46698 Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules

implications to warrant preparation of a

Federalism Assessment.

Environment

The Coast Guard has reviewed the

environmental impact of this proposed

rule and concluded that under section

2.B.2e(32) of COMDTINST M16475.1B,

this proposed change is categorically

excluded from further environmental

documentation because promulgation of

changes to drawbridge regulations have

been found not to have significant effect

on the environment. A ‘‘Categorical

Exclusion Determination’’ is available

for inspection or copying where

indicated under ADDRESSES.

List of Subjects in 33 CFR Part 117

Bridges.

Regulation

For the reasons discussed in the

preamble, the Coast Guard proposes to

amend 33 CFR part 117 as follows:

1. The authority citation for part 117

continues to read as follows:

Authority: 33 U.S.C. § 499; 49 CFR 1.46; 33

CFR 1.05–1(g); section 117.255 also issued

under the authority of Pub. L. 102–587, 106

Stat. 5039.

2. Section 117.663 is revised to read

as follows:

§ 117.663 Minnesota River.

The draws of bridges above LeSueur,

MN need not be opened for the passage

of vessels.

Dated: August 21, 1997.

T.W. Josiah,

Rear Admiral, U.S. Coast Guard, Commander,

Eighth Coast Guard District.

[FR Doc. 97–23442 Filed 9–3–97; 8:45 am]

BILLING CODE 4910–14–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 416

[BPD–831–P]

RIN 0938–AH15

Medicare Program; Adjustment in

Payment Amounts for New Technology

Intraocular Lenses

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Proposed rule.

SUMMARY: This proposed rule would

establish in regulations a process under

which interested parties may request,

with respect to a class of new

technology intraocular lenses (IOLs), a

review of the appropriateness of the

current payment amount for IOLs

furnished by Medicare-participating

ambulatory surgical centers.

The rule implements section 141(b) of

the Social Security Act Amendments of

1994, which requires us to develop and

implement this process.

DATES: Comments will be considered if

we receive them at the appropriate

address, as provided below, no later

than 5 p.m. on November 3, 1997.

ADDRESSES: Mail written comments (1

original and 3 copies) to the following

address: Health Care Financing

Administration, Department of Health

and Human Services, Attention: BPD–

831–P, P.O. Box 26688, Baltimore, MD

21207–0488.

If you prefer, you may deliver your

written comments (1 original and 3

copies) to one of the following

addresses:

Room 309–G, Hubert H. Humphrey

Building, 200 Independence Avenue,

SW., Washington, DC 20201, or

Room C5–09–26, 7500 Security

Boulevard, Baltimore, MD 21244–

1850.

Comments may also be submitted

electronically to the following e-mail

address: BPD831P@hcfa.gov. E-mail

comments must include the full name

and address of the sender and must be

submitted to the referenced address to

be considered. All comments must be

incorporated in the e-mail message

because we may not be able to access

attachments. Electronically submitted

comments will be available for public

inspection at the Independence Avenue

address below.

Because of staffing and resource

limitations, we cannot accept comments

by facsimile (FAX) transmission. In

commenting, please refer to file code

BPD–831–P. 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 309–G of the

Department’s offices at 200

Independence Avenue, SW.,

Washington, DC, on Monday through

Friday of each week from 8:30 a.m. to

5 p.m. (phone: (202) 690–7890).

Copies: To order copies of the Federal

Register containing this document, send

your request to: New Orders,

Superintendent of Documents, P.O. Box

371954, Pittsburgh, PA 15250–7954.

Specify the date of the issue requested

and enclose a check or money order

payable to the Superintendent of

Documents, or enclose your Visa or

Master Card number and expiration

date. Credit card orders can also be

placed by calling the order desk at (202)

512–1800 or by faxing to (202) 512–

2250. The cost for each copy is $8. As

an alternative, you can view and

photocopy the Federal Register

document at most libraries designated

as Federal Depository Libraries and at

many other public and academic

libraries throughout the country that

receive the Federal Register.

This Federal Register document is

also available from the Federal Register

online database through GPO Access, a

service of the U.S. Government Printing

Office. Free public access is available on

a Wide Area Information Server (WAIS)

through the Internet and via

asynchronous dial-in. Internet users can

access the database by using the World

Wide Web; the Superintendent of

Documents home page address is http:/

/www.access.gpo.gov/sulldocs/, by

using local WAIS client software, or by

telnet to swais.access.gpo.gov, then

login as guest (no password required).

Dial-in users should use

communications software and modem

to call (202) 512–1661; type swais, then

login as guest (no password required).

FOR FURTHER INFORMATION CONTACT:

Cathaleen Ahern, (410) 786–4515.

SUPPLEMENTARY INFORMATION:

I. Background

A. Payment for Ambulatory Surgical

Center Facility Services

Section 1832(a)(2)(F)(i) of the Social

Security Act (the Act) provides that

benefits under the Medicare

supplementary medical insurance

program (Part B) include services

furnished in connection with surgical

procedures that, under section

1833(i)(1)(A) of the Act, are specified by

us and are performed on an inpatient

basis in a hospital but that also can be

performed safely on an ambulatory basis

in an ambulatory surgical center (ASC)

or in a hospital outpatient department.

To participate in the Medicare program

as an ASC, a facility must meet the

standards specified under section

1832(a)(2)(F)(i) of the Act and 42 CFR

416.25 (‘‘Basic requirements’’). Our

regulations at 42 CFR part 416 contain

the coverage and payment rules for

services furnished by Medicareparticipating ASCs.

Section 1833(i)(2)(A) of the Act

authorizes us to pay ASCs a

prospectively-determined rate for

facility services. ‘‘Facility services’’

means services that are furnished in

conjunction with covered surgical

procedures performed in an ASC, or in

a hospital on an outpatient basis.

Section 416.61 sets forth included and

excluded facility services. ASC facility

services payment rates represent our
Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules 46699

estimate of a fair fee that takes into

account the costs incurred by ASCs

generally in furnishing facility services

in connection with performing a

surgical procedure. ASC payment rates

do not include physician fees and other

medical items and services, such as

laboratory services or prosthetic

devices, for which separate payment

may be authorized under other

provisions of the Medicare program.

However, an intraocular lens (IOL) is

included as an ASC facility service

under section 1833(i)(2)(A)(iii) of the

Act.

Payment for ASC facility services is

subject to the usual Medicare Part B

deductible and coinsurance

requirements. Therefore, participating

ASCs are paid 80 percent of the

prospectively-determined rate adjusted

for regional wage variations. The

beneficiary pays a coinsurance amount

equal to 20 percent of the wage-adjusted

ASC facility fee.

Currently, the Medicare program

covers approximately 2,300 procedures

performed in an ASC. We assign to each

procedure one of eight standard

payment rates. Collectively, the

procedures assigned a particular

payment rate constitute an ASC

payment group. The current payment

group rates follow:

Group 1—$312

Group 2—$419

Group 3—$479

Group 4—$591

Group 5—$674

Group 6—$785

Group 7—$935

Group 8—$923

All procedures within a payment group

are paid the same rate, adjusted for

geographic wage variation. (A detailed

discussion of the ASC payment

methodology and rate-setting

procedures is set forth in the final notice

published in the Federal Register on

February 8, 1990, entitled ‘‘Revision of

Ambulatory Surgery Center Payment

Rate Methodology’’ (55 FR 4526).)

A ninth payment group allotted

exclusively to extracorporeal shockwave

lithotripsy services was established in

the notice with comment period

published December 31, 1991 (56 FR

67666). The decision in American

Lithotripsy Society v. Sullivan, 785 F.

