances of 

quality service performed (numerator); 

• Report the number of performance 

exclusions; 

• Report the number of reported 

instances, performance not met (EP 

receives credit for reporting, not for 

performance); 

• Be able to transmit this data in a 

CMS-approved XML format. We expect 

that this CMS-specified record layout 

will be substantially the same as for the 

2008, 2009, and 2010 PQRI if aggregate 

level data is continued but will likely 

change if individual data elements are 

required, as discussed below. This 

layout will be provided to registries in 

2011; 

• Comply with a CMS-specified 

secure method for data submission, 

such as submitting the registry’s data in 

an XML file through an IACS user 

account or another approved method 

such as over the NHIN (national health 

information network) if technically 

feasible; 

• Submit an acceptable ‘‘validation 

strategy’’ to CMS by March 31, 2011. A 

validation strategy ascertains whether 

EPs have submitted accurately and on at 

least the minimum number (80 percent) 

of their eligible patients, visits, 

procedures, or episodes for a given 

measure. Acceptable validation 

strategies often include such provisions 

as the registry being able to conduct 

random sampling of their participant’s 

data, but may also be based on other 

credible means of verifying the accuracy 

of data content and completeness of 

reporting or adherence to a required 

sampling method; 

• Perform the validation outlined in 

the strategy and send the results to CMS 

by June 30, 2012 for the 2011 reporting 

year’s data; 

• Enter into and maintain with its 

participating professionals an 

appropriate Business Associate 

agreement that provides for the 

registry’s receipt of patient-specific data 

from the EPs, as well as the registry’s 

disclosure of quality measure results 

and numerator and denominator data on 

behalf of EPs who wish to participate in 

the PQRI program; 

• Obtain and keep on file signed 

documentation that each holder of an 

NPI whose data are submitted to the 

registry has authorized the registry to 

submit quality measures and numerator 

and denominator data to CMS for the 

purpose of PQRI participation. This 

documentation must be obtained at the 

time the EP signs up with the registry 

to submit PQRI quality measures data to 

the registry and must meet any 

applicable laws, regulations, and 

contractual business associate 

agreements; 

• Provide CMS access (if requested 

for validation purposes) to review the 

Medicare beneficiary data on which 

2011 PQRI registry-based submissions 

are founded or provide to CMS a copy 

of the actual data (if requested); 

• Provide the reporting option 

(reporting period and reporting criteria) 

that the EP has satisfied or chosen; 

• Provide CMS a signed, written 

attestation statement via mail or e-mail 

which states that the quality measure 

results and any and all data including 

numerator and denominator data 


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provided to CMS are accurate and 

complete; 

• Indicate the reporting period 

chosen for each EP who chooses to 

submit data on measures groups; 

• Base reported information on 

measures groups only on patients to 

whom services were furnished during 

the 12-month reporting period of 

January through December 2011 or the 

6-month reporting period of July 1, 2011 

through December 31, 2011; 

• Agree that the registry’s data may be 

inspected or a copy requested by CMS 

and provided to CMS under our 

oversight authority; 

• Be able to report data on all 

applicable measures in a given measures 

group on either 30 or more Medicare 

Part B FFS patients from January 1, 2011 

through December 31, 2011, or on 80 

percent of applicable Medicare Part B 

FFS patients for each EP (with a 

minimum of 15 patients during the 

January 1, 2011, through December 31, 

2011, reporting period or a minimum of 

8 patients during the July 1, 2011, 

through December 31, 2011, reporting 

period). 

These proposed qualification 

requirements for 2011 registries are 

similar to the PQRI qualification 

requirements for registries for previous 

years. However, we note, that registries 

would no longer be permitted to include 

non-Medicare patients for measures 

group reporting (see section VI.F.1.f. of 

this proposed rule for further discussion 

of the criteria for satisfactory reporting 

of measures groups by individual EPs). 

In addition, in prior years registries 

were permitted to develop their own 

algorithms to calculate measure results 

(that is, reporting and performance 

rates) from the data provided to them 

from their EP members. For the 2011 

PQRI, we propose that all current and 

future registries would have to meet the 

following new requirements proposed 

for 2011: 

• Use PQRI measure specifications 

and the CMS provided measure 

calculation algorithm to calculate 

reporting rates or performance rates 

unless otherwise stated if aggregated 

measures data is continued for 2011 

PQRI registry reporting. CMS will 

provide registries a calculation 

algorithm for each measure and/or 

measures group they intend to report in 

2011. 

• Provide a calculated result using 

the CMS supplied algorithm and XML 

file for each measure that the registry 

intends to calculate (as described 

below). This applies to all registries; 

those that are new to the program, and 

those that were previously qualified. 

The registries will be required to show 

that they can calculate the proper 

measure results (that is, reporting and 

performance rates) using the CMSsupplied algorithm and send the 

calculated data back to CMS in the 

specified format. 

• Provide us the individual data 

elements used to calculate the measures 

if so requested by CMS for validation 

purposes, if aggregated data submission 

is still the selected method of data 

collection. Registries that are subject to 

validation will be asked to send discrete 

data elements for a measure (determined 

by CMS) in the required data format for 

us to recalculate the registries’ reported 

results. Validation will be conducted for 

several measures at a randomly selected 

sample of registries in order to validate 

their data submissions. 

While registries allow EPs to collect 

data over a broader timeframe enabling 

us to implement more sophisticated 

measures in PQRI and despite their 

apparent success as a vehicle for quality 

reporting (over 90.0 percent of EPs who 

participated in the 2008 PQRI through 

registry-based reporting were incentive 

eligible), registry data results have been 

inconsistent when we have validated 

the registry data against claims. Even 

though qualified registries go through a 

thorough vetting and testing process, we 

have found differences in measure 

results (that is, performance rates) 

reported by the registries when 

compared to measure results calculated 

from claims data for the same EP. This 

makes it difficult for EPs to analyze 

their performance results for practice 

improvement in that the information 

may not be reliable and reproducible 

from registry to registry. This also makes 

possible physician comparison difficult 

and inconsistent. We believe there are 

likely several reasons for these 

inconsistencies, including the fact that 

some registries are getting their data 

from an EP’s EHR, the use of nonMedicare patients by registries for 

measures groups, and the use of 

different algorithms by registries to 

calculate measures. We believe the 

proposed new requirements for 

registries discussed above will help us 

in validating the registry data we receive 

by addressing some of the reasons 

leading to the inconsistencies. The 

proposal for 2011 to retain many of the 

2010 requirements while introducing 

some new requirements is intended to 

improve the registry-based reporting 

mechanism by capitalizing on some of 

the registry’s existing quality 

improvement functions, maximizing the 

registry’s ability to successfully submit 

EP’s quality measure results and 

numerator and denominator data on 

PQRI individual quality measures or 

measures groups to CMS, and 

discouraging small physicians’ offices or 

an individual EP from self-nominating 

to become a qualified registry. We 

continue to be concerned that an 

individual EP or a small practice does 

not have either the resources, or the 

capabilities, to successfully submit 

quality measures results and numerator 

and denominator data on PQRI 

individual measures or measures groups 

through the registry data submission 

process. We invite comments on the 

process and requirements that we 

propose to use to determine whether a 

registry is qualified to submit quality 

measures results (performance rates and 

reporting rates) and numerator and 

denominator data on PQRI quality 

measures or measures groups on an EP’s 

behalf. 

As stated previously, registries 

currently calculate the measure results 

(that is reporting and performance rates) 

from the data submitted to them by their 

EP members and send us the measure 

results for each participating EP, which 

are aggregated, nonpatient identifiable 

data. An advantage of this approach is 

that less data will need to be transmitted 

to CMS (since we only receive 

aggregated data), which means there is 

less data for CMS to analyze. 

Another option that we considered 

was changing the requirements with 

respect to the type of data that registries 

send us. For 2011, we considered 

requiring registries, instead, to send 

discrete data elements for a measure (as 

determined by CMS) in the required 

data format for us to calculate the EP’s 

measure results. Thus, the registry 

would be required to send CMS 

beneficiary-level data provided to the 

registry by the EP and CMS would use 

the data to calculate the EP’s measure 

results (that is, reporting and 

performance rates). This approach is 

similar to the approach that was 

contemplated when registry data 

submission began in 2008 and was 

referred to as ‘‘Option 2’’ in the CY 2008 

PFS proposed rule (72 FR 38203). An 

advantage of this approach is that it 

allows us to calculate the measure 

results and reduces the variation that 

occurs when registries try to aggregate 

their data and calculate the measure 

results themselves. Reducing the 

variation would facilitate comparison of 

EPs’ results should we move towards 

public reporting of performance results 

in the future. Also, if the measure 

specifications change from year to year, 

this approach would require the registry 

to make fewer systems changes. The 

registry would not need to update the 

algorithms used to calculate the 


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measure’s results. We invite comments 

on this alternative that was considered. 

We propose to post the final 2011 

PQRI registry requirements, including 

the exact date by which registries that 

wish to qualify for 2011 must submit a 

self-nomination letter and instructions 

for submitting the self-nomination 

letter, on the PQRI section of the CMS 

Web site at http://www.cms.gov/PQRI by 

November 15, 2010. We anticipate that 

new registries that wish to self-nominate 

for 2011 would be required to do so by 

January 31, 2011. 

Similar to 2010 PQRI, we propose that 

registries that were ‘‘qualified’’ for 2010 

and wish to continue to participate in 

2011 will not need to be ‘‘re-qualified’’ 

for 2011 except to the extent that the 

requirements change for 2011 (as 

proposed above). If this occurs, we 

propose that all previously qualified 

registries would need to demonstrate 

that they can meet the new 2011 data 

submission requirements. Additionally, 

we propose that registries that are 

unsuccessful submitting 2010 PQRI data 

(that is, fail to submit 2010 PQRI data 

per the 2010 PQRI registry 

requirements) will need to go through a 

full self-nomination vetting process for 

2011. Successful 2010 PQRI registries 

that choose to report on new or different 

2011 PQRI measures would also need to 

qualify for these additional measures 

and/or methods. We also propose that 

registries that are ‘‘qualified’’ for 2010, 

who were successful in submitting 2010 

PQRI data, and wish to continue to 

participate in 2011 would need to 

indicate their desire to continue 

participation for 2011 by submitting a 

letter to CMS indicating their continued 

interest in being a PQRI registry for 2011 

and their compliance with the 2011 

PQRI registry requirements by no later 

than October 31, 2010. Instructions 

regarding the procedures for submitting 

this letter will be provided to qualified 

2010 PQRI registries on the 2010 PQRI 

registry support conference calls. 

Similar to 2010 PQRI, we propose that 

if a qualified 2010 PQRI registry fails to 

submit 2010 PQRI data per the 2010 

PQRI registry requirements, the registry 

would be considered unsuccessful at 

submitting 2010 PQRI data and would 

need to go through the full selfnomination process again to participate 

in the 2011 PQRI. By March 31, 2011, 

registries that are unsuccessful at 

submitting quality measures results and 

numerator and denominator data for 

2010 would need to be able to meet the 

2011 PQRI registry requirements and go 

through the full vetting process again. 

This would include CMS receiving the 

registry’s self-nomination by March 31, 

2011. As discussed further under 

section VI.F.2. of this proposed rule, we 

propose that the above registry 

requirements would apply not only for 

the purpose of a registry qualifying to 

report 2011 PQRI quality measure 

results and numerator and denominator 

data on PQRI individual quality 

measures or measures groups, but also 

for the purpose of a registry qualifying 

to submit the proposed electronic 

prescribing measure for the 2011 

Electronic Prescribing Incentive 

Program. We invite comments on the 

proposed qualification requirements for 

registries for the 2011 PQRI. 

(5) Proposed Qualification 

Requirements for EHR Vendors and 

Their Products 

In 2010 PQRI, EHR products were 

listed on the PQRI section of the CMS 

Web site at http://www.cms.hhs.gov/ 

PQRI as a ‘‘qualified’’ EHR product (that 

is, the name of the vendor software 

product and the version that was 

qualified), and were available for the 

product’s users to submit quality data 

on Medicare beneficiaries to CMS 

directly from their system for the 2010 

PQRI. This list of qualified EHR vendors 

and products was posted upon 

completion of the 2009 EHR Testing 

Program in January 2010. 

Vendors’ EHR products that were 

listed as ‘‘qualified’’ products for the 

2010 PQRI were selected because the 

vendor self-nominated to participate in 

the 2009 EHR Testing Program and 

demonstrated that their products met 

the ‘‘Requirements for Electronic Health 

Record (EHR) Vendors to Participate in 

the 2009 PQRI EHR Testing Program’’ 

that were posted on the Alternative 

Reporting Mechanisms page of the PQRI 

section of the CMS Web site at http:// 

www.cms.gov/PQRI/20_Alternative

ReportingMechanisms.asp#TopOfPage 

on December 31, 2008. Additionally, a 

vendor’s EHR system was required to be 

updated according to the Final 2010 

EHR specifications, which were posted 

in January 2010 on the Alternative 

Reporting Mechanisms page of the PQRI 

section of the CMS Web site in order for 

an EHR vendor and its product to be 

qualified to submit information on 2010 

PQRI measures. 

The EHR vendor qualification process 

for the 2011 PQRI was finalized in the 

2010 PFS final rule with comment 

period (74 FR 61800 through 61802) and 

is currently underway. We anticipate 

the EHR vendor vetting process for the 

2011 PQRI will be complete in early 

2011. At the conclusion of the 2011 

PQRI EHR vendor vetting process, those 

EHR products that meet all of the 2011 

EHR vendor requirements will be listed 

on the PQRI section of the CMS Web 

site as a ‘‘qualified’’ PQRI EHR product, 

which indicates that the product’s users 

may submit quality data to CMS for the 

2011 PQRI. We continue to caution 

there is no guarantee that there will be 

any qualified EHR vendors available for 

the 2011 PQRI. However, since seven 

EHR vendors and their programs were 

‘‘qualified’’ to submit quality data to 

CMS directly from their EPs for 2010 

PQRI reporting, we are optimistic that 

for 2011 PQRI and subsequent years 

there will continue to be multiple 

‘‘qualified’’ EHR vendors available for 

EPs. 

During 2011, we propose to use the 

same self-nomination process described 

in the ‘‘Requirements for Electronic 

Health Record (EHR) Vendors to 

Participate in the 2011 PQRI EHR 

Testing Program’’ posted on the PQRI 

section of the CMS Web site at http:// 

www.cms.gov/PQRI/20_

AlternativeReporting

Mechanisms.asp#TopOfPage, to qualify 

additional EHR vendors and their EHR 

products to submit quality data 

extracted from their EHR products to the 

CMS clinical quality data warehouse for 

2012 PQRI. We propose that any EHR 

vendor interested in having one or more 

of their EHR products ‘‘qualified’’ to 

submit quality data extracted from their 

EHR products to the CMS clinical 

quality data warehouse for 2012 and 

subsequent years will be required to 

submit their self-nomination letter by 

January 31, 2011. Instructions for 

submitting the self-nomination letter 

will be provided in the 2012 EHR 

vendor requirements, which we expect 

to post in the 4th quarter of CY 2010. 

Specifically, for the 2012 PQRI, we 

propose that only EHR vendors that selfnominate to participate in the 2012 EHR 

Test Program will be considered 

qualified EHR vendors for the 2012 

PQRI. We propose that the 2011 PQRI 

EHR test vendors, who, if their testing 

is successful, may report 2012 PQRI 

data to CMS, must meet the following 

requirements: 

• Be able to collect and transmit all 

required data elements according to the 

2012 EHR Specifications. 

• Be able to separate out and report 

on Medicare Part B FFS patients only. 

• Be able to include TIN/NPI 

information submitted with an EP’s 

quality data. 

• Be able to transmit this data in the 

CMS-approved format. 

• Comply with a secure method for 

data submission. 

• Not be in a beta test form. 

• Have at least 25 active users. 

Additionally, we propose that 

previously qualified PQRI EHR vendors 

and 2012 EHR test vendors must also 


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participate in ongoing PQRI mandatory 

support conference calls hosted by CMS 

(approximately one call per month). 

These requirements would apply not 

only for the purpose of a vendor’s EHR 

product being qualified so that the 

product’s users may submit data 

extracted from the EHR for the 2012 

PQRI in 2013, but also for the purpose 

of a vendor’s EHR product being 

qualified so that the product’s users may 

electronically submit data extracted 

from the EHR for the electronic 

prescribing measure for the 2012 eRx 

Incentive Program in 2013. We propose 

that if a vendor misses more than one 

mandatory support call or meeting, the 

vendor and their product would be 

disqualified for the PQRI reporting year, 

which is covered by the call. 

We propose that previously qualified 

vendors and new vendors will need to 

incorporate any new EHR measures 

(measures electronically-specified) 

added to PQRI for the reporting year 

they wish to maintain their PQRI 

qualification, as well as update their 

electronic measure specifications and 

data transmission schema should either 

or both change. This proposed 

requirement ensures that all PQRI 

qualified EHR products can be used by 

EPs to report any PQRI EHR measure. 

We invite comments on the proposed 

qualification requirements for EHR 

Vendors and their products for the 2012 

PQRI. 

e. Proposed Criteria for Satisfactory 

Reporting of Individual Quality 

Measures for Individual EPs 

Section 1848(m)(3)(A) of the Act 

established the criteria for satisfactorily 

submitting data on individual quality 

measures as at least 3 measures in at 

least 80 percent of the cases in which 

the measure is applicable. If fewer than 

3 measures are applicable to the services 

of the professional, the professional may 

meet the criteria by submitting data on 

1 or 2 measures for at least 80 percent 

of applicable cases where the measures 

are reportable. This section establishes 

the presumption that if an EP submits 

quality data codes for a particular 

measure the measure applies to the EP. 

For years after 2009, section 

1848(m)(3)(D) of the Act provides 

additional authority to the Secretary, in 

consultation with stakeholders and 

experts, to revise the criteria for 

satisfactorily reporting data on quality 

measures. Based on this authority and 

the input we have previously received 

from stakeholders, we propose, for 2011, 

the following 2 criteria for claims-based 

reporting of individual measures by 

individual EPs: 

• Report on at least 3 measures that 

apply to the services furnished by the 

professional; and 

• Report each measure for at least 50 

percent of the EP’s Medicare Part B FFS 

patients for whom services were 

furnished during the reporting period to 

which the measure applies. 

To the extent that an EP has fewer 

than 3 PQRI measures that apply to the 

EP’s services, then we propose the EP 

would be able to meet the criteria for 

satisfactorily reporting data on 

individual quality measures by meeting 

the following 2 criteria: 

• Report on all measures that apply to 

the services furnished by the 

professional (that is 1 to 2 measures); 

and 

• Report each measure for at least 50 

percent of the EP’s Medicare Part B FFS 

patients for whom services were 

furnished during the reporting period to 

which the measure applies. 

We also propose for 2011 the 

requirement that an EP who reports on 

fewer than 3 measures through the 

claims-based reporting mechanism may 

be subject to the Measure Applicability 

Validation (MAV) process, which would 

allow us to determine whether an EP 

should have reported quality data codes 

for additional measures. This process 

was applied in prior years. Under the 

proposed MAV process, when an EP 

reports on fewer than 3 measures, we 

propose to review whether there are 

other closely related measures (such as 

those that share a common diagnosis or 

those that are representative of services 

typically provided by a particular type 

of EP). We further propose that if an EP 

who reports on fewer than 3 measures 

in 2011 reports on a measure that is part 

of an identified cluster of closely related 

measures and did not report on any 

other measure that is part of that 

identified cluster of closely related 

measures, then the EP would not qualify 

as a satisfactory reporter in 2011 PQRI 

or earn an incentive payment. In 2011, 

we propose that these criteria for 

satisfactorily reporting data on fewer 

than 3 individual quality measures 

would apply for the claims-based 

reporting mechanism only. 

We note that the proposed 2011 

criteria for satisfactory reporting of 

individual quality measures through 

claims submission are different from the 

2010 criteria, which required reporting 

on at least 80 percent of the EP’s 

Medicare Part B FFS patients for whom 

services were furnished during the 

reporting period to which the measure 

applies. 

The rationale for an 80 percent 

reporting rate is that this sample size 

would prevent selective reporting to 

achieve higher performance rates. 

However, we now have experience with 

claims based reporting, which has 

proved challenging for EPs, as discussed 

above. In 2007, approximately half of 

PQRI participants (defined as 

submitting at least one QDC), qualified 

for the PQRI incentive payment. 

Following the 2007 program 

completion, we performed an extensive 

review and made a number of analytic 

changes that we detailed in our 2007 

PQRI Experience Report. For 2008, the 

analytic changes that we made 

following the completion of the 2007 

program resulted in substantial 

increases in valid QDC reporting and 

the number of professionals qualifying 

for an incentive payment. However, the 

number who qualified for the incentive 

for the 2008 program year remained at 

about half of those who participated. A 

major reason for this was reporting at 

less than the required 80 percent 

reporting requirement. As a result of our 

review of the 2007 and 2008 program 

results, we believe that we can reduce 

the reporting sample requirement to 50 

percent for claims-based submission 

without increasing the likelihood that 

professionals will selectively report 

based on whether the performance 

expectation of a measure is met for that 

particular patient. Inasmuch as we do 

not allow resubmission of a claim solely 

for the purpose of resubmission of a 

QDC, EPs will still need to submit QDCs 

contemporaneously with the claim. 

Therefore, we believe that even at a 50 

percent reporting it would be difficult to 

selectively report for the purpose of 

better performance. Based on our 

review, we further believe that by 

reducing the reporting sample, there 

will be substantial increases in the 

portion of participating professionals 

who qualify for the PQRI incentive. 

Thus, we believe we can encourage 

significantly broader participation 

which otherwise might be deterred if 

physicians and other EPs do not believe 

that they are likely to qualify for the 

incentive. 

As previously stated, we propose that 

the 50 percent reporting sample would 

apply only to the 2011 PQRI claimsbased reporting mechanism available for 

reporting individual PQRI quality 

measures and not registry-based 

reporting or EHR-based reporting. 

For the 2011 PQRI, we propose the 

following 2 criteria for satisfactory 

reporting of data on individual PQRI 

quality measures for registry-based and 

EHR-based reporting: 

• Report on at least 3 measures that 

apply to the services furnished by the 

professional; and 


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• Report each measure for at least 80 

percent of the EP’s Medicare Part B FFS 

patients for whom services were 

furnished during the reporting period to 

which the measure applies. 

We do not believe that reducing the 

reporting sample to 50 percent for 

registry-based reporting or EHR-based 

reporting would substantially impact 

the portion of participating 

professionals who qualify for the PQRI 

incentive. As stated previously, over 

90.0 percent of EPs submitting data 

through registries were incentive 

eligible. 

The proposed 2011 criteria for 

satisfactory reporting of data on 

individual PQRI quality measures are 

summarized in Table 47 and are 

arranged by reporting mechanism and 

reporting period. We seek public 

comment on these proposed reporting 

criteria. We are particularly interested 

in receiving comments on our proposal 

to lower the reporting criteria for 

claims-based reporting of individual 

measures from 80 percent to 50 percent. 

We seek input on whether 50 percent is 

an appropriate threshold or if another 

threshold would be more appropriate. 

We had considered lowering the 

reporting criteria to a higher threshold 

(such as 60 percent or 75 percent) but 

we found that differences in the 

performance rates at 50 percent and 80 

percent reporting were not substantial 

while differences in the proportion of 

EPs satisfactorily reporting at the two 

different thresholds were substantial. 

TABLE 47—PROPOSED 2011 CRITERIA FOR SATISFACTORY REPORTING OF DATA ON INDIVIDUAL PQRI QUALITY

MEASURES, BY REPORTING MECHANISM AND REPORTING PERIOD

Reporting mechanism Reporting criteria Reporting period 

Claims-based reporting .............................. • Report at least 3 PQRI measures, or 1–2 measures if 

less than 3 measures apply to the EP; and 

January 1, 2011–December 31, 2011. 

• Report each measure for at least 50% of the EP’s 

Medicare Part B FFS patients seen during the reporting period to which the measure applies. 

Claims-based reporting .............................. • Report at least 3 PQRI measures, or 1–2 measures if 

less than 3 measures apply to the EP; and 

July 1, 2011–December 31, 2011. 

• Report each measure for at least 50% of the EP’s 

Medicare Part B FFS patients seen during the reporting period to which the measure applies. 

Registry-based reporting ............................ • Report at least 3 PQRI measures; and January 1, 2011–December 31, 2011. 

• Report each measure for at least 80% of the EP’s 

Medicare Part B FFS patients seen during the reporting period to which the measure applies. 

Registry-based reporting ............................ • Report at least 3 PQRI measures; and July 1, 2011–December 31, 2011. 

• Report each measure for at least 80% of the EP’s 

Medicare Part B FFS patients seen during the reporting period to which the measure applies. 

EHR-based reporting .................................. • Report at least 3 PQRI measures; and January 1, 2011–December 31, 2011. 

• Report each measure for at least 80% of the EP’s 

Medicare Part B FFS patients seen during the reporting period to which the measure applies. 

Table 47 illustrates that there are a 

total of 5 proposed reporting options for 

2011, or ways in which an EP may meet 

the criteria for satisfactorily reporting on 

individual quality measures for the 2011 

PQRI. Each proposed reporting option 

consists of the criteria for satisfactorily 

reporting such data and results on 

individual quality measures relevant to 

a given reporting mechanism and 

reporting period. EPs may potentially 

qualify for an incentive as satisfactorily 

reporting individual quality measures 

under more than one of the proposed 

reporting criteria, proposed reporting 

mechanism, and or for more than one 

proposed reporting period; however, 

only one incentive payment will be 

made to an EP based on the longest 

reporting period for which the EP 

satisfactorily reports. 

f. Proposed Criteria for Satisfactory 

Reporting Measures Groups for 

Individual EPs 

We also propose that individual EPs 

have the option to report measures 

groups instead of individual quality 

measures to qualify for the 2011 PQRI 

incentive, using claims or registries. As 

stated previously, we do not propose to 

make the EHR-based reporting 

mechanism available for reporting on 

measures groups in 2011. The criteria 

that we propose for 2011 for satisfactory 

reporting of measures groups through 

claims-based or registry-based reporting 

for either the 12-month or 6-month 

reporting period are as follows: (1) For 

claims-based reporting, the reporting of 

at least 1 measures group for at least 50 

percent of patients to whom the 

measures group applies, during the 

reporting period; or (2) for registrybased reporting, the reporting of at least 

1 measures group for at least 80 percent 

of patients to whom the measures group 

applies during the reporting period. EPs, 

for both claims-based and registry-based 

reporting under these criteria, would be 

required to submit data on a minimum 

of 15 unique Medicare Part B FFS 

patients for the 12-month reporting 

period and a minimum of 8 Medicare 

Part B FFS patients for the 6-month 

reporting period. We note that the 

proposed criteria for 2011 are the same 

criteria as for 2010 PQRI reporting on 

measures groups, with the exception of 

our reducing the reporting sample from 

80 percent to 50 percent for claimsbased submission of measures groups. 

We propose to reduce the reporting 

sample requirement for claims-based 

submission of measures groups for the 

same reasons discussed in section 

VI.F.1.e. of this proposed rule for 

claims-based submission of individual 

measures. In other words, we believe 

that reducing the reporting sample from 

80 percent to 50 percent will 

substantially increase the portion of 

participating EPs who qualify for a 2011 

PQRI incentive without encouraging EPs 

to selectively report only those cases 

that will increase their performance 

rates. Additionally for 2011, we propose 

to retain the criteria, available only for 

the 12-month reporting period, based on 

reporting on at least 1 measures group 

for at least 30 patients for whom 


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services were furnished between 

January 1, 2011, and December 31, 2011, 

to whom the measures group applies. 

We also propose that the 30 patients on 

which an EP would need to report a 

measures group for 2011 would not 

need to be consecutive patients. We 

propose that the EP may report on any 

30 unique patients seen during the 

reporting period to which the measures 

group applies. As in previous years, we 

propose that for 2011, the patients, for 

claims-based reporting, would be 

limited to Medicare Part B FFS patients. 

Finally, for registry-based reporting in 

2011, in contrast to prior program years, 

we propose to require that the minimum 

patient numbers or percentages must be 

met by Medicare Part B FFS patients 

exclusively and not non-Medicare Part 

B FFS patients. The reason for this is the 

difficulty of analyzing data we receive 

from registries, where patients other 

than Medicare Part B FFS patients are 

included. For example, under our 

proposal we would be able to compare 

claims data with registry submitted data 

to compare patients in the denominator 

of the measure for validation. The 

proposed 2011 criteria for satisfactory 

reporting of data on measures groups are 

summarized in Table 48 and are 

arranged by reporting mechanism and 

reporting period. 

TABLE 48—PROPOSED 2011 CRITERIA FOR SATISFACTORY REPORTING ON MEASURES GROUPS, BY REPORTING

MECHANISM AND REPORTING PERIOD

Reporting mechanism Reporting criteria Reporting period 

Claims-based reporting .............................. • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 30 Medicare Part B FFS patients. 

Claims-based reporting .............................. • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 50% of the 

EP’s Medicare Part B FFS patients seen during the 

reporting period to whom the measures group applies; and 

• Report each measures group on at least 15 Medicare 

Part B FFS patients seen during the reporting period 

to which the measures group applies. 

Claims-based reporting .............................. • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 50% of the 

EP’s Medicare Part B FFS patients seen during the 

reporting period to whom the measures group applies; and 

• Report each measures group on at least 8 Medicare 

Part B FFS patients seen during the reporting period 

to which the measures group applies. 

Registry-based reporting ............................ • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 30 Medicare Part B FFS patients. 

Registry-based reporting ............................ • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 80% of the 

EP’s Medicare Part B FFS patients seen during the 

reporting period to whom the measures group applies; and 

• Report each measures group on at least 15 Medicare 

Part B FFS patients seen during the reporting period 

to which the measures group applies. 

Registry-based reporting ............................ • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 80% of the 

EP’s Medicare Part B FFS patients seen during the 

reporting period to whom the measures group applies; and 

• Report each measures group on at least 8 Medicare 

Part B FFS patients seen during the reporting period 

to which the measures group applies. 

As illustrated in Table 48, there are a 

total of 6 proposed reporting options, or 

ways in which EPs may meet the criteria 

for satisfactory reporting of measures 

groups for the 2011 PQRI. Each 

proposed reporting option consists of 

the criteria for satisfactory reporting 

relevant to a given reporting mechanism 

and reporting period. As stated 

previously, EPs may potentially qualify 

as satisfactorily reporting for 2011 PQRI 

on measures groups under more than 

one of the reporting criteria, reporting 

mechanisms, and/or for more than one 

reporting period; however, only one 

incentive payment will be made to an 

EP based on the longest reporting period 

for which the EP satisfactorily reports. 

Similarly, an EP could also potentially 

qualify for the PQRI incentive payment 

by satisfactorily reporting both 

individual measures and measures 

groups. However, only one incentive 

payment will be made to the EP based 

on the longest reporting period for 

which the EP satisfactorily reports. We 

invite comments on the proposed 

criteria for satisfactory reporting 

measures groups for individual EPs. 

g. Proposed Reporting Option for 

Satisfactory Reporting on Quality 

Measures by Group Practices 

(1) Background and Authority 

Section 1848(m)(3)(C)(i) of the Act 

requires the Secretary to establish and 

have in place a process by January 1, 

2010 under which EPs in a group 

practice (as defined by the Secretary) 

shall be treated as satisfactorily 

submitting data on quality measures 


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under PQRI if, in lieu of reporting 

measures under PQRI, the group 

practice reports measures determined 

appropriate by the Secretary, such as 

measures that target high-cost chronic 

conditions and preventive care, in a 

form and manner, and at a time 

specified by the Secretary. Section 

1848(m)(3)(C)(ii) of the Act requires that 

this process provide for the use of a 

statistical sampling model to submit 

data on measures, such as the model 

used under the Medicare Physician 

Group Practice (PGP) demonstration 

project under section 1866A of the Act. 

A group practice reporting option 

(GPRO) was established for the 2010 

PQRI in the CY 2010 PFS final rule with 

comment period (74 FR 61807 through 

61811). 

In addition, payments to a group 

practice under section 1848(m) of the 

Act by reason of the process proposed 

herein shall be in lieu of the PQRI 

incentive payments that would 

otherwise be made to EPs in the group 

practice for satisfactorily submitting 

data on quality measures (that is, 

prohibits double payments). Therefore, 

for the 2011 PQRI, we propose to 

continue to allow a group practice, as a 

whole (that is, for the TIN(s)), to 

participate in 2011 PQRI and to submit 

PQRI quality measures for 2011 and 

qualify to earn an incentive. If, however, 

an individual EP is affiliated with a 

group practice participating in the 

GPRO and the group practice 

satisfactorily reports under the GPRO, 

the EP will be considered as 

satisfactorily reporting PQRI quality 

measures data at the individual level 

under that same TIN(s) (that is, for the 

same TIN/NPI combination). 

(2) Definition of ‘‘Group Practice’’ 

As stated above, section 

1848(m)(3)(C)(i) of the Act authorizes 

the Secretary to define ‘‘group practice.’’ 

For purposes of determining whether a 

group practice satisfactorily submits 

PQRI quality measures data, we propose 

that for the 2011 PQRI a ‘‘group practice’’ 

would consist of a physician group 

practice, as defined by a TIN, with 2 or 

more individual EPs (or, as identified by 

NPIs) who have reassigned their billing 

rights to the TIN. This proposed 

definition for group practice is different 

from the 2010 PQRI definition of group 

practice in that we propose to change 

the minimum group size from 200 to 2 

to enable more group practices to 

participate in the PQRI GPRO in 2011. 

Generally, our intent continues to be 

to build on an existing quality reporting 

program that group practices may 

already be familiar with by modeling 

some aspects of the the PQRI GPRO after 

the PGP demonstration while 

concurrently expanding the availability 

of the GPRO to more group practices. 

Since the PGP demonstration is a 

demonstration program for large group 

practices, one of the requirements for 

group practices participating in the PGP 

demonstration is for each practice to 

have 200 or more members. To be 

consistent with the PGP demonstration, 

we propose one GPRO process, which 

we refer to as ‘‘GPRO I’’ that would be 

available only to similar large group 

practices. For group practices that have 

fewer than 200 members, we propose, if 

technically feasible, an alternative 

GPRO process which we refer to as 

‘‘GPRO II’’. We invite comments on the 

proposed definition of ‘‘group practice’’ 

and our proposal to expand the 

definition of group practice to include 

groups with 2 or more members. 

In order to participate in the 2011 

PQRI through the GPRO, we propose to 

require group practices to complete a 

self-nomination process and to meet 

certain technical and other 

requirements. The proposed selfnomination process and participation 

requirements for GPRO I and GPRO II 

are separately discussed below. 

As discussed further in section VI.F.2. 

of this proposed rule, participation in 

the Electronic Prescribing (eRx) 

Incentive Program is voluntary for group 

practices selected to participate in the 

PQRI group practice reporting option. 

However, for 2011, we propose that 

group practices must participate in the 

PQRI group practice reporting option in 

order to be eligible to participate in the 

eRx group practice reporting option for 

2011 PQRI. This is the current 

requirement under the 2010 PQRI and 

ERx Incentive programs. Therefore, we 

propose that a group practice that 

wishes to participate in both the PQRI 

group practice reporting option and the 

electronic prescribing group practice 

reporting option must notify CMS of its 

desire to do so at the time that it selfnominates to participate in the PQRI 

group practice reporting option. 

In addition, we propose that group 

practices that are participating in 

Medicare demonstration projects, as 

approved by the Secretary, would also 

be considered group practices for 

purposes of the 2011 PQRI GPRO. 

Specifically, for the 2011 PQRI we 

propose to deem group practices 

participating in the PGP, Medicare Care 

Management Performance (MCMP), and 

EHR demonstrations to be participating 

in the PQRI GPRO since many of the 

measures being reported under these 

demonstration programs are similar to 

PQRI measures. As a result, such 

practices do not need to separately selfnominate to participate in the PQRI 

GPRO, although it would be necessary 

for such groups to meet the 

requirements for incentive qualification 

under their respective approved 

demonstration project. For example, the 

MCMP demonstration sites would be 

required to meet the requirements for 

earning a PQRI incentive specified 

under the MCMP demonstration. 

For purposes of the 2011 eRx 

Incentive Program, however, we 

propose that group practices 

participating in CMS-approved 

demonstration projects discussed above 

would be required to meet the proposed 

2011 eRx Incentive Program GPRO 

requirements or the proposed 2011 eRx 

Incentive Program requirements for 

individual EPs in order to qualify for a 

2011 eRx incentive. Such group 

practices would not be able to qualify 

for a 2011 eRx incentive via 

participation in an approved 

demonstration project since there is no 

eRx requirement under these 

demonstrations. 

(3) Proposed Process for Physician 

Group Practices To Participate as Group 

Practices and Criteria for Satisfactory 

Reporting 

(i) Group Practice Reporting Option for 

Physician Group Practices With 200 or 

More NPIs–GPRO I 

As stated above, we propose that 

group practices interested in 

participating in GPRO I must selfnominate to do so. Specifically, we 

propose that the 2011 PQRI selfnomination letter for group practices 

interested in participating in the 2011 

PQRI through the GPRO I must be 

accompanied by an electronic file 

submitted in a format specified by CMS 

(such as, a Microsoft Excel file) that 

includes the group practice’s TIN(s) and 

name of the group practice, the name 

and e-mail address of a single point of 

contact for handling administrative 

issues, as well as the name and e-mail 

address of a single point of contact for 

technical support purposes. This 

information was also required as part of 

the self-nomination process for the 2010 

PQRI GPRO. 

One change that we propose from the 

2010 PQRI GPRO is that we propose for 

2011 PQRI GPRO I to validate that the 

group practice consists of a minimum of 

200 NPIs and we will supply group 

practices with this list. We invite 

comment on this proposed change for 

self nomination criteria. In addition, we 

propose that the self-nomination letter 

must also indicate the group practice’s 

compliance with the following 

requirements: 

• Have an active IACS user account; 


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• Agree to attend and participate in 

all mandatory GPRO training sessions; 

and 

• Have billed Medicare Part B on or 

after January 1, 2010 and prior to 

October 29, 2010. 

We propose to post the final 2011 

PQRI participation requirements for 

group practices, including instructions 

for submitting the self-nomination letter 

and other requested information, on the 

PQRI section of the CMS Web site at 

http://www.cms.gov/PQRI by November 

15, 2010. Group practices that wish to 

self-nominate for 2011 would be 

required to do so by January 31, 2011. 

Upon receipt of the self-nomination 

letters we propose to assess whether the 

participation requirements were met by 

each self-nominated group practice 

using 2010 Medicare claims data. We do 

not propose to preclude a group practice 

from participating in the GPRO I if we 

discover, from analysis of the 2010 

Medicare claims data, that there are 

some EPs (identified by NPIs) that are 

not established Medicare providers (that 

is, have not billed Medicare Part B on 

or after January 1, 2010 and prior to 

October 29, 2010) as long as the group 

has at least 200 established Medicare 

providers. NPIs who are not established 

Medicare providers, however, would 

not be included in our incentive 

payment calculations. We propose that 

group practices that were selected to 

participate in the 2010 PQRI GPRO 

would automatically be qualified to 

participate in the 2011 PQRI GPRO I 

and would not need to complete the 

2011 PQRI GPRO I self-nomination 

process. 

For physician groups selected to 

participate in the PQRI GPRO I for 2011, 

we propose to retain the existing 12- 

month reporting period beginning 

January 1, 2011. We propose that group 

practices participating in GPRO I submit 

information on these measures using a 

data collection tool based on the GPRO 

Tool used in 2010 PQRI GPRO by 36 

participating group practices to report 

quality measures under PQRI. The 2010 

PQRI GPRO Tool will be updated as 

needed to include the 2011 PQRI GPRO 

I measures. We believe that use of the 

GPRO data collection tool allows group 

practices the opportunity to calculate 

their own performance rates for 

reporting quality measures. We propose 

that physician groups selected to 

participate in the 2011 PQRI through the 

GPRO I report on a proposed common 

set of 26 NQF-endorsed quality 

measures that are based on measures 

currently used for 2010 PQRI GPRO. We 

believe these measures target high-cost 

chronic conditions and preventive care. 

The proposed quality measures are 

identified in Table 71. 

The proposed 2011 PQRI GPRO I 

quality measures are based on a subset 

of the Doctor’s Office Quality (DOQ) 

quality measures set developed under 

the direction of CMS and were used in 

the PGP and/or MCMP demonstration 

programs, and have subsequently been 

used in 2010 PQRI GPRO. Contributors 

to the development of the DOQ 

measures set included the American 

Medical Association’s Physician 

Consortium for Performances 

Improvement (AMA–PCPI), the 

American College of Cardiology (ACC), 

the American Heart Association (AHA), 

the National Diabetes Quality 

Improvement Alliance, the National 

Committee for Quality Assurance 

(NCQA), and the Veterans Health 

Administration (VA). In most instances, 

these measures overlap with the 

proposed 2011 PQRI measures for 

reporting by individual EPs, however, 

there are some measures proposed for 

GPRO I that are not proposed for 

individual EPs. 

These quality measures are grouped 

into four disease modules: coronary 

artery disease; diabetes; heart failure; 

and preventive care services. On 

February 2, 2010, we hosted a 2011 

PQRI listening session to solicit input 

on a number of aspects of the PQRI, 

including measures for the 2011 PQRI 

GPRO. Since we received no suggestions 

for additional disease modules for the 

GPRO I from this listening session, we 

are not proposing any additional 

measures for the 2011 PQRI GPRO I. We 

invite comments on our proposal to use 

the 26 measures identified in Table 71 

for inclusion in 2011 PQRI GPRO I. We 

specifically request comments on 

whether these measures can and/or 

should be expanded for the group 

practice reporting option for future 

program years. Disease modules and 

measures should address high cost 

conditions and/or a gap in care. Further 

detail on criteria for measure selection 

can be found in section VI.F.1.h. below. 

The proposed process that group 

practices will be required to use to 

report data on quality measures for the 

2011 PQRI GPRO I and the proposed 

associated criteria for satisfactory 

reporting of data on quality measures by 

group practices, are summarized in 

Table 49. Under our proposed 2011 

program, group practices participating 

in PQRI GPRO I as a group practice 

would be required to report on all of the 

measures listed in Table 71. 

As part of the data submission process 

for 2011 GPRO I, we propose that during 

2012, each group practice would be 

required to report quality measures with 

respect to services furnished during the 

2011 reporting period (that is, January 1, 

2011, through December 31, 2011) on an 

assigned sample of Medicare 

beneficiaries. We propose to analyze the 

January 1, 2011 through October 31, 

2011 (that is, the last business day of 

October 2011) National Claims History 

(NCH) file to assign Medicare 

beneficiaries to each physician group 

practice using a patient assignment 

methodology modeled after the patient 

assignment methodology used in the 

PGP demonstration. Based on our desire 

to model the PQRI GPRO I after the PGP 

demonstration, we will also consider 

applying any refinements made to the 

patient assignment methodology used in 

the PGP demonstration prior to January 

1, 2011 to the 2011 PQRI GPRO I. 

Assigned beneficiaries would be limited 

to those Medicare FFS beneficiaries 

with Medicare Parts A and B for whom 

Medicare is the primary payer. Assigned 

beneficiaries would not include 

Medicare Advantage enrollees. A 

beneficiary would be assigned to the 

physician group that provides the 

plurality of a beneficiary’s office or 

other outpatient evaluation and 

management allowed charges (based on 

Medicare Part B claims submitted for 

the beneficiary for dates of services 

between January 1, 2011, and October 

31, 2011). Beneficiaries with only 1 visit 

to the group practice between January 1, 

2011 and October 31, 2011, would be 

eliminated from the group practice’s 

assigned patient sample for purposes of 

2011 PQRI GPRO I. For inclusion in the 

sample, assigned beneficiaries would be 

required to have at least 2 visits to the 

group practice between January 1, 2011, 

and October 31, 2011. 

Once the beneficiary assignment has 

been made for each physician group 

during the fourth quarter of 2011, we 

propose to provide each physician 

group selected to participate in the PQRI 

GPRO I with access to a database (that 

is, a data collection tool) that will 

include the group’s assigned beneficiary 

samples and the quality measures listed 

in Table 71. We propose to pre-populate 

the data collection tool with the 

assigned beneficiaries’ demographic and 

utilization information based on all of 

their Medicare claims data. We intend 

to provide the selected physician groups 

with access to this pre-populated 

database by no later than the first 

quarter of 2012. The physician group 

would be required to populate the 

remaining data fields necessary for 

capturing quality measure information 

on each of the assigned beneficiaries. 

Numerators for each of the quality 

measures would include all 


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beneficiaries in the denominator 

population who also satisfy the quality 

performance criteria for that measure. 

Denominators for each quality measure 

would include a sample of the assigned 

beneficiaries who meet the eligibility 

criteria for that disease module or each 

preventive care quality measure. All of 

the assigned patients’ inpatient, 

outpatient, and physician claims would 

be used in determining clinical 

eligibility for each module, regardless if 

they were submitted by the group 

practice or other providers. Identical to 

the sampling method used in the PGP 

demonstration, we propose that the 

random sample must consist of at least 

411 assigned beneficiaries. If the pool of 

eligible assigned beneficiaries is less 

than 411, then the group practice must 

report on 100 percent, or all, of the 

assigned beneficiaries to satisfactorily 

participate in the group practice 

reporting option. For each disease 

module or preventive care measure, the 

physician group would be required to 

report information on the assigned 

patients in the order in which they 

appear in the group’s sample (that is, 

consecutively). These proposed 

reporting criteria are identical to the 

reporting criteria used in the PGP 

demonstration and in the 2010 PQRI 

GPRO. By building on an existing 

demonstration program that large group 

practices may already have experience 

with, we hope to minimize burden on 

both group practices and CMS. 

TABLE 49—2011 PROPOSED PROCESS FOR PHYSICIAN GROUP PRACTICES TO PARTICIPATE AS GROUP PRACTICES AND

CRITERIA FOR SATISFACTORY REPORTING OF DATA ON QUALITY MEASURES BY GROUP PRACTICES FOR GPRO I 

Reporting mechanism Reporting criteria Reporting period 

A pre-populated data collection tool provided by CMS.• Report on all measures included in the data collection tool (26 measures); and January 1, 2011–December 31, 2011. 

• Complete the tool for the first 411 consecutively 

ranked and assigned beneficiaries in the order in 

which they appear in the group’s sample for each 

disease module or preventive care measure. If the 

pool of eligible assigned beneficiaries is less than 

411, then report on 100% of assigned beneficiaries. 

For 2011, we propose an exclusive 

reporting mechanism for EPs identified 

as part of the group practice with 

respect to the group as identified by the 

TIN. However, EPs who are part of the 

group practice, and who separately 

practice with respect to another TIN to 

which the EP has reassigned benefits, 

could separately qualify as individual 

EPs with respect to the other practice 

(TIN). As discussed above, we propose 

that each physician group selected to 

participate in the PQRI GPRO I would 

have access to a data base (that is a data 

collection tool) that would include the 

assigned beneficiary sample and the 

quality measures. This data collection 

tool was originally developed for use in 

the PGP demonstration, updated for use 

in the MCMP demonstration, and will 

continue to be updated as needed for 

use in the PQRI. The assigned 

beneficiaries’ demographic and 

utilization information is pre-populated 

based on claims data. We anticipate 

being able to provide the selected 

physician groups with access to this 

pre-populated database by the first 

quarter of 2012. The physician group 

would be required to populate the 

remaining data fields necessary for 

capturing quality measure information 

on each of the assigned beneficiaries. 

Numerators for each of the quality 

measures would include all 

beneficiaries in the denominator 

population who also satisfy the quality 

performance criteria for that measure. 

Denominators for each quality measure 

would include a sample of the assigned 

beneficiaries who meet the eligibility 

criteria for that quality measure module 

or preventive care measure. 

We expect that use of the PQRI GPRO 

I data collection tool allows group 

practices the opportunity to calculate 

their own performance rates for 

reporting quality measures. This 

provides group practices with the 

chance to preview their information 

prior to the public posting of 

performance data should we choose to 

do so in future program years. 

We invite comment on our proposal 

for 2011 to retain 200 as the number of 

NPIs for a TIN required for each group 

practice under the GPRO I. We also 

invite comment on our proposal to 

allow those ‘‘qualified’’ for 2010 GPRO 

to be rolled over for automatic 

qualification for 2011 GPRO I. 

(ii) Group Practice Reporting Option for 

Group Practices of 2—199 NPIs— 

GPRO–II 

As discussed previously, section 

1848(m)(3)(C) of the Act authorizes us to 

define the term ‘‘group practice’’ and 

requires us to establish a process under 

which EPs in group practices shall be 

treated as satisfactorily submitting data 

on PQRI quality measures, but is not 

prescriptive with regard to the 

characteristics of this process. Although 

for 2010 we did not provide a process 

for groups of less than 200 NPIs to 

report under the GPRO, we believe that 

there are significant potential benefits to 

allowing reporting at the group level 

generally. At present, for example, 

where more than one individual 

professional sees the same patient, each 

may have to report separately with 

respect to the patient even for processes 

of care that do not need to be repeated 

at each visit. Thus, there is significant 

duplication of reporting. Additionally, 

while we are not proposing to report 

performance information with respect to 

the 2011 PQRI GPRO, the public 

reporting of performance information at 

the group level raises substantially 

fewer issues, such as privacy, and the 

potential adverse impact of public 

reporting on the individual physician, 

and the lack of sufficient numbers of 

patients for any one physician to 

meaningfully differentiate performance 

results. Finally, we believe that many 

process-of-care measures depend on 

general functioning of the practice, such 

as in coordinating and tracking care, as 

opposed to a quality of a particular 

professional in the group, particularly 

for measures related to prevention and 

care of chronic illnesses. 

As a result, based on our authority 

under section 1848(m)(3)(C) of the Act 

to establish a process for group practices 

and our discretion to define ‘‘group 

practice’’ under this section we are 

proposing multiple processes for 

reporting at the group level for groups 

of EPs of all sizes for purposes of 

qualifying for a PQRI incentive 

payment. The proposed process for 

groups of 200 or more EPs, known as 

GPRO I, was discussed above. If 

technically feasible, we propose a new 

group practice reporting option (GPRO 


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II) for groups of 2–199 NPIs in a TIN for 

2011. For GPRO II in 2011, we propose 

to require groups of EPs who decide to 

report as a group to self-nominate. The 

self-nomination process would consist 

of sending a letter with the name of the 

group, the TIN, an e-mail address of the 

contact person, and the names and NPIs 

of all of the EPs practicing under that 

group’s TIN. We do not propose to 

preclude a group practice from 

participating in the GPRO II if we 

discover, from analysis of the 2010 

Medicare claims data, that there are 

some EPs (identified by NPIs) that are 

not established Medicare providers (that 

is, have not billed Medicare Part B on 

or after January 1, 2010 and prior to 

October 29, 2010) as long as the group 

has at least 2 established Medicare 

providers. NPIs who are not established 

Medicare providers, however, would 

not be included in our incentive 

payment calculations. 

We also propose that self-nominating 

groups would need to indicate in this 

letter if the group intends to report as a 

group for the eRx Incentive Program and 

the reporting mechanism the group 

intends to use to report as a group for 

the eRx Incentive Program. We would 

require that this information be sent to: 

GPRO II, c/o CMS, 7500 Security Blvd., 

Mail Stop S3–02–01, Baltimore, MD 

21244, and must be postmarked by 

January 31, 2011, for consideration in 

the program. 

Since GPRO II would be a new 

process available to groups in 2011, we 

propose to initially pilot the GPRO II 

process with a limited number of 

groups. We propose to select the first 

500 groups that meet the proposed 

eligibility requirements to participate in 

the 2011 GPRO II. We propose to use the 

postmark to determine the order in 

which groups self-nominated for GPRO 

II. We propose to consider only selfnomination letters postmarked between 

January 3, 2011 and January 31, 2011. 

We do not propose to consider letters 

postmarked prior to January 3, 2011 to 

prevent groups from self-nominating 

before the GPRO II requirements are 

finalized and to discourage groups from 

self-nominating for GPRO II prior to 

reviewing the final GPRO II 

requirements. 

For purposes of quality data 

submission, we propose, for the GPRO 

II, to allow EPs to submit their data 

through claims or through a qualified 

GPRO registry to the extent registries are 

technically capable of collecting, 

calculating and transmitting the 

required data to CMS and that we are 

able to accept such data from registries. 

For GPRO II, as discussed in greater 

detail below, we propose that in 

addition to reporting a specific number 

of individual measures, the group 

would have to report one or more 

proposed 2011 PQRI measures groups 

identified in Tables 57 through 70 of 

this proposed rule depending on the 

size of the group practice. In this way 

we seek to address a concern expressed 

regarding PQRI for individual reporting 

that EPs are able to select any three of 

a large array of measures making 

comparison data difficult whether for 

the same individual or among 

professionals. We believe that by having 

a smaller set of measures to choose 

from, we hope to focus on topics of 

major significance, and make the 

information obtained with respect to 

quality more meaningful. 

For purposes of satisfying the 

requirements under section 

1848(m)(3)(C)(i) of the Act for groups of 

2–199 NPIs, we propose that in order to 

be treated as satisfactorily reporting 

under GPRO II, the group practice 

would be required to report on 50 

percent or more (if submitting through 

claims) of all Medicare Part B patients 

who fit into the measures group 

denominator or 80 percent or more of 

Medicare patients if using a registry to 

report. 

Additionally, to earn a PQRI incentive 

payment for all allowed Medicare Part 

B services that are provided by the TIN, 

we propose that a group practice must 

report on three to six individual 2011 

PQRI measures, depending on the size 

of the group. We propose that the group 

practice may select from among any of 

the 2011 PQRI measures on which to 

submit data, provided the measures 

selected are not duplicated in the 

measures group(s) reported. 

We propose that, to satisfactorily 

report individual PQRI measures, a 

group must report each measure at the 

same rate (percentage) as determined by 

the method of submission as individual 

EPs. For example, if reporting via 

claims, to satisfactorily report 

individual measures, each measure 

would need to be reported on at least 50 

percent of eligible Medicare Part B FFS 

patients. 

An alternative which we considered 

was to require that the individual 

measures be selected from a more 

limited set of measures, such as 

measures closely linked to improved 

population health, or other measures 

perceived to address the greatest 

potential benefit from improved 

performance. While there are potential 

benefits to this approach of encouraging 

broad reporting of a more limited set of 

measures, we are concerned that any 

limited measures set may not be 

applicable to all groups, such as single 

specialty groups. Further we are 

concerned that this would diminish an 

important strength of the overall PQRI 

measures set, which is its broad 

applicability. We invite comments on 

the potential benefits of a core measures 

set, as opposed to allowing groups to 

select from among the array of PQRI 

measures, what measures should be 

included in that set, whether there are 

any PQRI measures that all 

professionals in group practices should 

report, where the measure applies to 

patients of the group. 

A second alternative that we 

considered was to require group 

practices, as part of the self-nomination 

process, to designate whether they were 

a multispecialty group with primary 

care, a multispecialty group without 

primary care, or a single specialty 

group, and if so, the specialty. 

Depending on what type of specialty the 

group is, we would identify a set of 

PQRI measures pertaining to the group’s 

specialty and require the group practice 

to report on the identified set of 

specialty-specific PQRI measures. We 

invite comments on the potential 

benefits of this approach as opposed to 

allowing groups to select from among 

the array of PQRI measures or requiring 

all groups, regardless of specialty, to 

report on the same core set of measures. 

Table 50 sets forth the proposed 

criteria for satisfactory reporting under 

the 2011 PQRI GPRO II and 

requirements for each group based on 

their respective group size (number of 

EPs). 

If a group does not satisfactorily 

report as a GPRO II group, we propose 

to analyze the individual professional’s 

data to see if they satisfactorily reported 

at the individual TIN/NPI level. If the 

EP satisfactorily reported at the 

individual level, he or she would 

receive a PQRI incentive, which is 

calculated using the EP’s TIN/NPI 

Medicare Part B allowed charges. 

If a group practice participating in the 

2011 PQRI GPRO II wants to also 

participate in the 2011 eRx Incentive 

Program as a small group, we propose 

that the group would need to indicate 

that preference in their self-nomination 

letter and would need to report on the 

number of unique encounters based on 

their group size as listed in Table 50 

below. For the 2011 eRx reporting for 

GPRO II, we propose the following 

reporting mechanisms: claims, a GPRO 

eRx qualified registry or a GPRO 

qualified EHR. As with the 2011 eRx 

Incentive Program for individual EPs 

and the 2011 eRx GPRO I, at least 10 

percent of a GPRO II group’s charges 

would need to be comprised of codes in 

the denominator of the electronic 


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prescribing measure and the group 

would need to use an electronic 

prescribing system that meets the 

requirements of the 2011 eRx measure. 

Similar to proposed GPRO I, if a GPRO 

II group self-nominates to report the eRx 

measure as a group, we propose that all 

members of the group practicing under 

the group’s TIN would be ineligible to 

report as an individual electronic 

prescriber. 

TABLE 50—2011 PROPOSED PROCESS FOR PHYSICIAN GROUP PRACTICES TO PARTICIPATE AS GROUP PRACTICES AND

CRITERIA FOR SATISFACTORY REPORTING OF DATA ON QUALITY MEASURES BY GROUP PRACTICES FOR GPRO II 

Group size (number of 

EPs) 

Number of MGs 

required to be reported 

Percent of Medicare Pt B patients in denominator for successful reporting 

via claims 

Percent of Medicare Pt B patients in denominator for successful reporting 

via registries 

Minimum number 

of patients in 

each measures 

group 

Number of required individual 

measures to report 

Required number 

of unique visits 

where an e-prescription was 

generated to be 

a successful 

electronic prescriber 

2–10 ................................. 1 50% 80% 35 3 75 

11–25 ............................... 1 50% 80% 50 3 225 

26–50 ............................... 2 50% 80% 50 4 475 

51–100 ............................. 3 50% 80% 60 5 925 

101–199 ........................... 4 50% 80% 100 6 1875 

The required number of unique visits 

where an electronic prescription was 

generated to be a successful electronic 

prescriber was determined by taking the 

midpoint of the group size range and 

multiplying the number by 12.5 and 

then rounding this number to the 

nearest multiple of 5. This is consistent 

with how the 2010 eRx GPRO 

requirements, which requires that the 

group practice report that at least 1 

prescription during an encounter was 

generated and transmitted using a 

qualified electronic prescribing system 

in at least 2,500 instances during the 

reporting period, were derived. For the 

2010 eRx Incentive Program, we 

assumed that half the members of an 

average sized-group (which we assumed 

to be 200 EPs) do not furnish the 

services represented by the electronic 

prescribing measure’s denominator 

codes, and thus, would not have an 

opportunity to report the electronic 

prescribing measure. For the remaining 

EPs within the group who do have an 

opportunity to report the electronic 

prescribing measure, we sought to hold 

those EPs to the same standard as 

individual EPs. Thus, for an average 200 

EP group, each of the 100 EPs with an 

opportunity to report the electronic 

prescribing measure would be expected 

to have 25 unique electronic prescribing 

events for a total of 2,500 unique 

electronic prescribing events for the 

group. 

We propose posting the information 

required by section 1848(m)(5)(G) of the 

Act for those group practices that are 

selected to participate in the 2011 PQRI 

under the GPRO II. That is, we propose 

to post the names of group practices that 

satisfactorily report under GPRO II as 

we propose to do for group practices 

that satisfactorily report under the 2011 

PQRI GPRO I. 

We invite comment on our proposal 

to add this second option (GPRO II) for 

group practices to report PQRI quality 

data measures and the GPRO II process. 

We also invite comments regarding our 

proposal to publicly report GPRO II 

information with respect to satisfactory 

PQRI participation. 

(iii) Alternatives Considered for 

Expanding the GPRO in 2011 

In addition to the GPRO II, another 

option that we considered for expanding 

the GPRO for 2011 was to expand GPRO 

I to include smaller group practices. 

Specifically, we considered allowing 

groups of 100 or more EPs to participate 

in the PQRI under GPRO using the same 

reporting mechanism and reporting 

criteria required under the 2010 PQRI 

GPRO and proposed for the 2011 PQRI 

GPRO I. We also considered modifying 

the definition of ‘‘group practice’’ to 

include groups that have and use 

multiple TINs. We invite comments on 

these alternatives. 

h. Statutory Requirements and Other 

Considerations for 2011 PQRI Measures 

(1) Statutory Requirements for 2011 

PQRI Measures 

Under section 1848(k)(2)(C)(i) of the 

Act, the PQRI quality measures shall be 

such measures selected by the Secretary 

from measures that have been endorsed 

by the entity with a contract with the 

Secretary under subsection 1890(a) of 

the Act (that is, the National Quality 

Forum, or NQF). However, in the case 

of a specified area or medical topic 

determined appropriate by the Secretary 

for which a feasible and practical 

measure has not been endorsed by the 

NQF, section 1848(k)(2)(C)(ii) of the Act 

authorizes the Secretary to specify a 

measure that is not so endorsed as long 

as due consideration is given to 

measures that have been endorsed or 

adopted by a consensus organization 

identified by the Secretary, such as the 

AQA alliance. In light of these statutory 

requirements, we believe that, except in 

the circumstances specified in the 

statute, each proposed 2011 PQRI 

quality measure would need to be 

endorsed by the NQF. The NQF 

endorsement status of each of the 

proposed measures is identified for each 

measure. The basis for including certain 

measures that are not endorsed by NQF 

is discussed further below. 

Additionally, section 1848(k)(2)(D) of 

the Act requires that for each 2011 PQRI 

quality measure, ‘‘the Secretary shall 

ensure that EPs have the opportunity to 

provide input during the development, 

endorsement, or selection of measures 

applicable to services they furnish.’’ We 

believe that this requirement is met for 

all proposed measures in several ways. 

Measure developers generally include a 

public comment phase in their measure 

development process. As part of the 

measures development process, 

measures developers typically solicit 

public comments on measures that they 

are testing in order to determine 

whether additional refinement of the 

measure(s) is needed prior to 

submission for consensus endorsement. 

For example, information on the 

measure development process, 

employed by us when CMS or our 

contractor is the measure developer, is 

available in the ‘‘Measures Management 

System Blueprint’’ found on the CMS 

Web site at http://www.cms.gov/apps/ 

QMIS/mmsBlueprint.asp. EPs also have 

the opportunity to provide input on a 

measure as the measure is being vetted 


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through the NQF consensus 

endorsement process. The NQF employs 

a public comment period for measures 

vetted through its consensus 

endorsement process (and previously, 

for the AQA consensus adoption 

process). Additionally, we have invited 

suggestions for measures during the last 

3 years, including most recently via the 

Listening Session held at CMS on 

February 2, 2010. The goal of the 

Listening Session was to discuss and 

solicit feedback on suggestions received 

on individual quality measures and 

measures groups for possible inclusion 

in the proposed set of quality measures 

for use in the 2011 PQRI program. 

Finally, as in previous program years, 

EPs also have an opportunity to provide 

input on the measures proposed for 

inclusion in the 2011 PQRI through this 

proposed rule, which provides a 60-day 

comment period. Accordingly, with 

regard to the 2011 PQRI, we believe we 

have satisfied this requirement in 

multiple ways. 

The statutory requirements under 

section 1848(k)(2)(C) of the Act, subject 

to the exception noted above, require 

only that the measures be selected from 

measures that have been endorsed by 

the entity with a contract with the 

Secretary under section 1890(a) (that is, 

the NQF) and are silent with respect to 

how the measures that are submitted to 

the NQF for endorsement were 

developed. The basic steps for 

developing measures applicable to 

physicians and other EPs prior to 

submission of the measures for 

endorsement may be carried out by a 

variety of different organizations. We do 

not believe there needs to be any special 

restrictions on the type or make up of 

the organizations carrying out this basic 

development of physician measures, 

such as restricting the initial 

development to physician-controlled 

organizations. Any such restriction 

would unduly limit the basic 

development of quality measures and 

the scope and utility of measures that 

may be considered for endorsement as 

voluntary consensus standards. 

(2) Other Considerations for Measures 

Proposed for Inclusion in the 2011 PQRI 

As stated previously, in addition to 

reviewing the 2010 PQRI measures for 

purposes of developing the proposed 

2011 PQRI measures, we reviewed and 

considered measure suggestions 

including comments received in 

response to the CY 2010 PFS proposed 

rule and final rule with comment 

period. Additionally, suggestions and 

input received through other venues, 

such as an invitation for measures 

suggestions via the Listening Session 

held February 2, 2010, were also 

reviewed and considered for purposes 

of our development of the list of 

proposed 2011 PQRI quality measures. 

A summary of the measures suggestions 

received via the Listening Session is 

included in the background paper that 

was provided to Listening Session 

participants. The Listening Session 

background paper is posted on CMS 

Sponsored Calls page of the PQRI 

section of the CMS Web site at: http:// 

www.cms.gov/PQRI/04_

CMSSponsoredCalls.asp#TopOfPage. 

With respect to the selection of new 

measures (that is, measures that have 

never been selected as part of a PQRI 

quality measure set for 2010 or any prior 

year), we propose to apply the following 

considerations, which include many of 

the same considerations applied to the 

selection of 2009 and 2010 PQRI quality 

measures for inclusion in the 2011 PQRI 

quality measure set described above: 

• High Impact on Healthcare. 

++ Measures that are high impact and 

support CMS and HHS priorities for 

improved quality and efficiency of 

care for Medicare beneficiaries. These 

current and long-term priority topics 

include the following: Prevention; 

chronic conditions; high cost and 

high volume conditions; elimination 

of health disparities; healthcareassociated infections and other 

conditions; improved care 

coordination; improved outcomes; 

improved efficiency; improved 

patient and family experience of care; 

improved end-of-life/palliative care; 

effective management of acute and 

chronic episodes of care; reduced 

unwarranted geographic variation in 

quality and efficiency; and adoption 

and use of interoperable HIT. 

• Measures that are included in, or 

facilitate alignment with, other 

Medicare, Medicaid, and CHIP programs 

in furtherance of overarching healthcare 

goals. 

• NQF Endorsement. 

++ Measures must be NQF-endorsed by 

June 1, 2010, in order to be 

considered for inclusion in the 2011 

PQRI quality measure set except as 

provided under section 

1848(k)(2)(C)(ii) of the Act. 

++ Section 1848(k)(2)(C)(ii) of the Act 

provides an exception to the 

requirement that the Secretary select 

measures that have been endorsed by 

the entity with a contract under 

section 1890(a) of the Act (that is, the 

NQF). As long as an area or medical 

topic for which a feasible and 

practical NQF-endorsed measure is 

not available has been identified and 

due consideration has been given to 

measures that have been adopted by 

the AQA or other consensus 

organization identified by Secretary. 

As discussed above, we anticipate not 

including measures which only have 

AQA adoption for future program 

years. 

++ The statutory requirements under 

section 1848(k)(2)(C) of the Act, 

subject to the exception noted above, 

require only that the measures be 

selected from measures that have been 

endorsed by the entity with a contract 

with the Secretary under section 

1890(a) (that is, the NQF) and are 

silent with respect to how the 

measures that are submitted to the 

NQF for endorsement are developed. 

The basic steps for developing 

measures applicable to physicians 

and other EPs prior to submission of 

the measures for endorsement may be 

carried out by a variety of different 

organizations. We do not believe there 

needs to be any special restrictions on 

the type or makeup of the 

organizations carrying out this basic 

development of physician measures, 

such as restricting the initial 

development to physician-controlled 

organizations. Any such restriction 

would unduly limit the basic 

development of quality measures and 

the scope and utility of measures that 

may be considered for endorsement as 

voluntary consensus standards. The 

requirements under section 

1848(k)(2)(C) of the Act pertain only 

to the selection of measures and not 

to the development of measures. 

• Address Gaps in PQRI Measure Set. 

++ Measures that increase the scope of 

applicability of the PQRI measures to 

services furnished to Medicare 

beneficiaries and expand 

opportunities for EPs to participate in 

PQRI. We continue to seek the broad 

ability to assess the quality of care 

furnished to Medicare beneficiaries, 

and ultimately to compare 

performance among professionals. We 

seek to increase the circumstances 

where EPs have at least three 

measures applicable to their practice 

and measures that help expand the 

number of measures groups with at 

least four measures in a group. 

• Measures of various aspects of 

clinical quality including outcome 

measures, where appropriate and 

feasible, process measures, structural 

measures, efficiency measures, and 

measures of patient experience of care. 

