[Federal Register Volume 65, Number 86 (Wednesday, May 3, 2000)]
[Rules and Regulations]
[Pages 25664-25668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-10971]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 414

[HCFA-1111-IFC]
RIN 0938-AK14


Medicare Program; Criteria for Submitting Supplemental Practice 
Expense Survey Data

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

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule establishes criteria for physician and 
non-physician specialty groups for submitting supplemental practice 
expense survey data for use in determining payments under the physician 
fee schedule. This interim final rule solicits public comments on the 
criteria for supplemental surveys.

DATES: Effective Date: This regulation is effective May 3, 2000.
    Comment Period: We will consider comments concerning criteria for 
supplemental surveys if we receive the comments at the appropriate 
address, as provided below, no later than 5 p.m. on July 3, 2000.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address ONLY: Health Care Financing Administration, 
Department of Health and Human Services, Attn: HCFA-1111-IFC, P.O. Box 
8013, Baltimore, MD 21244-8013.
    If you prefer, you may deliver by courier, your written comments 
(one original and three copies) to one of the following addresses: Room 
443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201 or C5-14-03, Central Building, 7500 Security 
Boulevard, Baltimore, MD 21244-1850. Comments mailed to those addresses 
may be delayed and could be considered late.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1111-IFC.
    Comments received timely will be available for public inspection as 
they are received, generally beginning approximately 3 weeks after 
publication of a document, in Room 443-G of the Department's offices at 
200 Independence Avenue, SW., Washington, DC 20201, on Monday through 
Friday of each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Kenneth Marsalek, (410) 786-4502.

SUPPLEMENTARY INFORMATION:

I. Background

A. Legislative History

    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 fee 
schedule be based on national uniform relative value units (RVUs) based 
on the relative resources used in furnishing a service. Section 1848(c) 
of the Act requires that national RVUs be established for physician 
work and practice and malpractice expenses.
    Under the formula set forth in section 1848(b)(1) of the Act, the 
amount paid for each service under the physician fee schedule is the 
product of three factors--(1) A nationally uniform relative value for 
the service; (2) a geographic adjustment factor (GAF) for each 
physician fee schedule area; and (3) a nationally uniform conversion 
factor (CF) for the service. The CF converts the relative values into 
payment amounts.
    For each physician fee schedule service, there are three RVU 
components--(1) Physician work; (2) practice expense; and (3) 
malpractice expense. In addition, each RVU component has a 
corresponding geographic practice cost index (GPCI) for each fee 
schedule area. The GPCIs reflect the relative costs of practice expense 
and malpractice insurance, and of one quarter of the physician work in 
an area compared to the national average.
    The general formula for calculating the Medicare fee schedule 
amount for a given service in a given fee schedule area is as follows:

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

    Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 
103-432) required us to develop a methodology for a resource-based 
system for determining practice expense RVUs for each physician's 
service beginning in 1998.
    The Balanced Budget Act of 1997 was enacted on August 5, 1997, 
before publication of the October 1997 final rule on the physician fee 
schedule (62 FR 59103). Section 4505(a) of the BBA delayed the 
effective date of the resource-based practice expense RVUs until 
January 1, 1999, while section 4505(b) provided for a 4-year 
transition, with resource-based practice expense RVUs becoming fully 
effective in 2002. In addition, section 4505(d)(1)(A) and (d)(1)(B) of 
the BBA required us to develop new resource-based practice expense 
RVUs, and section 4505(d)(1)(C) of the BBA required us to develop a 
refinement process to be used during each of the 4 years of the 
transition period.
    Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) 
requires us to establish a process under which we will 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 practice 
expense component of the physician fee schedule. Section 212(b) states 
that the process must be available for payments for the 2001 and 2002 
physician fee schedules. This time period is consistent with the last 
years of the 4-year transition period, noted above. Therefore, we are 
establishing a process for submission of data in calendar years (CY) 
2000 and 2001 for use in computing practice expense RVUs for CYs 2001 
and 2002 physician fee schedule, respectively. Section 212(a) requires 
that we promulgate an interim final regulation that permits submission 
of data for payment rates for 2001.