Supp. 1034 (D.D.C. 1992), prohibits us

from paying for these services under the

ASC benefit at this time. Extracorporeal

shockwave lithotripsy payment rates are

the subject of a separate document, and

a proposed notice was published

October 1, 1993 (58 FR 51355).

B. Payment for Intraocular Lenses

Furnished in an Ambulatory Surgical

Center

At the inception of the ASC benefit on

September 7, 1982, Medicare paid 80

percent of the reasonable charge for

IOLs supplied for insertion concurrent

with or following cataract surgery

performed in an ASC. Section 4063(b) of

the Omnibus Budget and Reconciliation

Act of 1987 (OBRA 1987) (Pub. L. 100–

203), enacted on December 22, 1987,

amended section 1833(i)(2)(A) of the

Act to mandate that we include

payment for an IOL furnished by an

ASC for insertion during or following

cataract surgery as part of the ASC

facility fee rather than paying for the

IOL separately, in addition to the

facility fee. Payment included in the

facility fee for an IOL must be

reasonable and related to the cost of

acquiring the class of IOL involved.

Thus, for services furnished beginning

March 12, 1990, which was the effective

date of the final notice published in the

Federal Register on February 8, 1990,

entitled ‘‘Revision of Ambulatory

Surgery Center Payment Rate

Methodology’’ (55 FR 4526), Medicare

included payment for an IOL in

payment group 6 and payment group 8,

the two payment groups that include

IOL insertion procedures. The

Physicians’ Current Procedural

Terminology (CPT) codes for groups 6

and 8 and their descriptors follow:

Payment Group 6

CPT code 66985—Insertion of

intraocular lens prosthesis (secondary

implant), not associated with concurrent

cataract removal.

CPT code 66986—Exchange of

intraocular lens. (This CPT code was

first listed in CPT 1992; we added it to

the ASC list effective January 30, 1992.)

Payment Group 8

CPT code 66983—Intracapsular

cataract extraction with insertion of

intraocular lens prosthesis (one stage

procedure).

CPT code 66984—Extracapsular

cataract removal with insertion of

intraocular lens prosthesis (one stage

procedure), manual or mechanical

technique (eg, irrigation and aspiration

or phacoemulsification).

Initially, we set the payment amount

for IOLs at $200. We did not categorize

IOLs into different classes for the

reasons discussed below. The $200

allowance applied to any IOL furnished

for surgical insertion by an ASC.

Our identification of $200 as the

appropriate amount of payment for an

IOL was influenced by the Office of

Inspector General’s (OIG’s) finding that

ASCs were able to negotiate an average

IOL price of $200, and that discounts in

unknown amounts were available to

other ASCs. (See Medicare Certified

Ambulatory Surgical Centers, Cataract

Surgery Costs and Related Issues, OAI–

09–88–00490, published March 1988.

Copies can be obtained from the Office

of Inspector General, Department of

Health and Human Services, (415) 556–

0675.)

In Outpatient Ophthalmic Surgery

Society, Inc. v. Shalala, No. 90–0305

(D.D.C. January 31, 1994), the court

rejected both arguments that were

mounted in a challenge to the $200 IOL

payment amount. The court deferred to

our reliance on the OIG study as the

basis for determining the IOL payment

amount and upheld our determination

that there is no medical justification to

recognize different classes of IOLs.

Section 4151(c)(3) of the Omnibus

Budget Reconciliation Act of 1990

(OBRA 1990) (Pub. L. 101–508), enacted

on November 5, 1990, froze the IOL

payment amount at $200 for IOLs

furnished by ASCs in conjunction with

surgery performed during the period

beginning November 5, 1990 and ending

December 31, 1992. We continued

paying an IOL allowance of $200 from

January 1, 1993 through December 31,

1993.

Section 13533 of the Omnibus Budget

Reconciliation Act of 1993 (OBRA 1993)

(Pub. L. 103–66), enacted on August 10,

1993, mandated that payment for an IOL

furnished by an ASC be equal to $150

beginning January 1, 1994 through

December 31, 1998.

II. Provisions of This Proposed Rule

A. Requirement for Review of Payment

for New Technology Intraocular Lenses

On October 31, 1994, the Congress

passed the Social Security Act

Amendments of 1994 (SSAA 1994)

(Pub. L. 103–432). Section 141(b) of

SSAA 1994 requires us, not later than 1

year after the date of enactment (that is,

by October 31, 1995), to develop and

implement a process under which

interested parties may request, with

respect to a class of new technology

IOLs, a review of the appropriateness of

the payment amount provided for IOLs

furnished by ASCs under section

1833(i)(2)(A)(iii) of the Act. Since

January 1, 1994, the payment amount

for IOLs furnished by ASCs under

section 1833(i)(2)(A)(iii) of the Act has

been $150.

Section 141(b)(1) of SSAA 1994

stipulates that an IOL may not be treated

as a new technology IOL unless it has

been approved by the Food and Drug
46700 Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules

Administration (FDA). Section 141(b)(2)

of SSAA 1994 requires that, in

determining whether to provide a

payment adjustment, we take into

account whether use of the IOL is likely

to result in reduced risk of

intraoperative or postoperative

complication or trauma, accelerated

postoperative recovery, reduced

induced astigmatism, improved

postoperative visual acuity, more stable

postoperative vision, or any other

comparable clinical advantages.

Section 141(b)(3) of SSAA 1994

requires that we publish at least

annually a list of the requests received

for review of the appropriateness of the

IOL payment amount with respect to a

new technology IOL. We must provide

a 30-day comment period on the IOLs

that are the subject of the requests for

review. Within 90 days of the close of

the comment period, we must publish a

notice of the determinations made with

respect to the appropriateness of the IOL

payment amount for the IOLs for which

a review was requested. Any adjustment

of the IOL payment amount (or payment

limit) for a particular IOL or class of

IOLs that we determine is warranted

would be effective not later than 30 days

following publication of the final notice

of our determination.

Implementation of section 141(b) of

SSAA 1994 requires three principal

policy decisions:

• Identification of a class or classes of

new technology IOLs.

• Determination of whether the

current IOL payment amount is

appropriate for an IOL identified as

belonging to a class of new technology

IOLs.

• Identification of the payment

adjustment to be applied if the current

payment amount is found to be

inappropriate.

In the sections that follow, we discuss

the factors that led us to the process that

is the subject of this proposed rule. We

welcome comments on the options

selected and rejected, and on potential

alternatives not considered.

B. Identification of a Class of New

Technology Intraocular Lenses

1. Distinguishing Among Classes of

Intraocular Lenses

In order to prepare the final notice

entitled ‘‘Revision of Ambulatory

Surgery Center Payment Rate

Methodology’’ (55 FR 4526) that was

published in the Federal Register on

February 8, 1990, we sought supporting

documentation that would justify

pricing IOLs according to IOL type or

‘‘class,’’ and that would establish the

basis for distinguishing among different

types of IOLs, such as placement of the

IOL within the eye, either as anterior

chamber or posterior chamber IOLs; or

the style of the IOL, either single-piece

or multi-piece; or characterization of the

IOL as ‘‘advanced technology.’’

On February 22, 1989, the FDA

advised us in a letter that its premarket

approval review process determined

whether IOLs were ‘‘safe and effective’’

not by comparing IOLs with one

another, but by comparing them with a

set of historical IOL data known

collectively as the ‘‘grid.’’ The FDA

noted that no additional labeling or

advertising claims of the superiority of

one IOL (or type of IOL) over another

had been approved at that time; that is,

medical benefits of one IOL or type of

IOL over another had not been proven

in the studies that were submitted to the

FDA. There were no across-the-board

differences in the indications and

contraindications or in the warnings

sections of the package insert that

would imply across-the-board medical

benefits for one IOL or type of IOL over

another.