Other considerations that we propose 

to apply to the selection of measures for 

2011, regardless of whether the measure 

was a 2010 PQRI measure or not, were: 


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• Measures that are functional, which 

is to say measures that can be 

technically implemented within the 

capacity of the CMS infrastructure for 

data collection, analysis, and 

calculation of reporting and 

performance rates. This leads to 

preference for measures that reflect 

readiness for implementation, such as 

those that are currently in the 2010 

PQRI program or have been through 

testing. The purpose of measure testing 

is to reveal the measure’s strengths and 

weaknesses so that the limitations can 

be addressed and the measure refined 

and strengthened prior to 

implementation. For any new measures 

considered for 2011 PQRI, preference is 

given to those that can be most 

efficiently implemented for data 

collection and submission. Therefore, 

any measures that have previously been 

found to be technically impractical to 

report because they are analytically 

challenging due to any number of 

factors, including those that are claimsbased, will again not been included for 

2011 PQRI. For example, in some cases, 

we are proposing to replace existing 

2010 PQRI measures with updated and 

improved measures that are less 

technically challenging to report. For 

example, we are proposing to replace 

existing 2010 PQRI measures #114 and 

#115 with updated and improved 

measure #TBD (Preventive Care and 

Screening: Tobacco Use: Screening and 

Cessation Intervention), which is less 

technically challenging to report. 

• In 2011 PQRI, as in 2010 PQRI, for 

some measures that are useful, but 

where data submission is not feasible 

through all otherwise available PQRI 

reporting mechanisms, a measure may 

be included for reporting solely through 

specific reporting mechanism(s) in 

which its submission is feasible. For the 

2011 PQRI, we propose to retain those 

measures that had previously been 

available for claims-based reporting and 

registry-based reporting, which were 

changed for 2010 PQRI to registry-based 

reporting only because they were 

technically challenging to report and/or 

analyze through the claims-based 

reporting mechanism. 

We welcome comments on the 

implication of including or excluding 

any given measure or measures for our 

proposed 2011 PQRI quality measure 

set, as well as feedback relative to our 

proposed approach in selecting 

measures. We recognize that some 

commenters may also wish to 

recommend additional measures for 

inclusion in the 2011 PQRI measures 

that we are not proposing. While we 

welcome all constructive comments and 

suggestions, and may consider such 

recommended measures for inclusion in 

future measure sets for PQRI and/or 

other programs to which such measures 

may be relevant, we will not be able to 

consider such additional measures for 

inclusion in the final 2011 measure set. 

As discussed above, section 

1848(k)(2)(D) of the Act requires that the 

public have the opportunity to provide 

input during the selection of measures. 

We also are required by other applicable 

statutes to provide opportunity for 

public comment on provisions of policy 

or regulation that are established via 

notice and comment rulemaking. 

Measures that were not included in this 

proposed rule for inclusion in the 2011 

PQRI that are recommended to CMS via 

comments on this proposed rule cannot 

be included in the 2011 measure set. 

As discussed above, section 

1848(k)(2)(D) of the Act requires that the 

public have the opportunity to provide 

input during the selection of measures. 

We also are required by other applicable 

statutes to provide opportunity for 

public comment on provisions of policy 

or regulation that are established via 

notice and comment rulemaking. 

Measures that were not included in this 

proposed rule for inclusion in the 2011 

PQRI that are recommended to CMS via 

comments on this proposed rule have 

not been placed before the public to 

comment on the selection of those 

measures within the rulemaking 

process. Even when measures have been 

published in the Federal Register, but 

in other contexts and not specifically 

proposed as PQRI measures, such 

publication does not provide true 

opportunity for public comment on 

those measures’ potential inclusion in 

PQRI. Thus, such additional measures 

recommended for selection for the 2011 

PQRI via comments on this proposed 

rule cannot be included in the 2011 

measure set. However, as discussed 

above, we will consider comments and 

recommendations for measures, which 

may not be applicable to the final set of 

2011 PQRI measures, for purposes of 

identifying measures for possible use in 

future years’ PQRI or other initiatives to 

which those measures may be pertinent. 

In addition, as in prior years, we again 

note that we do not use notice and 

comment rulemaking as a means to 

update or modify measure 

specifications. Quality measures that 

have completed the consensus process 

have a designated party (usually, the 

measure developer/owner) who has 

accepted responsibility for maintaining 

the measure. In general, it is the role of 

the measure owner, developer, or 

maintainer to make changes to a 

measure. Therefore, comments 

requesting changes to a specific 

proposed PQRI measure’s title, 

definition, and detailed specifications or 

coding should be directed to the 

measure developer identified in Tables 

52 through 70. Contact information for 

the 2010 PQRI measure developers is 

listed in the ‘‘2010 PQRI Quality 

Measures List,’’ which is available on 

the PQRI section of the CMS Web site 

at http://www.cms.gov/PQRI. 

However, we stress that inclusion of 

measures that are not NQF endorsed or 

AQA adopted is an exception to the 

requirement under section 

1848(k)(2)(C)(i) of the Act that measures 

be endorsed by the NQF. We may 

exercise this exception authority in a 

specified area or medical topic for 

which a feasible and practical measure 

has not been endorsed by NQF, so long 

as due consideration is given to 

measures that have been endorsed by 

the NQF. 

i. Proposed 2011 PQRI Quality Measures 

for Individual EPs 

As in 2010 PQRI, individual EPs have 

the choice of reporting PQRI quality 

measures data on either individual 

quality measures or on measures groups 

for 2011 PQRI. 

Consistent with statutory 

requirements for identifying and 

including measures for 2011 PQRI, the 

individual quality measures identified 

for use in the 2011 PQRI will be selected 

from those we propose in this rule and 

will ultimately be finalized as of the 

date the CY 2011 PFS final rule with 

comment period is available for public 

inspection at the Office of the Federal 

Register. No changes (that is, additions 

or deletions of measures) will be made 

after publication of the CY 2011 PFS 

final rule with comment period. 

However, as was the case in previous 

program years, we may make 

modifications or refinements, such as 

revisions to measures titles and code 

additions, corrections, or revisions to 

the detailed specifications for the 2011 

measures until the beginning of the 

reporting period. The 2011 measures 

specifications for individual quality 

measures will be available on the PQRI 

section of the CMS Web site at http:// 

www.cms.gov/PQRI when they are 

sufficiently developed or finalized. We 

are targeting finalization and 

publication of the detailed 

specifications for all 2011 PQRI 

measures on the PQRI section of the 

CMS Web site by November 15, 2010 

and will, in no event, publish these 

specifications later than December 31, 

2010. The detailed specifications will 

include instructions for reporting and 

will identify the circumstances in which 

each measure is applicable. For 2011, 


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we are proposing that for the most part, 

final PQRI quality measures will be 

selected from the 2010 PQRI measures. 

In response to the February 2, 2010 

Listening Session, CMS received 146 

individual measure suggestions and 9 

measures groups suggestions, one of 

which included modifications to an 

existing measures group, for possible 

inclusion in the 2011 PQRI. 

We propose to include a total of 198 

measures (this includes both individual 

measures and measures that are part of 

a proposed 2011 measures group) on 

which individual EPs can report for the 

2011 PQRI. The individual PQRI quality 

measures proposed for the 2011 PQRI 

are listed in Tables 52 through 56 and 

fall into four broad categories as set 

forth below. The four categories are the 

following: 

• Proposed 2011 Individual Quality 

Measures Selected From the 2010 PQRI 

Quality Measures Set Available for 

Claims-Based Reporting and RegistryBased Reporting; 

• Proposed 2011 Individual Quality 

Measures Selected From the 2010 PQRI 

Quality Measures Set Available for 

Registry-Based Reporting Only; 

• New Individual Quality Measures 

Proposed for 2011; and 

• Proposed 2011 Measures Available 

for EHR-Based Reporting. 

In addition, we are also proposing the 

inclusion of 1 new measures group for 

2011 PQRI. The measures proposed for 

2011 measures groups are listed in 

Tables 57 through 70. Please note Table 

51 includes 2010 PQRI measures that 

are not proposed for inclusion in 2011 

PQRI. 

TABLE 51—2010 PQRI QUALITY MEASURES NOT PROPOSED FOR INCLUSION IN THE 2011 PQRI 

Measure No. Measure title 

114 ............................. Preventive Care and Screening: Inquiry Regarding Tobacco Use. 

115 ............................. Preventive Care and Screening: Advising Smokers and Tobacco Users to Quit. 

135 ............................. Chronic Kidney Disease (CKD): Influenza Immunization. 

136 ............................. Melanoma: Follow-Up Aspects of Care. 

139 ............................. Cataracts: Comprehensive Preoperative Assessment for Cataract Surgery with Intraocular Lens (IOL) Placement. 

After careful consideration of 2010 

PQRI measures, we propose to retire 

these 5 measures because they did not 

meet one or more of the considerations 

for selection of proposed 2011 measures 

discussed in section VI.F.1.h. above. 

Specifically, we are proposing to retire 

PQRI measures #135, #136, and #139, 

for 2011 because they have been 

considered by NQF for possible 

endorsement but ultimately were not 

NQF-endorsed. In addition we propose 

to replace existing 2010 PQRI measures 

#114 and #115 with an updated and 

improved measure (#TBD ‘‘Preventive 

Care and Screening: Tobacco Use: 

Screening and Cessation Intervention’’), 

which is less technically challenging to 

report. We invite comments on our 

proposal to retire the 2010 measures 

listed in Table 51 for the 2011 PQRI. 

(1) Proposed 2011 Individual Quality 

Measures Selected From the 2010 PQRI 

Quality Measures Set Available for 

Claims-Based Reporting and RegistryBased Reporting 

For 2011, we propose to retain 170 

measures currently used in the 2010 

PQRI. These 170 proposed measures 

include 45 registry-only measures 

currently used in the 2010 PQRI, but do 

not include any measures that are 

proposed to be included as part of the 

2011 Back Pain measures group (see 

section VI.F.1.i.(5) of this proposed 

rule). Similar to the 2010 PQRI, for 

2011, we propose that any 2011 PQRI 

measures that are included in the Back 

Pain measures group would not be 

reportable as individual measures 

through claims-based reporting or 

registry-based reporting. 

The 125 individual 2010 PQRI 

measures proposed for inclusion in the 

2011 PQRI quality measure set as 

individual quality measures for either 

claims-based reporting or registry-based 

reporting are listed by their Measure 

Number and Title in Table 52, along 

with the name of the measure’s 

developer/owner, and the NQF measure 

number, if applicable. The PQRI 

Measure Number is a unique identifier 

assigned by CMS to all measures in the 

PQRI measure set. Once a PQRI Measure 

Number is assigned to a measure, it will 

not be used again to identify a different 

measure, even if the original measure to 

which the number was assigned is 

subsequently retired from the PQRI 

measure set. A description of the 

measures listed in Table 52 can be 

found in the ‘‘2010 PQRI Quality 

Measures List,’’ which is available on 

the Measures and Codes page of the 

PQRI section of the CMS Web site at 

http://cms.gov/PQRI. 

The 2010 measures that are proposed 

to be available for registry-based 

reporting only for the 2011 PQRI are 

discussed and identified in section 

VI.F.1.i.(2) of this proposed rule. 

TABLE 52—PROPOSED 2011 MEASURES SELECTED FROM THE 2010 PQRI QUALITY MEASURE SET AVAILABLE FOR

EITHER CLAIMS-BASED REPORTING OR REGISTRY-BASED REPORTING

Measure No. Measure title Measure developer NQF Measure No. 

1 ......................... Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 

Mellitus.

NCQA ..................................... 0059. 

2 ......................... Diabetes Mellitus: Low Density Lipoprotein (LDL–C) Control 

in Diabetes Mellitus.

NCQA ..................................... 0064. 

3 ......................... Diabetes Mellitus: High Blood Pressure Control in Diabetes 

Mellitus.

NCQA ..................................... 0061. 

6 ......................... Coronary Artery Disease (CAD): Oral Antiplatelet Therapy 

Prescribed for Patients with CAD.

AMA–PCPI ............................. 0067. 

9 ......................... Major Depressive Disorder (MDD): Antidepressant Medication During Acute Phase for Patients with MDD.NCQA ..................................... 0105. 

10 ....................... Stroke and Stroke Rehabilitation: Computed Tomography 

(CT) or Magnetic Resonance Imaging (MRI) Reports.

AMA–PCPI/NCQA ................. 0246. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40187 

TABLE 52—PROPOSED 2011 MEASURES SELECTED FROM THE 2010 PQRI QUALITY MEASURE SET AVAILABLE FOR

EITHER CLAIMS-BASED REPORTING OR REGISTRY-BASED REPORTING—Continued 

Measure No. Measure title Measure developer NQF Measure No. 

12 ....................... Primary Open Angle Glaucoma (POAG): Optic Nerve Evaluation.AMA–PCPI/NCQA ................. 0086. 

14 ....................... Age-Related Macular Degeneration (AMD): Dilated Macular 

Examination.

AMA–PCPI/NCQA ................. 0087. 

18 ....................... Diabetic Retinopathy: Documentation of Presence or Absence of Macular Edema and Level of Severity of Retinopathy.AMA–PCPI/NCQA ................. 0088. 

19 ....................... Diabetic Retinopathy: Communication with the Physician 

Managing On-Going Diabetes Care.

AMA–PCPI/NCQA ................. 0089. 

20 ....................... Perioperative Care: Timing of Antibiotic Prophylaxis—Ordering Physician.AMA–PCPI/NCQA ................. 0270. 

21 ....................... Perioperative Care: Selection of Prophylactic Antibiotic— 

First OR Second Generation Cephalosporin.

AMA–PCPI/NCQA ................. 0268. 

22 ....................... Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-Cardiac Procedures).AMA–PCPI/NCQA ................. 0271. 

23 ....................... Perioperative Care: Venous Thromboembolism (VTE) Prophylaxis (When Indicated in ALL Patients).AMA–PCPI/NCQA ................. 0239. 

24 ....................... Osteoporosis: Communication with the Physician Managing 

On-Going Care Post-Fracture of Hip, Spine or Distal Radius for Men and Women Aged 50 Years and Older.

AMA–PCPI/NCQA ................. 0045. 

28 ....................... Aspirin at Arrival for Acute Myocardial Infarction (AMI) ......... AMA–PCPI/NCQA ................. 0092. 

30 ....................... Perioperative Care: Timely Administration of Prophylactic 

Parenteral Antibiotics.

AMA–PCPI/NCQA ................. 0270. 

31 ....................... Stroke and Stroke Rehabilitation: Deep Vein Thrombosis 

Prophylaxis (DVT) for Ischemic Stroke or Intracranial 

Hemorrhage.

AMA–PCPI/NCQA ................. 0240 

32 ....................... Stroke and Stroke Rehabilitation: Discharged on Antiplatelet 

Therapy.

AMA–PCPI/NCQA ................. 0325. 

35 ....................... Stroke and Stroke Rehabilitation: Screening for Dysphagia AMA–PCPI/NCQA ................. 0243. 

36 ....................... Stroke and Stroke Rehabilitation: Consideration of Rehabilitation Services.AMA–PCPI/NCQA ................. 0244. 

39 ....................... Screening or Therapy for Osteoporosis for Women Aged 65 

Years and Older.

AMA–PCPI/NCQA ................. 0046. 

40 ....................... Osteoporosis: Management Following Fracture of Hip, 

Spine or Distal Radius for Men and Women Aged 50 

Years and Older.

AMA–PCPI/NCQA ................. 0045. 

41 ....................... Osteoporosis: Pharmacologic Therapy for Men and Women 

Aged 50 Years and Older.

AMA–PCPI/NCQA ................. 0049. 

43 ....................... Coronary Artery Bypass Graft (CABG): Use of Internal 

Mammary Artery (IMA) in Patients with Isolated CABG 

Surgery.

Society of Thoracic Surgeons 

(STS).

0516 or 0134. 

44 ....................... Coronary Artery Bypass Graft (CABG): Preoperative BetaBlocker in Patients with Isolated CABG Surgery.STS ........................................ 0127 or 0236. 

45 ....................... Perioperative Care: Discontinuation of Prophylactic Antibiotics (Cardiac Procedures).AMA–PCPI/NCQA ................. 0637. 

46 ....................... Medication Reconciliation: Reconciliation After Discharge 

From an Inpatient Facility.

AMA–PCPI/NCQA ................. 0097. 

47 ....................... Advance Care Plan ................................................................ AMA–PCPI/NCQA ................. 0326. 

48 ....................... Urinary Incontinence: Assessment of Presence or Absence 

of Urinary Incontinence in Women Aged 65 Years and 

Older.

AMA–PCPI/NCQA ................. 0098. 

49 ....................... Urinary Incontinence: Characterization of Urinary Incontinence in Women Aged 65 Years and Older.AMA–PCPI/NCQA ................. 0099. 

50 ....................... Urinary Incontinence: Plan of Care for Urinary Incontinence 

in Women Aged 65 Years and Older.

AMA–PCPI/NCQA ................. 0100. 

51 ....................... Chronic Obstructive Pulmonary Disease (COPD): 

Spirometry Evaluation.

AMA–PCPI ............................. 0091. 

52 ....................... Chronic Obstructive Pulmonary Disease (COPD): Bronchodilator Therapy.AMA–PCPI ............................. 0102. 

53 ....................... Asthma: Pharmacologic Therapy ........................................... AMA–PCPI ............................. 0047. 

54 ....................... 12–Lead Electrocardiogram (ECG) Performed for Non-Traumatic Chest Pain.AMA–PCPI/NCQA ................. 0090. 

55 ....................... 12–Lead Electrocardiogram (ECG) Performed for Syncope AMA–PCPI/NCQA ................. 0093. 

56 ....................... Community-Acquired Pneumonia (CAP): Vital Signs ............ AMA–PCPI/NCQA ................. 0232 

57 ....................... Community-Acquired Pneumonia (CAP): Assessment of Oxygen Saturation.AMA–PCPI/NCQA ................. 0094. 

58 ....................... Community-Acquired Pneumonia (CAP): Assessment of 

Mental Status.

AMA–PCPI/NCQA ................. 0234. 

59 ....................... Community-Acquired Pneumonia (CAP): Empiric Antibiotic .. AMA–PCPI/NCQA ................. 0096. 

64 ....................... Asthma: Asthma Assessment ................................................ AMA–PCPI ............................. 0001. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40188 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 52—PROPOSED 2011 MEASURES SELECTED FROM THE 2010 PQRI QUALITY MEASURE SET AVAILABLE FOR

EITHER CLAIMS-BASED REPORTING OR REGISTRY-BASED REPORTING—Continued 

Measure No. Measure title Measure developer NQF Measure No. 

65 ....................... Treatment for Children With Upper Respiratory Infection 

(URI): Avoidance of Inappropriate Use.

NCQA ..................................... 0069. 

66 ....................... Appropriate Testing for Children With Pharyngitis ................. NCQA ..................................... 0002. 

67 ....................... Myelodysplastic Syndrome (MDS) and Acute Leukemias: 

Baseline Cytogenetic Testing Performed on Bone Marrow.

AMA–PCPI/American Society 

of Hematology (ASH).

0377. 

68 ....................... Myelodysplastic Syndrome (MDS): Documentation of Iron 

Stores in Patients Receiving Erythropoietin Therapy.

AMA–PCPI/ASH .................... 0378. 

69 ....................... Multiple Myeloma: Treatment With Bisphosphonates ............ AMA–PCPI/ASH .................... 0380. 

70 ....................... Chronic Lymphocytic Leukemia (CLL): Baseline Flow 

Cytometry.

AMA–PCPI/ASH .................... 0379. 

71 ....................... Breast Cancer: Hormonal Therapy for Stage IC–IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive 

Breast Cancer.

AMA–PCPI/American Society 

of Clinical Oncology 

(ASCO)/National Comprehensive Cancer Network 

(NCCN).

0387. 

72 ....................... Colon Cancer: Chemotherapy for Stage III Colon Cancer 

Patients.

AMA–PCPI/ASCO/NCCN ...... 0385. 

76 ....................... Prevention of Catheter-Related Bloodstream Infections 

(CRBSI): Central Venous Catheter (CVC) Insertion Protocol.

AMA–PCPI ............................. 0464. 

79 ....................... End-Stage Renal Disease (ESRD): Influenza Immunization 

in Patients with ESRD.

AMA–PCPI ............................. 0227. 

84 ....................... Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating 

Treatment.

AMA–PCPI ............................. 0395. 

85 ....................... Hepatitis C: HCV Genotype Testing Prior to Treatment ........ AMA–PCPI ............................. 0396.

86 ....................... Hepatitis C: Antiviral Treatment Prescribed ........................... AMA–PCPI ............................. 0397. 

87 ....................... Hepatitis C: HCV Ribonucleic Acid (RNA) Testing at Week 

12 of Treatment.

AMA–PCPI ............................. 0398. 

89 ....................... Hepatitis C: Counseling Regarding Risk of Alcohol Consumption.AMA–PCPI ............................. 0401. 

90 ....................... Hepatitis C: Counseling Regarding Use of Contraception 

Prior to Antiviral Therapy.

AMA–PCPI ............................. 0394. 

91 ....................... Acute Otitis Externa (ACE): Topical Therapy ........................ AMA–PCPI ............................. AQA adopted Currently under 

NQF review. 

92 ....................... Acute Otitis Externa (ACE): Pain Assessment ...................... AMA–PCPI ............................. AQA adopted Currently under 

NQF review. 

93 ....................... Acute Otitis Externa (ACE): Systemic Antimicrobial Therapy—Avoidance of Inappropriate Use.AMA–PCPI ............................. AQA adopted Currently under 

NQF review. 

94 ....................... Otitis Media with Effusion (OME): Diagnostic Evaluation— 

Assessment of Tympanic Membrane Mobility.

AMA–PCPI ............................. AQA adopted Currently under 

NQF review. 

99 ....................... Breast Cancer Resection Pathology Reporting: pT Category 

(Primary Tumor) and pN Category (Regional Lymph 

Nodes) With Histologic Grade.

AMA–PCPI/College of American Pathologists (CAP).0391. 

100 ..................... Colorectal Cancer Resection Pathology Reporting: pT Category (Primary Tumor) and pN Category (Regional 

Lymph Nodes) With Histologic Grace.

AMA–PCPI/CAP .................... 0392. 

102 ..................... Prostate Cancer: Avoidance of Overuse of Bone Scan for 

Staging Low-Risk Prostate Cancer Patients.

AMA–PCPI ............................. 0389. 

104 ..................... Prostate Cancer: Adjuvant Hormonal Therapy for High-Risk 

Prostate Cancer Patients.

AMA–PCPI ............................. 0390. 

105 ..................... Prostate Cancer: Three-Dimensional (3D) Radiotherapy ...... AMA–PCPI ............................. 0388. 

106 ..................... Major Depressive Disorder (MDD): Diagnostic Evaluation .... AMA–PCPI ............................. 0103. 

107 ..................... Major Depressive Disorder (MDD): Suicide Risk Assessment.AMA–PCPI ............................. 0104. 

108 ..................... Rheumatoid Arthritis (RA): Disease Modifying Anti-Rheumatic Drug (DMARD) Therapy.NCQA ..................................... 0054. 

109 ..................... Osteoarthritis: Function and Pain Assessment ...................... AMA–PCPI ............................. 0050. 

110 ..................... Preventive Care and Screening: Influenza Immunization for 

Patients ≥ 50 Years Old.

AMA–PCPI ............................. 0041. 

111 ..................... Preventive Care and Screening: Pneumonia Vaccination for 

Patients 65 Years and Older.

NCQA ..................................... 0043. 

112 ..................... Preventive Care and Screening: Screening Mammography NCQA ..................................... 0031. 

113 ..................... Preventive Care and Screening: Colorectal Cancer Screening.NCQA ..................................... 0034. 

116 ..................... Antibiotic Treatment for Adults with Acute Bronchitis: Avoidance of Inappropriate Use.NCQA ..................................... 0058. 

117 ..................... Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient ...... NCQA ..................................... 0055. 

119 ..................... Diabetes Mellitus: Urine Screening for Microalbumin or 

Medical Attention for Nephropathy in Diabetic Patients.

NCQA ..................................... 0062. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40189 

TABLE 52—PROPOSED 2011 MEASURES SELECTED FROM THE 2010 PQRI QUALITY MEASURE SET AVAILABLE FOR

EITHER CLAIMS-BASED REPORTING OR REGISTRY-BASED REPORTING—Continued 

Measure No. Measure title Measure developer NQF Measure No. 

121 ..................... Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, Phosphorous, Intact Parathyroid Hormone (iPTH) 

and Lipid Profile).

AMA–PCPI ............................. Combined: 0570, 0571, 0572, 

0626. 

122 ..................... Chronic Kidney Disease (CKD): Blood Pressure Management.AMA–PCPI ............................. AQA adopted. 

123 ..................... Chronic Kidney Disease (CKD): Plan of Care—Elevated Hemoglobin for Patients Receiving Erythropoiesis-Stimulating Agents (ESA).AMA–PCPI ............................. AQA adopted. 

124 ..................... Health Information Technology (HIT): Adoption/Use of Electronic Health Records (EHR).CMS/Quality Insights of Pennsylvania (QIP).0488. 

126 ..................... Diabetes Mellitus: Diabetic Foot and Ankle Care, Peripheral 

Neuropathy—Neurological Evaluation.

American Podiatric Medical 

Association (APMA).

0417. 

127 ..................... Diabetes Mellitus: Diabetic Foot and Ankle Care, Ulcer Prevention—Evaluation of Footwear.APMA ..................................... 0416. 

128 ..................... Preventive Care and Screening: Body Mass Index (BMI) 

Screening and Follow-Up.

CMS/QIP ................................ 0421. 

130 ..................... Documentation and Verification of Current Medications in 

the Medical Record.

CMS/QIP ................................ 0419. 

131 ..................... Pain Assessment Prior to Initiation of Patient Therapy and 

Follow-Up.

CMS/QIP ................................ 0420. 

134 ..................... Screening for Clinical Depression and Follow-Up Plan ......... CMS/QIP ................................ 0418. 

140 ..................... Age-Related Macular Degeneration (AMD): Counseling on 

Antioxidant Supplement.

AMA–PCPI/NCQA ................. 0566. 

141 ..................... Primary Open-Angle Glaucoma (POAG): Reduction of Intraocular Pressure (IOP) by 15% OR Documentation of Plan 

of Care.

AMA–PCPI/NCQA ................. 0563. 

142 ..................... Osteoarthritis (OA): Assessment for Use of Anti-Inflammatory or Analgesic Over-the-Counter (OTC) Medications.AMA–PCPI ............................. 0051. 

145 ..................... Radiology: Exposure Time Reported for Procedures Using 

Fluoroscopy.

AMA–PCPI/NCQA ................. 0510. 

146 ..................... Radiology: Inappropriate Use of ‘‘Probably Benign’’ Assessment Category in Mammography Screening.AMA–PCPI/NCQA ................. 0508. 

147 ..................... Nuclear Medicine: Correlation With Existing Imaging Studies 

for All Patients Undergoing Bone Scintigraphy.

AMA–PCPI ............................. 0511. 

153 ..................... Chronic Kidney Disease (CKD): Referral for Arteriovenous 

(AV) Fistula.

AMA–PCPI ............................. AQA adopted. 

154 ..................... Falls: Risk Assessment .......................................................... AMA–PCPI/NCQA ................. AQA adopted. 

155 ..................... Falls: Plan of Care ................................................................. AMA–PCPI/NCQA ................. AQA adopted. 

156 ..................... Oncology: Radiation Dose Limits to Normal Tissues ............ AMA–PCPI ............................. 0382 

157 ..................... Thoracic Surgery: Recording of Clinical Stage for Lung Cancer and Esophageal Cancer Resection.STS ........................................ 0455. 

158 ..................... Carotid Endarterectomy: Use of Patch During Conventional 

Carotid Endarterectomy.

Society of Vascular Surgeons 

(SVS).

0466. 

163 ..................... Diabetes Mellitus: Foot Exam ................................................ NCQA ..................................... 0056. 

172 ..................... Hemodialysis Vascular Access Decision-Making by Surgeon 

To Maximize Placement of Autogenous Arterial Venous 

(AV) Fistula.

SVS ........................................ 0259. 

173 ..................... Preventive Care and Screening: Unhealthy Alcohol Use— 

Screening.

AMA–PCPI ............................. AQA adopted. 

175 ..................... Pediatric End-Stage Renal Disease (ESRD): Influenza Immunization.AMA–PCPI ............................. AQA adopted. 

176 ..................... Rheumatoid Arthritis (RA): Tuberculosis Screening .............. AMA–PCPI/NCQA ................. AQA adopted. 

177 ..................... Rheumatoid Arthritis (RA): Periodic Assessment of Disease 

Activity.

AMA–PCPI/NCQA ................. AQA adopted. 

178 ..................... Rheumatoid Arthritis (RA): Functional Status Assessment ... AMA–PCPI/NCQA ................. AQA adopted. 

179 ..................... Rheumatoid Arthritis (RA): Assessment and Classification of 

Disease Prognosis.

AMA–PCPI/NCQA ................. AQA adopted. 

180 ..................... Rheumatoid Arthritis (RA): Glucocorticoid Management ....... AMA–PCPI/NCQA ................. AQA adopted. 

181 ..................... Elder Maltreatment Screen and Follow-Up Plan ................... CMS/QIP ................................ AQA adopted. 

182 ..................... Functional Outcome Assessment in Chiropractic Care ......... CMS/QIP ................................ AQA adopted. 

183 ..................... Hepatitis C: Hepatitis A Vaccination in Patients with HCV .... AMA–PCPI ............................. 0399.

184 ..................... Hepatitis C: Hepatitis B Vaccination in Patients with HCV .... AMA–PCPI ............................. 0400.

185 ..................... Endoscopy & Polyp Surveillance: Colonoscopy Interval for 

Patients With a History of Adenomatous Polyps—Avoidance of Inappropriate Use.

AMA–PCPI/NCQA ................. AQA adopted Currently under 

NQF review. 

186 ..................... Wound Care: Use of Compression System in Patients With 

Venous Ulcers.

AMA–PCPI/NCQA ................. AQA adopted. 

188 ..................... Referral for Otologic Evaluation for Patient With Congenital 

or Traumatic Deformity of the Ear.

Audiology Quality Consortium 

(AQC).

Not applicable. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40190 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 52—PROPOSED 2011 MEASURES SELECTED FROM THE 2010 PQRI QUALITY MEASURE SET AVAILABLE FOR

EITHER CLAIMS-BASED REPORTING OR REGISTRY-BASED REPORTING—Continued 

Measure No. Measure title Measure developer NQF Measure No. 

189 ..................... Referral for Otologic Evaluation for Patient With History of 

Active Drainage From the Ear Within the Previous 90 

days.

AQC ....................................... Not applicable. 

190 ..................... Referral for Otologic Evaluation for Patient With a History of 

Sudden or Rapidly Progessive Hearing Loss.

AQC ....................................... Not applicable. 

193 ..................... Perioperative Temperature Management .............................. AMA–PCPI ............................. 0454. 

194 ..................... Oncology: Cancer Stage Documented .................................. AMA–PCPI/ASCO .................. 0386.

195 ..................... Stenosis Measurement in Carotid Imaging Studies ............... AMA–PCPI/NCQA ................. 0507. 

201 ..................... Ischemic Vascular Disease (IVD): Blood Pressure Management Control.NCQA ..................................... 0084. 

202 ..................... Ischemic Vascular Disease (IVD): Complete Lipid Profile ..... NCQA ..................................... 0073. 

203 ..................... Ischemic Vascular Disease (IVD): Low Density Lipoprotein 

(LDL–C) Control.

NCQA ..................................... 0075. 

204 ..................... Ischemic Vascular Disease (IVD): Use of Aspirin or Another 

Anti-thrombotic.

NCQA ..................................... 0068 

It is our understanding that measures 

#188, #189, and #190 were considered 

by NQF for possible endorsement but 

were not ultimately NQF-endorsed. 

However, since we are not aware of any 

other NQF-endorsed measures that are 

available to audiologists, we propose to 

exercise our exception authority under 

section 1848(k)(2)(C)(ii) of the Act. 

Therefore, we propose to use measures 

#188, #189, and #190 for the 2011 PQRI 

despite the fact that they are neither 

NQF-endorsed nor AQA adopted. 

Please note that detailed measure 

specifications, including the measure’s 

title, for 2010 individual PQRI quality 

measures may have been updated or 

modified during the NQF endorsement 

process or for other reasons prior to 

2011. The 2011 PQRI quality measure 

specifications for any given individual 

quality measure may, therefore, be 

different from specifications for the 

same quality measure used for 2010. 

Specifications for all 2011 individual 

PQRI quality measures, whether or not 

included in the 2010 PQRI program, 

must be obtained from the specifications 

document for 2011 individual PQRI 

quality measures, which will be 

available on the PQRI section of the 

CMS Web site on or before December 

31, 2010. 

(2) Proposed 2011 Individual Quality 

Measures Selected From the 2010 PQRI 

Quality Measures Set Available for 

Registry-Based Reporting Only 

For the 2011 PQRI, we propose to 

include 45 registry-only individual 

measures from the 2010 PQRI. As in 

2010 PQRI, we are proposing to 

designate these measures as registryonly measures for 2011 to relieve 

ongoing analytical difficulties 

encountered with claims-based 

reporting of these measures in prior 

program years. We encourage comments 

on our proposal to designate these 45 

2010 measures as registry-only measures 

for the 2011 PQRI. 

Although we are proposing to 

designate certain measures as registryonly measures for 2011, we cannot 

guarantee that there will be a registry 

qualified to submit each registry-only 

measure for 2011. We rely on registries 

to self-nominate and identify the types 

of measures for which they would like 

to be qualified to submit quality 

measures results and numerator and 

denominator data on quality measures. 

If no registry self-nominates to submit 

measure results and numerator and 

denominator data on a particular type of 

measure for 2011, then an EP would not 

be able to report that particular measure 

type via a registry. The Measure Number 

and Measure Title for these proposed 

registry-only measures are listed in 

Table 53 along with the NQF measure 

number, if applicable, and the name of 

the measure’s developer/owner. As 

mentioned above, a description of the 

measures listed in Table 53 can be 

found in the ‘‘2010 PQRI Quality 

Measures List,’’ which is available on 

the Measures and Codes page of the 

PQRI section of the CMS Web site at 

http://www.cms.gov/PQRI. 

TABLE 53: 2011 PROPOSED MEASURES SELECTED FROM THE 2010 PQRI QUALITY MEASURE SET AVAILABLE FOR

REGISTRY-BASED REPORTING ONLY

Measure No. Measure title Measure developer NQF Measure No. 

5 ......................... Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for 

Left Ventricular Systolic Dysfunction (LVSD).

AMA–PCPI ............................. 0081. 

7 ......................... Coronary Artery Disease (CAD): Beta-Blocker Therapy for 

CAD Patients With Prior Myocardial Infarction (MI).

AMA–PCPI ............................. 0070. 

8 ......................... Heart Failure: Beta-Blocker Therapy for Left Ventricular 

Systolic Dysfunction (LVSD).

AMA–PCPI ............................. 0083. 

33 ....................... Stroke and Stroke Rehabilitation: Anticoagulant Therapy 

Prescribed for Atrial Fibrillation at Discharge.

AMA–PCPI/NCQA ................. 0241. 

81 ....................... End-Stage Renal Disease (ESRD): Plan of Care for Inadequate Hemodialysis in ESRD Patients.AMA–PCPI ............................. 0323. 

82 ....................... End-Stage Renal Disease (ESRD): Plan of Care for Inadequate Peritoneal Dialysis.AMA–PCPI ............................. 0321 

83 ....................... Hepatitis C: Testing for Chronic Hepatitis C—Confirmation 

of Hepatitis C Viremia.

AMA–PCPI ............................. 0393. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40191 

TABLE 53: 2011 PROPOSED MEASURES SELECTED FROM THE 2010 PQRI QUALITY MEASURE SET AVAILABLE FOR

REGISTRY-BASED REPORTING ONLY—Continued 

Measure No. Measure title Measure developer NQF Measure No. 

118 ..................... Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker 

(ARB) Therapy for Patients With CAD and Diabetes and/ 

or Left Ventricular Systolic Dysfunction (LSVD).

AMA–PCPI ............................. 0066. 

137 ..................... Melanoma: Continuity of Care—Recall System ..................... AMA–PCPI/NCQA ................. 0650. 

138 ..................... Melanoma: Coordination of Care ........................................... AMA–PCPI/NCQA ................. 0561. 

143 ..................... Oncology: Medical and Radiation—Pain Intensity Quantified AMA–PCPI ............................. 0384. 

144 ..................... Oncology: Medical and Radiation—Plan of Care for Pain .... AMA–PCPI ............................. 0383. 

159 ..................... HIV/AIDS: CD4+ Cell Count or CD4+ Percentage ................ AMA–PCPI/NCQA ................. 0404. 

160 ..................... HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP) Prophylaxis.AMA–PCPI/NCQA ................. 0405. 

161 ..................... HIV/AIDS: Adolescent and Adult Patients With HIV/AIDS 

Who Are Prescribed Potent Antiretroviral Therapy.

AMA–PCPI/NCQA ................. 0406. 

162 ..................... HIV/AIDS: HIV RNA Control After Six Months of Potent 

Antiretroviral Therapy.

AMA–PCPI/NCQA ................. 0407. 

164 ..................... Coronary Artery Bypass Graft (CABG): Prolonged Intubation 

(Ventilation).

STS ........................................ 0129. 

165 ..................... Coronary Artery Bypass Graft (CABG): Deep Sternal 

Wound Infection Rate.

STS ........................................ 0130. 

166 ..................... Coronary Artery Bypass Graft (CABG): Stroke/Cerebrovascular Accident (CVA).STS ........................................ 0131. 

167 ..................... Coronary Artery Bypass Graft (CABG): Postoperative Renal 

Insufficiency.

STS ........................................ 0114. 

168 ..................... Coronary Artery Bypass Graft (CABG): Surgical Re-Exploration.STS ........................................ 0115. 

169 ..................... Coronary Artery Bypass Graft (CABG): Antiplatelet Medications at Discharge.STS ........................................ 0116. 

170 ..................... Coronary Artery Bypass Graft (CABG): Beta-Blockers Administered at Discharge.STS ........................................ 0117. 

171 ..................... Coronary Artery Bypass Graft (CABG): Lipid Management 

and Counseling.

STS ........................................ 0118. 

174 ..................... Pediatric End-Stage Renal Disease (ESRD): Plan of Care 

for Inadequate Hemodialysis.

AMA–PCPI ............................. AQA adopted Currently under 

NQF review. 

187 ..................... Stroke and Stroke Rehabilitation: Thrombolytic Therapy ...... AHA/ASA/ ..............................

TJC ........................................

0437. 

191 ..................... Cataracts: 20/40 or Better Visual Acuity Within 90 Days Following Cataract Surgery.AMA–PCPI/NCQA ................. 0565. 

192 ..................... Cataracts: Complications Within 30 Days Following Cataract 

Surgery Requiring Additional Surgical Procedures.

AMA–PCPI/NCQA ................. 0564. 

196 ..................... Coronary Artery Disease (CAD): Symptom and Activity Assessment.AMA–PCPI ............................. 0065. 

197 ..................... Coronary Artery Disease (CAD): Drug Therapy for Lowering 

LDL–Cholesterol.

AMA–PCPI ............................. 0074. 

198 ..................... Heart Failure: Left Ventricular Function (LVF) Assessment .. AMA–PCPI ............................. 0079. 

199 ..................... Heart Failure: Patient Education ............................................ AMA–PCPI ............................. 0082. 

200 ..................... Heart Failure: Warfarin Therapy Patients With Atrial Fibrillation.AMA–PCPI ............................. 0084. 

205 ..................... HIV/AIDS: Sexually Transmitted Disease Screening for 

Chlamydia and Gonorrhea.

AMA–PCPI/NCQA ................. 0409. 

206 ..................... HIV/AIDS: Screening for High Risk Sexual Behaviors .......... AMA–PCPI/NCQA ................. 0413. 

207 ..................... HIV/AIDS: Screening for Injection Drug Use ......................... AMA–PCPI/NCQA ................. 0415. 

208 ..................... HIV/AIDS: Sexually Transmitted Disease Screening for 

Syphilis.

AMA–PCPI/NCQA ................. 0410. 

209 ..................... Functional Communication Measure—Spoken Language 

Comprehension.

American Speech Language 

Haring Association (ASHA).

0445. 

210 ..................... Functional Communication Measure—Attention .................... ASHA ..................................... 0449. 

211 ..................... Functional Communication Measure—Memory ..................... ........................................... 0448. 

212 ..................... Functional Communication Measure—Motor Speech ........... ASHA ..................................... 0447. 

213 ..................... Functional Communication Measure—Reading ..................... ASHA ..................................... 0446. 

214 ..................... Functional Communication Measure—Spoken Language 

Expression.

ASHA ..................................... 0444. 

215 ..................... Functional Communication Measure—Writing ....................... ASHA ..................................... 0442. 

216 ..................... Functional Communication Measure—Swallowing ................ ASHA ..................................... 0443. 

Please note, as previously discussed 

above, detailed measure specifications, 

including a measure’s title, for 2010 

PQRI quality measures may be updated 

or modified during the NQF 

endorsement process or for other 

reasons during 2010. Therefore, the 

2011 PQRI quality measure 

specifications for any given quality 

measure may be different from 

specifications for the same quality 

measure used for 2010. Specifications 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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for all 2011 individual PQRI quality 

measures, whether or not included in 

the 2010 PQRI program, must be 

obtained from the specifications 

document for 2011 individual PQRI 

quality measures, which will be 

available on the PQRI section of the 

CMS Web site on or before December 

31, 2010. 

(3) New Individual Quality Measures 

Proposed for 2011 

We propose to include in the 2011 

PQRI quality measure set 20 measures 

that were not included in the 2010 PQRI 

quality measures set provided that each 

measure obtains NQF endorsement by 

June 1, 2010 and its detailed 

specifications are completed and ready 

for implementation in PQRI by August 

15, 2010. Besides having NQF 

endorsement, we again propose that the 

development of a measure is considered 

complete for the purposes of the 2011 

PQRI if by August 15, 2010: (1) The 

final, detailed specifications for use in 

data collection for PQRI have been 

completed and are ready for 

implementation, and (2) all of the 

Category II Current Procedural 

Terminology (CPT II) codes required for 

the measure have been established and 

will be effective for CMS claims data 

submission on or before January 1, 2011. 

The titles of these proposed additional, 

or new, measures are listed in Table 54 

along with the name of the measure 

developer and the proposed reporting 

mechanism (that is, whether the 

measure is proposed to be reportable 

using claims, registries, or both). For 

these 20 proposed measures, a PQRI 

Measure Number will be assigned to a 

measure if and when the measure is 

included in the final set of 2011 PQRI 

measures. 

Due to the complexity of their 

measure specifications, we propose that 

8 of these 20 measures would be 

available as registry-only measures for 

the 2011 PQRI. The remaining 15 

measures are proposed to be available 

for reporting through either claimsbased reporting or registry-based 

reporting. 

TABLE 54—NEW INDIVIDUAL QUALITY MEASURES PROPOSED FOR 2011 

Measure title NQF Measure number Measure 

developer 

Reporting 

mechanism(s) 

Change in Risk-Adjusted Functional Status for Patients 

With Knee Impairments.

0422 ...................................... FOTO .................................... Registry. 

Change in Risk-Adjusted Functional Status for Patients 

With Hip Impairments.

0423 ...................................... FOTO .................................... Registry. 

Change in Risk-Adjusted Functional Status for Patients 

With Lower Leg, Foot or Ankle Impairments.

0424 ...................................... FOTO .................................... Registry. 

Change in Risk-Adjusted Functional Status for Patients 

With Lumbar Spine Impairments.

0425 ...................................... FOTO .................................... Registry. 

Change in Risk-Adjusted Functional Status for Patients 

With Shoulder Impairments.

0426 ...................................... FOTO .................................... Registry. 

Change in Risk-Adjusted Functional Status for Patients 

With Elbow, Wrist or Hand Impairments.

0427 ...................................... FOTO .................................... Registry. 

Change in Risk-Adjusted Functional Status for Patients 

With a Functional Deficit of the Neck, Cranium, Mandible, Thoracic Spine, Ribs or Other General Orthopedic 

Impairment.

0428 ...................................... FOTO .................................... Registry. 

Care Transitions: Reconciled Medication List Received by 

Discharged Patients (Inpatient Discharges to Home/Self 

Care or Any Other Site of Care).

Currently under NQF review Society of Hospital Medicine 

(SMH) AMA–PCPI/NCQA.

Claims, Registry. 

Care Transitions: Transition Record with Specified Elements Received by Discharged Patients (Inpatient Discharges to Home/Self Care or Any Other Site of Care).Currently under NQF review Society of Hospital Medicine 

(SMH) AMA–PCPI/NCQA.

Claims, Registry. 

Care Transitions: Timely Transmission of Transition Record 

(Inpatient Discharges to Home/Self Care or Any Other 

Site of Care).

Currently under NQF review Society of Hospital Medicine 

(SMH) AMA–PCPI/NCQA.

Claims, Registry. 

Care Transitions: Transition Record with Specified Elements Received by Discharged Patients (Emergency Department Discharges to Ambulatory Care [Home/Self 

Care] or Home Health Care).

Currently under NQF review Society of Hospital Medicine 

(SMH) AMA–PCPI/NCQA.

Claims, Registry. 

Hypertension (HTN): Plan of Care ....................................... 0017 ...................................... AMA–PCPI ............................ Claims, Registry. 

Heart Failure (HF): Left Ventricular Function (LVF) Testing 79 .......................................... CMS ...................................... Registry. 

Melanoma: Overutilization of Imaging Studies in Stage 0– 

IA Melanoma.

0562 ...................................... AMA–PCPI ............................ Claims, Registry. 

Radiology: Reminder System for Mammograms .................. 0509 ...................................... AMA–PCPI ............................ Claims, Registry. 

Asthma: Assessment of Asthma Risk—Emergency Department/Inpatient Setting.Currently under NQF review AMA–PCPI ............................ Claims, Registry. 

Asthma: Discharge Plan—Emergency Department/Inpatient 

Setting.

Currently under NQF review AMA–PCPI ............................ Claims, Registry. 

Preventive Care and Screening: Tobacco Use: Screening 

and Cessation Intervention.

0028 ...................................... AMA–PCPI ............................ Claims, Registry. 

Recording of Performance Status Prior to Lung or Esophageal Cancer Resection.0457 ...................................... Society of Thoracic Surgery 

(STS).

Claims, Registry. 

Pulmonary Function Tests Before Major Anatomic Lung 

Resection.

0458 ...................................... Society of Thoracic Surgery 

(STS).

Claims, Registry. 

These measures are being proposed for 

the 2011 PQRI because they meet one or 

more of the considerations for measure selection discussed in section VI.F.1.h. 

of this proposed rule. 


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(4) Proposed 2011 Measures Available 

for EHR-Based Reporting 

For 2011, we propose to again accept 

PQRI data from EHRs for a limited 

subset of the proposed 2011 PQRI 

quality measures, contingent upon the 

successful completion of our 2010 EHR 

data submission process and a 

determination that accepting data from 

EHRs on quality measures for the 2011 

PQRI continues to be practical and 

feasible. 

We propose to make a total of 22 

measures available for EHR-based 

reporting in the 2010 PQRI. These 

include the 10 measures available for 

EHR-based reporting in the 2010 PQRI, 

which are identified in Table 55 and 12 

additional measures identified in Table 

56 that overlap with the clinical quality 

measures used in the EHR incentive 

program established by the American 

Recovery and Reinvestment Act 

(ARRA). Again, this year, we propose to 

make these measures available for 

electronic submission via an EHR 

because these measures target 

preventive care or common chronic and 

high-cost conditions. 

TABLE 55—PROPOSED 2011 MEASURES AVAILABLE FOR EHR-BASED REPORTING FROM 2010 PQRI 

Measure No. Measure title Measure 

developer NQF Measure No. 

1 ........................ Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 

Mellitus.

NCQA ........................................... 0059. 

2 ........................ Diabetes Mellitus: Low Density Lipoprotein (LDL–C) Control in Diabetes Mellitus.NCQA ........................................... 0064. 

3 ........................ Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus NCQA ........................................... 0061. 

5 ........................ Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or 

Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular 

Systolic Dysfunction (LVSD).

AMA–PCPI ................................... 0081. 

7 ........................ Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD 

Patients with Prior Myocardial Infarction (MI).

AMA–PCPI ................................... 0070. 

110 .................... Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old.AMA–PCPI ................................... 0041. 

111 .................... Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older.NCQA ........................................... 0043. 

112 .................... Preventive Care and Screening: Screening Mammography ............. NCQA ........................................... 0031. 

113 .................... Preventive Care and Screening: Colorectal Cancer Screening ........ NCQA ........................................... 0034. 

124 .................... Health Information Technology (HIT): Adoption/Use of Electronic 

Health Records (EHR).

CMS/QIP ...................................... 0488. 

TABLE 56: PROPOSED 2011 MEDICARE ARRA—HITECH MEASURES AVAILABLE FOR EHR-BASED REPORTING

Measure No. Measure title Measure 

developer NQF Measure No. 

TBD ................... Hypertension (HTN): Blood Pressure Measurement ......................... AMA–PCPI ................................... 0013. 

128 .................... Preventive Care and Screening: Body Mass Index (BMI) Screening 

and Follow-Up.

CMS/Quality Insights of Pennsylvania.0421. 

TBD ................... Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention.AMA–PCPI ................................... 0028. 

TBD ................... Childhood Immunization Status ......................................................... NCQA ........................................... 0038. 

TBD ................... Body Mass Index (BMI) 2 Through 18 Years of Age ........................ National Initiative for Children’s

Healtcare Quality.

0024. 

39 ...................... Screening or Therapy for Osteoporosis for Women Aged 65 Years 

and Older.

AMA–PCPI/NCQA ....................... 0046. 

47 ...................... Advance Care Plan ............................................................................ AMA–PCPI/NCQA ....................... 0326. 

48 ...................... Urinary Incontinence: Assessment of Presence or Absence of Urinary Incontinence in Women Aged 65 Years and Older.AMA–PCPI/NCQA ....................... 0098. 

173 .................... Preventive Care & Screening: Unhealthy Alcohol Use—Screening .. AMA–PCPI ................................... AQA Adopted. 

TBD ................... Drugs To Be Avoided in the Elderly .................................................. NCQA ........................................... 0022. 

41 ...................... Osteoporosis: Pharmacologic Therapy for Men and Women Aged 

50 Years and Older.

...................................................... 0049. 

142 .................... Osteoarthritis: Assessment of Use of Anti-Inflammatory or Analgesic OTC Meds.AMA–PCPI ................................... 0051. 

(5) Measures Proposed for Inclusion in 

2011 Measures Groups 

We propose to retain the following 13 

2010 PQRI measures groups for the 2011 

PQRI: (1) Diabetes Mellitus; (2) CKD; (3) 

Preventive Care; (4) CABG; (5) 

Rheumatoid Arthritis; (6) Perioperative 

Care; (7) Back Pain; (8) CAD; (9) Heart 

Failure; (10) IVD; (11) Hepatitis C; (12) 

HIV/AIDS; and (13) CAP. We are 

proposing to include these measures 

groups in 2011 PQRI because they each 

contain at least 4 PQRI quality measures 

that share a common denominator 

definition. 

For 2011, we propose that the CABG, 

CAD, Heart Failure, HIV/AIDS measures 

groups continue to be reportable 

through the registry-based reporting 

mechanism only, while the remaining 

Diabetes Mellitus, CKD, Preventive 

Care, Rheumatoid Arthritis, 

Perioperative Care, Back Pain, IVD, 

Hepatitis C, and CAP measures groups 

will continue to be reportable through 

either claims-based reporting or registrybased reporting for the 2011 PQRI. The 

4 2011 proposed measures groups 

reportable via registry-based reporting 

only are identified with an asterisk (*) 

below. 


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For 2010, the 13 measures groups that 

we propose to retain in the 2011 PQRI, 

combined with the one additional 

measures group we are proposing for 

2011, makes a total of 14 measures 

groups for the 2011 PQRI. The 1 

additional measures group we propose 

for the 2011 PQRI, identified in Table 

70, is an Asthma Measures Group. The 

Asthma Measures Group is proposed to 

be reportable through either claimsbased reporting or registry-based 

reporting. 

We believe that the measure groups 

proposed for the 2011 PQRI address 

gaps in quality reporting and are those 

that have a high impact on HHS and 

CMS priority topics for improved 

quality and efficiency for Medicare 

beneficiaries (such as prevention, 

chronic conditions, improved care 

coordination, improved efficiency, 

improved patient and family experience 

of care, and effective management of 

acute and chronic episodes). 

Finally, as in previous program years, 

for 2011, we continue to propose that 

except for the measures included in the 

Back Pain measures group, the measures 

included in any proposed 2011 

measures group be reportable either as 

individual measures or as part of a 

measures group. For 2011, we propose 

that the measures proposed for 

inclusion in the Back Pain measures 

group will continue to be reportable 

only as part of a measures group and not 

as individual measures in 2011. We 

propose that measures selected for 

inclusion in all 2011 PQRI measures 

groups (except for the Back Pain 

measures group) are reportable either as 

individual measures or as part of a 

measures group. 

The measures proposed for inclusion 

in each of the 2011 measures groups are 

identified in Tables 57 through 70. As 

stated previously, the PQRI Measure 

Number is a unique identifier assigned 

by CMS to all measures in the PQRI 

measure set. Once a PQRI Measure 

Number is assigned to a measure, it will 

not be used again, even if the measure 

is subsequently retired from the PQRI 

measure set. Measures that are not 

preceded by a number (in other words, 

those preceded by ‘‘TBD’’) in Tables 57 

through 71 were never part of a PQRI 

measure set prior to 2011. A number 

will be assigned to such measures for 

2011, if we finalize inclusion of the 

measures in the 2011 PQRI. 

As with measures group reporting in 

the 2008, 2009, and 2010 PQRI, we 

propose that each EP electing to report 

a group of measures for 2011 must 

report all measures in the group that are 

applicable to each patient or encounter 

to which the measures group applies at 

least up to the minimum number of 

patients required by the applicable 

reporting criteria. 

TABLE 57—MEASURES PROPOSED FOR 2011 DIABETES MELLITUS MEASURES GROUP

Measure No. Measure Title NQF Measure No. Measure developer 

1 ........................ Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 

Mellitus.

0059 ............................................. NCQA. 

2 ........................ Diabetes Mellitus: Low Density Lipoprotein (LDL–C) Control in Diabetes Mellitus.0064 ............................................. NCQA. 

3 ........................ Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus 0061 ............................................. NCQA. 

117 .................... Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient .................. 0055 ............................................. NCQA. 

119 .................... Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients.0062 ............................................. NCQA. 

163 .................... Diabetes Mellitus: Foot Exam ............................................................ 0056 ............................................. NCQA. 

TABLE 58—MEASURES PROPOSED FOR 2011 CKD MEASURES GROUP

Measure No. Measure Title NQF Measure No. Measure developer 

121 .................... Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, 

Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid Profile).

0570, 0571, 0572, 0626 .............. AMA–PCPI. 

122 .................... Chronic Kidney Disease (CKD): Blood Pressure Management ........ AQA adopted ............................... AMA–PCPI. 

123 .................... Chronic Kidney Disease (CKD): Plan of Care—Elevated Hemoglobin for Patients Receiving Erythropoiesis-Stimulating Agents 

(ESA).

AQA adopted ............................... AMA–PCPI. 

153 .................... Chronic Kidney Disease (CKD): Referral for Arteriovenous (AV) 

Fistula.

AQA adopted ............................... AMA–PCPI. 

TABLE 59—MEASURES PROPOSED FOR 2011 PREVENTIVE CARE MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

39 ...................... Screening or Therapy for Osteoporosis for Women Aged 65 Years 

and Older.

0046 ............................................. AMA–PCPI/NCQA. 

48 ...................... Urinary Incontinence: Assessment of Presence or Absence of Urinary Incontinence in Women Aged 65 Years and Older.0098 ............................................. AMA–PCPI/NCQA. 

110 .................... Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old.0041 ............................................. AMA–PCPI. 

111 .................... Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older.0043 ............................................. NCQA. 

112 .................... Preventive Care and Screening: Screening Mammography ............. 0031 ............................................. NCQA. 

113 .................... Preventive Care and Screening: Colorectal Cancer Screening ........ 0034 ............................................. NCQA. 

128 .................... Preventive Care and Screening: Body Mass Index (BMI) Screening 

and Follow-Up.

0421 ............................................. CMS/QIP. 

173 .................... Preventive Care and Screening: Unhealthy Alcohol Use—Screening.AQA adopted ............................... AMA–PCPI. 


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TABLE 59—MEASURES PROPOSED FOR 2011 PREVENTIVE CARE MEASURES GROUP—Continued 

Measure No. Measure title NQF Measure No. Measure developer 

TBD ................... Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention.0028 ............................................. AMA–PCPI. 

TABLE 60—MEASURES PROPOSED FOR 2011 CABG MEASURES GROUP * 

Measure No. Measure title NQF Measure No. Measure developer 

43 ...................... Coronary Artery Bypass Graft (CABG): Use of Internal Mammary 

Artery (IMA) in Patients with Isolated CABG Surgery.

0516, 0134 ................................... Society of Thoracic 

Surgeons (STS). 

44 ...................... Coronary Artery Bypass Graft (CABG): Preoperative Beta-Blocker 

in Patients with Isolated CABG Surgery.

0127, 0236 ................................... STS. 

164 .................... Coronary Artery Bypass Graft (CABG): Prolonged Intubation (Ventilation).0129 ............................................. STS. 

165 .................... Coronary Artery Bypass Graft (CABG): Deep Sternal Wound Infection Rate.0130 ............................................. STS. 

166 .................... Coronary Artery Bypass Graft (CABG): Stroke/Cerebrovascular Accident (CVA).0131 ............................................. STS. 

167 .................... Coronary Artery Bypass Graft (CABG): Postoperative Renal Insufficiency.0114 ............................................. STS. 

168 .................... Coronary Artery Bypass Graft (CABG): Surgical Re-exploration ...... 0115 ............................................. STS. 

169 .................... Coronary Artery Bypass Graft (CABG): Antiplatelet Medications at 

Discharge.

0116 ............................................. STS. 

170 .................... Coronary Artery Bypass Graft (CABG): Beta-Blockers Administered 

at Discharge.

0117 ............................................. STS. 

171 .................... Coronary Artery Bypass Graft (CABG): Lipid Management and 

Counseling.

0118 ............................................. STS. 

* This measures group is reportable through registry-based reporting only. 

TABLE 61—MEASURES PROPOSED FOR 2011 RHEUMATOID ARTHRITIS MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

108 .................... Rheumatoid Arthritis (RA): Disease Modifying Anti-Rheumatic Drug 

(DMARD) Therapy.

0054 ............................................. NCQA. 

176 .................... Rheumatoid Arthritis (RA): Tuberculosis Screening .......................... AQA adopted ............................... AMA–PCPI/NCQA. 

177 .................... Rheumatoid Arthritis (RA): Periodic Assessment of Disease Activity AQA adopted ............................... AMA–PCPI/NCQA. 

178 .................... Rheumatoid Arthritis (RA): Functional Status Assessment ............... AQA adopted ............................... AMA–PCPI/NCQA. 

179 .................... Rheumatoid Arthritis (RA): Assessment and Classification of Disease Prognosis.AQA adopted ............................... AMA–PCPI/NCQA. 

180 .................... Rheumatoid Arthritis (RA): Glucocorticoid Management ................... AQA adopted ............................... AMA–PCPI/NCQA. 

TABLE 62—MEASURES PROPOSED FOR 2011 PERIOPERATIVE CARE MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

20 ...................... Perioperative Care: Timing of Antibiotic Prophylaxis—Ordering 

Physician.

0270 ............................................. AMA–PCPI/NCQA. 

21 ...................... Perioperative Care: Selection of Prophylactic Antibiotic—First OR 

Second Generation Cephalosporin.

0268 ............................................. AMA–PCPI/NCQA. 

22 ...................... Perioperative Care: Discontinuation of Prophylactic Antibiotics 

(Non-Cardiac Procedures).

0271 ............................................. AMA–PCPI/NCQA. 

23 ...................... Perioperative Care: Venous Thromboembolism (VTE) Prophylaxis 

(When Indicated in ALL Patients).

0239 ............................................. AMA–PCPI/NCQA. 

TABLE 63—MEASURES PROPOSED FOR 2011 BACK PAIN MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

148 .................... Back Pain: Initial Visit ........................................................................ 0322 ............................................. NCQA. 

149 .................... Back Pain: Physical Exam ................................................................. 0319 ............................................. NCQA. 

150 .................... Back Pain: Advice for Normal Activities ............................................ 0315 ............................................. NCQA. 

151 .................... Back Pain: Advice Against Bed Rest ................................................. 0313 ............................................. NCQA. 


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TABLE 64—MEASURES PROPOSED FOR 2011 CAD MEASURES GROUP* 

Measure No. Measure title NQF Measure No. Measure developer 

6 ........................ Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD.0067 ............................................. AMA–PCPI. 

196 .................... Coronary Artery Disease (CAD): Symptom and Activity Assessment 0065 ............................................. AMA–PCPI. 

197 .................... Coronary Artery Disease (CAD): Drug Therapy for Lowering LDL– 

Cholesterol.

0074 ............................................. AMA–PCPI. 

TBD ................... Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention.0028 ............................................. AMA–PCPI. 

* This measures group is reportable through registry-based reporting only. 

TABLE 65—MEASURES PROPOSED FOR 2011 HEART FAILURE MEASURES GROUP* 

Measure No. Measure title NQF Measure No. Measure developer 

5 ........................ Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or 

Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular 

Systolic Dysfunction (LVSD).

0081 ............................................. AMA–PCPI. 

8 ........................ Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic 

Dysfunction (LVSD).

0083 ............................................. AMA–PCPI. 

198 .................... Heart Failure: Left Ventricular Function (LVF) Assessment .............. 0079 ............................................. AMA–PCPI. 

199 .................... Heart Failure: Patient Education ........................................................ 0082 ............................................. AMA–PCPI. 

TBD ................... Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention.0028 ............................................. AMA–PCPI. 

* This measures group is reportable through registry-based reporting only. 

TABLE 66—MEASURES PROPOSED FOR 2011 IVD MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

201 .................... Ischemic Vascular Disease (IVD): Blood Pressure Management 

Control.

0073 ............................................. NCQA. 

202 .................... Ischemic Vascular Disease (IVD): Complete Lipid Profile ................ 0075 ............................................. NCQA. 

203 .................... Ischemic Vascular Disease (IVD): Low Density Lipoprotein (LDL–C) 

Control.

0075 ............................................. NCQA. 

204 .................... Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic.0068 ............................................. NCQA. 

TBD ................... Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention.0028 ............................................. AMA–PCPI. 

TABLE 67—MEASURES PROPOSED FOR 2011 HEPATITIS C MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

84 ...................... Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating Treatment.0395 ............................................. AMA–PCPI. 

85 ...................... Hepatitis C: HCV Genotype Testing Prior to Treatment ................... 0396 ............................................. AMA–PCPI. 

86 ...................... Hepatitis C: Antiviral Treatment Prescribed ....................................... 0397 ............................................. AMA–PCPI. 

87 ...................... Hepatitis C: HCV Ribonucleic Acid (RNA) Testing at Week 12 of 

Treatment.

0398 ............................................. AMA–PCPI. 

89 ...................... Hepatitis C: Counseling Regarding Risk of Alcohol Consumption .... 0401 ............................................. AMA–PCPI. 

90 ...................... Hepatitis C: Counseling Regarding Use of Contraception Prior to 

Antiviral Therapy.

0394 ............................................. AMA–PCPI. 

183 .................... Hepatitis C: Hepatitis A Vaccination in Patients with HCV ............... 0399 ............................................. AMA–PCPI. 

184 .................... Hepatitis C: Hepatitis B Vaccination in Patients with HCV ............... 0400 ............................................. AMA–PCPI. 

TABLE 68—MEASURES PROPOSED FOR 2011 HIV/AIDS MEASURES GROUP* 

Measure No. Measure title NQF Measure No. Measure developer 

159 .................... HIV/AIDS: CD4+ Cell Count or CD4+ Percentage ............................ 0404 ............................................. AMA–PCPI/NCQA. 

160 .................... HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP) Prophylaxis .... 0405 ............................................. AMA–PCPI/NCQA. 

161 .................... HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS Who Are 

Prescribed Potent Antiretroviral Therapy.

0406 ............................................. AMA–PCPI/NCQA. 

162 .................... HIV/AIDS: HIV RNA Control After Six Months of Potent 

Antiretroviral Therapy.

0407 ............................................. AMA–PCPI/NCQA. 

205 .................... HIV/AIDS: Sexually Transmitted Disease Screening for Chlamydia 

and Gonorrhea.

0409 ............................................. AMA–PCPI/NCQA. 

206 .................... HIV/AIDS: Screening for High Risk Sexual Behaviors ...................... 0413 ............................................. AMA–PCPI/NCQA. 

207 .................... HIV/AIDS: Screening for Injection Drug Use ..................................... 0415 ............................................. AMA–PCPI/NCQA. 


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TABLE 68—MEASURES PROPOSED FOR 2011 HIV/AIDS MEASURES GROUP*—Continued 

Measure No. Measure title NQF Measure No. Measure developer 

208 .................... HIV/AIDS: Sexually Transmitted Disease Screening for Syphilis ..... 0410 ............................................. AMA–PCPI/NCQA. 

* This measures group is selected to be reportable through registry-based reporting only. 

TABLE 69—MEASURES PROPOSED FOR 2011 CAP MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

56 ...................... Community-Acquired Pneumonia (CAP): Vital Signs ........................ 0232 ............................................. AMA–PCPI/NCQA. 

57 ...................... Community-Acquired Pneumonia (CAP): Assessment of Oxygen 

Saturation.

0094 ............................................. AMA–PCPI/NCQA. 

58 ...................... Community-Acquired Pneumonia (CAP): Assessment of Mental 

Status.

0234 ............................................. AMA–PCPI/NCQA. 

59 ...................... Community-Acquired Pneumonia (CAP): Empiric Antibiotic ............. 0096 ............................................. AMA–PCPI/NCQA. 

TABLE 70—MEASURES PROPOSED FOR 2011 ASTHMA MEASURES GROUP

Measure No. Measure title NQF Measure No. Measure developer 

53 ...................... Asthma: Pharmacologic Therapy ....................................................... 0047 ............................................. AMA–PCPI. 

64 ...................... Asthma: Asthma Assessment ............................................................ 0001 ............................................. AMA–PCPI. 

TBD ................... Asthma: Assessment of Asthma Risk—Emergency Department/Inpatient Setting.Currently under NQF review ........ AMA–PCPI. 

TBD ................... Asthma: Discharge Plan-Emergency/Inpatient Setting ...................... Currently under NQF review ........ AMA–PCPI. 

We note that the specifications for 

measures groups do not necessarily 

contain all the specification elements of 

each individual measure making up the 

measures group. This is based on the 

need for a common set of denominator 

specifications for all the measures 

making up a measures group in order to 

define the applicability of the measures 

group. Therefore, the specifications and 

instructions for measures groups will 

again be provided separately from the 

specifications and instructions for the 

individual 2011 PQRI measures. We 

will post the detailed specifications and 

specific instructions for reporting 

measures groups on the PQRI section of 

the CMS Web site at http:// 

www.cms.gov/PQRI by no later than 

December 31, 2010. 

Additionally, the detailed measure 

specifications and instructions for 

submitting data on those 2011 measures 

groups that were also included as 2010 

PQRI measures groups may be updated 

or modified prior to 2011. Therefore, the 

2011 PQRI measure specifications for 

any given measures group could be 

different from specifications and 

submission instructions for the same 

measures group used for 2010. These 

measure specification changes are not 

expected to materially impact the 

intended meaning of the measures or 

the strength of the measures. 

j. Proposed 2011 PQRI Quality Measures 

for Physician Groups Selected To 

Participate in the Group Practice 

Reporting Option (GPRO I) 

As discussed in section VI.F.1.g.(3).(i) 

of this proposed rule, we propose that 

physician groups selected to participate 

in the 2011 PQRI GPRO I would be 

required to report on 26 proposed 

measures. We are proposing these 

measures because they are NQFendorsed measures currently collected 

as part of the PGP and/or MCMP 

demonstrations and in the 2010 PQRI 

GPRO. These proposed measures are 

listed in Table 71. To the extent that a 

measure is an existing PQRI measure 

available for reporting by individual 

EPs, the Measure Title is preceded by 

the measure’s PQRI Measure Number. If 

there is no number in the PQRI Measure 

Number column of the table, then the 

measure is not an existing PQRI 

measure and will be added to the 2011 

PQRI for purposes of the GPRO I. 

Measures proposed for GPRO II are 

discussed in section VI.F.1.g.(3).(ii) of 

this proposed rule. 

As in the 2010 PQRI, a separate 

measures specifications manual and 

other supporting documents will be 

available for group practices 

participating in the 2011 PQRI GPRO I. 

We anticipate that the group practice 

measures specifications manual will be 

available by November 15, 2010 on the 

PQRI section of the CMS Web site at 

http://www.cms.gov/PQRI. 