B. Current Methodology for Computing Practice Expense Relative Value 
Units

    Effective for services furnished beginning January 1, 1999, we 
established a new methodology for computing resource-based practice 
expense RVUs. The methodology uses practice expense data from two 
significant, accessible sources--HCFA's Clinical Practice Expert Panel 
(CPEP) data and the American Medical Association's (AMA's) 
Socioeconomic Monitoring System (SMS) data. Current aggregate specialty 
practice costs are used in the methodology to establish initial 
estimates of relative resources used in physicians' services across 
specialties and allocate them to specific procedures.
    The SMS collects information on aggregate practice expenses from a 
random national survey of approximately 4,000 physicians who spend the 
greatest proportion of their time in patient care activities. The 
survey includes AMA member and non-AMA member physicians and office and 
hospital-based physicians. Actual practice expense data by specialty, 
derived from the 1995 through 1997

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SMS survey data, were used to create six cost pools--administrative 
labor, clinical labor, medical supplies, medical equipment, office 
supplies, and all other expenses. The three steps used to create cost 
pools were as follows:
    (1) Determination of practice expenses per hour by cost category, 
using the SMS survey of actual cost data. The practice expense per hour 
for each physician respondent's practice was calculated as the practice 
expenses for the practice divided by the total number of hours spent in 
patient care activities by the physicians in the practice.
    (2) Determination of the total number of physician hours, by 
specialty, spent treating Medicare patients, using physician time data 
for each procedure code and Medicare claims data.
    (3) Calculation of the practice expense pools by specialty and by 
cost category by multiplying the practice expenses per hour for each 
category by the total physician hours.
    Since many specialties identified in our Medicare claims data did 
not correspond exactly to the specialties included in the practice 
expense tables from the SMS survey data, we crosswalked these 
specialties to the most appropriate SMS specialty category. (For a more 
detailed discussion of the methodology, you may refer to the June 1998 
proposed rule (63 FR at 30826) and the November 1998 final rule with 
comment (63 FR at 58816).)

C. Refinement of Practice Expense RVUs

    In the June 5, 1998 proposed rule (63 FR 30818) and the November 2, 
1998 final rule (63 FR 58814), we established the parameters for a 
refinement process and indicated that RVUs for all codes would be 
considered interim for CY 1999 and during the transition (through CY 
2001). In the November 1998 final rule, we outlined the initial 
refinement process and the steps we are taking to resolve outstanding 
general methodological issues.
    In the July 22, 1999 proposed rule (64 FR 39609), we stated that we 
awarded a one-year contract, beginning May 24, 1999, to The Lewin Group 
to provide technical assistance in evaluating various aspects of the 
practice expense methodology. These aspects include the following:
    <bullet> Evaluation of the validity and reliability of the SMS data 
for specialty and subspecialty groups.
    <bullet> Identification and evaluation of alternative and 
supplementary data from sources such as specialty and multi-specialty 
societies.
    <bullet> Development of criteria for accepting other surveys and 
determination of the appropriate form of these surveys.
    In the November 2, 1999 final rule (64 FR 59380), we noted the 
steps our contractor had taken to date, including issuance of its first 
draft report, ``Practice Expense Methodology,'' dated September 24, 
1999. This report, which contains recommendations about a variety of 
methodology issues and use of oversampling and supplemental surveys, is 
discussed below. (The report has been placed on our homepage under the 
title ``Practice Expense Methodology Report.'' Our homepage can be 
accessed through the HCFA Internet site at http://www.hcfa.gov/medicare/pfsmain.htm.) Also, in the final rule, we indicated that for 
CY 2000 we would use supplemental survey data from thoracic surgeons to 
calculate practice expense because this oversample followed the SMS 
format and was collected by the AMA contractor, thus helping to assure 
data consistency.
    In the September 24, 1999 report, the contractor recommended that 
we consider supplemental survey data furnished by physician and non-
physician specialty groups that have conducted independent surveys that 
adhere to uniformity of format, sample frame, contractor, and data 
analysis of information on practice expense and hours spent in patient 
care. Specifically, the contractor recommended the following criteria:
    <bullet> Draw the sample from the AMA Physician Masterfile when 
possible.
    <bullet> Survey a large enough number of individuals to assure an 
adequate number of usable responses.
    <bullet> Conduct the survey based on the SMS survey instruments and 
protocols, including administration and follow-up efforts.
    <bullet> Use the same contractor as the SMS and field the survey 
during the same timeframe.
    <bullet> Consistently define, throughout the SMS and all additional 
surveys, practice expense and hours spent in patient care.
    <bullet> Assign responsibility for data editing and analysis to the 
AMA's SMS project team.