The studies that were submitted to

HCFA at that time failed to yield

conclusive evidence of specific clinical

conditions or indications that required

or influenced the use of one IOL over

another, nor did HCFA find justification

for a differentiated price structure based

on IOL type. We therefore determined

that a $200 payment amount was both

reasonable and related to the costs

incurred by ASCs to acquire IOLs

available at that time. As noted above,

a Federal court sustained this

determination. (See Outpatient

Ophthalmic Surgery Society, Inc. v.

Shalala, No. 90–0305 (D.D.C. January

31, 1994).)

2. Criterion To Define a Class of New

Technology Intraocular Lenses

There still is no universally accepted

definition of what constitutes a ‘‘class of

new technology intraocular lenses.’’

Section 141(b) of SSAA 1994 does not

define new technology IOLs other than

to specify that an IOL may not be treated

as a new technology IOL unless it has

been approved by the FDA. We must

therefore first define the characteristics

that distinguish a ‘‘new technology’’ IOL

from other IOLs in order to comply with

section 141(b) of SSAA 1994.

Section 141(b) of SSAA 1994 requires

that we take clinical outcomes such as

‘‘reduced risk of intraoperative or

postoperative complication or trauma’’

and ‘‘reduced induced astigmatism’’

into account in determining whether to

provide a payment adjustment with

respect to a particular IOL.

Because they are identified with such

specificity, we infer that the clinical

outcomes listed in the law are intended

to characterize IOLs that belong to a

‘‘class of new technology intraocular

lenses,’’ the use of which not only

produces the specified clinical

outcomes, but does so to a greater

degree than other IOLs. We submit that

the latter consideration is crucial

because of the abundant evidence that

demonstrates that IOLs have attained a

level of technical sophistication, clinical

success, and patient satisfaction that

exceeds that of the more than 1 million

IOLs implanted during clinical trials

conducted between 1978 and 1982. (An

analysis of the 1978 through 1982

clinical trial data forms the FDA’s

‘‘grid,’’ the historical control group

against which newer IOLs are

measured.) To illustrate, 93 percent and

96.8 percent of patients in more recent

trials of two IOLs that were approved in

1994 achieved visual acuity of 20/40 or

better, compared to 88 percent of

patients in the historical control group.

The ‘‘best cases,’’ those without any

preoperative ocular pathology or

macular degeneration at any time,

achieved visual acuity of 20/40 or better

in 97 percent and 99.5 percent of the

patients in the two newer trials,

compared to 94 percent of the control

group grid patients. The high level of

improved vision and the low rate of

adverse effects already attainable using

currently available IOLs seem to leave

little room for substantive

improvements in the areas listed as

desirable outcomes in SSAA 1994. At

issue, then, is how to recognize IOLs

that exceed the already superior levels

of performance of IOLs readily

accessible in the current market to such

an extent that they warrant being

recognized as belonging to a separate

and distinct class of IOLs.

Determining if use of a particular IOL

results in specific clinical outcomes,

and the degree to which outcomes

attainable by use of that IOL exceed

what would be expected if a different

IOL were used, requires an assessment

of scientific data. We therefore

considered convening an expert panel to

evaluate claims of the clinical

superiority of an IOL, or asking

contractor medical directors to do so.

Part of the FDA’s responsibility is

granting premarket approval of

applications for new IOLs, through

analysis by specialists such as

ophthalmologists; chemical, biomedical,

and mechanical engineers;

microbiologists; and toxicologists. As

part of the premarket approval process,

an FDA group of experts evaluates
Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules 46701

claims of safety and effectiveness, and

approves the claims for the purposes of

labeling and advertising. The FDA also

has an advisory panel composed of

practicing ophthalmologists and other

clinicians who review clinical data and

advise the FDA on the approvability of

applications. This panel reviews any

new device that presents new questions

of safety and effectiveness.

Because the expertise and review

process already exist within the

Department of Health and Human

Services, it would be duplicative for us

to convene an expert panel for the

purpose of evaluating claims of the

clinical superiority of an IOL. Therefore,

we propose that the criterion for

identifying an IOL to be treated by us as

a ‘‘new technology’’ IOL under the

process proposed in this rule be that all

claims of the IOL’s specific clinical

advantages and superiority over existing

IOLs with respect to the factors listed in

section 141(b) of SSAA 1994, for

example, reduced risk of intraoperative

or postoperative complication or

trauma, accelerated postoperative

recovery, reduced induced astigmatism,

improved postoperative visual acuity,

more stable postoperative vision, or

other comparable clinical advantages,

have been approved by the FDA for

labeling and advertising purposes.

We asked the FDA if the premarket

approval process would allow it to

approve these claims for labeling and

advertising purposes. The FDA

responded on March 31, 1995 as

follows:

Intraocular lenses are regulated by the FDA

as Class III, restricted devices that require

premarket approval (PMA) prior to marketing

in the United States. FDA’s authority to

regulate labeling can be found throughout the

Federal Food, Drug and Cosmetic Act

(FFDCA) (i.e., Sections 201, 301, 501, 502,

507, 519, 520, 701, 704). IOL labeling is

reviewed and approved by the FDA as part

of the PMA review process (Section

515(c)(1)(f) of the FFDCA). Any extraordinary

labeling claims are similarly reviewed by the

FDA as part of the PMA process. A device

would be deemed to be misbranded if ‘its

labeling is false or misleading in any

particular’ (Section 502(a) of the FFDCA).

As a restricted device, an intraocular lens

would also be deemed to be misbranded if its

advertising is false or misleading or lacks

information required by the FFDCA,

including intended uses (Sections 502(q) and

(r) of the FFDCA). * * * Both clinical and

bench testing could be used by firms to

document additional claims, although

clinical data would be needed if the clinical

relevance or benefit of the ‘‘high-tech’’

feature were not well established.

In order to further define what

distinguishes an IOL that would be

treated as a ‘‘new technology’’ IOL

under section 141(b) of SSAA 1994, we

considered proposing as a second

criterion the requirement that the IOL be

appropriately characterized as a product

of ‘‘new technology.’’ We would have

expected a ‘‘new technology’’ IOL to

embody materials, design, fabrication,

or other features that are ‘‘new,’’ that is,

original and generally recognized as a

significant innovation relative to the

materials, design, fabrication, or features

of contemporary IOLs. However, any

lens, whether new or previously

approved, would have to demonstrate

clinical advantages to the FDA’s

satisfaction in order to comply with the

SSAA 1994 requirement of achieving

clinical advantages. Thus, we hold the

view that this definition of ‘‘new’’ is not

required. We welcome comments on

this issue.

Once we determine that an IOL

satisfies the clinical criterion proposed

above as the standard for treating an IOL

as a ‘‘new technology lens,’’ that IOL

will be considered as belonging to a

‘‘class of new technology lenses’’ for the

purposes of implementing the payment

review in accordance with section

141(b) of SSAA 1994 as described

below.

3. Five-Year Limit on Subsets of ‘‘New

Technology’’

We propose to impose certain

constraints on payment adjustments that

result from the process that is the

subject of this proposed rule to ensure

that Medicare payments for IOLs

furnished under section

1833(i)(2)(A)(iii) of the Act remain

reasonable and related to their

acquisition cost.

We do not believe that all IOLs that

could satisfy the overall criteria of ‘‘new

technology’’ proposed in this rule

would necessarily be of the same type

or category. Rather, based on our

assessment of the kinds of IOLs that are

currently in clinical trials, we believe

‘‘new technology’’ IOLs could logically

be grouped into smaller subsets of ‘‘new

technology,’’ each of which is defined or

identified by a common salient feature

or characteristic, such as fabrication

from the same material, or being

multifocal in design, or designed to

correct astigmatism.

