[Federal Register Volume 71, Number 18 (Friday, January 27, 2006)]
[Notices]
[Pages 4590-4591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-747]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare and Medicaid Services

[CMS-1328-N]


Medicare Program; February 15, 2006 Town Hall Meeting on the 
Practice Expense Methodology Including the Proposal From the Physician 
Fee Schedule Proposed Rule for Calendar Year 2006

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

ACTION: Notice of meeting.

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SUMMARY: This notice announces a Town Hall meeting on our methodology 
for establishing practice expense (PE) values for services paid under 
the physician fee schedule (PFS). The purpose of this meeting is to: 
(1) Clarify our proposed revisions to the PE methodology contained in 
the PFS calendar year (CY) 2006 proposed rule; and (2) receive comments 
and opinions from individuals of the medical community regarding ideas 
for the CY 2007 PFS proposed rule. This meeting is open to the public, 
but attendance is limited to space available.

DATES: The Town Hall meeting is scheduled for Tuesday, February 15, 
2006 from 1:30 p.m. to 4:30 p.m. e.s.t.

ADDRESSES: The Town Hall meeting will be held at the Centers for 
Medicare and Medicaid Services, 7500 Security Boulevard, Baltimore, MD 
21244-1850 in the auditorium in the central building.
    Meeting Registration: Persons wishing to attend this meeting must 
register by contacting Debbie Cooley at Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Mail stop C4-03-06, Baltimore, MD 
21244-1850, or, by FAX at 410-786-4490 to the attention of Debbie 
Cooley. Please include the name of the attendee and the organization he 
or she represents, if applicable. This information must be received by 
5 p.m., e.s.t, on Friday, February 10, 2006.
    This meeting will be held in a Federal Government building, the 
Centers for Medicare and Medicaid Services; therefore, persons 
attending this meeting will be required to show a government-issued 
photo identification and a copy of their confirmation of registration 
for the meeting. Access may be denied to persons without proper 
identification. In planning your arrival time, we recommend allowing 
additional time to clear security.
    Security measures include: Inspection of vehicles, inside and out, 
at the entrance to the grounds; passing through a metal detector; and, 
the inspection of all items brought into the building. Laptops and 
other computer equipment must be registered with the security desk upon 
entry. Please note that CMS headquarters is a smoke-free complex.

FOR FURTHER INFORMATION CONTACT: Debbie Cooley, (410)786-0007 or 
Dorothy Shannon, (410)786-3396.

SUPPLEMENTARY INFORMATION:

I. Background

    Since January 1, 1992, Medicare has paid for services of physicians 
and other practitioners under a physician fee schedule. This schedule 
sets payment rates for 7,000 services based on the resources used to 
provide those services and is updated annually. To construct the fee 
schedule, we assign values called relative value units (RVUs) to each 
service. The total RVUs for a service are the sum of the work RVUs 
(which include the physician's time and effort); the practice expense 
RVUs (which cover expenses such as overhead, staff, and supplies); and 
the malpractice expense RVUs (which cover malpractice premiums).
    In the CY 2006 PFS proposed rule (70 FR 45764), we outlined our 
plans to revise the practice expense (PE) methodology. There were three 
major parts to our proposal:
    1. Changing from a ``top-down'' methodology for calculating direct 
PE to a ``bottom-up'' approach. Currently, on a specialty-specific 
basis, we derive a PE per physician hour from aggregate survey data, 
create a cost pool using Medicare utilization data, and then allocate 
the pool to all the services performed by the specialty. This 
methodology is complex, often not intuitive, and produces some PE 
values that can change significantly from year-to-year. The proposed 
bottom-up approach would use the sum of the typical resource costs for 
clinical staff, supplies, and equipment required for each service. 
These typical costs for each service would be determined based 
primarily on recommendations we reviewed and accepted from the American 
Medical Association's Relative Value Update Committee (RUC). We would 
then convert these costs into direct cost PE RVUs. We believe this 
methodology is easier to understand and more intuitive than the current 
top-down approach, and should also improve the stability of the PE RVUs 
over time. In addition, because most of the inputs that would be used 
in the bottom-up calculation have been approved by the multi-specialty 
RUC, the medical community has already agreed to their accuracy.
    2. Accepting the supplementary PE surveys from seven specialties--
allergy, dermatology, urology, gastrointestinal, cardiology, radiology, 
and radiation oncology--and using these in the calculation of indirect 
PE.
    3. Calculating, on a code-specific basis, the higher of the current 
portion of the PE RVU for indirect costs (the indirect PE RVU) or the 
indirect PE RVU resulting from acceptance of the supplementary surveys.
    This proposal was to have the effect of mitigating the 
redistributive effects of accepting the seven supplementary surveys by 
ensuring that, before application of PE budget neutrality, the indirect 
PE RVUs for each service were

[[Page 4591]]

no lower than the current indirect PE RVUs.
    In comments on the CY 2006 PFS proposed rule, commenters indicated 
that they did not understand the mechanics of our proposals and that 
there was not enough information for specialties to analyze them. Many 
commenters requested a 1-year delay in implementation of our proposals 
to allow time for CMS to provide further information and to give other 
specialties an additional opportunity to submit their own supplementary 
survey.
    After reviewing the CY 2006 PFS proposed rule comments, we 
determined that the proposal for revising the indirect PE was confusing 
to the public because the published PE values and impacts were 
incorrect. Therefore, in the CY 2006 PFS final rule (70 FR 70116), we 
withdrew the proposed PE revision for 2006 and used the 2005 PE RVUs 
for most services. The only exceptions were to price the codes that 
were new in 2006 and, as required by the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L 108-173), to 
use the new urology PE data in the calculation of the drug 
administration codes used by their specialty.
    As we indicated when we issued the CY 2006 PFS final rule (70 FR 
70116), we intend to work with the medical community to ensure that any 
future proposals to change the PE methodology are understandable and 
informed by input from the medical community. As the initial step in 
this process, we are holding this Town Hall meeting to provide this 
opportunity.

II. Meeting Format

    This meeting will begin with an overview of the objectives of the 
meeting along with an introduction of the topics to be discussed during 
the meeting which include:
    <bullet> Clarifying our efforts to revise the PE methodology in the 
CY 2006 PFS proposed rule which include:
    + The change from a ``top-down'' methodology for calculating direct 
PE to a ``bottom-up'' approach utilizing the direct cost inputs;
    + The use of the accepted supplementary PE surveys from the seven 
specialties in the calculation of indirect PE;
    + The intended method of obtaining the indirect PE values; and
    + The elimination of the nonphysician workpool and the related 
impacts.
    <bullet> A question and answer session that offers the meeting 
attendees an opportunity to clarify further the topics discussed.
    <bullet> Soliciting input from individual attendees on each facet 
of our methodology: direct PE, indirect PE, supplementary surveys, and 
nonphysician workpool. The comments provided during this meeting will 
assist us in the preparation of the physician fee schedule proposed 
rule for CY 2007.
    To provide a basis of understanding before the meeting we will be 
posting information concerning the PE methodology on our Web site at 
http://www.cms.hhs.gov/PhysicianFeeSched/. This information will 
include current PE values, examples for deriving PE values using the 
bottom-up methodology, and projected impacts of these revisions. We 
encourage individuals to familiarize themselves with this material 
before the meeting. Copies of this information will be available on the 
day of the meeting.

Authority

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

    Dated: January 19, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 06-747 Filed 1-26-06; 8:45 am]
BILLING CODE 4120-01-P