II. Provisions of the Interim Final Rule

    We are amending the Medicare regulations in Sec. 414.22(b) 
(Relative value units (RVUs)) to add paragraph (b)(6) to establish 
criteria for physician and non-physician specialty groups for 
submitting practice expense surveys that may be used for establishing 
payments in the 2001 physician fee schedule. We use practice expense 
survey data to establish the specialty-specific practice expense per-
hour, and we will consider supplemental data that is obtained through 
surveys. We are adopting the criteria recommended by The Lewin Group, 
with some modifications, for supplemental survey data submitted to us 
by August 1, 2000 for consideration for use in our computation of RVUs 
for the 2001 physician fee schedule. In addition, we are soliciting 
public comment on the criteria that we will consider for survey data 
submitted between August 2, 2000 and August 1, 2001 for use in 
computing RVUs for the 2002 physician fee schedule.
    Any HCFA-designated specialty group may submit supplemental survey 
data. (Please see the list below for designated specialties.) However, 
for survey data submitted for payments in 2001, we will give priority 
consideration to specialties that are not represented or are 
underrepresented in the SMS data.

HCFA Specialty Code and Description

01--General Practice
02--General Surgery
03--Allergy/Immunology
04--Otology, Laryn., Rhino
05--Anesthesiology
06--Cardiology
07--Dermatology
08--Family Practice
10--Gastroenterology
11--Internal Medicine
12--Manip. Therapy
13--Neurology
14--Neurosurgery
16--OB-GYN
18--Ophthalmology
19--Oral Surgery
20--Orthopedic Surgery
22--Pathology
24--Plastic Surgery
25--Physical Medicine
26--Psychiatry
28--Colorectal Surgery
29--Pulmonary Disease
30--Radiology
33--Thoracic Surgery
34--Urology
35--Chiropractor, Licensed
36--Nuclear Medicine
37--Pediatrics
38--Geriatrics
39--Nephrology
40--Hand Surgery
41--Optometrist
43--CRNA/AA
44--Infectious Disease
46--Endocrinology
48--Podiatry
50--Nurse Practitioners
62--Psychologist (Billing Independently)
65--Physical Therapist (Indep. Practice)
66--Rheumatology
67--Occupational Therapist
68--Clinical Psychologist
69--Independent Laboratory