For payment purposes, after we

accept an IOL as satisfying the criterion

that we have proposed for belonging to

a ‘‘class of new technology lenses,’’ we

propose to assign that IOL to a subset of

IOLs with which it shares a common

feature that distinguishes it from other

‘‘new technology’’ IOLs. We further

propose to set the lifespan of each

subset of ‘‘new technology’’ IOLs at 5

years. That is, beginning the sixth year

following our initial recognition of a

‘‘new technology’’ subset, the new

technology attribute that the IOLs in the

subset have in common would cease to

be considered a characteristic of ‘‘new

technology,’’ and the Medicare payment

adjustment for IOLs in that subset

would be discontinued. We would not

consider for payment adjustment any

other IOLs whose primary

distinguishing feature was that attribute.

For IOLs approved at the beginning of

the fifth year of the subset term,

Medicare would pay any ‘‘new

technology’’ adjustment for 1 year only.

We are proposing a 5-year limit

because defining a ‘‘new technology’’

characteristic as ‘‘new’’ for fewer than 5

years does not seem fair to

manufacturers whose model(s) of the

new technology IOL may receive FDA

approval sometime after the original IOL

that opened the subset within the class

of ‘‘new technology’’ IOLs receives its

premarket approval. But to define a

‘‘new technology’’ characteristic as

‘‘new’’ for more than 5 years seems to

impose an unnecessary and

unwarranted drain on the Medicare

trust fund, given the natural course of

market forces that have repeatedly

succeeded in reducing IOL costs in a

few years following introduction of a

modification or innovation in design or

material.

4. Impact of Memorandum of

Understanding

On September 19, 1995, we published

a final rule with comment period in the

Federal Register entitled ‘‘Medicare

Program; Criteria and Procedures for

Extending Coverage to Certain Devices

and Related Services’’ (60 FR 48417).

That regulation discussed a

memorandum of understanding between

the FDA and HCFA regarding extending

Medicare coverage to certain

investigational devices. Although the

criteria to be used in the process

described in the rule include

determining whether or not a

‘‘significant modification’’ has been

made to a device, that determination

will not affect the process described in

this proposed rule. We will consult with

the FDA should issues arise concerning

the classification of lenses.

C. Appropriateness of Payment Amount

SSAA 1994 requires us to review the

appropriateness of the current IOL

payment amount with respect to a class

of new technology IOLs. Although

SSAA 1994 itself does not provide

explicit guidance on the standard for

judging the appropriateness of the

current IOL payment amount, section

1833(i)(2)(A)(iii) of the Act requires that

the IOL payment amount included in
46702 Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules

the ASC facility fee be reasonable and

related to the cost of acquiring the class

of IOL involved. Therefore, after we

determine that an IOL meets the

criterion that qualifies it to be treated as

a new technology IOL under the process

proposed in this rule, we must next

determine if the current IOL payment

amount is reasonable and related to the

cost of acquiring that IOL.

At this time, the only method we are

aware of for determining IOL

acquisition costs is to survey purchasers

and audit invoices. The OIG conducted

such a survey in preparing its 1994

report entitled Acquisition Costs of

Prosthetic Intraocular Lenses, OEI–05–

92–01030. (Copies can be obtained from

the Office of Inspector General,

Department of Health and Human

Services, (312) 353–4124.) The OIG

found that when IOL payments were

fixed at $200, ASCs could acquire and

were acquiring IOLs for an average of

$126 in 1991 and $112 in 1992. This

does not take into account discounts

available to the majority of purchasers

because the financial arrangements took

many forms, only a few of which were

straightforward rebates or price

reductions. The OIG also discovered

that the newest type of IOL available at

the time of its review (a foldable,

ultraviolet-absorbing, silicone IOL) was

obtainable within relatively the same

price range as other IOLs in the study

(from $75 to $475 for the foldable IOLs,

compared to a range of $30 to $450 for

rigid IOLs). The OIG determined that

ASCs were buying foldable IOLs for

$125 or less, at a time when the

Medicare IOL payment amount was

$200.

We are developing IOL cost data as

part of the 1994 Medicare Ambulatory

Surgical Center Payment Rate Survey of

Facility Overhead and Procedure

Specific Costs (Form HCFA–452B).

Although that information is not yet

available, we believe that the current

payment amount of $150 continues to

exceed the average cost to an ASC of

acquiring an approved IOL.

We may find, however, that IOLs

affected by this regulation will not have

been in widespread use by ASCs at the

time a review of the IOL is requested

under the provisions of section 141(b) of

SSAA 1994. Therefore, because actual

acquisition cost information may be

sparse, we propose also to take into

account list price; manufacturing costs;

selling costs; general and administrative

overhead costs; research and

development costs; manufacturer

discount and rebate packages; and any

other factors that may be relevant

indicators that the current payment

amount is not appropriate for the type

of new technology IOL under review.

We welcome comments on criteria that

would facilitate an objective

determination of what constitutes a

payment that is both reasonable and

related to acquisition cost with respect

to ‘‘new technology’’ IOLs. The criteria

should include the use of readily

verifiable data, for example, studies

published in peer-reviewed journals.

D. Payment Adjustment When Current

Payment Amount Is Inappropriate

The final step in the process that is

the subject of this proposed rule

involves determining the amount of a

payment adjustment if we find that the

current IOL payment amount is

inappropriate. Among the factors that

we propose to take into account in order

to determine the amount of the

adjustment to be made if the current IOL

allowance is found to be inappropriate

with respect to the acquisition cost of

the particular IOL are the following:

• Market projections based on

anticipated clinical indications of need

for the IOL and the percent of the

Medicare population expected to

present that need on an annual basis.

• Additional incremental costs

incurred to manufacture a new

technology IOL relative to the cost of

manufacturing other IOLs, such as the

cost attributable to using a more

sophisticated piece of machinery or the

cost of fabricating a new IOL material.

• Additional costs incurred to

conduct clinical trials that document for

FDA approval the clinical superiority of

the IOL relative to the costs incurred to

conduct clinical trials for other IOLs.

• Research and development costs

incurred that exceed those associated

with other IOLs approved by the FDA.

• Current and historical pricing, sales

volume, and revenues.

• A reasonable rate of return and

profit based on the manufacturer’s

investment in the IOL.

We considered other options for

determining the amount of an

adjustment to be made if the current

payment amount was found to be

inappropriate for an IOL being reviewed

under the provisions proposed in this

rule including—

• Application of a single flat, acrossthe-board percentage increase to the IOL

payment amount for every IOL that we

determined satisfied the criteria

defining a ‘‘new technology’’ IOL;

• The percent of the IOL industry’s

investment in research and

development that ultimately leads to

innovations in IOLs; and

• The percentage of sales attributable

to an IOL for which a review was

requested.

We rejected these options, however,

primarily because they are inconsistent

with the overall statutory mandate that

payment be reasonable and related to

the cost of acquiring an IOL.

E. Implementation of the Payment

Adjustment

1. Two-Year Limit on Payment

Adjustment

A related issue pertains to the

appropriate length of time the adjusted

payment amount would be allowed by

Medicare for a particular ‘‘new

technology’’ IOL. We propose to allow

a single IOL the benefit of any payment

adjustment determined to be

appropriate for a period of 2 years

following the review process proposed

in this rule. At the conclusion of the 2-

year payment adjustment period,

Medicare payment for the IOL would

then revert to the payment rate for IOLs

furnished by an ASC that is in effect at

that time.