TABLE 71—MEASURES FOR PHYSICIAN GROUPS PARTICIPATING IN THE 2011 PQRI GROUP PRACTICE REPORTING

OPTION (GPRO I) 

PQRI measure 

No. Measure title Measure developer NQF No. 

1 ........................ Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 

Mellitus.

NCQA ........................................... 0059 

2 ........................ Diabetes Mellitus: Low Density Lipoprotein (LDL–C)Control ............ NCQA ........................................... 0064 

3 ........................ Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus NCQA ........................................... 0061 

5 ........................ Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or 

Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular 

Systolic Dysfunction (LVSD).

AMA–PCPI ................................... 0081 

6 ........................ Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD.AMA–PCPI ................................... 0067 


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TABLE 71—MEASURES FOR PHYSICIAN GROUPS PARTICIPATING IN THE 2011 PQRI GROUP PRACTICE REPORTING

OPTION (GPRO I)—Continued 

PQRI measure 

No. Measure title Measure developer NQF No. 

7 ........................ Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD 

Patients with Prior Myocardial Infarction (MI).

AMA–PCPI ................................... 0070 

8 ........................ Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic 

Dysfunction (LVSD).

AMA–PCPI ................................... 0083 

110 .................... Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old.AMA–PCPI ................................... 0041 

111 .................... Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older.NCQA ........................................... 0043 

112 .................... Preventive Care and Screening: Screening Mammography ............. NCQA ........................................... 0031 

113 .................... Preventive Care and Screening: Colorectal Cancer Screening ........ NCQA ........................................... 0034 

117 .................... Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient .................. NCQA ........................................... 0055 

118 .................... Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme 

(ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) for Patients with CAD and Diabetes and/or Left Ventricular Systolic 

Dysfunction (LVSD).

AMA–PCPI ................................... 0066 

119 .................... Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients.NCQA ........................................... 0062 

163 .................... Diabetes Mellitus: Foot Exam ............................................................ NCQA ........................................... 0056 

GPRO DM–1 ..... Diabetes Mellitus: Hemoglobin A1c Testing ...................................... NCQA ........................................... 0057 

GPRO DM–9 ..... Diabetes Mellitus: Lipid Profile ........................................................... NCQA ........................................... 0063 

GPRO HF–2 ...... Heart Failure: Left Ventricular Function (LVF) Testing ...................... CMS.

198 .................... Heart Failure: Left Ventricular Function (LVF) Assessment .............. AMA–PCPI ................................... 0079 

GPRO HF–3 ...... Heart Failure: Weight Measurement .................................................. CMS AMA–PCPI not maintaining 0085 

199 .................... Heart Failure: Patient Education ........................................................ AMA–PCPI ................................... 0082 

200 .................... Heart Failure: Warfarin Therapy for Patients with Atrial Fibrillation .. AMA–PCPI ................................... 0084 

197 .................... Coronary Artery Disease (CAD): Drug Therapy for Lowering LDL– 

Cholesterol.

AMA–PCPI ................................... 0074 

GPRO HTN–1 ... Hypertension: Blood Pressure Measurement .................................... AMA–PCPI ................................... 0013 

GPRO HTN–2 ... Hypertension (HTN): Blood Pressure Control ................................... NCQA ........................................... 0018 

GPRo HTN–3 .... Hypertension (HTN): Plan of Care ..................................................... AMA–PCPI ................................... 0017 

k. Public Reporting of PQRI Data 

Section 1848(m)(5)(G) of the Act 

requires the Secretary to post on the 

CMS Web site, in an easily 

understandable format, a list of the 

names of EPs (or group practices) who 

satisfactorily submitted data on quality 

measures for the PQRI and the names of 

the EPs (or group practices) who are 

successful electronic prescribers. In 

addition, section 10331(a)(1) of the 

ACA, requires the Secretary to develop 

a Physician Compare Internet Web site 

by January 1, 2011, on which 

information on physicians enrolled in 

the Medicare program and other EPs 

who participate in the PQRI program 

would be posted. 

To meet the ACA deadline of January 

1, 2011, with respect to establishing the 

Physician Compare Web site, we 

propose, for 2011 PQRI, to use the 

current Physician and Other Health Care 

Professional Directory as a foundation 

for the Physician Compare Web site. As 

in 2010 PQRI, we propose to continue 

to make public the names of EPs and 

group practices that satisfactorily 

submit quality data for the 2011 PQRI. 

Previously, this was posted on the 

Physician and Other Health Care 

Professionals Directory. Our intent for 

the 2011 PQRI is to post the information 

on the Physician Compare Web site that 

must be developed by January 1, 2011. 

Specifically, we propose to post the 

names of EPs who: (1) Submit data on 

the 2011 PQRI quality measures through 

one of the reporting mechanisms 

available for the 2011 PQRI; (2) meet 

one of the proposed satisfactory 

reporting criteria of individual measures 

or measures groups for the 2011 PQRI as 

described above; and (3) qualify to earn 

a PQRI incentive payment for covered 

professional services furnished during 

the applicable 2011 PQRI reporting 

period, for purposes of satisfying the 

requirements under section 

1848(m)(5)(G)(i) of the Act, on the 

Physician Compare Web site. 

Similarly, for purposes of publicly 

reporting the names of group practices, 

on the Physician Compare Web site, for 

2011, we propose to post the names of 

group practices that: (1) Submit data on 

the 2011 PQRI quality measures through 

one of the proposed group practice 

reporting options; (2) meet the proposed 

criteria for satisfactory reporting under 

the respective group practice reporting 

option; and (3) qualify to earn a PQRI 

incentive payment for covered 

professional services furnished during 

the applicable 2011 PQRI reporting 

period for purposes of satisfying the 

requirements under section 

1848(m)(5)(G)(i) of the Act. 

We do not propose to require as a 

condition of participation in the 2011 

PQRI that performance information be 

made publicly available at either the 

group practice or individual level for 

2011 PQRI. However, we note that 

section 10331 of the ACA requires that 

not later than January 1, 2013, and with 

respect to reporting periods that begin 

no earlier than January 1, 2012, we 

implement a plan for making publicly 

available through Physician Compare, 

information on physician performance, 

including measures collected under 

PQRI. Consistent with section 10331 of 

the ACA, we expect, in the future, to 

publicly report performance information 

based on PQRI. 

We will be working on a plan to 

expand the information that is publicly 

posted on the Physician Compare in 

future years. This will be further 

described in future rulemaking. We 

solicit comments on our plan for 

implementation of a Physician Compare 

Web site for 2011. 


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l. Other Relevant ACA Provisions 

(1) Section 3002 (b)—Incentive Payment 

Adjustment for Quality Reporting 

Beginning 2015, a payment 

adjustment will apply under the PQRI. 

Specifically, under section 1848(a)(8) of 

the Act, as added by section 3002(b) of 

the ACA, with respect to covered 

professional services furnished by an EP 

during 2015 or any subsequent year, if 

the EP does not satisfactorily submit 

data on quality measures for covered 

professional services for the quality 

reporting period for the year, the fee 

schedule amount for services furnished 

by such professionals during the year 

shall be equal to the applicable percent 

of the fee schedule amount that would 

otherwise apply to such services. The 

applicable percent for 2015 is 98.5 

percent and for 2016 and each 

subsequent year it is 98.0 percent. 

We will address this provision of the 

ACA in future notice and comment 

rulemaking. 

(2) Section 3002(c)—Maintenance of 

Certification Programs and Section 

10327 Improvements to the Physician 

Quality Reporting System 

Section 3002(c) of the ACA amends 

section 1848(k)(4) of the Act to require 

a mechanism whereby an EP may 

provide data on quality measures 

through an MOCP operated by a 

specialty body of the American Board of 

Medical Specialties (ABMS). In 

addition, section 1848(m)(7)of the Act 

(‘‘Additional Incentive Payment’’), as 

added by section 10327(a) of the ACA, 

provides for an additional 0.5 percent 

incentive payment for years 2011 

through 2014 if certain requirements are 

met. In accordance with section 

1848(m)(7)(B) of the Act, in order to 

qualify for the additional incentive 

payment, an EP must— 

• Satisfactorily submit data on quality 

measures under PQRI for a year and 

have such data submitted— 

++ On their behalf through an MOCP 

that meets the criteria for a registry 

under PQRI (see section VI.F.1.d.(4) of 

this proposed rule); or 

++ In an alternative form and manner 

determined appropriate by the 

Secretary; and 

• More frequently than is required to 

qualify for or maintain board 

certification status— 

++ Participate in such an MOCP for a 

year; and 

++ Successfully completes a qualified 

MOCP for such year. 

Section 1848(m)(7)(C)(i) of the Act 

defines ‘‘Maintenance of Certification 

Program’’ as a continuous assessment 

program, such as a qualified ABMS 

MOCP, or an equivalent program (as 

determined by the Secretary), that 

advances quality and the lifelong 

learning and self-assessment of board 

certified specialty physicians by 

focusing on the competencies of patient 

care, medical knowledge, practice-based 

learning, interpersonal and 

communications skills and 

professionalism. Such a program shall 

require a physician to do the following: 

• Maintain a valid, unrestricted 

medical license in the United States. 

• Participate in educational and selfassessment programs that require an 

assessment of what was learned. 

• Demonstrate, through a formalized, 

secure examination, that the physician 

has the fundamental diagnostic skills, 

medical knowledge, and clinical 

judgment to provide quality care in their 

respective specialty. 

• Successful completion of a 

qualified MOCP practice assessment. 

As defined in section 

1848(m)(7)(C)(ii) of the Act, a ‘‘qualified 

Maintenance of Certification Program 

practice assessment’’ means an 

assessment of a physician’s practice 

that— 

(1) Includes an initial assessment of 

an EP’s practice that is designed to 

demonstrate the physician’s use of 

evidence-based medicine; 

(2) Includes a survey of patient 

experience with care; and 

(3) Requires a physician to implement 

a quality improvement intervention to 

address a practice weakness identified 

in the initial assessment and then to 

remeasure to assess performance after 

such intervention. 

To qualify for the additional incentive 

payment, section 1848(m)(7)(B)(iii) of 

the Act also requires the MOCP Program 

to submit to CMS, on behalf of the EP, 

information: 

(1) In a form and manner specified by 

the Secretary, that the EP has 

successfully completed a qualified 

MOCP practice assessment for such 

year; 

(2) If requested by the Secretary, 

information on the survey of patient 

experience with care; and 

(3) As the Secretary may require, on 

the methods, measures, and data used 

under the MOCP and the qualified 

MOCP practice assessment. 

Section 10327(b) of the ACA amends 

section 3002(c) of the ACA further to 

specify that the additional 0.5 percent 

incentive payment is available only for 

years 2011, 2012, 2013, and 2014. For 

years after 2014, if the Secretary 

determines it to be appropriate, the 

Secretary may incorporate participation 

in an MOCP and successful completion 

of a qualified MOCP practice assessment 

into the composite of measures of 

quality for care furnished pursuant to 

the physician fee schedule payment 

modifier. 

To implement the provisions under 

sections 3002(c) and 10327 of the ACA, 

CMS proposes for 2011 to require the 

following: 

• An EP wishing to be eligible for the 

additional PQRI incentive payment of 

0.5 percent must meet the proposed 

requirements for satisfactory PQRI 

reporting, for program year 2011, based 

on the 12-month reporting period. We 

propose to require that EPs seeking the 

additional PQRI incentive payment 

satisfactorily report for a 12-month 

reporting period rather than only a 6 

month reporting period, based on the 

statutory language that the EP must 

satisfactorily report ‘‘for a year.’’ For 

purposes of satisfactory reporting under 

PQRI, we propose that the EP may 

participate as an individual EP using 

either individual PQRI measures or 

measures groups and submitting the 

PQRI data via claims, a registry, or an 

her or participate under one of the 

GPRO options (I or II),. Alternatively, 

EPs may satisfactorily report under 

PQRI based on submission of PQRI data 

by an MOCP, provided that the MOCP 

has qualified as a PQRI registry for 2011. 

As indicated previously, an EP would 

not necessarily have to qualify for PQRI 

through an MOCP serving as a registry. 

Rather, we propose that an EP may 

qualify for the additional incentive, 

without reqard to the method by which 

the EP has met the basic requirement of 

satisfactory reporting under PQRI. 

• In addition to meeting the proposed 

requirements for satisfactory reporting 

under PQRI for program year 2011, the 

EP must have data submitted on his or 

her behalf through an MOCP, for the 

MOCP in which the EP participates. 

Although the MOCP need not become a 

qualified registry for data submission for 

PQRI purposes, the MOCP must meet 

the criteria for a registry for submission 

of the MOCP data as specified below. 

• An EP must, more frequently than 

is required to qualify for or maintain 

board certification, participate in an 

MOCP for a year and successfully 

complete a qualified MOCP practice 

assessment for such year. We believe 

that the ‘‘more frequently’’ requirement 

applies both to the elements of the 

MOCP itself and the requirement to 

successfully complete a qualified MOCP 

practice assessment. With regard to the 

elements other than completing a 

qualified MOCP practice assessment, we 

propose to require that the MOCP certify 

that the EP has ‘‘more frequently’’ than 

is required to qualify for or maintain 


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board certification ‘‘participated in a 

MOCP for a year’’ as required by section 

10327 of the ACA. We do not propose 

to specify with respect to participation 

how an EP must meet the more 

frequently requirement, but rather that 

the MOCP so certify that EP has met this 

requirement. We note that we do not 

believe that the ‘‘more frequently’’ 

requirement is applicable to the 

licensure requirement, given that one 

cannot be licensed ‘‘more frequently’’ 

than is required. However, we do 

believe that the ‘‘more frequently’’ 

requirement applies to the required 

elements under sections 

1848(m)(7)(C)(i)(II) and 

1848(m)(7)(C)(i)(III) of the Act. In other 

words, we believe that the EP must 

‘‘more frequently’’ than is required to 

qualify for or maintain board 

certification, participate in educational 

and self-assessment programs that 

require an assessment of what was 

learned; demonstrate, through a 

formalized, secure examination, that the 

physician has the fundamental 

diagnostic skills, medical knowledge, 

and clinical judgment to provide quality 

care in their respective specialty; and 

successfully complete a qualified MOCP 

practice assessment. 

With respect to the MOCP practice 

assessment, which is specifically 

delineated in section 1848(m)(7)(B)(ii) 

of the Act as being required more often 

than is necessary to qualify for or 

maintain board certification, we believe 

we need to be more specific regarding 

our interpretation of the phrase ‘‘more 

frequently.’’ Additionally, we are aware 

that some specialty boards have varying 

MOCP requirements for physicians to 

maintain board certification, based on 

the date of original certification. Some, 

we believe, may not be required to 

participate in an MOCP program at all 

in order to maintain board certifications. 

Accordingly, we recognize that ‘‘more 

often’’ may vary among physicians 

certified by the same specialty board. 

We interpret the statutory provisions as 

requiring participation in and successful 

completion of at least one MOCP 

practice assessment. Therefore, we 

propose, as a basic requirement, 

participation in and successful 

completion in at least one MOCP 

practice assessment. For physicians who 

are not required to participate in an 

MOCP to maintain board certification, 

‘‘more often’’ would be more than 0, and 

therefore only once. For physicians, 

however, who are otherwise required by 

the specialty board to participate in an 

MOCP to maintain board certification 

status, these physicians would need to 

complete the MOCP practice assessment 

a second time in order to qualify for the 

additional incentive payment. If an 

MOCP practice assessment were 

required more than once during a 

particular cycle, the EP would be 

required to complete the MOCP practice 

assessment a third time in order to 

qualify for the additional incentive. 

We are also aware that ABMS boards 

are at various stages in implementing 

the practice assessment modules, and 

some may not have such assessment 

modules in place. However, inasmuch 

as we interpret the statute to require an 

MOCP practice assessment at least once 

as part of the MOCP, EPs who do not 

have available, through their boards or 

otherwise, an MOCP practice 

assessment are not eligible for the 0.5 

percent incentive. 

• We believe that the experience of 

care survey provides particularly 

valuable information and propose that a 

qualified MOCP practice assessment 

must include a survey of patient 

experience with care. The Secretary may 

request information on the survey of 

patient experience with care, under 

section 1848(m)(7)(B)(iii) of the Act. In 

view of the importance of this 

information, and the lack of readily 

available alternative sources, we 

propose to require that MOCPs submit 

information as to the survey of patient 

experience with care for the EP 

regarding whom information is being 

submitted by the MOCP. 

We propose that MOCPs, who wish to 

enable their members to be eligible for 

an additional PQRI incentive payment 

for the 2011 PQRI, will need to go 

through a self-nomination process by 

January 31, 2011. We propose the board 

will need to include all of the following 

information in their self-nomination 

letter to CMS: 

• Provide detailed information 

regarding the MOCP with reference to 

the statutory requirements for such 

program. 

• Indicate the organization 

sponsoring the MOCP, and whether the 

MOCP is sponsored by an ABMS board. 

If not an ABMS board, indicate whether 

the program is substantially equivalent 

to the ABMS MOCP process. 

• The frequency of a cycle of MOC for 

the specific MOCP of the sponsoring 

organization; including what constitutes 

‘‘more frequently’’ for the MOCP practice 

assessment for the specific MOCP of the 

sponsoring organization. 

• What was, is, or will be the first 

year of availability of the MOCP practice 

assessment for completion by an EP. 

• What data is collected under the 

patient experience of care survey and 

how this information would be 

provided to CMS. 

• How the MOCP monitors that an EP 

has implemented a quality improvement 

process for their practice. 

• Describe the methods, and data 

used under the MOCP, and provide a 

list of all measures used in the MOCP 

for 2010 and to be used for 2011, 

including the title and descriptions of 

each measure, the owner of the measure, 

whether the measure is NQF endorsed, 

and a link to a Web site containing the 

detailed specifications of the measures, 

or an electronic file containing the 

detailed specifications of the measures. 

We propose that sponsoring 

organizations who desire to participate 

as an MOCP will need to be able to 

provide CMS the following information 

in a CMS-specified file format by no 

later than the end of the first quarter of 

2012: 

• The name, NPI and applicable 

TIN(s) of the EP who would like to 

participate in this process; 

• Attestation from the board that the 

information provided to CMS is 

accurate and complete; 

• The board has signed 

documentation from the EP that the EP 

wishes to have their information 

released to CMS; Information from the 

experience of care survey; 

• Information certifying that the EP 

has participated in an MOCP for a year, 

more frequently than is required to 

qualify for or maintain board 

certification status, including the year 

that the physician met the board 

certification requirements for the 

MOCP, and the year the EP participated 

in an MOCP ‘‘more frequently’’ than is 

required to maintain or qualify for board 

certification; and 

• Information certifying that the EP 

has completed the MOCP practice 

assessment one additional time more 

than is required to qualify for or 

maintain board certification, including 

the year of the original MOCP practice 

assessment or that an MOCP practice 

assessment is not required for the EP, 

and the year of the additional MOCP 

practice assessment completion. 

We propose that specialty boards that 

also desire to send PQRI information to 

CMS on behalf of their EP should be 

able to meet the requirements for 

registry data submission proposed in 

section VI.F.1.d.(4) of this rule and 

should follow the directions for selfnomination to become a qualified 

registry. Boards may also participate as 

registries for PQRI data provided that 

they meet the registry requirements. 

As an alternative to requiring boards 

to either operate a qualified PQRI 

registry or to self-nominate to submit 

MOCP data to CMS on behalf of their 

members, we also considered having the 


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various boards submit the MOCP data to 

the ABMS and having ABMS channel 

the information from the various boards 

to CMS. We invite comments on the 

proposed mechanism for receiving 

MOCP data from the specialty boards as 

well as on the alternative mechanism 

that we considered. 

(3) Section 3002(d)—Integration of PQRI 

and EHR Reporting 

Section 1848(m)(7) of the Act 

(‘‘Integration of Physician Quality 

Reporting and EHR Reporting), as added 

by section 3002(d) of the ACA requires 

us to move towards the integration of 

EHR measures with respect to the PQRI 

program. Section 1848(m)(7) of the Act 

specifies that by no later than January 1, 

2012, the Secretary shall develop a plan 

to integrate reporting on quality 

measures under PQRI with reporting 

requirements under subsection (o) 

relating to the meaningful use of EHRs. 

Such integration shall consist of the 

following: 

(A) The selection of measures, the 

reporting of which would both 

demonstrate— 

(i) Meaningful use of an EHR for 

purposes of the EHR incentive program; 

and 

(ii) Quality of care furnished to an 

individual; and 

(B) Such other activities as specified 

by the Secretary. 

In an effort to align PQRI with the 

EHR incentive program, we propose to 

include many ARRA core clinical 

quality measures in the PQRI program, 

to demonstrate meaningful use of EHR 

and quality of care furnished to 

individuals. We propose the selection of 

these measures to meet the requirements 

of planning the integration of PQRI and 

EHR reporting. We are working towards 

a plan to integrate reporting on quality 

measures to make available by January 

1, 2012. 

We solicit comments on this approach 

to integrate PQRI EHR measures with 

the clinical quality measures adopted 

for the EHR incentive program. 

Specifically, we encourage comments 

on how CMS plans to align the 

measures, and how the plan for 

integration will optimally improve 

quality of care for individuals and 

provide meaningful use of EHRs. 

(4) Section 3002(e)—Feedback 

Section 3002 (e) of the ACA amends 

section 1848(m)(5) of the Act by adding 

subparagraph (H), which requires the 

Secretary to provide timely feedback to 

EPs on the performance of the EP with 

respect to satisfactorily submitting data 

on quality measures. Since the 

inception of the program in 2007, the 

PQRI program has provided EPs who 

have reported PQRI data on quality 

measures feedback reports at the TIN/ 

NPI level detailing participation in 

PQRI, including reporting rate and 

performance rate information. For 2008, 

we improved the format and content of 

feedback reports based on stakeholder 

input. We also developed an alternate 

report distribution method whereby 

each EP can directly request and receive 

a feedback report. We will continue to 

provide feedback reports to individuals 

and group practices that satisfactorily 

submit PQRI quality measure and thus 

qualify to earn a PQRI incentive. 

We believe that the requirements 

under section 1848(m)(5)(H) of the Act, 

as added by section 3002(e) of the ACA, 

for ‘‘timely’’ feedback reports with 

respect to satisfactorily submitting data 

on quality measures is met by providing 

the feedback reports on or about the 

time of issuance of the incentive 

payments. Thus, we propose to provide 

2011 feedback reports on or about the 

time of issuance of the 2011 incentive 

payments, consistent with our current 

practice. 

In addition, we also propose to 

provide interim feedback reports for EPs 

reporting 2011 measures groups through 

the claims-based reporting mechanism. 

Specifically, we propose to develop 

interim feedback reports that are similar 

in content and format to the reports that 

we currently provide for such EPs using 

claims for dates of service between 

January 1, 2011 and February 28, 2011. 

We expect that we would be able to 

make these interim feedback reports 

available to EPs in June 2011. We 

believe interim feedback reports would 

be particularly valuable to EPs reporting 

measures group because, unlike with 

individual measures reporting, EPs 

would not be required to report on a 

certain percentage of eligible cases to 

satisfactorily report the 2011 PQRI 

measures groups. EPs could just report 

on 30 eligible cases to satisfactorily 

report using measures groups. Interim 

feedback regarding the number of cases 

reported as of February 28, 2011 would 

be valuable since an EP would know 

how many more cases he or she needs 

to report to satisfy the criteria for 

satisfactory reporting for claims-based 

reporting of measures groups. 

We also intend to continue to explore 

methods to facilitate PQRI feedback 

report distribution. Additionally, based 

on feedback from the 2011 PQRI 

Listening Session that was held on 

February 2, 2010, we are considering a 

process by which we could respond to 

interim feedback report requests at the 

individual level for claims-based 

submission, based upon first quarter 

claims data for the applicable program 

year. The goal of this would be to 

provide information to EPs as to errors 

in claims-based QDC submission while 

the reporting period is ongoing and 

prior to the start of the 6-month 

reporting period. We welcome 

comments with respect to our proposal 

to provide timely feedback reports for 

PQRI. 

(5) Section 3002(f)—Appeals 

Section 1848(m)(5)(I) of the Act, as 

amended and added by section 

3002(f)(2) of the ACA, requires an 

informal review process. Specifically, 

the statute requires that the Secretary 

establish and have in place, no later 

than January 1, 2011, an informal 

process for EPs to seek a review of the 

determination that an EP did not 

satisfactorily submit data on quality 

measures under the PQRI. 

We note that except as provided 

under the informal process under 

section 1848(m)(5)(I) of the Act, section 

1848(m)(5)(E) of the Act, as amended by 

section 3002(f) of the ACA, specifies 

that, with respect to the PQRI, there 

shall be no administrative or judicial 

review under section 1869, section 

1878, or otherwise, of: 

(1) The determination of measures 

applicable to services furnished by EPs 

under PQRI; 

(2) The determination of satisfactory 

reporting under PQRI; and 

(3) The determination of any PQRI 

incentive payment and PQRI payment 

adjustment. 

We propose to base the informal 

process on our current inquiry process 

whereby an EP can contact the Quality 

Net Help Desk (via phone or e-mail) for 

general PQRI and eRx Incentive Program 

information, information on PQRI 

feedback report availability and access, 

and/or information on PQRI Portal 

password issues. We believe that the 

current inquiry process provides a good 

basis for an informal review process 

because EPs currently can utilize the 

inquiry process if they have questions 

on whether they qualified for an 

incentive. However, the current inquiry 

process does not have timelines nor is 

it restricted to questions solely on 

whether the EP qualified for an 

incentive. Thus, for purposes of the 

informal process required under section 

1848(m)(5)(E) of the Act, we propose the 

following process: 

• An EP electing to utilize the 

informal process must request an 

informal review within 90 days of the 

release of his or her feedback report. 

• An EP can request the informal 

review by notifying the Quality Net 

Help Desk via e-mail at 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
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qnetsupport@sdps.org. The e-mail 

requesting the initiation of the informal 

review process should summarize the 

concern(s) of the EP and the reason(s) 

for requesting an informal review. 

• We propose to provide the EP with 

a response to his or her request for an 

informal review within 60 days of 

receiving the original request. 

• As this process is informal and the 

statute does not require a formal appeals 

process, we will not include a hearing 

or evidence submission process, 

although the EP may submit information 

to assist in the review. 

• Based on our informal review, we 

will provide a written response. Where 

we find that the EP did satisfactorily 

report, we propose to provide the 

applicable incentive payment. 

• Given that this is an informal 

review process and given the limitations 

on review under section 1848(m)(5)(E) 

of the Act, decisions based on the 

informal review will be final, and there 

will be no further review or appeal. 

• By December 31, 2011, we propose 

to post on the CMS PQRI Web site, 

further information regarding the 

operational aspects of the informal 

review process for 2011 PQRI. We invite 

public comment on this proposed 

process. 

2. Section 132: Incentives for Electronic 

Prescribing (eRx)— The Electronic 

Prescribing Incentive Program 

a. Program Background and Statutory 

Authority 

As defined in § 423.159(a), eRx is the 

transmission using electronic media, of 

prescription or prescription-related 

information between prescriber, 

dispenser, pharmacy benefit manager 

(PBM), or health plan, either directly or 

through an intermediary, including an 

eRx network. Included in eRx, but not 

limited to, are two-way transmissions 

between the point of care and the 

dispenser. 

Section 1848(m)(2) of the Act 

promotes the use of electronic 

prescribing by authorizing incentive 

payments to EPs or group practices who 

are ‘‘successful electronic prescribers.’’ 

The intention of the 2011 eRx Incentive 

Program, which is separate from, and in 

addition to, any incentive payment that 

EPs may earn through the PQRI 

program, is to continue to encourage 

significant expansion of the use of 

electronic prescribing by authorizing a 

combination of financial incentives and 

payment adjustments. Individual EPs do 

not have to participate in PQRI in order 

to participate in the eRx Incentive 

Program (and vice versa). We propose to 

add § 414.92 to title 42 of the Code of 

Federal Regulations to implement the 

provisions of the eRx Incentive Program 

discussed in this section of the 

proposed rule. 

For 2011, which is the third year of 

the eRx Incentive Program, the Secretary 

is authorized to provide successful 

electronic prescribers, as defined in 

section 1848(m)(3)(B) of the Act and 

further discussed below in this section, 

an incentive payment equal to 1.0 

percent of the total estimated Medicare 

Part B PFS allowed charges (based on 

claims submitted not later than 2 

months after the end of the reporting 

period) for all covered professional 

services furnished during the 2011 

reporting period. Covered professional 

services are defined under the statute to 

be services for which payment is made 

under, or is based on, the PFS and 

which are furnished by an EP. The 

applicable electronic prescribing 

percent (1.0 percent) authorized for the 

2011 eRx Incentive Program is different 

from that authorized for the 2009 and 

2010 eRx Incentive Program. 

Under section 1848(m)(2)(C) of the 

Act, the incentive payments for 

successful electronic prescribers for 

future years are authorized as follows: 

• 1.0 percent for 2012. 

• 0.5 percent for 2013. 

However, section 1848(m)(2)(D) of the 

Act, as added by section 4101(f)(2)(B) of 

Title IV of Division B of the American 

Recovery and Reinvestment Act of 2009 

(Pub.L. 111–5) (ARRA–HITECH), 

specifies that the eRx incentive does not 

apply to an EP (or group practice), if, for 

the EHR reporting period, the EP (or 

group practice) earns an incentive 

payment under the Medicare EHR 

incentive program. The Medicare EHR 

incentive program begins in 2011. 

Therefore, EPs who earn an incentive 

under the Medicare EHR Incentive 

Program, with respect to certified EHR 

technology that has eRx capabilities, 

will not be eligible to earn a separate 

incentive payment for being a successful 

electronic prescriber under the eRx 

Incentive Program. 

For eRx, when reporting any of the Gcodes for purposes of qualifying for the 

incentive payment for electronic 

prescribing in 2011, we propose that the 

professional must have and regularly 

use a ‘‘qualified’’ electronic prescribing 

system, as defined in the electronic 

prescribing measure specifications. If 

the professional does not have general 

access to an eRx system in the practice 

setting, as cited in the hardship 

exception as stated by the secretary, 

there is nothing to report. 

In addition, under section 

1848(a)(5)(A) of the Act, a PFS payment 

adjustment applies beginning in 2012 to 

those who are not successful electronic 

prescribers. Specifically, for 2012, 2013, 

and 2014, if the EP is not a successful 

electronic prescriber for the reporting 

period for the year, the PFS amount for 

covered professional services furnished 

by such professionals during the year as 

referenced above shall be less than the 

PFS amount that would otherwise apply 

over the next several years by: 

• 1.0 percent for 2012. 

• 1.5 percent for 2013. 

• 2.0 percent for 2014. 

We believe that the criteria for 

determination of successful electronic 

prescriber proposed herein for the eRx 

incentive payment are not required to be 

identical to the criteria that will be used 

to determine the applicability of the 

payment adjustment that begins in 2012. 

Policy considerations underlying the 

application of the incentive payment are 

not necessarily the same as those in 

applying a payment adjustment. In 

general, we believe that an incentive 

should be broadly available to 

encourage the widest possible adoption 

of eRx, even for low volume prescribers. 

On the other hand, we believe that a 

payment adjustment should be applied 

primarily to assure that those who have 

a large volume of prescribing do so 

electronically, without penalizing those 

for whom the adoption and use of an 

electronic prescribing system may be 

impractical given the low volume of 

prescribing. The 2011 eRx incentive and 

the application of the payment 

adjustment for 2012 will be addressed 

separately below. 

Under section 1848(m)(6)(A) of the 

Act, the definition of ‘‘EP’’ for purposes 

of eligibility for the eRx Incentive 

Program is identical to the definition of 

‘‘EP’’ for the PQRI under section 

1848(k)(3)(B) of the Act. In other words, 

EPs include physicians, other 

practitioners as described in section 

1842(b)(18)(C) of the Act, physical and 

occupational therapists, qualified 

speech-language pathologists, and 

qualified audiologists. However, as we 

have noted in prior years, for purposes 

of the eRx Incentive Program, eligibility 

is further restricted by scope of practice 

to those professionals who have 

prescribing authority. Detailed 

information about the types of 

professionals that are eligible to 

participate in the eRx Incentive Program 

is available on the Electronic 

Prescribing Incentive Program section of 

the CMS Web site at http:// 

www.cms.gov/ERXIncentive. 

As in the 2010 eRx Incentive Program, 

we propose in 2011 that the eRx 

Incentive Program continue to be an 

incentive program in which 

determination of whether an EP is a 


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successful electronic prescriber will be 

made at the individual professional 

level, based on the NPI. Inasmuch as 

some individuals (identified by NPIs) 

may be associated with more than one 

practice or TIN, the determination of 

whether an EP is a successful electronic 

prescriber will be made to the holder of 

each unique TIN/NPI combination. 

Then, as in previous years, payment 

will be made to the applicable holder of 

the TIN. For 2011, the determination of 

whether an EP is a successful electronic 

prescriber will continue to be made for 

each unique TIN/NPI combination. 

However, section 1848(m)(3)(C) of the 

Act required the Secretary by January 1, 

2010 to establish and have in place a 

process under which EPs in a group 

practice (as defined by the Secretary) 

would be treated as meeting the 

requirements for submitting data on 

electronic prescribing quality measures 

for covered professional services for a 

reporting period (or, for purposes of the 

payment adjustment under section 

1848(a)(5) of the Act, for a reporting 

period for a year) if, in lieu of reporting 

the electronic prescribing measure, the 

group practice reports measures 

determined appropriate by the 

Secretary, such as measures that target 

high-cost chronic conditions and 

preventive care, in a form and manner, 

and at a time specified by the Secretary. 

Therefore, in addition to making 

incentive payments for 2011 to 

individual EPs based on separately 

analyzing whether the individual EPs 

are successful electronic prescribers, we 

propose to also make incentive 

payments to group practices based on 

the determination that the group 

practice, as a whole, is a successful 

electronic prescriber in accordance with 

section 1848(m)(3)(C) of the Act. 

b. The 2011 eRx Incentive 

(1) The 2011 Reporting Period for the 

eRx Incentive Program 

Section 1848(m)(6)(C)(i)(II) of the Act 

defines ‘‘reporting period’’ for the 2011 

eRx Incentive Program to be the entire 

year. Section 1848(m)(6)(C)(ii) of the 

Act, however, authorizes the Secretary 

to revise the reporting period if the 

Secretary determines such revision is 

appropriate, produces valid results on 

measures reported, and is consistent 

with the goals of maximizing scientific 

validity and reducing administrative 

burden. We propose the 2011 eRx 

Incentive Program reporting period to be 

the entire calendar year (January 1, 2011 

through December 31, 2011) based on 

the definition of ‘‘reporting period’’ 

specified under section 

1848(m)(6)(C)(i)(II) of the Act. We 

believe that keeping the 2011 eRx 

Incentive Program reporting period 

consistent with 2009 and 2010 eRx 

Incentive Program reporting periods 

will help to further maintain program 

stability and be less confusing for EPs. 

Accordingly, we propose that 

successful electronic prescribers would 

be eligible to receive an incentive 

payment equal to 1.0 percent of the total 

estimated allowed Medicare Part B 

charges (based on claims submitted by 

no later than February 28, 2012) for all 

covered professional services furnished 

January 1, 2011 through December 31, 

2011. 

(2) Proposed Criteria for Determination 

of Successful Electronic Prescriber for 

EPs 

Under section 1848(m)(3)(B) of the 

Act, in order to qualify for the incentive 

payment, an EP must be a ‘‘successful 

electronic prescriber,’’ which the 

Secretary is authorized to identify using 

1 of 2 possible criteria. One criterion, 

under section 1848(m)(3)(B)(ii) of the 

Act, is based on the EP’s reporting, in 

at least 50 percent of the reportable 

cases, on any electronic prescribing 

quality measures that have been 

established under the physician 

reporting system, under subsection 

1848(k) of the Act (which, as noted 

previously, we have named ‘‘PQRI’’ for 

ease of reference) and are applicable to 

services furnished by the EP during a 

reporting period. We applied this 

criterion in 2009. However, for years 

after 2009, section 1848(m)(3)(D) of the 

Act permits the Secretary in 

consultation with stakeholders and 

experts to revise the criteria for 

submitting data on electronic 

prescribing measures under section 

1848(m)(3)(B)(ii) of the Act. 

The second criterion, under section 

1848(m)(3)(B)(iii) of the Act, is based on 

the electronic submission by the EP of 

a sufficient number (as determined by 

the Secretary) of prescriptions under 

Part D during the reporting period. If the 

Secretary decides to use the latter 

standard, then, in accordance with 

section 1848(m)(3)(B)(iv) of the Act, the 

Secretary is authorized to use Part D 

drug claims data to assess whether a 

‘‘sufficient’’ number of prescriptions 

have been submitted by EPs. However, 

under section 1848(m)(3)(B)(i) of the 

Act, if the standard based on a sufficient 

number (as determined by the Secretary) 

of electronic Part D prescriptions is 

applied for a particular reporting period, 

then the standard based on the reporting 

on electronic prescribing measures 

would no longer apply. 

For 2011, we propose to continue to 

require EPs to report on the electronic 

prescribing measure used in the 2009 

and 2010 eRx Incentive Program to 

determine whether an EP is a successful 

electronic prescriber, but we are 

proposing to again use modified 

measure specifications and to use 

modified reporting criteria based on the 

authority provided under section 

1848(m)(3)(D) of Act, as discussed 

below. 

As we stated in prior years, we are 

still considering the use of a certain 

number of Part D prescribing events as 

the basis for the incentive payment. We 

propose to continue to require EPs to 

report on the electronic prescribing 

measure used in the 2009 and 2010 eRx 

Incentive Program because we believe 

that the accuracy and completeness of 

the Part D data with respect to whether 

a prescription was submitted 

electronically is unknown. In 2010, 

information on whether a prescription 

was submitted electronically by an 

individual EP began to be collected on 

the Part D claims and/or Prescription 

Drug Event (PDE) data. Also, since April 

1, 2009, prescription drug plan sponsors 

are required to send PDE data with an 

individual prescriber’s NPI. We 

currently have limited information on 

the accuracy and completeness of NPI 

data that is submitted with the PDE 

data. The NPI is needed in order for 

CMS to be able to link an EP’s PDE data 

to his or her Medicare Part B claims to 

calculate the incentive payment 

amount. During 2010, we continue to 

evaluate the adequacy of Part D data to 

determine the feasibility of its use for 

determining whether an EP qualifies as 

a successful electronic prescriber. The 

use of Part D data for correlation has not 

yet shown to be possible due to NPI and 

other issues. Part D data is supplied by 

the pharmacy and not the EP. We are in 

the process of writing and will publish 

an evaluation of the PQRI reporting 

experience. The experience report will 

include an evaluation of the eRx 

Incentive Program. 

(i) Reporting the Electronic Prescribing 

Measure 

For 2011, we propose to retain the 3 

reporting mechanisms available to 

individual EPs to report the electronic 

prescribing measure in 2010 to maintain 

program stability. First, we propose to 

again retain the claims-based reporting 

mechanism that is used in the 2009 and 

2010 eRx Incentive Program. In 

addition, similar to the PQRI, for the 

eRx Incentive Program, we propose to 

continue the registry-based reporting 

mechanism and, we also propose that 

the EHR-based reporting mechanism be 

available for the electronic prescribing 

measure for 2011. 


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We propose that only registries 

qualified to submit quality measure 

results and numerator and denominator 

data on quality measures on behalf of 

EPs for the 2011 PQRI would be 

qualified to submit measure results and 

numerator and denominator data on the 

electronic prescribing measure on behalf 

of EPs for the 2011 eRx Incentive 

Program. As in 2010, not all registries 

qualified to submit quality measures on 

behalf of EPs for the 2011 PQRI would 

be qualified to submit quality measures 

results and numerator and denominator 

data on the eRx measure. The electronic 

prescribing measure is reportable by an 

EP any time he or she bills for one of 

the procedure codes for Part B services 

included in the measure’s denominator. 

Some registries who self-nominate to 

become a qualified registry for PQRI 

may not choose to self-nominate to 

become a qualified registry for 

submitting measures that require 

reporting at each eligible visit. Registries 

need to indicate their desire to qualify 

to submit measure results and 

numerator and denominator data on the 

electronic prescribing measure for the 

2011 eRx Incentive program at the time 

that they submit their self-nomination 

letter for the 2011 PQRI. In addition, we 

propose that registries that want to be 

qualified to submit measure results and 

numerator and denominator data on the 

electronic prescribing measure for the 

2011 eRx Incentive Program would be 

required to transmit 2011 eRx measure 

results and numerator and denominator 

data on the electronic prescribing 

measure to CMS in two separate 

transmissions. In addition to submitting 

2011 measure results and numerator 

data on the electronic prescribing 

measure in 2012 as described in section 

VI.F.1. above, such registries would 

need to submit 2011 measure results 

and numerator and denominator data on 

the electronic prescribing measure 

between July 1, 2011 and August 19, 

2011 for purposes of the eRx penalty 

described in section VI.F.2.c. below. 

The self-nomination process and 

requirements for registries for the PQRI, 

which also would apply to the registries 

for the 2011 eRx Incentive Program, are 

discussed previously in section VI.F.1. 

of this proposed rule. We will post a 

final list of qualified registries for the 

2011 eRx Incentive Program on the 

Electronic Prescribing Incentive 

Program section of the CMS Web site at 

http://www.cms.gov/ERXIncentive when 

we post the final list of qualified 

registries for the 2011 PQRI on the PQRI 

section of the CMS Web site. 

Similarly, we continue to propose that 

only EHR products ‘‘qualified’’ to 

potentially be able to submit clinical 

quality data extracted from the EHR to 

CMS for the 2011 PQRI would be 

considered ‘‘qualified’’ for the purpose 

of an EP potentially being able to submit 

data on the electronic prescribing 

measure for the 2011 eRx Incentive 

Program. The self-nomination process 

and requirements for EHR vendors for 

the PQRI, which would apply to the 

EHR vendors for the 2011 eRx Incentive 

Program were discussed in the CY 2010 

PFS final rule with comment period (74 

FR 61801 through 61802). EHR vendors 

were required to indicate their desire to 

have one or more of their EHR products 

qualified for the purpose of an EP 

potentially being able to submit data on 

the electronic prescribing measure for 

the 2011 eRx Incentive Program at the 

time that they submitted their selfnomination letter for the 2011 PQRI. A 

list of qualified EHR vendors and their 

products (including the version that is 

qualified) for the 2011 eRx Incentive 

Program will be posted on the eRx 

Incentive Program section of the CMS 

Web site at http://www.cms.gov/ 

ERXIncentive when we post the list of 

qualified EHR products for the 2011 

PQRI on the PQRI section of the CMS 

Web site. We propose that EPs who 

want to use a qualified EHR to submit 

the electronic prescribing measure for 

the 2011 eRx Incentive Program would 

be required to transmit 2011 eRx data to 

CMS in two separate transmissions. In 

addition to submitting 2011 data on the 

electronic prescribing measure in 2012, 

as described in section VI.F.1. above, 

such EPs would need to submit 2011 

data on the electronic prescribing 

measure between July 1, 2011 and 

August 19, 2011 for purposes of the eRx 

penalty described in section VI.F.2.c. 

below. 

(ii) The Reporting Denominator for the 

Electronic Prescribing Measure 

The electronic prescribing measure, 

similar to the PQRI measures, has 2 

basic elements, which include: (1) A 

reporting denominator that defines the 

circumstances when the measure is 

reportable; and (2) a reporting 

numerator. 

The denominator for the electronic 

prescribing measure consists of specific 

billing codes for covered professional 

services. The measure becomes 

reportable when any one of these 

procedure codes is billed by an EP for 

Part B covered professional services. As 

initially required under section 

1848(k)(2)(A)(ii) of the Act, and further 

established through rulemaking and 

under section 1848(m)(2)(B) of the Act, 

we may modify the codes making up the 

denominator of the electronic 

prescribing measure. As such, we 

expanded the scope of the denominator 

codes for 2010 to covered professional 

services outside the professional office 

and outpatient setting, such as 

professional services furnished in 

skilled nursing facilities or the home 

care setting. 

We propose to retain the following 

CPT codes in the denominator of the 

electronic prescribing measure for 2011: 

90801, 90802, 90804, 90805, 90806, 

90807, 90808, 90809, 90862, 92002, 

92004, 92012, 92014, 96150, 96151, 

96152, 99201, 99202, 99203, 99204, 

99205, 99211, 99212, 99213, 99214, 

99215, 99304, 99305, 99306, 99307, 

99308, 99309, 99310, 99315, 99316, 

99324, 99325, 99326, 99327, 99328, 

99334, 99335, 99336, 99337, 99341, 

99342, 99343, 99344, 99345, 99347, 

99348, 99349, 99350, G0101, G0108, 

G0109. In 2010, the expansion of the 

electronic prescribing measure 

denominator was expected to provide 

more EPs the opportunity to report the 

measure, and thus, provide more 

opportunities for EPs to participate in 

the eRx Incentive Program. Thus far, our 

experience in the 2010 eRx Incentive 

Program has been positive and we do 

not see a need to change the 

denominator codes for 2011. We invite 

comments on our proposal to retain the 

denominator codes from the 2010 

electronic prescribing measure 

denominator. 

There are no diagnosis codes in the 

measure’s denominator and there are no 

age/gender requirements in order for a 

patient to be included in the measure’s 

denominator (that is, reporting of the 

electronic prescribing measure is not 

further limited to certain ages or a 

specific gender). EPs are not required to 

report this measure in all cases in which 

the measure is reportable. EPs who do 

not bill for one of the procedure codes 

for Part B covered professional services 

included in the measure’s denominator 

will have no occasion to report the 

electronic prescribing measure. 

We further propose that by December 

31, 2010, we will post the final 

specifications of the measure on the 

‘‘eRx Measure’’ page of the eRx Incentive 

Program section of the CMS Web site at 

http://www.cms.gov/ERXIncentive. 

(iii) Qualified Electronic Prescribing 

System—Required Functionalities and 

Part D eRx Standards 

To report the electronic prescribing 

measure in 2011, we again propose that 

the EP must report one of the measure’s 

numerator ‘‘G’’ codes, as will be 

discussed below. However, when 

reporting any of the G-codes for 

purposes of qualifying for the incentive 


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payment for electronic prescribing in 

2011, we propose that the professional 

must have and regularly use a 

‘‘qualified’’ electronic prescribing 

system, as defined in the electronic 

prescribing measure specifications. If 

the professional does not have general 

access to an eRx system in the practice 

setting, the EP does not have any data 

to report for purposes of the incentive 

payment. 

Required Functionalities for a 

‘‘Qualified’’ Electronic Prescriber 

System. 

For 2011, we propose to retain what 

constitutes a ‘‘qualified’’ electronic 

prescribing system as a system based 

upon certain required functionalities 

that the system can perform. We 

propose that for 2011, a ‘‘qualified’’ 

electronic prescribing system would be 

one that can— 

• Generate a complete active 

medication list incorporating electronic 

data received from applicable 

pharmacies and PBMs, if available. 

• Allow EPs to select medications, 

print prescriptions, electronically 

transmit prescriptions, and conduct 

alerts (written or acoustic signals to 

warn the prescriber of possible 

undesirable or unsafe situations 

including potentially inappropriate dose 

or route of administration of a drug, 

drug-drug interactions, allergy concerns, 

or warnings and cautions). This 

functionality must be enabled. 

• Provide information related to 

lower cost, therapeutically appropriate 

alternatives (if any). The ability of an 

electronic prescribing system to receive 

tiered formulary information, if 

available, would again suffice for this 

requirement for 2011 and until this 

function is more widely available in the 

marketplace. 

• Provide information on formulary 

or tiered formulary medications, patient 

eligibility, and authorization 

requirements received electronically 

from the patient’s drug plan (if 

available). 

Part D Electronic Prescribing 

Standards. Section 1848(m)(3)(B)(v) of 

the Act specifies that to the extent 

practicable, in determining whether an 

EP is a successful electronic prescriber, 

‘‘the Secretary shall ensure that EPs 

utilize electronic prescribing systems in 

compliance with standards established 

for such systems pursuant to the Part D 

Electronic Prescribing Program under 

section 1860D–4(e)’’ of the Act. The Part 

D standards for electronic prescribing 

systems establish which electronic 

standards Part D sponsors, providers, 

and dispensers must use when they 

electronically transmit prescriptions 

and certain prescription related 

information for Part D covered drugs 

that are prescribed for Part D eligible 

individuals. To be a qualified electronic 

prescribing system under the current 

eRx Incentive Program, electronic 

systems must convey the information 

listed above under (a) through (d) using 

the standards currently in effect for the 

Part D electronic prescribing program. 

Additional Part D electronic prescribing 

standards were implemented April 1, 

2009. These latest Part D electronic 

prescribing standards, and those that 

had previously been adopted, can be 

found on the CMS Web site at http:// 

www.cms.gov/eprescribing. 

To ensure that EPs utilize electronic 

prescribing systems that meet these 

requirements, the electronic prescribing 

measure requires that those 

functionalities required for a ‘‘qualified’’ 

electronic prescribing system utilize the 

adopted Part D electronic prescribing 

standards. The Part D electronic 

prescribing standards relevant to the 

four functionalities for a ‘‘qualified’’ 

system in the electronic prescribing 

measure described above and listed as 

(a), (b), (c), and (d), currently are as 

follows: 

(a) Generate medication list—Use the 

National Council for Prescription Drug 

Programs (NCPDP) Prescriber/ 

Pharmacist Interface SCRIPT Standard, 

Implementation Guide, Version 8, 

Release 1, October 2005 (hereinafter 

‘‘NCPDP SCRIPT 8.1’’) Medication 

History Standard. 

(b) Transmit prescriptions 

electronically—Use the NCPDP SCRIPT 

8.1 for the transactions listed at 

§ 423.160(b)(2). 

(c) Provide information on lower cost 

alternatives—Use the NCPDP Formulary 

and Benefits Standard, Implementation 

Guide, Version 1, Release 0 (Version 

1.0), October 2005 (hereinafter ‘‘NCPDP 

Formulary and Benefits 1.0’’). 

(d) Provide information on formulary 

or tiered formulary medications, patient 

eligibility, and authorization 

requirements received electronically 

from the patient’s drug plan—use— 

(1) NCPDP Formulary and Benefits 1.0 

for communicating formulary and 

benefits information between 

prescribers and plans; 

(2) Accredited Standards Committee 

(ASC) X12N 270/271–Health Care 

Eligibility Benefit Inquiry and Response, 

Version 4010, May 2000, Washington 

Publishing Company, 004010X092 and 

Addenda to Health Care Eligibility 

Benefit Inquiry and Response, Version 

4010A1, October 2002, Washington 

Publishing Company, 004010X092A1 

for communicating eligibility 

information between the plan and 

prescribers; and 

(3) NCPDP Telecommunication 

Standard Specification, Version 5, 

Release 1 (Version 5.1), September 1999, 

and equivalent NCPDP Batch Standard 

Batch Implementation Guide, Version 1, 

Release 1 (Version 1.1), January 2000 for 

communicating eligibility information 

between the plan and dispensers. 

However, there are Part D electronic 

prescribing standards that are in effect 

for functionalities that are not 

commonly utilized at this time. Such 

functionalities are not currently 

required for a ‘‘qualified’’ system under 

the eRx Incentive Program. One 

example is Rx Fill Notification, which is 

discussed in the Part D electronic 

prescribing final rule (73 FR 18918, 

18926). For purposes of the 2011 

Electronic Prescribing Program, we 

again are not proposing to require that 

an electronic prescribing system contain 

all functionalities for which there are 

available Part D electronic prescribing 

standards. For those required 

functionalities described above, we 

propose that a ‘‘qualified’’ system must 

use the adopted Part D electronic 

prescribing standards for electronic 

messaging. 

There are other aspects of the 

functionalities for a ‘‘qualified’’ system 

that are not dependent on electronic 

messaging and are part of the software 

of the electronic prescribing system, for 

which Part D standards for electronic 

prescribing do not pertain and are not 

required for purposes of the eRx 

Incentive Program. For example, the 

requirements in qualification (b) listed 

above that require the system to allow 

professionals to select medications, 

print prescriptions, and conduct alerts 

are functions included in the particular 

software, for which Part D standards for 

electronic messaging do not apply. 

We are aware that there are significant 

numbers of EPs who are interested in 

participating in the eRx Incentive 

Program, but currently do not have an 

electronic prescribing system. The 

electronic prescribing measure does not 

require the use of any particular system 

or transmission network; only that the 

system be a ‘‘qualified’’ system having 

the functionalities described above 

based on Part D electronic prescribing 

standards. As in 2010, if the 

professional does not have general 

access to an electronic prescribing 

system in the practice setting, the EP 

does not have any data to report for 

purposes of the incentive payment and 

would not be able to participate in the 

2011 eRx Incentive Program. If an EP 

does not participate in the 2011 eRx 

Incentive Program he or she may be 

subject to the 2012 eRx penalty 


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discussed in section VI.F.2.c. of this 

proposed rule. 

(iv) The Reporting Numerator for the 

Electronic Prescribing Measure 

The proposed criteria for reporting for 

purposes of being a 2011 successful 

electronic prescriber are designed to 

reward those EPs who demonstrate that 

they have adopted a qualified electronic 

prescribing system and actually used 

the system in a substantial way to 

electronically prescribe. In this context, 

the reporting of information in 

circumstances where a professional did 

not electronically prescribe is not 

pertinent. Additionally, although it may 

be of interest to measure the proportion 

of prescribing events that are electronic, 

we do not believe such detail at the 

individual or group practice level is of 

sufficient value to warrant the high 

burden of reporting such information. 

We do note that in the future the use of 

Part D claims data may allow this 

information to be collected without the 

necessity for professionals to 

specifically report such details. 

Accordingly, for the 2011 electronic 

prescribing measure, we propose to 

retain the following numerator G-code 

from the 2010 electronic prescribing 

measure’s numerator: G8553 (At least 1 

prescription created during the 

encounter was generated and 

transmitted electronically using a 

qualified electronic prescribing system.) 

We propose to post the final 2011 

electronic prescribing measure 

specifications on the ‘‘eRx Measure’’ 

page of the eRx Incentive Program 

section of the CMS Web site at http:// 

www.cms.gov/ERXIncentive. We 

propose to post the final 2011 electronic 

prescribing measure specifications by 

no later than December 31, 2010. 

Because the electronic prescribing 

quality measure will apply only when 

an EP furnishes services indicated by 

one of the codes included in the 

measure’s denominator, for claimsbased reporting, for example, it will not 

be necessary for an EP to report G-codes 

for the electronic prescribing measure 

on claims not containing one of the 

denominator codes. However, if 

reporting a G-code, the G-code data 

submission will only be considered 

valid if it appears on the same Medicare 

Part B claim containing one of the 

electronic prescribing quality measure’s 

denominator codes. 

In addition, if the EP submits a 

Medicare Part B claim containing one of 

the electronic prescribing measure’s 

denominator codes, he or she can report 

the numerator G-code only when the EP 

furnishes services indicated by the Gcode included in the measure’s 

numerator. That is, only when at least 

1 prescription created during the 

encounter is generated and transmitted 

electronically using a qualified 

electronic prescribing system. 

(v) Criteria for Successful Reporting of 

the Electronic Prescribing Measure 

As discussed above, section 

1848(m)(3)(D) of the Act authorizes the 

Secretary to revise the criteria for 

submitting data on the electronic 

prescribing measure from the criteria 

specified under section 1848(m)(3)(B)(ii) 

of the Act, which requires the measure 

to be reported in at least 50 percent of 

the cases in which the measure is 

reportable. In 2010, we revised the 

criteria for successful electronic 

prescriber such that an EP shall be 

treated as a successful electronic 

prescriber for a reporting period based 

on the EP’s reporting of the electronic 

prescribing measure by generating and 

reporting one or more prescriptions 

associated with a patient visit 

electronically, a minimum of 25 unique 

visits per year in 2010 of applicable 

cases in the denominator of the eRx 

measure. For 2011, we again propose to 

make the determination of whether an 

EP is a successful electronic prescriber 

based on a count of the number of times 

(minimum threshold of 25) an EP 

reports that at least one prescription 

created during the encounter is 

generated using a qualified electronic 

prescribing system (that is, reports the 

G8553 code). 

As in 2010, we believe these criteria 

will bring us closer to our intention to 

transition to using a certain number of 

electronic Part D prescribing events as 

the basis for the incentive payment in 

future years. In proposing these criteria 

again for 2011 eRx, we continue to 

assume that once an EP has invested in 

an eRx system, integrated the use of the 

eRx system into the practice’s work 

flows, and has used the system to some 

extent, he or she is likely to continue to 

use the eRx system for most of the 

prescriptions he or she generates. 

For structural measures such as the 

electronic prescribing measure, once an 

EP has demonstrated that he or she has 

integrated use of an eRx system into his 

or her practice’s work flow, we believe 

that requiring the EP to continue to 

report the measure represents an 

administrative burden with little added 

benefit to the reliability and validity of 

the data being reporting. In contrast, for 

clinical quality measures, we believe 

that the reliability and validity of the 

performance rates depends on the 

adequacy of the sample. Therefore, we 

propose that an EP would be required to 

report that at least 1 prescription for a 

Medicare Part B FFS patient created 

during an encounter that is represented 

by 1 of the codes in the denominator of 

the electronic prescribing measure was 

generated and transmitted electronically 

using a qualified eRx system for at least 

25 times during the 2011 reporting 

period. 

The reporting threshold of 25 also 

takes into consideration that 

prescriptions are not generated with 

every Medicare Part B FFS patient 

encounter, some prescriptions, such as 

narcotics, cannot be prescribed 

electronically, and that not all Medicare 

Part B FFS encounters are represented 

by the electronic prescribing measure’s 

denominator codes. 

As stated previously, we propose that 

by December 31, 2010, we will post the 

final specifications of the measure on 

the ‘‘eRx Measure’’ page of the eRx 

Incentive Program section of the CMS 

Web site at http://www.cms.gov/ 

ERXIncentive. 

(3) Determination of the 2011 Incentive 

Payment Amount for Individual EPs 

Who Are Successful Electronic 

Prescribers 

Section 1848(m)(2)(B) of the Act 

imposes a limitation on the electronic 

prescribing incentive payment. The 

Secretary is authorized to choose 1 of 2 

possible criteria for determining 

whether or not the limitation applies to 

a successful electronic prescriber. The 

first criterion, under section 

1848(m)(2)(B)(i) of the Act, is based 

upon whether the Medicare Part B 

allowed charges for covered 

professional services to which the 

electronic prescribing quality measure 

applies are less than 10 percent of the 

total Medicare Part B PFS allowed 

charges for all covered professional 

services furnished by the EP during the 

reporting period. The second criterion, 

under section 1848(m)(2)(B)(ii) of the 

Act, is based on whether the EP submits 

(both electronically and nonelectronically) a sufficient number (as 

determined by the Secretary) of 

prescriptions under Part D (which can, 

again, be assessed using Part D drug 

claims data). If the Secretary decides to 

use the latter criterion, then, in 

accordance with section 1848(m)(2)(B) 

of the Act, the criterion based on the 

reporting on electronic prescribing 

measures would no longer apply. The 

statutory limitation also applies with 

regard to the application of the payment 

adjustment. 

Based on our proposal to make the 

determination of whether an EP is a 

‘‘successful electronic prescriber’’ based 

on submission of the electronic 

prescribing measure, we propose to 


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again apply the criterion under section 

1848(m)(2)(B)(i) of the Act for the 

limitation for the 2011 eRx Incentive 

Program. 

Since, as discussed above, we are 

retaining for 2011 our proposal to make 

the determination of whether an EP is 

a ‘‘successful electronic prescriber’’ 

based on submission of the electronic 

prescribing measure, we also are 

proposing to retain the requirement to 

analyze the claims submitted by the EP 

at the TIN/NPI level to determine 

whether the 10 percent threshold is met 

in determining the receipt of an 

electronic prescribing incentive 

payment for 2011 by an EP. This 

calculation is expected to take place in 

the first quarter of 2012 and will be 

performed by dividing the EP’s total 

2011 Medicare Part B PFS allowed 

charges for all such covered professional 

services submitted for the measure’s 

denominator codes by the EP’s total 

Medicare Part B PFS allowed charges for 

all covered professional services (as 

assessed at the TIN/NPI level). If the 

result is 10 percent or more, then the 

statutory limitation will not apply and 

a successful electronic prescriber will 

qualify to earn the electronic prescribing 

incentive payment. If the result is less 

than 10 percent, then the statutory 

limitation will apply and the EP will not 

earn an electronic prescribing incentive 

payment even if he or she electronically 

prescribes and reports a G-code 

indicating that he or she generated and 

transmitted a prescription electronically 

at least 25 times for those eligible cases 

that occur during the 2011 reporting 

period. Although an individual EP may 

decide to conduct his or her own 

assessment of how likely this statutory 

limitation is expected to apply to him or 

her before deciding whether or not to 

report the electronic prescribing 

measure, an individual EP may report 

the electronic prescribing measure 

without regard to the statutory 

limitation for the incentive payment. 

(4) Proposed Reporting Option for 

Satisfactory Reporting of the Electronic 

Prescribing Measure by Group Practices 

In 2010 eRx Incentive Program, we 

were required by section 1848(m)(3)(C) 

of the Act to establish a process under 

which EPs in a group practice shall be 

treated as a successful electronic 

prescriber. In addition, section 

1848(m)(3)(C)(iii) of the Act requires 

that payments to a group practice by 

reason of the process established under 

section 1848(m)(3)(C)(i) of the Act shall 

be in lieu of the payments that would 

otherwise be made under this 

subsection to EPs in the group practice 

for being a successful electronic 

prescriber. In 2011, we propose to retain 

the requirements from 2010 eRx 

Incentive Program with respect to 

making incentive payments to group 

practices based on the determination 

that the group practice, as a whole, is a 

successful electronic prescriber for 

2011. An individual EP who is affiliated 

with a group practice participating in 

the group practice reporting option that 

successfully meets the proposed 

requirements for group practices would 

not be eligible to earn a separate eRx 

incentive payment for 2011 on the basis 

of his or her successfully reporting the 

electronic prescribing measure at the 

individual level. 

(i) Definition of ‘‘Group Practice’’ 

Section 1848(m)(3)(C)(i) of the Act 

authorizes the Secretary to define 

‘‘group practice.’’ For purposes of 

determining whether a group practice is 

a successful electronic prescriber for 

2011, we propose that consistent with 

the definition of group practice 

proposed for the PQRI group practice 

reporting option (GPRO) discussed in 

section VI.F.1. of this proposed rule, a 

‘‘group practice’’ would be defined as a 

single Taxpayer Identification Number 

(TIN) with 2 or more EPs, as identified 

by their individual National Provider 

Identifier (NPI), who have reassigned 

their Medicare billing rights to the TIN. 

‘‘Group practice’’ would also include 

group practices participating in 

Medicare demonstration projects 

approved by the Secretary, as described 

in section VI.F.1.g.(2) of this proposed 

rule. 

In addition, we propose to restrict 

participation in the 2011 eRx GPRO to 

group practices participating in the 2011 

PQRI GPRO (either through GPRO I or 

GPRO II) or group practices that are 

deemed to be participating in the 2011 

PQRI GPRO (that is, group practices 

participating in a CMS-approved 

Medicare demonstration) that have 

indicated their desire to participate in 

the 2011 eRx GPRO. 

Therefore, unlike individual EPs who 

are not required to participate in the 

PQRI, to be eligible to earn an electronic 

prescribing incentive in 2011, group 

practices that wish to participate in the 

electronic prescribing group practice 

reporting option will be required to 

participate in the PQRI group practice 

reporting option or be deemed to be 

participating in the PQRI group practice 

reporting option based on the practice’s 

participation in an approved Medicare 

demonstration project. Participation in 

the eRx Incentive Program, including 

participation in the electronic 

prescribing group practice reporting 

option is, however, optional for group 

practices that are participating in PQRI 

under the group practice reporting 

option. If a group practice wishes to 

participate in the 2011 eRx Incentive 

Program under the group practice 

reporting option, it must indicate its 

desire to do so at the time that the group 

practice self-nominates to participate in 

the 2011 PQRI group practice reporting 

option. There is no need for group 

practices to indicate their intent to 

participate in the 2011 eRx Incentive 

Program as individual EPs when the 

group practice self-nominates to 

participate in the 2011 PQRI group 

practice reporting option. 

Group practices interested in 

participating in the 2011 PQRI through 

the group practice reporting option will 

be required to submit a self-nomination 

letter to CMS, requesting to participate 

in the 2011 PQRI group practice 

reporting option. Instructions for 

submitting the self-nomination letter 

will be posted on the PQRI section of 

the CMS Web site by November 15, 

2010. A group practice that wishes to 

participate in the eRx Incentive Program 

group practice reporting option will be 

notified of the selection decision to 

participate in the eRx Incentive Program 

at the same time that it is notified of the 

selection decision for the PQRI group 

practice reporting option. 

In addition to meeting the proposed 

eligibility requirements discussed in 

section VI.F.1.g. of this proposed rule, 

we propose that a group practice that 

wishes to participate in the 2011 eRx 

Incentive Program under the group 

practice reporting option will also have 

to indicate how it intends to report the 

electronic prescribing measure. That is, 

the group practice will need to indicate 

in its self-nomination letter which 

reporting mechanism the group practice 

intends to use for purposes of 

participating in the 2011 eRx Incentive 

Program group practice reporting 

option. 

(2) Process for Group Practices to 

Participate as Group Practices and 

Criteria for Successful Reporting of the 

Electronic Prescribing Measure by 

Group Practices 

For group practices selected to 

participate in the electronic prescribing 

group practice reporting option for 

2011, we propose the reporting period 

would be January 1, 2011, to December 

31, 2011. 

We propose that physician groups 

selected to participate in the 2011 eRx 

Incentive Program through the group 

practice reporting option would be able 

to choose to report the electronic 

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based, the registry-based, or, the EHRbased reporting mechanism. 

In order for a group practice 

participating in the PQRI GPRO I to be 

considered a successful electronic 

prescriber, we propose that the group 

practice would have to report that at 

least 1 prescription during an encounter 

was generated and transmitted 

electronically using a qualified 

electronic prescribing system in at least 

2,500 instances during the reporting 

period. In order for a group practice 

participating in the PQRI GPRO II to be 

considered a successful electronic 

prescriber, we propose that the group 

practice would have to report that at 

least 1 prescription during an encounter 

was generated and transmitted 

electronically using a qualified 

electronic prescribing system for the 

number of instances specified in Table 

50 (see section VI.F.1.g.(3).(ii). of this 

proposed rule). In other words, a group 

of 2–10 NPIs would need to report the 

2011 electronic prescribing measure for 

at least 75 denominator eligible patient 

encounters during 2011, 225 instances 

for groups of 11–25 NPIs, 475 instances 

for groups of 26–50 NPIs, 925 instances 

for groups of 51–100, and 1,875 

instances for groups of 101–199. 

Section 1848(m)(2)(B) of the Act 

specifies that the limitation on the 

applicability of the electronic 

prescribing incentive applies to group 

practices as well as individual EPs. 

Therefore, in determining whether a 

group practice will receive an electronic 

prescribing incentive payment for 2011 

by meeting the proposed reporting 

criteria described above, we would 

determine whether the 10 percent 

threshold is met based on the claims 

submitted by the group practice. 

This calculation is expected to take 

place in the first quarter of 2012 and 

will be determined by dividing the 

group practice’s total 2011 Medicare 

Part B PFS allowed charges for all 

covered professional services submitted 

for the measure’s denominator codes by 

the group practice’s total Medicare Part 

B PFS allowed charges for all covered 

professional services. If the result is 10 

percent or more, then the statutory 

limitation would not apply and a group 

practice that is determined to be a 

successful electronic prescriber would 

qualify to earn the electronic prescribing 

incentive payment. If the result is less 

than 10 percent, then the statutory 

limitation would apply and the group 

practice would not qualify to earn the 

electronic prescribing incentive 

payment. 

c. The 2012 eRx Penalty 

As stated previously, section 

1848(a)(5) of the Act requires that 

beginning with respect to covered 

professional services furnished by an EP 

in 2012, if the EP is not a successful 

electronic prescriber for the reporting 

period for the year, the fee schedule 

amount for such services furnished by 

such professional during 2012 shall be 

equal to 99 percent of the fee schedule 

amount that would otherwise apply to 

such PFS services. As noted previously, 

we do not believe that the criteria that 

will be used to determine the 

applicability of the payment adjustment, 

or penalty, for 2012 need to be identical 

to the criteria for determination of 

successful electronic prescriber. 

We note also that although earning an 

incentive payment under the EHR 

incentive payment program precludes 

an EP from earning an eRx incentive 

payment, it does not preclude the EP 

from being subject to the eRx penalty. In 

order to avoid the eRx penalty, an EP 

participating in the Medicare EHR 

incentive program still must meet the 

relevant eRx penalty criteria for being a 

successful electronic prescriber. 