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70--Clinic or Other Group
76--Peripheral Vascular Disease
77--Vascular Surgery
78--Cardiac Surgery
79--Addiction Medicine
80--Clinical Social Worker
81--Critical Care (Intensivists)
82--Hematology
83--Hematology/Oncology
84--Preventive Medicine
85--Maxillofacial Surgery
86--Neuropsychiatry
89--Clinical Nurse Practitioner
90--Medical Oncology
91--Surgical Oncology
92--Radiation Oncology
93--Emergency Medicine
94--Interventional Radiology
95--Indep. Physiological Lab
97--Gynecology/Oncology
    We will use several criteria for evaluating supplemental surveys 
submitted by August 1, 2000. Our criteria expand upon some of our 
contractor's recommendations, primarily by adopting more specific 
sampling criteria. We have not accepted several of our contractor's 
recommendations, but have modified them; we do not require that 
physician specialties use only the same contractor as the SMS, or that 
the AMA's SMS project team be assigned responsibility for data editing 
and analysis. In addition, as discussed below, it is not possible for 
the AMA to oversample a specialty in time to affect payments for CYs 
2001 and 2002. Following are the specific criteria we will use:
    <bullet> Physician groups must draw their sample from the AMA 
Physician Masterfile to ensure a nationally representative sample that 
includes both members and non-members of a physician specialty group. 
Physician groups must arrange for the AMA to send the sample directly 
to their survey contractor to ensure confidentiality of the sample; 
that is, to ensure comparability in the methods and data collected, 
specialties must not know the names of the specific individuals in the 
sample. (To request a sample from the Masterfile, contact Scott 
Birkhead of the AMA at (312) 464-2569. We understand that there is an 
approximate 1-week response time and a nominal charge for drawing the 
sample.)
    <bullet> Non-physician specialties not included in the AMA's SMS 
must develop a method to draw a nationally representative sample of 
members and non-members. At a minimum, these groups must include former 
members in their survey sample. The sample must be drawn by the non-
physician group's survey contractor, or another independent party, in a 
way that ensures the confidentiality of the sample; that is, to ensure 
comparability in the methods and data collected, specialties must not 
know the names of the specific individuals in the sample.
    <bullet> A group (or its contractors) must conduct the survey based 
on the SMS survey instruments and protocols, including administration 
and follow-up efforts, and definitions of practice expense and hours in 
patient care. In addition, any cover letters or other information 
furnished to survey sample participants must be comparable to such 
information previously supplied by the SMS contractor to its sample 
participants. (A copy of the guidelines and procedures may be obtained 
by contacting Kenneth Marsalek at (410) 786-4502.)
    <bullet> Use a contractor that has experience with the SMS or a 
survey firm with experience successfully conducting national multi-
specialty surveys of physicians using nationally representative random 
samples.
    <bullet> Submit raw survey data to us, including all complete and 
incomplete survey responses as well as any cover letters and 
instructions that accompanied the survey, by August 1, 2000 for data 
analysis and editing to ensure consistency. All personal identifiers in 
the raw data must be eliminated. (Send data to Health Care Financing 
Administration, Department of Health and Human Services, Attn: Kenneth 
Marsalek, C4-03-06, 7500 Security Boulevard, Baltimore, MD 21244-8013.)
    <bullet> Raw survey data submitted to us between August 2, 2000 and 
August 1, 2001 will be considered for use in computing practice expense 
RVUs for CY 2002.
    <bullet> The physician practice expense data from surveys that we 
use in our code-level practice expense calculations are the practice 
expenses per physician hour in the six practice expense categories--
clinical labor, medical supplies, medical equipment, administrative 
labor, office overhead, and other. Supplemental survey data must 
include data for these categories. Ideally, we would like to calculate 
practice expense values with precision; however, we recognize that we 
must achieve a balance because conducting surveys is expensive and 
there is a tension between achieving large sample sizes, which 
increases precision, and smaller ones, which conserves costs.
    Based on our review of existing physician practice expense surveys, 
we believe an achievable level of precision is a coefficient of 
variation, that is, the ratio of the standard error of the mean to the 
mean expressed as a percent, not greater than 10 percent, for overall 
practice expenses or practice expenses per hour. For existing surveys 
the standard deviation is frequently the same magnitude as the mean. If 
the standard deviation equals the mean, then a usable sample size of 
100 will yield a coefficient of variation of 10 percent. For small, 
homogeneous subspecialties, the variations in practice expenses may be 
lower because a smaller sample size achieves this level of precision. 
Other ways of expressing precision (for example, 95 percent confidence 
intervals) are also acceptable if they are approximately equivalent to 
a coefficient of variation of 10 percent or better. We will consider 
surveys for which the precision of the practice expenses are equal to 
or better than this level of precision and that meet the other survey 
criteria. Also, we will require documentation regarding how the 
practice expenses were calculated and will verify the calculations. Of 
course, we have the statutory authority to determine the final practice 
expense RVUs.
    Since the physician fee schedule is a national fee schedule, we 
require that the survey be representative of the target population of 
physicians nationwide. We can presume national representativeness if a 
random sample is drawn from a complete nationwide listing of the 
physician specialty or subspecialty and the response rate, the percent 
of usable responses received from the sample, is high, for example, 80 
to 90 percent. If any of these conditions (random sample, complete 
nationwide listing, and high response rate) are not achieved, then the 
potential impacts of the deviations upon national representativeness 
must be explored and documented. For example, if the response rate is 
low, then justification must be furnished to demonstrate that the 
responders are not significantly different from non-responders with 
regard to factors affecting practice expense. Differential weighting of 
subsamples may improve the representativeness. Minor deviations from 
national representativeness may be acceptable.
    We believe that it is impossible and impractical to set rigid 
cutoffs for most of these criteria, especially for national 
representativeness. We are attempting to be as flexible as possible 
consistent with our goal of obtaining new surveys of practice expense 
data that are scientifically sound and methodologically consistent with 
our existing estimates. For instance, a specialty may include different 
types of physician practices (for example, urban versus rural, academic 
versus non-academic, interventional versus non-