Supporting a 2-year payment limit is

the OIG’s 1994 report (Acquisition Costs

of Prosthetic Intraocular Lenses, OEI–

05–92–01030), which found a decrease

in IOL prices generally over a 2-year

period ranging from 11 to 14 percent in

various settings. We assume this

decrease is attributable to technology

diffusion and the associated

development of similar lenses by

competing firms. We believe a desirable

new technology IOL with demonstrated

clinical superiority would be subject to

equivalent conditions, and thus

experience a similar drop in acquisition

cost over a 2-year period.

2. Operational Payment Principles

The payment adjustments we publish

in the Federal Register would be

implemented prospectively, effective 30

days from the date of their publication.

This implementation date of a payment

adjustment is required under section

141(b) of SSAA 1994.

We propose to apply the same

payment adjustment amount established

for the first IOL or IOLs approved

within a new technology subset to all

IOLs that we subsequently accept as

satisfying the criteria for ‘‘new

technology’’ that are assigned to the

same subset. If a new technology IOL

were to qualify under more than one

subset of technology, and the subsets

had different payment rates, the IOL

would be paid for at the higher (or

highest) applicable rate.

We expect that more than one

manufacturer would be working to

develop IOLs that rely on the same or

similar technology that defines ‘‘new

technology’’ under the provisions of this
Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules 46703

rule. If we were to make a payment

adjustment under the provisions

proposed in this rule, the payment

adjustment amount would be based on

information regarding IOL production,

acquisition costs, and IOL benefits that

is submitted by the manufacturer or

manufacturers that first request review

for a particular type of new technology

IOLs. Manufacturers would have 3 years

during which to submit requests for

review of equivalent IOLs approved by

the FDA that were in a ‘‘new

technology’’ subset already approved by

us and still benefit from the full 2-year

payment adjustment term. Requests for

review of an IOL submitted during the

third year of a technology’s designation

as ‘‘new’’ would only have the benefit

of a payment adjustment for 1 year.

If an interested party wants an IOL to

be considered for a payment adjustment

under section 141(b) of SSAA 1994, that

interested party must request a review

in accordance with the process

proposed in this rule, which request

would be approved and published in a

final rule and codified in the Code of

Federal Regulations. In accordance with

section 141(b) of SSAA 1994, we would

adhere to a yearly cycle of receiving

requests for review, publishing those

requests, reviewing comments on the

requests, reviewing the requests, and

publishing our determinations. We

would not make determinations or

provide for payment adjustments

outside this schedule, although

interested parties may submit requests

for review as soon as FDA grants its

approval. We would compile these

requests for publication in the next

applicable Federal Register notice.

We propose to assign codes to be used

to bill for IOLs that qualify for the

payment adjustment. The list of these

IOLs, with the appropriate billing code,

would be published annually in the

Federal Register. Billing for any other

IOLs using ‘‘new technology’’ billing

codes would constitute fraud.

We invite comments on the suitability

of these proposals and solicit

suggestions for alternative approaches

for determining how to identify IOLs as

‘‘new technology’’; for evaluating the

appropriateness of the current IOL

allowance; for calculating the amount of

an adjustment to be made in the event

the current IOL payment amount is

found to be inappropriate with respect

to a particular IOL; and for defining the

period of time during which the

payment adjustment would be in effect.

We believe that any adjustment amount

should be modest, since the high

quality, readily accessible IOLs

currently on the market leave only

marginal room for improvement. We do

not believe that an upward adjustment

is warranted unless the new technology

IOLs, as a group, cost more to produce,

are appreciably superior clinically, and

successfully fulfill a need unmet before

that time in an innovative manner.

F. Review and Adjustment Process

In this section, we describe the

process that we propose to implement

annually in order to determine the

appropriateness of IOL pricing as

required under section 141(b) of SSAA

1994.

1. Federal Register Notice Inaugurates

Annual Cycle

The process, which is designed to be

repeated annually on a 365-day cycle,

would be initiated by publication of a

Federal Register notice that would serve

a threefold purpose.

a. Deadline for submission of a

request for review. The publication date

of the Federal Register notice

announcing the deadline by which any

interested parties would have to submit

requests in order for us to review the

appropriateness of the Medicare

payment allowance under section

1833(i)(2)(A)(iii) of the Act with respect

to a particular IOL would be established

as ‘‘Day 1’’ of the 365-day annual review

cycle. The ‘‘Day 1’’ Federal Register

notice would include the deadline for

submission of requests to review (the

date of publication of the Federal

Register notice plus 125 days); the

requirements to be satisfied in order for

an IOL to be treated as a ‘‘new

technology’’ IOL under section 141(b) of

SSAA 1994; the specific information

that must accompany a request for

review as well as the format in which

that information is to be submitted; the

address to which the request is to be

sent; the factors that we would take into

account in determining whether the

current IOL payment amount is

appropriate; the factors that we would

take into account in determining the

payment adjustment to be made; and

any other information that we believe is

relevant and necessary.

b. List of intraocular lenses for

payment adjustment. The Federal

Register notice published on ‘‘Day 1’’ of

the 365-day cycle, in addition to

announcing the deadline for submission

of requests to review for the forthcoming

year, would list those IOLs, identified as

new technology IOLs, for which we had

found a payment adjustment to be

appropriate during the prior year’s

review. The ‘‘Day 1’’ notice would also

include information on the amount of

any payment adjustment determined for

a particular IOL; the subset of ‘‘new

technology’’ under which each IOL

would be classified; the beginning date

of the period when the payment

adjustment would be effective (‘‘Day 1,’’

the date of publication of the Federal

Register notice, plus 30 days); the

code(s) to be used to bill for the IOL; the

expiration date of the period during

which the payment adjustment would

be allowed (2 years from the date of

publication of the Federal Register

notice); and, the expiration date of the

IOL’s ‘‘new technology’’ designation (5

years from the date of publication of the

Federal Register notice). Because ASC

rates are prospectively set, we would

make payment adjustments

prospectively.

c. Summary of previous year’s

determinations. The ‘‘Day 1’’ Federal

Register notice would list any other

IOLs to which a payment adjustment

still applied as the result of reviews in

earlier years; the type of ‘‘new

technology’’ under which each IOL had

been classified whether or not it

qualified for a payment adjustment; the

amount of the payment adjustment

allowed for each type of IOL; the code(s)

to be used to bill; and the dates when

the ‘‘new technology’’ designation of the

IOL and the applicable payment

adjustment would expire.

2. Publication of Requests for Review

We would provide that we must

receive requests for review no later than

125 days from the date of publication of

the ‘‘Day 1’’ Federal Register notice

inviting requests for review. We would

compile a list of any requests for review

that we received timely. The list,

including the manufacturer’s name and

the model number of the IOL to be

reviewed, would be published in a

Federal Register notice with comment

period. This second notice would be

published no later than 245 days from

the publication date of the first Federal

Register notice that initiated the annual

review cycle by inviting requests for

review. The public would have 30 days

to comment on the IOLs included in the

list of those for which a payment review

had been requested.

3. Our Review and Publication of

Determinations

We would review any comments that

were submitted regarding the list of

IOLs published in the Federal Register

along with the information submitted

with the request to review to decide

whether an adjustment of the current

IOL payment amount was appropriate

with respect to each IOL on the list.

Because of the rigid time frame for this

process, the applicant must submit

sufficient information in a timely

manner to allow for review. At our
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discretion, we may request additional

information. If an initial submission is

incomplete, however, we would make a

determination based on the information

submitted.

As described in an earlier section, we

propose to take the following factors

into account in determining whether to

provide a payment adjustment:

• The IOL meets the definition of a

‘‘new technology IOL’’ in § 416.180

(‘‘Definitions’’).