(1) The eRx Penalty Reporting Period 

For purposes of the 2012 eRx penalty, 

we propose to make a determination of 

whether an EP or a group practice is a 

successful electronic prescriber based 

on the reporting period that begins 

January 1, 2011 through June 30, 2011. 

We are proposing a 6-month reporting 

period for the 2012 penalty rather than 

a 12-month reporting period so that we 

may be able to complete the analysis of 

2011 data to determine whether an EP 

or group practice is a successful 

electronic prescriber prior to January 1, 

2012. In order to apply the penalty in 

2012 concurrently with claims 

submission, we will need to make a 

determination of whether the penalty 

applies sufficiently in advance of 2012. 

We believe that establishing a 6-month 

reporting period for the first year of the 

penalty will provide administrative 

efficiencies and avoid the need to apply 

a retroactive penalty or to make 

retroactive payments based on 

application of a penalty. 

For EPs and group practices using the 

claims-based reporting mechanism, we 

propose that all claims for services 

furnished between January 1, 2011 and 

June 30, 2011 must be processed by no 

later than July 31, 2011 for the claim to 

be included in our data analysis. This is 

in contrast to the incentive, where we 

allow 2 months for claims to be 

processed. In order to be able to make 

a determination of whether the penalty 

applies sufficiently in advance of 2012, 

we will need to begin our analysis of the 

claims shortly after June 30, 2011. We 

invite comments on the proposed 

reporting period for the 2012 penalty 

and our proposal to require claims to be 

submitted by no later than 1 month after 

the reporting period. 

(2) Criteria for Determining 

Applicability of the 2012 eRx Penalty to 

Individual EPs 

Based on the authority under section 

1848(m)(3)(D) of the Act, we propose 

that the 2012 eRx penalty would apply 

to an individual EP unless one of the 

following conditions is met: 

• The EP is not a physician (includes 

MDs, DOs, and podiatrists), nurse 

practitioner, or physician assistant as of 

June 30, 2011. We believe that it is 

appropriate to limit the application of 

the penalty to those professionals who 

generally have prescribing privileges 

nationwide. Other EPs not listed above 

may have prescribing privileges in some 

states but not others. Therefore, we 

propose to exempt EPs who do not 

generally have prescribing privileges 

from being subject to the penalty. 

• The EP does not have at least 100 

cases (that is, claims for patient 

services) containing an encounter code 

that falls within the denominator of the 

eRx measure for dates of service 

between January 1, 2011 through June 

30, 2011. We seek to apply the penalty 

only to EPs who have a sufficient 

number of cases between January 1, 

2011 and June 30, 2011 to meet the 

criteria for successful electronic 

prescribing for purposes of the penalty. 

We believe that, on average, for every 10 

eligible cases, there will be at least one 

electronic prescribing opportunity, 

which provides a sufficient number of 

cases to allow EPs to meet the criteria 

for being a successful electronic 

prescriber. In addition, we seek to 

prevent EPs who are new to Medicare 

from being subject to the eRx penalty. 

• The EP is a successful electronic 

prescriber for the January 1, 2011 

through June 30, 2011 reporting period. 

Specifically, we propose that the EP 

must report that at least 1 prescription 

for Medicare Part B FFS patients created 

during an encounter that is represented 

by 1 of the codes in the denominator of 

the 2011 electronic prescribing measure 

was generated and transmitted 

electronically using a qualified eRx 

system at least 10 times during the 2012 

eRx penalty reporting period (that is, 

January 1, 2011 through June 30, 2011). 

We propose reporting criteria that are 

lower for the 2012 eRx penalty than for 

the 2011 eRx incentive because EPs will 

only have 6 months to satisfy the 


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criteria for the 2012 penalty but have a 

full year to satisfy the criteria for the 

2011 incentive. 

The limitation with respect to the 

electronic prescribing measures 

required under section 1848(m)(2)(B)(i) 

of the Act also applies to the penalty. 

Therefore, we propose that if less than 

10 percent of the EP’s estimated total 

allowed charges for the January 1, 2011 

through June 30,2011 reporting period 

are comprised of services which appear 

in the denominator of the 2011 

electronic prescribing measure, then the 

EP would not be subject to the eRx 

penalty. 

We invite comments on the proposed 

conditions under which we would 

prospectively apply the 1.0 percent 

reduction in PFS charges for services 

furnished January 1, 2012 through 

December 31, 2012. We specifically 

invite comments on our proposals to 

exempt certain types of EPs and EPs 

who do not have a certain number of 

cases from the penalty as well as the 

proposed criteria for successful 

reporting of the electronic prescribing 

measure for individual EPs with respect 

to the penalty. 

As with the 2011 incentive payment, 

we propose that the determination of 

whether an EP is subject to the penalty 

will be made at the individual 

professional level, based on the NPI and 

for each unique TIN/NPI combination. 

(3) Criteria for Determining 

Applicability of the 2012 eRx Penalty to 

Group Practices 

As required by section 1848(m)(3)(C) 

of the Act, we are also required to 

establish and have in place a process 

under which EPs in a group practice 

shall be treated as a successful 

electronic prescriber for purposes of the 

eRx penalty. Thus, we propose that for 

purposes of the 2012 eRx penalty, a 

payment adjustment would not be 

applied to a a group practice 

participating in the 2011 eRx GPRO if 

the group practice is participating in 

either the 2011 PQRI GPRO I or the 2011 

PQRI GPRO II and meets the proposed 

2011 criteria for successful electronic 

prescribing described in sections 

VI.F.2.b.(4).(ii). (with respect to the eRx 

requirements for GPRO I participants 

who wish to participate in the 2011 eRx 

GPRO) and VI.F.1.g.(3).(ii). of the 

preamble to this proposed rule (with 

respect to the eRx requirements for 

GPRO II participants who wish to 

participate in the 2011 eRx GPRO) for 

the 2011 eRx incentive. 

For purposes of the 2012 eRx penalty, 

we propose that the proposed 2011 

criteria for successful electronic 

prescribing would need to be satisfied 

during the 2012 eRx penalty reporting 

period of January 1, 2011 through June 

30, 2011 for the same operational 

reasons that we are proposing a 6-month 

reporting period for the penalty for 

individual EPs. Furthermore, we do not 

believe that group practices would be 

disadvantaged by having to satisfy the 

proposed criteria for being a successful 

electronic prescriber for the 2011 

incentive in 6 months rather than 12 

months to avoid the penalty. When 

compared to the criteria for individual 

EPs, the proposed criteria for being a 

successful electronic prescriber for the 

2011 eRx incentive payment for group 

practices enable group practices, on 

average, to earn the incentive by 

electronically prescribing a fewer 

number of prescriptions per EP than 

what individual EPs are required to do. 

For purposes of determining whether 

the eRx penalty applies to a group 

practice, we propose to conduct our 

analysis for each unique TIN/NPI 

combination so as not to disadvantage 

EPs who may have joined the group 

practice after January 1, 2011. 

In addition, in accordance with 

section 1848(m)(2)(B)(i) of the Act, we 

also propose that the 2012 eRx penalty 

would not apply to an eRx GPRO in 

which less than 10 percent of the group 

practice’s estimated total allowed 

charges for the January 1, 2011 through 

June 30, 2011 reporting period are 

comprised of services which appear in 

the denominator of the 2011 electronic 

prescribing measure. To be consistent 

with how this limitation is applied to 

group practices for purposes of the 

incentive, we propose to determine 

whether this limitation applies to a 

group practice for the penalty at the TIN 

level. 

For the same reasons that we are 

proposing a 6-month reporting period 

for the 2012 eRx penalty for group 

practices, we also propose that we will 

use only claims processed by July 31, 

2011 in our analysis. This is consistent 

with our proposed approach for 

analyzing individual EP claims. 

Similarly, we propose that registries 

would need to submit eRx data for 

services furnished January 1, 2011 

through June 30, 2011 to CMS between 

July 1, 2011 and August 19, 2011 so that 

we may include registry data in our 

analysis. We propose also that group 

practices participating in the eRx group 

practice reporting option via EHR-based 

reporting would be required to submit 

eRx data for services furnished January 

1, 2011 through June 30, 2011 to CMS 

between July 1, 2011 and August 19, 

2011. 

We invite comments on the proposed 

criteria for determining applicability of 

the 2012 eRx penalty to group practices, 

including the proposed criteria for 

successful reporting of the electronic 

prescribing measure for group practices, 

and our proposed analytical approach. 

(4) Significant Hardship Exemption 

Section 1848(a)(5)(B) of the Act 

provides that the Secretary may, on a 

case-by-case basis, exempt an EP from 

the application of the payment 

adjustment, or penalty, if the Secretary 

determines, subject to annual renewal, 

that compliance with the requirement 

for being a successful electronic 

prescriber would result in a significant 

hardship, such in the case of an EP who 

practices in a rural area without 

sufficient Internet access. Therefore, we 

propose that in addition to meeting the 

criteria for successful electronic 

prescriber described in sections 

VI.F.2.(c).(2) and VI.F.2.(c).(3) of the 

preamble to this proposed rule, an EP or 

group practice may also be exempt from 

application of the 2012 eRx penalty, if 

during the 2012 eRx penalty reporting 

period (that is, January 1, 2011 through 

June 30, 2011), one of the following 

circumstances applies to the EP or 

group practice: 

• The EP or group practice practices 

in a rural area with limited high speed 

Internet access. 

• The EP or group practice practices 

in an area with limited available 

pharmacies for electronic prescribing. 

We propose to add two additional ‘‘G’’ 

codes to the 2011 electronic prescribing 

measure’s specifications describing 

these 2 circumstances. EPs or group 

practices to whom one or more of these 

circumstances apply would be required 

to report the appropriate G-code at least 

once between January 1, 2011 and June 

30, 2011 using their selected 2011 eRx 

reporting mechanism. Reporting of one 

of these two G-codes prior to June 30, 

2011 will indicate to us that the EP or 

group practice would like to be 

considered for an exemption from the 

2012 penalty under the significant 

hardship exception. We invite 

comments on the proposed process for 

the significant hardship exception as 

well as comments regarding other 

circumstances that should be 

considered a significant hardship. 

d. The 2013 eRx Penalty 

Section 1848(a)(5) of the Act also 

requires that with respect to covered 

professional services furnished by an EP 

in 2013, if the EP is not a successful 

electronic prescriber for the reporting 

period for the year, the fee schedule 

amount for such services furnished by 

such professional during 2013 shall be 

equal to 98.5 percent of the fee schedule 


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amount that would otherwise apply to 

such PFS services. Under section 

1848(m)(3)(C) of the Act, we are also 

required to establish and have in place 

a process under which EPs in a group 

practice shall be treated as a successful 

electronic prescriber for purposes of the 

eRx penalty. 

For purposes of the 2013 eRx penalty, 

we propose to use the proposed 2011 

criteria for successful electronic 

prescriber to determine whether an EP 

or a group practice is a successful 

electronic prescriber for purposes of the 

2013 eRx penalty. In addition, we 

propose that the reporting period for the 

2013 eRx penalty would be the 2011 

eRx incentive reporting period of 

January 1, 2011 through December 31, 

2011. We believe that matching the 

criteria that will be applied for the 2013 

penalty with the criteria that will be 

applied for the incentive in an earlier 

year would be the most effective means 

of encouraging EPs and group practices 

to adopt and use electronic prescribing 

systems since anyone who does not 

qualify for an incentive in 2011 would 

be subject to a payment adjustment in 

2013. We invite comments on this 

proposal. 

e. Public Reporting of Names of 

Successful Electronic Prescribers 

Section 1848(m)(5)(G) of the Act 

requires the Secretary to post on the 

CMS Web site, in an easily 

understandable format, a list of the 

names of EPs (or group practices) who 

satisfactorily submit data on quality 

measures for the PQRI and the names of 

the EPs (or group practices) who are 

successful electronic prescribers. As 

required by section 1848(m)(5)(G) of the 

Act, we are proposing to make public 

the names of EPs and group practices 

who are successful electronic 

prescribers for the 2011 eRx Incentive 

Program on the Physician Compare Web 

site that we are required to establish by 

January 1, 2011 under section 10331 of 

the ACA. As stated under section 

VI.F.1.k. of this proposed rule, we plan 

to use the existing Physician and Other 

Health Care Professionals directory as 

the foundation for the Physician 

Compare Web site. 

We anticipate that the names of 

individual EPs and group practices who 

are successful electronic prescribers for 

the 2011 eRx Incentive Program will be 

available in 2012 after the 2011 

incentive payments are paid. 

To comply with section 1848(m)(5)(G) 

of the Act, we specifically propose to 

post the names of individual EPs who 

report the electronic prescribing 

measure at least 25 times during the 

2011 reporting period for patient 

encounters included in the measure’s 

denominator, without regard to whether 

the limitation under section 

1848(m)(2)(B) of the Act applies to the 

EP and without regard to whether the 

EP actually qualifies to earn an 

incentive payment. In addition, since 

the PQRI and the eRx Incentive Program 

are two separate incentive programs and 

individual EPs are not required to 

participate in both programs to earn an 

incentive under either program, we 

point out that it is possible for an EP 

who participates in both incentive 

programs to be listed both as an 

individual EP who satisfactorily submits 

data on quality measures for the PQRI 

and is a successful electronic prescriber 

under the eRx Incentive Program. 

Likewise, an individual EP may be 

listed as an individual EP who 

satisfactorily submits data on quality 

measures for the PQRI but not as a 

successful electronic prescriber under 

the eRx Incentive Program (or vice 

versa) even if he or she participated in 

both incentive programs. 

Similarly, for purposes of publicly 

reporting the names of group practices, 

on the Physician Compare Web site, we 

intend to post the names of group 

practices that report the electronic 

prescribing measure the required 

number of times during the 2011 

reporting period for patient encounters 

included in the measure’s denominator 

without regard to whether the limitation 

under section 1848(m)(2)(B) of the Act 

applies to the group practice or whether 

the group practice actually qualifies to 

earn an incentive payment. Although 

any group practice participating in the 

eRx Incentive Program under the group 

practice reporting option would also 

have to participate in a PQRI group 

practice reporting option, the criteria for 

satisfactory reporting of PQRI measures 

for group practices are different from the 

criteria for successful reporting of the 

electronic prescribing measure by group 

practices. Therefore, it is possible for a 

group practice to be listed as a group 

practice that satisfactorily submits data 

on quality measures for the PQRI but 

not as a successful electronic prescriber 

under the eRx Incentive Program, or 

vice versa. 

G. DMEPOS Provisions 

1. Medicare Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies (DMEPOS) Competitive 

Bidding Program (CBP) 

a. Legislative and Regulatory History of 

DMEPOS CBP 

Medicare pays for most DMEPOS 

furnished after January 1, 1989 pursuant 

to fee schedule methodologies set forth 

in section 1834 of the Act, as added by 

section 4062 of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA ’87) 

(Pub. L. 100–203). Specifically, sections 

1834(a)(1)(A) and (B), and 1834 (h)(1)(A) 

of the Act provide that Medicare 

payment for these items is equal to 80 

percent of the lesser of the actual charge 

for the item or the fee schedule amount 

for the item. We implemented this 

payment methodology at 42 CFR part 

414, subpart D of our regulations. 

Sections 1834(a)(2) through (a)(5) and 

1834(a)(7) of the Act, and implementing 

regulations at § 414.200 through 

§ 414.232 (with the exception of 

§ 414.228), set forth separate payment 

categories of durable medical equipment 

(DME) and describe how the fee 

schedule for each of the following 

categories is established: 

• Inexpensive or other routinely 

purchased items (section 1834(a)(2) of 

the Act and § 414.220 of the 

regulations); 

• Items requiring frequent and 

substantial servicing (sections 1834(a)(3) 

of the Act and § 414.222 of the 

regulations); 

• Customized items (section 

1834(a)(4) of the Act and § 414.224 of 

the regulations); 

• Oxygen and oxygen equipment 

(section 1834(a)(5) of the Act and 

§ 414.226 of the regulations); 

• Other items of DME (section 

1834(a)(7) of the Act and § 414.229 of 

the regulations). 

For a detailed discussion of payment 

for DMEPOS under fee schedules, see 

the final rule published in the April 10, 

2007 Federal Register (72 FR 17992). 

Blood glucose testing strips or 

diabetic testing strips are covered under 

the Medicare DME benefit in accordance 

with section 1861(n) of the Act. Other 

supplies that are necessary for the 

effective use of DME are also covered 

under the Medicare DME benefit in 

accordance with longstanding program 

instructions at section 110.3 of chapter 

15 of the Medicare Benefit Policy 

Manual. 

Section 1847 of the Act, as amended 

by section 302(b)(1) of the MMA, 

requires the Secretary to establish and 

implement a DMEPOS CBP. Under the 

DMEPOS CBP, Medicare sets payment 

amounts for selected DMEPOS items 

and services furnished to beneficiaries 

in competitive bidding areas (CBAs) 

based on bids submitted by qualified 

suppliers and accepted by Medicare. For 

competitively bid items, these new 

payment amounts, referred to as ‘‘single 

payment amounts (SPA),’’ replace the 

fee schedule payment methodology. 

Section 1847(b)(5) of the Act provides 

that Medicare payment for these 


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competitively bid items and services is 

made on an assignment-related basis 

equal to 80 percent of the applicable 

SPA, unless any unmet Part B 

deductible described in section 1833(b) 

of the Act. Section 1847(b)(2)(A)(iii) of 

the Act prohibits the awarding of 

contracts to any entity unless the total 

amounts to be paid to contractors in a 

CBA are expected to be less than the 

total amounts that would otherwise be 

paid under the fee schedule 

methodologies set forth in section 

1834(a) of the Act. This requirement 

guarantees savings to both the Medicare 

program and beneficiaries under the 

program. The fee schedule 

methodologies will continue to set 

payment amounts for noncompetitively 

bid DMEPOS items and services. The 

program also includes provisions to 

ensure beneficiary access to quality 

DMEPOS items and services. Section 

1847 of the Act limits participation in 

the program to suppliers who have met 

applicable quality and financial 

standards and requires the Secretary to 

maintain beneficiary access to multiple 

suppliers. 

When first enacted by the Congress, 

section 1847(a)(1)(B) of the Act required 

the Secretary to phase in the DMEPOS 

CBP in a manner so that the competition 

under the program occurred in 10 of the 

largest metropolitan statistical areas 

(MSAs) in 2007. The program was to be 

expanded into 70 additional MSAs in 

2009, and then into additional areas 

after 2009. 

In the May 1, 2006 Federal Register 

(72 FR 25654), we issued a proposed 

rule that would implement the DMEPOS 

CBP for certain DMEPOS items and 

services and solicited public comment 

on our proposals. In the April 10, 2007 

Federal Register (72 FR 17992), we 

issued a final rule addressing the 

comments on the proposed rule and 

establishing the regulatory framework 

for the DMEPOS CBP in accordance 

with section 1847 of the Act. 

Consistent with the requirements of 

section 1847 of the Act and the 

competitive bidding regulations, we 

began implementation of the program by 

conducting the first round of 

competition in 10 of the largest MSAs 

in 2007. We limited competition during 

this first round of the program to 

DMEPOS items and services included in 

10 selected product categories, 

including mail order diabetic supplies. 

The bidding window opened on May 

15, 2007 and was extended to allow 

bidders adequate time to prepare and 

submit their bids. We then evaluated 

each submission and awarded contracts 

consistent with the requirements of 

section 1847(b)(2) of the Act and 

§ 414.414. Following the bid evaluation 

process, we awarded over 329 contracts 

to qualified suppliers. 

The DMEPOS CBP was effective on 

July 1, 2008. Beginning on that date, 

Medicare coverage for competitively bid 

DMEPOS items and services furnished 

in the first 10 CBAs was limited to items 

and services furnished by contract and 

grandfathered suppliers of oxygen and 

oxygen equipment and rented DME, and 

payment to these suppliers was based 

on the SPA, as determined under the 

competitive bidding regulations. For 

further discussion of the DMEPOS CBP 

and the bid evaluation process, see the 

final rule published in the April 10, 

2007 Federal Register (72 FR 17992). 

On July 15, 2008, the MIPPA was 

enacted. Section 154 of the MIPPA 

amended section 1847 of the Act to 

make certain limited changes to the 

DMEPOS CBP. Section 154(a) of the 

MIPPA delayed competition under the 

program and amended section 

1847(a)(1)(D)(i) of the Act to terminate 

the competitive bidding contracts 

effective June 30, 2008 and prohibit 

payment based on the contracts. 

Section 154(a) of the MIPPA required 

the Secretary to conduct a second 

competition to select suppliers for 

Round 1 in 2009 (‘‘Round 1 Rebid’’). The 

Round 1 Rebid includes the ‘‘same items 

and services’’ and is to be conducted in 

the ‘‘same areas’’ as the 2007 Round 1 

competition, with certain limited 

exceptions. Specifically, we were 

required to exclude the product category 

of negative pressure wound therapy 

(NPWT) items and services and the San 

Juan, Puerto Rico CBA from the Round 

1 Rebid. In addition, section 154(a) of 

the MIPPA permanently excluded group 

3 complex rehabilitative wheelchairs 

from the DMEPOS CBP by amending the 

definition of ‘‘items and services’’ in 

section 1847(a)(2) of the Act. Section 

154(a) of the MIPPA delayed 

competition for Round 2 of the 

DMEPOS CBP from 2009 to 2011, and 

subsequent competitions under the 

program to after 2011. Finally, section 

154(a) of the MIPPA specifically 

addresses the phase in of a competition 

for national mail order items and 

services by specifying that such 

competitions may be phased in after 

2010. 

b. Implementation of a National Mail 

Order DMEPOS Competitive Bidding 

Program (CBP) for Diabetic Testing 

Supplies 

We conducted competitions for mail 

order diabetic testing supplies in the 10 

CBAs selected for Round 1. In the 

Round 1 rebid we conducted 

competition for mail order diabetic 

testing supplies in 9 of the 10 CBAs 

selected in Round 1. These competitions 

were limited to diabetic testing supplies 

furnished by mail order contract 

suppliers, as defined in the April 10, 

2007 DMEPOS Competitive Bidding 

final rule (72 FR 17992) to individuals 

located in those CBAs. As defined in the 

final rule, a mail order contract supplier 

is ‘‘a contract supplier that furnishes 

items through the mail to beneficiaries 

who maintain a permanent residence in 

a CBA’’. We clarified in program 

instructions that ‘‘mail order’’ means 

items ordered remotely (that is, by 

phone, e-mail, Internet, or mail) and 

delivered to a beneficiary’s residence by 

common carriers (for example, U.S. 

Postal Service, Federal Express, United 

Parcel Service, or other shipping or 

courier service companies) but not items 

obtained by beneficiaries from local 

retail storefronts. 

Due to the inclusion of mail order 

diabetic supplies as a product category 

in Round 1 of the program, Medicare 

beneficiaries in a CBA who obtain 

diabetic testing supplies through mail 

order must purchase these supplies 

from a mail order contract supplier in 

order for Medicare to pay for these 

items. Payment for these items will be 

at the SPA determined consistent with 

the program’s regulations. Beneficiaries 

who do not obtain their testing supplies 

through mail order may purchase these 

products from any enrolled Medicare 

supplier and Medicare payment for 

these items will be at the fee schedule 

amount. The home blood glucose 

monitor (diabetic testing equipment) 

itself is not included in the Round 1 

DMEPOS CBP for mail order diabetic 

supplies. This allows the beneficiary to 

go to any enrolled supplier to obtain the 

glucose monitor that the beneficiary and 

their clinician believes best meets their 

medical needs. The supplier of the 

glucose monitor is responsible for 

training the beneficiary on how to use 

the monitor and for answering all follow 

up questions and providing all services 

required by the DMEPOS quality 

standards and supplier standards, found 

in § 424.57, related to the glucose 

monitoring system selected by the 

beneficiary and their clinician. The 

beneficiary then has the choice of 

obtaining the replacement diabetic 

testing supplies that work with their 

purchased monitoring system from any 

local, non-mail order supplier (typically 

a pharmacy) or from a mail order 

supplier whose contract requires them 

to ship the replacement diabetic 

supplies directly to the beneficiary’s 

home. If the beneficiary wants to 

continue receiving their replacement 


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supplies from a local pharmacy because 

that is their preference or because they 

want to have face-to-face access to a 

local pharmacist who, in addition to the 

supplier of the glucose monitoring 

system, can answer questions about the 

use of their system in testing their blood 

glucose levels, this choice is preserved. 

However, if they choose the 

convenience and savings associated 

with having their replacement supplies 

shipped directly to their home, the 

beneficiary can decide to obtain their 

supplies from a mail order contract 

supplier. 

The SPA was on average 43 percent 

lower than the fee schedule amount for 

diabetic testing supplies during the 

Round 1 of DMEPOS CBP. This 

reduction in payment would have 

resulted in a reduction of the 

beneficiary’s co-insurance payment. The 

contracts and SPAs for the Round 1 

Rebid for mail order diabetic testing 

supplies are scheduled to be effective 

for diabetic supplies furnished on a mail 

order basis to beneficiaries in the 9 

CBAs from January 1, 2011, through 

December 31, 2012. 

(1) National Mail Order DMEPOS CBP 

As part of our rulemaking 

implementing the DMEPOS CBP, we 

established regulations to implement 

competitions on a regional or national 

level for certain items such as diabetic 

testing supplies that are furnished on a 

mail order basis. We explained our 

rationale for establishing a national 

DMEPOS CBP for items furnished on a 

mail order basis in the Federal Register 

in the May 1, 2006 proposed rule (71 FR 

25669) and April 10, 2007 final rule (72 

FR 18018). A national mail order 

program would generate immediate 

national savings at a magnitude that 

may not be possible with local 

competitions among suppliers that are 

not able to obtain the type of volume 

purchasing discounts from 

manufacturers that are available to large, 

national mail order suppliers. In a 

September 2004 report (GAO–04–765), 

the Government Accountability Office 

(GAO) recommended that we consider 

using mail delivery for items that can be 

provided directly to beneficiaries in the 

home as a way to implement a DMEPOS 

competitive bidding strategy. In the case 

of diabetic supplies and other items 

furnished by local neighborhood 

pharmacies, establishing a competition 

for items furnished on a mail order basis 

would exempt local pharmacies from 

competing with national mail order 

suppliers while preserving the choice of 

the beneficiary to go to any local 

pharmacy to pick up their diabetic 

supplies. Manufacturers and suppliers 

have stated to CMS at different meetings 

on numerous occasions that the choice 

for beneficiaries to obtain diabetic 

supplies from local pharmacies with 

licensed pharmacists in house who can 

provide instructions and guidance to 

beneficiaries related to their testing 

needs is important and needs to be 

preserved. 

(2) DMEPOS CBP for National Mail 

Order Diabetic Supplies 

In the January 16, 2009 Federal 

Register, we published an interim final 

rule (IFC) (74 FR 2873) implementing 

certain changes to the DMEPOS CBP. 

Specifically, the rule implemented 

certain MIPPA provisions that delayed 

implementation of Round 1 of the 

program; required CMS to conduct a 

second Round 1 competition in 2009, 

and mandated certain changes for both 

the Round 1 Rebid and subsequent 

rounds of the program. In the January 

16, 2009 IFC preamble, we indicated 

that we would be considering 

alternatives for competition of diabetic 

testing supplies in future notice and 

comment rulemaking. We explained 

that we believed it was consistent with 

section 1847(a) to employ competitive 

bidding for diabetic suppliers in both 

the mail order and traditional retail 

markets, in part due to concerns raised 

about the bifurcation of the method of 

delivery of diabetic supplies and the 

difficulty in defining what constitutes 

‘‘mail order’’ for purposes of 

competition. 

(3) Overview of Proposed Rule 

As part of the phase in of the 

DMEPOS CBP, we are proposing to 

implement a national mail order 

DMEPOS CBP for diabetic testing 

supplies. Under the proposed mail order 

DMEPOS CBP, we would award 

contracts to suppliers to furnish these 

items across the nation to beneficiaries 

who elect to have replacement diabetic 

testing supplies delivered to their 

residence. Suppliers wishing to furnish 

these items through mail order to 

Medicare beneficiaries would be 

required to submit bids to participate in 

any DMEPOS CBP implemented for the 

furnishing of mail order items. In 

accordance with the DMEPOS CBP final 

rule, payment for mail order diabetic 

supplies would be based on the SPA 

determined from the bids submitted and 

accepted for the furnishing of diabetic 

testing supplies by mail order 

throughout the national CBA. 

As part of our proposal to implement 

the national mail order DMEPOS CBP, 

we are also proposing a revised 

definition in regulation of ‘‘mail order’’ 

so that there would be a clear 

distinction between mail order items 

and non-mail order items. This revised 

definition would apply to all future 

competitions for mail order items and 

services. We are also proposing to 

implement the special rule mandated by 

section 1847(b)(10)(A) of the Act for 

competitions for diabetic testing strips 

following the Round 1 Rebid. Section 

1847(b)(10)(A) requires suppliers 

bidding in competitions to furnish 

diabetic testing strips after the Round 1 

Rebid to demonstrate that their bid 

covers at least 50 percent of all types of 

diabetic testing strips furnished by 

suppliers. If the supplier is not able to 

satisfy this requirement, the Secretary 

must reject that bid. Finally, we are 

proposing to include an additional term 

in contracts of mail order suppliers of 

diabetic testing supplies following the 

Round 1 Rebid. The proposed term 

would prohibit suppliers from 

influencing or incentivizing 

beneficiaries to change their brand of 

glucose monitor and test strips. 

(4) Future Competitions for Diabetic 

Testing Supplies 

Section 1847(a)(1)(A) of the Act 

mandates the establishment of DMEPOS 

CBP for items described in section 

1847(a)(2)(A) of the Act, including 

diabetic testing supplies. Section 

1847(a)(1)(B)(ii) of the Act authorizes 

the phase in of items and services under 

these programs beginning with the 

highest cost and highest volume items 

and services or those items and services 

that are determined to have the largest 

savings potential. Current Medicare 

claims data from fiscal year 2009 shows 

that over 62 percent of beneficiaries 

currently receive their replacement 

diabetic testing supplies from mail order 

suppliers. Mail order diabetic testing 

supplies account for approximately one 

billion dollars in allowed charges per 

year and are therefore high volume 

items. We believe that a national mail 

order CBP for diabetic testing supplies 

would result in large savings as a result 

of competition between entities that 

would factor into their bids savings 

from volume discount purchasing of 

quantities of supplies needed on a 

national rather than local basis. 

Therefore, we believe that implementing 

a national mail order DMEPOS CBP for 

diabetic testing supplies is the best 

option for meeting the requirements of 

the statute referenced above as long as 

certain refinements discussed below are 

made to the program to address 

concerns about the mail order/non-mail 

order bifurcation. 

We have heard from industry groups 

and suppliers that furnish diabetic 

testing supplies on a national mail order 


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basis of their concerns that national 

chain pharmacies that furnish diabetic 

testing supplies through both a national 

mail order business and local retail 

pharmacies will encourage beneficiaries 

to obtain these items from local retail 

locations by inappropriately offering 

certain incentives to Medicare 

beneficiaries such as coupons for other 

store items. Based on our experience 

from Round 1, we believe DMEPOS CBP 

for mail order diabetic testing supplies 

would be subject to manipulation 

without a clearer definition of what we 

mean by mail order. We agree with the 

industry groups and suppliers that have 

indicated that this practice will harm 

businesses that only furnish diabetic 

testing supplies on a mail order basis. In 

order to address these concerns, we are 

proposing to add to § 414.402 a 

definition of ‘‘National mail order 

DMEPOS CBP.’’ We propose to define 

that term as a program whereby 

contracts are awarded to suppliers for 

the furnishing of mail order items across 

the nation. We believe that 

implementing a national competitive 

bidding program for diabetic supplies 

would preserve beneficiary choice to 

purchase testing supplies in person 

from any local pharmacy that is an 

enrolled Medicare supplier that 

furnishes diabetic supplies, while 

clarifying the definition of mail order 

will provide significant savings 

potential for beneficiaries and the 

program. Savings would be generated in 

the near future from national SPAs for 

supplies furnished on a mail order or 

home delivery basis and on a long term 

basis for all diabetic supplies as a result 

of the requirement of section 

1834(a)(1)(F) of the Act to either 

competitively bid in all areas or adjust 

prices in all areas by January 1, 2016. 

We believe that more beneficiaries will 

elect to choose the mail order/home 

delivery option, thereby further 

increasing short term savings under the 

program. Even if this is not the case, and 

the percentage of beneficiaries choosing 

the mail order/home delivery option 

remains at the current rate of 62 percent, 

savings for the remaining 38 percent 

must be achieved by no later than 

January 1, 2016, as a result of the 

requirements of section 1834(a)(1)(F) of 

the Act. 

We considered other alternatives for 

establishing DMEPOS CBP for diabetic 

testing supplies that would eliminate 

the mail order/non-mail order 

bifurcation and associated concerns. 

These alternatives include: 

• A national competition among all 

types of suppliers for all replacement 

diabetic supplies. Under this 

alternative, all beneficiaries would 

receive their replacement diabetic 

supplies from contract suppliers 

responsible for furnishing diabetic 

supplies throughout the nation using 

any method of delivery as long as the 

supplies are delivered on a timely basis. 

• Competitions in regional CBAs 

among all types of suppliers for all 

replacement diabetic supplies. Under 

this alternative, all beneficiaries would 

receive their replacement diabetic 

supplies from contract suppliers 

responsible for furnishing diabetic 

supplies throughout a designated region 

of the country using any method of 

delivery to a beneficiary home as long 

as the supplies are delivered on a timely 

basis. 

• Competitions in local CBAs among 

all types of suppliers for all replacement 

diabetic supplies. Under this 

alternative, all beneficiaries would 

receive their replacement diabetic 

supplies from contract suppliers 

responsible for furnishing diabetic 

supplies throughout the local area using 

any method of delivery to a beneficiary 

as long as the supplies are delivered on 

a timely basis. 

We believe that the first option to bid 

on a national basis for all diabetic 

supplies, would result in most 

beneficiaries using mail order and might 

generate more savings than a national 

competition for diabetic supplies 

furnished on a mail order basis only. 

However, this first option would likely 

eliminate the beneficiary choice to 

obtain replacement diabetic supplies on 

a non-mail order basis from any 

enrolled supplier that is a pharmacy or 

other local supplier storefront where a 

licensed pharmacist is on hand to offer 

guidance and consultation to the 

beneficiary. We believe the other two 

options would also diminish this 

choice. In addition, the alternatives of 

regional or local competitions are not 

likely to result in savings at or above the 

level that can be generated from a 

national competition for mail order 

supplies. Suppliers participating in a 

national program may be able to obtain 

volume purchasing discounts for the 

quantities of supplies needed 

nationwide. Therefore, we are not 

proposing any of these alternatives at 

this time. However, we are specifically 

requesting public comments on these 

and other alternatives for establishing 

DMEPOS CBP for diabetic supplies. 

In § 414.411, we are proposing to 

establish a national mail order DMEPOS 

CBP with competitions taking place 

after 2010 for the purpose of awarding 

contracts to suppliers to furnish 

replacement diabetic testing supplies 

across the nation, with additional 

program refinements described below. 

We note that the decision to proceed 

with a national mail order competition 

after 2010 does not prevent us from 

phasing in competitions for non-mail 

order diabetic supplies or from 

conducting competitions for diabetic 

supplies in general in the future 

consistent with section 1847(a)(1) of the 

Act. 

(5) Definition of Mail Order Item 

We are proposing to define ‘‘mail 

order item’’ in 42 CFR 414.402 to mean 

any item (for example, diabetic testing 

supplies) shipped or delivered to the 

beneficiary’s home, regardless of the 

method of delivery. We are also 

proposing to define ‘‘non-mail order 

item’’ as any item (for example, diabetic 

testing supplies) that a beneficiary or 

caregiver picks up in person at a local 

pharmacy or supplier storefront. 

Therefore, the only items excluded from 

the mail order definition and mail order 

competition would be those that a 

beneficiary or caregiver picks up in 

person at a local pharmacy or other 

local supplier storefront. These revised 

definitions of mail order item and nonmail order item are intended to clearly 

identify which items are truly mail 

order. In addition, we believe this 

definition will preserve the choice of 

the beneficiary to obtain replacement 

diabetic supplies in person from a local 

pharmacy and eliminate the 

circumvention of the mail order 

program. 

As discussed above, for Round 1 and 

the Round 1 Rebid of the DMEPOS CBP, 

we defined mail order contract supplier 

in our regulations at § 414.402 to mean 

a contract supplier that furnishes items 

through the mail. We further defined 

mail order in program instructions to 

mean ‘‘items ordered remotely (that is, 

by telephone, e-mail, Internet or mail) 

and delivered to beneficiary’s residence 

by common carriers (for example, U.S. 

Postal Service, Federal Express, United 

Parcel Service) and does not include 

items obtained by beneficiaries from 

local storefronts.’’ The intent of the 

Round 1 definition was to distinguish 

between mail order supplies (supplies 

furnished directly to the beneficiary’s 

home) and non-mail order supplies 

(supplies picked up at a local 

pharmacy). Manufacturers and suppliers 

of blood glucose monitors and test strips 

have expressed on numerous occasions 

the importance of maintaining the 

patient option of obtaining diabetic 

testing supplies from a local pharmacy 

that provides full time access to a 

licensed pharmacist who can provide 

instructions and guidance to the 

beneficiary or caregiver related to the 

use of the diabetic supplies (the 


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pharmacy pickup option). This is the 

‘‘non-mail order’’ option we attempted to 

separate from the mail order option with 

the Round 1 definition of mail order. 

During implementation of Round 1 of 

the program, we discovered that 

suppliers that did not successfully 

compete and win a contract under the 

program tried to adopt certain 

approaches to circumvent the mail order 

definition. In the first round of 

competitive bidding, suppliers that lost 

their bid to be a contract supplier for 

mail order diabetic testing supplies 

considered ways to change their 

delivery methods to circumvent the 

mail order DMEPOS CBP. For example, 

some mail order suppliers considered 

purchasing a fleet of cars to deliver 

these items to the beneficiary’s home so 

as not to be considered a mail order 

supplier. Other suppliers attempted to 

enter into special ‘‘private’’ 

arrangements with well known delivery 

services and claimed that because of 

such arrangements they should not be 

considered mail order suppliers. These 

alternative home delivery methods do 

not provide any benefits to the patient 

beyond what the traditional mail order 

home delivery method offers. They are 

simply ways to continue furnishing 

diabetic supplies on a home delivery 

basis after submitting a bid for mail 

order that does not result in the award 

of a contract under the DMEPOS CBP. 

Without a clear distinction between 

mail order (home delivery option) and 

non-mail order (pharmacy pickup 

option), suppliers could continue to 

attempt to make arrangements as they 

did in the initial Round 1 competition 

to circumvent the DMEPOS CBP. We 

consider these practices to be 

inconsistent with the DMEPOS CBP 

statute and regulations currently in 

effect, and our proposal is intended to 

further clarify the existing definition of 

mail order. Such arrangements prevent 

beneficiaries and the Medicare program 

from realizing savings afforded by the 

mail order DMEPOS CBP and is unfair 

to winning suppliers who bid in good 

faith for a contract for furnishing 

supplies to the home delivery market. 

This proposed definition of mail order 

item would not apply to the Round 1 

competition because of the specific 

requirement of MIPPA to rebid Round 1 

in 2009 for the same items and services 

included in the initial Round 1 

competition. However, for a national 

competition, it is imperative that the 

new definition of mail order item be in 

place because of the implications such 

a program would have on the entire 

mail order delivery market in the United 

States. In these future competitions, we 

would continue to emphasize in our 

educational efforts the basic distinction 

between mail order (home delivery) and 

non-mail order (pharmacy pickup). In 

addition, we will continue to take 

appropriate and necessary action against 

suppliers that do not comply with the 

revised definition. 

As mentioned above, an alternative 

DMEPOS CBP for replacement diabetic 

supplies would be to hold a national 

competition among all types of 

suppliers for all replacement diabetic 

supplies. One benefit to this approach is 

that it would eliminate the need to 

differentiate between mail order and 

non-mail order supplies; however, it 

would likely eliminate the pharmacy 

pickup choice since most local 

pharmacies would not be able to service 

the entire CBA if they did not also 

operate a national mail order service. 

We invite comments on our proposed 

definition of ‘‘mail order’’ and its impact 

on future rounds of bidding. 

(6) Special Rule in Case of Competition 

for Diabetic Testing Strips 

Following Round 1 of the program, 

any competition for diabetic testing 

strips, such as the national mail order 

program for diabetic testing supplies 

proposed in this rule, must include the 

special rule set forth in section 

1847(b)(10)(A) of the Act. Under that 

section, a supplier must demonstrate 

that their bid to furnish diabetic testing 

strips covers the furnishing of a 

sufficient number of different types of 

diabetic testing strip products that, in 

the aggregate and taking into account 

volume for the different products, to 

account for at least 50 percent of all 

such types of products on the market. 

Section 1847(a)(10)(A) also specifies 

that the volume for the different 

products may be determined in 

accordance with data (which may 

include market based data) recognized 

by the Secretary. When a beneficiary 

needs to obtain replacement test strips, 

they must obtain the specific brand of 

test strips products that work with their 

brand and model of blood glucose 

monitor. The test strips are not 

manufactured in a way that allows use 

of different brands of test strips in 

different brands of monitors. Therefore, 

when replacement test strips are 

furnished, the supplier must ensure that 

the specific brand and model of test 

strips that the patient requires for use 

with their purchased monitor is 

furnished. 

Section 1847(b)(10)(B) of the Act 

mandates the Office of Inspector 

General (OIG) of the Department to 

conduct a study before 2011 to generate 

volume data for the various products 

that could be used for this purpose. 

Under the DMEPOS CBP, bidding 

suppliers are required to provide 

information on the products they plan 

to furnish if awarded a contract. We 

propose to use this information and 

information on the market share 

(volume) of the various diabetic testing 

strip products to educate suppliers on 

meeting the requirements of this special 

rule. In addition, it may be necessary to 

obtain additional information from 

suppliers such as invoices or purchase 

orders to verify that the requirements in 

the statute have been met. 

We are proposing that suppliers be 

required to demonstrate that its bid 

covers the minimum 50 percent 

threshold provided in the statute, but 

we invite comments on whether a 

higher threshold should be used. We 

have proposed the 50 percent threshold 

in part because we believe that all 

suppliers have an inherent incentive to 

furnish a wide variety of types of 

diabetic testing products to generate a 

wider customer referral base. The 50 

percent threshold would ensure that 

beneficiaries have access to mail order 

delivery of the top-selling diabetic test 

strip products. In addition, as explained 

below, we are proposing an ‘‘antiswitching provision’’ that we believe 

should obviate the need to establish a 

threshold of greater than 50 percent for 

the purpose of implementing this 

special rule because the contract 

suppliers would not be able to carry a 

limited variety of products and switch 

beneficiaries to those products. 

For purposes of implementing the 

special rule in section 1847(b)(10)(A), 

we are proposing to define ‘‘diabetic 

testing strip product’’ as a specific brand 

and model of test strip, as that is the 

best way to distinguish among different 

products. Therefore, we plan to use 

market based data for specific brands 

and models of diabetic test strips to 

determine the relative market share or 

volume of the various products on the 

market that are available to Medicare 

beneficiaries. We plan to review a 

variety of data, including but not 

limited to data furnished in the OIG 

report, to determine the market share of 

the various products. The special rule 

mandated by section 1847(b)(10)(A) of 

the Act applies to all competitions for 

diabetic testing strips after the first 

round of the DMEPOS CBP. Therefore, 

we would apply this rule to non-mail 

order competitions and/or local 

competitions conducted for diabetic 

testing strips after Round 1 of the 

DMEPOS CBP. 


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(7) Anti-Switching Rule in Case of 

Competition for Diabetic Test Strips 

We do not believe that we can 

effectively apply the 50 percent rule, as 

required by section 1847(b)(10)(A) of the 

Act, if we do not establish an antiswitching rule to prevent suppliers from 

influencing beneficiaries to switch 

monitors. We have heard concerns from 

beneficiary advocacy groups, as well as 

industry representatives, that contract 

suppliers furnishing diabetic testing 

supplies in the first round encouraged 

beneficiaries to switch to a different 

brand of blood glucose monitor and 

testing supplies than they and/or their 

physician or clinician previously 

selected. Suppliers attempted to switch 

beneficiaries to the less expensive 

monitor or the monitor that provided 

them with the most profit rather than 

the monitor that was most suitable for 

them. Without the anti-switching rule, 

suppliers may offer 50 percent of the 

brands on the market but continue to 

switch beneficiaries to the least 

expensive brands so that the 

requirement to offer at least 50 percent 

of the brands on the market rather than 

a few specific brands becomes 

meaningless. 

We are proposing to prohibit 

suppliers awarded contracts for diabetic 

testing supplies from influencing or 

incentivizing the beneficiary in any way 

to switch the brand of glucose monitor 

and testing supplies they are currently 

using. We would propose that contract 

suppliers continue to furnish the brand 

of testing supplies that work with the 

monitor currently in use by the 

beneficiary. In the case where the 

beneficiary is receiving a monitor for the 

first time or a replacement monitor, the 

contract supplier would be subject to 

the requirements of § 414.420 in order to 

protect beneficiaries from feeling forced 

or incentivized to use a particular type 

or brand of monitor We continue to 

believe the proper role of the contract 

supplier is to furnish diabetic testing 

strips and other supplies to 

beneficiaries, not to interfere with the 

beneficiary’s selection of the type of 

monitor and supplies. This requires the 

supplier to furnish the brand of testing 

supplies that work with the blood 

glucose monitor product that the 

beneficiary and/or clinician, and not the 

supplier of the testing supplies, selects. 

If the beneficiary needs a blood glucose 

monitor for the first time, or needs to 

replace their existing blood glucose 

monitor, and neither the beneficiary nor 

their physician has determined which 

brand or type of monitor to obtain, the 

beneficiary may continue to ask for 

assistance from the supplier to select a 

monitor and the supplier should show 

them the full range of products. 

However, if the beneficiary has already 

selected a monitor and simply needs 

replacement diabetic testing supplies, 

the supplier must furnish the brands of 

testing supplies that work with the 

brand monitor that the beneficiary has 

selected. We believe this proposal 

would preserve the integrity of the 

clinical decision regarding choice of 

glucose monitoring system and would 

result in contract suppliers offering a 

wide variety of diabetic testing supply 

products. 

We are proposing to amend § 414.422 

to add the anti-switching requirement to 

the terms of the contract for a supplier 

of diabetic testing supplies. A supplier 

would be in breach of their contract and 

subject to the sanctions set forth under 

§ 414.423(g), including termination, if 

they violate this term. We welcome 

comments on this proposal. 

c. Off-the-Shelf (OTS) Orthotics 

Exemption 

In the April 10, 2007 final rule (72 FR 

17992), we established § 414.404(b)(1), 

which sets forth several exemptions to 

the DMEPOS CBP. These exceptions are 

applicable to providers, physicians, and 

treating practitioners that furnish 

certain DMEPOS items under Medicare 

Part B. The exempted items are limited 

to crutches, canes, walkers, folding 

manual wheelchairs, blood glucose 

monitors, and infusion pumps that are 

DME. For an explanation as to why 

these items were exempt see the 

DMEPOS Competitive Bidding final rule 

(CMS–1270–F) published April 10, 

2007, (72 FR 17992). For the exemptions 

to apply, the items must be furnished by 

a physician or treating practitioner to 

his or her own patients as part of his or 

her professional service. The items are 

to be billed under a billing number 

assigned to the physician, the treating 

practitioner (if possible), or a group 

practice to which the physician or 

treating practitioner has reassigned the 

right to receive Medicare payment. 

The April 10, 2007 final rule also 

established an exemption for a physical 

therapist in private practice (as defined 

in § 410.60(c)) or an occupational 

therapist in private practice (as defined 

in § 410.59(c)) to furnish competitively 

bid OTS orthotics without submitting a 

bid and being awarded a contract under 

the DMEPOS CBP, provided that the 

items are furnished only to the 

therapist’s own patients as part of a 

physical or occupational therapy 

service. 

Section 154(d) of MIPPA amended 

section 1847(a) of the Act by adding 

paragraph (7), which expands the 

exemptions from the DMEPOS CBP for 

certain OTS orthotics to physicians or 

other practitioners (as defined by the 

Secretary) if furnished to their own 

patients as part of their professional 

service. Section 1847(a)(7) of the Act, as 

added by MIPPA, also expanded the 

exemption from the program to 

hospitals for certain OTS orthotics, 

crutches, canes, walkers, folding manual 

wheelchairs, blood glucose monitors, 

and infusion pumps if these items are 

furnished to the hospital’s own patients 

during an admission or on the date of 

discharge. 

The DMEPOS CBP Round 1 Rebid 

interim final rule with comment period 

(IFC) included the expanded exemption 

for certain DMEPOS items as provided 

by MIPPA for hospitals. We noted in the 

IFC that we would address the 

expanded exemption of OTS orthotics 

for hospitals, physicians and other 

practitioners in future rulemaking. 

In this proposed rule, we are 

proposing to revise current provisions at 

§ 414.404(b)(1)(i) to incorporate the 

provision of section 1847(a)(7)(A)(i) and 

(ii) of the Act that exempts from the 

program OTS orthotics furnished by 

physicians and other practitioners to 

their own patients as part of their 

professional service or by hospitals to 

the hospital’s own patients during an 

admission or on the date of discharge. 

d. Grandfathering Rules Resulting in 

Additional Payments To Contract 

Suppliers Under the DMEPOS 

Competitive Bidding Program (CBP) 

Section 1847(a)(4) of the Act requires 

that in the case of rented DME and 

oxygen and oxygen equipment, the 

Secretary shall establish a 

‘‘grandfathering’’ process. This 

requirement was implemented through 

regulations at § 414.408(j) that were 

published in the April 10, 2007 Federal 

Register (72 FR 17992). The 

grandfathering process allows 

beneficiaries who were renting DME 

items or receiving oxygen and oxygen 

equipment prior to the start of a 

DMEPOS CBP from a supplier who did 

not win a contract to continue to rent 

the equipment from that noncontract 

supplier if that supplier chooses to 

become a grandfathered supplier. Under 

§ 414.408(i)(2), when the beneficiary 

decides to use a contract supplier 

instead of a grandfathered supplier to 

receive their oxygen equipment and 

supplies, the contract supplier receives 

a minimum of 10 monthly payments for 

taking over the furnishing of oxygen and 

oxygen equipment. When a beneficiary 

decides to use a contract supplier to 

furnish capped rental DME, section 

§ 414.408(h)(2) restarts the 13-month 


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capped rental period. These rules were 

established, in part, based on advice 

from the Program Advisory and 

Oversight Committee (PAOC) and are 

intended to give bidding suppliers an 

assurance that they would be 

compensated in these situations and 

would not have to factor into their bids 

the cost of receiving as few as one 

monthly payment for beneficiaries near 

the end of the 13-month cap for capped 

rental items and 36-month cap for 

oxygen equipment. 

At the time these rules were 

developed, the supplier was mandated 

by the statute to transfer title to the 

equipment to the beneficiary after the 

both the 13-month cap for capped rental 

items and the 36-month cap for oxygen 

equipment. Section 144(b) of the MIPPA 

repealed the transfer of title requirement 

for oxygen equipment, as established by 

Deficit Reduction Act of 2005, replacing 

that requirement with the 36-month 

rental cap. Under the revised oxygen 

payment provisions, suppliers now get 

the equipment back when the 

beneficiary no longer needs it. Also, at 

the time these rules were developed, the 

beneficiary had the option to acquire 

standard power wheelchairs on a lump 

sum purchase basis, an option which 

greater than 95% of the beneficiaries 

selected, based upon historic claims 

data. Therefore, those items generally 

would not be affected by the 

grandfathering rules. However, as 

discussed in section 3136 of this 

proposed rule, section 3136 of the ACA 

eliminates the lump sum purchase 

option for standard power wheelchairs. 

This new policy applies to items 

furnished under the DMEPOS CBP 

beginning with Round 2 of the program. 

Over 200,000 beneficiaries received 

standard power wheelchairs nationwide 

in 2009, and the Medicare allowed 

charges for these wheelchairs was over 

$650 million, including both rental and 

purchase options. Therefore, this large 

volume of capped rental items will be 

subject to the grandfathering rules 

effective with Round 2 of the DMEPOS 

CBP, thus increasing the overall 

magnitude of the effect these rules have 

on the program and beneficiaries. 

In some cases, the grandfathering 

rules described above place a financial 

burden on beneficiaries who are near 

the end of the 13 or 36-month rental cap 

periods. If a beneficiary’s existing 

supplier chooses not to be a 

grandfathered supplier, the beneficiary 

will be required to switch to a contract 

supplier in order for Medicare to 

continue to pay for the furnishing of the 

rental equipment. In such cases, the 

beneficiary will be responsible for 

additional co-insurance amounts. Based 

on experience from the initial Round 1 

competition in 2008, we believe that 

most suppliers will choose to 

grandfather and therefore these rules 

will have no impact on these situations. 

However, in those limited situations in 

which the beneficiary does not use a 

grandfathered supplier and the 

beneficiary is near the end of the 13 or 

36-month rental cap period, the impact 

on the beneficiary could be significant. 

As mentioned above, our current 

grandfathering rules will result in a 

limited number of beneficiaries facing 

additional co-insurance payments. To 

illustrate the impact some beneficiaries 

may face as a result of these rules, a 

beneficiary who has already made 12 

coinsurance payments for a capped 

rental item could make as many as 12 

additional copayments as a result of 

restarting the capped rental period 

when they transition from a noncontract 

supplier to a contract supplier at the 

beginning of a DMEPOS CBP. In another 

example, a beneficiary who has already 

made 35 coinsurance payments for 

oxygen and oxygen equipment could 

make as many as 9 additional 

copayments as a result of the rule that 

provides a minimum of 10 monthly 

payments when they transition from a 

noncontract supplier to a contract 

supplier at the beginning of a DMEPOS 

CBP. As stated above, we expect that 

most noncontract suppliers will choose 

to become grandfathered suppliers, 

therefore limiting the number of 

instances where these rules would 

apply. However, in light of the 

beneficiary impact in the those extreme 

cases illustrated above, and in light of 

the recent legislative changes by the 

MIPPA and the ACA as explained 

above, we are reevaluating whether or 

not changes to these grandfathering 

rules are necessary. As discussed above, 

as a result of the MIPPA, suppliers of 

oxygen equipment no longer lose title to 

the equipment after receiving the 36th 

payment and this may warrant 

reconsideration of the minimum 

number of payments they should 

receive as contract suppliers when a 

beneficiary transitions to them from a 

noncontract supplier at the beginning of 

a DMEPOS CBP. In addition, we believe 

it is important to reevaluate the policy 

that restarts the 13-month capped rental 

period in situations where a beneficiary 

transitions from a noncontract supplier 

to a contract supplier at the beginning 

of a DMEPOS CBP. Therefore, we are 

soliciting public comments on whether 

or not the current rules should be 

changed to reduce the number of 

payments the contract supplier would 

receive in these situations above the 13 

and 36-month limits set forth under the 

standard payment rules in section 

1834(a) of the Act. We also plan to 

solicit advice from the PAOC on this 

subject at a future committee meeting. 

e. Appeals Process 

The DMEPOS CBP final rule issued 

on April 10, 2007 includes 

§ 414.422(g)(1), which states that ‘‘any 

deviation from contract requirements, 

including a failure to comply with 

governmental agency or licensing 

organization requirements, constitutes a 

breach of contract.’’ In the event we 

determine that a contract supplier’s 

actions constitute a breach of contract, 

§ 414.422(g)(2) authorizes us to take one 

or more of the following actions: 

• Require the contract supplier to 

submit a corrective action plan; 

• Suspend the contract supplier’s 

contract; 

• Terminate the contract; 

• Preclude the contract supplier from 

participating in the DMEPOS CBP; 

• Revoke the supplier number of the 

contract supplier; or 

• Avail itself of other remedies 

allowed by the statute. 

Proposed Appeals Process 

We are proposing to add a new 

§ 414.423 to establish an appeals 

process for contracts terminated under 

section 1847(a) and (b) of the Act. 

Section § 414.423, as proposed in this 

rule, would set forth policies and 

procedures relating to our 

determinations of a breach of contract 

and the appeals process for contract 

suppliers that are considered to be in 

breach of contract. In addition, we are 

proposing to add new definitions to 

§ 414.402 that are used in the proposed 

§ 414.423. 

Given the impact that termination has 

on a contract supplier, we believe it is 

appropriate for contract suppliers whose 

contract(s) may be terminated due to a 

breach of contract to have access to an 

appeal process that will reconsider that 

termination. In establishing this process 

we reviewed other appeals processes, 

such as the appeals process under Part 

D located at 42 CFR 423.641 through 

423.668, Subpart N—Medicare Contract 

Determinations and Appeals, to 

consider essential steps to ensure 

suppliers have access to an appropriate 

review of certain CMS decisions. We 

chose to propose a simplified process 

that would not result in disruption to 

the program by having suppliers going 

in and out of the program. For this 

reason, we propose a process for review 

and reconsideration before the contract 

is actually terminated. This proposal 

would avoid the necessity to reinstate 


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retroactively suppliers because the 

contracts would generally not be 

terminated before the full review 

process has occurred. This would 

protect the supplier because we 

generally would not terminate a 

supplier until a final decision is made. 

Another feature of this process that may 

be beneficial to some suppliers is 

allowing them to submit a corrective 

action plan (CAP) depending upon the 

nature of the breach. We believe our 

proposal would allow most suppliers to 

correct identified deficiencies. 

(1) Purpose and Definitions: (§ 414.402) 

We are proposing to amend § 414.402 

to define the following terms: 

• Affected party means a contract 

supplier that has been notified that their 

DMEPOS CBP contract would be 

terminated for a breach of contract. 

• Breach of contract means any 

deviation from contract requirements, 

including a failure to comply with a 

governmental agency or licensing 

organization requirements. 

• Corrective Action Plan (CAP) means 

a contract supplier’s written document 

with supporting information that 

describes the actions the contract 

supplier would take within a specified 

timeframe to remedy the breach of 

contract. 

• Competitive Bidding 

Implementation Contractor (CBIC) 

Hearing Officer (HO) means an 

individual, who was not involved with 

the CBIC recommendation to terminate 

a DMEPOS CBP contract, who is 

designated by CMS to review and make 

an unbiased and independent 

determination from the CBIC’s 

recommendation to terminate a 

DMEPOS CBP contract. 

• Parties to the Hearing means the 

DMEPOS contract supplier and CMS. 

(2) Applicability 

The appeals process proposed in this 

regulation would allow contract 

suppliers the opportunity for a review of 

the following: 

• A CMS determination under 

§ 414.422(g)(1) that the contract supplier 

breached its contract entered into as 

part of the DMEPOS CBP; and 

• Certain agency actions taken under 

§ 414.422(g)(2). 

The proposed appeals process would 

not apply to any other actions made by 

CMS, nor would the existence of other 

appeals processes preclude us from 

terminating a DMEPOS CBP contract. In 

other words, the proposed appeals 

process would be in addition to—and 

would not replace—existing CMS 

regulations regarding other appeals 

mechanisms. For example, a contract 

may be terminated because a supplier’s 

National Supplier Clearinghouse (NSC) 

number has been revoked or inactivated. 

In this case, the supplier would not 

appeal the decision to inactive or revoke 

its number through this appeals process. 

Instead, the supplier would continue to 

appeal the inactivation or revocation of 

its supplier number through the NSC’s 

appeals process, and we would 

postpone the termination decision until 

the supplier completes the NSC appeals 

process. 

Under our proposal, when we issue a 

termination decision, it would be final 

and binding unless a postponement of 

the termination decision is allowed by 

proposed § 414.423. We welcome 

comments on the scope of the proposed 

appeals process. 

(3) Contract Termination 

We are proposing that this appeals 

process applies in situations where the 

supplier has received a notice that we 

have determined that they are in breach 

of contract and that their contract is 

therefore subject to termination. A 

contract may be terminated for any 

violation of the terms of the contract. 

Examples of violations include, but are 

not limited to, situations where the 

contract supplier— 

• Has committed or participated in 

false, fraudulent, or abusive activities 

affecting the Medicare program, 

including the submission of false or 

fraudulent data or claims; 

• Experiences financial difficulties so 

that they are unable to effectively 

provide the necessary services to a 

Medicare beneficiary; or 

• Fails to meet the nondiscrimination policy and provides 

different items to beneficiaries located 

in a competitive bidding area (CBA) 

than it provides to its non-Medicare 

beneficiaries at § 414.422(c). 

We welcome comments on our 

proposed termination process. 

(4) Notice of Termination 

Under the proposed rule, the CBIC 

would work with suppliers to 

informally resolve performance 

deficiencies under its DMEPOS CBP 

contract prior to sending a 

recommendation to CMS that the 

supplier’s contract be terminated. If the 

CBIC cannot informally resolve the 

supplier’s deficiencies and recommends 

that we terminate the contract, we 

would review the CBIC’s 

recommendation to terminate the 

supplier’s contract. If we find that a 

breach occurred, we would begin the 

contract termination process by sending 

out a notice of termination to the 

supplier. 

We also propose requirements for the 

notice of termination so that suppliers 

are informed of the basis for CMS’s 

action as well as their options to 

respond to this action. The notice would 

explain all actions we plan to take in 

response to the supplier’s breach, such 

as the ability to submit a CAP or our 

determination to preclude a supplier 

from participating in future rounds of 

competitive bidding if found in breach 

of contract. If the supplier decides to 

appeal any of these decisions the 

supplier would submit an appeal in 

response to the notice to terminate. If 

we consider a supplier to be in breach 

of its contract, either in part or in whole, 

we would notify the contract supplier of 

the termination by certified mail. The 

notice would indicate that the contract 

supplier has been found to be in breach 

of contract and that the supplier’s 

contract would be terminated within 45 

calendar days of the date of the 

notification of termination. The notice 

would be sent by the CBIC using 

certified mail on the same date as the 

date on the notification of termination. 

The date of the notification of 

termination is the date that the 

notification is signed. The notification 

will be mailed on the date that it is 

signed. This date will be indicated on 

the notification. 

The proposed rule requires the notice 

to include, at a minimum, the following 

information: 

• The reasons for the termination in 

sufficient detail to allow the contract 

supplier to understand the nature of its 

breach of contract; 

• Depending on the nature of the 

breach, whether the supplier may be 

allowed to submit a CAP in lieu of 

requesting a hearing by the HO; 

• The right to request a hearing by the 

HO; 

• The address to which the written 

request for a hearing must be mailed; 

• The address to which the CAP must 

be mailed; and 

• The effective date of the 

termination of the contract, if a CAP is 

not submitted or if a request for a 

hearing has not been filed timely. 

We believe that this information 

would be sufficient to provide the 

supplier with the basis for CMS’s action, 

as well as their options in responding to 

our decision. We welcome comments on 

our proposal regarding the contents of 

the notice. 

In addition, our proposed rule 

requires the notice to indicate any 

additional penalties that may result 

from the termination, such as not being 

eligible to bid in future rounds of 

competitive bidding. An appeal of the 

termination would include the appeal of 


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any other results from the termination 

that are permissible under § 414.423, 

such as preclusion from participation in 

future rounds of the DMEPOS CBP. We 

believe this information may help the 

supplier to decide whether to appeal the 

notice of termination. 

(5) Corrective Action Plan 

We are also proposing a process by 

which a contract supplier may be able 

to submit a CAP to address the breach 

of contract. Depending on the nature of 

the breach of contract, we propose that 

the notice to the supplier would 

indicate whether a contract supplier 

would be allowed to provide the CBIC 

with a written CAP instead of 

submitting a request for a hearing by a 

HO. For example, under this proposal 

we would not allow a CAP if the 

supplier has been excluded, debarred or 

convicted of a health care related crime. 

We may also not allow a CAP that 

would result in negative consequences 

to the beneficiaries or the program 

caused by delaying the termination of 

the contract. 

We are proposing timelines related to 

the CAP. Under the proposed rule, if the 

supplier decides to submit a CAP, the 

CAP must be received by the CBIC 

within 30 calendar days from the date 

on the notice of termination. If the 

supplier decides not to submit a CAP, 

the supplier retains the right to request 

a review by a HO within 30 days from 

the date of the notice for termination. 

While the CAP is being evaluated, the 

termination determination would be 

postponed. We believe that 30 days is a 

sufficient amount of time for suppliers 

to prepare and submit a CAP and this 

would also ensure that there are no 

unnecessary delays in the appeals 

process. 

Under the proposed rule, we would 

require the CAP to demonstrate that the 

contract supplier has a plan to remedy 

all of the deficiencies that were 

identified in its notice of termination 

and must specify the timeframes for 

correcting these deficiencies. The CBIC 

would review the CAP to ensure that the 

contract supplier would be taking the 

appropriate measures in a timely 

manner to remedy the breach of 

contract. What constitutes a timely 

manner is dependent on the type of 

deficiency that is being corrected. Once 

the nature of the deficiency is identified 

the CBIC and CMS would make a caseby-case determination concerning what 

constitutes a timely manner for 

correcting the deficiency. However, we 

expect most deficiencies to be corrected 

within 90 days or less. Further guidance 

of what constitutes a timely manner 

would be communicated to the contract 

supplier by the CBIC as part of the 

review process. 

As part of the review process, the 

CBIC would provide guidance, in 

accordance with CMS instructions, 

regarding the type of documentation 

that the CAP and the follow-up report 

must provide to substantiate that the 

deficiencies have been corrected. To 

make a determination if a CAP would be 

considered acceptable, we may discuss 

the CAP with the supplier, and as a 

result of these discussions, the CBIC 

will allow a supplier to make revisions 

to its CAP during the review process. 

Suppliers may only revise their CAP 

one time during the review process. The 

timeframe for the review process would 

vary upon the circumstances for each 

case. If the supplier does not submit an 

acceptable CAP during the review 

process, the supplier would receive a 

new notice that their CAP is not 

acceptable or has not been implemented 

consistent with the supplier’s original 

submission and its contract would be 

terminated within 45 calendar days. 

Every supplier would have a one time 

opportunity to revise their CAP based 

upon deficiencies identified by the 

CBIC. Failure to develop and implement 

an approved CAP would result in a new 

notice to the supplier of the termination 

of the DMEPOS CBP contract and 

provide notice that the supplier may 

request a hearing on this termination. 

Under the proposed rule, once an 

acceptable CAP has been completed the 

contract supplier must provide a followup report within 5 days of the agreed 

upon date for the completion of the CAP 

to verify that all of the deficiencies 

identified in the CAP have been 

corrected consistent with the 

timeframes specified in the CAP, as 

approved by the CMS. We believe that 

5 days is sufficient time for a supplier 

to submit a report to CBIC outlining all 

steps that have been completed to 

correct the identified deficiencies. 

We welcome comments on our 

proposals relating to the option for a 

CAP. 

(6) Right To Request a Hearing by the 

CBIC Hearing Officer (HO) 

We propose that a contract supplier 

that has received a notice that we 

consider the supplier in breach of 

contract has the right to request a 

hearing before a HO who was not 

involved with the original breach of 

contract determination. We consider 

this process to be a reconsideration of 

the original decision, and consistent 

with other Medicare appeals provisions, 

we believe it is important that an 

individual not involved in making the 

initial recommendation conduct the 

reconsideration of the initial decision. 

As mentioned previously, the HO would 

be an individual who is designated by 

CMS to review and to make an unbiased 

and independent recommendation of 

whether to terminate the supplier’s 

DMEPOS CBP contract. The notice to 

the contract supplier would also 

identify the location to which a request 

for hearing must be sent. 

Under the proposed rule, a contract 

supplier may appeal the notice of 

termination by submitting a written 

request to the CBIC for a hearing by a 

HO. The written request should include 

any evidence to support its appeal. The 

HO is not required to allow evidence 

submitted in addition to the evidence 

submitted along with the written 

request. The hearing request must be 

received by the CBIC within 30 calendar 

days from the date of the termination 

letter. A request for a hearing must be 

sent to the address identified on the 

notice. Failure to request a hearing 

within the allotted 30 calendar days 

would result in a termination of the 

supplier’s contract, as of the effective 

date of termination identified in the 

notice to the supplier. There would be 

no extensions to this 30-day timeframe. 

We believe suppliers have sufficient 

time to decide whether or not to request 

a hearing and the deficiencies identified 

in the notice may pose a risk to the 

DMEPOS CBP. The date the request is 

received by the CBIC determines if the 

hearing request was timely filed. 

We would require that the request for 

hearing be filed by a supplier’s 

authorized official, because an 

authorized official of the company 

signed the contract and this ensures the 

validity of the request. The authorized 

official must be an official of the 

company who is identified on the 

supplier’s CMS 855–S form as an 

authorized official of the supplier. A 

supplier may appoint someone other 

than the authorized official to be a 

representative for them at the hearing. 