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interventional) that exhibit different patterns of practice expense. 
Similarly, a stratified sampling of these different types of practices 
may be a more efficient sampling strategy than a simple random sample 
of the entire specialty. We welcome surveys with more sophisticated 
designs and these types of survey variations if relevance to our 
criteria is documented.
    We would need to make the supplemental survey data that we 
determine complies with the above criteria consistent with the SMS data 
we are using. Specifically, we are currently using 1994 through 1996 
specialty practice expense per-hour data from the SMS. Thus, we would 
deflate supplemental survey data to be consistent with the timeframe of 
the data from other specialties from the SMS. For example, since the 
midpoint of the SMS data we currently use is 1995, we would deflate 
supplemental survey data to 1995 using the Medicare Economic Index. 
Therefore, any comparison between supplemental survey information and 
the SMS practice expense per-hour data we are currently using should 
take into account that the data should be deflated to 1995 costs. We 
will make comparable adjustments to bring future supplemental surveys 
into the same timeframe as SMS data used in the future.
    In addition, if a specialty is represented in the SMS data, we will 
weight average (based on the number of survey responses) the 
supplemental data with the existing SMS data already being used. If the 
specialty is not represented in the SMS data, we will substitute the 
new data for the crosswalked SMS data currently being used for the 
specialty. Specialties may also wish to consider that under our 
methodology for determining practice expenses, we calculate specialty 
specific practice expense RVUs based on estimates of practice expenses 
for specific procedures in combination with the SMS data. The specialty 
specific practice expense RVUs are weight averaged based on the 
frequency of allowed services performed by a given specialty. Thus, 
supplemental data from a specialty that represents a small proportion 
of the allowed services for a given procedure code will have little 
influence on the procedure's final value in the weighted averaging.
    Also, some practitioner services (services of certified registered 
nurse anesthetists, nurse practitioners, clinical nurse specialists, 
physician assistants, and certified nurse mid-wives) are paid based on 
a percentage of the physician fee schedule amount. Since the payment 
under the physician fee schedule for a service performed by a 
practitioner is required to be based on a percentage of the amount paid 
to a physician for a service, we are considering whether to use only 
physician practice expense data in determining the practice expense 
RVUs for each practitioner service.
    The AMA has provided us with information on its plans for 
collecting future data on physicians' practice expenses. (We are 
including this information so that physician specialty groups can take 
it into account in their plans.) The AMA indicated that most experts 
agree that the optimal method of obtaining practice expense data is to 
survey physician practices instead of surveying individual physicians 
about their share of a practice's expenses, as does the SMS. In 
addition, the AMA has found that it has become increasingly difficult 
and expensive to collect practice expense data through the SMS. For 
example, physicians tend to relocate more frequently, are increasingly 
unwilling to spend 25 to 30 minutes on the telephone to complete the 
SMS survey, and are increasingly unlikely to have access to the 
detailed financial information requested in SMS. Based on these 
considerations, last year the AMA began developing a new practice-level 
survey. In designing the new practice survey, the AMA is seeking to 
address some of the limitations of the SMS survey and the questions 
regarding its appropriateness for use in developing practice expense 
RVUs.
    Drafts of the practice expense survey have been reviewed with 
outside experts, potential users of the data, and representatives from 
specialty societies, including the AMA's Specialty Society Relative 
Value Update Committee and group practices. The AMA is currently 
conducting a limited pilot of the practice survey with physician-owned 
practices. The pilot excludes single specialty practices in radiology, 
anesthesiology, pathology, and emergency medicine. Accounting for these 
specialties is more complicated, and separate instrumentation will be 
required. Collection of practice-level data for these specialties will 
not be implemented in the first practice survey, unless staff from 
these specialty societies are able to design a survey instrument that 
the AMA can use. If the pilot of the survey is successful, the AMA 
plans to conduct the practice survey initially in 2000 and, in 
alternate years thereafter, the practice expense survey and the SMS 
survey.
    If the CY 2000 practice expense survey is successful, the AMA plans 
to drop the expense questions from the SMS beginning with the calendar 
2001 SMS survey. If the practice expense survey is unsuccessful, the 
AMA will reconsider its plans for CY 2001 and future years. Under those 
circumstances, it may be necessary to retain the expense questions in 
the SMS. However, cost factors may constrain the extent to which the 
AMA can conduct a complete SMS survey with practice expense questions 
in CY 2001. Regardless, there are still 2 years of data from the 1998 
and 1999 SMS surveys that we can use in updating future practice 
expense RVUs.

III. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, 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.

IV. Use of Interim Final Rule

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and substance 
of the proposed rule or a description of the subjects and issues 
involved.
    In this instance, however, the need to engage in proposed 
rulemaking is obviated by section 212 of BBRA that requires that we 
promulgate this regulation on an interim final basis. We are providing 
a 60-day period for public comment.

V. Information Collection Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), 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 PRA requires that we 
solicit comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.