• The extent to which the current IOL

payment amount is reasonable and

reflects the acquisition cost of the IOL

under review.

No later than 90 days after the close

of the public comment period, we

would publish in the Federal Register a

notice announcing our determinations

with respect to the requests for review

that had been published 120 days

previously announcing the amount of

any new payment adjustments;

announcing the deadline for submission

of the upcoming year’s requests for

review 125 days from that time; and

summarizing payment adjustments

made previously that were still in effect.

With publication of this notice, the

annual cycle would be repeated with a

new ‘‘Day 1’’ date.

The following table summarizes the

key events in the annual review cycle

that is the subject of this proposed rule:

Event Timeframe

Publication of a FEDERAL REGISTER notice inviting requests for review, announcing our determinations of adjustments to be made to ‘‘new technology’’ IOL payment amounts, and summarizing adjustments from prior years that are still in effect.

Date of publication of this notice constitutes

‘‘Day 1’’ of the annual review cycle.

Effective date for any payment adjustments that we determine are appropriate as published in

the FEDERAL REGISTER on ‘‘Day 1.’’.

‘‘Day 1’’ date plus 30 days.

Deadline for receipt of the IOL review requests for our consideration ........................................... ‘‘Day 1’’ date plus 125 days.

Publication in the FEDERAL REGISTER of the list of requests for review ......................................... ‘‘Day 1’’ date plus 245 days.

End of 30-day public comment period regarding the list of requests for review ............................ ‘‘Day 1’’ date plus 275 days.

Publication of a FEDERAL REGISTER notice inviting requests for review, announcing our determinations of adjustments to be made to ‘‘new technology’’ IOL payment amounts, and summarizing adjustments from prior years that are still in effect.‘‘Day 1’’ date plus 365 days; cycle starts over

with new ‘‘Day 1.’’

To summarize the process that we

propose in this rule, in order for us to

treat an IOL as a new technology IOL

under the provisions of SSAA 1994, the

IOL must have obtained FDA approval

to include in labeling and advertising

claims of superior clinical advantages

over other IOLs. If we find that the IOL

for which a review is requested meets

this criterion and if we determine that

the current payment amount for IOLs

furnished by ASCs is inappropriate with

respect to the IOL, that is, the current

IOL payment amount is not reasonable

and is not related to the cost of

acquiring the IOL, we would adjust the

payment amount for the IOL. In

determining the amount of adjustment,

we propose to take into account

development and manufacturing costs

and sales projections as elements of cost

with respect to the IOL under review,

both alone and relative to other IOLs.

G. Requirements for Content of a

Request To Review

We propose to require interested

parties seeking a review of the IOL

allowance under section 141(b) of the

SSAA 1994 to submit certain

information that we regard as critical if

we are to make a fair and objective

determination that the payment amount

for an IOL paid under section

1833(i)(2)(A)(iii) of the Act is or is not

appropriate. Interested parties

requesting a review of the IOL payment

amount with respect to a particular IOL

would be required to submit the

following: identification of the

individual IOL under consideration as a

‘‘new technology’’ IOL for which a

payment review is requested, including

the name of the manufacturer, model

number, trade name, and the date the

FDA granted premarket approval for the

IOL; a copy of the FDA’s summary of

safety and effectiveness; a copy of the

labeling claims of specific clinical

advantages approved by the FDA;

reports of modifications made after FDA

approval; development and

manufacturing costs of the ‘‘new

technology’’ IOL relative to the costs of

manufacturing other approved IOLs; the

costs of conducting clinical trials for the

IOL in question relative to the costs of

conducting clinical trials for other

approved IOLs; indications and

contraindications for use;

epidemiological data indicating demand

for the IOL; sales price, sales history,

and revenues, and prices and projected

revenues during the period of the

payment adjustment; names of

purchasers; and other information we

consider appropriate for making a

determination. We cannot be allinclusive in this list since we may need

information that we cannot foresee at

this time. We may modify our requests

for information as changes in

technology dictate. We may request

supplemental information from

individual interested parties during the

review process. The interested party

would be responsible for demonstrating

to our satisfaction that a payment

adjustment for the IOL under review is

warranted, especially given the

widespread availability of high quality

IOLs at a cost equal to or less than the

current Medicare IOL allowance. The

burden of proof would be on the

interested party to show that the current

IOL payment amount is inappropriate

for the new technology IOL for which a

review is requested.

Interested parties should be aware

that 45 CFR 5.65(c) provides that a

submitter of information may designate

all or part of the information as being

exempt from mandatory disclosure

under Exemption 4 of the Freedom of

Information Act.

III. Collection of Information

Requirements

This document does not impose

information collection and

recordkeeping requirements.

Consequently, it need not be reviewed

by the Office of Management and

Budget under the authority of the

Paperwork Reduction Act of 1995 (44

U.S.C. 3501 et seq.).

IV. 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, if we proceed with

a subsequent document, we will

respond to the comments in the

preamble to that document.

V. Regulatory Impact Statement

We generally prepare a regulatory

flexibility analysis that is consistent

with the Regulatory Flexibility Act
Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules 46705

(RFA) (5. U.S.C. 601 through 612) unless

the Secretary certifies that a proposed

rule would not have a significant

economic impact on a substantial

number of small entities. For purposes

of the RFA, we consider all

manufacturers of IOLs, ASCs, hospital

outpatient departments, and physicians

who perform IOL insertion surgery to be

small entities. Individuals and States are

not included in the definition of a small

entity. We are not preparing a regulatory

flexibility analysis because we have

determined, and the Secretary certifies,

that this proposed regulation would not

have a significant economic impact on

a substantial number of small entities.

Also, section 1102(b) of the Act

requires the Secretary to prepare a

regulatory impact analysis if a proposed

rule would have a significant impact on

the operations of a substantial number

of small rural hospitals. This 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 50

beds. We are not preparing a rural

hospital impact statement because we

have determined, and the Secretary

certifies, that this proposed regulation

would not have a significant impact on

the operations of a substantial number

of small rural hospitals.

Although this proposed rule is not an

‘‘economically significant’’ rule under

Executive Order 12866, we present

below a voluntary analysis of the effects

of this proposed rule because many

beneficiaries who undergo IOL insertion

surgery following a cataract extraction

could be affected.

We believe that the fiscal impact of

this rule would be negligible. We do not

expect that making this payment

adjustment would have an impact on

the availability or prices of other IOLs.

We do not expect that it would affect

competition, employment, or

investment. The ocular implant industry

is mature, with a successful product

readily available to purchasers. Our data

suggest that we pay, under the Medicare

program, more than the acquisition cost

for most of the IOLs used today. New

technology IOLs would achieve

improvements in only small segments of

the industry, since the majority of IOLs

function superbly. The IOLs under

development that we are aware of

would substitute for spectacles in some

cases, and in others would allow the

patient to wear a single vision

prescription rather than bifocals. The

desirability of this feature to the

Medicare population is not known.

There would be no significant

program savings, even if the use of these

IOLs reduced expenditures for

spectacles or eliminated the need for

follow-up treatment. The complexities

of claims processing for an additional

payment on top of a bundled, fixed

payment would be considerable.

Manual claims processing or a

significant reconfiguration of claims

processing software would be required.

The payment method for ASC-type

procedures performed in hospital

outpatient departments requires that we

use a blend of 42 percent of the

hospital’s costs or charges and 58

percent of the ASC rate as a basis for

payment. The addition of an adjustment

to two of the ASC rates would

complicate hospital payment. The

review process to determine which IOLs

qualify for a payment adjustment would

be costly in terms of staff hours and

Federal Register publication costs. We

would have to develop new codes to

identify specific IOLs, which creates the

possibility of ‘‘upcoding,’’ or using

those codes for IOLs not eligible for the

adjustment. We would also have to

undertake an extensive educational

effort, to explain the use of the new

codes to the provider community and to

our contractors. This would involve

manual issuances and program

memoranda. These direct and indirect

costs more than outweigh the marginal

benefit available to a few manufacturers.