However, the representative may not be 

an individual who has been disqualified 

or suspended from acting as a 

representative by the Secretary or 

otherwise prohibited by law. The 

request for a hearing must be filed with 

the CBIC at the address identified on the 

notice of termination. 

We welcome comments on our 

proposed process for requesting a 

hearing by a HO. 

(7) Scheduling of the Hearing 

The proposed rule also addresses 

scheduling the hearing. We propose that 

within 30 calendar days from the receipt 

of a supplier’s timely hearing request 

the HO would contact the parties to 


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schedule a hearing. The request for a 

hearing would result in the 

postponement of the date of the contract 

termination. The only exception to this 

rule is when a supplier has been 

excluded, debarred or convicted of a 

health care related crime; in that 

situation the supplier’s contract would 

be terminated immediately. In the 

hearing request the contract supplier 

may ask for the hearing to be held in 

person or by telephone. The HO would 

send a notice to the parties to the 

hearing indicating the time and place 

for the hearing at least 30 days before 

the date of the hearing. The HO may, on 

his or her own motion, or at the request 

of a party, change the time and place for 

the hearing, but must give the parties to 

the hearing a 30-day notice of the 

change. 

The proposed rule would require that 

the HO’s notice scheduling the hearing 

must provide, at a minimum, the 

following information: 

• Date, time, and location of the 

scheduled hearing; 

• Description of the hearing 

procedure; 

• Issues to be resolved; 

• Requirement that the contract 

supplier bears the burden of proof to 

demonstrate that it is not in breach of 

contract; and 

• Provide an opportunity for the 

supplier to submit evidence to support 

its appeal. We believe this information 

provides the supplier with sufficient 

information regarding the hearing date, 

time, and matters that would be 

addressed at that time. We welcome 

comments on the content of this notice 

and the procedures for scheduling a 

hearing. 

(8) Burden of Proof 

We propose that the contract supplier 

would present to the HO the basis for its 

disagreement with the termination 

notice and would have the burden of 

proof to demonstrate to the HO with 

supporting evidence that it is not in 

breach of its contract and that the 

termination action is not appropriate. 

The supplier’s supporting evidence 

must be submitted with its request for 

a hearing. The supporting evidence and 

the request for a hearing must be 

submitted together and received by the 

HO within 30 calendar days from the 

date identified on the notice of 

termination. In the absence of good 

cause, the HO may not allow evidence 

to be submitted in addition to the 

evidence submitted along with the 

written request. We also have the 

opportunity to submit evidence to the 

HO within 30 days of receiving the 

notice announcing the hearing. The HO 

will share all evidence submitted, both 

from the supplier and CMS, in 

preparation for the hearing with all 

affected parties within 15 days prior to 

the scheduled date of the hearing. 

We welcome comments on our 

proposal regarding the burden of proof. 

(9) Role of the Hearing Officer (HO) 

Our proposal requires that the HO 

conduct a thorough and independent 

review. Such a review requires the 

consideration of all information and 

documentation relevant to the hearing 

and submitted consistent with this 

proposal. Consistent with this goal, we 

propose that the HO is responsible for 

all of the following: 

• Sharing all evidence submitted, 

both from supplier and CMS, in 

preparation for the hearing with all 

affected parties within 15 days prior to 

the scheduled date of the hearing. 

• Conducting the hearing and 

deciding the order in which the 

evidence and the arguments of the 

parties would be presented. 

• Determining the rules on 

admissibility of the evidence. 

• Examining the witnesses, in 

addition to the examinations conducted 

by CMS and the contract supplier. 

• Determining the rules for requesting 

documents and other evidence from 

other parties. 

• Ensuring a complete recording of 

the hearing is available and provided to 

all parties to the hearing and the CBIC. 

• Preparing a file of the record of the 

hearing which includes all evidence 

submitted as well as any relevant 

documents identified by the HO and 

considered as part of the hearing. 

• Complying with all applicable 

provisions of 42 U.S.C. Title 18 and 

related provisions of the Act, the 

applicable regulations issued by the 

Secretary, and manual instructions 

issued by CMS. 

The HO would make a 

recommendation based on the 

information presented and submitted. 

The HO would issue a written 

recommendation to CMS within 30 days 

of the close of the hearing, unless the 

HO requests an extension from CMS and 

demonstrates to CMS that he or she 

needs an extension due to complexity of 

the matter or heavy work load. The HO’s 

recommendation would include the 

rationale for his or her recommendation 

regarding the termination of the 

supplier’s contract and the HO would 

submit this recommendation to CMS for 

its determination. 

We welcome comments on the role of 

the CBIC HO in our proposed rule. 

(10) CMS’s Final Determination 

Under the proposed rule, the HO’s 

recommendation is submitted to CMS, 

and the agency would make the final 

determination regarding whether the 

supplier’s contract would be terminated. 

Our determination would be based upon 

on the record of the hearing, evidence, 

and documents considered by the HO as 

part of the HO recommendation. 

Information submitted after the hearing 

would not be considered. Our decision 

would be made within 30 days of the 

receipt of the HO’s recommendation. If 

our decision is to terminate the contract, 

the supplier would be notified of the 

effective date of termination by certified 

mail. Our decision regarding the 

termination of the contract is final and 

binding. 

We welcome comments on our 

proposal relating to CMS’s final 

determination of a supplier’s contract 

termination. 

(11) Effective Date of the Contract 

Termination 

Under the proposed rule, suppliers 

who submit a CAP or request a hearing 

would have the termination date 

identified on the notice delayed. The 

only exception to this rule is when a 

supplier has been excluded, debarred or 

convicted of a health care related crime; 

in that situation the contract would be 

terminated immediately. For 

terminations that do not meet these 

exceptions, the effective date of a final 

termination would be determined as 

follows: 

• The termination of a supplier’s 

DMEPOS CBP contract is effective on 

the date specified in the initial notice of 

termination, which will be 45 days from 

the date of the notice, unless the 

supplier request a hearing with the HO 

or the supplier submits an acceptable 

CAP. 

• After reviewing the HO 

recommendation, if we terminate a 

supplier’s contract the effective date of 

the termination would be the date 

specified in the post-hearing notice sent 

to the supplier indicating CMS’s final 

determination to terminate the contract. 

We welcome comments on our 

proposals related to the effective date of 

contract termination. 

(12) Effect of Contract Termination 

Under our proposal, once a supplier’s 

contract is terminated for breach of 

contract under the DMEPOS CBP, the 

contract supplier is no longer a 

DMEPOS CBP contract supplier for any 

DMEPOS CBP product category for 

which it was awarded a contract. This 

termination applies to all areas and 


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product categories because there is only 

one contract that encompasses all CBAs 

and product categories for which the 

supplier was awarded a contract. We 

would not make payment and would 

reject claims for DMEPOS competitive 

bid items and services furnished by a 

supplier whose contract has been 

terminated after the effective date of the 

termination for the remainder of the 

contract period. 

We recognize that a supplier’s 

termination would impact beneficiaries 

within the CBA. Therefore, we therefore 

propose that terminated suppliers must 

notify all beneficiaries within the CBA 

who are receiving rented competitively 

bid items of the termination of their 

contract status so that the beneficiaries 

can make arrangements to receive 

equipment and suppliers through other 

contract suppliers. After we have made 

our final determination and sent 

notification to the supplier, the supplier 

must notify beneficiaries within 5 days 

of receipt of the contract supplier’s final 

notice of termination. This notice must 

inform beneficiaries that they would 

have to select a new contract supplier to 

furnish their DMEPOS items in order for 

Medicare to pay for these items. For 

beneficiary protection, we also propose 

that contract suppliers who fail to give 

proper notification to beneficiaries may 

be prevented from participating in 

future rounds of DMEPOS CBP. We also 

propose that rental items may not be 

picked up from the beneficiary’s home 

until after the last day of the rental 

month for which the supplier has 

already received payment. We are 

proposing both of these policies to 

protect the beneficiary and to ensure 

that suppliers do not pick up equipment 

from a beneficiary for a time period for 

which they have already been paid to 

provide the service. 

2. Changes to Payment Rules for Oxygen 

and Oxygen Equipment 

a. Background 

The general Medicare payment rules 

for DME are set forth in section 1834(a) 

of the Act and 42 CFR part 414, subpart 

D of our regulations. Section 1834(a)(1) 

of the Act and § 414.210(a) of our 

regulations establish the Medicare 

payment for a DME item as equal to 80 

percent of either the lower of the actual 

charge or the fee schedule amount for 

the item. The beneficiary coinsurance is 

equal to 20 percent of either the lower 

of the actual charge or the fee schedule 

amount for the item once the deductible 

is met. 

The specific payment rules for oxygen 

and oxygen equipment under the 

existing fee schedules are set forth in 

section 1834(a)(5) of the Act and 

§ 414.226 of our regulations. Suppliers 

are paid a monthly payment amount for 

furnishing medically necessary oxygen 

contents (for both stationary and 

portable) and stationary oxygen 

equipment described under the class 

described in § 414.226(c)(1)(i). 

Equipment in the stationary class 

includes stationary oxygen 

concentrators, which concentrate 

oxygen from room air; stationary liquid 

oxygen systems, which use oxygen 

stored as a very cold liquid in cylinders 

and tanks; and gaseous oxygen systems, 

which administer compressed oxygen 

directly from cylinders. 

A monthly add-on payment is also 

made to suppliers furnishing medically 

necessary portable oxygen equipment 

falling under one of two classes 

described in § 414.226(c)(1)(ii) and (iii). 

Equipment in these classes includes 

traditional portable equipment, that is, 

portable liquid oxygen systems and 

portable gaseous oxygen systems, and 

oxygen generating portable equipment 

(OGPE), that is, portable oxygen 

concentrators and oxygen transfilling 

equipment used to fill portable tanks or 

cylinders in the home. Both the liquid 

and gaseous oxygen systems (for 

stationary and traditional portable 

systems) require on-going delivery of 

oxygen contents. 

Section 1834(a)(5)(F) of the Act, as 

amended by section 144(b) of MIPPA, 

limits the monthly rental payments to 

suppliers for oxygen equipment to 36 

months of continuous use, although 

monthly payments for furnishing 

gaseous or liquid oxygen contents 

continue after the 36-month equipment 

rental cap is reached for gaseous or 

liquid systems. In the CY 2009 PFS final 

rule with comment period (73 FR 69875 

through 69876), we discussed section 

144(b) of MIPPA and included a 

detailed discussion of how section 

5101(b) of the Deficit Reduction Act of 

2005 (DRA) previously required 

suppliers to transfer title to oxygen 

equipment to the beneficiary at the end 

of the 36-month rental period. Section 

144(b) of the MIPPA repealed this 

requirement to transfer title to the 

oxygen equipment to the beneficiary 

and allows suppliers to retain title to the 

oxygen equipment after 36 monthly 

rental payments are made for the 

equipment. 

Section 414.210 establishes the 

requirements for the replacement of 

DME, including oxygen equipment. 

Section 414.210(f)(1) states that if an 

item of DME, which includes oxygen 

equipment, has been in continuous use 

by the patient for the equipment’s 

reasonable useful lifetime or if the 

original equipment is lost, stolen, or 

irreparably damaged, the patient may 

elect to obtain a new piece of 

equipment. In such circumstances, 

§ 414.420(f)(2) authorizes payment for 

the new oxygen equipment in 

accordance with § 414.226(a). Section 

414.210(f)(1) states that the reasonable 

useful lifetime for DME, which includes 

oxygen equipment, is determined 

through program instructions. In the 

absence of CMS program instructions, 

the carrier may determine the 

reasonable useful lifetime for 

equipment, but in no case can it be less 

than 5 years. Computation is based on 

when the equipment is delivered to the 

beneficiary, not the age of the 

equipment. If the beneficiary elects to 

obtain new oxygen equipment after the 

reasonable useful lifetime, the payment 

is made for a new 36-month rental 

period in accordance with § 414.226(a). 

We are proposing to revise the 

payment rule for oxygen and oxygen 

equipment at § 414.226(g)(1) to address 

situations where beneficiaries relocate 

outside the service area of a supplier 

during the 36-month rental payment cap 

period for the oxygen equipment. 

Beneficiaries are experiencing great 

difficulties in finding suppliers willing 

to furnish oxygen equipment in 

situations where only a few months are 

left in the 36-month rental payment 

period at the time they relocate. For 

example, if a beneficiary is in the 30th 

rental month, the new supplier would 

be entitled to only 6 months of rental 

payments and then would have to 

continue to furnish the oxygen and 

oxygen equipment during any period of 

medical need for the remainder of the 

reasonable useful lifetime of the 

equipment. This creates a financial 

disincentive for oxygen suppliers to 

furnish oxygen and oxygen equipment 

to beneficiaries in these situations. 

The proposed changes to the payment 

rules for oxygen and oxygen equipment 

would apply to oxygen and oxygen 

equipment furnished under Part B and 

would also apply to oxygen and oxygen 

equipment furnished under programs 

implemented in accordance with 

section 1847(a) of the Act. 

b. Furnishing Oxygen Equipment after 

the 36-Month Rental Period (Cap) 

In the CY 2010 PFS final rule with 

comment period (74 FR 61887 through 

61890), we finalized § 414.226(g)(1) 

which, in accordance with section 

1834(a)(5)(F)(ii)(I) of the Act, requires 

the supplier that furnishes oxygen 

equipment during the 36-month rental 

period to continue furnishing the 

oxygen equipment after the 36-month 

rental period. The supplier is required 


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to continue to furnish the equipment 

during any period of medical need for 

the remainder of the reasonable useful 

lifetime of the equipment. As we noted 

when finalizing this rule, section 

1834(a)(5)(F)(ii)(I) does not provide any 

exceptions to this requirement. If the 

beneficiary relocates outside the 

supplier’s normal service area at some 

time after the 36-month rental period 

but before the end of the reasonable 

useful lifetime of the equipment, the 

supplier must make arrangements for 

the beneficiary to continue receiving the 

equipment at his or her new place of 

residence. This responsibility for 

furnishing the equipment does not 

transfer to another supplier. 

We revised § 414.226(f) to conform 

our regulations to this new MIPPA 

requirement. We deleted the transfer of 

ownership requirement and added the 

new requirement that the supplier must 

continue furnishing the oxygen 

equipment after the 36-month rental 

period during any period of medical 

need for the remainder of the reasonable 

useful lifetime of the equipment. It is 

important to note that § 414.226(g)(1)(ii) 

does not apply this same requirement in 

situations where the beneficiary 

relocates outside of the supplier’s 

normal service area during the 36- 

month rental period. 

c. Furnishing Oxygen Equipment during 

the 36-Month Rental Period (Cap) 

Section § 414.226(g)(1) contains the 

requirement that the supplier that 

furnishes oxygen and oxygen equipment 

for the first month of the 36th month of 

the rental cap period must continue to 

furnish the equipment for the entire 36- 

month period of continuous use, with 

limited exceptions. One exception at 

§ 414.226(g)(1)(ii) applies when a 

beneficiary permanently relocates his or 

her residence during the 36-month 

rental period outside of the current 

supplier’s normal service area. This 

exception was proposed in the ‘‘Home 

Health Prospective Payment System 

Rate Update for Calendar Year 2007 and 

Deficit Reduction Act of 2005 Changes 

to Medicare Payment for Oxygen 

Equipment and Capped Rental Durable 

Medical Equipment; Proposed Rule’’ 

published in the August 3, 2006 Federal 

Register (71 FR 44094) and was 

intended to reduce the burden on the 

supplier in these situations. This 

approach is also consistent with the 

regulations addressing capped rental 

items described in § 414.229. We 

addressed this issue in the capped 

rental context in the July 10, 1995 

Federal Register (60 FR 35494) in 

response to comments. The discussion 

states that since the implementation of 

the capped rental payment methodology 

on January 1, 1989, we received no 

reports of beneficiaries having difficulty 

obtaining access to capped rental DME 

after relocating outside the supplier’s 

service area. Since enactment of the 

capped rental DME payment category in 

section 4062 of the Omnibus Budget 

Reconciliation Act of 1987 (Pub. L. 100– 

203), representatives of the DME 

industry indicated that suppliers would 

be able to accommodate beneficiaries in 

these situations, and this has proven to 

be true for capped rental items. In fact, 

we have found this to be the case to this 

day. 

For this reason, we believed that 

beneficiaries would not encounter 

problems obtaining access to oxygen 

and oxygen equipment in similar 

situations, that is, following the 36- 

month cap imposed by section 144(b) of 

MIPPA. However, since the changes to 

the payment rules for oxygen and 

oxygen equipment mandated by the 

DRA became effective in 2006 and the 

36-month rental cap imposed by MIPPA 

was reached for the first time in January 

2009, we have received many reports of 

beneficiaries relocating prior to the end 

of the 36-month rental payment cap 

period and having difficulty finding an 

oxygen supplier in the new location. We 

have learned that many suppliers are 

unwilling to provide services in 

situations where there are a few number 

of months left in the 36-month rental 

payment period. 

We do not believe that beneficiaries 

have encountered similar issues 

following the 36-month rental cap, 

which most likely is the result of 

different statutory requirements for 

these two periods (that is, during and 

after the 36-month rental period). 

Section 1834(a)(5)(F)(ii) of the Act 

requires the supplier that furnishes the 

oxygen equipment during the 36-month 

rental payment period to continue 

furnishing the equipment after the 36- 

month rental payment period. 

Consistent with this requirement, we 

established regulations at § 414.226(f)(1) 

that require the supplier to furnish the 

equipment or make arrangements for 

furnishing the equipment in situations 

where the beneficiary relocates outside 

the supplier’s normal service area. Since 

no such requirement currently applies 

in situations where the beneficiary 

relocates prior to the end of the 36- 

month rental payment period, and in 

fact current regulations at 

§ 414.226(g)(1)(ii) absolve the supplier 

of the obligation to continue furnishing 

oxygen equipment in these situations, 

beneficiaries are experiencing 

difficulties finding suppliers of oxygen 

equipment in their new locations that 

are willing to accommodate them. As 

noted above, we have not seen this 

problem in the capped rental DME 

context. The requirement at 

§ 414.226(g)(1) to furnish oxygen 

equipment for the entire 36 month 

rental cap period was established in the 

course of implementing section 5101(b) 

of the DRA in order to safeguard the 

beneficiary from situations where 

suppliers might discontinue service and 

pick up oxygen equipment prior to the 

end of the 36-month rental cap in order 

to avoid losing title to the equipment. 

As mentioned earlier, the transfer of 

title of oxygen and oxygen equipment 

after the 36th paid rental month was 

repealed. The exception to this rule at 

§ 414.226(g)(1)(ii) was established based 

on our experience that suppliers of 

capped rental DME have accommodated 

beneficiaries in these situations, which, 

unfortunately, has not been our 

experience in the context of oxygen 

equipment. 

In order to address this vulnerability 

facing beneficiaries as a result of 

regulations currently in effect, we are 

proposing to revise the exception at 

§ 414.226(g)(1)(ii) to apply only to 

situations where the beneficiary 

relocates before the 18th paid rental 

month to an area that is outside the 

normal service area of the supplier that 

initially furnished the equipment. We 

are proposing to revise the regulation to 

require the supplier that furnishes the 

oxygen equipment and receives 

payment for month 18 or later to either 

furnish the equipment for the remainder 

of the 36-month rental payment period 

or, in the case where the beneficiary has 

relocated outside the service area of the 

supplier, make arrangements for 

furnishing the oxygen equipment with 

another supplier for the remainder of 

the 36-month rental payment period. 

The supplier that is required to furnish 

the equipment on the basis of this 

requirement must also furnish the 

equipment after the 36-month rental 

payment period in accordance with the 

requirements of section 1834(a)(5)(F)(ii) 

and § 414.226(f). 

The proposed revision would mean 

that a supplier does not have to 

continue to furnish the oxygen 

equipment if the beneficiary relocates 

outside the normal service area before 

the 18th paid rental month during a 

period of continuous use. Under the 

current rule, a supplier does not have to 

furnish the oxygen equipment if the 

beneficiary relocated before the 36th 

paid rental month during a period of 

continuous use. The current rule was 

established based on the long term, 

demonstrated ability of suppliers of 

capped rental DME to accommodate 


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beneficiaries in situations where they 

relocate near the end of a capped rental 

payment period. With regard to oxygen 

equipment, suppliers in general have 

not demonstrated a willingness to 

accommodate beneficiaries in similar 

situations. Therefore, it is necessary to 

revisit this rule in order to protect 

beneficiaries in these situations. This 

proposal would allow either a new 

supplier in the beneficiary’s new service 

area or a supplier in the old service area 

to receive at least half of the 36 monthly 

payments allowed for under the current 

statutory payment rule for oxygen 

equipment. We believe this approach 

would be fair to suppliers in either 

scenario since the same minimum 

number of payments applies. Based on 

current 2010 Medicare allowed fee 

schedule amounts for stationary oxygen 

equipment, total payments for 18 

months is $3,117.06. We believe this 

new rule would provide greater 

financial incentive to suppliers in areas 

where beneficiaries relocate to furnish 

oxygen equipment in these situations. 

We also believe that this proposal 

would not disadvantage suppliers 

required to continue furnishing oxygen 

equipment or make arrangements for 

furnishing oxygen equipment to 

beneficiaries that relocate outside their 

normal service area since these 

suppliers would receive 18 or more 

monthly payments. Most of the cases 

that have been reported regarding 

problems encountered by beneficiaries 

in obtaining access to oxygen equipment 

after relocating during the 36-month 

rental cap period have been situations 

where the beneficiary has relocated 

during the second half of the 36-month 

rental cap period. Therefore, we believe 

that this rule would largely address 

access problems associated with 

relocations during the 36-month rental 

cap period because the supplier that 

received payments during the first half 

of the 36-month rental cap period would 

be obligated to continuing furnishing 

the equipment during the second half of 

the 36-month rental cap period. 

H. Provider and Supplier Enrollment 

Issue: Air Ambulance Provision 

The National Transportation Safety 

Board (NTSB) is an independent Federal 

agency charged by the Congress with 

investigating transportation accidents, 

determining their probable cause and 

making recommendations to prevent 

similar accidents from occurring. Based 

on information derived from testimony 

provided at the NSTB public hearing 

and investigations into recent 

Helicopter Emergency Medical Services 

(HEMS) accidents, the NTSB made 

several specific recommendations to the 

Secretary of Health and Human Services 

on September 24, 2009. 

Specifically, the NTSB recommended 

that the Secretary develop minimum 

safety accreditation standards for HEMS 

operators that augment the operating 

standards of 14 CFR part 135 by 

including for all fights with medical 

personnel on board: (a) Scenario-based 

pilot training; (b) implementation of 

preflight risk evaluation programs; and 

(c) the installation of FAA-approved 

terrain awareness warning systems, 

night vision imaging systems, flight data 

recording systems for monitoring and 

autopilots if a second pilot is not used. 

In response to the NTSB concerns, the 

Secretary noted that the 

recommendations to CMS were similar 

to those being made to the Federal 

Aviation Administration (FAA). While 

we have expertise to regulate health and 

safety requirements that suppliers and 

providers of healthcare should meet, we 

do not have the expertise to determine 

aircraft safety requirements. The 

Secretary stated that, ‘‘we believe the 

FAA should determine the minimum 

level of safety that HEMS operators 

should meet and CMS should adopt 

regulations that require any HEMS 

operator that enrolls in Medicare to 

meet those requirements.’’ The Secretary 

also added that, ‘‘while we do not 

believe CMS should augment FAA 

regulations, we do believe that CMS’ 

regulations should ensure that only 

those HEMS operators that maintain the 

minimum level of requirements 

established by the FAA through its 

regulations are enrolled or maintain 

enrollment in the Medicare program.’’ 

In the April 21, 2006 Federal 

Register, we published the 

‘‘Requirements for Providers and 

Suppliers to Establish and Maintain 

Medicare Enrollment’’ final rule. This 

final rule implemented section 

1866(j)(1)(A) of the Act. In this final 

rule, we required that all providers and 

suppliers (other than physicians or 

practitioners who have elected to ‘‘optout’’ of the Medicare program) must 

complete an enrollment form and 

submit specific information to CMS in 

order to obtain Medicare billing 

privileges. Section 424.515 required that 

ambulance service providers continue to 

resubmit enrollment information in 

accordance with § 410.41(c)(2), which 

states, ‘‘Upon a carrier’s request, 

complete and return the ambulance 

supplier form designated by CMS and 

provide Medicare carrier with 

documentation of compliance with 

emergency vehicle and staff licensure 

and certification requirements in 

accordance with State and local laws.’’ 

This final rule also established 

§ 424.510(d)(2)(iii) which states, 

‘‘Submission of all documentation, 

including all applicable Federal and 

State licensure and regulatory 

requirements that apply to the specific 

provider or supplier type that related to 

providing health care services, required 

by CMS under this or other statutory or 

regulatory authority, or under the 

Paperwork Reduction Act of 1995, to 

establish the provider or supplier’s 

eligibility to furnish Medicare covered 

items or services to beneficiaries in the 

Medicare program.’’ 

While the Airline Deregulation Act 

(Pub. L. 95–504) preempts a State, 

political subdivision of a State, or 

political authority of at least 2 States 

from enacting or enforcing a law, 

regulation, or other provision having the 

force and effect of law related to a price, 

route, or service of an air carrier that 

may provide air transportation, air 

ambulances remain subject to Federal 

laws and regulations. In accordance 

with § 424.516(a)(2), providers and 

suppliers must adhere to all Federal 

regulations and State laws and 

regulations, as required, based on the 

type of services or supplies the provider 

or supplier type will furnish and bill 

Medicare. 

In § 424.510(d)(iii), we are proposing 

to clarify that ambulance suppliers and 

other providers and suppliers include 

documentation regarding all applicable 

Federal and State certifications. 

Accordingly we are propsing to revise 

§ 424.510(d)(iii) from ‘‘Submission of all 

documentation, including all applicable 

Federal and State licenses and 

regulatory requirements that apply to 

the specific provider or supplier type 

that relate to providing health care 

service, required by CMS under this or 

other statutory or regulatory authority, 

or under the Paperwork Reduction Act 

of 1995, to establish the provider or 

supplier’s eligibility to furnish Medicare 

covered items or services to 

beneficiaries in the Medicare program,’’ 

to ‘‘Submission of all documentation, 

including all applicable Federal and 

State licenses, certifications (including, 

but not limited to Federal Aviation 

Administration and Clinical Laboratory 

Improvement Act certifications), and 

regulatory requirements that apply to 

the specific provider or supplier type 

that relate to providing health care 

service, required by CMS under this or 

other statutory or regulatory authority, 

or under the Paperwork Reduction Act 

of 1995, to establish the provider or 

supplier’s eligibility to furnish Medicare 

covered items or services to 

beneficiaries in the Medicare program.’’ 

We are also proposing to revise 

§ 424.516(e)(2) and add new paragraph 


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(e)(3) to clarify that Medicare enrolled 

providers and suppliers must report a 

revocation or suspension of a Federal or 

State license or certification, including 

but not limited to FAA and Clinical 

Laboratory Improvement Act (CLIA) 

certifications. This revision will clarify 

that fixed-wing ambulance operators 

and HEMS operators are responsible for 

notifying the designated Medicare 

contractor for their State when FAA 

revokes or suspends any license or 

certification. Moreover, fixed-wing 

ambulance operators and HEMS 

operators must maintain all 

requirements as specified in 14 CFR part 

135. 

We believe that requiring fixed-wing 

ambulance and HEMS operators to 

notify their Medicare contractor of a 

suspension or revocation of a license or 

certification will ensure that any action 

taken by the FAA or other regulating 

authority will have a direct linkage to 

the operator’s ability to maintain their 

Medicare enrollment. We believe that 

such a policy will help improve aircraft 

safety for operators that are enrolled in 

Medicare and providing services to 

Medicare beneficiaries. In addition, 

since the FAA is responsible for the 

issuance and enforcement of regulations 

and minimum standards covering 

manufacturing, operating, and 

maintaining aircraft, we will work with 

the FAA to confirm that fixed-wing 

ambulance operators and HEMS 

operators remain in compliance with 

FAA safety regulations (including, but 

not limited to Federal Aviation 

Administration and certifications) to the 

Medicare contractor within 30 days of 

the revocation or suspension of the 

license or certification, the provider or 

supplier is making the decision to 

voluntarily terminate its Medicare 

billing privileges because the provider 

or supplier is no longer in compliance 

with the applicable licensing or 

certification requirements for their 

provider or supplier type. We believe 

that allowing providers and suppliers to 

self-report licensure or certification 

revocations and suspensions within a 30 

day period via the Medicare enrollment 

application (such as, the Internet-based 

Provider Enrollment Chain and 

Ownership System (PECOS) or the 

paper CMS–855) promotes compliance 

with the Medciare reporting 

requirements found in § 424.516. In 

addition, by reporting a licensure or 

certification revocation or suspension 

within 30 days, the provider or supplier 

avoids the Medicare contractor bringing 

an action to revoke its Medicare billing 

privileges and establishing and 

Medicare enrollment bar, see 

§ 424.535(c). Thus, by complying with 

the reporting responsibilities found in 

§ 424.516 and voluntarily terminating 

from the Medicare program, the air 

ambulance supplier can submit an 

initial application to enroll in the 

Medicare program as soon as the 

licensure or certification revocation or 

suspension action is resolved with the 

applicable licensing or certification 

organization. 

In § 424.502, we are proposing to 

define the term, ‘‘voluntary termination’’ 

as it is currently used in the Medicare 

program and throughout this regulation 

in the context of the provider 

enrollment requirements: We are 

proposing that the term, ‘‘voluntary 

termination’’ to mean an air ambulance 

supplier, that submits written 

confirmation to CMS of its decision to 

discontinue enrollment in the Medicare 

program. 

Futhermore, we belive that an air 

ambulance supplier, can make the 

decision to voluntary terminate their 

business relationship with the Medicare 

program at any time, including when 

the provider or supplier makes the 

decision that they will no longer furnish 

services to Medicare beneficiaries. 

In those situations, where an air 

ambulance supplier does not meet their 

reporting responsibilities and notify the 

Medicare program of a Federal or State 

licensure or certification revocation or 

suspension within 30 days of the 

reportable event, we believe that it is 

appropriate to that CMS or the Medicare 

contractor revoke the supplier’s 

Medicare billing privileges using 

§ 424.535(a)(1). We believe that this 

change will clarify that CMS or our 

Medicare contractor may revoke 

Medicare billing privileges when these 

types of suppliers do not report a 

revocation or suspension of a Federal or 

State license or certification. 

I. Technical Corrections 

1. Physical Therapy, Occupational 

Therapy and Speech-language Pathology 

We are proposing to revise § 409.23(c) 

by making a minor technical correction 

to remove an extraneous cross-reference 

which was initially proposed in the CY 

2008 PFS proposed rule (72 FR 38122, 

72 FR 38193, and 72 FR 38221). This 

cross-reference refers the reader to 

‘‘paragraph (c)(1)(ii) of this section,’’ a 

paragraph also proposed in the CY 2008 

PFS proposed rule, but never finalized. 

In the CY 2008 PFS final rule with 

comment period, we inadvertently 

neglected to remove the associated 

cross-reference from the regulations 

text. Accordingly, we now propose to 

rectify that oversight by making an 

appropriate correction in the regulations 

text, along with other minor formatting 

revisions. We are also proposing to 

make a minor clarification to the section 

heading and introductory text of 

§ 409.23 (along with a conforming 

revision to the corresponding 

regulations text at § 409.20(a)(3)) by 

revising the existing phrase ‘‘speech 

therapy’’ to read ‘‘speech-language 

pathology services,’’ so that it more 

accurately reflects the currently used 

terminology for this type of therapeutic 

treatment. 

In addition, we are also proposing to 

make a minor wording change in the 

provision at § 409.17(d) (which is 

incorporated by reference in 

§ 409.23(c)(2)), in order to clarify that 

the former provision’s reference to 

‘‘hospital’’ policies and procedures can 

alternatively refer, depending on the 

particular context, to SNF policies and 

procedures. 

2. Scope of Benefits 

In § 410.3, we are proposing a 

technical correction to paragraph (b)(2). 

Currently, § 410.3(b)(2) states that the 

specific rules on payment are set forth 

in subpart E of part 410. However, the 

specific payment rules are actually 

listed in subpart I of part 410. Therefore, 

we are proposing to correct § 410.3(b)(2) 

in this proposed rule. 

VII. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs): 


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A. ICRs Regarding Diagnostic X-ray 

Tests, Diagnostic Laboratory Tests, and 

Other Diagnostic Tests: Conditions 

(§ 410.32) 

Proposed § 410.32(d)(2)(i) would 

require the physician or qualified non 

physician practitioner (as defined in 

§ 410.32(a)(2)) who orders the service 

must maintain documentation of 

medical necessity in the beneficiary’s 

medical record. In addition, both the 

medical record and the laboratory 

requisition (or order) would be required 

to be signed by the physician or 

qualified non physician practitioner (as 

defined in § 410.32(a)(2) of this section) 

who orders the service. The burden 

associated with these requirements 

would be the time and effort necessary 

for a physician or qualified 

nonphysician practitioner to sign the 

medical record or laboratory requisition 

(or order). There would also be a 

recordkeeping requirement associated 

with maintaining the documentation of 

medical necessity in the beneficiary 

medical record. While these 

requirements are subject to the PRA, we 

believe the associated burden is exempt 

from the PRA in accordance with 5 CFR 

1320.3(b)(2). We believe that the time, 

effort, and financial resources necessary 

to comply with the aforementioned 

information collection requirements 

would be incurred by persons in the 

normal course of their activities and 

therefore considered to be usual and 

customary business practices. 

B. ICRs Regarding General Exceptions to 

the Referral Prohibition Related to Both 

Ownership/Investment and 

Compensation (§ 411.355) 

Proposed § 411.355(b)(7)(i) states that 

with respect to magnetic resonance 

imaging, computed tomography, and 

positron emission tomography, the 

referring physician shall provide written 

notice to the patient at the time of the 

referral that the patient may receive the 

same services from a person other than 

one described in § 411.355(b)(1). The 

written notice shall include a list of 

other suppliers (as defined in § 400.202 

of this title) that provide the services for 

which the individual is being referred. 

The list shall include a minimum of 10 

suppliers within a 25-mile radius of the 

referring physician’s office location at 

the time of the referral. The notice 

should be written in a manner sufficient 

to be reasonably understood by all 

patients and should include for each 

supplier on the list, at a minimum, the 

supplier’s name, address, telephone 

number, and distance from the referring 

physician’s office. A record of the 

disclosure notification, signed by the 

patient, shall be maintained as a part of 

the patient’s medical record. 

Section 411.355(b)(7)(ii) proposes that 

if the referring physician makes a 

referral within an area with fewer than 

10 other suppliers within the 25-mile 

radius of the physician’s office location 

at the time of the referral, the physician 

shall list all of the other suppliers of the 

imaging service that are present within 

a 25-mile radius of the referring 

physician’s office location, including up 

to 10 suppliers. Provision of the written 

list of alternate suppliers will not be 

required if no other suppliers provide 

the services for which the individual is 

being referred within the 25-mile radius. 

These physicians must still disclose to 

the patient that the patient may receive 

these services from a person other than 

one described in § 411.355(b)(1) in a 

manner sufficient to reasonably be 

understood by all patients. A record of 

the disclosure notification, signed by 

the patient and the referring physician, 

shall be maintained as a part of the 

patient’s medical record. 

The burden associated with the 

requirements contained in this section 

would be the time and effort necessary 

for a physician to develop a standard 

disclosure. There would also be burden 

associated with the time and effort 

necessary for a physician to provide the 

disclosure to the patient, to obtain the 

patient’s signature, and to record the 

paper as part of the patient’s medical 

record. We estimate that it would take 

1 hour for a physician’s office to 

develop a standard disclosure. We 

further estimate that 71,000 physicians 

will be required to comply with these 

requirements. The total burden 

associated with the development of the 

standard disclosure is 71,000 hours at a 

cost of $1,042,280. Similarly, we 

estimate that it will take each physician 

1 minute to provide the disclosure to 

the patient, to obtain the patient’s 

signature, and to record the paper as 

part of the patient’s medical record. We 

believe that each provider will make 

approximately 106 disclosures. The 

total estimated annual for this 

requirement is 125,433 hours at a cost 

of $10,536,400. 

C. ICRs Regarding Appeals Process for 

Termination of Competitive Bidding 

Contract (§ 414.423) 

Proposed § 414.423(c)(1)(i) states that 

CMS has the option to allow a DMEPOS 

supplier to provide a written CAP to 

remedy the deficiencies identified in the 

notice, when CMS determines that the 

delay in the termination date caused by 

allowing a CAP will not cause harm to 

beneficiaries. As stated in proposed 

§ 414.423(c)(2)(i) a CAP must be 

submitted within 30 calendar days from 

the date on the notification letter. If the 

supplier decides not to submit a CAP 

the supplier may within 30 days of the 

date on the termination letter request a 

hearing by a CBIC hearing officer. 

The burden associated with this 

requirement is the time and effort 

necessary for a supplier that has 

received a termination notice to develop 

and submit a CAP. We estimate that 10 

suppliers will need to comply with this 

requirement annually. Similarly, we 

estimate that it will take a supplier an 

average of 3 hours to develop a CAP. 

The total estimated annual burden 

associated with this requirement is 30 

hours at a cost of $2,250. 

Proposed § 414.423(e)(2) would 

require that if CMS accepts the CAP, 

including supplier’s designated 

timeframe for its completion, the 

supplier must provide a follow-up 

report within 5 days after the supplier 

has fully implemented the CAP that 

verifies that all of the deficiencies 

identified in the CAP have been 

corrected in accordance with the 

timeframes accepted by CMS. The 

burden associated with this requirement 

is the time and effort necessary for a 

supplier to develop and submit a 

follow-up report. While this 

requirement is subject to the PRA, we 

believe the associated burden is exempt 

under 5 CFR 1320.3(h)(6). In accordance 

with 5 CFR 1320.3(h)(6), a request for 

facts or opinions addressed to a single 

person is not defined as information 

collection requirements and is therefore 

exempt from the PRA. 

Proposed § 414.423(f)(1) states that a 

supplier who has received a notice that 

CMS considers them in breach of 

contract or that their CAP is not 

acceptable has the right to request a 

hearing before a CBIC HO who was not 

involved with the original 

determination. Section 414.423(f)(2) 

further proposes that a supplier who 

wishes to appeal the termination notice 

must submit a written request to the 

CBIC. The request for a hearing must be 

received by the CBIC within 30 calendar 

days from the date of the notice to 

terminate. 

The burden associated with this 

section is the time and effort necessary 

for a supplier to develop and submit a 

written request for a hearing by a CBIC 

Hearing Officer. We estimate that it will 

take a supplier 8 hours to develop and 

submit a request for a hearing. We 

believe 5 suppliers will be subject to 

this requirement on an annual basis. 

The total estimated annual burden 

associated with developing and 

submitting a written request for a 


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hearing by a CBIC Hearing Officer is 40 

hours at a cost of $3,000. 

Proposed § 414.423 would require a 

contract suppliers whose contract has 

been terminated to notify all 

beneficiaries who are receiving rented 

competitive bid items or competitive 

bid items received on a recurring basis, 

of the termination of their contract. The 

notice to the beneficiary from the 

supplier whose contract was terminated 

must be provided within 5 days of 

receipt of the notice of termination. The 

notification to the beneficiaries must 

inform the beneficiaries that they are 

going to have to select a new contract 

supplier for these items. 

The burden associated with this 

section is the time and effort necessary 

for a supplier to develop and distribute 

notification of its termination to all 

beneficiaries receiving rented 

competitive bid items or competitive 

bid items received on a recurring basis. 

We estimate that it will take a supplier 

3 hours to develop and distribute a 

notice announcing its termination to all 

of its beneficiaries receiving rented 

competitive bid items or competitive 

bid items received on a recurring basis. 

We believe 2 suppliers will be subject 

to this requirement on an annual basis. 

The total estimated annual burden 

associated with this requirement is 6 

hours at a cost of $450. 

D. ICRs Regarding Additional Provider 

and Supplier Requirements for Enrolling 

and Maintaining Active Enrollment 

Status in the Medicare Program 

(§ 424.516) 

Proposed § 424.516(e)(2) would 

require a provider or supplier to report 

a revocation or suspension to the 

applicable Medicare contractor within 

30 days any revocation or suspension of 

a Federal or State license or 

certification. Similarly, proposed 

§ 424.516(e)(2) states that within 30 

days of voluntary withdrawal or 

involuntary termination from the 

Medicare program, the provider or 

supplier must report voluntary 

withdraw or involuntary termination to 

the applicable Medicare contractor. The 

burden associated with the 

requirements in § 424.516(e)(2) and (3) 

is the time and effort necessary for a 

provider or supplier to report the 

required information to the applicable 

Medicare contractor. While these 

requirements are subject to the PRA, 

each submission will be evaluated on a 

case-by-case basis. 

E. ICRs Regarding Additional Provider 

and Supplier Requirements for Enrolling 

and Maintaining Active Enrollment 

Status in the Medicare Program 

(§ 424.516) 

Proposed § 424.516(e)(2) would 

require a provider or supplier to report 

a revocation or suspension to the 

applicable Medicare contractor within 

30 days any revocation or suspension of 

a Federal or State license or 

certification. Similarly, proposed 

§ 424.516(e)(2) states that within 30 

days of voluntary withdrawal or 

involuntary termination from the 

Medicare program, the provider or 

supplier must report voluntary 

withdraw or involuntary termination to 

the applicable Medicare contractor. The 

burden associated with the 

requirements in § 424.516(e)(2) and (3) 

is the time and effort necessary for a 

provider or supplier to report the 

required information to the applicable 

Medicare contractor. While these 

requirements are subject to the PRA, 

each submission will be evaluated on a 

case-by-case basis. 

TABLE 72—ESTIMATED ANNUAL RECORDKEEPING AND REPORTING BURDEN

Regulation section(s) OMB Control No. 

Respondents Responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly 

labor cost of 

reporting 

(in $) 

Total 

labor cost of 

reporting 

(in $) 

Total capital/mainte- nance costs (in $) 

Total cost 

(in $) 

§ 411.355 ................................ 0938–New .. 71,000 71,000 1 71,000 14.68 1,042,280 0 1,042,280 

71,000 7,454,760 0 .0167 125,433 83.79 10,536,400* 0 10,536,400 

§ 414.423 ................................ 0938–New .. 10 10 3 30 75.00 2,250 0 2,250 

5 5 8 40 75.00 3000 .................... 3000 

2 2 3 6 75.00 450 .................... 450 

Total ................................. .................... 71,017 7,525,777 ...................... 196,509 .................... .................... .................... 11,584,380 

* The annual cost burden for this provision was calculated by taking 106 disclosures per year per physician × $1.40 per disclosure = $148.40 a year per physician × 

71,000 physicians = $10,536,400. 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

[CMS–1503–P] Fax: (202) 395–6974; or 

E-mail: OIRA_submission@omb.eop.gov. 

F. Additional Information Collection 

Requirements 

This proposed rule imposes collection 

of information requirements as outlined 

in the regulation text and specified 

above. However, this proposed rule also 

makes reference to several associated 

information collections that are not 

discussed in the regulation text 

contained in this document. The 

following is a discussion of these 

information collections, some of which 

have already received OMB approval. 

1. Part B Drug Payment 

The discussion of average sales price 

(ASP) issues in section VI.A.1 of this 

proposed rule does not contain any new 

information collection requirements 

with respect to payment for Medicare 

Part B drugs and biologicals under the 

ASP methodology. Drug manufacturers 

are required to submit ASP data to us 

on a quarterly basis. The ASP reporting 

requirements are set forth in section 

1927(b) of the Act. The burden 

associated with this requirement is the 

time and effort required by 

manufacturers of Medicare Part B drugs 

and biologicals to calculate, record, and 

submit the required data to CMS. While 

the burden associated with this 

requirement is subject to the PRA, it is 

currently approved under OMB control 

number 0938–0921. 

3. Physician Quality Reporting Initiative 

(PQRI) 

Section VI.F.1. of this proposed rule 

discusses the background of the PQRI, 

provides information about the 

proposed measures and reporting 

mechanisms to be available to eligible 

professionals (EPs) and group practices 

who choose to participate in the 2011 

PQRI, and the proposed criteria for 

satisfactory reporting in 2011. 


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With respect to satisfactory 

submission of data on quality measures 

by EPs, EPs include physicians, other 

practitioners as described in section 

1842(b)(18)(c) of the Act, physical and 

occupational therapists, qualified 

speech-language pathologists, and 

qualified audiologists. EPs may choose 

whether to participate and, to the extent 

they satisfactorily submit data on 

quality measures for covered 

professional services, they can qualify to 

receive an incentive payment. To 

qualify to receive an incentive payment 

for 2011, the EP (or group practice) must 

meet one of the proposed criteria for 

satisfactory reporting described in 

sections VI.F.1.e. or VI.F.1.f. of this 

proposed rule (or section VI.F.1.g. for 

group practices). 

Because this is a voluntary program, 

it is difficult to accurately estimate how 

many EPs will opt to participate in the 

PQRI in CY 2011. Information from the 

‘‘PQRI 2007 Reporting Experience 

Report,’’ which is available on the PQRI 

section of the CMS Web site at http:// 

www.cms.hhs.gov/PQRI, indicates that 

nearly 110,000 unique TIN/NPI 

combinations attempted to submit PQRI 

quality measures data via claims for the 

2007 PQRI. Therefore, for purposes of 

conducting a burden analysis for the 

2011 PQRI, we will assume that all EPs 

who attempted to participate in the 

2007 PQRI will also attempt to 

participate in the 2011 PQRI. 

Furthermore, we believe that the burden 

for EPs who are participating in the 

PQRI for the first time in 2011 will be 

considerably higher than the burden for 

EPs who have participated in PQRI in 

prior years. 

For individual EPs, the burden 

associated with the requirements of this 

reporting initiative is the time and effort 

associated with EPs identifying 

applicable PQRI quality measures for 

which they can report the necessary 

information, collecting the necessary 

information, and reporting the 

information needed to report the EP’s or 

group practice’s measures. We believe it 

is difficult to accurately quantify the 

burden because EPs may have different 

processes for integrating the PQRI into 

their practice’s work flows. Moreover, 

the time needed for an EP to review the 

quality measures and other information, 

select measures applicable to his or her 

patients and the services he or she 

furnishes to them, and incorporate the 

use of quality data codes into the office 

work flows is expected to vary along 

with the number of measures that are 

potentially applicable to a given 

professional’s practice. Since EPs are 

generally required to report on at least 

3 measures to earn a PQRI incentive, we 

will assume that each EP who attempts 

to submit PQRI quality measures data is 

attempting to earn a PQRI incentive 

payment and reports on an average of 3 

measures for this burden analysis. 

Because we anticipate even greater 

participation in the 2011 PQRI than in 

previous years, including participation 

by EPs who are participating in PQRI for 

the first time in 2011, we will assign 5 

hours as the amount of time needed for 

EPs to review the 2011 PQRI Measures 

List, review the various reporting 

options, select the most appropriate 

reporting option, identify the applicable 

measures or measures groups for which 

they can report the necessary 

information, review the measure 

specifications for the selected measures 

or measures groups, and incorporate 

reporting of the selected measures or 

measures groups into the office work 

flows. This estimate is based on our 

assumption that an EP will need up to 

2 hours to review the 2011 PQRI 

Measures List, review the reporting 

options, and select a reporting option 

and measures on which to report and 3 

hours to review the measure 

specifications for up to 3 selected 

measures or up to 1 selected measures 

group and to develop a mechanism for 

incorporating reporting of the selected 

measures or measures group into the 

office work flows. 

Information from the Physician 

Voluntary Reporting Program (PVRP), 

which was a predecessor to the PQRI, 

indicated an average labor cost of $50 

per hour. To account for salary increases 

over time, we will use an average 

practice labor cost of $58 per hour in 

our estimates based on an assumption of 

an average annual increase of 

approximately 3 percent. Thus, we 

estimate the cost for EP associated with 

preparing to report PQRI quality 

measures would be approximately $290 

per EP ($58 per hour x 5 hours). 

We continue to expect the ongoing 

costs associated with PQRI participation 

to decline based on an EP’s familiarity 

with and understanding of the PQRI, 

experience with participating in the 

PQRI, and increased efforts by CMS and 

stakeholders to disseminate useful 

educational resources and best 

practices. 

We believe the burden associated 

with actually reporting the PQRI quality 

measures will vary depending on the 

reporting mechanism selected by the EP. 

For claims-based reporting, EPs must 

gather the required information, select 

the appropriate quality data codes 

(QDCs), and include the appropriate 

QDCs on the claims they submit for 

payment. The PQRI will collect QDCs as 

additional (optional) line items on the 

existing HIPAA transaction 837–P and/ 

or CMS Form 1500 (OCN: 0938–0999). 

We do not anticipate any new forms and 

no modifications to the existing 

transaction or form. We also do not 

anticipate changes to the 837–P or CMS 

Form 1500 for CY 2011. 

Based on our experience with the 

PVRP, we continue to estimate that the 

time needed to perform all the steps 

necessary to report each measure (that 

is, reporting the relevant quality data 

code(s) for a measure) on claims ranges 

from 15 seconds (0.25 minutes) to over 

12 minutes for complicated cases and/ 

or measures, with the median time 

being 1.75 minutes. At an average labor 

cost of $58 per hour per practice, the 

cost associated with this burden ranges 

from $0.24 in labor to about $11.60 in 

labor time for more complicated cases 

and/or measures, with the cost for the 

median practice being $1.69. 

The total estimated annual burden for 

this requirement will also vary along 

with the volume of claims on which 

quality data is reported. In previous 

years, when we required reporting on 80 

percent of eligible cases for claimsbased reporting, we found that on 

average, the median number of reporting 

instances for each of the PQRI measures 

was 9. Since we propose to reduce the 

required reporting rate by over one-third 

to 50 percent, then for purposes of this 

burden analysis we will assume that an 

EP will need to report each selected 

measure for 6 reporting instances. The 

actual number of cases on which an 

eligible professional would be required 

to report quality measures data will 

vary, however, with the EP’s patient 

population and the types of measures on 

which the EP chooses to report (each 

measure’s specifications includes a 

required reporting frequency). 

Based on the assumptions discussed 

above, we estimate the total annual 

reporting burden per EP associated with 

claims-based reporting to range from 4.5 

minutes (0.25 minutes per measure × 3 

measures × 6 cases per measure) to 180 

minutes (12 minutes per measure × 3 

measures × 6 cases per measure), with 

the burden to the median practice being 

31.5 minutes (1.75 minutes per measure 

× 3 measures × 6 cases). We estimate the 

total annual reporting cost per EP 

associated with claims-based reporting 

to range from $4.32 ($0.24 per measure 

× 3 measures × 6 cases per measure) to 

$208.80 ($11.60 per measure × 3 

measures × 6 cases per measure), with 

the cost to the median practice being 

$30.42 per EP ($1.69 per measure × 3 

measures × 6 cases per measure). 

For registry-based reporting, there 

would be no additional time burden for 

EP to report data to a registry as EP 


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opting for registry-based reporting 

would more than likely already be 

reporting data to the registry for other 

purposes. Little, if any, additional data 

would need to be reported to the 

registry for purposes of participation in 

the 2011 PQRI. However, EPs would 

need to authorize or instruct the registry 

to submit quality measures results and 

numerator and denominator data on 

quality measures to CMS on their 

behalf. We estimate that the time and 

effort associated with this would be 

approximately 5 minutes per EP. 

Registries interested in submitting 

quality measures results and numerator 

and denominator data on quality 

measures to CMS on their participants’ 

behalf in 2011 would need to complete 

a self-nomination process in order to be 

considered ‘‘qualified’’ to submit on 

behalf of EPs unless the registry was 

qualified to submit on behalf of EPs for 

prior years and did so successfully. We 

estimate that the self-nomination 

process for qualifying additional 

registries to submit on behalf of EPs for 

the 2011 PQRI involves approximately 1 

hour per registry to draft the letter of 

intent for self-nomination. It is 

estimated that each self-nominated 

entity will also spend 2 hours for the 

interview with CMS officials and 2 

hours calculating numerators, 

denominators, and measure results for 

each measure the registry wishes to 

report using a CMS-provided measure 

flow. However, the time it takes to 

complete the measure flow could vary 

depending on the registry’s experience 

and the number and type of measures 

for which the registry wishes to submit 

on behalf of EPs. Additionally, part of 

the self-nomination process involves the 

completion of an XML submission by 

the registry, which is estimated to take 

approximately 5 hours, but may vary 

depending on the registry’s experience. 

We estimate that the registry staff 

involved in the registry self-nomination 

process have an average labor cost of 

$50 per hour. Therefore, assuming the 

total burden hours per registry 

associated with the registry selfnomination process is 10 hours, we 

estimate the total cost to a registry 

associated with the registry selfnomination process to be approximately 

$500 ($50 per hour × 10 hours per 

registry). 

The burden associated with the 

registry-based reporting requirements of 

this voluntary reporting initiative is the 

time and effort associated with the 

registry calculating quality measure 

results from the data submitted to the 

registry by its participants and 

submitting the quality measures results 

and numerator and denominator data on 

quality measures to CMS on behalf of 

their participants. The time needed for 

a registry to review the quality measures 

and other information, calculate the 

measures results, and submit the 

measures results and numerator and 

denominator data on the quality 

measures on their participants behalf is 

expected to vary along with the number 

of EPs reporting data to the registry and 

the number of applicable measures. 

However, we believe that registries 

already perform many of these activities 

for their participants. The number of 

measures that the registry intends to 

report to CMS and how similar the 

registry’s measures are to CMS’ PQRI 

measures will determine the time 

burden to the registry. 

For EHR-based reporting, the EP must 

have an IACS account, which we 

believe takes less than 1 hour to obtain. 

Once an EP has an IACS account, he or 

she must extract the necessary clinical 

data from his or her EHR, and submit 

the necessary data to the CMSdesignated clinical data warehouse. 

With respect to our proposal to require 

an EP to submit a test file, we believe 

that doing so would take less than 1 

hour. With respect to submitting the 

actual 2011 data file in 2012, we believe 

that this would take an EP no more than 

2 hours, depending on the number of 

patients on which the EP is submitting. 

We believe that once the EHR is 

programmed by the vendor to allow data 

submission to CMS, the burden to the 

EP associated with submission of data 

on PQRI quality measures should be 

minimal. Because this manner of 

reporting quality data to CMS was new 

to PQRI for 2010 and no EHR data 

submissions have taken place yet, it is 

difficult to estimate how many EPs will 

opt to participate in the PQRI through 

the EHR mechanism in CY 2011. 

An EHR vendor interested in having 

their product(s) be used by EPs to 

submit PQRI quality measures data to 

CMS were required to complete a selfnomination process in order for the 

vendor’s product(s) to be considered 

‘‘qualified’’ for 2011. It is difficult to 

accurately quantify the burden 

associated with the EHR selfnomination process as there is variation 

regarding the technical capabilities and 

experience among vendors. For 

purposes of this burden analysis, 

however, we estimate that the time 

required for an EHR vendor to complete 

the self-nomination process will be 

similar to the time required for registries 

to self-nominate that is approximately 

10 hours at $50 per hour for a total of 

$500 per EHR vendor ($50 per hour x 

10 hours per EHR vendor). 

The burden associated with the EHR 

vendor programming its EHR product(s) 

to extract the clinical data that the EP 

needs to submit to CMS for purposes of 

reporting 2010 PQRI quality measures 

will be dependent on the EHR vendor’s 

familiarity with PQRI, the vendor’s 

system capabilities, as well as the 

vendor’s programming capabilities. 

Some vendors already have these 

necessary capabilities and for such 

vendors, we estimate the total burden 

hours to be 40 hours at a rate of $50 per 

hour for a total burden estimate of 

$2,000 ($50 per hour x 40 hours per 

vendor). However, given the variability 

in the capabilities of the vendors, those 

vendors with minimal experience 

would have a burden of approximately 

200 hours at $50 per hour, for a total 

estimate of $10,000 per vendor ($50 per 

hour x 200 hours per EHR vendor). 

With respect to the process for group 

practices to be treated as satisfactorily 

submitting quality measures data under 

the 2011 PQRI discussed in section 

VI.F.1. of this proposed rule, group 

practices interested in participating in 

the 2011 PQRI through one of the 

proposed group practice reporting 

options would need to complete a selfnomination process similar to the selfnomination process required of 

registries and EHR vendors. Therefore, 

assuming 2 hours for a group practice to 

decide whether to participate as a group 

or individually, approximately 2 hours 

per group practice to draft the letter of 

intent for self-nomination, gather the 

requested information, and provide this 

requested information, and an 

additional 2 hours undergoing the 

vetting process with CMS officials, we 

estimate a total of 6 hours associated 

with the self-nomination process. 

Assuming that the group practice staff 

involved in the group practice selfnomination process have the same 

average practice labor cost as the 

average practice labor cost estimates we 

used for individual EPs of $58 per hour, 

we estimate the total cost to a group 

practice associated with the group 

practice self-nomination process to be 

approximately $348 ($58 per hour x 6 

hours per group practice). 

The burden associated with the group 

practice reporting requirements of this 

voluntary reporting initiative is the time 

and effort associated with the group 

practice submitting the quality measures 

data. For practices participating under 

the proposed GPRO I process, this 

would be the time associated with the 

physician group completing the data 

collection tool. The information 

collection components of this data 

collection tool have been reviewed by 

OMB and are currently approved under 


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OMB control number 0938–0941, with 

an expiration date of December 31, 

2011, for use in the Physician Group 

Practice, Medicare Care Management 

Performance (MCMP), and EHR 

demonstrations. Based on burden 

estimates for the PGP demonstration, 

which uses the same data submission 

methods, we estimate the burden 

associated with a physician group 

completing the data collection tool 

would be approximately 79 hours per 

physician group. Based on an average 

labor cost of $58 per physician group, 

we estimate the cost of data submission 

per physician group associated with 

participating in the proposed PQRI 

GPRO I would be $4,582 ($58 per hour 

x 79 hours per group practice). 

For group practices participating 

under the proposed GPRO II process, 

the burden associated with submitting 

the PQRI quality measures data would 

be the time associated with the group 

practice submitting the required data to 

CMS via claims or a registry. We would 

expect that data submission under 

GPRO II would take no more time than 

the time it would take an individual EP 

to submit via claims or registry. We 

believe it would be appropriate to 

multiply the appropriate burden 

estimates for each reporting mechanism 

for individual EPs by the number of EPs 

in a group to obtain the burden 

estimates for data submission under 

GPRO II. For example, based on our 

estimate of 15.75 minutes per EP under 

claims-based reporting, we would 

expect that a 2-person group would 

have a burden of 31.50 minutes for 

claims-based submission under GPRO 

II. 

We invite comments on this burden 

analysis, including the underlying 

assumptions used in developing our 

burden estimates. 

3. Electronic Prescribing (eRx) Incentive 

Program 

We believe it is difficult to accurately 

estimate how many EPs will opt to 

participate in the eRx Incentive Program 

in CY 2011. Final participation numbers 

from the first year of the eRx Incentive 

Program (2009) are not available. 

Information from the ‘‘PQRI 2007 

Reporting Experience Report,’’ which is 

available on the PQRI section of the 

CMS Web site at http:// 

www.cms.hhs.gov/PQRI, however, 

indicates that nearly 110,000 unique 

TIN/NPI combinations attempted to 

submit PQRI quality measures data via 

claims for the 2007 PQRI. Therefore, for 

purposes of conducting a burden 

analysis for the 2011 eRx Incentive 

Program, we will assume that as many 

EPs who attempted to participate in the 

2007 PQRI will attempt to participate in 

the 2011 eRx Incentive Program. As 

such, we can estimate that nearly 

110,000 unique TIN/NPI combinations 

will participate in the 2011 eRx 

Incentive Program. 

Section VI.F.2 of this proposed rule 

discusses the background of the eRx 

Incentive Program. Section VI.F.2.b.(2) 

of this proposed rule provides 

information on how we propose EPs and 

group practices can qualify to be 

considered a successful electronic 

prescriber in 2011 in order to earn an 

incentive payment. For 2011, EPs and 

group practices may choose whether to 

participate and, to the extent they 

meet— (1) certain thresholds with 

respect to the volume of covered 

professional services furnished; and (2) 

the criteria to be considered a successful 

electronic prescriber described in 

section VI.F.2.b.(2) of this proposed 

rule, they can qualify to receive an 

incentive payment for 2011 and/or 

avoid being subject to a penalty that 

goes into effect in 2012. 

For the 2011 eRx Incentive Program, 

as discussed in section VI.F.2. of this 

proposed rule, we propose that each EP 

would need to report the G-code 

indicating that at least one prescription 

generated during an encounter was 

electronically submitted at least 25 

instances during the reporting period. 

We expect the ongoing costs associated 

with participation in the eRx Incentive 

Program to decline based on an EP’s 

familiarity with and understanding of 

the eRx Incentive Program, experience 

with participating in the eRx Incentive 

Program, and increased efforts by CMS 

and stakeholders to disseminate useful 

educational resources and best 

practices. 

Similar to PQRI, one factor in the 

burden to individual EPs would be the 

time and effort associated with 

individual EPs reviewing the electronic 

prescribing measure to determine 

whether it is applicable to them, 

reviewing the available reporting 

options (we propose this measure would 

be reportable through claims-based 

reporting, registry-based reporting, or 

through EHRs) and selecting one, 

gathering the required information, and 

incorporating reporting of the measure 

into their office work flows. Since the 

eRx Incentive Program consists of only 

1 measure to report, we estimate 2 hours 

as the amount of time needed for 

individual EPs to prepare for 

participation in the eRx Incentive 

Program. At an average cost of 

approximately $58 per hour per 

practice, we estimate the total 

preparation costs to individual EPs to be 

approximately $116 (2 hours × $58 per 

hour). 

Another factor that influences the 

burden to EPs is how they choose to 

report the electronic prescribing 

measure. For EPs who choose to do so 

via claims, we estimate that the burden 

associated with the requirements of this 

incentive program is the time and effort 

associated with gathering the required 

information, selecting the appropriate 

quality data codes (QDCs), and 

including the appropriate QDCs on the 

claims they submit for payment. For 

claims-based reporting, the QDCs will 

be collected as additional (optional) line 

items on the existing HIPAA transaction 

837–P and/or CMS Form 1500. We do 

not anticipate any new forms and no 

modifications to the existing transaction 

or form. We also do not anticipate 

changes to the 837–P or CMS Form 1500 

for CY 201. 

Based on the information from the 

PVRP described above for the amount of 

time it takes a median practice to report 

one measure one time on claims (1.75 

minutes) and our proposal to require 

EPs to report the measure 25 times, we 

estimate the burden associated with 

claims-based data submission to be 

43.75 minutes (1.75 minutes per case × 

1 measure × 25 cases per measure). This 

equates to a cost of approximately 

$42.29 (1.75 minutes per case × 1 

measure × 25 cases per measure × $58 

per hour) per individual EP. 

Because registry-based reporting of 

the electronic prescribing measure to 

CMS was added to the eRx Incentive 

Program for 2010 and EPs are not 

required to indicate to us how they plan 

to report the electronic prescribing 

measure each year, it is difficult to 

accurately estimate how many EPs will 

opt to participate in the eRx Incentive 

Program through the registry-based 

reporting mechanism in CY 2011. We do 

not anticipate, however, any additional 

burden for EPs to report data to a 

registry as EPs opting for registry-based 

reporting would more than likely 

already be reporting data to the registry 

for other purposes. Little, if any, 

additional data would need to be 

reported to the registry for purposes of 

participation in the 2011 eRx Incentive 

Program. However, EPs would need to 

authorize or instruct the registry to 

submit quality measures results and 

numerator and denominator data on the 

electronic prescribing measure to CMS 

on their behalf. We estimate that the 

time and effort associated with this 

would be approximately 5 minutes for 

each EP that wishes to authorize or 

instruct the registry to submit quality 

measures results and numerator and 

denominator data on the electronic 


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prescribing measure to CMS on their 

behalf. 

Based on our proposal to consider 

only registries qualified to submit PQRI 

quality measures results and numerator 

and denominator data on quality 

measures to CMS on their participants’ 

behalf for the 2010 PQRI to be qualified 

to submit results and numerator and 

denominator data on the electronic 

prescribing measure for the 2010 eRx 

Incentive Program, there would be no 

need for a registry to undergo a separate 

self-nomination process for the eRx 

Incentive Program and therefore, no 

additional burden associated with the 

registry self-nomination process. 

There would also be a burden to the 

registry associated with the registry 

calculating results for the electronic 

prescribing measure from the data 

submitted to the registry by its 

participants and submitting the quality 

measures results and numerator and 

denominator data on the electronic 

prescribing quality measure to CMS on 

behalf of their participants. The time 

needed for a registry to review the 

electronic prescribing measure and 

other information, calculate the 

measure’s results, and submit the 

measure’s results and numerator and 

denominator data on the measure on 

their participants behalf is expected to 

vary along with the number of EPs 

reporting data to whom the measure 

applies. However, we believe that 

registries already perform many of these 

activities for their participants. Since 

the E–Prescribing Incentive Program 

consists of only one measure, we believe 

that the burden associated with the 

registry reporting the measure’s results 

and numerator and denominator to CMS 

on behalf of their participants would be 

minimal. 

For EHR-based reporting, the EP must 

extract the necessary clinical data from 

his or her EHR and submit the necessary 

data to the CMS-designated clinical data 

warehouse. Because this manner of 

reporting quality data to CMS was first 

added to the eRx Incentive Program in 

2010 and EPs are not required to 

indicate to us how they intend to report 

the electronic prescribing measure, it is 

difficult to estimate how many EPs will 

opt to participate in the eRx Incentive 

Program through the EHR-based 

reporting mechanism in CY 2011. We 

believe that once an EP’s EHR is 

programmed by the vendor to allow data 

submission to CMS, the burden to the 

EP associated with submission of data 

on the electronic prescribing measure 

should be minimal. 

Since we are considering only EHR 

products qualified for the 2010 PQRI to 

be qualified for the 2011 eRx Incentive 

Program, there would be no need for 

EHR vendors to undergo a separate selfnomination process for the 2011 eRx 

Incentive Program and therefore, no 

additional burden associated with the 

self-nomination process. 

There would also be a burden to the 

EHR vendor associated with the EHR 

vendor programming its EHR product(s) 

to extract the clinical data that the EP 

needs to submit to CMS for purposes of 

reporting the proposed 2011 electronic 

prescribing measure. The time needed 

for an EHR vendor to review the 

measure and other information and 

program each qualified EHR product to 

enable EPs to submit data on the 

measure to the CMS-designated clinical 

data warehouse will be dependent on 

the EHR vendor’s familiarity with the 

electronic prescribing measure, the 

vendor’s system capabilities, as well as 

the vendor’s programming capabilities. 

Since only EHR products qualified for 

the 2011 PQRI would be qualified for 

the 2011 eRx Incentive Program and the 

eRx Incentive Program consists of only 

one measure, we believe that any 

burden associated with the EHR vendor 

to program its product(s) to enable EPs 

to submit data on the electronic 

prescribing measure to the CMSdesignated clinical data warehouse 

would be minimal. 

Finally, with respect to the process for 

group practices to be treated as 

successful electronic prescribers under 

the 2011 eRx Incentive Program 

discussed in section VI.F.2. of this 

proposed rule, we propose that group 

practices would have the same options 

as individual EPs in terms of the form 

and manner for reporting the electronic 

prescribing measure (that is, group 

practices would have the option of 

reporting the measure through claims, a 

qualified registry, or a qualified EHR 

product). There are only 2 differences 

between the proposed requirements for 

an individual EP and a group practice: 

(1) The fact that a group practice would 

have to self-nominate; and(2) the 

number of times that a group practice 

would be required to report the 

electronic prescribing measure. 

We do not anticipate any additional 

burden associated with the group 

practice self-nomination practice since 

we propose to limit the group practices 

to those selected to participate in the 

2011 PQRI GPRO I or PQRI GPRO II. 

The practice only would need to 

indicate their desire to participate in the 

eRx GPRO at the same time they selfnominate for either PQRI GPRO I or 

PQRI GPRO II and indicate how they 

intend to report the electronic 

prescribing measure. 

In terms of the burden to group 

practices associated with submission of 

the electronic prescribing measure, we 

believe that this would be similar to the 

burden to individual EPs for submitting 

the electronic prescribing measure. In 

fact, overall, there could be less burden 

associated with a practice participating 

as a group rather than as individual EPs 

because the total number of reporting 

instances required by the group could 

be less than the total number of 

reporting instances that would be 

required if each member of the group 

separately reported the electronic 

prescribing measure. Thus, we believe 

that the burden to a group practice 

associated with reporting the electronic 

prescribing measure could range from 

almost no burden (for groups who 

choose to do so through a qualified EHR 

or registry) to 72.92 hours (1.75 minutes 

per measure × 1 measure × 2,500 cases 

per measure) for a GPRO I group who 

chooses to report the electronic 

prescribing measures through claims 

submission. Consequently, the total 

estimated cost per group practice to 

report the electronic prescribing 

measure could be as high as $4,225 

($1.69 per measure × 1 measure × 2,500 

cases per measure). 