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    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    This interim final rule requests HCFA-designated specialty groups 
to submit supplemental survey data to us, which meets the requirements 
of this section, by August 1, 2000, for consideration for payments in 
2001. However, for survey data submitted for payments in 2001, we will 
give priority consideration to specialties that are not represented or 
are under represented in the SMS data. The burden associated with these 
requirements is the time necessary for the provider to submit the 
required data. However, due to the nature of the request, we estimate 
the number of submissions to average fewer than 10 on an annual basis. 
Therefore, these requirements are not subject to the PRA, as defined 
under 5 CFR 1320.3(c).
    We have submitted a copy of this interim final rule to OMB for its' 
review of the information collection and requirements.
    If you comment on these information collection and recordkeeping 
requirements, please mail copies directly to the following: Health Care 
Financing Administration, Office of Information Services, Information 
Technology Investment Management Group, Attn: John Burke, HCFA-1111-
IFC, Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-1850, 
and, Office of Information and Regulatory Affairs, Office of Management 
and Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Allison Eydt, HCFA Desk Officer, HCFA-1111-IFC.

VI. Regulatory Impact Statement

    We have examined the impacts of this interim final rule as required 
by Executive Order of 1993 (E.O.) 12866, the Unfunded Mandates Reform 
Act of 1995 (E.O.) 12875 (UMRA) (Pub. L. 104-4), and the Regulatory 
Flexibility Act of 1980 (RFA) (Pub. L. 96-354), and the Federalism 
Executive Order of 1999 (E.O.) 13132. E.O. 12866 directs agencies to 
assess all costs and benefits of available regulatory alternatives and, 
when regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
The RFA requires agencies to analyze options for regulatory relief of 
small businesses. For purposes of the RFA, small entities include small 
businesses, non-profit organizations, and government agencies. Most 
hospitals and most other providers and suppliers are small entities, 
either by non-profit status or by having revenues of $5 million or less 
annually. For purposes of the RFA, all physicians and non-physician 
providers are considered to be small entities. Individuals and States 
are not included in the definition of a small entity.
    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. This 
analysis must conform to the provisions of section 604 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 50 beds.
    Since this rule only provides criteria for physicians and non-
physicians who wish to provide data to us in computing RVUs under the 
physician fee schedule, there are no budgetary implications arising 
from this rule. Furthermore, this rule is required by statute and, 
thus, reflects the Congress's view of appropriate agency action.
    The UMRA also requires (in section 202) that agencies prepare an 
assessment of anticipated costs and benefits before developing any rule 
that may result in an expenditure by State, local, or tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any year. This final rule with comment will have no 
consequential effect on State, local, or tribal governments. We believe 
the private sector cost of this rule falls below these thresholds as 
well.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this rule will not have a significant economic impact on 
a substantial number of small entities or a significant impact on the 
operations of a substantial number of small rural hospitals.
    In accordance with the provisions of E.O. 12866, this regulation 
was reviewed by the Office of Management and Budget.

VII. Federalism

    We have examined this rule in accordance with E.O. 13132 and have 
determined that this final rule will not have any negative impact on 
the rights, roles, or responsibilities of State, local, or Tribal 
governments.

List of Subjects in 42 CFR Part 414

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and record keeping 
requirements, Rural areas, X-rays.

    For the reasons set forth in the preamble, 42 CFR chapter IV is 
amended as follows:

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

    Part 414 is amended as set forth below:
    1. The authority citation for part 414 continues to read as 
follows:

    Authority: Secs. 1102, 1871, and 1881(b)(1) of the Social 
Security Act (42 U.S.C. 1302, 1395(hh), and 1395rr(b)(1)).


    2. In Sec. 414.22, the introductory text is republished and a new 
paragraph (b)(6) is added to read as follows:


Sec. 414.22  Relative value units (RVUs).

    HCFA establishes RVUs for physicians' work, practice expense, and 
malpractice insurance.
* * * * *
    (b) Practice expense RVUs. * * *
* * * * *
    (6)(i) HCFA establishes criteria for supplemental surveys regarding 
specialty practice expenses submitted to HCFA by August 1, 2000 that 
may be used in determining practice expense RVUs for the 2001 physician 
fee schedule.
    (ii) Any HCFA-designated specialty group may submit a supplemental 
survey.
    (iii) Survey data and related materials submitted to HCFA between 
August 2, 2000 and August 1, 2001 will be considered for use in 
determining practice expense RVUs for the 2002 physician fee schedule.

(Catalog of Federal Domestic Assistance Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program)

    Dated: March 20, 2000.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Approved: April 10, 2000.
Donna E. Shalala,
Secretary.
[FR Doc. 00-10971 Filed 5-2-00; 8:45 am]
BILLING CODE 4120-01-P