In accordance with the provisions of

Executive Order 12866, this regulation

was reviewed by the Office of

Management and Budget.

List of Subjects in 42 CFR Part 416

Health facilities, Kidney diseases,

Medicare, Reporting and recordkeeping

requirements.

For the reasons set forth in the

preamble, 42 CFR part 416 would be

amended as follows:

PART 416—AMBULATORY SURGICAL

SERVICES

1. The authority citation for part 416

continues to read as follows:

Authority: Secs. 1102 and 1871 of the

Social Security Act (42 U.S.C. 1302 and

1395hh).

2. A new subpart F, consisting of

§§ 416.180, 416.185, 416.190, 416.195,

and 416.200, is added to read as follows:

Subpart F—Adjustment in Payment

Amounts for New Technology Intraocular

Lenses

Secs.

416.180 Definitions.

416.185 Payment review process.

416.190 Who may request a review.

416.195 Content of a request to review.

416.200 Application of the payment

adjustment.

Subpart F—Adjustment in Payment

Amounts for New Technology

Intraocular Lenses

§ 416.180 Definitions.

As used in this subpart, the following

definitions apply:

Class of new technology intraocular

lenses (IOLs) means all of the IOLs,

collectively, that HCFA determines to

have met the definition of ‘‘new

technology IOL’’ under the provisions of

this subpart.

Interested party means any

individual, partnership, corporation,

association, society, scientific or

academic establishment, professional or

trade organization, or any other legal

entity.

New technology IOL means an IOL

that HCFA determines to have met the

following criterion: The FDA has

approved for use in labeling and

advertising the IOL’s claims of specific

clinical advantages and superiority over

existing IOLs with regard to reduced

risk of intraoperative or postoperative

complication or trauma, accelerated

postoperative recovery, reduced

induced astigmatism, improved

postoperative visual acuity, more stable

postoperative vision, or other

comparable clinical advantages.

New technology subset means a group

of IOLs that HCFA determines to meet

the criterion for being treated as new

technology IOLs and that share a

common feature or features that

distinguish them from other IOLs. For

example, all new technology IOLs that

are made of a particular bioengineered

material could comprise one subset,

while all that rely on a particular optical

innovation could comprise another.

§ 416.185 Payment review process.

(a) HCFA publishes a Federal Register

notice announcing the deadline and

requirements for submitting a request

for HCFA to review payment for an IOL.

(b) HCFA receives requests for review

of payment for an IOL.

(c) HCFA compiles a list of the

requests it receives timely and identifies

the IOL manufacturer’s name, the model

number of the IOL to be reviewed, the

interested party or parties that submit

requests, and a summary of the

interested party’s grounds for requesting

review of the appropriateness of the IOL

payment amount.

(d) HCFA publishes the list of

requests in a Federal Register notice

with comment period, giving the public

30 days to comment on the IOLs for

which review was requested.
46706 Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules

(e) HCFA reviews the information

submitted with the request to review,

any timely comments that are submitted

regarding the list of IOLs published in

the Federal Register, and any other

timely information that HCFA deems

relevant to decide whether to provide a

payment adjustment. Factors that HCFA

takes into account in determining

whether the IOL payment amount

provided under section 1833(i)(A)(2)(iii)

of the Act is appropriate with respect to

an IOL for which a review was

requested include, but are not limited

to, the following:

(1) Whether the IOL meets the

definition of a ‘‘new-technology IOL’’ in

§ 416.180.

(2) What it costs ASCs to acquire IOLs

in the new technology subset to which

the IOL under review belongs.

(3) Whether the current IOL payment

allowance is reasonable with regard to

the IOL under review.

(f) If HCFA determines that the

current IOL payment allowance is not

appropriate for the IOL under review,

HCFA establishes a payment adjustment

that takes into account the following

factors:

(1) IOL manufacturing costs.

(2) The IOL manufacturer’s selling

costs and general and administrative

overhead costs.

(3) Research and development costs

attributable to the IOL.

(4) Manufacturer discount and rebate

packages.

(5) Other information that HCFA

considers appropriate in determining a

payment adjustment.

(g) Within 90 days of the end of the

comment period following the Federal

Register notice identified in paragraph

(d) of this section that lists IOLs for

which a review was requested, HCFA

publishes its determinations with regard

to payment adjustments in the Federal

Register. In the same Federal Register

notice, HCFA also announces the

deadline and requirements for

submitting requests for the next annual

cycle of reviews.

(h) Payment adjustments are effective

beginning 30 days after the publication

of HCFA’s determinations in the

Federal Register.

§ 416.190 Who may request a review.

Any party who is able to furnish the

information required in § 416.195 may

request that HCFA review the

appropriateness of the payment amount

provided under section 1833(i)(2)(A)(iii)

of the Act with respect to an IOL that

meets the definition of a new

technology IOL in § 416.180.

§ 416.195 Content of a request to review.

The interested party requesting a

review of the IOL payment amount must

timely furnish convincing evidence that

the payment amount provided under

section 1833(i)(2)(A)(iii) of the Act is

not appropriate for a new technology

IOL and that a payment adjustment is

reasonable and warranted.

(a) Requirements for a request to

review the appropriateness of the IOL

payment amount for a new technology

IOL. In order for HCFA to consider a

request to review the IOL payment

amount with regard to a particular IOL,

the request must meet all of the

following requirements:

(1) Identification of an IOL. The

interested party must provide the

following information:

(i) The name of the manufacturer, the

model number, and the trade name of

the IOL.

(ii) A copy of the FDA’s summary of

the IOL’s safety and effectiveness.

(iii) A copy of the labeling claims of

specific clinical advantages approved by

the FDA for the IOL.

(iv) A copy of the IOL’s original FDA

approval notification.

(v) Reports of modifications made

subsequent to original FDA approval.

(vi) Indications and contraindications

for use of the IOL.

(vii) Epidemiological data indicating

demand for the IOL.

(viii) Other information that HCFA

finds necessary for identification of the

IOL.

(2) IOL costs. To enable HCFA to

review the appropriateness of the

payment amount provided under

section 1833(i)(2)(A)(iii) of the Act with

regard to the IOL, the following

documented evidence of the cost of the

IOL and the manufacturer’s investment

in the IOL is required:

(i) The manufacturer’s current list

price for the IOL and a history of the

IOL’s pricing since FDA approval was

obtained.

(ii) Manufacturing costs of the IOL

relative to the costs of manufacturing

other approved IOLs.

(iii) Research and development costs

incurred to create the IOL, using

research and development costs of other

FDA-approved IOLs for purposes of

comparison.

(iv) Costs incurred to conduct clinical

trials for the purpose of demonstrating

for FDA approval the clinical

superiority of the IOL relative to the

costs incurred to conduct clinical trials

for other approved IOLs.

(v) Sales and revenue history of the

IOL, and sales and revenues projected

for the IOL if a payment adjustment

were approved by HCFA.

(vi) Names of purchasers of the IOL.

(vii) Other information HCFA finds

necessary for making a determination.

(b) Confidential information. To the

extent that information received from an

IOL manufacturer can reasonably be

characterized as a trade secret or as

privileged or confidential commercial or

financial information, Exemption 4 of

the Freedom of Information Act (5

U.S.C. 552(b)(4)) and, with respect to

trade secrets, the Trade Secrets Act (18

U.S.C. 1905), allow HCFA to maintain

the confidentiality of the information

and to protect it from disclosure not

otherwise authorized or required by

Federal law.