As with individual EPs, we believe 

that group practices that choose to 

participate in the 2011 eRx GPRO 

through registry-based reporting of the 

electronic prescribing measure would 

more than likely already be reporting 

data to the registry. Little, if any, 

additional data would need to be 

reported to the registry for purposes of 

participation in the 2011 eRx Incentive 

Program beyond authorizing or 

instructing the registry to submit quality 

measures results and numerator and 

denominator data on the electronic 

prescribing measure to CMS on their 

behalf. We estimate that the time and 

effort associated with this would be 

approximately 5 minutes for each group 

practice that wishes to authorize or 

instruct the registry to submit quality 

measures results and numerator and 

denominator data on the electronic 

prescribing measure to CMS on their 

behalf. 

For group practices that choose to 

participate in the 2011 eRx Incentive 

Program through EHR-based reporting of 

the electronic prescribing measure, once 

the EHR is programmed by the vendor 

to allow data submission to CMS, the 

burden to the group practice associated 

with submission of data on the 

electronic prescribing measure should 

be minimal. 

We invite comments on this burden 

analysis, including the underlying 


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assumptions used in developing our 

burden estimates. 

VIII. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

IX. Regulatory Impact Analysis 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). We estimate, as 

discussed below in this section, that the 

PFS provisions included in this 

proposed rule will redistribute more 

than $100 million in 1 year. Therefore, 

we estimate that this rulemaking is 

‘‘economically significant’’ as measured 

by the $100 million threshold, and 

hence also a major rule under the 

Congressional Review Act. Accordingly, 

we have prepared a Regulatory Impact 

Analysis that to the best of our ability 

presents the costs and benefits of the 

rulemaking. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, if a rule has a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that most hospitals and most 

other providers are small entities as that 

term is used in the RFA (including 

small businesses, nonprofit 

organizations, and small governmental 

jurisdictions). The great majority of 

hospitals and most other health care 

providers and suppliers are small 

entities, either by being nonprofit 

organizations or by meeting the SBA 

definition of a small business (having 

revenues of less than $34.5 million in 

any 1 year) (for details see the SBA’s 

Web site at http://sba.gov/idc/groups/ 

public/documents/sba_homepage/ 

serv_sstd_tablepdf.pdf (refer to the 

620000 series). Individuals and States 

are not included in the definition of a 

small entity. The RFA requires that we 

analyze regulatory options for small 

businesses and other entities. We 

prepare a regulatory flexibility analysis 

unless we certify that a rule would not 

have a significant economic impact on 

a substantial number of small entities. 

The analysis must include a justification 

concerning the reason action is being 

taken, the kinds and number of small 

entities the rule affects, and an 

explanation of any meaningful options 

that achieve the objectives with less 

significant adverse economic impact on 

the small entities. 

For purposes of the RFA, physicians, 

NPPs, and suppliers including IDTFs 

are considered small businesses if they 

generate revenues of $10 million or less 

based on SBA size standards. 

Approximately 95 percent of physicians 

are considered to be small entities. 

There are over 1 million physicians, 

other practitioners, and medical 

suppliers that receive Medicare 

payment under the PFS. 

For purposes of the RFA 

approximately 85 percent of suppliers of 

durable medical equipment, prosthetics, 

orthotics, and supplies (DMEPOS) are 

considered small businesses according 

to the SBA size standards. Our most 

recent claims information includes 

47,000 entities billing Medicare for 

DMEPOS each year. Total annual 

estimated Medicare expenditures for 

DMEPOS suppliers are approximately 

$10.1 billion in CY 2009, for which $8.1 

billion was fee-for-service (FFS) and $2 

billion was for managed care. 

For purposes of the RFA, 

approximately 80 percent of clinical 

diagnostic laboratories are considered 

small businesses according to the SBA 

size standards. 

Ambulance providers and suppliers 

for purposes of the RFA are also 

considered to be small entities. 

In addition, most ESRD facilities are 

considered small entities for purposes of 

the RFA, either based on nonprofit 

status or by having revenues of $34.5 

million or less in any year. We note that 

a considerable number of ESRD 

facilities are owned and operated by 

large dialysis organizations (LDOs) or 

regional chains, which would have total 

revenues more than $34.5 million in any 

year if revenues from all locations are 

combined. However, the claims data we 

use to estimate payments for this RFA 

and RIA does not identify which 

dialysis facilities are parts of an LDO, 

regional chain, or other type of 

ownership. Each individual dialysis 

facility has its own provider number 

and bills Medicare using this number. 

Therefore, we consider each ESRD 

facility to be a small entity for purposes 

of the RFA. We consider a substantial 

number of entities to be significantly 

affected if the proposed rule has an 

annual average impact on small entities 

of 3 to 5 percent or more. The majority 

of ESRD facilities will experience 

impacts of approximately 2 percent of 

total revenues. There are 954 nonprofit 

ESRD facilities with a combined 

increase of 2.1 percent in overall 

payments relative to current overall 

payments. We note that although the 

overall effect of the wage index changes 

is budget neutral, there are increases 

and decreases based on the location of 

individual facilities. The analysis and 

discussion provided in this section and 

elsewhere in this proposed rule 

complies with the RFA requirements. 

Because we acknowledge that many of 

the affected entities are small entities, 

the analysis discussed throughout the 

preamble of this proposed rule 

constitutes our regulatory flexibility 

analysis for the remaining provisions 

and addresses comments received on 

these issues. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis, if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. Any such regulatory impact 

analysis must conform to the provisions 

of section 603 of the RFA. For purposes 

of section 1102(b) of the Act, we define 

a small rural hospital as a hospital that 

is located outside of a metropolitan 

statistical area and has fewer than 100 

beds. We do not believe this proposed 

rule has impact on significant 

operations of a substantial number of 

small rural hospitals because most 

dialysis facilities are freestanding. 

While there are 184 rural hospital-based 

dialysis facilities, we do not know how 

many of them are based at hospitals 

with fewer than 100 beds. However, 

overall, the 184 rural hospital-based 

dialysis facilities will experience an 

estimated 2.1 percent increase in 

payments. As a result, this rule will not 

have a significant impact on small rural 

hospitals. Therefore, the Secretary has 

determined that this proposed rule will 

not have a significant impact on the 

operations of a substantial number of 

small rural hospitals. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40231 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2010, that 

threshold is approximately $135 

million. This proposed rule will not 

mandate any requirements for State, 

local, or tribal governments in the 

aggregate, or by the private sector, of 

$135 million. Medicare beneficiaries are 

considered to be part of the private 

sector and as a result a more detailed 

discussion is presented on the Impact of 

Beneficiaries in section IX.G. of this 

regulatory impact analysis. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

We have examined this proposed rule in 

accordance with Executive Order 13132 

and have determined that this 

regulation would not have any 

substantial direct effect on State or local 

governments, preempt States, or 

otherwise have a Federalism 

implication. 

We have prepared the following 

analysis, which together with the 

information provided in the rest of this 

preamble, meets all assessment 

requirements. The analysis explains the 

rationale for and purposes of this 

proposed rule; details the costs and 

benefits of the rule; analyzes 

alternatives; and presents the measures 

we will use to minimize the burden on 

small entities. As indicated elsewhere in 

this rule, we are implementing a variety 

of changes to our regulations, payments, 

or payment policies to ensure that our 

payment systems reflect changes in 

medical practice and the relative value 

of services. We provide information for 

each of the policy changes in the 

relevant sections of this proposed rule. 

We are unaware of any relevant Federal 

rules that duplicate, overlap, or conflict 

with this proposed rule. The relevant 

sections of this rule contain a 

description of significant alternatives if 

applicable. 

A. RVU Impacts 

1. Resource-Based Work, PE, and 

Malpractice RVUs 

Section 1848(c)(2)(B)(ii) of the Act 

requires that increases or decreases in 

RVUs may not cause the amount of 

expenditures for the year to differ by 

more than $20 million from what 

expenditures would have been in the 

absence of these changes. If this 

threshold is exceeded, we make 

adjustments to preserve budget 

neutrality. 

Our estimates of changes in Medicare 

revenues for PFS services compare 

payment rates for CY 2010 with 

proposed payment rates for CY 2011 

using CY 2009 Medicare utilization for 

all years. To the extent that there are 

year-to-year changes in the volume and 

mix of services provided by physicians, 

the actual impact on total Medicare 

revenues will be different than those 

shown in Table 73. The payment 

impacts reflect averages for each 

specialty based on Medicare utilization. 

The payment impact for an individual 

physician would be different from the 

average, based on the mix of services the 

physician furnishes. The average change 

in total revenues would be less than the 

impact displayed here because 

physicians furnish services to both 

Medicare and non-Medicare patients 

and specialties may receive substantial 

Medicare revenues for services that are 

not paid under the PFS. For instance, 

independent laboratories receive 

approximately 85 percent of their 

Medicare revenues from clinical 

laboratory services that are not paid 

under the PFS. 

Table 73 shows only the payment 

impact on PFS services. We note that 

these impacts do not include the effect 

of the current law ¥6.1 percent CY 

2011 PFS update. The following is an 

explanation of the information 

represented in Table 73: 

• Column A (Specialty): The 

Medicare specialty code as reflected in 

our physician/supplier enrollment files. 

• Column B (Allowed Charges): The 

aggregate estimated PFS allowed 

charges for the specialty based on CY 

2009 utilization and CY 2010 rates. That 

is, allowed charges are the PFS amounts 

for covered services and include 

coinsurance and deductibles (which are 

the financial responsibility of the 

beneficiary). These amounts have been 

summed across all services furnished by 

physicians, practitioners, or suppliers 

within a specialty to arrive at the total 

allowed charges for the specialty. 

• Column C (Impact of Work and 

Malpractice (MP) RVU Changes): This 

column shows the estimated CY 2011 

impact on total allowed charges of the 

changes in the work and malpractice 

RVUs. 

• Column D (Impact of PE RVU and 

Multiple Procedure Payment Reduction 

Changes—Full): This column shows the 

estimated CY 2011 impact on total 

allowed charges of the changes in the PE 

RVUs if there were no remaining 

transition to the full use of the new PPIS 

data. This column also includes the 

impact of the various MPPR and 

imaging equipment utilization policies. 

• Column E (Impact of PE RVU and 

MPPR Changes—Tran): This column 

shows the estimated CY 2011 impact on 

total allowed charges of the changes in 

the PE RVUs under the second year of 

the 4-year transition to the full use of 

the new PPIS data. This column also 

includes the impact of the various 

MPPR and imaging equipment 

utilization policies. 

• Column F (Impact of MEI Rebasing): 

This column shows the estimated CY 

2011 impact on total allowed charges of 

the proposed CY 2011 rescaling of the 

RVUs so that the proportions of total 

payments based on the work, PE, and 

malpractice RVUs match the 

proportions proposed in the rebased CY 

2006 MEI. 

• Column G (Combined Impact— 

Full): This column shows the estimated 

CY 2011 combined impact on total 

allowed charges of all the changes in the 

previous columns if there were no 

remaining transition to the new PE 

RVUs using the PPIS data. 

• Column H (Combined Impact— 

Tran): This column shows the estimated 

CY 2011 combined impact on total 

allowed charges of all the changes in the 

previous columns under the second year 

of the 4-year transition to the new PE 

RVUs using the PPIS data.


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40232 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 73—CY 2011 PFS PROPOSED RULE TOTAL ALLOWED CHARGE ESTIMATED IMPACT FOR RVU, MPPR, AND MEI 

REBASING CHANGES* 

Specialty 

Allowed 

charges 

(mil) 

Impact of 

work and 

MP RVU 

changes 

Impact of PE RVU and 

MPPR changes Impact of 

MEI rebasing 

Combined impact 

Full Tran Full Tran 

(A) (B) (C) (D) (E) (F) (G) (H) 

TOTAL ...................................................... $79,731 0% 0% 0% 0% 0% 0% 

01—ALLERGY/IMMUNOLOGY ............... $176 0% 0% 0% 4% 4% 4% 

02—ANESTHESIOLOGY ........................ $1,729 0% 3% 1% ¥3% 0% ¥2% 

03—CARDIAC SURGERY ...................... $373 0% ¥1% 0% 0% ¥1% 0% 

04—CARDIOLOGY .................................. $6,801 0% ¥5% ¥2% 0% ¥5% ¥2% 

05—COLON AND RECTAL SURGERY .. $134 0% 4% 1% 0% 4% 1% 

06—CRITICAL CARE .............................. $233 0% 2% 1% ¥2% 0% ¥1% 

07—DERMATOLOGY .............................. $2,678 0% 1% 1% 2% 3% 3% 

08—EMERGENCY MEDICINE ................ $2,527 0% 1% 1% ¥3% ¥2% ¥2% 

09—ENDOCRINOLOGY .......................... $382 0% 3% 1% ¥1% 2% 0% 

10—FAMILY PRACTICE ......................... $5,351 0% 3% 1% 0% 3% 1% 

11—GASTROENTEROLOGY ................. $1,752 0% 2% 1% ¥1% 1% 0% 

12—GENERAL PRACTICE ..................... $704 0% 2% 1% 0% 2% 1% 

13—GENERAL SURGERY ..................... $2,221 0% 3% 1% 0% 3% 1% 

14—GERIATRICS .................................... $182 0% 5% 2% ¥2% 3% 0% 

15—HAND SURGERY ............................ $100 0% 3% 1% 2% 5% 3% 

16—HEMATOLOGY/ONCOLOGY .......... $1,870 0% ¥5% ¥2% 1% ¥4% ¥1% 

17—INFECTIOUS DISEASE ................... $567 0% 4% 2% ¥2% 2% 0% 

18—INTERNAL MEDICINE ..................... $10,381 0% 3% 1% ¥1% 2% 0% 

19—INTERVENTIONAL PAIN MGMT ..... $379 0% 4% 2% 1% 5% 3% 

20—INTERVENTIONAL RADIOLOGY .... $222 0% ¥9% ¥4% 0% ¥9% ¥4% 

21—MULTISPECIALTY CLINIC/OTHER $44 0% ¥5% ¥4% 1% ¥4% ¥3% 

22—NEPHROLOGY ................................ $1,891 0% 0% 0% ¥1% ¥1% ¥1% 

23—NEUROLOGY ................................... $1,415 0% 4% 1% 0% 4% 1% 

24—NEUROSURGERY ........................... $622 0% 2% 1% 1% 3% 2% 

25—NUCLEAR MEDICINE ...................... $57 0% ¥7% ¥4% 1% ¥6% ¥3% 

27—OBSTETRICS/GYNECOLOGY ........ $649 0% 1% 0% 1% 2% 1% 

28—OPHTHALMOLOGY ......................... $5,154 0% 7% 3% 1% 8% 4% 

29—ORTHOPEDIC SURGERY ............... $3,339 0% 2% 1% 1% 3% 2% 

30—OTOLARNGOLOGY ......................... $915 0% 3% 1% 1% 4% 2% 

31—PATHOLOGY ................................... $1,040 0% ¥1% 0% ¥1% ¥2% ¥1% 

32—PEDIATRICS .................................... $65 0% 2% 1% 0% 2% 1% 

33—PHYSICAL MEDICINE ..................... $868 0% 4% 1% ¥1% 3% 0% 

34—PLASTIC SURGERY ........................ $306 0% 4% 2% 1% 5% 3% 

35—PSYCHIATRY ................................... $1,105 0% 1% 1% ¥3% ¥2% ¥2% 

36—PULMONARY DISEASE .................. $1,736 0% 2% 1% ¥1% 1% 0% 

37—RADIATION ONCOLOGY ................ $1,889 0% ¥5% ¥2% 4% ¥1% 2% 

38—RADIOLOGY .................................... $4,975 0% ¥12% ¥6% 0% ¥12% ¥6% 

39—RHEUMATOLOGY ........................... $496 0% 0% 0% 1% 1% 1% 

40—THORACIC SURGERY .................... $388 0% ¥1% 0% 0% ¥1% 0% 

41—UROLOGY ........................................ $1,909 0% ¥6% ¥2% 1% ¥5% ¥1% 

42—VASCULAR SURGERY ................... $702 0% ¥2% ¥1% 2% 0% 1% 

43—AUDIOLOGIST ................................. $52 0% ¥7% ¥2% 1% ¥6% ¥1% 

44—CHIROPRACTOR ............................ $732 0% 3% 1% ¥2% 1% ¥1% 

45—CLINICAL PSYCHOLOGIST ............ $557 0% ¥6% ¥2% ¥5% ¥11% ¥7% 

46—CLINICAL SOCIAL WORKER .......... $376 0% ¥5% ¥2% ¥5% ¥10% ¥7% 

47—DIAGNOSTIC TESTING FACILITY $851 0% ¥26% ¥13% 6% ¥20% ¥7% 

48—INDEPENDENT LABORATORY ...... $1,009 0% ¥6% ¥2% 4% ¥2% 2% 

49—NURSE ANES/ANES ASST ............. $706 0% 2% 2% ¥3% ¥1% ¥1% 

50—NURSE PRACTITIONER ................. $1,175 0% 4% 1% ¥1% 3% 0% 

51—OPTOMETRY ................................... $937 0% 7% 3% 1% 8% 4% 

52—ORAL/MAXILLOFACIAL SURGERY $38 0% 3% 2% 2% 5% 4% 

53—PHYSICAL/OCCUPATIONAL 

THERA ................................................. $2,138 0% ¥7% ¥11% ¥1% ¥8% ¥12% 

54—PHYSICIAN ASSISTANT ................. $868 0% 3% 1% 0% 3% 1% 

55—PODIATRY ....................................... $1,738 0% 4% 2% 1% 5% 3% 

56—PORTABLE X-RAY SUPPLIER ....... $91 0% 3% 2% 6% 9% 8% 

57—RADIATION THERAPY CENTERS $69 0% ¥9% ¥3% 8% ¥1% 5% 

OTHER ..................................................... $67 0% 2% 1% ¥1% 2% 2% 

* Does not include the impact of the current law ¥6.1 percent CY 2011 update. 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40233 

2. CY 2011 PFS Impact Discussion 

a. Changes in RVUs 

The most widespread specialty 

impacts of the RVU changes are 

generally related to two factors. First, as 

discussed in section II.A.2. of this 

proposed rule, we are currently 

implementing the second year of the 4- 

year transition to new PE RVUs using 

the new PPIS data that were adopted in 

the CY 2010 PFS final rule with 

comment period (74 FR 61751). The 

impacts of using the new PPIS data are 

generally consistent with the impacts 

discussed in the CY 2010 PFS final rule 

with comment period (74 FR 61983 

through 61984). 

The second general factor 

contributing to the CY 2011 impacts 

shown in Table 73 is the proposed CY 

2011 rescaling of the RVUs so that in the 

aggregate they match the proposed 

work, PE, and malpractice proportions 

in the rebased CY 2006 MEI. That is, as 

discussed in section II.E.1. of this 

proposed rule, the proposed rebased 

MEI has a greater proportion attributable 

to malpractice and PE and, 

correspondingly, a lesser proportion 

attributable to work. Specialties that 

have a high proportion of total RVUs 

attributable to work, such as 

anesthesiology, are estimated to 

experience a decrease in aggregate 

payments as a result of this rescaling, 

while specialties that have a high 

proportion attributable to PE, such as 

radiation oncology, are estimated to 

experience an increase in aggregate 

payments. Malpractice generally 

represents a small proportion of total 

payments and the rescaling of the 

malpractice RVUs is not the primary 

driver of the specialty impacts. As 

discussed in section II.E.1. of this 

proposed rule, the proposed rescaling of 

the RVUs to match the proposed rebased 

MEI is budget neutral overall. 

Table 73 also includes the impacts 

resulting from our proposed regulatory 

change to apply the current 50 percent 

MPPR policy to therapy services. Under 

the PFS, we estimate that this change 

would primarily reduce payments to the 

specialties of physical therapy and 

occupational therapy. In order to 

maintain budget neutrality, we are 

proposing to redistribute the PFS 

savings back into other services paid 

under the PFS by increasing all PE 

RVUs by approximately 1 percent. 

Because providers in settings outside 

of the PFS, such as outpatient hospital 

departments, are also paid using the 

PFS payment rates and policies for 

physical therapy services, we estimate 

that this proposal would reduce (not 

redistribute) payments in those settings 

for therapy services by approximately 

13 percent in CY 2011. 

In addition, Table 73 includes the 

impacts resulting from the proposed 

regulatory change to the scope of the 

current contiguous body area MPPR 

policy for imaging services from 

contiguous body areas to include 

noncontiguous body areas. We estimate 

that this change would primarily reduce 

payments to the specialties of IDTF and 

radiology. In order to maintain budget 

neutrality, we are proposing to 

redistribute these savings back into 

other services paid under the PFS by 

increasing all PE RVUs by 

approximately 0.1 percent. 

Table 73 also reflects the impacts 

resulting from certain ACA provisions, 

including section 3135 that amends 

section 1848(b)(4) of the Act to reduce 

the payment for expensive diagnostic 

imaging equipment, and, effective July 

1, 2010, increases the level of the MPPR 

for contiguous body areas from 25 

percent to 50 percent. The proposed 

expansion of the MPPR policy is further 

discussed in section II.C.4. of this 

proposed rule, while the discussions of 

the provisions of section 3135 of the 

ACA are found in sections V.M. and 

II.A.3.a. of this proposed rule. As 

required by sections 1848(c)(2)(B)(v)(V) 

and (VI) of the Act (as added by sections 

3135(a) and (b) of the ACA), these 

changes are not budget neutral and 

result in program savings. See section 

IX.D below for a discussion of the 

budget impacts of the ACA provisions. 

We note that the payment impact for 

an individual physician may be 

different from the average, based on the 

mix of services the physician furnishes. 

b. Combined Impact 

Column H of Table 73 displays the 

estimated CY 2011 combined impact on 

total allowed charges by specialty of all 

the proposed RVU and MPPR changes.

These impacts range from an increase of 

8 percent for portable x-ray suppliers, to 

a decrease of 12 percent for physical/ 

occupational therapy. There is generally 

a slightly positive net effect of our 

proposals on primary care specialties, 

such as family practice, internal 

medicine, and geriatrics. Again, these 

impacts are estimated prior to the 

application of the negative CY 2011 CF 

update specified under the current 

statute. 

Table 74 shows the estimated impact 

on total payments for selected highvolume procedures of all of the changes 

discussed previously, including the 

effect of the CY 2011 negative PFS CF 

update. We selected these procedures 

because they are the most commonly 

furnished by a broad spectrum of 

physician specialties. There are separate 

columns that show the change in the 

facility rates and the nonfacility rates. 

For an explanation of facility and 

nonfacility PE, we refer readers to 

Addendum A of this proposed rule. 

TABLE 74.—IMPACT OF PROPOSED RULE AND ESTIMATED PHYSICIAN UPDATE ON CY 2011 PAYMENT FOR SELECTED

PROCEDURES

CPT 1HCPCS 

Code MOD Short descriptor 

Facility Nonfacility 

CT 2010 2 CY 2011 3 Percent 

change CY 2010 2 CY 2011 3 Percent change 

11721 ........... ............ Debride nail, 6 or more .......... $20.72 $18.41 ¥11 $31.23 $29.71 ¥5 

17000 ........... ............ Destruct premalg lesion ......... 40.88 39.04 ¥4 57.91 55.98 ¥3 

27130 ........... ............ Total hip arthroplasty ............. 1,084.09 1,005.16 ¥7 NA NA NA 

27244 ........... ............ Treat thigh fracture ................ 918.31 854.90 ¥7 NA NA NA 

27447 ........... ............ Total knee arthroplasty .......... 1,159.32 1,074.64 ¥7 NA NA NA 

33533 ........... ............ CABG, arterial, single ............ 1,536.01 1,374.42 ¥11 NA NA NA 

35301 ........... ............ Rechanneling of artery ........... 869.49 783.95 ¥10 NA NA NA 

43239 ........... ............ Upper GI endoscopy, biopsy 133.42 122.76 ¥8 256.05 243.80 ¥5 

66821 ........... ............ After cataract laser surgery ... 216.59 210.41 ¥3 228.80 222.69 ¥3 

66984 ........... ............ Cataract surg w/iol, 1 stage ... 549.57 524.43 ¥5 NA NA NA 

67210 ........... ............ Treatment of retinal lesion ..... 479.17 457.89 ¥4 494.21 473.12 ¥4 

71010 ........... ............ Chest x-ray ............................. NA NA NA 18.17 16.94 ¥7 

71010 ........... 26 Chest x-ray ............................. 7.10 6.38 ¥10 7.10 6.38 ¥10 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
40234 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

TABLE 74.—IMPACT OF PROPOSED RULE AND ESTIMATED PHYSICIAN UPDATE ON CY 2011 PAYMENT FOR SELECTED

PROCEDURES—Continued 

CPT 1HCPCS 

Code MOD Short descriptor 

Facility Nonfacility 

CT 2010 2 CY 2011 3 Percent 

change CY 2010 2 CY 2011 3 Percent 

change 

77056 ........... ............ Mammogram, both breasts .... NA NA NA 82.61 78.08 ¥5 

77056 ........... 26 Mammogram, both breasts .... 34.63 30.69 ¥11 34.63 30.69 ¥11 

77057 ........... ............ Mammogram, screening ........ NA NA NA 61.60 57.45 ¥7 

77057 ........... 26 Mammogram, screening ........ 27.82 24.80 ¥11 27.82 24.80 ¥11 

77427 ........... ............ Radiation tx management, ×5 153.00 141.17 ¥8 153.00 141.17 ¥8 

88305 ........... 26 Tissue exam by pathologist ... 28.67 26.03 ¥9 28.67 26.03 ¥9 

90801 ........... ............ Psy dx interview ..................... 100.21 88.14 ¥12 120.93 109.75 ¥9 

90862 ........... ............ Medication management ........ 35.77 32.16 ¥10 44.28 41.00 ¥7 

90935 ........... ............ Hemodialysis, one evaluation 53.08 48.37 ¥9 NA NA NA 

92012 ........... ............ Eye exam established pat ..... 38.32 36.09 ¥6 58.48 56.96 ¥3 

92014 ........... ............ Eye exam & treatment ........... 58.48 55.00 ¥6 85.44 82.74 ¥3 

92980 ........... ............ Insert intracoronary stent ....... 689.80 608.64 ¥12 NA NA NA 

93000 ........... ............ Electrocardiogram, complete NA NA NA 15.61 14.24 ¥9 

93010 ........... ............ Electrocardiogram report ....... 7.10 6.38 ¥10 7.10 6.38 ¥10 

93015 ........... ............ Cardiovascular stress test ..... NA NA NA 72.67 66.29 ¥9 

93307 ........... 26 Echo exam of heart ............... 38.32 34.13 ¥11 38.32 34.13 ¥11 

93510 ........... 26 Left heart catheterization ....... 198.71 174.81 ¥12 198.71 174.81 ¥12 

98941 ........... ............ Chiropractic manipulation ...... 24.13 21.85 ¥9 27.25 25.29 ¥7 

99203 ........... ............ Office/outpatient visit, new ..... 57.34 52.79 ¥8 76.93 72.67 ¥6 

99213 ........... ............ Office/outpatient visit, est ....... 38.04 35.11 ¥8 51.38 48.86 ¥5 

99214 ........... ............ Office/outpatient visit, est ....... 58.48 53.77 ¥8 76.93 72.43 ¥6 

99222 ........... ............ Initial hospital care ................. 101.62 93.54 ¥8 NA NA NA 

99223 ........... ............ Initial hospital care ................. 149.60 137.25 ¥8 NA NA NA 

99231 ........... ............ Subsequent hospital care ...... 29.81 27.25 ¥9 NA NA NA 

99232 ........... ............ Subsequent hospital care ...... 53.93 49.35 ¥9 NA NA NA 

99233 ........... ............ Subsequent hospital care ...... 77.50 70.96 ¥8 NA NA NA 

99236 ........... ............ Observ/hosp same date ......... 166.06 151.73 ¥9 NA NA NA 

99239 ........... ............ Hospital discharge day .......... 77.78 71.94 ¥8 NA NA NA 

99283 ........... ............ Emergency dept visit ............. 48.26 43.21 ¥10 NA NA NA 

99284 ........... ............ Emergency dept visit ............. 91.41 81.76 ¥11 NA NA NA 

99291 ........... ............ Critical care, first hour ............ 170.04 153.94 ¥9 203.25 187.33 ¥8 

99292 ........... ............ Critical care, add’l 30 min ...... 85.16 77.09 ¥9 91.97 83.97 ¥9 

99348 ........... ............ Home visit, est patient ........... NA NA NA 63.59 58.19 ¥8 

99350 ........... ............ Home visit, est patient ........... NA NA NA 130.58 120.30 ¥8 

G0008 .......... ............ Admin influenza virus vac ...... NA NA NA 16.75 16.45 ¥2 

1 CPT codes and descriptions are copyright 2010 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply. 

2Payments based upon corrected CY 2010 conversion factor of $28.3868 under the statute as of October 30, 2009 that would be in effect on 

December 31, 2010 under current law. 3Payments based upon the projected CY 2011 conversion factor of $26.6574 adjusted by the proposed MEI rescaling factor of 0.921.

B. Geographic Practice Cost Indices 

(GPCIs) 

As discussed in section II.D. of this 

proposed rule, we are required to 

update the GPCI values at least every 3 

years and phase in the adjustment over 

2 years (if there has not been an 

adjustment in the past year). For CY 

2011, we are proposing new GPCIs for 

each Medicare locality. The updated 

GPCIs reflect the first year of the 2-year 

phase in. The new GPCIs rely upon the 

2010 HUD data for determining the 

relative cost differences in the office 

rent component of the PE GPCIs, as well 

as the 2006 through 2007 professional 

malpractice premium data for 

determining the malpractice GPCIs. The 

2006 through 2008 Bureau of Labor and 

Statistics (BLS) Occupational 

Employment Statistics (OES) data were 

used as a replacement for 2000 Census 

data for determining the physician work 

GPCIs and the employee compensation 

component of the PE GPCIs. As 

discussed in section II.D. of this 

proposed rule, the cost share weights for 

each GPCI value, that is, work, PE, and 

malpractice, reflect the same 

proportions determined for the 

proposed 2006-based MEI. 

Additionally, the proposed GPCIs 

reflect several provisions required by 

the ACA. Section 1848(e)(1)(H) of the 

Act (as added by section 3102(b) of the 

ACA) specifies that for CY 2010 and CY 

2011, the employee wage and rent 

portions of the PE GPCIs reflect only 

one-half of the relative cost differences 

for each locality compared to the 

national average and includes a ‘‘hold 

harmless’’ provision for any PFS locality 

that would receive a reduction to its PE 

GPCI resulting from the limited 

recognition of cost differences. Section 

1848(e)(1)(E) of the Act (as amended by 

section 3102(a) of the ACA) extends the 

1.000 work GPCI floor only through 

December 31, 2010. Therefore, the 

proposed CY 2011 GPCIs reflect the 

sunset of the 1.000 work GPCI floor. 

Section 1848(e)(1)(G) of the Act (as 

amended by section 134(b) of the 

MIPPA) established a permanent 1.500 

work GPCI floor in Alaska, beginning 

January 1, 2009 and, therefore, the 1.500 

work GPCI floor in Alaska will remain 

in place for CY 2011. Moreover, section 

1848(e)(1)(I) of the Act (as added by 

section 10324(c) of the ACA) establishes 

a 1.000 PE GPCI floor for services 

furnished in frontier states effective 

January 1, 2011. OACT estimates the 

combined impact of these provisions on 

a fiscal year cash basis as $580 million 

for FY 2011. 

As required by the statute, the 

updated GPCIs would be phased in over 

a 2-year period. Addendum D to this 

proposed rule shows the estimated 

effects of the revised GPCIs on locality 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40235 

GAFs for the transitional year (CY 2011) 

in descending order. The GAFs reflect 

the use of updated underlying GPCI 

data, updated cost share weights, and 

the ACA provisions. The GAFs are a 

weighted composite of each area’s work, 

PE, and malpractice GPCIs using the 

national GPCI cost share weights. While 

we do not actually use the GAFs in 

computing the PFS payment for a 

specific service, they are useful in 

comparing the estimated overall costs 

and payments for different localities. 

The actual effect on payment for any 

specific service would deviate from the 

estimated payment based on the GAF to 

the extent that the proportions of work, 

PE, and malpractice expense RVUs for 

the specific service differ from those of 

the GAF. The most significant changes 

would occur in 12 payment localities, 

where the GAF increases by more than 

1 percent or decreases by more than 2 

percent. The cumulative effects of all of 

the GPCI revisions, including the 

updated underlying GPCI data, updated 

cost share weights, and provisions of the 

ACA, are reflected in the CY 2012 GPCI 

values that are displayed in Addendum 

E to this proposed rule. 

C. Rebasing and Revising of the MEI 

As discussed in section II.E.1. of this 

proposed rule, we are proposing to 

rebase and revise the MEI for the CY 

2011 PFS. Substituting the proposed 

2006 MEI weights in place of the 2000 

weights and implementing the proposed 

revisions to the MEI has no impact on 

the projected MEI increase for CY 2011. 

The projected MEI update for CY 2011 

is 0.3 percent under both the 2000-based 

and 2006-based MEI. After CY 2011, the 

MEI updates are slightly higher (0.1 

percentage point) in the early part of the 

forecast, unchanged in the medium 

term, and slightly lower in the long term 

(between 0.1 to 0.2 percentage points). 

D. The Affordable Care Act Provisions 

1. Section 3103: Extension of Exceptions 

Process for Medicare Therapy Caps 

This provision extends the exceptions 

process for therapy caps through 

December 31, 2010. Therapy caps are 

discussed in detail in section III.A.1. of 

this proposed rule. OACT estimates the 

impact on a fiscal year cash basis as 

$1.16 billion for FY 2011. 

2. Section 3104: Extension of Payment 

for Technical Component of Certain 

Physician Pathology Services 

As discussed in section V.E. of this 

proposed rule, this provision continues 

payment to independent laboratories for 

the TC of physician pathology services 

for fee-for-service Medicare 

beneficiaries who are inpatients or 

outpatients of a covered hospital 

through CY 2010. OACT estimates the 

impact on a fiscal year cash basis as $80 

million for FY 2011. 

3. Sections 3105 and 10311: Extension 

of Ambulance Add-Ons 

As discussed in section V.F. of this 

proposed rule, these provisions require 

the extension of certain add-on 

payments for ground ambulance 

services, and the extension of certain 

rural area designations for purposes of 

air ambulance payment. As further 

discussed in section V.F., we are 

amending the Medicare program 

regulations to conform the regulations to 

these provisions of the ACA. These 

statutory provisions are essentially 

prescriptive and do not allow for 

discretionary alternatives on the part of 

the Secretary. 

As discussed in the July 1, 2004 

interim final rule (69 FR 40288), in 

determining the super-rural bonus 

amount under section 1834(l)(12) of Act, 

we followed the statutory guidance of 

using the data from the Comptroller 

General (GAO) of the U.S. We obtained 

the same data as the data that were used 

in the GAO’s September 2003 Report 

titled ‘‘Ambulance Services: Medicare 

Payments Can Be Better Targeted to 

Trips in Less Densely Populated Rural 

Areas’’ (GAO report number GAO–03– 

986) and used the same general 

methodology in a regression analysis as 

was used in that report. The result was 

that the average cost per trip in the 

lowest quartile of rural county 

populations was 22.6 percent higher 

than the average cost per trip in the 

highest quartile. As required by section 

1834(l)(12) of the Act, this percent 

increase is applied to the base rate for 

ground ambulance transports that 

originate in qualified rural areas, which 

were identified using the methodology 

set forth in the statute. Payments for 

ambulance services under Medicare are 

determined by the point of pick-up (by 

zip code area) where the beneficiary is 

loaded on board the ambulance. We 

determined that ground ambulance 

transports originating in 7,842 zip code 

areas (which were determined to be in 

‘‘qualified rural areas’’) out of 42,879 zip 

code areas, according to the July 2010 

zip code file, will realize increased base 

rate payments under this provision; 

however, the number and level of 

services that might occur in these areas 

for CY 2011 is unknown at this time. 

While many elements may factor into 

the final impact of sections 3105(a), (b), 

and (c) and 10311(a), (b), and (c) of the 

ACA, our Office of the Actuary (OACT) 

estimates the impact of all these 

provisions to be $10 million for FY 

2011. 

4. Section 3107: Extension of Physician 

Fee Schedule Mental Health Add-On 

As discussed in section V.G. of this 

proposed rule, this provision extends 

the period of time for the five percent 

increase in Medicare payment for 

specified mental health services through 

CY 2010. OACT estimates the impact on 

a fiscal year cash basis as $20 million 

for FY 2011. 

5. Section 3111: Payment for Bone 

Density Tests 

As discussed in section V.I. of this 

proposed rule, this provision restores 

payment for dual-energy x-ray 

absorptiometry (DXA) services 

furnished during CYs 2010 and 2011 to 

70 percent of the Medicare rate paid in 

CY 2006. OACT estimates the impact on 

a fiscal year cash basis as $60 million 

for FY 2011. 

6. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in 

Certain Rural Areas 

As discussed in section V.K. of this 

proposed rule, this provision 

reinstitutes reasonable cost payment for 

clinical diagnostic laboratory tests 

performed by hospitals with fewer than 

50 beds that are located in qualified 

rural areas as part of their outpatient 

services for cost reporting periods 

beginning on or after July 1, 2010 

through June 30, 2011. For some 

hospitals with cost reports that begin as 

late as June 30, 2011, this reinstitution 

of reasonable cost payment could affect 

services performed as late as June 29, 

2012, because this is the date those cost 

reports will close. 

7. Section 3135: Modification of 

Equipment Utilization Factor For 

Advanced Imaging Services 

As discussed in section V.M. of this 

proposed rule, for services furnished on 

or after July 1, 2010, section 

1848(b)(4)(D) of the Act (as added by 

section 3135(b) of the ACA) adjusts the 

technical component MPPR for multiple 

imaging studies provided in a single 

imaging session on contiguous body 

parts within families of codes from 25 

percent to 50 percent as of July 1, 2010. 

For services furnished on or after 

January 1, 2011, section 1848(b)(4)(C) of 

the Act (as added by section 3135(a) of 

the ACA) increases the equipment 

utilization rate to 75 percent for 

expensive diagnostic imaging 

equipment, changing the CY 2011 

transitional utilization rate adopted in 


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the CY 2010 PFS final rule with 

comment period to the 75 percent rate. 

Both of these provisions are not budget 

neutral. OACT estimates the impact on 

a fiscal year cash basis to be savings to 

the Medicare program of $160 million 

for FY 2011. 

8. Section 3136: Revisions in Payments 

for Power Wheelchairs 

As discussed in section V.N. of this 

proposed rule, this provision requires 

the Secretary to revise the capped rental 

fee schedule amounts for all power 

wheelchairs effective for power 

wheelchairs furnished on or after 

January 1, 2011. Under the monthly 

capped rental payment structure, the fee 

schedule will pay 15 percent (instead of 

10 percent) of the purchase price for the 

first three months and 6 percent (instead 

of 7.5 percent) for the remaining rental 

months not to exceed 13 months. In 

addition, the lump sum (up front) 

purchase payment will be eliminated for 

standard power-driven wheelchairs. For 

complex rehabilitative power-driven 

wheelchairs, the provision permits 

payment to be made on a lump sum 

purchase method or a monthly rental 

method. These changes are prescriptive 

in the statute and does not allow for 

discretionary alternatives. 

We expect the changes mandated by 

section 3136 of the ACA as a whole to 

achieve program savings as a result of 

total payments per standard power 

wheelchair being less than 100 percent 

of the purchase fee schedule amount. 

This decrease in expenditures is 

expected for two reasons. Primarily, the 

provision will eliminate the lump sum 

payment method for standard powerdriven wheelchairs and instead 

payment will be made under the 

monthly rental method resulting in 

lower aggregate payments because many 

beneficiaries who use standard power 

wheelchairs do not use them for as long 

as 13 months. In addition, we note that 

currently a significantly lower volume 

of power-driven wheelchairs are paid 

under the monthly payment method. 

The payment impact of increasing 

monthly rental payments in the initial 3 

months will be offset both by the 

savings achieved from eliminating the 

lump sum payment method for standard 

power-driven wheelchairs and by 

decreasing payments for the remaining 

months of rental from 7.5 percent to 6 

percent of the purchase price for all 

power-driven wheelchairs. We 

compared the estimates of current 

payments for power-driven wheelchairs 

to estimates of payments resulting from 

the changes which showed an estimated 

payment impact of a decrease in 

expenditures of approximately $780 

million over a 5-year period. The FY 

2011 cash savings was $120 million. 

9. Section 3401: Revisions of Certain 

Market Basket Updates and 

Incorporation of Productivity 

Adjustments 

As discussed in section V.P. of this 

proposed rule, section 3401 of the ACA 

incorporates a productivity adjustment 

into the update factors for certain 

payment systems. Specifically, section 

3401 requires that in CY 2011 (and in 

subsequent years), update factors under 

the ambulatory surgical center payment 

system, the ambulance fee schedule, 

and the clinical laboratory fee schedule 

be adjusted by the productivity 

adjustment. OACT estimates the impact 

to be savings to the Medicare program 

of $20 million, $30 million, and $50 

million for the ambulatory surgical 

center payment system, the ambulance 

fee schedule, and the clinical laboratory 

fee schedule, respectively, for FY 2011. 

Furthermore section 3401 changed the 

2011 ESRD composite rate Market 

Basket minus one increase to a Market 

Basket increase. This provision would 

be a cost to the Medicare program of $40 

million (does not include coinsurance). 

10. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

As discussed in section V.Q. of this 

proposed rule, for services furnished on 

or after January 1, 2011, section 

1861(s)(2)(FF) of the Act (as added by 

section 4103 of the ACA) provides 

Medicare coverage, with no coinsurance 

or deductible, for an annual wellness 

visit. The annual wellness visit entails 

the creation of a personalized 

prevention plan for an individual that 

includes a health risk assessment and 

may include other elements, such as 

updating the family history, identifying 

providers that regularly provide medical 

care to the individual, body mass index 

measurement, development of a 

screening service schedule, and 

identification of risk factors. OACT 

estimates the impact on a fiscal year 

cash basis to be $110 million for FY 

2011. 

11. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

As discussed in section V.R. of this 

proposed rule, for services furnished on 

or after January 1, 2011, sections 

1833(a)(1) and 1833(b) of the Act (as 

amended by section 4104 of the ACA) 

waive the deductible and coinsurance 

requirements for most preventive 

services, and waive the deductible for 

colorectal cancer screening tests that are 

reported with other codes. Services to 

which no coinsurance or deductible 

would be applied are the annual 

wellness visit, the initial preventive 

physical examination, and any covered 

preventive service if it is recommended 

with a grade of A or B by the United 

States Preventive Services Task Force. 

We estimate that this new benefit will 

result in an increase in Medicare 

payments. OACT estimates the impact 

on a fiscal year cash basis to be $110 

million for FY 2011. 

12. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

As discussed in section V.S. of this 

proposed rule, for services furnished on 

or after January 1, 2011 and before 

January 1, 2016, sections 1833(x) and (y) 

of the Act (as added by section 5501 of 

the ACA) provide primary care 

practitioners, as well as general 

surgeons practicing in geographic health 

professional shortage areas, with 10 

percent incentive payments based on 

their provision of primary care or major 

surgical services, respectively. OACT 

estimates the impact on a fiscal year 

cash basis to be $170 million for FY 

2011. 

13. Section 6003: Disclosure 

Requirements for In-office Ancillary 

Services Exception to the Prohibition of 

Physician Self-Referral for Certain 

Imaging Services 

In section V.T of the preamble of this 

proposed rule, we propose to amend 

§ 411.355(b)(2) to include a new 

disclosure requirement created by 

section 6003 of the ACA and related to 

the in-office ancillary services exception 

to the physician self-referral 

prohibition. Specifically, the statute 

requires that, with respect to magnetic 

resonance imaging, computed 

tomography, and positron emission 

tomography, the referring physician 

must inform the patient in writing at the 

time of the referral that the patient may 

obtain the same imaging services from 

another supplier. In addition, the statute 

requires physicians to provide a written 

list of other suppliers who furnish the 

same imaging services in the area in 

which the patient resides. 

We propose that the written notice 

shall include a list of at least 10 other 

suppliers who provide the services for 

which the individual is being referred 

and which are located within a 25-mile 

radius of the referring physician’s office 

location. If there are fewer than 10 other 

suppliers located within a 25-mile 

radius of the physician’s office location, 

the physician shall list all of the other 

suppliers of the imaging service that are 

present within a 25-mile radius of the 


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referring physician’s office location, 

including up to 10 suppliers. Provision 

of the written list of alternate suppliers 

will not be required if no other 

suppliers provide the services for which 

the individual is being referred within 

a 25-mile radius. We also propose that 

the notice should be written in a 

manner sufficient to be reasonably 

understood by all patients and should 

include for each supplier on the list, at 

a minimum, the supplier’s name, 

address, telephone number, and 

distance from the referring physician’s 

office location. A record of the 

disclosure notification, signed by the 

patient, shall be maintained as a part of 

the patient’s medical record. 

Our proposal minimizes the 

administrative burden for the physician 

by requiring the development of only 

one list of alternative suppliers for each 

office location, rather than multiple lists 

targeting the various areas in which the 

physician’s patients reside. 

We do not anticipate that our 

proposals in section V.T. of the 

preamble of this proposed rule would 

have a significant economic impact on 

a substantial number of physicians, 

other health care providers and 

suppliers, or the Medicare or Medicaid 

programs and their beneficiaries. 

Specifically, we believe that this 

proposed rule would affect only those 

physicians who provide MRI, CT, PET 

services under the in-office ancillary 

services exception and beneficiaries 

receiving those services. We are 

uncertain of the number of physicians 

who will have to comply with this 

disclosure requirement. Using data from 

the 2009 CMS Statistics booklet, we 

propose an estimate of 71,000 Medicare 

enrolled physicians would have to 

comply with this new requirement. This 

figure represents 20 percent of primary 

care and medical specialty physicians 

enrolled in Medicare Part B. In order to 

ensure accuracy of the effect of this 

provision on physician practices, we are 

soliciting comments regarding the 

appropriateness of this estimate. The 

burden associated with disclosing the 

information, receiving the patient’s 

signature on the form and maintaining 

a record of such disclosure will be de 

minimis for the individual physician. 

Our proposed criteria for the new 

disclosure requirement would present a 

negligible economic impact on the 

physician or group practice required to 

create the disclosure notice. The 

physician or group practice would incur 

only a one-time cost associated with 

developing a disclosure notice that 

informs patients that they may receive 

the same imaging services from another 

supplier and also lists other suppliers 

located within a 25-mile radius of the 

physician’s office location at the time of 

the referral. We believe it would take an 

individual 1 hour to create the notice 

informing patients that they may receive 

imaging services from another supplier 

as well as to compile the list of 10 other 

suppliers. In addition, we believe it 

would require a negligible amount of 

time to provide the notice and list of 

suppliers to the patient and to maintain 

a copy of the notice in the patient’s 

medical record. 

We believe that beneficiaries would 

be impacted positively by this new 

provision. The disclosure that the 

patient may receive the referred imaging 

services from another supplier 

contributes to informed decisionmaking about the availability of such 

imaging services from other suppliers. 

We also believe that furnishing a list of 

other suppliers who provide the same 

services in the vicinity of the referring 

physician serves patient convenience. 

The proposed regulation makes no 

significant changes that would impede 

patient access to health care services, 

and it will likely improve patients’ 

awareness of options in deciding where 

to receive imaging services. 

14. Section 6404: Maximum Period for 

Submission of Medicare Claims 

Reduced to Not More Than 12 Months 

As discussed in section V.U. of this 

proposed rule, section 6404 of the ACA 

reduces the maximum time period for 

filing Medicare claims to no more than 

12 months after the date of service. 

Under the new law, claims for services 

furnished on or after January 1, 2010, 

must be filed within 1 calendar year 

after the date of service. In addition, 

section 6404 of the ACA provides that 

claims for services furnished before 

January 1, 2010, must be filed no later 

than December 31, 2010. 

Section 6404 of the ACA also permits 

the Secretary to make certain exceptions 

to the 1-year filing deadline. This 

proposed rule would create two new 

exceptions to the 1-year filing deadline. 

The first exception would permit the 

time limits for filing claims to be 

extended where a beneficiary becomes 

retroactively entitled to Medicare 

benefits, but was not entitled to 

Medicare benefits at the time the 

services were furnished. Under this 

exception, the time to file a claim would 

be extended through the last day of the 

sixth month following the month in 

which the beneficiary received 

notification of the retroactive Medicare 

entitlement to the date of the furnished 

service. 

The second exception would permit 

the time limits for filing claims to be 

extended where: (1) At the time the 

service was furnished, the beneficiary 

was not entitled to Medicare; (2) 

subsequently, the beneficiary received 

notification of Medicare entitlement, 

retroactively effective to the date of the 

furnished service; and (3) subsequently 

the State Medicaid agency recovered the 

Medicaid payment for the furnished 

service from a provider or supplier 11 

months or more after date the service 

was furnished. Under this exception, 

the time to file a claim would be 

extended through the last day of the 

sixth month following the month in 

which the State recovered the Medicaid 

payment from the provider or supplier. 

The budgetary impact related to this 

provision is significant as future 

payment of claims for services incurred 

will now be made at an earlier date, 

relative to the 12-month submission 

expiration. This is reflected by the Part 

A and Part B payment amounts of $60 

and $50 million for FY 2011. However, 

for purposes of the Regulatory Impact 

Analysis, the economic impact of this 

provision is non-economically 

significant, as to the interest lost on 

money now required to pay claims prior 

to the 12-month submission expiration 

is minimal. 

Providers and suppliers have 

established billing practices for the 

submission of claims for payment to the 

Medicare program. Although this 

proposed rule would require providers 

and suppliers to submit Medicare feefor-service claims within 12 months 

from the date of service, we believe 

providers and suppliers would easily 

revise their billing practices on a onetime basis, and suffer no economic 

impact. In fact, analysis of Medicare 

claims data shows that more than 99 

percent of Part A and Part B claims are 

filed in 12 months or less. In addition, 

some providers and suppliers will 

receive payment and interest on claims 

that are filed at an earlier date. 

Lastly, providers, suppliers, or the 

small number of beneficiaries that 

occasionally submit claims may benefit 

from the availability of the two 

proposed new exceptions to the timely 

filing rule; however, we believe the 

impact on program costs would be 

negligible. 

E. Other Provisions of the Proposed 

Regulation 

1. Part B Drug Payment: ASP Issues 

Application of our proposed policies 

for ‘‘Carry Over ASP’’ and ‘‘Partial 

Quarter ASP Data,’’ as discussed in 

section VI.A. of this proposed rule, are 

dependent on the status and quality of 

quarterly manufacturer data 


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submissions, so we cannot quantify 

associated savings. 

Furthermore, we do not expect that 

our proposed policy for determining the 

payment amount for drugs and 

biologicals which include intentional 

overfill, as discussed in section VI.A of 

this proposed rule, will impact 

payments made by the Medicare 

program. 

Finally, as discussed in section VI.A 

of this proposed rule, we are proposing 

to provide for appropriate price 

substitutions that account for marketrelated pricing changes and would 

allow Medicare to pay based off lower 

market prices for those drugs and 

biologicals that consistently exceed the 

applicable threshold percentage. We 

believe that this proposal will generate 

some savings for the Medicare program 

and its beneficiaries since any 

substituted prices would be for amounts 

less than the calculated 106 percent of 

the ASP. 

2. Ambulance Fee Schedule: Proposed 

Policy for Reporting Units When Billing 

for Ambulance Fractional Mileage 

As discussed in section VI.B. of this 

proposed rule, we are proposing to 

implement fractional mileage billing for 

all providers and suppliers of 

ambulance services. For all claims for 

mileage totaling up to 100 covered 

miles, we are proposing to require all 

providers and suppliers of ambulance 

services to bill mileage rounded up to 

the nearest tenth of a mile rather than 

the nearest whole mile and are 

proposing to pay based on that amount. 

By requiring that providers and 

suppliers round up to the nearest tenth 

of a mile rather than the nearest whole 

mile, providers and suppliers would be 

submitting claims for anywhere between 

0.1 and 0.9 of a mile less per claim and 

Medicare would pay based on that 

amount. We anticipate that requiring 

greater accuracy in billing for 

ambulance mileage will generate modest 

cost savings for the Medicare program. 

Based on our rough estimates using CY 

2008 claims data, Medicare could 

potentially save at least $45 million per 

year in payments for base mileage billed 

by suppliers, and perhaps as much as 

$80 million per year when considering 

other types of ambulance mileage 

payments such as those for rural 

mileage and those made to institutional 

providers. 

3. Chiropractic Services Demonstration 

As discussed in section VI.D. of this 

proposed rule, we are continuing the 

recoupment of the $50 million in 

expenditures from this demonstration in 

order to satisfy the budget neutrality 

requirement in section 651(f)(1)(b) of the 

MMA. We initiated this recoupment in 

CY 2010 and this will be the second 

year. As discussed in the CY 2010 PFS 

final rule with comment period, we 

finalized a policy to recoup $10 million 

each year through adjustments to the 

PFS for all chiropractors in CYs 2010 

through 2014. To implement this 

required budget neutrality adjustment, 

we are recouping $10 million in CY 

2011 by reducing the payment amount 

under the PFS for the chiropractic CPT 

codes (that is, CPT codes 98940, 98941, 

and 98942) by approximately 2 percent. 

4. Renal Dialysis Services Furnished by 

ESRD Facilities 

The ESRD related provisions are 

discussed in sections V.P. and VI.E. of 

this proposed rule. To understand the 

impact of the changes affecting 

payments to different categories of 

ESRD facilities, it is necessary to 

compare estimated payments under the 

current year (CY 2010 payments) to 

estimated payments under the revisions 

to the composite rate payment system 

(CY 2011 payments) as discussed in 

section VI.E. of this proposed rule. To 

estimate the impact among various 

classes of ESRD facilities, it is 

imperative that the estimates of current 

payments and estimates of proposed 

payments contain similar inputs. 

Therefore, we simulated payments only 

for those ESRD facilities for which we 

are able to calculate both current CY 

2010 payments and proposed CY 2011 

payments. 

Also, as explained in the ESRD PPS 

proposed rule (74 FR 50019), section 

1881(b)(14)(E)(i) of the Act requires a 4- 

year transition (phase-in) from the 

current composite payment system to 

the ESRD PPS, and section 

1881(b)(14)(E)(ii) allows ESRD facilities 

to make a one-time election to be 

excluded from the transition. As of 

January 1, 2011, ESRD facilities that 

elect to go through the transition would 

be paid a blended amount that will 

consist of 75 percent of the basic casemix adjusted composite payment system 

and the remaining 25 percent would be 

based on the ESRD PPS payment. 

Therefore, these proposed rates listed in 

the impact table below reflect only the 

composite rate portion of the blended 

payment amounts for facilities going 

through the first year of the 4-year 

transition under the new ESRD PPS. A 

full analysis of the projected impact of 

the ESRD PPS will be addressed in the 

ESRD PPS final rule which will be 

published in the summer. 

ESRD providers were grouped into the 

categories based on characteristics 

provided in the Online Survey and 

Certification and Reporting (OSCAR) 

file and the most recent cost report data 

from the Healthcare Cost Report 

Information System (HCRIS). We also 

used the December 2009 update of CY 

2009 National Claims History file as a 

basis for Medicare dialysis treatments 

and separately billable drugs and 

biologicals. Since the December 2009 

update of the CY 2009 National Claims 

History File is incomplete, we updated 

the data. The description of the updates 

for the separately billable drugs is 

described in section IV.E. of this 

proposed rule. To update the treatment 

counts we used the ratio of the June 

2009 to the December 2008 updates of 

the CY 2008 National Claims History 

File figure for treatments. This was an 

increase of 12.4 percent. Due to data 

limitations, we are unable to estimate 

current and proposed payments for 32 

of the 5318 ESRD facilities that bill for 

ESRD dialysis treatments. 

Table 75 shows the impact of this 

year’s proposed changes to CY 2011 

payments to hospital-based and 

independent ESRD facilities. The first 

column of Table 75 identifies the type 

of ESRD provider, the second column 

indicates the number of ESRD facilities 

for each type, and the third column 

indicates the number of dialysis 

treatments. The fourth column shows 

the effect of all proposed changes to the 

ESRD wage index for CY 2011 as it 

affects the composite rate payments to 

ESRD facilities. The fourth column 

compares aggregate ESRD wage-adjusted 

composite rate payments in CY 2011 to 

aggregate ESRD wage-adjusted 

composite rate payments in CY 2010. In 

CY 2010, ESRD facilities receive 100 

percent of the CBSA wage-adjusted 

composite rate. The overall effect to all 

ESRD providers in aggregate is zero 

because the CY 2011 ESRD wage index 

has been multiplied by a budget 

neutrality adjustment factor to comply 

with the statutory requirement that any 

wage index revisions be done in a 

manner that results in the same 

aggregate amount of expenditures as 

would have been made without any 

changes in the wage index. The fifth 

column shows the effect of proposed 

changes to the ESRD wage index in CY 

2011 and the effect of section 3401(h) of 

the ACA, which amends section 

1881(b)(14)(F) of the Act to revise the 

ESRD market basket increase factor. 

Effective January 1, 2011, there is a full 

ESRD bundled market basket update to 

the composite rate component of the 

blended payment amount under the 

payment system. We anticipate an 

estimated ESRD market basket increase 

factor of 2.5 percent for those facilities 


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electing to go through the ESRD PPS 

transition. The sixth column shows the 

overall effect of the proposed changes in 

composite rate payments to ESRD 

providers, including the drug add-on. 

The overall effect is measured as the 

difference between the proposed CY 

2011 payment with all changes as 

proposed in this rule and current CY 

2010 payment. This payment amount is 

computed by multiplying the wageadjusted composite rate with the drug 

add-on for each provider times the 

number of dialysis treatments from the 

CY 2009 claims. The CY 2011 proposed 

payment is the composite rate for each 

provider (with the proposed 14.7 

percent drug add on) times dialysis 

treatments from CY 2009 claims. The 

CY 2010 current payment is the 

composite rate for each provider (with 

the current 15.0 percent drug add on) 

times dialysis treatments from CY 2009 

claims. 

The overall impact to ESRD providers 

in aggregate is 2.2 percent as shown in 

Table 75. Most ESRD facilities will see 

an increase in payments as a result of 

the ACA provision. While section 

3401(h) of the ACA modifies the ESRD 

bundled market basket, which we 

anticipate will be a 2.5 percent increase 

to the ESRD composite rate portion of 

the blended payment amount, this 2.5 

percent increase does not apply to the 

drug add-on to the composite rate. For 

this reason, the impact of all changes in 

this proposed rule is a 2.2 percent 

increase for all ESRD providers. Overall, 

payments to independent ESRD 

facilities will increase by 2.2 percent 

and payments to hospital-based ESRD 

facilities will increase by 2.1 percent. 

TABLE 75—IMPACT OF CY 2012 CHANGES IN PAYMENTS TO HOSPITAL-BASED AND INDEPENDENT ESRD FACILITIES

[Percent change in composite rate payments to ESRD facilities] 

1 2 3 4 5 6 

Number of 

facilities 

Number of dialysis 

treatments 

(in millions) 

Effect of changes 

in wage index 1

Effect of changes 

in wage index and 

of affordable care 

act provision 2

Overall effect of 

wage index 

affordable care act 

& drug add-on 3

All Providers ........................................... 5,286 38.8 0.0% 2.5% 2.2% 

Independent .................................... 4,715 35.1 0.0% 2.5% 2.2% 

Hospital Based ............................... 571 3.7 ¥0.1% 2.4% 2.1% 

By Facility Size 

Less than 5000 treatments ............. 1,973 5.6 0.1% 2.6% 2.3% 

5000 to 9999 treatments ................ 2,042 14.8 0.1% 2.6% 2.3% 

Greater than 9999 treatments ........ 1,271 18.3 ¥0.1% 2.4% 2.1% 

Type of Ownership 

Profit ............................................... 4,332 32.1 0.0% 2.5% 2.3% 

Nonprofit ......................................... 954 6.7 ¥0.1% 2.4% 2.1% 

By Geographic Location 

Rural ............................................... 1,167 6.3 0.2% 2.7% 2.4% 

Urban .............................................. 4,119 32.5 0.0% 2.5% 2.2% 

By Region 

New England .................................. 163 1.3 ¥0.6% 1.9% 1.6% 

Middle Atlantic ................................ 591 4.8 ¥0.4% 2.1% 1.8% 

East North Central .......................... 869 6.0 0.2% 2.7% 2.4% 

West North Central ......................... 397 2.1 ¥0.1% 2.4% 2.2% 

South Atlantic ................................. 1,188 8.8 0.0% 2.5% 2.2% 

East South Central ......................... 415 2.9 0.0% 2.5% 2.3% 

West South Central ........................ 712 5.6 0.4% 2.9% 2.7% 

Mountain ......................................... 310 1.8 0.2% 2.7% 2.4% 

Pacific ............................................. 603 5.1 0.0% 2.5% 2.3% 

Puerto Rico & Virgin Islands .......... 38 0.4 ¥2.4% 0.0% ¥0.2% 

Notes: Payments have been adjusted to reflect budget neutrality. 2010 includes the MIPPA 1 percent increase and site neutral rates. 2010 & 

2011 are 100 percent new CBSA wage adjusted compsite rate. 1This column shows the overall effect of wage index changes on ESRD providers. Composite rate payments are computed using the proposed CY 2011 wage indexes which are compared to composite rate payments using the current CY 2010 wage indexes. 2This column shows the effect of the changes in the Wage Indexes and the ACA provision which includes an ESRD Bundled Market Basket 

(anticipated 2.5 percent) increase to the composite rate. This provision is effective January 1, 2011. 3This column shows the percent change between CY 2011 and CY 2010 composite rate payments to ESRD facilities. 

4The CY 2011 payments include the CY 2011 wage adjusted composite rate, an anticipated 2.5 percent increase due to the ACA effective 

January 1, 2011, and the drug add-on of 14.7 percent. The CY 2010 payments include the CY 2010 wage adjusted composite rate, a 1 percent 

increase and site neutral rates effective January 1, 2009, and the drug add-on of 15.0 percent. This column shows the effect of wage index, 

ACA, and drug add-on changes. Although as a result of the ACA provision we anticipate a 2.5 percent increase to the composite rate in CY 

2011, this increase does not apply to the drug add-on to the composite rate. For this reason, the impact of all changes in this proposed rule is a 

2.2 percent increase for all ESRD providers. 

5. Section 131(b) of the MIPPA: 

Physician Payment, Efficiency, and 

Quality Improvements—Physician 

Quality Reporting Initiative (PQRI) 

As discussed in section VI.F.1 of this 

proposed rule, we propose several 

different reporting options for EPs who 

wish to participate in the 2011 PQRI. 

Although there may be some cost 

incurred in the PQRI and their 

associated code sets, and for expanding 

an existing clinical data warehouse to 

accommodate registry-based reporting 

and EHR-based reporting for the PQRI, 

we do not anticipate a significant cost 

impact on the Medicare program. 

Participation in the CY 2011 PQRI by 

individual EPs is voluntary and 

individual EPs and group practices may 

have different processes for integrating 

the PQRI into their practice’s work 

flows. Given this variability and the 

multiple reporting options that we 

propose to provide, it is difficult to 

accurately estimate the impact of the 

PQRI on providers. Furthermore, we 

believe that costs for EPs who are 


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participating in the PQRI for the first 

time in 2011 will be considerably higher 

than the cost for EPs who participated 

in PQRI in prior years. In addition, for 

many EPs, the cost of participating in 

the PQRI is offset by the incentive 

payment received. 

With respect to the potential incentive 

payment that will be made for the 2011 

PQRI, we estimate this amount to be 

approximately $100 million. This 

estimate is derived from looking at our 

2008 incentive payment of more than 

$93 million and then accounting for the 

fact that the 2008 incentive payment 

was 1.5 percent of an EP’s total 

estimated Medicare Part B PFS allowed 

charges for all covered professional 

services furnished during the 2008 

reporting period. For 2011, the incentive 

payment is 1.0 percent of an EP’s total 

estimated Medicare Part B PFS allowed 

charges for all covered professional 

services furnished during the 2011 

reporting period. Although we expect 

that the lower incentive payment 

amount for 2011 would reduce the total 

outlay by approximately one-third, we 

also expect more EPs to participate in 

the 2011 PQRI as there are more 

methods of data submission and 

additional alternative reporting periods. 

One factor that influences the cost to 

individual EPs is the time and effort 

associated with individual EPs 

identifying applicable PQRI quality 

measures and reviewing and selecting a 

reporting option. This burden will vary 

with each individual EP by the number 

of applicable measures, the EP’s 

familiarity and understanding of the 

PQRI, experience with PQRI 

participation, and the method(s) 

selected by the EP for reporting of the 

measures, and incorporating the 

reporting of the measures into the office 

work flows. Information obtained from 

the Physician Voluntary Reporting 

Program (PVRP), which was a 

predecessor to the PQRI and was the 

first step for the reporting of physician 

quality of care through certain quality 

metrics, indicated an average labor cost 

per practice of approximately $50 per 

hour. To account for salary increases 

over time, we will use an average 

practice labor cost of $58 per hour for 

our estimates, based on an assumption 

of an average annual increase of 

approximately 3 percent. Therefore, 

assuming that it takes an individual EP 

approximately 5 hours to review the 

PQRI quality measures, review the 

various reporting options, select the 

most appropriate reporting option, 

identify the applicable measures for 

which they can report the necessary 

information, and incorporate reporting 

of the selected measures into their office 

work flows, we estimate that the cost to 

EPs associated with preparing to report 

PQRI quality measures would be 

approximately $290 per individual EP 

($58 per hour × 5 hours). 

Another factor that influences the cost 

to individual EPs is how they choose to 

report the PQRI measures (that is, 

whether they select the claims-based, 

registry-based or EHR-based reporting 

mechanism). For claims-based PQRI 

reporting, estimates from the PVRP 

indicate the time needed to perform all 

the steps necessary to report quality 

data codes (QDCs) for 1 measure on a 

claim ranges from 15 seconds (0.25 

minutes) to 12 minutes for complicated 

cases or measures. In previous years, 

when we required reporting on 80 

percent of eligible cases for claimsbased reporting, we found that on 

average, the median number of reporting 

instances for each of the PQRI measures 

was 9. Since we propose to reduce the 

required reporting rate by over one-third 

to 50 percent, then for purposes of this 

impact analysis we will assume that an 

EP will need to report each selected 

measure for 6 reporting instances, or 6 

cases. Assuming that an EP, on average, 

will report 3 measures and that an EP 

reports on an average of 6 reporting 

instances per measure, we estimate that 

the cost to an individual EP associated 

with claims-based reporting of PQRI 

measures would range from 

approximately $4.35 (0.25 min per 

reporting instance × 6 reporting 

instances per measure × 3 measures × 

$58 per hour) to $208.80 (12 min per 

reporting instance × 6 reporting 

instances per measure × 3 measures × 

$58 per hour). If an EP satisfactorily 

reports, these costs will more than likely 

be negated by the incentive earned. For 

the 2007 PQRI, which had a 1.5 percent 

incentive for a 6-month reporting 

period, the mean incentive amount was 

close to $700 for an individual EP and 

the median incentive payment amount 

was over $300. 

For registry-based reporting, 

individual EPs must generally incur a 

cost to submit data to registries. 

Estimated fees for using a qualified 

registry range from no charge, or a 

nominal charge, for an individual EP to 

use a registry to several thousand 

dollars, with a majority of registries 

charging fees ranging from $500–$1000. 

However, our impact analysis should be 

limited to the incremental costs 

associated with PQRI reporting, which 

we believe are minimal. Many EPs who 

select registry-based reporting were 

already utilizing the registry for other 

purposes and would not need to report 

additional data to the registry 

specifically for PQRI. The registries also 

often provide the EP services above and 

beyond what is required for PQRI. 

For EHR-based reporting, an 

individual EP generally would incur a 

cost associated with purchasing an EHR 

product. Although we do not believe 

that the majority of EPs would purchase 

an EHR solely for the purpose of 

participating in PQRI, we estimate that 

an individual EP who chooses to do so 

would have to spend anywhere from 

$25,000–$54,000 to purchase and 

implement a certified EHR and $10,000 

annually for ongoing maintenance. 

