**GAO-03-372R**                      Jan 02, 2003                  

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## Highlights

GAO reviewed the Centers for Medicare and Medicaid Service's (CMS)new rule on revisions to payment policies under the physician fee schedule for calendar year 2003 and inclusion of registered nurses in the personnel provision of the critical access hospital emergency services requirement for frontier areas and remote locations. GAO noted that (1) the rule would announce the physician fee schedule update for calendar year 2003 and refine the resource-based practice expense relative value units; and (2) CMS complied with applicable requirements in promulgating the rule.

##  Department of Health and Human Services, Centers for Medicare and Medicaid Services: Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule for CalendarYear 2003 and Inclusion of Registered Nurses in the Personnel Provision of the Critical Access Hospital Emergency Services Requirement for Frontier Areas and Remote Locations, GAO-03-372R, January 2,2003

B-291802January 2, 2003The Honorable Max Baucus     Chairman     The Honorable Chuck Grassley     Ranking Minority Member     Committee on Finance     United States SenateThe Honorable W.J. Billy Tauzin     Chairman     The Honorable John D. Dingell     Ranking Minority Member     Committee on Energy and Commerce     House of Representatives     The Honorable William M. Thomas     Chairman     The Honorable Charles B. Rangel     Ranking Minority Member     Committee on Ways and Means     House of Representatives     Subject:*Department of Health and Human Services, Centers for Medicare and Medicaid Services: Medicare Program; Revisions to Payment Policies    Under the Physician Fee Schedule for Calendar Year 2003 and Inclusion of Registered Nurses in the Personnel Provision of the Critical Access Hospital Emergency Services Requirement for Frontier    Areas and Remote Locations*Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of Health and    Human Services, Centers for Medicare and Medicaid Services, entitled Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2003 and Inclusion    of Registered Nurses in the Personnel Provision of the Critical Access Hospital Emergency Services Requirement for Frontier Areas and Remote Locations (RIN: 0938-AL21).  We received    the rule on December 20, 2002.  It was published in the Federal Register as a final rule with comment period on December 31, 2002.  67 Fed. Reg. 79966.     The final rule announces the physician fee schedule update for calendar year 2003 and refines the resource-based practice expense relative value units, among other changes to the Medicare Part B    payment policy.     Enclosed is our assessment of the CMS's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  Our review indicates that    the CMS complied with the applicable requirements.     If you have any questions about this report, please contact James W. Vickers, Assistant General Counsel, at (202) 512-8210.  The official responsible for GAO evaluation work relating to the    subject matter of the rule is William Scanlon, Managing Director, Health Care.  Mr. Scanlon can be reached at (202) 512-7114.                 signed     Kathleen E. Wannisky     Managing Associate General Counsel     Enclosurecc: Ann Stallion     Regulations Coordinator     Department of Health and       Human Services            ENCLOSURE     ANALYSIS UNDER 5 U.S.C.  801(a)(1)(B)(i)-(iv) OF A MAJOR RULE     ISSUED BY THE     DEPARTMENT OF HEALTH AND HUMAN SERVICES,     CENTERS FOR MEDICARE AND MEDICAID SERVICES     ENTITLED     "MEDICARE PROGRAM; REVISIONS TO PAYMENT POLICIES UNDER THE PHYSICIAN FEE SCHEDULE FOR CALENDAR YEAR 2003 AND INCLUSION OF REGISTERED NURSES IN THE PERSONNEL PROVISION OF THE CRITICAL ACCESS    HOSPITAL EMERGENCY SERVICES REQUIREMENT FOR FRONTIER AREAS AND REMOTE LOCATIONS"     (RIN: 0938-AL21)(i) Cost-benefit analysis     CMS conducted a regulatory impact analysis and found that the changes to the Medicare Economic Index would result in increases in Medicare expenditures for physicians' services of $150 million    in fiscal year (FY) 2003, $340 million in FY 2004, and $550 million in FY 2005.(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C.  603-605, 607, and 609     After conducting a Regulatory Flexibility Analysis, CMS has certified that the final rule will not have a significant economic impact on a substantial number of small entities.(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.  1532-1535     The final rule does not contain either an intergovernmental or private sector mandate, as defined in title II, of more than $100 million in any one year.(iv) Other relevant information or requirements under acts and executive orders     Administrative Procedure Act, 5 U.S.C.  551 etseq.     The final rule was issued using the notice and comment procedures contained at 5 U.S.C. 553.  On June 28, 2002, CMS published a Notice of Proposed Rulemaking (67 Fed. Reg. 43846) and    an interim final rule (67 Fed. Reg. 43555) in the Federal Register.  In response, CMS received 236 comments, which were considered in issuing the final rule.     Paperwork Reduction Act, 44 U.S.C.  3501-3520     The final rule does not include any information collections that are subject to review by the Office of Management and Budget under the Paperwork Reduction Act.     Statutory authorization for the rule     The final rule is promulgated under the authority contained in sections 1102, 1871, and 1881(b)(1) of the Social Security Act (42 U.S.C. 1302, 1395rr(b)(1), and 1396hh).     Executive Order No. 12866     The final rule was reviewed by OMB and found to be an economically significant regulatory action under the order.     Executive Order No. 13132 (Federalism)     The final rule does not have sufficient federalism implications to warrant the preparation of a federalism assessment.

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