§ 416.200 Application of the payment

adjustment.

(a) New technology subset. (1) HCFA

designates a predominant characteristic

of a new technology IOL that both sets

it apart from other IOLs and links it

with other similar IOLs with the same

characteristic to establish within the

‘‘class of new technology IOLs’’ a

specific subset of new technology.

(2) Each subset is recognized for

purposes of this subpart as belonging to

the class of new technology IOLs for a

period of 5 years, effective beginning the

date that the first IOL that defines the

subset is identified.

(3) During the fifth year following the

date that the first IOL is designated as

belonging to the subset, requests to

review IOLs that would be considered

part of the subset that expires at the end

of the year are not considered.

(4) Beginning on the sixth anniversary

date of the effective date of the

recognition of a subset, payment

adjustments applicable to IOLs in that

subset cease for all IOLs in that subset

and payment reverts to the payment rate

in effect at that time for IOLs under

section 1833(i)(2)(A)(iii) of the Act.

(b) Duration of payment adjustment.

(1) Any single model of IOL for which

HCFA determines that a payment

adjustment is appropriate receives the

payment adjustment for a period of 2

years.

(2) On the second anniversary date of

implementation of a payment

adjustment approved for the IOL under

the provisions of this subpart, payment

for the IOL reverts to the IOL payment

rate in effect at that time under section

1833(i)(2)(A)(iii) of the Act.

(c) Similarity of payment adjustment.

All IOLs included in the same subset of

new technology IOLs and for which

HCFA determines a payment adjustment

is appropriate receive the same payment

adjustment.

(d) Basis for payment. (1) In order for

HCFA to consider an IOL for a payment
Federal Register / Vol. 62, No. 171 / Thursday, September 4, 1997 / Proposed Rules 46707

adjustment under this subpart, an

interested party must submit timely a

request for review prepared in

accordance with the requirements in

§ 416.195, and the IOL must be included

in the list of requests for review that is

published annually in the Federal

Register in accordance with the process

described in § 416.185.

(2) In order for HCFA to make an IOL

payment adjustment under this subpart,

the IOL for which the adjustment is

approved must be identified in the list

of determinations HCFA publishes in

the Federal Register 125 days after

publication of the list of requests for

review.

(i) HCFA assigns a unique billing code

to each IOL for which it determines a

payment adjustment is appropriate.

(ii) Using the billing code assigned to

an IOL for which HCFA determines a

payment adjustment is appropriate

under this subpart in order to bill for a

different IOL constitutes fraud.

(Sections 1832(a)(2)(F)(i) and 1833(i)(2)(a) of

the Social Security Act (42 U.S.C.

1395k(a)(2)(F)(i) and 1395l(i)(2)(a)))

(Catalog of Federal Domestic Assistance

Program No. 93.774, Medicare—

Supplementary Medical Insurance Program)

Dated: January 17, 1997.

Bruce C. Vladeck,

Administrator, Health Care

Financing Administration.

Dated: March 10, 1997.

Donna E. Shalala,

Secretary.

[FR Doc. 97–23380 Filed 9–3–97; 8:45 am]

BILLING CODE 4120–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 73

[MM Docket No. 97–189, RM–9135]

Radio Broadcasting Services;

Nassawadox, VA

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Commission requests

comments on a petition filed by Ken

Robol requesting the allotment of

Channel 252A to Nassawadox, Virginia,

as the community’s first local aural

transmission service. Channel 252A can

be allotted to Nassawadox in

compliance with the Commission’s

minimum distance separation

requirements without the imposition of

a site restriction. The coordinates for

Channel 252A at Nassawadox are 37–

28–24 NL and 75–51–30 WL.

DATES: Comments must be filed on or

before October 20, 1997, and reply

comments on or before November 4,

1997.

ADDRESSES: Federal Communications

Commission, Washington, DC 20554. In

addition to filing comments with the

FCC, interested parties should serve the

petitioner, or its counsel or consultant,

as follows: Ken Robol, 303 Amherst

Court, Chesapeake, Virginia 23320

(petitioner).

FOR FURTHER INFORMATION CONTACT: Pam

Blumenthal, Mass Media Bureau, (202)

418–2180.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Notice of

Proposed Rule Making, MM Docket No.

97–189, adopted August 20, 1997, and

released August 29, 1997. The full text

of this Commission decision is available

for inspection and copying during

normal business hours in the FCC’s

Reference Center (Room 239), 1919 M

Street, NW, Washington, DC. The

complete text of this decision may also

be purchased from the Commission’s

copy contractor, ITS, Inc., (202) 857–

3800, 2100 M Street, NW, Suite 140,

Washington, DC 20037.

Provisions of the Regulatory

Flexibility Act of 1980 do not apply to

this proceeding.

Members of the public should note

that from the time a Notice of Proposed

Rule Making is issued until the matter

is no longer subject to Commission

consideration or court review, all ex

parte contacts are prohibited in

Commission proceedings, such as this

one, which involve channel allotments.

See 47 CFR 1.1204(b) for rules

governing permissible ex parte contacts.

For information regarding proper

filing procedures for comments, see 47

CFR 1.415 and 1.420.

List of Subjects in 47 CFR Part 73

Radio broadcasting.

Federal Communications Commission.

John A. Karousos,

Chief, Allocations Branch, Policy and Rules

Division, Mass Media Bureau.

[FR Doc. 97–23437 Filed 9–3–97; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 73

[MM Docket No. 97–187, RM–9149]

Radio Broadcasting Services;

Patterson, IA

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Commission requests

comments on a petition by West Wind

Broadcasting requesting the allotment of

Channel 290A to Patterson, Iowa, as the

community’s first local aural

transmission service. Channel 290A can

be allotted to Patterson in compliance

with the Commission’s minimum

distance separation requirements

without the imposition of a site

restriction. The coordinates for Channel

290A at Patterson are 41–20–54 NL and

93–52–49 WL.

DATES: Comments must be filed on or

before October 20, 1997, and reply

comments on or before November 4,

1997.

ADDRESSES: Federal Communications

Commission, Washington, DC 20554. In

addition to filing comments with the

FCC, interested parties should serve the

petitioner, or its counsel or consultant,

as follows: Victor A. Michael, Jr.,

President, West Wind Broadcasting, c/o

Magic City Media, 1912 Capitol Avenue,

Suite 300, Cheyenne, Wyoming 82001

(petitioner).

FOR FURTHER INFORMATION CONTACT: Pam

Blumenthal, Mass Media Bureau, (202)

418–2180.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Notice of

Proposed Rule Making, MM Docket No.

97–187, adopted August 20, 1997, and

released August 29, 1997. The full text

of this Commission decision is available

for inspection and copying during

normal business hours in the FCC’s

Reference Center (Room 239), 1919 M

Street, NW, Washington, DC. The

complete text of this decision may also

be purchased from the Commission’s

copy contractor, ITS, Inc., (202) 857–

3800, 1231 20th Street, NW,

Washington, DC 20036.

Provisions of the Regulatory

Flexibility Act of 1980 do not apply to

this proceeding.

Members of the public should note

that from the time a Notice of Proposed

Rule Making is issued until the matter

is no longer subject to Commission

consideration or court review, all ex

parte contacts are prohibited in

Commission proceedings, such as this

one, which involve channel allotments.

See 47 CFR 1.1204(b) for rules

governing permissible ex parte contacts.

For information regarding proper

filing procedures for comments, see 47

CFR 1.415 and 1.420.

List of Subjects in 47 CFR Part 73

Radio broadcasting.