Although we believe that the majority 

of EPs attempting to qualify for the 

additional 0.5 percent incentive 

payment authorized by section 

1848(m)(7) of the Act would be those 

who are already required by their 

Boards to participate in an MOCP, 

individual EPs who wish to qualify for 

the additional 0.5 percent incentive 

payment and are not currently 

participating in an MOCP would also 

have to incur a cost for participating in 

an MOCP. The manner in which fees are 

charged for participating in an MOCP 

vary by specialty. Some Boards charge 

a single fee for participation in the full 

cycle of MOC. Such fees appear to range 

anywhere from over $1,100 to nearly 

$1,800 per cycle. Some Boards have 

annual fees that are paid by their 

diplomates. On average, ABMS 

diplomates pay approximately $200.00 

per year for participating in MOC. Some 

Boards have an additional fee for the 

MOC Part III secure examination, but 

most Boards do not have additional 

charges for participation in the Part IV 

practice/quality improvement activities. 

With respect to the proposed process 

for group practices to be treated as 

satisfactorily submitting quality 

measures data for the CY 2011 PQRI 

discussed in section VI.F.1 of this 

proposed rule, group practices 

interested in participating in the CY 

2011 PQRI through the group practice 

reporting option (GPRO) I or GPRO II 

may also incur a cost. However, for 

groups that satisfactorily report for 2011 

PQRI, we believe these costs would be 

completely offset by the incentive 

payment earned since the group practice 

would be eligible for an incentive 

payment equal to 1 percent of the entire 

group’s total estimated Medicare Part B 

PFS allowed charges for covered 

professional services furnished during 

the reporting period. 

One factor in the cost to group 

practices would be the costs associated 

with the self-nomination process. 

Similar to our estimates for staff 

involved with the claims-based 

reporting option for individual EPs, we 

also estimate that the group practice 


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staff involved in the group practice selfnomination process has an average labor 

cost of $58 per hour. Therefore, 

assuming 2 hours for a group practice to 

decide whether to participate 

individually or as a group and 4 hours 

for the self-nomination process, we 

estimate the total cost to a group 

practice associated with the group 

practice self-nomination process to be 

approximately $348 ($58 per hour × 6 

hours per group practice). 

For groups participating under the 

proposed GPRO I process, another factor 

in the cost to the group would be the 

time and effort associated with the 

group practice completing and 

submitting the proposed data collection 

tool. The information collection 

components of this data collection tool 

have been reviewed by OMB and are 

currently approved under OMB control 

number 0938–0941, with an expiration 

date of December 31, 2011. Based on the 

Physician Group Practice (PGP) 

demonstration’s estimate that it takes 

approximately 79 hours for a group 

practice to complete the data collection 

tool, which uses the same data 

submission methods as those we have 

proposed, we estimate the cost 

associated with a physician group 

completing the data collection tool 

would be approximately $4,582 ($58 per 

hour × 79 hours per group practice). 

For group practices participating 

under the proposed GPRO II process, 

the costs associated with submitting the 

PQRI quality measures data would be 

the time associated with the group 

practice submitting the required data to 

CMS via claims or a registry. The costs 

for a group practice reporting to a 

registry should be similar to the costs 

associated with registry reporting for an 

individual EP, as the process is the same 

with the exception that more patients 

and more measures must be reported in 

GPRO II compared to an individual EP. 

For similar reasons, the costs for a group 

practice reporting via claims should also 

be similar to the costs associated with 

claims-based reporting for an individual 

EP. Overall, there is significantly less 

burden associated with a group practice 

participating in PQRI via GPRO II than 

doing so as individual EPs. Participation 

in GPRO II requires the group practice 

as a whole to report a fewer number of 

measures on a fewer number of people 

since EPs within a group who share 

patients would not be required to 

separately report measures for those 

shared patients. Therefore, assuming 

that an average group practice would 

spend 20 hours for data submission, we 

estimate the cost of data submission 

under GPRO II would be approximately 

$1,160 (20 hours for data submission × 

$58 per hour). Smaller groups may need 

less time for data submission as they 

would be required to report fewer 

measures and presumably have a 

smaller patient population while larger 

groups may need more time for data 

submission since they would be 

required to report more measures and 

presumably have a larger patient 

population. 

In addition to costs incurred by EPs 

and group practices, registries and EHR 

vendors may also incur some costs 

related to the PQRI. Registries interested 

in becoming ‘‘qualified’’ to submit on 

behalf of individual EPs would also 

have to incur a cost associated with the 

vetting process and with calculating 

quality measures results from the data 

submitted to the registry by its 

participants and submitting the quality 

measures results and numerator and 

denominator data on quality measures 

to CMS on behalf of their participants. 

We estimate the registry self-nomination 

process would cost approximately $500 

per registry ($50 per hour × 10 hours per 

registry). This cost estimate includes the 

cost of submitting the self-nomination 

letter to CMS and completing the CMS 

vetting process. Our estimate of $50 per 

hour average labor cost for registries is 

based on the assumption that registry 

staff include IT professionals whose 

average hourly rates range from $36 to 

$84 per hour depending on experience, 

with an average rate of nearly $50 per 

hour for a mid-level programmer. 

However, the 2010 qualified registries 

would not incur any costs associated 

with the self-nomination process unless 

they are unsuccessful at submitting 

2010 PQRI results, they wish to be 

qualified to submit additional measures 

or for additional methods, or we finalize 

new requirements for 2011. We do not 

believe that there are any additional 

costs for registries associated with a 

registry calculating quality measures 

results from the data submitted to the 

registry by its participants and 

submitting the quality measures results 

and numerator and denominator data on 

quality measures to CMS on behalf of 

their participants. We believe that the 

majority of registries already perform 

these functions for their participants. 

An EHR vendor interested in having 

its product(s) be used by individual EPs 

to submit PQRI measures to CMS for 

2012 would have to complete a vetting 

process during 2011 and program its 

EHR product(s) to extract the clinical 

data that the EP needs to submit to CMS 

for purposes of reporting 2012 quality 

measures as well. We propose that 

previously qualified vendors would 

need to only update their electronic 

measure specifications and data 

transmission schema to incorporate any 

new EHR measures to maintain their 

qualification for the 2012 PQRI. 

Therefore, for EHR vendors that were 

not previously qualified, the cost 

associated with completing the selfnomination process, including the 

vetting process with CMS officials, is 

estimated to be $500 ($50 per hour × 10 

hours per EHR vendor). Our estimate of 

a $50 per hour average labor cost for 

EHR vendors is based on the 

assumption that vendor staff include IT 

professionals whose average hourly 

rates range from $36 to $84 per hour 

depending on experience, with an 

average rate of nearly $50 per hour for 

a mid-level programmer. We believe 

that the cost associated with the time 

and effort needed for an EHR vendor to 

review the quality measures and other 

information and program the EHR 

product to enable individual EPs to 

submit PQRI quality measures data to 

the CMS-designated clinical warehouse 

will be dependent on the EHR vendor’s 

familiarity with PQRI, the vendor’s 

system’s capabilities, as well as the 

vendor’s programming capabilities. 

Some vendors already have the 

necessary capabilities and for such 

vendors, we estimate the total cost to be 

approximately $2,000 ($50 per hour × 

40 hours per vendor). However, given 

the variability in the capabilities of the 

vendors, we believe an estimate for 

those vendors with minimal experience 

would be approximately $10,000 per 

vendor ($50 per hour × 200 hours per 

EHR vendor). 

6. Section 132 of the MIPPA: Incentives 

for Electronic Prescribing (eRx)—The 

eRx Incentive Program 

Section VI.F.2. of this proposed rule 

describes the proposed 2011 Electronic 

Prescribing (eRx) Incentive Program. To 

be considered a successful electronic 

prescriber in CY 2011, an individual EP 

would need to meet the requirements 

proposed in section VI.F.2. of this 

proposed rule. 

We anticipate that the cost impact of 

the eRx Incentive Program on the 

Medicare program would be the cost 

incurred for maintaining the electronic 

prescribing measure and its associated 

code set, and for maintaining the 

existing clinical data warehouse to 

accommodate registry-based reporting 

and EHR-based reporting for the 

electronic prescribing measure. 

However, we do not anticipate a 

significant cost impact on the Medicare 

program since much of this 

infrastructure has already been 

established for the PQRI program. 

Individual EPs and group practices 

may have different processes for 


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integrating the eRx Incentive Program 

into their practices’ work flows. Given 

this variability and the multiple 

reporting options that we propose to 

provide, it is difficult to accurately 

estimate the impact of the eRx Incentive 

Program on providers. Furthermore, we 

believe that costs for EPs who are 

participating in the eRx Incentive 

Program for the first time in 2011 will 

be considerably higher than the cost for 

EPs who participated in the eRx 

Incentive Program in prior years. In 

addition, for many EPs (especially those 

who participated in the eRx Incentive 

Program in prior years), the cost of 

participating in the eRx Incentive 

Program will be offset by the incentive 

payment received. 

At this time, no eRx incentive 

payments have been made yet. We are 

currently analyzing 2009 eRx data, 

which was the first year of the program, 

and anticipate making the 2009 

incentive payments later this year. We 

estimate that the incentive payments for 

the 2011 eRx Incentive Program (which 

will be paid in 2012) will be 

approximately $81 million. This 

estimate is based on preliminary 

participation numbers from the early 

part of 2010 and incentive payments 

that have been made for PQRI. We 

anticipate that despite a decrease in the 

incentive payment amount from 2 

percent in 2010 to 1 percent of total 

estimated Medicare Part B allowed 

charges for covered professional 

services in 2011, more EPs (and groups) 

will choose to participate in the 2011 

eRx Incentive Program to avoid a 

prospective 1 percent payment penalty 

in 2012 for not demonstrating that they 

are successful electronic prescribers. 

Even though the incentive payment 

amount for the 2011 eRx Incentive 

Program is equal to the incentive 

payment amount for the 2011 PQRI, we 

believe that the total incentive amount 

that will be paid for the 2011 eRx 

Incentive Program will be less than the 

total incentive payment amount that 

will be paid for the PQRI discussed 

above. The eRx Incentive Program does 

not apply to all EPs. For example, EPs 

who do not have prescribing privileges 

or EPs who do not practice in a 

particular care setting would not be able 

to participate in the eRx Incentive 

Program even though they can 

participate in PQRI. 

Any EP who wishes to participate in 

the eRx Incentive Program must have a 

qualified electronic prescribing system 

in order to participate. Therefore, a onetime potential cost to some individual 

EPs would be the cost of purchasing and 

using an eRx system, which varies by 

the commercial software package 

selected, the level at which the 

professional currently employs 

information technology in his or her 

practice and the training needed. One 

study indicated that a midrange 

complete electronic medical record with 

electronic prescribing functionality 

costs $2,500 per license with an annual 

fee of $90 per license for quarterly 

updates of the drug database after setup 

costs while standalone prescribing, 

messaging, and problem list system may 

cost $1,200 per physician per year after 

setup costs. Hardware costs and setup 

fees substantially add to the final cost of 

any software package. (Corley, S.T. 

(2003). ‘‘Electronic prescribing: a review 

of costs and benefits.’’ Topics in Health 

Information Management 24(1):29–38.). 

These are the estimates that we propose 

to use for our impact analysis. 

Similar to PQRI, one factor in the cost 

to individual EPs is the time and effort 

associated with individual EPs 

reviewing the electronic prescribing 

measure to determine whether it is 

applicable to them, reviewing the 

available reporting options and selecting 

one, gathering the required information, 

and incorporating reporting of the 

measure into their office work flows. 

Since the eRx Incentive Program 

consists of only 1 quality measure, we 

propose to estimate 2 hours as the 

amount of time needed for individual 

EPs to prepare for participation in the 

eRx Incentive Program. Information 

obtained from the Physician Voluntary 

Reporting Program (PVRP), which was a 

predecessor to the PQRI and was the 

first step for the reporting of physician 

quality of care through certain quality 

metrics, indicated an average labor cost 

per practice of approximately $50 per 

hour. To account for salary increases 

over time, we will use an average 

practice labor cost of $58 per hour for 

our estimates, based on an assumption 

of an average annual increase of 

approximately 3 percent. At an average 

cost of approximately $58 per hour, we 

estimate the total preparation costs to 

individual EPs to be approximately 

$116 ($58 per hour × 2 hours). 

Another factor that influences the cost 

to individual EPs is how they choose to 

report the electronic prescribing 

measure (that is, whether they select the 

claims-based, registry-based or EHRbased reporting mechanism). For 

claims-based reporting, there would be 

a cost associated with reporting the 

appropriate QDC on the claims an 

individual EP submits for payment. 

Based on the information from the PVRP 

described above for the amount of time 

it takes a median practice to report one 

measure one time (1.75 min) and the 

proposed requirement to report 25 

electronic prescribing events during 

2011, we estimate the annual estimated 

cost per individual EP to report the 

electronic prescribing measure via 

claims-submission to be $42.29 (1.75 

min per case × 1 measure × 25 cases per 

measure × $58 per hour). Assuming that 

the mean and median incentive 

payment amounts per individual EP 

would be comparable to those for the 

PQRI since the incentive payments are 

calculated in the same manner, we 

believe that for most successful 

electronic prescribers who earn an 

incentive, these costs would be negated 

by the incentive payment received. 

For EPs who select the registry-based 

reporting mechanism, we do not 

anticipate any additional cost for 

individual EPs to report data to a 

registry, as individual EPs opting for 

registry-based reporting are more than 

likely already reporting data to the 

registry. Little if any, additional data 

would need to be reported to the 

registry for purposes of participation in 

the CY 2011 eRx Incentive Program. 

Individual EPs using registries for PQRI 

will likely experience minimal, if any, 

increased costs charged by the registry 

to report this 1 additional measure. 

For EHR-based reporting, the EP must 

extract the necessary clinical data from 

his or her EHR, and submit the 

necessary data to the CMS-designated 

clinical data warehouse. Once the EHR 

is programmed by the vendor to allow 

data submission to CMS, the cost to the 

individual EP associated with the time 

and effort to submit data on the 

electronic prescribing measure should 

be minimal. 

With respect to the proposed process 

for group practices to be treated as 

successful electronic prescribers under 

the CY 2011 eRx Incentive Program 

discussed in section VI.F.2 of this 

proposed rule, group practices have the 

same option as individual eligible 

professionals in terms of the form and 

manner for reporting the eRx measure 

(that is, group practices have the option 

of reporting the measure through claims, 

a qualified registry, or a qualified EHR 

product). There are only 2 differences 

between the requirements for an 

individual EP and a group practice: (1) 

The fact that a group practice would 

have to self-nominate; and (2) the 

number of times a group practice would 

be required to report the eRx measure. 

Overall, there could be less cost 

associated with a practice participating 

in the eRx Incentive Program as a group 

rather than the individual members of 

the group separately participating. We 

do not anticipate any additional costs 

associated with the group practice selfnomination process since we propose to 


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limit the group practices to those 

selected to participate in the 2011 PQRI 

GPRO I or PQRI GPRO II. The practices 

only would need to indicate their desire 

to participate in the eRx GPRO at the 

time they self-nominate for either PQRI 

GPRO I or PQRI GPRO II. 

The costs for a group practice 

reporting to an EHR or registry should 

be similar to the costs associated with 

registry and EHR reporting for an 

individual EP, as the process is the same 

with the exception that more electronic 

prescribing events must be reported by 

the group. For similar reasons, the costs 

for a group practice reporting via claims 

should also be similar to the costs 

associated with claims-based reporting 

for an individual EP. Therefore, we 

estimate that the costs for group 

practices who are selected to participate 

in the CY 2011 eRx Incentive Program 

as a group would range from $126.88 

(1.75 min per case × 1 measure × 75 

cases per measure × $58 per hour) for 

the smallest groups participating under 

GPRO II to $4,229.17 (1.75 min per case 

× 2500 cases per measure × $58 per 

hour) for the groups participating under 

GPRO I. 

We believe that the costs to individual 

EPs and group practices associated with 

avoiding the eRx penalty that goes into 

effect in 2012 would be similar to the 

costs of an EP or group practice 

reporting the electronic prescribing 

measure for purposes of the 2011 eRx 

incentive. The proposed requirements 

for avoiding the 2012 eRx penalty, 

including the reporting period, 

essentially overlaps with the proposed 

requirements for the 2011 eRx incentive. 

Based on our proposal to consider 

only registries qualified to submit 

quality measures results and numerator 

and denominator data on quality 

measures to CMS on their participant’s 

behalf for the 2011 PQRI to be qualified 

to submit results and numerator and 

denominator data on the eRx measure 

for the CY 2011 eRx Incentive Program, 

we do not anticipate any cost to the 

registry associated with becoming a 

registry qualified to submit the eRx 

measure for CY 2011. 

The cost for the registry would be the 

time and effort associated with the 

registry calculating results for the eRx 

measure from the data submitted to the 

registry by its participants and 

submitting the quality measures results 

and numerator and denominator data on 

the eRx quality measure to CMS on 

behalf of their participants. We believe 

such costs would be minimal as 

registries would already be required to 

perform these activities for PQRI. 

Likewise, based on our proposal to 

consider only EHR products qualified 

for the CY 2011 PQRI to be qualified to 

submit results and numerator and 

denominator data on the electronic 

prescribing measure for the CY 2011 

eRx Incentive Program, there would be 

no need for EHR vendors to undergo a 

separate self-nomination process for the 

eRx Incentive Program. Therefore, there 

would be no additional cost associated 

with the self-nomination process. 

The cost to the EHR vendor associated 

with the EHR-based reporting 

requirements of this reporting initiative 

is the time and effort associated with the 

EHR vendor programming its EHR 

product(s) to extract the clinical data 

that the individual EP needs to submit 

to CMS for purposes of reporting the CY 

2011 eRx measure. Since we propose 

that only EHR products qualified for the 

2011 PQRI would be qualified for the 

CY 2011 eRx Incentive Program, and the 

eRx Incentive Program consists of only 

one measure, we believe that any 

burden associated with the EHR vendor 

to program its product(s) to enable 

individual EPs to submit data on the 

eRx measure to the CMS-designated 

clinical data warehouse would be 

minimal. 

7. Durable Medical Equipment-Related 

Issues 

a. Off-the-Shelf (OTS) Orthotics 

Exemption 

In section VI.G. of this proposed rule, 

we are proposing to expand the 

exemptions from the Competitive 

Bidding Program (CBP) for certain OTS 

orthotics to physicians or other 

practitioners (as defined by the 

Secretary) if furnished to their own 

patients as part of their professional 

service. 

The proposed exemption is a selfimplementing mandate required by 

section 154(d) of MIPPA, which added 

section 1847(a)(7) of the Act. Section 

1847(a)(7)(A) of the Act expanded the 

exemptions from the CBP for certain 

OTS orthotics to physicians or other 

practitioners (as defined by the 

Secretary) if furnished to their own 

patients as part of their professional 

service. Section 1847(a)(7)(B) of the Act, 

as added by section 154(d) of MIPPA, 

also expanded the exemption from CBP 

for certain OTS DME items (crutches, 

canes, walkers, folding manual 

wheelchairs, blood glucose monitors, 

and infusion pumps) when furnished by 

hospitals to the hospital’s own patients 

during an admission or on the date of 

discharge. 

We believe this exemption would 

have a negligible impact on physicians 

and other providers. The exemption will 

allow physicians to continue to provide 

these items to their own patients 

without submitting a bid and becoming 

a contract supplier. This will also allow 

continued access to OTS items for 

beneficiaries while being seen in their 

physician’s office. 

b. Changes to Payment for Oxygen 

Equipment 

The revisions pertaining to oxygen 

and oxygen equipment in section VI.G. 

of this proposed rule reflect changes 

made by section 144(b) of MIPPA and 

regulations implementing that 

provision. In § 414.226(g), exceptions 

are listed to the requirement that the 

supplier that furnishes oxygen 

equipment in the 1st month of the 36- 

month period must continue to furnish 

it until medical necessity ends or the 

36-month of continuous use ends. 

Section VI.G. changes one exception 

(§ 414.226(g)(1)(ii)) to read that if a 

beneficiary relocates to an area that is 

outside the normal service area of the 

supplier before the 18th month, then the 

supplier does not have to continue to 

furnish the item or make arrangements. 

We expect that revising 

§ 414.226(g)(1)(ii) so that only suppliers 

that have received at least 18 months of 

rental payments must continue to 

furnish the oxygen equipment until 

medical necessity ends or the end of the 

reasonable useful lifetime should have a 

minor impact on the supplier, but 

should provide protection to 

beneficiaries. The reason that we expect 

the revised exception will have little 

impact has foremost to do with the fact 

that it applies in cases that are the 

exception to the normal circumstances. 

Only 38 percent of the beneficiaries are 

still renting by the 18th month of the 

rental period; only suppliers furnishing 

oxygen equipment to this subgroup of 

beneficiaries will be affected by this 

proposed change. Further, relocation 

between the 18th to the 36th month is 

not a common occurrence. Such 

relocation happens with less than 0.5 

percent of the beneficiaries using 

oxygen equipment. In addition, between 

the 32nd and 35th month, relocation 

happens with the beneficiaries in about 

0.06 percent of the time on average. 

c. Diabetic Testing Supplies 

We are establishing requirements for 

conducting a national competition for 

furnishing diabetic supplies on a mail 

order basis. Specifically this proposed 

rule will establish 3 requirements: A 

new definition for what constitutes mail 

order; a rule that requires contract 

suppliers to provide at a minimum 50 

percent of all of the different types of 

diabetic testing products on the market 

by brand and model name; and a 


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prohibition against influencing and 

incentivizing beneficiaries to switch 

their brand of monitor and testing 

suppliers. 

Currently based on claims data from 

fiscal year 2009 over 62 percent of 

beneficiaries receive their replacement 

diabetic testing supplies from mail order 

suppliers. This definition will not 

impact these beneficiaries because they 

can continue to obtain their items 

through mail order. The remaining 38 

percent of beneficiaries may continue to 

obtain these items from a local 

storefront. We do not expect this rule to 

have any adverse affects on beneficiaries 

because the new definition of mail order 

is reflective of the way that beneficiaries 

currently get their testing supplies. 

However, we believe that by clarifying 

this definition we will protect 

beneficiaries from paying higher copayment amounts and we anticipate 

program savings that would have been 

eroded by suppliers circumventing our 

definition to continue to provide items, 

even if not awarded a contract under 

competitive bidding and to obtain the 

higher fee schedule payment amount. 

This definition is also consistent with 

the way that suppliers currently do 

business by either providing items 

through mail order or at a local 

storefront. For these reasons we believe 

this new definition will have minimal 

impact. 

Also, we considered the option to not 

bifurcate bidding based on delivery 

method and to bid for diabetic testing 

suppliers regardless of how the items 

were obtained. We rejected this 

approach because it would force 

companies with different business 

models to compete against each other, 

by requiring local pharmacies to 

compete with national mail order 

suppliers in order to win a contract to 

be able to furnish testing supplies. 

In order to implement a national mail 

order competition for diabetic supplies, 

we are also proposing to implement the 

special ‘‘50 percent rule’’ mandated by 

MIPPA. This rule requires a bidder to 

demonstrate that its bid ‘‘covers types of 

diabetic testing strip products that, in 

the aggregate and taking into account 

volume for the different products, cover 

50 percent (or such higher percentage as 

the Secretary may specify) of all such 

types of products.’’ The 50 percent 

threshold would ensure that 

beneficiaries have access to mail order 

delivery of the top-selling diabetic test 

strip products from every contract 

supplier. We plan to use the information 

that bidding suppliers provide on their 

bidding Form B where suppliers list the 

products they plan to furnish. We 

believe this requirement will have a 

minimal impact on suppliers because 

most suppliers currently provide a wide 

range of the brands and models in order 

to gain market share. The statute states 

that suppliers are required to carry at 

least 50 percent of all brands on the 

market. However, the Secretary can 

establish suppliers to carry a higher 

percentage of brands. We have adopted 

50 percent criteria because we believe 

this is reflective of what suppliers are 

currently doing and ensures appropriate 

access for beneficiaries. 

In addition to the 50 percent rule, we 

are also proposing to establish an antiswitching requirement. This provision 

would prevent contract suppliers from 

switching beneficiaries from their 

current brand to a brand provided by 

the supplier. We believe this 

requirement will protect the beneficiary 

and physician choice of glucose 

monitoring systems. The decision 

concerning the type of monitor and 

testing supplies that a beneficiary 

chooses should not be made by the 

supplier but rather by the beneficiary 

and their physician. We believe that this 

provision will have a minimal impact 

on suppliers because suppliers currently 

offer a variety of products and generally 

do require beneficiaries to switch from 

the brands they are familiar with and 

customarily use. 

d. Metropolitan Statistical Areas 

We believe that the provisions 

pertaining to subdividing metropolitan 

statistical areas (MSAs) with 

populations of at least 8,000,000 for the 

purpose of establishing competitive 

bidding areas (CBAs) under Round 2 of 

the DMEPOS Competitive Bidding 

Program will have a positive impact on 

most suppliers, particularly small 

suppliers. The authority provided by 

section 1847(a)(1)(D)(ii)(II) of the Act 

would be used to create CBAs that are 

smaller than the highly and densely 

populated MSAs of: Chicago-NapervilleJoliet, IL–IN–WI; Los Angeles-Long 

Beach-Santa Ana, CA; and New YorkNorthern New Jersey-Long Island, NY– 

NJ–PA. This should result in more 

manageable service areas for suppliers 

to navigate when furnishing items. More 

importantly, it should ensure more 

timely delivery of items and services to 

beneficiaries located throughout each of 

the MSAs. It should also benefit small 

suppliers because they would have 

smaller geographic areas to cover as 

contract suppliers than the large MSAs, 

which in some cases, might prevent 

them from being considered for 

participation under the program. The 

larger suppliers would still have the 

opportunity to bid in all of the CBAs 

within each MSA. We expect that 

subdividing the large MSAs of Chicago, 

Los Angeles, and New York would not 

have a negative impact on program 

savings, as long as each CBA is large 

enough to be attractive to suppliers for 

bidding purposes. 

Table 76 considers FY cash impact on 

the entire Medicare program, including 

Medicare Advantage for FYs 2011 thru 

2015 of the provisions of this proposed 

rule related to the establishment of 

CBAs during Round 2 and prior to 

calendar year 2015. The FY–CY 

distinction is an important one when 

comparing savings. For example, the 

savings for the Medicare DMEPOS 

Competitive Bidding Program will be for 

9 months of FY 2013, but for 12 months 

of CY 2013. Table 76 considers the 

impact on program expenditures, and 

does not include beneficiary 

coinsurance. Finally, the estimates in 

Table 76 incorporate spillover effects 

from the competitive acquisition 

program onto the Medicare Advantage 

program. The expectation is that the 21 

additional MSAs added to the Medicare 

DMEPOS Competitive Bidding Program 

would lower prices for DME products in 

FFS would lead to lower prices in the 

Medicare Advantage market. The table 

below considers FY cash impact of the 

above provisions on the entire Medicare 

program, including Medicare Advantage 

for the FY. 

TABLE 76—FISCAL YEAR COSTS TO

THE MEDICARE PROGRAM

FY Cost 

(in $millions) 

2011 .................................. 0 

2012 .................................. 0 

2013 .................................. ¥40 

2014 .................................. ¥70 

2015 .................................. ¥110 

Subdividing the large MSAs of Chicago, 

Los Angeles, and New York is 

considered to have little to no fiscal 

impact. The exceptions to the Medicare 

DMEPOS Competitive Bidding program 

involving rural areas, MSAs with 

populations less than 250,000, and low 

population density areas in selected 

MSAs before 2015 are considered to 

have little to no impact because the 

baseline never considered these areas as 

subject to competitive bidding prices. 

8. Air Ambulance 

In section VI.G. of this proposed rule, 

we present our proposals regarding air 

ambulance and provider and supplier 

enrollment. We note that this proposal 

is an administrative initiative that may 

result in Medicare program savings but 

at this time those savings are 

inestimable. We believe the probable 


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costs providers or suppliers will incur 

as a result of this rule to be negligible. 

F. Alternatives Considered 

This proposed rule contains a range of 

policies, including some provisions 

related to specific MIPPA and ACA 

provisions. The preceding preamble 

provides descriptions of the statutory 

provisions that are addressed, identifies 

those policies when discretion has been 

exercised, presents rationale for our 

proposals and, where relevant, 

alternatives that were considered. 

G. Impact on Beneficiaries 

There are a number of changes in this 

proposed rule that would have an effect 

on beneficiaries. In general, we believe 

that many of the proposed changes, 

including the refinements of the PQRI 

with its focus on measuring, submitting, 

and analyzing quality data, the 

expansion of the list of Medicareapproved telehealth services, the 

incentive payments for primary care 

services furnished by primary care 

practitioners in any location and major 

surgical procedures furnished by 

general surgeons in HPSAs, the waiver 

of beneficiary cost-sharing for most 

preventive services, and the annual 

wellness visit proposals, will have a 

positive impact and improve the quality 

and value of care provided to Medicare 

beneficiaries. 

The regulatory provisions may affect 

beneficiary liability in some cases. For 

example, the waiver of the deductible 

and coinsurance for the annual wellness 

visit, the IPPE, and preventive services 

with a grade of A or B from the USPSTF 

would reduce beneficiary liability for 

these services. Most changes in 

aggregate beneficiary liability due to a 

particular provision would be a function 

of the coinsurance (20 percent if 

applicable for the particular provision 

after the beneficiary has met the 

deductible). To illustrate this point, as 

shown in Table 74, the CY 2010 

national payment amount in the 

nonfacility setting for CPT code 99203 

(Office/outpatient visit, new) under the 

conversion factor that was consistent 

with the statute as of October 30, 2009 

and that would be in effect on December 

31, 2010 under current law, is $76.93 

which means that in CY 2010 a 

beneficiary would be responsible for 20 

percent of this amount, or $15.39. Based 

on this proposed rule, the CY 2011 

national payment amount in the 

nonfacility setting for CPT code 99203, 

as shown in Table 74, is $72.67, which 

means that, in CY 2011, the beneficiary 

coinsurance for this service would be 

$14.53. 

Additionally, beneficiary liability 

would also be impacted by the effect of 

the aggregate cost (savings) of the 

provisions on the standard calculation 

of the Medicare Part B premium rate 

(generally 25 percent of the provision’s 

cost or savings). 

Most policies discussed in this rule 

that impact payment rates, such as the 

expansion of the MPPR to therapy 

services and the increased discount on 

the TC of multiple imaging procedures 

from 25 percent to 50 percent, would 

similarly impact beneficiaries’ 

coinsurance. 

H. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), in Table 77, we have 

prepared an accounting statement 

showing the estimated expenditures 

associated with this proposed rule. This 

estimate includes the estimated FY 2011 

cash benefit impact associated with 

certain ACA and MIPPA provisions, and 

the CY 2011 incurred benefit impact 

associated with the estimated CY 2011 

PFS conversion factor update based on 

the FY 2011 President’s Budget 

baseline. 

TABLE 77—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES

Category Transfers 

CY 2011 Annualized Monetized 

Transfers.

Estimated decrease in expenditures of $5.7 billion for PFS conversion factor update. 

From Whom To Whom? ................. Federal Government to physicians, other practitioners and providers and suppliers who receive payment 

under Medicare. 

FY 2011 Annualized Monetized 

Transfers.

Estimated increase in expenditures of $2 billion for Affordable Care Act provisions. 

From Whom To Whom? ................. Federal Government to providers. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medical 

devices, Medicare, Reporting and 

recordkeeping requirements, Rural 

areas, X-rays. 

42 CFR Part 409 

Health facilities, Medicare. 

42 CFR Part 410 

Health facilities, Health professions, 

Kidney diseases, Laboratories, 

Medicare, Reporting and recordkeeping 

requirements, Rural areas, X-rays. 

42 CFR Part 411 

Kidney diseases, Medicare, Physician 

Referral, Reporting and record keeping 

requirements. 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare Reporting and recordkeeping 

requirements. 

42 CFR Part 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare, 

Reporting and recordkeeping. 

42 CFR Part 415 

Health facilities, Health professions, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

1. The authority citation for part 405 

continues to read as follows: 


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Authority: Secs. 1102, 1861, 1862(a), 1871, 

1874, 1881, and 1886(k) of the Social 

Security Act (42 U.S.C. 1302, 1395x, 

1395y(a), 1395hh, 1395kk, 1395rr and 

1395ww(k)), and sec. 353 of the Public 

Health Service Act (42 U.S.C. 263a). 

Subpart X—Rural Health Clinic and 

Federally Qualified Health Center 

Services 

2. A new § 405.2449 is added to read 

as follows. 

§ 405.2449 Preventive services. 

For services furnished on or after 

January 1, 2011, preventive services 

covered under the Medicare Federally 

qualified health center benefit are those 

preventive services defined in section 

1861(ddd)(3) of the Act, and § 410.2 of 

this chapter. Specifically, these include 

the following: 

(a) The specific services currently 

listed in section 1861(ww)(2) of the Act, 

with the explicit exclusion of 

electrocardiograms; 

(b) The Initial Preventive Physical 

Examination (IPPE) (as specified by 

section 1861(ww)(1) of the Act as added 

by section 611 of the Medicare 

Prescription Drug, Improvement and 

Modernization Act of 2003 (Pub. L. 108– 

173) and § 410.16 of this chapter); and 

(c) The Personalized Prevention Plan 

Services (PPPS), also known as the 

‘‘Annual Wellness Visit’’ (as specified by 

section 1861(hhh) of the Act as added 

by section 4103 of the Affordable Care 

Act (Pub. L. 111–148) and part 410, 

subpart B, § 410.15 of this chapter). 

3. Section 405.2470 is amended by 

adding a new paragraph (d) to read as 

follows: 

§ 405.2470 Reports and maintenance of 

records. 

* * * * * 

(d) Collection of additional claims 

data. Beginning January 1, 2011, a 

Medicare FQHC must report on its 

Medicare claims such information as the 

Secretary determines is needed to 

develop and implement a prospective 

payment system for FQHCs including, 

but not limited to all pertinent HCPCS 

(Healthcare Common Procedure Coding 

System) code(s) corresponding to the 

service(s) provided for each Medicare 

FQHC visit (as defined in § 405.2463). 

PART 409—HOSPITAL INSURANCE 

BENEFITS 

4. The authority citation for part 409 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart B—Inpatient Hospital Services 

and Inpatient Critical Access Hospital 

Services 

§ 409.17 [Amended] 

5. Amend § 409.17(d) by removing the 

phrase ‘‘hospital policies and 

procedures’’ and adding in its place the 

phrase ‘‘the provider’s policies and 

procedures.’’ 

Subpart C—Posthospital SNF Care 

6. Section 409.20 is amended by 

revising paragraph (a)(3) to read as 

follows: 

§ 409.20 Coverage of services. 

(a) * * * 

(3) Physical therapy, occupational 

therapy, and speech-language pathology 

services. 

* * * * * 

7. Section 409.23 is revised to read as 

follows: 

§ 409.23 Physical therapy, occupational 

therapy, and speech-language pathology 

services. 

Medicare pays for physical therapy, 

occupational therapy, or speechlanguage pathology services as 

posthospital SNF care if they are 

furnished— 

(a) By (or under arrangements made 

by) the facility and billed by (or 

through) the facility; 

(b) By qualified physical therapists, 

physical therapist assistants, 

occupational therapists, occupational 

therapy assistants, or speech-language 

pathologists as defined in part 484 of 

this chapter; and 

(c) In accordance with a plan that 

meets the requirements of § 409.17(b) 

through (d) of this part. 

PART 410—SUPPLEMENTARY 

MEDICAL INSURANCE (SMI) 

BENEFITS 

8. The authority citation for part 410 

continues to read as follows: 

Authority: Secs. 1102, 1834, 1871, and 

1893 of the Social Security Act (42 U.S.C. 

1302, 1395m, 1395hh, and 1395ddd). 

Subpart A—General Provisions 

9. Section 410.2 is amended by 

adding the definition of ‘‘Preventive 

services’’ in alphabetical order to read as 

follows: 

§ 410.2 Definitions. 

* * * * * 

Preventive services means all of the 

following: 

(1) The specific services listed in 

section 1861(ww)(2) of the Act, with the 

explicit exclusion of electrocardiograms; 

(2) The Initial Preventive Physical 

Examination (IPPE) (as specified by 

section 1861(ww)(1) of the Act); and 

(3) The Personalized Prevention Plan 

Services (PPPS), also known as the 

‘‘Annual Wellness Visit’’ (as specified by 

section 1861(hhh) of the Act) 

§ 410.3 [Amended] 

10. Amend § 410.3(b)(2) by removing 

the reference ‘‘subpart E’’ and adding in 

its place the reference ‘‘subpart I.’’ 

Subpart B—Medical and Other Health 

Services 

11. Section 410.15 is added to read as 

follows: 

§ 410.15 Annual wellness visits providing 

Personalized Prevention Plan Services: 

Conditions for and limitations on coverage. 

(a) Definitions. 

Detection of any cognitive 

impairment, for the purpose of this 

section, means assessment of an 

individual’s cognitive function by direct 

observation, with due consideration of 

information obtained by way of patient 

report, concerns raised by family 

members, friends, caretakers or others. 

Eligible beneficiary for purposes of 

this section means an individual who is 

no longer within 12 months after the 

effective date of his or her first Medicare 

Part B coverage period and who has not 

received either an initial preventive 

physical examination or an annual 

wellness visit providing a personalized 

prevention plan within the past 12 

months. 

Establishment of, or an update to the 

individual’s medical and family history 

for purposes of this section means, at a 

minimum, the collection and 

documentation of the following: 

(i) Past medical and surgical history, 

including experiences with illnesses, 

hospital stays, operations, allergies, 

injuries and treatments. 

(ii) Use or exposure to medications 

and supplements, including calcium 

and vitamins. 

(iii) Medical events in the 

beneficiary’s parents and any siblings 

and children, including diseases that 

may be hereditary or place the 

individual at increased risk. 

First annual wellness visit providing 

personalized prevention plan services 

for purposes of this section means the 

following services furnished an eligible 

beneficiary by a health professional as 

those terms are defined in this section: 

(i) Establishment of an individual’s 

medical and family history. 

(ii) Establishment of a list of current 

providers and suppliers that are 

regularly involved in providing medical 

care to the individual. 


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(iii) Measurement of an individual’s 

height, weight, body-mass index (or 

waist circumference, if appropriate), 

blood pressure, and other routine 

measurements as deemed appropriate, 

based on the beneficiary’s medical and 

family history. 

(iv) Detection of any cognitive 

impairment that the individual may 

have, as that term is defined in this 

section. 

(v) Review of the individual’s 

potential (risk factors) for depression, 

including current or past experiences 

with depression or other mood 

disorders, based on the use of an 

appropriate screening instrument for 

persons without a current diagnosis of 

depression, which the health 

professional may select from various 

available standardized screening tests 

designed for this purpose and 

recognized by national medical 

professional organizations. 

(vi) Review of the individual’s 

functional ability and level of safety, 

based on direct observation or the use 

of appropriate screening questions or a 

screening questionnaire, which the 

health professional as defined in this 

section may select from various 

available screening questions or 

standardized questionnaires designed 

for this purpose and recognized by 

national professional medical 

organizations. 

(vii) Establishment of the following: 

(A) A written screening schedule for 

the individual such as a checklist for the 

next 5 to 10 years, as appropriate, based 

on recommendations of the United 

States Preventive Services Task Force 

and the Advisory Committee on 

Immunization Practices, and the 

individual’s health status, screening 

history, and age-appropriate preventive 

services covered by Medicare. 

(B) A list of risk factors and 

conditions for which primary, 

secondary or tertiary interventions are 

recommended or are underway for the 

individual, including any mental health 

conditions or any such risk factors or 

conditions that have been identified 

through an initial preventive physical 

examination (as described under 

§ 410.16 of this subpart), and a list of 

treatment options and their associated 

risks and benefits. 

(viii) Furnishing of personalized 

health advice and a referral, as 

appropriate, to health education or 

preventive counseling services or 

programs aimed at reducing identified 

risk factors and improving selfmanagement, or community-based 

lifestyle interventions to reduce health 

risks and promote self-management and 

wellness, including weight loss, 

physical activity, smoking cessation, fall 

prevention and nutrition. 

(ix) Any other element determined 

appropriate through the National 

Coverage Determination process. 

Health professional for purposes of 

this section means: 

(i) A physician who is a doctor of 

medicine or osteopathy (as defined in 

section 1861(r)(1) of the Social Security 

Act); or 

(ii) A physician assistant, nurse 

practitioner, or clinical nurse specialist 

(as defined in section 1861(aa)(5) of the 

Act; or 

(iii) A medical professional (including 

a health educator, registered dietitian or 

nutritionist) or a team of medical 

professionals, who are working under 

the supervision of a physician as 

defined in paragraph (i) of this 

definition. 

Review of the individual’s functional 

ability and level of safety for purposes 

of this section includes, at minimum, 

assessment of the following topics: 

(i) Hearing impairment, 

(ii) Ability to successfully perform 

activities of daily living, 

(iii) Fall risk and 

(iv) Home safety. 

Subsequent annual wellness visit 

providing personalized prevention plan 

services means the following services 

furnished an eligible beneficiary by a 

health professional as those terms are 

defined in this section: 

(i) An update of the individual’s 

medical and family history. 

(ii) An update of the list of current 

providers and suppliers that are 

regularly involved in providing medical 

care to the individual as that list was 

developed for the first annual wellness 

visit providing personalized prevention 

plan services. 

(iii) Measurement of an individual’s 

weight (or waist circumference), blood 

pressure and other routine 

measurements as deemed appropriate, 

based on the individual’s medical and 

family history. 

(iv) Detection of any cognitive 

impairment that the individual may 

have, as that term is defined in this 

section. 

(v) An update to the following: 

(A) The written screening schedule 

for the individual as that schedule is 

defined in paragraph (a) of this section 

for the first annual wellness visit 

providing personalized prevention plan 

services. 

(B) The list of risk factors and 

conditions for which primary, 

secondary or tertiary interventions are 

recommended or are underway for the 

individual as that list was developed at 

the first annual wellness visit providing 

personalized prevention plan services. 

(vi) Furnishing of personalized health 

advice to the individual and a referral, 

as appropriate, to health education or 

preventive counseling services or 

programs as that advice and related 

services are defined in paragraph (a) of 

this section. 

(vii) Any other element determined 

appropriate through the National 

Coverage Determination process. 

(b) Conditions for coverage of annual 

wellness visits providing personalized 

prevention plan services. Medicare Part 

B pays for first and subsequent annual 

wellness visits providing personalized 

prevention plan services that are 

furnished to an eligible beneficiary, as 

described in this section, if they are 

furnished by a heath professional, as 

defined in this section. 

(c) Limitations on coverage of an 

annual wellness visit providing 

personalized prevention plan services. 

(1) Payment may not be made for 

either a first or a subsequent annual 

wellness visit providing personalized 

prevention plan services that is 

performed for an individual who is not 

an eligible beneficiary as described in 

this section. 

(2) Payment may not be made for 

either a first or a subsequent annual 

wellness visit providing personalized 

prevention plan services that is 

performed for an individual who is an 

eligible beneficiary as described in this 

section and who has had either an 

initial preventive physical examination 

as specified in section 410.16 of this 

subpart or either a first or a subsequent 

annual wellness visit providing 

personalized prevention plan services 

performed within the past 12 months. 

(d) Effective date. Coverage for an 

annual wellness visit providing 

personalized prevention plan services is 

effective for services furnished on or 

after January 1, 2011. 

12. Section 410.32 is amended by 

adding paragraph (b)(2)(vii) to read as 

follows: 

§ 410.32 Diagnostic x-ray tests, diagnostic 

laboratory tests, and other diagnostic tests: 

Conditions. 

* * * * * 

(b) * * * 

(2) * * * 

(vii) Diagnostic tests performed by a 

certified nurse-midwife authorized to 

perform the tests under applicable State 

laws. 

* * * * * 

13. Section 410.78 is amended by 

revising the introductory text of 

paragraph (b) to read as follows: 

§ 410.78 Telehealth services. 

* * * * * 


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40248 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 

(b) General rule. Medicare Part B pays 

for office or other outpatient visits, 

subsequent hospital care services (with 

the limitation of one telehealth visit 

every 3 days), subsequent nursing 

facility care services (not including the 

Federally-mandated periodic visits 

under § 483.40(c) of this chapter and 

with the limitation of one telehealth 

visit every 30 days), professional 

consultations, psychiatric diagnostic 

interview examination, neurobehavioral 

status exam, individual psychotherapy, 

pharmacologic management, end-stage 

renal disease-related services included 

in the monthly capitation payment 

(except for one ‘‘hands on’’ visit per 

month to examine the access site), 

individual and group medical nutrition 

therapy services, individual and group 

kidney disease education services, 

individual and group diabetes selfmanagement (DSMT) training services 

(except for one hour of in-person 

services to be furnished in the year 

following the initial DSMT service to 

ensure effective injection training), and 

individual and group health and 

behavior assessment and intervention 

services furnished by an interactive 

telecommunications system if the 

following conditions are met: 

* * * * * 

Subpart I—Payment for SMI Benefits 

14. Section 410.150 is amended by 

adding paragraph (a)(20) to read as 

follows: 

§ 410.150 To whom payment is made. 

(a) * * * 

(20) To a certified nurse-midwife for 

professional services furnished by the 

certified nurse-midwife in all settings 

and for services and supplies furnished 

incident to those services. Payment is 

made only if no facility or other 

provider charges or is paid any amount 

for the furnishing of the professional 

services of the certified nurse-midwife. 

15. Section 410.152 is amended by 

revising paragraph (l) to read as follows: 

§ 410.152 Amounts of payment. 

* * * * * 

(l) Amount of payment: Preventive 

services. Medicare Part B pays 100 

percent of the Medicare payment 

amount established under the 

applicable payment methodology for the 

service setting for providers and 

suppliers for the following preventive 

services: 

(1) Pneumococcal (as specified in 

paragraph (h) of this section), influenza, 

and hepatitis B vaccine and 

administration. 

(2) Screening mammography. 

(3) Screening pap tests and screening 

pelvic exam. 

(4) Prostate cancer screening tests 

(excluding digital rectal examinations). 

(5) Colorectal cancer screening tests 

(excluding barium enemas). 

(6) Bone mass measurement. 

(7) Medical nutrition therapy (MNT) 

services. 

(8) Cardiovascular screening blood 

tests. 

(9) Diabetes screening tests. 

(10) Ultrasound screening for 

abdominal aortic aneurysm (AAA). 

(11) Additional preventive services 

identified for coverage through the 

national coverage determination (NCD) 

process. 

(12) Initial Preventive Physical 

Examination (IPPE). 

(13) Personalized Prevention Plan 

Services (PPPS). 

16. Section 410.160 is amended by— 

A. Revising paragraph (b)(2). 

B. Adding paragraphs (b)(10), (11), 

(12), and (13). 

The revisions and additions read as 

follows: 

§ 410.160 Part B annual deductible. 

* * * * * 

(b) * * * 

(2) Pneumococcal, influenza, and 

hepatitis b vaccines and their 

administration. 

* * * * * 

(10) Bone mass measurement. 

(11) Medical nutrition therapy (MNT) 

services. 

(12) Personalized prevention plan 

services (PPPS). 

(13) Additional preventive services 

identified for coverage through the 

national coverage determination (NCD) 

process. 

* * * * * 

PART 411—EXCLUSIONS FROM 

MEDICARE AND LIMITATIONS ON 

MEDICARE PAYMENT 

17. The authority citation for part 411 

continues to read as follows: 

Authority: Secs. 1102, 1860D–1 through 

1860D–42, 1871, and 1877 of the Social 

Security Act (42 U.S.C. 1302, 1395w–101 

through 1395w–152, 1395hh, and 1395nn). 

Subpart A—General Exclusions and 

Exclusion of Particular Services 

18. Section 411.15 is amended by— 

A. Republishing the introductory text. 

B. Revising paragraph (a)(1). 

C. Adding new paragraph (k)(16). 

The revision and addition read as 

follows: 

§ 411.15 Particular services excluded from 

coverage. 

The following services are excluded 

from coverage. 

(a) * * * 

(1) Examinations performed for a 

purpose other than treatment or 

diagnosis of a specific illness, 

symptoms, complaint, or injury, except 

for screening mammography, colorectal 

cancer screening tests, screening pelvic 

exams, prostate cancer screening tests, 

glaucoma screening exams, ultrasound 

screening for abdominal aortic screening 

for abdominal aortic aneurysms (AAA), 

cardiovascular disease screening tests, 

diabetes screening tests, a screening 

electrocardiogram, initial preventive 

physical examinations that meet the 

criteria specified in paragraphs (k)(6) 

through (k)(15) of this section, 

additional preventive services that meet 

the criteria in § 410.64 of this chapter, 

or annual wellness visits providing 

personalized prevention plan services 

* * * * * 

(k) * * * 

(16) In the case of an annual wellness 

visit providing a personalized 

prevention plan, subject to the 

conditions and limitations specified in 

§ 410.15 of this chapter. 

* * * * * 

Subpart J—Financial Relationships 

Between Physicians and Entities 

Furnishing Designated Health Services 

19. Section 411.355 is amended by 

adding paragraph (b)(7) to read as 

follows: 

§ 411.355 General exceptions to the 

referral prohibition related to both 

ownership/investment and compensation. 

* * * * * 

(b) * * * 

(7) Disclosure requirement for certain 

imaging services. 

(i) With respect to magnetic resonance 

imaging, computed tomography, and 

positron emission tomography, the 

referring physician shall provide written 

notice to the patient at the time of the 

referral that the patient may receive the 

same services from a person other than 

one described in paragraph (b)(1) of this 

section. Except as set forth in paragraph 

(b)(7)(ii) of this section, the written 

notice shall include a list of at least 10 

other suppliers (as defined in § 400.202 

of this chapter) that provide the services 

for which the individual is being 

referred and which are located within a 

25-mile radius of the referring 

physician’s office location at the time of 

the referral. The notice should be 

written in a manner sufficient to be 

reasonably understood by all patients 

and should include for each supplier on 

the list, at a minimum, the supplier’s 

name, address, telephone number, and 

distance from the referring physician’s 


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office location. A record of the 

disclosure notification, signed by the 

patient, shall be maintained as a part of 

the patient’s medical record. 

(ii) If there are fewer than 10 other 

suppliers located within a 25-mile 

radius of the physician’s office location 

at the time of the referral, the physician 

shall list all of the other suppliers of the 

imaging service that are present within 

a 25-mile radius of the referring 

physician’s office location, including up 

to 10 suppliers. Provision of the written 

list of alternate suppliers will not be 

required if no other suppliers provide 

the services for which the individual is 

being referred within the 25-mile radius. 

* * * * * 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END-STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

20. The authority citation for part 413 

continues to read as follows: 

Authority: Secs. 1102, 1812(d), 1814(b), 

1815, 1833(a), (i), and (n), 1861(v), 1871, 

1881, 1883, and 1886 of the Social Security 

Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 

1395g, 1395l(a), (i), and (n), 1395x(v), 

1395hh, 1395rr, 1395tt, and 1395ww); and 

sec. 124 of Public Law 106–133 (113 Stat. 

1501A–332). 

Subpart E—Payments to Providers 

21. Section 413.70 is amended by 

adding a sentence at the end of 

paragraph (b)(3)(ii)(B) to read as follows: 

§ 413.70 Payment for services of a CAH. 

* * * * * 

(b) * * * 

(3) * * * 

(ii) * * * 

(B) * * * Effective for primary care 

services furnished by primary care 

practitioners (as defined in § 414.80(a)) 

and major surgical procedures furnished 

by general surgeons in health 

professional shortage areas (as defined 

in § 414.2) furnished on or after January 

1, 2011 and before January 1, 2016, 

incentive payments specified under 

§ 414.80 and § 414.67(b), respectively, of 

this chapter shall not be included in 

determining payment made under this 

paragraph. 

* * * * * 

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

22. The authority citation for part 414 

continues to read as follows: 

Authority: Secs. 1102, 1871, and 1881(b)(l) 

of the Social Security Act (42 U.S.C. 1302, 

1395hh, and 1395rr(b)(l)). 

Subpart A—General Provisions 

23. Section 414.2 is amended by 

adding the definitions of ‘‘Health 

Professional Shortage Area’’ and ‘‘Major 

surgical procedure’’ in alphabetical 

order to read as follows: 

§ 414.2 Definitions. 

* * * * * 

Health Professional Shortage Area 

(HPSA) means an area designated under 

section 332(a)(1)(A) of the Public Health 

Service Act as identified by the 

Secretary prior to the beginning of such 

year. 

Major surgical procedure means a 

surgical procedure for which a 10-day or 

90-day global period is used for 

payment under the PFS and section 

1848(b) of the Act. 

* * * * * 

24. Section 414.26 is amended by— 

A. Redesignating paragraph (c) as 

paragraph (d). 

B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 414.26 Determining the GAF. 

* * * * * 

(c) Adjusting the practice expense 

index to account for the Frontier State 

floor. (1) General criteria. Effective on or 

after January 1, 2011, CMS will adjust 

the practice expense index for 

physicians’ services furnished in 

qualifying States to recognize the 

practice expense index floor established 

for Frontier States. A qualifying State 

must meet the following criteria: 

(i) At least 50 percent of counties 

located within the State have a 

population density less than 6 persons 

per square mile. 

(ii) The State does not receive a nonlabor related share adjustment 

determined by the Secretary to take into 

account the unique circumstances of 

hospitals located in Alaska and Hawaii. 

(2) Amount of adjustment. The 

practice expense value applied for 

physicians’ services furnished in a 

qualifying State will be not less than 

1.00. 

(3) Process for determining 

adjustment. (i) CMS will use the most 

recent Population Estimate data 

published by the U.S. Census Bureau to 

determine county definitions and 

population density. This analysis will 

be periodically revised, such as for 

updates to the decennial census data. 

(ii) CMS will publish annually a 

listing of qualifying Frontier States 

receiving a practice expense index floor 

attributable to this provision. 

* * * * * 

Subpart B—Physicians and Other 

Practitioners 

25. Section 414.54 is revised to read 

as follows: 

§ 414.54 Payment for certified nursemidwives’ services. 

(a) For services furnished after 

December 31, 1991, allowed amounts 

under the fee schedule established 

under section 1833(a)(1)(K) of the Act 

for the payment of certified nursemidwife services may not exceed 65 

percent of the physician fee schedule 

amount for the service. 

(b) For certified nurse midwife 

services furnished on or after January 1, 

2011, allowed amounts may not exceed 

100 percent of the physician fee 

schedule amount for the services. 

26. Section 414.65 is amended by 

revising the introductory text of 

paragraph (a)(1) to read as follows: 

§ 414.65 Payment for telehealth services. 

(a) * * * 

(1) The Medicare payment amount for 

office or other outpatient visits, 

subsequent hospital care services (with 

the limitation of one telehealth 

subsequent hospital care service every 3 

days), subsequent nursing facility care 

services (not including the Federallymandated periodic visits under 

§ 483.40(c) and with the limitation of 

one telehealth nursing facility care 

service every 30 days), professional 

consultations, psychiatric diagnostic 

interview examination, neurobehavioral 

status exam, individual psychotherapy, 

pharmacologic management, end-stage 

renal disease-related services included 

in the monthly capitation payment 

(except for one ‘‘hands on’’ visit per 

month to examine the access site), 

individual and group medical nutrition 

therapy services, individual and group 

kidney disease education services, 

individual and group diabetes selfmanagement training (DSMT) services 

(except for 1 hour of in-person DSMT 

services to be furnished in the year 

following the initial DSMT service to 

ensure effective injection training), and 

individual and group health and 

behavior assessment and intervention 

furnished via an interactive 

telecommunications system is equal to 

the current fee schedule amount 

applicable for the service of the 

physician or practitioner. 

* * * * * 

27. Section 414.67 is revised to read 

as follows: 


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§ 414.67 Incentive payments for services 

furnished in Health Professional Shortage 

Areas. 

(a) Health Professional Shortage Area 

(HPSA) physician bonus program. A 

HPSA physician incentive payment will 

be made subject to the following: 

(1) HPSA bonuses are payable for 

services furnished by physicians as 

defined in section 1861(r) of the Act in 

areas designated as of December 31 of 

the prior year as geographic primary 

medical care HPSAs as defined in 

section 332(a)(1)(A) of the Public Health 

Service Act. 

(2) HPSA bonuses are payable for 

services furnished by psychiatrists in 

areas designated as of December 31 of 

the prior year as geographic mental 

health HPSAs if the services are not 

already eligible for the bonus based on 

being in a geographic primary care 

HPSA. 

(3) Physicians eligible for the HPSA 

physician bonus are entitled to a 10 

percent incentive payment above the 

amount paid for their professional 

services under the physician fee 

schedule. 

(4) Physicians furnishing services in 

areas that are designated as geographic 

HPSAs prior to the beginning of the year 

but not included on the published list 

of zip codes for which automated HPSA 

bonus payments are made should use 

the AQ modifier to receive the HPSA 

physician bonus payment. 

(b) HPSA surgical incentive payment 

program. A HPSA surgical incentive 

payment will be made subject to the 

following: 

(1) A major surgical procedure as 

defined in § 414.2 of this part is 

furnished by a general surgeon on or 

after January 1, 2011 and before January 

1, 2016 in an area recognized for the 

HPSA physician bonus program under 

paragraph (a)(1) of this section. 

(2) Payment will be made on a 

quarterly basis in an amount equal to 10 

percent of the Part B payment amount 

for major surgical procedures furnished 

as described in paragraph (1), in 

addition to the amount the physician 

would otherwise be paid. 

(3) Physicians furnishing services in 

areas that are designated as geographic 

HPSAs eligible for the HPSA physician 

bonus program under paragraph (a)(1) of 

this section prior to the beginning of the 

year but not included on the published 

list of zip codes for which automated 

HPSA surgical bonus payments are 

made should report a specified HCPCS 

code modifier to receive the HPSA 

surgical bonus payment. 

(4) The payment described in 

paragraph (b)(2) of this section is made 

to the surgeon or, where the surgeon has 

reassigned his or her benefits to a 

critical access hospital (CAH) paid 

under the optional method, to the CAH 

based on an institutional claim. 

28. Section 414.80 is added to subpart 

B to read as follows: 

§ 414.80 Incentive payment for primary 

care services. 

(a) Definitions. As defined in this 

section— 

Eligible primary care practitioner 

means one of the following: 

(i) A physician (as defined in section 

1861(r)(1)) who meets all of the 

following criteria: 

(A) Enrolled in Medicare with a 

primary specialty designation of 08- 

family practice, 11-internal medicine, 

37-pediatrics, or 38-geriatrics. 

(B) At least 60 percent of the 

physician’s allowed charges during a 

reference period specified by the 

Secretary are for primary care services. 

(ii) A nurse practitioner, clinical 

nurse specialist, or physician assistant 

(as defined in section 1861(aa)(5)) who 

meets all of the following criteria: 

(A) Enrolled in Medicare with a 

primary specialty designation of 50- 

nurse practitioner, 89-certified clinical 

nurse, or 97-physician assistant. 

(B) At least 60 percent of the 

practitioner’s allowed charges during a 

reference period specified by the 

Secretary are for primary care services. 

Primary care services means new and 

established patient office or other 

outpatient evaluation and management 

(E/M) visits; initial, subsequent, 

discharge, and other nursing facility E/ 

M services; new and established patient 

domiciliary, rest home (e.g., boarding 

home), or custodial care E/M services; 

domiciliary, rest home (e.g., assisted 

living facility), or home care plan 

oversight services; and new and 

established patient home E/M visits. 

(b) Payment. 

(1) For primary care services 

furnished by an eligible primary care 

practitioner on or after January 1, 2011 

and before January 1, 2016, payment is 

made on a quarterly basis in an amount 

equal to 10 percent of the payment 

amount for the primary care services 

under Part B, in addition to the amount 

the primary care practitioner would 

otherwise be paid for the primary care 

services under Part B. 

(2) The payment described in 

paragraph (b)(1) of this section is made 

to the eligible primary care practitioner 

or, where the physician has reassigned 

his or her benefits to a critical access 

hospital (CAH) paid under the optional 

method, to the CAH based on an 

institutional claim. 

29. A new § 414.90 is added to 

subpart B to read as follows: 

§ 414.90 Physician quality reporting 

initiative (PQRI). 

(a) Basis and Scope. This part 

implements the following provisions of 

the Act: 

(1) 1848(a)—Payment Based on Fee 

Schedule. 

(2) 1848(k)—Quality Reporting 

System. 

(3) 1848(m)—Incentive Payments for 

Quality Reporting. 

(b) Definitions. As used in this 

section, unless otherwise indicated— 

Covered professional services means 

services for which payment is made 

under, or is based on, the Medicare 

physician fee schedule as provided 

under section 1848(k)(3) of the Act and 

which are furnished by an eligible 

professional. 

Eligible professional (EP) means any 

of the following: 

(i) A physician. 

(ii) A practitioner described in section 

1842(b)(18)(C) of the Act. 

(iii) A physical or occupational 

therapist or a qualified speech-language 

pathologist. 

(iv) A qualified audiologist (as 

defined in section 1861(ll)(3)(B) of the 

Act). 

Group practice 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. This term also includes 

group practices participating in 

Medicare demonstration projects 

approved by the Secretary. 

Maintenance of certification program 

means a continuous assessment 

program, such as qualified American 

Board of Medical Specialties 

Maintenance of Certification Program or 

an equivalent program (as determined 

by the Secretary), that advances quality 

and the lifelong learning and selfassessment of board certified specialty 

physicians by focusing on the 

competencies of patient care, medical 

knowledge, practice-based learning, 

interpersonal and communication skills 

and professionalism. Such a program 

must include the following: 

(i) The program requires the physician 

to maintain a valid unrestricted license 

in the United States. 

(ii) The program requires a physician 

to participate in educational and selfassessment programs that require an 

assessment of what was learned. 

(iii) The program requires a physician 

to demonstrate, through a formalized 

secure examination, that the physician 


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has the fundamental diagnostic skills, 

medical knowledge, and clinical 

judgment to provide quality care in their 

respective specialty. 

(iv) The program requires successful 

completion of a qualified Maintenance 

of Certification Program practice 

assessment. 

Maintenance of certification program 

practice assessment means an 

assessment of a physician’s practice 

that— 

(i) Includes an initial assessment of an 

eligible professional’s practice that is 

designed to demonstrate the physician’s 

use of evidence-based medicine; 

(ii) Includes a survey of patient 

experience with care; and 

(iii) Requires a physician to 

implement a quality improvement 

intervention to address a practice 

weakness identified in the initial 

assessment under paragraph (i) and then 

to remeasure to assess performance 

improvement after such intervention. 

Measures group means a subset of 

four or more PQRI measures that have 

a particular clinical condition or focus 

in common. The denominator definition 

and coding of the measures group 

identifies the condition or focus that is 

shared across the measures within a 

particular measures group. 

Performance rate means the 

percentage of a defined population who 

receives a particular process of care or 

achieve a particular outcome for a 

particular quality measure. 

Physician quality reporting initiative 

(PQRI) means the physician reporting 

system under section 1848(k) of the Act 

for the reporting by eligible 

professionals of data on quality 

measures and the incentive payment 

associated with this physician reporting 

system. 

Qualified electronic health record 

(EHR) means an EHR vendor’s product 

and version that, with respect to a 

particular program year, has selfnominated and successfully completed 

a vetting process (as specified by CMS) 

to demonstrate the product’s 

compliance with the PQRI qualification 

requirements specified by CMS for a 

program year. 

Qualified registry means a medical 

registry or a Maintenance of 

Certification Program operated by a 

specialty body of the American Board of 

Medical Specialties that, with respect to 

a particular program year, has selfnominated and successfully completed 

a vetting process (as specified by CMS) 

to demonstrate its compliance with the 

PQRI qualification requirements 

specified by CMS for that program year. 

The registry may act as a data 

submission vendor, which has the 

requisite legal authority to provide PQRI 

data (as specified by CMS) on behalf of 

an eligible professional to CMS. 

Quality reporting period means with 

respect to a year, a period specified by 

the Secretary. 

Reporting rate means the percentage 

of patients that the eligible professional 

indicated a quality action was or was 

not performed divided by the total 

number of patients in the denominator 

of the measure. 

(c) Incentive payments. With respect 

to covered professional services 

furnished during a reporting period by 

an eligible professional, if— 

(1) There are any quality measures 

that have been established under the 

PQRI that are applicable to any such 

services furnished by such professional 

(or in the case of a group practice under 

paragraph (h) of this section, such group 

practice) for such reporting period; and 

(2) The eligible professional (or in the 

case of a group practice under paragraph 

(h) of this section, the group practice) 

satisfactorily submits (as determined 

under paragraph (g) of this section for 

eligible professionals and paragraph (h) 

of this section for group practices) to the 

Secretary data on such quality measures 

in accordance with the PQRI for such 

reporting period, in addition to the 

amount otherwise paid under section 

1848 of the Act, there also shall be paid 

to the eligible professional (or to an 

employer or facility in the cases 

described in section 1842(b)(6)(A) of the 

Act or, in the case of a group practice) 

under paragraph (h) of this section, to 

the group practice, from the Federal 

Supplementary Medical Insurance Trust 

Fund established under section 1841 an 

amount equal to the applicable quality 

percent (as specified in paragraph (c)(3) 

of this section) of the eligible 

professional’s (or, in the case of a group 

practice under paragraph (h) of this 

section, the group practice’s) total 

estimated allowed charges for all 

covered professional services furnished 

by the eligible professional (or, in the 

case of a group practice under paragraph 

(h) of this section, by the group practice) 

during the applicable reporting period. 

For purposes of this paragraph, 

(i) The eligible professional’s (or, in 

the case of a group practice under 

paragraph (h) of this section, the group 

practice’s) total estimated allowed 

charges for covered professional 

services furnished during a reporting 

period are determined based on claims 

processed in the National Claims 

History (NCH) no later than 2 months 

after the end of the applicable reporting 

period; 

(ii) In the case of an eligible 

professional who furnishes covered 

professional services in more than one 

practice, incentive payments are 

separately determined for each practice 

based on claims submitted for the 

eligible professional for each practice; 

(iii) Incentive payments earned by an 

eligible professional (or in the case of a 

group practice under paragraph (h) of 

this section, by a group practice) for a 

particular program year will be paid as 

a single consolidated payment to the 

TIN holder of record. 

(3) Applicable quality percent. The 

applicable quality percent is as follows: 

(i) For 2011, 1.0 percent; and 

(ii) For 2012, 2013, and 2014, 0.5 

percent; 

(d) Additional incentive payment. (1) 

Through 2014, if an eligible professional 

meets the requirements described in 

paragraph (d)(2) of this section, the 

applicable percent for such year, as 

described in paragraphs (c)(3)(i) and (ii) 

of this section, must be increased by 0.5 

percentage points. 

(2) In order to qualify for the 

additional incentive payment described 

in paragraph (d)(1) of this section, an 

eligible professional shall meet the 

following requirements: 

(i) The eligible professional must— 

(A) Satisfactorily submit data on 

quality measures for purposes of this 

section for a year; and 

(B) Have such data submitted on their 

behalf through a Maintenance of 

Certification program (as defined in 

paragraph (b) of this section) that meets: 

(1) The criteria for a registry (as 

specified by CMS)); or 

(2) An alternative form and manner 

determined appropriate by the 

Secretary. 

(ii) The eligible professional, more 

frequently than is required to qualify for 

or maintain board certification status— 

(A) Participates in such a 

Maintenance of Certification Program 

for a year; and 

(B) Sucessfully completes a qualified 

Maintenance of Certification Program 

practice assessment (as defined in 

paragraph (b) of this section) for such 

year. 

(iii) A Maintenance of Certification 

program submits to the Secretary, on 

behalf of the eligible professional, 

information — 

(A) In a form and manner specified by 

the Secretary, that the eligible 

professional has successfully met the 

requirements of paragraph (d)(2)(ii) of 

this section which may be in the form 

of a structural measure); 

(B) If requested by the Secretary, on 

the survey of patient experience with 

care (as described in paragraph (b) of 

this section); and 

(C) As the Secretary may require, on 

the methods, measures, and data used 


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under the Maintenance of Certification 

Program and the qualified Maintenance 

of Certification Program practice 

assessment. 

(e) Incentive payment adjustment. (1) 

With respect to covered professional 

services furnished by an eligible 

professional during 2015 or any 

subsequent year, if the eligible 

professional does not satisfactorily 

submit data on quality measures for 

covered professional services for the 

quality reporting period for the year (as 

determined under paragraph (g) for 

eligible professionals and paragraph (h) 

of this section for group practices), the 

fee schedule amount for such services 

furnished by such professional during 

the year (including the fee schedule 

amount for purposes of determining a 

payment based on such amount) must 

be equal to the applicable percent of the 

fee schedule amount that would 

otherwise apply to such services under 

section 1848(m) of the Act. 

(2) Applicable percent. For purposes 

of paragraph (1) of this section, the term 

‘applicable percent’ means— 

(i) For 2015, 98.5 percent; and 

(ii) For 2016 and each subsequent 

year, 98 percent. 

(f) Use of consensus-based quality 

measures. For each program year, CMS 

will publish the final list of measures 

and the final detailed measure 

specifications for all quality measures 

selected for inclusion in the PQRI 

quality measure set for a given program 

year on a CMS Web site by no later than 

December 31 of the prior year. 

(1) Subject to paragraph (f)(2) of this 

section, for purposes of reporting data 

on quality measures for covered 

professional services furnished during a 

year, subject to paragraph (g) of this 

section, the quality measures specified 

under this paragraph must be such 

measures selected by the Secretary from 

measures that have been endorsed by 

the entity with a contract with the 

Secretary under section 1890(a) of the 

Act. 

(2) Exception. In the case of a 

specified area or medical topic 

determined appropriate by the Secretary 

for which a feasible and practical 

measure has not been endorsed by the 

entity with a contract under section 

1890(a) of the Act, the Secretary may 

specify a measure that is not so 

endorsed as long as due consideration is 

given to measures that have been 

endorsed or adopted by a consensus 

organization identified by the Secretary, 

such as the AQA alliance. 

(3) Opportunity to provide input on 

measures. For each quality measure 

adopted by the Secretary under this 

paragraph, the Secretary shall ensure 

that eligible professionals have the 

opportunity to provide input during the 

development, endorsement, or selection 

of quality measures applicable to 

services they furnish. 

(g) Requirements for individual 

eligible professionals to qualify to 

receive an incentive payment. In order 

to qualify to earn a PQRI incentive 

payment for a particular program year, 

an individual eligible professional, as 

identified by a unique TIN/NPI 

combination, must meet the criteria for 

satisfactory reporting specified by CMS 

for such year by reporting on either 

individual PQRI quality measures or 

PQRI measures groups identified by 

CMS during a reporting period specified 

in paragraph (g)(1) of this section and 

using one of the reporting mechanisms 

specified in paragraph (g)(2) of this 

section. Although an eligible 

professional may attempt to qualify for 

the PQRI incentive payment by 

reporting on both individual PQRI 

quality measures and measures groups, 

using more than one reporting 

mechanism (as specified in paragraph 

(g)(2) of this section), or reporting for 

more than one reporting period, he or 

she will receive only one PQRI 

incentive payment per TIN/NPI 

combination for a program year. 

(1) Reporting periods. For purposes of 

this paragraph, the reporting period 

with respect to a program year are— 

(i) The 12-month period from January 

1 through December 31 of each program 

year; or 

(ii) The 6-month period from July 1 

through December 31 of each program 

year. 

(iii) Exceptions. The 6-month 

reporting period is not available for 

EHR-based reporting of individual PQRI 

quality measures or for reporting by 

group practices under the process 

described in paragraph (h) of this 

section. 

(2) Reporting mechanisms. For each 

program year, an eligible professional 

who wishes to participate in the PQRI 

must report information on the 

individual PQRI quality measures or 

PQRI measures groups identified by 

CMS in the following manner: 

(i) Reporting the individual PQRI 

quality measures or PQRI measures 

groups to CMS, by no later than 2 

months after the end of the applicable 

reporting period, on the eligible 

professional’s Medicare Part B claims 

for covered professional services 

furnished during the applicable 

reporting period; 

(ii) Reporting the individual PQRI 

quality measures or PQRI measures 

groups to a qualified registry (as 

specified in paragraph (b) of this 

section) in the form and manner and by 

the deadline specified by the qualified 

registry selected by the eligible 

professional. The selected registry will 

submit information, as required by 

CMS, for covered professional services 

furnished by the eligible professional 

during the applicable reporting period 

to CMS on the eligible professional’s 

behalf; or 

(iii) Reporting the individual PQRI 

quality measures to CMS by extracting 

clinical data using a secure data 

submission method, as required by 

CMS, from a qualified EHR product (as 

defined in paragraph (b) of this section) 

by the deadline specified by CMS for 

covered professional services furnished 

by the eligible professional during the 

applicable reporting period. Prior to 

actual data submission for a given 

program year and by a date specified by 

CMS, the eligible professional must 

submit a test file containing real or 

dummy clinical quality data extracted 

from the qualified EHR product selected 

by the eligible professional using a 

secure data submission method, as 

required by CMS. 

(h) Requirements for group practices 

to qualify to receive an incentive 

payment. A group practice (as defined 

in paragraph (b) of this section) will be 

treated as satisfactorily submitting data 

on quality measures under PQRI for 

covered professional services for a 

reporting period (or for purposes of 

paragraph (e) of this section, for a 

quality reporting period for the year), if, 

in lieu of reporting PQRI measures, the 

group practice— 

(1) Meets the participation 

requirements specified by CMS for the 

PQRI group practice reporting option 

(GPRO); 

(2) Is selected by CMS to participate 

in the PQRI GPRO; 

(3) Reports measures specified by 

CMS in the form and manner, and at a 

time specified by CMS; and 

(4) Meets the criteria for satisfactory 

reporting specified by CMS. 

(5) No double payments. Payments to 

a group practice under this paragraph 

must be in lieu of the payments that 

would otherwise be made under the 

PQRI to eligible professionals in the 

group practice for meeting the criteria 

for satisfactory reporting for individual 

eligible professionals. 

(i) If an eligible professional, as 

identified by an individual NPI, has 

reassigned his or her Medicare billing 

rights to a TIN selected to participate in 

the PQRI GPRO for a program year, then 

for that program year the eligible 

professional must participate in the 

PQRI via the GPRO. For any program 

year in which the TIN is selected to 


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participate in the PQRI GPRO, the 

eligible professional cannot individually 

qualify for a PQRI incentive payment by 

meeting the requirements specified in 

paragraph (g) of this section. 

(ii) If, for the program year, the 

eligible professional participates in the 

PQRI under another TIN that is not 

selected to participate in the PQRI 

GPRO for that program year, then the 

eligible professional may individually 

qualify for a PQRI incentive by meeting 

the requirements specified in paragraph 

(g) of this section under that TIN. 

(i) Limitations on review. (1) Except as 

specified in paragraph (h)(2) of this 

section, there is no administrative or 

judicial review under section 1869, 

section 1879, or otherwise of— 

(i) The determination of measures 

applicable to services furnished by 

eligible professionals under PQRI; 

(ii) The determination of the payment 

limitation; and 

(iii) The determination of any PQRI 

incentive payment and the PQRI 

payment adjustment. 

(j) Informal review. Except as 

specified in paragraph (i) of this section 

eligible professionals (or in the case of 

reporting under paragraph (h) of this 

section, group practices) may seek a 

review of the determination that an 

eligible professional (or in the case of 

reporting under paragraph (h) of this 

section, group practices) did not 

satisfactorily submit data on quality 

measures under the PQRI. 

(1) To request an informal review, an 

eligible professional (or in the case of 

reporting under paragraph (h) of this 

section, group practices) must submit a 

written request to CMS within 90 days 

of the release of the feedback reports. 

The request must summarize the 

concern(s) and reasons for requesting an 

informal review and may also include 

information to assist in the review. 

(2) CMS will provide a written 

response within 60 days of the receipt 

of the original request. All decisions 

based on the informal review will be 

final. There will be no further review or 

appeal. 

(k) Public reporting of an eligible 

professional’s or group practice’s PQRI 

data. For each program year, CMS will 

post on a public Web site, in an easily 

understandable format, a list of the 

names of eligible professionals (or in the 

case of reporting under paragraph (h), 

group practices) who satisfactorily 

submitted PQRI quality measures. 

30. A new § 414.92 is added to 

subpart B to read as follows: 

§ 414.92 Electronic prescribing incentive 

program. 

(a) Basis and scope. This part 

implements the following provisions of 

the Act: 

(1) Section 1848(a)—Payment Based 

on Fee Schedule. 

(2) Section 1848(m)—Incentive 

Payments for Quality Reporting. 

(b) Definitions. As used in the part, 

unless otherwise indicated— 

Covered professional services means 

services for which payment is made 

under, or is based on, the Medicare 

physician fee schedule as provided 

under section 1848(k)(3) of the Act and 

which are furnished by an eligible 

professional. 

Electronic prescribing (eRx) incentive 

program means the incentive payment 

program established under section 

1848(m) of the Act for the adoption and 

use of electronic prescribing technology 

by eligible professionals. 

Eligible professional means any of the 

following healthcare professionals who 

have prescribing authority: 

(i) A physician. 

(ii) A practitioner described in section 

1842(b)(18)(C) of the Act. 

(iii) A physical or occupational 

therapist or a qualified speech-language 

pathologist. 

(iv) A qualified audiologist (as 

defined in section 1861(ll)(3)(B) of the 

Act). 

Group practice means a group 

practice, as defined at § 414.90(b), that— 

(i) Is or is deemed to be participating 

in the Physician Quality Reporting 

Initiative (PQRI) group practice 

reporting option (GPRO) under § 414.90; 

and 

(ii) Has indicated its desire to 

participate in the eRx GPRO. 

Qualified electronic health record 

(EHR) means an EHR product and 

version that, with respect to a particular 

program year, is designated by CMS as 

a qualified EHR for the purpose of the 

PQRI (as described in § 414.90) and the 

product’s vendor has indicated a desire 

to have the product qualified for 

purposes of the product’s users to 

submit information related to the eRx 

measure. 

Qualified registry means a medical 

registry or a Maintenance of 

Certification Program operated by a 

specialty body of the American Board of 

Medical Specialties that, with respect to 

a particular program year, is designated 

by CMS as a qualified registry for the 

purpose of the PQRI (as described in 

§ 414.90) and that has indicated its 

desire to be qualified to submit the eRx 

measure on behalf of eligible 

professionals for the purposes of the eRx 

Incentive Program. 

(c) Incentive payments. (1) Subject to 

paragraph (c)(3) of this section, with 

respect to covered professional services 

furnished during a reporting period by 

an eligible professional, if the eligible 

professional is a successful electronic 

prescriber for such reporting period, in 

addition to the amount otherwise paid 

under section 1848 of the Act, there also 

shall be paid to the eligible professional 

(or to an employer or facility in the 

cases described in paragraph (A) of 

section 1842(b)(6)) or, in the case of a 

group practice under paragraph (e) of 

this section, to the group practice, from 

the Federal Supplementary Medical 

Insurance Trust Fund established under 

section 1841 of the Act an amount equal 

to the applicable eRx percent (as 

specified in paragraph (c)(1)(ii) of this 

section) of the eligible professional’s (or, 

in the case of a group practice under 

paragraph (e) of this section, the group 

practice’s) total estimated allowed 

charges for all covered professional 

services furnished by the eligible 

professional (or, in the case of a group 

practice under paragraph (e) of this 

section, by the group practice) during 

the applicable reporting period. 

(i) For purposes of this paragraph, 

(A) The eligible professional’s (or, in 

the case of a group practice under 

paragraph (e) of this section, the group 

practice’s) total estimated allowed 

charges for covered professional 

services furnished during a reporting 

period are determined based on claims 

processed in the National Claims 

History (NCH) no later than 2 months 

after the end of the applicable reporting 

period; 

(B) In the case of an eligible 

professional who furnishes covered 

professional services in more than one 

practice, incentive payments are 

separately determined for each practice 

based on claims submitted for the 

eligible professional for each practice; 

(C) Incentive payments earned by an 

eligible professional (or in the case of a 

group practice under paragraph (e) of 

this section, by a group practice) for a 

particular program year will be paid as 

a single consolidated payment to the 

TIN holder of record. 

(ii) Applicable eRx percent. The 

applicable eRx percent is as follows: 

(A) For the 2011 and 2012 program 

years, 1.0 percent; and 

(B) For the 2013 program year, 0.5 

percent. 

(iii) Limitation with respect to 

electronic health record (EHR) incentive 

payments. The provisions of this 

paragraph do not apply to an eligible 

professional (or, in the case of a group 

practice under paragraph (e) of this 

section, a group practice) if, for the EHR 


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reporting period the eligible 

professional (or group practice) receives 

an incentive payment under section 

1848(o)(1)(A) of the Act with respect to 

a certified EHR technology (as defined 

in section 1848(o)(4) of the Act) that has 

the capability of eRx. 

(2) Incentive payment adjustment. 

Subject to paragraph (c)(1)(ii) and 

paragraph (c)(3) of this section, with 

respect to covered professional services 

furnished by an eligible professional 

during 2012, 2013, or 2014, if the 

eligible professional (or in the case of a 

group practice under paragraph (e) of 

this section, the group practice) is not a 

successful electronic prescriber (as 

specified by CMS for purposes of the 

payment adjustment) for an applicable 

reporting period (as specified by CMS) 

the fee schedule amount for such 

services furnished by such professional 

(or group practice) during the program 

year (including the fee schedule amount 

for purposes of determining a payment 

based on such amount) is equal to the 

applicable percent (as specified in 

paragraph (c)(2)(i) of this section) of the 

fee schedule amount that would 

otherwise apply to such services under 

section 1848 of the Act. 

(i) Applicable percent. The applicable 

percent is as follows: 

(A) For 2012, 99 percent; 

(B) For 2013, 98.5 percent; and 

(C) For 2014, 98 percent. 

(ii) Significant hardship exception. 

An eligible professional (or in the case 

of a group practice under paragraph (e) 

of this section, a group practice) may be 

exempt from the application of the 

payment adjustment under this 

paragraph if, subject to annual renewal, 

CMS determines that compliance with 

the requirement for being a successful 

electronic prescriber (as specified by 

CMS for purposes of the payment 

adjustment) would result in a significant 

hardship. For purposes of this 

paragraph, any of the following 

circumstances constitute a ‘‘significant 

hardship:’’ 

(A) An eligible professional (or group 

practice) who practices in a rural area 

with limited high speed Internet access. 

(B) An eligible professional (or group 

practice) who practices in an area with 

limited available pharmacies for 

electronic prescribing. 

(C) Other circumstances identified by 

CMS. 

(3) Limitation with respect to 

electronic prescribing quality measures. 

The provisions of paragraphs (c)(1) and 

(c)(2) of this section do not apply to an 

eligible professional (or, in the case of 

a group practice under paragraph (e) of 

this section, a group practice) if for the 

reporting period the allowed charges 

under section 1848 of the Act for all 

covered professional services furnished 

by the eligible professional (or group, as 

applicable) for the codes to which the 

electronic prescribing measure (as 

identified by CMS) applies are less than 

10 percent of the total of the allowed 

charges under section 1848 of the Act 

for all such covered professional 

services furnished by the eligible 

professional (or the group practice, as 

applicable). 

(d) Requirements for individual 

eligible professionals to qualify to 

receive an incentive payment. In order 

to be considered a successful electronic 

prescriber and qualify to earn an eRx an 

incentive payment (subject to paragraph 

(c)(3) of this section), an individual 

eligible professional, as identified by a 

unique TIN/NPI combination, must 

meet the criteria for successful 

electronic prescriber specified by CMS 

during the reporting period specified in 

paragraph (d)(1) of this section and 

using one of the reporting mechanisms 

specified in paragraph (d)(2) of this 

section. Although an eligible 

professional may attempt to qualify for 

the eRx incentive payment using more 

than one reporting mechanism (as 

specified in paragraph (d)(2) of this 

section), he or she will receive only one 

eRx incentive payment per TIN/NPI 

combination for a program year. 

(1) Reporting period. For purposes of 

this paragraph, the reporting period 

with respect to a program year is the 

entire calendar year. 

(2) Reporting mechanisms. An eligible 

professional who wishes to participate 

in the eRx Incentive Program must 

report information on the eRx measure 

identified by CMS to— 

(i) CMS, by no later than 2 months 

after the end of the applicable reporting 

period, on the eligible professional’s 

Medicare Part B claims for covered 

professional services furnished by the 

eligible professional during the 

reporting period specified in paragraph 

(d)(1) of this section; 

(ii) A qualified registry (as defined in 

paragraph (b)) in the form and manner 

and by the deadline specified by the 

qualified registry selected by the eligible 

professional. The selected registry will 

submit information, as required by 

CMS, for covered professional services 

furnished by the eligible professional 

during the reporting period specified in 

paragraph (d)(1) of this section to CMS 

on the eligible professional’s behalf; or 

(iii) CMS by extracting clinical data 

using a secure data submission method, 

as required by CMS, from a qualified 

EHR product (as defined in paragraph 

(b) of this section) by the deadline 

specified by CMS for covered 

professional services furnished by the 

eligible professional during the 

reporting period specified in paragraph 

(d)(1) of this section. Prior to actual data 

submission for a given program year and 

by a date specified by CMS, the eligible 

professional must submit a test file 

containing real or dummy clinical 

quality data extracted from the qualified 

EHR product selected by the eligible 

professional using a secure data 

submission method, as required by 

CMS. 

(e) Requirements for group practices 

to qualify to receive an incentive 

payment. 

(1) A group practice (as defined in 

paragraph (b) of this section) will be 

treated as a successful electronic 

prescriber for covered professional 

services for a reporting period if the 

group practice meets the criteria for 

successful electronic prescriber 

specified by CMS in the form and 

manner and at the time specified by 

CMS. 

(2) No double payments. Payments to 

a group practice under this paragraph 

must be in lieu of the payments that 

would otherwise be made under the eRx 

Incentive Program to eligible 

professionals in the group practice for 

being a successful electronic prescriber. 

(i) If an eligible professional, as 

identified by an individual NPI, has 

reassigned his or her Medicare billing 

rights to a TIN selected to participate in 

the eRx GPRO for a program year, then 

for that program year the eligible 

professional must participate in the eRx 

Incentive Program via the GPRO. For 

any program year in which the TIN is 

selected to participate in the eRx 

Incentive Program GPRO, the eligible 

professional cannot individually qualify 

for an eRx incentive payment by 

meeting the requirements specified in 

paragraph (d) of this section. 

(ii) If, for the program year, the 

eligible professional participates in the 

eRx Incentive Program under another 

TIN that is not selected to participate in 

the eRx Incentive Program GPRO for 

that program year, then the eligible 

professional may individually qualify 

for an eRx incentive by meeting the 

requirements specified in paragraph (d) 

of this section under that TIN. 

(f) Public reporting of an eligible 

professional’s or group practice’s erx 

incentive program data. For each 

program year, CMS will post on a public 

Web site, in an easily understandable 

format, a list of the names of eligible 

professionals (or in the case of reporting 

under paragraph (e) of this section, 

group practices) who are successful 

electronic prescribers. 


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Subpart D—Payment for Durable 

Medical Equipment and Prosthetic and 

Orthotic Devices 

31. Section 414.202 is amended by 

adding a definition of ‘‘complex 

rehabilitative power-driven wheelchair’’ 

in alphabetical order to read as follows: 

§ 414.202 Definitions. 

* * * * * 

Complex rehabilitative power-driven 

wheelchair means a power-driven 

wheelchair that is classified as— 

(1) Group 2 power wheelchair with 

power options that can accommodate 

rehabilitative features (for example, tilt 

in space); or 

(2) Group 3 power wheelchair. 

* * * * * 

32. Section 414.226 is amended by 

revising paragraph (g)(1) to read as 

follows: 

§ 414.226 Oxygen and oxygen equipment. 

* * * * * 

(g) * * * 

(1) The supplier that furnishes oxygen 

equipment for the first month during 

which payment is made under this 

section must continue to furnish the 

equipment until medical necessity ends, 

or the 36-month period of continuous 

use ends, whichever is earlier, unless— 

(i) The item becomes subject to a 

competitive acquisition program 

implemented in accordance with 

section 1847(a) of the Act; 

(ii) Before the 18th month of 

continuous use, the beneficiary 

relocates to an area that is outside the 

normal service area of the supplier that 

initially furnished the equipment; 

(iii) The beneficiary elects to obtain 

oxygen equipment from a different 

supplier prior to the expiration of the 

36-month rental period; or 

(iv) CMS or the carrier determines 

that an exception should apply in an 

individual case based on the 

circumstances. 

* * * * * 

33. Section 414.229 is amended by— 

A. Revising paragraphs (a)(3), (d)(1), 

and (h). 

B. Adding paragraphs (a)(4), (a)(5), 

and (b)(3). 

The revisions and additions read as 

follows: 

§ 414.229 Other durable medical 

equipment-capped rental items. 

(a) * * * 

(3) For power-driven wheelchairs 

furnished on or after January 1, 2006 

through December 31, 2010, payment is 

made in accordance with the rules set 

forth in paragraphs (f) or (h) of this 

section. 

(4) For power-driven wheelchairs that 

are not classified as complex 

rehabilitative power-driven 

wheelchairs, furnished on or after 

January 1, 2011, payment is made in 

accordance with the rules set forth in 

paragraph (f) of this section. 

(5) For power-driven wheelchairs 

classified as complex rehabilitative 

power-driven wheelchairs, furnished on 

or after January 1, 2011, payment is 

made in accordance with the rules set 

forth in paragraphs (f) or (h) of this 

section. 

(b) * * * 

(3) For power-driven wheelchairs 

furnished on or after January 1, 2011, 

the monthly fee schedule amount for 

rental equipment equals 15 percent of 

the purchase price recognized as 

determined under paragraph (c) of this 

section for each of the first 3 months 

and 6 percent of the purchase price for 

each of the remaining months. 

* * * * * 

(d) * * * 

(1) Suppliers must offer beneficiaries 

the option of purchasing power-driven 

wheelchairs at the time the supplier first 

furnishes the item. On or after January 

1, 2011, this option is available only for 

complex rehabilitative power-driven 

wheelchairs. Payment must be on a 

lump-sum fee schedule purchase basis if 

the beneficiary chooses the purchase 

option. The purchase fee is the amount 

established in paragraph (c) of this 

section. 

* * * * * 

(h) Purchase of power-driven 

wheelchairs furnished on or after 

January 1, 2006. 

(1) Suppliers must offer beneficiaries 

the option to purchase power-driven 

wheelchairs at the time the equipment 

is initially furnished. 

(2) Payment is made on a lump-sum 

purchase basis if the beneficiary chooses 

this option. 

(3) On or after January 1, 2011, this 

option is available only for complex 

rehabilitative power-driven 

wheelchairs. 

Subpart F—Competitive Bidding for 

Certain Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) 

34. Section 414.402 is amended by 

adding the definitions of ‘‘Affected 

party,’’ ‘‘Breach of contract,’’ ‘‘Corrective 

Action Plan,’’ ‘‘Hearing Officer,’’ ‘‘Mail 

order item,’’ ‘‘National mail order 

competitive bidding program,’’ 

‘‘Nonmail order item’’ and ‘‘Parties to the 

hearing’’ in alphabetical order to read as 

follows: 

§ 414.402 Definitions. 

Affected party means a contract 

supplier that has been notified that their 

DMEPOS CBP contract will be 

terminated for a breach of contract. 

* * * * * 

Breach of contract means any 

deviation from contract requirements, 

including a failure to comply with a 

governmental agency or licensing 

organization requirements, constitutes a 

breach of contract. 

* * * * * 

Corrective action plan (CAP) means a 

contract supplier’s written document 

with supporting information that 

describes the actions the contract 

supplier will take within a specified 

timeframe to remedy a breach of 

contract. 

* * * * * 

Hearing Officer (HO) means an 

individual, who was not involved with 

the CBIC recommendation to terminate 

a DMEPOS Competitive Bidding 

Program contract, who is designated by 

CMS to review and make an unbiased 

and independent determination 

following the Competitive Bidding 

Implementation Contractor’s (CBIC’s) 

recommendation to terminate a 

DMEPOS Competitive Bidding Program 

contract. 

* * * * * 

Mail order item means any item (for 

example, diabetic testing supplies) 

shipped or delivered to the beneficiary’s 

home, regardless of the method of 

delivery. 

* * * * * 

National mail order competitive 

bidding program means a program and 

competition resulting in the award of 

contracts to suppliers for furnishing 

mail order items throughout the nation. 

* * * * * 

Nonmail order item means any item 

(for example, diabetic testing supplies) 

that a beneficiary or caregiver picks up 

in person at a local pharmacy or 

supplier storefront. 

Parties to the hearing means the 

DMEPOS contract supplier and CMS. 

* * * * * 

35. Section 414.404 is amended by 

revising paragraph (b)(1)(i) to read as 

follows: 

§ 414.404 Scope and applicability. 

* * * * * 

(b) * * * 

(1) * * * 

(i) The items furnished are limited to 

crutches, canes, walkers, folding manual 

wheelchairs, blood glucose monitors, 

and infusion pumps that are DME, and, 


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in addition, off-the-shelf (OTS) 

orthotics. 

* * * * * 

36. Section 414.408 is amended by-– 

A. Revising paragraph (f)(1). 

B. Redesignating paragraphs (h)(2) 

through (h)(7) as paragraphs (h)(3) 

through (h)(8) respectively. 

C. Adding new paragraph (h)(2). 

D. In newly designated paragraphs 

(h)(3)(i) and (ii), remove the phrase 

‘‘(h)(2)’’ and add in its place the phrase 

‘‘(h)(3).’’ 

The revision and addition reads as 

follows: 

§ 414.408 Payment rules. 

* * * * * 

(f) * * * 

(1) The single payment amounts for 

new purchased durable medical 

equipment, including power 

wheelchairs that are purchased when 

the equipment is initially furnished, and 

enteral nutrition equipment are 

calculated based on the bids submitted 

and accepted for these items. For 

contracts entered into beginning on or 

after January 1, 2011, payment on a 

lump sum purchase basis is only 

available for power wheelchairs 

classified as complex rehabilitative 

power wheelchairs. 

* * * * * 

(h) * * * 

(2) For contracts entered into 

beginning on or after January 1, 2011, 

the monthly fee schedule amount for 

rental of power wheelchairs equals 15 

percent of the single payment amounts 

calculated for new durable medical 

equipment under paragraph (f)(1) of this 

section for each of the first 3 months, 

and 6 percent of the single payment 

amounts calculated for these items for 

each of the remaining months 4 through 

13. 

* * * * * 

37. Section 414.410 is amended as 

follows: 

A. Revising paragraphs (a)(2) and 

(a)(3). 

B. Adding a new paragraph (a)(4). 

The revisions and addition read as 

follows: 

§ 414.410 Phase-in implementation of 

competitive bidding programs. 

(a) * * * 

(2) In CY 2011, in an additional 91 

MSAs (the additional 70 MSAs selected 

by CMS as of June 1, 2008, and the next 

21 largest MSAs by total population 

based on 2009 population estimates, 

and not already phased in as of June 1, 

2008). CMS may subdivide any of the 91 

MSAs with a population of greater than 

8,000,000 into separate CBAs, thereby 

resulting in more than 91 CBAs. 

(3) After CY 2011, additional CBAs 

(or, in the case of national mail order for 

items and services, after CY 2010). 

(4) For competitions (other than for 

national mail order items and services) 

after CY 2011 and prior to CY 2015, the 

following areas are excluded: 

(i) Rural areas. 

(ii) MSAs not selected under 

paragraphs (a)(1) or (a)(2) of this section 

with a population of less than 250,000. 

(iii) An area with low population 

density within an MSA not selected 

under paragraphs (a)(1) or (a)(2) of this 

section. 

* * * * * 

38. Section 414.411 is added to read 

as follows: 

§ 414.411 Special rule in case of 

competitions for diabetic testing strips 

conducted on or after January 1, 2011. 

(a) National mail order competitions. 

A supplier must demonstrate that their 

bid submitted as part of a national mail 

order competition for diabetic testing 

strips covers the furnishing of a 

sufficient number of different types of 

diabetic testing strip products that, in 

the aggregate, and taking into account 

volume for the different products, 

includes at least 50 percent of all the 

different types of products on the 

market. A type of diabetic testing strip 

means a specific brand and model of 

testing strips. 

(b) Other competitions. CMS may 

apply this special rule to non-mail order 

or local competitions for diabetic testing 

strips. 

39. Section 414.422 is amended by 

adding paragraph (e)(3) to read as 

follows: 

§ 414.422 Term of contracts. 

* * * * * 

(e) * * * 

(3) Contract suppliers for diabetic 

testing supplies must furnish the brand 

of diabetic testing supplies that works 

with the home blood glucose monitor 

selected by the beneficiary. The contract 

supplier is prohibited from influencing 

or incentivizing the beneficiary by 

persuading, pressuring, or advising 

them to switch from their current brand 

or for new beneficiaries from their 

preferred brand of glucose monitor and 

testing supplies. The contract supplier 

may not furnish information about 

alternative brands to the beneficiary 

unless the beneficiary requests such 

information. 

* * * * * 

40. Section 414.423 is added to read 

as follows: 

§ 414.423 Appeals process for termination 

of competitive bidding contract. 

This section implements an appeals 

process for suppliers that CMS has 

determined are in breach of their 

Medicare DMEPOS Competitive Bidding 

Program contracts and where CMS has 

taken action to terminate the supplier’s 

contract. Except as specified in this 

regulation termination decisions made 

under this section are final and binding. 

(a) Terminations for breach of 

contract. CMS may terminate a 

supplier’s DMEPOS Competitive 

Bidding Program contract when it 

determines that the supplier has 

violated any of the terms of its contract. 

(b) Notice of termination—(1) CMS 

notification. If CMS determines a 

supplier to be in breach of its contract 

either in part or in whole, it will notify 

the Medicare DMEPOS supplier of the 

termination by certified mail. 

(2) Content of the notice. The CMS 

notice sent by the CBIC will include the 

following: 

(i) The reasons for the termination. 

(ii) The right to request a hearing by 

a CBIC Hearing Officer, and depending 

on the nature of the breach, the supplier 

may also be allowed to submit a CAP in 

lieu of requesting a hearing by a CBIC 

Hearing Officer, as specified in 

paragraph (c)(1)(i) of this section. 

(iii) The address to which the written 

request for a hearing must be mailed. 

(iv) The address to which the CAP 

must be mailed, if applicable. 

(v) Penalties that will accompany the 

termination, such as not being eligible 

to bid in future rounds of competitive 

bidding. 

(vi) The effective date of termination 

is 45 days from the date of the 

notification letter unless a timely 

hearing request has been filed or a 

Corrective Action Plan (CAP) has been 

submitted within 30 days of the date on 

the notification letter. 

(c) Corrective Action Plan. 

(1) Option for Corrective Action Plan 

(CAP). 

(i) CMS has the option to allow a 

DMEPOS supplier to provide a written 

Corrective Action Plan (CAP) to remedy 

the deficiencies identified in the notice, 

when CMS determines that the delay in 

the termination date caused by allowing 

a CAP will not cause harm to 

beneficiaries, for example, we would 

not allow a CAP if the supplier has been 

excluded, debarred, or convicted of a 

healthcare related crime. 

(ii) If a supplier chooses not to submit 

a CAP or if CMS determines that a 

supplier’s CAP is insufficient, the 

supplier may request a hearing on the 

termination. 

(2) Submission of a CAP. 


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(i) A Corrective Action Plan must be 

submitted within 30 calendar days from 

the date on the notification letter. If the 

supplier decides not to submit a 

Corrective Action Plan the supplier may 

within 30 days of the date on the 

termination letter may request a hearing 

by a CBIC hearing officer. 

(ii) Suppliers will only have the 

opportunity to submit a CAP when they 

are first notified that they have been 

determined to be in breach of contract. 

If the CAP is not acceptable or properly 

implemented, suppliers will receive a 

termination notice. 

(d) The purpose of the Corrective 

Action Plan. 

(1) For the supplier to eliminate all of 

the deficiencies that were identified in 

the CBIC notice to terminate its contract 

to avoid contract termination. 

(2) To identify the timeframes by 

which the supplier will implement each 

of the components of the CAP. 

(e) Review of the CAP. 

(1) The CBIC will review the CAP and 

submit a recommendation to CMS 

concerning whether the CAP includes 

the steps necessary to remedy the 

contract deficiencies as identified in the 

notice. 

(2) If CMS accepts the CAP, including 

supplier’s designated timeframe for its 

completion; the supplier must provide a 

follow-up report within 5 days after the 

supplier has fully implemented the CAP 

that verifies that all of the deficiencies 

identified in the CAP have been 

corrected in accordance with the 

timeframes accepted by CMS. 

(3) If the supplier does not implement 

an acceptable CAP the supplier will 

receive a new notice that their contract 

will be terminated within 45 calendar 

days of the date on the notice to 

terminate. 

(f) Right to request a hearing by the 

CBIC hearing officer (HO). 

(1) A supplier who has received a 

notice that CMS considers the supplier 

in breach of contract or that the 

supplier’s CAP is not acceptable has the 

right to request a hearing before a HO 

who was not involved with the original 

determination. 

(2) A supplier who wishes to appeal 

the termination notice must submit a 

written request to the CBIC. The request 

for a hearing must be received by the 

CBIC within 30 calendar days from the 

date of the notice to terminate. 

(3) A request for hearing must be in 

writing and submitted by an authorized 

official of the supplier. 

(4) The appeals process for the 

Medicare DMEPOS Competitive Bidding 

Program is not to be used in place of 

other existing appeals processes that 

apply to other parts of Medicare. 

(5) In the absence of submitting a CAP 

when the supplier is offered the 

opportunity to submit a CAP within 30 

days of the notice in accordance with 

paragraph (c)(1) of this section, a 

supplier’s failure to timely request a 

hearing will result in a termination of 

the supplier’s DMEPOS Competitive 

Bidding Program contract effective 45 

days from the date on the notice to 

terminate. 

(g) The CBIC Hearing Officer 

schedules and conducts the hearing. 

(1) Within 30 calendar days from the 

receipt of the supplier’s timely request 

for a hearing the hearing officer will 

contact the parties to schedule the 

hearing. 

(2) The hearing may be held in person 

or by telephone at the supplier’s 

request. 

(3) The scheduling notice to the 

parties must indicate the time and place 

for the hearing and must be sent to the 

supplier 30 days before the date of the 

hearing. 

(4) The HO may, on his or her own 

motion, or at the request of a party, 

change the time and place for the 

hearing, but must give the parties to the 

hearing 30 day notice of the change. 

(5) The HO’s scheduling notice must 

provide the parties to the hearing and 

the CBIC the following information: 

(i) Description of the hearing 

procedure. 

(ii) The general and specific issues to 

be resolved. 

(iii) The supplier has the burden to 

prove it is not in violation of the 

contract. 

(iv) The opportunity for parties to the 

hearing to submit evidence to support 

their positions. 

(v) All evidence submitted, both from 

the supplier and CMS, in preparation 

for the hearing with all affected parties 

within 15 days prior to the scheduled 

dated of the hearing. 

(h) Burden of proof. 

(1) The burden of proof is on the 

Competitive Bidding Program contract 

supplier to demonstrate to the HO with 

convincing evidence that it has not 

breached its contract or that termination 

is not appropriate. 

(2) The supplier’s supporting 

evidence must be submitted with its 

request for a hearing. 

(3) If the Medicare DMEPOS supplier 

fails to submit this evidence at the time 

of its submission, the Medicare 

DMEPOS supplier is precluded from 

introducing new evidence later during 

the hearing process, unless permitted by 

the hearing officer. 

(4) The CBIC and CMS also have the 

opportunity to submit evidence to the 

HO within 10 days of receiving a notice 

announcing the hearing. 

(5) The HO will share all evidence 

submitted, both from the supplier and/ 

or CMS, in preparation for the hearing 

with all affected parties within 15 days 

prior to the scheduled date of the 

hearing. 

(i) Role of the Hearing Officer. The 

HO will conduct a thorough and 

independent review of the evidence 

including the information and 

documentation submitted for the 

hearing and other information that the 

HO considers pertinent for the hearing. 

The role of the HO includes, at a 

minimum, the following: 

(1) Conducts the hearing and decides 

the order in which the evidence and the 

arguments of the parties are presented; 

(2) Determine the rules on 

admissibility of the evidence; 

(3) Examines the witnesses, in 

addition to the examinations conducted 

by CMS, CBIC and the contract supplier; 

(4) The CBIC may assist CMS in the 

appeals process including being present 

at the hearing, testifying as a witness, or 

performing other, related ministerial 

duties. 

(5) Determines the rules for requesting 

documents and other evidence from 

other parties; 

(6) Ensures a complete record of the 

hearing is made available to all parties 

to the hearing; 

(7) Prepares a file of the record of the 

hearing which includes all evidence 

submitted as well as any relevant 

documents identified by the HO and 

considered as part of the hearing; and 

(8) Complies with all applicable 

provisions of 42 U.S.C. Title 18 and 

related provisions of the Act, the 

applicable regulations issued by the 

Secretary, and manual instructions 

issued by CMS. 

(j) Hearing Officer recommendation. 

(1) The HO will issue a written 

recommendation to CMS within 30 days 

of the close of the hearing or as soon as 

practical after the hearing. 

(2) The recommendation will explain 

the basis and the rationale for the HO’s 

recommendation. 

(3) The hearing officer must include 

the record of the hearing, along with 

evidence and documents produced 

during the hearing along with its 

recommendation. 

(k) CMS’ consideration of a HO’s 

recommendation. 

(1) CMS’ review of the HO 

recommendation will not allow the 

supplier to submit new information. 

(2) After reviewing the HO 

recommendation, CMS’ decision will be 

made within 30 days from the date of 

receipt of the HO’s recommendation. 

(3) A CMS decision to terminate will 

indicate the effective date of the 

termination. 


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(4) This decision is final and binding. 

(l) Effect of contract termination. 

(1) A contract supplier whose contract 

has been terminated may no longer 

furnish competitive bid items to 

beneficiaries within a CBA and be 

reimbursed by Medicare for these items 

after the effective date of the 

termination. 

(2) A contract supplier whose contract 

has been terminated must notify all 

beneficiaries who are receiving rented 

competitive bid items or competitive 

bid items received on a recurring basis, 

of the termination of their contract. The 

notice to the beneficiary from the 

supplier whose contract was terminated 

must be provided within 5 days of 

receipt of the final notice of termination. 

The notification to the beneficiaries 

must inform the beneficiaries that they 

are going to have to select a new 

contract supplier to furnish these items 

in order for Medicare to pay these items. 

(m) Effective date of the contract 

termination. 

(1) A supplier’s DMEPOS CBP 

contract is terminated effective on the 

termination date specified in the CBIC 

notice to the supplier, unless the 

supplier timely requests a hearing with 

the HO or the supplier has submitted a 

CAP under paragraph (x) of this section. 

(2) If a supplier requests an HO 

review of the CMS decision to terminate 

its contract, and CMS based upon on the 

HO recommendation terminates the 

supplier’s contract, the effective date of 

the termination will be the date 

specified in the CBIC notice to the 

supplier. 

(3) For violations of the terms of the 

supplier’s DMEPOS CBP contract that 

may harm beneficiaries, such as a 

supplier providing an inferior product 

that causes harm to the beneficiary, no 

delays of the effective date of the 

termination will be allowed. 

Subpart H–Fee Schedule for 

Ambulance Services 

39. Section 414.610 is amended by 

revising paragraphs (c)(1)(i), (c)(5)(ii), 

(f), and (h) to read as follows: 

§ 414.610 Basis of payments. 

* * * * * 

(c) * * * 

(1) Ground ambulance service levels. 

(i) The CF is multiplied by the 

applicable RVUs for each level of 

service to produce a service-level base 

rate. For services furnished during the 

period July 1, 2004 through December 

31, 2006, ambulance services originating 

in urban areas (both base rate and 

mileage) are paid based on a rate that is 

one percent higher than otherwise is 

applicable under this section, and 

ambulance services originating in rural 

areas (both base rate and mileage) are 

paid based on a rate that is two percent 

higher than otherwise is applicable 

under this section. For services 

furnished during the period July 1, 2008 

through December 21, 2010, ambulance 

services originating in urban areas (both 

base rate and mileage) are paid based on 

a rate that is two percent higher than 

otherwise is applicable under this 

section, and ambulance services 

originating in rural areas (both base rate 

and mileage) are paid based on a rate 

that is three percent higher than 

otherwise is applicable under this 

section. 

* * * * * 

(5) * * * 

(ii) For services furnished during the 

period July 1, 2004 through December 

31, 2010, 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. 

* * * * * 

(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, as of 

January 1, 2011, is reduced by the 10- 

year moving average of changes in 

annual economy-wide private nonfarm 

business multi-factor productivity 

(MFP) (as projected by the Secretary for 

the 10-year period ending with the 

applicable fiscal year, year, cost 

reporting period, or other annual 

period.) 

* * * * * 

(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 December 31, 2010. 

40. Section 414.620 is revised to read 

as follows: 

§ 414.620 Publication of the ambulance fee 

schedule. 

(a) Changes in payment rates resulting 

from incorporation of the annual 

inflation factor and the multi-factor 

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). 

Subpart J—Submission of 

Manufacturer’s Average Sales Price 

Data 

41. Section 414.804 is amended by— 

A. Redesignating paragraph (a)(6) as 

(a)(7). 

B. Adding new paragraph (a)(6). 

The addition reads as follows: 

§ 414.804 Basis of payment. 

(a) * * * 

(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. 

* * * * * 

Subpart K—Payment for Drugs and 

Biologicals Under Part B 

42. Section 414.902 is amended by 

adding the definitions of ‘‘Biosimilar 

biological product’’ and ‘‘Reference 

biological product’’ in alphabetical order 

to read as follows: 

§ 414.902 Definitions. 

* * * * * 

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. 

* * * * * 

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. 

* * * * * 

43. Section 414.904 is amended by— 


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A. Adding paragraphs (a)(3), (i), and 

(j). 

B. Revising paragraph (d)(3). 

The revisions and additions read as 

follows: 

§ 414.904 Average sales price as the basis 

for payment. 

(a) * * * 

(3) For purposes of this section— 

(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 FDAapproved 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 shall be made for 

amounts of product in excess of that 

reflected on the FDA-approved label. 

* * * * * 

(d) * * * 

(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) 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 by the 

lesser of the widely available market 

price or 103 percent of the average 

manufacturer price as subject to the 

following adjustments: 

(i) The payment amount substitution 

will be applied at the next ASP payment 

amount calculation period after the 

Inspector General informs the Secretary 

(at such times specified by the 

Secretary) about drugs or biologicals 

that have exceeded the applicable 

threshold percentage, and will remain 

in effect for one quarter after 

publication. 

(ii) Payment at 103 percent of the 

average manufacturer price for a billing 

code will be applied at such times 

when: 

(A) The threshold for making price 

substitutions, as defined in section (iii) 

is met; and, 

(B) When 103 percent of the AMP is 

less than the 106 percent of the ASP 

during the quarter in which the average 

manufacturer price would be applied. 

(iii) The applicable threshold for AMP 

comparisons for calendar years 2005, 

2006, 2007, 2008, 2009, 2010, is 5 

percent. For CY 2011, the threshold for 

ASP comparisons is reached when: 

(A) The ASP for the billing code has 

exceeded the AMP for the billing code 

by 5 percent or more in two consecutive 

quarters, or three of the last four 

quarters; immediately preceding the 

quarter to which the price substitution 

recommendation would apply; and, 

(B) The average manufacturer price 

for the billing code is calculated using 

the same set of NDCs used for the 

average sales price calculation as per 

this section for the billing code; 

(iv) The applicable threshold for 

WAMP comparisons for calendar years 

2005 through 2011 is 5 percent. 

(v) No payment amount substitutions 

will occur before the preliminary 

injunction issued on December 19, 

2007, by the United States District of 

Columbia in National Association of 

Chain Drug Stores et al. v. Health and 

Human Services, Civil Action No. 1:07– 

cv–02017 (RCL), is vacated. 

* * * * * 

(i) If manufacturer ASP data is not 

available prior to the publication 

deadline for quarterly payment limits, 

the payment limit is calculated by 

carrying over the most recent available 

manufacturer ASP price from a previous 

quarter for an NDC, adjusted by the 

weighted average of the change in the 

manufacturer ASPs for the NDCs that 

were reported during both the most 

recently available quarter and the 

current quarter. 

(j) Biosimilar biological products. 

Effective July 1, 2010, the payment 

amount for a biosimilar biological drug 

product (as defined in § 414.902 of this 

subpart) is the sum of the average sales 

price of all NDCs assigned to the 

biosimilar biological product 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 drug product 

(as defined in § 414.902 of this subpart). 

PART 415—SERVICES FURNISHED BY 

PHYSICIANS IN PROVIDERS, 

SUPERVISING PHYSICIANS IN 

TEACHING SETTINGS, AND 

RESIDENTS IN CERTAIN SETTINGS 

44. The authority citation for part 415 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart C—Part B Carrier Payments 

for Physician Services to Beneficiaries 

in Providers 

45. Section 415.130 is amended by 

revising paragraph (d) to read as 

follows: 

§ 415.130 Conditions for payment: 

Physician pathology services. 

* * * * * 

(d) Physician pathology services 

furnished by an independent laboratory. 

(1) The technical component of 

physician pathology services furnished 

by an independent laboratory to a 

hospital inpatient or outpatient on or 

before December 31, 2010, may be paid 

to the laboratory by the contractor under 

the physician fee schedule if the 

Medicare beneficiary is a patient of a 

covered hospital as defined in 

paragraph (a)(1) of this section. 

(2) For services furnished after 

December 31, 2010, an independent 

laboratory may not bill the Medicare 

contractor for the technical component 

of physician pathology services 

furnished to a hospital inpatient or 

outpatient. 

(3) For services furnished on or after 

January 1, 2008, the date of service 

policy in § 414.510 of this chapter 

applies to the TC of specimens for 

physician pathology services. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

46. The authority citation for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart B—Certification and Plan of 

Treatment Requirements 

47. Section 424.20 is amended by 

revising paragraph (e)(2) to read as 

follows: 

§ 424.20 Requirements for posthospital 

SNF care. 

* * * * * 

(e) * * * 

(2) A physician extender (that is, a 

nurse practitioner, a clinical nurse 

specialist, or a physician assistant as 

those terms are defined in section 

1861(aa)(5) of the Act) who does not 

have a direct or indirect employment 

relationship with the facility but who is 

working in collaboration with a 

physician. For purposes of this 

section— 

(i) Collaboration. 

(A) Collaboration means a process 

whereby a physician extender works 

with a doctor of medicine or osteopathy 

to deliver health care services. 

(B) The services are delivered within 

the scope of the physician extender’s 

professional expertise, with medical 

direction and appropriate supervision as 

provided for in guidelines jointly 

developed by the physician extender 

and the physician or other mechanisms 

defined by Federal regulations and the 

law of the State in which the services 

are performed. 


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(ii) Types of employment 

relationships. 

(A) Direct employment relationship. A 

direct employment relationship with the 

facility is one in which the physician 

extender meets the common law 

definition of the facility’s ‘‘employee,’’ 

as specified in 20 CFR 404.1005, 

404.1007, and 404.1009. When a 

physician extender meets this definition 

with respect to an entity other than the 

facility itself, and that entity has an 

agreement with the facility for the 

provision of nursing services under 

§ 409.21 of this subchapter, the facility 

is considered to have an indirect 

employment relationship with the 

physician extender. 

(B) Indirect employment relationship. 

(1) When a physician extender meets 

the definition of a direct employment 

relationship in paragraph (e)(2)(ii)(A) of 

this section with respect to an entity 

other than the facility itself, and that 

entity has an agreement with the facility 

for the provision of nursing services 

under § 409.21 of this subchapter, the 

facility is considered to have an indirect 

employment relationship with the 

physician extender. 

(2) An indirect employment 

relationship does not exist if the 

agreement between the entity and the 

facility involves only the performance of 

delegated physician tasks under 

§ 483.40(e) of this chapter. 

* * * * * 

Subpart C—Claims for Payment 

48. Section 424.44 is amended by 

revising paragraphs (a), (b), and (e) to 

read as follows: 

§ 424.44 Time limits for filing claims. 

(a) Time limits. 

(1) For services furnished on or after 

January 1, 2010, except as provided in 

paragraphs (b) and (e) of this section, 

the claim must be filed no later than the 

close of the period ending 1 calendar 

year after the date of service. 

(2) For services furnished before 

January 1, 2010, except as provided in 

paragraphs (b) and (e) of this section, 

the claim must be filed on or before 

December 31 of the following year for 

services that were furnished during the 

first 9 months of a calendar year, and on 

or before December 31st of the second 

following year for services that were 

furnished during the last 3 months of 

the calendar year, except that for 

services furnished during the last 3 

months of 2009 all claims must be filed 

no later than December 31, 2010. 

(b) Exceptions to time limits. 

Exceptions to the time limits for filing 

claims include the following: 

(1) The time for filing a claim will be 

extended if CMS or one of its 

contractors determines that a failure to 

meet the deadline in paragraph (a) of 

this section was caused by error or 

misrepresentation of an employee, 

Medicare contractor (including 

Medicare Administrative Contractor, 

intermediary, or carrier), or agent of the 

Department that was performing 

Medicare functions and acting within 

the scope of its authority. 

(2) The time for filing a claim will be 

extended if CMS or one of its 

contractors determines that a failure to 

meet the deadline in paragraph (a) of 

this section is caused by all of the 

following conditions: 

(i) At the time the service was 

furnished the beneficiary was not 

entitled to Medicare. 

(ii) The beneficiary subsequently 

received notification of Medicare 

entitlement effective retroactively to or 

before the date of the furnished service. 

(3) The time for filing a claim will be 

extended if CMS or one of its 

contractors determines that a failure to 

meet the deadline in paragraph (a) of 

this section is caused by all of the 

following conditions: 

(i) At the time the service was 

furnished the beneficiary was not 

entitled to Medicare. 

(ii) The beneficiary subsequently 

received notification of Medicare 

entitlement effective retroactively to or 

before the date of the furnished service. 

(iii) A State Medicaid agency 

recovered the Medicaid payment for the 

furnished service from a provider or 

supplier 11 months or more after the 

service was furnished. 

(4) Extension of time. (i) The time to 

file a claim will be extended through the 

last day of the 6th calendar month 

following the month in which the error 

or misrepresentation referenced in 

paragraph (b)(1) of this section, is 

corrected. However, no extension of 

time will be granted for paragraph (b)(1) 

when the request for that exception is 

made to CMS or one of its contractors 

more than 4 years after the date of 

service. 

(ii) If CMS or one of its contractors 

determines that both of the conditions 

are met in paragraph (b)(2) of this 

section but that all of the conditions in 

paragraph (b)(3) are not satisfied, the 

time to file a claim will be extended 

through the last day of the 6th calendar 

month following the month in which 

the beneficiary received notification of 

Medicare entitlement effective 

retroactively to or before the date of the 

furnished service. 

(iii) If CMS or one of its contractors 

determines that all of the conditions are 

met in paragraph (b)(3) of this section, 

the time to file a claim will be extended 

through the last day of the 6th calendar 

month following the month in which 

the State Medicaid agency recovered the 

Medicaid payment for the furnished 

service from the provider or supplier. 

* * * * * 

(e) As specified in §§ 424.520 and 

424.521 of this subpart, there are 

restrictions on the ability of the 

following newly-enrolled suppliers to 

submit claims for items or services 

furnished prior to the effective date of 

their Medicare billing privileges: 

(1) Physician or non-physician 

practitioner organizations. 

(2) Physicians. 

(3) Nonphysician practitioners. 

(4) Independent diagnostic testing 

facilities. 

* * * * * 

Subpart P—Requirements for 

Establishing and Maintaining Medicare 

Billing Privileges 

49. Section 424.502 is amended by 

adding a definition of ‘‘Voluntary 

termination’’ in alphabetical order to 

read as follows: 

§ 424.502 Definitions. 

* * * * * 

Voluntary termination means that a 

provider or supplier, including an 

individual physician or non-physician 

practitioner, submits written 

confirmation to CMS of its decision to 

discontinue enrollment in the Medicare 

program. 

50. Section 424.510 is amended by 

revising paragraph (d)(1)(iii) to read as 

follows: 

§ 424.510 Requirements for enrolling in 

the Medicare program. 

* * * * * 

(d) * * * 

(1) * * * 

(iii) Submission of all documentation, 

including all applicable Federal and 

State licenses, certifications (including, 

but not limited to Federal Aviation 

Administration and Clinical Laboratory 

Improvement Act certifications), and 

regulatory requirements that apply to 

the specific provider or supplier type 

that relate to providing health care 

service, required by CMS under this or 

other statutory or regulatory authority, 

or under the Paperwork Reduction Act 

of 1995, to establish the provider or 

supplier’s eligibility to furnish Medicare 

covered items or services to 

beneficiaries in the Medicare program. 

* * * * * 

51. Section 424.516 is amended by 

adding paragraph (e)(3) to read as 

follows: 


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§ 424.516 Additional provider and supplier 

requirements for enrolling and maintaining 

active enrollment status in the Medicare 

program. 

* * * * * 

(e) * * * 

(3) Within 30 days any revocation or 

suspension of a Federal or State license 

or certification (including Federal 

Aviation Administration and Clinical 

Laboratory Improvement Act 

certifications), an air ambulance 

supplier must report a revocation or 

suspension of its license or certification 

to the applicable Medicare contractor. 

* * * * * 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program). 

Dated: June 18, 2010. 

Marilyn Tavenner, 

Acting Administrator and Chief Operating 

Officer, Centers for Medicare & Medicaid 

Services. 

Approved: June 24, 2010. 

Kathleen Sebelius, 

Secretary. 

ADDENDUM A: Explanation and Use of 

Addendum B 

The Addenda on the following pages 

provide various data pertaining to the 

Medicare fee schedule for physicians’ 

services furnished in CY 2011. Addendum B 

contains the RVUs for work, nonfacility PE, 

facility PE, and malpractice expense, and 

other information for all services included in 

the PFS. 

In previous years, we have listed many 

services in Addendum B that are not paid 

under the PFS. To avoid publishing as many 

pages of codes for these services, we are not 

including clinical laboratory codes or the 

alpha-numeric codes (Healthcare Common 

Procedure Coding System (HCPCS) codes not 

included in CPT) not paid under the PFS in 

Addendum B. 

Addendum B contains the following 

information for each CPT code and alphanumeric HCPCS code, except for: Alphanumeric codes beginning with B (enteral and 

parenteral therapy); ‘‘E’’ (durable medical 

equipment); ‘‘K’’ (temporary codes for 

nonphysicians’ services or items); or ‘‘L’’ 

(orthotics); and codes for anesthesiology. 

Please also note the following: 

• An ‘‘NA’’ in the ‘‘Nonfacility PE RVUs’’ 

column of Addendum B means that CMS has 

not developed PE RVUs in the nonfacility 

setting for the service because it is typically 

performed in the hospital (for example, an 

open heart surgery is generally performed in 

the hospital setting and not a physician’s 

office). If there is an ‘‘NA’’ in the nonfacility 

PE RVU column, and the contractor 

determines that this service can be performed 

in the nonfacility setting, the service will be 

paid at the facility PE RVU rate. 

• Services that have an ‘‘NA’’ in the 

‘‘Facility PE RVUs’’ column of Addendum B 

are typically not paid under the PFS when 

provided in a facility setting. These services 

(which include ‘‘incident to’’ services and the 

technical portion of diagnostic tests) are 

generally paid under either the hospital 

outpatient prospective payment system or 

bundled into the hospital inpatient 

prospective payment system payment. In 

some cases, these services may be paid in a 

facility setting at the PFS rate (for example, 

therapy services), but there would be no 

payment made to the practitioner under the 

PFS in these situations. 

1. CPT/HCPCS code. This is the CPT or 

alpha-numeric HCPCS number for the 

service. Alpha-numeric HCPCS codes are 

included at the end of this Addendum. 

2. Modifier. A modifier is shown if there 

is a technical component (modifier TC) and 

a professional component (PC) (modifier-26) 

for the service. If there is a PC and a TC for 

the service, Addendum B contains three 

entries for the code, specifically a code for: 

The global values (both professional and 

technical); modifier—26 (PC); and modifier— 

TC. The global service is not designated by 

a modifier, and physicians must bill using 

the code without a modifier if the physician 

furnishes both the PC and the TC of the 

service. Modifier-53 is shown for a 

discontinued procedure, for example a 

colonoscopy that is not completed. There 

will be RVUs for a code with this modifier. 

3. Status indicator. This indicator shows 

whether the CPT/HCPCS code is included in 

the PFS and whether it is separately payable 

if the service is covered. 

A = Active code. These codes are 

separately payable under the PFS if covered. 

There will be RVUs for codes with this 

status. The presence of an ‘‘A’’ indicator does 

not mean that Medicare has made a national 

coverage determination regarding the service. 

Contractors remain responsible for coverage 

decisions in the absence of a national 

Medicare policy. 

B = Bundled code. Payments for covered 

services are always bundled into payment for 

other services not specified. If RVUs are 

shown, they are not used for Medicare 

payment. If these services are covered, 

payment for them is subsumed by the 

payment for the services to which they are 

incident (an example is a telephone call from 

a hospital nurse regarding care of a patient). 

C = Contractors price the code. Contractors 

establish RVUs and payment amounts for 

these services, generally on an individual 

case basis following review of 

documentation, such as an operative report. 

E = Excluded from the PFS by regulation. 

These codes are for items and services that 

CMS chose to exclude from the PFS by 

regulation. No RVUs are shown, and no 

payment may be made under the PFS for 

these codes. Payment for them, when 

covered, continues under reasonable charge 

procedures. 

I = Not valid for Medicare purposes. 

Medicare uses another code for the reporting 

of, and the payment for these services. (Codes 

not subject to a 90-day grace period.) 

M = Measurement codes, used for reporting 

purposes only. There are no RVUs and no 

payment amounts for these codes. CMS uses 

them to aid with performance measurement. 

No separate payment is made. These codes 

should be billed with a zero (($0.00) charge 

and are denied) on the MPFSDB. 

N = Noncovered service. These codes are 

noncovered services. Medicare payment may 

not be made for these codes. If RVUs are 

shown, they are not used for Medicare 

payment. 

R = Restricted coverage. Special coverage 

instructions apply. If the service is covered 

and no RVUs are shown, it is contractorpriced. 

T = There are RVUs for these services, but 

they are only paid if there are no other 

services payable under the PFS billed on the 

same date by the same provider. If any other 

services payable under the PFS are billed on 

the same date by the same provider, these 

services are bundled into the service(s) for 

which payment is made. 

X = Statutory exclusion. These codes 

represent an item or service that is not within 

the statutory definition of ‘‘physicians’ 

services’’ for PFS payment purposes. No 

RVUs are shown for these codes, and no 

payment may be made under the PFS. 

(Examples are ambulance services and 

clinical diagnostic laboratory services.) 

4. Description of code. This is an 

abbreviated version of the narrative 

description of the code. 

5. Physician work RVUs. These are the 

RVUs for the physician work in CY 2011. 

6. Fully implemented nonfacility PE RVUs. 

These are the fully implemented resourcebased PE RVUs for nonfacility settings. 

7. CY 2011 transitional nonfacility PE 

RVUs. These are the CY 2011 resource-based 

PE RVUs for nonfacility settings. 

8. Fully implemented facility PE RVUs. 

These are the fully implemented resourcebased PE RVUs for facility settings. 

9. CY 2011 Transitional facility PE RVUs. 

These are the CY 2011 resource-based PE 

RVUs for facility settings. 

10. Malpractice expense RVUs. These are 

the RVUs for the malpractice expense for CY 

2011. 

Note: The BN reduction resulting from the 

chiropractic demonstration is not reflected in 

the RVUs for CPT codes 98940, 98941 and 

98942. The required reduction will only be 

reflected in the files used for Medicare 

payment. 

11. Global period. This indicator shows the 

number of days in the global period for the 

code (0, 10, or 90 days). An explanation of 

the alpha codes follows: 

MMM = Code describes a service furnished 

in uncomplicated maternity cases, including 

antepartum care, delivery, and postpartum 

care. The usual global surgical concept does 

not apply. See the Physicians’ Current 

Procedural Terminology for specific 

definitions. 

XXX = The global concept does not apply. 

YYY = The global period is to be set by the 

contractor (for example, unlisted surgery 

codes). 

ZZZ = Code related to another service that 

is always included in the global period of the 

other service. (Note: Physician work and PE 

are associated with intra-service time and, in 

some instances, with the post-service time.) 


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jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.099</GPH>
40358 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.100</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40359 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.101</GPH>
40360 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.102</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40361 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.103</GPH>
40362 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.104</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40363 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.105</GPH>
40364 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.106</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40365 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.107</GPH>
40366 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.108</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40367 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.109</GPH>
40368 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.110</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40369 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.111</GPH>
40370 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.112</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40371 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.113</GPH>
40372 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.114</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40373 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.115</GPH>
40374 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.116</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40375 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.117</GPH>
40376 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.118</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40377 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.119</GPH>
40378 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.120</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40379 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.121</GPH>
40380 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.122</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40381 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.123</GPH>
40382 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.124</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40383 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.125</GPH>
40384 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.126</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40385 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.127</GPH>
40386 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.128</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40387 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.129</GPH>
40388 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.130</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40389 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.131</GPH>
40390 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.132</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40391 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.133</GPH>
40392 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.134</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40393 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.135</GPH>
40394 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.136</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40395 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.137</GPH>
40396 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.138</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40397 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.139</GPH>
40398 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.140</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40399 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.141</GPH>
40400 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.142</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40401 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.143</GPH>
40402 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.144</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40403 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.145</GPH>
40404 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.146</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40405 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.147</GPH>
40406 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.148</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40407 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.149</GPH>
40408 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.150</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40409 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.151</GPH>
40410 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.152</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40411 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.153</GPH>
40412 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.154</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40413 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.155</GPH>
40414 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.156</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40415 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.157</GPH>
40416 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.158</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40417 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.159</GPH>
40418 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.160</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40419 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.161</GPH>
40420 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.162</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40421 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.163</GPH>
40422 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.164</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40423 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.165</GPH>
40424 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.166</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40425 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.167</GPH>
40426 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.168</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40427 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.169</GPH>
40428 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.170</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40429 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.171</GPH>
40430 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.172</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40431 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.173</GPH>
40432 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.174</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40433 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.175</GPH>
40434 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.176</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40435 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.177</GPH>
40436 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.178</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40437 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.179</GPH>
40438 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.180</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40439 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.181</GPH>
40440 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.182</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40441 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.183</GPH>
40442 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.184</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40443 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.185</GPH>
40444 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.186</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40445 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.187</GPH>
40446 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.188</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40447 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.189</GPH>
40448 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.190</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40449 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.191</GPH>
40450 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.192</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40451 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.193</GPH>
40452 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.194</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40453 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.195</GPH>
40454 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.196</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40455 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.197</GPH>
40456 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.198</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40457 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.199</GPH>
40458 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.200</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40459 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.201</GPH>
40460 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.202</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40461 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.203</GPH>
40462 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.204</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40463 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.205</GPH>
40464 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.206</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40465 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.207</GPH>
40466 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.208</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40467 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.209</GPH>
40468 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.210</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40469 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.211</GPH>
40470 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.212</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40471 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.213</GPH>
40472 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.214</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40473 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.215</GPH>
40474 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.216</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40475 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.217</GPH>
40476 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.218</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40477 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.219</GPH>
40478 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.220</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40479 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.221</GPH>
40480 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.222</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40481 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.223</GPH>
40482 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.224</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40483 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.225</GPH>
40484 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.226</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40485 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.227</GPH>
40486 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.228</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40487 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.229</GPH>
40488 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.230</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40489 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.231</GPH>
40490 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.232</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40491 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.233</GPH>
40492 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.234</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40493 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.235</GPH>
40494 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.236</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40495 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.237</GPH>
40496 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.238</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40497 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.239</GPH>
40498 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.240</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40499 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.241</GPH>
40500 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.242</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40501 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.243</GPH>
40502 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.244</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40503 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.245</GPH>
40504 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.246</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40505 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.247</GPH>
40506 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.248</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40507 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.249</GPH>
40508 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.250</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40509 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.251</GPH>
40510 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.252</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40511 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.253</GPH>
40512 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.254</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40513 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.255</GPH>
40514 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.256</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40515 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.257</GPH>
40516 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.258</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40517 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.259</GPH>
40518 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.260</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40519 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.261</GPH>
40520 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.262</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40521 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.263</GPH>
40522 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.264</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40523 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.265</GPH>
40524 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.266</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40525 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.267</GPH>
40526 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.268</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40527 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.269</GPH>
40528 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.270</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40529 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.271</GPH>
40530 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.272</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40531 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.273</GPH>
40532 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.274</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40533 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.275</GPH>
40534 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.276</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40535 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.277</GPH>
40536 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.278</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40537 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.279</GPH>
40538 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.280</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40539 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.281</GPH>
40540 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.282</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40541 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.283</GPH>
40542 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.284</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40543 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.285</GPH>
40544 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.286</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40545 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.287</GPH>
40546 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.288</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40547 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.289</GPH>
40548 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.290</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40549 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.291</GPH>
40550 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.292</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40551 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.293</GPH>
40552 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.294</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40553 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.295</GPH>
40554 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.296</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40555 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.297</GPH>
40556 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.298</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40557 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.299</GPH>
40558 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.300</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40559 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.301</GPH>
40560 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.302</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40561 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.303</GPH>
40562 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.304</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40563 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.305</GPH>
40564 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.306</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40565 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.307</GPH>
40566 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.308</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40567 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.309</GPH>
40568 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.310</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40569 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.311</GPH>
40570 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.312</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40571 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.313</GPH>
40572 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.314</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40573 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.315</GPH>
40574 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.316</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40575 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.317</GPH>
40576 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.318</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40577 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.319</GPH>
40578 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.320</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40579 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.321</GPH>
40580 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.322</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40581 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.323</GPH>
40582 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.324</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40583 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.325</GPH>
40584 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.326</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40585 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.327</GPH>
40586 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.328</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40587 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.329</GPH>
40588 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.330</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40589 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.331</GPH>
40590 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.332</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40591 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.333</GPH>
40592 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.334</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40593 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.335</GPH>
40594 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.336</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40595 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.337</GPH>
40596 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.338</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40597 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.339</GPH>
40598 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.340</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40599 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.341</GPH>
40600 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.342</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40601 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.343</GPH>
40602 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.344</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40603 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.345</GPH>
40604 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.346</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40605 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.347</GPH>
40606 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.348</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40607 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.349</GPH>
40608 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.350</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40609 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.351</GPH>
40610 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.352</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40611 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.353</GPH>
40612 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.354</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40613 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.355</GPH>
40614 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.356</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40615 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.357</GPH>
40616 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.358</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40617 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.359</GPH>
40618 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.360</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40619 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.361</GPH>
40620 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.362</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40621 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.363</GPH>
40622 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.364</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40623 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.365</GPH>
40624 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.366</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40625 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.367</GPH>
40626 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.368</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40627 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.369</GPH>
40628 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.370</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40629 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.371</GPH>
40630 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.372</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40631 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.373</GPH>
40632 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.374</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40633 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.375</GPH>
40634 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.376</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40635 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.377</GPH>
40636 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.378</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40637 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.379</GPH>
40638 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.380</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40639 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.381</GPH>
40640 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.382</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40641 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.383</GPH>
40642 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.384</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40643 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.385</GPH>
40644 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.386</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40645 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.387</GPH>
40646 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.388</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40647 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.389</GPH>
40648 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.390</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40649 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.391</GPH>
40650 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.392</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40651 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.393</GPH>
40652 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.394</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40653 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.395</GPH>
40654 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.396</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40655 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.397</GPH>
40656 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.398</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40657 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.399</GPH>
40658 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.400</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40659 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.401</GPH>
40660 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.402</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40661 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.403</GPH>
40662 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.404</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40663 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.405</GPH>
40664 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.406</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40665 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.407</GPH>
40666 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.408</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40667 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.409</GPH>
40668 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.410</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40669 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.411</GPH>
40670 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.412</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40671 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.413</GPH>
40672 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.414</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40673 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.415</GPH>
40674 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.416</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40675 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.417</GPH>
40676 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.418</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40677 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.419</GPH>
40678 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.420</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40679 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.421</GPH>
40680 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.422</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40681 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.423</GPH>
40682 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.424</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40683 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.425</GPH>
40684 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.426</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40685 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.427</GPH>
40686 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.428</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40687 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.429</GPH>
40688 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.430</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40689 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.431</GPH>
40690 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.432</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40691 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.433</GPH>
40692 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.434</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40693 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.435</GPH>
40694 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.436</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40695 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.437</GPH>
40696 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.438</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40697 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.439</GPH>
40698 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.440</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40699 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.441</GPH>
40700 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.442</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40701 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.443</GPH>
40702 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.444</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40703 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.445</GPH>
40704 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.446</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40705 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.447</GPH>
40706 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.448</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40707 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.449</GPH>
40708 Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.450</GPH>
Federal Register / Vol. 75, No. 133 / Tuesday, July 13, 2010 / Proposed Rules 40709 

[FR Doc. 2010–15900 Filed 6–25–10; 4:15 pm] 

BILLING CODE 4120–01–P 


jlentini on DSKJ8SOYB1PROD with PROPOSALS2EP13JY10.451</GPH>